1.1 The Inspiration for This Book

This book was inspired by substantial interest in social innovation and social entrepreneurship outside of the developed Global North and the popular use of various terms and constructs that describe forms of innovation related to social enterprises. The objective of this book is to stimulate research and policy debates about the how and why of innovation that addresses the means and ends of value creation for the many, with less. We motivate this by engaging the literature of innovation studies with basic social science questions about institutional constraint and opportunity, in the context of diverse, empirically-informed contexts to understand ‘frugal innovation’, an important emerging concept for innovation research, policy and practice. Our research captures the views of social entrepreneurs, who innovate under constraints. We argue for and provide new models, methods and the beginnings of a theory of frugal innovation.

Such innovation is described using a wide range of constructs, including social, frugal, inclusive, catalytic, grassroots, jugaad and Ghandian innovation. We do not wish to be embroiled in the debate over broad ‘umbrella constructs’ or to act as ‘validity police’ in narrowly defining issues (Hirsch and Levin, Reference Hirsch and Levin1999). Instead, we recognise Hirsch and Levin’s life cycle of scholarly constructs, which progresses from excitement to validity checks and then to an understanding of typologies, before either becoming stable constructs or disappearing from the literature. Our research instead builds on findings from the experiences of social entrepreneurs, to contribute to models of innovation that start from different assumptions about resources, process and purpose. This empirical move both connects different kinds of evidence to the discussion and also reframes some conventional assumptions in the mainstream innovation literatures (Bamberger and Pratt, 2010; Chandy and Prabhu, Reference Chandy, Prabhu and Bayus2011). We present this work as an invitation for research colleagues to experiment and decide how best to further develop frugal innovation concepts, models and theories.

In this chapter, we cite the main literature, though not exhaustively as one would typically do in a literature review chapter (for detailed literature review see Bhatti, Reference Bhatti2014), outline the questions that arise, summarise our methodology for investigating these questions and share our main findings.

1.2 Theoretical Framing from the Literature

Jan Fagerberg (Reference Fagerberg, Fagerberg, Mowery and Nelson2005) reviews the broad area of innovation studies and identifies four emphases in the research literature: ‘innovation in the making’, ‘the systemic nature of innovation’, ‘how innovation differs’ and ‘innovation and performance’. Our work builds out from the question of ‘how innovation differs’. We know how innovation differs across sectors, types of organisations and geographical locations and among entrepreneurs, managers and other individuals. However, we know very little about the ways in which social entrepreneurs (Elkington and Hartigan, Reference Hartigan and Elkington2008; Mair and Martí, Reference Mair and Martí2006; Reference Mair and Martí2007; Reference Mair and Martí2009), rather than commercial entrepreneurs (Austin, Stevenson and Skillern, Reference Austin, Stevenson and Wei Skillern2006; Sarasvathy, Reference Sarasvathy2001; Reference Sarasvathy and Sarasvathy2006), conceptualise models of innovation (Desa, Reference Desa2009a; Guillén, Reference Guillén1994; Mair, Battilana and Cardenas, 2013; Marinova and Phillimore, Reference Marinova, Phillimore and Shavinina2003; Sarasvathy, Reference Sarasvathy2001). Focusing on models of innovation and specifically on social entrepreneurs and the way they understand innovation provides an opportunity to study innovation outside the status quo and in unique contexts.

Our review picks up on this point: to begin to situate innovation in a broader view of institutional opportunity and constraint. We find that some research in development studies examines the way in which innovation occurs despite the simultaneous challenges of institutional voids and resource scarcity. We found little or no work in the fields of organisation theory or strategic management that attends to these issues. We connect this finding with research on broadly social and purposeful innovation (distinct from a conventional focus on technology innovation). Nicholls and many others propose social entrepreneurial activity as market-based innovation focused on societal change (Nicholls, Reference Nicholls, Carter and Evans-Jones2006a; Reference Nicholls2006b; Nicholls and Murdock, Reference Nicholls and Murdock2011). Much of the research on social entrepreneurship asks who social entrepreneurs are and what they do. This population is especially relevant to our study. In our review of the literature, we show how little is known about how social entrepreneurs conceptualise innovation in extreme contexts shaped by resource constraints and institutional voids.

Research by organisational institutionalists on social entrepreneurial ventures has only thinly been concerned with the origins of innovation (Lounsbury and Crumley, Reference Lounsbury and Crumley2007). Although some studies have explored how social entrepreneurs face the challenges of institutional voids and resource scarcity (cf. Austin, Stevenson and Skillern, Reference Austin, Stevenson and Wei Skillern2006; Dart, Reference Dart2004a; Reference King, Cassell and Symon2004b; Desa, Reference Desa2009a; Reference Desa, Hockerts, Mair and Robinson2009b; Grimes et al., 2012; Haugh, Reference Haugh2005; Mair and Martí, Reference Mair and Martí2009; Mair, Martí and Ventresca, Reference Mair, Martí and Ventresca2012; Mulgan et al., Reference Mulgan, Ali, Halkett and Sanders2007a; Reference Mulgan, Tucker, Ali and Sanders2007b; Seelos and Mair, Reference Seelos and Mair2005), few analyse how innovation is perceived or understood by social entrepreneurs.

