Frugal Innovation: A Global Networks' Perspective

Die Unternehmung (Swiss Journal of Business Research and Practice), Vol. 66 (3), pp. 245-274.

Posted: 4 Jan 2013

See all articles by Rajnish Tiwari

Rajnish Tiwari

Hamburg University of Technology (TUHH)

Cornelius Herstatt

Technical University Hamburg-Harburg (TUHH)

Date Written: December 1, 2012

Abstract

Recent years have seen the emergence of a paradigm of low-cost innovations targeted at economically weaker sections of the society, seeking to align business with social welfare. In many instances, results on the ground have been, however, rather sobering as firms have generally worried that “good quality, low price” may cannibalize into their regular business. At the same time those very customers that were intended to benefit from the new approach have tended to shy away from them fearing low quality and social stigma of using cheap products. Using multiple case studies of successful affordability-driven innovations (“frugal innovations”) from India we investigate how firms can effectively reduce market and technology uncertainty of product innovations targeted at price-sensitive customers. The key criteria to success seem to lie in reducing the overall cost of ownership and enhancing customer perception of quality and image. The case studies reveal that affordability-driven innovations are especially successful when firms turn to open global innovation networks for collaborative development in all phases of the innovation value chain.

Keywords: Frugal Innovations, Bottom of the Pyramid, Lead Markets, Open Innovation, Global Innovation, India, Open Global Innovation Networks, Innovation Systems

Suggested Citation

Tiwari, Rajnish and Herstatt, Cornelius, Frugal Innovation: A Global Networks' Perspective (December 1, 2012). Die Unternehmung (Swiss Journal of Business Research and Practice), Vol. 66 (3), pp. 245-274.. Available at SSRN: https://ssrn.com/abstract=2196084

Rajnish Tiwari (Contact Author)

Hamburg University of Technology (TUHH) ( email )

Hamburg, D-21071
Germany

HOME PAGE: http://www.global-innovation.net

Cornelius Herstatt

Technical University Hamburg-Harburg (TUHH) ( email )

Hamburg, D-21071
Germany

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