Knowledge assets and radical/incremental innovation performance: The role of organizational agility

Abstract

To achieve and sustain radical and incremental innovation performance in today’s fast-paced environments, firms need to develop dynamic capabilities, like organizational agility, that allow them to quickly sense and respond to opportunities. Therefore, a better understanding of enabling assets and mechanisms is important for theory and practice. Drawing on the knowledge-based view and dynamic capability theory, this study investigates how specific knowledge assets enhance sensing and responding agility, which, in turn, advance radical and incremental innovation performance. Based on survey data from 385 firms, this study offers nuanced insights. First, human and social capital are positively related to sensing agility. Second, social and organizational capital are positively related to responding agility. Third, sensing agility mediates the relationships between both human and social capital and radical innovation performance, whereas responding agility mediates the link between both social and organizational capital and incremental innovation performance. Hence, this study contributes to innovation and strategic management literature by empirically validating specific knowledge assets as important antecedents of organizational agility’s underlying dimensions. Additionally, our findings substantiate dynamic capability theory as pivotal theoretical lens to explain the mechanisms underlying the relationships between a firm’s knowledge assets and radical/incremental innovation performance.