Drivers of Frugal Innovation in Traditional Craft Villages: A Conceptual Framework for Cost-Saving and Sustainable Local Development

Abstract

Traditional craft villages are resource-constrained local production systems that combine cultural heritage, household-based production, intergenerational skills, local employment, and market competition. Although frugal innovation has been widely discussed as a way of creating affordable and resource-efficient solutions under scarcity, its antecedents in traditional craft villages remain insufficiently theorized. This conceptual paper develops a source-grounded model of factors affecting frugal innovation in traditional craft villages, with a focus on cost-saving innovation and sustainable local development. Building on the resource-based view, dynamic capability theory, the knowledge-based view, customer participation literature, social capital theory, and institutional support perspectives, the paper proposes eight antecedents of frugal innovation, including customer participation, customer demand, organic innovative culture, bricolage, knowledge management, empowering leadership, government support, and network embeddedness. Frugal innovation is conceptualized as the capability to reduce cost, focus on core functionalities, maintain adequate user value, save resources, and support local sustainable co-creation. The paper contributes by translating frugal innovation theory into a craft-village-specific framework, clarifying the theoretical logic of each antecedent, and providing a measurement foundation for future empirical testing among craft households, cooperatives, and micro and small enterprises. The proposed framework is intended for subsequent survey-based studies using PLS-SEM or CB-SEM and for policy discussions on how traditional craft villages can innovate affordably without weakening cultural and social value.