Market Orientation and the New Product Paradox.

The extant literature shows that the strength of the market orientation–performance relationship decays as the terminal measure of performance shifts from new product success to profitability to market share. As Day (1999) concluded, a broader nomological inquiry is needed to more fully understand the nature and limits of market orientation\u27s effects. This suggests that a broader nomological inquiry is needed to fully understand the nature and limits of market orientation\u27s effects. Utilizing a national sample of marketing executives, the present study\u27s purpose is to build a fuller understanding of the effects of market orientation on firm performance. Its structural equations model includes measures of new product success, profitability, and market share. The research reinforces a strong positive relationship between market orientation and new product success. The expanded nomological network under study, however, implies barriers to market orientation\u27s effectiveness. First, market-orientation-inspired increases in the priority firms place on “breakthrough” learning without commensurate increases in the priority placed on “breakthrough” innovation capabilities can boomerang and negatively impact new product success. Second, market-orientation-inspired new product development programs that are unable to increase market share can negatively impact profitability. These gatekeepers to the success of market orientation underscore the need for firms to coordinate a strong market orientation with resources and capabilities that increase the effectiveness of the marketing function. Without such coordination, the positive effect of market orientation on new product success may be limited to incremental innovations, and the overall effect of successful new products on profitability may be limited

Market Knowledge Dimensions and Cross-Functional Collaboration: Examining the Different Routes to Product Innovation Performance

There is consensus in the marketing literature that market knowledge and cross-functional collaboration are two fundamental resources for successful product innovation. However, few studies examine the dimensions or characteristics of market knowledge and how and why these resources influence product innovation performance. Drawing on contingency theory and the knowledge-based view of the firm, the authors argue that knowledge integration mechanisms may account for the effects of market knowledge dimensions (i.e., breadth, depth, tacitness, and specificity) and cross-functional collaboration on product innovation performance. They find that market knowledge specificity and cross-functional collaboration affect product innovation performance through knowledge integration mechanisms. In contrast, whereas the effect of market knowledge depth is partially mediated, market knowledge breadth has a direct, unmediated effect on product innovation performance. A test of an alternative moderating perspective shows that the effects of market knowledge depth and cross-functional collaboration on product innovation are negatively moderated by knowledge integration mechanisms. By showing the differential effects of market knowledge dimensions on product innovation performance, the authors provide a more refined understanding of the interplay among market knowledge, its integration, and the firm's performance in product innovation. The authors also conclude that by overlooking the role of knowledge integration mechanisms, previous research may have provided an overly optimistic view of the value of cross-functional collaboration in product innovation