Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets

Dysfunctional competition (typically involving violation of intellectual property rights) is common in emerging economies, making it difficult for innovators to profit from their innovation activities. Firms operating in emerging economies must choose appropriate strategies to address the idiosyncratic challenges of dysfunctional competition and achieve competitive advantage. The utility of competitive strategies (cost leadership and differentiation) and market-based assets (customer orientation, competitor orientation, and marketing creativity) were assessed for their ability to help an innovating firm deal with dysfunctional competition and improve the returns from innovation. Data from a survey of managers in 282 Chinese high technology companies demonstrates that an emphasis on cost leadership, a customer orientation and creative marketing predicts better product innovation performance in environments with a high level of dysfunctional competition. Differentiation and a competitor orientation were found to be less effective.