Market orientation, innovation capability and business performance

Juho-Petteri Huhtala · Antti Sihvonen · Johanna Frösén · Matti Jaakkola · Henrikki Tikkanen

138 citations0/0 files storedBaltic Journal of Management

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Innovation and Knowledge Management Marketing and Advertising Strategies Business Strategies and Innovation

Abstract

Purpose – The paper aims to examine the role of market orientation (MO) and innovation capability in determining business performance during an economic upturn and downturn. Design/methodology/approach – The data comprise two national-level surveys conducted in Finland in 2008, representing an economic boom, and in 2010 when the global economic crisis had hit the Finnish market. Partial least square path analysis is used to test the potential mediating effect of innovation capability on the relationship between MO and business performance during economic boom and bust. Findings – The results show that innovation capability fully mediates the performance effects of a MO during an economic upturn, whereas the mediation is only partial during a downturn. Innovation capability also mediates the relationship between a customer orientation and business performance during an upturn, whereas the mediating effect culminates in a competitor orientation during a downturn. Thus, the role of innovation capability as a mediator between the individual market-orientation components varies along the business cycle. Originality/value – This paper is one of the first studies that empirically examine the impact of the economic cycle on the relationship between strategic marketing concepts, such as MO or innovation capability, and the firm's business performance.

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References

2011PLS-SEM: Indeed a Silver Bullet 1982Asymptotic Confidence Intervals for Indirect Effects in Structural Equation Models 1998The partial least squares approach for structural equation modeling.1977Estimating Nonresponse Bias in Mail Surveys 1977Estimating Nonresponse Bias in Mail Surveys 1996Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance 2011An assessment of the use of partial least squares structural equation modeling in marketing research 1990The Effect of a Market Orientation on Business Profitability

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