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Although new forms of innovation such as open innovation, user innovation or crowdsourcing have been intensively discussed in the past decade, there is little systematic exploration of their wider positive and negative effects on economy, society and environment. Based on the recent debate in the literature and findings from a European foresight project, this paper aims to discuss the critical aspects of new forms of innovation such as increased participation, the use of information technologies and the increased pace of innovation and their challenges for innovation policy.

Based on a collection of international practice examples from industry and society, innovation visions have been generated and assessed by different experts across whole Europe.

A generic trend identified can be best described as open, distributed and networked innovation process. Although many new innovation models accelerate the innovation process, there are also some counter trends which in some fields may slow down the innovation process. In addition, the increased use of web-based tools, algorithms and information technologies raises new questions concerning the protection of intellectual property and data security. This reveals new questions for policymaking, which have not gained much attention on the European level so far.

Although there is an established discourse around potentially negative impacts of the outcomes of the innovation processes notably in the field of technology assessment, innovation capacity is usually seen as a desirable characteristic of innovation systems. In this paper, the possible negative aspects of new innovation models, an issue hardly addressed in the innovation literature so far, are discussed.

Given the importance of frugal innovation for small and medium-sized enterprises (SME) in developing countries, this study aims to explore the role of IT resources on frugal innovation through the mediating roles of knowledge sources and to what extent the relationship between sources of knowledge and frugal innovation is strengthened or weakened under the moderating effects of market turbulence.

This is an empirical study. Data were gathered from 355 SME employees of Pakistan through a questionnaire survey; the variance-based PLS-SEM approach was used to analyze the data.

Findings reveal the significant impacts of IT resources on different aspects of frugal innovation, namely, frugal functionality (FF), frugal cost (FC) and frugal ecosystem (FE). Moreover, the paper highlights the mediating roles of sources of knowledge in the relationship between IT resources and frugal innovation in frugal functionality and frugal cost. Findings also revealed that the moderation of market turbulence strengthens the effects of sources of knowledge on frugal functionality and ecosystem, but surprisingly weakens the relationship between sources of knowledge and frugal cost.

To bring a deeper understanding of the significant role of IT and knowledge sources, future research should examine the potential moderating role of environmental factors or perceived organizational support or mediating role of knowledge management processes in the relationship between IT resources and frugal innovation.

The paper provides a valuable understanding and novel approach for directors of SMEs in developing countries to improve their frugal innovation capability through IT and knowledge resources.

This study contributes to bridging research gaps in the literature and advances how IT resources, directly and indirectly, help firms improve frugal innovation capability via mediating roles of sources of knowledge.