Innovation and Culture as a Dynamic Capability for Firm Performance: A Study from Emerging Markets
- 143 Downloads
Abstract
The research aimed to assess the influence of multiple dimensions of innovation on performance. The research is motivated from the possible impact of the internal organizational factors on the firm performance. We investigate the effect of dynamic capabilities such as product innovation, process innovation, and innovation culture on the firm performance. We collect a sample of 115 respondents and unique primary data from the executives of Indian firms. Established scales were used to design the survey instrument. A measurement model was developed in AMOS to conduct the confirmatory factor analysis and validate the scale again. A path model was developed to test the hypotheses. We find support for process innovation but not for product innovation and innovation culture. We extend the analysis further to understand whether the size of the firms has differences in the results. We find further support for innovation culture in large-size firms. We discuss the results in the Indian context to substantiate our hypotheses.
Keywords
Firm performance Innovation culture Process innovation Product innovation SEMNotes
Acknowledgements
This revision has helped us to improve our research articulation, our understanding of our research areas, and it was an opportunity for an immense amount of learning. We like to thank the editor in chief and the esteemed reviewers for their valuable comments, which had helped us to bring this manuscript to the stage where it is now.
Compliance with Ethical Standards
Conflict of interest
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
References
- Abu Bakar, L. J., & Ahmad, H. (2010). Assessing the relationship between firm resources and product innovation performance: A resource-based view. Business Process Management Journal. https://doi.org/10.1108/14637151011049430.CrossRefGoogle Scholar
- Ahuja, G., Lampert, C. M., & Tandon, V. (2008). 1 Moving beyond Schumpeter: Management research on the determinants of technological innovation. Academy of Management Annals. https://doi.org/10.5465/19416520802211446.CrossRefGoogle Scholar
- Al Ahbabi, S. A., Singh, S. K., Balasubramanian, S., & Gaur, S. S. (2019). Employee perception of impact of knowledge management processes on public sector performance. Journal of Knowledge Management. https://doi.org/10.1108/JKM-08-2017-0348.CrossRefGoogle Scholar
- Ashley, C., & Tuten, T. (2015). Consumer perceptions of online shopping environments. Psychology & Marketing. https://doi.org/10.1002/mar.20323.CrossRefGoogle Scholar
- Awad Alhaddad, A. (2015). The effect of advertising awareness on brand equity in social media. International Journal of E-Education, e-Business, e-Management and e-Learning. https://doi.org/10.17706/ijeeee.2015.5.2.73-84.CrossRefGoogle Scholar
- Baer, M., & Frese, M. (2003). Innovation is not enough: Climates for initiative and psychological safety, process innovations, and firm performance. Journal of Organizational Behavior. https://doi.org/10.1002/job.179.CrossRefGoogle Scholar
- Bag, S., & Gupta, S. (2017). Antecedents of sustainable innovation in supplier networks: A South African experience. Global Journal of Flexible Systems Management. https://doi.org/10.1007/s40171-017-0158-4.CrossRefGoogle Scholar
- Bagheri, S. K., & Di Minin, A. (2015). The changing competitive landscape of the global upstream petroleum industry. Journal of World Energy Law and Business. https://doi.org/10.1093/jwelb/jwu036.CrossRefGoogle Scholar
- Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of Management. https://doi.org/10.1016/S0149-2063(01)00115-5.CrossRefGoogle Scholar
- Barreda, A. A., Bilgihan, A., Nusair, K., & Okumus, F. (2015). Generating brand awareness in online social networks. Computers in Human Behavior. https://doi.org/10.1016/j.chb.2015.03.023.CrossRefGoogle Scholar
- Bates, K. A., & Flynn, E. J. (1995). Innovation history and competitive advantage: A resource-based view analysis of manufacturing technology innovations. Academy of Management Proceedings. https://doi.org/10.5465/ambpp.1995.17536502.CrossRefGoogle Scholar
- Baum, J. A. C., & Oliver, C. (1991). Institutional linkages and organizational mortality. Administrative Science Quarterly. https://doi.org/10.2307/2393353.CrossRefGoogle Scholar
