Investigating Organizational Drivers of Jugaad Innovations: A Study of Indian Missionary Hospitals

Abstract

To sustain, mature social enterprises in emerging markets, rely on Jugaad innovations, or flexible, frugal, and inclusive innovations. However, there is no empirical evidence on how firms can produce systematic, scalable, and profitable Jugaad innovations. Moreover, there is conflicting guidance on whether organizational design should encourage specialization or (in) formalization to achieve Jugaad innovations. To fill these gaps, we first conduct a qualitative study comprising of 41 interviews and 20 physical visits to missionary hospitals in India, which exhibit considerable heterogeneity in Jugaad innovations. We discover that both specialization and formalization influence Jugaad innovations, with corporate governance practices (CGP) and elaboration by internal stakeholders being important contingencies. Using these institutional insights, we build a theoretical framework relying on knowledge-based view and hypothesize that specialization (formalization) will increase (decrease) Jugaad innovation and be differently moderated by CGP and elaboration. We empirically test the framework with primary data from 183 missionary hospitals accounting for endogeneity. We find that while specialization (formalization) has a positive (negative) diminishing effect relationship with Jugaad innovations, the optimal ratio of specialization to formalization is 71:29. Ours is the first empirical study exploring the drivers of Jugaad innovations and highlighting the intricate tension between two seemingly at-odds drivers.