THE ANTECEDENTS AND THE CONSEQUENCES OF INNOVATION CAPABILITIESByHayri Erkan OzkayaThe innovation capabilities enable the firms to transform their knowledge into product innovations that lead to product performance. In spite of their importance the research about these capabilities is limited and the innovation capability is studied as a monolith construct in the extant literature. However there are different types of innovation capabilities that differ in their antecedents and consequences. This study differentiates the innovation capability and product innovation types (technological, aesthetic and market-based) and examines how they are created and used in two essays. Essay 1 includes 288 managers from the U.S. and 386 managers from the People's Republic of China (PRC) and focuses on strategic orientation as the antecedent of innovation capabilities and market knowledge competence. Essay 2 includes 304 managers from the U.S. and examines market knowledge dimensions and inter-functional cooperation as the antecedents of innovation capabilities and differentiates the effects of exploration and exploitation capabilities on product newness. Both of the essays examine product innovation types as the consequences of innovation capabilities that lead to product performance. The results in Essay 1 indicate that the relationships of the innovation capabilities with their antecedents and consequences differ according to their types (technological, aesthetic and market-based), all of the product innovation types increase product performance, and market orientation has a positive effect on market knowledge competence. The comparison between U.S. and PRC indicates that, in the U.S., aesthetics innovation has a higher effect on product performance. Market-based innovation capability has a higher effect on market-based, and aesthetic innovation but a lower effect on tech innovation. Market orientation has a higher effect on market knowledge competence and on market-based innovation capabilities, and customer knowledge process has a higher effect on product performance.The results in Essay 2 indicate that innovation capabilities mediate the relationship between market knowledge dimensions and product innovations as well as the relationship between inter-functional cooperation and product innovations. Market knowledge dimensions have different effects on innovation capability types, product innovations and product performance. Exploration and exploitation capabilities have different effects on product innovations and they negatively interact with each other. The results have significant theoretical and managerial implications to better understand and facilitate the product innovation capabilities.
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