Do the Performances of Innovative Firms Differ Depending on Market-oriented or Technology-oriented Strategies?

Abstract

Despite a perception to the contrary, the performances and values of innovative firms can differ. While people are preconditioned to believe that these firms perform well and have high valuations, this is not always the case. In order to explain this phenomenon, we adopt a lens of strategic orientations that influence innovation: market orientation and technology orientation. By using 10-year panel data, and a content analysis examining the relative orientations of our sample firms, we find that the market-oriented and technology-oriented tendencies of innovative firms influence firm performance and value. Relatively market-oriented innovative firms can guarantee instant performance by offering customers new products and services that they want. However, customers may not be loyal to one particular innovative firm. By contrast, relatively technology-oriented innovative firms are not subject to customers' fastidious choices and have higher firm values. Furthermore, environmental uncertainty negatively influences the relatively market-oriented innovative firms' value as well as sales performance.

Keywords:

• Innovative firms
• strategic orientation
• market-oriented innovation
• technology-oriented innovation
• environmental uncertainty
• firm performance

Notes

¹ The magazine reported the top 20 in the 2005 issue, the top 100 for 2006 and 2007, and the top 50 for the 2008, 2009 and 2010 issues.