the impact of consumer innovativeness on adoption
TRANSCRIPT
THE IMPACT OF CONSUMER INNOVATIVENESS ON ADOPTION INTENTION, AND THE ROLE OF PERCEICVED RISKS OF FRUGAL
INNOVATIONS AND PRODUCT USAGE.
University of Amsterdam Master of Business Administration
Track Entrepreneurship and Innovation Management Master Thesis
Author: Amy Flynn Student number: 11703040 Supervisor: A. Alexiev Due date: June 22nd , 2018
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STATEMENT OF ORIGINALITY This document is written by student Amy Marie Flynn who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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TABLE OF CONTENTS
LIST OF FIGURES .................................................................................................................. iv
LIST OF TABLES .................................................................................................................... iv
ACKNOWLEDGEMENT........................................................................................................... v
ABSTRACT ................................................................................................................................ i
Keywords ............................................................................................................................................ i
1. INTRODUCTION .................................................................................................................. 1
1.1 Research Gap ............................................................................................................................... 2
1.2 Research Question ....................................................................................................................... 4
2. LITERATURE REVIEW ....................................................................................................... 5
2.1 Innovation .................................................................................................................................... 5
2.2 Frugal Innovations....................................................................................................................... 6
2.3 Developed Countries .................................................................................................................... 7
2.4 Frugal innovations and developed countries............................................................................... 8
2.5 Consumer behavior ................................................................................................................... 10
2.5.1 Innovation intention process ............................................................................................................. 10
2.5.2 Innovation intention outcomes .......................................................................................................... 11
2.6 Consumer innovativeness .......................................................................................................... 13
2.7 Perception of risk ....................................................................................................................... 15
2.8 Product Usage ............................................................................................................................ 18
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3. RESEARCH METHODOLOGY .......................................................................................... 19
3.1 Research design ......................................................................................................................... 20
3.2 Case Study: eyewear .................................................................................................................. 20
3.2.1 Market leader .................................................................................................................................... 21
3.2.2 Market disruptors ............................................................................................................................. 22
3.3 Participants in the study ............................................................................................................ 24
3.4 Date collection procedure .......................................................................................................... 26
3.5 Measurement scales ................................................................................................................... 27
3.5.1 Consumer innovativeness .................................................................................................................. 27
3.5.2 Perception of Risk ............................................................................................................................. 28
3.5.3 Product Usage ................................................................................................................................... 28
3.5.4 Adoption intention ............................................................................................................................ 29
3.5.5 Control variables ............................................................................................................................... 29
4. RESULTS ............................................................................................................................. 30
4.1 Analytical strategy ..................................................................................................................... 30
4.2 Descriptive statistics .................................................................................................................. 31
4.3 Hypotheses testing ..................................................................................................................... 33
4.3.1 Mediation testing ............................................................................................................................... 33
4.3.2 Moderation testing ............................................................................................................................ 34
4.4 Additional testing ....................................................................................................................... 36
4.4.1 Hierarchical multiple regression analysis ......................................................................................... 36
4.4.3 Perception of risk factor correlations ............................................................................................... 37
4.4.4 Frugal innovation factor correlations ............................................................................................... 38
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5. DISCUSSION ...................................................................................................................... 39
5.1 Managerial implications ............................................................................................................ 43
5.2 Limitations ................................................................................................................................. 46
5.3 Suggestions for future research ................................................................................................. 47
5.4 Conclusion.................................................................................................................................. 48
6. BIBLIOGRAPHY ................................................................................................................. 49
7. APPENDIX .......................................................................................................................... 57
APPENDIX A: Survey cover letter .............................................................................................................. 57
APPENDIX B: Survey questionnaire ........................................................................................................... 57
LIST OF FIGURES Figure 1: Hypothesized conceptual model ................................................................................. 19
Figure 2: Results of the hypothesized research model ................................................................ 35
LIST OF TABLES Table 1: Sample demographics .................................................................................................. 25
Table 2: Sample country of residency- (HDI) rank and score ..................................................... 26
Table 3: Means, standard deviations, and correlations among variables (N=263) ....................... 32
Table 4: Estimated coefficients of the mediation model ............................................................. 34
Table 5:The (In)direct effects of the mediation model ............................................................... 34
Table 6: Hierarchical regression model of adoption intention .................................................... 37
Table 7: Means, standard deviations, and correlations - perception of risk factors (N=263) ....... 38
Table 8: Means, standard deviations, and correlations - frugal innovation attributes (N=263) .... 39
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ACKNOWLEDGEMENT
This thesis could not be completed without the help and guidance of others. Therefore, I would
like to take the opportunity to convey my gratitude to those who helped me during this research
project. To begin, I would like to express my appreciation to my supervisor at the University of
Amsterdam, Alex Alexiev, for his continued guidance and inspiration throughout this process. I
would also like to thank my family and friends for their continued support and patience during this
period.
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ABSTRACT
The aim of this study was to gain an understanding of consumer behavior in developed
countries towards frugal innovations. These innovations can be classified as innovations that
satisfy a need and have an emphasis on core functionality and cost reduction. The goal was to
observe if the consumers’ innovativeness, and their perception of risk of these products would
impact their adoption intention. Product usage was also examined to see if it would moderate the
relationship between consumer innovativeness and adoption intention. This quantitative study
collected data through a questionnaire which focused on the case study of the eyewear industry
with a sample of 263 individuals residing in countries with a Human Development Index score
above .700. The results found evidence that perceived risk of frugal innovations was negatively
related to adoption intention as well as evidence that consumer innovativeness was negatively
related to perception of risk, both of which bolster findings in literature. Research yielded no
relationship between product usage and perceived risk, nor between consumer innovativeness and
adoption intention, which challenges some existing literature surrounding the influence of domain
specific and general innovativeness on adoption intention. This paper is merely an initial step in
understanding correlative and basic caustic relationships in consumer behavior towards these
particular products, but the first steps nonetheless. Future research, especially across multiple
frugal products or services and testing of other consumer behavior characteristics could provide a
more comprehensive understanding of this topic.
Keywords
Frugal Innovations, Consumer Behavior, Adoption Intentions, Developed Countries, Perceived
Risk, Product usage and Consumer Innovativeness
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1. INTRODUCTION Weakening buyer power and vaster separation of socio-economic classes in some
developed countries calls for an innovation overhaul (Bhatti, et al., 2017). Additionally, increased
awareness of global consequences, such as resource depletion, demands investment in and
transformation of production and consumption patterns (Lelivelda & Knorringa, 2018). Taking
all these influences into consideration, frugal innovations might have the potential to satisfy these
needs. Frugal innovations are “good enough” products or services that have an intense focus on
drastically reduced cost structures and an emphasis on core functionality (Radjou, 2015; Weyrauch
& Herstatt, 2016). Their no-frills factors accommodate affordability, sustainability and
accessibility all while not compromising on quality (Tiwari & Herstatt, 2012; Radjou, 2015).
Products and process innovations of this nature that have already been created help to fulfill
medical, transportation and common household needs. Some examples of these products include
General Electric’s portable electrocardiogram, which was originally $2,000 but by centering only
on the product’s core competencies the device was recreated to be only $800. Another example is
a water purifier that was ordinarily priced around $270 but was stripped down and focused in to
$23 (Rao, 2013).
The markets that these products were initially created for and have been historically
concentrated in are emerging markets or Bottom of Pyramid (BoP) segments, which consists of
about 2.7 billion of the world’s population and it is made up of individuals that exist on less than
$2.50 a day (Prahalad, 2005). Since the introduction of frugal innovations in 2010, the definition,
innovation process and patterns of diffusion within BoP communities have been closely observed
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(Economist, 2010). However, it is beginning to gain attention in its applicability to developed
countries (Hossain M. , 2018; Pisoni, Michelini, & Martignoni, 2018).
Nevertheless, if frugal innovations could be a factor in alleviating some of the financial
pressures that many individuals are facing in developed countries, while still providing the quality
that this consumer segment has grown to expect, can it be assumed that their introduction into the
market will be one of ease? With the launch of any innovation lies the possibility of consumer
resistance. As many as 90% of all innovations do not survive when they are launched on the market
(Cornescu & Adam, 2013). Hence, there are critical areas that need to be addressed so that frugal
innovations can successfully have an impact (Hossain M. , 2018). Therefore, as this growing
phenomenon diffuses, it is important to anticipate if consumer behavior toward this specific
innovation type differs from a typical innovation and how. Henceforth, the examination of
consumer behavior towards disruptive frugal innovations in developed markets is one of great
interest, not only for companies, marketers and policy makers but also for consumer behavior
researchers (Pisoni, Michelini, & Martignoni, 2018).
1.1 Research Gap
To better understand the diffusion of frugal innovation ideology on a global scale, it is
critical to understand the drivers of innovation adoption and user acceptance (Agarwal, Grottke,
Mishra, & Brem, 2017; Hossain M. , 2018). Innovation adoption and resistance has been a long
time focus of study. It focuses on the descriptive factors of innovations and how they affect the
perception of the innovation with an emphasis on understanding of the driving forces behind
adoptive behavior. It has been found that product risk perception and consumer innovativeness are
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two of the most profound drivers of innovation adoption and they are critical to understand for an
innovation’s success (Hirunyawipada & Paswan, 2006).
Consumer innovativeness has gained a lot of attention from literature as one of the factors
behind the seeking out or openness to new products and potential adoption (Aldás-Manzano,
Lassala-Navarré, Ruiz-Mafé, & Sanz-Blas, 2009; Stone & Grønhaug, 1993). Product risk
perception has also garnered a foothold as one of the main factors driving the potential innovation
adoption or resistance (Klieijen, Lee, & Wetzels, 2009; Bagozzi & Lee, 1999). The initial reaction
to a product can greatly affect how a product is perceived. The study of overall risk perception of
frugal innovations, which are made up of elements likes financial, social, psychological and
functional risk perceptions can help companies understand the areas of concern for a consumer in
the developed world (Dholakia, 2001; Stone & Grønhaug, 1993). In tandem, the effects of risk
perception and consumer innovativeness on each other and in relation to adoption intention have
been researched, however there is currently little literature supporting a study of these factors in
relation to frugal innovations.
