Uncovering the Paradox of Affordable Innovation: The Divergent Effect of Innovativeness on Managers' Attitudes Toward Affordable Innovation

Abstract

Affordable innovation refers to new products and services that target customers with a low willingness or ability to pay. Although they can provide significant economic and societal benefits, managers often prefer premium innovations to affordable innovations. To understand the factors that lead managers to reject affordable innovations, we hypothesize several antecedents at the individual, firm, and product levels to the individual affordable innovation rejection attitude. We conduct a cross-national study and test a structural equation model with 319 participants from Germany, the United States, and South Africa. The results show that individual innovativeness plays a central but contradictory role in managers' attitudes toward affordable innovation. While general innovativeness leads to positive attitudes toward affordable innovation, technological innovativeness drives rejection of affordable innovation. Individual perceptions of firm-level and product-level factors are also important. Individuals' rejection of affordable innovation in managerial contexts in turn leads to lower investment in affordable innovation projects. We corroborate and enrich these findings also in a qualitative follow-up study. With this research, we contribute to the literature on innovation management by explaining the conditions under which managers reject affordable innovations.