ORGANISATIONAL ENABLERS OF FRUGAL INNOVATION IN EARLY

STAGE FIRMS: INNOVATION PROCESS, COLLABORATION AND

LEGITIMACY BUILDING 1
Annie Fraser
University of Edinburgh, 29 Buccleuch Place, Edinburgh, frasera204@gmail.com
Raluca Bunduchi (corresponding author)
University of Edinburgh, 29 Buccleuch Place, Edinburgh, Raluca.Bunduchi@ed.ac.uk

ABSTRACT
How can firms develop innovations that provide value while being affordable to customers
whose needs, either by choice or otherwise, can only be satisfied on ultra-low budgets? Existing
research on frugal innovation is limited, and focused on approaches to reduce costs during
product development, and to gain access to the disenfranchised individuals in the target market.
Less is known about other organisational processes that enable frugal innovation development.
Through a multi case study of four early stage frugal innovators, we set out to examine three
such organisational enablers of frugal innovation: innovation process for value creation,
relationship building for gaining resources, and building legitimacy for seeking acceptance and
support for frugal innovation. We uncover the innovation processes as iterative movements
between sensing and seizing opportunities, we identify complex and extensive networking
behaviour that characterise early stage frugal innovator firms to access specific set of resources
and we identify building legitimacy, a process which was widely ignored in existing frugal
innovation product research, as a key organisational enabler that allows frugal innovators to
overcome and reframe their resource constraints.

INTRODUCTION
How can firms develop innovations that provide value while being affordable to customers
whose needs, either by choice or otherwise, can only be satisfied on ultra-low budgets? How
can firms enable the development of such frugal innovations when they themselves are subject
to significant resource constraints? In the last decade, such questions have become increasingly
pregnant for innovation researchers. First, emergent markets (EM), where both consumers and
firms are characterised by chronic shortage of resources (Sheth, 2011), have become an
important feature of the world economy, thus raising the importance of understanding the
practice of innovation under resource constraints (Subramanian et al., 2015). Second, the 2008
financial crisis has brought into focus frugal approaches to product innovation both for
developed market (DM) firms keen on cost discipline to overcome resource deficiencies, and
for DM consumers keen on products with the overall cost of ownership significantly lower than
standard (Cuhna et al., 2014).
Despite the increasing relevance of frugal innovation (FI), our knowledge of innovation
practices under conditions of resource constraints is limited (Cuhna et al., 2014; George et al.,
2012; Hall, 2014), with existing research focusing on the approaches through which frugal
innovators develop their product to reduce costs (e.g. Lim et al., 2013; Ray and Ray, 2011),
and their efforts, often relying on developing a creative set of relationships, to gain access to
the disenfranchised individuals and communities that they target (e.g. Ernst et al., 2015; George
et al., 2012; Ramani and Mukharjee, 2014). While such research had advanced our
understanding of two key organisational enablers of FI: frugal engineering during product
development, and relationship building for bridging access, less is known about other

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This paper has been presented at the 23th Innovation and Product Development Management Conference,
Glasgow, 12th – 14th of June, 2016

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organisational processes that enable FI (George et al., 2012). We examine three such
organisational enablers that are not yet fully understood: innovation process for value creation,
relationship building for gaining resources, and building legitimacy for seeking acceptance and
support for the FI. Our research questions are thus:
RQ1: How do frugal innovation firms organise their (value creation) innovation process?
RQ2: Why and with whom do frugal innovation firms engage in network building to support
their innovation process?
RQ3: What are the challenges to legitimacy for frugal innovation firms and how do frugal
innovation firms overcome these challenges and build legitimacy?
In examining these research questions, we focus on a specific context where the challenges of
engaging in FI are exacerbated: early stage firms. Early stage firms generally tend to be small
in size (Carayannopoulos, 2009), thus having less access to financial and human capital
resources compared with larger firms (van de Vrande et al., 2009). Lacking both funds and
personnel (van de Vrande et al., 2009), early stage firms’ survival depends even more on their
ability to develop external collaborations to access resources (Stinchcombe, 1965). Finally,
early stage firms suffer from “the liability of newness” (Freeman et al, 1986), with both
stakeholders and customers being less likely to consider them as either necessary and valid
(Singh et al., 1986). These challenges that early stage firms face due to resource scarcity,
pressures for external relationships building and overcoming legitimacy challenges are likely
to significantly intensify their efforts to engage in frugal approaches to organise the innovation
process, thus providing fertile ground for our investigation.

THEORETICAL FRAMEWORK
A recent review distinguished between three approaches to study product innovation in
contexts characterised by resource scarcity: bricolage, improvisation and frugal innovation
(Cuhna et al., 2014). For bricoleurs (Levi-Strauss, 1966) resource scarcity is an opportunity,
and their innovation process involves the creative bundling of scarce resources to respond to
these opportunities (Halme et al., 2012). Research in improvisation considers resource scarcity
a threat, where innovators draw upon available resource under time pressures, with the
innovation process characterised by the convergence of planning and execution stages
(Moorman and Miner, 1998). For frugal innovators, research scarcity is a fact, as they cannot
easily change neither their own resource-poor conditions (see Ernst et al., 2015), nor, critically,
those of their customers (Cunha et al., 2014). FI thus involves “innovative products and
services that seek to minimise the use of material and financial resources in the complete value
chain with the objective of reducing the cost of ownership while fulfilling or even exceeding
certain pre-defined criteria of acceptable quality standards” (Tiwari and Herstatt, 2012, pg.
248). While there are many alternative concepts to FI currently in use including inclusive
innovation (George et al., 2012), innovation in resource scarce environments (Cuhna et al.,
2014; Gibbert et al., 2013) affordability-driven innovations (Ernst et al., 2015), reverse
innovation (Immelt et al., 2009), jugaad innovation (Radjou et al., 2012), frugal engineering
(Sehgal et al., 2010), Gandhian innovation (Prahalad and Mashelkar, 2010) and innovation for
the bottom of the pyramid (BoP) (Prahalad and Hammond, 2002), most research agree that a
frugal approach to innovation shares a number of common traits. First, FI addresses with
extreme efficiency some basic and essential need of consumers, often but not necessarily poor
(Cuhna et al., 2014; Hart, 2005; Prahalad, 2012) through a focus on elementary, core-
functionality product features (Tiwari and Herstatt, 2012). Second, frugal innovation is based
on the development of strong social (Cuhna et al., 2014) and local (Ernst et al., 2015)
embeddedness practices which allow the FI firms to acquire a deep understanding of and
integration with the target customers (Ansai et al., 2012; Cuhna et al, 2014). Finally, frugal
innovators operate in an environment characterised by resource scarcity (Cuhna et al., 2014),

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and thus cannot rely on identifying and bundling dormant resources to respond to this
opportunity in the same way as bricoleurs (Halme et al., 2012), nor can they draw fast upon
available resources to generate solutions in the same way as improvisateurs (Moorman and
Miner, 1998). Instead frugal innovators reframe their contextual constraints and articulate new
opportunities by rethinking their resource scarcity conditions (George et al., 2012).
In their framework on inclusive growth innovation, George et al. (2012) draw together these
three common traits under a set of three broad organisational processes that, they argue, allow
firms to engage in frugal innovation including (1) enacting new business models; (2) bridging
access and (3) reframing constraints. Enacting new business models involves establishing
complex new organisational design, structures and processes that implement particular
solutions to achieve frugal innovation. Bridging access involves organisational processes that
identify, locate, and create access to FI target customers, often disenfranchised individuals and
communities located in subsistence markets, through building relationships. Reframing
constraints refers to the frugal innovators’ actions who take the resource poor context as an
assumed input and find new ways to perceive these constraints to create opportunities (George
et al., 2012). Being guided by these categories, we set out to examine three organisational
processes which have been largely ignored by existing FI research.

