Does Market Orientation Facilitate Balanced Innovation Programs? An Organizational Learning Perspective

Abstract

There appears to be widespread agreement that optimal new product development programs require a balance between customer‐led and lead‐the‐customer innovation practices. The former is associated with adaptive learning inspired incremental innovation, whereas the latter is associated with generative‐learning‐inspired radical innovation. There is debate, however, as to whether a strong market orientation can facilitate this balance. Some believe that a strong market orientation causes firms to overemphasize customer‐led incremental innovations. Others believe that a strong market orientation can facilitate this balance but assert that traditional measures of market orientation only capture the types of behaviors associated with customer‐led incremental innovations. This latter concern has led some to abandon the single‐construct operationalization of market orientation and to introduce two constructs—responsive and proactive market orientation—into the literature. The purpose of this research is to address these developments. The study makes use of a national sample of marketing executives and employs a cross‐sectional survey design. Measures used are market orientation, radical and incremental innovation priority, generative and adaptive learning priority, and new product success. Confirmatory factor analyses and structural equations models are employed to develop measures and to test hypotheses. The study's results reaffirm the position that a strong market orientation helps facilitate a balance between incremental and radical innovation by shifting firms' innovation priority more toward radical innovation activities. It also suggests that the abandonment of traditional conceptualizations and measures of market orientation are premature.