Explore how SME family businesses of travel service industry use market knowledge for product innovation*

Based on theoretical lens including input-process-output, knowledge-based view, and resource dependence theory, this study proposes that the relationship between market knowledge (MK) and product innovation may be mediated by operational effectiveness, knowledge governance capability, and modularity production. With travel retailers as the data analysis unit, 261 cases were collected in two waves from the travel supply chain in Taiwan. This study adopts two-step approach of confirmatory factor analysis and structural equation modeling method to investigate the relationship among different constructs. Based on the path analysis results of the theoretical model, five of six paths were confirmed and operational effectiveness, knowledge governance capability, and modularity production were all positively affected by MK; two of them mediated the positive relationship between MK and product innovations, except for knowledge governance capability. This study echoes recent call for the possible factors as the key mediators on MK and innovation relationship in SME-FBs context.