Frugality-based advantage

Kazuhiro Asakawa, Alvaro Cuervo-Cazurra, C. Annique Un

Research output: Contribution to journalArticle

Abstract

We analyze frugality-based advantage and explain its types and implications. Frugality-based advantage is an advantage that a firm achieves over competitors in its ability to develop and use frugal innovations, that is, innovations that overcome external resource constraints. We differentiate among three types of frugality-based advantages based on the external constraints they solve: (1) Input frugality-based advantage, which is the result of addressing restrictions in the provision of inputs needed for the production process; (2) Income frugality-based advantage, which is driven by solving limitations in the income of consumers; and (3) Infrastructure frugality-based advantage, which is the outcome of resolving constraints in the hard and soft infrastructure of the country. We explain how these three types of frugality-based advantages differ in their transferability across locations and their sustainability across time. Frugality-based advantage complements the resource-based view by explaining how the scarcity of external resources, rather than their abundance, can support the advantage of some firms.

Original languageEnglish
JournalLong Range Planning
DOIs
Publication statusPublished - 2019 Jan 1

Keywords

  • Competitive advantage
  • Constraints
  • Frugal
  • Innovation
  • Resource-based view

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Finance
  • Strategy and Management

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