What is frugal innovation? Three defining criteria

Abstract

Recently, the innovation management literature has witnessed a rising interest in the so-called frugal innovation. The term was initially discussed in the context of emerging markets, giving non-affluent customers opportunities to consume affordable products and services suited to their needs. However, the meaning of frugal innovation is fuzzy. Further, the increasing appearance of frugal innovation in developed markets challenges earlier definitions that often characterised frugal innovation particularly in the context of emerging markets. So far, it has not been clear what differentiates frugal innovation from other innovation types. Thus, we need criteria that make it possible to determine what frugal innovation is and what is not. In order to determine a clear definition, we choose a multimethod approach, conduct a literature review, and interview 45 managers from companies and researchers from different research institutes. On the basis of the results, we define three criteria for frugal innovation: substantial cost reduction, concentration on core functionalities, and optimised performance level. We contribute to the literature by refining the meaning of frugal innovation. We also enable organisations to better deal with the challenge of developing frugal innovation in both emerging and developed markets.

Full text

R E S E A R C H Open Access
What is frugal innovation? Three defining
criteria
Timo Weyrauch
*
and Cornelius Herstatt
Abstract
Recently, the innovation management literature has witnessed a rising interest in the so-called frugal innovation.
The term was initially discussed in the context of emerging markets, giving non-affluent customers opportunities to
consume affordable products and services suited to their needs. However, the meaning of frugal innovation is
fuzzy. Further, the increasing appearance of frugal innovation in developed markets challenges earlier definitions
that often characterised frugal innovation particularly in the context of emerging markets. So far, it has not been
clear what differentiates frugal innovation from other innovation types. Thus, we need criteria that make it possible
to determine what frugal innovation is and what is not. In order to determine a clear definition, we choose a
multimethod approach, conduct a literature review, and interview 45 managers from companies and researchers
from different research institutes. On the basis of the results, we define three criteria for frugal innovation:
substantial cost reduction, concentration on core functionalities, and optimised performance level. We contribute to
the literature by refining the meaning of frugal innovation. We also enable organisations to better deal with the
challenge of developing frugal innovation in both emerging and developed markets.
Keywords: Frugal innovation, Frugal engineering, Reverse innovation, Cost innovation, Low-cost innovation, Good-
enough innovation, Jugaad innovation, Constraint-based innovation, Resource-constrained innovation, Gandhian
innovation
Introduction
Frugal innovations mainly originated in the context of
emerging markets. The main idea was to develop
products and services that fit these markets’special
needs and requirements and that were cheap enough
to give non-affluent customers opportunities for con-
sumption (Hart and Christensen 2002; Prahalad and
Hart 2002; Wooldridge 2010; Soni and Krishnan
2014). In the meantime, frugal innovations have also
found their way into developed markets (The Econo-
mist 2012) and are often referred to as reverse
innovation (Govindarajan and Trimble 2012; Immelt
et al. 2009; von Zedtwitz et al. 2015). Several exam-
ples have been written about frugal innovation. For
instance, Rao (2013) discusses 30 different frugal in-
novations. Well-known examples include the Tata
Nano (Ray and Ray 2011; Tiwari and Herstatt 2014)
and the handheld, pocket-sized ultrasound device GE
Vscan (Govindarajan and Trimble 2012).
Butwhatdoesfrugalinnovationmean?Whatdiffer-
entiates frugal innovation from other innovation
types? Publications in the field of frugal innovation
often provide definitions that rely on the possible at-
tributes of frugal innovation (for instance, significantly
lower costs, ease of use, limited features, and low im-
pact on the environment). Other articles propose a
theoretical understanding of frugal innovation and
seek to develop frameworks to distinguish frugal in-
novations from terms such as low-cost innovation,
good-enough innovation, jugaad innovation, frugal en-
gineering, constraint-based innovation, Gandhian
innovation, or reverse innovation (Bhatti and Ven-
tresca 2013; Brem and Wolfram 2014; Ostraszewska
and Tylec 2015; Zeschky et al. 2014). Current frame-
worksanddefinitionshelpustobetterunderstand
frugal innovation and what it could look like. How-
ever, to date, we have lacked criteria for clearly defin-
ing frugal innovation. With this paper, we seek to
* Correspondence: timo.weyrauch@tuhh.de
Institute for Technology and Innovation Management, Hamburg University
of Technology, Am Schwarzenberg-Campus 4, 21073 Hamburg, Germany
Journal of Fru
g
al Innovatio
n
© The Author(s). 2016 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and
reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to
the Creative Commons license, and indicate if changes were made.
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1
DOI 10.1186/s40669-016-0005-y

answer the following question: whichcriteriaapply
that allow us to define frugal innovation?
To answer this question, we chose a multimethod
approach. First, we conducted a literature review to
identify attributes and characterisations of frugal
innovation used in the literature. In step two, we
interviewed 45 managers from companies and re-
searchers from different research institutes that deal
with frugal innovation in order to capture the term’s
practical meaning. By coding the results, we noted
that most characteristics attributed to frugal
innovation can be subsumed into three categories:
cost reduction, core functionality, and performance
level. On the basis of this finding, we deduced three
criteria for frugal innovation: substantial cost reduc-
tion, concentration on core functionalities, and opti-
mised performance level. We propose to characterise
innovations as frugal if they meet all of these three
criteria at the same time.
By defining these three criteria, our contribution to
theory is a more precise understanding of frugal
innovation. First, we suggest referring to an innovation
as frugal only if all three criteria are met. Thus, these
criteria can be used to check whether or not a certain
innovation can be characterised as frugal. Second, the
criteria help us to better understand why frugal innova-
tions are different and why their development can be
challenging: all three criteria must be met simultan-
eously. This has practical implications: to develop frugal
innovations, all three criteria should be considered so as
to identify the specific characteristics to make a new
product or service frugal.
This paper is structured as follows. In the next
section, we provide an overview of concepts and
frameworks that distinguish frugal innovation from
other innovation types. We then explain the meth-
odology and outline our results. On the basis of our
literature review and interviews, in the “Discussion”
section, we deduce three criteria for frugal
innovation. Finally, we point out theoretical and
managerial implications, discuss potential limita-
tions, and provide recommendations for further
research.
Background
Several concepts and frameworks attempt to distinguish
frugal innovation from other innovation types. Most are
based on literature reviews (for an overview, see Table 1).
Cunha et al. (2014) examined literature streams in the
field of scarcity and product innovation. They consider
frugal innovation to be product innovation when there is
a scarcity of affluent customers and distinguish it from
bricolage, which is when material resources are scarce,
and from improvisation, when time is scarce.
Brem and Wolfram (2014) seek to distinguish between
frugal innovation and related terms such as frugal engin-
eering, constraint-based innovation, Gandhian innovation,
jugaad innovation, reverse innovation, catalytic
innovation, grassroots innovation, and indigenous
innovation. They introduce a conceptual framework
based on a literature review of 363 explored articles.
Their framework classifies frugal innovation and the re-
lated terms by using the three dimensions: sophistication,
sustainability, and emerging market orientation. In their
classification, compared to jugaad innovation or reverse
innovation, frugal innovation has low to medium sophis-
tication, medium sustainability, and medium emerging
market orientation.
Zeschky et al. (2014) also analyse different resource-
constrained innovation types. They distinguish between
frugal innovation, good-enough innovation, and cost
innovation, conceptualising the distinctions between
them. They classify frugal innovation via the criteria
technical novelty and market novelty. In their view, fru-
gal innovation has a higher technical novelty and a
higher market novelty than good-enough innovation and
cost innovation. Also, in their conceptualisation, cost
innovation means the same for less, good-enough
innovation means tailored for less, and frugal innovation
means new for less. Ostraszewska and Tylec (2015) use a
similar conceptualisation, with the criteria the same for
less,adapted for less, and new for less to distinguish be-
tween cost innovation, jugaad innovation, Gandhian
innovation, good-enough innovation, and frugal
innovation. In their classification, the GE LOGIQ Book
Ultrasound Machine is an example of frugal innovation
(new for less), while the city car Tata Nano is an example
of Gandhian innovation (adapted for less); elsewhere, the
Tata Nano is used as a typical example of frugal
innovation (Rao 2013; Tiwari and Herstatt 2014; Wool-
dridge 2010).
Soni and Krishnan (2014) review the literature on fru-
gal innovation and propose, in their conceptual paper,
looking at frugal innovation not as a monolithic entity.
They introduce three frugal innovation types: frugal
innovation as a mindset or way of life,asaprocess, and
as an outcome in the form of products or services. Their
approach aims at a typology of frugal innovation rather
than focusing on distinctions between frugal innovation
and other innovation types.
Basu et al. (2013) distinguish between frugal innovation
and conventional innovation along four characteristics:
driver, process, core capabilities, and location. The driver
of frugal innovation is described by what do they need,in
contrast to what would be nice to have; the latter relates to
conventional innovation. The process is described as bot-
tom-up in contrast to top-down. The core capability is
functionality (rugged, lightweight, adaptable, and simple)
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 2 of 17

