Environmental Munificence And Service Firm Performance: The Moderating Role Of Management Innovation Capability

Abstract

Based on the narratives of environmental munificence perspective, RBV and contingency theory, this study investigates how management innovation capability influence the functional relationship between environmental munificence and service firm performance. Employing a cross-sectional survey-based sample of 162 employees of four mobile telecommunication firms in Lagos State, Nigeria. A moderated regression analysis to test two-way interaction hypotheses was conducted, and the results show that environmental munificence has a significant positive effect on market share (R2 =0.273, F(1,160) = 60.060, p <0.05). However, it failed to significantly influence profitability (R2 =0.008, F(1,160) = 1.250, p > 0.05). Further analysis shows that environmental munificence explained the variation in service firm performance for both market share (? R2 =0.154, p <0.05) and profitability (?R2 =0.159, p < 0.05) with the introduction of management innovation capability as a moderator. This finding suggests that managers of service firms should invest in developing an innovative high-level capability that would help their firms to identify and take advantage of the opportunities for growth in a dynamic environment. This study contributes to innovation and environmental munificence literature. First, contrary to prior studies which position environmental munificence as a moderator, this study employs environmental munificence as a first-order predictor variable of firm performance and suggest under which condition firm performance can be enhanced. Finally, this study further corroborates the position of the RBV which posit that firm can achieve superior performance in a fast-changing environment as long as it can deploy its core resource and unique competencies.