To explore scholarly and practical examples, we connect two main streams in the literature: innovation studies and social entrepreneurship (as shown in Figure 1.1). The literature on innovation (stream 1) looks at innovation faced with a single constraint: either institutional voids or resource scarcity. Few if any studies of innovation explore more complex cases, where innovation must simultaneously grapple with institutional voids and resource scarcity. The social entrepreneurship literature (stream 2) argues that social entrepreneurs often have to function and innovate in extreme conditions shaped by both institutional voids and resource scarcity.

Figure 1.1 Identifying gaps in the literature

This study seeks to advance the models and theories of innovation by bridging a gap in the literature between studies of innovation in relation to social entrepreneurship and studies that relate to institutions and resources. Posing the question of how social entrepreneurs and similar actors conceptualise and approach innovation reveals new insights into different ways of innovating (Fagerberg, Reference Fagerberg, Fagerberg, Mowery and Nelson2005).

1.3 What Do We Know about Social Innovation?

Many observers argue that social entrepreneurs provide innovative leadership in social enterprises (Dees, Reference Dees1996; Reference Dees2011), while socially entrepreneurial organisations emphasise the role of innovation (Borins, Reference Borins2000). However, like the term ‘social entrepreneurship’, social innovation has poorly defined boundaries, meanings and definitions (Caulier-Grice et al., Reference Caulier-Grice, Davies, Patrick and Norman2012; Murray et al., Reference Murray, Caulier-Grice and Mulgan2010). Julie Caulier-Grice and co-authors (Reference Murray, Caulier-Grice and Mulgan2010) suggest that social innovation is far broader than social entrepreneurship, and that there are both opportunities and challenges through the discovery and use of new knowledge. And in the literature, social innovation is even more elusive than social entrepreneurship, for which concepts, definitions and analyses have been relatively well defined (cf. Mair and Martí, Reference Mair and Martí2009; Nicholls and Murdock, Reference Nicholls and Murdock2011). Robin Murray, Julie Caulier-Grice and Geoff Mulgan (Reference Murray, Caulier-Grice and Mulgan2010) co-authored the ‘The Open Book of Social Innovation’ as a result of major collaboration between NESTA (the National Endowment for Science, Technology and the Arts) and the Young Foundation, two organisations which have long espoused the role that social innovation can play in solving major concerns of our time. They define ‘social innovations as new ideas (products, services and models) that simultaneously meet social needs and create new social relationships or collaborations’ (p. 3). They further contend that social innovation does not have fixed boundaries – it occurs in all sectors, public, non-profit and private, and a lot of the creativity is taking place at sectoral boundaries. According to Timo J. Hamalainen and Risto Heiskala (Reference Hamalainen and Heiskala2007) there are five types of innovation (technological, economic, regulative, normative and cultural) that together form the sphere of social innovations.

This book builds on a stream of social innovation literature that describes social innovation as the work of social entrepreneurs, emphasising the role of individuals in developing innovative solutions for difficult social challenges (Bornstein, Reference Bornstein2004; Bornstein and Davis, Reference Bornstein and Davis2010; Dees and Anderson, Reference Dees and Anderson2006; Goldsmith, Reference Goldsmith2010; Hartigan and Elkington, Reference Hartigan and Elkington2008; Hoogendoorn, Pennings and Thurik, Reference Hoogendoorn, Pennings and Thurik2010). Nicholls and Murdock’s (Reference Nicholls and Murdock2011, p.2) literature review shows that social innovation research focuses on ‘systems and processes of change in social relations’ at one extreme and on ‘innovation around the conceptualization, design and production of goods and services that address social and environmental needs and market failures’ at the other. Moreover, social innovation is a practice-led, contextually based field (Murray et al., Reference Murray, Caulier-Grice and Mulgan2010) and most texts have analysed successful case studies rather than the patterns and stages of social innovation (Caulier-Grice et al., Reference Caulier-Grice, Davies, Patrick and Norman2012). Similarly, most of the literature on social innovation has focused on the process perspective and practical concerns relating to the development and implementation of successful programmes and strategies.

