The Role of Innovation

European Journal of Innovation Management
The role of innovation in building competitive advantages: an empirical

investigation
Prodromos Chatzoglou, Dimitrios Chatzoudes,
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advantages: an empirical investigation", European Journal of Innovation Management, Vol. 21 Issue:
1, pp.44-69, https://doi.org/10.1108/EJIM-02-2017-0015
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EJIM
21,1 The role of innovation in building
competitive advantages: an
empirical investigation
44 Prodromos Chatzoglou and Dimitrios Chatzoudes
Democritus University of Thrace, Xanthi, Greece
Received 21 February 2017
Revised 17 May 2017
Accepted 22 May 2017
Abstract
Purpose – Nowadays, innovation appears as one of the main driving forces of organisational success.
Despite the above fact, its impact on the propensity of an organisation to develop and sustain a competitive
advantage has not yet received sufficient empirical investigation. The purpose of this paper is to enhance the
existing empirical literature by focusing on the antecedents of innovation and its impact on competitive
advantage. It proposes a newly developed conceptual framework that adopts a three-step approach,
highlighting areas that have rarely been simultaneously examined before.
Design/methodology/approach – The examination of the proposed conceptual framework was

performed with the use of a newly developed structured questionnaire that was distributed to a group of
Greek manufacturing companies. The questionnaire has been successfully completed by chief executive
officers (CEOs) from 189 different companies. CEOs were used as key respondents due to their knowledge
and experience. The reliability and the validity of the questionnaire were thoroughly examined.
Empirical data were analysed using the structural equation modelling technique. The study is empirical
(based on primary data), explanatory (examines cause and effect relationships), deductive (tests research
hypotheses) and quantitative (includes the analysis of quantitative data collected with the use of a
structured questionnaire).
Findings – Results indicate that knowledge management, intellectual capital, organisational capabilities and
organisational culture have significant direct and indirect effects on innovation, underlining the importance of
their simultaneous enhancement. Finally, the positive effect of innovation on the creation of competitive
advantages is empirically validated, bridging the gap in the relevant literature and offering avenues for
additional future research.
Originality/value – The causal relationship between innovation and competitive advantage, despite its
significant theoretical support, has not been empirically validated. The present paper aspires to bridge this
gap, investigating the impact of innovation on the development of competitive advantages. Moreover, the
present study adopts a multidimensional approach that has never been explored in the existing innovation
literature, making the examination of the proposed conceptual framework an interesting research topic.
Keywords Greece, Innovation, Empirical study, Competitive advantage, Structural equation modelling (SEM),
Innovation antecedents
Paper type Research paper
1. Introduction
Innovation is a widely recognised concept that has attracted the interest of both the academic
and business world, as well as the interest of the governments of all developed and developing
countries (Santos et al., 2014; Bowen et al., 2010). Nowadays, innovation has become the
main challenge for all types of organisations (Andreeva and Kianto, 2011), since it seems to be
a key driver of long-term business success (Baker and Sinkula, 2002; Balkin et al., 2000;
Enzing et al., 2011). Additionally, on a macro-level, innovation-based competition has been
argued to constitute the basis for sustained development in the post-industrial knowledge
economy (Bessant and Tidd, 2007; Labitzke et al., 2014; Romer, 2004).
The present study focuses on organisational innovation (micro-level analysis), rather
than regional, national or international innovation (macro-level analysis), since the first
European Journal of Innovation
Management signals a more practical approach, focusing on elements that are within the control of each
Vol. 21 No. 1, 2018
pp. 44-69
company (Crossan and Apaydin, 2010). When being approached from an organisational,
© Emerald Publishing Limited
1460-1060
knowledge-based perspective (Dangelico et al., 2010), innovation can be defined as the
DOI 10.1108/EJIM-02-2017-0015 process of translating ideas (or inventions) into marketable goods and services in a way that
produces value (Brettel and Cleven, 2011; Krizaj et al., 2014; Mota Pedrosa, 2012; Popdiuk Innovation in
and Choo, 2006; Trott, 2005). Moreover, Crossan and Apaydin (2010) underline that building
innovation is both a process and an outcome, thus focusing on the (usually neglected) competitive
business processes that support the development and actual application of innovative ideas.
Various scholars have conducted empirical studies underlining the interconnectivity of advantages
innovation with different organisational measures, as well as its impact on various measures
of business success. For example, Calantone et al. (2002) found that learning orientation affects 45
innovativeness, which in turn affects firm performance. Baer and Frese (2003) confirmed the
relationship between process innovation and firm performance, but argued that
“psychological safety” and “initiative climate” moderate that relationship. Moreover,
Darroch (2005) pointed out that the knowledge management (KM) process is the coordinating
mechanism in the causal relationship between innovation and performance. Thornhill (2006)
concluded that firm knowledge, industry dynamism and innovation interact in the way they
influence firm performance. Finally, Kostopoulos et al. (2011) found that absorptive capacity
contributes (both directly and indirectly) to innovation and financial performance, while
innovation also has a direct positive effect on financial performance.
In addition to the plethora of the empirical studies that have examined the
multidimensional role of innovation, many other scholars have theoretically argued in
favour of its significant impact on business success. According to Helfat et al. (2007), the
propensity of a company to innovate represents a dynamic capability that significantly
affects its overall financial success. On the same vein, Crossan and Apaydin (2010) argue
that “dynamic innovation capabilities reside in managerial levers that enable innovation”
(p. 1171), and therefore, enhance business performance. Moreover, Nobre et al. (2011) view
innovation as a key source of customer benefits and added value. Finally, numerous other
theoretical efforts that have attracted thousands of readers across the globe (e.g. Berkun,
2010; Christensen, 2003; Johnson, 2010; Kelley, 2007) have supported that innovation has
important positive effects for most organisations.
Despite the widely accepted significance of innovation (supported in empirical and
theoretical papers, as well as in numerous business rankings and indices), innovation
research remains fragmented, poorly grounded in a theoretical level, and not fully tested in
different areas and settings (Crossan and Apaydin, 2010). According to Droege et al. (2009),
future research is needed in order to empirically validate various theoretical models and
general accepted ideas. Additionally, Laforet (2011) argues that the empirical investigation
of the relationship between organisational innovation (or company innovation orientation)
and business performance is weak and calls for further research.
The research fragmentation and poor empirical investigation of several important issues
also applies when examining the relationship between organisational innovation and
competitive advantage. On the one hand, theoretical papers (and university textbooks)
undoubtedly argue in favour of that relationship, but fail to ground their arguments on any
coherent evidence. On the other hand, empirical papers examining the same relationship are
very rare, while the ones that exist provide a quite hazed view of the subject.
For example, Keupp et al. (2012) open their literature review paper (published in the
International Journal of Management Reviews), arguing that “Firms can use innovation
strategically in order to achieve competitive advantage (Hitt et al., 1998; Ireland and Hitt
1999) […]”. Nevertheless, this argument is vaguely based on two references that do not
contain any crucial evidence that can support the impact of innovation on competitive
advantage. More specifically, the paper of Ireland and Hitt (1999) does not make
any reference, or even insinuate, such a relationship. The same applies for the paper of
Hitt et al. (1998). On the same vein, Crossan and Apaydin (2010) (in another literature review
paper published in the Journal of Management Studies) argue that “Innovation might be
one of a few lasting sources of competitive advantage (Dess and Picken, 2000;
EJIM Tushman and O’Reilly, 1996)”. As with the above study of Keupp et al. (2012), the two
21,1 references provided by Crossan and Apaydin (2010) do not even insinuate the relationship
between innovation and competitive advantage.
When trying to analyse the empirical literature, once again focusing on the impact of
innovation on the development of competitive advantages, one easily concludes that the body
of research is, once again, fragmented and out of focus. More specifically, various studies
46 examining the relationship between innovation and competitive advantage employ weak
methodologies and incorporate factors that do not allow further generalisation (e.g. “pricing
innovation” and “green innovation”). Additionally, very few studies built on the findings of
previous research, something that does not allow to draw coherent conclusions.
For example, Johannessen and Olsen (2009) concluded that knowledge processes
enhance innovation, which ultimately leads to sustainable competitive advantages.
Nevertheless, the methodology they employed (synthesis of previous theoretical
contributions) is not considered to be quite reliable. Moreover, Hinterhuber and Liozu
(2014) examined innovation in pricing and concluded that it may be a very powerful (and, in
many cases, least explored) source of competitive advantage. Once again, the implemented
methodology of this study is mostly qualitative (interviews with managers), something that
limits its overall validity. On the contrary, Chiou et al. (2011) used a methodological
approach that is considered more reliable (qualitative study with hypotheses development
and control) and found that green innovation significantly affects both the environmental
performance and the competitive advantage of a company. Regretfully, the conclusions of
Chiou et al. (2011) cannot be further generalised, since they only refer to “green innovation”.
Additionally, Bagchi-Sen (2001) established that SMEs pursuing product innovation
are better performers in terms of sales, exports, R&D expenditure and value added. Despite
that, it takes a certain mental leap in order to perceive an enhanced performance in these
four areas (factors) as an indication of obtaining a competitive advantage. Finally, Chahal
and Bakshi (2014) concluded that innovation mediates the relationship between intellectual
capital (IC) and competitive advantage. Their research is one of the few empirical studies
that examine the relationship between innovation and competitive advantage without
including major methodological inefficiencies.
All the above indicate that neither theoretical nor empirical papers provide coherent data
supporting the relationship between innovation and competitive advantage. On the contrary,
it seems that this relationship is being taken for granted, despite the lack of serious empirical
support. The present paper aspires to bridge this gap, investigating the impact of innovation
on the development of competitive advantages. Moreover, the effect of various other factors
(KM, IC, organisational capabilities, organisational culture) on innovation is being examined.
The investigation of the casual relationships between these factors is accomplished through
the development of a conceptual framework. This framework incorporates factors that have
rarely been collectively examined before in the relevant literature and is expected to enhance
the existing empirical knowledge, while offering practical guidelines to organisations.
2. Conceptual framework
As mentioned above, the present study aims to expand the findings of the existing body of
literature, investigating the impact of innovation on the propensity of a company to create
competitive advantages. In addition to the investigation of the above relationship, the
impact of various antecedents (factors) on innovation is, moreover, being examined.
The proposed conceptual framework includes six factors (categorised into three
dimensions): innovation antecedents (KM, IC, organisational capabilities, organisational
culture), innovation and competitive advantage (see Figure 1). According to the best of the
researchers’ knowledge, such a conceptual framework has never been examined before in
the relevant literature. The following paragraphs present the hypotheses of the study.
