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Are heterogeneous customers always good for iterative innovation?

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  • Jiang, Xiaoxian
  • Jin, Ruijie
  • Gong, Min
  • Li, Mingzhu

Abstract

Are heterogeneous customers always good for iterative innovation? To address this question, building on the knowledge-based view and cognitive load theory, we investigate the impact of customer heterogeneity on software products’ iterative innovation and how such relationship changes with firms’ absorptive capacity. Using a dataset on software product iterative innovation of publicly listed firms in China from 2007 to 2019, the findings support our prediction that software products’ iterative innovation follows an inverted U-shape as customer heterogeneity increases, which indicates that a high level of customer heterogeneity impedes software products’ iterative innovation. Moreover, this nonlinear effect is moderated by a firm’s absorptive capacity such that the inflection point of the inverted U-shaped curve is shifted upward in firms with high levels of absorptive capacity, enhancing the impact of customer heterogeneity on software products’ iterative innovation.

Suggested Citation

  • Jiang, Xiaoxian & Jin, Ruijie & Gong, Min & Li, Mingzhu, 2022. "Are heterogeneous customers always good for iterative innovation?," Journal of Business Research, Elsevier, vol. 138(C), pages 324-334.
    • Handle: RePEc:eee:jbrese:v:138:y:2022:i:c:p:324-334
    DOI: 10.1016/j.jbusres.2021.09.024
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