Examining the Relationship between the Three Components of Market Orientation and Innovativeness in Export Ventures (2012)

ABSTRACTThe current study focuses on examining the impact of three components of market orientation-customer orientation, competitor orientation and interfunctional coordination-on innovativeness of exporting firms by developing a conceptual model that incorporates risk-taking as an intermediary variable between the two orientations and innovativeness. The conceptual model is tested with data collected from 159 US export managers. The results indicate that being focused on consumers discourages risk-taking and innovativeness, while having a focus on competitors has the opposite effect and encourages willingness to take risks, which in return promotes innovativeness in exporting firms.INTRODUCTIONGlobalization has promoted worldwide exporting levels to soar and account for more than 32% of global activity (Mandel, 2009). Technological advances in information and communications, production methods, transportation, and international logistics have led to the increase in the exporting activity (Webster & Deshpande, 1990; Knight & Cavusgil, 2004). However, these advances have also resulted in highly competitive and turbulent markets (Caruana, Morris & Velia, 1998) and sophisticated and demanding customers (Knight & Cavusgil, 2004), which in return have required exporting firms to be both entrepreneurial (Knight, 1997; Caruana et al, 1998) and market-oriented (Knight & Cavusgil, 2004).The marketing literature advocates that exporting companies need to be market-oriented as customers are more knowledgeable and sophisticated in their choices and require higher degrees of responsiveness from companies (Webster & Deshpande, 1990; Knight & Cavusgil, 2004). Besides, with an increasing number of countries being integrated into the world economy, exporting firms are faced with increased global competition (Caruana et al, 1998) and an increased need for constantly monitoring and adopting to the changes in macroeconomic, legal and regulatory environments of various countries (Rose & Shoham, 2002). The existing literature supports the notion that market-oriented exporting firms experience enhanced performance levels (Cadogan, Diamantopoulos & Siguaw, 2002; Rose & Shoham, 2002; Akyol A Caruana et al, 1998). Creativity, ingenuity, and calculated risk-taking associated with entrepreneurial orientation are considered to be crucial for companies operating in the international markets as domestic strengths might not be sufficient (Zahra & Garvis, 2000). In the exporting context, similar to market orientation, acquiring an entrepreneurial orientation is found to be associated with higher performance (Balabanis & Katsikea, 2003; Zahra & Garvis, 2000).Although being market and entrepreneurial-oriented are viewed as necessary requirements for long-term survival of the exporting firms (Caruana et al, 1998; Luo, Zhou & Liu, 2005), with one exception (Knight & Cavusgil, 2004), the existing literature has investigated market and entrepreneurial orientations in domestic settings. More importantly, a review of the literature indicates that the relationships between the components of market and entrepreneurial orientations are not clear. Several previous studies have argued that both orientations are correlated (e.g., Morris & Paul, 1987; Miles & Arnold, 1991; Barrett & Weinstein, 1998) or simply complement each other (e.g., Slater & Narver, 1995; Jaworski & Kohli, 1996; Atuahene-Gima & Ko, 2001; Liu, Luo and Shi, 2002; Knight & Cavusgil, 2004). Others have found a one-way directional relationship between the orientations (e.g., Matsuno, Mentzer, & Ozsomer, 2002; Liu, Luo and Shi, 2003). Although these studies were valuable in establishing a relationship between market orientation and entrepreneurship, none of these studies have focused on studying how these two important constructs were related at the component level. …