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Article

Construction of Frugal Innovation Path in the Context of Digital Transformation: A Study Based on NCA and QCA

by
Xiaoyu Qu
,
Xutian Qin
* and
Xiaopeng Wang
School of Management, Dalian Polytechnic University, Dalian 116034, China
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(3), 2158; https://doi.org/10.3390/su15032158
Submission received: 1 December 2022 / Revised: 17 January 2023 / Accepted: 18 January 2023 / Published: 23 January 2023
(This article belongs to the Special Issue Close the Gap: Corporate Environmental Responsibility and the New Challenges for Companies in the Green Transition Era)
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Review Reports Versions Notes

Abstract

:
With the continuous advancement of digital globalization, enterprises need to seek development opportunities in the context of diversification and resource shortage. Frugal innovation provides a new way for enterprises to realize social value and create a win-win situation. Based on 113 enterprises’ survey data, fuzzy set qualitative comparative analysis (fsQCA) and necessary condition analysis (NCA) are used to explore the multiple concurrency factors and causality mechanisms of digital transformation, organizational resilience, learning from failure and design thinking for frugal innovation. It is found that: (1) Digital transformation, organizational resilience, internal learning from failure, external learning from failure and design thinking cannot effectively stimulate frugal innovation alone, and linkage matching of multiple antecedents is needed to promote frugal innovation. (2) There are three paths to producing high frugal innovation, namely, external learning from failure and design thinking driving under digital transformation learning from failure driving under design thinking guidance, organizational resilience driving under digital transformation. (3) There are two paths to produce non-high frugal innovation, which are asymmetrical with high frugal innovation path. Our results are helpful for the study of digital transformation and frugal innovation at the enterprise level. In addition, our research results also provide practical solutions and a theoretical basis for enterprises to carry out frugal innovation activities under the new economic normal.

1. Introduction

At present, the speed of economic development in China has changed from high-speed growth stage to a medium high speed growth stage, and the driving force of economic growth has changed from material factors to innovation driven, which has brought new challenges to economic and social development. According to the statistics of 2021, the people with low and general salary in China accounted for 87.1% of the population. Obviously, under the new normal, the products with too high an R & D cost, too rich a function and too high a sales price cannot meet the vast majority of bottom of the pyramid (BOP) groups, forming an emerging market characterized by insufficient individual purchasing capacity, large population base, large demand, limited supply and so on. In order to minimize the consumption of resources and solve the imbalance between supply and demand, the concept of frugal innovation emerges as the times require. Frugal innovation refers to the process of reducing the non-essential cost of products or services on the basis of cost savings, in an inclusive and sustainable manner, while satisfying individualized consumption and remaining devoted to providing quality-guaranteed products and services for BOP groups through process improvement, process innovation, technology reorganization, product design and so on. Thus, frugal innovation is a new paradigm for enterprises for providing satisfactory products and services for BOP groups and to solve the contradiction between supply and demand in emerging markets.
Frugal innovation has attracted much attention as a business model that can provide low cost and “good enough” products or services for low income groups in emerging markets [1] Therefore, scholars have conducted in-depth explorations on how to drive enterprises’ frugal innovation [2]. With the continuous study of the new business model, some scholars have found that organizational resilience plays a role in breaking path dependence [3], stimulating potential, and resource integration in the process of enterprises’ transformation, which is helpful for enterprises to enhance opportunity mining and risk perception, and to shape the defense and adaptability of enterprises [2]. Organizational resilience is beneficial for enterprises to quickly recover from the failure and frustration of frugal innovation, and even if enterprises with organizational resilience experience setbacks and failures, they still firmly believe that they have the ability to restart, to a certain extent, and then quickly integrate all kinds of resources and start a new round of innovation activities. In addition, some scholars have confirmed that digital transformation can reduce the cost of product development by providing reliable information, perceptual prediction [4], collaborative integration and so on. That is, provide enterprises with more superior conditions to promote frugal innovation [5]. Digital transformation can help enterprises to enhance organizational resilience, enhance the stability and flexibility of enterprises, and drive the innovation of production process, business process and development strategy by reducing cost and increasing efficiency, optimizing allocation and improving the mode of information transmission [6]. Previous studies have found that design thinking is helpful to improve the thinking ability of low-cost design, exploring solutions and not sticking to traditional innovation in the process of frugal innovation, and helps to occupy and meet the requirements of emerging markets for high performance price ratio, simple design and concise products [7]. Some scholars have further proved that effective learning from failure will be more able to promote product re-engineering, technological renewal and process remodeling than would successful experience [8]. Enterprises can adjust their development strategy and maintain sensitivity in a timely manner through internal learning from failure and external learning from failure [9]. Learning from failure enhances the level of enterprises’ opportunity identification and resource utilization, improves the emergency response ability of enterprises, and provides a powerful guarantee for the implementation of frugal innovation [10]. It can be seen that digital transformation, organizational resilience, learning from failure and design thinking can help enterprises quickly respond to the personalized needs of BOP groups. Through continuous integration of external and internal experience, information and knowledge, they make use of existing resources and technologies to continuously improve resource utilization, maximize innovation, and promote frugal innovation.
The innovative points of this paper are as follows: First, most of the existing scholars’ research methods have used qualitative or quantitative single methods to explore, and mostly analyzed from a single influencing factor or the interaction between influencing factors, lacking the use of qualitative and quantitative mixed methods to study frugal innovation. Therefore, this paper uses fuzzy set qualitative comparative analysis (fsQCA) and necessary condition analysis (NCA) to comprehensively explore “qualitative case” and “quantitative variable”, which is beneficial in exploring how to promote frugal innovation of enterprises. Second, existing studies have shown that the “black box” that reveals how digital transformation, organizational resilience, failure learning and design thinking promote frugal innovation is an important basis for exploring the internal logic of enterprise frugal innovation. However, from the perspective of configuration, there has been little research on the relationship between multiple elements and the combination path. Based on the perspective of configuration, this paper explores how to coordinate and link multiple elements to promote frugal innovation. Third, most of the existing research on the influencing factors of frugal innovation focuses on the macro or micro level with national, provincial and industrial levels as the research objects, and ignores the development differences at the enterprise level, that is, different enterprises have different paths to develop frugal innovation.
Therefore, based on the perspective of configuration, this paper applies fuzzy set qualitative comparative analysis (fsQCA) and necessary condition analysis (NCA) to analyze the sufficient and necessary causal links among digital transformation, organizational resilience, failure learning, design thinking and frugal innovation, and further explores the complex linkage relationship between multiple factors and frugal innovation. In order to provide a scientific decision basis for emerging markets to solve the contradiction between supply and demand under the new normal.

