Innovation orientation and firm performance moderating effect of absorptive capacity. A case of the German IT industry

Many innovation studies have been conducted to show the effect of innovation practices on firm performance. Meanwhile research on exploratory and exploitative innovation is burgeoning to examine how they influence firms’ performance. This study introduces absorptive capacity as a new and additional factor to influence the impact of innovation orientation (exploratory and exploitative innovation) on firm’s performance. Preliminary results by PLS (Partial least square) show that potential absorptive capacity moderates the effect of innovation orientation on the firm’s performance. Our findings also reveal ambidextrous nature of exploratory and exploitative innovation which helps to better explain the difficulty of managing between exploratory and exploitative innovation.