Strategic Responses During Frugal Innovation at the Base of the Pyramid: the Case of Philips Community Life Centres

When multinational enterprises (MNEs) seek to serve the needs of base of the pyramid (BOP) environments, they are often confronted with several environmental factors, among them, severe resource constraints and institutional complexities. MNEs adopt two overarching strategic orientations to navigate these factors: the strategy to adapt to the new context, or the strategy to shape the context. This paper investigates how and when these strategic orientations are deployed in an MNE. It further explores the intra-organisational tensions and dilemmas that arise when these strategic orientations are implemented. This paper analyzes a case of frugal innovation in a primary care intervention developed and deployed in Kenya by Philips N. V., a Dutch multinational technology company. Several propositions are generated based on the case ndings. The paper contributes to the frugal innovation literature which lacks rigorous, in-depth analytical case studies on organisational processes associated with new product development. It also offers managers a useful toolkit that could inform how they could strategically navigate the pressures of BOP environments. How does a multinational enterprise entering the BOP deploy strategic orientations to or shape the new context? What are the intra-organisational consequences of deploying these strategies at the BOP? To the analyses a case study of frugal innovation in healthcare in Kenya, in particular, Philips Community Life Centres (CLC) developed and deployed by Philips N. V., a Dutch multinational technology company. A CLC is a platform that bundles new technologies and integrated service offerings into primary healthcare. It upgrades and transforms primary healthcare facilities in semi-urban, rural and remote areas into social and economic community hubs, with community engagement at the core of product development and facility management. The case is analysed based on Khanna and Palepu's (2005) Five Contexts framework that the healthcare in Philips strategic responses during the innovation process, the predictive factors. ndings the emerging intra-organisational tensions as Philips implemented the strategies identied. respond to the local conditions in two regions in Kenya, Philips adopted both market adaptation and market shaping strategies through its CLC programme. Analysis of those strategies and tactics signals a pattern of decision making presented below. frugal innovation discourse. Findings reveal that frugal innovation is not only towards adapting to also an institutional focus and effect. Finally, the paper sheds new light on intra-organisational dynamics within multinationals that result when different strategic orientations are implemented in new BOP contexts. The study shows that shifting internal organisation logics can be a challenging task due to cognitive biases entrenched by operating successfully in markets that are fundamentally different from the BOP. However, given that MNEs have largely saturated their home country markets and are actively looking for new markets in the BOP, these tensions can not be ignored.

This study focuses on frugal innovation in the BOP.
The nature of BOP contexts Following the lead of Prahalad and Hammond (2002) who coined the term, BOP contexts have been de ned based on per capita income at or below US$1,500 or US$2,000 per annum. The BOP market has also been described based on the household poverty threshold of US$1 or US$2 per day (Banerjee and Du o 2007). BOP markets were previously associated with entire countries and regions in Africa, Asia and Latin America (Kolk, Rivera-Santos, and Rufín 2014), or even more generally, emerging markets (Khanna, Palepu, and Sinha 2005). The discourse has, however, evolved to focus on customer segments characterized by strong resource constraints and poor market access-a perspective that this paper adopts.
Along with poverty as the foundational factor of the BOP, these contexts are characterized by resource constraints and institutional complexities. From a foreign entrant's perspective, resource constraints in BOP contexts relate factors of production, i.e. shortages of high-quality raw materials and commodities, inadequate infrastructure such as power supply, water, roads and logistics, and de ciencies of speci c business or technical skills in the human resources available (Mair and Marti 2009, Khanna, Palepu, and Sinha 2005, Ernst et al. 2015. Further, BOP contexts are exempli ed by 'institutional voids', i.e. de ciencies or absences of formal market institutions such as capital markets, governance mechanisms, and property rights protections that make doing business challenging Palepu 1997, Mair andMarti 2009). An alternative view highlights' institutional complexity', i.e. the coexistence of formal market and political institutions, and informal traditional or indigenous political, social and cultural institutions that result in an uncertain and ambiguous environment Ventresca 2012, Onsongo 2017).
The challenge for an MNE entering these settings therefore involves effectively navigating and leveraging these complexities. We next explore the strategies that organizations that engage in frugal innovation employ to succeed in BOP environments.

