Stimulating frugal innovation via information technology resources, knowledge sources and market turbulence: a mediation-moderation approach

Purpose Given the importance of frugal innovation for small and medium-sized enterprises (SME) in developing countries, this study aims to explore the role of IT resources on frugal innovation through the mediating roles of knowledge sources and to what extent the relationship between sources of knowledge and frugal innovation is strengthened or weakened under the moderating effects of market turbulence. Design/methodology/approach This is an empirical study. Data were gathered from 355 SME employees of Pakistan through a questionnaire survey; the variance-based PLS-SEM approach was used to analyze the data. Findings Findings reveal the significant impacts of IT resources on different aspects of frugal innovation, namely, frugal functionality (FF), frugal cost (FC) and frugal ecosystem (FE). Moreover, the paper highlights the mediating roles of sources of knowledge in the relationship between IT resources and frugal innovation in frugal functionality and frugal cost. Findings also revealed that the moderation of market turbulence strengthens the effects of sources of knowledge on frugal functionality and ecosystem, but surprisingly weakens the relationship between sources of knowledge and frugal cost. Research limitations/implications To bring a deeper understanding of the significant role of IT and knowledge sources, future research should examine the potential moderating role of environmental factors or perceived organizational support or mediating role of knowledge management processes in the relationship between IT resources and frugal innovation. Practical implications The paper provides a valuable understanding and novel approach for directors of SMEs in developing countries to improve their frugal innovation capability through IT and knowledge resources. Originality/value This study contributes to bridging research gaps in the literature and advances how IT resources, directly and indirectly, help firms improve frugal innovation capability via mediating roles of sources of knowledge.