Effects of Supplier and Customer Integration on Product Innovation and Performance: Empirical Evidence in Hong Kong Manufacturers

While the beneficial impacts of supplier and customer integration are generally acknowledged, very few empirical research studies have examined how an organization can achieve better product performance through product innovation enhanced by such integration. This paper thus examines the impact of key supplier and customer integration processes (i.e., information sharing and product codevelopment with supplier and customer, respectively) on product innovation as well as their impact on product performance. It contributes to existing literature by asking how such integration activities affect product innovation and performance in both direct and indirect ways. After surveying 251 manufacturers in Hong Kong, this study tested the relationships among information sharing, product codevelopment, product innovativeness, and performance with three control variables (i.e., company size, type of industry, and market certainty). Structural equation modeling with correlation and t‐tests was used to test the hypothesized research model. The findings indicate a direct, positive relationship between supplier and customer integration and product performance. In particular, this study verifies that sharing information with suppliers and product codevelopment with customers directly improves product performance. In addition, this study empirically examines the indirect effects of supplier and customer integration processes on product performance, mediated by innovation. This has seldom been attempted in previous research. The empirical findings show that product codevelopment with suppliers improves performance, mediated by innovation. However, the sampled firms cannot improve their product innovation by sharing information with their current customers and suppliers as well as codeveloping new products with the customers. If the adoption of supplier and customer integration is not cost free, the findings of this study may suggest firms work on particular supplier and customer integration processes (i.e., product codevelopment with suppliers) to improve their product innovation. The study also suggests that companies codevelop new products only with new customers and lead users instead of current ones for product innovation. For managers, this study has demonstrated that both information sharing and product codevelopment affect performance directly and indirectly. Managers should put more emphasis on these key processes, especially when linked with product innovation. Managers should consider involving their suppliers and customers in the early stages of design. Information sharing with suppliers is also important in product development. As suggested by this study, extensive effort on supplier and customer integration should be made to directly augment current product performance and product innovation at the same time.     

The Value of Customer Cocreated Knowledge during the Innovation Process

Customer cocreation during the innovation process has recently been suggested to be a major source for firms' competitive advantage. Hereby, customers actively engage in a firm's innovation process and take over innovation activities traditionally performed by a firm's employees. Despite its suggested importance, previous research has revealed contradictory findings regarding its impact, the nature of involved customers, and the channels of communication that enable cocreation. To provide a more fine‐grained picture, customer cocreated knowledge is first delineated into its key value dimensions of relevance, novelty, and costs, and then their impact on various innovation outcomes is investigated. Next, the study examines the antecedent role of customer determinants; that is, lead user characteristics and customer–firm closeness, on these knowledge value dimensions. Finally, we explore how these effects are moderated by the type of communication channel used. An empirical validation of the conceptual model is performed by means of survey data from 126 customer cocreation projects. The data analysis indicates that customer cocreation is most successful for the creation of highly relevant but moderately novel knowledge. Cocreation with customers who are closely related to the innovating firm results in more highly relevant knowledge at a low cost. Yet, cocreation with lead users produces novel and relevant knowledge. These effects are contingent on the richness and reach of the communication channels enabling cocreation. Overall, the findings shed light on opportunities and limitations of customer cocreation for innovation and reconcile determinants originating in relationship marketing and innovation management. At the same time, managers obtain recommendations for selecting customers and communication channels to enhance the success of their customer cocreation initiatives.     

Virtual Word of Mouth and Willingness to Pay for Consumer Electronic Innovations

The authors examine the impact of virtual word‐of‐mouth (vWOM) communication on willingness to pay (WTP) for an innovation. A series of hypotheses are developed that link vWOM to the credibility of innovation information, perceived utilitarian value, and the perceived hedonic value of an innovation, which are in turn hypothesized to influence WTP. The authors test these hypotheses using data collected in Japan from 658 potential adopters of e‐readers and from 565 potential adopters of smartphones. Findings indicate that, in both samples, vWOM is positively correlated with the perceived credibility of innovation information, which in turn is positively correlated with both perceived utilitarian value and perceived hedonic value. WTP is also positively correlated with an innovation's perceived utilitarian and perceived hedonic value. In addition, the path between vWOM and perceived hedonic value is positive and significant in both samples. However, the path between vWOM and perceived utilitarian value is positive and significant in the smartphone sample, but not in the e‐reader sample. The empirical findings provide support for theoretical arguments that link WTP for complex consumer electronic products to consumer perceptions of utilitarian and hedonic value. The results also have important implications for the creation of vWOM strategies designed to reduce the price sensitivity of potential adopters.     

