Resources Fungibility as a Moderator in the Relationship between Dynamic Capabilities and Innovation Capability

Managerial cognition of resources fungibility is an important dimension that shapes organizational responses. However, the role of managerial cognition of resources fungibility has been empirically overlooked by scholars. Furthermore, extant literature lacks a model to enable a systematic measurement and evaluation of managerial cognition of resources fungibility, which has yet to be developed. This study empirically examines the moderating role of resources fungibility in the relationship between dynamic capabilities and innovation capability. To operationalize managerial cognition to enable the development of a measurable model for resources fungibility, 209 large Malaysian manufacturing firms were selected as sample to study the relationship between resources fungibility and firm's capabilities. The Partial Least Squares (PLS) technique was applied. This study finds that resources fungibility moderates the relationship between integrating capability and coordinating capability and innovation capability. Meanwhile, resources fungibility does not moderates the relationship between learning capability and innovation capability.