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.

Firm performance in uncertain times: the importance of networking capabilities

“…Thus, our study contributes to the theory by showing the bright side of environmental uncertainties and how they help managers in mature and entrepreneurial firms become aware of the importance of developing NCs. We confirm the findings of Mokhtarzadeh et al . (2022), which showed that business environment turbulence and how managers perceive it improve innovation performance through enhancing NCs and collaborative innovation capability.…”

“…During crises, relationships must be managed differently to ensure efficient resource exchange while controlling the risks associated with firms' interdependencies (Zafari et al ., 2020). Therefore, our results confirm previous studies arguing that environmental conditions can be a driving force acting on NCs (Mokhtarzadeh et al ., 2022). The findings also indicate that NCs are important organizational assets during difficult times when firms are exposed to environmental uncertainties.…”

How Enterprises Achieve Frugal Innovation: A Configurational Study Based on the Model of Organizational Symbiosis

“…Enterprises must assess and adjust their organizational boundaries based on the environment's dynamism to adapt to changing transaction conditions [46]. This study considers environmental turbulence as an influencing factor in corporate symbiotic relationships [47]. Research related to influencing factors primarily involves environmental turbulence and technological turbulence.…”

“…This characteristic is often associated with rapid transformations and high uncertainty. In research conducted by Mokhtarzadeh et al [47], environmental turbulence is further divided into two dimensions: market turbulence and technological turbulence. Following the approach of Jansen et al [58], we devised a five-item scale to measure technological turbulence and another five-item scale to capture market turbulence.…”