The Impact of Customer Involvement on New Product Development: Contingent and Substitutive Effects

More and more companies are actively involving their customers in the new product development (NPD) process. However, there is little consensus regarding the contribution of customer involvement to new product outcomes. A better understanding of this contribution can shed light on whether and when it is worthwhile to involve customers and thus provide firms better guidelines for making such decisions. This study examines the effects of two forms of customer involvement on new product outcomes: the traditional form of customer involvement as an information source (CIS) and the more active form of customer involvement as co‐developers (CIC). The authors offer a better understanding of whether customer involvement can lead to successful innovation by (1) identifying conditions that impact the effects of CIS and CIC on NPD outcomes, (2) contrasting the conditional effects of CIS and CIC to understand how they influence NPD outcomes differently, and (3) examining the potential substitutive relationship between CIS and CIC to understand their joint effects in improving innovation. They find that an experimental NPD approach that emphasizes trial and error learning moderates the relationship between customer involvement and new product outcomes. Specifically, the results reveal contrasting contingent effects of CIS and CIC: CIS is more beneficial for new product outcomes when firms take a more experimental NPD approach, whereas the effect of CIC is stronger when the NPD process is characterized with lower experimentation. CIS and CIC also substitute for each other in their contribution to new product outcomes. These findings suggest that each of the two forms of customer involvement has its unique advantages and is suitable for different conditions. When considering the adoption of CIC, firms should take into account their learning approaches as well as the effectiveness of CIS in the NPD process.     

Is a Picture Always Worth a Thousand Words? The Impact of Presentation Formats in Consumers' Early Evaluations of Really New Products (RNPs)

Really new products (RNPs) enable consumers to do things they have never been able to do before. However, research has shown that consumers have difficulties understanding the benefits of such novel products, and therefore, adoption intentions remain low. Mental simulations and analogies have been identified as effective framing strategies to convey the benefits of RNPs. However, existing research has focused solely on the use of mental simulations and analogies conveyed using words, whereas these can also be conveyed using pictures. Although the general consumer research literature points to a superiority effect of pictures, because the underlying mechanisms that individuals use to understand RNPs differ entirely from those used for traditional products, there is a need to study the impact of pictures for RNPs. Moreover, prior work has not examined differences in RNP type. The present research argues that RNPs can be utilitarian, hedonic, or hybrid and that the optimal presentation format (words versus pictures) is contingent upon the type of RNP considered. Consequently, failure to acknowledge this distinction could lead to negative consequences. The present study aims to identify the impact of alternative presentation formats (i.e., words versus pictures) presented using different framing strategies (i.e., analogies versus mental simulations) on individual responses (i.e., product comprehension and attitude to the product) to three types of RNPs (i.e., utilitarian versus hedonic versus hybrid). Hypotheses are tested by means of an experimental study. The results of the study show that the effectiveness of alternative combinations of framing strategies and presentation formats in enhancing comprehension and attitude for RNPs depends on product type (utilitarian versus hedonic versus hybrid). The empirical findings presented not only extend prior work on consumer responses to mental simulations and analogies for RNPs, but also establish connections between this literature and an underdeveloped stream of research on hybrid products, as well as a broader stream of research on utilitarian versus hedonic product benefits. The findings suggest that practitioners may not have been using optimal marketing communications strategies to convey the benefits of RNPs. Strategies that may help enhance consumer responses to RNPs by taking into consideration product type (utilitarian versus hedonic versus hybrid) are put forward.     

