Product innovativeness under market uncertainty: the mediating impact of market orientation and absorptive capacity

In increasingly uncertain market environments, businesses often struggle to maintain competitiveness through product innovation. Therefore, understanding how business entities, particularly small and medium-sized enterprises (SMEs), leverage their internal resources and capabilities to drive product innovation requires further exploration. This study, based on a survey of 313 Chinese technology-based SMEs, examines how SMEs utilise resources such as market orientation (i.e. customer orientation and competitor orientation) and absorptive capacity to enhance product development innovation in uncertain market conditions. Our findings indicate that market environmental uncertainty positively influences product innovativeness. Additionally, SMEs are more likely to prioritise processing competitor information to enhance product innovation while placing less emphasis on adopting a customer-oriented strategy in highly dynamic and uncertain markets. This study contributes to the literature by conceptualising market uncertainty as a driver of business activities and empirically testing its alignment with internal contingencies to reveal its effects on product innovativeness.