Strategic Orientation, Dynamic Capabilities, and Business Model Innovation: The Emergent Role of Top Management Support

Background: As connectivity becomes commoditized amid over-the-top (OTT) competition and stagnant average revenue per user (ARPU), business model innovation, rather than network expansion, has become a primary determinant of incumbent telecommunications operators’ continued relevance. Objective: This study examines how strategic orientation translates into business model innovation (BMI) through dynamic capabilities (DC) and under what conditions top management support (TMS) influences this relationship among incumbent telecommunications firms in Indonesia. Methods: This study tests direct and DC-mediated effects of SO on BMI, with TMS as a potential boundary condition moderating the DC–BMI relationship. Analysis uses two-stage partial least squares structural equation modeling (PLS-SEM) applied to survey data from 130 executive respondents. Results: SO positively influences DC (β = 0.610, p < .001) and exerts both a significant direct effect on BMI (β = 0.377, p < .001) and a significant indirect effect through DC (β = 0.125, p = .025), indicating partial rather than full mediation. TMS does not significantly moderate the DC–BMI relationship (p = .313) but emerges as a significant direct predictor of BMI (β = 0.324, p = .001), with an effect larger than that of DC itself. Eliminating the reconfiguring dimension of DC on discriminant validity grounds left sensing and seizing as the final indicators of DC. Conclusion: Findings suggest a shift in the interpretation of TMS’s role, from a boundary condition consistent with upper echelons theory toward a direct antecedent consistent with dynamic managerial capabilities theory.