Global power relations are shifting and the predominant position of Western economies has been significantly challenged over the last two decades by emerging countries from the global South. More and more, large developing economies like India, China and Brazil engage in the global economy on an equal footing with their Western counterparts. However, at the micro level this increased equality is far from being realized and whereas new MNCs from the South thrive in the open market economy, the actual people at the Bottom of the Pyramid (BoP) generally do not pick the fruits from increased globalization. Traditional research and development-led growth and standard financial systems (even those used by Southern firms) do not fit their situation wherein purchasing power is very low and economic time horizons are short. Frugal Innovation, a relatively new concept in innovation management focused on the (re)design of products, services or systems to make them affordable for low-income customers without sacrificing user value (Peša, 2014), may potentially be an answer to unanswered BoP demand for affordable and reliable communication, utilities, healthcare and financial products. It aims to bring products, services and systems within the reach of billions of poor and emerging middle-class consumers at the Middle and Base of the Pyramid (Bhatti, 2012; Zeschky et al, 2014). By dramatically cutting costs while safeguarding user value and technological sophistication, frugal innovation has been hailed as potentially disruptive of innovation processes, business models and even entire economies (Tiwari and Herstatt, 2012; Rao, 2013; Radjou and Prabhu, 2014).
Frugal Innovation is not only an interesting new concept from the perspective of poor consumers. The notion of doing more with less (Radjou and Prabhu, 2014) also offers an interesting new approach to Corporate Social Responsibility (CSR), a field of studies that has received significant attention over the last decades, both in practice and in theory through focus on issues like labour codes and environmental impacts and standards. Also in this field a debate emerges about shifting perspectives, as countries like China, India and Brazil do not only want to be standard taking countries, but naturally have ideas of their own on what responsibility entails, influencing the notion of what it means to be a responsible business in the future.
Unequal economic profit of globalization is however not the only challenge for good future growth we face in the coming years. Conventional economic growth has relied heavily on natural resources and increasingly it becomes clear that this type of growth cannot be sustained in the long run. The world needs new, sustainable types of energy and decreasing reliance on unrenewable resources to develop towards a green economy. Frugal innovation can play an important role in connecting the South to this development and potentially even result in developing countries leapfrogging towards flexible and clean energy and water supply through frugal initiatives at the meso or micro level. Furthermore, sustainability goes beyond the environment and also has its social and economic aspects. Successful Frugal Innovation ideally takes all three elements into account and can therefore be a useful tool in reaching a multitude of the Sustainable Development Goals (SDGs). With its focus on context-sensitivity, affordability and renewability it may have a positive influence on poverty alleviation, inclusiveness, and long term sustainability.
Although Frugal Innovation may possess the capacity to make a difference in creating sustainable global development in line with the SDGs, the concept has also been criticized as merely exacerbating capitalist exploitation and inequality (Schwittay, 2011; Dolan, 2012). Therefore we need to remain critical to prevent falling into the pitfall of the next hype in development speak. Frugal Innovation often takes place at the absolute bottom where informal economy jobs and entrepreneurial activities create the bulk of (very modest) incomes. Too rigid transformation from the informal to the formal economy through Frugal Innovation potentially threatens livelihoods of the poor and thus the relation between frugality, innovation and the formal/informal divide needs to be better assessed. More detailed empirical studies are required to ascertain whether frugal innovation will lead to equitable economic growth or whether it will merely sustain existing inequalities (Knorringa et al, 2016).
The aim of this Working Group session is to grasp how, where and when Frugal Innovation can play an influential role in tackling the challenges of economically, socially and environmentally sustainable development of today and our future. We invite contributions that cover questions like (but are not limited to):
- How can Frugal Innovation lead to sustainable economic transformation in the Global South?
- How can Frugal Innovation be a leading factor in the growing international private sector’s ambition to work responsibly?
- Where, when and how can successful Frugal Innovations lead to sustainable economic growth at the macro level?
Prof. dr. Peter Knorringa
Erasmus University Rotterdam, International Institute of Social Studies / Centre for Frugal Innovation in Africa
Prof. dr. Cees van Beers
Delft University of Technology, Faculty of Technology, Policy and Management / Centre for Frugal Innovation in Africa
Dr. André Leliveld
Leiden University, African Studies Centre / Centre for Frugal Innovation in Africa