Elastic and plastic innovation capability in firms

Abstract

Purpose Although the extant innovation literature has extensively explored the attributes of different types of innovation capability, little is known yet about the common phenomenon of the rebound and durableness of innovation capability. Therefore, the purpose of this paper is to address these aspects by introducing the concepts of elastic and plastic innovation capability. Design/methodology/approach Based on the behavioral theory of the firm, the authors propose a theoretical model to study the antecedents and outcomes of elastic and plastic innovation capability. An empirical testing involves two data sets that contained 183 companies in three industries. The empirical evidence supports the existence of the concepts of elastic and plastic innovation capability. Findings The research findings also demonstrate that a firm’s past performance is positively related to elastic innovation capability. Elastic innovation capability and organizational aspiration are positively related to plastic innovation capability. Both elastic and plastic innovation capability significantly lead to superior performance. Originality/value This study makes three main contributions to the existing innovation literature. First, the authors extend existing knowledge on innovation capability by proposing two new types of innovation capability – elastic and plastic innovation capability. Second, the proposed concepts of elastic and plastic innovation capability contribute to the theory of dynamic capability. Finally, this study reveals the micro-mechanism of elastic and plastic innovation capability from the perspective of the behavior theory of the firm and their different effect on firm performance.