Another attribute that can greatly affect innovation adoption is the impact of consumers
familiarity with existing products and their current product usage (Bagozzi & Lee, 1999; Klieijen,
Lee, & Wetzels, 2009). This factor can be a significant influencer of innovation risk perception
especially toward innovation adoption (Cornescu & Adam, 2013; Stone & Grønhaug, 1993).
However, it has also been seen to contribute to consumer innovativeness (Goldsmith & Hofacker,
1991). These attributes were chosen to study specifically because their combination has the
opportunity to gauge the openness to frugal innovations that these consumers might exhibit and
how they perceive these products.
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As stated before, frugal innovations are beginning to gain attention in their applicability to
developed countries (Hossain M. , 2018; Pisoni, Michelini, & Martignoni, 2018). In 2011, Ernst
& Young interviewed 547 executives concerning emerging markets and their outlook on frugal
innovations. 75% of respondents saw frugal innovations as an important business opportunity and
over 81% agreed that frugal innovations are just as important in developed countries as in
developing countries (Ernst & Young, 2001). In the academic community numerous authors
mention that frugal innovations have a place in both developed and emerging markets, however
most literature focus has remained on emerging markets (Weyrauch & Herstatt, 2016). Therefore,
innovation adoption of frugal innovations amongst developed country consumers was chosen as
the overarching theme of this research.
1.2 Research Question
Following the previous identification of the research gap, this study seeks to investigate
consumer adoption behaviors of frugal innovations. To this end, it includes risk perception,
product usage, consumer innovativeness and adoption intention (Bagozzi & Lee, 1999; Klieijen,
Lee, & Wetzels, 2009; Venkatraman M. , 1991). The main research question this thesis seeks to
understand is:
Does consumer innovativeness, perceived risks of frugal innovations and product usage influence
the consumer adoption intention in the eyeglasses industry of developed countries?
With this research question, this paper seeks to develop an understanding of the consumer
behaviors toward frugally innovated products within developed markets, an area in innovation
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literature that is currently insufficiently researched (Pisoni, Michelini, & Martignoni, 2018).
Observation of the widespread diffusion of frugal innovations is critical to understanding this
global phenomenon (Zeschky, Widenmayer, & Gassmann, 2014). In-depth observation of how
existing product usage, product risk perceptions and consumer innovativeness behaviors could
influence the adoption intention patterns for innovations of this nature will aid in the identification
of need. The perception of risk is made up of various dimensions and this examination will also
dissect which risks, if any, have greater influences on the overall risk perception of frugal
innovations. These elements include, financial, functional, social and psychological (Dholakia,
2001). The study also challenges the viewpoint that frugal innovations should only be made only
for BoP markets (Rao, 2013). To gain more insight into what drives consumer behavior in
developed countries, this paper will also investigate the importance that consumers attach to
affordability, accessibility, quality and sustainability, which are all attributes of frugal innovations
(Radjou, 2015; Tiwari, Fischer, & Kalogerakis, 2016).
2. LITERATURE REVIEW
2.1 Innovation
Innovation aims to change, transform or renew a process, product or service all while
creating value for the consumer or growing the knowledge of the organization seeking to generate
value. New product development is a crucial factor to economic growth and innovations’ “creative
destruction” is a principal force in economically transforming societies by attributing to firm
competitiveness (Schumpeter, 1942). Within the realm of innovations changes can be large and
small, radical and incremental, but it remains that the fundamental genes are that of novelty and
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usefulness. Radical innovations fundamentally alter and depart from existing practices while
incremental innovations are simply a variation on existing practices. The last category is
architectural innovation, which is a reconfiguration of an established system (O’Sullivan &
Dooley, 2009). Beyond the innovation category, innovations have the ability to change a market
and this is the ideology that surround disruption, which alters the current market and competition
structure.
2.2 Frugal Innovations
Existing literary definitions of frugal innovations are slightly ambiguous and often used
interchangeably with similar concepts. These concepts include jugaard, inclusive, grassroots,
resource-constrained, good-enough, reverse, low-cost and cost innovations (Hossain M. , 2018;
Weyrauch & Herstatt, 2016; Zeschky, Widenmayer, & Gassmann, 2014). But there are concise
differences when turning a magnifying glass on frugal innovations and as literature on this topic
expands common themes begin to arise.
First in dissecting the term, frugal, which originally stems from the mid-sixteenth century
Latin word ‘frugalis’ (frūgālis), meaning sparing or economical, refers to practices in resource
constrained environments (Rao, 2013). When combined with innovation there are specific
characteristics that an innovation must attain to be placed in this category. Permeating all
definitions is the factor of affordability through substantial cost reduction (Basu, Banerjee, &
Sweeny, 2013; Bhatti, et al., 2017; Haudeville & Wolff, 2016; Hossain M. , 2017; Rao, 2013;
Weyrauch & Herstatt, 2016). However, it is made abundantly clear that the low cost does not
correlate or allow for low quality or inferior performance, but rather can be characterized as
“affordable excellence” that seeks optimization of performance levels (Weyrauch & Herstatt,
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2016). Another main factor is accessibility, in which only appropriate and adaptable or easy-to-
use features are included in the product (Basu, Banerjee, & Sweeny, 2013; Hossain M. , 2017).
This core component and functionality concentration promotes high scalability to reach the largest
market possible through ease of use and dispersion (Rao, 2013; Weyrauch & Herstatt, 2016).
Lastly, frugal innovations promote sustainability through social, environmental and economic
means by being a tool that facilitates responsible development (Khan, 2016; Tiwari & Herstatt,
2012; Radjou, 2015)
When simplified, the factors that frugal innovations encapsulate are quality, affordability,
accessibility and sustainability. This combination creates an innovation that can be considered a
significant disruptive force (Rao, 2013). Disruptive innovations serve an untapped segment and
create greater value than its existing counterpart if there is one. In the case of frugal innovations,
they are cheaper, smaller, simpler and more convenient to use than its existing counterpart. Overall,
frugal innovations strive to deliver more economic and social value to a wider base of people using
fewer financial and natural resources by delivering “more and better with less” (Zeschky,
Widenmayer, & Gassmann, 2014).
2.3 Developed Countries
To accurately frame the area of interest, a distinction between developed and developing
countries must be made as the aim of the research is to examine consumers in developed markets.
Developing and developed countries have various synonyms such as emerging or advanced
respectively, and it is used when referring to particular consumer segments or areas. However, the
United Nations (UN) specifically states: “There is no established convention for the designation
of ‘developed’ and ‘developing’ countries or areas in the United Nations system” (UN, 2016).
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However, they do state that: “In common practice, Japan in Asia, Canada and the United States in
northern America, Australia and New Zealand in Oceania, and Europe are considered ‘developed’
regions or areas” (UN, 2016). Additionally, the UN development program has created the ‘Human
Development Index’ (HDI), which concentrates on economic growth and safety in assessing the
development of a country as well as their people and capabilities (UN, 2016). The calculation
factors in the dimensions of health such as life expectancy, education, particularly the mean years
of schooling for adults 25+ and expected years of schooling for children, and lastly standard of
living, meaning the gross national income per capita.
From the latest report focusing on 2016, the HDI scale had a listing of countries where the
highest score was .949, down to the lowest that was .342. To further segment, four categories were
made. Countries .800 or higher were considered to have very high HDI, .700-.799 were high HDI,
.550-.699 correlated with medium HDI and those countries below .550 were considered to have
low HDI (UN, 2016). For this research’s’ purpose the concentration will be on those countries
with .700 or higher HDI.
2.4 Frugal innovations and developed countries
For a long time, frugality has been a virtue that many developed economies and cultures
valued, however post war prosperity sparked a consumeristic movement which led to excessive
manufacturing and buying (Tiwari, Fischer, & Kalogerakis, 2016). But since last decade’s
economic crisis of 2008, which affected primarily Europe and the USA, this changed many
income-situations and now the frugal movement is back on the rise (Tiwari, Fischer, &
Kalogerakis, 2016). There are crusades like anti-consumption or “anti-consumerism” gaining
influence among consumers and demand is increasing for “good enough” and affordable products
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(Radjou, 2015; Rao, 2013). Additionally, in recent studies, the ongoing theme of creating products
or processes that are unnecessary complex and have redundant functionalities has been seen to
instill “feature fatigue” consumers and now consumers cry for a reduction of complexity (Tiwari,
Fischer, & Kalogerakis, 2016). Extravagant research and development and marketing costs have
also skyrocketed in the past decade, but they do not cover the relentless and exhausting run for
new and advanced technology (Haudeville & Wolff, 2016). Consequently, companies are also
considering these frugal alternatives to trim costs, as well as help create purchasing power for the
consumer and support domestic demand (Haudeville & Wolff, 2016).
Furthermore, changes in value perceptions promote desirability of products focused on
core functionalities that have long-lasting usability and have environmental and social sustainable
attributes (Hossain M. , 2017; Hossain M. , 2018). This is because there has been a heightened
sense of responsibility for the environment leading the strike against excessive wastefulness in the
last few years (Tiwari, Fischer, & Kalogerakis, 2016). In addition, social inclusion and economic
driven opportunities are being examined more closely as the gap between rich and poor is steadily
increasing and underserved market segments exist. Frugal innovations have been seen to stimulate
growth and encourage innovation in both emerging and industrialized countries as they serve these
underserved markets (Rao, 2013). Tapping into this potential market segment increases the
momentum of the movement of resource frugality and bolsters its global phenomenon status
(Bhatti, et al., 2016). Finally, to reiterate, although the initial creation of frugal innovations was
meant for the Bottom of the Pyramid (BoP) in developing countries, BoP also exists in developed
countries, but regardless of this fact, BoP is not the only segment that can benefit from frugal
innovations. Other segments stand to benefit as well (Hossain M. , 2018).
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2.5 Consumer behavior
An understanding of the background of consumer behavior is necessary to properly address
this research. This area of interest studies the journey of individuals or groups acquiring, using,
experiencing and discarding products or services (Dholakia, 2001). Each phase is influenced by
numerous internal and external factors, both of which are extremely important to understand,
especially in regards to innovations. Resistance and adoption of a products are the two ends of the
spectrum with concern to the outcomes of consumer behavior. The classification of frugal
innovations as disruptive innovations can potentially threaten the possibility of consumer adoption
because the success of innovation diffusion is hinged upon the consumer behavior towards it and
disruption can influence the consumer’s perception of risk, which is one of the biggest factors of
consumer behavior. This adoption can also be influenced by the consumers innovative
predisposition or domain specific activities as well as their existing product use.
