Innovation Capability Of Firms Research Articles

Unlocking innovation potential: the impact of artificial intelligence transformation on enterprise innovation capacity

PurposeBuilding upon the resource-based view (RBV) and related research, this paper empirically examines the impact and specific mechanisms of artificial intelligence transformation on corporate innovation capabilities. It provides micro-level evidence of AI’s influence on innovation behavior.Design/methodology/approachDrawing upon data from Chinese listed companies spanning the period from 2011 to 2022, this study employs a dual fixed-effects model and a mediation effects model to empirically analyze the influence of enterprise AI transformation on its innovation capability as well as the specific mechanisms involved.FindingsThe research reveals that AI transformation significantly enhances the innovation capability of enterprises. Heterogeneity analysis indicates that AI transformation exerts a stronger promoting effect on the innovation capability of non-technology firms, large enterprises and those within the manufacturing sector. Mechanism analysis further reveals that AI transformation enhances innovation capability by boosting enterprise profits, reducing costs and reinforcing internal control mechanisms. Further examination demonstrates that AI transformation elevates the quality, efficiency and eco-friendliness of enterprise innovation.Originality/valueFirstly, this study employs text analysis methods from machine learning to construct artificial intelligence indicators at the firm level, providing stronger evidence of AI’s impact on corporate innovation capabilities. Secondly, it extends corporate innovation behavior to include innovation quality, efficiency and green innovation practices, offering a more comprehensive validation of AI’s role in fostering corporate innovation.

National innovation policy, entrepreneurial activity, managerial ability and green innovation of agribusinesses

This study examines the impact of national innovation policy on the breakthrough green innovation capabilities of agribusiness firms. Despite the global shift toward sustainable development and innovation-driven strategies, research on the mechanisms through which national policies influence green innovation in the agricultural sector is limited. By investigating the mediating role of urban entrepreneurial activity and the moderating effect of managerial ability, this study provides novel insights into the complex relationships among policy, entrepreneurship, and innovation in agribusiness. The findings contribute to the theoretical understanding of green innovation capabilities and offer valuable insights for policymakers to promote sustainable development in the agricultural sector. Furthermore, this study unveils asymmetric effects across ownership types and regions, emphasizing the need for targeted policy interventions. By bridging these research gaps, this study significantly advances the knowledge of green innovation in agribusiness and informs evidence-based policymaking for an increasingly sustainable future.

The masking effect of green innovation: A study based on carbon market shocks

Previous empirical evidence indicates that the carbon market exerts a positive influence on the performance of corporate green innovation. In light of the proposition that there are differences in the green innovation capabilities of firms, we propose a masking effect hypothesis which suggests that the carbon market does, in fact, improve firms' green innovation performance at the overall level. However, separately, this improvement effect is only observed for high-capability firms, and not for ordinary firms. We test the hypothesis and explore the potential mechanism. The results show that, firstly, the outstanding green innovation performance of high-capability firms leads to a masking effect, which is robust to different estimation methods and variable settings. Secondly, the high innovation capability increases the positive effect of the carbon market on green innovation, irrespective of whether the capability is brown or green, which means a weak version of the masking effect. Finally, the different propensities towards co-innovation lead to the masking effect.

Does money buy innovation? The effect of the “Innovative City” pilot on firm innovation in China

This study investigates the “Innovative City” pilot in China and its impact on fostering firm innovation by alleviating financial constraints. Employing difference-in-differences-in-differences approach, we provide strong evidence that the policy significantly boosted firm innovation capabilities, measured by increased patenting. A key mechanism is the program's expansion of bank credit access for firms, particularly benefiting financially constrained firms. Furthermore, the positive impact is amplified in regions with more developed banking sectors and for firms with pre-existing bank relationships, highlighting the role of market frictions. These findings highlight the pivotal role of a competitive and transparent credit market.

How knowledge-based HRM practices affects aspects of innovation capability through knowledge management: the moderating role of innovative culture

Purpose Given the important of knowledge resource and human capital for improving innovation competence, the purpose of this study is to examine the influence of knowledge-based HRM practices on product and process innovation of firms via the mediating role of knowledge management capability and moderating role of innovative culture. Design/methodology/approach The paper used structural equation modeling and empirical data collected from 271 participants in 156 manufacturing and service firms to examine the level of how knowledge-based HRM practices and knowledge management affect product and process innovation under the moderating role of innovative culture. Findings The research findings confirm the mediating roles of knowledge management between knowledge-based HRM practices and two specific types of innovation namely product and process innovation. It also firstly reveals the positive moderating role of innovative culture in enhancing the effects of knowledge management on product innovation. The results underline the necessity of building an innovative climate and knowledge-based HRM practices to stimulate knowledge management for improving innovation capability of firms in the developing and emerging markets. Research limitations/implications The paper helps bring deeper insights to leaders and practitioners about the new knowledge-based approach that enhances innovation competence for organizations. Originality/value The paper significantly contributed to theoretical and practical initiatives on theory of HRM practices and knowledge management by showing different moderating and mediating mechanism thereby firms can follow to enhance innovation capability of firms in developing and emerging markets.