PDMA Success Measurement Project: Recommended Measures for Product Development Success and Failure

Success is not just elusive; it is also multifaceted and difficult to measure. A firm can assess the success or failure of a development project in any (or all) of many terms, including customer satisfaction, financial return, and technical advantage. To complicate matters, success may be measured not only at the level of the individual project, but also at the program level. With so many variables to consider and so many stakeholders involved, managers face a difficult challenge just deciding which measures are useful for measuring product development success. Recognizing that no single measure suffices for gauging the success of every product development project, Abbie Griffin and Albert L. Page hypothesize that the most appropriate set of measures for assessing project-level success depends on the project strategy. For example, the objectives (and thus, the success criteria) for a new product that creates an entirely new market will differ from those of a project that extends an existing product line. Similarly, they hypothesize that the appropriate measures of a product development program's overall success depend on the firm's innovation strategy. For example, a firm that values being first to market will measure success in different terms from those used by a firm that focuses on maintaining a secure market niche. To test these hypotheses, product development professionals were presented with six project strategy scenarios and four business strategy scenarios. For each project strategy scenario, participants were asked to select the four most useful measures of project success. For each business strategy scenario, participants were asked to choose the set of four measures that would provide the most useful overall assessment of product development success. The responses strongly support the idea that the most appropriate measures of project-level and program-level success depend on the firm's project strategy and business strategy, respectively. For example, customer satisfaction and customer acceptance were among the most useful customer-based measures of success for several project strategies, but market share was cited as the most useful customer-based measure for projects involving new-to-the-company products or line extensions. At the program level, firms with a business strategy that places little emphasis on innovation need to focus on measuring the efficiency of their product development program, while innovative firms need to assess the program's contribution to company growth.     

Product radicalness and firm performance in B2B marketing: A moderated mediation model

There has been ambiguity and controversy in establishing the links between the introduction of radical innovations and firm performance. While radical innovations create customer value and grow product sales, they are also fraught with uncertainty due to customer resistance to innovative products and significant costs associated with commercialization. This research aims to explain the contrarian findings between radical innovations and firm performance in a business-to-business (B2B) context by examining two mediating variables – new product advantage and customer unfamiliarity. Using a multi-informant approach, the authors collected survey data from a sample of 170 Spanish B2B firms engaged in new product development, provided by 357 managers. The authors find that, while new product advantage positively mediates the relationship between product radicalness and firm performance, customer unfamiliarity has a negative mediation effect on this relationship. Furthermore, the authors examine the moderated mediation effect by industry type, manufacturing vs. service, and find that it moderates the mediation of customer unfamiliarity: The negative impact of product radicalness on customer unfamiliarity is greater for manufacturing firms than for service firms. With these findings, the authors discuss implications for development and marketing of radical innovations and how those implications facilitate firm performance in the B2B context.     

Investigating the Drivers of Innovation and New Product Success: A Comparison of Strategic Orientations*

The notion of producing innovations and achieving new product success has received a great deal of attention. Though many have investigated these effects in marketing and various fields within management, there has been little cross‐fertilization between fields of study to explain the basis for this superior performance. Though research has examined the resource‐based view (RBV) and market orientation individually, none has evaluated and compared their effect on firm innovation and new product success in one study. Furthermore, although empirical work has been conducted between market orientation and organizational learning, comparatively less research has been conducted to evaluate the relationship between organizational learning and the RBV to examine their combined effects on a firm's ability to innovate and succeed. Subsequently, the purpose of the present article is to investigate whether a focus on the customer (i.e., market orientation) or the firm (i.e., RBV) will drive the ability to (1) innovate within the firm and (2) succeed in terms of new product success, financial performance, market share, and customer value. The present article examines the relationship between organizational learning and the RBV and market orientation. It presents an empirically testable framework that investigates the relationship that RBV and market orientation have with performance outcomes. Data were collected from 249 senior executives. LISREL was applied to evaluate the relationships. Confirmatory factor analysis and related techniques were applied to assess the robustness of the measures used. Findings show that organizational learning is strongly associated with market orientation, which in turn impacts various performance outcomes including customer value. The RBV had a significant relationship with new product success. These results suggest that managers seeking innovation and new product success should focus less on the provision of customer value. Instead they should look toward developing their resources within the firm, including investing in human resources, to ultimately provide value to the firm. Findings indicate that this unique offering—innovations—will have an indirect effect on customer value and financial performance. In contrast, those in pursuit of positive financial performance and customer value should focus on the development of market orientation. Even though this will not necessarily lead to the development of innovative processes and new product success according to the present study, this approach may lead to a greater market share in the long term. This article reviews theoretical and managerial implications in more depth, providing an impetus for further research.     

