| Summary: | Resistance to innovation is a behavioral barrier to implementing innovation in any organization. It is associated with employees’ demotivation to adopt new technologies. Strategic orientation toward digitalization is a new dimension in shaping innovative organizational performance. It is also evident from past studies that certain employees’ capabilities are associated with organizations’ strategic orientation when undergoing digitalization. This study examines the relationship between these factors and achieving innovative organizational performance. First, it looks at how strategic orientation toward digitalization relates to digital capabilities, which include digital knowledge and innovation. This study also examines how capabilities affect strategic orientation toward digitalization and innovative organizational performance. Moreover, the negatively regulating role of resistance to innovation as a moderator is also tested between capabilities and innovative organizational performance in this research. The authors discovered a connection between strategic orientation towards digitalization and innovative organizational performance in their research. A Likert scale with five points was used to quantify the responses, and the points ranged from 1 to 5 on the scale, with one being strongly disagreed and five strongly agreed. The findings of the study also show that digital knowledge capability and innovation capability have a substantial impact on innovative organizational performance. The research also discovered that employees’ resistance to innovation exerts a sizeable moderating influence on the connection between digital knowledge competence and innovation capability within the innovative organizational performance. The study’s results show that businesses must have a strategic focus on digitalization if they want to improve their ability to come up with new ideas and their digital knowledge skills, which are both critical for the growth of the entrepreneurial system. The model that has been proposed is available to entrepreneurs so that they can apply it in their businesses to advance the entrepreneurial system appropriately. The authors present a theoretical model for entrepreneurial systems based on the strategic orientation towards the digitalization approach. This model is something that entrepreneurs could utilize to improve the performance of their organizations as a whole. In addition, the employee’s resistance to innovation is used as a moderator in the model, which is another innovative method. The research contributes new and essential information to the existing literature on innovative organizational performance.
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