2.5.1 Innovation intention process
Consumer decision processes about innovations are foundationally made from purposive
behavior, where a consumer makes decisions about goals related to his or her subjective
wellbeing. Goals represented the consumers’ cognitive schemas of what they want to achieve or
experience, or things they want to happen to them. They also summarizes a consumer’s desires
and become the basis for planning, action initiation, action control, and goal achievement (Austin
& Vancouver, 1996; Bagozzi & Lee, 1999). When the process of consumer adoption is closely
observed it can be divided into two broad phases, which are goal setting and goal striving (Austin
& Vancouver, 1996; Bagozzi & Lee, 1999). Goal setting is comprised of various appraisal and
related information processing activities directed at the innovation and ends with a decision to
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adopt or not. This process is shown to consist of five stages: initial response to innovations,
followed by perceptual and evaluative processing, emotional acceptance or resistance, coping
responses and lastly, the adoption intention decision. The decision options consist of trying and
adopting, overcoming resistance, resisting, and indecision (Bagozzi & Lee, 1999). These can be
categorized into adoption intention, postponement intention and rejection intention (Klieijen, Lee,
& Wetzels, 2009; Ram & Jung, 1989). Goal striving on the other hand consists of processes that
revolve around transforming goals into goal attainment through planning and implementation
activities and ends with actual adoption or rejection. Similar to the goal setting process, the goal
striving process is shown to consist of five stages: appraisal and choice of means, action planning,
initiation of goal pursuit, control of goal pursuit and finally, actual adoption or not (Klieijen, Lee,
& Wetzels, 2009). This paper will study the goal setting process primarily as the main variable of
intention rather than actualized adoption is observed. The types of outcomes will now be
elaborated upon.
2.5.2 Innovation intention outcomes
Innovation adoption is the result of an evaluation that is positive and the consumer wishes
to try out the new product. Resistance to innovations is slightly more complex and literature
distinguishes different forms of resistance to innovations. Initially there is passive and active
resistance. Passive innovation resistance is an unconscious form of resistance prior to the
evaluation of the new product and it is driven by two main factors. Firstly, by the individuals'
disposition concerning resistance to change and secondly, satisfaction with the status quo
(Klieijen, Lee, & Wetzels, 2009; Patsiotis, Hughes, & Webber, 2013). When consumers are
satisfied with their current situation, then they simply have no desire or reason to change (Cornescu
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& Adam, 2013). Active resistance, which is a conscious form of resistance comes from functional
and psychological barriers following a deliberate evaluation of a new product (Ram & Sheth,
1989). The main motivators for active resistance arise from the degree of a change that an
innovation causes in the consumers established behavioral patterns, norms, habit and traditions.
These changes can conflict with the consumer’s belief system or in some way, cause a
psychological conflict or problem for consumers. This is because innovations that can potentially
transform future life tend to generate high levels of negative social involvement (Cornescu &
Adam, 2013). From there it is possible to look at the outcome intentions in which there are three
main types including postponing, rejection and opposition (Klieijen, Lee, & Wetzels, 2009;
Patsiotis, Hughes, & Webber, 2013; Ram & Sheth, 1989).
Postponing the decision refers to pushing forward the adoption or rejection of an
innovation. After a certain period of time, the postponing can take the form of acceptance or
rejection. Initially it is found that the innovation is acceptable but it is not adopted at that point in
time. The main drivers of this behavior are economic risk and product usage. Perhaps the customer
cannot economically afford the innovation and will be able to at a later date. The product usage
patterns develop unconsciously and the consumer becomes comfortable with their current
situation. This is a prime example of passive resistance (Cornescu & Adam, 2013). Consumer
perceptions about innovation-specific factors that do not meet expectations lead to functional and
psychological barriers (Heidenreich, Kraemer, & Handrich, 2016). The most important
characteristic of this kind of resistance is that it may lead consumers to seek appropriate
information which can cause them to jump straight to acceptance. On the other hand, consumers
might reject an innovation based on the existing awareness related to innovation, especially when
they realized that it is not appropriate for them (Cornescu & Adam, 2013).
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Rejection is the outright resistance to a product which is most commonly driven through
functional and social risks. Perceived images from lack of knowledge of the product is a factor in
rejection as well. Economic risk also plays a role in this type of resistance, however for rejection
the economic risk concerns whether or not the innovation is a good long-term investment
(Cornescu & Adam, 2013; Klieijen, Lee, & Wetzels, 2009). The last type of resistance is
opposition, which can be defined as a behavior actively opposing the introduction of the
innovation. Opposition drivers include functional and social risks that are embedded in the
personal and societal environment. At this point, consumers might launch an attack on the
innovation they deem unsuitable. The level of inherent physical risks that accompany the
innovation and conflicts with the existing traditions and norms of society also drive this type of
resistance (Cornescu & Adam, 2013; Klieijen, Lee, & Wetzels, 2009). For purposes of this study,
adoption and the first two types of resistance, postponement and rejection will be observed in order
to hone in specifically on these types of intention.
2.6 Consumer innovativeness
Consumer innovativeness was first defined as a personality trait that affects how
individuals perceive new ideas and independently decide whether or not to adopt innovations,
regardless of others’ experiences (Hirschman, 1980; Midgley & Dowling, 1978; Midgley &
Dowling, 1993). This terminology has evolved to introduce new factors that affect the adoption of
innovations such as demographic, personal characteristics and perceived innovation characteristics
(Im, Bayus, & Mason, 2003). Literature sought to classify consumers into different risk bearing
groups (Rogers, 1962). The first to adopt are considered the innovators of the group and they can
differ from late adopters demographically. Typically, it has been found in literature that the early
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adopter profile is a young, educated, affluent individual who is also involved in the product class
and purchases the innovation because the perceived risks are less that the perceived benefits (Im,
Bayus, & Mason, 2003; Venkatraman M. , 1991).
Further studies defined two types of innovativeness from the original innate innovativeness
that Midgely proposed (Midgley & Dowling, 1993). Open-processing or global innovativeness is
made up of cognitive and sensory innovativeness. Cognitive style incorporates an individual’s
intellect and perceptual or attitudinal characteristics and constitutes a preference for new
experiences that stimulate the mind. This differs from sensory innovativeness, which is the
stimulation of the senses through internal functions, like daydreaming and fantasy and external
adventure or thrill-seeking behavior. All of which is a force seeking arousal (Hirunyawipada &
Paswan, 2006; Venkatraman & Price, 1990). Several studies utilized this form of consumer
innovativeness as a predictor of innovation adoption (Citrin, Sprott, Silverman, & Stem, 2000).
Other subsets of this area include life innovativeness and adoptive innovativeness. In 1980, Raju
proposed a test of innovativeness scale and his predecessors, Baumgartner and Steenkamp refined
this scale (Roehrich, 2004). This scale focused on “exploratory behavior’ as a driver to innovation
adoption. From the aforementioned literature, this paper draws a hypothesis on the relationship
between consumer innovativeness and the innovation adoption intention.
The other type of innovativeness is domain specific innovativeness, which is a scale
measuring how likely an individual is to try innovations within an area of their interest (Roehrich,
2004). In 1995, Goldsmith conducted a study comparing global innovativeness to domain specific
innovativeness and their influence on adoption behavior and found that while domain specific
innovativeness yielded useful predictions of adoptive behaviors, global innovativeness was weakly
related. Further still, their study found that global innovativeness and new product adoption was
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mediated by domain-specific innovativeness (Citrin, Sprott, Silverman, & Stem, 2000; Goldsmith
& Hofacker, 1991; Hirschman, 1980). This has created some inconsistent findings within literature
and therefore, this study seeks to understand the link to a better degree by observing global
innovativeness with adoption intentions in regards to frugal innovations and hypothesized that
there is a positive relationship to adoption intention.
H1: There is a positive, direct relationship between consumer innovativeness and innovation
adoption intention.
2.7 Perception of risk
An important factor in consumer behavior is risk perception and its impact on that success
or failure of the product or service that is being introduced. Since the introduction of this concept
by Raymond Bauer (1960) there have been a large number of studies dissecting this element
(Bauer, 1960; Mitchell, 1999). Risk perception, in a nutshell, can be described as unpleasant
and unanticipated consequences that arise from a purchase of a product and is especially driven
by the uncertainties that surround the proposed innovation (Dholakia, 2001). Interestingly, in the
study of consumer psychology, most topics are studied with both positive and negative aspects in
mind, whilst the conceptualization of risk perception is primarily focused on negative aspects
(Dholakia, 2001). Consumers identify their perceived risks during the evaluation phase of the goal
setting process when they are attempting understand the benefits and risks of potentially adopting
a new product (Cornescu & Adam, 2013).
16
When observing the barriers that inhibit the resistance of an innovation, typically there are
functional barriers and psychological barriers (Ram & Jung, 1989). Within these barriers there are
a variety of risks that are being identified, but six key dimensions of perceived risk have been
historically proven throughout research. These risks include financial, performance, physical,
psychological, social and risks (Dholakia, 2001). Financial risk correlates to the negative
monitory outcomes consumers experience after they adopt products. Performance risk is
based on predisposed evaluations that are founded on knowledge and cognitive understanding
of particular product domains and it specifically concerns the uncertainty about products not
performing up to the consumers expectations. (Aldás-Manzano, Lassala-Navarré, Ruiz-Mafé, &
Sanz-Blas, 2009; Jacoby & Kaplan, 1972). Physical risk is the perception that a product will be
harmful to adopters. Psychological risk is characterized as emotional nervousness that arises
post-purchase. These emotions can include frustration, disappointment, worry, and regret
(Hirunyawipada & Paswan, 2006; Jacoby & Kaplan, 1972). Social risks revolve around the
potential for attracting unfavorable responses from a consumer’s social network. Lastly, time risk
perception can be defined such that the consumer believes that the adoption and the use of the
product will take too much time (Hirunyawipada & Paswan, 2006; Jacoby & Kaplan, 1972).
