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Digital product and service innovations (DPSI) has attracted widespread attention from both management scholars and practitioners. Previous studies have documented that information technology (IT) capability and digital orientation positively influence DPSI performance. However, the question of whether and how digitalization capability can facilitate DPSI performance remains unresolved. This paper fills these gaps by investigating the mediating role of improvisation capability and the moderating role of technological turbulence.

This study used two-wave data from 240 matched digital transformation department leaders and senior managers from Chinese firms and examined the hypotheses deploying hierarchical regression and bootstrapping.

Our analyses reveal positive, significant links between digitalization capability and improvisation capability and between improvisation capability and DPSI performance. The findings further show that the effect of digitalization capability on DPSI performance is partially mediated by improvisation capability and that technological turbulence strengthens the indirect relationship between digitalization capability and DPSI performance through improvisation capability.

Integrating resource-based view, this research provides evidence that the extent to which improvisation capability mediates the relationship between digitalization capability and DPSI performance depends on technological turbulence. It provides a new direction for digitalization capability and DPSI performance.