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.     

Using Exploratory and Exploitative Market Learning for New Product Development*

While the need for research on the market‐learning efforts of a firm in relation to its new product development is continuously emphasized, the empirical results on this issue reported so far have been mixed. The current study contends that the inconclusive nature of the empirical evidence is mostly due to the existence of different dimensions of organizational market learning—exploratory and exploitative—and to possible different routes by which these learning dimensions are linked to new product performance. More specifically, this study argues that exploratory market learning contributes to the differentiation of the new product because it involves the firm's learning about uncertain and new opportunities through the acquisition of knowledge distant from existing organizational skills and experiences. By contrast, this study posits that exploitative market learning enhances cost efficiency in developing new products as it aims to best use the currently available market information that is closely related to existing organizational experience. This study provides empirical support for this two‐dimensional scheme of organizational market learning and its consequent effects on two components of new product advantage: new product differentiation and cost efficiency. Further, given that the effectiveness of firms' strategic efforts is contingent upon the nature of the market environment, the current study examines the moderating effects of environmental dynamism and market competitiveness for this market learning—new product advantage relationship. This study is based on survey data from 157 manufacturing firms in China that encompass various industries. The empirical findings support the two‐dimensional market learning efforts that increase new product differentiation and cost efficiency, respectively. The study confirms that exploratory market learning becomes more effective under a turbulent market environment and that exploitative market learning is more contributive when competitive intensity is high. It also suggests that because of their differential direct and moderating effects on new product advantage either exploratory or exploitative market learning may not be used exclusively, but the two should be implemented in parallel. Such learning implementations will help to secure both the feature and cost‐based new product advantage components and will consequently lead to the new product success. The current study attempts to contribute to greater clarity and better understanding of how market learning influences new product success as it theoretically identifies and empirically validates the two forms of new product advantage as the conceptual mediator between market learning and new product performance.     

Determinants of IT Usage and New Product Performance*

Explosive growth of information technologies (IT) has prompted interest in examining the role of IT in new product development (NPD). Through desktop software and Web‐based tools, IT has been used to aid idea generation and product testing as well as for NPD activities such as process and portfolio management. Recent research suggests, however, that a gap exists between IT availability and usage. Given the importance of IT in creating business value through the development of new products and services, the present study seeks to identify factors that affect IT usage. Further, anecdotal evidence and conceptual studies intimate that the usage of IT tools for NPD can shorten time to market, can improve product quality, and can increase productivity. However, empirical substantiation of this impact is mostly nonexistent. The current study investigates the relationship between IT usage and two measures of new product performance: speed to market and market performance. Employing a mail‐survey methodology, the study uses data from a sample of practitioner members from the Product Development & Management Association to examine the effect of project risk, existence of a champion, autonomy, innovative climate, IT infrastructure, and IT embeddedness on the extent of IT usage. These data are also used to explore the impact of IT usage on speed to market and market performance. The results indicate that project risk, existence of a champion, and IT embeddedness positively affect the extent of IT usage for NPD. Additionally, IT usage positively and significantly influences the performance of the new product in the marketplace. Surprisingly, and contrary to popular belief, IT usage does not have any impact on speed to market. An important implication of this study is that IT usage influences performance but not in the way managers expect. Specifically, IT usage does not seem to affect speed to market but rather positively impacts the performance of the new product in the marketplace. This result suggests that IT usage in NPD provides far more value to firms than previously thought and provides evidence to support greater investments in IT for product development efforts. Other implications of the study are that unless IT is embedded into the NPD process and champions for IT tools exist, chances are that IT will not be used and its benefits will not be realized.     

Proactive/Responsive Market Orientation and Marketing—Research and Development Integration

The level of integration between the marketing and research and development (R&D) functions may be gauged by degree of communication, information sharing, and collaboration between the functions during the new product development process. This article examines how a firm's strategic choice regarding market orientation may influence the relationship between marketing and R&D personnel, and how this relationship may affect organizational success. Under examination are both the responsive form of market orientation, in which a firm focuses on immediate customer needs and tends to be market driven, and the proactive form, in which the firm focuses on future market needs and tends to be invention driven. It is theorized that responsive market orientation will be more positively related to marketing‐R&D integration due to the market‐driven nature of the orientation. Conversely, it is theorized proactive market orientation will be more positively related to organizational success than responsive market orientation due to the innovation‐driven nature of the orientation. The study was implemented via a Web‐based survey and data analysis was performed using structural equation modeling techniques. The results of this study provide empirical evidence that both proactive and responsive market orientation exhibit a positive relationship with marketing–R&D integration, indicating that both forms of market orientation may lead to closer collaboration between the marketing and R&D functions. Despite the assumption that a proactive orientation is driven by innovation and technology in which R&D may play a more significant role, there is evidence that a high degree of synergy is developed between the groups when the focus is on future market needs. A market‐driven responsive orientation by necessity requires high integration between departments to commercialize products in a timely manner to meet current market needs. Proactive market orientation exhibits a positive relationship with market performance, whereas responsive market orientation does not. The result may show evidence of the “new product paradox," whereby developing products to address immediate market needs may result in lower market performance because the new products may be replacements for obsolete offerings or are actually cannibalizing sales of existing products.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

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.     

