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Market knowledge dimensions and cross-functional collaboration: Examining the different routes to product innovation performance

De Luca, Luigi Mario ORCID: and Atuahene-Gima, K. 2007. Market knowledge dimensions and cross-functional collaboration: Examining the different routes to product innovation performance. Journal of Marketing 71 (1) , pp. 95-112.

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Executive Summary The argument that market knowledge and cross-functional collaboration enhance product innovation performance has gained wide acceptance among scholars and managers. In this study, the authors use contingency theory and knowledge-based arguments to support this conclusion but, at the same time, qualify it in several ways. In particular, they complement extant knowledge with two main sets of findings. First, they distinguish among different dimensions of market knowledge (i.e. breadth, depth, and specificity and tacitness) and analyze their differential value for product innovation performance. Second, they investigate how formal knowledge integration mechanisms (i.e., use of documentation, information sharing meetings, analysis of successful and failed projects, and project reviews and briefings by external experts and consultants) help realize the full benefits of market knowledge and cross-functional collaboration in product innovation. The results from a double-informant survey of high-tech firms in China show that market knowledge breadth, depth, and specificity positively influence product innovation performance. However, tacitness of market knowledge is not related to product innovation performance. As for the role of knowledge integration mechanisms, such organizational structures and processes help translate market knowledge depth, market knowledge specificity, and cross-functional collaboration into product innovation performance. However, it appears that though some characteristics of market knowledge and cross-functional collaboration may make knowledge integration mechanisms necessary, their use must be tempered by the amount of contextual complexity the firm faces and the resulting need for functional flexibility and autonomy. Conversely, market knowledge breadth has a strong, unmediated effect on product innovation performance. Thus, it is inherently valuable for product innovation performance. This study challenges researchers and managers to take a more sophisticated look at how and why market knowledge and cross-functional collaboration affect product innovation outcomes. First, the direct effect of market knowledge breadth sheds new light on the importance ascribed to the concept of market orientation in product innovation and the importance that marketing theory places on a broad understanding of customers and competitors. Second, the results regarding the effects of market knowledge dimensions suggest that theoretical exploration of the failure of firms in product innovation should not be ascribed mainly to their failure in cross-functional collaboration, as many previous research and anecdotal reports have suggested. Third, this study clarifies how and why knowledge integration mechanisms matter in product innovation performance by showing simultaneously their mediating and moderating roles. The use of knowledge integration mechanisms appears to involve a trade-off between their necessity, occasioned by stickiness of market knowledge and the information-processing demands of cross-functional collaboration on the one hand and the implementation costs of knowledge integration mechanisms on the other hand. Finally, the findings of this study, along with those of previous studies, call for further investigation into the value of tacit knowledge for product innovation and firm performance.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
Publisher: AMA - American Marketing Association
ISSN: 0022-2429
Last Modified: 21 Oct 2022 09:19

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