Digital Platform Capabilities and Circular Economy: Impact of Customer Green Pressure on Frugal Innovative Strategies

ABSTRACT Manufacturing entities in emerging economies face significant obstacles implementing circular economy principles due to resource‐constrained environments. Arguably, manufacturers need customer green pressure to propel the circular economy, alongside frugal innovative strategies. There is a dearth of research on digital platform (DP) capabilities, customer green pressure, and frugal innovative strategies with circular economy. Drawing on dynamic capabilities theory, 889 manufacturers were surveyed in the emerging economy of India. Customer green pressure moderation was assessed on the links between frugal innovative strategies and circular economy, DP integration capabilities and frugal innovation, and DP reconfiguration capabilities and frugal innovative strategies. Structural equation modelling revealed that DP integration and reconfiguration capabilities positively influence frugal innovation strategies enabling circular economy performance. Customer green pressure positively moderated DP reconfiguration and frugal innovative strategies. Actionable insights are provided to prioritize DP capability development to satisfy customer green pressure and promote frugal innovative strategies, ultimately facilitating the circular economy.