Market Knowledge Tacitness and SMEs' New Product Performance

Abstract

In this study, we investigate the impact of market knowledge tacitness on the new product performance of Small and Medium-sized Enterprises (SMEs). Tacit market knowledge provides valuable information for new product development (NPD) and enables SMEs to differentiate themselves from competitors. However, knowledge tacitness also brings potential obstacles to knowledge integration and exploitation and creates barriers for NPD. Drawing insights from knowledge-based view, we posit that the effect of market knowledge tacitness on SMEs' new product performance is contingent on firm's R&D strength and new product features. Utilizing a sample of 227 high technology firms in China, we find that internal R&D effort strengthens the effect of market knowledge tacitness on SMEs' new product performance. More specifically, our results show that market knowledge tacitness has a more significant positive effect on performance of new product with market newness, but a negative effect for the one with technological newness. The theoretical and practical implications of these results are discussed.