The Impact of a Creativity‐supporting Work Environment on a Firm's Product Innovation Performance

Many scholars and practitioners have suggested that a creativity‐supporting work environment contributes to a firm's product innovation performance. Although there is evidence that such an environment enhances innovative behavior at individual level, very few studies address the effect of a creativity‐supporting work environment on product innovation performance at firm level, and the results are inconsistent. This paper examines the relationship between a firm's creativity‐supporting work environment and a firm's product innovation performance in a sample of 103 firms. For measuring a firm's creativity‐supporting work environment, a comprehensive and creativity‐focused framework is used. The framework consists of 9 social‐organizational and 12 physical work environment characteristics that are likely to enhance employee creativity. These characteristics contribute to the firm's overall work environment that supports creativity. The firm's product innovation performance is defined by two distinct concepts: new product productivity (NP productivity), which is the extent to which the firm introduces new products to the market, and new product success (NP success), which is the percentage of the firm's sales from new products. In most firms, different knowledgeable informants provided the data for the variables. The results show that firms with creativity‐supporting work environments introduce more new products to the market (NP productivity), and have more NP success in terms of new product sales (NP success). NP productivity partly mediates the relationship between creativity‐supporting work environment and NP success. The mediation model shows that the two paths from a creativity‐supporting work environment to NP success are about equally important: the direct path between creativity‐supporting work environment and NP success has a coefficient of .22, and the coefficient of the indirect path via NP productivity is .23. The creativity‐supporting work environment framework can be used in managerial practice to enhance employee creativity for product innovation. It allows applying a flexible and broad approach by influencing both social‐organizational and physical characteristics of the work environment.     

The Paradox of Openness: How Product and Patenting Experience Affect R&D Sourcing in China?

External R&D sourcing may help firms compete in an environment characterized by rapid technological changes. Yet, prior studies have produced conflicting findings on how a firm's technological experience affects the extent to which the firm engages in external R&D sourcing. Although many highlight that firms with extensive technological experience are equipped with more technological knowledge, collaborative skills, and absorptive capacity, encouraging greater levels of external R&D, others suggest the opposite due to potential exchange hazards and partnership conflicts. Adopting an external partner's perspective, the current study reconsiders this “paradox of openness” by analyzing how a focal firm's product experience and patenting experience affect an external partner's tendency to provide external R&D services to the focal firm. Specifically, this study explore how a focal firm's knowledge protectiveness and tacitness embedded in its product and patenting experience influences the external partners' motivation for knowledge transfer. This study predicts that a firm's product experience increases the focal firm's external R&D sourcing because it provides high levels of knowledge tacitness and external openness and can encourage external partners to share and exchange knowledge with the focal firm. In contrast, a firm's patenting experience decreases the focal firm's external R&D sourcing because it denotes knowledge explicitness and protectiveness and may discourage external partners to share and exchange knowledge with the focal firm. This study further predicts that patenting experience has a negative moderating effect on the relationship between product experience and external R&D sourcing. Using a data set of 575 high‐tech firms in China, this study finds support for our predictions. Our findings contribute to the growing literature on the knowledge‐based view and technology entrepreneurship in emerging markets.     

The Evolution of Earnings Volatility During and After the Great Recession

This paper explores how men's and women's earnings volatility evolved during and after the Great Recession, the most severe downturn of the postwar era. Using matched March Current Population Survey data, I find that earnings volatility rose considerably after the Great Recession began and, particularly for men, the volatility increase was as large as in the severe recession of the early 1980s. These findings update the evidence on the counter‐cyclicality of earnings volatility. I show that such counter‐cyclicality is due mainly to counter‐cyclical volatility in annual hours of work. In turn, the counter‐cyclical volatility in work hours appears mainly among workers who experience unemployment.     

