Strategic innovation system and firm innovation performance: empirical analysis based on dynamic capabilities and knowledge base view

The accelerating pace of consumer and market demand poses a substantial challenge for firms aiming to develop knowledge-intensive strategies to address demand gaps. These strategies are designed to establish and maintain competitive advantage by innovatively leveraging their competencies and capabilities. This study employs the dynamic capabilities and knowledge capabilities views to investigate the impact of strategic innovation systems (SIS) on firm innovation performance (FIP). To achieve this objective, the study analyzes the integration of knowledge into the innovation process to assess the influence of strategic systems on innovation performance. The research hypotheses were evaluated using a quantitative research design involving 111 SMEs in China. The findings reveal a negative impact of both SIS and distinct competencies (DC) on firm innovation performance. Furthermore, SIS demonstrated a positive influence on product innovation. Additionally, the mediation analysis showed an indirect effect of SIS on firm innovation performance through product innovation. Moreover, DC and externalities displayed mediating effects. These findings contribute to the literature on strategic systems and innovation performance by providing practical recommendations for managers seeking to enhance innovation performance.