Revisiting the Mediating Effect between Market Orientation and New Product Innovation Performance: Competitive Intensity and Sensemaking as Moderator

Abstract

The knowledge of value and diversity is the source of firm’s competitive advantage, and that a most core assumption of knowledge-based view is that it is the integration of units’ inner firm instead of knowledge itself that accumulates the competitive advantage. Based on knowledge-based theory, a questionnaire survey of 335 firms in China was conducted to empirically analyze the relationship between market orientation, absorptive capacity, and new product innovation performance. The article found that the absorptive capacity mediates the relationship between market orientation and new product performance, and competitive intensity, sensemaking negative adjusts the relationship between market orientation and absorptive capacity. This study shows that firms need to identify useful knowledge from complex market information and technical information, and that firms and employees need to digest and absorb a large amount of information and convert them into knowledge, which promote firm form ability that is absorptive capacity to gain a competitive advantage. Firms should have a sense of risk and maintain a high sensemaking to external environment.