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The Influence of Product Innovation on Firm Performance: Focusing on the Moderating Effects of Linkage Capability and Market Turbulence

Profiting from product innovation is important for firm success. However, factors affecting the link between product innovation and firm performance is still unclear according to the previous empirical findings. Therefore, the purpose of this study is to introduce internal relation-based contingency of firm's linkage capability and external environment based contingency of market turbulence to analyze their moderating effect on the relationship between product innovation and firm performance. The empirical analysis is conducted with the survey data collected from 196 firms in Jilin province of China. The findings show that firm's close linkage capability with customers, suppliers, competitors and other firms within the same industry positively moderates the relationship between product innovation and firm performance while external market turbulence negatively moderates the relationship between product innovation and firm performance. The results implicate, in order to maximize the positive influence of product innovation on firm performance, firms should continuously exploit social capital and monitor external environment.