Managing functional diversity, risk taking and incentives for teams to achieve radical innovations

In this study we analyse the effect of team diversity, encouragement to take risks and team incentives on the degree of radicalness of innovation. Empirical research has been conducted with a sample of 95 companies from four innovative industries according to their high number of patents. The results indicate that team diversity and the combined use of long- and short-term incentives are associated with incremental innovation, whereas the development of risk-taking attitudes within the team is associated with radical innovation.     

Exploring proactive market strategies

Proactivity is an important driver of firm performance and for the creation of customer value on business-to-business markets. It is however not entirely clear what it is proactive firms actually do to achieve success. By investigating proactive firms' market strategies, i.e. the sets of activities they perform in order to create superior customer value, a holistic overview of the activities involved in proactive market strategies is provided. Through a case study of five proactive firms, proactive activities are identified. Using three strategic orientations—customer, competition, and innovation orientation—unique proactivity profiles are created, reflecting the patterns in the identified proactive activities. Through these profiles, three overarching proactive market strategies are forwarded: market shaping, customer engagement, and innovation leadership. These are proposed to act as generic proactive market strategies, representing coordinated proactive activities driven by multiple strategic orientations and aimed at creating customer value. These generic strategies help us understand of the role of proactivity in crafting high-performing market strategies by representing different routes to success.     

Decomposing Product Innovativeness and Its Effects on New Product Success

Does product innovativeness affect new product success? The current research proposes that the ambiguity in findings may be due to an overly holistic conceptualization of product innovativeness that has erroneously included the concepts of product advantage and customer familiarity. This article illustrates how the same measures have often been used to assess product advantage with product innovativeness and product innovativeness with customer familiarity. These paired overlaps in measurement use are clarified in this research, which decomposes dimensions of product innovativeness along conceptual lines into distinct product innovativeness, product advantage, and customer familiarity constructs. To further support this decomposition, structural equation modeling is used to empirically test the distinctions. The measurement model supports the conceptual separation, and the path model reveals contingent effects of product innovativeness. Although product innovativeness enhances product advantage, a high level of innovativeness reduces customer familiarity, indicating that product innovativeness can be detrimental to new product success if customers are not sufficiently familiar with the nature of the new product and if innovativeness fails to improve product advantage. This exercise in metric development also reveals that after controlling for product advantage and customer familiarity, product innovativeness has no direct effect on new product profitability. This finding has strong implications for firms that mistakenly pursue innovation for its own sake. Consideration of both distribution and technical synergy as driving antecedents demonstrates how firms can still enhance new product success even if an inappropriate level of innovativeness is present. This leads to a simple but powerful two‐step approach to bringing highly innovative products to market. First, firms should only emphasize product innovativeness when it relates to the market relevant concepts of product advantage and customer familiarity. Second, existing technical and distribution abilities can be used to enhance product quality and customer understanding. Distribution channels in particular should be exploited to counter customer uncertainty toward newly introduced products.     

Impacts of Hedonic and Utilitarian User Motives on the Innovativeness of User‐Developed Solutions

When individual consumers develop products for their own use, they in part expect to be rewarded by the use value of what they are creating (utilitarian user motives), and in part expect to be rewarded intrinsically by such things as the fun and learning experience derived from creating it (hedonic user motives). This paper shows a first‐of‐type study to understand the relationship between individual consumers' motives to innovate and the novelty and utility of the solutions they develop. The theoretical framework integrates self‐determination theory and goal‐setting theory. The major findings of this study are that utilitarian user motives positively affect the utility of user‐developed innovations. In contrast, hedonic user motives drive solution novelty; the more an innovator is “in it for fun,” the more novel the solution developed. However, hedonic user motives also have an inverted U‐shaped relationship with solution utility. When the dominant motive for developing an innovation is the joy of the creative process rather than use value, the utility of what is developed is negatively affected. These findings are of research interest, and can be of significant practical interest to producers hoping to benefit from user‐developed innovations. For the first time, it has been possible to show that the adjustment of hedonic rewards, for example by means such as gamification, can affect the nature and utility of solutions individuals create.     