2.1 Innovation antecedents Innovation in
According to Jayaram et al. (2013), innovation performance depends on specific actions that building
are employed in order to increase the innovative capability. The relevant literature has competitive
explored quite few of these factors. Despite the above fact, many scholars (Akgün et al., 2009;
Çokpekin and Knudsen, 2012; Ganter and Hecker, 2014; Jayaram et al., 2013; Paladino, 2007) advantages
argue that the understanding of the actions, processes and strategies that lead to improved
innovation performance are not examined to their full extend. Actually, the studies that have 47
been conducted seem to focus on many different factors, thus failing to validate their findings
in general settings and offer a coherent theoretical background.
For example, Wang and Lin (2012) used the social cognitive theory and discovered that
innovation self-efficacy, role conflict, and role ambiguity have an impact on innovation
performance. García-Morales et al. (2006) analysed a series of strategic factors and found out
that personal mastery, transformational leadership, shared vision, proactivity and the
environment have a significant impact on organisational innovation. Ganter and Hecker
(2014) applied fuzzy set Qualitative Comparative Analysis and discovered that several
configurations of contextual factors lead to enhanced organisational innovation.
Moreover, Ganter and Hecker (2013) investigated various theories and factors and
concluded that numerous contextual factors affect the level of innovation of German companies
(e.g. degree of competition). Moreover, Nasution et al. (2011) discovered that entrepreneurship
and human resource management are significant drivers of innovation. Finally, numerous
other empirical studies have examined different innovation antecedents (e.g. Ar and Baki, 2011;
Aragon-Correa et al., 2007; Cambra-Fierro et al., 2011; Gielnik et al., 2014; Laforet, 2008).
Table AI summarises the factors that have been used in the relevant literature as
innovation antecedents. As it can be seen, most empirical studies examine their own set of
factors, many different factors have been proposed in the body of literature and only few
factors (e.g. market orientation) have been used in more than two studies. As a result, the
empirical literature has failed to generate a consensus concerning the most significant
innovation antecedents. Moreover, since many different antecedents have been proposed, a
researcher finds quite difficult to select and examine the most significant ones.
The present study recognises the lack of consensus in the literature and aspires to
propose and investigate a set of innovation antecedents that can be used as a point of
reference for future empirical studies. In order to propose the most important innovation
antecedents, two methodological steps were taken. First, an extensive literature review
identified the factors that have been used by previous studies as innovation antecedents
(see Table AI for more details); second, a panel of experts was used in order to discuss these
factors and provide a list of the most significant ones (focus group methodology).
This approach offers the following advantages: the selection of innovation antecedents
was not conducted according to the subjective judgment of the researchers, but was a result
Knowledge
management
Intellectual
capital
H1-H4 (+) H5 (+) Competitive
Innovation
advantage
Organizational
capabilities Figure 1.
The proposed
Organisational
conceptual framework
culture of the study
EJIM of a more coherent and objective procedure, the proposed conceptual framework
21,1 (see Figure 1) has a strong basis on the opinions of experienced practitioners and the
selection of factors with low practical significance was avoided. It is argued that randomly
selecting the antecedents of innovation, without any theoretical or empirical justification,
would have resulted in the limited reliability of the present study.
In order to enhance the validity of the focus group methodology, two sessions were
48 conducted in different geographical areas, while all companies were selected in random (from
the list of the 500 largest Greek manufacturers). Each focus group included four managers of
manufacturing companies (mostly chief executive officers (CEOs)). This approach is in line
with the main principles of the focus group methodology (Berg et al., 2004), since there was an
adequate number of participants for each session, two different sessions with different
participants were being held, while the represented companies were randomly selected.
The participants of each group were given (in paper) an extensive list of factors that have
been used in the literature in order to predict innovation. Then, a detailed conversation
was conducted, with one member of the research team acting as moderator. Each focus
group took approximately two and a half hours. Notes were taken during each session
by a second moderator, while additional notes were added after reviewing the recorded
sessions. After long discussions, each focus group selected the most important factors of the
provided list. Additionally, the practitioners proposed few factors that were not included in
the initial list (e.g. IC).
This procedure led in the selection of the four innovation antecedents of the present
study: KM (knowledge accumulation and storage, knowledge creation, knowledge sharing,
IC (human capital, structural capital, customer capital), organisational capabilities (customer
orientation, market orientation, responsiveness to change) and organisational culture
(adhocracy culture).
2.1.1 KM. On a theoretical level, the link between KM and innovation has been
extensively discussed. For example, Xu et al. (2010) developed a networking process of
continuous innovation based on KM, arguing that these procedures are highly
intercorrelated. On the same vein, Goh (2005) proposed an integrated management
framework for managing innovation based on specific knowledge initiatives. Moreover,
Tidd et al. (2005) argued that innovation can be achieved through the combination of
different sets of knowledge. Finally, Du Plessis (2007) concluded that innovation is
extremely dependent on the availability of knowledge, and therefore, the management of
organisational knowledge is crucial in enhancing the level of innovativeness.
According to various authors (Andreeva and Kianto, 2011; Subramaniam and Youndt,
2005; Xu et al., 2010), wide-scale, empirical research is quite scarce, yet it also supports the
relationship between KM and innovation. More specifically, Alegre et al. (2013) found that
KM dynamic capabilities act as a mediating factor between KM practices and innovation.
Donate and Guadamillas (2011) discovered that knowledge exploration and exploitation
practices have a significant impact on innovation outcomes, while knowledge-centred
culture, knowledge-oriented leadership and knowledge-centred HR practices have a
moderating effect on the above relationship. Moreover, Hung et al. (2010) revealed that KM
is positively associated with both TQM and innovation, while TQM is a mediator between
KM and innovation outcomes. On the same vein, Chen and Huang (2009) showed that KM
capacity plays a mediating role between strategic human resource practices and innovation.
Finally, Noruzy et al. (2013) and Lai et al. (2014) found support for the relationship between
KM and innovation, but without using any mediating or moderating relationships.
When examining the adopted methodologies of the above studies, one can easily underline
the diversity in the measurement of the KM construct. More specifically, most of these studies
have examined the impact of only few KM processes (dimensions) on innovation. As argued
by Andreeva and Kianto (2011), very seldom has the relevant literature included the whole
bundle of KM processes when examining the impact of KM on innovation. KM, in the present Innovation in
study, is perceived as “the process of acquiring, creating, sharing, using and managing building
information and knowledge” (Alavi and Leidner, 2001; Alegre et al., 2013; Darroch, 2005). competitive
Under that rationale, it is measured via three dimensions (which represent the main processes
of KM): knowledge accumulation and storage; knowledge creation; and knowledge sharing. advantages
The above operationalisation of KM is in line with numerous previous studies, which argue
that the main KM processes are knowledge acquisition, knowledge documentation, intra-firm 49
knowledge sharing and knowledge creation (e.g. Andreeva and Kianto, 2011; Chen and
Huang, 2009; Gold et al., 2001; Grover and Davenport, 2001).
Therefore, the present paper argues that the simultaneous implementation of all the
above KM processes will provide a better background for the enhancement of
organisational innovation. Hence, the following hypothesis is proposed:
H1. KM has a direct positive impact on innovation.
2.1.2 IC. The relationship between IC and innovation has very seldom been investigated in
the relevant literature. While some authors have argued, on a theoretical level, in favour of
this relationship, the body of empirical research is still very scarce and the methodologies
utilised are quite inconsistent. On a literature review paper, Mention (2012) argued that the
research community has yet to examine the effect of IC on innovation, while the few studies
that have been conducted produced mixed results. On another theoretical paper, Karchegani
et al. (2013) supported that IC is a vital asset that helps organisations to create value and
innovate. Nevertheless, both authors (Karchegani et al., 2013; Mention, 2012) call for more
research on the subject.
In the present study, the measurement of IC follows the most popular categorisation that is
found in the relevant literature: human capital, structural capital and customer (relational) capital
(Bontis, 1998; Edvinsson, 1997; Mavridis and Kyrmizoglou, 2005; Yang and Lin, 2009).
This categorisation has been followed by most of the studies that have examined the impact of
IC on innovation (see Al-Dujaili, 2012; Dumay et al., 2013; Subramaniam and Youndt, 2005;
Wu and Sivalogathasan, 2013; Yitmen, 2011; Zerenler et al., 2008). In one of these studies, Dumay
et al. (2013) found that that the elements of human, structural and customer capital are required
for successful innovation, while the respective relationship is significant and overwhelmingly
positive. On the same direction, Subramaniam and Youndt (2005) discovered that human,
structural, customer capital and their interrelationships selectively influence incremental
innovative capabilities. Similar findings were obtained by Zerenler et al. (2008) and Yitmen (2011).
In order to support the impact of IC on innovation, the link between human, structural,
customer capital and innovation should first be established. Human capital is defined as the
summary of employees’ knowledge, skills, capabilities, experience, attitude, wisdom and
creativities (Bontis, 1998; Edvinsson, 1997). According to Dakhli and De Clercq (2004) and
Barczak and Wilemon (2003), these specific competencies have a strong effect on innovation,
since an innovative employee mindset is more likely to result in the development of
innovative procedures, products or services.
Structural capital represents the supportive, non-physical, infrastructure, processes and
databases that enable human capital to function (Bontis, 1998; Edvinsson, 1997). According
to Zerenler et al. (2008), these infrastructures are necessary for an enhanced innovative
performance. Moreover, according to Marsh and Stock (2003), the dynamic organisational
capabilities of an organisation (e.g. information systems, patents, policies, processes) can
enhance the value-creation activities that have a positive effect on innovation. Finally,
according to Menon et al. (2002), the exceptional operational processes of a company
decrease its innovation development cycles, while the infrastructural characteristics and
various management systems can positively influence the propensity towards innovation.
EJIM Customer (relational) capital consists of customer and supplier relationships, trademarks
21,1 and trade names, licences and franchises (Bontis, 1998; Edvinsson, 1997). Zerenler et al.
(2008) and Bonner and Walker (2004) argue that a company with strong and embedded
relationships develops superior products and services, since its customers provide
innovation projects with a diversity of perspectives, competencies and experiences.
Moreover, the strategic partners of a company are helpful in achieving enhanced innovation
50 performance through the utilisation of shared resources and market information
(Capello and Faggian, 2005). Hence, it is hypothesised that:
H2. IC has a direct positive impact on innovation.
2.1.3 Organisational capabilities. Despite the wide empirical investigation in the field of
organisational capabilities (Gusberti et al., 2013; Ouakouak et al., 2014; Schreyögg and
Kliesch-Eberl, 2007), their impact on innovation remains largely unexplored. In that context,
the present study aspires to provide a point of reference for future researchers and enhance
the level of existing knowledge. In line with the study of Lewrick et al. (2012), customer
orientation, market orientation and responsiveness to change are identified as three of the
organisational capabilities that have an impact on innovation.

