Understanding innovation driven by digital strategic orientation in emerging markets: the roles of organizational unlearning and knowledge inertia

Purpose Deciphering effective digital strategies to resolve the digitalization paradox and unlock innovation outcomes in emerging markets holds significant theoretical and managerial implications. This study aims to explore the mechanisms through which digital strategic orientation influences innovation performance in manufacturing enterprises within emerging markets, highlighting organizational unlearning as a mediator and knowledge inertia as a moderator. Design/methodology/approach This study used a dual-wave survey approach to gather data from 314 Chinese respondents in manufacturing enterprises via online and offline questionnaires. Structural equation model, regression and the PROCESS plugin were used to test the proposed hypotheses and assess the mediating effects and moderating effects. Findings The results demonstrate that digital strategic orientation, including digital market orientation and digital technology orientation, positively influences innovation performance. Organizational unlearning emerges as a critical mediating mechanism through which digital strategic orientation enhances innovation performance. Knowledge inertia acts as a moderating factor negatively impacting the relationship between digital strategic orientation and organizational unlearning, thereby weakening innovation performance. Originality/value First, this study advances the theoretical understanding of digital strategic orientation by clarifying the nuanced impacts of its two distinct yet complementary dimensions, namely, digital market orientation and digital technology orientation, on innovation performance. Second, to the best of the authors’ knowledge, this study is the first to validate organizational unlearning as a critical yet overlooked mediating mechanism translating digital strategic orientation into enhanced innovation performance, thus providing new insights into resolving the digitalization paradox in rapidly digitizing emerging markets. Third, this study enriches the strategic management and organizational learning literature by empirically validating knowledge inertia as a critical boundary condition negatively moderating the relationship between digital strategic orientation and organizational unlearning in emerging markets. Finally, this study provides valuable guidance for both managers and policymakers to overcome the digitalization paradox and to promote digital transformation in emerging markets.