Combining Frugal Innovation, Inclusive Business, and Scrum for Addressing Low-income Contexts with Sustainability Considerations

Sustainability and the penetration of new markets beyond developed industries are two topics that are gaining increasing attention both in research and in business practice. As Western industries are becoming saturated, companies are looking for further business alternatives and are focusing on North-South opportunities, among others. Therefore, bottom-of-the-pyramid markets are often mentioned as promising mass markets. However, market access remains a challenge, as bottom-of-the-pyramid contexts are characterized by low incomes, resource constraints, and infrastructural barriers. In addition, sustainable practices are a challenge. Since the introduction of the Sustainable Development Goals by the United Nations, which apply to all countries, companies are required to address aspects of sustainability in their business practices. However, they have to cope with conflicting dimensions inherent to sustainability such as improving economic and social aspects, which are usually accompanied by higher resource demands and environmental degradation. Previous literature started to address these issues by focusing on innovative approaches such as frugal innovation, social innovation, or resource-constrained innovation. In the last decade, research on frugal innovations has particularly focused on how to address the challenges of low-income and resource-constrained contexts, often with aspects of sustainability in mind. However, to address these low-income contexts, having a suitable innovation is not enough; businesses must actually reach the target group, such as by overcoming accessibility issues in rural areas. Initial research has examined the value chains of frugal innovations and ways to engage the consumer, which also leads to social improvements. Building on this research, this dissertation combines four themes – frugal innovation, sustainability, inclusive business, and Scrum – to illustrate how innovations can address the needs of target groups in bottom-of-the-pyramid contexts and how these innovations can be implemented by engaging target customers. The first paper illustrates the links between frugal innovation and sustainability based on a new sustainability evaluation framework. All cases considered contribute to sustainability, with social improvements being most notable. New employment and income opportunities are key social improvements. They reflect inclusive business approaches, which are the focus of the second paper. The case examples of the second paper show how frugal innovation can be implemented in accordance with inclusive business, which leads to customer involvement and thus mutually supports frugal innovation. The Inclusive Business Link Model for Frugal Innovation was built to show connections of frugal innovation and inclusive business and to provide application possibilities. A key finding was that for the cases considered a high level of customer integration can be achieved through frugal innovations with modular designs and is supported by knowledge transfer and partnerships. To address knowledge transfer and partnerships in particular, the last paper applies Scrum as an agile approach at the execution level for inclusive business. In developing the conceptual model Inclusive Business Scrum Approach, inclusive business is considered as the 'what' and Scrum as the 'how' in engaging low-income consumers. With regard to all three papers and the four included topics, this dissertation achieves several outcomes and contributes to a broader view of how low-income consumers can be addressed. First, each paper illustrates benefits of combining the concepts that could be valuable when addressing the bottom-of-the-pyramid context. Thereby, the papers build on each other and include previous results. Second, aspects of social sustainability are addressed mainly by combining frugal innovation and inclusive business. Third, each paper develops a model or framework intending to support practical applicability. Finally, an outline is provided for how combining frugal innovation, inclusive business, and Scrum positively could impact partnerships, knowledge transfer, and the empowerment of the target group, which could culminate in an approach that addresses challenges experienced when entering the Bottom of the Pyramid that also considers sustainability. The new management options developed begin at a general level and end at an execution level and thus contribute to holistic perspectives on innovations, approaches, and implementation options for organizations intending to address the Bottom of the Pyramid.:Abstract 1 Table of Contents 3 List of Abbreviations 6 List of Tables 7 List of Figures 8 1 Introduction 9 2 Theoretical background 15 2.1 Defining sustainability 15 2.2 The BoP as target group 18 2.3 Frugal innovation 20 2.4 Inclusive business 22 2.5 The agile approach Scrum 25 2.6 Contribution of the investigations and the current relevance of topics 28 3 Methodology 30 4 Papers 32 4.1 Publication 1: Introducing a Sustainability Evaluation Framework based on the Sustainable Development Goals applied to Four Cases of South African Frugal Innovation 32 4.1.1 Introduction 33 4.1.2 Theoretical background and research context 34 4.1.3 Methodology 38 4.1.4 Developing an evaluation framework 40 4.1.5 Limitations 44 4.1.6 Introducing the frugal cases 44 4.1.7 Findings 45 4.1.8 Discussion 48 4.1.9 Conclusion 49 4.2 Publication 2: How Frugal Innovation and Inclusive Business Are Linked to Tackle Low-income Markets 51 4.2.1 Introduction 51 4.2.2 Literature review 55 4.2.3 Methods 62 4.2.4 Results 66 4.2.5 Cross case analysis 75 4.2.6 Inclusive business integration stair model 77 4.2.7 Development of propositions 82 4.2.8 Discussion 84 4.2.9 Research implications 86 4.2.10 Managerial implications 87 4.2.11 Concluding remarks and future research 88 4.3 Publication 3: Boosting Inclusive Businesses’ Opportunities Through the Adoption of Scrum: an Execution Strategy to Enter Low-end Markets 91 4.3.1 Introduction 92 4.3.2 Theoretical background 94 4.3.3 Conceptual model: Inclusive Business Scrum Approach 99 4.3.4 Challenges 106 4.3.5 Summary of key facts and propositions 108 4.3.6 Conclusion 111 4.3.7 Research implications 112 4.3.8 Managerial implications 113 4.3.9 Limitations and future research ideas 114 5 Discussion 116 5.1 Social sustainability 117 5.2 Partnerships 118 5.3 Knowledge transfer 118 5.4 Empowering the target group 119 5.5 Context challenges 119 6 Critical considerations and additional thoughts 121 6.1 Definition and contributions of frugal innovation 121 6.2 Sustainability of initiatives at the BoP and inclusive business 122 6.3 Aspects of leadership theories in Scrum 124 7 Methodological limitations 126 8 Research implications and future research ideas 128 9 Managerial implications 131 10 Conclusion 133 11 References 135 11.1 List of interviews 171 11.2 Further references used in Publication 2, anonymized form 17