Exploring The Role Of Dynamic Environments On The Firms’ Innovation Performance: Mediating Roles Of Technology And Market-Sensing Capability

Purpose: This study aims to analyse the influence of dynamic environments on technology and market-sensing capability. It also aims to examine the influence of technology and market-sensing capability on innovation performance. Besides, it aims to explore the influence of innovation performance on the organisation’s financial performance. It also aims to examine the influence of technology and market-sensing capability on the organisation’s financial performance. Design/methodology/approach: The research model was tested using a structural equation modelling design based on survey data from 183 Saudi companies from different sectors, used by software (SPSS v. 28 and SmartPLS v. 4). Findings: This study shows that dynamic environments strongly influence both financial and innovation performance. However, this study shows that innovation performance does not directly affect financial performance. Furthermore, this study shows that dynamic environments strongly influence both technology and market-sensing capability. Likewise, this study shows that both technology and market-sensing capability strongly influence financial performance. However, this study shows that both technology and market-sensing capability do not directly affect innovation performance. Originality/value: This study has demonstrated that dynamic environments will have a direct effect on the financial performance of companies by compelling them to allocate their resources more strategically and flexibly in order to adapt to the changing and unpredictable conditions of dynamic environments. Moreover, this study has also demonstrated that dynamic environments will have a direct effect on the technology and market-sensing capability of organisations. This will motivate organisations to gather and analyse information about customers, competitors, and market trends, and to use this information to identify and exploit opportunities for innovation, differentiation, and value creation for customers and stakeholders. In addition to the previous findings, this study has also shown that dynamic environments will improve the technology and market-sensing capability of organisations. This will inspire organisations to collect and analyse information about the needs, preferences, and behaviours of customers, the strategies, actions, and strengths of competitors, and the trends, opportunities, and threats of the market, and to use this information to recognize and leverage opportunities for innovation, differentiation, and value creation for customers and stakeholders. Furthermore, this capability allows organisations to use their dynamic capabilities to innovate with their resources and competencies, which are essential for gaining competitive advantage and superior performance in dynamic environments.