For example, Sandra M. Bates (Reference Bates2011) in, The Social Innovation Imperative, claims to present the first detailed, structured methodology for social innovation derived from academic models and practical experience. It offers a ‘how-to’ guide addressing acute or ‘wicked problems’ such as healthcare, education, poverty, disaster response, neglected elderly people and environmental destruction. Wicked problems are complex issues that are particularly hard to resolve, in part because they involve several different constituencies, with conflicting or competing objectives (Bates, Reference Bates2011). However, this book does not explore how social entrepreneurs themselves perceive social or any other kind of innovation. Although practice is important, our working hypothesis is that understanding how social entrepreneurs think about and perceive the work of ‘innovation’, builds additional layers of knowledge about how innovation under constraint and scarcity may occur.

1.4 Innovation under Constraint

When we first set out on this study, a search of the literature revealed few scholarly papers on innovation in institutional voids or with resource constraints, let alone with both constraints simultaneously. A search on Business Source Complete and Proquest revealed only two peer-reviewed papers using the search criteria [innovation AND (‘institutional void’ OR ‘institutional voids’)]. Neither paper offered empirical insight into innovation under these conditions. A similar search through both databases using the search criteria [innovation AND (‘resource scarcity’ OR ‘resource constraint’] revealed 48 and 227 results respectively. Many of these papers were in the fields of environmental or development studies; few were in organisational or management studies. When we added the term ‘social entrepreneur’ or ‘social entrepreneurship’ to the search criteria, the search returned no papers.

Like Desa (2008), who found little research on whether entrepreneurship in resource-constrained environments was different from conventional business entrepreneurship, we found little or no literature discussing whether innovation in resource-constrained environments was different from mainstream innovation. There was some acknowledgement in the development literature of the double-edged problem of institutional voids and resource scarcity, but no in-depth studies of innovation facing both challenges simultaneously. This is surprising, given the likelihood these two constraints are both present in developing market economies or in other contexts where social entrepreneurs are active. Looking at the situations in which both factors co-occur offers a fascinating opportunity for innovation scholars to study interesting and ‘extreme’ contexts.

Most researchers have looked at the effects of financial resource constraints on innovation team performance (cf. Paananen, Reference 287Paananen2012; Rao and Drazin, Reference Rao and Drazin2002; Weiss et al., Reference Weiss, Gibbert and Hoegl2011). This suggests that there is potential to meta-theorise and study resources (beyond financial resources) to move the level of analysis from teams to firms. By using a combination of resource-related and institutional theories, we can take a further step and link a firm’s innovation activities to its institutional environment and available resources. This pointed us to social entrepreneurship as a useful starting point for the study of innovation in a context of institutional voids and resource scarcity.

However, despite the now substantial and rich body of research published about social entrepreneurs and their relationship with innovation, we don’t know how they think or talk about innovation. Indeed, there is not much knowledge about social innovation, the activity routinely attributed to social entrepreneurs (cf. Minks, Reference Minks2011; Phills et al., Reference Phills, Deiglmeier and Miller2008; Pol and Ville, Reference Pol and Ville2009). It is important not only to observe what social entrepreneurs do, but also to understand how they talk about what they do, as this can provide insights into why and how social entrepreneurs innovate in the ways that they do.

1.5 The Question of Frugal Innovation

Although we were motivated by the growing discourse around frugal innovation, and the role of social entrepreneurs in creating such innovation, we wanted the social entrepreneurs themselves to provide us with fundamental information about innovation models and practices. Our approach differs from most work on frugal innovation because it does not begin by asking ‘what is frugal innovation?’, or even assuming that such a thing exists. Instead, we go directly to the innovators and those involved with them, to ask what innovation means to them, without introducing the concepts of social or frugal innovation or other related terms.

Our approach does not lead respondents towards a particular notion or conceptualisation of innovation. For this reason, it provides a more ‘grounded’ (not to be construed as a purely grounded methodological approach in the sense of Barney Glaser and Anselm Strauss) and reliable understanding of innovation, where the construct does not mask the nature of innovation, as revealed by social entrepreneurs. We have merged established streams of literature from social entrepreneurship and innovation to explore an interesting research opportunity. Other relevant, emerging concepts found in the literature, such as frugal innovation, reverse innovation, grassroots innovation, inclusive innovation and jugaad innovation are introduced into the discussion only after our respondents have alluded to them.