According to Langerak (2001), customer orientation is positively associated with
proficiency in strategic planning, idea generation and screening. These capabilities are
considered extremely important for innovation enhancement (Grissemann et al., 2013;
Matsuo, 2006). Moreover, market orientation fosters the production of new products and
services, by providing a source of ideas that assist organisational change, improving the
level of available market information and enhancing marketing strategies (Keskin, 2006).
Hence, the degree to which a company acquires, distributes and uses market information is
a significant input for the innovation process (Baker and Sinkula, 1999; Keskin, 2006).
Finally, Tucker (2002) argued that one of the most significant characteristics of innovation
is its responsiveness to change. According to Tucker (2002), the quicker the responsiveness
to change, the more enhanced the innovation initiatives of the organisation. The same basic
principle has been highlighted by other authors (McAdam et al., 2000). Hence, it is
hypothesised that:
H3. Organisational capabilities have a direct positive impact on innovation.
2.1.4 Organisational culture. The concept of organisational culture first emerged in the
literature in the 1970s and 1980s (e.g. Hofstede, 1981). According to Gaynor (2013), despite
the inherent difficulty in fully quantifying the culture of an organisation, one could argue
that it includes “the beliefs, the values, the rituals, the legends, and the past history which
often becomes embellished as time passes” (p. 5). Moreover, according to the same author,
for innovation to really thrive, the organisational culture must reach beyond these
characteristics. More specifically, innovation should be embedded deep within the genes of
the organisation (Gaynor, 2013).
Numerous studies have found that culture has a significant effect on innovation
(Dobni, 2008; Jamrog et al., 2006; Lau and Ngo, 2004). Schein (1984, 1990) was one of the
first authors to make that argument. More specifically, he empirically examined the
dimensions of the organisational culture that have an impact on the intensity of
innovative behaviour (Schein, 1984). Nowadays, it has been widely accepted that
organisational culture can assist employees to accept innovation as a basic organisational
value (Hartmann, 2006). Moreover, according to Tesluk et al. (1997), employees know, deep
within, whether creative and innovative behaviours are part of the mentality of their
company. Kotter and Heskett (1992) identified that the optimal culture for enhancing
innovation is an adaptive, learning culture.
According to Schein (2010), organisational culture includes: artefacts (visible structures Innovation in
and processes), that are hard to decipher, espoused beliefs and values (ideals, goals, building
aspirations, ideologies, rationalisations), that may not be in harmony with organisational competitive
behaviours and other artefacts, basic underlying assumptions (unconscious beliefs and
values taken for granted), that determine behaviour, perception, thought and feeling. advantages
Therefore, the culture of an organisation includes many different attributes and is
expressed in various ways. For example, an organisational culture may emphasise on 51
formal control systems and minimise employee experimentation. On the same vein, an
organisational culture may inhibit or support innovative behaviour. The term
“organisational culture” is not synonymous with the term “culture of innovation”.
The first term is much broader, while the second is merely an attribute of the first.
A “culture of innovation” is perceived as a holistic process that involves the entire
organisation, requires multi-disciplinary teams and constitutes a complete life cycle of the
cultural impact (Rahuma and Wan Ismail, 2008).
Cameron and Quinn (1999) defined four different types of organisational cultures:
adhocracy, hierarchy, clan and market. Adhocracy and hierarchy culture are usually
examined together, since they represent two totally different approaches. More specifically,
an adhocracy culture focuses on flexibility and change and is externally oriented. On the
other hand, hierarchy culture is control oriented and mainly focuses on the internal
environment (Cameron and Quinn, 1999). According to Valencia et al. (2010), an adhocracy
culture favours innovation the most, since its two most important characteristics (flexibility
and external orientation) are the cornerstones of an innovative organisational behaviour.
On the contrary, the hierarchical culture favours decision making by authority, high
formalization and emphasis on internal processes, hence is negatively associated with
innovation (Valencia et al., 2010). The present study will investigate whether an adhocracy
culture has a positive effect on innovation. Therefore, it is hypothesised:
H4. Organisational culture (adhocracy culture) has a direct positive impact on innovation.
2.2 Innovation and competitive advantage

