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Purpose While acknowledging the importance of innovation capability and its potential for creating competitive advantage for firms, the purpose of this paper is to further explain how firms can gain the most from this potential. In the face of the low success rate of innovations and innovation activities in the hospitality sector, this study explains – through the dynamic capability perspective – that building a flexible organization is instrumental in creating competitive advantage out of innovation capabilities. Design/methodology/approach The study uses data from hospitality firms operating in an emerging economy with a fast-growing hospitality sector. As this study uses survey and statistical methods, the possibility of common method bias is addressed by partial least squares structural equation modeling to test the hypothesized relationships. Findings The study finds that organizational flexibility (OF) is an important mediator in the relationship between innovation capabilities and competitive advantage. The study explains that building a flexible organization is instrumental in creating competitive advantage out of innovation capabilities in hospitality firms. Originality/value This study suggests that relying only on innovation capability offers hospitality firms just a fraction of what would be gained if such capabilities are properly aligned with OF. This is because such alignment generates better response power to changing needs as the firm becomes more mobile, responsive and agile to rapidly identify market trends, adjust internal operations and respond quickly to new market demand.
Anning‐Dorson et al. (Thu,) studied this question.