Strategic choices in BOP contexts
Strategic choices for MNEs in BOP contexts-including those engaging in frugal innovation-essentially focus on whether (1) to adapt to local conditions, or (2) to alter those local conditions in order to maintain their usual mode of operations so as to leverage their global competitive resources Sinha 2005, Peng 2003, Ausrød, Sinha, and Widding 2017). In tting with the rst alternative of 'going local', frugal innovation has been conceptualized as a process of adapting technologies and related business models to the constraints of BOP contexts. The adaptation process on one hand involves reengineering products and business models to t the context and address the needs of consumers (Zeschky, Widenmayer, and Gassmann 2011), and on the other hand, innovating or experimenting with the business models that deploy those technologies (Chesbrough 2010, George, McGahan, and.
Therefore, efforts to adapt to context are driven by the external environment.
The large body of work in entrepreneurship and neo-institutionalism has shown however that entrepreneurs do not just blindly respond to what exists in their environment, entrepreneurs engage in purposive actions and practices aimed at change (Bruton, Ahlstrom, and Li 2010). Pioneering entrepreneurs in nascent markets are incentivized to change the institutional environment in ways that reinforce their interests (Battilana, Leca, and Boxenbaum 2009), and reduce environmental complexity by imposing familiar routines and standards (Boisot and Child 1999). Thus, the second alternative focused on altering local conditions may involve changing institutional environments to facilitate the deployment of new (frugal) products or services.
In sum, organisations are unlikely to be invariably passive or active, conforming or resistant, or adapting to the context or shaping the context. Rather, as Oliver (1997) argues, their behaviour is predictable based on the nature of the local conditions.

Intra-organisational consequences of BOP strategic choices
In deploying either or both of these strategic choices, foreign entrants confront con icting pressures. On one hand, they want to align with their global norms to leverage their competitive clout, and on the other hand, also align with local norms in favour of creating a better t with the local institutional environment (Peng 2003). These pressures are exacerbated for MNEs that are non-monolithic, and those that face con icting sets of external environments. Additionally, MNEs may also have complex internal environments with inconsistencies and con ict among the interests, values, practices, and routines used in the various parts of the organization (Kostova et al., 2008). Therefore, we expect to see various tensions within the organization as it deploys either of these strategies.
Adaptation to the context from the perspective of frugal innovation involves changing existing organizational designs to accommodate low-cost innovation, and recon guring how value is created and captured to gain access to and compete in BOP settings (George, McGahan, and Prabhu 2012). A frugal mindset needs to be adopted, and this may manifest through bricolage (Baker and Nelson 2005), effectuation (Sarasvathy 2001), and improvisation (Radjou, Prabhu, and Ahuja 2012). These processes are associated mainly with local enterprises innovating under resource constraints. For an MNE to embrace this logic, it may entail shifting the entire internal logic of the organization and learning from the practices of successful local entrepreneurs that operate from de facto frugal mindsets. In a practical sense, adopting a frugal attitude may involve focusing on 'good enough' solutions, which implies a constant evaluation of the ideal balance between quality, cost and functionality in response to local requirements and constraints. In general, shifting internal organization logics has proven to be a challenging task due to cognitive biases entrenched by operating successfully in markets that are fundamentally different from the BOP.
Consequences of the choice to shape the context through frugal innovation may be a short-term loss of competitiveness as the organisation builds legitimacy for its new products.
The following section investigates the rationale underlying various strategic choices made by the Western MNE Philips N.V. as it deployed healthcare facilities in Kenya, and subsequently explore the resulting intra-organisational tensions. energy, indoor and outdoor LED-lighting, and clean water supply into these facilities. Philips developed both CLCs in collaboration with the respective local county governments.
A single case study approach was selected to investigate our phenomena of interest, i.e. frugal innovation in a Western MNE entering a sub-Saharan African, its strategic choices and consequences, in a nuanced, empirically-rich and holistic way as proposed by Yin (2009, 50). In the context of BOP research and the frugal innovation discourse, the Philips CLC case is unique: 1) Philips N.V., which is a technology rm is diversifying its product offerings by entering the service industry in Africa for the rst time, 2) it is entering the state-controlled public service domain of primary healthcare, and thus, it must be not only frugal to cope with extreme resource constraints but also be innovative at the institutional level. The single case study will enable exploration of the normative issues around product innovation and organizational strategy from an interpretative standpoint-a common approach used particularly in empirical studies focused on BOP markets (Andersen and Esbjerg 2020, Ausrød, Sinha, and Widding 2017, Go n et al. 2019). Further, MNE strategic choice has yet to be investigated through the lens of frugal innovation. Thus, an inductive approach applied through a single case study would yield propositions that could be explored further in future research.

