Frugality-based advantage

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

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

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
Article number101879
JournalLong Range Planning
Volume52
Issue number4
DOIs
Publication statusPublished - 2019 Aug

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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