Frugal business model innovation in the Base of the Pyramid

Abstract

This paper investigates how a multinational enterprise (MNE) engages in frugal business model innovation to find the optimal balance between value creation and value capture in resource-constrained contexts in sub-Saharan Africa. Using qualitative content analysis, we analyse the case of Community Life Centres (CLC), a primary healthcare innovation developed by Royal Philips N.V., a multinational technology organisation headquartered in The Netherlands. Our findings show that an MNE can innovate by developing multiple iterations of the same business model—customising it to different geographical markets. Some aspects of the business model remain static, while others are dynamic. In this regard, the innovation process in a resource-constrained service sector is pegged on the financing model, and target markets are adjusted based on financial opportunities available, while the value proposition and costing mechanisms remain relatively static. This paper contributes new insights to the frugal innovation and business model innovation literature.