Responsive and proactive market orientation and innovation success under market and technological turbulence

The study investigates how market and technological changes in an organization's business environment moderate the relationships between responsive and proactive market orientation, innovation success, and market success of the organization. The respondents in the study were senior managers of companies operating in a Central European country. The Internet survey resulted in 441 usable questionnaires. Data were analyzed using a non-linear structural equation models with MPLUS5. The results provide support for distinguishing between the two complementary forms of market orientation, proactive and responsive. While proactive market orientation is a determinant of both innovation and market success of the organization, the impact of responsive market orientation on the innovation and market success is positive and significant only in a rapidly changing market environment. Companies can improve their innovation success and in turn market success by improving their proactive market orientation, i.e. by investing resources in exploring customer needs, customer problems with existing products and latent customer needs. The study contributes to the literature by examining the entire chain of relationships between market orientation, innovation success and market success by adopting both a responsive and proactive market orientation. It is the first study that examines these relationships in the context of companies from a European country and with consideration of market turbulence/changes.

[1]  Albert Maydeu-Olivares,et al.  Exploring the link between market orientation and innovation in the European and US insurance markets , 2001 .

[2]  J. Farley,et al.  Corporate Culture, Customer Orientation, and Innovativeness in Japanese Firms: A Quadrad Analysis , 1993 .

[3]  K. Atuahene–Gima,et al.  An exploratory analysis of the impact of market orientation on new product performance a contingency approach , 1995 .

[4]  Jesper Strandskov.  Sources of competitive advantages and business performance , 2006 .

[5]  James L. Arbuckle,et al.  Full Information Estimation in the Presence of Incomplete Data , 1996 .

[6]  O. Ferrell,et al.  The effect of market orientation on product innovation , 2000 .

[7]  Mirjana Radovic Markovic,et al.  Managing the organizational change and culture in the age of globalization , 2008 .

[8]  Rosanna Garcia,et al.  The Effects of Environmental Turbulence on New Product Development Strategy Planning , 2003 .

[9]  B. Menguc,et al.  Creating a firm-level dynamic capability through capitalizing on market orientation and innovativeness , 2006 .

[10]  David J. Ketchen,et al.  An assessment of the measurement of performance in international business research , 2008 .

[11]  Fan Yang,et al.  Nonlinear structural equation models: The Kenny-Judd model with Interaction effects , 1996 .

[12]  David T. Wilson,et al.  A Longitudinal Study of the Impact of Market Structure, Firm Structure, Strategy, and Market Orientation Culture on Dimensions of Small-Firm Performance , 1996 .

[13]  Willem E. Saris,et al.  Simple, Efficient and Distribution-free Approach to Interaction Effects in Complex Structural Equation Models , 2008 .

[14]  C. Chou,et al.  The curvilinear relationships between responsive and proactive market orientations and new product performance: A contingent link , 2008 .

[15]  Jin K. Han,et al.  Market Orientation and Organizational Performance: Is Innovation a Missing Link? , 1998 .

[16]  A. O'Cass,et al.  Implementing competitive strategies: the role of responsive and proactive market orientations , 2010 .

[17]  J. Sheth,et al.  Revisiting marketing's lawlike generalizations , 1999 .

[18]  H. Marsh,et al.  Structural Equation Models of Latent Interactions: Clarification of Orthogonalizing and Double-Mean-Centering Strategies , 2010 .

[19]  Bernard J. Jaworski,et al.  Markor: A Measure of Market Orientation , 1993 .

[20]  George J. Avlonitis,et al.  Successful new-to-the-market versus ‘me-too’ retail financial services : the influential role of marketing, sales, EDP/systems and operations , 2006 .

[21]  C. Prahalad,et al.  Corporate imagination and expeditionary marketing. , 1991, Harvard business review.

[22]  Gordon E. Greenley.  Market Orientation and Company Performance: Empirical Evidence From UK Companies , 1995 .

[23]  Dr Brendan J. Gray,et al.  Thriving on Turbulence , 1999 .

[24]  H. Marsh,et al.  Structural equation models of latent interactions: evaluation of alternative estimation strategies and indicator construction. , 2004, Psychological methods.

[25]  J. González‐Benito,et al.  Role of entrepreneurship and market orientation in firms' success , 2009 .

[26]  R. Cooper,et al.  Benchmarking the Firm's Critical Success Factors in New Product Development , 1995 .

[27]  Eric M. Olson,et al.  The Contingent Value of Responsive and Proactive Market Orientations for New Product Program Performance , 2005 .

[28]  Bernard J. Jaworski,et al.  Market orientation: The construct, research propositions, and managerial implications. , 1990 .

[29]  David Berkowitz,et al.  Market Orientation and New Product Development in Global Industrial Firms , 2000 .

[30]  Bernard J. Jaworski,et al.  Market-driven versus driving markets , 2000 .

[31]  Ahmet H. Kirca,et al.  Market Orientation: A Meta-Analytic Review and Assessment of its Antecedents and Impact on Performance , 2005 .

[32]  A. Grinstein.  The effect of market orientation and its components on innovation consequences: a meta-analysis , 2008 .

[33]  Christian Homburg,et al.  A Multiple-Layer Model of Market-Oriented Organizational Culture: Measurement Issues and Performance Outcomes , 2000 .

[34]  J. Hauser,et al.  Integrating R&D and marketing: A review and analysis of the literature , 1996 .

[35]  Gordon E. Greenley,et al.  THE PERFORMANCE IMPACT OF MARKETING RESOURCES , 2005 .