Environmental liability insurance, green innovation, and mediation effect study

This paper begins by establishing a three-party game model involving three key players: the insurer, the firm, and the government. This model is used to analyze the utility of each party in various scenarios, one of which encourages green innovation within the firm. According to this model, when the insurer rejects insurance coverage and the government maintains a neutral stance on environmental liability insurance, the firm may opt to engage in green innovation. Green innovation fundamentally serves as a mechanism to mitigate environmental pollution risks stemming from the firm’s operational processes. In cases where the insurer declines underwriting, it becomes rational for the firm to enhance its risk management through green innovation, which can be viewed as a mitigating factor in the context of environmental liability insurance. To comprehensively examine the overall impact of environmental liability insurance on the green innovation endeavors of firms, we use a mediation effect model utilizing firm-level data from heavily polluting industries. This paper delves into the intricate relationship between environmental liability insurance and the capacity of heavily polluting firms to engage in green innovation, along with the mediating influence of financing constraints between these two factors. The findings of this analysis suggest that the acquisition of environmental liability insurance enhances the green innovation capabilities of firms operating in heavily polluting industries by alleviating financing constraints, serving as a mediating factor in this regard.

The Effects of the Development Zone Upgrading on the Diversification of Firm’s Product Exports: Evidence from Chinese Exporters

Against the backdrop of frequent international trade frictions, reducing external risks in export trade through industrial policies has become crucial for China’s high-quality and steady foreign trade development. This paper examines the impact of development zone upgrading policies on the diversification of firm product exports by using a time-varying difference-in-differences model. We find that after the upgrading of development zones, the diversification of firm product exports increases by 2.13%, and concentration decreases by 1.33%. Moreover, this policy has a stronger impact on the diversification level of product exports for firms upgraded to customs special supervision areas, located inland, and engaged in general trade. These conclusions remain robust even after conducting additional robustness tests using alternative measures of the dependent variable, different identification methods for development zone upgrading, and controlling for other industrial policy effects. Furthermore, the upgrading of development zones improves export diversification through three main channels: enhancing firm innovation capabilities, optimizing management efficiency, and providing financial support to firms.

The interaction effect of goal orientation and mindfulness of entrepreneurs on firm innovation capability and its impact on firm performance

Purpose Grounded in the resource-based view of the firm, this study aims to examine the effects of goal orientation and the mindfulness of entrepreneurs on firm innovation capability and analyzes that capability’s subsequent impact on firm performance. The authors also analyze whether mindfulness interacts with goal orientation to intensify its effect on firm innovation capability. Design/methodology/approach Simple random sampling was used to obtain the sample of Thai firms listed in the Department of Business Development database (n = 304). The data analysis was done by using partial least square structural equation modeling. Findings Goal orientation and mindfulness are positively associated with firm innovation capability. The analysis also supports the interaction effect of goal orientation and mindfulness on firm innovation capability. Moreover, firm innovation capability is positively associated with firm performance. Practical implications Goal orientation and mindfulness should be considered two essential soft skills that entrepreneurs must develop to build up their firms’ innovation capability. Because entrepreneurs are the key drivers of economic growth and sustainable development, the government agencies responsible for the entrepreneurship development should consider goal orientation and mindfulness as parts of their entrepreneurship training program and development policy. Originality/value The finding about the interaction effect of goal orientation and mindfulness on firm innovation capability provides new evidence that was not documented in previous research. The authors clarify that these are entrepreneurial characteristics that could supplement each other to maximize the potential of entrepreneurs and strengthen the innovation capability of their firms.

