Doing more with less, sustaining more with trust: Digital social responsibility, customer retention, and circular practices under institutional pressures

The transition toward a circular economy has become an important pathway for firms seeking to address resource scarcity and environmental sustainability challenges. However, limited research explains how firms in emerging economies mobilize internal capabilities and relational assets to implement circular economy practices under institutional pressures. Drawing on the resource-based view and institutional theory, this study examines the roles of digital social responsibility, customer retention, regulatory pressure, and normative pressure in stimulating frugal innovation and circular economy practices. Using survey data collected from 396 firms in Vietnam and analyzed through structural equation modeling, the findings indicate that digital social responsibility significantly promotes both frugal innovation and customer retention, while frugal innovation and customer retention contribute to circular economy practices. Furthermore, frugal innovation mediates the relationship between digital social responsibility and circular economy practices. In contrast, regulatory pressure does not exert significant effects on frugal innovation or circular economy practices, and normative pressure does not significantly influence digital social responsibility or frugal innovation in the examined context. These findings highlight the importance of internally developed digital responsibility and innovation capabilities in enabling circular transformation. The study contributes to the literature by integrating digital social responsibility, frugal innovation, and customer retention into a unified framework explaining circular economy implementation, and by clarifying the mechanisms through which firms convert stakeholder engagement and organizational capabilities into sustainability-oriented practices.