in contrast to desirability and design. The last characteris-
tic, location, is developing and emerging markets,incon-
trast to developed markets of conventional innovation.
Further publications create an understanding of fru-
gal innovation by examining principles that underlie
frugal innovation and frugal engineering. Kumar and
Puranam (2012) identify six principles: robustness,
portability, de-featuring, leapfrog technology, mega-
scale production, and service ecosystems. Radjou and
Prabhu (2014) also present six principles: engage and
iterate, flex your assets, create sustainable solutions,
shape customer behaviour, co-create value with prosu-
mers, and make innovative friends. Further principles
and needed competencies to develop frugal and re-
lated innovations are discussed in the literature (Basu
et al. 2013; Prahalad and Mashelkar 2010).
The abovementioned concepts, frameworks, and princi-
ples are helpful for us to get a better idea of what frugal
Table 1 Distinguishing characteristics of frugal innovations
Article,
authors
Distinguishing characteristics Distinguishing between frugal innovation and other innovation
types
Concepts and
frameworks to classify
frugal innovation
Cunha et al.
(2014)
Field of scarcity •Frugal innovation: affluent customers are scarce.
•Bricolage: material resources are scarce.
•Improvisation: time is scarce.
Brem and
Wolfram
(2014)
Sophistication, sustainability, and
emerging market orientation
•Frugal innovation has low to medium sophistication, medium
sustainability, and medium emerging market orientation.
Zeschky et al.
(2014)
Technical novelty and market novelty
Criteria: same for less, tailored for less,
and new for less
•Frugal innovation has higher technical and higher market
novelty than good-enough innovation and cost innovation.
•Frugal innovation = new for less, cost innovation = same for less,
and good-enough innovation = tailored for less.
Ostraszewska
and Tylec
(2015)
Criteria: same for less, adapted for less,
and new for less
•The GE LOGIQ Book Ultrasound Machine is an example of frugal
innovation (new for less); the Tata Nano (often used as a typical
example for frugal innovation) is considered an example of
Gandhian innovation (adapted for less).
Soni and
Krishnan
(2014)
Introducing three frugal innovation
types
•Frugal innovation can be interpreted as a mindset or a way of
life, as a process, and as an outcome in the form of products or
services.
Basu et al.
(2013)
Introducing characteristics of frugal
innovation and conventional innovation
•Frugal innovation
- Driver: what do they need
- Process: bottom-up
- Core capabilities: functionality (rugged, lightweight,
adaptable, simple)
- Location: developing markets, emerging markets.
•Conventional innovation
- Driver: what would be nice to have
- Process: top-down
- Core capabilities: desirability and design
- Location: developed markets.
Rules and principles of
frugal innovation
Kumar and
Puranam
(2012)
Identifying six underlying principles of
frugal innovation
•Principles: robustness, portability, de-featuring, leapfrog
technology, mega-scale production, and service ecosystems.
Radjou and
Prabhu
(2014)
Identifying six underlying principles of
frugal innovation
•Principles: engage and iterate, flex your assets, create
sustainable solutions, shape customer behaviour, co-create
value with prosumers, and make innovative friends.
Prahalad and
Mashelkar
(2010)
Introducing three Gandhian innovation
types (in our context, interpreted as
frugal innovation)
Introducing rules for Gandhian
innovation
•The three Gandhian innovation types are as follows: disrupting
business models, modifying organisational capabilities, and
creating or sourcing new capabilities.
•The five rules for Gandhian innovation are as follows:
1. Develop a deep commitment to serving the unserved.
2. Articulate and embrace a clear vision.
3. Set very ambitious goals to foster an entrepreneurial spirit.
4. Accept that constraints will always exist and creatively
operate within them.
5. Focus on people, not just shareholder wealth and profits.
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 3 of 17

innovation means. Prabhu and Gupta (2014) argue that
“frugal innovations in products are easily identified by ex-
pert examination”. However, it still seems difficult for us
to determine what a frugal innovation is. In these con-
cepts, frugal innovation is often related to developing and
emerging markets, although frugal innovations have en-
tered developed markets (Govindarajan and Trimble
2012; Immelt et al. 2009; von Zedtwitz et al. 2015). Ac-
cordingly, criteria to determine frugal innovation should
be universal and should be independent from the question
whether or not it is discussed in the context of emerging
or developed markets. Further, the abovementioned dis-
tinguishing characteristics mainly focus on special aspects
such as technical novelty, market novelty, or the field of
scarcity. Using the scarcity field or market novelty and
technical novelty for distinction are useful to point out
particular differences between frugal innovation and other
innovation types. However, by using the distinguishing
characteristics depicted in Table 1, it remains difficult to
clearly define frugal innovation in ways that, first, make it
easier to determine whether or not an innovation is frugal
and, second, what can be considered the most important
aspects in order to develop frugal innovation.
In the literature, frugal innovation is seen as an outcome
and as a process. Soni and Krishnan (2014) note that the
process is often referred to as frugal engineering, with fru-
gal innovation being the outcome. Brem and Wolfram
(2014) have a similar understanding. In contrast, Basu et
al. (2013) call the process frugal innovation—similar to
George et al. (2012), who consider frugal innovation to be
a complex process rather than only an outcome. We focus
on attributes and descriptions of product innovation and
service innovation rather than on processes. However, in
our view, our results can also be transferred to processes.
Methods
Our approach is a multimethod approach based on the
following four-step procedure: literature review, inter-
action with practitioners, category building, and deduc-
tion of criteria for frugal innovation.
First, we conducted a literature review to capture what
is denoted by frugal innovation. We searched two data-
bases, EBSCO Business Source Premier and ISI Web of
Science, for relevant articles in the frugal innovation field.
We conducted a key phrase search. As shown in the the-
ory, the literature uses the terms frugal engineering and
frugal innovation to treat similar issues. Thus, we used the
key phrases “frugal innovation”,“frugal innovations”,and
“frugal engineering”in the topic or abstract fields.
Our research included publications until October
2014. We found 36 results in EBSCO and 43 in ISI Web
of Science. Since 17 articles were redundant, the total
number of articles was 62. We searched the articles for
definitions and characteristics attributed to frugal
innovation. Of these, 34 provided the searched informa-
tion and we sorted out 28. We subsumed expressions of
similar attributes, characteristics, and descriptions into
categories in a first-cycle coding (Saldaña 2013; Miles et
al. 2014). The results of the coding were reviewed by
three researchers, of whom one has been an expert in
the frugal innovation field for 5 years, one a sustainable
product development expert for 2 years, and one an ex-
pert in collaborative product development for 3 years.
None of these three researchers were involved in writing
the paper. The results of the literature review and the
coding were used to develop a questionnaire.
Second, we interviewed 45 managers from companies
and researchers from different research institutes with in-
tersections with frugal innovation per questionnaire. Since
the interviews were part of a more extensive data collec-
tion series on frugal innovation, we used further methods,
such as focus group interviews. The interviewees were
asked which attributes identified in the first-cycle coding
of the literature review apply to frugal innovation. We
used a five-point rating scale (Sekaran and Bougie 2013).
(Possible answers were fully applies, applies, neutral, ap-
plies to a lesser extent, and does not apply.) We provided
an open field for comments. To define criteria for frugal
innovation that are also valid for developed markets, we
were particularly interested in managers from developed
markets who were familiar with global and frugal
innovation. To identify interviewees, we chose to contact
participants of the symposium Frugal Innovation and the
Internationalisation of R&D organised by the Hamburg
University of Technology’s Centre of Frugal Innovation in
October 2014, as well as managers from companies doing
frugal innovation. To ensure high familiarity with the term
frugal innovation, interviewees had to meet frugal
innovation experience-related criteria. We analysed the
data and carefully checked that interviewees had been fa-
miliar with frugal innovation for more than a year and that
the companies and the research institutes in question
were involved in research or sales in the frugal innovation
field. In the end, we could include the results of 34 inter-
views into our analysis.
Third, after analysing the results, we did a second-
cycle coding in order to identify primary categories
that subsume all characteristics attributed to frugal
innovation. Fourth, on the basis of the identified pri-
mary categories, we developed criteria for frugal
innovation and defined them in detail.
Results
Literature review
In the 62 identified articles, we searched for charac-
terisations, definitions, and attributes used to de-
scribe frugal innovation. We were particularly
interested in how frugal innovation was understood
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 4 of 17

