HARNESSING ORGANIZATIONAL CAPABILITIES TO DRIVE STRATEGIC INNOVATION AND BUSINESS PERFORMANCE

Abstract

The dynamic nature of the IT business, long-term competitiveness is becoming increasingly driven by the strategic potential of an organization to innovate. This study examines four main organizational capabilities such as Talent, Market Insight, Financial Resources, and Analytics Capability all play a role in building an Innovation-Driven Strategy (IDS) that in turn results in improved Strategic Innovation Outcomes. Borrowing from the Dynamic Capabilities View (DCV), the study provides a comprehensive model connecting internal capabilities and innovation performance via the mediating platform of strategy. Employing cross-sectional survey as the data collection method for 384 mid-to-senior managers of leading IT companies in India, the model was empirically tested and validated on employing Structural Equation Modeling with AMOS. Findings validated that all four enablers play significant and significant influences on Innovation-Driven Strategy construction with Talent playing the largest impacts. Findings also revealed a strong positive correlation between IDS and Strategic Innovation Outcomes, validating the innovation's strategic importance to process, product, and market-type innovations. SEM findings provided reasonable model fit indices and hypothesized relationships were statistically significant. This implies that companies which tactically coordinate their organizational human, informational, financial, and analytical resources are most likely to deliver breakthrough innovation results. The study further provides an empirically validated measurement model to the field of empirical strategic innovation management studies. It also makes theoretical contributions in the form of IDS operationalization as an intervening variable and an extension of DCV to strategic innovation. Managerial concerns call on IT executives to balance investment between talent building, market sensing infrastructure, financial flexibility, and analytics infrastructure. Policy concerns encourage greater public-private partnership in creating digital talent and offering funding incentives for innovation. This study provides strategic advice for technology-led firms wanting to organize innovation initiatives with optimal strategic leverage.