There is an especially profound incline in perception of risk surrounding new products
because there are heightened levels of uncertainties or negative consequences that could occur
(Citrin, Sprott, Silverman, & Stem, 2000; Dholakia, 2001; Ram & Sheth, 1989).
Subsequently, for this research perception of risk is hypothesized to have a negative effect on
adoption intention.
Literature also suggests that when an individual has higher levels of personal
innovativeness, then they exhibit a greater willingness to confront the uncertainties that
17
surround innovative technologies (Rogers, 1995). Studies which focused upon consumer
innovativeness as a construct to improve e-banking adoption illustrated that consumer
innovativeness indirectly, yet effectively reduced consumer risk perception of using this new
internet channel. Consequently, they suggest that higher levels consumer innovativeness
reduces the amount of perceived risk of an innovation (Aldás-Manzano, Lassala-Navarré,
Ruiz-Mafé, & Sanz-Blas, 2009; Hirunyawipada & Paswan, 2006). Therefore, there is support
for a negative relationship between perceived risk and innovative behavior (Bauer, 1960).
This research attempts to extend upon this theory where the perceived risks of a frugally
innovated product are proposed in order to better understand if consumers also have this
propensity for uncertainty. With that being said, it is hypothesized that perceived risk is
negatively related to consumer innovativeness. Therefore, a relationship whereas perception
of risk of frugal innovation mediates the relationship between consumer innovativeness and
adoption intention is proposed. Meaning that there is a negative relationship between
consumer innovativeness and perception of risk, hence high levels of consumer
innovativeness leads to lower levels of perceived risk. Moreover, there is a negative
relationship between perception of risk and adoption intention, meaning higher levels of
perception of risk lead to low levels of adoption intension.
H2: The positive relationship between consumer innovativeness and adoption intention is
mediated by risk perception of frugal innovations.
18
2.8 Product Usage
Literature has also highlighted that another impactful factor on adoption or resistance of
innovations is existing product usage (Klieijen, Lee, & Wetzels, 2009; Ram & Jung, 1989).
Typically, it has been noted that product usage especially over an established period of time, can
create habitual behavior which in turn can cause turmoil for consumers when they are
propositioned to change. Also, if there are well-established products already on the market,
consumers become comfortable with these products and their offerings making it somewhat of a
standard. Past experience and how the consumer uses the products also influences future
purchases. Studies surrounding innovation resistance note that a call to change can negatively
affect the outlook and success rate of a new product (Dholakia, 2001; Klieijen, Lee, & Wetzels,
2009). Similar to perception of risk, this resistance arises either because “it poses potential changes
from a satisfactory status quo or because it conflicts with their belief structure.” (Ram & Sheth,
1989, p.6).
Previous studies have observed product usage alongside expertise and involvement,
insinuating that long-time users of products can best determine what is needed and what is not
needed for successful application. It is believed that user experience will prove as an understanding
of industry issues and the risks that come with the product class (Ram & Jung, 1989). Although,
contrary to some of the existing research one study states that innovative consumer behavior is
associated with the involvement in a product category (Goldsmith R. E., 2001). Therefore, having
noted differing viewpoints on the influence of product usage on the perceived risk and innovation
adoption behaviors, this study seeks to better understand the impacts. With lacking literature on
this specific topic concerning frugal innovations it is very important to see if the existing market
activities will inhibit the openness of consumers to these disruptive innovations. It is hypothesized
19
that high levels of product usage will create an environment of resistance and will negatively
influence the relationship with innovation adoption intention.
H3: The positive relationship between consumer innovativeness and adoption intention is
moderated by product usage. So that this relationship is weaker for higher levels of product usage.
Following the aforementioned hypotheses, this paper arrives at the following conceptual model
with hypothesized relationships.
3. RESEARCH METHODOLOGY This chapter will explain how the hypotheses of this research will be tested. It will begin
with the method of research and the case study. Thereafter, an explanation of the sample will be
given, followed by a depiction of the descriptive statistics of the final sample. Finally, the
measurements of the independent variable, dependent variable, mediator, moderator and control
variables will be discussed.
Product Usage
FI Risk Perception
Consumer Innovativeness
FI Adoption Intention
+H1
-H3
-H2 -H2
H2
Figure 1: Hypothesized conceptual model
20
3.1 Research design
This paper employed a systematic literature review as the foundation for a theoretical
framework and research question development. The first step was to establish the scope and
research question. The articles were then reviewed based on their abstracts and the researcher’s
criteria, after which they were submitted to a full-text review. As noted, the concept of frugal
innovations in the context of developed markets has previously not been sufficiently researched
and there is a lack of richness in existing literature in this area (Pisoni, Michelini, & Martignoni,
2018). However, when observed from the context of consumer behavior this topic gains an
extensive background of literary works attempting to understand the phenomenon of innovation
adoption and resistance and the driving forces behind their success and failures. Therefore,
quantitative measuring aligns with testing of the existing theory of consumer behavior and the
impacts that consumer innovativeness, risk perception and product usage have in this new area
(Saunders, Lewis, & Thornhill, 2012). Additionally, this methodology is in line with the research
question and will provide useful information when testing the developed hypotheses and
furthermore, the theory is not of a descriptive nature. The scope of the research provides constructs
to gather valuable data within a specific industry that has been gaining momentum in the frugal
innovation field but does not limit itself too narrowly.
3.2 Case Study: eyewear
From the definition of frugal innovation that the literature depicts there are various
innovations can be considered frugal that have already been launched in the developed market but
have yet to be aptly acknowledged. When examining the existing marketplace, it was identified
21
that some of the players in the prescription eyewear industry are offering frugal innovations though
products and services. Therefore, the case study of eyewear retailers has been chosen because this
industry is currently being disrupted by frugal innovations. Brands like Warby Parker (US) and
Ace and Tate (NL) have been scaling up against existing industry giant Luxottica (IT) and their
products and services coincide with the qualities that categorize a product as frugal. Affordability,
quality, accessibility and lastly in varying aspects, sustainability, define these firms’ processes and
their offerings. Consequently, a study of consumers introduced to frugally disruptive eyewear
brands provides a real-life example of frugal innovations in developed economies and the
opportunity to observe adoption and resistance intentions of these products.
This product also is a useful product to examine due to its (relatively) inexpensive nature,
universal product usage and familiarity. About 64% of Americans and 48% of Europeans wear
glasses (Portal, 2018; America, 2017). Furthermore, eyewear is a very interesting area as very few
objects are considered 100% aesthetical and 100% functional with the necessity of needing the fit
an individual for up to 15 hours a day (CBS, 2012). In the last two decades, glasses have been
revolutionized and evolved from singularly being used as a medical device but now can be
considered personal statement pieces or even high fashion, which provides a wide range of
consumer behavior applicability. Thus, it is believed that this is a suitable design in facilitating the
understanding of frugal innovations in the context of developed markets.
3.2.1 Market leader
Luxottica is an Italian company that has been designing, manufacturing and distributing
fashion, luxury, sports and performance eyewear since its formation in the 1960s. Through its
vertically-integrated business model, Luxottica not only maintains and designs for 28 Luxury
22
eyewear brands but also serves as the parent company to some of the largest eyewear retailers in
various countries. This includes Lens Crafters, Pearle Vision, Target and Sear Optical and various
boutiques in North America, OPSM and Lens Crafters in Asia-Pacific, GMO in Latin America,
Salmoiraghi & Viganò in Italy and Sunglass Hut worldwide (Luxottica, 2018). To further increase
their hold on the North American market Luxottica also owns the second largest optical insurance
company, iMED. Additionally, in 2017 they merged with Essilor, a lens coating expert, to further
enhance their eyewear stronghold. They have created an environment where they have become a
price maker and are able to charge up to 20 times the production cost. The average cost of these
glasses is $300 but can go upwards to $600 and beyond (Luxottica, 2018). By permeating all these
avenues, Luxottica has successfully created an “optical illusion” of variety and choice for the
customer (CBS, 2012). However, there are other players that have attempted to break through the
barriers the Luxottica empire has built.
3.2.2 Market disruptors
According to the criteria for frugal innovations selected from the literature, companies like
Warby Parker and Ace & Tate can be classified as frugal innovators. These brands are seen as
disruptors on many levels, beginning by offering prescription glasses at a fraction of the cost as
the industry leaders. They also provide an online marketplace where individuals can be delivered
at home frame try-on when ordered or simply go to a store location which is also provided. This
innovation encapsulates not only frugal products but also a frugal services and processes. CNBS
Disruptor 50, an annual list that began in 2013, ranks private companies whose innovations are
changing the world by properly identifying unexploited niches and formulating new ecosystems
for the products and services they offer. Warby Parker regularly made this list since its inception
23
and other companies with similar business models like Ace and Tate in the Netherlands and
Germany was 2015’s most innovative company. Quanttroncento in Italy and Zenni Opitcal and
Coastal in the USA have also experienced great market penetration as well (Tate, 2018; Warby
Parker, 2018).
The products of the aforementioned frugal innovators are priced around $90-$100. When
the founders of Warby Parker first experienced the expensive nature of glasses, they stated, “We
were amazed at how hard it was to find a pair of great frames that didn’t leave our wallets bare”
(Warby Parker, 2018). Although this pricing still does not serve the entire market, it taps into a
very scalable segment. As a process, the distribution is direct from manufacturer to consumer or
store, cutting out excess transportation costs and reducing the margins inflicted upon costumers as
the trading from business to business is reduced. By designing in-house, the excess costs for
outsourcing that need is reduced. When compared to other glasses the quality is parallel in make
and lens. There are consistently new collections that are made available in various styles that
compete with other retailers. Lens and frames are durable and functional. The main differentiation
is the additional components that the design houses and high fashion consumers provide.
This kind of business model is centered around the basic principles of frugal innovations.