- Berry, A., Bohn, T., & Mulder, N. (2016). The changing landscape of global trade in business services and value chains: Are emerging economies taking over? Research Handbooks on the WTO Series. https://doi.org/10.4337/9781783478064.CrossRefGoogle Scholar
- Beske, P., Land, A., & Seuring, S. (2014). Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature. International Journal of Production Economics. https://doi.org/10.1016/j.ijpe.2013.12.026.CrossRefGoogle Scholar
- Bhadani, A. K., & Jothimani, D. (2016). Big data: Challenges, opportunities, and realities. Effective Big Data Management and Opportunities for Implementation. https://doi.org/10.4018/978-1-5225-0182-4.ch001.CrossRefGoogle Scholar
- Bhaumik, S., & Beena, P. (2003). Survey of FDI in India. Centre for New and Emerging Markets. Google Scholar
- Bishwas, S. K. (2015). Achieving organization vitality through innovation and flexibility: An empirical study. Global Journal of Flexible Systems Management. https://doi.org/10.1007/s40171-014-0089-2.CrossRefGoogle Scholar
- Breitschwerdt, D., Conet, A., Michor, L., Müller, N., & Salmon, L. (2016). Performance and disruption—A perspective on the automotive supplier landscape and major technology trends. Hg. v. McKinsey & Company, zuletzt geprüft am, 7, 2018.Google Scholar
- Brennan, L., Ferdows, K., Godsell, J., Golini, R., Keegan, R., Kinkel, S., et al. (2015). Manufacturing in the world: Where next? International Journal of Operations and Production Management. https://doi.org/10.1108/IJOPM-03-2015-0135.CrossRefGoogle Scholar
- Busaibe, L., Singh, S. K., Ahmad, S. Z., & Gaur, S. S. (2017). Determinants of organizational innovation: A framework. Gender in Management. https://doi.org/10.1108/GM-01-2017-0007.CrossRefGoogle Scholar
- Campbell, D. T., & Fiske, D. W. (1959). Convergent and discriminant validation by the multitrait-multimethod matrix. Psychological Bulletin. https://doi.org/10.1037/h0046016.CrossRefGoogle Scholar
- Dabić, M., Lažnjak, J., Smallbone, D., & Švarc, J. (2018). Intellectual capital, organisational climate, innovation culture, and SME performance: Evidence from Croatia. Journal of Small Business and Enterprise Development. https://doi.org/10.1108/JSBED-04-2018-0117.CrossRefGoogle Scholar
- Dinesh, K., & Sushil (2019). Strategic innovation factors in startups: Results of a cross-case analysis of Indian startups. Journal of Global Business Advancement, 12(3), 449–470.CrossRefGoogle Scholar
- dos Santos e Silva, D. F., Bomtempo, J. V., & Alves, F. C. (2019). Innovation opportunities in the Brazilian sugar-energy sector. Journal of Cleaner Production, 999, 999. https://doi.org/10.1016/j.jclepro.2019.02.062.CrossRefGoogle Scholar
- Doty, D. H., & Glick, W. H. (1998). Common methods bias: Does common methods variance really bias results? Organizational Research Methods. https://doi.org/10.1177/109442819814002.CrossRefGoogle Scholar
- Dubey, R., Gunasekaran, A., Childe, S. J., Blome, C., & Papadopoulos, T. (2019a). Big data and predictive analytics and manufacturing performance: Integrating institutional theory, resource-based view and big data culture. British Journal of Management. https://doi.org/10.1111/1467-8551.12355.CrossRefGoogle Scholar
- Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., Hazen, B., Giannakis, M., et al. (2017). Examining the effect of external pressures and organizational culture on shaping performance measurement systems (PMS) for sustainability benchmarking: Some empirical findings. International Journal of Production Economics. https://doi.org/10.1016/j.ijpe.2017.06.029.CrossRefGoogle Scholar
- Dubey, R., Gunasekaran, A., Childe, S. J., Roubaud, D., Fosso Wamba, S., Giannakis, M., et al. (2019b). Big data analytics and organizational culture as complements to swift trust and collaborative performance in the humanitarian supply chain. International Journal of Production Economics. https://doi.org/10.1016/j.ijpe.2019.01.023.CrossRefGoogle Scholar
- Eisenhardt, K. M., & Bourgeois, L. J. (1988). Politics of strategic decision making in high-velocity environments: Toward a midrange theory. Academy of Management Journal. https://doi.org/10.5465/256337.CrossRefGoogle Scholar
- El-Kassar, A. N., & Singh, S. K. (2019). Green innovation and organizational performance: The influence of big data and the moderating role of management commitment and HR practices. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2017.12.016.CrossRefGoogle Scholar