Innovation process for developing a FI value proposition

Demil and Lecocq (2010) identify two elements of a business model that enable a firm to
exploit its resources to generate value: developing a value proposition by meeting the needs of
its target customers allowing the firm to realise a specific price, and business and organisational
processes and activities which determine the cost incurred by the firm to deliver this value
proposition to its target customers. Research on FI has focused on examining the organisational
processes underlying the frugal engineering approaches which achieve dramatic cost
reductions during FI product development. For example Ray and Ray (2011) examined how
through a “deliberate and singular focus on frugal use of technology and resources” (pg. 224)
Tata have dramatically changed the logic of their product development and altered their
assembly and distribution models to reduce the cost of product design, manufacturing and
downstream activities during the development of Nano. Using the same example, Lim et al.
(2013) developed a framework for building innovative capability that underlines an innovation
process characterised by successive iterations between design, build, and test cycles and by
combinations of in-house with external resources to radically reduce product costs.
However, developing FI products is not only about reducing cost to meet affordability needs,
but also about developing a sustainable value proposition through embedding features in the
product that are important to the consumers (Bowman and Ambrosini, 2000). As frugal
innovators target basic and essential needs of generally ultra-low cost customers, their value
proposition generally centres on the provision of essential functions that satisfy these needs
(Cunha et al., 2014). Product features that were found to create value for frugal innovation
consumers include quality, robustness, intuitive use and multifunctionlaity (Nakata and
Weidner, 2012; Viswanathan and Sridharan, 2012; Williamson, 2010). Understanding these
ultra-low cost customers specific needs, and re-thinking the design approach to the product to
address them through embedding appropriate product feature is critical, and has to precede the
cost focussed product development and delivery stage (Viswanathan and Sridharan, 2012).
However, little is known about these early stages of the innovation process through which
frugal innovators identify and make sense of user needs, and how they then translate these
needs into products or services which provide a sustainable value proposition to their target
customers. While existing research has begun to consider the processes through which firms
assemble and organise their resources to create value in resource constrained settings (George
et al., 2012) by examining concepts such as bricolage (Halme et al., 2012) and improvisation

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(Radjou et al., 2012), our focus on FI however means that bricolage or improvisation are
difficult (Cuhna et al., 2014).
To guide our exploration of innovation processes for valuable FI we draw from the dynamic
capabilities perspective which consider organisational processes as referring to the explicitly
and often codifiable structuring and combination of resources which create new value by
manipulating resources (Wang and Ahmed, 2007). Our focus on processes (dynamic
capabilities) rather than resources (resources) is justifiable as for firms operating in resource
poor environments, the processes through which the resources are organised within the firm
are likely to be more important than the resources themselves in influencing their ability to
pursue FI (Lim et al., 2013). Teece (2007) identified two critical organisational processes that
underpin the creation of value (see also Ambrosini and Bowman, 2009): sensing, involving the
identification and shaping of opportunities and threats from the environment, and seizing,
involving the addressing of these opportunities through new products, processes or services.
Sensing requires the firm to constantly scan, search and explore both technologies and markets,
involving both the research and probing of customer needs and technological possibilities, and
the understanding of demand, industry structures and markets, and other market actors’
responses. Seizing requires the firm to develop and commercialise the opportunity, and to select
or develop a particular product architecture and an appropriate business model to allow it to
exploit the opportunity (Teece, 2007). Following Teece (2007), we conceptualise sensing
opportunities and seizing them through reconfiguring resources to develop products and
services are critical processes to underpin the creation of value in FI. Our first research question
is thus: How do early stage firms organise their innovation process to sense and seize
opportunities for frugal innovation? (RQ1).

Building relationships for accessing resources

In this study we expand the concept of bridging access to include not only relationships to
gain access to the community to enable the diffusion of the innovation, but also relationships
to gain access to the knowledge about the needs and opportunities within their specific
communities to develop the innovation in the first place (Tiwari and Herstatt, 2012). The role
of external collaboration is widely emphasised in FI research, with studies examining
embeddedness within open innovation networks (Tiwari and Herstatt, 2012) and within the
local community (Ernst et al., 2015) to build a BoP ecosystem (Ramani & Mukherjee, 2014;
Ramachandran et al., 2012) in order to leverage the social capital within these communities
(Ansari et al., 2012). Although such research identifies a range of drivers for collaboration for
FI including (i) the need to access knowledge about local needs during conceptualisation (Ernst
at al., 2015; Tiwari and Herstatt, 2012),; (ii) to lower costs during product design and
development (Lim et al., 2013; Ray and Ray, 2011), and (iii) to bridge access to their target
customers during launch (George et al., 2012) to enable the diffusion of the FI (Ramani &
Mukherjee, 2014) by gaining access to distribution (Ernst et al., 2015) and promotion (Tiwari
and Herstatt, 2012) channels, particular attention has been paid in FI research only to the latter
two. Existing FI research emphasises the special nature of FI markets, where the lack of
institutional support requires frugal innovators to invest in building the capabilities of the
community to uptake the innovation (Ramani & Mukherjee, 2014), and identifies a range of
partners that FI engage to build access to these disenfranchised communities including
foundations, public labs, non-governmental agencies, microfinance and not for profit firms
(Ernst et al., 2015; Ramani & Mukherjee, 2014). Similarly, studies examining frugal
engineering have identified external collaborations with a range of suppliers, generally for
profit firms, as a key strategy employed by frugal innovators to reduce costs during product
design, development and manufacture (e.g. Ray and Ray, 2011). Less attention however is paid
to collaboration for accessing knowledge to sense domain specific opportunities and to seize

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them through developing products and services. It is thus unclear how networking enables the
value creation during the FI process, rather than frugal engineering and access to communities.
To guide our exploration of collaboration during the creation of the FI value proposition, we
consider collaborative relationships as arenas of resources procurement, where firms engage in
relations with other actors to access resources they needs (Galaskiewicz, 1985). Drawing from
the resource based view, we thus explain collaborative behaviour based on the need to access
other firm’s resources and competencies to generate value creating strategies (Eisenhardt and
Schoonhoven, 1996). Firms engage in collaborative relationships when they themselves are in
vulnerable strategic position and require resources, or conversely when firms are in strong
social position and can capitalise on their own resources to create opportunities through
collaboration with others (Eisenhardt and Schoonhoven, 1996). When the collaboration is
driven by the need to create synergies between resources, for example to achieve cost or risk
reduction, firms will pool similar resources to generate economies of scale and scope, and
rationalise innovation processes (Katz, 1986) to create value. In contrast, when the drivers are
to develop innovations, such as new technologies, firms will combine complementary
resources (Miotti and Sachwald, 2003) to create value. The choice of collaborative partners for
innovation is thus dictated by the nature of resources which the partner commands, as partners
will be chosen depending on the kind of similar or complementary resources required (Miotti
and Sachwald, 2003). Research also found that range of partners matters, with firms relying on
a more diverse range of partners having higher the degree of novelty in their innovations (Nieto
and Santamaria, 2007). Our second research question is thus: Why and with whom do frugal
innovation firms engage in network building to support their FI efforts? (RQ2)

Building legitimacy to gain support and resources for FI

We focus here on legitimacy building as a key process through which frugal innovators
overcome the environmental constraints and gain access to external resources. Existing
research identifies two types of constraints that frugal innovators face: resource scarcity and
image perceptions. Both of these constraints are related to the two organisational enablers
discussed earlier. First, to overcome resource scarcity constraints, frugal innovators build
external collaborative relationships to access needed resources (Tiwari and Herstatt, 2012).
Existing research, implicitly drawing from the resource based view, generally explains
collaborative behaviour as being driven by the need of frugal innovators to access
complementary resources (see discussion in the section above). However, it does not fully
explain why partners which possess such required resources are willing to engage with the FI
firms, which are often themselves resource poor thus lacking the ability to capitalise on their
existing resources to attract partners as suggested by the resource based view (Eisenhardt and
Schoonhoven, 1996). Second, as discussed earlier, FI requires the development of a value
proposition which is both affordable to consumer on ultra-low budgets, and provides good and
robust value to consumers (Ernst et al., 2015). Research shows that BoP consumers seek
aspirational products that fulfil their higher order needs and do not carry the stigma of being a
poor people’s product (Tiwari and Herstatt, 2012). Successful examples of frugal innovation
such as M-Pesa which allows mobile money transfer and payment services, and multifunctional
washing machines that clean also fruits and vegetables are example of sophisticated products
which combine low cost and high value (Ernst et al., 2015) and which have avoided association
with a “poor people/poor quality product” image. In contrast, the difficulties of Nano to gain
customers’ acceptance due to their image of being “the world cheapest car” (Tiwari and
Herstatt, 2012) highlight the constraints that frugal innovators face in persuading their
customers that their product is both affordable and good quality.
To fully examine the constraints that frugal innovators face within their contexts and their
behaviour in reframing these constraints to seek acceptance for their products we draw from

5
the institutional research on legitimacy building (Schuman, 1995). While the dynamic
capabilities and resource based view perspectives that underscored our earlier two research
questions emphasise rational calculations of economic pressures for efficiency and
performance, institutional approach conceptualises organisational behaviour as the product of
values, beliefs and norms that characterise the institutional environments in which organisation
are embedded (Di Maggio and Powell, 1983). In order to survive within their environments,
firms must be seen as legitimate. Legitimacy is critical as stakeholders are more likely to
commit resources and support actors they perceived as legitimate (Zimmerman and Zeitz,
2002). Legitimation involves being “desirable, proper, or appropriate within some socially
constructed system of norms, values, beliefs, and definitions” (Schuman, 1995; pg. 574).
Institutional research differentiate between various types of legitimacy (e.g. Aldrich and Fiol,
1994; Hunt and Aldrich, 1996; Suchman, 1995; Zimmerman and Zeitz, 2002). We follow here
Suchman’s classification (1995) that differentiate between pragmatic, moral and cognitive
legitimacy (see Table 1).