The impact of CEO core self‐evaluation on the firm's entrepreneurial orientation

Although much has been attributed to a CEO's personality, one particularly intriguing, and as yet unexplored, investigation is its impact on the firm's entrepreneurial orientation. Additionally, despite calls from the upper‐echelon literature, CEO personality research has been hobbled by the absence of a unifying construct that captures core dimensions of personality, and by the difficulty in obtaining such intimate assessments from executives. Building on recent advances in personality research, in particular the identification and validation of the core self‐evaluation construct that captures the core facets of an executive's sense of self‐potency, we develop and test a model of the impact of CEO core self‐evaluation on entrepreneurial orientation. Then, consistent with upper echelons and personality theory, we specify the contingent role of environmental dynamism. Using multisource data from a sample of CEOs and their top management teams from 129 firms, including a time‐lagged assessment of the firm's entrepreneurial orientation, we find evidence to suggest that CEOs whose personalities reflect higher core self‐evaluations have a stronger positive influence on their firms' entrepreneurial orientation. In addition, we find that this influence is particularly strong in firms facing dynamic environments, but negligible in stable environments. Copyright © 2009 John Wiley & Sons, Ltd.     

Managing liquidity in research‐intensive firms: signaling and cash flow effects of patents and alliance activities

The effective holding and management of liquid assets is critical to success in research‐intensive industries. The primary output of invention is new knowledge. However, because of its ‘sticky’ characteristics, knowledge may not easily diffuse to external shareholders, leading to knowledge asymmetries between managers/employees and external suppliers of capital. Many valuable R&D projects may thus fail to attract external financing, limiting a firm's ability to invest in R&D. In this study, we examine how the cash flow and signaling properties of a firm's patents and certain aspects of its alliance strategy can attenuate such problems. Specifically, we suggest that a firm's R&D investments positively predict the level of its liquid asset holdings. This is due to the fact that invention‐induced knowledge asymmetries increase the firm's cost of accessing external liquid capital. However, holding cash entails opportunity costs. In this regard, we also find that patent production and certain alliance activities provide important signaling mechanisms, which reduce knowledge asymmetries between the firm and capital markets, and consequently lower the firm's need to hold liquid assets. Empirical tests were conducted using a sample of 108 U.S‐based biotechnology firms. Copyright © 2009 John Wiley & Sons, Ltd.     

Intra‐industry diversification and firm performance

We study how intra‐industry product diversity affects firm performance by analyzing the implications of expanding a firm's product line within its core business. We conjecture that increases in product diversity initially undermine performance because of negative transfer effects but then improve it due to economies of scope. We further theorize that this U‐shaped effect of product diversity becomes more pronounced as the firm increases the intensity of its technology investment, yet is likely to be attenuated by the firm's accumulated experience with intra‐industry diversification. Data on 156 U.S.‐based software firms operating from 1990 to 2001 furnish support for these conjectures. Our study advances emerging research on intra‐industry diversification by underscoring some of its contingent performance effects. Copyright © 2013 John Wiley & Sons, Ltd.     

Product Design Innovation and Customer Value: Cross‐Cultural Research in the United States and Korea

Innovation is one of the key drivers of success that a firm must utilize to develop a competitive advantage. The ability to innovate is especially important for a firm's survival in dynamic, changing environments. Customer demands are constantly changing, and more purchases are made when a firm's product design incorporates what customers perceive as cutting‐edge innovations. Satisfying customer demands is a distinct challenge for product designers because firms must develop a clear understanding of what aspects of design the customer wants. Although the importance of design has increased, very little research has been done to explain the relationship between product innovation and product design. Studies indicate that design innovation may create greater customer value through improvements in design value. Previous research has been limited and has not provided a clear concept of design innovation or defined the relationship between design innovation and marketing competencies. This paper seeks to offer a conceptual definition of design innovation, and to define the link between design innovation and marketing competencies. This paper utilizes cross‐cultural research to discover how these concepts differ due to cultural differences between the United States and Korea. This research contributes substantially to our understanding of the relationship between design innovation and customer value.     

