5. Discussion and conclusions
5.1 The direct effect of intellectual capital on product innovation performance
This study finds that intellectual capital directly improves product innovation performance. The result is consistent with existing empirical evidence (Subramaniam and Youndt, 2005; Hsu and Sabherwal, 2012; Lee et al., 2011) and the argument that a firm’s knowledge base helps the firm innovate (Cohen and Levinthal, 1990; Szulanski, 1996). Therefore, using existing knowledge creatively is critical for manufacturers who do not focus on developing state-of-the-art technological advances in a product category to innovate. We also find that this effect is moderated by a country’s environmental conditions. Manufacturers in the countries that have introduced more policies driving endogenous innovation and accumulated more technological and managerial knowledge during economic development rely more on intellectual capital for developing new products.