2. Literature Review and Model Construction

2.1. Digital Transformation and Frugal Innovation

Digital transformation is the effective use of digital technology in enterprises. Through information integration, perception and prediction, risk identification and other ways, enterprises can establish contacts with consumers, suppliers and other enterprises, so as to help enterprises to obtain greater value [11]. First of all, digital transformation is conducive to enterprises which rely on a strong information network, effectively helping enterprises to obtain and collate a large number of consumer data about the pyramid [12], and to shape business processes, product research and development, service renewal and other aspects’ changes [13]. Secondly, digital transformation emphasizes that the enterprises and the supplier obtain the information in the industrial chain and the supply chain in time. Digital transformation can accelerate the information circulation speed, and reduce the use cost and information cost of the data elements [14], which is beneficial to enterprises in overcoming the information asymmetry and incompleteness in the transaction process [15], to achieve low cost manufacturing through accurate matching, and to realize frugal innovation. Finally, digital transformation is committed to strengthening the relationship between enterprises and other market subjects, and helping enterprises to cooperate and communicate directly with each other at low cost, high quality and efficiency, and reducing the involvement of intermediary organizations [16], so that enterprises can change from indirect participation to direct participation, and can more accurately understand the potential needs of stakeholders, so as to build a good mutually beneficial network.

2.2. Organizational Resilience and Frugal Innovation

Organizational resilience is defined as an important ability to identify, analyze and adapt to the dynamic environment in adversity. Its importance lies not in the capture of the market, but in the use of existing knowledge, technology and manpower to resolve the crisis in the face of emergencies and recession [6] Taking into account the price sensitivity, quantity driven and meagre profits of emerging markets, there may be some correlation or intrinsic role between organizational resilience and frugal innovation [17]. Organizational resilience mainly includes two dimensions, namely result-oriented ability and process-oriented ability. Organizational resilience is helpful for enterprises to overcome external pressures and challenges by integrating organization, personnel, technology and other elements [18]. Organizational resilience can help enterprises manage and control unknown risks, and quickly respond to market mutations [19], so as to achieve the purpose of implementing frugal innovation. At the same time, organizational resilience is good at responding quickly to the dynamic market environment through adaptability and flexibility, which is perfectly consistent with the frugal innovation characterized by opportunity, agile action, flexible thinking, simple design and serving the bottom-of-pyramid customers in adversity. Organizational resilience is beneficial to enterprises for breaking the internal and external constraints formed by the lack of human, financial and technological resources, and then to continue to carry out frugal innovation.

2.3. Learning from Failure and Frugal Innovation

Learning from failure refers to the process in which enterprises reflect and summarize the internal and external failure experience, constantly draw lessons and understand their own characteristics, so as to change the behavior of enterprises, reduce the possibility of repeating the same mistakes, improve the probability of success when they encounter similar events in the future through internal learning from failure and external learning from failure, and improve the performance of enterprises. First of all, with internal learning from failure, enterprises will make up for their own shortcomings [20], break their original cognitive limitations, identify new opportunities from failed events, break through the original innovation model, and establish a new development strategy, product operation and resource allocation based on the existing market, promote the transformation of enterprises resources to products and services and other value creation process, and provide effective support for frugal innovation [21,22]. Secondly, successful frugal innovation cannot be separated from the timely perception and utilization of emerging market opportunities. External learning from failure is beneficial for enhancing the response speed of innovation changes such as competitors and partners. The obtained heterogeneous information urges enterprises to reshape their development strategy under the guidance of others’ experience, to implement the knowledge and technology gained through external learning from failure, and to produce novel solutions in order to promote frugal innovation [23].

