Dynamic Managerial Capabilities, Firm Context, and Innovation: Evidence from Iran

Document Type : Research Paper

Authors

1 PhD., Faculty of Industrial Engineering and Management, Malek Ashtar University of Technology, Tehran, Iran.

2 Faculty of Industrial Engineering and Management, Malek Ashtar University of Technology, Tehran, Iran.

Abstract

This research delves into the complex relationship between dynamic managerial capabilities (DMCs) and innovation performance, examining the moderating effects of activity type, export level, and firm size. Employing rigorous ANOVA methodologies, the study elucidates the nuanced and conditional impacts of managerial actions on innovation outcomes. A significant aspect of this investigation is the classification of managers based on their specific DMC components, a novel contribution to the field that enhances our understanding of how different managerial competencies shape innovation. The results indicate substantial interactions between DMCs and the outlined contextual factors. Notably, Type 1 managers, distinguished by their superior managerial human capital, expansive social networks, and propensity for intuitive decision-making, demonstrate a robust positive effect on innovation across varied activities. In contrast, Type 9 managers, who possess limited managerial human capital yet maintain extensive social networks, display performance variability contingent on operational contexts. In export-centric firms, both Type 1 and Type 5 managers emerge as key drivers of innovation, adeptly maneuvering the complexities of international markets through their strategic acumen and flexibility. Moreover, the effectiveness of DMCs is significantly modulated by firm size, with micro and small enterprises deriving optimal benefits from a multifaceted managerial skill set, whereas larger corporations exhibit a greater reliance on established systemic processes. This research lays the groundwork for subsequent inquiries into the strategic deployment of DMCs in diverse organizational scenarios and offers critical insights for enhancing innovation-led development.

Keywords

Main Subjects


Acar, O. A., Tarakci, M., & van Knippenberg, D. (2019). Creativity and Innovation Under Constraints: A Cross-Disciplinary Integrative Review. Journal of management, 45(1), 96-121. https://doi.org/10.1177/0149206318805832
Adler, P. S., & Kwon, S.-W. (2002). Social Capital: Prospects for a New Concept. Academy of management review, 27(1), 17-40. https://doi.org/10.5465/amr.2002.5922314
Adna, B. E., & Sukoco, B. M. (2020). Managerial cognitive capabilities, organizational capacity for change, and performance: The moderating effect of social capital. Cogent Business & Management, 7(1), 1843310. https://doi.org/10.1080/23311975.2020.1843310
Adner, R., & Helfat, C. E. (2003). Corporate effects and dynamic managerial capabilities. Strategic Management Journal, 24(10), 1011-1025. https://doi.org/https://doi.org/10.1002/smj.331
Ahmed, F. U., & Brennan, L. (2019). An institution-based view of firms’ early internationalization. International Marketing Review, 36(6), 911-954. https://doi.org/10.1108/IMR-03-2018-0108
Alhammadi, B., Khalid, K., Ahmad, S. Z., & Davidson, R. (2024). Examining the interplay between managerial ties, dynamic capabilities and innovation climate in driving balanced and combined ambidextrous innovation. Journal of Asia Business Studies, ahead-of-print(ahead-of-print). https://doi.org/10.1108/JABS-10-2023-0407
