NEW SOURCES OF GROWTH: THE ROLE OF FRUGAL INNOVATION AND TRANSFORMATIONAL LEADERSHIP
Keywords:
New Source of Growth, Innovation, Frugal Innovation, Transformational Leadership, Breakthrough Possibility Frontier
Abstract
This paper’s main thesis is that frugal innovation and transformational leadership offer
additional sources of growth. Our main contribution is the proposal of what we refer
to as the breakthrough possibility frontier (BPF) model, which integrates two aspects
of leadership: innovation quality (frugal innovation) and leadership competency
(transformational leadership). We test the BPF model on two groups of respondents,
one group consisting of university students who had never been formal leaders
and the other formal leaders who had office experience. The BPF analysis suggests
that transformational leadership is a game changer, required for breakthroughs.
Transformational leadership is key to encouraging innovation quality and leadership
competency and, we argue, to facilitating new sources of growth. Our results imply
the development of an integrated institutional framework for innovation. We believe
that innovative leadership development programs that can be easily implemented
and replicated in other regions are needed to develop transformational leadership
competencies.
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References
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Innovation Abilities: A Research on SMEs. International Conference on Eurasian
Economies, 2, 396-399.
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Sustainability, 8, 1034.
Kock, A., & Gemünden, H. G. (2016). Antecedents to Decision‐Making Quality
and Agility in Innovation Portfolio Management. Journal of Product Innovation
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Koellinger, P. (2008). The Relationship Between Technology, Innovation, and Firm
Performance—Empirical Evidence from e-Business in Europe. Research Policy,
Vol. 37, 1317-1328.
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Le Bas, C. (2016). The Importance and Relevance of Frugal Innovation to Developed
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Innovation Economics & Management, 21, 3-8.
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OECD. (2012). Innovation and Inclusive Development Conference Discussion Report.
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OECD. (2013). New Sources of Growth: Knowledge-Based Capital—Key Analyses and
Policy Conclusions—Synthesis Report. Available at https://www.oecd.org/sti/
inno/ knowledge-based-capital-synthesis.pdf.
Prahalad, C. K. (2005). The Fortune at the Bottom of the Pyramid: Eradicating Poverty
with Profits. Philadelphia: Wharton Business Publishing.
Raghuramapatruni, R., & Kosuri, S. (2017). The Straits of Success in a VUCA
World. IOSR Journal of Business and Management (IOSR-JBM), 1, 16-22.
Schumpeter, J. A. (1949). Theory of Economic Development. Cambridge, MA: Harvard
University Press.
US Department of Commerce. (2012). 2011 Annual Report: Powering Export Growth.
Retrieved from https://2016.trade.gov/cs/cs_annualreport12.pdf.
Weyrauch, T., & Herstatt, C. (2016). What Is Frugal Innovation? Three Defining
Criteria. Journal of Frugal Innovation, 2, 1.
Woodridge, J. (2010). Econometric Analysis of Cross Section and Panel Data.
Cambridge: MIT Press.
World Economic Forum. (2017). The Global Risks Report 2017, 12th Ed. Geneva:
World Economic Forum.
World Bank. (2018). Available at http://www.worldbank.org/en/news/pressrelease/
2018/06/05/global-economy-to-expand-by-3-1-percent-in-2018-slowergrowth-
seen-ahead.
Zeschky, M., Widenmayer, B., & Gassmann, O. (2011). Frugal Innovation in
Emerging Markets. Research-Technology Management, 54, 38-45.
Zhao, Z. Y., & Lei, X. P. (2013). Empirical Analysis of the Relationship between
Technology Innovation and Basic Research. Current Science, 104, 714-720.
Complex World. Cambridge: Harvard Business Publishing.
Baker, S. (2015). Sustainable Development. London: Routledge, Taylor & Francis Ltd.
Bappenas. (2011). Masterplan Percepatan dan Perluasan Pengembangan Ekonomi
Indonesia 2011-2025. Retrieved from https://www.bappenas.go.id/index.php/
download_file/view/11060/3437/ at November 10th 2018.
Barden, M., & Morgan, A. (2015). A Beautiful Constraint: How to Transform Your
Limitations into Advantages, and Why It’s Everyone’s Business. New York: Wiley.
Bass, B. M. (1990). From Transactional to Transformational Leadership Learning
to Share the Vision. Organizational Dynamics, 18, 19-32.