2.4. Design Thinking and Frugal Innovation

Since the design thinking was put forward, its connotation has been interpreted mainly from the view of method, cognition and process [24]. Most scholars agree that the dimensions of problem orientation, diversification, experiment and traceability reasoning can perfectly reflect the overall style of design thinking [25]. Design thinking uses iterative thinking to reflect and refine the existing knowledge, technology, products, management and so on, and actively respond to the challenges in the face of the existing problems and deficiencies, so as to meet the low-price and high-quality needs of the bottom consumers and realize frugal innovation. The problem orientation in design thinking can improve the ability of enterprises to capture and apply breakthrough opportunities, and then constantly explore the internal logic of problems and sum up its experience to solve problems, which provides the possibility for the successful implementation of frugal innovation. The diversification of design thinking can promote the integration of different internal and external perspectives, viewpoints and resources, coordinate the strategic change of enterprises at any time, and increase the flexibility and ability to deal with problems, so as to realize frugal innovation. The experimental orientation in design thinking emphasizes that enterprises need to integrate internal resources, emerging market opportunities, and time opportunities, and use innovative thinking to solve problems, improve product design [26], improve production processes and reduce the use of resources and time costs. The traceability reasoning in design thinking requires enterprises to sum up the causes of the existing problems that are about to arise, look to prior experience, measure the current problems from many aspects and put forward the basis of decision making, so as to promote frugal innovation.

2.5. The Relationship among Various Factors and Frugal Innovation from the Perspective of Configuration

There is an inherent logical correlation among digital transformation, organizational resilience, learning from failure and design thinking. For example, digital transformation can improve the generality and interaction of information, constantly explore and mine the new functional attributes of existing resources, realize the product and technological innovation that cannot be achieved in the original state, and then shape the ability of enterprises’ integration, defense, adaptation and so on, so as to improve the organizational resilience [27]. Organizational resilience helps enterprises to judge quickly in the event of emergencies. It plays a role in the replacement of the original resources, and makes up for the loss of resources and capabilities under destructive crises [28], and ensures that enterprises engaged in the digital transformation of customer behavior can fundamentally ensure the effective use of digital technology [29]. For example, learning from failure pays attention to reflection, change and growth, which can help enterprises obtain failure experience at low cost, and take the initiative to evaluate the past view of resources from the perspective of criticism, reform and innovation, and break through the established thinking framework, and strengthen the thinking of organizational design [8]. Design thinking promotes enterprises to think from an open and diversified point of view, constantly explore and try more innovative technologies, management methods, production processes, and combination schemes to provide new logic and new solutions for learning from failure [30]. For example, digital transformation through technical means to enhance the bottom-of-pyramid consumers’ demand, preferences, consumption capacity and other information judgment [31], and based on these to reduce the probability of enterprises to repeat the same mistakes, so as to improve the ability of learning from failure. Learning from failure brings experience and the practical premises for digital transformation, so as to reflect and improve the existing operation strategy and sales mode of the enterprises, control the production and management cost of the enterprises more efficiently, and make the enterprises realize the digital transformation by reasonably avoiding the risk and constantly improving the existing mode [32]. It can be seen that digital transformation, organizational resilience, learning from failure and design thinking are not completely separated in the effort to encourage enterprises to implement frugal innovation. On the contrary, there are close relationships among the four factors in the internal logic of driving frugal innovation.
That is, the coupling linkage mechanism formed by digital transformation, organizational resilience, learning from failure and design thinking can play a good role in promoting frugal innovation. It is explained that enterprises not only need to rely on design thinking to enhance reverse thinking and logical analysis ability, but also need to improve business operation and sales process with the help of digital transformation. While constantly improving organizational resilience to overcome the bottleneck of resource constraints, we constantly rethink and correct the existing innovation behavior in learning from failure, so as to realize the reasonable and efficient application of existing knowledge, technology and talents to meet the needs of product quality and technology in the process of frugal innovation.
To sum up, digital transformation is beneficial to enterprises in making appropriate adjustments according to uncertain factors, dynamic environmental information and existing resources, to constantly enhance the judgment of bottom consumers’ demand, preference, consumption ability and so on. Organizational resilience constantly integrates and improves the enterprises’ operation strategy, controls the production and operation cost more efficiently, promotes the enterprises to think based on the open and diversified angle, carries on the innovation activity, constantly explores and attempts more innovation technology, the management mode, the production flow, the combination plan and so on. Learning from failure brings experience and practical premise for frugal innovation, promotes enterprises to reflect, change and grow, reduces the probability of enterprises repeating the same mistakes, helps enterprises to obtain failure experience at low cost, breaks through the established thinking framework, and provides new logic and new solutions for frugal innovation. Design thinking is helpful for enterprises to form flexible thinking and ideas, helps enterprises to make rapid judgment in the event of emergencies, plays a role in replacing the original resources, improves the utilization rate of enterprises resources, makes up for the loss of resources and capabilities in the process of innovation, and improves the response speed of enterprises to market changes by analyzing and testing the diversified use of existing resources. And this is all to provide resources, security and creative support for enterprises to achieve frugal innovation. It can be seen that digital transformation, organizational resilience, learning from failure and design thinking do not play an isolated role in the process of frugal innovation, and there may be a coupling and interaction mechanism among them.

2.6. Causality Asymmetry of Factor Combinations at Different Levels

According to configuration theory, the interaction of multiple antecedent conditions will produce result variables, that is, the pluralistic combination among antecedent conditions has causality asymmetry. Causality asymmetry refers to the conditional combination that leads to the production of result variables is not simply reversed [33]. For example, A is the result variable, M and N are the conditional variables. M × N may cause A to occur, or ∼M × N or M × ∼N may cause A to occur. That is to say, any combination of two or more conditions has two sides. For example, digital transformation may not only improve products or process services to drive frugal innovation, but also put enterprises implementing frugal innovation at risk of high investment or excessive reliance on network information. That is to say, no matter which kind of antecedent conditions promote frugal innovation, it is not only positive or reverse, but it is necessary to further explore which combination is more helpful to promote frugal innovation.
To sum up, previous scholars have confirmed the driving effect of antecedents on frugal innovation, however, the relevant research does not explain the complex linkage among the conditions of frugal innovation, and how to have a synergistic effect on frugal innovation. In this paper, the factors affecting frugal innovation are brought into the same theoretical framework, which lays a perfect theoretical foundation for the analysis of the collaborative impact of digital transformation, organizational resilience, design thinking and learning from failure on frugal innovation from the overall perspective. The theoretical framework is shown in Figure 1.

