Is technological innovation good or bad? An empirical investigation of technology startups

Abstract

Digitalization has brought several unpredictable changes in the field of technology and innovation management. Despite several studies on how digital innovation stands out in terms of a firm's performance, there is an evident research gap for empirical studies on technology startups from developing countries. Therefore, this research investigates the impact of digitalization in three categories (digital interconnectedness, digitalized value chains and big data analytics) on exploratory and exploitative innovations under the moderation of absorptive capacity in technology startups of three different sizes operating in Pakistan. The study used the binary probit model and the results reveal the impact of digitalization on exploratory and exploitative innovations is heterogenous in startups of different sizes along with a significant moderating effect of absorptive capacity. The findings suggest that technological innovation plays a different role among different sizes of startups under the moderation of absorptive capacity.