The influence of knowledge-oriented leadership on business model innovation and open innovation: mediating role of absorptive capacity

PurposeThis paper aims to explore the importance of knowledge-oriented leadership in the context of business model innovation (BMI) and open innovation. This study also seeks to explore the existence of a mediating effect of absorptive capacity.Design/methodology/approachData were collected using a survey, from the information technology industry in India. The relationships proposed in the conceptual framework were tested with structural equation modeling (SEM) using Smart partial least squares (PLS) 3.FindingsThe findings highlight a positive influence of knowledge-oriented leadership on BMI and open innovation. Results also revealed that open innovation can facilitate BMI. Additionally, findings highlighted the mediating role of absorptive capacity in these relationships.Practical implicationsThis study suggests that businesses should employ and value leaders who can create, transform, store and use knowledge resources. Companies that employ such leaders encourage the creation and exchange of new knowledge, which consequently would lead to the successful exploration of innovative approaches. A culture of open innovation would help managers break down barriers, overcome inertia and continuously test new business models to generate revenues, increase value, enhance organizational effectiveness and ultimately gain competitive advantage.Originality/valueThis study is one of the first to empirically contribute to the role of knowledge-oriented leadership and BMI from the perspective of open innovation.