Twentieth International Conference on Knowledge, Culture, and Change in Organizations

Abstract

The network concept derived from social capital theory has received considerable attention in business and management domains (e.g. international business, logistics, industrial marketing). However, extant studies overlook the links between network assets, dynamic capability and innovation performance in the context of the financial service sector. In addition, innovation performance has repeatedly been given little importance in service industries unlike the manufacturing sector. Therefore, this study examines hypothetical relationships among the aforementioned constructs in the financial service sector. We assess our hypotheses by conducting a piloted and administrated survey in the Egyptian Financial Service Sector (n=342). Using a structural equation modelling, our empirical results provide support to the key role of dynamic capability’s mediation between network assets and innovation performance. Our analysis shows network assets such as network configuration, network ties and network stability are significantly interrelated, and network stability fully mediates the effect of network configuration and network ties on dynamic capability. Moreover, our study indicates that network assets influence dynamic capability which in turn influences innovation performance. Thus, we advance our understanding on how network assets create an integrative structure which affects dynamic capability. Our results also indicate that the possession of network assets is not necessarily associated with innovation performance. However, the development of network structure is one of the key antecedents of dynamic capability. Hence, firms should build network assets, but without dynamic capability, innovation performance could be doomed. Thus, managers should rethink the integration of their network assets and dynamic capability to enhance innovation performance.