Towards innovation capability in retail services: managing the tensions of exploration and exploitation

ABSTRACT Retailing is said to be at a critical period where much higher demands are being placed on retail actors to develop their capability for explorative innovation for lasting competitive advantage. Developing innovation capabilities is a challenging pursuit, however, and is a topic that is under-researched in the retail context. This paper thus investigates tensions that emerge when retail firms pursue explorative innovation in an organisational context characterised by exploitation-oriented activity, and how these are managed through various organisational mechanisms. The findings from our multiple case study reveal how developing innovation capability in incumbent retail firms gives rise to complex tensions related to strategic intent, organisational culture and structure. These are perceived as organisational paradoxes and managed as such due to the need to balance these opposing poles, emphasising the need for balance instead of making an explicit choice. Retail incumbents establish differentiating mechanisms for innovation, complemented by various integrative mechanisms. The study shows that in order to enable explorative, radical innovation in retail firms, innovation work needs to be differentiated from that of ongoing operations, provided that integration is facilitated at operational and strategic levels. By focusing on incumbent retail firms using exploration-exploitation paradox as a theoretical lens, the study contributes with new perspectives on building innovation capability in this context. The paper gives evidence to how developing innovation capabilities lies in the management of these complex tensions as paradoxes using the combination of differentiation and integration mechanisms.

A Configurational Approach to Maturity Model Development – Using fsQCA to Build a Multiple-Pathway Maturity Model

Maturity models can be used as tools to depict the developmental trajectories of entity classes in domains and evaluate the relative position of an entity within this framework. However, their development process has been the focus of researchers and practitioners ever since, resulting in different procedures, development approaches, and conceptual models. Thus, a major criticism of maturity models is the often missing conceptual and theoretical grounding when it comes to the interpretation of the concept of maturity. To address this shortcoming, our research approach focuses on the rigorous development of a multiple-pathway maturity model. By following a sequential, theoretically grounded process, the resulting maturity model can be viewed as an instantiation of the predefined conceptual components and characteristics in a predefined domain. We present and discuss the instantiated sector and size-specific maturity model for innovation capability in small industrial firms, which is developed by applying configurational methods on a dataset and thereby offers multiple pathways to maturity. This concept of equifinality is central to our approach. It has rarely been considered in maturity model development research, although it offers the potential to build more realistic models with greater applicability, especially in domains with many interdependencies.

Approaching The Firm’s Innovation Capability through Knowledge Management Lens

Firm innovation capability has attracted attention of researchers and the term innovation has been largely explained in the strategic management literature in a variety of dimensions. In this attempt, organizational knowledge strategy, a knowledge-oriented culture and knowledge management sharing have been proposed to play a key role in determining firm’s innovation capability. This paper aims to draw together knowledge from two different scientific disciplines i.e. strategic management and knowledge management. A conceptual model emerges as we specifically recognize the core KM concepts as a prospective basis for explaining the phenomenon of firm innovation capability by drawing literature based definitions on knowledge strategy, knowledge centered culture and knowledge sharing. This study advances towards conceptualizing the domain of firm innovation capability by applying the ‘Knowledge Management Lens’ composed of knowledge strategy, knowledge oriented culture and knowledge sharing.

Fostering firm innovativeness: Understanding the sequential relationships between human resource practices, psychological empowerment, innovative work behavior, and firm innovative capability

This study investigated the relationships between human resource (HR) practices, employee psychological empowerment, employee innovative work behavior, and firm innovation capability in the context of the Information and Communication Technology (ICT) sector in Jordan. Employing the Social Exchange Theory (SET) as a guiding framework, this study explored how employee psychological empowerment and innovative work behavior mediated the influence of HR practices on a firm's innovative capabilities. Drawing on extensive data collected from ICT organizations in Jordan, our analysis had several key findings. A significant positive correlation between HR practices and psychological empowerment was observed. Job design emerged as the most influential factor affecting psychological empowerment, whereas compensation had a weaker impact. Furthermore, we established that psychological empowerment significantly enhanced innovative work behavior, underscoring its role as a catalyst for innovative work behavior within the sector. Finally, our study supported the theory that psychological empowerment influenced a firms' innovation capabilities, emphasizing the pivotal role of employee empowerment in driving firm-level innovation in the Jordanian ICT sector. These findings provide insights for academic and practical audiences, clarifying how HR practices, employee psychological empowerment, and innovative work behavior collectively influenced firm innovation capability within the unique context of the Jordanian ICT sector.

Manufacturing breakthrough: analysing the differential effect of digital transformation on continuous innovation capability in enterprises

ABSTRACTThis study explores the relationship and influence mechanism between digital transformation and continuous innovation capability of enterprises, which shows that digital transformation promotes continuous innovation capability by enhancing corporate social responsibility, while the degree of fair competition in the market strengthens the relationship between digital transformation and continuous innovation capability. Data are derived from listed manufacturing industries in China from 2008 to 2020. The Heckman two-stage model is used to analyse the impact of digital transformation decisions on continuous innovation capability. Counterfactual estimation provides the average treatment effect of digitally transforming firms compared to non-digitally transforming firms. Empirical findings suggest that non-state-owned firms whose digital transformation multiplies the effect of continuous innovation capability, while state-owned firms do not benefit as much as expected; digital transformation has a better effect on improving the continuous innovation capability of high-tech firms than of non-high-tech firms.

