Chapter 2: Frugal Innovation and Sustainable Development in Libya

Frugal innovation (FI) is a mechanism companies use to create value from limited resources, aiming to meet the needs of a broad customer segment in emerging markets. This study investigates the impact of FI on sustainable development (SD) in Libya. Data from 112 employees of small and medium enterprises (SMEs) were analyzed using WarpPLS software and structural equation modeling. The findings indicate that while two factors – low cost of frugal innovation (LCFI) and creation of an ecosystem for frugal innovation (CEFI) – do not significantly affect SD, the core functions of frugal innovation (CFFI) significantly impact SD. This work is among the first empirical studies to explore business models for FI and their influence on SD in Libya, contributing to the theoretical and empirical literature on the topic.