, Volume 24, Issue 3, pp 261-276

Profiting from product innovation: The impact of legal, marketing, and technological capabilities in different environmental conditions

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Abstract

Although product innovation is a key tool for firms competing in the marketplace, innovating firms often fail to obtain economic returns from their product innovations. This study examines the moderating effects of legal, marketing, and technological capabilities on the relationship between product innovation and firm performance in different environmental conditions in order to identify how a firm can leverage these capabilities to profit from product innovation. Based on the data of 223 Chinese firms, this study finds that legal capability positively moderates the relationship between product innovation and firm performance, especially when competitive intensity is high; the moderating effect of marketing capability is positive, although it is weakened by market turbulence; and technological capability has a negative moderating effect, which becomes more significant as technological turbulence increases.

This study is supported by the National Natural Science Foundation of China (71202107), the Humanities and Social Sciences Research Foundation from the Ministry of Education of China (11YJC630184), and the Young Scholar Research Foundation from the School of Business, Nanjing University (2011-05).