The moderating role of environmental dynamism between firm emotional capability and performance

Purpose – This paper aims to examine the impact of a firm's emotional capability on its performance by considering the environmental dynamism, and to enhance the literature on organizational change and competencies. Design/methodology/approach – The study involves a questionnaire‐based survey of managers and employees from a variety of firms operating in Turkey. A total of 356 surveys from 112 firms were received and subjected to moderated multiple hierarchical regression analyses. Findings – The results show that firm emotional capability, which involves the dynamics of encouragement, displaying freedom, playfulness, experiencing, reconciliation, and identification constructs, has a significant effect on the firm's financial performance and organizational effectiveness. Further, that the relationship between emotional capability and firm performance was influenced by the environmental dynamism including changes in industry, competition and consumer. Research limitations/implications – This study only scratched the surface in the important research area on emotional capability in organizational change management scholarship; hence this requires further empirical research. Practical implications – This study helps managers to understand the role an organization's skill plays in the management of its employees' emotions in order to increase the firm's performance in changing environments. Originality/value – The paper explores the emotional perspective of organizational capabilities on a firm's financial performance and organizational effectiveness to increase one's comprehension of successful capabilities‐environment matching, and understanding of the capabilities of firms for continued and effective adaptation.