Market orientation, innovation and competitive strategies in industrial firms

Abstract

Market orientation promotes the satisfaction of market needs with a higher degree of excellence than competitors. However, its potential effects on the companies' innovation strategy are discussed. The question is whether or not market orientation, due to an excessive customer focus, leads mainly to the development of incremental innovations and, consequently, to reactive innovation strategies. To obtain further insight into this topic, a market orientation measurement scale is first developed, taking into account the instrument proposed in the last decade. Then, the scale psychometric properties are evaluated. Once it proves to be a solid instrument of measurement, the relationship between market orientation and the following variables is analysed: firms' commitment to the innovation activities, effective innovation rates, degree of innovativeness of the new products developed, firms' competitive strategy and companies' performance. The study supports the beneficial effects of market orientation on the innovation strategy, providing empirical evidence in a research field where contributions of this nature are very scarce.In addition, the convenience of incorporating market orientation into industrial firms' management is reinforced.