Network-based market knowledge and product innovativeness
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Network-based market knowledge and product innovativeness Yongchuan Bao & Shibin Sheng & Kevin Zheng Zhou
Published online: 3 December 2011 # Springer Science+Business Media, LLC 2011
Abstract An ongoing debate in marketing literature is whether market knowledge facilitates or impedes new product innovativeness. To reconcile inconsistent findings, this study disaggregates market knowledge into breadth and depth dimensions and uncovers their divergent effects on new product innovativeness. Given organizations’ increasing reliance on network contacts for access to market knowledge, we focus on market knowledge derived from external ties. Based on an empirical test of 244 firms in China, this study finds that market knowledge breadth has a U-shaped relationship, whereas market knowledge depth has an inverted Ushaped relationship, with product innovativeness. These findings carry important theoretical and managerial implications. Keywords Market knowledge . Knowledge breadth . Knowledge depth . Product innovativeness
1 Introduction Product innovativeness is a critical factor that determines new product success. An innovative product attribute can differentiate a new product from competitive offerings and enable the product to achieve a unique positioning in the marketplace (Im and Workman 2004). Moreover, product innovativeness exerts positive effects Y. Bao (*) Sawyer Business School, Suffolk University, Boston, MA 02108, USA e-mail: [email protected] S. Sheng School of Business, University of Alabama at Birmingham, Birmingham, AL 35294, USA e-mail: [email protected] K. Z. Zhou School of Business, The University of Hong Kong, Pokfulam, Hong Kong e-mail: [email protected]
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Mark Lett (2012) 23:309–324
through different mechanisms on new product profitability and market success (Calantone et al. 2006; Lee and O’Connor 2003). Extant marketing literature has indicated the pivotal role of knowledge in shaping product innovativeness (e.g., Brockman and Morgan 2003; Moorman 1995; Moorman and Miner 1997; Rindfleisch and Moorman 2001). However, most studies consider market knowledge as a unidimensional firm resource, ignoring the distinctive components of knowledge architecture and their strategic implications for product innovation. More recently, a series of studies converges on the notion that breadth and depth dimensions represent fundamental building blocks of firm assets and such a dichotomy offers rich insights into how firm assets differentially influence firm performance and innovation productivity (De Luca and Atuahene-Gima 2007; Fang et al. 2011; Prabhu et al. 2005). In line with this research, we disaggregate market knowledge into the breadth and depth components and examine their differential effects on product innovativeness. More important, by switching from knowledge as a unidimensional construct to knowledge components, we can better understand whether market knowledge facilitates or hinders the development of innovative new products. Extant studies diverge on the function of market knowledge in new
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