Institutions and frugal innovation: The case of Jugaad

Multinationals from emerging markets are embracing frugal innovation. While resource constraints and business opportunities targeting the underserved have been identified as core reasons for the same, we heed to researchers calls for a fine-grained understanding of the formal and informal institutions that promote frugal innovation. Using jugaad – an ingenious form of indigenous frugal innovation practiced by Indian multinationals as a study context, we utilize a neo-institutional theoretical lens to explore its antecedents and outcomes while explicating the organizational characteristics that enable and sustain jugaad. Our qualitative study with eight Indian multinationals finds that jugaad is a response to a complex combination of myriad institutional factors that challenge these multinationals to innovate frugally, enabled by specific organizational characteristics that ultimately lead to jugaad outcomes. Our findings are presented in a conceptual framework that advances the understanding of jugaad and extends neo-institutional theory to this context. We also provide some future direction for this contemporary stream of research.