Does good digital business strategy bring good market intelligence and service innovation? Interference of different levels of organizational memory

Purpose - Facing the increasing competition and uncertainty, when and how to improve service innovation performance with the help of digital business strategy has become an important issue for global service firms. In this study, organizational memory level and dispersion are regarded as moderating variables and market intelligence response is introduced as a mediator, aiming at clarifying the boundary conditions and mechanism of digital business strategy affecting service innovation performance. Design/methodology/approach - A survey was conducted among middle and senior managers from 245 service firms in China. The data were analyzed using SPSS and Mplus software for reliability and validity analysis, hypothesis testing and robustness testing. Findings - Digital business strategy was positively related to the service innovation performance of service firms. Market intelligence responsiveness mediated the positive effect of digital business strategy on service innovation performance of service firms. The positive effect between digital business strategy and market intelligence responsiveness was strengthened when the level and dispersion of organizational memory were moderate. Practical implications - This study suggests that it is a very effective approach for service firms to initiate digital business strategy to improve service innovation performance. Furthermore, market intelligence responsiveness is crucial because it can help service firms quickly respond to market changes and adapt them accordingly. Managers of service firms should recognize that the benefits of digital business strategy are maximized only when the level and dispersion of organizational memory are moderate. Originality/value - This study is the first to address the question of how and when digital business strategy drives service innovation performance in the context of digitization. In addition, this study enriches and advances organizational learning theory because it discusses the differential impact of digital business strategy on service innovation performance under varying degrees of organizational memory level and dispersion.