The term ‘frugal innovation’ was coined in the late 2000s through activities by large corporations such as Tata and Nissan-Renault and through activities in large emerging markets such as in China (Gupta and Wang, Reference Gupta and Wang2009). The term and the idea was propagated popularly by The Economist in 2010 and then picked up by public policy experts and academics in the early 2010s. Two early policy reports by NESTA and the SERCO Institute in the UK attributed frugal innovation largely to social entrepreneurs (Bound and Thornton, Reference Bound and Thornton2012; Singh et al., Reference Singh, Gambhir, Sotiropoulos and Duckworth2012). Alongside, highly acclaimed work by Navi Radjou, Jaideep Prabhu and Simone Ahuja brought awareness of this different type of innovation to global competitiveness in terms of jugaad (Reference Radjou, Prabhu and Ahuja2012) and by Vijay Govindarajan and Chris Trimble to international business in terms of reverse innovation (Reference Govindarajan and Trimble2012). Almost ten years on, definitions abound for frugal innovation (see Pisoni, Michelini and Martignoni, Reference Pisoni, Michelini and Martignoni2018 for latest review). But there is still scope to contribute to clear and crisp conceptual, theoretical and operational definitions and frameworks at various micro–meso–macro levels of analysis, such as among individual innovators, organisational forms and sectoral domains. Without having the benefit of an integrative theoretical foundation, many practitioners and some scholarly publications on frugal innovation have had to rely on conceptual studies or on anecdotal evidence. Such papers have sought to promote specific objectives, such as corporate marketing of new product offerings, strategic approaches for international business or public sector reform. A recent systematic literature review in progress of published examples of frugal innovations (Hossain, Reference Hossain2016; Reference Hossain2017) reveals that most of these come from Western MNCs, with only a small amount generated locally or in developing countries. Yet, much of frugal innovation activity is associated to activities in developing or emerging market countries (Petrick and Juntiwasarakij, Reference Petrick and Juntiwasarakij2011; Zeschky, Widenmayer and Gassmann, Reference Zeschky, Widenmayer and Gassmann2011). This may well be the case because much local innovation is not recognised or made widely visible, which makes it challenging to link conceptual understanding with evidence.

We believe that our approach arguably presents one of the most in-depth, extensive studies of the topic, using established academic theories and research methods from the domain of social entrepreneurship and innovation to frame and build models of innovation from the perspectives of social entrepreneurs from around the world working closely with their local communities. And we seek to understand this activity in the unique features of the contexts in which they operate, often marked by challenges and constraints. We build up on and support previous work that frames these constraints as resource scarcity and institutional voids, weaknesses or complexities (Bhatti, Reference Bhatti2012; Bhatti and Ventresca, Reference Bhatti and Ventresca2013; Prabhu, Tracey and Hassan, Reference Prabhu, Tracey and Hassan2017; Soni and Krishnan, Reference Soni and Krishnan2014). Whether social entrepreneurs adhere to or associate themselves with certain constructs around innovation, we leave it to the respondents to divulge.

1.6 How Does This Book Approach Innovation Differently?

We use an empirical approach to connect the little we know about social entrepreneurs’ views of innovation with social and purposeful innovation, rather than adopting the status quo’s focus on technology innovation. The received wisdom is that social entrepreneurial activity is market-based innovation focused on societal change (Nicholls, Reference Nicholls, Carter and Evans-Jones2006a; Nicholls and Murdock, Reference Nicholls and Murdock2011). Fundamentally, social entrepreneurship is challenging because it attempts to merge two ostensibly contradictory organisational goals – social value creation and profit generation – in environments where even a basic institutional infrastructure may not exist (Grimes et al., 2012).

Much has been achieved in social entrepreneurship research since Perrini and Vurro (Reference Perrini, Vurro, Mair, Robinson and Hockerts2006) argued that the main difficulty impeding systematic empirical studies in social entrepreneurship was the lack of a general framework for comparing very diverse experiences. Given that social enterprises by nature can be rather diverse, we maintain that it is premature for scholars to generalise that all of them engage in social innovation. Consequently, when researching social innovation among social entrepreneurs, we discovered a continuing shortage of empirically informed frameworks through which to compare innovations across diverse social enterprises.

Before grappling with practical concerns or defining good or bad strategies for social innovation, social scientists must pay more attention to the way social entrepreneurs conceptualise and perceive innovation as a construct, phenomenon or concept. This book moves away from practice towards a more conceptual approach, which can generate models and concepts of innovation that transcend what social entrepreneurs actually do on the ground. Some of the unaddressed questions in social innovation research include the following: Is social innovation collectively perceived as one construct or a varied group? To what extent do academic conceptualisations of social innovation match or differ from those of social entrepreneurs?

Setting out to address these issues, we take a step back to explore the fundamental question: How do social entrepreneurs conceptualise innovation broadly and specifically under constraints or in extreme conditions marked by institutional voids and resource scarcity? The gaps in the literature suggest that this work will be a seminal study in delineating innovation into models of understanding based on the empirically gathered perceptions of social entrepreneurs. As this study aims to understand patterns and concepts of innovation, it does not seek out successful cases but rather looks at early stage social entrepreneurs, who may not yet be considered ‘successful’. Furthermore, the geographical and sectoral diversity of informants in this study allows a broader perspective on innovation carried out by social entrepreneurs.

