Determining the role of sources of knowledge and IT resources for stimulating firm innovation capability: a PLS-SEM approach

Purpose Drawing on the knowledge-based view (KBV), the research examines the impact of knowledge sources (internal and external knowledge sources) on two aspects of innovation radical and incremental innovation. Additionally, the research seeks to provide deeper insight into the link between the variables by studying how information technology (IT) resources mediate the relationship between knowledge sources and innovation capability. Design/methodology/approach The study assessed the relationship between latent variables using a quantitative research approach and variance-based structural equation modelling on a sample of 380 individuals from 83 Pakistani manufacturing and service firms. Findings The study's results revealed a significant impact of knowledge sources (internal and external knowledge sources) on radical and incremental innovation. Further, the study examines the mediating role of IT resources in connecting knowledge sources and a firm's innovation capability. Research limitations/implications Future studies should investigate the association among the constructs under the moderating roles of environmental turbulence to provide insight into the relationship between knowledge sources, IT resources, and innovation capability. Practical implications The paper provides evidence that knowledge sources and IT resources are the key driving factors of innovation capability. Managers and directors of firms in developing and emerging countries should establish firms' knowledge sources and IT resources to improve innovation capability. Originality/value There is a scarcity of studies that has explored the relationship between sources of knowledge, IT resources, and specific types of innovation, namely radical and incremental innovation. The paper helps fill research gaps in the literature and advances understanding of how knowledge sources, directly and indirectly, stimulate firms' innovation capabilities via the mediating role of IT resources.