What is frugal innovation? Three defining criteria?
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Frugal innovation refers to solutions, methods, or designs that focus on serving new customers in resource-constrained contexts, such as emerging and developing markets. It involves creating affordable products or services that meet the needs of customers while utilizing as few resources as possible. Frugal innovation is characterized by three defining criteria: substantial cost reduction compared to conventional counterparts, concentration on core functionalities, and optimized performance level. These criteria highlight how frugal innovation aims to provide affordable solutions with reduced functionalities, making them more inclusive and accessible to a wider range of people.
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| Frugal innovation refers to solutions, methods, or designs that focus on serving customers in resource-constrained contexts. The defining criteria include serving new customers in the bottom of the pyramid or emerging markets, utilizing as few resources as possible, and requiring significant changes in firms' activities. | |
01 Jan 2017 | The paper defines frugal innovation as having three criteria: substantial cost reduction, concentration on core functionalities, and optimized performance level. |
10 Feb 2023 | Frugal innovation is defined as an approach that involves substantial cost reduction compared to conventional counterparts, a focus on core functionalities, and an optimized performance level. |
Open access•Journal Article | Frugal innovation is the ability to generate more value while using fewer resources. The three defining criteria are affordability, sustainability, and high quality. |
Related Questions
What are the theories used to study frugal innovation?5 answersFrugal innovation is studied using various theories such as the theory of planned behavior, which identifies behavioral attitude, subjective norms, and perceived behavior control as key factors in frugal innovation. Additionally, the concept of frugal innovation involves creating solutions with essential quality and functionality using minimal resources, targeting customers with lower purchasing power. Frugal innovation is characterized by substantial cost reduction, focusing on core functionalities, and optimized performance levels. Furthermore, frugal innovation aims to serve low-income customers in developing countries by providing affordable products and services to address social and environmental issues, contributing to both business growth and inclusive growth.
How to address Financial constraints of product innovation?5 answersTo address financial constraints of product innovation, firms can consider various strategies based on the insights provided by research. Financial constraints negatively impact firms' innovation activities. Innovation subsidies may have a moderated effect on R&D investment in the presence of financial constraints. Policies aimed at alleviating financial constraints for innovative firms can be beneficial, going beyond traditional fiscal incentives. Firms facing financial constraints can benefit from reducing individual and market-based financial constraints, especially smaller and medium enterprises. Additionally, firms should focus on accumulating internal funds to overcome financial hindrances during the innovation process. By understanding the relationship between innovation output and financial performance, firms can tailor their strategies to navigate financial constraints and enhance product innovation.
Do consumers perceive frugal behaviors as less environmentally friendly?4 answersConsumers' perception of frugal behaviors as environmentally friendly depends on various factors. Research by Wang et al.shows that consumers' conservation behavior is influenced by their perception of a firm's greenness. If consumers perceive a firm as being green and committed to the environment, they are more likely to engage in conservation behaviors. On the other hand, Brough et al.suggest that there is a prevalent association between green behavior and femininity, which may lead to men avoiding green behaviors to preserve a macho image. However, it is important to note that these findings are specific to consumer behavior and may not directly address the perception of frugal behaviors as environmentally friendly. Further research is needed to fully understand how consumers perceive frugal behaviors in relation to environmental friendliness.
What is the conceptualization of financial innovations?5 answersFinancial innovation is a concept that has gained significant attention in recent years. It refers to the development and implementation of new financial products, services, and processes. Financial innovation is seen as a driving force for economic growth and is considered essential for the sustainability of the financial sector. Scholars have highlighted the importance of financial innovation in promoting economic growth and have referred to it as an "engine of economic growth". However, there is a recognition that financial innovation is complex and diverse, making it challenging to develop a single general theory to explain its development. Instead, a meta-theory approach that identifies, classifies, and connects theories of development for financial innovations is proposed as a better way to understand the complexities and diversities affecting financial innovation processes.
Ntrepreneurship ecosystem influences the development of frugal innovation and informal entrepreneurship?3 answersThe development of frugal innovation and informal entrepreneurship is influenced by the entrepreneurial ecosystem. The ecosystem comprises of formal/informal rules, access to market, and family as important elements that facilitate effective knowledge flows, networking, and resource sharing. The effectiveness of entrepreneurship in influencing economic growth is dependent on the stage of economic development of a country. Factors such as effective political, legal, regulatory, and economic frameworks, as well as the development of key resources and key stakeholders' functionality, are crucial for productive entrepreneurship. The entrepreneurship ecosystem is composed of macro-economic factors, cultural, social, and political willingness and ability to influence entrepreneurial activity. The dynamics of an entrepreneurial ecosystem, the choices of entrepreneurs, and the interactions between entrepreneurs and resource providers are shaped by the context, including institutional arrangements and resource scarcities. Innovation ecosystems play a role in supporting and inducing heterogeneity among new ventures, and managerial challenges may arise in developing and leveraging technological and marketing capabilities within these ecosystems.
How can we show PRUDENCE AND FRUGALITY in the enviroment?2 answersPrudence and frugality in the environment can be demonstrated by adopting fast and frugal heuristics for decision-making in uncertain contexts. These decision strategies, which are simple and psychologically plausible, have been shown to perform well in situations with limited time, information, and computational capacity. By using these heuristics, individuals can make efficient and effective choices that promote pro-environmental behavior. Additionally, emphasizing the potential for gain and co-benefits in environmental communication can engage people and encourage their involvement in addressing environmental challenges. By highlighting the positive outcomes and opportunities associated with environmental action, individuals may be more motivated to adopt pro-environmental behaviors. Furthermore, considering the social implications of environmental decline and the importance of collective engagement can also promote prudence and frugality in the environment. By recognizing the impact of our actions on others and fostering social connection, individuals can contribute to a more sustainable and responsible approach to the environment.