The preceding subsections have outlined the research opportunity that lies at the intersection of the innovation studies and social entrepreneurship literatures, specifically by merging institutional and resource-related theories. Note that this work does not specifically seek to address how social entrepreneurs actually innovate. Instead, it aims mainly to understand how social entrepreneurs perceive and present innovation under constraints, which may at times allude to how they actually innovate.

1.7 The Conceptual Framework

We have established the importance of understanding social entrepreneurship and innovation in the context of institutional voids and resource scarcity. Social entrepreneurs and innovators must devise low-cost strategies, either tapping into or circumventing institutional voids and resource limitations to innovate, develop and deliver products and services to low-income users with little purchasing power, often on a mass scale. We develop in this section an initial conceptual framework that incorporates elements from two classic theoretical perspectives to identify and motivate our object of study: innovation, as perceived by social entrepreneurs within extreme contexts.

Miles and Huberman long ago styled a conceptual framework as a written or visual presentation that ‘explains either graphically, or in narrative form, the main things to be studied – the key factors, concepts or variables – and the presumed relationship among them’ (Miles and Huberman, Reference Miles and Huberman1994, p. 18). We envisage a conceptual framework that takes into consideration the contingency perspective from the study of organisation–environment relations to specify the context in which social entrepreneurs operate, including resources and institutions both upstream and downstream from their innovation activities. We also use a value chain innovation perspective to analyse innovation inputs and outputs both upstream and downstream of the innovation process, with attention to both institutional voids and resource scarcity.

We examine perceptions of innovation among social entrepreneurs from a contingency perspective (Lawrence and Lorsch, Reference Lawrence and Lorsch1967; Woodward, Reference Woodward1965) because contingency theory postulates that decision-making depends on various internal and external constraints or situational factors.Footnote ¹ Contingency theory is a form of foundational logic used by management scholars, which underpins many organisation and strategic management theories. Its roots can be found in works by Joan Woodward (Reference Woodward1965) and Paul R. Lawrence and Jay W. Lorsch (Reference Lawrence and Lorsch1967), who argued that the variations they observed in organisational designs associated with high performance (based on various contextual factors) implied that there was not ‘one best way’ to organise. The contingency approach has underpinned institutional theories on design and change (cf. Greenwood et al., Reference Greenwood, Oliver, Sahlin and Suddaby2008; Hargrave and Van de Ven, Reference Hargrave and Van de Ven2006; Hinings and Reay, Reference Hinings and Reay2009; Thornton, Ocasio and Lounsbury, Reference Lounsbury, Ocasio and Thornton2012). Through the contingent lens, we analyse the boundary conditions within which processes and structures of innovation pan out among social entrepreneurs. This research seeks to understand not only broader concepts of innovation, but also how relevant actors conceptualise innovation under the dual external constraints. These literature streams highlight that social entrepreneurs hold interpretive assumption about two main external constraints: resources and institutional conditions.

Another way to examine perceptions of innovation among social entrepreneurs is to visualise the innovation process in terms of the value chain. Value chain analysis has been used to study a range of innovation questions (cf. Dedrick, Kraemer and Linden, Reference Dedrick, Kraemer and Linden2010; Hansen and Birkinshaw, Reference Hansen and Birkinshaw2007; Kaplinsky and Morris, Reference Kaplinsky and Morris2001; Roper, Du and Love, Reference Roper, Du and Love2008;). Morten T. Hansen and Julian Birkinshaw (Reference Hansen and Birkinshaw2007) advise, ‘To improve innovation, executives need to view the process of transforming ideas into commercial outputs as an integrated flow rather like Michael Porter’s value chain for transforming raw materials into finished goods’ (p. 3). The innovation value chain is basically comprised of a recursive process of knowledge sourcing, transformation and exploitation (Roper, Du and Love, Reference Roper, Du and Love2008), thereby incorporating everything from inputs to outputs.

Value chain analysis is a useful tool for identifying mixed constraints that are either supply- or demand-driven and occur either upstream or downstream of the value chain. Elco van Burg et al. (Reference Burg, Podoynitsyna, Beck and Lommelen2012) explore a new approach to reconciling inconsistencies in the literature regarding how resource constraints affect opportunity identification by entrepreneurs. Previous studies show that resource constraints have mixed effects on how entrepreneurs identify innovation and entrepreneurial opportunity. Sometimes, resource constraints lead to identifying more opportunities; at other times, entrepreneurs see fewer opportunities. Burg et al. (Reference Burg, Podoynitsyna, Beck and Lommelen2012) distinguish between supply and demand constraints and their relationship with supply and demand opportunities. Based on a quantitative study of 219 small and medium-sized enterprises (SMEs), they find that resource constraints direct the entrepreneur’s attention towards opportunities inside rather than outside the constrained domain. What is specifically relevant for this study is Burg et al.’s (Reference Burg, Podoynitsyna, Beck and Lommelen2012) suggestion that researchers should simultaneously consider different types of resource constraints and sources of opportunities. We do so in this study by considering mixed resource constraints, which can represent either an opportunity or an impediment to innovation. And we extend the work of Burg et al. (Reference Burg, Podoynitsyna, Beck and Lommelen2012) with this focus on perception of constraints (Gioia and Thomas, Reference Gioia and Thomas1996).

