How to Promote New Product Development through Networked and Embedded Innovation? Based on the Perspective of Digital Transformation

Although current studies indicated that embedded innovation is a crucial addition to the cooperative innovation and the process is often accompanied by digital transformation, few have declared the action path or long-term effects. The effects of networked and embedded innovation on new product development are discussed in a unified theoretical framework in this study. Drawing upon network embeddedness and resource orchestration theories, we propose that: (1) networked innovation promotes new product development performance, and this effect is fully mediated by digital transformation; (2) there exists an inverted U-shaped relationship between embedded innovation and new product development performance, where digital transformation plays the role of complementary partial mediation. Unbalanced panel data made up of 245 firms operating in China’s A-share computer communication industry from 2007 to 2020 has been used to test the theoretical model. We aim to emphasize that based on loosely coupled innovation enhancement and power aggregated conflict mitigation mechanisms, digital transformation has a mediating effect in the relationship between the two paradigms of cooperative innovation and new product development, respectively. According to the findings of our study, a future fit innovation strategy is suggested for technology firms.