Product Market Competition and Firm Innovation: The Mediating Role of Strategic Agility in Driving Competitive Advantage

This study explores the mediating role of strategic agility in the relationship between product market competition and firm innovation, addressing the need for firms to adapt and innovate in highly competitive environments. While product market competition is recognized as a driver of innovation, its effects can be stimulatory or restrictive depending on a firm’s ability to respond effectively. The study develops a conceptual framework that integrates strategic agility as a key mediator, enabling firms to navigate competitive pressures and enhance innovation capabilities. A narrative review methodology was used to bring together existing literature on strategic agility, product market competition, and firm innovation, providing a comprehensive understanding of their interconnected dynamics. The findings reveal that firms with greater strategic agility are better able to balance exploration and exploitation strategies, adapt to market shifts, and transform competitive pressures into innovative outcomes, thereby sustaining competitive advantage. The study contributes to the theory of dynamic capabilities by extending the competition-innovation-performance framework and emphasizing the role of agility in driving innovation. From a practical perspective, it offers insights for managers on the importance of agility-driven strategies, such as flexible resource allocation, dynamic capabilities, and data-driven innovation. However, due to the conceptual nature of the study, future research should empirically validate the proposed framework across different industries and market contexts to enhance its applicability and relevance.