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Sustainability challenges have compelled SMEs, in emerging markets, to reassess their innovation strategies. Faced with resource and technological limitations, SMEs have increasingly adopted frugal innovation as a key approach to maintain competitiveness. Despite the increasing scholarly interest, the literature regarding the antecedents of frugal innovation remains limited. To fill this gap, this paper investigates the impact perceived CSR on employee frugal innovation alongside examining potential mediating roles of environmental-passion and prosocial-motivation and civility acting as a moderator. Four-hundred twelve employees from Albanian SMEs were surveyed while data was analysed through PLS-SEM analysis technique. The results indicate that external CSR positively impacts frugal innovation, while internal CSR does not have impact. Prosocial-motivation and environmental-passion partially mediate these relationships. The moderating effect of civility is significant in the link among internal CSR and external CSR with environmental passion, however, civility does not moderate the association between both CSR dimensions with prosocial motivation.
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