When the Heat is On: Competition Intensity as a Strategic Amplifier of Risk-Taking and Innovation

Abstract

This study examines how competition intensity functions as a strategic amplifier of firm innovation by moderating the effects of organizational risk-taking tolerance and previous business ownership. Integrating Strategic Entrepreneurship Theory and Contingency Theory, the research tests a moderated model using survey data from 344 small business owners. Results indicate that competition intensity exerts a direct positive effect on firm innovation. More importantly, competition intensity amplifies the positive relationship between organizational risk-taking tolerance and firm innovation and similarly amplifies the innovation benefits of previous business ownership. These findings suggest that under heightened competitive pressure, firms with greater tolerance for risk-taking and leaders possessing prior entrepreneurial experience are better positioned to convert environmental threats into innovative opportunities. Implications for practitioners emphasize that cultivating risk-tolerant organizational cultures and leveraging entrepreneurial experience become particularly valuable as competition intensifies, enabling firms to sustain competitive advantage through proactive innovation.