It was created to increase the accessibility of prescription service and glasses for all, which was
and continues to be one of the most crucial differentiating factors. The goal of these disruptors is
to connect directly with the customer which expands the customer segment. Service wise it is
possible to do an instore prescription check or comprehensive eye exam at some of these
companies. This cuts out the travel and time needed to visit an optometrist office as well as
additional insurance costs for doctor visits. If a customer cannot visit a store, but has difficulty
picking between frames there is a mobile application for that as well or there is the option to freely
24
ship four or five test pairs for at home try-on. If a consumer prefers the instore experience, some
companies like Ace and Tate and Warby Parker have introduced retail locations. These stores are
placed based on data driven analytics of need (Culture, 2018). Some disruptors fulfill the final
characteristic of frugal innovation from a social sustainability standpoint. To aid with the global
need for eyewear Warby Parker mimicked Tom’s Shoes model of a buy a pair, give a pair model
and providing free vision care, training and glasses to areas in need (Culture, 2018; Warby Parker,
2018).
3.3 Participants in the study
The target segment was directed towards to all individuals within developed countries. In
order to better understand the how product experience affects potential adoption both current
prescription eyewear consumers and potential future, as well as non-consumers in developed
countries were set as the target segment because the understanding of perception of product and
future buyer trends is of interest. Table 1 depicts the demographic characteristics of the participant
sample. Table 2 illustrates the country participants and the HDI rankings and scores. Only
countries with a marking of .700 or higher were considered for this study. Anonymity of the
participants was preserved. Since this is a large population a non-probability convenience sample
was be utilized. Hence, this sample was not selected using a random selection method, which
occurs when the probability of either a sample respondent or unit included cannot be determined
(Bryman & Bell, 2011).
25
Table 1: Sample demographics
Variables N % Mean SDGender 1.711 .462Male 77 29.28%Female 185 70.34%Non-binary 1 .38%Age 3.118 1.20318 or younger 1 .38%18 to 24 years 78 29.66%25 to 34 years 138 52.47%35 to 44 years 9 3.42%45 to 54 years 11 4.18%55 to 64 years 24 9.13%Age 65 or older 2 .76%Education 5.049 1.071Less than high school degree 1 .38%High school degree 20 7.60%Associate degree 5 1.90%Bachelor's degree 164 62.36%Master's degree 64 24.33%Doctoral or Professional degree 9 3.42%Profession 3.726 2.312Student 97 36.88%Unemployed 2 .76%Unemployed (looking for work) 6 2.28%Working (paid employee) 136 51.71%Working (self-employed) 17 6.46%Retired 5 1.90%Income 3.084 1.712Less than $20,000 72 27.38%$20,000 to $39,999 33 12.55%$40,000 to $69,999 55 20.91%$70,000 to $99,999 36 13.69%$100,000 to $149,999 38 14.45%$150,000 or more 29 11.03%
Demographic profile of respondents (N=263)
26
Table 2: Sample country of residency- (HDI) rank and score
(UN, 2016) 3.4 Date collection procedure
For data collection an online survey was created, distributed and administered through
Qualtrics software, an online research platform. A cover letter was used to explain the research
goals to respondents and advise them of the voluntary nature of the survey and that their
information would be treated in a confidential manner. This cover letter can be found in the
Appendix (Appendix A). The questions of the survey were framed to observe specific consumer
behavior and product perceptions regarding eyewear and the factors of frugal innovations.
Thereafter, the survey covered basic demographic and socio-economic factors. The survey was
conducted in English. A complete version of the survey can be found in the Appendix (Appendix
B). Links to the survey were distributed through social networks and personal connections with a
request to share the link to others in snowballing fashion.
Country of Residency N % HDI Rank HDI ScoreAntigua and Barbuda 1 .39% .786 61Austria 1 .39% .893 24Azerbaijan 1 .39% .759 77Belgium 1 .39% .896 21Denmark 1 .39% .925 6Finland 1 .39% .895 23Ireland 2 .39% .923 8Italy 1 .39% .887 27Germany 1 .39% .925 4Netherlands 97 38.19% .924 6New Zealand 1 .39% .915 13Singapore 1 .39% .925 4Sweden 1 .39% .913 15UK 5 1.97% .909 16USA 139 54.72% .920 11
Country of residency profile of respondents (N=263)
27
The survey method extends to a vast base and collected copious data for provision of large
scale results. There also is an absence of interviewer effects with these types of questionnaires,
therefore is no interviewer variability. The method is also more convenient for respondents
because they can complete a questionnaire when they want and at the speed that they want to go
(Bryman & Bell, 2011). There was however a time horizon of the release and close of the survey
for this research which was 27 days. Limitations of this form of research includes the
generalizability of findings of consumer behavior across other products, services and industries.
3.5 Measurement scales
3.5.1 Consumer innovativeness
Consumer innovativeness was measured using a scale developed by Raju in 1980
(Roehrich, 2004). This scale was used to measure consumer innovativeness and their tendencies
toward ‘‘exploratory behavior.’ A 5-item scale, in which respondents rated themselves on a 5-
point scale was used. This scale was anchored with “strongly disagree” and “strongly agree”
(Roehrich, 2004). All five items of innovativeness are > .30 and therefore have good correlation.
The removal of any of these items would substantially affect the scales reliability. The combined
consumer innovativeness scale showed a Cronbach’s Alpha α = .668. This amount is below the
average of .70, which is recommended to establish a scale’s reliability (Nunnally & Bernstein,
1994). However, various authors justify the acceptance of a lower average although it is not ideal
(George & Mallery, 2003; Hair, 2006). It is also important to point out that this scale utilized a
Likert scale and Cronbach's Alpha’s can have a tendency to underestimate the reliability of a few
items (Gaderman, Guhn, & Zumbo, 2012). The scale’s mean and standard deviation were,
respectively, 3.476 and 0.620
28
3.5.2 Perception of Risk
The elements of risk perception were measured through a 10-item scale utilizing using two
to three measures each of psychological, social, functional and financial risk. The elements were
measured based on items from the Stone and Grønhaug (1993) scale. The scale was adapted from
a 7-point scale to a 5-point scale anchored in “disagree strongly” to “agree strongly”. The social
risk questions “I think I would be held in a higher esteem by my coworkers” (SocCB1)* and “I
feel concerned about what my friends would think of me, if I made a bad choice” (rSocCB2)*
were removed due to the low degree of good correlation with SocCB1 at .232 and SocCB2 at .211.
This removal still resulted in the collection of information on psychological, functional and
financial risk attributes which formulated a strong scale for risk perception of this product. The
remaining variables all have a good correlation >.30, therefore, the remaining eight items would
substantially affect reliability if they were deleted. The inclusion of the social variables equated to
a Cronbach Alpha α =.804. With the removal of the two social variables Cronbach's Alpha α =.
.827, which is high in reliability. The scale’s mean and standard deviation were, respectively 2.349
and .660.
3.5.3 Product Usage
Product usage was measured using a two-item scale, specifically observing product usage
frequency and level of experience, similar to that of Ram and Jung in 1989 (Ram & Jung, 1989).
For the first question, “how often do you wear prescription glasses?” the respondents were asked
to classify themselves into one of four categories ranging from “daily, weekly, monthly, never”.
Furthermore, for the users, a 6-point scale was then proposed inquiring, “approximately how many
29
years have you worn glasses?” with intervals from “less than 5 years” to “45 years or more”. The
two items of the product usage scale are well above .30 and it would substantially affect the scales
reliability if they were deleted. The two items were averaged to form a single variable. This scale
had a Cronbach’s Alpha α =.768 and therefore, has good reliability. The scale’s mean and standard
deviation were, respectively, 2.498 and 1.338.
3.5.4 Adoption intention
Adoption intention of the frugal innovation was measured through a 5-point scale ranging
from “definitely would” to “definitely would not” when asked, “How likely would you be to
purchase these glasses today? The scale’s mean and standard deviation were, respectively, 3.150
and 1.129.
3.5.5 Control variables
The control variables of this study are the individual demographic characteristics of gender,
age, education level, and annual income. Some literature has revealed that there is a particular
profile for individuals who exhibit greater levels of innovativeness and have a predisposition and
tendency to adopt more new products (Venkatraman M. , 1991). This profile is made up of young
individuals, typically male with high levels of income, education and favorable attitudes toward
risk. They also are less likely to be married and they exhibit good levels of social mobility and
participation, as well as have high opinion leadership (Midgley & Dowling, 1993; Im, Bayus, &
Mason, 2003; Rogers, 1995).
There are however, some studies that contradict these statements, stating that a few
characteristics, but not all characteristics affect innovativeness. One example is the characteristic
30
of age, which was seen to negatively influence consumer innovativeness, but income and education
are shown to have no impact (Im, Bayus, & Mason, 2003). Other’s results suggest that the
relationship between personal characteristics and consumer innovative predispositions is weak,
but further still, studies on the same topic do not support the link at all (Goldsmith, Flynn, & Clark,
2014; Im, Bayus, & Mason, 2003). Since there are diverse opinions about the effect of these
characteristics on consumer innovativeness, they will be controlled for the mediation and
moderation testing. However, these variables will be reviewed from a correlation standpoint to
understand their influence on perception of risk factors and adoption intentions. They will also be
studied alongside frugal innovation attributes to better understand how consumer groups weigh
each attribute.
4. RESULTS
In this section the results of the different analyses will be presented. At first, the analytical
strategy of the collected data will be discussed. Subsequently, the descriptive statistics for the most
important variables are given. Finally, this section ends with testing the hypotheses which were
formulated in this research. Of the 332 electronic surveys, 69 were partially completed, leaving a
total of 263 usable results and a 79% completion rate. The goal was to reach at least 200+
participates for good reliability (Sue & Ritter, 2007).
4.1 Analytical strategy
A check of the frequencies was computed to examine if there were any errors in the data;
no errors were found. Missing values were excluded by analyzing units listwise, therefore only
31
units that had no missing data in any variable were analyzed. To ensure that there were no existing
counter-intuitive items, items that were phrased in a way that agreement would represent a low
level of the construct being measured, were recoded into different variables. This means that items
from perception of risk, rFinCB1, rSocCB1, rPsyCB3 were recoded and are now FinCB1, SocCB1,
PsyCB3. Items of consumer innovativeness, rInvCB2, rInvCB3, rInvCB4, rInvCB5 were recoded
and now represent InvCB2, InvCB2, InvCB3, InvCB4, InvCB5. Following this procedure, the
PROCESS Macro written by Andrew F. Hayes for SPSS was used to test the hypotheses H1, H2
and H3. Furthermore, an additional hierarchical multiple regression analysis and correlations
examination regarding the factors of frugal innovations and control variables was completed in
order to better understand the factors in the study.
