The Determinants of Frugal Innovation Success of the Subsistence’s Entrepreneurships in Ethiopia: Evidence from Addis Ababa

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More recently, studies show that entrepreneurship and innovation are a means to reach the unmet needs of the poor majority at the bottom of the primed. However, addressing the problem of the poor in the developing nations or making up the base of the pyramid, especially the informal sector as an engine for growth is not easy. This is also an existing fact in Ethiopia. Hence, this thesis is initiated to investigate the determinants of subsistence’s entrepreneurships from using and selling out of frugal innovations as well as to look into its relative influence on the entrepreneurial performance success of the subsistence’s operators. The study aims to widen the knowledge about the situation of frugal innovation at the base of the primed (BOP) in the country. While, policy makers and academicians may also use the findings of the research to influence policy debates and to use them as a reference for further study. The objective of this study is to assess the determinants of subsistence entrepreneurship in using and selling out of frugal innovation in Addis Ababa, Ethiopia. The study used a survey method using a questionnaire to collect data from a sample of 385 subsistence’s operators. The study used the descriptive, correlation and regression analysis techniques to analyse the data. The finding shows that all factors are significant determinants except firm size. Whereas, the institutional voids and firm age are found with a negative effect for using and selling out of frugal innovations. As per the finding of this study the entrepreneurial capability, enabling environmental actors and the social weak ties were found as most important determinants of subsistence’s entrepreneurships for using and selling out of frugal innovations in Addis Ababa. More specifically, the entrepreneurial capability was found as a most important determinant of frugal innovations with that on average a one percent increase in the overall capability of the entrepreneur leads to an increase in applying and selling out of frugal innovations by 37 percent. Besides, it has found that frugal innovation not only positively but also highly drives the entrepreneurial performance success of the subsistence’s entrepreneurship in Addis Ababa. The findings of this study can be inputs to the policy makers that target to enhance the capacity and sustainability of micro-and small enterprises which focus on innovation.



Base of the primed, Entrepreneurship, Frugal innovation