Innovation capability is a core capability among entrepreneurs, but the factors that determine it remain inconclusive. Using dynamic capability theory with a microfoundation perspective, this study aims to examine the influence of artisan creativity, paradox mindset and cultural identity on innovation capability. It also tests customer orientation as a moderator variable. This study aims to examine the influence of artisan creativity, paradox mindset, and cultural identity on innovation capability among entrepreneurs, drawing on dynamic capability theory from a microfoundation perspective. It also aims to investigate the moderating role of customer orientation in these relationships.
The hypotheses were tested empirically using data from 202 teams and 619 artisan entrepreneurs in Indonesia. To analyse the data, a multilevel analysis was conducted using MPlus.
Artisan entrepreneurs with a paradox mindset and high individual artisan creativity have greater innovation capabilities. This relationship is stronger when craft entrepreneurs are more customer-orientated. Other findings show that the higher the cultural identity, the greater the ability to innovate and this influence is more substantial when one has a lower customer orientation. The paper further discusses academic and managerial implications.
This study adopts dynamic capability theory from a microfoundations perspective to explain how individual creativity and cultural identity shape innovation capability in artisan entrepreneurship.
