Determinants of Employee Creativity, Leadership, and Employee Capabilities in Driving Frugal Innovation: A Systematic Literature Review

Abstract

This study aims to analyze the roles of employee creativity, leadership, and employee capabilities in driving frugal innovation, based on a systematic literature review. Employing a descriptive qualitative approach via the Systematic Literature Review (SLR) method covering 30 reputable scholarly articles published between 2021 and 2026 the analysis was conducted through four key stages: identification, selection, extraction, and narrative synthesis. The findings indicate that: 1) Employee creativity plays a role in generating ideas and alternative solutions when organizations face resource constraints; 2) Leadership contributes by establishing a vision, supporting experimentation, granting autonomy, and fostering a conducive work environment; and 3) Employee capabilities provide the foundation of knowledge and technical skills that enable organizations to develop solutions that are simple, affordable, and efficient, while maintaining the product's core functionality. Additionally, innovation capabilities, organizational culture, and entrepreneurial orientation were identified as further driving variables. This research offers a theoretical contribution to the integration of human resource management and strategic management, while providing practical guidance for organizations seeking to optimize internal potential amidst budget constraints