Abstract
In the era of “Industry 4.0”, individualized demand and small batch customization manufacturing will become the trend, which calls for strong capabilities of customer orientation and rapid reaction. In addition to the redesign of smart and autonomous production processes, the market-oriented frugal innovation is a valuable exploration under the framework of “Industry 4.0”. This paper anchors itself at a deprecated policy context to study frugal innovation patterns and their forming mechanisms, which is still a rarely touched area. By selecting as its cases Shifeng, Baoya and Taiqi from the Shandong province, China, this paper uses a qualitative approach to analyze low-speed electric vehicle (EV) businesses according to a three-dimension frugal innovation framework composed by business ecosystem (BE) configurations, BE capabilities and innovation process. The findings are as follows, (1) there are three typical frugal innovation patterns, namely market-based persistence, market-based contingency and technology-based contingency, which help frugal innovators obtain an abundant market performance even under a deprecated policy environment; (2) a vertical integration network and strong marketing capabilities are the capital to select a market-based persistence pattern, while the lack of some substantial resources and capabilities compels firms to have to adopt a more flexible way of frugal innovation in order to carve out a safe niche. This paper contributes to frugal innovation research by exploring a new deprecated policy context rather than traditional institution voids, constructing a frugal innovation framework from the BE perspective by focusing on focal firms, and proposing three frugal innovation patterns under different resource constraints. From the practical side, this paper suggests that future innovation policy should balance advanced technology requirements and practical market demands, and the governments should also emphasize market positioning and demand orientation in the process of Industry 4.0 transformation.
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