Competitor Intelligence and Product Innovation: The Role of Open-Mindedness and Interfunctional Coordination

Drawing on the central theme of open innovation and the inbound flow of knowledge for improving a firm's innovation performance, this research investigates the application of external knowledge (i.e., competitor intelligence) in product innovation through the mediators of interfunctional coordination and open-mindness. We examine the joint moderating effect of environmental uncertainty on results obtained from survey data involving 284 executives from Chinese small- and medium-sized enterprises (SMEs) within the information technology. Our results reveal that competitor intelligence has a positive and direct effect on product innovation and relationships can be further strengthened by interfunctional coordination and open-mindedness. In testing their interaction with dynamic external environments, we found that the level of environmental uncertainty interacts positively with open-mindedness, but negatively with the effect of interfunctional coordination on product innovation. We conclude that by building openly innovative and knowledge sharing culture, SME managers can improve their product innovation performance by obtaining and processing external knowledge relating to competitors. This article contributes to the open innovation literature, advancing understanding of the inflow of external knowledge for innovative output and, more importantly, sheds light on the research of open innovation practices in SMEs from emerging economies.