Innovation through Experience Staging: Motives and Outcomes

There is a growing recognition of the opportunities of innovation through experience staging. The literature, however, tends to focus on high‐profile examples of firms from largely hedonic sectors, such as entertainment and hospitality. These cases provide vivid and persuasive examples, but they fail to address how firms outside these sectors can join the experience economy—a term coined in 1998 by Pine and Gilmore—by developing new products and services with experiences at their core. The paper reports on two studies undertaken to examine why firms that do not belong to sectors that are largely hedonic innovate through experience staging and how they benefit from doing so. The first study is an in‐depth case study of 15 diverse firms, which examines these firms' motives for pursuing innovation through experience staging. The second study is a two‐year longitudinal quantitative survey of 131 small‐ and medium‐sized firms (SMEs) to address the question of the benefits that firms that do not have strong brands can gain by from innovation through staging experiences. The first study provides the basis for classifying firms along two dimensions depending on the nature of the new products or services (referred to collectively as offerings) they create. The first dimension has to do with whether new offerings have a functional or experiential core. The second dimension has to do with the degree of experiential augmentation applied to offerings. The first study suggests that firms adopt an experience‐staging strategy to innovation based on both outward‐facing and inward‐facing motives. The outward‐facing motives include improving a firm's image in its market, entering new markets, and attracting new customers. The inward‐facing motives include improving a firm's attractiveness to employees and increasing profitability. The results of the second study suggest that creating offerings with an experiential core can contribute to success by enhancing a firm's image, its attractiveness to employees, and its ability to enter new markets. Moreover, experiential augmentation contributes to profitability, new customer attraction, and employee attractiveness. This research has important implications for theory and practice. In the first place, this research extends existing theory about experience staging to firms outside sectors that are largely hedonic. In the second place, the managerial implications are that innovation through experience staging can be an effective way for SMEs, even those outside industries, such as entertainment or hospitality, to create competitive advantage.     

The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market‐driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross‐functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer's perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can, therefore, change as product experience and learning increase. From a firm's perspective, it is unclear how to be customer‐oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics. A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm's strategic decisions in developing and launching really new products. The framework is based on in‐depth interviews with high‐tech product managers across several sectors, focusing on the business‐to‐business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm's product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers' customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.     

Transformational Leadership and Organizational Innovation: The Roles of Internal and External Support for Innovation*

Leadership has been suggested to be an important factor affecting innovation. A number of studies have shown that transformational leadership positively influences organizational innovation. However, there is a lack of studies examining the contextual conditions under which this effect occurs or is augmented. Therefore, this study aimed to investigate the impact of transformational leadership on organizational innovation and to determine whether internal and external support for innovation as contextual conditions influence this effect. Organizational innovation was conceptualized as the tendency of the organization to develop new or improved products or services and its success in bringing those products or services to the market. Transformational leadership was hypothesized to have a positive influence on organizational innovation. Furthermore, this effect was proposed to be moderated by internal support for innovation, which refers to an innovation supporting climate and adequate resources allocated to innovation. Support received from external organizations for the purposes of knowledge and resource acquisition was also proposed to moderate the relationship between transformational leadership and organizational innovation. To test these hypotheses, data were collected from 163 research and development (R&D) employees and managers of 43 micro‐ and small‐sized Turkish entrepreneurial software development companies. Two separate questionnaires were used to collect the data. Employees' questionnaires included measures of transformational leadership and internal support for innovation, whereas managers' questionnaires included questions about product innovations of their companies and the degree of support they received from external institutions. Organizational innovation was measured with a market‐oriented criterion developed specifically for developing countries and newly developing industries. Hierarchical regression analysis was used to test the hypothesized effects. The results of the analysis provided support for the positive influence of transformational leadership on organizational innovation. This finding is significant because this positive effect was identified in micro‐ and small‐sized companies, whereas previous research focused mainly on large companies. In addition, external support for innovation was found to significantly moderate this effect. Specifically, the relationship between transformational leadership and organizational innovation was stronger when external support was at high levels than when there was no external support. This study is the first to investigate and empirically show the importance of this contextual condition for organizational innovation. The moderating effect of internal support for innovation, however, was not significant. This study shows that transformational leadership is an important determinant of organizational innovation and encourages managers to engage in transformational leadership behaviors to promote organizational innovation. In line with this, transformational leadership, which is heavily suggested to be a subject of management training and development in developed countries, should also be incorporated into such programs in developing countries. Moreover, this study highlights the importance of external support in the organizational innovation process. The results suggest that technical and financial support received from outside the organization can be a more important contextual influence in boosting up innovation than an innovation‐supporting internal climate. Therefore, managers, particularly of micro‐ and small‐sized companies, should play external roles such as boundary spanning and should build relationships with external institutions that provide technical and financial support. The findings of this study are especially important for managers of companies that plan to or currently operate in countries with developing economies.     

