Business innovation in the Digital Era: A literature review of innovation ecosystems, strategies, and organizational capabilities (2020–2025)

Abstract

In a rapidly changing and highly competitive global economic environment, business innovation has become a critical driver of competitive advantage and long-term organizational viability. This study reviews contemporary research on business innovation published between 2020 and 2025, focusing on key dimensions including innovation strategy, digital innovation, open innovation, innovation capabilities, innovation management systems, and organizational innovation. Drawing on an analysis of 30 peer-reviewed scholarly articles, the review synthesizes major trends, theoretical developments, and practical insights shaping the field. The findings indicate that current research is increasingly centered on innovation ecosystems, the transformative role of digital technologies, and the growing importance of collaborative approaches. Notably, organizational innovation emerges as the most strongly associated with innovation performance, particularly within small and medium-sized enterprises (SMEs). In addition, external disruptions such as the COVID-19 pandemic are found to act as catalysts for business model innovation and accelerated digital transformation. This review contributes to the literature by providing an integrated overview of contemporary innovation paradigms and identifying key directions for future research and managerial practice in an evolving digital and ecosystem-driven context.