This paper analyzes the interaction among the step-by-step innovation, the product market competition (PMC), and the knowledge information flow in the growth process. Patents protect their holders from being imitated or copied but do not protect them against the possibility that less-efficient competitors master the diffused knowledge. The degree to which diffused knowledge should be exploited by less-efficient firms is determined by both their knowledge assimilating capacities and Research and Development (R&D) teams' competence type and level. The individual skill distribution in R&D team may lead to different innovative behaviors: replicating the knowledge or creation of novel knowledge. Here, we first find that replicating the knowledge and creation of novel knowledge are both growth enhancing; second, the more the flexibility on individual creativity in R&D team is, the faster is the growth; third, the knowledge information flow has a polarization effect on firms' innovative performance.