The consequences of innovation failure: An innovation capabilities and dynamic capabilities perspective

Abstract

Organizations engage with innovation by leveraging their innovation capabilities and dynamic capabilities. In this study, we examined how organizational innovation capabilities and dynamic capabilities can influence organizational performance, taking into account cases when innovation projects do not yield beneficial outcomes to organizations. Building on the dynamic capability view and the notion of innovation capability, we developed a conceptual model and subsequently validated it by conducting a survey on a sample of organizations across multiple manufacturing and service industries that are based in India. By applying PLS-SEM, we found that different contextual factors including commercial viability and technological feasibility play a critical role towards innovation failure and success. In its turn, innovation failure negatively influences organizational performance.