Strategic Orientation of the Firm and New Product Performance

This research seeks to understand which of three different strategic orientations of the firm (customer, competitive, and technological orientations) is more appropriate, when, and why, in the context of developing product innovations. We propose a structural model of the impact of the strategic orientation of the firm on the performance of a new product. This impact is hypothesized to occur as a chain of events. Strategic orientation is viewed first as an antecedent of the characteristics of the innovation marketed by the firm. The subsequent market performance of the innovation is hypothesized to be a function of both the innovation's characteristics and the firm's strategic orientation. The ability of the firm to take advanta ge of its orientation to market,the innovation succesfully is also hypothesized to be moderated by the firm's environment. The results provide evidence for best practices as follows. (1) A firm wishing to develop an innovation superior to the competition must have a strong technological orientation. (2) A competitive orientation in high growth markets is useful because it enables firms to develop innovations with lower costs, a critical element of success. (3) Firms should be consumer oriented and technology oriented in markets where demand is relatively uncertain. These orientations together lead to products which perform better. and the firm will be able to market innovations better, thereby achieving a superior level of performance. (4) A competitive orientation is useful to market innovations when demand is not too uncertain but should be deemphasized in highly uncertain markets. In short, these results suggest that the appropriateness of a 6ven strategic orientation, even a customer orientiation, is not unconditional.