The impact of market dynamism on innovation from a digital perspective: the moderating roles of TMT digital orientation and firm digital capabilities

Purpose This study aims to examine how top management team (TMT) digital orientation and firm digital capabilities influence innovation in dynamic markets. Design/methodology/approach This research used computer-aided text analysis to examine TMTs’ digital backgrounds and firm digital capabilities based on annual reports. The author analyzed a sample of 264 publicly listed Taiwanese electronics firms over the period from 2018 to 2023. Findings The finding indicates a positive relationship between market dynamism and innovation. In addition, both a higher level of TMT digital orientation and stronger firm digital capabilities are positively associated with innovation. Furthermore, firm digital capabilities amplify the positive effect of market dynamism on innovation. Originality/value This research contributes to existing upper echelon theory literature, which has insufficiently examined TMT digital orientation as a key TMT attribute influencing innovation. The author also addresses the role of digital capabilities as dynamic capabilities, which remains empirically underdeveloped. This research incorporates digital perspectives to address gaps in understanding how both TMT digital orientation and firm digital capabilities moderate the relationship between market dynamism and innovation.