The purpose of this paper is to empirically investigate the mechanisms through which absorptive capacity (AC), trust and information systems jointly influence product innovation.

This study proposes a research model to examine the mediating role of AC on the impacts of trust and information systems on product innovation and the moderating roles of trust and information systems on the relationship between AC and product innovation. The hypotheses are empirically tested using regression and bootstrapping methods and data collected from 276 manufacturing firms in China.

This study finds that trust and information systems positively affect product innovation and the effects are fully mediated by AC. AC also significantly enhances product innovation, and the effect is amplified by trust as well as information systems. In addition, the results show that trust and information systems improve AC both individually and interactively.

The findings extend existing knowledge on the antecedents of AC and the contingent conditions under which a manufacturer’s AC is more effective than that of its rivals. The results also clarify the mechanisms through which trust and information systems improve product innovation. This study provides insights into the complex relationships among a manufacturer’s sociotechnical systems, knowledge management processes and new product development, and reveals how to design organisational systems to fully capitalise the value of AC on product innovation.