Achieving Fit between Learning and Market Orientation: Implications for New Product Performance

Drawing on the learning and market orientation literature, this study examines how responsive and proactive market orientations interact with exploitative and exploratory learning to affect new product performance. Despite advancements in understanding the distinctions between the different types of learning and market orientations, little evidence exists regarding which types of market orientation work best with exploitative or exploratory learning to improve new product performance. Using a sample of 216 high‐tech Canadian firms, the authors find that new product performance is elevated only when exploratory learning is bundled with proactive market orientation. New product performance suffered when exploratory learning was complemented with responsive market orientation and when exploitative learning was complemented with proactive market orientation. Implications for marketing theory and practice are discussed.     

Continuity,Change, and New Product Performance: The Role of Stream Concentration*

Product development teams often face the challenge of designing radically new products that cater at the same time to the revealed tastes and expectations of existing customers. In new product development projects, this tension guides critical choices about continuity or change concerning product attributes and team composition. Research suggests these choices interact, but it is not clear whether they are complements or substitutes and if the level of change in one should match or not the level of change in the other. In this article, we examine the interaction between product attribute change, team change, and a new team-level factor, which we term stream concentration, as it captures differences among team members in terms of familiarity with the knowledge domain of the new product being developed. We measure stream concentration as team members’ prior NPD experience within a given set of products and assess its impacts on the management of change in new product development projects using longitudinal data from the music industry. We analyze 2621 new product development projects between 1962 and 2008 involving 34,265 distinct team members. Results show that stream concentration is a critical factor in new product development projects that, together with product attributes and team composition, affects new product performance. We discuss implications for research and practice.     

Information Use and New Product Outcomes: The Contingent Role of Strategy Type

Information is an important resource for firms to develop new products successfully, and firms must rely on their ability to use information effectively. This research builds on information processing and contingency theories to explore the effect of firm strategy type and the conceptual and instrumental use of information on new product outcomes. Firms operating in high-tech industries are faced with high levels of uncertainty caused by rapidly evolving technologies. Consequently, creating innovative and successful products becomes particularly challenging. Past research examining organizational use of information points to the presence of strategic contingencies that may impact the new product outcomes that accrue to a firm. A cross-sectional study was conducted to examine how the impact of information use on new product outcomes varies by strategy type. Using data from 150 software development firms based in a developing economy, the theoretical hypotheses proposed are tested. After controlling for environmental turbulence, the research results demonstrate that firms focusing on specific types of information use innovate successfully only when that information use is congruent with an appropriate strategic orientation. Specifically, the present study finds that prospector firms focusing on conceptual information use enhance both their new product performance and new product creativity outcomes, whereas analyzer firms enhance only their new product performance outcomes. A focus on instrumental information use has different effects for firms. Defender firms enhance both their new product performance and creativity outcomes only when focusing on instrumental information use. In contrast, prospector firms detract from their new product creativity outcomes, and analyzer firms reduce their new product performance outcomes when focusing on instrumental information use.     

Market Information Acquisition,Use, and New Venture Performance*

A substantial body of existing research has linked firm performance to the acquisition and use of customer, competitor, and other market information. This paper examines the impact on new venture performance of formal processes for market information collection and use. This study hypothesizes that new venture performance will be an increasing function of both market information and use. Two moderator hypotheses are also tested. In particular, it is expected that the impact of formal market information processes will be greater in market‐driven new ventures than in technology‐driven new ventures. These hypotheses were tested using data collected from 222 Chinese new ventures. The empirical analysis confirms the positive role of formal processes in new venture performance. However, the analysis does not support the moderator hypotheses. This study finds that (1) formal processes for information acquisition are equally important in technology‐driven and market‐driven firms and (2) formal processes for information use have a greater impact on new venture performance in technology‐driven firms than in market‐driven firms.     

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.     

