Innovation strategy beyond the COVID-19 pandemic: the role of trust under disruptive technology

Purpose This paper aims to understand how firms promote innovation under disruptive technology by exploring the role of trust and risk-taking behaviour in enhancing product development towards competitive advantage. Design/methodology/approach This study proposes a structural equation model that entails seven hypotheses for the constructs and their relationship with support from the previous literature. The empirical analysis involves a survey of the 390 small firms in Indonesia to generate four scenarios following the COVID-19 pandemic. Findings The evidence indicates that trust allows the firms to take a risk for new product development, which is, in turn, help to achieve their competitive advantage. However, the impact of product development on competitive advantage varies depending on the capability of the firms to deal with the information technological turbulence. Research limitations/implications This study adopted the concept of trust at the organisational level and did not cover the concept of trust at the family and community levels. Secondly, this study focusses on small and medium-sized enterprises as unit analysis during the COVID-19 pandemic. The results depend on the subject of study, which could be different from the normal condition. Practical implications This study provides four scenarios of foresight innovation strategy, which allow the firms to deal with various plausible futures. The proposed model devise strategies to prepare a strategy in the face of uncertainty. The findings encourage the firms to cultivate trust from their business partners to create innovation. Originality/value This study extends the discussion on how innovativeness leads to firm competitive advantage by examining the role of trust and risk-taking behaviour in product development under information technological turbulence. The results confirm the integration between social capital theory and the contingency approach.