Customer Involvement in New Service Development: An Examination of Antecedents and Outcomes*

Customer involvement has been recognized as an important factor for successful service development. Despite its acknowledged importance, a review of the literature suggests that there is little empirical evidence about the effectiveness and outcomes of interacting with customers while developing new services. Similarly, the extant literature shows mixed views about the effect of technological uncertainty on customer involvement and the effectiveness of customer involvement at different stages of the new service development process. Against this backdrop, the present study has three objectives: (1) to investigate the effects of customer involvement on operational dimensions (i.e., innovation speed and technical quality) and market dimensions (i.e., competitive superiority and sales performance) of new service performance; (2) to examine the effect of technological novelty and technological turbulence on customer involvement; and (3) to explore the moderating effect of the stage of the development process on the relationships among technological novelty, technological turbulence and customer involvement, and customer involvement and new service performance. A total of 807 firms with 75 or more employees in a varied set of industries were selected from the Dun & Bradstreet's 2004 listing of Spanish service firms. A questionnaire was mailed to the person in charge of new service development at each company. A total of 102 complete questionnaires were returned. Findings reveal that whereas customer involvement has a positive direct effect on technical quality and innovation speed, it has an indirect effect on competitive superiority and sales performance through both technical quality and innovation speed. The study also finds a positive effect of technological novelty as well as technological turbulence on customer involvement. Contrary to expectations, the study does not find any moderating effects of the stage of the development process. This study has several theoretical and managerial implications. In terms of theoretical implications, the study supports the role of technological uncertainty (novelty and turbulence) as an antecedent to customer involvement. It also provides empirical evidence of the impact of customer involvement on operational and market dimensions of new service performance. In terms of managerial implications, the study offers critical insights on how customer involvement in new service development translates into improved new service performance. Furthermore, it reveals that the importance of customer involvement in technologically uncertain contexts and its impact on new service performance are independent of the stage of the development process, suggesting that managers should involve customers throughout the entire development process.     

Analyzing the Effects of Market and Resource Orientations on Innovative Outcomes in Times of Turbulence*

Innovation and new product success are often a core precursor to superior performance. Although research has examined the resource‐based view (RBV) and market orientation (MO) individually, limited research has evaluated and compared their effect on innovation and new product success in one study. Furthermore, relative to MO, comparatively less research has been conducted to evaluate the relationship between organizational learning (OL) and the RBV to examine their effects on a firm's ability to innovate and succeed. The purpose of this paper is to investigate the role of environmental variables (i.e., market turbulence and technological turbulence) on the relationship between two strategic orientations and performance and to extend a previous study. Specifically, it aims to evaluate whether a focus on the customer or the firm will impact innovation, product quality, new product success, financial performance, and customer value in settings of varying environmental turbulence. Data were collected from more than 200 senior executives. LISREL was applied to evaluate the relationships under examination. Interaction effects were assessed using a nested goodness‐of‐fit strategy using a multiple‐group solution. Results depicted significant relationships between organizational learning and both resource and market orientations. Significant relationships also emerged between each strategic orientation and various performance indicators. Interaction effects were observed for market turbulence on customer value and market orientation as well as for resource orientation (RO) on innovation in times of high technological turbulence. The paper concludes with a review of theoretical and managerial implications to stimulate further debate. These results suggest that managers seeking innovation and new product success cannot afford to ignore the environment and do so at their peril. The provision of customer value is essential for positive financial performance. Thus, management needs to monitor environmental contexts so that they are able to adjust their investment in market orientation and the requisite processes that enable its implementation. Conversely, the effects of RO on performance are more robust across industry conditions, presenting an alternative avenue for management to achieve market superiority. The paper concludes with a review of theoretical and managerial implications to stimulate further debate.     

