Dynamic pathways of the servitization of local contents through frugal innovation-perspective on circular business model

This study addresses the limited research on how small enterprises or startups in vulnerable local economies can achieve resilience. It investigates the transformation of circular business models by focusing on the servitization of local content, driven by frugal innovation. To achieve these aims, we utilize a case study approach. In this paper, we introduce and conceptualize “dynamic servitization,” a process where firms create novel services by innovatively reusing local content and adapting work forms under significant resource constraints. The findings have significant implications for the future development of local economies. First, local content, ranging from agricultural byproducts to intangible assets such as regional culture, is a vital catalyst for frugal innovation and economic revitalization. Second, frugal innovation is not merely about cost-cutting but is a strategic approach for developing sustainable, high-value services. By using fewer resources to create better outcomes, firms can build resilient business models. Finally, this paper offers a replicable pathway for entrepreneurs and policymakers aiming to foster sustainable growth. The dynamic servitization model demonstrates that combining the principles of the circular economy with frugal, service-oriented innovation can generate new economic value and employment, strengthening local communities. The contribution of this paper is the proposal of a new closed-loop circular business model, demonstrating a practical pathway for firms in resource-scarce environments.