As mentioned earlier (in the introduction section), the relationship between innovation and
competitive advantage has not been rigorously tested. Various authors argue that
companies with a high degree of innovation develop and maintain competitive advantages
(Crossan and Apaydin, 2010; Keupp et al., 2012; Valencia et al., 2010), but little empirical
support has been provided for this relationship.
Innovation is defined as the development of new products, business processes and
organic changes that create wealth (Olavarrieta and Villena, 2014; Vila et al., 2014). On the
other hand, the development of a competitive advantage means that the organisation
possesses resources and capabilities that are superior to that of its competitors, thus
enabling it to deliver superior value to customers (Porter, 2004).
According to established theoretical work (Drucker, 1985; Miles and Snow, 1978),
innovative companies are more flexible and have a greater capacity to adapt to changes.
These characteristics protect them in periods of instability, since they can respond rapidly
to changes, detect new opportunities and exploit the existing ones to a greater extent than
the immediate competition. Thus, a completive advantage may derive from the flexibility of
an organisation and its capacity to react successfully to change.
In a contemporary study, Hinterhuber and Liozu (2014) identified innovation in terms of
product pricing as a source of competitive advantage. The authors argue that innovation in
pricing is less about numbers and much more about adopting an appropriate pricing model
that will enable the profitable growth of the organisation, while providing superior
satisfaction to its customers (Hinterhuber and Liozu, 2014). In another study, Chiou et al. (2011)
EJIM found that green process innovation is a source of competitive advantage. Given the increased
21,1 number of environmental regulations and heightened public awareness, having green
products and processes highly affects the development of competitive advantages.
In the present study, it is hypothesised that organisations with a high level of innovation
would perform better in obtaining competitive advantages. First, the introduction of new
products or services may deliver superior value to the customers of the organisation,
52 especially when its rival companies cannot provide the same range (of products or services).
Second, an innovation in business processes may reduce the production time, or service
delivery time, once again providing added value to existing (or new) customers. Third, the
more innovative an organisation, the more possible to develop and successfully implement
new strategies that counter negative fluctuations of the external environment:
H5. Innovation has a direct positive impact on the development of competitive advantages.
Figure 1 summarises all the above hypotheses, thus, presenting the proposed conceptual
framework of the study.
3. Research methodology
The present study is empirical (it is based on primary data), explanatory (examines cause
and effect relationships), deductive (tests research hypotheses) and quantitative (includes
the analysis of quantitative data collected with the use of a structured questionnaire).
3.1 Population of the study