4.2 Descriptive statistics
Descriptive statistics, which is inclusive of means, standard deviations and correlations
between the study variables were computed for all variables. Skewness, kurtosis and normality
tests were also conducted. All variables except product usage were normally distributed with
skewness and kurtosis ranging between -1 and 1; Innovation Adoption Intention (skewness = -
.256, kurtosis -.795), Perception of Risk of Frugal Innovations (skewness =.314, kurtosis =.282),
Consumer Innovativeness (skewness = -.359, kurtosis =.153) and Product Usage (skewness = .067,
kurtosis = -1.398).
In examination of the correlation output there are various correlations found amongst the
data. Table 3 depicts the means, the standard deviations, and the correlations between the study
variables. When observing the control variables, from this data set there is a significant correlation
between gender and age (r=.157, p <.05) and product usage and gender (r=.126, p<.05). There was
32
a very significant correlation between income and age (r=.360, p <.01) and income and product
usage (r=.206, p<.01). Furthermore, there was a significant correlation with perception of risk and
age (r= .130, p <.05). Moving beyond the demographic characteristics there were significant
correlations between all of the adoption intention other scaled variables. This includes very
significant correlations with adoption intention and perception of risk (r= -.511, p <.01), adoption
intention and product usage (r= -.177, p <.01) and adoption intention and consumer innovativeness
have a significant correlation (r= .133, p <.05). Lastly, there was a very significant correlation
between consumer innovativeness and perception of risk (r= -.269, p <.01.) These last variables
are in line with the literature findings. Risk perception and product usage are negatively correlated
with adoption intention whilst consumer innovativeness is positively correlated. Risk perception
is also negatively correlated with consumer innovativeness.
Table 3: Means, standard deviations, and correlations among variables (N=263)
Variables Mean SD 1 2 3 4 5 6 7 81. Gender 1.710 .4622. Age 3.120 1.203 .157*
3. Education 5.050 1.071 -.033 -.1174. Income 3.080 1.712 .079 .360** .0445. Adoption Intention 3.150 1.129 -.007 -.046 .111 .0476. Consumer Innovativeness 3.476 0.620 .066 -.026 .031 .048 .133* (.668)7. Perception of Risk 2.349 0.660 .003 .130* -.114 -.078 -.511** -.269** (.827)8. Product Usage 2.567 1.339 .126* .206** -.051 .136* -.177** -.078 .068 (.768)* Correlation is significant at the 0.05 level (2-tailed).** Correlation is significant at the 0.01 level (2-tailed).
33
4.3 Hypotheses testing
4.3.1 Mediation testing
To begin testing the hypotheses PROCESS Macro written by Andrew F. Hayes for SPSS
was used (Hayes, 2013). Hypotheses H1 and H2, were tested by model 4. This is the model for the
testing of a mediation relationship with consumer innovativeness as an independent variable (X),
adoption intention as the outcome variable (Y) and perception of product risk (M) as the mediating
variable. The variables gender, age, education and income were taken into account as control
variables. The results of these analyses are displayed in Table 4 and 5. Overall, the model explains
1.05% of the variance in the value of adoption intentions (F(5,256)=5.978, p <.01, R2 = .105
From a simple mediation analysis which was conducted using ordinary least squares path
analysis, consumer innovativeness indirectly influenced adoption intention through its effect on
consumer risk perception of frugal innovations. As Table 4 illustrates, participants relatively
higher in consumer innovativeness are estimated to be lower in their consumer risk perception of
frugal innovations (a1 = -.270, p < .001). Participants relatively lower in consumer risk perception
of frugal innovations are estimated to be higher in their adoption intention (b1 = -.872, p = <.001).
Therefore, high consumer innovativeness creates low risk perception which in turn heightens the
level of adoption intention. Overall, these result show that there is significant evidence supporting
H2 hypothesis from all aspects.
A bias-corrected bootstrap confidence interval for the indirect effect (a1b1 = .237) based
on 5,000 bootstrap samples was entirely above zero (.124 to .374), indicating that there is a
tendency for those that perceive themselves as innovative feel less perception of risk of the frugal
34
innovations, which translates to greater adoption intentions. Interestingly, there was no statistically
significant evidence that consumer innovativeness influenced adoption intention independent of
its effect on consumer risk perception of frugal innovations (c1= -.007, p=.942) therefore p>.05
and is not significant, hence rejecting H1.
Table 4: Estimated coefficients of the mediation model
Table 5:The (In)direct effects of the mediation model
4.3.2 Moderation testing
To test H3, PROCESS Macro written by Andrew F. Hayes for SPSS was used (Hayes,
2013). H3, was tested by model 8. This is the model for the testing of a moderating relationship on
Consequence
Antecedent Coeff. SE p Coeff. SE pInnovativeness (X) a1 -.270 .063 <.001 c1 -.007 .102 .942Risk Perception (M) b1 -.872 .097 <.001Gender -.002 .085 .982 -.021 .133 .876Age .080 .036 .026 .023 .056 .689Education -.051 .037 .163 .059 .057 .306Income -.044 .025 .073 -.002 .038 .962Constant i1 3.43 .332 <.001 i2 4.89 .616 <.001
R2= .105 R2= .265F(5,256)=5.978, P<.001 F(6,255)=15.290, P<.001
Risk Perception (M) Adoption Intention (Y)
Effect SE P LLCI ULCIDirect effect c1’ -.007 .102 .942 -.208 .193Total effect c1’ .230 .112 .042 .009 .451
Boot SE BootLLCI BootULCIIndirect effect total a1b1 .237 .061 .124 .374
35
a mediator with consumer innovativeness as an independent variable (X), adoption intention as the
outcome variable (Y), perception of product risk (M) as the mediator and product usage (W) as
the moderator. The variables gender, age, education and income were taken into account as control
variables. The analysis yielded that there is no moderating interaction, with the outcome equaling
( a3=.018, p=.718). Therefore p>.05 and is not significant meaning that there is no moderation
affect, no further documentation is necessary and H3 is rejected.
The conceptual model with the outcomes of the tested hypotheses and their relationships is
provided below.
Note: *p <.05, **p <.01 = hypothesis rejected = hypothesis supported
Product Usage
Product Usage
FI Risk Perception
FI Risk Perception
Consumer Innovativeness
Consumer Innovativeness
FI Adoption Intention
FI Adoption Intention
-H3 -H3
-H2 -H2
-H2 -H2
H2 H2
-0.270**
-.872**
Figure 2: Results of the hypothesized research model
+H1 -H2
36
4.4 Additional testing
4.4.1 Hierarchical multiple regression analysis
In order to better understand the effects of the main variables on adoption intention, a
hierarchical multiple regression was performed in order to investigate abilities of consumer
innovativeness, product risk perception and product usage in predicting levels of adoption
intention, after controlling gender, age, education and income. The results are illustrated in Table
6 below. In the first step of the hierarchical multiple regression, the four controlling variables of
gender, age, education and income were entered. It was found that this model was statically
significant F(4,257)= 1.103; p<.05 and explained 1.70% of the variance in adoption intention. In
step 2, consumer innovativeness, product risk perception and product usage were entered. The
total variance explained by the model as a whole was 28.70%, F(5,257)= .287 ; p<.001. By
introducing consumer innovativeness, product risk perception and product usage an additional
35.5% variance in adoption intention was explained, after controlling gender, age, education and
income (R2 Change = .355; F(3,254)= 32.113; p<.001). In the final model two out of seven
predictor variables were statistically significant, with perception of risk recording a lower Beta
value (β = -.504, p < .01) than product usage, which had a Beta value (β = -.155, p < .01). In
other words, if person’s perception of risk increases for one, their adoption intention decreases
for 0.504. On the other hand, if person’s product usage increase for one, their adoption intention
decreases for 0.155.
37
Note: *p <.05, **p <.01 Table 6: Hierarchical regression model of adoption intention
4.4.3 Perception of risk factor correlations
Risk perception was made up of four different dimensions for this study, however the
social attribute was removed from the overall risk perception total when analyzing the
moderation and mediation affects due to low scale correlation. It is included here to observe its
singular effect. A correlation calculation was conducted in order to see which risks aligned most
with different demographic characteristics and which factors had the most correlative power of
adoption intentions. The results are included in Table 7 below.
When observing the demographic factors and perception of risk elements it can be seen
that there is a significant correlation between financial risk and age (r=.129, p<.05), and
psychological risk and age (r=.143, p<.05). This illustrates that older individuals correlate to
higher levels of these two risk factors. In regards to adoption intention, all elements of perception
of risk had significant correlations. Financial risk has the largest negative effect on adoption
intention (r=-.494, p<.001), followed by functional risk (r=-.406, p<.01), psychological risk (r=-
.382, p<.001) and lastly, social risk (r=-.258, p<.001).
R R2 R2 Change B SE B tStep 1 .130 .017 .000 .153 .000 -.002Gender -.054 .064 -.057 -.840Age .107 .066 .102 1.625Income .042 .044 .063 .950EducationStep 2 .536 .287 .355Gender .017 .132 .007 .126Age .044 .056 .046 .784Income .054 .057 .052 .958Education .007 .038 .010 .174Consumer Innovativeness -.029 .100 -.016 -.285Perception of Risk -.865 .096 -.504 -9.007Product Usage -.131 .046 -.155 -2.841
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Table 7: Means, standard deviations, and correlations - perception of risk factors (N=263)
4.4.4 Frugal innovation factor correlations
To further understand the behavior of consumer towards frugal innovation attributes,
participants were asked to rank from 1 “most important” to 4 “least important” the attributes of the
proposed frugal innovation. These attributes were represented as the following, Price
(affordability), quality (quality), buy one and give one to someone in need (sustainability) and
availability on-line and instore (accessibility). The items were recoded to match levels of
importance. The mean and standard deviations were 3.051 and .783 for price, 3.520 and .691 for
quality 1.688 and .842, for sustainability and 1.742 and .765 for accessibility respectively. This
indicates that in order quality, price, accessibility and lastly, sustainability were most important to
this participant group. A mean, standard deviation and correlation analysis was conducted in order
to see if there were particular correlations with any of the other factors from the study. In the
examination of the correlation output there are various correlations found amongst the data.
