Three developments are particularly interesting for our discussion: global socio-economic shifts, respective changes in consumer demands and new companies that become increasingly effective in catering these demands. We investigate how decision makers in organization react to these developments with regard to their innovation activities.
While a variety of concepts provide theoretical lenses to analyze the above mentioned developments, frugal innovation (FI) seems to become the most frequently applied approach (Agarwal, Grottke, Mishra,, & Brem, 2017). FIs are defined as offerings that cost significantly less than comparable solutions while focusing on core functionalities and providing a performance level, which is optimized for the given use context (Weyrauch & Herstatt, 2016). Offering such innovations provides opportunities that are increasingly targeted by new local players in emerging markets (Ernst, Kahle, Dubiel, Prabhu, & Subramaniam, 2015), which might become a challenge for established companies (Zeschky, Widenmayer, & Gassmann, 2011). These developments arguably have implications for various actors in the global marketplace. Multi-national companies (MNCs) being especially confronted with these dynamics. However, MNCs often seem to ignore the opportunities provided by targeting cost conscious customers with affordable solutions that fit local needs (Prahalad & Hart, 2002).
Case study research has shown that a committed leader that is convinced of the opportunities for FIs can have a catalysing role (Ramdorai & Herstatt, 2015). While giving a comprehensive insight on the crucial championing role, literature remains relatively silent on the cognitive antecedents of the leadership behaviour in focus.
With regard to Prahalad and Hart’s (2002) notion, it is important to keep in mind that organizations do not identify opportunities, but its members do (Krueger, 2007). We believe that investigating the respective mindset is very promising to understand why MNCs might not always exploit the opportunities provided by FIs.
We build on our previous efforts to frame the frugal mindset phenomenon (Krohn & Herstatt, 2018) and include the Theory of Planned Behaviour (TPB) (Ajzen, 1990) as an analytical framework.
To identify and define factors that can be applied to understand the cognitive antecedents to supporting FI projects, this study applied a multi-method approach. First, a systematic literature review (SLR) was conducted to synthesize relevant existing findings. Second, to validate and complement the analytical framework and the identified factors, the results were discussed with 16 practitioners, experts and political stakeholders of FIs in a focus group.
After the identification of 361 sources an iterative selection process was conducted using developed inclusion criteria. From the results of two literature databases 66 duplicates were removed. Afterwards a title screening was done to identify obviously unrelated articles towards the research question and 236 out of the 295 remaining articles were included for further analysis. The abstracts of the 236 articles were analyzed and 104 sources matched the inclusion criteria and were consequently included in the final selection. Nine of the sources could not be obtained so that the final database included 95 relevant articles for which a multi-stage coding process of was conducted.
The full-text analysis and coding of the literature sample resulted in the identification of 30 total key influencing factors and 6 stakeholders in the decision towards the performance of FI projects in organizations. These consist of 11 factors for the individual attitude, five factors from the professional environment and therefore subjective norms, and a total of 14 barriers for FI projects as factors for the perceived behavioral control.
The identified influencing factors affect the decision making process from several angles. Selected findings show that economic arguments are driven by the market potential that FIs offer to companies (Banerjee & Leirner, 2014) but also sustainability and social aspects are important to individuals in the organization (Agnihotri, 2015). The recent trend of frugality and a growing feature fatigue among customers increases the acceptance of frugal innovation projects in organizations as well.
Our study indicates that the management of a firm is a crucial stakeholder in the decision-making process and a strong support from the management for frugal innovations is regarded as a key enabler for such projects (Tiwari, Fischer, & Kalogerakis, 2017).
Contribution to Scholarship
We advance the theoretical discussion of the frugal mindset phenomenon, which has been suggested to be important for FI (Zeschky, Widenmayer, & Gassmann, 2011; Soni & Krishnan, 2014) but not received in-depth investigation. While scholars have suggested that individuals in organisations need to change their mindset (Zeschky, Widenmayer, & Gassmann, 2011) and develop a “frugal mindset” (Soni & Krishnan, 2014) the discussion remains descriptive. To the best of our knowledge, no publication attends a theory driven approach to this FI focused phenomenon.
We apply the TPB, which suggests that intentions are credible predictors of actual succeeding behaviour and its closest cognitive antecedent (Ajzen, 1990). Intentions in turn are a function of attitudes towards a behaviour, perceived social norms and perceived behavioural control. We provide influencing factors to these categories, which can help to understand the formation of intentions to pursue FI projects, which we define as a deliberative frugal mindset.
Contribution to Practice
From a practical perspective, the nuanced understanding of a mindset is a first step in developing actions to understand, influence and guide the prevailing mindset of individuals in an organization in the desired direction (French II, 2016). Hence, the understanding of the frugal mindset can help to assess the perspective of important project stakeholders and support FI champions to achieve full support.
Special Track 3.3 poses the question what determinants are leading the acceptance for frugal products and services in societies that are not characterized by extreme resource constraints. Key decision makers in organizations are important societal stakeholders regarding FIs and our work allows a systematic understanding of their perspective.
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