When do online reviews matter most for product innovation? Exploring institutional and organizational contextual factors in B2B firms

Purpose This research aims to address the critical need to understand how external feedback mechanisms (online reviews) drive innovation in the context of varying external institutional environments and firm-level capabilities. Design/methodology/approach Drawing on organizational learning theory, institutional theory and the dynamic capabilities framework, the study analyzes a sample of 558 B2B firms in China. Findings The findings reveal that online reviews positively influence product innovation, serving as a critical source of external knowledge. However, institutional development weakens this relationship, as firms in highly developed regions rely less on online feedback due to access to formalized market systems. Product diversification also weakens the relationship, reflecting challenges in integrating feedback across multiple product lines. Conversely, corporate compliance capability strengthens the relationship, enhancing firms’ absorptive capacity and alignment with regulatory and industry standards. Originality/value This study contributes to the literature by exploring the boundary conditions under which online reviews drive product innovation and provides insights for managers to consider strategies based on institutional and organizational contexts.