Looking for new possibilities in emerging industries: The impact of strategic sensing capability on high-tech startups’ product innovation

Although the existing literature generally acknowledges that dynamic capabilities (DCs) can promote product innovation in emerging industries, the effectiveness of sensing capabilities remains contested. This study deconstructs sensing capabilities into technology-sensing and market-sensing capabilities, examines and compares their impacts on startups’ product innovation in emerging industries. We also investigate the moderating roles of digital technology and the market-related knowledge base. Through a combination of quantitative and qualitative research, we found that: a) startups’ market-sensing and technology-sensing capabilities have distinct and interaction effects on product innovation; b) startups’ knowledge depth and breadth moderate the effects of these two capabilities; and c) digital technology amplifies the effects of these capabilities. Thus, this study advances the dynamic capabilities theory in emerging industries, mitigates the heterogeneity in existing research, and deepens our understanding of the distinct roles of sensing capabilities.