LAUSR

Abstract Extending the research on the positive effects of functional conflicts, this study examines how functional conflicts influence innovation capability and responsive capability in channel relationships by triggering inter-organizational knowledge sharing. The moderating effects of conflict frequency and relationship quality on the relationships between functional conflict, knowledge sharing, and capabilities are also explored. Based on a questionnaire survey of 152 small- and medium-sized enterprises in China, the results show that (1) functional conflict can stimulate inter-organizational knowledge sharing, but the frequency of conflict negatively moderates this relationship; (2) knowledge sharing has a mediating effect on the relationship between functional conflict and marketing capability; and (3) relationship quality positively moderates the relationship between functional conflict and knowledge sharing, but negatively moderates the relationship between knowledge sharing and innovation capability. These findings broaden the theoretical scope of conflict theory and refine the theoretical framework of channel conflict. This study also has significant practical implications for organizations seeking to effectively guide and resolve conflicts.