[36]  Hanne Harmsen,et al.  Implementation of success factors in new product development – the missing links? , 2001 .

[37]  John C. Narver,et al.  Responsive and proactive market orientation and new-product success. , 2004 .

[38]  James M. Sinkula,et al.  The synergistic effect of market orientation and learning orientation on organizational performance , 1999 .

[39]  C. Fornell,et al.  Customer Satisfaction and Shareholder Value , 2004 .

[40]  S. Hunt,et al.  The Comparative Advantage Theory of Competition , 1995 .

[41]  D. A. Kenny,et al.  Estimating the nonlinear and interactive effects of latent variables. , 1984 .

[42]  Robert G. Cooper,et al.  New Products : The Factors that Drive Success , 1994 .

[43]  G. Rose,et al.  Export performance and market orientation: establishing an empirical link , 2002 .

[44]  Adamantios Diamantopoulos,et al.  Linking market orientation and company performance: preliminary evidence on Kohli and Jaworski's framework , 1993 .

[45]  George S. Day,et al.  Assessing Advantage: A Framework for Diagnosing Competitive Superiority , 1988 .

[46]  P. Ellis.  Market Orientation and Performance: A Meta-Analysis and Cross-National Comparisons , 2006 .

[47]  John C. Narver,et al.  Does Competitive Environment Moderate the Market Orientation-Performance Relationship?: , 1994 .

[48]  François A. Carrillat,et al.  A meta-analysis of the relationship between market orientation and business performance: evidence from five continents , 2004 .

[49]  K. Yuan,et al.  5. Three Likelihood-Based Methods for Mean and Covariance Structure Analysis with Nonnormal Missing Data , 2000 .

[50]  G. Hult,et al.  Does market orientation matter?: a test of the relationship between positional advantage and performance , 2001 .

[51]  J. Fahy,et al.  Market Orientation in the Transition Economies of Central Europe:: Tests of the Narver and Slater Market Orientation Scales , 2000 .

[52]  R. Cooper,et al.  Determinants of Timeliness in Product Development , 1994 .

[53]  Dennis J. Cahill,et al.  The marketing concept and new high-tech products: Is there a fit? , 1994 .

[54]  S. Slater.  Market orientation at the beginning of a new millennium , 2001 .

[55]  K. Appiah-Adu,et al.  Market orientation and performance: empirical tests in a transition economy , 1998 .

[56]  C. Moorman,et al.  Cross-Sectional versus Longitudinal Survey Research: Concepts, Findings, and Guidelines , 2008 .

[57]  James M. Sinkula,et al.  Learning Orientation, Market Orientation, and Innovation: Integrating and Extending Models of Organizational Performance , 1999 .

[58]  E. Hultink,et al.  The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance , 2004 .

[59]  Ram Subramanian,et al.  Examining the Market Orientation-Performance Relationship: A Context-Specific Study , 1998 .

[60]  R. Ginevičius,et al.  Exploration of strategy: Objectives, competencies and competitive advantage , 2005 .

[61]  Kwaku Atuahene-Gima,et al.  An Exploratory Analysis of the Impact of Market Orientation on New Product Performance , 1995 .

[62]  R. Subramanian,et al.  The market orientation-performance relationship in the context of a developing economy: An empirical analysis , 2001 .

[63]  James M. Hulbert,et al.  Innovation or customer orientation? An empirical investigation , 2004 .

[64]  G. McClelland,et al.  Misleading Heuristics and Moderated Multiple Regression Models , 2001 .

[65]  Bernard J. Jaworski,et al.  Market orientation: Antecedents and consequences , 1993 .

[66]  Lopo L. Rego,et al.  Customer Satisfaction, Cash Flow, and Shareholder Value , 2005 .

[67]  Gordon E. Greenley,et al.  Market orientation in the service sector of the transition economies of central Europe , 2003 .

[68]  Michael E. Sobel,et al.  Pseudo-Maximum Likelihood Estimation of Mean and Covariance Structures with Missing Data , 1990 .

[69]  Jakki J. Mohr,et al.  Drucker’s insights on market orientation and innovation: implications for emerging areas in high-technology marketing , 2009 .

[70]  David M. Szymanski,et al.  Why Some New Products are More Successful than Others , 2001 .

[71]  J. Farley,et al.  ORGANIZATIONAL CULTURE, MARKET ORIENTATION, INNOVATIVENESS, AND FIRM PERFORMANCE: AN INTERNATIONAL RESEARCH ODYSSEY , 2004 .

[72]  Clayton M. Christensen,et al.  CUSTOMER POWER, STRATEGIC INVESTMENT, AND THE FAILURE OF LEADING FIRMS , 1996 .

[73]  J. Mentzer,et al.  The Effects of Entrepreneurial Proclivity and Market Orientation on Business Performance , 2002 .

[74]  John C. Narver,et al.  The Effect of a Market Orientation on Business Profitability , 1990 .

[75]  J. Jaccard,et al.  LISREL Approaches to Interaction Effects in Multiple Regression , 1998 .

[76]  John C. Narver,et al.  Strategic Management Journal Research Notes and Communications Customer-led and Market-oriented: Let's Not Confuse the Two , 2022 .

[77]  James M. Sinkula,et al.  Market Orientation and the New Product Paradox. , 2005 .

[78]  J. Dawes.  The Relationship between Subjective and Objective Company Performance Measures in Market Orientation Research: Further Empirical Evidence , 1999 .