Innovating for competitive advantage: managerial risk-taking ability counterbalances management controls

The study applies dynamic capability theory to investigate the combined impact of the two mediators management controls and managerial risk taking in the relationship between innovative capability and competitive advantage. The study was conducted during 2016-2017 using a partial least squares-structural equation modeling technique with a sample of 165 professional managers in the highly competitive Indian information technology industry which is global in its reach and has its competitive strength in its innovations. The study found that the ability to innovate had a direct impact on firms' competitive advantage. When both the mediators were considered together, they counterbalanced one another. We thus theorize that managerial risk-taking ability mitigates the impact of managerial controls. This finding has significant ramifications for organizations' operational and strategic choices. The study contributes to the strategic management literature by validating dynamic capability theory in an emerging market context. From a methods perspective, this study illustrates the application of a multiple mediation methodology in the context of a dynamic capability theory framework.