Social entrepreneurs can encounter constraints both upstream and downstream of the innovation process. Upstream, social entrepreneurs have to deal with institutional voids (Khanna and Palepu, Reference Khanna and Palepu1997) and complex institutional contexts (Mair, Martí and Ventresca, Reference Mair, Martí and Ventresca2012), as well as limited resources. Downstream, social entrepreneurs have to create outputs to address the needs of the base of the pyramid (BoP), that is, the largest and poorest socio-economic segment of the population (Prahalad, Reference Prahalad2005). They must find the means to provide access to these outputs through various institutional structures and mechanisms. Resource scarcity can mean the inability of vast populations to afford the means to address not only wants but also needs (Seelos and Mair, Reference Mair and Martí2007). Some of these constraints might be viewed as threats, others as opportunities, depending on various environmental and behavioural factors.

In the ‘extreme resource constrained’ contexts (Mair and Martí, Reference Mair and Martí2009) that social entrepreneurs often function in, resources may be scarce at all points along the value chain – meaning that affordability affects not only the end market consumer but also any firm wishing to use another firm’s outcome in its own process. And that affordability itself has a negotiated character. The challenge for companies doing business, designing products and managing costs for the BoP market is that customers are willing (London and Hart, Reference Hart and London2004; Prahalad, Reference Prahalad2005) but often unable to pay due to income constraints (Seelos and Mair, Reference Mair and Martí2007), which are another form of resource constraint facing service providers in these environments. We depict this as a downstream resource constraint in the value chain framework. The unique social, cultural and institutional characteristics of the BoP markets mean that traditional industrial-scale products, services and management processes will not work for them (Prahalad, Reference Prahalad2005). Affordability is not just a concern at the end point or outcome of innovation; it is a cumulative of the value creation transversal across the entire process. For this reason, we examine how all users face resource constraints upstream and downstream at every point of the value chain, in a context that includes institutional complexities or voids.

DiMaggio and Powell (Reference DiMaggio and Powell1983; Reference DiMaggio, Powell, Powell and DiMaggio1991) developed institutional theory arguments in the context of organisations and industries to account for how context models shape the form and focus of change. Extending this to the societal level, institutions are ‘the humanly devised constraints that structure human interaction’ through informal cultural norms as well as formal legal rules (North, Reference North1990, p. 3). Douglass C. North’s formal and informal institutions are classified by W. Richard Scott (Reference Scott1995; Reference Scott2008) into three analytic categories: regulative, normative and cultural-cognitive. The regulative pillar includes society’s state-enforced laws; the normative pillar involves the roles and expectations set for specific groups by professional societies; the cultural-cognitive pillar includes generally accepted beliefs and values shared among individuals. Each of these pillars provides a summary of relevant social sciences literatures (Hoffman and Ventresca, Reference Hoffman and Ventresca2002). Together, they comprise a conceptual framework and toolkit through which to evaluate and to understand institutional architectures and action processes. We view these as general institutions.

For our analysis of contextual resource scarcity and institutional voids, we extend this institutional theory perspective with a further material consideration. The pillars approach provides us important tools to understand how cognitive models and perspectives combine to generate conventional, socially-stable understandings of the world in practice. This approach under-specifies a focus on material infrastructure – the complex, durable institutions that enable markets to function, such as ports, roads, energy distribution systems, schools and hospitals. Rahul Tongia and Eswaran Subramanian (Reference Subramanian and Tongia2006) discuss directly the analysis of such durable, material institutions, suggesting that the developing world is particularly lacking in institution rule systems, including infrastructure and capital market mechanisms. They compare commercial information and communications technology (ICT) solutions in the United States to those in the developing world; in the former, infrastructure and market mechanisms are available, while in the latter, the same institutional facilities are rare or non-existent. Ray et al. (Reference Ray, Barney and Muhanna2004) find that resources and capabilities including technical IT skills, knowledge and infrastructure flexibility can affect operational processes. However, they view infrastructure from a resource-based perspective (Arikan and Barney, Reference Arikan, Barney, Hitt, Freeman and Harrison2001; Barney, Reference Barney1991; Peteraf, Reference Peteraf1993), whereby the infrastructure is held or controlled by the firm. Other tangible, material elements of infrastructure, such as ports, roads and training universities, are often provided as public infrastructure for the public good, rather than being controlled by firms. We differentiate between such infrastructure assets controlled by firms and viewed through the resource-based view (RBV) lens and infrastructure assets that are not controlled by firms but instead by governments and other authoritative professional bodies, in accordance with the institutional theory lens.

