Business model transformation for frugal innovation during market disruption

In several developing countries entrepreneurs work under radical uncertainty caused by market disruptions. In this study, we apply effectuation theory to theorize the process through which entrepreneurs innovate their business models to create new opportunities to serve low-income customers in the face of radical uncertainty. Based on an in-depth qualitative multi-case study in Iran, we illustrate how the effectual logic enables entrepreneurs to transform their business models constantly to cope with market disruptions caused by economic sanctions. Our findings contribute to business model innovation and frugal innovation research. We also contribute to effectuation theory by extending its boundary conditions.