Alignment of market orientation and innovation as a success factor: a five-country study

Abstract

The traditional perception of market orientation – as the satisfaction of expressed customer needs – is considered to be too customer-led, thus producing no radical but only incremental innovation. The present study deals with the second facet of market orientation – proactive market orientation, i.e. the discovery and satisfaction of latent customer needs – and investigates the relationship of firm performance with both market orientation facets in conjunction with incremental and radical innovation. We test interaction effects based on survey data from 737 firms from Austria, Germany, Switzerland, Thailand and the USA, and conduct a cross-cultural comparison of the results. The empirical results indicate significant relationships between market orientations and market effectiveness and reveal significant interactions between each market orientation facet and the corresponding innovation focus. These findings suggest that firms across cultures benefit when they act in a market-oriented way and when they align their market orientation with their innovation strategy.

Keywords:

• proactive market orientation
• radical and incremental innovation
• cross-cultural research
• firm performance
• hierarchical regression analysis

Notes

This means that we do not expect the estimated influence of cultural dimensions to differ significantly from zero; for methodology, see Verbeek (2004, 24).