Business ties and effectuation for radical innovation in small firms: the moderating role of competitive aggressiveness

Karami, Masoud ORCID: https://orcid.org/0000-0002-6040-4563, Hossain, Mokter, Hashemi, Omid and Mehrara, Nikan ORCID: https://orcid.org/0000-0002-9531-3602 (2025) Business ties and effectuation for radical innovation in small firms: the moderating role of competitive aggressiveness. Marketing Intelligence & Planning. pp. 1-23. ISSN 0263-4503

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Abstract

Purpose Business ties play a key role in small firms’ innovation. However, limited studies have addressed how business ties contribute to radical innovation in small firms. This study investigates the mediating role of effectuation in utilizing business ties in radical innovation by small firms. It also examines how competitive aggressiveness moderates the focal association. Design/methodology/approach Using survey data from 383 Iranian small firms, we employed hierarchical regression analysis and structural equation modeling to test the hypotheses. Findings Our findings indicate that experimentation and flexibility enable small firms to leverage their business ties for radical innovation, whereas affordable loss and pre-commitment do not mediate the focal association. The study also found that competitive aggressiveness accentuates the positive impact of small firms’ business ties. Originality/value This study enhances our understanding of how business ties influence radical innovation in small firms while emphasizing the importance of effectual mechanisms and competitive aggressiveness.