What we will do versus what we can do: The relative effects of unit‐level NPD motivation and capability

Although a firm's innovation performance has been commonly attributed to its innovative capability, in a study of 102 Chinese automobile assemblers, we find that employees' collective motivation for new product development (NPD) is more important than NPD capability in determining firms' innovation performance. This finding suggests that researchers need to simultaneously consider both unit‐level capability and unit‐level motivation in studying the mechanisms that drive innovation. Furthermore, our results indicate that a firm's strategic orientation focusing on NPD affects its employees' collective NPD motivation and NPD capability through relevant, mediating HRM practices. Copyright © 2013 John Wiley & Sons, Ltd.     

Fact‐Finding Effectiveness: Evidence from New York State Fact‐Finding Effectiveness

In a collective‐bargaining environment characterized by increasing fiscal and taxpayer pressures, this article examines the continued viability of fact‐finding as a dispute‐resolution mechanism in New York State's public sector. This is an important question because fact‐finding is the final dispute‐resolution procedure for most unionized employees in New York and many other states. Whether fact‐finding effectiveness was measured by the proximity of fact‐finder recommendations to the final settlement or by outright acceptance of the fact‐finder report, regression results show that New York fact‐finding has successfully met the challenges of the intensified environmental pressures in the 1990s. No significant decline was found in its ability to move parties toward the compromise outcome. Part of the fact‐finding's continued success can be attributed to the policy shift by New York's Public Employment Relations Board (PERB) in 1991 in the role of the fact‐finder from an accommodative to a more adjudicative function. The well‐reasoned adjudicative fact‐finding report has more potential to bring public pressure to bear on the extreme positions of the parties. Mediation was better left to the professional PERB mediators. Finally, it also was found that fact‐finders who were full‐time neutrals were more effective under this more adjudicative style.     

Delineating Design Factors that Influence the Global Product Launch Process*

Preparing for and managing the global product launch process offers unique challenges as each targeted country can pose unique differences across the design categories of channel parameters, country mores, language and colloquialisms, and technology infrastructure. Though not an exhaustive list, these have a predominant influence on the global product launch process on a per‐global‐region basis. Using a case‐study methodology, this article draws on the global product launch experiences of two firms, showing that such influences preclude use of a mass‐marketing, standardization approach. Though it appears that certain elements of global product launch may be standardized for purposes of efficiencies, a global product launch appears to require at least some degree of customization. Such thinking parallels a design perspective, which mandates a tailoring of product and marketing mix to encourage early acceptance within the intended global market. To suggest when customization should be employed, four design categories of channel parameters—country mores, language and colloquialisms, and technology infrastructure—appear to have strong propensity to dictate customized design requirements for a worldwide launch, where greater differences across these design categories would mandate more customization toward each respective global region. Post hoc comments by managers in the focal case studies support this and further delineate that these four design factors necessitate keen consideration in the course of planning and enacting activities during the global product launch process. The two cases studies especially show that customized design decisions will likely pertain to launch schedule due to local retailers' calendars, product aesthetics due to local consumer preferences, point‐of‐sale and other marketing communications due to language requirements, and technology enhancements in light of local market acceptability and both social and regulatory expectations. Managers involved in planning a global product launch should therefore heed channel owners—brand owners, retailers, and distributors—so that they give preference to, promote, and sell the respective company's product relative to competitors' products. To assist toward securing such preference status, channel owners should have a role in advising the timing of launch and design considerations (e.g., color and form). Logistic issues, such as delivery and after‐sales support via this channel, are keen considerations as well. Logistics has to be thought through to ensure that demand can be met across all regions for a new product. And with the growing prevalence of Internet worldwide, managers must pay keen attention to cultural references and language used on any Internet site to ensure that the product is properly represented and promoted during its global launch. The process of a global product launch is therefore more than the company's ability to gain access to a particular market; it is the company's ability to understand key design issues per each global region respectively and to respond to pressing global region differences by customizing the total product offering to meet the needs of that global region.     

