The Effect Of Environmental Turbulence And Dynamic Capabilities On Firms' Discontinuous Innovation

Considerable previous studies regarded discontinuous innovation as the engine of firms'long-term growth and success. However, as more and more managers shifting their attentions to discontinuous innovation, the decision and implementation of discontinuous innovation have become exceptionally complex and difficult, due to senior managers'cognitive disability,information filters, perceiving smaller incentives, organizational routines, and internal conflict of interest.Extant researches have focused on firms'passive adaptive behaviors when a new technology clearly threatens the existing dominant product and technology. There is little research revealing the role of incumbent firms during the lengthy period before an emerging field becomes a threat. The opportunities for discontinuous innovation will neither appear in a prepackaged form nor automatically drop on your knees. Firms'perception of environment turbulence directly affects their abilities to identify and exploit the new technology. Moreover, it has been said that dynamic capability provides an adequately approaches for discontinuous innovation while there is a dearth of research to systematically analyze the mechanisms and effects of environment turbulence, dynamic capabilities on discontinuous innovation.Based on Austrian economics as an intellectual cornerstone, this dissertation explores how environment turbulence and dynamic capabilities affect discontinuous innovation, and examines the non-liner effect of discontinuous innovation on organizational performance. With a sample of 204 Chinese manufacturing firms, most of my hypothesises are supported. This dissertation not only contributes to the dynamic capabilities theory and innovation theory, but also have important implications for strategic management and innovation management for Chinese firms. Specifically, four contributions are addressed:(1) Provides a deep understanding of the effect of environment turbulence on discontinuous innovation.Focus on two levels of the environment turbulence(institutional environment and industry environment) and the dimensions of environmental dynamics and hostility, this paper analyzes the effect of perceived technological turbulence, market turbulence, competitive hostility, and policy hostility on discontinuous innovation, and then further deepened and expanded the effect of perceived environment turbulence on discontinuous innovation. The results indicate that perceived technological turbulence has a positive effect on technology discontinuous innovation; both of the two dimensions of market turbulence and competitive hostility have a positive effect on discontinuous innovation; policy hostility has a positive effect on market discontinuous innovation, while affect technological discontinuities innovation negatively.(2) Explores and investigates the effect of dynamic capabilities on discontinuous innovation.With the evolving trend of micro foundations psychological foundations of dynamic capabilities, this paper regarded dynamic capabilities as an active cognitive processes on knowledge, then explores its effect on discontinuous innovation, which enrichs the antecedents of discontinuous innovation. The results suggest that all the three dimensions of dynamic capabilities have obviously positive effect on technology discontinuous innovation, so as to the effect of organizational reconfiguration capabilities on market discontinuous innovation. In addition, dynamic capabilities has an obviously moderating effect on the relationship between perceived environment turbulence and discontinuous innovation.(3) Proposes and examines the non-linear effect of discontinuous innovation on organizational performance.Following the absorptive capacity perspective, this paper examines the non-liner effect of discontinuous innovation on firms'financial performance and growth performance. The results suggested that the relationship between technology discontinuous innovation and organizational performance has an inverted U-shape, while the market discontinuous innovation not only has a positive but also marginal increasing effect on organizational performance. The findings also have important implications for Chinese firms to enhance their organizational performance through discontinuous innovation.(4) Examines the partial mediation effect of discontinuous innovation between environmental turbulence, dynamic capabilities and organizational performance.Considering the controversial and ambiguous findings between environmental characteristics and organizational performance, direct or indirect effect of dynamic capabilities on competitive advantage/organizational performance, this paper regarded discontinuous innovation as a mediation variable. The results demonstrated the partial mediation effect of discontinuous innovation between environmental turbulence, dynamic capabilities and organizational performance. As a result, our findingsare favourable toward conciliating different theoretical viewpoints.