Institutional Perspectives on Frugal Innovation

The target market for frugal innovations is predominantly the developing countries, where institutions that facilitate market and economic transactions are either weak or non-existent. Though the institutional conditions in developing countries are likely to affect frugal innovations significantly, this important aspect of innovation management is yet to receive research attention. To highlight this scholarly oversight, and address this unchartered territory, our chapter explores the institutional factors that influence the development and diffusion of frugal innovations. Using a systematic review of three well-known frugal innovation cases, this study explored the background and contexts of these innovations to extract the institutional factors by which they are characterised. The findings suggest that frugal innovations are influenced by eight major institutional factors: culture and tradition; legal and regulatory regimes; activism of non-governmental organisations; government arrangements and systems; informal relations and partnerships; market/trade arrangements and systems; media influence; and family relations. The extensive discussion section highlights the effects of these factors and their implications for frugal innovation management.