Factors associated with perceived frugal-innovation capability in traditional craft villages: A respondent-level PLS-SEM study in Hanoi, Vietnam

Abstract

Frugal innovation is increasingly treated as a capability for developing affordable, resource-efficient, and context-appropriate solutions, yet its antecedents remain fragmented across the literature and are insufficiently examined in community-embedded craft production. This study evaluates two connected sets of respondent-level associations in traditional craft villages in Hanoi, Vietnam. The resource-recombination route links perceived empowering leadership, knowledge management, organic innovative culture, and network embeddedness with bricolage and, in turn, perceived frugal-innovation capability. The institution-market route links network embeddedness with perceived government support, perceived customer requirements, customer participation, and frugal-innovation capability. A cross-sectional survey produced 432 returned questionnaires; 416 retained cases were analyzed using partial least squares structural equation modeling (PLS-SEM). All constructs are interpreted as respondents’ perceptions of practices and conditions in their focal production or business units rather than as objective organization-level measures. Bricolage had the largest direct association with perceived frugal-innovation capability (β = 0.441), and empowering leadership had the largest association with bricolage (β = 0.492). Network embeddedness was associated with several specific indirect routes, while perceived government support was associated with frugal-innovation capability both directly and through customer-facing constructs. The model explained 52.5% of the adjusted variance in perceived frugal-innovation capability. The findings support a resource-conversion interpretation centered on bricolage, but the cross-sectional, single-source design does not establish temporal mediation or causal effects. The craft-village setting informs interpretation; heritage preservation, cultural authenticity, and objective resource scarcity were not directly measured and therefore remain boundary conditions for future research.