Supportiveness of Organizational Climate, Market Orientation, and New Product Performance in Chinese Firms

Most knowledge development efforts in new product development have focused on Western economies and companies. However, due to its size, rapid growth rate, and market reforms, China has emerged as an important new context for new product development. Unfortunately, current understanding of the factors associated with new product success in China remains limited. We address this knowledge gap using mixed methods. First, we conducted 19 in‐depth interviews with managers involved in new product development in 11 different Chinese firms. The qualitative fieldwork indicated that firm behaviors and employee perceptions consistent with the phenomena of market orientation and the supportiveness of organizational climate both are viewed as important drivers of the new product performance of Chinese firms. Drawing on the marketing, management, and new product development literature this study develops a hypothetical model linking market orientation, supportiveness of organizational climate, and firms' new product performance. Direct relationships are hypothesized between both market orientation and supportiveness of organizational climate and firms' new product performance, as well as a relationship between supportiveness of organizational climate and market orientation. Data to test the hypothetical model were collected via an on‐site administered questionnaire from 110 manufacturing firms in China. The hypothesized relationships are tested using structural equation modeling. Results indicate a positive direct relationship of market orientation on firms' new product performance, with an indirect positive effect of supportiveness of organizational climate via its impact on market orientation. However, no support is found for a direct relationship between the supportiveness of a firm's organizational climate and its new product performance. These findings are consistent with resource‐based view theory propositions in the marketing literature indicating that market orientation is a valuable, nonsubstitutable, and inimitable resource and with similar propositions in the management literature concerning organizational culture. However, this study's findings also indicate that in contrast to a number of organizational culture theory propositions and empirical findings in some consumer service industries, the impact of organizational climate on firm performance in a new product context is indirect via the firm's generation, dissemination, and responsiveness to market intelligence. These results suggest that an effort to improve firms' new product performance by enhancing the flow and utilization of market intelligence is an appropriate allocation of resources. Further, this study's findings indicate that managers should direct at least some of their efforts to enhance a firm's market orientation at improving employee perceptions of the supportiveness of the firm's management and of their peers. This study indicates a need for further research concerning the role of different dimensions of organizational climate in firms' new product processes.     

A rational‐expectations revision of Makadok's resource/capability synthesis

Makadok has recently developed a mathematical model aimed at synthesizing the resource‐based and dynamic‐capabilities views of the rent creation process. One unstated implicit assumption in that model is that each bidding firm in the resource market is ignorant not only of the content of rival firms' private information, but also of the quality (i.e., the noisiness or reliability) of that information. Consequently, that model does not qualify as a rational‐expectations Bayesian Nash equilibrium—a fact that both generates questionable results (e.g., the possibility of negative expected profits) and impedes any effort to extend the model. The rational‐expectations critique in economics points out that this sort of nonrational assumption becomes increasingly implausible as economic actors learn more about each other's patterns over time through repeated interactions (in this case, as bidders repeatedly compete against each other to buy different resources over time). So, over the long run, the only truly stable, viable, and robust assumption would be rational‐expectations behavior. The primary purpose of this paper is to put Makadok's model on the firmer methodological footing of rational‐expectations Bayesian Nash equilibrium, so that it will no longer generate questionable results, and so that future researchers can more easily extend it. The secondary purpose of this paper is to demonstrate that this shift to rational‐expectations assumptions has little substantive impact on the testable hypotheses generated by Makadok's original model. Copyright © 2002 John Wiley & Sons, Ltd.     

Toward a legitimacy‐based view of political risk: The case of Google and Yahoo in China

Traditional political risk theories often focus on a developing host country government's ability to intervene in the activities of foreign multinationals in the extractive or infrastructure sectors. This results in inadequate understanding of (1) how a government's motivation to intervene is influenced by the broader societal context, (2) the importance of multinationals' political risk at home, and (3) the increasing political risk faced by high‐tech and service firms. We argue that there is a need to update the bargaining power and political institutions theories and further develop a legitimacy‐based view of political risk. Then, we examine the political risk experienced by Google and Yahoo at home and abroad due to their activities in China to illustrate the benefits of a holistic approach to political risk. Copyright © 2015 John Wiley & Sons, Ltd.     

