Frugality-Based Advantage

Asakawa, K., Cuervo-Cazurra, A., & Un. A. 2019. Frugality-based advantage. Long Range Planning, (Forthcoming).

23 Pages Posted: 6 Jun 2019

See all articles by Kazuhiro Asakawa

Kazuhiro Asakawa

Keio University - Graduate School of Business Administration

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

C. Annique Un

Northeastern University - International Business & Strategy

Date Written: December 18, 2018

Abstract

We analyze frugality-based advantage and explain its types and implications. The frugality-based advantage is an advantage that a firm achieves over competitors in its ability to develop and use frugal innovations, that is, innovations that overcome external resource constraints. We differentiate among three types of frugality-based advantages based on the external constraints they solve: (1) Input frugality-based advantage, which is the result of addressing restrictions in the provision of inputs needed for the production process; (2) Income frugality-based advantage, which is driven by solving limitations in the income of consumers; and (3) Infrastructure frugality-based advantage, which is the outcome of resolving constraints in the hard and soft infrastructure of the country. We explain how these three types of frugality-based advantages differ in their transferability across locations and their sustainability across time. Frugality-based advantage complements the resource-based view by explaining how the scarcity of external resources, rather than their abundance, can support the advantage of some firms.

Keywords: frugal, competitive advantage, innovation, constraints, resource-based view

JEL Classification: F23, M16, M21, O313, O35

Suggested Citation

Asakawa, Kazuhiro and Cuervo-Cazurra, Alvaro and Un, C. Annique, Frugality-Based Advantage (December 18, 2018). Asakawa, K., Cuervo-Cazurra, A., & Un. A. 2019. Frugality-based advantage. Long Range Planning, (Forthcoming).. Available at SSRN: https://ssrn.com/abstract=3390702

Kazuhiro Asakawa

Keio University - Graduate School of Business Administration ( email )

4-1-1 Hiyoshi,
Kohoku-ku
Yokohama, 223-8526
Japan

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

C. Annique Un

Northeastern University - International Business & Strategy ( email )

Boston, MA 02115
United States

HOME PAGE: http://anniqueun.com/

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