Fail forward: the relationship between innovation failure and breakthrough innovation in the context of knowledge- based capabilities

Purpose This study aims to explore the impact mechanism of the degree of innovation failure on breakthrough innovation in Chinese listed companies, and examines the moderating effect of the company’s own knowledge-based capabilities. Design/methodology/approach Based on organizational learning theory and using the innovation failure data of invention patents from Chinese A-share listed companies on the main board from 2003 to 2017 as research samples, this study constructs and examines a comprehensive framework and its impact on breakthrough innovation regarding “what kind of innovation failure will promote breakthrough innovation”, focusing on innovation failure, enterprise knowledge base, and breakthrough innovation. Findings Empirical research has found a U-shaped relationship between innovation failure and breakthrough innovation. In other words, both a low level of failure and an extremely high level of failure can significantly promote breakthrough innovation in enterprises. Furthermore, when the depth of enterprise knowledge is high, it further strengthens the non-linear relationship between innovation failure and breakthrough innovation. Originality/value The research results enrich the study of the failure predicament and breakthrough innovation of Chinese technology innovation enterprises, revealing effective paths for Chinese technology innovation enterprises to get rid of the passive situation of innovation failure, and providing theoretical support and practical reference for “breaking new ground and achieving breakthrough innovation”.