Individual managers’ market and technological knowledge competence driving management innovation: The mediating roles of effectuation and causation

Abstract

The rapid pace of technological development has intensified environmental uncertainty and market complexity, making management innovation essential for firms to adapt and sustain competitiveness. Despite its importance, firms often struggle to initiate management innovation due to a limited understanding of the underlying mechanisms that drive it. Existing research has insufficiently examined the role of managerial knowledge competence, an essential cognitive foundation that shapes managerial decision-making, in fostering management innovation. To address this research gap, this study investigates how individual top managers’ market and technological knowledge competence drive management innovation, emphasizing the mediating roles of effectuation- and causation-oriented decision-making logics. Drawing on survey data collected from 591 top managers across diverse industries in Chinese firms, findings reveal that both forms of managerial knowledge competence promote management innovation, with technological knowledge competence exerting a more pronounced influence than market knowledge competence. Furthermore, both effectuation and causation partially mediate this relationship, with causation exhibiting a stronger mediating effect. These results contribute to the literature on innovation and managerial decision-making by shedding light on the reinforcing effect of managers’ knowledge competence on management innovation and on how their decision-making logics shape this relationship. The study provides actionable insights for top managers, organizations, and policymakers by highlighting the importance of developing both knowledge competence and decision-making approaches to enhance innovativeness.