Factors Influencing Innovation Capability of Flour Processing Firms in Southwest, Nigeria

Factors Influencing Innovation Capability of Flour Processing Firms in Southwest, Nigeria

Applying knowledge-based human resource management to drive innovation: the roles of knowledge sharing and competitive intensity

PurposeGiven the increasingly important role of knowledge capital on key outcomes and innovation capabilities of organizations, this paper aims to investigate the influences of knowledge-based human resource management (KHRM) practices on innovation capability of firms via mediating role of knowledge sharing (KS). This study also examines whether competitive intensity moderates the effects of KS behaviors on specific aspects of innovation capability, namely, product and process innovation.Design/methodology/approachThis paper used structural equation modeling to examine the level of how KHRM practices and KS impact on two types of innovation capability, namely, product innovation and process innovation using data collected from 265 participants in 112 manufacturing and service firms in Vietnam.FindingsThe research findings confirm the mediating roles of KS behaviors between KHRM practices and two specific types of innovation. Besides, the paper first reveals the moderating role of competitive intensity in the relationships between KS and product innovation. The results underline the necessity of building a climate of KHRM practices to stimulate employees sharing knowledge, which, in turn, positively promotes innovation capabilities in an organization.Research limitations/implicationsFuture research should investigate the impact of different forms of human resource management (HRM) practices on innovation via the mediating effects of certain aspects of KS to bring better understanding on the importance of HRM practices and knowledge resources in pursuing innovation competence.Practical implicationsThis paper offers leaders a deeper understanding of potential effects of competitive intensity and environmental factors to promote innovation capabilities in their firms.Originality/valueThis paper has significant contributed to theoretical and practical initiatives on theory of HRM practices and knowledge management by showing different moderating and mediating mechanism thereby firms can follow to enhance innovation capability of firms in developing and emerging markets.

Stimulating exploitative and exploratory innovation through transformational leadership and knowledge management capability: the moderating role of competitive intensity

PurposeGiven the importance of leadership practices and knowledge resources in fostering innovation capabilities of firms, the purpose of this study is to explore the influence of transformational leadership on exploitative and exploratory innovation via mediating role of knowledge management capability. This study also attempts to increase understanding of the appropriate mechanisms for firms to pursue innovation capability by examining the moderating mechanism of competitive intensity.Design/methodology/approachThis study utilized the structural equation modeling and cross-sectional design to test hypotheses in the proposed research model using survey data collected from 351 participants in 120 manufacturing and service firms.FindingsThe findings indicate that transformational leadership induces greater effect on exploratory innovation compared to its effect on exploitative innovation. The mediating role of knowledge management capability between transformational leadership and aspects of innovation capability is also supported. Especially, the influences of knowledge management capability on exploratory innovation capability are enhanced and depended on the degree of competitive intensity.Research limitations/implicationsFuture research should examine the mediating mechanisms of knowledge acquisition, knowledge sharing and knowledge application to provide deeper insight on the role of specific components of knowledge management capability in linking transformational leadership and innovation capability.Practical implicationsThe paper highlights the important role of transformational leadership practices for fostering knowledge management capability and specific aspects of innovation capability under high level of competitive pressure.Originality/valueThe paper is unique in the attempts to provide a prospective solution for firms to pursue and improve innovation based on the meaningful insights on the mediating role of knowledge management capability and moderating effect of competitive intensity in the relationship between transformational leadership and specific dimensions of innovation capability.

Technology transfer services impacts on open innovation capabilities of SMEs

Given the limited R&D investments, small and medium enterprises (SMEs) need to orchestrate their innovation capabilities and remove technological bottlenecks properly. To enhance their possibilities and results from collaborative activities, they can refer to intermediaries that foster knowledge and technology transfer (TT) in an inter-organisational setting. This paper aims to study how the services provided by TT intermediaries can impact specific open innovation (OI) capabilities of firms acquiring these services. OI capabilities are distinguished into potential absorptive capability, realised absorptive capability, external identification and external commercialisation. We conducted an embedded case study research, with the TT services offered by AREA Science Park, the leading Italian Scientific and Technological Park, as the main unit of analysis. The analysis of the patterns of OI capabilities enhanced in eight SMEs advised by AREA revealed that the types of TT services provided by AREA could be grouped into specific packages, summarised in a resulting framework of impacts of intermediary TT services. The study results contribute to the interplay between TT and OI literature and are helpful for both TT intermediaries and SME managers in designing and selecting the services according to the capabilities they would like to enhance and the type of collaborative innovation they would like to pursue.