Basu, R. R., Banerjee, P. M., & Sweeny, E. G. (2013). Frugal Innovation: Core
Competencies to Address Global Sustainability. Journal of Management for
Global Sustainability, 1, 63-82.
Bhatti, Y. (2012). What is Frugal, What Is Innovation? Towards a Theory of Frugal
Innovation. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_
id=2005910 at November 10th 2018.
Bhatti, Y., Basu, R., Barron, D., & Ventresca, M. (2018). Frugal Innovation: Models,
Means, Methods. Cambridge: Cambridge University Press.
Burns, J.M. (1987). Leadership. New York. Harper & Row.
Bryman, B., & Bell, E. (2011). Business Research Methods, 3rd Ed. Oxford: Oxford
University Press.
Bound, K., & Thronton, I. (2012). Our Frugal Future: Lessons from India’s Innovation
System. London: Nesta Operating Company.
Carlaw, K. I., & Lipsey, R. G. (2006): GPT-Driven, Endogenous Growth. The
Economic Journal, 116, 155-174.
Charan, R. (2009). Leadership in the Era of Economic Uncertainty: Managing in a
Downturn. McGraw-Hill.
Chersbrough, H. (2003). R&D Through Open Innovation. Retrieved from https://
www.strategy-business.com/article/21626?gko=c2045 at November 10th 2018.
Corbin, J., & Strauss, A. (2008). Basics of Qualitative Research: Techniques and
Procedures for Developing Grounded Theory, 3rd Ed. Thousand Oaks, CA: Sage
Publications, Inc.
Corrado, C. A., Haskel, J., Jona-Lasinio, C., & Iommi, M. (2012), Intangible Capital
and Growth in Advanced Economies: Measurement Methods and Comparative
Results. INTAN-Invest Mimeo.
Creswell, J. W. (2014). Research Design: Qualitative, Quantitative and Mixed Methods
Approaches. Thousand Oaks, CA: Sage.
Elkins, T., Keller, R. T. (2003). Leadership in Research and Development
Organizations: A Literature Review and Conceptual Framework. Leadership
Quarterly, 14, 587–606.
Food and Agriculture Organization of the United Nations (FAO). (2018). Tackling
Poverty and Hunger through Digital Innovation. Retrieved from http://www.fao.
org/3/ca1040en/CA1040EN.pdf at October 29th 2018.
Fu, X., Pietrobelli, C. and Soete, L. (2010). The Role of Foreign Technology and
Indigenous Innovation in the Emerging Economies: Technological Change
and Catching-up. World Development, 39, 1204-1212.
Fullan, M. (2004). Leadership & Sustainability: System Thinkers in Action. Thousand
Oaks, CA: Corwin Press.
García-Morales, V. J., Lloréns-Montes, F. J., Verdú-Jover, A. (2008). Influence of
Personal Mastery on Organizational Performance through Organizational
Learning and Innovation in Large Firms and SMEs. Technovation, 27, 547-568.
George, G., McGahan, A. M., & Prabhu, J. (2012). Innovation for Inclusive
Growth: Towards a Theoretical Framework and a Research Agenda. Journal of
Management Studies, 49, 1-23.
Gumusluoglu, L., & Ilsev, A. (2007). Transformational Leadership, Creativity, and
Organizational Innovation. Journal of Business Research, 62, 461-473.
Hargreaves, A., & Fink, D. (2000). Three Dimensions of Educational Reform.
Educational Leadership, 57, 30-34.
Hargreaves, A., & Fink, D. (2003). The Seven Principles of Sustainable Leadership.
Journal of the Department of Supervision and Curriculum Development, N.E.A., 61,
8-13.
Hunt, J. G., Stelluto, G.E. and Hooijberg, R. (2004). Toward New-Wave
Organization Creativity: Beyond Romance and Analogy in the Relationship
Between Orchestra-Conductor Leadership and Musician Creativity. Leadership
Quarterly, 15, 145–62.
International Monetary Fund. (2018). World Economic Outlook: Challenges to
Steady Growth. Washington, DC, October.
Jerrim J. (2013). The Reading Gap: The Socio-Economic Gap in Children’s Reading Skills:
A Cross-National Comparison using PISA 2012. Paris: OECD.
Juhro, S. M., & Aulia, A. F. (2018), Transformational Leadership through Applied
Neuroscience: Transmission Mechanism of the Thinking Process. International
Journal of Organizational Leadership, 7, 211-229.