3. Research Methods and Data Collection

3.1. Research Methods

Qualitative comparative analysis (QCA) is based on Boolean algebra principles, with the overall point of view to explore the antecedent conditions of multiple case samples and finally obtain one or more combinations of different factors that can cause the occurrence of result variables. This method focuses on the analysis of how the different antecedent condition variables coordinating and linking leads to the result variables, which is more suitable for finding the complexity and diversity of the causality between the antecedent condition variables and the result variables.
Necessary condition analysis (NCA) is used to study whether there are necessary and sufficient conditions between antecedent condition variables and result variables. The necessary condition in NCA is that if the result variable appears, then a corresponding antecedent condition must exist. This method can deal with continuous variables and discrete variables, and can also obtain the effect level of each antecedent condition necessary for the generation of result variables [34].
As a type of QCA, fuzzy set qualitative comparative analysis (fsQCA) can not only explain the complex causality mechanism of multiple concurrency between multiple antecedent conditions and result variables, and obtain the linkage relationship between antecedent conditions and result variables, but also can measure the detailed subordination scores of each antecedent condition in order to reveal the asymmetry of frugal innovation in enterprises’ management practice [35]. At the same time, NCA method can test whether there is an inevitable relationship between result variable and a certain antecedent condition, measure the effect quantity of necessary conditions, and effectively explore which antecedent conditions are necessary and sufficient to promote frugal innovation. Therefore, the combination of fsQCA and NCA is more valuable.
The question is how to better explore the necessary and sufficient causality between different variables and frugal innovation under the background of digital transformation. Firstly, data of proposed variables were collected through questionnaire survey, and descriptive analysis was carried out with SPSS software to observe the correlation between each antecedent variable. Secondly, R language was used for NCA analysis to measure the necessity of each antecedent condition, and then the reliability of the test results was analyzed with the single factor necessary in software fsQCA. Finally, fuzzy set analysis was carried out in fsQCA software to construct the driving path of the result variable. This paper reveals the complex causal mechanism that promotes frugal innovation under the background of digital transformation.

3.2. Data Collection

This research project conducted a comprehensive online survey from March 2022 to May 2022, collecting preliminary data by contacting enterprises that had published their email addresses, as web based distribution mitigates potential social desirability bias. The sample mainly included 28 provinces, municipalities and districts in China, such as Liaoning province, Shandong province, Hunan province, Sichuan province, Yunnan province and so on, covering 82.35% of China’s total areas, covering industries in the fields of electronic equipment, mechanical products, medicine and chemical industry. Before the questionnaire’s survey, the seniority limit of the respondents was not set, to reduce the selection bias. The researchers explained the significance and use of the survey and detailed descriptions of the questions related to the questionnaire. Before the questionnaire’s survey, the researchers explained the significance and use of the survey, and described the related questions in detail. Through network research, e-mail and other means was used to send out 200 questionnaires, and 187 questionnaires were recovered; the recovery rate was 93.7%. Due to the same answers or lack of questions in some questionnaires, 113 valid questionnaires were collected after removing the invalid questionnaires, and the effective recovery rate was 56.7%. QCA is suitable for small sample studies of less than 10 or 15 and large sample studies of more than 100. This survey includes 113 questionnaires samples. We can use QCA to do the research, which can not only explore the depth and uniqueness of the cases, but also take into account the external validity, so as to ensure the scientific nature and effectiveness of the research.
The descriptive statistics of the sample are as follows: 16.92% for state owned enterprises, 21.39% for Sino–foreign joint ventures, 61.19% for private enterprises, 0.5% for foreign funded enterprises, 78.11% for enterprises with fewer than 200 employees, 19.4% for enterprises with 200 to 500 employees, and 2.49% for enterprises with more than 500 employees. Enterprises with less than 5 years of establishment accounted for 40.8%, enterprises with 6 to 10 years accounted for 49.76%, and enterprises of more than 10 years accounted for 9.44%. Electronic equipment enterprises were 39.3% of the total, machinery products enterprises were 47.26%, pharmaceutical and chemical enterprises were 1.49% and other industries were 11.95%.

