The Effect of Product Innovation and Competitive Advantage on Firm Performance Through Dynamic Capabilities at LocknLock
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Abstract
Amidst profound structural disruptions driven by value chain digitalization and stringent environmental sustainability mandates, the global manufacturing landscape exposes a critical innovation paradox where technological advancements frequently fail to guarantee market resilience. Grounded in the synthesis of the Resource-Based View (RBV) and Dynamic Capability Theory (DCT), this study investigates the causal mechanisms linking product innovation, competitive advantage, and firm performance. Employing a quantitative explanatory design, primary empirical data were acquired from 230 strategic management personnel at PT LocknLock Indonesia and rigorously evaluated using variance-based Partial Least Squares Structural Equation Modeling (PLS-SEM). The empirical estimation reveals a counterintuitive reality: product innovation exerts no significant direct impact on firm performance. Instead, the structural model demonstrates that dynamic capabilities operate as an indispensable full mediator for product innovation and a partial mediator for competitive advantage, collectively explaining a substantial 82.0% of the variance in firm performance. These findings decisively dismantle deterministic linear commercialization assumptions, proving that latent innovation assets inevitably devolve into sunk costs without the institutional agility to sense macro-environmental disruptions, seize omnichannel ecosystems, and reconfigure legacy operational architectures. Ultimately, this research dictates a strategic paradigm shift for corporate executives, urging a pivot from exclusive investments in product engineering toward the aggressive cultivation of dynamic governance to secure long-term economic sustainability.
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