Can strategic flexibility help firms profit from product innovation?

Although it is generally acknowledged that product innovation is critical for firms to sustain their competitive advantages, innovating firms sometimes fail to obtain economic returns from product innovation. This study focuses on the moderating effect of strategic flexibility (composed of resource flexibility and coordination flexibility) on the relationship between product innovation and firm performance, in order to address an important but previously unexplored question: Can strategic flexibility help firms profit from product innovation? Our empirical test, utilizing a sample of 607 Chinese firms, reveals that the moderating effect of resource flexibility on the positive relationship between product innovation and firm performance is negative, while that of coordination flexibility is positive. Further, such moderating effects are especially likely to be profound for firms confronting a high level of competitive intensity. We conclude by discussing our contributions, the implications, and possible future extensions.