in each article. In some cases, only a few attributes
were mentioned or the meaning had to be inter-
preted from the context. When the meaning was too
blurred, we sorted the article out. In the end, we in-
corporated 86 items for attributes and characteristics
used in 34 articles, as summarised in the second col-
umn of Table 2.
In step two, we conducted first-cycle coding, which
is used to summarise segments of data (Saldaña 2013;
Miles et al. 2014). We coded expressions of similar
attributes, characteristics, or description by using at-
tribute categories. We conducted inductive coding,
meaning we developed codes progressively during
data collection (Miles et al. 2014). As a result of the
coding, nine attribute categories could be identified:
functional and focussed on essentials, considerably
lower initial cost or purchase price, reducing the total
cost of ownership, minimising the use of material and
financial resources, user-friendly and easy to use, ro-
bust, high value and quality, scalable and sales of
large numbers, and sustainable (see column 1,
Table 2 ) . Ta b le 3 in th e A p p endi x p r o vide s a m o re
detailed overview. To assure that the data are inter-
pretable in a similar way, we checked for inter-rater
reliability. We calculated Krippendorff’sαon the basis
of the coding of a second independent researcher.
Krippendorff’sαturned out to be α= .972. Since it is
customary to require α≥.800, our results are reliable
(Gwet 2014; Krippendorff 2004).
Interviews
The nine attribute categories created in the first-cycle
coding were used for the questionnaires of the inter-
views with the 45 managers and researchers. After data
cleaning, we included answers of 34 interviewees into
our analysis. Of these, 27 interviewees were managers
from companies located in Germany or with subsidiaries
there. The companies were from all branches and oper-
ated globally: 24 companies operated in Europe, 20 in
Asia, 19 in North America, 17 in South America, 17 in
Africa, 17 in the Commonwealth of Independent States,
16 in the Middle East, and 16 in Australia and Oceania.
Of the interviewees, 22 were managers of larger multi-
national companies with more than 500 employees and
annual turnover of at least 500 million euro. Of the in-
terviewees, 18 were in executive position, 15 worked in
R&D, and seven were researchers from research insti-
tutes such as universities and research organisations lo-
cated in Germany. Interviewees were asked which
attributes apply to frugal innovation. The interview re-
sults indicate at least two attribute categories that are
crucial for understanding frugal innovation: frugal
innovation is “functional and focussed on essentials”, ac-
cording to all interviewees, and has “considerably lower
initial cost or purchase price”according to 32 of the 34
interviewees. Further attributes identified in the litera-
ture review are also strongly associated with frugal
innovation. “Reducing the total cost of ownership”is a
distinctive attribute according to 27 interviewees,
Table 2 Attributes and characterisations of frugal innovation
Attribute categories (first-cycle coding) Attributes and characterisations of frugal innovations used in articles
a
Functional and focussed on essentials Bare essentials, core benefits, cut corners, taking exception to some of the requirements, de-featuring, elim-
inating unessential functions, entirely new applications, provide the essential functions people need, fulfil
the requirements of awareness, fulfil the requirements of availability, good enough, light, limited features,
new functionality, do not have sophisticated technological features, portability, reduced functionalities, redu-
cing the complexity, tailor made, unnecessary frills stripped out
Considerably lower initial cost or
purchase price
Accessible, affordable, affordability, avoid needless costs in the first place, cheaper, cost discipline, cost
effective, extreme cost advantage, fulfil the requirements of access, fulfil the requirements of affordability,
low budget, low cost, low prices, low priced, minimising non-essential costs, minimum cost, more affordable
prices, much lower price, reducing cost, trying to reduce the cost, significantly lower costs, ultra-low cost
Reducing the total cost of ownership Reducing the cost of ownership
Minimising the use of material and
financial resources
Avoiding obesity, draw sparingly on raw materials, economical means, economic use of resources, low input
of resources, minimise the use of extensive resources, minimise the use of financial resources, minimise the
use of material, reduces material use, reducing the use of scarce resources, resource-saving product
User-friendly and easy to use Easy to use, simple, simpler
Robust Durable, low maintenance, reliable, robust, robustness, stable, sturdy, tough
High value and quality Fulfilling or even exceeding certain pre-defined criteria of acceptable quality standards, good service, high-
end technology, high value, leapfrog technology, maintain quality, maximising value, right value proposition,
value for money, value products
Scalable and sales of large numbers Drive profits through volumes, highly scalable, mega-scale production, scalable
Sustainable Eco-friendly, ecological, little environmental intervention, low carbon footprint, meets green marketing
objectives, service ecosystem, sustainability
a
Phrases in Table 2are directly quoted from the articles (see Table 3 in the Appendix). However, we adjusted them to British English
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 5 of 17

“minimising the use of material and financial resources”
according to 25, “user-friendly and easy to use”as well
as “robust”according to 24, and “high value and quality”
according to 23, which corresponds to 68% of the inter-
viewees. However, frugal innovation has the attribute
“scalable and sales of large amounts”according to only
17 interviewees and is “sustainable”according to only 11
interviewees. The results are summarised in Fig. 1.
In the open field, one interviewee added “fulfilling
local needs in terms of price and function”as an attri-
bute of frugal innovation; another added “innovative de-
sign”. Both attributes can be subsumed into the attribute
categories “functional and focussed on essentials”and, in
the first case, into “considerably lower cost or purchase
price”.
Most articles discussed in the literature review focus
only on some attributes (see Table 3 in the Appendix),
whereas the interviewees confirmed almost all attribute
categories we had identified in the literature review.
Only the attributes “scalable and sales of large amounts”
and “sustainable”are confirmed as attributes of frugal
innovation by a smaller number of interviewees; we dis-
cuss this later.
Identification of primary categories
To better understand what constitutes the core of frugal
innovation, we conducted pattern coding as a second-
cycle method to group the results of the first-cycle cod-
ing into a smaller number of categories (Saldaña 2013;
Miles et al. 2014). We sought to identify primary cat-
egories on the basis of the attribute categories. The pri-
mary categories cost reduction, core functionality, and
performance level could subsume the attribute categor-
ies (see Fig. 2).
To go into detail: we identified nine attribute categor-
ies. The first category is “functional and focussed on es-
sentials”and was confirmed by 100% of the interviewees
as a distinct attribute of frugal innovation. The attribute
category “functional and focussed on essentials”could
be subsumed to the primary category core functionality.
The second and third attribute categories we identified
are “considerably lower initial cost or purchase price”
and “reducing the total ownership”; both can be sub-
sumed into the primary category cost reduction. “Mini-
mising the use of material and financial resources”could
be matched to the primary categories cost reduction,
core functionality, and performance level. The attribute
category “user-friendly and easy to use”could be
matched to the primary categories core functionality and
performance level. “Robust”and “high value and quality”
could be subsumed into the primary category perform-
ance level. We subsumed the attribute categories “scal-
able and sales of large numbers”and “sustainable”into
“further issues”. In the “Discussion”section, we explain
why a further main category did not need to be created
for these two aspects.
Discussion
The findings indicate that the discourse about frugal
innovation mostly occur within the three main categor-
ies cost reduction, functionality, and performance level.
Thus, most characteristics that are attributed to frugal
innovation can be related to at least one of the three pri-
mary categories. Using the three categories, we defined
criteria for frugal innovation.
The primary category, cost reduction, includes aspects
such as “considerably lower initial cost or purchase
price”,“reducing the total cost of ownership”, and “mini-
mising the use of material and financial resources”(see
Fig. 2). Attributes in the literature such as “much lower
price”,“significantly lower costs”,or“ultra-low cost”(see
Table 2) indicate significantly lower cost or prices. Thus,
our first criterion for frugal innovation is “substantial
cost reduction”; we define it in detail in the next section.
The second primary category, core functionality, con-
tains aspects such as “functional and focussed on
Fig. 1 Summary of interview results
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 6 of 17