Data Collection
Data was collected from a variety of sources: participant observation, documentary evidence, and in-depth interviews conducted intermittently between February 2017 and November 2018. Face-to-face, semi-structured interviews were conducted with research scientists and venture managers at the Philips Africa Innovation Hub in Nairobi, Kenya and the corporate o ces in Eindhoven and Amsterdam, The Netherlands. These interviews focused on the early-stage conception of the CLC as a venture. They also explored the activities related to the ongoing development and commercialization of the CLC programme in Africa such as co-creation processes, the partnership framework, nancing, the CLC roadmap and the future developments. CLC medical staff in the health facility in Nairobi were also interviewed to collect evidence on the day-to-day operations of the CLC. To further validate the perspectives gathered from Philips staff, further interviews were done with o cials of the County Government of Kiambu, particularly o cials of the county health department that were directly involved in the development, launch and monitoring and evaluation of the CLC. The objective was to interview all actors directly involved with the CLC programme development and deployment, thus there was no overt sampling procedure applied when selecting respondents. Each interview-guided by the standard protocol for capturing emergent themes proposed by Strauss and Corbin (1998)-lasted between 20 minutes and three hours, with some respondents being interviewed multiple times. The interviews were audio-recorded and transcribed verbatim. The list of respondents is included in the appendix.
The interviews were supplemented with participant observation of the operations at the Githurai Lang'ata CLC. While eld observation notes were not coded in the data analysis, they were used to validate the ndings from the interview data. A wide array of documents was also collected from the Philips o ces in Amsterdam, Eindhoven and Nairobi, among them, documentation on the co-creation processes with the community, the components of the CLC, the innovation process followed to develop and commercialize ventures, and project management procedures. The documentation shed light on Philips' internal logic as the CLC evolved and the organizational framework that supported its development. Further documentation on Kenya's and Kiambu County's health system, i.e. the health policy, national and county strategies and investment plans were collected in Kenya to aid in contextualizing the CLC within the health system and evaluating institutional changes under evolution.
To enhance data reliability, two researchers participated in the majority of the interviews, observations and documentary evidence collection. Utilizing multiple sources of data from interviewees in Kenya and The Netherlands, from within Philips and from the local government, data from documentary evidence, and perspectives gathered from participant observation enabled triangulation of the evidence to ensure internal validity of the study as proposed by Yin (2009) and Eisenhardt (1989). The data collection strategy was developed in collaboration with two other senior researchers involved in the project with whom follow-up discussions were done to reduce bias and to ensure that there are minimal gaps.  Figure 1 for a list of the descriptive codes. Through the process of axial coding, we then grouped similar contextual factors into more abstract analytic codes. For example, multiplicity of expectations was a common theme arising from the fact that local norms were diverse due to heterogeneous groups and primary care services in the regions studied. Other emergent themes from each of the 'Five Contexts framework' domains are presented in Table 1.
The second cycle of coding focused on identifying speci c strategic responses of Philips N.V. to the contextual factors identi ed in the previous cycle.
Through a second review of the whole dataset, further descriptive codes were generated, for example, adopting a modular design approach to cater for heterogeneous needs or co-opting local healthcare governance structures and Community Health Workers. These strategies were linked directly to the contextual factors identi ed in the primary coding cycle. In Table 1, linked codes are presented in the same row, such that each strategic response is connected to a speci c contextual factor. In order to determine whether these strategic responses were focused on either adapting to the context or shaping the context, we analyzed them interpretatively to see if there is a pattern of decision making. This process was inductive and recursive so as to identify the predictive factors as more abstract, theory-rich constructs. Speci cally, we explored the rationale underlying Philips responses and the related scope of contextual factors. We then found, for example, that strategic responses that addressed established formal institutions and deeply entrenched informal institutions tended to adapt to local conditions rather than shape them. From these ndings, we made some propositions on the expected behaviour of an MNE to pressures in a BOP context.
Finally, we explored the consequences or outcomes of these strategic choices on the Philips organisation. We engaged in a selective coding process in another review of the dataset to nd ways in which the strategies identi ed in the second cycle of coding resulted in tensions or dilemmas within the organization. We also engaged in axial coding to categorize these outcomes as internal or external, and short-term or long-term.
This coding process was conducted by one researcher. However, to avoid misinterpretations and ensure that the nal themes adequately re ect the phenomena, the ndings were shared with three of the interviewees from Philips and with fellow researchers in the project.

