ENTREPRENEURIAL LEADERSHIP AND MARKET TURBULENCE IN THE PERSPECTIVE OF THE EFFECT OF ABSORPTIVE CAPACITY ON INNOVATION AMBIDEXTERITY

Abstract

The primary objective of this research is to examine the impact of absorptive capacity on innovation ambidexterity. Additionally, this study seeks to investigate the moderating effects of entrepreneurial leadership and market turbulence on the relationship between absorptive capacity and innovation ambidexterity. The research employed a survey methodology, wherein the participants consisted of leaders, specifically founders or key managers, from a total of 265 small and medium-sized enterprises (SMEs) across diverse industries in the region of East Java. The research model was constructed utilizing the structural equation modeling (SEM) approach, and the association between variables was examined employing partial least squares structural equation modeling (PLS-SEM). The findings of this study demonstrate the significance of absorptive capacity in enhancing innovation ambidexterity strategies. Furthermore, it is imperative to acknowledge that the pivotal factor that enhances the connection between the aforementioned entities lies in the involvement of entrepreneurial leaders. The impact of a company's dynamic capability to effectively manage external knowledge on its innovation ambidexterity strategy is further heightened in situations where the external environmental conditions are characterized by uncertainty. To the best of our knowledge, there is limited existing research that has comprehensively investigated the relationship among absorptive capacity, innovation ambidexterity, entrepreneurial leadership, and market turbulence within a single research model. The findings of this study provide a comprehensive description of the innovation process phenomenon observed in small and medium-sized enterprises (SMEs). Furthermore, it has been observed that the involvement of company executives significantly influences the level of intensity with which the innovation strategy is implemented. Moreover, the unpredictability of the company's environmental circumstances may influence the company's ability to effectively absorb and leverage innovation ambidexterity.