The business models of frugal enterprises for sustainable development in a constrained environment
Constraints and institutional voids in emerging markets pose significant challenges to serving low-income customers. Indeed, the complex constraints often discourage traditional companies from pursuing such endeavors, but a new breed of enterprises characterized by their frugal approach is emerging from this constrained environment. Nevertheless, we know little about how these frugal enterprises transform constraints into opportunities through innovative business models that include collaboration with local and international partners, as well as how they can contribute to sustainable development. Drawing on institutional theory perspective and the resource-based view, this study explores how frugal enterprises create business models for serving overlooked customers in emerging markets and overcoming the various constraints and institutional voids. Based on six cases of frugal enterprise and 22 interviews, this qualitative study contributes to the literature in three ways: First, it reveals how frugal enterprises transform constraints and institutional voids into viable business models for serving traditionally underserved customers. Second, it sheds light on how these enterprises engage with local and international partners to overcome the constraints in emerging markets. Finally, it demonstrates that frugal enterprises contribute to sustainable development in a profitable manner. The findings offer valuable insights to guide managers and policymakers in attaining sustainability and profitability in the emerging markets.
History
School
- Loughborough Business School
Published in
IEEE Transactions on Engineering ManagementVolume
71Pages
3448 - 3463Publisher
Institute of Electrical and Electronics EngineersVersion
- AM (Accepted Manuscript)
Rights holder
© IEEEPublisher statement
© 2023 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.Acceptance date
2023-12-06Publication date
2023-12-13Copyright date
2023ISSN
0018-9391eISSN
1558-0040Publisher version
Language
- en