Whether dynamic capabilities can enhance firm innovation performance under the economic uncertainty crisis: Thailand’s manufacturing industry

Abstract Amid the fear of world economic uncertainty, to survive in this circumstance, it is recognized that a firm’s innovative performance can be enhanced by the challenging strategy of dynamic capabilities. This study employed the Strategic Choice Theory, showing that manufacturer executives may deploy dynamic capabilities to cope with this economic uncertainty and eventually achieve firm innovation performance. As such, it aims to explore both direct and conditional indirect effects of dynamic capabilities, market intelligence generation, and IT flexibility toward firm innovation performance. The 402 target manufacturers were determined by equal cluster sampling, and data collection was performed over six regions of Thailand. For data analysis, construct validity was performed using first-order CFA, and the two-level factor structure was explored using PROCESS models 4 and 14 with OLS Regression. The results revealed that the second-order moderated mediating effect of an association between dynamic capabilities and market intelligence generation with high IT flexibility toward firm innovation performance was positively significant (ω = 0.03, CI [0.013, 0.056]). Highlighting that the reinforcement of market intelligence generation with high IT flexibility on dynamic capabilities could provide a greater positive effect on firm innovation performance than the isolated effect of dynamic capabilities. Therefore, manufacturing firms are encouraged to deploy an association of market intelligence generation and high IT flexibility to reinforce dynamic capabilities to enhance firm innovation performance to cope with any economic uncertainty in the Thailand context.