Reviewers

Chenyu Pan, Master’s student, Purdue University
Masie Keshavarz, Research Associate, Purdue University
Dr. Scott Downey, Director of the Center for Food and Agricultural Business and Professor, Purdue University

Article

The impact of digital leadership on hidden champions’ competitive advantage: A moderated mediation model of ambidextrous innovation and value co-creation by Qihai Cai, Jiahua Wu, Ting Wu, Po-Chien Chang and Abbas Mardani

Source

Cai, Q., Wu, J., Wu, T., Chang, P.-C., & Mardani, A. (2024). The impact of digital leadership on hidden champions’ competitive advantage: A moderated mediation model of ambidextrous innovation and value co-creation. Journal of Business Research, 182, 114819. https://doi.org/10.1016/j.jbusres.2024.114819

Summary

This study looks at how digital leadership supports the competitive advantage of hidden champions. It focuses on two main ideas: ambidextrous innovation and value co-creation.

Ambidextrous innovation is the ability to balance two types of innovation:

  • Explorative innovation involves taking risks, experimenting, and developing new ideas, products, or processes.
  • Exploitative innovation focuses on improving and refining what already exists to boost efficiency and get more value out of current resources.

For companies to stay competitive, they need to manage both types of innovation well.

The study shows that digital leadership plays a key role in helping companies balance these two types of innovation. Leaders who embrace digital tools and foster an innovative culture can create a competitive advantage by encouraging both exploration (new ideas) and exploitation (improving current products).

The study also highlights the importance of value co-creation, which means working closely with stakeholders like customers and suppliers to develop better products and services. Digital leaders can use this approach to improve collaboration, leading to even greater competitive advantages.

The article provides practical recommendations for leaders, such as:

  • Investing in training to improve digital skills.
  • Encouraging a culture of experimentation and risk-taking.
  • Engaging stakeholders in the innovation process to create value together.

In summary, digital leadership helps companies stay ahead of the competition by balancing new ideas with improvements to existing products and working closely with stakeholders.

What does this mean for food and agricultural business?

There are two aspects of this research that have implications for food and agribusinesses.  The context of digital innovation will continue to affect this sector, but the generalized concepts of innovation and co-creation are often underrepresented at the service level and may represent a larger opportunity for many food and agribusiness firms.

Digital leadership can transform traditional practices by leveraging technologies like AI and big data. For instance, using AI to optimize water and fertilizer use can significantly enhance productivity and sustainability. Innovations like real-time data on weather, soil conditions, crop health, as well as the analysis of these interactions, may impact agriculture. Similarly, food businesses can innovate in areas like real-time inventory management, portion control, quality metrics, and analysis of factors that drive business results. Digital integration between food and agribusinesses will continue to offer benefits in food quality, safety, and profitability.

While the concepts of ambidextrous innovation and value co-creation are often applied in administrative environments, their application at the service level can be more useful. Explorative innovation involves developing new methods for customer and seller cooperation, enriching partnerships beyond transactional exchanges. Leaders in food and agribusiness organizations might consider encouraging experimentation and cooperation at the buyer-seller level to facilitate consumer experiences that benefit both parties. Exploitative innovation focuses on refining processes, which can help boost efficiency, reduce costs and increase profits. Value co-creation has the potential to move buyer-seller conversations away from commoditized products and pricing and toward more productive and substantive partnerships.

If a company can really find a good balance between explorative and exploitative innovations, and utilize them well, they may realize competitive advantages that take less time and capital to create than technical product innovations. These innovations are potentially closer to consumers than similar efforts in a laboratory. Involving stakeholders through value co-creation ensures that agribusinesses remain aligned with market needs, leading to customer satisfaction and loyalty.

Food and agricultural businesses can benefit from fostering strong digital leadership, but in many organizations, this will require cultural shifts and managerial support. Leaders who foster innovation can guide their teams in providing tools that help buyers make better decisions and improve operational efficiency.

Food and agribusiness leaders should champion sellers who partner with their customers to develop innovations that enhance productivity, sustainability and customer engagement, ensuring their organizations remain competitive in a tech-driven market. Investing in training programs to enhance innovation and co-creation skills among employees is vital. By empowering teams with these competencies, leaders can draw from multiple disciplines – technology, manufacturing, marketing, distribution, and finance – to foster improvement for both buyer and seller organizations. Engaging with stakeholders, such as customers, suppliers and local communities, as part of the innovation process can lead to better products and services that meet market demands. Collaborative efforts can enhance the sustainability and resilience of relationships and business performance.