The population of the study includes manufacturing companies, regardless of size,
ownership, year of establishment and location. Based on the most recent data provided by
ICAP (2012), the Greek manufacturing sector consists of 4,933 manufacturing companies,
currently registered in official state records. These companies belong to a wide range of
industrial sectors and sizes.
3.2 Measurement
The examination of the proposed conceptual framework was made with the use of a newly
developed questionnaire. The questionnaire was based on items (questions) that have been
used by various previous researchers (see Table I). All questions were translated to Greek
and then back to English by another person, in order to detect, and consequently, improve
discrepancies. The five-point Likert scale was used for the measurement of all factors
(1 representing “strongly disagree” to 5 representing “strongly agree”). A pre-testing
process (pilot testing) was also undertaken. The questionnaire was sent to 5 practitioners
and 2 academics, in order to test whether it met all theoretical and practical requirements.
Table I demonstrates the six research factors, the number of items used for their
measurement and the studies from which they were adapted. In total, the questionnaire
consists of 76 questions used to measure the 6 research factors.
3.3 Data collection

A list including the contact data of most of the 4,933 manufacturing companies of the initial
population was obtained from the official website of ICAP (a “Business Service Group” that
features reliable information). An initial contact (telephone call) was made with
approximately 1,000 of these companies. The questionnaire, along with a cover letter
including all necessary clarifications, was distributed to 459 companies that agreed to
participate in the survey. From these companies, only 189 usable questionnaires were
received (response rate 41 per cent, representation of the whole population 3.83 per cent).
CEOs were selected as the key respondents, due to their knowledge and expertise.
Innovation in
Factor Items References
building
A. Knowledge management competitive
A.1. Knowledge accumulation 5 Wheelwright and Clark (1992), Al-Busaidi and Olfman (2005),
and storage Karadsheh et al. (2009) advantages
A.2. Knowledge creation 4 Gold et al. (2001), Kianto (2011)
A.3. Knowledge sharing 5 Gold et al. (2001), Alavi and Leidner (2001), Lin and Lee (2005)
B. Intellectual capital
53
B.1. Human capital 6 Petty and Guthrie (2000), Guthrie (2001), Subramaniam and Youndt
(2005), Wu et al. (2008)
B.2. Structural capital 7
B.3. Customer capital 7
C. Organisational capabilities
C.1. Customer orientation 6 Narver and Slater (1990), Matsuo (2006)
C.2. Market orientation 5 Jaworski and Kohli (1993)
C.3. Responsiveness to change 5 Lewrick et al. (2012)
D. Organisational culture 6 Cameron and Quinn (1999)
(Adhocracy culture)
E. Innovation
E.1. Product innovation 6 Baker and Sinkula (1999), Prajogo et al. (2004)
E.2. Process innovation 5
G. Competitive advantage
Measured as a 9 Ha-Brookshire and Dyer (2009), Feng et al. (2010), Schilke (2014), Table I.
mono-dimensional construct Wang (2014) Measurement of
Total number of items 76 research factors
The research period lasted three months ( January-March 2014). The empirical data were
analysed using the “structural equation modelling (SEM)” technique.
The majority (22.7 per cent) of the companies of the sample belong to the “Food and
beverages” industry. Moreover, 23.5 per cent of the sample companies employ 101-500
employees, 47.6 per cent employ 51-100 employees, while only 19.6 per cent and 9.3 per cent
of the companies employ less than 50 and more than 1,000 employees, respectively.
An independent samples t-test was performed in order to control whether the different
sector and size of the companies of the sample could be considered as a significant limitation
for the overall validity of the study. More specifically, we tested whether sector and size
differentiate the mean scores of the various research factors (KM, IC, organisational
capabilities, organisational culture, innovation, competitive advantage). The appropriate
statistical analysis (conducted with the use of IBM SPSS 22.0) revealed that no statistically
significant differences among the mean scores of these factors exist. Therefore, the impact of
size and sector is not a concern for the present study.
3.4 Reliability and validity

The questionnaire was tested for both its content and construct validity. Content validity
was assessed through: consultation with academics, experts in the field, consultation with
experienced practitioners and pilot testing. Minor amendments were made to several items
(questions) after the completion of that procedure.
The test of the construct validity of the questionnaire was conducted in two steps.
More specifically, each research factor was evaluated for its unidimensionality and
reliability, for the goodness of fit to the proposed research model.
The estimation of the unidimensionality was conducted using explanatory factor
analysis, while for the estimation of the reliability, the Cronbach αmeasure was used.
EJIM After making all the proposed modifications (extraction of items), the appropriate tests
21,1 concluded that all the scales used are valid and reliable (see Table II for the main results).
Furthermore, the evaluation of the goodness of fit of each research factor to the proposed
model was conducted using confirmatory factor analysis (CFA). The analysis included,
among others, the following measures: the χ2 and the p-value, the construct reliability
and variance extracted measures and the RMSEA, CFI and GFI indexes. All tests conducted
54 produced satisfactory results (see Table III for the main results).
Moreover, a second-order CFA was additionally performed for five out of the six factors of
the study (KM, IC, organisational capabilities, organisational culture, and innovation), since
their total factor score was needed for testing the research hypotheses. All statistical indices
calculated at this particular analysis were also within acceptable levels (see Table III). Therefore
the final score of each factor was calculated using the mean of the sub-factors used in each case.
4. Empirical results
The examination of the proposed conceptual framework (test of research hypotheses) was
conducted using the SEM technique (the maximum likelihood estimation method was
employed). The covariance matrix was used as the table of entry and the extraction of the
Standardized Completely Solution was requested (Hair et al., 1995; Kelloway, 1998).
In more detail, the (modified) structural model fitted the data well, while the factors that
were included can explain 70 per cent of the variance of the dependent factor “innovation”
and 65 per cent of the dependent factor “competitive advantage”. It must be stressed that
new paths were added to the model, based on modification indexes of AMOS. This resulted
in a structural model with improved fit and explanatory power.
More analytically, to evaluate the fit of the overall model the χ2 value ( χ2 ¼ 37.22 with
11 degrees of freedom) and the p-value ( p ¼ 0.041) were estimated. These values indicate a
Bartlett’s test Total variance Cronbach

Factor KMO of sphericity Eigenvalue explained (%) α
A. Knowledge management
Knowledge accumulation and storage 0.723 26.4* 2.155 68.28 0.76
A.2. Knowledge creation 0.711 54.9* 2.248 71.16 0.72
A.3. Knowledge sharing 0.873 66.2* 1.748 65.98 0.79
B. Intellectual capital
Human capital 0.639 174.6* 3.017 58.11 0.81
B.2. Structural capital 0.717 264.4* 2.841 66.21 0.89
B.3. Customer capital 0.715 196.3* 1.471 71.36 0.84
Customer orientation 0.796 29.3* 2.441 69.44 0.81
C.2. Market orientation 0.823 132.1* 1.641 74.46 0.86
C.3. Responsiveness to change 0.778 326.6* 2.411 81.15 0.79
D. Organisational culture
Adhocracy culture 0.612 155.9* 1.894 77.49 0.79
E. Innovation
Product innovation 0.813 19.5* 2.263 81.45 0.81
E.2. Process innovation 0.899 22.3* 1.941 84.93 0.77
Table II.
Estimation of G. Competitive advantage
unidimensionality Measured as a mono-dimensional construct 0.715 55.8* 2.245 81.11 0.86
and reliability Note: *p o0.01
Normed χ2
Innovation in
Factor CR VE (%) RMSEA CFI GFI building
First-order confirmatory factor analysis competitive
A. Knowledge management
Knowledge accumulation and storage 3.59 0.64 65.7 0.096 0.94 0.88 advantages
A.2. Knowledge creation 4.62 0.71 61.2 0.082 0.97 0.92
A.3. Knowledge sharing 3.29 0.73 71.2 0.091 0.99 0.95
B. Intellectual capital 55
B.1. Human capital 4.47 0.75 54.5 0.099 0.97 0.93
B.2. Structural capital 3.34 0.66 54.6 0.099 0.99 0.91
B.3. Customer capital 2.15 0.87 62.6 0.092 0.99 0.99
Customer orientation 3.15 0.66 74.1 0.074 0.93 0.96
C.2. Market orientation 4.74 0.77 65.9 0.082 0.92 0.91
C.3. Responsiveness to change 1.66 0.81 88.3 0.079 0.97 0.97
D. Organisational culture
Adhocracy culture 3.26 0.79 55.2 0.091 0.99 0.97
E. Innovation
Product innovation 2.46 0.82 61.1 0.089 0.91 0.97

