COVID-19 has developed chaos and uncertainty for small and medium enterprises (SMEs) causing mass downsizing. Under such uncertainty, innovation is key to survival and agility to growth. This study examines role of knowledge coupling and business process digitization (BPD) in sustaining innovation through market capitalizing agility (MCA) besides downsizing strategy. Data have been collected from top and mid management of Chinese manufacturing SMEs and analyzed with knowledge-based view and self-tuning model through Smart-PLS 4. Knowledge coupling positively contributes to MCA and innovation irrespective of downsizing strategy. Effect of BPD on innovation performance is same; however, insignificant on MCA in no-downsizing sample. Likewise, MCA positively influences innovation performance and positively mediates between knowledge coupling (BPD) and innovation performance only during downsizing. This study is first of its kind to establish mediating effect of MCA between knowledge coupling (BPD) and innovation performance during downsizing phase and offers significant theoretical and practical implications.
AkpanIJUdohEAPAdebisiB (2020) Small business awareness and adoption of state-of-the-art technologies in emerging and developing markets, and lessons from the COVID-19 pandemic. Journal of Small Business and Entrepreneurship34: 123–140.
2.
AliSGreenPRobbA, et al. (2022) Governing information technology (IT) investment: A contingency perspective on organization’s IT investment goals. Australian Journal of Management47: 3–23.
3.
Al-OmoushKSSimón-MoyaVSendra-GarcíaJ (2020) The impact of social capital and collaborative knowledge creation on e-business proactiveness and organizational agility in responding to the COVID-19 crisis. Journal of Innovation and Knowledge5: 279–288.
4.
BarNirAGallaugherJMAugerP (2003) Business process digitization, strategy, and the impact of firm age and size: The case of the magazine publishing industry. Journal of Business Venturing18: 789–814.
5.
BrauerMLaamanenT (2014) Workforce downsizing and firm performance: An organizational routine perspective. Journal of Management Studies51: 1311–1333.
6.
BroekhuizenTLJBroekhuisMGijsenbergMJ, et al. (2021) Introduction to the special issue–Digital business models: A multi-disciplinary and multi-stakeholder perspective. Journal of Business Research122: 847–852.
7.
Cegarra-NavarroJGSoto-AcostaPWensleyAKP (2016) Structured knowledge processes and firm performance: The role of organizational agility. Journal of Business Research69: 1544–1549.
8.
ChandlerA (1962) Strategy and Structure. Cambridge, MA: MIT Press.
9.
CharoensukmongkolP (2021) Does entrepreneurs’ improvisational behavior improve firm performance in time of crisis?Management Research Review45: 26–46.
10.
CharoensukmongkolPPandeyA (2022) The flexibility of salespeople and management teams: How they interact and influence performance during the COVID-19 pandemic. Asia Pacific Management Review. Epub ahead of print 7July. DOI: 10.1016/j.apmrv.2022.07.001.
11.
CharoensukmongkolPSuthatornP (2022) How managerial communication reduces perceived job insecurity of flight attendants during the COVID-19 pandemic. Corporate Communications27: 368–387.
12.
ChenHYaoYZhouH (2020) How does knowledge coupling affect exploratory and exploitative innovation? The chained mediation role of organisational memory and knowledge creation. Technology Analysis and Strategic Management33: 713–727.
13.
DabicMStojčićNSimićM, et al. (2021) Intellectual agility and innovation in micro and small businesses: The mediating role of entrepreneurial leadership. Journal of Business Research123: 683–695.
Del GiudiceMScuottoVPapaA, et al. (2021) A self-tuning model for smart manufacturing SMEs: Effects on digital innovation. Journal of Product Innovation Management38: 68–89.
16.
DisoskaEMTevdovskiaDToshevska-TrpchevskaaK, et al. (2020) Evidence of innovation performance in the period of economic recovery in Europe. Innovation: The European Journal of Social Science Research33: 280–295.
17.
DongXYXuLC (2008) The impact of China’s millennium labour restructuring program on firm performance and employee earnings. Economics of Transition16: 223–245.
18.
DoveR (2001) Response Ability: The Language, Structure, and Culture of the Agile Enterprise. New York: Wiley.
19.
DrewSAW (1994) Downsizing to improve strategic position. Management Decision32: 4–11.
20.
