The contingent value of firm innovativeness for business performance under environmental turbulence

Drawing on the resource-based view and contingency theory, this study investigates how technological and market turbulence influence the effect of firm innovativeness on business performance. Using a survey-based sample of 452 Taiwanese manufacturing firms in a broad range of industries, we employ a hierarchical moderated regression analysis to test two-way interaction hypotheses. The results show that technological turbulence enhances the positive effect of firm innovativeness on business performance but that market turbulence does not. The post hoc analysis indicates that when technological turbulence is high, firm innovativeness has a more positive effect on business performance. An additional sub-group analysis reveals that the positive moderating influence of market turbulence manifests only in the high-technology sub-sample. Our findings suggest that managers of manufacturing firms should nurture high levels of innovativeness to help their firms to thrive under high technological turbulence. This study contributes to the firm innovativeness literature by clarifying the boundary conditions under which firm innovativeness enhances business performance. Contrasting with previous research, our research demonstrates that the performance effect of firm innovativeness is not equally positive but instead increases with the level of technological turbulence. We shed new light on the crucial role of firm innovativeness in an environmental of high technological turbulence.