Contributory role of dynamic capabilities in the relationship between organizational learning and innovation performance

Purpose - The direct impact of organizational learning (OL) on organizational performance has been studied over the past two decades. However, how OL contributes to organizational innovation still remains under-researched. Based on the knowledge-based view of the firm and dynamic capability theory, we developed a theoretical framework in order to empirically examine how OL offers organizations the essential tools for creating dynamic capabilities (DCs), which pave the way for innovation performance (IP). Design/methodology/approach - The authors apply a time-lagged, multisource and survey-based research designed to test the proposed model in the pharmaceutical industry where knowledge is a source of innovation. The data collected from companies operating in such an industry were analyzed by utilizing hierarchical regression analysis to explore how OL could lead to IP through DC. Findings - The results indicated that OL is positively, significantly associated with DCs, as well as its dimensions of learning, integrating and reconfiguring capabilities. The findings showed that these capabilities are significant predictors of innovation performance. In addition, the findings revealed that innovation culture significantly moderates the relationship between DCs and innovation performance. Originality/value - By dedicating more time and resources, managers can reinforce dynamic capabilities as a strategic tool to generate new knowledge and distribute it across the organization, which can go a long way toward boosting innovation performance in the pharmaceutical industry. This study offers researchers and practitioners invaluable insights into how effective OL can enhance firm-level innovation performance through dynamic capabilities.