E.2. Process innovation 3.63 0.89 73.5 0.087 0.93 0.95
G. Competitive advantage
Measured as a mono-dimensional construct 3.19 0.61 67.8 0.097 0.99 0.99
Second-order confirmatory factor analysis
A. Knowledge management 3.13 0.71 59.3 0.097 0.91 0.93
B. Intellectual capital 4.29 0.83 74.5 0.093 0.97 0.99
C. Organisational capabilities 3.64 0.83 69.7 0.088 0.99 0.99
D. Organisational culture 3.29 0.66 56.6 0.090 0.96 0.97 Table III.
E. Innovation 2.54 0.73 64.3 0.097 0.93 0.99 Estimation of the
G. Competitive advantage 3.19 0.61 67.8 0.097 0.99 0.99 goodness of fit
good fit of the data to the overall model. However, the sensitivity of the χ2 statistic to the
sample size forces towards the adoption of other supplementary measures for evaluating
the overall model (Harrison and Rainer, 1996; Smith and McMillan 2001), such as the
“Normed-χ2” index (3.38), the RSMEA index (0.087), the RMR index (0.022), the CFI (0.97), the
GFI (0.99) and the NFI (0.96), that all indicate a very good fit.
Figure 2 demonstrates the final structural model (after all necessary modifications),
along with the path coefficients and the adjusted R2 scores (accepted hypotheses
are represented with solid lines, new paths are represented with dotted lines). Table IV
shows the overall findings concerning the original hypotheses and the new proposed
causal relationships.
In synopsis, results offer support to four research hypotheses (H1, H2, H3, H5), whilst
one hypothesis is not verified by the empirical data (H4). Moreover, six new causal paths are
being added to the initially proposed conceptual framework.
In more detail, organisational capabilities is the antecedent with the strongest direct
impact on innovation (r¼0.40), followed by IC (r¼0.29), and KM (r¼0.23). On the other
hand, organisational culture does not seem to have a direct effect on innovation, but it has a
significant indirect effect (r¼0.64), through KM, IC and organisational capabilities. Table V
summarises the direct, indirect and total effects of all four innovation antecedents.
When the total effects of the innovation antecedents are being considered, it seems that
organisational culture has the strongest total effect on innovation (r ¼0.64), followed by IC
(r ¼ ¼ and KM (r 0.34).
0.60), organisational capabilities (r 0.39) ¼
As mentioned earlier, the effect of organisational culture is mediated through KM, IC, and
organisational capabilities. Moreover, the total effect of IC on innovation is mediated
EJIM Knowledge 0.23
21,1 management
0.71
0.29
0.51 R 2=0.70 R 2=0.65
Organisational 0.29 Intellectual 0.29 0.81 Competitive
Innovation
culture capital advantage
56 0.35
0.30
Overall model fit
Organizational
capabilities z2/df= 3.38
0.40
CFI= 0.97
GFI= 0.99
RMSEA= 0.087
Figure 2. RMR= 0.022
The modified model
Note: All paths are statistically significant
Hypothesis Path Path coefficient Remarks
H1 Knowledge management → innovation 0.23 Accepted

H2 Intellectual capital → innovation 0.29 Accepted
H3 Organisational capabilities → innovation 0.40 Accepted
H4 Organisational culture → innovation – Rejected
H5 Innovation → competitive advantage 0.81 Accepted
Proposed causal relationships
Organisational culture → knowledge management 0.29* New path
Organisational culture → intellectual capital 0.29* New path
Organisational culture → organisational capabilities 0.30* New path
Intellectual capital → knowledge management 0.51* New path
Table IV. Intellectual capital → organisational capabilities 0.35* New path
Hypotheses Knowledge management → organisational capabilities 0.71* New path
testing results Note: *p o0.01
through KM and organisational capabilities. While IC has a direct effect of r¼0.294, its total
effect (direct and indirect) is r¼ 0.607. These findings underline the importance of
organisational culture and IC on innovation enhancement.
Moreover, the empirical results reveal that all innovation antecedents (along with all their
interrelationships) can explain 70 per cent of the variance of innovation. This finding is
rather important, since it highlights the significant of strengthening various organisational
areas, rather than focusing only on few.
Additionally, concerning the relationship between innovation and competitive
advantage, it seems that the effect of the first on the second is quite considerable
(r ¼0.80). Moreover, organisational innovation can explain 65 per cent of the propensity of a
company to develop a competitive advantage. The empirical verification of that specific
relationship (that was very rarely been investigated in previous research papers) enriches
the literature and sets the path for additional future research.
Finally, it was found that innovation mediates the relationship between its four
antecedents and competitive advantage. More specifically (see Table V for details),
organisational culture has the strongest indirect impact on competitive advantage (r¼0.52),
followed by IC (r¼0.49), organisational capabilities (r¼0.32) and KM (r¼0.27). Once again,
the predominant role of organisational culture and IC is being emphasised. It seems that
Organisational Intellectual Knowledge Organisational
Innovation in
culture capital management capabilities Innovation building
competitive
Direct effects
Intellectual capital 0.709 0.000 0.000 0.000 0.000 advantages
Knowledge management 0.287 0.506 0.000 0.000 0.000
Organisational capabilities 0.301 0.351 0.290 0.000 0.000
Innovation 0.000 0.294 0.227 0.398 0.000 57
Competitive advantage 0.000 0.000 0.000 0.000 0.805
Indirect effects
Intellectual capital 0.000 0.000 0.000 0.000 0.000
Knowledge management 0.359 0.000 0.000 0.000 0.000
Organisational capabilities 0.436 0.147 0.000 0.000 0.000
Innovation 0.649 0.313 0.115 0.000 0.000
Competitive advantage 0.522 0.489 0.276 0.321 0.000
Total effects
Intellectual capital 0.709 0.000 0.000 0.000 0.000
Knowledge management 0.646 0.506 0.000 0.000 0.000 Table V.

