Innovating for Financial Sustainability in Nonprofit Symphony Orchestras: A Dynamic Capabilities Perspective

Symphony orchestras (SOs) face financial and legitimacy challenges, from unstable revenue to shifting stakeholder expectations. Grounded in dynamic capabilities theory, we investigate how innovation strengthens nonprofit SOs’ financial sustainability. Using survey data from 131 North American SOs, we test a model where environmental intelligence and external partnerships shape product and process innovation, affecting financial outcomes. Results indicate environmental intelligence alone does not generate innovation but depends on partnerships for resource access and action. Furthermore, process innovation enhances financial outcomes, whereas product innovation yields no immediate return. Necessary condition analysis shows innovation is required for high financial performance. Overall, findings highlight that innovation in mission-driven, resource-constrained settings is deliberate and depends on leadership and partnerships to balance artistic and managerial logics. We contribute to nonprofit and arts management research by clarifying SOs’ innovation pathways, offering practical implications for managers and policymakers to strengthen financial sustainability across the performing arts and nonprofit sector.