How management practices shape innovation outcomes: a configurational analysis of centralisation, environmental dynamism and dual innovation in an emerging market

Purpose This study aims to examine how exploratory and exploitative innovation interact with the management practice of centralisation and environmental dynamism to shape firm performance in an emerging market. It responds to limitations of universal direct-effect and contingency models by adopting a configurationally informed perspective to capture the interdependent effects of structure, managerial routines and environmental conditions. Design/methodology/approach A configuration-based theoretical model was developed and tested using survey data from 127 managerial respondents across Sri Lankan firms. The survey instrument was pre-tested and pilot-tested before administration. Hierarchical linear regression was used to assess direct effects and hypothesised two-way and three-way interaction effects among innovation types, centralisation and environmental dynamism. Findings Both exploratory and exploitative innovation exhibit strong and statistically significant negative direct effects on firm performance. Contrary to expectations, centralisation, conceptualised as a management practice, does not significantly moderate the innovation–performance relationship, nor do higher-order interaction effects involving environmental dynamism receive empirical support. The findings indicate that innovation-related performance risks dominate structural and contextual contingency effects in the examined emerging-market context. Research limitations/implications Findings highlight the value of configurational theorising in innovation research by clarifying the empirical boundaries of contingency and configurational arguments in emerging markets. Rather than demonstrating stable interaction effects, the study shows that innovation–performance relationships may be driven primarily by direct cost and risk dynamics. Future research should examine additional organisational practices, such as culture, learning orientation and market orientation, using longitudinal and comparative designs to better understand the interdependent mechanisms shaping innovation outcomes across emerging economies. Originality/value This study advances scholarship by reframing centralisation as a core management practice rather than a structural attribute and by empirically demonstrating the limits of its conditioning role in innovation performance outcomes. It provides rare empirical evidence from a South Asian emerging market, offering a contextually grounded understanding of how managerial routines relate to, rather than systematically condition, exploratory and exploitative innovation performance under conditions of institutional volatility and resource constraint.