New Business Models for Frugal Innovation: Experience from an Enterprise Supporting Sustainable Smallholder Agriculture in Kenya

Abstract

Prior frugal innovation studies have highlighted their role in promoting ecological and social sustainability. The way enterprises coordinate a value proposition with the upstream and downstream value chain activities and a workable financial model is noted to be key in the delivery of innovations. However, the extant literature does not explicitly explain how enterprises combining socially oriented practices with economic rationality, successfully deliver their frugal innovation to low-income consumers. The current study thus contributes to this gap by employing the business model theoretical framework via a single case study design for a Kenyan enterprise supporting precision farming by serving smallholder farmers with digitally enabled low-cost soil sensors and interactive support services. Analysis of the case reveals four approaches that led to the successful delivery of the innovation: long-term focus, adjustable commitment, continuous experimentation, and the bricolage principle. In addition, digital technologies positively influenced the success of the soil sensors and respective business models. This study contributes to the literature streams around frugal innovation and social entrepreneurship, by expanding knowledge around bringing frugal innovations to the market. Moreover, the study develops a framework of value creation and capture, in digitally enabled frugal innovation. This is of practical significance to enterprises engaging in frugal innovation in low-income contexts.