Table 1: Types of legitimacy (adapted from Suchman, 1995)

Legitimacy type Pragmatic Moral Cognitive
cognitive consistency when
Underlying stakeholders’ evaluation of the
stakeholders' self-interest stakeholders adopt a common frame
behavioural organisation and its activities
calculations (interest) of reference widely accepted within
dynamic (evaluation)
the organisation (cognition)
judgements about whether
judgements about whether the taken for grantedness as whether
the organisation or its
Based on … organisation or its activities the organisation is necessary or
activities benefit the
are the right thing to do inevitable
stakeholders
Tradition strategic, rational tradition institutional perspective

When a firm lacks one or multiple such legitimacies, it responds by choosing among a range
of legitimation strategies (see Aldrich and Fiol, 1994; Oliver, 1991), which generally involve
either attempts (i) to change the firm to demonstrate conformity with values, norms or cultural
models, such as by changing their processes, activities, structures of business model, (ii) to
select a favourable audience to seek support from, or (iii) to manipulate the environment, such
as by attempting to alter the perceptions of their stakeholders (cf. Suchman, 1995; also
Zimmerman and Zeitz, 2002). There is a relatively well established research on legitimacy and
entrepreneurship that examines external legitimacy strategies in the context of new ventures
(Rao et al., 2008; Zimmerman and Zeitz, 2002; Wang et al., 2014). Research on product
innovation and legitimacy in established firms is more limited and focuses on the strategies
that innovator actors engage in to gain internal legitimacy for their idea from organisational
decision makers through emphasising normative, moral (Dougherty and Heller, 1994) as well
as pragmatic alignments (Bunduchi, 2014) between the innovation idea and the organisation.
In both cases, the focus is on gaining legitimacy to acquire resources both to allow the firm to
survive and grow (Zimmerman and Zeitz, 2002), and to pursue the product innovation
internally (Bunduchi, 2014). In the context of FI characterised by resource scarcity, the issue
of legitimacy is largely unaddressed in existing research, neither in terms of clearly identifying
the challenges to legitimacy, nor in exposing the mechanisms through which legitimacy can be
gained. Our third research question is thus: what are the challenges to legitimacy for frugal
innovation firms? (RQ3a) and How do frugal innovation firms build legitimacy to
overcome such challenges? (RQ3b)

RESEARCH DESIGN
Our research follows a multi-case study research design due to the importance of
understanding the context in which FI takes place, and to the need to allow for flexibility during

6
the design as well established paradigms to investigate FI are still lacking (cf. Cunha et al,
2014; Geroge et al., 2012). We focus on a particular sector of frugal innovation: medical
devices. The choice is informed by the growing prominence and need for cost-effective, and
therefore frugal medical devices across DMs and EMs (Gottlieb and Makower, 2013). The
companies were selected by way of three different means. First, a Google search was conducted
for medical device companies that developed frugal medical devices. Second, details of the
research project were advertised in two active FI LinkedIn groups. Third, FI experts were
contacted from within the first author’s own personal network. In the end, we have identified
four companies which were willing to engage in the research and fulfilled our criteria: (1)
operate in the medical device sector; (2) have an example of FI product already launched or
close to launching; (3) are less than 10 years old thus counting as early stage firms. Most
products are in similar stages of development; with three of the products were already launched,
while another product (Eye Check) was planning the launch for October 2015. The FI firms
(under pseudonym) and their FI products are presented in table 2.

Table 2: Cases’ characteristics

Company Founding Product Year of No of Location
year launch employees
Eye Check 2012 Portable eye examination kit (mobile 2015 7 Glasgow, UK
app and lens adapter)
JetInject 2005 Needle-free vaccine injector 2009 20 Denver, US
All-in-one Eye 2010 Non-mydriatic Ophthalmic Device 2010 110 Bangalore,
Solution India
Kits for Kids 2008 New born incubator 2012 25 Bangalore,
India
Data collection involved semi structured interviews with representatives of the four cases, and
secondary sources of data regarding the firm and their product (see table 3). Respondents
included CEOs, product managers, and other R&D managers who were directly involved in
the development of a specified frugal product.

Table 3: Secondary data

Company Company Online product information & Public case News Online
website product brochures studies articles videos
Eye Check x x x
JetInject x x x
All-in-one Eye x x
Solution
Kits for Kids x x x
Secondary data was used for three purposes. First, secondary data was used to contextualise
the cases by collecting background information on the companies, their founders, their products
and the technologies deployed. Second, secondary sources provided insight particularly into
the product features, and the legitimacy mechanisms employed by the FI actors. In all cases,
FI product features were initially obtained from the company website, online brochures and
product videos. Legitimacy seeking mechanisms were first identified from lists of certifications
from the company webpage, and stories from new articles and publicly available case studies.
Finally, secondary data also served to triangulate the data collected from the semi-structured
interviews. In total seven interviews lasting between 30 to 60 minutes were conducted with six
different respondents between June and July 2015, two for JetInject and Kits for Kids, and one
for All-in-One and respectively Eye Check. The interviews focused on the frugal product
development process throughout three stages: conceptualization, development, and
commercialization. For each of these stages, questions focused on motivations, approaches,
barriers, and facilitators.
All of the interviews were first transcribed and send back to respondents for verification.
Following transcriptions, the data was first pre-coded using techniques such as highlighting,

7
underlining, and preliminary jottings to identify “codable moments”, or areas worthy of
attention (e.g. Saldana, 2012). This initial coding involved identifying the initial concepts from
the data and corresponds to the 1st order codes suggested by Gioia et al. (2012). Next, the codes
were organised per each case study to seek emergent 2nd order concepts which broadly match
the theoretical themes identified in the literature review: innovation process, building
relationships and seeking legitimation (see table 4).
Table 4. Data structure (following Gioia et al., 2012)
Themes 2nd order codes 1st order codes
recognizing an opportunity:
 identifying an unmet domain specific opportunity
 sensing a social opportunity
 identifying a large market need
 exploring potential technologies
sensing
understanding local needs and context:
 shortcoming of existing solution
 understanding users' needs
 knowledge of local context
 clarifying affordability requirements
converting of local needs and context into product features:
Innovation
 Expensive to affordable
process:
sensing &  Big and bulky to smart and portable, hand held, compact and lightweight
seizing  Requires access to electricity to using solar power, or requiring no external
power source
 Requires trained personnel (sometime to operate multiple pieces of
seizing equipment) to ease to use (requiring minimum training and with one
multifunctional equipment)
 Lack of eye care professional to remote diagnosis
 User accessibility in rural areas to integration with GPS/SMS to coordinate
patients pick up, or portable to deliver care at patient location
 Unsafe to safe
 Painful and not always accurate to pain free and accurate
iterations between achieve desired features through iterations between design and manufacture
sensing and seizing focused in improving product quality for BoP & high income users
public - government agencies
private firms, for profit
type of partners private firms, not for profit
third sector - charities, NGOs
Building research institutes and universities
networks access to knowledge about context of use
access to domain specific knowledge (technical and commercial)
drivers for
access to technological knowledge
collaboration
access to resources (finance and otherwise) to reduce costs through development
access to promotion and distribution channels
customers
employees
types of audiences
investors
targeted
media
partners
(lack of) types of pragmatic:
legitimacy  low earning potential / profitability of FI
 lack of financial capital offering opportunities for high salaries
moral
Building
 product image as inferior in quality standards to existing products
legitimacy
 firm seen as being inferior in skills to firms based in DM
cognitive
 product based on unfamiliar technology making it difficult to comprehend
 product features unfamiliar to audiences making it difficult to comprehend
legitimation conforming: demonstrating alignment to audience expectations
strategies selection: identifying supporting audiences
manipulation: changing audiences perceptions
legitimacy leverage the social image of the product
mechanisms leverage the reputation of the network

