Innovativeness in the context of technological and market dynamism: The conflicting effects of network density

Innovativeness is a critical aspect for the survival and success of the company in the long term. The purpose of this paper is to study how the density of the network in which the company is immersed influences the relationship between environment, dynamism and innovativeness. More specifically, the authors analyse whether the network density acts in a heterogeneous way, worsening or improving the effects of technological and market dynamism on innovativeness, respectively.

The empirical study was conducted on a sample of 292 companies in the agri-food industry in Spain. In order to test the proposed model, the authors used partial least squares.

The results show that technological dynamism has a positive effect on the generation and development of a firm’s innovativeness. However, market dynamism does not influence innovativeness. The authors also observe that the interactive effects between network density and dynamism are significant, but in a divergent way. Whereas the interactive effect between density and technological dynamism is negative, the interaction between density and market dynamism is positive.

The main contribution of the study is to show how the level of network density alters the effect of technological and market dynamism on innovativeness. The authors highlight the relevance of network theory to explain the contextual background to innovativeness. The authors also stress the importance of differentiating between the market and technological components of dynamism to further elucidate their effects.