EFFECTS OF DYNAMIC CAPABILITIES ON FRUGAL INNOVATION: A CONCEPTUAL FRAMEWORK FOR SUSTAINABLE SUPPLY CHAIN APPLICATION

Abstract

Recently, supply chain operations have been influenced by three concepts such as sustainable supply chain, dynamic capabilities, and disruptive innovation. First, sustainability has become a necessary goal for businesses and a powerful strategy for competitive advantage. Sustainable innovations along the supply chain are increasingly important regarding firm competitiveness to respond to rapid changes in the market. Secondly, disruptive innovations are particularly adopted by firms, because they aim to provide product or process to a new set of customers (or customers with new sets of requirements). Big data and predictive analytics are one of them and may have the ability to generate considerably more business and social value while significantly reducing the use of scarce resources. This disruptive innovation could improve the ability to help with the sustainability of sourcing decisions, and reduce environmental footprint are increasingly recognized. Thirdly, developing dynamic capabilities such as absorptive capacity both in firms and in supply chains are also integral to responding to dynamic markets and customer needs. Dynamic capabilities are collective resources (financial and technical assets coordinated with knowledge and competencies) which are essentially change-oriented, helping firms redeploy and reconfigure. Any innovation (whether process or product oriented) must then rely on such capabilities. The main objective of this paper is to develop a conceptual framework through a literature review, to identify the features of disruptive innovations applied to the sustainable supply chain, and to analyze the role of dynamic capabilities. We will focus on how certain dynamic capabilities such as absorptive capacity affect the impact of the utilization of big data analytics on sustainable supply chain on frugal processes, which has not been investigated in depth.