The microfoundations of innovation processes in Latin American firms

Purpose: The purpose of this paper is to explore the microfoundations of innovation-enabling dynamic capabilities in Latin American firms and, in particular, their processes to: sense and shape opportunities; seize opportunities; and maintain competitiveness through reconfiguring assets. Design/methodology/approach: The authors carried out a confirmatory factor analysis of survey data obtained from a sample of 721 firms located in Latin America, and employed a hierarchical analysis of linear regressions with robust standard errors to test the hypotheses. Findings: The authors found that when firms manage their innovation processes based on sensing opportunities and reconfiguring their tangible and intangible assets, they are more likely to improve on four innovation-related outcomes: development of new products and services; profitability; market share; and diversification. Research limitations/implications: The findings are limited to the specific context of Latin American countries. In particular, the authors took a random sample of firms from a business directory built by prestigious Latin American business schools, but that may not be representative. Therefore, the generalizability of the results is limited beyond the type of companies that are represented in that sampling frame. Originality/value: Contributions are twofold. First, the authors test the applicability of an orchestration model of dynamic capabilities to the Latin American context. And, second, the authors relate specific microfoundations of dynamic capabilities to the ability of firms to innovate successfully.