- Fernandez-Stark, K., Bamber, P., & Gereffi, G. (2011). The offshore services value chain: Upgrading trajectories in developing countries. International Journal of Technological Learning, Innovation and Development. https://doi.org/10.1504/IJTLID.2011.041905.CrossRefGoogle Scholar
- Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics. https://doi.org/10.1016/j.ijpe.2011.05.014.CrossRefGoogle Scholar
- Gupta, A. K., & Gupta, N. (2019). A dynamic capability view of adaptability on new product success launch. Journal of Supply Chain Management Systems, 8(1), 38–44.Google Scholar
- Hair, J. F., Anderson, R. E., Tatham, R. L., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Upper Saddle River: Pearson Prentice Hall. https://doi.org/10.1016/j.ijpharm.2011.02.019.CrossRefGoogle Scholar
- Haleem, A., Kumar, S., & Luthra, S. (2018). Flexible system approach for understanding requisites of product innovation management. Global Journal of Flexible Systems Management. https://doi.org/10.1007/s40171-017-0171-7.CrossRefGoogle Scholar
- Han, C., & Nielsen, B. (2018). Management innovation and firm performance: Toward ambidextrous product innovation. Academy of Management Proceedings. https://doi.org/10.5465/ambpp.2018.16709abstract.CrossRefGoogle Scholar
- Hannan, M. T., Carroll, G. R., & Pólos, L. (2003). The organizational niche. Sociological Theory. https://doi.org/10.1046/j.1467-9558.2003.00192.x.CrossRefGoogle Scholar
- Hoyler, M., Parnreiter, C., Watson, A., Lambregts, B., Kleibert, J., & Beerepoot, N. (2018). The making of Mumbai as a global city: Investigating the role of the offshore services sector. Global City Makers. https://doi.org/10.4337/9781785368950.00014.CrossRefGoogle Scholar
- Hsin Chang, H., Hong Wong, K., & Sheng Chiu, W. (2019). The effects of business systems leveraging on supply chain performance: Process innovation and uncertainty as moderators. Information & Management. https://doi.org/10.1016/j.im.2019.01.002.CrossRefGoogle Scholar
- Irwin, J. G., Hoffman, J. J., & Lamont, B. T. (1998). The effect of the acquisition of technological innovations on organizational performance: A resource-based view. Journal of Engineering and Technology Management. https://doi.org/10.1016/S0923-4748(97)00028-3.CrossRefGoogle Scholar
- Izogo, E. E., & Ogba, I. E. (2015). Service quality, customer satisfaction and loyalty in automobile repair services sector. International Journal of Quality and Reliability Management. https://doi.org/10.1108/IJQRM-05-2013-0075.CrossRefGoogle Scholar
- Jajja, M. S. S., Kannan, V. R., Brah, S. A., & Hassan, S. Z. (2017). Linkages between firm innovation strategy, suppliers, product innovation, and business performance: Insights from resource dependence theory. International Journal of Operations and Production Management. https://doi.org/10.1108/IJOPM-09-2014-0424.CrossRefGoogle Scholar
- Jin, Z., Navare, J., & Lynch, R. (2018). The relationship between innovation culture and innovation outcomes: Exploring the effects of sustainability orientation and firm size. R&D Management. https://doi.org/10.1111/radm.12351.CrossRefGoogle Scholar
- Jugend, D., Jabbour, C. J. C., Alves Scaliza, J. A., Rocha, R. S., Junior, J. A. G., Latan, H., et al. (2018). Relationships among open innovation, innovative performance, government support and firm size: Comparing Brazilian firms embracing different levels of radicalism in innovation. Technovation. https://doi.org/10.1016/j.technovation.2018.02.004.CrossRefGoogle Scholar
- Jusoh, R., Ibrahim, D. N., & Zainuddin, Y. (2008). The performance consequence of multiple performance measures usage: Evidence from the Malaysian manufacturers. International Journal of Productivity and Performance Management. https://doi.org/10.1108/17410400810847393.CrossRefGoogle Scholar
- Kanwal, N., Zafar, M. S., & Bashir, S. (2017). The combined effects of managerial control, resource commitment, and top management support on the successful delivery of information systems projects. International Journal of Project Management. https://doi.org/10.1016/j.ijproman.2017.08.007.CrossRefGoogle Scholar
- Kaur, S., Gupta, S., Singh, S. K., & Perano, M. (2019). Organizational ambidexterity through global strategic partnerships: A cognitive computing perspective. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2019.04.027.CrossRefGoogle Scholar
- Kim, B., Park, K. S., Jung, S. Y., & Park, S. H. (2018). Offshoring and outsourcing in a global supply chain: Impact of the arm’s length regulation on transfer pricing. European Journal of Operational Research. https://doi.org/10.1016/j.ejor.2017.09.004.CrossRefGoogle Scholar
