Abstract

This article critically analyses how the entrepreneurial ecosystem (EE) and institutional environment influences the development of frugal innovation and informal entrepreneurship. There is a dearth of empirical research on African entrepreneurship ecosystems and complementors that produce innovations in the informal sector. We address this gap, by examining why and how informal businesses operate and evolve. Based on a qualitative approach, interviewing 20 business owners in Nigeria, two focus groups meeting with 5 and 7 business associations leaders respectively, we examine the role of institutional environments, how entrepreneurs operate and overcome the barriers to entrepreneurship. The results reveal a model of determinants of frugal innovation and informal entrepreneurship ecosystem comprising of formal/informal rules, access to market and family as important elements that act as a means to effective knowledge flows, networking, capital and resources sharing.