DuanYDengZLiuH, et al. (2022) Exploring the mediating effect of managerial ability on knowledge diversity and innovation performance in reverse cross-border M&As: Evidence from Chinese manufacturing corporations. International Journal of Production Economics247: 108434.
21.
FornellCLarckerD (1981) Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research18: 39–50.
22.
GalanakisCMRizouMAldawoudTMS, et al. (2021) Innovations and technology disruptions in the food sector within the COVID-19 pandemic and post-lockdown era. Trends in Food Science and Technology110: 193–200.
23.
García-MoralesVJLloréns-MontesFJVerdú-JoverAJ (2008) The effects of transformational leadership on organizational performance through knowledge and innovation. British Journal of Management19: 299–319.
24.
GibsonCBBirkinshawJ (2004) The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal47: 209–226.
GrantRM (1996) Prospering in dynamically-competitive environments: Organizational capability as knowledge integration. Organization Science7: 375–387.
27.
GroverVMalhotraMK (1999) A framework for examining the interface between operations and information systems: Implications for research in the new millennium. Decision Sciences30: 901–920.
28.
HairJBlackWBabinB, et al. (2010) Multivariate Data Analysis. Hoboken, NJ: Pearson Prentice Hall.
29.
HairJFRisherJJSarstedtM, et al. (2019) When to use and how to report the results of PLS-SEM. European Business Review31: 2–24.
30.
HairJFHultGTMRingleCM, et al. (2017) A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). 2nd ed. London: SAGE.
31.
HillierDMarshallAMcColganP, et al. (2007) Employee layoffs, shareholder wealth and firm performance: Evidence from the UK. Journal of Business Finance and Accounting34: 467–494.
32.
HuangLWangCChinT, et al. (2022) Technological knowledge coupling and green innovation in manufacturing firms: Moderating roles of mimetic pressure and environmental identity. International Journal of Production Economics248: 108482.
JainS (2020) From jugaad to jugalbandi: Understanding the changing nature of Indian innovation. Asia Pacific Journal of Management39: 1–26.
35.
JiaoLBairdKHarrisonG (2020) Searching in the regulatory environment: The impact of regulatory search on firm innovativeness. Australian Journal of Management45: 153–171.
36.
JinNYangNSharifSMF, et al. (2022) Changes in knowledge coupling and innovation performance: The moderation effect of network cohesion. Journal of Business and Industrial Marketing37: 2380–2395.
37.
JordanPJTrothAC (2020) Common method bias in applied settings: The dilemma of researching in organizations. Australian Journal of Management45: 3–14.
38.
KawaiN (2015) Does downsizing really matter? Evidence from Japanese multinationals in the European manufacturing industry. International Journal of Human Resource Management26: 501–519.
39.
KleinVBTodescoJL (2021) COVID-19 crisis and SMEs responses : The role of digital transformation. Knowledge and Process Management28: 117–133.
40.
KockN (2015) Common method bias in PLS-SEM. International Journal of E-Collaboration11: 1–10.
41.
KumarAAyedeeN (2021) Technology adoption: A solution for SMEs to overcome problems during Covid-19. Academy of Marketing Studies Journal25: 1–16.
42.
LeeOKSambamurthyVLimKH, et al. (2015) How does IT ambidexterity impact organizational agility?Information Systems Research26: 398–417.
43.
LeeJBerenteN (2012) Digital innovation and the division of innovative labor: Digital controls in the automotive industry. Organization Science23: 1428–1447.
44.
LeeSMTrimiS (2021) Convergence innovation in the digital age and in the COVID-19 pandemic crisis. Journal of Business Research123: 14–22.
45.
LuYRamamurthyK (2011) Understanding the link between information technology capability and organizational agility: An empirical examination. MIS Quarterly35: 931–954.
46.
MarcoulidesGAChinWWSaundersC (2009) A critical look at partial least squares modeling. MIS Quarterly33: 171–176.
47.
Martínez-CostaMJiménez-JiménezDDine RabehHA (2019) The effect of organisational learning on interorganisational collaborations in innovation: An empirical study in SMEs. Knowledge Management Research and Practice17: 137–150.
48.
MeiLRentocchiniFChenJ (2021) Antecedents of strategic ambidexterity in firms’ product innovation: External knowledge and internal information sharing. Journal of Small Business Management. Epub ahead of print 22September. DOI: 10.1080/00472778.2021.1944635.
49.
MilesJ (2012) Management and Organization Theory. London: Wiley.
