Cost Discipline, Frugal Innovation and SME Performance under Resource Constraints: The Mediating Role of Resource Bricolage Capability
DOI:
https://doi.org/10.57125/FS.2026.09.20.05Keywords:
cost discipline, frugal innovation, resource bricolage capability, resource constraints, SME performance, PLS-SEM.Abstract
Small and medium-sized enterprises (SMEs) in emerging economies compete from a chronically narrow resource base, yet how their strategic orientations are converted into performance under scarcity remains under-specified. Integrating the resource-based view, the dynamic-capabilities perspective, and entrepreneurial bricolage theory, this study tests a moderated-mediation model in which a cost discipline orientation and a frugal innovation orientation influence SME performance both directly and through resource bricolage capability, with resource constraint hypothesised to strengthen the orientation-to-bricolage relationships. Primary data from 292 Chinese SMEs were analysed with partial least squares structural equation modelling (PLS-SEM) and 5,000 bootstrap resamples. Both strategic orientations significantly built bricolage capability (β = 0.274 and 0.225) and directly raised performance (β = 0.210 and 0.324), and bricolage capability significantly raised performance (β = 0.240) while partially and complementarily mediating both orientation–performance relationships (indirect effects = 0.066 and 0.054). As hypothesised, resource constraint significantly and positively moderated the cost-discipline-to-bricolage relationship (interaction β = 0.162, p = .002), strengthening the conversion of cost discipline into bricolage capability where constraint is high; the parallel frugal-innovation interaction could not be stably estimated. Resource constraint also exerted a significant positive direct effect on bricolage capability (β = 0.152). The model explained 36.5% of the variance in performance and 31.4% in bricolage capability. The study positions resource bricolage capability as the central mechanism converting strategic orientation into performance under scarcity. It establishes resource constraint as both a direct antecedent of improvisation and an amplifier of the cost-discipline-to-capability relationship. These findings refine bricolage theory, extend the frugal-innovation literature to a quantitative mechanism test, and offer resource-poor SMEs an actionable account of how strategic posture becomes a competitive result.
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