How Firm Performs Under Stakeholder Pressure: Unpacking the Role of Absorptive Capacity and Innovation Capability

Sanjay Kumar Singh, Manlio Del Giudice, Melita Nicotra, Fabio Fiano

Research output: Contribution to journalArticlepeer-review

24 Citations (Scopus)

Abstract

Organizational innovation capability is a critical competitive strategy to generate and execute ingenious ideas necessary to offer new services, processes, and products to stay relevant and competitive. This becomes important in the context of small and medium-sized enterprises (SMEs) who depend significantly on stakeholders for an uninterrupted supply of relevant resources to produce and provide offerings to the markets amidst fierce market competition to stay competitive. We draw upon resource dependence and dynamic capabilities theory to investigate how stakeholder pressure acts upon SMEs to utilize their absorptive capacity of developing innovation capability to improve their overall performance. We collected data from 291 SMEs from the manufacturing sector to test the hypotheses of the study. Results suggest that absorptive capacity mediates the influence of stakeholder pressure on innovation capability. Furthermore, innovation capability too mediates the relationship between absorptive capacity and firm performance. This article contributes to theoretical and practical implications.

Original languageEnglish
Pages (from-to)3802-3813
Number of pages12
JournalIEEE Transactions on Engineering Management
Volume69
Issue number6
Early online date9 Dec 2020
DOIs
Publication statusPublished - Dec 2022

Keywords

  • Absorptive capacity (ACAP)
  • firm performance (FPERF)
  • organizational innovation capability
  • small- and medium-sized enterprises (SMEs) stakeholder pressure

ASJC Scopus subject areas

  • Strategy and Management
  • Electrical and Electronic Engineering

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