essentials”,“minimising the use of material and financial
resources”, and “user-friendly and easy to use”(see
Fig. 2). In the literature, this incorporates attributes and
descriptions like “core benefits”,“reduced functional-
ities”,or“essential functions people need”(see Table 2).
Thus, the second criterion for frugal innovation is con-
centration on core functionalities; we will define it in
detail.
The third primary category is performance level.
We could subsume many attributes describing frugal
innovation into this category. For instance, frugal
innovation is characterised as “easy to use”,“reli-
able”,“robust”,“high-end technology”,“maintain
quality”,or“fulfilling or even exceeding certain pre-
defined criteria of acceptable quality standards”(see
Table2).Atthesametime,frugalinnovationmust
meet very specific needs often not addressed by
mature-market products (Sehgal et al. 2010). There-
fore, our third criterion for frugal innovation is
optimised performance level; we will define it in
detail.
What all frugal innovations have in common is
that they meet all three criteria simultaneously (see
Fig. 3). However, how the three criteria we defined
manifest in real products and services strongly de-
pends on the user environment and context. For in-
stance, while criterion 2, concentration on core
functionalities, is valid for emerging markets and de-
veloped markets, the core functionalities will differ
depending on the context.
The three criteria can also be relevant for other
innovation types. Cost innovation also seeks significant
cost reduction (Williamson 2010), and other innovation
types also seek core functionality and simplicity (Flatters
and Willmott 2009). The difference between frugal
innovation and other innovation types is that frugal
innovation must meet all of the three criteria at the
same time.
Substantial cost reduction
Criterion 1 for frugal innovation is substantial cost
reduction. Frugal innovation is characterised by a
much lower price or significantly lower costs com-
pared to conventional products and services. Almost
every definition or description of frugal innovation
in the literature emphasises this aspect, as we have
seen in both the literature review and the interview
results.
In the literature, it is not explicitly mentioned
whether or not lower costs must always be from a
customer perspective or whether or not an innovation
can be frugal when there is a cost reduction only
from a manufacturer or service provider perspective.
By interpreting the findings, it becomes clear that it
must always be from a customer perspective.Aswe
have seen in the literature review, most characterisa-
tions are from a customer perspective, such as “af-
fordable”(Jha and Krishnan 2013; Mukerjee 2012;
Sharma and Iyer 2012; The Economist 2010), “low
budget”,or“low priced”(see Table 3 in the Appen-
dix). A cost reduction that relates only to a manufac-
turer or service provider is insufficient, because it is
not in line with most terms that characterise frugal
innovation. Thus, the criterion substantial cost reduc-
tion must always be met from a customer perspective.
This already includes the perspective of the manufac-
turer or service provider.
Fig. 2 Identification of the primary categories of frugal innovation
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 7 of 17

Few articles emphasise that frugal innovation seeks to
reduce the total cost of ownership (Barclay 2014; Tiwari
and Herstatt 2012). For Ojha (2014), this is at least valid
for the Indian market (Ojha 2014). The criterion sub-
stantial cost reduction is in line with this perception and
encompasses both lower cost or purchase price and re-
duced total cost of ownership. At least one of the two
aspects must be met.
It is difficult to specify the extent of the cost reduc-
tion in frugal innovation. This question is not suffi-
ciently answered in the literature. As we have seen
in the literature review, characterisations such as
“minimum cost”,“much lower price”,“significantly
lower costs”or “ultra-low cost”indicate that the cost
reduction must be significant for an innovation to be
considered a frugal innovation. It is hard to deter-
mine a specific threshold value for the criterion sub-
stantial cost reduction, since there are no
representative samples. Rao (2013) compared the
prices of 13 frugal innovations with ordinary prod-
ucts and services, mainly based on Internet searches.
On the basis of his comparison, the extent of cost
reduction can be calculated and between 58 and 97%
on an average of 80%. Rao’s understanding of frugal
innovation here is mostly in line with our criteria,
despite his short definition of “scarcity-induced-,
minimalist- or reverse-innovation”(Rao 2013). While
Rao’s (2013) sample is not representative and quite
small, it gives an indication of the extent of cost re-
duction. As long as no representative publications
are available, we propose that frugal innovation’s
substantial cost reduction must be at least one third
of comparable products but strongly depends on the
user context.
Concerning criterion 1, frugal innovations have a
significantly lower purchase price or lower total cost
of ownership from a customer perspective (one third
or more, with prices and costs compared to current
solutions available on the market or, if no solution
exists yet, with the assumed costs of making them
available to the market, for instance by importing
current solutions).
Concentration on core functionalities
Criterion 2 for frugal innovation is concentration on
core functionalities. In the literature, frugal
innovation is often associated with core benefits, es-
sential functions, and reduced complexity (see Table 2
and Table 3 in the Appendix). Thus, the meaning of
frugal innovation implies a focus on the core func-
tionalities with the highest customer benefits, and it
directly targets user requirements, as we will discuss
in some detail: Wooldridge (2010, p. 3) notes that,
“[i]nstead of adding ever more bells and whistles,
they strip the products down to their bare essen-
tials”. Cunha et al. (2014, p. 202) point out that “fru-
gal innovation aims to respond with extreme
efficiency to some essential need”. According to all
the interviewees, frugal innovations are “functional
and focussed on essentials”, and most interviewees
confirmed that frugal innovations “minimising the
use of material and financial resources”and are
“user-friendly and easy to use”(see Fig. 2). The cri-
terion concentration on core functionalities is not
Fig. 3 Criteria for frugal innovation
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 8 of 17

