Abstract
Growing changes in global environment is compelling firms to seek and exploit opportunities for market growth. Innovation that is cost effective, functional and sustainable (frugal) is considered to be one of the most important factors for such growth. For this study, we investigate the effects of risk-taking and proactivity dimensions of entrepreneurial orientation on frugal innovation (FI); and moderation of external sources of knowledge. Using hierarchical regression analysis on data nested from 385 SMEs of Pakistan, we find partially support for hypothesized relationships. The data revealed positive influence of risk-taking and proactivity on FI. However, external sources of knowledge strengthens the impact of risk-taking while weakens the effects of proactivity on FI. In addition, data also revealed a positive influence of external sources of knowledge on FI. The findings offer some theoretical and managerial implications.
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