The influence of business networks on frugal innovation capability: The role of organizational ambidexterity

This study explores the role of business networks—specifically, inter-firm collaboration (IFC), university relationships (UR), and government relationships (GR)—in shaping frugal innovation capability (FIC) among small and medium-sized enterprises (SMEs) in emerging and developing economies (EMDEs). Based in the resource-based view (RBV) theory and dynamic capability theory (DCT), the study expands on existing literature by investigating how these networks influence FIC and the moderating role of organizational ambidexterity (OA) in these relationships. The empirical findings confirm that IFC and GR significantly enhance FIC, whereas UR does not have a substantial impact, likely due to a misalignment between academic research and the practical needs of SMEs. Notably, OA negatively moderates the IFC-FIC relationship, indicating that high OA might introduce complexities that hinder the benefits of IFC on FIC. In contrast, OA positively moderates the GR-FIC relationship, suggesting that the effectiveness of government support in promoting frugal innovation is amplified when SMEs possess high levels of OA. The findings highlight the importance of targeted business networks and the nuanced role of OA in maximizing FIC in resource-constrained environments. This research contributes to the RBV literature by demonstrating the differential impacts of various business networks on FIC and highlighting the critical moderating role of OA.