Ali, M. A., Hussin, N., Flayyih, H. H., Haddad, H., Al-Ramahi, N. M., Almubaydeen, T. H., Hussein, S. A., & Hasan Abunaila, A. S. (2023). A Multidimensional View of Intellectual Capital and Dynamic Innovative Performance. Journal of Risk and Financial Management, 16(3), 139. https://www.mdpi.com/1911-8074/16/3/139
Alpkan, L., Bulut, C., Gunday, G., Ulusoy, G., & Kilic, K. (2010). Organizational support for intrapreneurship and its interaction with human capital to enhance innovative performance. Management Decision, 48(5), 732-755. https://doi.org/10.1108/00251741011043902
Ambrosini, V., & Altintas, G. (2019). Dynamic Managerial Capabilities. In Oxford Research Encyclopedia of Business and Management. Oxford University Press. https://doi.org/10.1093/acrefore/9780190224851.013.20
Argote, L., & Ingram, P. (2000). Knowledge Transfer: A Basis for Competitive Advantage in Firms. Organizational behavior and human decision processes, 82(1), 150-169. https://doi.org/https://doi.org/10.1006/obhd.2000.2893
Artz, G. (2015). Innovation system symbiosis: The impact of virtual entrepreneurial teams on integrated innovation and regional innovation systems. In G. Roos & A. O'Connor (Eds.), Integrating Innovation: South Australian Entrepreneurship Systems and Strategies (pp. 91-116). The University of Adelaide Press. https://www.cambridge.org/core/product/F73356276178B3530A684F0C41DB6B15
Asija, A., & Ringov, D. (2020). Dynamic capabilities: The role of board monitoring and managerial incentives. BRQ Business Research Quarterly, 24(4), 268-280. https://doi.org/10.1177/2340944420916309
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108
Bashir, M., & Verma, R. (2019). Internal factors & consequences of business model innovation. Management Decision, 57(1), 262-290. https://doi.org/10.1108/MD-11-2016-0784
Baum, J. A. C., & Lant, T. K. (2003). HITS AND MISSES: MANAGERS’ (MIS)CATEGORIZATION OF COMPETITORS IN THE MANHATTAN HOTEL INDUSTRY. In J. A. C. Baum & O. Sorenson (Eds.), Geography and Strategy (Vol. 20, pp. 119-156). Emerald Group Publishing Limited. https://doi.org/10.1016/S0742-3322(03)20004-8
Brislin, R. W. (1986). The wording and translation of research instruments. In Field methods in cross-cultural research. (pp. 137-164). Sage Publications, Inc.
Buenechea-Elberdin, M., Sáenz, J., & Kianto, A. (2017). Exploring the role of human capital, renewal capital and entrepreneurial capital in innovation performance in high-tech and low-tech firms. Knowledge Management Research & Practice, 15(3), 369-379. https://doi.org/10.1057/s41275-017-0069-3
Cao, X., Ouyang, T., Balozian, P., & Zhang, S. (2020). The Role of Managerial Cognitive Capability in Developing a Sustainable Innovation Ecosystem: A Case Study of Xiaomi. Sustainability, 12(17), 7176. https://www.mdpi.com/2071-1050/12/17/7176
Cao, Y., Ren, S., & Du, M. (2022). Strategic trademark management: a systematic literature review and prospects for future research. Journal of Brand Management, 29(5), 435-453. https://doi.org/10.1057/s41262-022-00283-9
Carree, M. A., & Thurik, A. R. (2003). The Impact of Entrepreneurship on Economic Growth. In Z. J. Acs & D. B. Audretsch (Eds.), Handbook of Entrepreneurship Research: An Interdisciplinary Survey and Introduction (pp. 437-471). Springer US. https://doi.org/10.1007/0-387-24519-7_17
Donaldson, L. (2001). The Contingency Theory of Organizations   https://doi.org/10.4135/9781452229249
Donate, M. J., Peña, I., & Sánchez de Pablo, J. D. (2016). HRM practices for human and social capital development: effects on innovation capabilities. The International Journal of Human Resource Management, 27(9), 928-953. https://doi.org/10.1080/09585192.2015.1047393
