FOREIGN MARKET KNOWLEDGE, COUNTRY SALES BREADTH AND INNOVATIVE PERFORMANCE OF EMERGING ECONOMY FIRMS

Abstract

We examine the impact of foreign market knowledge on innovative performance in emerging economy firms. We also study how this relationship is moderated by country sales breadth, i.e., the diversity of countries in which the firm derives sales. We test two competing theoretical perspectives on this relationship: diversity logic suggesting country sales breadth is beneficial to innovative performance, and time compression diseconomies logic suggesting the opposite. Drawing from a sample of 92 Chinese firms, we show that foreign market knowledge has a positive impact on innovative performance, and that this relationship is positively moderated by country sales breadth. Our study suggests that managers in Chinese firms develop effective capabilities in accessing, integrating and utilising foreign market knowledge from a breadth of international sources in their quest for innovation.