Amongst the control variables there was a very significant correlation between females and the
importance of sustainability (r= .188, p <.01), between age and price (r= -.220, p <.01), between
Variables Mean SD 1 2 3 4 5 6 7 8Gender 1.710 .462Age 3.120 1.203 .157*Education 5.050 1.071 -.033 -.117Income 3.080 1.712 .079 .360** .044Functional Risk 2.608 .923 .008 .068 -.103 -.098Financial Risk 2.186 .808 .027 .129* -.112 -.116 .554**Psychological Risk 2.198 .679 -.024 .143* -.066 .024 .464** .490**
Social Risk 2.709 .657 -.089 -.046 -.085 -.121 .221** .236** .450**
Adoption Intention 3.145 1.129 -.007 -.046 .111 .047 -.406** -.494** -.382** -.258**
* Correlation is significant at the 0.05 level (2-tailed).** Correlation is significant at the 0.01 level (2-tailed).
39
price and income (r= -.166, p <.01) as well as with a very significant correlation between
accessibility and income (r= .165, p <.01).
Table 8: Means, standard deviations, and correlations - frugal innovation attributes (N=263)
5. DISCUSSION
The overall purpose of this study was to create a foundation for future research in the
behavior exhibited by consumers in developed countries towards frugal innovations. The specific
factors of consumer behavior that were researched were consumer innovativeness, perception of
risk and product usages and their effect on adoption intention. These are all factors that literature
emphasizes as having an important impact on consumer behavior towards innovations (Aldás-
Manzano, Lassala-Navarré, Ruiz-Mafé, & Sanz-Blas, 2009; Citrin, Sprott, Silverman, & Stem,
2000; Hirunyawipada & Paswan, 2006). These factors were examined to evaluate if and to what
extent they impacted the overall adoption intention behavior.
This study suggests that perceived risk, which has also been theorized as an instigator
of resistance to the adoption of innovation, has a significant negative influence on the
innovation adoption intention. Hence, high levels of perception of risk correlates to low levels of
adoption intention. Perceived risk can arise when newness leads to uncertainty and
Variables Mean SD 1 2 3 4 5 6 71. Gender 1.711 .4622. Age 3.112 1.203 .157*
3. Education 5.049 1.071 -.033 -.1174. Income 3.084 1.712 .079 .360** .0445. Price 3.051 .783 -.080 -.220** .035 -.166**
6. Quality 3.520 .691 -.081 .036 -.029 .015 -.368**
7. Sustainability 1.688 .842 .188** .063 -.031 -.015 -.380** -.232**
8. Accessability 1.742 .795 -.049 .119 .024 .165** -.263** -.262** -.484**
* Correlation is significant at the 0.05 level (2-tailed).** Correlation is significant at the 0.01 level (2-tailed).
40
consequently restricts consumers' adoption which is heavily studied in literature (Cornescu &
Adam, 2013). The new insights that this paper provides is the confirmation that frugal
innovations do not escape this construct and they experience resistance similar to other
innovations. To understand the underlying causes of perception of risk amongst frugal
innovation psychological, functional and financial risks, as well as social risks were observed
individually, because as noted earlier every product or service that is introduced is
characterized by different mixes of risks or some risks are weighted more heavily than others
(Citrin, Sprott, Silverman, & Stem, 2000). It was observed that each of these factors were
strong predictors of innovation resistance, however the results suggest that financial risks
followed by functional, psychological and social risks are the driving forces behind the
heightened levels of risk perception with these products. Henceforth, it is recommended that
through the introduction of new frugal innovations an early evaluation of specific risks should
be identified and then appropriate steps can be taken to ease the consumers negative emotions
towards these products.
In addition to these findings, this study also demonstrates that consumer
innovativeness is a key inhibitor of perception of risk, which is overall positive for the
adoption intentions of innovations. This significant negative relationship between consumer
innovativeness and perception of risk, insinuates that higher levels of consumer innovativeness
equates to lower levels of perception of risk. This is similar to the results of two studies that also
observed the relationship between consumer innovativeness, perception of risk and adoption
intention. They too found that there is a significant negative relationship between consumer
innovativeness and perception of risk (Agarwal, Grottke, Mishra, & Brem, 2017; Hirunyawipada
& Paswan, 2006; Im, Bayus, & Mason, 2003).
41
Contrary to the findings of the similar studies, the results of this study did not support that
consumer innovativeness directly impacts adoption intention, which others found to be positively
significant (Aldás-Manzano, Lassala-Navarré, Ruiz-Mafé, & Sanz-Blas, 2009; Citrin, Sprott,
Silverman, & Stem, 2000; Hirunyawipada & Paswan, 2006). There are multiple reasons that might
shed a light on these differences in outcome. Firstly, there are various scales that can be utilized
for measuring innovativeness, although as a whole the scales that have been developed have not
been extremely predictive (Roehrich, 2004). For instance, Raju’s (1980) “exploratory” scale of
innovativeness was utilized here and other studies often utilize Goldsmith’s (2001) domain
specific scale of innovativeness. Other reasoning includes that previous studies were conducted
based on another class of innovative products that were not of this nature, hence the importance of
this study. Additionally, there was a difference in the sample sizes amongst studies in this area.
Other studies sample size is relatively homogeneous and ranging between 117 and 746 participants
(Aldás-Manzano, Lassala-Navarré, Ruiz-Mafé, & Sanz-Blas, 2009) (Goldsmith R. E., 2001;
Hirunyawipada & Paswan, 2006). This study was not extremely high in homogeneity, however it
succeeded in gathering 263 usable respondents with a fair spread of income, profession, education
and gender.
Regardless of all of these differences, it is important to reiterate that the effects of
consumer innovativeness on adoption intention have been somewhat inconsistent across
various studies (Im, Bayus, & Mason, 2003). The findings of this study support the
hypothesized relationship that risk perception mediates the relationship between consumer
innovativeness and adoption intention. However, it completely explained the relationship, which
was not anticipated. Product usage was found to not have a moderating effect on the relationship
between consumer innovativeness and adoption intention, but as this study found no relationship
42
to begin with, this result was expected after the first hypothesis was tested and was found not
significant.
Nonetheless, the revelation that product usage could also be a predictor of adoption
intention along with perception of risk supported existing studies that suggest these two factors are
both inhibitors of adoption intention. Product usage and risk perceptions have been noted as factors
of innovation resistance independently (Klieijen, Lee, & Wetzels, 2009). When introducing frugal
innovations to existing product users a particular level of care must be taken as these users are
typically highly knowledgeable about this domain as they have been active in it for some time. To
compound this some individuals are comfortable in their current state and therefore must be
persuaded otherwise by highlighting how the new innovation will benefit them and compliment
their lifestyles (Goldsmith R. E., 2001).
In regards to the control variables, this paper discovered that there was no correlation
between consumer innovativeness and the control variables when additional tests were
completed, which reinforces the side of literature that does not support personal characteristics as
being predictors of innovativeness (Goldsmith, Flynn, & Clark, 2014; Im, Bayus, & Mason,
2003). Consequently, this serves only to further cloud the understanding of the makeup of
consumer innovativeness. With perception of risk, older people were seen to have low thresholds
for risk with new products, which correlates with existing literature (Agarwal, Grottke, Mishra,
& Brem, 2017).
In regards to the overall study and research question it can be noted that risk perception
and product usage can have a predicting effect on adoption intention. Risk perception also has a
significant impact on adoption intention as does consumer innovativeness by way of perceived
risk reduction. This study confirms that innovation intention is driven by product risk perception
43
as consumer behavior literature has supported for many years (Cornescu & Adam, 2013; Klieijen,
Lee, & Wetzels, 2009). The main contribution of this research is portrayed in the model that
integrates the influence of consumer innovativeness traits and the perceived risks of frugal
innovations on adoption intention.
5.1 Managerial implications
Moving forward, some individuals will choose to adopt frugal innovations simply for the
financial incentives they provide, especially as the economic resurrection has been a slow
trajectory. Others find their reduced complexity most appealing and will choose to adopt them
based on this fact, as long as they align with their existing quality standards. A third reason why
individuals might adopt is the rising depletion and scarcity of natural resources. It has been
speculated that a sense of environmental responsibility will continue to increase and individuals
might be more attuned to adopting these products based on this factor. But regardless of the
motivations of adopting frugal innovations, many stakeholders in business and politics are
expecting the trend of frugality to continue to gain strength (Tiwari, Fischer, & Kalogerakis,
2016). That being said, the insights from this study could help policy makers and marketing
managers effectively promote consumption patterns that are sustainable and enhance consumer
welfare. This means that the promotion of products could better reflect the consumers’ beliefs and
integrate utilitarian benefits especially as individuals become more environmentally conscious and
resource aware. Making frugality a desirable characteristic would go a long way toward
sustainable consumption (Bas, 2016).
One of the main contributions this research offers to managers and marketers is based on
the discovery of the negative relationship between consumer risk perception and adoption intention
44
of frugal innovations. Marketers should try to design and deliver information or products
addressing specific issues and concerns raised by consumer risk evaluations of these innovations.
For example, one of the main perceived risks of frugal innovations is the financial risk. Companies
could try to reduce the perceived financial risks by offering deals such as the possibility to return
the product within a pre-determined time frame for a full refund of the original price. Additionally,
companies could try to offer lease possibilities where the consumer could end the lease at any
given moment. Another significant perceived risk is that the anticipated benefits or functionality
does not meet the consumer’s expectations. Companies could reduce this perceived risk by
offering extensive warranty packages with their products. These types of countermeasures, aimed
at reducing the perceived risk associated with frugal innovations, could help companies to increase
the adoption intention of their products and hence ease their entry into developed markets. It is
wise that companies help to reduce the perception of risk by successfully communicating how the
innovation complements their lifestyles (Cornescu & Adam, 2013).
