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Abstract This study develops and tests arguments that the relationship between organizational creativity and market performance is channeled through new product development (NPD) capability, and that the indirect effect of creativity on performance, via NPD capability, is conditional upon levels of environment dynamism and market responsiveness. The proposed relationships are tested on a sample of 221 small‐ and medium‐sized enterprises (SMEs) in a major sub‐Saharan African market. Findings from the study indicate that process and product NPD capabilities partially mediate the effect of novelty and usefulness elements of organizational creativity on market performance. The study further finds that while environment dynamism weakens the indirect effects of novelty and usefulness of organizational creativity, via process and product NPD capabilities, on market performance, the effects are strengthened under conditions of greater responsiveness to target market needs. A theoretical contribution from this study is the finding that how organizational creativity dimensions drive market performance is more complex than previously thought: it depends on whether or not organizational creativity components are first used to develop an organization's process and product innovation capabilities, and whether target market environment conditions are dynamic and an organization has ability to respond to target market demands.
Boso et al. (Tue,) studied this question.