Findings
Philips' overall strategy with the CLC programme was to improve access to primary care by strengthening the backbone of the healthcare system by At the core of Philips CLC strategy is community engagement, rst through co-creation, and subsequently through community participation in the governance of CLC facilities. Philips' efforts to co-create with the local community adapted the value proposition of the CLC to community needs. Philips further aligned with local norms around healthcare delivery and management by leveraging existing institutions and relations. Co-optation efforts were at two levels: recruiting Community Health Workers (CHW) to use the Philips backpacks and equipment in their routine household health visits, and adopting pre-existing local health committees as the governance framework for the CLC. These strategies gave legitimacy to CLC in the community by fostering local ownership even though the facilities had a clear Philips brand image.
Findings on the CLC programme also show that Philips sought to adapt product development to these norms and value systems by embracing modularity. Modularity means that core primary care services are at the core of the standard design, while auxiliary services or the different modes of delivery can be customized or added on based on the speci c needs and circumstances of any particular area and health facility. The modular design is seen as a way to balance efforts to adapt to local needs and developing a standardized solution, as the Senior CLC Research Scientist intimated: We still retain as something which is going to be unique to the facility, and what elements are going to go as part of a module and negotiable. And then we come up with different standardization models.
The modular design also enables Philips to leverage knowledge gathered from one site to develop the core and auxiliary elements further. Deploying it in the eld, you optimize between what you can do locally and what you can leverage from other places (Head of Research Africa, Philips).

The product market
Philips considered the existing resource constraints and the underdeveloped primary care product market as an opportunity to introduce a new frugal paradigm of primary healthcare delivery. This is evident in the overarching strategy of the CLC venture to develop a community-level healthcare solution that easily adapts to the different community needs in different African villages (Internal company report, 2014). This effort to adapt was evident in Philips's effort to re-engineer its products and processes, and to form partnerships to overcome market information de cits. In this regard, Philips adopts frugal engineering as a mindset.As the Head of Research Africa explains: Coming from Eindhoven where we have amazing infrastructure, I cannot afford that infrastructure here in Kenya. We talk about the acceptability and affordability in how a product should be created, then we need to look into cost-effectiveness. And since I started work for low resource setting, Value The regulatory environment Kenya, like many developing countries, has a tiered healthcare system (see Figure 1). However, there is poor coordination within this tiered system to facilitate However, as his last statement above indicates, the design of the CLC is not only aligned to the KEPH, but also to the local needs at play. This implies that local needs potentially go over and above the stipulations of the policy-a matter that opens up opportunities for innovation outside the policy stipulations, and thus opportunities to shape the policy environment via demonstration effects. Further, Philips, in conjunction with the county governments, found opportunities to innovate within this policy framework in a way that may in uence the development of primary healthcare delivery. Such policy experimentation enabled Philips to further engage in advocacy for innovation within the KEPH framework. Philips also engaged in co-creation with community members to identify mismatches between local needs or expectations with both Philips standards and the local government's standards. Such a bottom-up approach gave legitimacy to the resulting CLC design, even though it may con ict with expectations on both sides. In summary, the ndings show that Philips adopted both strategies to adapt to and to in uence the regulatory framework.

