Frugal Innovation as a Strategic Mechanism Linking Learning, International Growth Orientation, and Performance

ABSTRACT This study examines how international growth orientation and organizational learning capability jointly influence frugal innovation and organizational performance. Survey data were collected from 342 manufacturing firms in Santa Catarina (Southern Brazil) and analyzed using partial least squares structural equation modeling and multigroup analysis. The results show that frugal innovation mediates the relationship between learning capability and performance, whereas both learning capability and frugal innovation mediate the effects of international growth orientation on performance. The multigroup tests indicate that the mediation of learning capability is present only among exporting firms, whereas the mediating role of frugal innovation occurs in both smaller and larger firms, with stronger effects among large enterprises. Because frugal innovation emphasizes resource efficiency and essential functionalities, the model reflects mechanisms that support environmentally oriented business strategies in resource‐constrained contexts. The study highlights how learning routines and frugality‐based innovation jointly enhance performance in emerging‐economy manufacturing.