OverbyEBharadwajASambamurthyV (2006) Enterprise agility and the enabling role of information technology. European Journal of Information Systems15: 120–131.
52.
PapadopoulosTBaltasKNBaltaME (2020) The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice. International Journal of Information Management55: 102192.
53.
PDMA
(2004) The PDMA Glossary for New Product Development. The PDMA Handbook of New Product Development. DOI: 10.1002/9780470172483.gloss.
54.
PigolaADa CostaPR (2022) In search of understanding about knowledge and learning on innovation performance. Scientometrics127: 3995–4022.
55.
PodsakoffPMacKenzieSBLeeJ-Y, et al. (2003) Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology88: 879–903.
56.
RamdaniBGuermatCMellahiK (2021) The effect of downsizing on innovation outputs: The role of resource slack and constraints. Australian Journal of Management46: 346–365.
57.
Product Development and Management Association (PDMA) (2004) The PDMA Glossary for New Product Development. Chicago, IL: PDMA.
RichtnérAÅhlströmP (2006) Organizational downsizing and innovation. SSE/EFI Working Paper Series in Business Administration 2014: 1–22.
60.
RicoRGibsonCClarkMA (2020) Team adaptation and the changing nature of work: Lessons from practice, evidence from research, and challenges for the road ahead. Australian Journal of Management45: 507–526.
61.
RitalaPOlanderHMichailovaS, et al. (2015) Knowledge sharing, knowledge leaking and relative innovation performance: An empirical study. Technovation35: 22–31.
62.
Ritter-HayashiDKnobenJVermeulenPAM (2020) Success belongs to the flexible firm: How labor flexibility can retain firm innovativeness in times of downsizing. Long Range Planning53: 101914.
63.
RobertsNGroverV (2012) Leveraging information technology infrastructure to facilitate a firm’s customer agility and competitive activity: An empirical investigation. Journal of Management Information Systems28: 231–270.
64.
SambamurthyVBharadwajAGroverV (2003) Shaping agility through digital options: Reconceptualizing the role of information technology in contemporary firms. MIS Quarterly: Management Information Systems27: 237–264.
65.
SitlingtonHMarshallV (2011) Do downsizing decisions affect organisational knowledge and performance?Management Decision49: 116–129.
66.
SlomanSFernbachP (2018) The Knowledge Illusion: Why We Never Think Alone. New York: Riverhead Books.
67.
SlywotzkyAJWeberKMorrisonDJ (2000) How Digital Is Your Business?New York: Crown Business.
68.
SpectorPE (2019) Do not cross me: Optimizing the use of cross-sectional designs. Journal of Business and Psychology34: 125–137.
69.
SuchardJAShinkleGA (2019) Innovation in newly public firms: The influence of government grants, venture capital, and private equity. Australian Journal of Management47: 20190627012941.
70.
SwinkMNarasimhanRWangC (2007) Managing beyond the factory walls: Effects of four types of strategic integration on manufacturing plant performance. Journal of Operations Management25: 148–164.
71.
TabachnickBGFidellLSUllmanJB (2007) Using Multivariate Statistics. 7th ed.Boston, MA: Pearson.
72.
WangTLibaersD (2016) Nonmimetic knowledge and innovation performance: Empirical evidence from developing countries. Journal of Product Innovation Management33: 570–588.
73.
WyrtkiKRöglingerMRosemannM (2021) Opportunity-led ideation: How to convert corporate opportunities into innovative ideas. Creativity and Innovation Management30: 523–541.
74.
YayavaramSAhujaG (1994) Decomposability in knowledge structures and its impact on the usefulness of inventions and knowledge-base malleability. Administrative Science Quarterly53: 333–362.
75.
YayavaramSChenWR (2015) Changes in firm knowledge couplings and firm innovation performance: The moderating role technological complexity. Strategic Management Journal36: 377–396.
76.
YooYHenfridssonOLyytinenK (2010) The new organizing logic of digital innovation: An agenda for information systems research. Information Systems Research21: 724–735.
77.
YusufYYSarhadiMGunasekaranA (1999) Agile manufacturing: The drivers, concepts and attributes. International Journal of Production Economics62: 33–43.
78.
ZhouJBiGLiuH, et al. (2018) Understanding employee competence, operational IS alignment, and organizational agility—An ambidexterity perspective. Information and Management55: 695–708.