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 certification and endorsements

ANALYSIS AND FINDINGS

We set out to explore three areas of organisational enablers of frugal innovation: innovation
process, building networks and building legitimacy. Our analysis uncovers the FI process as an
series of iteration between sensing and seizing processes to develop a value proposition. We
find that sensing involves a matching process between a domain specific opportunity, social
need, large market gap, and shortcomings of existing technological solutions, followed by
building understanding across four elements of the domain of application: user needs, local
context, shortcomings of existing solutions and affordability. Seizing processes involve the
transformation of these understandings into specific product features to realise the sensed
opportunity. The iterations between sensing and seizing are shaped by strong resource
constraints which force the frugal innovator to seek access to resources externally through
engaging in two distinct organisational processes. First, FI actors build collaborative
relationships with a wide range of different partners throughout the FI process to gain access
to particular types of complementary resources needed to pursue the FI. Second, FI actors
engage in legitimacy building to align with the expectations, values and norms of targeted
audiences either through leveraging their social image, the reputation of their partners, the
familiarity of embedded technologies and through relying on certifications and endorsements
for their products. The two resource seeking processes are characterised by distinct behavioural
dynamics. While relationship building is underlined by self-interest calculations to maximise
value creation through seeking access to complementary resources through external partners,
legitimacy building is institutionally driven based on the need to survive through seeking
acceptance within the particular environment in which the FI and its targeted audiences are
embedded (see Figure 1).

Type of Legitimacy
economic challenges Legitimacy
collaborators efficiency driven legitimacy driven
seeking
Type of behaviour behaviour BUILDING
BUILDING behaviour:
resources LEGITIMACY strategies &
NETWORKS
driving mechanisms
collaboration Type of audiences
Access to targeted
resources?

RESOURCE CONSTRAINTS
Recognising an SENSING Building an SEIZING
opportunity: domain understanding of current Convert
specific, social, market gap solution, local needs and understanding into
FRUGAL & technologies exploration context, and affordability product features
INNOVATION
PROCESS
Further iterations

Figure 2: Enabling mechanisms for frugal innovation in organisations

The next section analyses each of the three major themes: (1) the innovation process
characterising FIs, and the efforts of our four FI actors to support and resource the innovation
process through (2) building networks and (3) seeking legitimacy.

Innovation process
In all cases, we distinguish four components of the core FI process: both [1] recognizing an
under-met need opportunity and [2] building an understanding the local needs and context are

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associated with sensing, with seizing involving the [3] conversion of understandings of local
needs and contexts into product features; followed up by [4] iterations between the three stages.
[1] In all cases, the FI debuted with sensing an opportunity. This process was described by
respondents are involving the matching of up to four distinct elements: the identification of a
previously under-met health (domain specific) need that characterised the EM and sometimes
DM markets; the identification of a social need, e.g. the opportunity to eradicate preventable
blindness; the recognition of a large market gap, e.g. millions of patients in a particular EM,
and sometime within DM markets; and in the case of JetInject, the exploration of potential
technological solutions, e.g. the opportunities to improve on a 50 years old technology. In all
cases, the matching between a domain specific and social need started the process, followed by
the sensing of a large market gap, and was matched to varying degrees by some initial
technological capabilities within the team that enabled the original exploration of technological
solutions (see Table 5).

Table 5: Components of opportunity sensing across cases

Cases Health related Social opportunity Large market gap Technical possibilities
need
Eye Check (DM Inaccessible and Eliminate avoidable Between 300,000
firm) under-met need for blindness in Kenya and Kenyan patients to
eye screening other developing & 228 million+ global
services developed countries BoP and developed
country patients
JetInject(DM Under-met need Enhance safety of 3,3 million _ Improve on 50 years old
firm) for safer vaccinations for healthcare healthcare workers jet injection technology
vaccination workers and patients & and patients through creating a special
reduce the spread of globally force of delivery using a
diseases in both developed spray to reach specific
and developing countries target tissue
All-in-one Eye Inaccessible and Eliminate avoidable Between 5,85
Solution (EM under-met need for blindness in India and other million Indian
firm) eye screening developing countries patients to 228
services million+ global
BoP patients
Kits for Kids Inaccessible and Increase survival rates of Cc 1 million infants
(EM firm) under-met need for premature and neonatal each year
premature and infants in developing
neonatal care countries
services
The cases differed in terms of where they saw their markets, and the reliance on exploring new
technology possibilities. Firms from DMs (Eye Check and JetInject) identified the market gap
both within their countries of origin, other DMs, and EMs. Firms from EMs (All-in-one Eye
Solution and Kits for Kids) initially sensed the market gap only within their countries of origin
and other EMs. Further, exploring new technical possibilities was apparent only in one case
(JetInject). In two of the other cases sensing was driven by the identification of a social
opportunity that is then matched with existing technological competencies within the team
either by themselves (All-in-One Eye Solution) or in collaboration through within easy-reach
partners (Kits for Kids). In one case (Kits for Kids) the social need was paramount in driving
the exploration of potential technological solutions which were acquired based on seeking and
engaging external partners which possessed the required technological competencies.
[2] In all cases the identification of the opportunity was followed by FI actors refining its four
component elements so that they can clearly articulate this sensed opportunity. This refining
involved acquiring knowledge to understand the shortcomings of existing solution; of user
needs; of the local context of deployment; and of affordability constraints. Existing solution
understanding included clarifying the drawbacks of the existing solutions. User understanding
focused on identifying patient and healthcare worker habits and behaviour, and typical
challenges and constraints faced by both patients and healthcare workers. Contextual

10
understanding involve exposing the nature of the healthcare system and environmental
conditions, constraints, and challenges. Finally, affordability understanding concerned the
clarification of economic constraints on deployment, both intermediaries and end users low
purchasing power.
The cases were similar as to how they gathered this understanding and knowledge, which
generally involved a combination of internal efforts with external attempts to engage with users
(see Table 6 in appendix).
In all cases external efforts involved leveraging knowledge about the users, their context and
affordability, through direct engagement with the users and through formal collaborations with
external partners. Three cases (Eye Check, Kits for Kids, and All-in-One Eye Solution)
complemented these external efforts with internally focused field research to support
understanding building during sensing. The one case that did not engage in field research
(JetInject) was able to do so because basic product features had been pre-determined by an
external collaborating organization. Moreover, in this case the founder’s past participation in
medical missions throughout various EMs likely provided some basic existing solution, user,
contextual, and affordability understandings of health provision in EM environments.
[3] Once the opportunity was clarified, the next step involved seizing the opportunity by
converting the acquired understandings into features embedded into the FI product. Seizing
started in all cases by mapping the shortcoming of the existing solution against the different
components of the understanding built at the previous stage (user needs, local context and
affordability constraints). Mapping was followed by the identification of specific product
features that were matched across the user, context and affordability needs (see Table 7).

