The too-much-of-a-good-thing effect of digitalization capability on radical innovation: the role of knowledge accumulation and knowledge integration capability

Purpose This study aims to investigate the complex relationship between digitalization capability (DC) and radical innovation performance (RIP). In particular, this study sheds new light on the results of previous studies on the effects of DC on firm innovation. Design/methodology/approach The authors obtained questionnaire data from 271 IT managers of randomly selected high-tech Chinese firms. The data was used to empirically test the proposed hypotheses using hierarchical regression analysis. Findings The findings of this study reveal that DC has an inverted U-shaped effect on RIP. Knowledge accumulation (KA) has a partial mediating effect on the DC-RIP link. Knowledge integration capability (KIC) was found to moderate the DC-RIP relationship: the higher a firm's KIC, the flatter the DC-RIP curve. Moreover, there is empirical evidence of the shape-flip phenomenon of the DC-RIP curve: when KIC > 1.82, the DC-RIP relationship is no longer an inverted U-shaped but presents as a U-shaped curve. Research limitations/implications This study explores the DC-RIP relationship from the perspective of knowledge management, deepens the research scope of digitalization and lays the foundation for subsequent research. Originality/value This study provides potential explanations for contradictory views of the effect of DC on innovation in the existing literature by revealing the nonlinear relationship of DC and RIP and the important roles of KA and KIC in that relationship. The new insights into the role of KIC as a threshold for the DC-RIP link provide a direction for firms to control the pace of digital transformation.