Boundary-spanning Search For Product Innovation: The Moderating Role Of Environment

As the intensities of competition and the acceleration of environmental turbulence, it is necessary for companies to do boundary-spanning search increasingly to find a new competitive advantage to achieve higher market share (Floyd and Lane, 2000). In this case, the concept of boundary-spanning search gradually penetrated into the research of organizational learning, organizational strategy, innovation and entrepreneurship. Though many studies have emphasized the importance of technical knowledge, the importance of market knowledge in product innovation has been overlooked for long. This paper argues that companies should both carry out activities about technical knowledge boundary-spanning search and market knowledge boundary-spanning search. Technical knowledge boundary-spanning search mainly means that through local or non-local information and knowledge search, enterprises discover new technologies, new products and new business, and pursue new knowledge, as well as do experiment with new methods. While market knowledge boundary-spanning search is that enterprises seek for a better understanding of customer needs, market preferences, product usage and alternative models to achieve brand extension, product and new target customers re-positioning, and make opportunities for innovation.Despite the technical knowledge and market knowledge are both important for the business, the current study can't explain how the successful organization coordinate the two kinds of search activities in face of the scarcity of resources. This paper argues that one most important reason is that previous studies did not consider the external environment. However, a key feature of the strategic management practices is to emphasize the dynamic business environment. Previous studies have shown that the effects of organizational strategic orientation, organizational learning and entrepreneurial orientation will all be subject to environment. Levinthal and March (1993) and Lewin et al (1999) argue that environmental factors such as environment turbulence moderates the relationship of organizational strategy orientation and the innovation performance. However, there is little empirical research on such a moderating role.As an emerging market, China market is becoming more and more heterogeneous, two environment forces, environment turbulence and environment competition increasingly affect the decision-making and production (Luo,2003). As an emerging economy, China provides a unique background to study the impact of organizational search on innovation. Environment turbulence represents the degree of the change of unstable environment, characterized by the change of technology, customer preferences, product demand and supply. High-turbulent environment often means shorter product life cycle, more elimination of existing competitiveness, in these cases, the timely introduction of new products to replace the eliminated products may become the key to business success (Kotabe and Swan,1995). Environment Competition is the degree of competition of the industry, usually characterized by more competitors, mainly in the following forms:price wars, more advertising marketing and product offerings, additional services and more transactions (Porter, 1985). In a highly competitive market, prices are more transparent and effectively regulated by the market.At present, although there have been more and more researches on organization search, the causes and consequences of such activities are still not clear. Based on the theories of dynamic capability and strategic management, this paper explores the moderating role of environmental factors (including environment turbulence and environment competition) in the relationship between technical knowledge boundary-spanning search and market knowledge boundary-spanning search and product innovation. Study shows that market knowledge boundary-spanning search is more conducive to product innovation under high-turbulent environment, while in the highly competitive environment, technical knowledge boundary-spanning search is more conducive to product innovation. With this interpretation and verification, the paper clearly shows how the successful organization coordinate the relationship between technical knowledge boundary-spanning search and market knowledge boundary-spanning search, and how to make a different response to different environmental condition.