Modeling of Frugal Innovation Enablers by System Dynamics approach in Small and Medium Enterprises (Household appliances manufacturer)

Today in Iran, events such as economic sanctions, inflation and unemployment have reduced the purchasing power of consumers and on the other hand, producers have faced problems in supplying raw materials and production costs. In this situation, small and medium industries need more attention than large industries, because these industries, despite their flexibility and job creation, need innovation to stay competitive. In this situation, frugal innovation can be appropriate, which also pays attention to sustainability and creating benefits for society. Therefore, the purpose of this paper is dynamic modelling of frugal innovation enablers in small and medium-sized home appliance manufacturers. First, by reviewing the literature, the enablers were identified and provided in a questionnaire to 200 industry experts. By exploratory factor analysis, the factor loads were determined and finally, dynamic modelling of variables was performed. According to the results, one of the most important enablers in frugal innovation is management support, which leads to the use of local capacities and the application of a modular approach in production and reduces the cost of access to factors of production. Investment in research and development will lead to the identification of cheaper raw materials, creative and safer designs, and attention to social and environmental issues will also contribute to the goals of this innovation.