- Kohlbacher, M. (2013). The impact of dynamic capabilities through continuous improvement on innovation: The role of business process orientation. Knowledge and Process Management. https://doi.org/10.1002/kpm.1405.CrossRefGoogle Scholar
- Lawson, B., & Samson, D. (2001). Developing innovation capability in organisations: A dynamic capabilities approach. International Journal of Innovation Management. https://doi.org/10.1142/s1363919601000427.CrossRefGoogle Scholar
- Leachman, C., Pegels, C. C., & Shin, S. K. (2005). Manufacturing performance: Evaluation and determinants. International Journal of Operations and Production Management. https://doi.org/10.1108/01443570510613938.CrossRefGoogle Scholar
- Leal-Rodríguez, A. L., Eldridge, S., Roldán, J. L., Leal-Millán, A. G., & Ortega-Gutiérrez, J. (2015). Organizational unlearning, innovation outcomes, and performance: The moderating effect of firm size. Journal of Business Research. https://doi.org/10.1016/j.jbusres.2014.11.032.CrossRefGoogle Scholar
- Lee, K., Woo, H. G., & Joshi, K. (2017). Pro-innovation culture, ambidexterity and new product development performance: Polynomial regression and response surface analysis. European Management Journal. https://doi.org/10.1016/j.emj.2016.05.002.CrossRefGoogle Scholar
- Lee, G., & Xia, W. (2006). Organizational size and IT innovation adoption: A meta-analysis. Information & Management. https://doi.org/10.1016/j.im.2006.09.003.CrossRefGoogle Scholar
- Liu, Y., & Lopez, R. A. (2016). The impact of social media conversations on consumer brand choices. Marketing Letters. https://doi.org/10.1007/s11002-014-9321-2.CrossRefGoogle Scholar
- Malaviya, P., & Wadhwa, S. (2005). Innovation management in organizational context: an empirical study. Global Journal of Flexible Systems Management, 6(2), 1–14.Google Scholar
- Michaelis, T. L., Aladin, R., & Pollack, J. M. (2018). Innovation culture and the performance of new product launches: A global study. Journal of Business Venturing Insights. https://doi.org/10.1016/j.jbvi.2018.04.001.CrossRefGoogle Scholar
- Michaelis, T. L., & Markham, S. K. (2017). Innovation training: Making innovation a core competency. Research Technology Management. https://doi.org/10.1080/08956308.2017.1276387.CrossRefGoogle Scholar
- Mitrega, M., Forkmann, S., Zaefarian, G., & Henneberg, S. C. (2017). Networking capability in supplier relationships and its impact on product innovation and firm performance. International Journal of Operations and Production Management. https://doi.org/10.1108/IJOPM-11-2014-0517.CrossRefGoogle Scholar
- Mossholder, K. W., Bennett, N., Kemery, E. R., & Wesolowski, M. A. (1998). Relationships between bases of power and work reactions: The mediational role of procedural justice. Journal of Management. https://doi.org/10.1177/014920639802400404.CrossRefGoogle Scholar
- Najafi-Tavani, S., Najafi-Tavani, Z., Naudé, P., Oghazi, P., & Zeynaloo, E. (2018). How collaborative innovation networks affect new product performance: Product innovation capability, process innovation capability, and absorptive capacity. Industrial Marketing Management. https://doi.org/10.1016/j.indmarman.2018.02.009.CrossRefGoogle Scholar
- Noronha, E., & D’Cruz, P. (2016). Creating space: The role of the state in the Indian IT-related offshoring sector. Space, Place and Global Digital Work. https://doi.org/10.1057/978-1-137-48087-3_8.CrossRefGoogle Scholar
- OECD. (2005). Oslo manual Guidelines for collecting and interpreting innovation. In F. Gault (Ed.), Handbook of innovation indicators and measurement. Cheltenham: Edward Elgar Publishing. https://doi.org/10.4337/9780857933652.00010.CrossRefGoogle Scholar
- Ojha, A. K. (2014). MNCs in India: Focus on frugal innovation. Journal of Indian Business Research. https://doi.org/10.1108/JIBR-12-2012-0123.CrossRefGoogle Scholar
- Piansoongnern, O. (2016). Chinese leadership and its impacts on innovative Work behavior of the Thai employees. Global Journal of Flexible Systems Management. https://doi.org/10.1007/s40171-015-0110-4.CrossRefGoogle Scholar
- Piening, E. P., & Salge, T. O. (2015). Understanding the antecedents, contingencies, and performance implications of process innovation: A dynamic capabilities perspective. Journal of Product Innovation Management. https://doi.org/10.1111/jpim.12225.CrossRefGoogle Scholar
- Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. The Journal of Applied Psychology. https://doi.org/10.1037/0021-9010.88.5.879.CrossRefGoogle Scholar
- Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management. https://doi.org/10.1177/014920638601200408.CrossRefGoogle Scholar
- Pradhan, J. P. (2017). Emerging multinationals: A comparison of Chinese and Indian outward foreign direct investment. Institutions and Economies, 3, 113–148.Google Scholar
- Rajapathirana, R. P. J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm performance. Journal of Innovation & Knowledge. https://doi.org/10.1016/j.jik.2017.06.002.CrossRefGoogle Scholar
- Sardana, D., Gupta, N., & Sharma, P. (2018). Spirituality and religiosity at the junction of consumerism: Exploring consumer preference for spiritual brands. International Journal of Consumer Studies. https://doi.org/10.1111/ijcs.12467.CrossRefGoogle Scholar
- Sardana, D., Terziovski, M., & Gupta, N. (2016). The impact of strategic alignment and responsiveness to market on manufacturing firm’s performance. International Journal of Production Economics. https://doi.org/10.1016/j.ijpe.2016.04.018.CrossRefGoogle Scholar
- Schumpeter, J. (1934). The theory of economic development—An inquiry into profits, capital, credit, interest, and the business cycle. Regional Studies., 51, 1–2.Google Scholar
- Selsky, J. W., Goes, J., & Babüroǧlu, O. N. (2007). Contrasting perspectives of strategy making: Applications in “hyper” environments. Organization Studies. https://doi.org/10.1177/0170840607067681.CrossRefGoogle Scholar
- Singh, S. K. (2019). Territoriality, task performance, and workplace deviance: Empirical evidence on role of knowledge hiding. Journal of Business Research. https://doi.org/10.1016/j.jbusres.2018.12.034.CrossRefGoogle Scholar
- Singh, S. K., Chen, J., Del Giudice, M., & El-Kassar, A. N. (2019). Environmental ethics, environmental performance, and competitive advantage: Role of environmental training. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2019.05.032.CrossRefGoogle Scholar
- Singh, N., & Sushil (2004). Flexibility in product development for success in dynamic market environment. Global Journal of Flexible Systems Management, 5(1), 1–12.Google Scholar
- Tarafdar, M., & Gordon, S. R. (2007). Understanding the influence of information systems competencies on process innovation: A resource-based view. Journal of Strategic Information Systems. https://doi.org/10.1016/j.jsis.2007.09.001.CrossRefGoogle Scholar
- Teece, D., & Pisano, G. (1994). The dynamic capabilities of firms: An introduction. Industrial and Corporate Change. https://doi.org/10.1093/icc/3.3.537-a.CrossRefGoogle Scholar
- Teece, D. J., Pisano, G., & Shuen, A. M. Y. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18, 509–533.CrossRefGoogle Scholar
- Terziovski, M. (2010). Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: A resource-based view. Strategic Management Journal, 31(8), 892–902.Google Scholar
- Tuan, N., Nhan, N., Giang, P., & Ngoc, N. (2016). The effects of innovation on firm performance of supporting industries in Hanoi, Vietnam. Journal of Industrial Engineering and Management. https://doi.org/10.3926/jiem.1564.CrossRefGoogle Scholar
- Verona, G. (1999). A resource-based view of product development. Academy of Management Review. https://doi.org/10.5465/AMR.1999.1580445.CrossRefGoogle Scholar
- Verona, G., & Ravasi, D. (2003). Unbundling dynamic capabilities: An exploratory study of continuous product innovation. Industrial and Corporate Change, 12(3), 577–606.CrossRefGoogle Scholar
- Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal. https://doi.org/10.1002/smj.4250050207.CrossRefGoogle Scholar
- Yang, C. F., & Sung, T. J. (2016). Service design for social innovation through participatory action research. International Journal of Design, 10, 21–36.Google Scholar
- Yaseen, S. G., Dajani, D., & Hasan, Y. (2016). The impact of intellectual capital on the competitive advantage: Applied study in Jordanian telecommunication companies. Computers in Human Behavior. https://doi.org/10.1016/j.chb.2016.03.075.CrossRefGoogle Scholar
- Zaefarian, G., Forkmann, S., Mitręga, M., & Henneberg, S. C. (2017). A capability perspective on relationship ending and its impact on product innovation success and firm performance. Long Range Planning. https://doi.org/10.1016/j.lrp.2015.12.023.CrossRefGoogle Scholar
- Zahra, S. A., & George, G. (2002). The net-enabled business innovation cycle and the evolution of dynamic capabilities. Information Systems Research. https://doi.org/10.1287/isre.13.2.147.90.CrossRefGoogle Scholar