Innovative Behavior and Firm Competitive Advantage: The Moderating Effect of Environmental Dynamism

Abstract The study investigated the effect of innovative behavior of managers on the competitive advantage of small, medium, and micro enterprises (SMMEs) in South Africa. In addition, the study examined the moderating role of environmental dynamism in the relationship between innovative behavior and competitive advantage. The study adopted the quantitative research design, and the cross-sectional survey method was used for data collection. Hierarchical regression was used for data analysis. Based on a dataset of 140 respondents, the results indicated that innovative behavior has a significant positive impact on competitive advantage. The moderating effect of environmental dynamism is insignificant. Theoretically, the study explains the moderating effect of environmental dynamism in the relationship between innovative behavior and firm competitive advantage. To sustain competitive advantage, it is important for firms to invest in the innovative behavior of managers and employees through training. Management must foster an environment that support the generation of new ideas by employees and the coordination of such ideas to improve products and services.