The role of organizational ambidexterity and frugal innovation in enhancing circular supply chains: The effect of artificial intelligence capabilities

Abstract

Integrating circular economy practices into supply chains is hailed as an effective pathway towards addressing pollution and resource depletion. However, implementing circular supply chains (CSCs) requires major shifts in current organizations' systems, processes, and competencies. Therefore, the successful implementation of CSCs depends largely on organizations' innovative and adaptive activities and capabilities; however, the role of such in the implementation of CSCs has largely been overlooked in the extant literature. To address this, this study investigates the impact of organizational ambidexterity activities (exploration and exploitation) on frugal innovation and, in turn, on the CSC. The study further examines the moderating role of artificial intelligence capabilities regarding the impact of frugal innovation on CSCs. We carried out a structured survey of textile manufacturing firms operating in Jordan, from which we gained 210 responses. The responses were analyzed using the SmartPLS software suite to assess the veracity of the measurement and test the hypothesized relationships. The analysis demonstrated that organizational ambidexterity activities (i.e., exploration and exploitation) positively influence frugal innovation. Additionally, the analysis uncovered that frugal innovation exerts a positive impact on the CSC, which is further enhanced when firm develop artificial intelligence capabilities. This provides valuable insights into the theoretical discourse and managerial practice on innovation and supply chain management.