Faiz, M., Sarwar, N., Tariq, A., & Memon, M. A. (2024). Mastering digital leadership capabilities for business model innovation: the role of managerial decision-making and grants. Journal of Small Business and Enterprise Development, 31(3), 574-597. https://doi.org/10.1108/JSBED-07-2023-0341
Flick, U. (2013). The SAGE Handbook of Qualitative Data Analysis. SAGE Publications Ltd. http://digital.casalini.it/9781446296691
Foss, N. J., & Knudsen, T. (2003). The resource-based tangle: towards a sustainable explanation of competitive advantage. Managerial and Decision Economics, 24(4), 291-307. https://doi.org/https://doi.org/10.1002/mde.1122
George, N., Karna, A., & Sud, M. (2022). Entrepreneurship through the lens of dynamic managerial capabilities: a review of the literature. Journal of Management & Organization, 28(3), 605-631. https://doi.org/10.1017/jmo.2022.25
Gerulaitiene, N., Pundziene, A., & Kabasinskas, A. (2024). Managers' emotion-regulation capabilities and family firm innovativeness: a dynamic managerial capability view. Journal of Strategy and Management, 17(1), 78-100. https://doi.org/10.1108/JSMA-02-2023-0021
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109-122. https://doi.org/https://doi.org/10.1002/smj.4250171110
Gusman, Y., & Febrian, E. (2016). The impact of managerial cognition, human capital and social capital on strategic entrepreneurship and firm performance: Evidence from Indonesian Islamic Bank Industry. Academy of Strategic Management Journal, 15, 82-94.
Hamilton, K., Shih, S.-I., & Mohammed, S. (2016). The Development and Validation of the Rational and Intuitive Decision Styles Scale. Journal of personality assessment, 98(5), 523-535. https://doi.org/10.1080/00223891.2015.1132426
Hargadon, A., & Sutton, R. I. (2000). Building an innovation factory. Harvard business review, 78(3), 157-166, 217. http://europepmc.org/abstract/MED/11183977
Helfat, C. E. (2007). Stylized facts, empirical research and theory development in management. Strategic Organization, 5(2), 185-192. https://doi.org/10.1177/1476127007077559
Helfat, C. E., & Martin, J. A. (2014). Dynamic Managerial Capabilities: Review and Assessment of Managerial Impact on Strategic Change. Journal of management, 41(5), 1281-1312. https://doi.org/10.1177/0149206314561301
Helfat, C. E., & Martin, J. A. (2015). Dynamic Managerial Capabilities:Review and Assessment of Managerial Impact on Strategic Change. Journal of management, 41(5), 1281-1312. https://doi.org/10.1177/0149206314561301
Helfat, C. E., & Peteraf, M. A. (2015). Managerial cognitive capabilities and the microfoundations of dynamic capabilities. Strategic Management Journal, 36(6), 831-850. https://doi.org/https://doi.org/10.1002/smj.2247
Helfat, C. E., & Winter, S. G. (2011). Untangling Dynamic and Operational Capabilities: Strategy for the (N)ever-Changing World. Strategic Management Journal, 32(11), 1243-1250. https://doi.org/https://doi.org/10.1002/smj.955
Heubeck, T. (2023). Looking back to look forward: a systematic review of and research agenda for dynamic managerial capabilities. Management Review Quarterly. https://doi.org/10.1007/s11301-023-00359-z
Heubeck, T., & Meckl, R. (2022a). Antecedents to cognitive business model evaluation: a dynamic managerial capabilities perspective. Review of Managerial Science, 16(8), 2441-2466.
Heubeck, T., & Meckl, R. (2022b). More capable, more innovative? An empirical inquiry into the effects of dynamic managerial capabilities on digital firms' innovativeness. European Journal of Innovation Management, 25(6), 892-915.
