Knowledge integration as a catalyst for frugal innovation: A structural equation modeling approach

Abstract

Considering the significance of frugal innovation for Small and Medium Enterprises (SMEs) in emerging economies, the present research seeks to investigate how knowledge integration drives frugal innovation. The study also sheds light on the mechanisms for promoting varying forms of innovation ability by examining the moderating effect of perceived organizational support. The present research adopted a quantitative methodology. The population of the study consists of SMEs’ employees in Sri Lanka, and the sample was selected using a convenience sampling technique. Self-administered questionnaires were used to collect data from 248 Sri Lankan SMEs’ employees. The data were analysed for assessment of the measurement and structural models via a multi-group structural equation approach to assess hypotheses established in the study. The study found a significant impact of knowledge integration on various dimensions of frugal innovation, such as Frugal Cost (FC), Frugal Functionality (FF), and Frugal Ecosystem (FE). Further, the study reports the moderating effect of perceived organisational support on the association between knowledge integration and the frugal functionality, frugal cost, and frugal ecosystem dimensions of frugal innovation. The findings emphasise the important role of knowledge integration in enabling frugal innovation for SMEs’ managers and in developing an organisational climate where employee contributions are valued. Hence, this study investigates the underexplored interplay between knowledge integration and frugal innovation by investigating the moderating role of perceived organisational support in this relationship through the lenses of the knowledge-based view in a resource-constrained environment.