The relationships between responsive and proactive market orientation and innovation

performance in family firms

Lien Beck, Marion Debruyne, Wim Janssens, Tinne Lommelen (Hasselt University, Belgium)

Purpose Literature review

Market orientation and innovation performance The relationship between market orientation and innovation

performance in a family firm context Research methodology Results Conclusion

Outline

The relationships between responsive and proactive market orientation and innovation performance in a family firm context

Taking into account the moderating influence of generational involvement competitive intensity

Purpose

Market orientation

Responsive market

orientation

Proactive market

orientation

Innovation performance

Competitive intensity

Generational involvement

Originated in the early 1990s Definition: A firm’s ability to generate and disseminate

market intelligence and to respond on it (Kohli & Jaworski, 1990)

2 dimensions (Narver et al., 2004): Responsive MO – current customers and their expressed needs Proactive MO – customers’ latent needs

Responsive and proactive MO have a positive influence on innovation performance

Market orientation and innovation performance

Generational involvement Creates a distinction in the group of family firms Moderating influence because of difference in:

Innovation orientation External orientation Decision-making structure

H1a: The positive influence of responsive market orientation will be more strongly associated with innovation performance in subsequent generations than in first generation family firms.

H1b: The positive influence of proactive market orientation will be more strongly associated with innovation performance in subsequent generations than in first generation family firms.

Market orientation – innovation performance in

family firms

Competitive intensity Frequently considers as moderating factor in the MO –

innovation relationship Moderating influence because of:

Monitoring customers’ needs becomes more important because customers have plenty alternative sources to satisfy their needs

Necessity of exploring new knowledge increases

H2a: The positive influence of responsive market orientation will be more strongly associated with innovation performance when family firms act in markets with high competitive intensity.

H2b: The positive influence of proactive market orientation will be more strongly associated with innovation performance when family firms act in markets with high competitive intensity.

Market orientation – innovation performance in

family firms

Sample: Project ‘Strategic Innovation’ 63 family firms Measures

Questionnaire MO and innovation performance: Validated scales of Likert-type

from 1 to 5 Interview

Generational involvement Perception of competitiveness in the market

2 control variables Size and age of the firms

Analysis Multiple regression

Research methodology

ResultsVariables Model 1

ßModel 2 ß

Model 3 ß

Step 1: Controls Size (log)6 tot 10 years (dummy)11 to 20 years (dummy)More than 20 years (dummy)

Step 2: Main effects Competitive intensityGenerational involvement Responsive market orientationProactive market orientation

Step 3: Interaction effects Responsive MO x generational involvementProactive MO x generational involvementResponsive MO x competitive intensityProactive MO x competitive intensity

R²Adjusted R²F-statistic Change in R²

.19 -.66-.30-.54

.051-.017.751

.27**-.35 .10-.27

-.70***-.41 .32* .37**

.482

.4026.038***.431***

.28**-.53 .02-.34

-.71***-.35 .15 .81***

-.04-.22 .28-.55*

.530

.4124.505***.048

* p<.10; ** p<.05; ***p<.01

Responsive and proactive MO are positively associated with innovation performance in family firms

Competitive intensity exercises a moderating effect with proactive MO Contrary to our expectations, competitive intensity restrains the

positive effect of proactive MO on innovation performance

Results - Discussion

-2

-1,5

-1

-0,5

0

0,5

1

1,5

2

Low proactive MO High proactive MO

Inno

vati

on p

erfo

rman

ce

Competitive intensity islow

Competitive intensity ishigh

Limitations SI-database Limited sample Cross-sectional research

Future research Other interesting context variables Differentiate between more generations More complex models

Conclusion

Generational involvement exercises no moderating effect on the relationship between MO and innovation performance

Competitive intensity negatively moderates the influence of proactive MO on innovation performance

This study emphasizes the importance of research on the relationship between MO and innovation in the special context of the family firm

Conclusion

Questions? Suggestions?

For more information: lien.beck@uhasselt.be