Table 7. Converting understanding into product features across cases

Current solution product features mapped
Cases against acquired understanding of user
needs, local context and affordability
Expensive
Big and bulky, requiring large indoor spaces
Requires continuous electricity
Eye Check
Requires trained personnel
Lack of eye care professional
Patients cannot get to doctors
Expensive
Unsafe (high risk of needle stick injuries &
needle reuse)
JetInject
Requires external power source (needle free)
Requires trained personnel
Painful and fear-inducing for patient (needle
and needle-free)
Big and bulky and non-portable (needle free)
Expensive
Requires multiple pieces of equipment each
All-in-One performing specialised functions
Eye Solution Big and bulky
Requires continuous power source
Requires highly trained personnel
Lack of eye care professionals
→ FI product features
Affordable (costs $500 compared to $250000 for
→ traditional retina camera) & low maintenance
costs
Smart & portable (the size of a smartphone), can
→
be used in an indoor space of any size
Does not require continuous electricity
→ (healthcare workers charge the devices in solar
powered backpacks)
→ Easy to use (requires minimal training)
→ Remote diagnosis
Integration with GPS/SMS to coordinate and
→
schedule patients pickups
→ Affordable (through use: no external power
source, reduce waste of vaccines, reduced cost per
injection, reduce cost of waste disposal)
→ Auto-disabling syringe
→ Does not require external power source
→ Ease to use (minimal training required)
→ Accurate injections via water injection
technology
→ Small and hand-held
→ Affordable (1/5th of the cost of standard
equipment) & low maintenance costs
→ Multifunctional (one equipment piece required)
→ Compact, lightweight and portable
→ Long lasting power source
→ Ease to use; easy to interpret results
→ Remote diagnosis

11
 Expensive → Affordable (valued at $300, less than 1% the cost
of traditional incubator & low maintenance costs)
Rural patients cannot get to the equipment → Portable to be used for transport to rural areas
Kits for Kids
(which is only found in urban hospitals)
Requires continuous electricity → Does not require continuous electricity
Requires trained personnel → Ease to use (minimal training required)
The shortcomings of existing solutions across the cases share similar characteristics such
requiring trained personnel, inaccessible to rural patients, requiring access to sources of
continuous electricity, and expensive that reflect the similarity in user needs, specifics of local
context and affordability constraints across the domains of use. Seizing involves building upon
the understandings developed during the refining opportunity stage and developing a value
proposition through transforming these understandings into a collection of product features
embedded into the FI that fulfil all the user, context and affordability needs.
[4] In all of the cases, sensing and seizing capabilities were developed iteratively throughout
the FI product development process. For example, all cases engaged in efforts to understand
the local needs and context both during the sensing and seizing stages.
While in all cases, a first product prototype was developed through combing the product
features identified at the previous stage, this prototype went through successive iterations
before launch. Such iterations were driven by the feedback from external collaborations and
engagement with users. In all cases, although affordability was important, improving the
quality of the solution was mentioned by all respondents as the key focus of these successive
iteration cycles. In this sense, quality refers to the product’s ability to solve the problem by
effectively meeting users’ needs and affordability constraints within the given context and
environment. In many cases, the iteration lead to the addition of features (such as cloud based
software to enable remote diagnoses) which were considered required to appropriately address
the needs within the given contexts. The cases therefore show that above-basic features in FIs
may also be required not just to meet basic customer aspirations, but also to satisfy specific
customer needs.

Building collaborative relationships

Our analysis identified two themes associated with building networks: [1] drivers for
collaboration, and [2] type of partners. In all cases, throughout the FI process, actors
purposefully seek and engage with partners to gain access to complementary resources to allow
them to develop the FI. As such, relationship building process is driven by self-interest
calculation to maximise the utility of the collaboration to the firm by seeking complementary
resources that enable the frugal innovators to develop their product, such as knowledge to refine
and seize the sensed opportunity, financial capital and assets to reduce costs, and promotion
and distribution channels to gain access to users (see Table 8 in appendix).
[1] Three types of resources were sought through collaboration: knowledge, financial
resources and other assets to reduce costs during innovation, and access to distribution channels
and promotion (see Table 9).

Table 9: Types of resources sought through collaboration

Types of resources Eye Check JetInject All-in-One Eye Solution Kits for Kids
Local needs and context knowledge (market x x x x
knowledge and access to users)
Domain specific technical knowledge x x
(medical and scientific knowledge)
Domain specific commercial Knowledge x x x
(business and industry)
Technical knowledge x
Financial resources and other assets for cost x x
reduction
Access to promotion and distribution channels x x x

12
Knowledge was the most commonly sought resource from building relationships, with most of
the collaborations identified across all cases targeted at accessing a range of types of knowledge
to complement the knowledge within the firm, which was primarily technological (Eye Check,
All-in-One and JetInjet), and design based (Kits for Kids). The next most common driver for
collaboration was to gain access to users, followed by collaboration to gain financial and other
forms of resources to reduce costs.
The most common complementary form of knowledge sought was knowledge about the user
needs and local market, followed by commercial knowledge in three cases. Collaboration to
access technological resources to complement the technological capabilities located within the
actor was present in only one case (JetInject) where the exploration of technological
opportunities was also an element of the matching process during sensing. Technical domain
specific knowledge was a rational for collaboration only on two cases (Eye Check and All-in-
one). Interestingly, there is no distinctive pattern between DM and EM based markets, with
both DM and EM actors being as likely to engage in external collaboration to access knowledge
about local context and user needs.
[2] The type of partners were selected purposefully depending on the nature of complementary
resources they possessed (see Table 10).

Table 10. Type of partners sought depending on type of resource

Types of resources Academic & Charity Private, NGO Public Private, End
Research not-for government for profit users
institute profit
Local needs and context Eye Check Eye All-in-One JetInject Eye
knowledge (market Kits for Kids Check Check
knowledge & access to Kits for JetInject
users) Kids All-in-
One
Kits for
Kids
Domain specific Eye Check All-in-One
knowledge (medical &
scientific knowledge)
Commercial knowledge Eye Check All-in-One
(business and industry) Kits for Kids
Technical knowledge All-in-One All-in-One All-in-
One
Financial & other Eye Check JetInject
resources to reduce cost
Access to promotion Kits for Kids Eye Check
&distribution channels Kits for Kids
The widest range of diverse partners, although all of them not for profit organisations, were
employed across all the cases to seek local needs and context knowledge. All our frugal
innovators sought to partner with organizations which worked closely with the users from the
target market, and had implemented solutions to address these or similar problems in the past
in similar markets thus having a good understanding of local context. Because these
organizations were not motivated by profits, but aimed to address the same social, domain
specific issues as the FI actors, they were seen by the FI actor as willing to share their
knowledge and networks, often because the FI products would complement their objectives.
Domain specific knowledge, both technical and commercial, was acquired in toe cases out of
three through academic collaborations. Although relying on academic collaboration to acquire
commercial knowledge can appear surprising, in both instances, FI emerged as an academic
based project, with the universities then offering start-up incubation support to develop the idea
further. Collaboration for technological knowledge is sought across academic, private NFP
social enterprises and private firms. In most cases technological knowledge gaps were first
addressed by hiring team members, rather than relying on external partners.

13
Collaborations for accessing additional financial resources to reduce the cost during
development were sought only in two cases and involved academic and private collaborators.
The academic collaborators of Eye Check shouldered the costly expenses of clinical trials for
the FI actors, whilst they benefitted by being able to further its own medical research efforts.
Similarly, JetInject collaborated with vaccine manufacturers (private firm collaboration), in
which the private partner shouldered the cost of clinical trials in exchange for access to use
JetInject’s proprietary technology.
Finally, access to promotion and distribution channels was acquired almost exclusively through
partnering with local government, although in one case the FI actor relied on partnership with
a US based university with strong links into the target market. By leveraging existing
distribution channels, the firms were able to greatly expand their reach into the public and
government healthcare sectors, which are more fragmented in EMs when compared to the
private healthcare sector.

Legitimacy
Our analysis identifies three themes associated with building legitimacy: [1] key audiences
targeted; [2] challenges to legitimacy across these audiences and [3] low level mechanisms to
seek legitimacy deployed as part of broad generic strategies. By and large, legitimacy was
critical to demonstrate that the FI idea aligns with the norms, values and beliefs of the targeted
audiences (moral legitimacy) and was used strategically by the FI actor as a tool to gain support
and resources from these audiences to support the FI innovation process (see Table 11 in the
appendix).
[1] In their efforts to overcome resource constraints, all our firms engaged in extensive
legitimacy building to seek the acceptance of key audiences throughout the FI development
process. Broadly, employees where targeted during the early stages of the innovation process
to attract highly skilled resources to allow the conceptualisation of the product through building
understanding and converting this understanding into value added product features; investors
to provide funding to support the development of this initial concept or prototype into a fully-
fledged product; while early customers were targeted to accept the product during launch.
[2] In all the cases, the firms faced challenges to legitimacy because these audiences were a)
unfamiliar with the technologies and/or product components embedded into the FI, b) sceptical
about the economic feasibility of the FI products, and c) concerned about the quality of FI
products (see Table 12).