Market Orientation and Innovativeness in Supply Chains: Supplier's Impact on Customer Satisfaction

As today's firms increasingly outsource their noncore activities, they not only have to manage their own resources and capabilities, but they are ever more dependent on the resources and capabilities of supplying firms to respond to customer needs. This paper explicitly examines whether and how firms and suppliers, who are both oriented to the same customer market, enable innovativeness in their supply chains and deliver value to their joint customer. We will call this customer of the focal firm the “end user.” The authors take a resource‐dependence perspective to hypothesize how suppliers' end‐user orientation and innovativeness influence downstream activities at the focal firm and end‐user satisfaction. The resource dependence theory looks typically beyond the boundaries of an individual firm for explaining firm success: firms need to satisfy customer demands to survive and depend on other parties such as their suppliers to achieve customer satisfaction. Accordingly, the research design focuses on three parties along a supply chain: the focal firm, a supplier, and a customer of the focal firm (end user). The results drawn from a survey of 88 matched chains suggest the following. First, customer satisfaction is driven by focal firms' innovativeness. A focal firm's innovativeness depends, on the one hand, on a focal firm's market orientation and, on the other hand, on its suppliers’ innovativeness. Second, no relationship could be established between a focal firm's market orientation and a supplier's end‐user orientation. Market orientation typically has within‐firm effects, while innovativeness has impact beyond the boundaries of the firm. These results suggest that firms create value for their customer through internal market orientation efforts and external suppliers' innovativeness.     

The double‐edged effect of knowledge acquisition: How contracts safeguard pre‐existing resources

Research summary : Acquiring knowledge on a partner's pre‐existing resources plays an important yet ambiguous role in collaborative relationships. We formally model how contracts trade off productive and destructive uses of knowledge in a buyer‐supplier relationship. We show that, when the buyer's pre‐existing resources are vulnerable to the revelation of sensitive knowledge, the supplier overinvests in knowledge acquisition as it expects to use the knowledge as a threat in price negotiations. A non‐renegotiable closed‐price contract prevents such overinvestment and reduces the supplier's ability to expropriate the buyer ex post. Our results extend to the cases of renegotiable closed‐price contracts, repeated interactions between a buyer and a supplier, and the use of nondisclosure policies. We draw theoretical, empirical, and managerial implications from our model. Managerial summary : This study yields new insights regarding the use of contract design in protecting pre‐existing, nonrelationship specific assets in buyer‐supplier arrangements. Anecdotal examples illustrate the “dark side” of these arrangements where opportunistic suppliers exploit knowledge of buyers' pre‐existing resources to seek rent and appropriate value. When a supplier is likely to act harmfully, a closed‐price contract that specifies the price of the supplier's component upfront may reduce the supplier's incentives to overinvest in acquiring and exploiting knowledge of the buyer's pre‐existing resources. As such, when a buyer's pre‐existing resources are highly valuable, and thus more vulnerable to use by the supplier outside of the arrangement, a non‐renegotiable closed‐price contract is more efficient. Additionally, limited disclosure policies and informal agreements based on repeated interactions complement indirect governance via price contracts. Copyright © 2015 John Wiley & Sons, Ltd.     

Cooperation and the Ability to Minimize the Time and Cost of New Product Development within the Spanish Automotive Supplier Industry

New product development (NPD) cycle time has become a strategic competitive weapon for corporations and a focus for research on product development management. Reducing NPD cycle time may create relative advantages in market share, profit, and long‐term competitiveness. This article follows recent research that already has moved beyond anecdotes and case studies to test factors empirically and variables that are associated with the company's NPD time and cost minimization abilities. One emerging research area is the impact of comprehensive lists or sets of firm variables (not project variables) on the ability to speed up NPD. At the same time, several authors' findings suggest a contingency approach to speeding up innovation. Contingency theory argues that there is not one “best answer” to a particular problem: Instead, the appropriateness of managerial interventions is dependent on the prevailing conditions that surround that problem. On the issue of NPD, several scholars point out that cooperation accelerates learning and product development: Firms that combine resources can gain a competitive advantage over firms that are unable to do so, and this is viewed as one of the key benefits of interfirm cooperation. A firm's network of cooperations represent a valuable resource that can yield differential returns in the same way as other tangible and intangible assets such as product brands or R&D capabilities. Combining both lines of research, this study seeks to add to the growing literature and further to inform practicing managers in speeding up NPD by analyzing the relationship between cooperation and the use of some NPD firm practices. This article shows the results of a survey of 63 Spanish automotive suppliers to test the moderation effect of cooperation in the relationship between the use of NPD firm practices and the company's NPD time and cost minimization abilities. Factor and regression analyses were used to test the article's hypotheses. It was found that high‐cooperation companies used more intensively sets of firm practices than low‐cooperation companies. It also was found that two out of four identified factors of NPD firm practices—Design‐Manufacturing Interface and Cross‐Functional Design—were related positively to the company's NPD time and cost minimization abilities in the subsample of high‐cooperation companies but not in the low‐cooperation companies. These results support late research in the area of speeding up NPD. The article discusses some implications for managers.     

