MNCs in India: focus on frugal innovation

Frugal innovation is a term that has been used to describe the low-cost products and services, as well as the systems and processes adopted by organizations to develop them. The purpose of this paper is to examine the experience of multi-national companies (MNCs) in India as they adopt the philosophy of frugal innovation to develop products that are high in technology but low in terms of cost to meet the requirements of the market conditions in India, and similar low-income economies.

The case study methodology was adopted to understand the experiences of the Indian subsidiaries of two MNCs, Bosch India and 3M India. Data were acquired through interviews with key decision makers, documents, and publicly available information.

The two MNCs have increased research and development (R&D) in India and adopted the philosophy of frugal innovation which combines high technology with low costs. Based on the analysis, some propositions are presented indicating that MNCs will shift R&D to India if there are market opportunities; they will adopt the philosophy of frugal innovation to produce high technology products that are lost cost and low cost over product lifetime and will also expand to new-to-the-world innovation and finally contribute to global innovation.

The study is based on only two case studies and a large sample study may be required before the findings can be generalized.

Other MNCs can learn from Bosch India and 3M India in terms of adopting frugal innovation practices to be successful in low-income economies.

The field of frugal innovation is quite new and largely based on anecdotal accounts of successful low-cost innovation. This paper provides a more detailed account of the experiences of two well-known organizations to present propositions that may be used to conduct a large sample study.