Heubeck, T., & Meckl, R. (2023). Microfoundations of innovation: A dynamic CEO capabilities perspective. Managerial and Decision Economics, 44(6), 3108-3126. https://EconPapers.repec.org/RePEc:wly:mgtdec:v:44:y:2023:i:6:p:3108-3126
Hillmann, J., Duchek, S., Meyr, J., & Guenther, E. (2018). Educating Future Managers for Developing Resilient Organizations: The Role of Scenario Planning. Journal of Management Education, 42(4), 461-495. https://doi.org/10.1177/1052562918766350
Hitt, M. A., Hoskisson, R. E., & Kim, H. (1997). International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms. The Academy of Management Journal, 40(4), 767-798. https://doi.org/10.2307/256948
Iglesias, A. E. A., & Maksimov, V. (2023). How can organizations tackle the challenge of pursuing a social mission? The role of dynamic managerial capabilities. Development and Learning in Organizations: An International Journal, 37(6), 25-28. https://doi.org/https://doi.org/10.1108/DLO-07-2022-0126
Jeretin-Kopf, M., Wuttke, C. C., Haas, R., & Wiesmüller, C. (2016). Methods and Tools for Enabling Employees to Contribute to Technological Progress. International Journal of Engineering Pedagogy (iJEP), 6(3), pp. 45-52. https://doi.org/10.3991/ijep.v6i3.5779
Kamasak, R., Ozbilgin, M., Kucukaltan, B., & Yavuz, M. (2020). Regendering of dynamic managerial capabilities in the context of binary perspectives on gender diversity. Gender in Management: An International Journal, 35(1), 19-36. https://doi.org/10.1108/GM-05-2019-0063
Karaca, V., & Bağış, M. (2024). Rational versus intuitive cognition and influence of dynamic managerial capabilities on SMEs’ perceived international performance: evidence from emerging economy. Management Research Review, ahead-of-print(ahead-of-print). https://doi.org/10.1108/MRR-06-2023-0440
Kazakov, R., Petrova, P., & Kazakova, Y. (2024). Managerial Dynamic Cognitive Capabilities in a Complex Market Environment. In Understanding and Managing Socioeconomic Systems Behaviour: Applications of Qualitative and Quantitative System Dynamics and Agent-Based Modelling in Healthcare and Pharmaceuticals, Finance, Arts and Culture, Sociology and Education Systems (pp. 91-118). Springer International Publishing. https://doi.org/10.1007/978-3-031-57057-5_6
Kevill, A., Trehan, K., Harrington, S., & Kars-Unluoglu, S. (2020). Dynamic managerial capabilities in micro-enterprises: Stability, vulnerability and the role of managerial time allocation. International Small Business Journal, 39(6), 507-531. https://doi.org/10.1177/0266242620970473
Khan, K. U., Atlas, F., Ghani, U., Akhtar, S., & Khan, F. (2021). Impact of intangible resources (dominant logic) on SMEs innovation performance, the mediating role of dynamic managerial capabilities: evidence from China. European Journal of Innovation Management, 24(5), 1679-1699. https://doi.org/10.1108/EJIM-07-2020-0276
Kor, Y. Y., & Mesko, A. (2013). Dynamic managerial capabilities: Configuration and orchestration of top executives' capabilities and the firm's dominant logic. Strategic Management Journal, 34(2), 233-244. https://doi.org/https://doi.org/10.1002/smj.2000
Kryeziu, L., Kurutkan, M. N., Krasniqi, B. A., Ramadani, V., Hajrullahu, V., & Haziri, A. (2024). Cognitive styles and dynamic managerial capabilities: implications for SMEs in a transition economy. International Journal of Entrepreneurial Behavior & Research, 30(1), 200-231. https://doi.org/10.1108/IJEBR-04-2023-0406
Kulkarni, S., Cristofaro, M., & Ramamoorthy, N. (2024). Evolutionary sensemaking: a managerial metacognitive dynamic capability to reduce information asymmetry. Management Decision, 62(13), 201-222. https://doi.org/10.1108/MD-10-2023-1858
