Luigi M. De Luca & Kwaku Atuahene-Gima
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.
Biography
Luigi M. De Luca is a doctoral candidate in Business Administration and Management at Bocconi University, Milan, Italy. He received his MS (Honors) in Business Administration and Management from Bocconi University in 2002. His teaching and research interests lie in the area of market orientation, marketing strategy. and new product development. In addition to Journal of Marketing, he has also published in Industrial Marketing Management.
Kwaku Atuahene-Gima is Professor of Marketing and Innovation Management at the China Europe International Business School (CEIBS) in Shanghai. He was formerly Professor of Innovation Management and Marketing, head of the Department of Management (1996–1999), and founder and director of the Center for Innovation Management and Organizational Change at the City University of Hong Kong. He received his Bachelor of Science (Honors) (Business Administration) from the University of Ghana, Master of Commerce (Marketing) from the University of New South Wales, and PhD (Innovation Management and Marketing) from the University of Wollongong. He is an Honorary Professor of Remin University, Beijing. He has also taught at the Queensland University of Technology and the University of Wollongong. Before entering academia, he held executive positions in product development, distribution, marketing, and materials management in the pharmaceutical industry for several years. Kwaku’s teaching and research interests focus on innovation management, creativity, marketing innovation, and product development. Kwaku has more than a decade of research experience on these topics with both large companies and new technology ventures in China, the United States, and Australia. He is interested in innovation management, specifically, how firms can (1) build innovation as an organizational competency, (2) manage new product development processes from idea generation to successful marketing, (3) excel in research-and-development management, (4) develop and implement business model innovations and creative marketing strategies, and (5) adopt and implement innovation management best practices. Kwaku’s work has been published in leading international journals, such as Journal of Marketing, Journal of Product Innovation Management, Academy of Management Journal, Management Science, Organization Science, Strategic Management Journal, Journal of International Marketing, Journal of Business Research, Research Technology Management, and International Journal of Technology Management, among others. His research work has won prestigious best-paper awards at the American Marketing Association’s educators’ conferences, appeared in the best-paper proceedings of the Academy of Management, and received a Citation of Excellence for Highest Quality and for outstanding contribution to knowledge by Annbar. Kwaku is the founder and managing director of InnoGrowth Limited, a consulting company with a mission to support organizations to deal with the challenges of managing innovation to create future success stories. He was a member of the Judging Panel for the Hong Kong Awards for Industry: Innovation (1997–1999). He has been a keynote speaker at the annual gathering of the Hong Kong Coalition of Services Industries and the Chinese International Invention and Innovation Symposium and has written/spoken on innovation to the press, such as Hong Kong Business, South China Morning Post, the Bulletin (Hong Kong), Global Entrepreneur, National Business Daily, 21 Century Business Herald (China), and El Mundo (Spain). He has also discussed marketing and innovation issues on CNBC, China Business News, Dragon TV, and CCTV-9.
Journal of Marketing, Vol. 71, No. 1, January 2007
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