Absorptive Capacity and Disruptive Innovation: The Mediating Role of Organizational Agility

Abstract

Disruptive innovation involves a process where a new entrant enters the lower end of the market and gradually penetrates the mainstream market, eventually displacing the incumbent. Disruptive innovation has been widely used as a strategy for competitive advantage. The gathering and sharing of new information significantly contribute to the success of disruptive innovation. Anchoring on dynamic capability theory, the current research work studies the role of absorptive capacity in the adoption of disruptive innovation. The study also investigates the role of organizational agility in this relationship. Using structural equation modeling analysis based on the response of 192 Indian innovation and development professionals, the study found that both potential and realized absorptive capacity significantly influence the adoption of disruptive innovation. Organizational agility mediates this relationship between absorptive capacity and disruptive innovation. Organizations can use the current study to better understand how new information can be assimilated and used to adopt disruptive innovation and design innovation strategies accordingly.