only a way to reduce costs. Concentrating on core
functionalities can also have the purpose of making
a product or service easy to use (Andel 2013; Wool-
dridge 2010), of saving resources (Barclay 2014; Rao
2014; Tiwari and Herstatt 2012), of having a lower
impact on the environment (Basu et al. 2013; Jänicke
2014; Sharma and Iyer 2012), or of meeting a specific
lifestyle or consumer behaviour (Flatters and Willmott
2009). Thus, the criterion concentration on core func-
tionalities encompasses all the aforementioned charac-
terisations and is a discrete criterion.
In short, frugal innovations must concentrate on core
functionalities compared to current solutions available
in the market.
Optimised performance level
Criterion 3, optimised performance level, is particu-
larly important if one is to capture the full meaning
of frugal innovation. It is not sufficient to focus
only on core functionalities. There must also be a
serious examination of which levels of performance
and quality are in fact required. Here, performance
has a very broad meaning, covering the perform-
ance of all functionalities and engineering charac-
teristics, such as speed, power, durability, and
accuracy (see Fig. 3). The relevant engineering
characteristics for which the performance level
must be determined vary with the context. For in-
stance, a frugal car has different engineering char-
acteristics to a frugal ultrasound machine. Other
innovation types also require serious examination of
the performance level, not only frugal innovations.
However, often, not all innovation types meet the
criterion optimised performance level,especiallyby
product innovations from developed markets, which
are often over-engineered (one example is provided
by Oliver Wyman (2013) that shows that Western
manufacturers’premium and high-priced construc-
tion equipment do not meet the requirements of the
global construction equipment market, with its
growing demand for machines with technically sim-
ple and robust technologies that allow for do-it-
yourself repairs). Which performance level should be
aimed for often receives insufficient attention. Litera-
ture characterise frugal innovations as “high-value,
low-cost”and “high-end, low-cost technology prod-
ucts”(Ahuja 2014; Brem and Wolfram 2014; Ojha
2014), while Andel (2013, p. 4) describes the per-
formance level of frugal innovations as “get the per-
formance its engineers originally planned”.This
implies that the right level of performance and qual-
ity has to be achieved. Soni and Krishnan (2014, p.
31) underline this aspect: “meeting the desired ob-
jective with a good-enough, economical means”.
Further, Tiwari and Herstatt (2012, p. 98) note that
frugal innovations are “fulfilling or even exceeding
certain pre-defined criteria of acceptable quality
standards”.Thus,frugalinnovationshouldmeetthe
performance and quality levels that are in fact re-
quired and with minimal costs.
There are two reasons why the criterion is opti-
mised performance level.First,insomecases,the
conventional performance level is not good enough
for frugal innovation. An example of this is car
horns in Indian cars. Since car horns are used ex-
cessively in India, they must be able to withstand
much greater strain than in developed markets and
even more than in other emerging markets (Her-
statt et al. 2008). Thus, a higher performance level
than that for horns in most premium cars in Eur-
ope is needed. This demonstrates that the perform-
ance level in frugal innovation is not always lower,
to avoid over-engineering; in some cases, the re-
quirement can be higher, as this example shows.
The performance level must optimally fit the
intendedpurposeandthespecificrequirementsof
the environment in which the frugal innovation will
be used, especially for emerging and developing
markets, with their special needs, but even for de-
veloped markets. The second reason is that the re-
quired level must be met very precisely. If the
performance level is too high, as it is with the pre-
mium Western construction equipment, costs are
too high. As noted, to significantly reduce costs is
a primary aspect of frugal innovation. If the per-
formance level is too low, specific requirements are
not met and frugal innovation’s aspiration to deliver
“high value”,“maintain quality”,and“maximising
value to the customer”(see Table 2 and Table 3 in
the Appendix) is not met. Thus, an optimal per-
formance level is crucial.
However, some frugal innovations use standard
components or commercially available subsystems.
GE Healthcare, a subsidiary of General Electric, de-
veloped a frugal electrocardiogram device, the MAC
400, that contained a commonly used printer system,
like those used for bus ticketing systems, to reduce
costs (Ramdorai and Herstatt 2015). We argue, if it
is cheaper to use a standard component or an
already existing solution to develop a frugal
innovation, it should be used, even if it might pro-
vide better than required performance. However, it is
crucial to be aware of the optimal performance level
before choosing a solution.
In short, frugal innovations must meet the perform-
ance level that is needed for its de facto purpose and
the local conditions, compared to current solutions
available in the market.
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 9 of 17

Possible additional characteristics
In the literature review, frugal innovation is often char-
acterised by attributes such as “highly scalable”or
“drives profits through volumes”, which we coded
into the attribute category “scalable and sales of
large numbers”. We identified further attributes,
such as “eco-friendly”,“little environmental interven-
tion”,and“meets green marketing objectives”,which
we coded into the attribute category “sustainable”
(see Table 2 and Table 3 in the Appendix). The
interview results show that only 17 interviewees
think frugal innovation can be characterised as scal-
able and only 11 think it can be characterised as
sustainable (see Fig. 2). This indicates that frugal
innovation does not necessarily involve scalability
and sustainability. Frugal innovations can contribute
to sustainability by minimising resource use (Jänicke
2014; Sharma and Iyer 2012). However, we assume
that being sustainable often is not the primary focus.
For instance, frugal innovations such as the Vscan
ultrasound device (Govindarajan and Trimble 2012)
for the Chinese market or the mini-truck Tata Ace
(Tiwari and Herstatt 2014) for the Indian market
were invented to meet local needs rather than to
meet green marketing objectives. Scalability is also
often mentioned as an attribute of frugal innovations
(see Table 2 and Table 3 in the Appendix). The
much lower prices for frugal products and services
cause lower margins. Thus, more products or ser-
vices must be sold compared to conventional
innovation with higher margins to gain the same
profit. This makes scalability important to frugal in-
novations. However, this criterion does not distin-
guish frugal innovations from non-frugal ones. We
argue that frugal innovations can be also developed
for small target groups as long as they generate
profit.
Thus, frugal innovations can have additional character-
istics such as being sustainable or scalable, but they are
already frugal if they simultaneously meet the three cri-
teria substantial cost reduction,concentration on core
functionalities, and optimised performance level.
Using the three criteria
We will now illustrate how frugal innovation can take
place by means of these criteria. The criteria are appro-
priate for all frugal innovation types and targeted at
emerging and developed markets. For this reason, we
chose two well-known examples: the MittiCool, a fridge
made from clay (Radjou et al. 2012) which targets the
emerging market in India, and the GE Vscan, a hand-
held, cellphone-sized ultrasound machine which was ori-
ginally developed for the Chinese market and then also
entered developed markets (Govindarajan and Trimble
2012). The procedure to determine whether or not an
innovation can be considered frugal is to prove each of
the three criteria.
The MittiCool particularly targets areas without
electricity in India (Radjou et al. 2012). It was
launched at a price of Rs2,500 (around 30 euro) (FT
Foundation 2010). Fridges of the same size still cost
at least Rs6,000 (around 80 euro), as per the website
of the e-commerce company Flipkart (www.flipkart.-
com). Accordingly, in that market, the MittiCool
costs almost 60% less than a comparable fridge.
Thus, it meets criterion 1 (substantial cost reduc-
tion). The MittiCool is intended to cooling primarily
water, fruits, vegetables, and dairy. Cooling is via
water evaporation, fitting the local conditions with-
out electricity. It has no further frills or functions
such as lightning, different freezing levels or a freez-
ing compartment. Thus, it also meets criterion 2
(concentration on core functionalities). The
temperature is in the 5 to 8 °C (FT Foundation
2010), enough for its primary purposes. Its size
(18.5 × 11 in.) is small but also big enough for its
purposes. There is no need for higher or lower per-
formance. Thus, it also meets criterion 3 (optimised
performance level). Therefore, the MittiCool is a fru-
gal innovation (see Fig. 4).
Our second example is the Vscan.TheVscanwas
developed for the Chinese market; in contrast with
the MittiCool, it also targets developed markets, in
which it is used for quick diagnosis (Govindarajan
and Trimble 2012). The procedure to determine
whether or not the Vscan is a frugal innovation is
the same. It must be proven that all three criteria
are met. As depicted in Fig. 4, the result is that the
Vscan can also be characterised as a frugal
innovation. This example illustrates that the three
criteria are also appropriate for developed markets.
To illustrate a negative example: in developed mar-
kets, tablet computers vary greatly in prices. The
cheapest cost about 100 euro, and the most expensive
ones about 3000 euro (as per online retailers’web-
sites). The cheap ones are much cheaper than the
mid-priced or most expensive ones. Thus, criterion 1
is met. When seeking to prove criterion 2, it becomes
apparent that the cheap tablets’number and types of
functions seem very similar to the more expensive
one, although their performance is lower. Often, they
even use the same operating system. We cannot ob-
serve a focus on core functionalities. Thus, criterion 2
is not met. Now, criterion 3 must be proved. Com-
pared to the more expensive tablets, the cheap ones
have lower performance, such as a lower-resolution
display, less storage space, or a slower processor.
However, their performance levels are not optimised
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 10 of 17

