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Purpose: Despite insightful works regarding the nature of the processes and the rewards associated with product innovation, previous studies have little assessed when a firm’s product innovation leads truly to its international growth. Focusing on the roles of diversification contexts, the author attempted to address an issue of how firms can generate international growth from product innovation. Research design, data, and methodology: Drawing critically on the resource-advantage theory of competition, the author developed a model that may explain how firms achieve international growth through product innovation. The model was empirically tested with an event study on 175 announcements of international product innovation. Results: This results of the present study indicate that the innovativeness of a new product positively influences international growth and that related diversifiers achieve greater international growth through product innovation than do unrelated diversifiers. In addition, it is found that the level of diversification negatively moderates the effect of product innovativenesss on international growth. In contrast, competitor protection and market diversification positively moderate the effect of product innovativenesss on international growth. Conclusions: The author suggested that firms innovate products in order to achieve expected growth in international markets by considering the following issues. First, international marketing managers should deeply understand the components of product innovativeness because international product innovations can be effective when the innovativeness of a new product is high. Second, international marketing managers should consider the level of product diversification before developing new products internationally because international product innovation is likely to be more successful when the level of product diversification is low than is high. Third, international marketing managers should focus on the moderating role of the type of product diversification, competitor protection, and the level of market diversification in international product innovation because a low level of each of the factors can alleviate the positive effects of product innovation on international growth although a firm has a strong innovativeness.