Kaplinsky, R. (2011). Schumacher Meets Schumpeter: Appropriate Technology
below the Radar. Research Policy, 40, 193–203.
Karadal, H., & Saygin, M. (2011). The Effect of Information Technology on
Innovation Abilities: A Research on SMEs. International Conference on Eurasian
Economies, 2, 396-399.
Khan, R. (2016). How Frugal Innovation Promotes Social Sustainability.
Sustainability, 8, 1034.
Kock, A., & Gemünden, H. G. (2016). Antecedents to Decision‐Making Quality
and Agility in Innovation Portfolio Management. Journal of Product Innovation
Management, 33, 670-686.
Koellinger, P. (2008). The Relationship Between Technology, Innovation, and Firm
Performance—Empirical Evidence from e-Business in Europe. Research Policy,
Vol. 37, 1317-1328.
Lawrence, K. (2013). Developing Leaders in a VUCA Environment. UNC Executive
Development:1-15.
Le Bas, C. (2016). The Importance and Relevance of Frugal Innovation to Developed
Markets: Milestones towards the Economics of Frugal Innovation. Journal of
Innovation Economics & Management, 21, 3-8.
Lembaga Ilmu Pengetahuan Indonesia. (2013). Inovasi Frugal: Tantangan dan Peluang
Penelitian dan Pengembangan Serta Bisnis di Indonesia. Jakarta: PAPPIPTEK LIPI.
NESTA. (2009). The Innovation Index: Measuring the UK’s Investment in Innovation
and its Effects. Available at https://www.nesta.org.uk/report/innovationindex-
2009/.
Ojha, N.P. & Ayilavarapu, D. (2016). Leapfrogging the World with Frugal Innovation.
Available at https://www.bain.com/insights/leapfrogging-world-with-frugalinnovation-
livemint/.
Organisation for Economic Co-operation and Development (OECD). (2004).
Innovation and Economic Growth. Available at https://www.oecd.org/cfe/
tourism/34267902.pdf.
OECD. (2012). Innovation and Inclusive Development Conference Discussion Report.
Presented at Cape Town, South Africa, November 21st 2012.
OECD. (2013). New Sources of Growth: Knowledge-Based Capital—Key Analyses and
Policy Conclusions—Synthesis Report. Available at https://www.oecd.org/sti/
inno/ knowledge-based-capital-synthesis.pdf.
Prahalad, C. K. (2005). The Fortune at the Bottom of the Pyramid: Eradicating Poverty
with Profits. Philadelphia: Wharton Business Publishing.
Raghuramapatruni, R., & Kosuri, S. (2017). The Straits of Success in a VUCA
World. IOSR Journal of Business and Management (IOSR-JBM), 1, 16-22.
Schumpeter, J. A. (1949). Theory of Economic Development. Cambridge, MA: Harvard
University Press.
US Department of Commerce. (2012). 2011 Annual Report: Powering Export Growth.
Retrieved from https://2016.trade.gov/cs/cs_annualreport12.pdf.
Weyrauch, T., & Herstatt, C. (2016). What Is Frugal Innovation? Three Defining
Criteria. Journal of Frugal Innovation, 2, 1.
Woodridge, J. (2010). Econometric Analysis of Cross Section and Panel Data.
Cambridge: MIT Press.
World Economic Forum. (2017). The Global Risks Report 2017, 12th Ed. Geneva:
World Economic Forum.
World Bank. (2018). Available at http://www.worldbank.org/en/news/pressrelease/
2018/06/05/global-economy-to-expand-by-3-1-percent-in-2018-slowergrowth-
seen-ahead.
Zeschky, M., Widenmayer, B., & Gassmann, O. (2011). Frugal Innovation in
Emerging Markets. Research-Technology Management, 54, 38-45.
Zhao, Z. Y., & Lei, X. P. (2013). Empirical Analysis of the Relationship between
Technology Innovation and Basic Research. Current Science, 104, 714-720.
Published
2019-10-15
How to Cite
Juhro, S. M., & Aulia, A. F. (2019). NEW SOURCES OF GROWTH: THE ROLE OF FRUGAL INNOVATION AND TRANSFORMATIONAL LEADERSHIP. Buletin Ekonomi Moneter Dan Perbankan, 22(3), 383 - 402. https://doi.org/10.21098/bemp.v22i3.1195
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Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
