How does dynamic network capability operate? A moderated mediation analysis with NPD speed and firm age

Abstract

Purpose Systematic research examining the mechanisms that mediate the dynamic capability–performance relationship remains scarce. So too is research on the conditions under which these mechanisms might be influential. Accordingly, this study aims to build upon business network research to examine how a firm’s dynamic network capability (DNC) impacts firm performance, mediated by the speed of product reconfiguration (i.e. new product development [NPD] speed) and bounded by firm age. Design/methodology/approach The authors conduct moderated mediation analysis on survey data from small- and medium-sized manufacturing and technology firms in the USA. This study uses an initial survey and then a follow-up survey. Findings The findings support the general view that DNC is instrumental to firm performance, regardless of firm age. However, DNC operates differently for younger vs older firms. That is, DNC’s impact on the performance of younger firms is enabled by speeding up NPD, while much of the performance impact for older firms appears to be through alternative resource reconfiguration route(s). This study identifies the need to include a mediating variable such as resource reconfiguration to detect how DNC impacts performance. Research limitations/implications The model could include different dimensions of mediating resource reconfigurations, alternative boundary conditions and longer-term data. Practical implications This study provides managers with insight on how speed of product reconfiguration (in terms of NPD) operates in the DNC–performance relationship. It also helps them understand how this relationship changes in younger vs older firms. Originality/value To the best of the authors’ knowledge, this study is the first to provide empirical evidence on how DNC operates to influence performance in firms that are younger vs older.

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