3.3. Variable Measure

Referring to the existing maturity questionnaires, we discussed with the relevant scholars, and made appropriate adjustments to the description of the existing questionnaires, so that the final adjusted questionnaires can better express the research topic. This paper used Likert Scale Level Five to measure the items of each variable; 1 expresses “Strong opposition” and 5 expresses “Very much agree”.
The scale of frugal innovation was designed by referring to the scale proposed by Thomas et al., (2020) [36], combined with the typical characteristics of frugal innovation, evaluated from the aspects of realization form and product composition, including ten items; for example, “The enterprise pays attention to the requirements of cost reduction and ensures the quality of products and services”, and “The enterprise pays attention to the consumption view, values and lifestyle of BOP groups”.
The scale of digital transformation was designed by referring to the scale proposed by Loonam et al., (2018) [37], combined with the practice of enterprises’ digital transformation, digital technology reform and other aspects, including three items; for example, “Optimizing products and service systems through digital technology” and “Using digital technology to establish an effective cooperation mechanism”.
The scale of organizational resilience was designed by referring to the scale proposed by Martina et al., (2019) [38], measured from the risk resistance, emergency management and other aspects, including three items; for example, “The enterprise can quickly change from the daily business model to respond to the crisis state” and “In addition to dealing with daily business activities, the enterprise has the ability to deal with some emergencies”.
The scale of learning from failure was designed by referring to the scale proposed by Geissdoerfer et al., (2016) [39]. The internal learning from failure is mainly measured from the aspects of advantages and disadvantages and causes of failure, including four items; or example, “The enterprise can effectively manage the internal relationship” and “The enterprise can clearly understand its own advantages and disadvantages“. External learning from failure is mainly measured from the aspects of external perception and alertness, including four items; for example, “The enterprise can always pay attention to and analyze potential competitors in the industry”, “The enterprise can effectively manage external relations”.
The scale of design thinking was designed by referring to the scale proposed by Anderson and Lillis, (2011) [40], including twelve items; for example, “The enterprise often consider and communicate from the point of view of each other (users or other relevant people)” and “The enterprise constantly refine its ideas and deny itself until getting satisfactory results from users”.

3.4. Reliability, Validity Test and Calibration

SPSS 25.0 software was used to verify the reliability and validity of the questionnaires. According to Table 1, the Cronbach’s α coefficient and KMO value of all variables are more than 0.7, the p of Bartlet’s spherical test is less than 0.001, and the range of factor loading is between 0.601∼0.914, which indicates that the reliability and validity of each item are good.
Each variable was measured by mean method, and the conditional variable was calibrated into fuzzy set by direct method. The three calibration points of the conditional variables are set to the full subordination (75%), intersection (50%) and full non-subordination (25%) of the descriptive statistics of the case sample. The results are shown in Table 2.

4. Analysis Result

4.1. Analysis of Necessary Conditions

The analysis methods of effect level in NCA include upper limit regression (CR) and upper limit envelopment analysis (CE). CR and CE can obtain the lowest level of effect d (0 < d < 1), the value of effect d is low level, 0.1 to 0.3 level, 0.3 to 0.5 level, and the Monte Carlo simulation replacement test can obtain. If the effect is more than 0.1 and p is significant, it is confirmed that the antecedent condition is a necessary condition for result variable. In addition, NCA also includes bottleneck level analysis, which refers to the horizontal value (%) required by the prior condition when a particular result reaches a certain level (%) of the maximum observed range [41].
The results of effect analysis using CR and CE methods in NCA are shown in Table 3. The p values of digital transformation, organizational resilience, internal learning from failure, external learning from failure and design thinking are not significant, so they are not considered to be the necessary conditions for frugal innovation.
The level of CR bottleneck in NCA was analyzed, as shown in Table 4. The bottleneck analysis results show that 5.8% internal learning from failure is needed to achieve 30% frugal innovation.
fsQCA was used to analyze the necessity of antecedent conditions needed in the process of frugal innovation, as shown in Table 5. The necessity of a single condition is generally lower than 0.9, which proves that there is no single necessary condition for enterprises to produce frugal innovation.
In summary, digital transformation, organizational resilience, internal learning from failure, external learning from failure, and design thinking cannot promote enterprises to produce frugal innovation alone. Therefore, it is necessary to incorporate these antecedent conditions into fsQCA configuration analysis to further explore the configuration that produces high or non-high frugal innovation.