By using the contingency and value chain perspectives coupled with insights from the analysis of institutional rules, we propose the following conceptual framework for innovation in contexts shaped by institutional voids and resource scarcity, as shown in Figure 1.2. In Figure 1.3, we summarise the three main constraints that innovators have to overcome in underserved markets.

Figure 1.2 Conceptual framework

1. a Upstream, social entrepreneurs lack capital, skills and labour resources;

2. b Downstream, clients or customers are resource-deficient with low purchasing power;

3. c Upstream activities take place in environments in which institutional complexities or voids affect conventions about contracts, rules, trust and legitimacy;

4. d Downstream, there is not much institutional supply-chain and distribution infrastructure, such as roads, ports or transportation capacity.

Figure 1.3 Main constraints on innovation in underserved markets

We see this interpretation of value chain analysis as a conventional analytical tool well-grounded in management practice may help to increase cases of innovation by social entrepreneurs from the odd example here or there to standard practice. Although the unit of observation is the entrepreneur, the unit of analysis is the value chain through which the social entrepreneur seeks to innovate. And the framework we propose introduces perceptions of the actor at each point in the process. The above conceptual framework is a starting point to access this extensive work, which seeks to build models of innovation by empirically revealing the perceptions and views of social entrepreneurs.

Models as abstract conceptualisations have been used widely to make sense of how things are or will be. Examples include economic, policy, business, geographic and biological models. However, lessons learnt from over-reliance on econometric modelling suggest that pure reductionism does not do justice to the complexity and plurality of realities (Sen, Reference Sen, Last and Quirk1986; Stiglitz, Reference Stiglitz2015; Toole, Reference Tooley1990). To avoid such risks, we refrain from using purely economic models and focus more on conceptual models of innovation to better understand the wide range of perspectives that social entrepreneurs bring to innovation.

1.8 Research Questions

We use this framing to take up the question of how actors conceptualise innovation generally and specifically in unique, extreme contexts marked by resource scarcity and institutional voids. The main question is: How do social entrepreneurs conceptualise innovation generally and specifically under constraints or extreme conditions marked by institutional voids and resource scarcity?

We develop the following three sub-questions to motivate the research:

1.9 Approach and Method

This study uses qualitative methods to study two communities of social entrepreneurs, many of whom are motivated by the potential for social impact to build technology- and science-based ventures. These informants are globally networked and formally recognised social entrepreneurs, identified through a process where they have applied to a prestige global ‘boot camp’ programme. These sample are not random, but rather represent highly stylised sets of social entrepreneurs, articulate about what they do and why.

We analyse innovation and value chains at the meso level, while micro-level observations incorporate business plan summaries, interviews with entrepreneurs, investors and academics and observations made at an annual, intensive social entrepreneurship and innovation ‘boot-camp’. The lead author conducted two international fieldwork trips spanning four months, collecting 81 interviews and 163 archival documents. We have used thematic content analysis (TCA), in particular the technique of template analysis, in order to assemble and digest evidence from these data sources.

The suitability of a qualitative research methodology derives from the nature of the social phenomenon studied (Morgan and Smircich, Reference Morgan and Smircich1980), namely, how social entrepreneurs talk about innovation. According to Louis Cohen and Lawrence Manion (Reference Cohen and Manion1980, p. 27), ‘the purpose of social science is to understand social reality as different people see it and to demonstrate how their views shape the action which they take within that reality’. Our research objective calls for an in-depth, detailed study that explores the ways in which social entrepreneurs perceive innovation in context.

We developed a descriptive, qualitative research design to collect data that describes how social entrepreneurs think about innovation. This design suits the relatively limited knowledge available about actor conceptualisations of innovation. Acknowledging the risks and limitations of building theory based on innovation as socially constructed, we chose not to pursue a purely inductive, field-based, grounded theory approach (Glaser and Strauss, Reference Glaser and Strauss1967). Instead, we adopted the methodological approach of retroduction (Ragin, Reference Ragin1994; Ragin and Amoroso, Reference Ragin and Amoroso2010), which supports the iterative use of deduction based on current knowledge and of induction based on emerging evidence. Retroduction is gaining use in management and entrepreneurship research, with the growth in interest of pragmatist philosophy of management and organisations sciences research (Farjoun, Ansell and Boin, Reference Farjoun, Ansell and Boin2015).

