Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition

• The performance effect of firm innovativeness varies across different configurations of market turbulence and competition.
• Firm innovativeness best facilitates performance under high market turbulence and high competitive intensity.
• The value of firm innovativeness fails to materialize when market turbulence is low and competitive intensity is high.
• The individual moderating effects of market turbulence and competitive intensity are mutually dependent.
• It is strategically important to match firm innovativeness with the specific configurational condition of market contexts.

To clarify the nature of the effect of firm innovativeness on business performance, this study draws on contingency theory and an interactional perspective to develop a conceptual framework to investigate how the interaction between market turbulence and competitive intensity moderates the relationship between firm innovativeness and business performance. This study used survey data from a sample of 154 high-tech manufacturing firms in Taiwan and employed hierarchical moderated regression analysis to test the hypotheses developed. The results reveal that the effect of firm innovativeness on business performance varies across the different configurations of market turbulence and competitive intensity. Specifically, the performance effect of firm innovativeness is most positive under high market turbulence and high competitive intensity; the performance effect is least positive under low market turbulence and low competitive intensity. However, the performance benefits of firm innovativeness fail to materialize under low market turbulence and high competitive intensity. Overall, these findings highlight that market turbulence and competition jointly influence the direction and strength of the performance effect of firm innovativeness. This study advances firm innovativeness research by identifying the configurational market conditions that augment or limit the value of firm innovativeness.