The labour market
Human resources employed to develop, test and implement the CLC venture were pivotal to the envisioned success of the venture, particularly in making it locally relevant. Thus, available human resources in the labour market in Kenya were considered crucial to the MNE, not only with regard to their knowledge capabilities on primary healthcare and the policy environment, but also technical capabilities that matched the requirements of realizing the CLC, e.g.
managing co-creation processes and related user studies, developing locally relevant medical technology and information systems, and integrating the CLC components in a way that made sense in different low resource settings.
At Philips, we believe that our workforce should be a re ection of the society in which we operate, a re ection of our customers, and the markets we serve Various Philips executives observed that raising funds from African capital markets for large investments in the primary healthcare space is challenging given the absence of local venture capitalists, and varying priorities and constraints of local nancial institutions. Public healthcare expenditure in most Africa countries is also generally low.
[Financing] is a challenge that [local governments] have even though the willingness is there. And this is a new eld and in general there is a challenge on how to nance this type of solutions.
To raise capital, Philips explored public private partnerships with national and local governments which, though limited, have budgets for primary healthcare development and for related recurrent costs such as facility management and human resources. Philips' rst CLC in Kenya was established through a publicprivate partnership arrangement in which the local government supplied the land, labour to refurbish the facility and construct building extensions, supply water, and recurrent expenditure such as sta ng costs and supply of medical commodities. Philips absorbed the investment in medical, laboratory and refrigeration equipment, and the energy, lighting and IT solutions. Philips has also explored a Management Equipment Services model that enables local governments to make regular, prearranged payments for leased equipment over an agreed contractual period. Philips also adapted to constraints in the capital market by exploring various donor-led nancing options. For instance, to nance the Mandera CLC, Philips and the local county government sourced for capital from The United Nations Population Fund (UNFPA). Internally, the need to develop fundraising procedures within the CLC end-to-end process became pertinent, as explained by the Head of Research Africa: We deal with donors many times through calls for proposals. Sometimes we need to approach them and develop a case which we can pitch. This is particularly related to the M2O part, its more related to development projects and funding. Many of the donors actually have funds or budgets available for speci c areas, and that can be primary care.
In sum, Philips' effort to fundraise through external markets is an obvious strategy to adapt to contextual constraints by mobilizing external resources.
However, the type of public-private partnerships that Philips has negotiated in primary the healthcare arena is revolutionary as it has the potential to in uence the structure of primary care investments in Kenya, and by extension, in Africa.

Predictive Factors
The preceding section demonstrated that, to respond to the local conditions in two regions in Kenya, Philips adopted both market adaptation and market shaping strategies through its CLC programme. Analysis of those strategies and tactics signals a pattern of decision making presented below.
Adapting to the Context Deeply embedded informal institutions and established formal institutions: The case ndings have shown that local norms and value systems in healthcare delivery at the community level are deeply ingrained. As a foreign entrant into a BOP setting, changing those norms in the short-term, particularly in primary care in rural areas, is a risky strategy. Recognizing this, Philips instead chose to collaborate with and co-opt local communities to learn about local primary care norms and needs. In this way, the MNE was able to align with local norms to gain legitimacy of their new intervention in the BOP context. Similarly, the case ndings show Philips aligning with 'The Kenya Essential Package for Health (KEPH)', which is part of the Kenya Health Policy for similar reasons: to gain legitimacy for the CLC within the existing formal institutional framework.
P2. When an MNE is confronted with deeply embedded informal institutions or established formal institutions, it is likely to respond by adapting to those institutions in order to develop a locally embedded product.
Resource constraints: The case ndings show that as a foreign MNE, Philips had to confront signi cant resource constraints to design and implement the CLC as a primary care intervention. Thus, the organization is compelled to respond by, for instance, engaging in frugal engineering as a response to de ciencies in the product market. The organization may also hire local staff to gain local knowledge capabilities, and train new hires to address any skill de cits. Further, the organization may adapt to underdeveloped capital markets by raising capital externally to facilitate usually signi cant capital investments in research, development and implementation. These strategic choices were geared towards deploying resources to adapt to local resource de ciencies.
P4. When an MNE engaging in frugal innovation in a BOP setting confronts severe resource constraints, it is likely to respond by adapting the context by mobilizing internal resources.

Shaping the Context
A multiplicity of expectations: Multiple expectations arise when an actor is dealing with heterogeneous stakeholders. Given that the CLC programme was to be scaled up and rolled out in different regions in Kenya, but also in sub-Saharan Africa, it would be too costly to customize each facility to each of those expectations. Thus, Philips opted to use a modular design approach to develop locally relevant solutions that can be standardized to facilitate scale-up. In this way, the core elements of the CLC shape of in uence how healthcare services are consumed.
P1. When an MNE faces multiple expectations from heterogeneous groups in a BOP context, it is likely to make the strategic choice to shape those expectations to successfully enter the market and scale up.
Inconsistencies, absence or weaknesses in the regulatory framework: In the process of conforming to the existing institutional framework, Philips discovered various weaknesses in the system, among them, poor coordination in the referral system. These weaknesses were due to institutional voids in the system, which created an opportunity for Philip to make interventions with the CLC that have implications for the policy framework. For instance, Philips was able to experiment with new technology beyond the policy stipulations to address existing primary care needs, while co-opting policymakers in the learning process with the view of scaling up the CLC as a new healthcare delivery organizational form.
P3. When an MNE engaging in frugal innovation in a BOP setting encounters institutional voids in the regulatory framework, it is likely to respond by in uencing the context by lling those institutional voids.

