Fostering product innovation in industry networks: the mediating role of knowledge integration

The locus of innovation has shifted from single entrepreneurial firms to groups of networked firms. Inter-organizational cooperation rather than competition to exploit the value of knowledge through new product innovation lies at the heart of the knowledge-based economy. This paper focuses on the phenomenon of network product innovation and the holistic integration of distributed knowledge across organizational boundaries to foster production innovation. A new construct, knowledge integration, is found to have a strong positive impact on new product performance. Resource complementarity, market orientation, and information sharing are three antecedents that positively affect knowledge integration across organizational boundaries. Survey data also suggest that knowledge integration serves as a mediator between the three antecedents and product innovation performance. Managerial implications and future research directions are discussed.