Rethinking of firm innovation capability: Examining the moderating role of leadership ability on a new business model

‘Market-driving’ is a concept for changing the composition, behavior, and/or roles of different players in a specific market. Market-driving firms shape the future course of a market and could influence the other firms in the market, customer preferences, and business relationships and even redesign the value proposition for a certain segment of customers. Leadership ability helps to achieve better firm performance through market-driving competency. Although there are a few studies in these areas, there are only limited studies that investigate the role of leadership ability and market-driving competency in influencing the marketing and financial performance of a firm. Under such circumstances, the aim of this study is to rethink the firm innovation capability and propose a new business model from the B2B Market-driving competency and leadership ability perspectives. The proposed business model is derived from the theories of the resource-based view (RBV) and dynamic capability view (DCV). CB-SEM technique is used to test the model with 412 responses from B2B firms. The new business model is supported by the firm's internal capabilities and leadership style. The study also finds branding, relationship marketing, and innovation capabilities as antecedents of market-driving competency with leadership style being an important moderator to improving market-driving competency and firm performance.

The influence of open innovation on the synergistic innovation capability of Chinese manufacturing firms: the mediating role of tacit knowledge acquisition

PurposeChina has climbed from 22nd in the Global Innovation Index Rankings in 2017 to 11th in the 2022 due to the transition of its manufacturing firms from assemblers to system integrators. This paper examines how firms can enhance their innovation capability through inbound and outbound open innovation.Design/methodology/approachThis paper applies both open innovation and a knowledge-based view and proposes a conceptual framework that encompasses innovation capability and the significance of tacit knowledge acquisition. A questionnaire was designed to collect relevant data from 139 Chinese manufacturing firms in six regions to test this framework.FindingsThe authors found that inbound open innovation has a stronger impact than outbound open innovation on synergistic innovation capability. The acquisition of skill-based tacit knowledge has a slightly stronger intermediary role between open innovation (no matter inbound or outbound) and synergistic innovation capability than cognitive tacit knowledge does.Practical implicationsFirms should improve external tacit knowledge acquisition efforts to generate new knowledge, inspire the innovation passion of employees and implement ambidextrous open innovation.Originality/valueThis paper makes a good first step to analyze the effect of ambidextrous open innovation on the synergistic innovation capability of Chinese manufacturing firms. It verifies the role of skill-based and cognitive tacit knowledge acquisition and provides new reflections on open innovation strategy in emerging economies, thus enriching open innovation and knowledge-based theories.

Knowledge sharing enablers, processes, and innovation capability in a telecommunications company in an emerging market economy: a mixed-methods case study approach

PurposeThis study aims to explore the interaction among individual factors (enjoyment in helping others and knowledge self-efficacy), organizational factors (top management support and organizational rewards) and the use of information and communication technology factors as enablers of knowledge-sharing (KS) processes (knowledge donating and knowledge collecting) and firm innovation capability (IC) in a telecommunications company in an emerging market economy, namely, Bahrain.Design/methodology/approachThe study used a mixed-methods case study approach. It used answers from 77 employees’ questionnaires and applied the partial least squares structural equation modeling method to test the research model. Several in-depth semidirective interviews were conducted with managers from different levels, functions and educational qualifications to address additional social, cultural, structural and strategic issues related to KS and IC.FindingsThe results indicated that enjoyment of helping others correlates with knowledge collection. Top management support had a substantial connection with knowledge donation, which had a robust positive relationship with firm IC. The interviews showed that moving toward a customer-centric strategy, policies, procedures and KS culture in a big organization with many business silos required tremendous effort and pain. People’s ability, willingness and readiness to share knowledge heavily depend on the corporate culture. Employee resistance to change posed a significant challenge.Originality/valueResearchers have rarely used a case study or a mixed-methods case study approach to explore KS and IC. This study aims to fill this gap using a mixed-methods approach to examine KS enablers, processes and IC in a developing country’s social and cultural context, Bahrain. The work brings together new ways of looking at things and figuring out what they mean to understand knowledge transfer and IC in a telecommunications company. The company must incur changes and additions to its KS mechanisms to inspire innovation.