Can market knowledge lead to radical product innovation performance? The double-edged sword effect of absorptive capacity

Purpose This paper examines the effect of market knowledge on market success of product innovativeness and the moderating role of absorptive capacity. We separated market knowledge into market diversity and market significance components and examined their effects on radical product innovation performance. Design/methodology/approach This paper adopted the secondary database study. Excluding cases with missing values of main variables, a total of 1,219 Taiwanese manufacturing firms from the Third Taiwan Technology Innovation Survey (TTIS3) database were used to test the hypotheses. A moderated hierarchical regression approach was utilized to analyze the data. Findings The results revealed that the relationship between market diversity and radical product innovation performance is a predominantly positive concave downward curve. In contrast, the relationship between market significance and radical product innovation performance is a predominantly negative concave downward curve. Furthermore, the results also indicated that absorptive capacity has different moderating effects on the relationships between market diversity/significance and radical product innovation performance. Absorptive capacity enhances the negative effect of market significance but suppresses the positive effect of market diversity on radical product innovation performance. Originality/value This paper is the first research which contributes to examining the relationship between market knowledge and radical product innovation sale performance.