Lee, C., Hallak, R., & Shaheer, I. (2024). Chapter 5: Human capital, social capital, and psychological capital of tourism entrepreneurs. Handbook of Tourism Entrepreneurship. In (pp. 56-68). Edward Elgar Publishing. https://doi.org/10.4337/9781803920023.00012
Lenihan, H., McGuirk, H., & Murphy, K. R. (2019). Driving innovation: Public policy and human capital. Research policy, 48(9), 103791. https://doi.org/https://doi.org/10.1016/j.respol.2019.04.015
Levasseur, L., Foss, N. J., & Klein, P. G. (2022). Time Perspective, Firm Resources, and Dynamic Capabilities. Academy of Management Proceedings, 2022(1), 12395. https://doi.org/10.5465/AMBPP.2022.12395abstract
Liu, C.-H., & Lee, T. (2015). Promoting entrepreneurial orientation through the accumulation of social capital, and knowledge management. International Journal of Hospitality Management, 46, 138-150. https://doi.org/https://doi.org/10.1016/j.ijhm.2015.01.016
Luoma, J., & Martela, F. (2021). A dual-processing view of three cognitive strategies in strategic decision making: Intuition, analytic reasoning, and reframing. Long range planning, 54(3), 102065. https://doi.org/https://doi.org/10.1016/j.lrp.2020.102065
Ma, W. W. K., Sun, K., & Ma, J. (2012). The influence of cognitive learning styles on the use of online learning environments. Hybrid Learning: 5th International Conference, ICHL 2012, Guangzhou, China, August 13-15, 2012. Proceedings 5,
Makadok, R., Burton, R., & Barney, J. (2018). A practical guide for making theory contributions in strategic management. Strategic Management Journal, 39(6), 1530-1545. https://doi.org/https://doi.org/10.1002/smj.2789
Mehta, A. M., & Ali, S. A. (2021). Dynamic managerial capabilities and sustainable market competencies: role of organisational climate. International Journal of Ethics and Systems, 37(2), 245-262. https://doi.org/10.1108/IJOES-07-2020-0121
Mostafiz, M. I., Sambasivan, M., & Goh, S. K. (2019). Impacts of dynamic managerial capability and international opportunity identification on firm performance. Multinational Business Review, 27(4), 339-363. https://doi.org/10.1108/MBR-09-2018-0061
Mostafiz, M. I., Sambasivan, M., & Goh, S. K. (2020). The performance of export manufacturing firms: roles of international entrepreneurial capability and international opportunity recognition. International Journal of Emerging Markets.
Mostafiz, M. I., Sambasivan, M., & Goh, S. K. (2021). Antecedents and consequences of market orientation in international B2B market: role of export assistance as a moderator. Journal of Business & Industrial Marketing, 36(6), 1058-1075. https://doi.org/10.1108/JBIM-09-2019-0411
Muhammad Ahmed, A. (2024). Entrepreneurial Mindset: Fostering Innovation in Business Management. Advance Journal of Econometrics and Finance, 1(3), 1-9. http://ajeaf.com/index.php/Journal/article/view/12
Nahapiet, J., & Ghoshal, S. (1998). Social Capital, Intellectual Capital, and the Organizational Advantage. The Academy of Management Review, 23(2), 242-266. https://doi.org/10.2307/259373
Narayan, S. (2020). Essays on Managerial Cognition, Diversity and Business Model Innovation (Publication Number EPS-2020-497-S&E) [Ph.D. thesis, http://hdl.handle.net/1765/126857
Ņikitina, T., & Lapiņa, I. (2018). The concept of manager: critical analysis and competencies required. Proceedings of the 10th International Scientific Conference" Business and Management,
Nugroho, B., & Zulfiani, Z. (2021). A Causal-Comparative Study of Inquiry-Based Science Learning Based on Levels of Students' Cognitive Learning Outcomes: Systematic Review. Jurnal Pendidikan Sains Indonesia (Indonesian Journal of Science Education), 9(4), 655-670.