Tensions emerging from the strategic orientations
For Philips deploying the two strategic orientations resulted in some tensions and dilemmas at the intersection of the parent organisation and the local a liate. Entering the BOP was not business as usual, it was also a disruptive process within the organisation. It called for a re-examination of taken-forgranted organisation processes and philosophies. Below are the tensions that emerged as the CLC was being deployed in Kenya: New R&D capabilities (technology push vs demand-pull capabilities) As already seen, Philips leveraged its internal engineering capabilities to develop high-tech frugal technologies that t the primary healthcare product market.
However, Philips realized that deploying frugal technologies in a coherent or integrated solution requires more than a technology-push R&D approach that Philips has become accustomed to while serving markets in industrialized settings. The organization needed to develop a new set of competencies to implement a demand-driven, bottom-up approach based on local needs assessment and co-creation efforts. To address this challenge, Philips has to acquire new capabilities to implement a demand-pull R&D framework as a complement to its conventional technology-push approach. Addressing this challenge would require a review, and possibly, a restructuring of the internal organizational resources and norms The Senior CLC Research Scientist, Philips explains further: It has taken us three years to really gure out what it takes to have an operational CLC. Now we are trying to work in the organization to gure out how we can t the requirements or the norms set within the organization. It might seem very simple, but the process of transforming yourself internally to cater to a population through one solution is a big risk. We are trying to de ne a new way to do business.

Tension in the internal commercialization operations: silo-based approach vs solution-oriented approach
Philips' operations are structured around a silo-based approach where each product line has dedicated operational infrastructure ranging from R&D to revenue management. Philips has been building and selling high-margin products such as MRI machines through dedicated business units. However, the CLC as a proposition is packaged not as a product or combination of products, but as a 'solution' that contains various medical devices, laboratory and refrigeration equipment, energy and lighting technologies, and IT solutions. Thus, an integrated product management approach, not only for R&D, but for the entire product development and commercialization process, was required. As the Venture Manager of the CLC elaborated: It means that certain organizational tendencies need to be broken. So rst, you can't work in silos. You can no longer say that that ultrasound is a different business unit, or patient care and monitoring is a different unit, and they have their own R&D, they have their own P&L, they have their own individual ways of working. We need to work together. And that is a big responsibility, because we are talking about changing our way of working for an organization which has really set itself up for more than 100 years.
In order to respond to these operational challenges, Philips developed a new three-phase 'end-to-end process' for the CLC scaling programme. This is a work ow programme that caters to the complexity of deploying a solution in the African context and takes into account the large variety of clients and partners (governments, donors, development banks, etc.) engaged in different stages of realizing a CLC. It begins with an Idea-to-Market (I2M) phase that streamlines R&D processes, followed by the Market-to-Order (M2O) phase where a value proposition is developed, and an assessment of customer needs is done and translated into an order. The nal phase, Order-to-Cash (O2C), spans from the moment there is a handshake between Philips, its partners and the customer to the point an order is formalized. Thus, it covers product and service delivery, manufacturing execution, logistics, warehousing, and related nancial transactions. An implementation phase follows, where many partners are also engaged to supply and realize the CLC, and to service it on an ongoing basis. This end-to-end process was found to be useful not only for the CLCs in sub-Saharan Africa, but also for other products rolled out in other markets.

Tension between standardization and customization to scale the intervention
The value of co-creation is highly appreciated at the African Innovation Hub as a way to adapt the CLC to local norms and local resource constraints.
However, ndings from interviews indicated that executives at Philips corporate did not share this perspective, co-creation was expensive, and its return on investment was yet to be established. They preferred to manufacture standard health technologies that can be sold at high volumes in new markets. Cocreation costs involve hiring many well-paid, highly skilled scientists capable of implementing time-consuming participatory approaches, sending them to remote hardship areas which exacerbates costs, and designing CLCs from the ground-up. To balance these interests, one viable alternative was to cater to a speci c range of customer (Senior CLC Research Scientist), particularly when a large donor organization that is willing make a capital investment to implement CLCs on a large scale so as to demonstrate integrative change in primary healthcare. This alternative was alluring due to its economies of scale that lower the cost of co-creation per facility. According to the Philips Head of Research Africa, the objective is to nd the balance between what is locally relevant, and what is cost effective.
To further alleviate the high cost of scaling the co-creation approach, Philips started to develop a standardized way of engaging with the community that is more sustainable and cost-effective. This application, based on information technology, would be used to investigate work ows and patient ows in local facilities, assess local challenges, and collecting insights from community members. The IT-based tool would be used remotely instead of sending someone to a dangerous place to do co-creation (Head of Research Africa, Philips), and data collected would feed into the CLC design process.

