Driving Circular Supply Chains in Street Coffee SMEs: The Role of Bricolage Capability, Frugal Innovation, and Entrepreneurial Leadership

Abstract

This study examines how bricolage capability shapes circular supply chain (CSC) among street coffee SMEs in the Special Region of Yogyakarta, Indonesia, with frugal innovation as a mediator and entrepreneurial leadership as a moderator. Evidence from resource-constrained street coffee SMEs remains scarce. Data were collected through a structured questionnaire from 143 street coffee business owners and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). Bricolage capability has a significant positive effect on frugal innovation but no significant direct effect on the CSC. Frugal innovation has a significant positive effect on the CSC and fully mediates the relationship between bricolage capability and the CSC, indicating indirect-only mediation. Entrepreneurial leadership significantly moderates both the path from bricolage capability to frugal innovation and the path from frugal innovation to the CSC. Theoretically, improvising with available resources does not strengthen the CSC by itself; it does so only after being converted into frugal innovation, the mechanism through which improvisation translates into circular outcomes. Entrepreneurial leadership acts as a boundary condition at both stages of this conversion. By revealing this two-stage conditional process in an emerging-market SME setting, the study refines understanding of how resource-constrained firms move toward circular supply chains.