Table 12. Legitimacy challenges across cases

Cases Pragmatic Moral Cognitive
(economic feasibility) (quality concerns) (unfamiliarity)
Eye Check Employees Customers (customers) (lack of
investors challenge)
JetInject Employees Investors Customers
investors
All-in-one Eye Solution Employees Customers customers
investors
Kits for Kids Employees Customers Partners
investors customers
a) Unfamiliarity with frugal technology was symptomatic of a cognitive legitimacy crisis, and
was affecting primarily the customers of the FI. Three cases encountered legitimacy challenges
because their technology diverged from standard devices, while in the case of Eye Check the
incorporation of familiar technology was seen as the key reason why the product is not
challenged by customers. In all of these three cases, the FI products involved the development
of new components within a new architecture (radical innovations), thus resulting in a device
having a very different appearance and functionalities comparing with existing products, and

14
which were unfamiliar to the targeted audiences. The one case (JetInject) that has not faced
cognitive legitimacy challenges thus far most closely resembles a modular innovation as
although components or modules of standard eye examination equipment were transported into
a different architecture (i.e. a mobile phone), the architecture of the mobile phone itself
remained unchanged, and therefore was familiar to constituencies. The findings indicate that
FIs that are more radical in nature are more likely to face cognitive legitimacy challenges due
to the customers’ unfamiliarity with the technology embedded in the product.
b) All cases experienced crises of pragmatic legitimacy arising from perceptions of low
financial earning potential affecting in all cases both prospective employees and investors. Both
employees and investors doubted the economic utility that they would gain from being
associated with, i.e. working for or investing in the FI firm, generally due to the fact that they
were priced significantly lower than existing devices, and were not proven in the market.
c) All cases also encountered concerns regarding the quality of their FI which affected
primarily consumers, but also investors in one case and reflects a crisis of moral legitimacy.
Due to the low price, and in the case of EM based firms the association with the EM, customers
evaluated FI products as being of inferior quality, not aligning with the standards of quality for
similar products in this market, which were priced higher and were developed by DM firms.
[3] To address the crisis affecting cognitive, moral and pragmatic legitimacies across the range
of audiences targeted, FI actors deployed a range of legitimacy seeking mechanisms: a)
leveraging the social aspect of the FI product, b) leveraging the reputation of their partners, c)
acquiring quality certification & endorsements and d) leveraging the familiarity of technologies
or product components. These mechanisms were deployed as part of all three types of high
level legitimacy strategies: conforming, selecting, and manipulating. However, with one
exception, all these mechanisms were targeted at gaining moral legitimacy (see Table 13). As
such, the FI actors focused their efforts on seeking to signal that their products comply with
norms, values and expectations associated with the right product for these particular audiences
to compensate for the lack of pragmatic and cognitive legitimacy.

Table 13. Types of legitimacy, legitimacy strategies and mechanisms

Conforming Selection Manipulation
Pragmatic - - -
Moral  Leveraging the social aspect of the product  Leveraging the  Leveraging the
(customers) [1 case, 1 instance] social aspect of the social aspect of
 Certifications and endorsements (customers, product (employees, the product
investors) [2 cases, 4 instances] investors, customers, (customers) [1
 Leveraging the familiarity of the partner media) [4 cases, 8] case, 1 instance]
(customers) [2 cases, 2 instances]
Cognitive  Leveraging the familiarity of the technologies - -
/ product (customers) [1 case, 1 instance]
a) Leveraging the social aspect of the product was by far the most common mechanisms
employed to seek moral legitimacy by all FI actors and with all types of audience. The
mechanisms was most commonly associated with selection strategy to target benevolent
supports across all audiences, but it was also used as part of conforming and manipulation
strategies to seek the acceptance of early consumers.
As early-stage SMEs, all of the cases faced limited financial capital to attract new employees,
through demonstrating financial return. As such, all companies leveraged the social aspect of
the company to target employees attracted by the opportunity to fulfil a social mission.
Similarly, two cases (Eye Check, Kits for Kids) that were experimenting difficulties in
demonstrating financial viability to their investors overcome this through pursuing niched
sources of funding, such as grants and fellowships, both of which invest in projects that aspire
to meet a social aim. As these investors have specific social oriented criterion that the firms
and products must meet in order to receive investment, the FI actors were able to increase their

15
chances for acquiring capital while evading competition from the many other purpose generic
investment-seeking firms.
Also, three of the cases were leveraging the social aspect of their product to attract consumers.
In one case (Eye Check), the social motivation attracted media attention, which strengthened
the company’s brand and reputation, thereby generating credibility in the market to attract
socially minded customers. In another case (All-in-One), the social aspect served as a
differentiator for targeting consumers which were attracted by being part of fulfilling a social
objective. Finally, JetInject used the social aspect of the product to identify with its target
consumers’ (i.e. healthcare workers’) ethos (i.e. the desire to improve healthcare).
b) The two cases from EMs (All-in-One and Kits for Kids) also leveraged the reputation of
their partners to signal conformity with expected norms and standards for product quality in
the market and both targeted customers. The partners were used as proxies to signal to
customers that the product aligns with the high standards of product quality and thus
overcoming their concerns regarding the quality of FI products originated in EM.
c) Certification and endorsements of FI product by institutions based in DM was also used
sparingly by three of the FI actors (Eye Check, JetInject and Kits for Kids) to signal
conformance with expected norms and standards of product quality (as part of conformance
strategy to gain moral legitimacy). This mechanism was targeted primarily to address the lack
of moral legitimacy of the product for customers whose perception of the FI product was of
one of inferior quality.
d) Leveraging the familiarity of technologies was used only in one case where the FI was less
radical comparing with the other cases to demonstrate the comprehensibility of the product to
consumers. In all the other cases, the radical nature of the product meant the technologies and/
or product components were seen as alien by the customers and partners thus signalling a lack
of cognitive legitimacy.

DISCUSSION
We set out to examine the organisational enablers for frugal innovation. Our analysis was
informed by George et al.’s framework (2012) which identifies three categories of
organisational enablers: enacting new business models, bridging access, and reframing
constraints. We focused on one critical aspect of each of these three categories: the approach
taken by FI actors to organise their innovation processes and activities to develop a sustainable
value proposition, building external collaborative relationships to access resources, and seeking
legitimacy for the innovation to reframe resource constraints and gather support.
First, our analysis finds that FI actors organise their innovation process as cycles of iterations
between sensing and seizing (RQ1). The process begins with sensing under-met domain
specific opportunities followed by acquiring an understanding of the domain of application.
Existing research tends to portray the opportunity identification process as involving the
identification of untapped markets (Radjou, et al., 2012; Radjou and Prabhu, 2014), sometimes
in combination with the pursue of a social motivation (Prahalad and Hart, 2002; George, et al.,
2012; Bhatti, 2012), which is then followed up by building an understanding of the local needs
and context (Tiwari and Herstatt, 2012) generally involving local research teams (Zeschky, et
al., 2011). Our analysis undercovers a finer grained picture of this sensing process which
involves a matching process between domain specific opportunity, unmet social need, large
market gap and exploration of technological opportunities, and is followed by acquiring an
understanding of the domain of application across four areas: shortcoming of existing solution,
user needs, local context, and affordability constraints.
Our findings also show that to seize the opportunity and create value, FI actors start by
matching the shortcoming of the existing solution against the different components of this
understanding (user needs, local context and affordability constraints). It is through this

