The effect of market orientation and its components on innovation consequences: a meta-analysis

Abstract

While there is a rich body of research on market orientation’s effect on business performance, much little attention has been given to its effect on innovation consequences. This is the first meta-analytic effort to study the independent effects of market orientation components (customer orientation, competitor orientation, interfunctional coordination) on innovation consequences. Also, it is the first meta-analysis to study the impact of contextual characteristics on the way market orientation affects innovation consequences. The study finds that market orientation components positively affect innovation consequences but that competitor orientation’s effect depends on a minimum level of customer orientation. The study also suggests that the relationship between market orientation and innovation consequences is stronger in highly competitive environments but weaker in technology turbulent ones. Finally, findings suggest that the relationship is stronger in large firms, service companies, and in countries characterized by high individualism and high power distance national cultures.

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Notes

  1. 1.

    Twenty-two studies that test the effect of market orientation on innovation consequences could not be included in the meta-analysis because they did not meet the eligibility criteria (e.g., studies reporting multiple regression coefficients). Still, the inclusion rate—72% (56 of a total of 78 articles) is comparable to other meta-analyses in marketing (e.g., Geyskens et al. 1998; Kirca et al. 2005). Also, an outlier analysis confirmed that no independent study with very large sample contaminates the analysis (Hunter and Schmidt 1990). The complete list of studies employed in the analysis is available from the author.

  2. 2.

    Given recent criticism of Hofstede’s cultural dimensions we also used the measures suggested in the increasingly cited GLOBE framework (e.g., House et al. 2004). This only slightly changed the nature of our results.

  3. 3.

    The original items were standardized across countries (Gatignon et al. 1989). We used data from 2000 as this is the median year of the sampled studies.

  4. 4.

    In a preliminary analysis we tested for the effects of potential control variables. We first wished to minimize sample bias due to differences in response styles across countries and cultures. We thus included a dummy variable for the country language, whether English or not. This factor can substantially affect the reliability of the market orientation measures studied as these were designed in the U.S. (Ellis 2006). We also tested for the effect of market orientation measure (Narver and Slater’s MKTOR (1990) vs. Kohli, Jaworski and Kumar’s MARKOR (1993)) and innovation consequences measure (innovativeness vs. new product performance). These variables were not significant and thus we excluded them from further analysis (Kirca et al. 2005).

  5. 5.

    We run two analyses pertaining to two dependent variables: the reliability-corrected relationship (i.e., disattenuated) between market orientation and innovation consequences (e.g., Cano et al. 2004) and its Z-transformed value (e.g., Henard and Szymanski 2001; Kirca et al. 2005). The analyses yielded similar results and we thus report results only based on the latter approach.

  6. 6.

    We identified 160 effects of market orientation on business performance reported in 98 studies appearing in 1990–2006 (N = 31,640). Business performance included overall performance (n = 79), profitability (n = 38), growth (n = 23), sales (n = 13), and market share (n = 7). The complete list of studies employed in this analysis is available from the author. For testing the relationships between market orientation components and business performance we obtained data on 23 effects of customer orientation (N = 4,910) reported in 21 studies; 18 effects of competitor orientation (N = 3,742) reported in 17 studies; and 15 effects of interfunctional coordination (N = 3,248) reported in 14 studies.

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Correspondence to Amir Grinstein.

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Grinstein, A. The effect of market orientation and its components on innovation consequences: a meta-analysis. J. of the Acad. Mark. Sci. 36, 166–173 (2008). https://doi.org/10.1007/s11747-007-0053-1

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Keywords

  • Market orientation
  • Innovation
  • New products
  • Meta-analysis
  • Cross-national