EXAMINING THE INFLUENCE OF ENVIRONMENTAL TURBULENCE ON FIRM INNOVATION PERFORMANCE IN EMERGING MARKETS: USING AN ENVIRONMENT-STRATEGY-PERFORMANCE FRAMEWORK

Abstract

Evidence suggests that turbulent environment exposure is a significant driving force for business innovation. The automotive industry is strongly influenced by environmental dynamics due to continuous technological changes. Car OEMs require an accurate landscape of industrial uncertainties. The purpose of this study is to investigate the role of business environmental turbulence (BET) in innovation performance. Applied to the environment-strategy-performance framework and underpinned by the dynamic capability view (DCV) and contingency theory, our research model concerns both the antecedent and moderation roles of BET in innovation performance. A sample of 306 questionnaire data is collected from the management of Iranian automotive firms, and PLS-SEM is used for the analysis. The results suggest that BET improves innovation performance through enhancing networking capability (NC) and collaborative innovation capability (CIC). Besides, BET positively moderates the relationship between NC and innovation performance. This study contributes to understanding business innovation in a turbulent environment setting. Our findings offer important implications for managers to set strategies, particularly in a dynamic environment.