4.2. Configuration Analysis

The configuration of high or non-high frugal innovation is analyzed in fsQCA3.0 software. The consistency threshold is set to 0.80, and the case threshold is set to 1. The antecedent condition which appears both in intermediate solution and simple solution is regarded as a core condition, and antecedent condition which appears only in intermediate solution is regarded as an auxiliary condition. In Table 6, “•” means that an auxiliary condition exists, ”◯⊗” means that the lack of an auxiliary condition, “●” means that a core condition exists, “⊗“ means that the lack of a core condition. The consistency of the three paths of high frugal innovation is about 0.811, and the overall coverage is 0.593. The consistency of the two paths of non-high frugal innovation is about 0.952, and the overall coverage is 0.584.
(1)
Analysis of high frugal innovation configuration
This paper summarizes three paths that are helpful for enterprises in the promotion of frugal innovation, and names the discovered paths according to the process of configuration theorization.
➀
External learning from failure and design thinking driving under the digital transformation path
Configuration S1: This means that under the joint action of digital transformation (as a core condition), external learning from failure (as a core condition) and design thinking (as a core condition), even if organizational resilience and internal learning from failure do not exist, will promote frugal innovation. Improving the breadth and depth of information through digital transformation, enterprises can get information from upstream, downstream and bottom consumers more conveniently, cheaply and intelligently. Design thinking can promote enterprises to capture and apply new technologies, new knowledge, and new ideas by external learning from failure. These new technologies, new knowledge, and new ideas can be reasonably applied to product reconstruction, operation process reset and so on, to promote information exchange and value transmission among the innovation subjects. This path can also promote enterprises to realize the purpose of optimizing the process, improving quality and increasing efficiency, and reducing the development cost. Therefore, when enterprises have high digital transformation, external learning from failure and design thinking, they can improve the development speed, product quality and resource utilization rate, and then produce function practical, durable and portable frugal products with resource saving. Enterprises can meet the needs of the bottom consumers in emerging markets.
➁
Learning from failure driving under the guidance of design thinking path
Configuration S2: This means that no matter whether the digital transformation exists or not, and even if the organizational resilience is missing as a core condition, as long as learning from failure and design thinking as core conditions exist, enterprises can produce high frugal innovation. The reason is that enterprises can obtain diversified and complementary failure experience based on internal learning from failure and external learning from failure, and apply learning from failure practice to product reconstruction, process remodeling and technology reengineering by breaking the thinking formula. At the same time, through the acquisition of failure experience, we can more accurately understand the changes in consumers’ demand, trends and competitor strategies in emerging markets. Coupled with the guidance of design thinking, testing methods and thinking patterns can be provided for enterprises to implement frugal innovation. In this way, enterprises will make full use of existing resources and technological advantages, and improve business opportunity identification, external network relationship processing, and so on. In addition, these kinds of enterprises do not focus on improving organizational resilience, which will not make enterprises disperse the technology, materials and manpower used in learning from failure. This path helps enterprises to achieve frugal innovation with higher quality and lower cost.
➂
Organizational resilience driving under digital transformation path
Configuration S3: This means that no matter whether design thinking exists or not, the enterprise has high digital transformation and organizational resilience (which are the core conditions), as well as more frequent external learning from failure (which is an auxiliary condition), and even if the enterprise does not have much internal learning from failure, it will lead to high frugal innovation. The reason is that digital transformation can help enterprises to establish close ties with bottom consumers, suppliers and other enterprises, and get the relevant market information and perceive the dynamic environment. In addition, organizational resilience is beneficial to improve the ability of innovation output in the crisis. Organizational resilience also can help enterprises improve the responsiveness of bottom consumers’ demand in emerging markets, so as to take immediate adjustment to commodity design and sales means, and help enterprises get rid of the constraints of resources and improve frugal innovation. Although this kind of enterprises does not have high internal learning from failure, enterprises can accurately understand the existing resources and external environment by external learning from failure, and constantly adjust and improve the identification and mining of the new functions of the existing resources through external learning from failure. In this way, enterprises will thoroughly enhance the matching relationship between the external resources in the market and the elements needed by frugal innovation.
Through the comparison of the three paths of high frugal innovation, it is found that the enterprises that obtain high frugal innovation often have strong design thinking and external learning from failure ability, or have a high level of digital transformation and organizational resilience. Among them, the highest coverage is configuration S1, 31.1% of the result variable are explained, which reflects the configuration effect of digital transformation, external learning from failure and design thinking can drive enterprises to produce frugal innovation. The coverage of configuration S2 is 25.6%, The coverage of configuration S3 is 25.2%, which confirms that the path to promote high frugal innovation is diverse and complex.
(2)
Analysis of non-high frugal innovation configuration
In this paper, we find that there are two configurations for enterprises to produce non-high frugal innovation through fsQCA3.0 software, as shown in Table 6.
Configuration N1: This shows that if the level of digital transformation, organizational resilience, and external learning from failure is less, and design thinking cannot play a good auxiliary role, even if there are more internal learning from failure, it will also inhibit frugal innovation of enterprises.
Configuration N2: This means that the enterprises have perfect organizational resilience and internal learning from failure, but the digital transformation and external learning from failure are less, even if they have better design thinking, it will also lead to the low level of frugal innovation.
Through the comparison of the two paths of non-high frugal innovation, it is found that those enterprises that do not have digital transformation and external learning from failure tend to have low levels of frugal innovation. According to the coverage of the two configurations, configuration N2 is a little higher than configuration N1; the proportion of explanation for the result variable is 39.2% and 28.7%, respectively, indicating that these two configurations are the bottleneck hindering the promotion of frugal innovation.
(3)
Comparative Analysis of High and non-high frugal innovation configuration
In the five configurations, namely S1∼S3 and N1∼N2, the situation of high external learning from failure as the core condition or auxiliary condition appears in three configurations, and all of them are in the high frugal innovation configuration (S1∼S3). At the same time, as the core condition, there is a total lack of external learning from failure in two non-high frugal innovation. That is, there must be external learning from failure in the high frugal innovation configuration, but the external learning from failure is missing in the non-high frugal innovation configuration. It shows that external learning from failure is an important factor affecting frugal innovation.
In S1∼S3, there are two paths with external learning from failure and design thinking, and the coverage degree is 56.7%. That is, external learning from failure, coupled with design thinking can promote enterprises to achieve the goal of high frugal innovation. In N1∼N2, the lack of digital transformation or external learning from failure is the core condition in non-high frugal innovation configuration, even if the high internal learning from failure is the core condition, it will also lead to non-high frugal innovation. It is found that the antecedent conditions of high or non-high frugal innovation are not consistent, which proves that there is asymmetry between the high frugal innovation path and the non-high frugal innovation path.

4.3. Robustness Test

Configuration robustness is tested by fsQCA3.0 software using non-high frugal innovation. The case consistency threshold is increased from 0.80 to 0.85, and the results are shown in Table 7.
By comparing the configuration paths in Table 6 and Table 7, a configuration is missing in the robustness test results. The H1 path still confirms that if digital transformation and external learning from failure as core conditions are missing, it will also produce non-high frugal innovation. This will occur even if internal learning from failure as a core condition, design thinking as a core condition and organizational resilience as an auxiliary condition are high in the configuration. Therefore, the test results are relatively robust.
Robustness test results show that these factor combinations are not the opposite of the combinations that drive high frugal innovation in Table 6. There is an asymmetry between high frugal innovation and non-high frugal innovation. Moreover, lack of digital transformation and external learning from failure are the key factors that lead to non-high frugal innovation in enterprises.