Neo‐Rawlsian Fringes: A New Approach to Market Segmentation and New Product Development*

Prior research into the link between new product development and market segmentation has focused on two main approaches: (1) design, segment, and do limited competitive evaluation; and (2) segment first, design second. This paper proposes a third approach, which is to simultaneously design, perform segmentation according to benefit and to evaluate against competitive designs. This research uses a benefit segmentation technique based on conjoint analysis (or other techniques that relate product attributes to consumer utility) in which the segments emerge simultaneously with the design based on certain design principles or “strategies.” Herein a method is proposed to narrow down the many possible feasible designs (combinations of attributes) to a finite set and to examine the appeal of each design. Five distinct design strategies are proposed for modeling and studying competitive reaction. These include “traditional” ones such as differentiation and new ones whose fringe customers have high utility. The paper shows that these five strategies are adequate for modeling competitive reaction using simulation. Another contribution of the paper is the way competitive reaction is modeled. In generating and evaluating a design the desire herein is also to assess the defensibility of the design and include it in the evaluation criteria. These issues are addressed by decomposing the solution procedure into two phases. In the first phase, different optimal designs are created based on predefined product development strategies. In the second, these optimal designs are compared against one another with regard to market share and potential to secure market leadership. This work shows that the nature of competition as well as the variability of customer preferences are critical to how a strategy performs. This process uncovers a surprisingly robust design strategy—developing attributes such that a “lower fringe” is most satisfied—that even achieves market dominance under certain conditions. This methodology is also applied to partworth data on refrigerators, which provides a concrete example of the concepts and demonstrates results consistent with the propositions developed earlier in the paper.     

The Impact of the Corporate Mind‐set on New Product Launch Strategy and Market Performance

In the last decade, there has been an increasing interest in the link between new product launch strategy and market performance. So far, new product launch research has focused on this performance relationship without giving much attention to background factors that can facilitate or inhibit successful launch strategies. However, investigating such antecedents that set the framework in which different strategic launch decisions enable or prevent the market performance of new products is useful for enhancing the current state of knowledge. Drawing on the concept of a firm's orientation, the present study discusses the influence of the corporate mind‐set on new product launch strategy and market performance. It is hypothesized that the capability to successfully launch new products is based on the interplay between a firm's mind‐set (i.e., an analytical, risk‐taking, and aggressive posture) and its strategic launch decisions on setting launch objectives, selecting target markets, and positioning the new product. A research model with mediating effects is proposed, where the corporate mind‐set determines the launch strategy decisions, which in turn impact market performance. The model is tested with data on 113 industrial new products launched in business‐to‐business markets in Germany using a multiple informant approach. The results support the mediated model as the dimensions of the corporate mind‐set have a significant impact on most strategic launch decisions, which in turn significantly contribute to market performance. It is found that while an analytical posture relates to all three strategic launch decisions, risk taking and an aggressive posture have a significant impact on two, respectively one, launch strategy elements. These findings confirm the importance of investigating antecedents for a successful new product launch, as the corporate mind‐set serves as a background resource that sets the framework for successful new product launch decisions. In the final section implications for research and managerial practice as well as limitations of this research are provided.     

An Exploratory Analysis of the Impact of Market Orientation on New Product Performance

For many firms, emphasizing the importance of market orientation has taken on a mantra-like quality. Mission statements and memos, policies, and procedures all highlight the importance of staying in touch with the customer. It is also widely assumed that the relationship between market orientation and new product performance depends on environmental conditions and product characteristics. To date, however, little empirical evidence has been presented to support the assumption that market orientation influences new product performance. Kwaku Atuahene-Gima addresses this research need in a study of 275 Australian firms. In addition to exploring the relationship between market orientation and new product development activities and performance, his study examines the effects of environmental conditions and product characteristics. Specifically, the study investigates whether the relationship between market orientation and new product performance depends on the degree of product newness to customers and the firm; the intensity of market competition and the hostility of the industry environment; and the stage of the product life cycle at which the new product was introduced. The survey results provide strong support for the basic proposition that market orientation influences new product performance and development activities. The results show a strong positive relationship between market orientation and a new product's market performance. Market orientation is also shown to have a strong positive effect on proficiency of predevelopment activity, proficiency of launch activity, service quality, product advantage, marketing synergy, and teamwork. Although market orientation is generally found to be an important factor in the success of new products, its influence varies depending on the type of new product—that is, radical versus incremental. Market orientation appears to have greater influence on new product performance when the product represents an incremental change to both the customers and the firm. However, this does not mean that a market-oriented approach is unnecessary in the development of radically hew products. Market orientation also has a greater effect when the perceived intensity of market competition and industry hostility are high, and during the early stage of the product life cycle. Because market competition and industry hostility typically intensify as the product life cycle progresses, these findings suggest that the effects of market orientation are pervasive. In other words, managers should not limit their expectations of market orientation to specific projects or specific stages of the development process and product life cycle.     