Marketers could also utilize the specific demographic characteristics that were observed to
properly address the main concerns about these products they exhibited such as older people
tended to feel concern over the functional and financial risk of the products. On the other hand,
they could promote the characteristics of frugal innovations with the correct consumer group. To
illustrate, consumers with higher incomes cared more about accessibility than the price of the item.
The results also showed that younger people were more price sensitive than older individuals.
Specifically, to policy makers, perhaps revisiting mature marketplaces to establish new
types of standards could spark the further diffusion of frugal innovations in developed countries.
These marketplaces might have a void or untapped consumer segment that a frugal innovation
could fill or they might already have unidentified frugal innovations in their marketplace (Bas,
45
2016). For businesses, understanding what aspects of consumer behavior can impact the adoption
or resistance of their product is extremely important. Especially understanding the difference
between postponement, rejection and opposition might enable companies to combat these negative
reactions. In the case of postponement, which for this study was the most prevalent outcome,
companies can increase comfort levels by increasing the transparency and traceability of
components of the innovation. It is crucial to provide easily available information, as information
pushing or overload increases the resistance (Klieijen, Lee, & Wetzels, 2009).
Another point to note is that the researched product can be characterized as frugal, but so
can the process through which it was recreated. By cutting out extra transportation and product
aspects beyond core competencies the cost was drastically reduced without necessarily reducing
quality. This methodology would aid companies in harnessing frugality and improving their
profitability in a world conscious of both cost and sustainability. Moreover, firms can choose to
develop themselves more frugally by reducing their research and development expenditures and
manufacturing costs (Bas, 2016). This is an incredibly interesting strategic move that many
companies are shifting towards and through the disruptors that were discussed before, it illustrates
that it is possible to achieve a customer base for simplified, lower cost, core competency products.
Furthermore, there can be knowledge enhancements which can be deduced from observation of
the grassroots and localized efforts that are flourishing in developing countries. These efforts can
spark a movement from a transferring of ideas for improved designs of existing products in
developed countries (Bas, 2016).
By focusing on consumer’s environmental consciousness, reducing the perceived risks of
frugal innovations, or targeting the correct consumer segment, companies can aid the smooth
introduction and adoption of frugal innovations into developed markets. Additionally, companies
46
should assess not only their products, but their processes as well. To conclude, frugal innovations
do have a place in the developed world as can be seen from the success of markets disruptors like
Warby Parker and Ace and Tate and the openness to the innovation that the participants of this
study exhibited.
5.2 Limitations
There are various limitations that both constricted this research and arose throughout. To
begin, there are varying definitions of the attributes that define a frugal innovation. Therefore, only
the most common aspects amongst literature were taken into consideration when defining the case
study. Additionally, “Frugal innovation” was the main keyword used in article research,
consequently relevant papers that refer to the interchangeable names of frugal innovations may not
have been included in this study. In regards to the case study, the innovation that was chosen for
observation already has a foothold in the market of many developed countries, so consumers might
be more open to the idea of adopting an innovation they are familiar with. A more drastic
innovation or fairly unknown frugal innovation or one that originates outside of the developed
market, might spark a difference in results.
The adoption behavior could potentially have been measured across a set of products to
increase reliability rather than being controlled with a single product, as there might be some
intervening effects that can occur in relation to the study of a single product (Goldsmith R. E.,
2001). As with any studies, the specific sample and product class might limit the generalizability
of the findings. Although the measures of consumer innovativeness, perception of risk and usage
frequency are considered to be valid and reliable measures, they might not completely reflect
actual adoptive behavior, product knowledge or purchase intention (Midgley & Dowling, 1978;
47
Ram & Jung, 1989). Specifically, in this study the consumer innovativeness scale that was utilized
resulted in a low reliability based on the Cronbach’s Alpha. Furthermore, additional items of
perception of risk might have solidified the reliability of each risk factor and made the construct
stronger.
5.3 Suggestions for future research
The field of frugality is one that touches various sets of theoretical sectors, which includes
psychology and ethics, anthropology and sociology, engineering sciences and economics and
business management. This is because frugality can be a personal trait, a cultural or belief system
or a manufacturing process or innovation overhaul (Tiwari, Fischer, & Kalogerakis, 2016).
Therefore, as the demand rises for frugal innovations there are many areas that will expand due to
its universal applicability and need for extensive attention.
The findings of this research help to create a foundation for further research with respect
to frugal innovations in developed markets. This research also highlights that there are frugal
innovations that exist in developed countries already, as seen from the product that was observed
and it was positively received by consumers. Perhaps a review of mature markets in developed
countries will reveal other existing frugal innovation that can be examined. Other suggestions
include observations of different aspects of consumer behavior over a wider breadth of frugal
products and services.
The seeking out of these products could be internally or externally motivated. Internally, it
could originate from embedded behaviors that lean toward frugality. These could arise from
psychological traits or values which is beyond this particular study. External influences can arise
from cultural or social influences or marketing schemas. But most importantly external economic
48
condition might have an effect on a trending towards frugal buying or lack thereof (Goldsmith,
Flynn, & Clark, 2014).
5.4 Conclusion
Through this research it was found that there is a significant negative relationship between
consumer innovativeness and perception risk of frugal innovations and also between perception of
risk with adoption intention. The was no significant direct relationship between consumer
innovativeness and adoption intention or a moderating effect of product usage on perception of
risk. However, product usage was a significant predictor of adoption intention. The study also
illustrated that particular attributes of frugal innovations were more desirable within different
demographic segments. And lastly, in regards to demographics, perception of risk of frugal
innovations fluctuates most commonly with an individuals’ age. To conclude, the results that have
been presented enhance the understanding of the influences that come play a role in the first steps
to frugal innovation adoption intention. Further research can uncover more about this topic, both
on the consumer behavior factors and the innovation factor effects.
49
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7. APPENDIX
APPENDIX A: Survey cover letter Thank you for choosing to participate in this survey! This study is being conducted for the Master's Thesis of Amy Flynn, student at the Amsterdam Business School. The study seeks to examine the roles that consumer risk perception, innovativeness and product usage play in the adoption or resistance of frugal innovations in advanced markets. Frugal innovations are products or services that are characterized by affordability, accessibility, sustainability whilst maintaining quality. Note that there is no right or wrong answer. The best answer is the one that is the closest to your experience and/or is the best in describing what is being asked of you. The data (i.e. the information and responses you provide in the survey) will only be used for the purposes of this study and will be treated anonymously. No individual responses will be presented. By participating in this study, you consent to the data being used for these purposes. Please keep in mind that your participation in this research is entirely voluntary. In case you have any questions or concerns, please do not hesitate to contact Amy Flynn at [email protected]. APPENDIX B: Survey questionnaire
1. How often do you wear prescription glasses?
- Daily (4) - Weekly (3) - Monthly (2) - Never (1)
2. Approximately how many years have you worn glasses?
- Not Applicable (1) - Less than 5 years (2) - 5 - 14 years (3) - 15 - 24 years (4) - 25 - 34 years (5) - 35 - 44 years (6) - 45 years or more (7)
3. Approximately how much did you spend on your current glasses?
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- Not Applicable (1) - Less than $100 (2) - $100 - $199 (3) - $200 - $299 (4) - $300 - $399 (5) - $400 - $499 (6) - $500 or more (7)
4. How did you purchase your current glasses? (Online, In-store, other)
- Online (3) - In-store (2) - Other/Not Applicable (1)
5. These glasses have the following characteristics:
- $95 including prescription lenses - Available Online and In-store - Ships 5 test frames for free - Buy one, give one to someone in need
6. Please rate your feelings by means of the following dimensions on a scale from 1 (=strongly disagree) to 5 (=strongly agree): When I think about purchasing and wearing these glasses…
- I worry about how dependable and reliable they would be. (FunCB1) - I would be afraid that the glasses would not provide me with the level of benefit I
expected it to. (FunCB2) - I am concerned the product might have negative physical side effects. (FunCB3) - I think it is a wise investment. (rFinCB1) - I think it would be bad way to spend my money. (FinCB2) - I think I would be held in a higher esteem by my coworkers. (rSocCB1)* - I feel concerned about what my friends would think of me, if I made a bad choice.
(SocCB2)* - I feel psychologically uncomfortable. (PsyCB1) - I feel unwanted anxiety. (PsyCB2) - I feel excited. (rPsyCB3)
*These items were removed due to low correlative nature
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1. How likely would you be to purchase these glasses today? - Definitely would (5) - Probably would (4) - Might or might not (3) - Probably would not (2) - Definitely would not (1)
8. Please place in order the items that are from 1 (=most important), to 4 (=least important),
when considering this product: - Price - Quality - Buy one, give one to someone in need - Availability on-line and instore
9. Please rate your feelings by means of the following dimensions on a scale from 1
(=strongly disagree) to 5 (=strongly agree): - When I see a new or different brand on a shelf, I often pick it up just to see what it is like.
(InvCB1) - A new store or product is not something I would be eager to find out about (rInvCB2) - I am very cautious in trying new/different products. (rInvCB3) - I would rather wait for others to try a new product. (rInvCB4) - Investigating new brands and products is generally a waste of time. (rInvCB5)
10. What is your sex?
- Male (1) - Female (2) - Non-binary (3)
11. How old are you (in years)?
- Under 18 years (1) - 18 to 24 years (2) - 25 to 34 years (3) - 35 to 44 years (4) - 45 to 54 years (5) - 55 to 64 years (6) - Age 65 or older (7)
12. In which country do you currently reside?
- Qualtrics generated numbering
13. What is the highest level of school you have completed or the highest degree you have received?
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- Less than high school degree (1) - High school degree (2) - Associate degree (4) - Bachelor's degree (5) - Master's degree (6) - Doctoral or Professional degree (7)
14. Which statement best describes your current employment status?
- Student (1) - Unemployed (2) - Unemployed (looking for work) (3) - Working (paid employee) (5) - Working (self-employed) (8) - Retired (9)
15. Information about income is crucial to this research, please indicate an estimate of the
yearly household income. - Less than $20,000 (1) - $20,000 to $39,999 (2) - $40,000 to $69,999 (3) - $70,000 to $99,999 (4) - $100,000 to $149,999 (5) - $150,000 or more (6)