Organisational capabilities 0.738 0.498 0.290 0.000 0.000 Direct, indirect and
Innovation 0.649 0.607 0.343 0.398 0.000 total effects of
Competitive advantage 0.522 0.489 0.276 0.321 0.805 research factors
these factors not only have a significant effect on innovation, but they are crucial in
developing competitive advantages, as well.
The analysis of these results gives room for very interesting observations:
• Organisational culture (adhocracy culture) appears to be an especially significant factor
for the enhancement of innovation, since it sets the general organisational climate.
It acts like an innovation inhibitor, affecting all other three factors that were included in
the proposed conceptual framework (KM, IC, organisational capabilities). That specific
finding modifies the structural composition of the conceptual framework, arguing that
organisational culture is not an immediate antecedent of innovation, but rather acts like
a facilitator of innovation antecedents. Therefore, the present study finally argues in
favour of a four-step approach that drives the development of competitive advantages:
organisational culture (an inhibitor/facilitator of innovation antecedents), innovation
antecedents, innovation and competitive advantage.
Despite the fact that numerous studies (Hogan and Coote, 2014; Sharifirad and Ataei, 2012;
Uzkurt et al., 2013; Valencia et al., 2010; Lin and McDonough, 2011; Škerlavaj et al., 2010)
have found evidence supporting the direct impact of organisational culture on innovation,
its indirect effect has very rarely been investigated (Liao et al., 2012). Nevertheless, the
present study found strong evidence supporting the indirect effect of culture on innovation
and suggests that future research should really look into that direction:
• According to the empirical results, companies should adopt an informal form of
organisation, which should be flexible, adaptable and defined by a lack of strict
formal structure (adhocracy culture). Moreover, individual initiatives should be
encouraged and self-organisation in order to accomplish tasks should not be
punished. The results indicate that such a culture acts as a facilitator of innovation
and significantly affects the development of competitive advantages. That is
because it is flexible, adaptable and non-permanent and can, therefore,
respond rapidly and more successfully to the needs of the constantly changing
external environment.
EJIM • The three (remaining) innovation antecedents have statistical significant effects on
21,1 innovation, but, on the other hand, have strong relationships with one another.
More specifically, IC has an impact on KM and organisational capabilities, while KM
has an impact on organisational capabilities. That strongly insinuates that these
factors should be enhanced together, since the development in one area brings
benefits to other areas, as well. IC seems to have a central role in the enhancement of
58 innovation, since its indirect impact on innovation passes through the two others
factors (its total effect is 0.607).
While previous studies have examined various innovation antecedents, the main tendency is
to neglect the possible causal relationships that exist between these factors (Ar and Baki,
2011; Ganter and Hecker, 2013; García-Morales et al., 2006; Hult et al., 2004; Tajeddini and
Trueman, 2012; Wan et al., 2015). The present study considers innovation antecedents as a
bundle of interrelated procedures that should be enhanced together. The same approach has
been followed only in a specific segment of the existing empirical literature (Lee and Tsai,
2005; Nasution et al., 2011):
• Organisational capabilities that are necessary for an innovative behaviour are

fostered by IC (r¼0.35) and KM (r ¼0.71). In particular, the very strong impact of
KM on organisational capabilities dictates the following thinking: when an
organisation does well in the accumulating, storing, creating and sharing knowledge,
then it will excel in market and customer orientation, while being more responsive to
change. Similar thinking has been presented before in the KM literature
(Dawson, 2000; Gold et al., 2001). The same rationale also applies for the
relationship between IC and KM (r¼0.51). The higher the level of human, structural
and customer capital, the better the accumulation, storing, creating and sharing of
organisational knowledge. That finding calls for more research on that specific
relationship, since its further analysis does not fall in the scope of the present study
(Marr et al., 2003; Wiig, 1997; Zhou and Fink, 2003).
• Finally, the present study found out that the effect of innovation on the development
of competitive advantages is very strong (r¼0.81, R2 ¼ 65 per cent). Since it is one of
the very few studies that examined that relationship by collecting self-reported data
(using a structured questionnaire), it is highly recommended that future research
should replicate the same methodology and try to further validate these results.
5. Conclusions
The present study developed an original conceptual framework that investigated the impact
of innovation on competitive advantage. Moreover, the impact of KM, IC, organisational
capabilities and organisational culture (innovation antecedents) on innovation has also been
examined. A newly developed questionnaire was distributed to Greek manufacturers and 189
usable questionnaires were finally returned. The validity and reliability of the measurement
was thoroughly examined, while the empirical data were analysed using the SEM technique.
The test of the five research hypotheses, significantly assisted by the modification
indexes provided by AMOS, produced a very interesting (modified) research model with
significant explanatory power. The main finding concerns the role of organisational culture
(adhocracy culture). Despite the original conceptual categorisation of organisational culture
as an antecedent of innovation, the results of the statistical analysis indicated that this
factor is actually an inhibitor/facilitator of the other three innovation antecedents (KM, IC,
organisational capabilities). In other words, organisational culture sets the environment in
which the effects of innovation antecedents are transmitted towards innovation.
An organisational culture that constrains flexibility, adaptability, employee initiatives
and self-organisation may destroy all other innovation initiatives and limit the capacity of Innovation in
the overall company to innovate. On the contrary, an adhocracy culture is much more likely building
to act as an arc of innovation. competitive
Moreover, the empirical results indicate that innovation will not result from simply
focusing on few factors. The high degree of interconnectivity of all innovation antecedents advantages
underlines the need for adopting a holistic approach, handling all antecedents as a coherent
bundle of organisational practices. The proper management of all these practices will have 59
the strongest possible effect on innovation.
Additionally, the final (modified) conceptual framework dictates the causal path of the
relationships between the three (remaining) innovation antecedents and innovation itself. In that
context, IC appears as the most important parameter of translating knowledge-intensive
initiatives into innovative results. For instance, IC affects KM, which in turn affects organisational
capabilities, with the last factor (mainly) affecting innovation. On a different causal path,
IC affects both KM and organisational capabilities, which in turn have an effect on innovation.
Therefore, it seems that without a focus on IC, innovation is quite impossible to achieve.
The value and originality of the present paper lies in its basic approach. Its (modified)
conceptual framework has never been proposed in the innovation literature, while it seems
to explain the relationships among various organisational factors. Implementing companies
can use it as a compass for directing their innovation initiatives. Other scientists can use it
as a starting point in the investigation of innovation and competitive advantage.
More specifically, on an organisational level, managers should pursue the following
goals: develop an (adhocracy) culture that encourages creativity, experimentation, flexibility
(adaptability), risk taking, entrepreneurial thinking, individual ingenuity and freedom;
develop a KM system that encourages dialogue and collaboration, establishes processes for
knowledge sharing, centralises information and rewards staff based on the quality of their
KM contributions; focus on the needs of the customers (customer orientation), analyse the
changes in the external environment (market orientation) and adopt practices that increase
the organisational responsiveness to change (e.g. involve employees in the various
change initiatives, explain the necessity of change, explain how change can benefit the
organisation and the individuals, reinforce and reward positive behaviours); further develop
the IC of the organisation (e.g. obtain and store information about core job knowledge of the
significant employees, create performance review systems that are based on meaningful
metrics, develop effective succession planning systems).
On a macroeconomic level, public policy makers should focus on the following areas in
order to enhance innovation (Autant-Bernard et al., 2013; Mohnen and Röller, 2005;
Smits and Kuhlmann, 2004): ensure that alternative sources of finance really exist; remove
obstacles in legislation and taxation; provide platforms for cooperation, experimenting and
learning; provide infrastructures for strategic intelligence; and support the availability of
skilled employees. According to Autant-Bernard et al. (2013), innovation policy includes far
more than providing R&D subsidies; its most significant role is to develop mechanisms that
facilitate the capture and assimilation of knowledge. Finally, according to the seminal study
of Tödtling and Trippl (2005), a “best practice” innovation policy which could be applied to
every region does not exist. Policy makers should customise their initiatives in order to fit
the characteristics of each different region.
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EJIM Appendix
21,1
Innovation antecedents Corresponding studies