16
matching process that product features are developed to redress the shortcomings of the current
solution. We also find that these shortcoming as often similar across the same application
domain, due to the similarity in the BoP contexts of use. Such a findings refines the argument
put forward in existing research concerning the benefit of starting FI development with a clean
slate approach (Tiwari and Herstatt, 2012; Govindarajan and Trimble, 2013). While the
development did indeed in all cases assumed a completely different solution, rather than
improvements in existing once, the assessment of the current solution was present in all cases
to support the development of the value proposition.
Finally, an important finding is the iterative nature of the FI process, which confirms
suggestions in exiting literature that FI requires more flexibility compared with traditional
innovation models (Radjou and Prabhu, 2015). Our findings support existing research which
find that iterations often focus on improving the quality of the product (Tiwari and Herstatt,
2012), in addition to simplicity and basicness (Radjou, et al., 2012; Tiwari and Herstatt, 2012).
Second, we find that FI actors engage in networking activities with a range of actors throughout
the duration of the FI process in order to gain access to specific resources (RQ2). In line with
existing research, we find that knowledge acquisition, followed by lower cost, enhanced
promotion, and access to distribution channels were the main drivers of these collaboration
efforts (Soni, 2013; Tiwari and Herstatt, 2012). However, we find that knowledge to build
understanding across the four domains, i.e. context (market knowledge), user needs, domain
specific (medical/scientific and business/industry knowledge), and technology to be the key
resource driving the collaboration efforts of frugal innovators, rather than reducing costs or
bridging access. We also find that the widest range of partners, although all not for profit
organisations, are deployed to seek understanding, with a much less diverse range of
collaboration involved to reduce costs and to gain access to markets.
Our findings thus point to the importance of collaboration to support sensing by leveraging the
knowledge from external organizations who already possess the required knowledge, rather
than the frugal engineering process through cost reduction, or the launch stage through building
access. We find that the external organizations that are more likely to be used by early stage FI
firms to leverage such knowledge are non-profits. Such external organisations are themselves
driven exclusively by social motivation to address similar problems to those pursued by the
early-stage FI firms. As such, they not only possess in-depth knowledge about the relevant
problem, but their social driven approach is also cognate to that of the case companies.
Finally, we find that FI actors deploy a range of legitimacy seeking mechanisms to reframe
their resource constraints, and gain the support and acceptance for their FI product from a range
of external and internal audiences (RQ3). By and large, legitimacy challenges to frugal
innovators, and consequently their legitimacy seeking behaviour has been largely ignored in
FI research. Much of the FI research focuses on large domestic companies or MNCs (Prahalad,
2005; Tiwari and Herstatt, 2012), and paints an optimistic picture as it calls on MNCs to engage
in FI in order to reap the benefits presented by the large, but underserved, EM and BoP masses,
as well as to capture new market opportunities in DMs through reverse innovation (Prahalad,
2005; Govindarajan and Trimble, 2013). However, our findings show that all our early stage
frugal innovators firms encountered significant legitimacy challenges. Audiences were
sceptical of the earning potential of FI product, questioned whether the FI product fulfilled the
expected norms and quality standards in the market, and had difficulties to comprehend the
product itself as it was often based on unfamiliar technologies or/and different significantly
from the models available on the market. Resource scarcity however meant that our early stage
frugal innovators depended on a large extent on the ability to gain support and acceptance from
a range of stakeholders to be able to develop their FI product. As such, gaining legitimacy was
critical to our actors and involved deploying a range of legitimacy seeking mechanisms
(leveraging the social image of the product, the reputation of its partners, the familiarity of

17
embedded technology and certification and endorsements) that involved primarily selecting
supportive audiences, but also conforming and manipulation of their audiences, and targeted
primarily, but not exclusively, moral legitimacy.

CONCLUSIONS
We develop a framework drawing from dynamic capabilities, resource based view and
institutional theory to examine the organisational process that enable FI in early stage firms.
Our framework contributes to existing research by providing a set of concepts to allow the
exploration of FI processes in organizations.
First, we uncover the processes through which firms organise their innovation process to create
a value proposition as iterative movements between sensing and seizing. Our approach to
clarify the components processes involved in sensing and seizing provides a finer grained view
of the FI process, uncovers the opportunity matching process involved in sensing, and the
converting of distinct areas of understanding across four domains into value added product
features involved in seizing. Our approach thus allows to unpack the process involved in the
developing of a FI value proposition that precedes the frugal engineering development process
emphasised by most current FI research (e.g. Lim et al., 2013; Ray and Ray, 2011).
Second, we identify complex and extensive networking behaviour that characterise early stage
FI firms to access specific set of resources. We identify building relationships as a critical
enabler throughout the innovation process, not simply, as emphasised in FI research, to bridge
access (Ernst et al., 2015; Ramani and Mukherjee, 2014) or to support cost reductions (Lim et
al., 2013; Ray and Ray, 2011). Our analysis clarifies how networking enables early stage FI
firms to overcome their resource constraints and develop a value proposition as well as to
deliver this value through frugal engineering.
Finally, we identify building legitimacy, a process which was widely ignored in existing FI
product research, as a key organisational enabler that allows frugal innovators to overcome and
reframe their resource constraints. We find that FI face a range of legitimacy challenges across
all the types of legitimacies: pragmatic, moral and cognitive, well beyond those identified in
current research as associated with resource scarcity and image (Tiwari and Herstatt, 2012).
Although legitimacy crises affected all three types of legitimacies, the FI legitimacy seeking
efforts target primarily (although not exclusively) moral legitimacy, primarily through
leveraging the social image of the product.
Our research also has significant implications for practice. We identify the importance of
considering the process involved in sensing and seizing opportunities for developing a value
proposition to the targeted consumers that goes beyond engaging in frugal engineering to
satisfy solely affordability needs. More significantly, our findings sensitize managers in firms
considering FI to the need for legitimacy building behaviour to access resources beyond the
need for network building. Also, the reliance of our FI actors on leveraging the social nature
of the product to seek moral legitimacy indicates that they are missing opportunities to deploy
effectively a range of other mechanism (such as leveraging the legitimacy of their partners,
some degree of familiarity and certifications) to seek both moral but also cognitive legitimacy
to gain the support of their audiences that ultimately enables them to develop their FI.

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APPENDIX

Table 6. Refining opportunity through deepening understanding across cases

Cases Approaches Existing solution understanding User understanding Contextual understanding Affordability understanding
 Technology was heavy,  Rural healthcare workers  Ophthalmologists only Existing equipment was too
composed of multiple pieces of lacked skills to operate found in urban areas expensive, required high
equipment standard equipment  Rural areas affected by poor maintenance costs and incurred
 Required set-up in large,  Rural healthcare workers infrastructure, e.g. high costs for patients
indoor room or space lacked access to training to inadequate roads and lack of
 Could only be used by highly improve their ability to continuous electricity
trained professionals (e.g. operate standard equipment  Villages do not have indoor
Internal – two separate ophthalmologists) spaces large enough to
field visits  Not durable enough to accommodate set-up of
withstand hard/rugged existing equipment
conditions in rural areas
 Required continuous electricity
Eye  Patients in rural areas, many  Patients in rural areas cannot
Check of whom are blind, cannot afford neither the expenses for
get themselves to the doctors doctors’ appointments nor the
travel to the urban area
 Technology was hard and  Only about half of medical  Existing equipment was
complicated to use students feel confident in perceived to be expensive
their ability to use traditional
ophthalmoscopes
External - engaging with  Most doctors would rather
DM users refer patients to
ophthalmologists than use a
traditional ophthalmoscope
to scan the patients
themselves
 Standard needle injectors  BoP users likely to reuse  BoP environments affected  BoP healthcare workers and
incurred expenses due to needles due to resource by discontinuous power patients could not afford, and
syringe dead-space and scarcity and lack of sources would not pay, more than the
inconsistent injections awareness of risks price of standard injectors
External - Leveraging (therefore requiring multiple  Standard needle injectors
JetInject partner (WHO) injections attempts) difficult to operate, required
knowledge  Standard needle injectors trained training
showed high-risk of needle
stick injuries
 Needle-free operators required
external power source

21
  Needle-free operators were
unsafe
 Standard needle injectors  DM users would appreciate
caused fear for DM more affordable devices
healthcare workers and
patients
External - engaging with
 Standard needle injectors
DM users
difficult to operate for DM
users
 Some prevalence of needle
stick reuse in DM settings
 Technology was heavy.  Patients in rural areas, many  Ophthalmologists are  Existing eye examination
Composed of multiple pieces of whom are blind, cannot located in urban areas equipment is too expensive,
of equipment get themselves to visit the  Rural areas are affected by requires high maintenance
External leveraging
 Required set-up in large, doctors they need poor infrastructure: costs and incurs high costs for
initial partner knowledge
indoor room or space  Healthcare workers in rural inadequate roads and patients
All-in-one Aravind) combined with
 Could only be used by highly- areas did not have the skills discontinuous power
Eye Internal efforts to
trained professionals (i.e. to operate existing sources
Solution confirm this knowledge
ophthalmologists) equipment  Villages did not have indoor
through follow up field
visits  Not durable enough to spaces large enough to
withstand harsh / rugged accommodate set up of
conditions in rural areas existing equipment
 Required continuous electricity
 Not durable enough to  Healthcare workers did not  Incubators only found in  Existing incubators were too
withstand harsh/rugged know how to operate urban hospitals expensive, required high
conditions in rural areas incubators  Rural areas characterised by maintenance costs and high
 Could only be used by highly-  Healthcare workers / adverse environmental costs to patients
Internal - field visits trained professionals hospital staff did not know conditions & poor
 Not portable, so long commute how to repair incubators infrastructure: lacking
between urban hospitals and  Rural workers lacked skills continuous electricity
rural areas put infants at risk to operate / repair and lacked  Large population residing in
Kits for
 Required continuous electricity access to training rural areas
Kids
 Fragmented healthcare  Rural healthcare centres can
systems composed of public only afford technologies that
and private healthcare require low capital investment
External - engaging with centres with different and maintenance costs, and
DM users expectations and needs low costs to the patients
 Adverse environmental
conditions, in particular
poor infrastructure