Sustainability,Social Media Driven Open Innovation,and New Product Development Performance*

Sustainability and social media use in open innovation play important roles in a firm's new product development (NPD) process. This research examines, in conjunction, the roles of sustainability and social media driven inbound open innovation (SMOI) for a firm's NPD performance, and further, takes a more refined approach by differentiating between different types of SMOI activities. To this end, this research develops and tests a conceptual framework, which predicts that (1) a firm's sustainability orientation (SO) is positively associated with its NPD performance, (2) customer focus (CF) partially mediates the SO–NPD performance link, and (3) particular SMOI activities moderate the CF–NPD performance link. The empirical results, using data from the Product Development and Management Association (PDMA)'s comparative performance assessment study, provide support for most of the framework. Notably, this research documents a positive link between SO and NPD performance, as well as a partial mediating role of CF. The results further suggest that social media driven open innovation activities focused on gathering market insights enhance CF directly, while social media driven open innovation activities that garner technical expertise enhance the link between CF and NPD performance. This paper bridges the separate literatures on sustainability and open innovation, and contributes to the NPD research. The findings suggest that managers should take a strategic approach to sustainability and embed it in the NPD process. Furthermore, managers should manage social media based open innovation carefully to fully benefit the firm during the front end and back end of NPD.     

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's effects. This suggests that a broader nomological inquiry is needed to fully understand the nature and limits of market orientation's effects.
Utilizing a national sample of marketing executives, the present study's 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's 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.     

The Effect of Multiknowledge Individuals on Performance in Cross‐Functional New Product Development Teams*

This study examines the effect of multiknowledge individuals (especially those possessing both marketing and technological knowledge) on performance in cross‐functional new product development teams. A survey of 62 cross‐functional teams shows that the proportion of multiknowledge individuals has an indirect positive effect through information sharing on product innovativeness and a direct positive effect on time efficiency of new product development teams.     

Best Practices for New Product Pricing: Impact on Market Performance and Price Level under Different Conditions

To date, research on new product pricing has predominantly been approached as a choice between market skimming and penetration pricing. Despite calls for research that addresses other complexities in new product pricing, empirical research responding to these calls remains scarce. This paper examines three managerial price‐setting practices for new products, i.e., value‐informed, competition‐informed, and cost‐informed pricing. By engaging in these practices, managers can develop and compare quantifications in order to attain an introduction price for the product. The authors draw on consumer price perception literature, Monroe's pricing discretion model, and numerical cognition literature to develop hypotheses about the impact of price‐setting practices on new product market performance and price level. By studying the effects on market performance and price level, the paper provides insights that may help explain the growth of new products and address the problems of underpricing. The hypotheses are tested in a management survey of 144 production and service companies. The results indicate which pricing practices are superior for the achievement of either higher market performance or higher prices in specific product and market conditions. Whereas value‐informed pricing has an unambiguous positive impact on relative price level and market performance, the results also suggest that in many cases engaging in value‐informed pricing is not enough. The effects of cost‐informed and competition‐informed pricing may differ depending upon the objective (market performance or higher prices), product conditions (product advantage and relative product costs), and market condition (competitive intensity). Engaging in inappropriate pricing practices leads to a decline in new product performance. Moreover, bad pricing practices make the positive effect of product advantage on the outcome variables disappear. The latter finding suggests that companies can jeopardize their efforts and investments in the new product development process if they engage in the wrong price‐setting practices. The findings imply that managers should consider different factors in new product pricing. First, when launching a new product, they should determine their explicit pricing objective, either stressing market performance or a higher price level. To determine the most appropriate pricing practices, however, they should next assess their situation in terms of product advantage, relative product costs, and competitive intensity. Together with the pricing objective, these conditions determine the best pricing practice. On a higher level, the findings imply that companies should invest in knowledge development in order to engage in the appropriate pricing practices for each product launch.     

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.     

Market Vision and Market Visioning Competence: Impact on Early Performance for Radically New,High‐Tech Products*

Having the “right” market vision (MV) in new product scenarios involving high degrees of uncertainty has been shown to help firms achieve a significant competitive advantage, which can ultimately lead to superior financial results. Despite today's increased rate of radical innovation, and hence the importance of effective vision, relatively little research has been undertaken to improve our understanding of this phenomenon. The exploratory and empirical investigation undertaken herewith responds to this research gap by focusing on MV and its precursor, market visioning competence (MVC), for radically new, high‐tech products. MV is a clear and specific mental model/image that organizational members have of a desired and important product‐market for a new advanced technology, and MVC is a set of individual and organizational capabilities that enable the linking of advanced technologies to a future market opportunity. Based on samples of high‐tech firms involved in early technology developments, the measurement study indicates that five factors comprise MV (i.e., clarity, magnetism, specificity, form, and scope) and that four factors underlie MVC (i.e., networking, idea driving, proactive market orientation, and market learning tools). Structural equation modeling is used to demonstrate that MVC significantly and positively impacts MV and that each of these constructs significantly and positively influences certain aspects of early performance (EP) in new product development. This is the first empirical study to develop a comprehensive set of scales to measure these constructs and then to combine them in a model by which to examine their interrelationships.