Can frugal innovation bridge the needs of low income consumers with long term economic development? A study from the health sector in South Africa
(Erasmus University Rotterdam)
Paper short abstract:
This paper explores to what extent the development and delivery of frugal innovation can bridge needs of low income consumers with long term economic development in the form of technical change and technological capabilities in local firms.
Paper long abstract:
Frugal innovation has drawn enormous attention from various quarters in the last decade. Multinational Corporations have raced to offer stripped down versions of their products to the large untapped African market, many times under the umbrella of "creative capitalism" and "inclusive business". The idea of "doing more with less for more people" as one road towards realizing the Sustainable Development Goals has created much excitement in policy circles. Despite speculations that frugal innovation can provide a solution to Africa's many challenges - a confluence of its untapped market and development agenda, the discourse around how it relates to local development remains ideologically polarized and lacking detailed empirical evidence.
This paper rests on the argument that, if frugal innovation is to be positioned as an enabler of economic development, it not only has to address individual capability by serving needs of the price conscious consumer as a product; but must also induce technical change and technological capability in local firms in the innovation process.Under normal circumstances, it is recognized that there is tension between economic growth and inclusion. In developing countries with scarce resources, governments find it difficult to balance the primary objectives of creating basic living conditions with long term economic development goal through technological capability building. I explore to what extent frugal innovation can bridge these two dimensions of development. Using data from the health sector in South Africa, my methodological approach involves firm level innovation study and is informed by theories on multinationals, technological capability and innovation systems.
Inclusive innovation for development: what inclusion for a fairer future?