Strategic orientation toward digitalization to improve innovation capability: why knowledge acquisition and exploitation through external embeddedness matter

Abstract

Purpose This study aims to analyze the mediating effect of the open innovation processes of knowledge acquisition and exploitation as external embeddedness strategy on the relationships between strategic orientation toward digitalization and the three dimensions of the innovation capability: client, marketing and technology. Design/methodology/approach The research model was tested using a structural equation modeling design based on survey data from a financial and insurance sector multinational enterprise with direct operations in seven emerging countries. This sector is classified as being highly digitalized. Findings The results show that strategic orientation toward digitalization has an effect on innovation capability, with a greater impact on the client and technology dimensions than on the marketing dimension. However, the relationships with clients and technology are partially mediated by acquisition, while the one with marketing is mediated by exploitation. Originality/value This finding widens the current purpose and theoretical sense of external embeddedness as a type of inter-organizational arrangement key for digitalization in the literature, which is focused on the adaptation of digital technology of the head office to the needs of the subsidiaries and the systems of their local allies. By contrast, the study results show that external embeddedness is key for the multinational to be able, from its global way of creating value through digital technologies, not only to improve operating efficiency, but also to meet costumer experience expectations in each host country and innovate in local commercialization strategies, on account of the knowledge transfer between the multinational and the local players on customer preferences and technology uses in local markets.

Emotional capability: the missing link between information technology capabilities and innovation performanceCapacidad emocional: el vínculo perdido entre capacidades de tecnologías de la información y desempeño innovadorCapacidade emocional: O elo perdido entre as capacidades das tecnologias da informação e o desempenho inovador

“…Regarding the academic contributions, this study provides empirical evidence that confirms the mediating role of the EC in the relationship between ITC and IP. Therefore, these results contrast with current research on the identification of mediating variables, which has been dealing almost exclusively with constructs that operate under cold cognition logic (Arias-Pérez et al, 2021b;vom Brocke et al, 2020;Madero-G omez et al, 2020). This study demonstrates that emotionally hot constructs such as EC play an important role in the relationship between ITC and IP, because of improvements in information processing, the use of IT and in virtual communication. This finding is quite significant because it forces us to reconsider the relevance of continuing with studies that propose mediating factors in the relationship between ITC and IP, which imply an additional effort in terms of rational processing of information.…”

“…The direct effects of ITCs on IP have been widely established in the literature, the latter being understood as the concrete outcomes of the innovation process mainly related to product range extension through technologically new, improved, environmentally friendly products, the development of new product lines and obsolete product replacement (Juliao-Rossi et al, 2019;Montégu et al, 2019). In detail, ITCs influence IP in three ways: knowledge management, support in the innovation process and interorganizational coordination (Arias-Pérez et al, 2021b;Kleis et al, 2012;Wu et al, 2019).…”

“…This issue has been addressed in the academic literature from the perspective of IT capabilities (ITC) and several studies have shown the positive effect of ICTs on IP because of the improvement in knowledge management and interorganizational communication and direct support to specific stages in the innovation process (Arias-Pérez et al, 2021b;Parida and Örtqvist, 2015). Additionally, it has recently been proven that this relationship is mediated by organizational factors requiring an additional effort in terms of information processing in a rational and analytical manner, including strategic market orientation (Wang et al, 2013), corporate entrepreneurship capability (Chen et al, 2015) and absorptive capacity (Mao et al, 2020;Martinez-Sanchez et al, 2019;Wu et al, 2019).…”

Impact of COVID-19 Crisis on Knowledge Management Practices in Sultanate of Oman

“…While large organizations started depending more on the internal resources, small and medium firms' knowledge needs are being fulfilled through external sources (Marie and Horváthová, 2019). Spending on KM activities is being significantly reduced due to the dependency on e-knowledge sources and digital processes (Seetharaman, 2020;Priyono, Moin and Putri, 2020;Arias-Pérez, Velez-Ocampo, and Cepeda-Cardona, 2021). Important change made to KM practices is that the managers now started measuring the effectiveness of the KM implementation that was mainly missing the pre-COVID-19 period.…”

“…Mnasri and Papakonstantinidis, (2020) through their case research conducted in Belgium suggested detrivialization as a method to explore existing knowledge and indicated that effective organizational communication can contribute to this strategy. According to Arias-Pérez, Velez-Ocampo, and Cepeda-Cardona (2021), digitalization of knowledge management activities can help improve organizational performance through enhanced innovation capability. KM implementation operates on the premise that individuals who are embodied with knowledge are expected to share their knowledge with fellow employees (Dul, Ceylan and Jaspers, 2011) to ensure a collective improvement in performance (Yakhlef, 2010) and create a competitive advantage for their organization (Hislop, 2013).…”