to a specific purpose, in contrast for instance to the
laptops of the One Laptop per Child Association,
which meet criterion 3 by optimising the performance
of its robust and low-cost laptops for self-empowered
learning of the world’s poorest children (OLPC Asso-
ciation 2015). In our example, criterion 3 is not met.
We conclude that cheap tablets sold in developed
markets are not frugal innovations. Although criterion
1 is met owing to much lower prices, criteria 2 and 3
are not. Thus, cheap tablets in developed markets are
simply cost innovations.
Contribution, limitations, and further research
Our examination of frugal innovation and our three cri-
teria for frugal innovation have several implications.
Theoretical implications
We contribute to the literature on frugal innovation
in two primary ways. First, we refined the meaning of
frugal innovation and its basic concept. Previous defi-
nitions often relied on specific attributes. However, at-
tributes of frugal innovation can differ. Frugal
innovation for emerging markets with specific condi-
tions concerning infrastructure, climate, or customer
habits must fulfil different requirements compared to
frugal innovation for developed markets. Even in
emerging markets, attributes such as robustness or
the ability to deal with frequent blackouts can be im-
portant for some markets, but not for others. Thus,
the three criteria are defined independently of specific
attributes or target markets. How the three criteria
manifest in real products and services strongly de-
pends on the user environment and the context.
However, we recommend that one refers to an
innovation as frugal if all three criteria—substantial
cost reduction, concentration on core functional-
ities, and optimised performance level—are met
simultaneously.
Second, we advance the understanding of frugal
innovation. As noted, frugal innovation meets all
three criteria at the same time. This can be helpful to
better understand why it can be challenging to de-
velop frugal innovations. First principles and ap-
proaches to develop frugal innovation have been
published (Basu et al. 2013; Kumar and Puranam
2012; Lehner and Gausemeier 2016; Prahalad 2012;
Prahalad and Mashelkar 2010; Radjou and Prabhu
2014). However, owing to the research stream’snew-
ness, we still lack a comprehensive theoretical under-
standing of frugal innovation (Cunha et al. 2014). Our
three criteria provide a structure of the primary as-
pects that must be considered if one is to understand
and to be able to develop frugal innovations.
Managerial implications
Two managerial implications result from the discus-
sion. First, to develop frugal innovations, organisa-
tions must find out how a specific frugal innovation
Fig. 4 Using the three criteria for frugal innovation
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 11 of 17

must look like. Attributes of frugal innovations can
differ tremendously, as we saw in the literature re-
view. The specific attributes of frugal innovations
strongly depend on the specific context, such as the
environment, the specific needs, or the market struc-
ture. Thus, instead of trying to find out what the key
general attributes of frugal innovation are, to which
there is no universal answer, organisations should use
the three criteria as a framework to identify the spe-
cific attributes and characteristics required to meet
customers’specific needs in a certain context and an
intended purpose.
Second, to develop frugal innovations, organisations
should consider all three criteria to identify all spe-
cific attributes and characteristics required to make a
new product or service a frugal one. Since the devel-
opment of frugal innovations involves meeting all
three criteria simultaneously, each criterion must be
considered.
Limitations and further research
Our study has limitations. First, the frugal
innovation research stream is fairly new and is still
evolving. The number of peer-reviewed publications
in the frugal innovations field is small and is grad-
ually increasing. To enhance this research field, it
was necessary to include non-peer-reviewed articles
and publications. Second, we had to decide which
criteria we should use to select publications. Thus,
we only included publications from the EBSCO
Business Source Premier and ISI Web of Science
databases. These databases did not capture all the
articles in the frugal innovation field. Some well-
known publications are not part of the literature
review because the key phrase search missed them
(Cunha et al. 2014; Radjou and Prabhu 2014; Rao
2013; Tiwari and Herstatt 2014). Nonetheless, our
literature review findings would be similar if these
articles would have been included, owing to their
similar understandings of frugal innovation. Third,
interviewees were only from Germany. This might
not provide a comprehensive picture of the world-
wide understanding of frugal innovation. However,
the interviewees were managers of companies that
operate globally, notably in emerging markets, and
are therefore familiar with the different require-
ments of developed and emerging markets. Further,
we were particularly interested in the understanding
of frugal innovation in developed markets; little is
known in this regard. The results show that the in-
terviewees’understandings broadly resemble the
understanding in the literature. This indicates a
similar perception of frugal innovation in emerging
and developed markets. Fourth, the meaning of
frugal innovation is still evolving. On the one hand,
proposing criteria for frugal innovation might con-
strain the broadness of the current discussions. On
the other hand, to agree on criteria that must be
met to characterise a certain innovation type as fru-
gal gave us the opportunity to help to consolidate
the research stream.
Clearly, further research is needed. First, the three cri-
teria for frugal innovation can be useful to consider the
key aspects during the product development process.
However, it is challenging to develop frugal innovations,
especially for firms in developed markets. Researchers
should explore how frugal innovations can be success-
fully developed. Second, we need to look at the chal-
lenges that can be encountered while pursuing frugal
innovation. Third, to date, little is known about the po-
tential of frugal products and services for developing
markets. More research needs to be done if we are to
better understand for which organisations and target
groups frugal innovations hold promise.
Conclusions
The frugal innovation research stream is still new.
Apperantly, the literature of fugal innovation has primar-
ily focussed on emerging markets. However, currently,
frugal innovations are also adapted for developed mar-
kets (Govindarajan and Trimble 2012; The Economist
2012). As a consequence, it is crucial to have a common
understanding of the term frugal innovation. It would be
useful to agree on certain criteria that must be met if
one is to characterise an innovation as frugal.
With this objective in mind, we examined the meaning
of frugal innovation. We identified that most attributes
and characterisations of frugal innovations can be sub-
sumed into three categories. On the basis of the identi-
fied categories, we defined three criteria for frugal
innovation. We propose that innovations are frugal if
they simultaneously meet the criteria substantial cost re-
duction,concentration on core functionalities, and opti-
mised performance level.
It is clear that attributes and characteristics of fru-
gal innovation depend on the target markets, which
have different needs and local conditions. Thus, the
attributes of frugal innovation can vary greatly. Our
three criteria for frugal innovation illustrate the core
concept independently of the target market or specific
attributes. Therefore, these criteria can be used for
both emerging and developed markets. We conclude
that this results in a more profound understanding of
the core of frugal innovation, to better meet the re-
quirements of emerging markets and to transfer and
adapt the main concept from emerging markets to
developed markets.
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 12 of 17

Appendix
Table 3 Categorisation of characterisations and attributes of frugal innovation
Article Quotation
a
Attribute categories
Functional
and
focussed
on
essentials
Considerably
lower initial
cost or
purchase
price
Reducing
the total
cost of
ownership
Minimising
the use of
material
and
financial
resources
User-
friendly
and
easy to
use
Robust High
value
and
quality
Scalable
and
sales of
large
numbers
Sustainable
Agarwal
and Brem
(2012)
“good-enough”,“affordable”
(p. 2), “Frugal products with
heavy resource constraints
have extreme cost advantages
compared to existing
solutions and are much
simpler and cheaper with
limited features”(p. 2)
●● ●
Ahuja
(2014)
“cost that will make the
solution accessible to as many
individuals as possible”(p. 54),
“high-value, low-cost, and
scalable products”(p. 55),
“more efficient, cost-effective,
and eco-friendly”(p. 55)
●●●●
Andel
(2013)
“keep it simple”(p. 4), “cut
corners, taking exception to
some of the requirements”
(p. 4)
●●
Barclay
(2014)
“reducing the complexity and
cost”(p. 165), “reducing the
complexity and cost of a
good or service”(p. 172),
“good-enough”,“affordable
products”(p. 172), “lean or
cost-effective”(p. 172), “seek
to minimize the use of
extensive resources in the
complete value chain with the
intent of reducing the cost of
ownership while fulfilling or
even exceeding certain
pre-defined criteria of
acceptable quality standards”
(p. 173)
●●●● ●
Bills et al.
(2014)
“low-cost”(p. 3022) ●
Brem and
Wolfram
(2014)
“do not have sophisticated
technological features”,“low
cost”,“comparably high value”,
“simple and ecological
products, processes, services,
and business models”,“low
input of resources”,“low cost”,
“little environmental
intervention”,“low carbon
footprint”,“core benefits”,
“eliminating unessential
functions”,“maintain quality”,
“maximize value”,“minimize
inessential costs”(p. 5)
●● ●● ● ●
Craig (2012)“product that can be afforded
by those at the bottom of the
bottom of the economic
pyramid”,“reliable”(p. 36)
●●
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 13 of 17