The Role of Value‐Informed Pricing in Market‐Oriented Product Innovation Management*

Although the positive effect of a market orientation on new product success is widely accepted and the market orientation literature has increased its understanding of how a market orientation leads to performance, the extant literature has overlooked the role of value‐informed pricing in the relationship. Value‐informed pricing is a pricing practice in which the decision makers base the price of the new product on the customers' perceptions of the benefits that the product offers and how these benefits are traded by customers against the price (that has yet to be determined). Considering that pricing mistakes may hit hard on the profitability of product innovations, it is important to firms to have a good understanding of its role. This study develops a framework in which value‐informed pricing is integrated in the relationship between market orientation and new product performance. A distinction is made between customer and competitor orientations, and relative product advantage is also included in the conceptual model. The model is tested on data obtained from managers based on a cross sectional sample of 144 firms. The respondents were involved in a decision‐making process of the pricing of a new product. The model is tested using structural equations modeling. The results show that value‐informed pricing has a strong effect on new product performance. It also reveals that each component of a market orientation fulfills a specific role in a market‐oriented organization. Value‐informed pricing is found to have important mediating effects in the market orientation–new product performance relationship. Results show that firms with a strong customer orientation engage in value‐informed pricing and develop superior benefits to customers in an advantageous product. In turn, both value‐informed pricing and relative product advantage positively affect new product market performance. However, no significant effect of competitor orientation on value‐informed pricing is found. Combined with the finding that competitor orientation negatively affects relative product advantage, this suggests that competitor orientation may hurt new product performance when this orientation is not balanced with a strong customer orientation. The results also portray that value‐informed pricing leads to higher product advantage. Interestingly, this relation is contingent on the degree of interfunctional coordination within the firm. This suggests that the relationship between market orientation and new product performance is strongest if firms integrate value‐informed pricing in the new product development process. In this sense, a market‐oriented firm mirrors the customer value perception that makes a trade‐off between benefits and price.     

Moderating Effects of Nationality and Product Category on the Relationship between Innovation and Customer Equity in Korea and China

Innovation has become a key concept in recent decades. Truly innovative products can create value for consumers, extend the product category, generate higher margins, and strengthen the brand. Simply speaking, relationships may form between product innovation and each driver of customer equity. However, for different product categories and nationalities, this relationship may differ. This paper not only identifies the relationships between innovation and customer equity, but also examines the moderating effects of product category and nationality. In total, 409 consumers from Korea (n = 200) and China (n = 209) were surveyed by questionnaire in this study. The stimuli of the degree of innovation (i.e., radical or incremental) included Nike+Ipod and Adidas 1, and Nike Air Max and Adidas Team Series from the shoe industry, while H&M designer label and Nano material, and H&M seasonal collection and cycle material from the clothing industry. Structural equation modeling was used to test the hypotheses. The results show that the degree of innovation exerts positive influences on value equity and brand equity, which can be drivers of customer equity. Thus, the reason firms launch innovative products is not only to boost sales by increasing customer value, but also to improve brand image, which can influence the customers’ purchase decision. The relationship between innovation and customer equity can be moderated by product category and nationality. Managers should develop different innovation strategies based on different product categories and customer nationalities.     

Innovation strategies in the enzyme industry

Abstract The enzyme industry is characterised by a rapid rate of technological change and market dynamism. There are over 2000 different types of enzymes with patent cover and yet only a fraction of these have been successfully commercially exploited. What innovation strategies are used by UK suppliers? Could the success rate be improved? This paper reports the findings of a recent survey of UK enzyme suppliers to investigate their approaches to the management of innovation. The main thrust of the research considered the role of marketing and especially the role of customer involvement in the innovation process. A variety of approaches were found but essentially the customer has a fairly restricted part to play in innovation in this dynamic and technological market.