CFIA / EADI Workshop ‘How can frugal innovation become inclusive innovation?’

1. Centre for Frugal Innovation in Africa CFIA / EADI Workshop ‘How can frugal innovation become inclusive innovation?’ 26 and 27 November 2015, ISS, The Hague Frugal Innovation: A Literature Review Iva Peša (CFIA) & André Leliveld (ASC/CFIA) Contact:i.pesa@ascleiden.nl ; leliveld@ascleiden.nl

2. Literature review Centre for Frugal Innovation in Africa • The ‘emergence’ of frugalinnovation • The definition of frugalinnovation • The cycle of frugalinnovation • Frugalinnovation as inclusiveinnovation? • Conclusion: towards a research agenda

3. The ‘emergence’ of frugal innovation Centre for Frugal Innovation in Africa • The Economist, business guru talk and academic debate • Historical precedents: WW II, East Africa, India • Dominant innovation trajectory: capital intensive, high-tech, exogenous to the low-income context • 1970s: Appropriate Technology Movement • 1980s – now: Internationalisation of innovation • Global Value Chains • Global diffusion of capabilities • Rise of low income (BoP) and middle class consumers in Asia, Africa and Latin America • Economic crisis and trade collapse in North America and Europe (2008) • Polycentric innovation • Changing policy context: more focus on the role of private sector and business in development (PSD)

4. The definition of frugal innovation Aspects highlighted in literature • (Re)design / technology: • Value sensitive design • Basic functionalities • Goodenoughquality / durability • Costandaffordability • User value • BoP / middleclass consumers / preferences • Innovation environment • Resource constraints • Informal sector • Polycentrism Working definition The (re)design of products, services and systems to make them affordable for low-income customers without sacrificing user value. Centre for Frugal Innovation in Africa

5. The cycle of frugal innovation Centre for Frugal Innovation in Africa • Leadingidea in literature: frugalinnovation > product development • Focus on: • Contextualchallenges (low income / resource constrained) • Organisationalcollaborationthatfostersfrugalinnovation: • RoleMNCsand MNC subsidiaries • Polycentricnetworks (e.g., MNCs – local entrepreneurs, MNCs-NGOs, etc.) • Bottom up (communities, informal sector, ‘prosumption’, ‘populareconomies’) • Roleknowledgecentres • Business model: production, distribution, consumption, marketing • Institutions: • Governanceand policy, includinglegalaspects • Motivations / interests • History / pathdependency / institutional change

6. Towards an integrative approach? Centre for Frugal Innovation in Africa

7. Frugal innovation and inclusive innovation Centre for Frugal Innovation in Africa Definition inclusive innovation: “the development and implementation of new ideas which aspire to create opportunities that enhance social and economic wellbeing for disenfranchised members of society” (George, MacGahan & Prabhu, 2012, 663). Frugal innovation as inclusive innovation? Two assessments: Celebratory discourse on ability of international business to serve the needs of the BoP: ‘inclusive business for the poor’, ‘social business’, ‘pro-poor business’, ‘inclusive capitalism’ Role of corporate business might have adverse effects, redefining ‘the poor’ into consumers, delivering products poor people do not need, etc. Plea for more focus on locality, role of informal sector (not as part of GVCs) The role of standards: a balancing act

8. Towards a research agenda Centre for Frugal Innovation in Africa • More empirical macro / meso / micro studies needed on: • rolesandinterests of actors (entrepreneurs, types, consumers, knowledge) involved • technologicalconditionsforfrugalinnovation • social, culturalandinstutionalcontexts of frugalinnovation • business models • transformativedimensions of frugalinnovation: innovation systems, technology, economy, communities, society, capabilities, consumerbehaviour, etc. • Theoreticalcontributionsto: - ethical literature focusing on early engagements in new technologies - the socio-technical systems literature - the innovation and entrepreneurship literature - the literature on inclusive business models and development - literature on economic transformation and local economic development - the emerging literature on patterns of consumption at the BoP