The Dynamic Advantage: Entrepreneurial Manager, Dynamic Capabilities and Product Innovation in Incumbent Firms

Product innovation enables incumbent firms to remain competitive in their industry. However, it can be challenging for these firms to innovate due to their established processes, organizational structure, and risk aversion. Due to these features, the incumbent’s innovation processes are stumbling; thus, it is important to recognize the importance of the entrepreneurial manager’s role and dynamic capabilities and act to develop them. We address a research question of how to ensure a non-R&D incumbent technological firm’s competitive advantage through successful product innovation. The study aims to investigate the interlinks between the entrepreneurial manager, dynamic capabilities, and product innovation leading to incumbents’ competitive advantage. To achieve the aim, an illustrative single case study analysis of an incumbent firm operating in the construction sector in Lithuania was carried out. The results of the study revealed that it is important for incumbent firms to recognize the importance of dynamic capabilities and take action to develop them. Furthermore, an entrepreneurial manager is crucial to driving the product innovation process. By mastering a unique combination between entrepreneurial management, dynamic capabilities, and product innovation, incumbent firms can stay competitive and succeed in today’s rapidly changing business environment.