How to flourish under constraints: imitation or innovation? The mediation role of innovation and absorptive capacity on firm performance

Purpose The purpose of this study is to simultaneously investigate a comprehensive analysis of the extent to which strategic orientations, namely, imitation and innovation orientations, and knowledge management affect firm performance. Design/methodology/approach Drawing on the theoretical frameworks of the resource-based view and dynamic capability theory, this scholarly inquiry has proposed a comprehensive framework that delineates the relationships amongst imitation, innovation, absorptive capacity (ACAP), innovation performance and financial performance. To scrutinize the proposed research model, bootstrap routines were used through Smart partial least squares to estimate the procedures. To collect the necessary data, a questionnaire and financial statements were acquired from a sample of 100 Iranian firms listed on the Tehran Stock Exchange. The findings of the study have important implications for both scholars and practitioners seeking to enhance firm performance through the effective utilization of imitation, innovation and ACAP. Findings The results indicate that imitation activities have directly led to the improvement in innovation performance, even in the presence of innovation and ACAP. However, the relationship has not been confirmed by financial performance. Originality/value Imitation and innovation orientations have been identified as pivotal strategic orientations that can significantly affect firm performance. As far as the authors know, this investigation represents the first comprehensive examination of both imitation and innovation activities as a critical transition in emerging markets (EMs) characterized by complex economies, such as Iran. The findings may aid firms in enhancing their performance by providing insight into the strategic importance of imitation and innovation orientations in EMs.