Frugal Innovation and Digital Effectuation

Evidence of human ingenuity to solve complex everyday problems with elegant solutions in adverse conditions can be seen across the globe. The study of frugal innovation attempts to theorize such problem-solving efforts in constrained environments. Ubiquitous digital technologies influence the way these problems are perceived, and the way solutions are conceived, developed, deployed, and consumed. This dissertation explores how entrepreneurs can exploit modern-day digital technologies and platforms to develop frugal solutions that have the potential to transform the lives of millions living at the bottom of the economic pyramid. In the last decades, the lens of effectuation theory has provided many insights about the entrepreneurial journey of such innovators, by articulating the logic that drives their mindset, actions, decisions, and resourcefulness. In this dissertation, we extend the theory of effectuation into ‘digital effectuation’ and use this lens to explore and develop models of IT-enabled frugal innovation processes and outcomes.

The empirical context of this dissertation about digital effectuation involves two studies of entrepreneurs in four countries that span a range of frugal contexts. The first is a comparative, theory development case study of seven entrepreneurs in Japan, Nepal, and New Zealand which empirically examines how the use and functionalities of digital technology aid effectuation action in frugal innovation endeavors. Our findings show that both conventional and unconventional usage of digital technologies extend effectual actions in unique ways that enhance both process and outcome of venture creation. The second is a single case study of an Indian entrepreneur which explores the macroeconomic and cultural development outcomes of frugal innovation that is enabled by digital effectuation. This study illustrates how grassroots entrepreneurs enacting digital effectuation in a frugal innovation endeavor can create ripple effects of social (cultural) and economic development that benefits a wider community of contributors and consumers. The dissertation extends entrepreneurship and information systems theories of frugal entrepreneurship by linking digital technologies and entrepreneurial effectuation actions. It also contributes to the literature on ICT for development (ICT4D) by illustrating how digital entrepreneurship has the potential not only to bring about economic benefits, but also to stimulate local culture production, an impact of digital entrepreneurship often overlooked in the literature.