Table 3 Categorisation of characterisations and attributes of frugal innovation (Continued)
Article Quotation
a
Attribute categories
Functional
and
focussed
on
essentials
Considerably
lower initial
cost or
purchase
price
Reducing
the total
cost of
ownership
Minimising
the use of
material
and
financial
resources
User-
friendly
and
easy to
use
Robust High
value
and
quality
Scalable
and
sales of
large
numbers
Sustainable
Dandonoli
(2013)
“ultra-low cost, durable, easy
to use, draw sparingly on raw
materials and minimize
environmental impact”,
“significantly lower costs”
(p. 2)
●●●● ●
Fukuda and
Watanabe
(2011)
“accessibility, accountability
and affordability”(p. 92)
●
Gupta and
Wang
(2010)
“sturdy”,“stable”●
Howard
(2011)
“low-cost”,“low carbon
footprint”(p. 53)
●●
Jha and
Krishnan
(2013)
“low-priced, value products
that can drive profits through
volumes”,“affordable, value
products that meet the needs
of resource-constrained
customers”(p. 250)
●●●
Kahle et al.
(2013)
“low-cost”,“offer high value”,
“fulfil the requirements of
awareness, access,
affordability, and availability”
(p. 221)
●● ●
Kumar
(2008)
“value for money”(p. 251) ●
Kumar and
Puranam
(2012)
“robustness”,“portability”,
“defeaturing”,“leapfrog
technology”,“megascale
production”,“service
ecosystem”
●●●●●
Leavy
(2014)
“Affordability and
sustainability”(p. 36)
●●
Lim et al.
(2013)
“resource-saving product for
low income consumers”
(p. 393)
●
Mandal
(2014)
“low-cost solutions using
homegrown or self-created
technologies, often born out
of dire need”(p. 11)
●
Mukerjee
(2012)
“tailor made”,“right value
proposition”,“affordability
becomes the key issue”
●● ●
Nocera
(2012)
“light and highly
manufacturable as well as
robust and low maintenance”
(p. 47)
●
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 14 of 17

Table 3 Categorisation of characterisations and attributes of frugal innovation (Continued)
Article Quotation
a
Attribute categories
Functional
and
focussed
on
essentials
Considerably
lower initial
cost or
purchase
price
Reducing
the total
cost of
ownership
Minimising
the use of
material
and
financial
resources
User-
friendly
and
easy to
use
Robust High
value
and
quality
Scalable
and
sales of
large
numbers
Sustainable
Ojha (2014)“high-end low-cost technol-
ogy products for markets such
as India, which are demanding
in terms of features of the
products and/or services of-
fered but are also demanding
in terms of the price”(p. 8)
●●
Pawlowski
(2013)
“Frugal innovation is about
creating highly scalable
products which have reduced
functionalities while reducing
costs”(p. 527)
●● ●
Prabhu and
Gupta
(2014)
“Frugal innovations in
products are vital in
developing countries to reach
price sensitive customers that
seek robust products at low
prices”(p. 3309)
●●
Radjou and
Prabhu
(2013)
“ability to generate
considerably more business
and social value while
significantly reducing the use
of scarce resources”(p. 1)
●●
Rao (2014)“low-budget”(p. 44),
“economic usage of
resources”,“avoiding obesity”
(p. 45)
●●
Sehgal et al.
(2011)
“Cost discipline is an intrinsic
part of the process but, rather
than simply cutting existing
costs, frugal engineering seeks
to avoid needless costs in the
first place”(p. 33), “maximising
value to the customer while
minimising non-essential
costs”(p. 35), “The ultimate
goal of frugal engineering is
basic: to provide the essential
functions people need”(p. 35)
●● ● ●
Sharma and
Iyer (2012)
“frugal engineering that
reduces material use (thereby
reducing burden on supply
chain) and meets green
marketing objectives at much
lower, and therefore, more
affordable prices”(p. 599)
●● ●
Soni and
Krishnan
(2014)
“meeting the desired
objective with a good-
enough, economical means”
(p. 31)
●●
The
Economist
(2012)
“unnecessary frills stripped
out”
●
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 15 of 17

Authors’contributions
All authors read and approved the final manuscript.
Competing interests
The authors declare that they have no competing interests.
Received: 27 May 2016 Accepted: 10 December 2016
References
Agarwal, N., & Brem, A. (2012). Frugal and reverse innovation—literature overview
and case study insights from a German MNC in India and China. In B. Katzy,
T. Holzmann, K. Sailer, & K. D. Thoben (Eds.), Proceedings of the 2012 18th
International Conference on Engineering, Technology and Innovation (pp. 1–11).
Ahuja, S. (2014). Cost vs. value + empathy: a new formula for frugal science.
Design Management Review, 25(2), 52–55.
Andel, T. (2013). Frugal price: virtue or vice? Material Handling & Logistics, 68(11), 4.
Barclay, C. (2014). Using frugal innovations to support cybercrime legislations in
small developing states: introducing the cyber-legislation development and
implementation process model (CyberLeg-DPM). Information Technology for
Development, 20(2), 165–195.
Basu, R. R., Banerjee, P. M., & Sweeny, E. G. (2013). Frugal innovation: core
competencies to address global sustainability. Journal of Management for
Global Sustainability, 1(2), 63–82.
Bhatti, Y. A., & Ventresca, M. (2013). How can ‘frugal innovation’be
conceptualized? Said Business School Working Paper Series, Oxford.
Bills, T., Bryant, R., & Bryant, A. W. (2014). Towards a frugal framework for
monitoring road quality. In 17th International IEEE Conference on Intelligent
Transportation Systems (ITSC).
Brem, A., & Wolfram, P. (2014). Research and development from the bottom up-
introduction of terminologies for new product development in emerging
markets. Journal of Innovation and Entrepreneurship, 3(1), 1–22.
Craig, A. (2012). Back to basics. Supply Management, 17(1), 36–39.
Cunha, M. P. e., Rego, A., Oliveira, P., Rosado, P., & Habib, N. (2014). Product
innovation in resource-poor environments: three research streams. Journal of
Product Innovation Management, 31(2), 202–210.
Dandonoli, P. (2013). Open innovation as a new paradigm for global
collaborations in health. Global Health, 9(41), 1–5.
Flatters, P., & Willmott, M. (2009). Understanding the post-recession consumer.
Harvard Business Review, 87(7-8), 106–112.
FT Foundation. (2010). What a cool idea: a fridge that doesn’t need electricity.
Retrieved January 09, 2016, from http://www.ftfoundation.com/English/pdf/
Cool_Idea.pdf.
Table 3 Categorisation of characterisations and attributes of frugal innovation (Continued)
Article Quotation
a
Attribute categories
Functional
and
focussed
on
essentials
Considerably
lower initial
cost or
purchase
price
Reducing
the total
cost of
ownership
Minimising
the use of
material
and
financial
resources
User-
friendly
and
easy to
use
Robust High
value
and
quality
Scalable
and
sales of
large
numbers
Sustainable
The
Economist
(2010)
“trying to reduce the cost of
something in order to make it
affordable”
●
Tiwari and
Herstatt
(2012)
“seek to minimize the use of
material and financial
resources in the complete
value chain (development,
manufacturing, distribution,
consumption, and disposal)
with the objective of reducing
the cost of ownership while
fulfilling or even exceeding
certain pre-defined criteria of
acceptable quality standards”
(p. 98)
●● ●
Wooldridge
(2010)
“Instead of adding ever more
bells and whistles, they strip
the products down to their
bare essentials”,“Frugal
products need to be tough
and easy to use”(p. 3)
●●●
Zeschky et
al. (2011)
“We have adopted the term
frugal innovation, defined as
responding to severe resource
constraints with products
having extreme cost
advantages compared to
existing solutions”(p. 39)
●
Zeschky et
al. (2014)
“new functionality at a lower
cost”(p. 23), “entirely new
applications at much lower
price points than existing
solutions”(p. 23)
●●
a
This column lists the attributes and characterisations of frugal innovation used in literature. If articles adopted them from other articles, we do not refer to the
original source
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 16 of 17