5. Conclusions and Practical Applications

5.1. Conclusions

Based on data from 113 enterprise surveys, this paper explores how digital transformation, organizational resilience, learning from failure and design thinking can promote frugal innovation by using fuzzy set qualitative comparative analysis (fsQCA) and necessary condition analysis (NCA).
The results show that: firstly, digital transformation, organizational resilience, internal learning from failure, external learning from failure and design thinking need linkage matching to promote frugal innovation; a single antecedent condition cannot constitute a necessary condition for high and non-high frugal innovation, and this conclusion is still valid after a variety of methods. Secondly, there are three ways to produce high frugal innovation, namely, external learning from failure and design thinking driven by digital transformation, learning from failure driven by design thinking, and organizational resilience driven by digital transformation. Thirdly, there are two kinds of paths to produce non-high frugal innovation, and they are asymmetrical with the paths of high frugal innovation.

5.2. Theoretical Implications

Firstly, based on the perspective of configuration and combined with the specific situation in China, we explore the multiple concurrent factors that drive frugal innovation. From the perspective of configuration, the paper brings digital transformation, organizational resilience, internal learning from failure, external learning from failure and design thinking into the analysis framework of frugal innovation theory. By combining fsQCA and NCA, this paper explores the driving mechanism of five antecedents on frugal innovation, and expands and improves the theoretical framework of frugal innovation.
Secondly, the paper reveals the root causes that cause and hinder frugal innovation, and finds the multiple promotion paths of frugal innovation. From the configuration perspective, this paper explores the influence of diversified antecedent conditions on the implementation of frugal innovation and identifies the core conditions and auxiliary conditions that drive frugal innovation. By clarifying the path of driving frugal innovation, the paper provides a practical basis for enterprises to implement frugal innovation.
Thirdly, the QCA method is innovatively introduced into frugal innovation research, which broadens the application field of QCA method. The QCA approach based on the configuration perspective is a suitable tool for understanding the complex phenomenon of frugal innovation in enterprises. This paper introduces the QCA method into frugal innovation, which not only clarifies the equivalent driving path of enterprises frugal innovation, but also broadens the application field of QCA method.

5.3. Practical Implications

Firstly, for those enterprises with high level of digital transformation, close external relations, and which can effectively use design thinking to think and innovate, we can choose the external learning from failure and design thinking driven under the digital transformation path. These enterprises can improve the level of digital transformation by setting up special funds for data resources development, perfecting digital facilities and equipment, strengthening digital knowledge, information exchange and sharing, and so on. At the same time, we should constantly strengthen the consciousness of learning from failure, carry out the practical activities of failure case inquiry and learning from failure activities, cultivate innovative skills based on design thinking, minimize resource consumption by means of development planning, problem identification, performance appraisal and so on, so as to provide low price and good quality products and services for the bottom-of-pyramid consumer groups.
Secondly, for enterprises that continue to learn from internal and external experiences, have a good atmosphere of learning from failure, and can flexibly use existing resources, technologies and other open innovation, we can take learning from failure driven under the guidance of design thinking path. Based on the periodic evaluation results of enterprises’ knowledge, experience and thinking, such enterprises can enhance design thinking ability through regular case discussion, failure experience sharing, external expert explanation, industry hot spot exchange and so on, helping to improve the utilization rate of innovation resources and the level of technology transformation, and producing products or services with affordable price, and product functions to meet the basic needs with good performance.
Thirdly, enterprises that can make effective use of digital technology, and have strong identification ability and defense ability can choose the organizational resilience driven under the digital transformation path. Taking into account current strategic objectives and emerging market needs, such enterprises can combine digital transformation with organizational resilience, and flexibly adjust existing resources and capabilities through insight and analysis of the dynamic environment, identification of new opportunities, development of new ways of cooperation, and so on. Enterprises should use virtual technology such as big data, artificial intelligence, block chain and so on, to improve the speed of product research and development, simplify the product process, improve the performance of existing products, analyze the demand of consumer groups, and so on, so as to improve the efficiency of resource use, and then reduce the cost of innovation and realize the steady development of frugal innovation.

5.4. Limitations and Prospects

First of all, although the research objects of this paper include state owned enterprises, Sino foreign joint ventures, private enterprises and foreign funded enterprises, all of these enterprises are Chinese enterprises, and the applications and promotion in international scenarios are not considered. We will select foreign enterprises across international regions and industries as objects for future research. Secondly, based on digital transformation, this paper studies the antecedent variables of frugal innovation. However, limited by the number of variables, whether other factors affect frugal innovation needs to be further studied. Finally, future research can be combined with dynamic QCA to carry out configuration evolution research and explore effective ways to promote enterprises’ frugal innovation under the digital ecosystem.

Author Contributions

Conceptualization, X.Q. (Xiaoyu Qu); methodology, X.Q. (Xutian Qin); formal analysis, X.Q. (Xiaoyu Qu) and X.W.; investigation, X.Q. (Xutian Qin); resources, X.Q. (Xutian Qin); project administration, X.Q. (Xutian Qin) and X.W.; funding acquisition, X.Q. (Xiaoyu Qu). All authors have read and agreed to the published version of the manuscript.

