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Purpose This study aims to examine the roles of dynamic innovation capabilities and open innovation activities in breakthrough innovation. Drawing from the absorptive capacity perspective, organizational inertia theory, and open innovation, the authors seek to argue that dynamic innovation capabilities have a curvilinear effect on breakthrough innovation that is moderated by open innovation activities. Design/methodology/approach A mail survey was sent to the top 1,000 firms in Taiwan, the target respondents being senior managers with experience in developing at least three successful breakthrough innovations in the past five years. A total of 218 usable questionnaires were collected, resulting in a respondent rate of 22.9 percent. Findings The findings support the argument that dynamic innovation capabilities have an inverted U‐shape relationship with breakthrough innovation. Meanwhile, open innovation activities strengthen the positive effects of dynamic innovation capabilities on breakthrough innovation. Research limitations/implications The findings enrich the existing literature by proposing and confirming empirically that open innovation activities help firms with effective coordination of dynamic innovation capabilities. Practical implications Managers must be aware of the limitations of their existing dynamic innovation capabilities in terms of developing breakthrough innovation. Originality/value This study not only resolves the conflicting views about the relationship between dynamic capabilities and innovation but also adds to the existing literature that indicates the failure of leading firms in the face of rapid environmental change.
Cheng et al. (Fri,) studied this question.