Fukuda, K., & Watanabe, C. (2011). A perspective on frugality in growing economies:
triggering a virtuous cycle between consumption propensity and growth.
Journal of Technology Management for Growing Economies, 2(2), 79–98.
George, G., McGahan, A. M., & Prabhu, J. (2012). Innovation for inclusive growth:
towards a theoretical framework and a research agenda. Journal of
Management Studies, 49(4), 661–683.
Govindarajan, V., & Trimble, C. (2012). Reverse innovation: create far from home,
win everywhere. Boston: Harvard Business Press.
Gupta, A., & Wang, H. (2010). Tata Nano: not just a car but also a platform.
Retrieved October 31, 2014, from http://www.bloomberg.com/news/articles/
2010-01-29/tata-nano-not-just-a-car-but-also-a-platform.
Gwet, K. L. (2014). Handbook of inter-rater reliability: the definitive guide to
measuring the extent of agreement among raters (4th ed.). Gaithersburg:
Advanced Analytics, LLC.
Hart, S. L., & Christensen, C. M. (2002). The great leap. Sloan Management Review,
44(1), 51–56.
Herstatt, C., Tiwari, R., & Buse, S. (2008). India’s national innovation system: key
elements and corporate perspectives (Working Paper 51). Hamburg.
Howard, M. (2011). Will frugal innovation challenge the west? Market Leader.
(Quarter 3), 53.
Immelt, J. R., Govindarajan, V., & Trimble, C. (2009). How GE is disrupting itself.
Harvard Business Review, 87(10), 56–65.
Jänicke, M. (2014). Frugale Technik. Ökologisches Wirtschaften-Fachzeitschrift, 29(1),
30–36.
Jha, S. K., & Krishnan, R. T. (2013). Local innovation: the key to globalisation. IIMB
Management Review, 25(4), 249–256.
Kahle, H., Dubiel, A., Ernst, H., & Prabhu, J. (2013). The democratizing effects of
frugal innovation: implications for inclusive growth and state-building.
Journal of Indian Business Research, 5(4), 220–234.
Krippendorff, K. (2004). Reliability in content analysis. Human communication
research, 30(3), 411–433.
Kumar, N. (2008). Internationalization of Indian enterprises: patterns, strategies,
ownership advantages, and implications. Asian Economic Policy Review, 3(2),
242–261.
Kumar, N., & Puranam, P. (2012). Frugal engineering: an emerging innovation
paradigm. Ivey Business Journal, 76(2). Retrieved November 01, 2014, from
http://iveybusinessjournal.com/publication/frugal-engineering-an-emerging-
innovation-paradigm/.
Leavy, B. (2014). India: MNC strategies for growth and innovation. Strategy &
Leadership, 42(2), 30–39.
Lehner, A.-C., & Gausemeier, J. (2016). A pattern-based approach to the
development of frugal innovations. Technology Innovation Management
Review, 6(3), 13–21.
Lim, C., Han, S., & Ito, H. (2013). Capability building through innovation for
unserved lower end mega markets. Technovation, 33(12), 391–404.
Mandal, S. (2014). Frugal innovations for global health—perspectives for students.
IEEE pulse, 5(1), 11–13.
Miles, M. B., Huberman, A. M., & Saldaña, J. (2014). Qualitative data analysis: a
methods sourcebook (3rd ed.). Thousand Oaks: Sage Publications.
Mukerjee, K. (2012). Frugal innovation: the key to penetrating emerging markets.
Ivey Business Journal, 76(4). Retrieved November 01, 2014, from http://
iveybusinessjournal.com/publication/frugal-innovation-the-key-to-
penetrating-emerging-markets/.
Nocera, D. G. (2012). Can we progress from solipsistic science to frugal
innovation? Daedalus, 141(3), 45–52.
Ojha, A. K. (2014). MNCs in India: focus on frugal innovation. Journal of Indian
Business Research, 6(1), 4–28.
Oliver, W. (2013). Global construction equipment market: Chinese companies set the
pace. New York: Oliver Wyman Group.
OLPC Association. (2015). Mission. Retrieved April 03, 2015, from http://one.laptop.
org/about/mission.
Ostraszewska, Z., & Tylec, A. (2015). Reverse innovation—how it works.
International Journal of Business and Management, 3(1), 57–74.
Pawlowski, J. M. (2013). Towards born-global innovation: the role of knowledge
management and social software. In B. Janiūnaitė, A. Pundziene, & M.
Petraite (Eds.), Proceedings of the 14th European Conference on Knowledge
Management. ECKM 2013: Kaunas University of Technology, Kaunas, Lithuania,
5–6 September 2013 (pp. 527–534). Reading, UK: Academic Conferences and
Publishing International Ltd.
Prabhu, G., & Gupta, S. (2014). Heuristics of frugal service innovations. In Portland
International Conference on Management of Engineering and Technology,
Conference Proceedings 2014 (pp. 3309–3312). Kanazawa.
Prahalad, C. K. (2012). Bottom of the pyramid as a source of breakthrough
innovations. Journal of Product Innovation Management, 29(1), 6–12.
Prahalad, C. K., & Hart, S. L. (2002). The fortune at the bottom of the pyramid.
strategy+business, 26,54–67.
Prahalad, C. K., & Mashelkar, R. A. (2010). Innovation’s holy grail. Harvard Business
Review, 88(7/8), 132–141.
Radjou, N., & Prabhu, J. (2013). Frugal innovation: a new business paradigm.
INSEAD Knowledge Publications,1–3. Retrieved October 31, 2014, from http://
knowledge.insead.edu/innovation/frugal-innovation-a-new-business-
paradigm-2375.
Radjou, N., & Prabhu, J. C. (2014). Frugal innovation: how to do more with less (1st
ed.). New York: PublicAffairs.
Radjou, N., Prabhu, J. C., & Ahuja, S. (2012). Jugaad innovation: think frugal, be
flexible, generate breakthrough growth (1st ed.). San Francisco: Jossey-Bass.
Ramdorai, A., & Herstatt, C. (2015). Frugal innovation in healthcare: how targeting
low-income markets leads to disruptive innovation. India studies in business and
economics. Cham: Springer.
Rao, B. C. (2013). How disruptive is frugal? Technology in Society, 35(1), 65–73.
Rao, B. C. (2014). Alleviating poverty in the twenty-first century through frugal
innovations. Challenge, 57(3), 40–59.
Ray, S., & Ray, P. K. (2011). Product innovation for the people’s car in an emerging
economy. Technovation, 31(5-6), 216–227.
Saldaña, J. (2013). The coding manual for qualitative researchers (2nd ed.). Los
Angeles: Sage Publications.
Sehgal, V., Dehoff, K., & Panneer, G. (2010). The importance of frugal engineering.
strategy+business, 59(Summer 2010), 1–5.
Sehgal, V., Dehoff, K., & Panneer, G. (2011). Back to basics. Market Leader. (Quarter
1), 33–37.
Sekaran, U., & Bougie, R. (2013). Research methods for business: a skill-building
approach (6th ed.). Chichester, West Sussex: Wiley.
Sharma, A., & Iyer, G. R. (2012). Resource-constrained product development:
implications for green marketing and green supply chains. Industrial
Marketing Management, 41(4), 599–608.
Soni, P., & Krishnan, R. T. (2014). Frugal innovation: aligning theory, practice, and
public policy. Journal of Indian Business Research, 6(1), 29–47.
The Economist (2010). In praise of techno-austerity, 395(8686), 14. Retrieved
October 29, 2014, from http://www.economist.com/node/16321516.
The Economist. (2012). Asian innovation: frugal ideas are spreading from east to
west. Retrieved October 29, 2014, from http://www.economist.com/node/
21551028.
Tiwari, R., & Herstatt, C. (2012). Assessing India’s lead market potential for cost-
effective innovations. Journal of Indian Business Research, 4(2), 97–115.
Tiwari, R., & Herstatt, C. (2014). Aiming big with small cars: emergence of a lead
market in India. India studies in business and economics. Heidelberg: Springer.
von Zedtwitz, M., Corsi, S., Søberg, P. V., & Frega, R. (2015). A typology of reverse
innovation. Journal of Product Innovation Management, 32(1), 12–28.
Williamson, P. J. (2010). Cost innovation: preparing for a ‘value-for-money’
revolution. Long Range Planning, 43(2-3), 343–353.
Wooldridge, A. (2010, April 17). First break all the rules: the charms of frugal
innovation. The Economist,3–5.
Zeschky, M., Widenmayer, B., & Gassmann, O. (2011). Frugal innovation in
emerging markets. Research-Technology Management, 54(4), 38–45.
Zeschky, M., Winterhalter, S., & Gassmann, O. (2014). From cost to frugal and
reverse innovation: mapping the field and implications for global
competitiveness. Research-Technology Management, 57(4), 20–27.
Weyrauch and Herstatt Journal of Frugal Innovation (2016) 2:1 Page 17 of 17