Shifting Representations: Understanding How CEO Cognitive Flexibility Fosters Digital Product Innovation in Incumbent Firms

Abstract While digital product innovation offers unprecedented opportunities for incumbent firms to create competitive advantages, its fluid and iterative nature presents distinctive cognitive challenges. There is limited empirical literature explaining the role of constructive cognitive characteristics of executives in differentiating the successful pursuit of digital product innovation. Drawing on upper echelons theory and the attention-based view, we examine how chief executive officer (CEO) cognitive flexibility enables incumbent firms to pursue digital product innovation. Through a mixed-methods approach combining a field survey of 178 machine-building firms and a scenario-based experiment with 134 participants, we demonstrate that CEOs with higher cognitive flexibility achieve superior digital product innovation outcomes by facilitating insightful information acquisition and processing. This relationship is strengthened when CEOs engage in more boundary spanning activities and when firms possess greater social capital. Our study contributes to strategic leadership research by demonstrating how CEO cognitive flexibility enables incumbent firms to navigate the cognitive demands of digital product innovation, while enriching our understanding of how adaptive attention patterns shape strategic adaptation in increasingly digitized environments.