LAUSR

Retail firms are increasingly using social media for purposes other than traditional marketing, such as innovation. Yet, while the innovation literature has established the benefits of involving customers in the development of products/services through open innovation, the role of social media in innovation is not well understood. Accordingly, we investigate how social media drives innovation in retail businesses. Using data from 414 firms, we find that social media positively relates to radical and incremental innovation, mediated by multiple digital channels and moderated by digital capabilities. Consequently, we propose a social media dynamic capabilities framework to guide future research and innovation in retail business.