We identified two social entrepreneurship programmes convened in Silicon Valley, California as our source of social entrepreneurs. The Global Social Benefit Institute (GSBI^®), which is part of Miller Center for Social Entrepreneurship at Santa Clara University and the Design for Extreme Affordability (DEA) programme, which is part of d.school (Hasso Plattner Institute of Design) at Stanford University. The former is a professional programme that seeks to accelerate growth for existing social entrepreneurs from around the world, while the latter is a university degree module that serves as an incubator for enrolled students. The focus on participants and alumni of these programmes gave us access to a globally and sector diverse group of social entrepreneurs and textual sources (business plans), as well as the opportunity to carry out in-depth interviews and observations.

We were drawn to these two programmes because they have both produced widely recognised examples of social entrepreneurship and impact, including ventures such as Kiva, Whirlwind Wheelchair, Anudip, Toughstuff, Thrive, MIT OpenCourseWare, Vision Spring, Jaipur/ReMotion Knee, Embrace and D-Light. Our initial reasons for choosing these California-based programmes were logistical – both programmes were ongoing, with high credibility and with well-documented activities and participants. They offered access to historical documents in the form of business plan summaries from multiple social entrepreneurs, whom we could also meet in person. Both programmes have extensive networks that span global networks in social entrepreneurship community; their members originate all over the world and focus on diverse markets – mainly in emerging and developing economies but also developed. The well-networked programmes offered a concentrated, accessible opportunity to collect extensive and diverse data during the span of time an early career research project allows. The international profile of these universities solved one set of logistics: how to speak to social entrepreneurs from many countries where social enterprises were being established. This choice presented a different challenge: how to interpret the findings from this ‘select’ set of social entrepreneurs, a topic we return to in the discussion of findings.

At the start of this chapter, we identified our object of study as the conceptualisation of innovation, and specifically the models of innovation held by and animating the actions of social entrepreneurs. The subjects of study were individual social entrepreneurs and the experts who worked with them, including academics, mentors and investors. These informants, who represent diverse geographical locations and sectors, provided direct and indirect data sources (interviews, business plans and other commentary) for this analysis of how social entrepreneurs perceive innovation. Because the respondents come from many geographical and market sectoral categories, there is much variation in the data. We used this variance to develop greater understanding of innovation that takes into account complex constraints.

This is a brief overview of the research methodology, its strengths and weaknesses. We provide a more detailed version of the design, data and methods in Appendix C. After exploratory fieldwork, negotiating access and collecting data, we drew most heavily on the GSBI programme data analysis and findings. We also made use of rich but more limited data from the edea site to perform an external validity and limited generalisability test, also summarised in Appendix C.

1.10 Contribution to Organisation Theory and Strategic Management

Despite growing interest, the current scholarly understanding of innovation among social entrepreneurs is based largely on the assumption that social innovation is produced by social entrepreneurs. This assumption, while common, has so far not been empirically tested. It lacks a unified and coherent framework that captures the unique constraining environment in which social entrepreneurs innovate. Our work investigates empirically how social entrepreneurs conceptualise innovation. We use these empirical insights to propose a theoretical model useful for further research on frugal innovation, as carried out in or for challenging contexts.

Models of innovation derived from the perceptions of social entrepreneurs add directly to wider efforts to specify how such actor perceptions shape innovation process and outcomes. Our contribution progresses such models, challenging and extending current assumptions about social innovation and other emerging concepts, including frugal, grassroots and reverse innovation, all frequently associated with social entrepreneurship. This study foregrounds the perceptions of entrepreneurs and the ‘models’ of innovation in complex content, in the specific ways shown in Table 1.1.

Overall, this study reveals the ways social entrepreneurs perceive conceptual drivers and determinants and key features of innovation. To describe our findings, we structure and report on the insights of our respondents as frugal innovation in more complex contexts. This grounded approach starts with the basics: how social entrepreneurs conceptualise innovation. It provides a major large-scale, evidence-based set of results showing what frugality is in innovation, what is innovative about frugal innovation, what motivates social entrepreneurs and other frugal innovators to adopt this approach to innovation and what strategies they use to achieve such purposeful innovation.

In the next two chapters, we report on the results from content analyses and thematic coding. We propose two models of innovation based on these findings. Model 1 (views of innovation among social entrepreneurs) is the focus of Chapter 2; Model 2 (innovation under constraints; the views of social entrepreneurs) is the focus of Chapter 3. In Chapter 4 we integrate lessons from these two models of innovation to propose a theory of frugal innovation. In Chapter 5, we assess the models and the proposed theory and its applicability by reviewing ten published examples of innovation popularly cited in support of emerging innovation concepts. In Chapter 6, we review some of these emerging concepts in innovation and discuss how the findings from this study mainly contribute to the literature on frugal innovation. In Chapter 7, we outline some implications and relevant lessons from this empirical project for theory, practice, policy and future research.