Enabling open innovation in small‐ and medium‐sized enterprises: how to find alternative applications for your technologies

A critical success factor in the practice of Open Innovation is the timely identification of opportunities for out‐licensing a firm's technologies outside its core business. This can be particularly challenging for small‐ and medium‐sized enterprise (SMEs), because of their focussed business portfolio, specialized knowledge basis, and limited financial resources that can be devoted to innovation activities. The paper illustrates a quick and easy‐to‐use methodology for the identification of viable opportunities for out‐licensing a firm's technologies outside its core business. The method uses established TRIZ instruments in combination with non‐financial weighting and ranking techniques and portfolio management tools. It has been developed by the authors in collaboration with an Italian SME working in the packaging industry.     

Foreign‐based competition and corporate diversification strategy

Since the mid‐1980s U.S. domestic firms have faced significant increases in foreign‐based (i.e., import) competition as reductions in barriers to international commerce have resulted in markets and industries becoming increasingly global. Despite the growing and widespread importance of foreign‐based competition, the influence that such competition may exert on corporate diversification strategy is a question largely overlooked in the strategic management literature. This paper examines the impact of foreign‐based competition in a firm's core business on both the level and nature of a firm's diversification strategy at the corporate level in a panel dataset of U.S. firms over the period 1985–94. Our findings provide the first evidence that increased foreign‐based competition is indeed a statistically significant factor explaining both the reduced business‐level diversity and the increased strategic focus of U.S. firms that has been widely perceived over the past two decades. Copyright © 2005 John Wiley & Sons, Ltd.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

Responsive and Proactive Market Orientation and New‐Product Success*

What is the relationship between market orientation and new‐product success? This important question has not been examined adequately to date because the concept of market orientation has been measured too narrowly. The concept of market orientation implies both responsive market orientation, which addresses the expressed needs of customers, and proactive market orientation, which addresses the latent needs of customers—that is, opportunities for customer value of which the customer is unaware. In the numerous market orientation–performance studies to date, the measure of market orientation has consisted virtually entirely of behaviors related to satisfying customers' expressed needs rather than satisfying their latent needs as well. The present study extends the measurement of market orientation to match the full scope of the concept—to measure both responsive market orientation and proactive market orientation. Using data from a sample of technologically diverse businesses, the present study develops a measure of proactive market orientation, refines the extant measure of responsive market orientation, and analyzes the relationship of a business's responsive and proactive market orientation to its new‐product success. The study findings imply that for any business to create and to sustain new‐product success, a responsive market orientation is not sufficient and, thus, that a proactive market orientation plays a very important positive role in a business's new‐product success. These findings make intuitive sense. For if in developing its new products a business relies solely on what customers state as their new product needs, the business is very vulnerable economically. Such a business is vulnerable not only for relying on customers' best guesses for new products, many or most of which may have little long‐term economic value for either party, but also to competitors' parallel new product responses and the inevitable resulting price competition. A business that relies solely on customers' expressed needs to develop its new products creates no new insights into value‐adding opportunities for the customer and thereby creates little or no customer dependence and foundation for customer loyalty. The important role for proactive market orientation in new‐product success is intuitively obvious—and is supported empirically in this study.