Abstract:Iterative innovation model, which is rooted in internet age and integrates the advantages of breakthrough and incremental innovation, has become popular presently. However, the impact mechanism and linking synergy effect of strategic flexibility and interaction capability on iterative innovation performance have not been clarified. Therefore, strategic flexibility is divided into two dimensions: resource flexibility and coordination flexibility. Interaction ability is defined and divided into three dimensions: perceptual interaction ability, information interaction ability and management interaction ability from the perspective of communication between enterprises and customers. The theoretical logic of relationship between strategic flexibility, interaction ability, and iterative innovation is constructed. Taking 187 enterprises which in Hunan, Zhejiang, Hubei and other regions as the survey samples, the configuration effect of iterative innovation performance is explored by using questionnaire survey and fuzzy set qualitative comparative analysis method. The results show that: (1) There are three configurations that drive high iterative innovation speed: coordination flexibility matches perception interaction capability, resource flexibility matches information interaction capability (or management interaction capability), and coordination flexibility matches management interaction capability. (2) There are four configurations that drive high iterative innovation sustainability: coordination flexibility matches information interaction capability, resource flexibility matches perception interaction capability, resource flexibility matches management interaction capability, and coordination flexibility matches management interaction capability. (3) The samples covered by each configuration of driving iterative innovation performance have life cycle characteristics but the start-up samples are not included in the high iterative innovation sustainability configuration. The inspiration drawn from research conclusion is that enterprises should determine the priority development level for improving iterative innovation speed and sustainability basing on their own situation and industry development requirement, and implement iterative innovation behavior on the basis of fully considering their own lifecycle stage.