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Table 11. Targeted audiences, legitimacy challenges and legitimating mechanisms across cases
Targeted Legitimacy challenges
Cases audiences across
FI stages
Employees Attracting human resources was difficult as the firm has limited
financial resources to pay attractive salaries (self-interest
calculations of utility: pragmatic)
Investors: funders, Acquiring funding to support product development was difficult
donors and potential through targeting typical investors as the product seemed to offer
customers limited financial opportunities (self-interest calculations of utility:
pragmatic)
Eye
Check Customers (lack of legitimacy challenge in what concerns) acceptance (buy in)
by consumers as the product incorporate familiar technology
making the product comprehensible (cognitive consistency
allowing comprehensibility as familiar technology provides a
model to furnish plausible explanations for the product )
Customers & media Different regulations and standards across different countries which
means that devices sold in one country might not be accepted in
another as they do not conform to the regulations within that market
(evaluations of normative alignment: moral)
Employees Prospective employees hesitated to get involved as vaccine injectors
were considered low-end, earning potential appeared to be low and
the firm has limited financial capital to recruit full time members
(self-interest calculations of utility - pragmatic)
Investors Difficulty in acquiring funding for development as investors:
JetInject  were sceptical of what they saw as low earning potential (self-
interest calculation of utility - pragmatic)
 were not accepting the product as it was made of plastic, a
major alteration from both the glass standard needle injectors
and the metal needle-free injectors (evaluation of normative
alignment – moral)
Legitimating mechanisms
Leveraging the social aspect of the product to attract required expertise to develop
the product in house, by targeting employees attracted to promote the social mission
of the company (selection based on evaluations of normative alignment: moral)
Leveraging the social aspect of the product by advertising the social mission of
eliminating preventable blindness as a primary feature of the product to focus
attention on the social mission rather than financial opportunities to increase the
likelihood of success of:
 grant application: by targeting social mission specialised funders (The Queen
Elizabeth Diamond Jubilee Trust & Mazda Rebels) (selection based on
evaluations of normative alignment: moral)
 the crowdfunding efforts: by targeting donors and customers compelled to
promote products with a social mission (selection based on evaluations of
normative alignment: moral)
Leveraging familiar technologies / product components by incorporating a familiar
technology (mobile phone) to make the product comprehensible to consumers
(conforming based in cognitive consistency)
Leveraging the social image of the product to attract media attention to build
reputation and brand to gain visibility and acceptance within the market, in particular
by customer attracted by the social mission of the product (selection based on
evaluations of normative alignment: moral)
Certifications and endorsements by seeking first European certification which eases
diffusion to other countries as they base their certification on Europe (conforming
based on evaluations of normative alignment: moral)
Leveraging the social aspect of the product by highlighting the opportunity to address
a social need through contributing to the development of the product and seeking
employees that were interested in the product social aspect rather than a high salary
(selection based on evaluations of normative alignment: moral)
Certification and endorsements by seeking US FDA clearance to gain credibility with
investors that they are “a real player” (conforming based on evaluations of
normative alignment: moral)
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 (early) customers Customers (health workers) early on struggled to accept the product
because of their unfamiliarity with the company’s needle-free
technology which was different from that of both needle injectors,
as well as of the other needle-free injectors on the market (which
were made of metal and were significantly bigger) (lack of cognitive
consistency affects comprehensibility: cognitive)
Employees Lack of starting financial capital and lack of clear financial
opportunities as frugal medical devices was relatively a new industry
in India made it difficult to attract human capital (self-interest
calculations: pragmatic)
Investor / sponsor Original corporate sponsor (MNC) withdraw support as the product
does not align with its strategy (focused on high end product), it is
unfamiliar with the market landscape and demand for low cost
devices, and it feared insufficient earning potential to justify its
investment (self-interest calculations of utility: pragmatic)
Customers Customers had difficulties in accepting the product due to:
All-in-
One Eye  its unfamiliarity: the product did not physically resembled any
existing medical device thus being difficult to comprehend
Solution
(lack of cognitive consistency affects comprehensibility:
cognitive)
 the fact that customers perceived it to be of inferior quality as
the product appeared more basic than existing medical devices
as it is designed to be used with minimal training, it was priced
significantly below existing medical devices, and was
developed by a EM firm rather than a DM firm as most other
medical devices in operation (evaluations of normative
alignment: moral)
Employees Lack of starting financial capital makes it difficult to attract top
talent through financial incentives (self-interest calculations:
pragmatic)
Kits for Investors Difficulties to attract investment to develop the product due to the
Kids product’s low cost nature which questioned its ability to generate
profits (self-interest calculations: pragmatic)
Partners Original partner charities that were involved in initiating the concept
withdrew their support once the first prototype was developed as
Leveraging the social aspect of the product by promoting to early customers the social
aspect of the product, which eventually facilitated its launch as healthcare workers
(targeted customers) identified with the ethos of the product’s mission of promoting
greater vaccination safety and reducing disease spread (conforming based on
evaluations of normative alignment: moral)
Certification and endorsements by seeking ISA certification in Europe to gain access
to the European market, and also through amassing a range of different and
sometimes first certifications for this kind of product to demonstrate alignment with
product standards in this market (conforming based on evaluations of normative
alignment: moral)
Leveraging social aspects of the product by conveying its mission of eradicating
preventable blindness and attract employees who were particularly motivated in
promoting the company’s social mission (selection based on evaluations of
normative alignment: moral)
Leveraging social aspects of the product by emphasising the product’s social aspect
as a key differentiator in the marketspace, as the majority of the other devices
originated from profit-driven companies. This social aspect alleviated some of the
customers’ scepticism regarding the price and quality of the product, and of the
technology unfamiliarity (manipulating - by changing customers’ perceptions
regarding the kind of product in this market - based on evaluations of normative
alignment: moral)
Leveraging the legitimacy of the partner by emphasising the association with a
legitimate partner (Aravind Eye Care) with a strong reputation for high quality eye
care service delivery in India which alleviated some of customers’ concerns regarding
the alignment of the product with the desired quality norms and standards
(conforming based on evaluations of normative alignment: moral)
Leveraging social aspects of the product by seeking other graduates from the same
university with an interest in addressing a social need, and who embarked on the
project knowing there would be very limited or no financial compensation for their
work (selection based on evaluations of normative alignment: moral)
Leveraging social aspects of the product by seeking niche sources of funding that are
aimed specifically at providing funding for socially motivated products (Echoing
Green Fellowship) and applied for funding highlighting the social aspect of the
product (selection based on evaluations of normative alignment: moral)
24
 they struggled to accept the product due to its lack of any
resemblance to a traditional incubator (lack of cognitive consistency
affects comprehensibility: cognitive)
tomers Difficulty in gaining customers to accept the product due to:
 its unfamiliarity: the product did not resemble traditional
incubators thus being difficult to comprehend (lack of
cognitive consistency affects comprehensibility: cognitive)
 the fact that customers perceived the product to be inferior in
quality as the company was based in EM, while the majority of
medical devices used in India originated from a DM country
(evaluations of normative alignment: moral)
Leveraging the legitimacy of partners by emphasising the association with a
reputable, world known University (which both the founders and other employees
were graduates of) to demonstrate that the product developed by University graduates
(i.e. highly skilled) conforms to the expected norms of product quality (conforming
based on evaluations of normative alignment: moral)
Certification and endorsements by seeking European certification to match the
credibility of traditional devices which do have European certification and align with
customers’ expectations for product quality (conforming based on evaluations of
normative alignment: moral)
25