Frugal entrepreneurship: A way to seize business opportunities for low-income customers

Abstract

Frugal innovation (FI) is a recently emerged phenomenon that is increasingly gaining importance to serve a set of customers in developing countries. Frugal entrepreneurship (FE) based on frugal innovations is emerging from different regions. FI mainly emerging from resource-constrained environments with institutional voids shows how to serve low-income customers with affordable solutions. Yet, we know little about this phenomenon. The objective of this study is to explore how frugal entrepreneurs embrace institutional voids in a developing country to identify and execute business opportunities targeting low-income customers. Using six start-up cases from Pakistan, this qualitative study contributes to the existing literature on FI and FE in several ways. We reveal certain underlying mechanisms that entrepreneurs utilize in their attempt to undertake FI. We find that the entrepreneurs’ strong aspirations to tackle societal needs trigger them to develop FIs and pursue FE. Constructive cobbling and leveraging appropriate technologies in a frugal manner, in particular, are two key enablers for FE, which results in novel outcomes. Based on the findings, we provide implications and future research avenues.