O’Reilly, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator's dilemma. Research in organizational behavior, 28, 185-206. https://doi.org/https://doi.org/10.1016/j.riob.2008.06.002
Papa, A., Santoro, G., Tirabeni, L., & Monge, F. (2018). Social media as tool for facilitating knowledge creation and innovation in small and medium enterprises. Baltic Journal of Management, 13(3), 329-344. https://doi.org/10.1108/BJM-04-2017-0125
Podsakoff, P. M., Podsakoff, N. P., Williams, L. J., Huang, C., & Yang, J. (2024). Common Method Bias: It's Bad, It's Complex, It's Widespread, and It's Not Easy to Fix. Annual Review of Organizational Psychology and Organizational Behavior, 11(Volume 11, 2024), 17-61. https://doi.org/https://doi.org/10.1146/annurev-orgpsych-110721-040030
Quigley, T. J., & Hambrick, D. C. (2012). When the former ceo stays on as board chair: effects on successor discretion, strategic change, and performance. Strategic Management Journal, 33(7), 834-859. https://doi.org/https://doi.org/10.1002/smj.1945
Saunila, M. (2020). Innovation capability in SMEs: A systematic review of the literature. Journal of Innovation & Knowledge, 5(4), 260-265. https://doi.org/https://doi.org/10.1016/j.jik.2019.11.002
Schmitt, R., & Almeida, F. (2020). Building a culture of continuous innovation: How Pixar and Google address this challenge? Journal of Management, Economics, and Industrial Organization, 4(1), 22-39.
Shiferaw, R. M., & Amentie Kero, C. (2024). Dynamic capabilities view practices of business firms: a systematic literature review. Cogent Business & Management, 11(1), 2336309. https://doi.org/10.1080/23311975.2024.2336309
Singh, J. V. (2001). McKinsey's Managing Director Rajat Gupta on leading a knowledge-based global consulting organization. Academy of Management Perspectives, 15(2), 34-44. https://doi.org/10.5465/ame.2001.4614868
Talebi, K., & Ghavamipour, M. (2012). SMALL-MEDIUM ENTERPRISES IN IRAN: PRIORITIZE FACTORS AFFECTING SUCCESS USING ANP METHOD. Advances in Business-Related Scientific Research, 77.
Talebi, K., Ghavamipour, M., & Irandust, A. (2012). Innovation in Iran’s small and medium size enterprises (SMEs): Prioritize influence factors affecting innovation of SMEs, using analytic network process (ANP) method. African Journal of Business Management, 6(43), 10775-10785. https://doi.org/DOI: 10.5897/AJBM11.1679
Teece, D. J. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319-1350. https://doi.org/https://doi.org/10.1002/smj.640
Teece, D. J. (2014a). A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of international business studies, 45(1), 8-37.
Teece, D. J. (2014b). The foundations of enterprise performance: Dynamic and ordinary capabilities in an (economic) theory of firms. Academy of Management Perspectives, 28(4), 328-352.
Timothy, V. L. (2022). The effect of top managers’ human capital on SME productivity: the mediating role of innovation. Heliyon, 8(4), e09330. https://doi.org/https://doi.org/10.1016/j.heliyon.2022.e09330
Xu, Y. (2011). Entrepreneurial social capital and cognitive model of innovation. Management Research Review, 34(8), 910-926. https://doi.org/10.1108/01409171111152510
Yang, D., Wang, A. X., Zhou, K. Z., & Jiang, W. (2019). Environmental Strategy, Institutional Force, and Innovation Capability: A Managerial Cognition Perspective. Journal of Business Ethics, 159(4), 1147-1161. https://doi.org/10.1007/s10551-018-3830-5
Zahra, S. A., Neubaum, D. O., & Larrañeta, B. (2007). Knowledge sharing and technological capabilities: The moderating role of family involvement. Journal of Business Research, 60(10), 1070-1079. https://doi.org/https://doi.org/10.1016/j.jbusres.2006.12.014
Zhou, K. Z., & Wu, F. (2010). Technological capability, strategic flexibility, and product innovation. Strategic Management Journal, 31(5), 547-561.