1. Organisational factors
68 1.1. Orientation-related factors
Market orientation Cambra-Fierro et al. (2011), Hult et al. (2004), Laforet (2008), Lee
and Tsai (2005), Farida (2017), Nasution et al. (2011), Otero-Neira
et al. (2013), Paladino (2007), Veidal and Korneliussen (2013)
Entrepreneurial orientation Farida (2017), Hult et al. (2004), Veidal and Korneliussen (2013)
Learning orientation Hult et al. (2004), Lee and Tsai (2005), Nasution et al. (2011)
Technology orientation Saemundsson and Candi (2014)
Business orientation Saemundsson and Candi (2014)
Strategic orientation Laforet (2008)
Long-term orientation Tajeddini and Trueman (2012)
Resource orientation Paladino (2007)
Customer orientation (focus) Ar and Baki (2011)

1.2. Culture-related factors
Centralisation Jansen et al. (2006), Kyriakopoulos et al. (2015), Prajogo and
McDermott (2014)
Formalization Jansen et al. (2006), Prajogo and McDermott (2014)
Connectedness Jansen et al. (2006), Prajogo and McDermott (2014)
Individualism Tajeddini and Trueman (2012)
Power distance Tajeddini and Trueman (2012)
Organisational culture Laforet (2008)
Participation Lee and Tsai (2005)
Power sharing Lee and Tsai (2005)
Collaboration Lee and Tsai (2005)
Shared vision García-Morales et al. (2006)
Proactivity García-Morales et al. (2006)
Role ambiguity Wang and Lin (2012)
Role conflict Wang and Lin (2012)
Co-creation Farida (2017)
1.3. Personal characteristics
Transformational leadership Aragon-Correa et al. (2007), García-Morales et al. (2006)
Top management support Ar and Baki (2011)
Personal mastery García-Morales et al. (2006)
Divergent thinking Gielnik et al. (2014)
General mental ability Gielnik et al. (2014)
Entrepreneurial experience Gielnik et al. (2014)
Entrepreneurship Nasution et al. (2011)
Opportunity identification Gielnik et al. (2014)
Entrepreneurial proclivity Otero-Neira et al. (2013)
Social (employee) capital Farida (2017)
1.4. Innovation-related factors
Innovation-related activities (R&D, Piening and Salge (2015)
machinery, software, acquisition of
external knowledge, training, design)
Innovation self-efficacy Wang and Lin (2012)
Table AI. Creative capability Ar and Baki (2011)
Innovation R&D strategy Ar and Baki (2011)
antecedents examined
in previous
empirical studies (continued )
Innovation in
Innovation antecedents Corresponding studies
building
R&D process Wan et al. (2015) competitive
Strategy of product innovation Jayaram et al. (2013)
Strategy of process innovation Jayaram et al. (2013) advantages
1.5. Knowledge-related factors
Absorptive capacity Fosfuri and Tribó (2008) 69
Knowledge sources Ganter and Hecker (2013)
Customer knowledge development Wang and Lin (2012)
1.6. Contextual factors
Firm size Ganter and Hecker (2013), Laforet (2008)
Education of workforce Ganter and Hecker (2013)
Geographic scope Ganter and Hecker (2013)
1.7. Various factors
Organisational learning Ar and Baki (2011), Aragon-Correa et al. (2007), Paladino (2007)
Human resource practices Nasution et al. (2011)
Organisational collaboration Ar and Baki (2011)

Supplier relationship Ar and Baki (2011)
Recourses (e.g. relational, financial, Kyriakopoulos et al. (2015)
technological, reputational)
2. Environmental factors
Environmental dynamism Jansen et al. (2006), Jayaram et al. (2013), Saemundsson and
Candi (2014)
Competitive intensity Jayaram et al. (2013), Saemundsson and Candi (2014)
Competitive factors (e.g. intensity Ganter and Hecker (2013)
of competition, speed of
technological change)
Environmental uncertainty Prajogo and McDermott (2014)
Environmental hostility Prajogo and McDermott (2014)
Environmental competitiveness Jansen et al. (2006)
Environmental changes García-Morales et al. (2006)
Competitive turbulence Kyriakopoulos et al. (2015) Table AI.
About the authors

Prodromos Chatzoglou is a Professor of MIS at the Department of Production and Management
Engineering, Democritus University of Thrace, Xanthi, Greece. He holds a Bachelor of Arts (BA)
(Economics), Graduate Industrial School, Thessaloniki, Greece, a Master of Science (MSc) (Management
Sciences), and a PhD (Information Engineering), both from the UMIST, Manchester, UK. His research
interests include information systems management, knowledge management, e-business and strategic
management. His work has been published in Decision Sciences, International Journal of Medical
Informatics, Information Systems Journal, European Journal of Information Systems, among others.
Dimitrios Chatzoudes is a PhD Candidate at the Department of Production and Management
Engineering of Democritus, University of Thrace, Xanthi, Greece. His Bachelor Degree is in Business
Administration and his Postgraduate Degree in International Economics. His academic interests include
research methods, supply chain management and production management. Dimitrios Chatzoudes is the
corresponding author and can be contacted at: dchatzoudes@yahoo.gr
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European Journal of Innovation Management

The role of innovation in building competitive advantages: an empirical

References: this document contains references to 162 other documents.

Design/methodology/approach – The examination of the proposed conceptual framework was

organisational capabilities that have an impact on innovation.

2.2 Innovation and competitive advantage

3.1 Population of the study

3.3 Data collection

3.4 Reliability and validity

Bartlett’s test Total variance Cronbach

Product innovation 2.46 0.82 61.1 0.089 0.91 0.97

Hypothesis Path Path coefficient Remarks

H1 Knowledge management → innovation 0.23 Accepted

Knowledge management 0.646 0.506 0.000 0.000 0.000 Table V.

• Organisational capabilities that are necessary for an innovative behaviour are

Management, Vol. 36 No. 3, pp. 349-359.

of organizational innovation and organizational learning in entrepreneurship”, Industrial

GrFigures2012/2012_01_13_12_42_22/document.pdf (accessed 1 September 2012).

Research, Vol. 61 No. 7, pp. 753-764.

evidence from China”, Technovation, Vols 39-40, May-June, pp. 94-104.

Innovation antecedents Corresponding studies

Customer orientation (focus) Ar and Baki (2011)

Organisational collaboration Ar and Baki (2011)

About the authors

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