The main purpose of this research was to discover the mediating role of innovation capability on the relationship between strategic agility and organizational performance in the corporations listed on the ASE. The results of the research showed that the level of strategic agility and organizational performance in these corporations was moderate, which is consistent with the findings of some previous studies
[30][32][63][32,34,54]. The level of innovation capability was high, and this result corresponds to those obtained in
[41][43][43,45]. Therefore, the management of corporations listed on the ASE is aware of the critical importance of providing unique products and services to their customers, and adopts contemporary management approaches that assist them in research and development processes to keep pace with customers’ desires. Furthermore, these corporations seek to adapt to the changes in the work environment through the acquisition of organizational resources that are flexible enough and by sensing opportunities and threats in the work environment in a proactive way in order to be able to develop appropriate scenarios for these changes.
In terms of its hypotheses, this study sought to test three hypothetical influences as stated in H1, H2, and H3. H1 assumed that strategic agility has a significant influence on organizational performance, while H2 suggested that strategic agility has a significant influence on innovation capability. Finally, H3 postulated that innovation capability has a significant influence on organizational performance. Firstly, the results indicated that strategic agility has a positive influence on organizational performance. This result can be explained by the fact that organizations that adopt agile strategies based on developing practical scenarios derived from sensing changes in the business environment have greater opportunities to improve their financial position, achieve customer satisfaction, and gain the largest market share compared to their competitors. In line with
[64][62], the results revealed that strategic agility had a positive influence on innovation capability. Prior works in this regard asserted the role that strategic agility played in improving organizational performance. Such works indicated that strategic agility assists organizations in sensing their environments for changes and opportunities, to adapt and respond quickly and utilize their resources effectively and efficiently
[3][12][15][17][28][30][31][65][5,14,17,19,30,32,33,57].
Secondly, the results revealed that there is a significant influence of strategic agility on innovation capability. This result suggests that the ultimate aim of innovation capability can be achieved through strategic agility, which allows organizations to be aware of their market changes and customer needs. Hence, strategic agility is viewed as a prerequisite of innovation capability
[13][15]. The specific contribution of strategic agility to innovation capability can be explained through the exceptional capabilities of strategic agility, which are recognizing the external environment via strategic sensitivity, acquiring new resources or reshaping current resources (resource fluidity), and total commitment to face external challenges (leadership unity)
[14][25][26][27][16,27,28,29].
Thirdly, the results pointed out that innovation capability has a positive influence on organizational performance, which is consistent with the results of
[42][44]. Thus, organizations’ ability to modify their administrative methods and orientation towards contemporary business models, which are considered to provide novel products and services and develop new uses for existing products, leads organizations to achieve their strategic goals effectively and efficiently. Finally, it was found that the innovation capability has a significant mediating influence on the relationship between strategic agility and organizational performance. That is, the total effect of strategic agility on organizational performance increased with the introduction of innovation capability, which transmits the effect of strategic agility to organizational performance. In other words, strategic ability equips an organization with information about the market, and the customers and innovation capability enable an organization to develop new processes or inputs and create creative products
[43][45][45,47]. Therefore, organizations’ awareness of the importance of predicting changes in the business environment and reallocating available resources in proportion to the exploitation of opportunities and avoiding threats improves their ability to create products and services that meet the desires of customers. This ultimate aim can be achieved through a contemporary management approach that supports continuous development activities, which is reflected in improving productivity, building a wide base of loyal customers and achieving an increase in returns in the long term.
6. Contributions to the Literature
This study contributes to the literature on strategic agility, innovation capability, and organizational performance in several ways. First, the study shows that strategic sensitivity, resource fluidity, and leadership unity are crucial strategic components for improving organizational performance. Strategic sensitivity allows organizations to distinguish market opportunities and assess the suitability of their internal strengths to exploit these opportunities. Resource liquidity refers to the extent of resource flexibility that enables an organization to adjust its resources and the way they are used in line with its priorities. Moreover, the ongoing collective commitment of the management (i.e., leadership unity) helps an organization to expand its ability to adapt to environmental changes. The role of the leadership here is to make the right decisions at the right time.
These three components play a central role in boosting organizational performance. In the context of industrial organizations, taking advantage of opportunities often means introducing new products. Achieving this goal not only requires the availability of resources, but also flexibility in their use, in terms of resource allocation and reallocation according to demand. The picture is not complete without the collective administrative orientation and the speed of decision-making.
Second, the study signifies that strategic agility is a main prerequisite of innovation capability. The most important implicit feature of strategic agility is the ability to integrate resources, which is crucial to encourage innovation. Innovation here refers to transforming ideas into new processes or products. The ability to innovate is itself a dynamic ability that means harnessing new knowledge to respond to change in an organization’s environment by focusing on existing resources and processes. The role of strategic agility here is to determine the nature of the environmental change and the form of the optimal response. The problem that firms face in this regard is that they are able to respond to the change in the environment, but the response they offer is inappropriate. Here, the importance of strategic agility appears, as it determines market needs that have not yet been met. Both strategic agility and innovation capability are complementary features of ambidextrous firms.
Third, it is well established that strategic agility improves organizational performance, but new insight is brought by the knowledge that strategic agility suits various environmental changes. This depends on the nature of the market opportunities. One type of change requires enhancing the capabilities of an organization by providing other dynamic capabilities such as the ability to innovate, while other types mean making minor adjustments to the products in order to meet the demands of the moment in the market. In both cases, strategic agility plays an important role. Thus, this study contributes to the literature of sustainability, as it shows that dynamic capabilities such as strategic agility and innovation capability assist organizations in achieving supportable performance.
7. Managerial Implications
The piece of information that managers miss is not that innovation capability leads to better performance, but how innovation capability can be developed. The current study shows that innovation is continuous because the environment in which an organization operates is constantly changing. The most important characteristic of innovation capability is the flexibility to adapt to that change. For an organization to maintain an active state of innovation adequacy, it must provide a guide that directs innovation to the path of success. This guide is strategic agility.
On the other hand, the response to environmental changes depends on the nature of the change itself. Some changes require an organization to make improvements to existing products, and some require the introduction of new products with completely different characteristics. The organization in the second case must be more capable of innovating.
Accordingly, managers who seek to improve organizational performance must take the nature of changes and market opportunities into consideration. The nature of these changes and opportunities determines the nature of the response. Continuous improvement of the product itself is a form of response, and changing the whole characteristics of the product is another form of response. Sometimes, an organization has strategic agility and the ability to innovate, but it fails to improve its organizational performance due to its inability to determine the appropriate response.
Moreover, an organization must determine the appropriate way to improve performance in light of its assessment of market needs. If an organization realizes that improving performance is through a rapid response by introducing new products, the way it exploits the capabilities of agility and innovation is different from improving performance through improving existing products. Both strategic agility and innovation capability are essential to elevate organizational performance; however, the optimal mix of these capabilities is subject to the method of performance enhancement.
8. Limitations and Future Directions
Although this research dealt with vital variables in the science of strategic management, there were a set of limits that should be considered in future studies. First, there was a need to expand the study of strategic agility in order to define theoretical frameworks and discover the practical implications of organizations adopting this strategy in the volatile business market. Secondly, future studies should consider that this research was implemented in Jordan, which is a developing country; hence, future studies should go towards conducting such research in emerging and developed countries in order to discover the perspective of strategic agility. Last but not least, future studies should try to identify the impact of strategic agility on managerial and economic variables such as entrepreneurial orientation, sustainable competitive advantage, and organizational prowess in order to present a set of proposals that lead to organizational development.
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