How does disruptive innovation influence firm performance? A moderated mediation model

Abstract

PurposeBased on the literature on disruptive innovation, this research explores how disruptive innovation directly and indirectly (via innovation speed and innovation quality) influences firm performance in relation to the contingency of market-supporting institutions.Design/methodology/approachA sample of 207 firms was gathered through questionnaires targeting senior managers and R&D managers from high-tech firms in China with two waves including explanatory variables and outcome variables.FindingsThis empirical results indicate that disruptive innovation positively affects firm performance, and that innovation speed and innovation quality mediate the relationship between disruptive innovation and firm performance. Meanwhile, market-supporting institutions positively moderate the relationship between innovation speed and firm performance, but negatively moderate the relationship between innovation quality and firm performance.Research limitations/implicationsThis study suggests that disruptive innovation is important to firm performance, innovation speed and innovation quality play mediating roles, and market-supporting institutions acts as moderating effects. A research limitation is that the data were collected mainly through a questionnaire.Practical implicationsFirms should incorporate disruptive innovation as an important strategy and improve innovation speed and innovation quality to promote firm performance, and policymakers should improve the levels of market-supporting institutions to facilitate innovation and performance.Originality/valueThis study contributes the literature of disruptive innovation by uncovering the positive effect of disruptive innovation and firm performance and the mediating effects of innovation speed and innovation quality on the abovementioned relationship, and revealing their contingency effects of market-supporting institutions.