The Mediating Effect of Dynamic Capabilities on the Relationship Between Strategic Foresight and Strategic Renewal: Evidence from Islamic Banks in Jordan

Abstract

Purpose: The present study aimed to examine the mediating effect that dynamic capabilities may have on the relationship between strategic foresight and strategic renewal.   Design/methodology/ approach: The present study relied on quantitative and qualitative methods. More specifically, the authors used a cross-sectional design and survey strategy. Three hundred and three participants were selected randomly from four Islamic banks operating in Jordan completed the study questionnaire. A structural equation modeling technique was employed to test the study hypotheses by using SmartPLS 3 software package.   Findings: The results demonstrated that strategic foresight and dynamic capabilities have a significant and positive effect on strategic renewal. Also, the results illustrated that the dynamic capabilities have a partial mediating effect on the relationship between strategic foresight and strategic renewal.   Research limitations: The results of the present study relate to Islamic banks in Jordan; hence the ability to generalize the findings to other sectors is limited. Another limitation is respondent bias because the study design relies heavily on the participants’ perceptions.   Practical implementation: Used properly, strategic foresight allows managers to see how events in the external environment influence their organizations’ performance. Thus, managers can use strategic foresight for making corrections in plans, policies, strategies, and objectives to get performance back on track using their organizations’ dynamic capabilities.   Originality: Despite the amount of research and studies that have been devoted to understanding strategic foresight, dynamic capabilities, and strategic renewal over the last decades, the relationship between these three constructs has never been studied collectively. Therefore, the present study fills this gap in the literature.