Funding

The research was funded by National Natural Science Foundation of China (project number: 71802035), Federation of Social Sciences Project of Liaoning Province (project number: 2022lslwtkt005) (project number: 2023lslybkt-009), Science and Technology Innovation Fund of Dalian City (project number: 2022JJ13FG102), Federation of Social Sciences Project of Dalian City (project number: 2022dlskzd304), and Academy of Social Sciences Project of Dalian City (project number: 2022dlsky120).

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 15 02158 g001 550
Figure 1. Theoretical framework.
Figure 1. Theoretical framework.
Sustainability 15 02158 g001
Table
Table 1. Reliability and validity test.
Table 1. Reliability and validity test.
VariableCronbach’s αKMOp of Bartlett’s Spherical TestFactor Loading
Digital transformation0.7700.7840.000 < 0.0010.617∼0.692
Organizational resilience0.7060.8090.601∼0.647
Internal learning from failure0.7540.8220.624∼0.859
External learning from failure0.8630.8230.718∼0.842
Design thinking0.8780.7870.867∼0.914
Frugal innovation0.8480.8360.700∼0.828
Table
Table 2. Fuzzy set calibration.
Table 2. Fuzzy set calibration.
VariableFuzzy Set Calibration
Full SubordinationIntersectionFull
Non-Subordination
Digital transformation5.0004.3304.000
Organizational resilience4.6704.0004.000
Internal learning from failure5.0004.2504.000
External learning from failure4.7504.0003.750
Design thinking4.6504.2504.080
Frugal innovation4.7504.2504.000
Table
Table 3. Results of NCA necessary condition analysis.
Table 3. Results of NCA necessary condition analysis.
Antecedent ConditionApproachAccuracyUpper Limit AreaScopeEffect Quantityp-Value
Digital transformationCR97.1%0.0110.9400.0110.010
CE100%0.0230.9400.0230.507
Organizational resilienceCR100%0.0190.9800.0190.225
CE100%0.0070.9800.0390.225
Internal learning from failureCR96.3%0.0390.9400.0420.064
CE100%0.0360.9400.0380.119
External learning from failureCR100%0.0160.9800.0170.389
CE100%0.0330.9800.0330.374
Design thinkingCR100%0.0160.9800.0160.445
CE100%0.0310.9800.0320.389
Table
Table 4. NCA bottleneck level (%) Analysis results.
Table 4. NCA bottleneck level (%) Analysis results.
Frugal InnovationDigital TransformationOrganizational ResilienceInternal Learning from FailureExternal Learning from FailureDesign Thinking
0NNNNNNNNNN
10NNNNNNNNNN
20NNNNNNNNNN
30NNNN5.8NNNN
40NNNN15.1NNNN
50NNNN21.3NNNN
60NNNN30.6NNNN
70NNNN46.6NNNN
80NNNN52.5NNNN
90NNNN60.4NNNN
10056.896.076.882.878.8
Table
Table 5. Necessity test of single condition based on fsQCA.
Table 5. Necessity test of single condition based on fsQCA.
Antecedent ConditionHigh Frugal InnovationNon-High Frugal Innovation
Digital transformation0.4910.5700.4690.698
~Digital transformation0.7400.5210.7120.642
Organizational resilience0.7260.5360.6760.641
~Organizational resilience0.5140.5530.5110.705
Internal learning from failure0.5900.5010.6600.719
~Internal learning from failure0.6690.6050.5420.629
External learning from failure0.7770.5940.6520.640
~External learning from failure0.5290.5420.5860.771
Design thinking0.6770.5640.6050.646
~Design thinking0.5750.5320.5920.701
Table
Table 6. High frugal innovation and non-high frugal innovation configuration.
Table 6. High frugal innovation and non-high frugal innovation configuration.
Antecedent ConditionHigh Frugal InnovationNon-High Frugal Innovation
S1S2S3N1N2
Digital transformation● ●⊗⊗
Organizational resilience ⊗●⊗●
Internal learning from failure ●◯●●
External learning from failure●●•⊗⊗
Design thinking●● ◯•
Consistency0.7120.7370.7460.9560.951
Coverage degree0.3110.2560.2520.2870.392
Net coverage0.7580.6180.8780.9420.870
Overall consistency0.8110.952
Overall coverage0.5930.584
Table
Table 7. Robustness test.
Table 7. Robustness test.
Antecedent ConditionNon-High Frugal Innovation
H1
Digital transformation⊗
Organizational resilience•
Internal learning from failure●
External learning from failure⊗
Design thinking●
Consistency0.475
Coverage degree0.439
Net coverage0.941
Overall consistency0.938
Overall coverage0.532
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Qu, X.; Qin, X.; Wang, X. Construction of Frugal Innovation Path in the Context of Digital Transformation: A Study Based on NCA and QCA. Sustainability 2023, 15, 2158. https://doi.org/10.3390/su15032158

AMA Style

Qu X, Qin X, Wang X. Construction of Frugal Innovation Path in the Context of Digital Transformation: A Study Based on NCA and QCA. Sustainability. 2023; 15(3):2158. https://doi.org/10.3390/su15032158

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Qu, Xiaoyu, Xutian Qin, and Xiaopeng Wang. 2023. "Construction of Frugal Innovation Path in the Context of Digital Transformation: A Study Based on NCA and QCA" Sustainability 15, no. 3: 2158. https://doi.org/10.3390/su15032158

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