Tension in quality standards: EU-oriented vs local standards
In the R&D process, further tensions emerged on whether to impose Philips internal quality standards developed in its European markets on the African context. New frugal products aimed for African and Asian markets were subjected to prolonged, bureaucratic European-based quality standards that complicated and delayed deployment. For instance, the Philips Children's Automated Respiration Monitor (ChaRM), which was developed by the Africa Innovation Hub for use in the CLC, was subjected to heavy regulatory approval processes for which capacity lacked in Africa and in India where the device was manufactured. To conform to the European standard, the Indian factory had to be EU accredited, which entailed worker training and new bureaucracies.
These processes delayed production and subjected the Philips CHaRM to competition from China where such procedures are either relaxed or non-existent.
The consequences are, as the Venture Manager CLC describes: It makes us slow, very slow. It makes us very expensive, and the question is, can we really compete in this market with such heavy burden that we shouldn't carry. In the end, you probably have wonderful quality product that is completely regulated and what not, but how competitive are you?
Tension between local and Philips' corporate organizational culture Managers can also shift the organisation's strategic orientation in different domains upon learning about the local context, acquiring new resources, and when changes occur in the external environment. For instance, certain contextual factors may imply that only market adaptation can be applied as a strategy.
However, immersing oneself in the context to learn about opportunities such as institutional voids can present an opportunity to change the strategy to a market shaping one. In other words, managers should be willing to experiment in their new local contexts to nd the best course of action.
Strategic orientations can also be layered, and as such, may differ across the organisation during the early phases of developing and launching a frugal innovation. At the subsidiary or local a liate level, there is a clearer appreciation of the fact that any solution developed must adapt to local resource constraints and the institutional environment. This could be due to the fact that the local organisation is locally embedded, and it must routinely confront these constraining factors in its direct interactions with local communities and governments (Ciabuschi, Holm, and Martín Martín 2014). Its search for legitimacy is on more temporal and micro-level. The parent organisation, however, adopts a broader macro perspective that seeks to induce changes in the new context by in uencing the institutional environment. This re ects the nested hierarchical nature of MNE strategy. Thus, managers must tactfully navigate these layers during the product development process.
Similarly, layering of the strategic orientation may also have a temporal aspect. Managers can use market adaptation to enter the market, learn about the market, and explore how a scalable yet contextually relevant product can be developed. This justi es the need to make large investments towards co-creation processes, frugal engineering, training and development of local hires, and community outreach in order to understand how the product fares as an intervention in the existing environment. The market adaptation strategy can be seen as a way to gain legitimacy in the new context and get local ownership from policy makers and the community. Upon proof of concept, i.e. a scalable product, the organisation would aim to deploy and scale up a more standardised solution. To pave way for such a solution in new contexts, the organisation may more overtly engage in efforts to in uence local institutions such as regulation and local norms. However, this approach is prohibitively costly and high risk if the proof of concept is not achieved and legitimacy is not garnered.

Limitations and further research
While this study aids our understanding of the nature of frugal innovation strategy in BOP contexts, it has some limitations that could be addressed in future research. The contributions are drawn from a single in-depth case study in the primary healthcare sector, and thus, the empirical ndings cannot be directly generalized beyond similar contexts and public sectors. Nevertheless, the study has generated propositions that could be analysed whenever an MNE is entering a BOP context by doing frugal innovation. Further research could investigate whether similar studies in other sectors and contexts will generate similar results.
The study also focused on a powerful MNE with vast internal resources and capabilities and access to external resources (e.g., more capital, partnerships, etc), and clout to in uence institutions. Further research can explore how a less powerful MNE, or a local enterprise make strategic choices when confronted with similar contextual factors.

Declarations
Availability of data and materials The data that support the ndings of this study are available on request from the author. The data are not publicly available as they contain information that could compromise the privacy of research participants.

Competing interests
The author declares that they have no competing interests.

Funding
This work was supported by the Netherlands Organization for Scienti c Research [NWO grant number 313-99-314].

Authors' contributions
This is a single authored paper, thus all contributions were made by the sole author.