How Strategic Innovation Capabilities Drive Revenue Model Diversification: A Capability–Mechanism–Context Analysis in Private Art Education
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Abstract
This Article aimed to study (1) the direct effects of strategic innovation capabilities—comprising Digital Capabilities, Brand-Culture Orientation, and Service Innovation Capability—on Revenue Model Diversification and Financial Performance; (2) the mediating mechanisms of Artistic Value Co-Creation and Educational Service Redesign; and (3) the moderating contingencies of Market Dynamism and Founder Strategic Vision. Utilizing a sequential explanatory mixed-methods design, the sample was 392 valid survey respondents representing private art education organizations across East and Southeast Asia (comprising China, Thailand, Vietnam, Malaysia, and Indonesia). They were selected by purposive sampling targeting organizational founders, senior managers, and instructional leaders. The instrument for collecting data was a structured multi-item questionnaire using Likert-type scales, supplemented by 18 semi-structured follow-up interviews. Data were analyzed using descriptive statistics, PLS-SEM (Partial Least Squares Structural Equation Modeling), and content analysis. The findings were as follows:
1. Digital Capabilities (β = .241, p < .001), Brand-Culture Orientation (β = .287, p < .001), and Service Innovation Capability (β = .318, p < .001) positively influenced Revenue Model Diversification, with Service Innovation Capability producing the strongest direct effect. Revenue Model Diversification was strongly associated with Financial Performance (β = .541, p < .001).
2. Artistic Value Co-Creation mediated the relationship between Brand-Culture Orientation and Revenue Model Diversification (indirect β = .117, p < .001), while Educational Service Redesign mediated the relationship between Digital Capabilities and Revenue Model Diversification (indirect β = .139, p < .001).
3. Market Dynamism positively moderated the relationship between Service Innovation Capability and Revenue Model Diversification (β = .143, p = .003), and Founder Strategic Vision positively moderated the relationship between Revenue Model Diversification and Financial Performance (β = .168, p = .001). Qualitative findings revealed that transforming recorded courses into recurring memberships and modular content into certified learning pathways enabled institutions to break away from tuition dependence. This study advances Dynamic Capabilities Theory by establishing the Capability–Mechanism–Context framework to guide creative service managers toward sustainable business model innovation.
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