Abstract

This study explores the relationship between capability reconfiguration and firm innovation performance by analyzing a sample of 375 manufacturing firms in China. The results suggest that the relationship between capability reconfiguration and innovation performance is affected by both the catch-up stage and the mode of capability reconfiguration (evolution or substitution). The catch-up stage of enterprises significantly impacts the moderating effects of innovation magnitude on the relationship between capability substitution and firm innovation performance, however, it has no obvious effects on the moderation of innovation magnitude on the relationship between capability evolution and innovation performance. This study contributes to the theory of dynamic capability and catch-up by revealing how innovation magnitude affects capability reconfiguration and subsequent innovation performance in different catch-up stages. The implication of this study is to remind managers to take full account of the innovation magnitude and catch-up stage in their decision-making.