Market Orientation and Technology Innovation in Korean IT SMEs: The Moderating Role of Cross-functional Cooperation and Cooperation with Outside Organizations

Abstract

This paper investigates how Korean IT SMEs (Small and Medium Sized Enterprises) deploy their market orientation, cross-functional cooperation and cooperation with outside organizations for successful technology innovation. Specifically, this study analyses the main effects of market orientation on technology innovation as well as the interaction effects among the above variables. The survey data of 326 Korean IT SMEs were collected and integrated as the empirical base for testing the hypotheses. Empirical results showed that market orientation was an influential determinant to SMEs' technology innovation. Also, the interaction between market orientation and cross-functional cooperation had a positive and significant effect on IT SMEs' technology innovation (both of product and process innovation). And the interaction between market orientation and cooperation with outside organizations had a positive and significant effect on IT SMEs' product innovation, but not on the process innovation. The IT SMEs' innovation is a complex task and there is no single best way available for all firms. The implications of these findings, limitations, and future research directions were also discussed.JEL Classification: O31, O53