How Digital Capabilities and Knowledge Inertia Jointly Affect Radical and Incremental Innovation

The purpose of this study is to investigate how digital capabilities and knowledge inertia jointly affect both radical and incremental innovation. The empirical study finds that, while there is a U-shaped effect of digital technological capability (DTC) on radical innovation performance (RIP) and incremental innovation performance (IIP), digital cognitive capability (DCC) can both enhance RIP and IIP based on data from 304 Chinese firms obtained by the scenario separation method and the inter-temporal method. Additionally, learning inertia amplifies the positive effect of DCC on RIP while weakening the U-shaped link between DTC and RIP. In the meantime, the positive effect of DCC on IIP is strengthened by experience inertia. The research on digital capabilities and their application to innovation is expanded by the findings, which also give firms a theoretical foundation and methodological direction for overcoming the digital dilemma.