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Topic: Relationship between strategic orientation, market orientation, service innovation with market and business performance
Sheraz Arif Chughtai MBA 1.5 (Eve) MB-11-14 Prof. Hayat Awan
Department Of Management Sciences Air University Multan Campus
The different types of strategic orientations are not mutually exclusive. 1991). 1997). our research focuses on service innovation. 2003). In the current context. orientations. However. which in turn may contribute to competitive advantages in today’s business environment. 1994). 1991. firms with a strong customer orientation emphasize the creation and maintenance of customer value. Innovation has been empirically linked with superior performance (Damanpour and Evan. Many firms elect to compete on the basis of service rather than on physical products (Gronroos. Literature Review: Innovation: . Narver and Slater. 1989).Introduction: Firm managers place different emphases on strategic behaviors and select strategic orientations dependent upon what they wish to accomplish (Olson et al.. 1993. we examine how resources impact one type of capability development – service innovation. will have different relative impacts (Day. Grant. 1990). 2000. 2006). More competitor-oriented firms encourage in-depth assessment of targeted competitors and costoriented firms pursue efficiency throughout their value chain (Day.e. Porter. For example. firms commonly engage in multiple sets of behaviors at the same time (Gatignon and Xuereb. Kandampully. 1990. Service innovation is a ―hot topic‖ warranting greater attention (Berry et al. Khan and Manopichetwattana. Service innovation represents an additional means by which firms can improve their market performance and efficiency (Chapman et al. Hurley and Hult. Strategic orientation focuses resources to achieve desired outcomes. Strategic orientations are aspects of corporate culture (Deshpande et al. 1985). 1998. i. 2005). 2002)... Corporate or organizational culture represents intangible resources for firms (Barney. while much of the previous research has centered on product innovation.. 1984. The deployment of those resources.
Service innovation is the development of a new service that is perceived as new and helpful to a particular focal audience (Flint et al. displaying the latest technologies and capabilities. 1990.Organizational cultureswill vary among firms. While the definition set forth by Rogers can be applied to the service context. Organizational culture is defined as the pattern of shared values and beliefs that provide norms for behavior within an organization (Deshpande and Webster. Strategic orientation as organizational culture: Strategic orientation is defined as the ―strategic directions implemented by a firm to create the proper behaviors for the continuous superior performance of the business‖ (Gatignon and Xuereb. Narver and Slater. Previous studies examining strategic orientations have pointed specifically to the behaviors associated with the organizationwide generation. and almost immediately encounter direct competition. practice. 2003). As suggested by Day (1994).. As a result. researchers have provided insights as to how firms innovate and how innovations spread to other firms and individuals (Damanpour. However. Grant. innovation is an idea. Kohli and Jaworski. it becomes an organizational culture. the types of information and intelligence shared within firms will also vary. Service enhancements can add value for organizations. Service innovation has been discussed from a conceptual perspective. 1999. 2005. 1997. or object that is perceived as new by an individual or organization (Rogers. and use of market intelligence as being the key ingredients of a strategic orientation (Baker and Sinkula.While later sections will highlight specific differences in the intelligence sought by firms. it is also important to discuss the general intelligence characteristics. 1990). 1989). Defined broadly. When strategic orientation extends to all levels of an organization. An important aspect of a strategic orientation is the creation of shared values and behaviors throughout the entire organization. much of the existing literature is centered on product innovation. Organizational culture is reinforced through the continuous sharing of information and intelligenceamong employees. culture can unify an organization’s capabilities into a ―cohesive whole‖. but has received little empirical study.Innovation plays a critical role in the increasingly competitive business environment in which firms operate. a distinct definition for service innovation is warranted to recognize its unique nature. Firms often race to market with new product offerings. 1991). dissemination. 1990. 1994). 2005. Sinkula. The type of . Menguc and Auh. 1991). Narver and Slater.
Turner and Makhija. A critical component of customer orientation is the emphasis on seeing supply chain opportunities and constraints from the perspective of the customer (Deshpande et al. The following sections discuss three relevant strategic orientations. 1993. As they learn about the needs of their customers. competitive assessment is . 1993. Access to these systems and methods of communication throughout organizational levels reinforces the orientation of the firm as employees are able to quickly access and share new information with others in the firm. Narver and Slater. organizational processes.. In order to effectively share information throughout the organization. 1990). 1990). Firms adopting a competitor orientation develop an in-depth assessment of targeted competitors and potential competitors and use the resulting knowledge to match or exceed competitors’ strengths (Kohli and Jaworski. Narver and Slater. 1995). 1996. Customer orientation: Customer orientation is an organizational culture that facilitates the understanding of targeted buyers and allows for the continuous creation of customer value (Narver and Slater. 2005). 2006).. In a competitor-oriented firm. Intelligence is often codified in information systems. along with the type of intelligence required by each. 1990.intelligence that is shared is driven by the strategic orientation of the firm. 2000. Employees within a customer-oriented organization are aware of who the customers are and how they should be served. 1990). This allows the firm to identify potential new customers along with opportunities to create value for the customer.. they are quick to share the new information with other individuals and departments within the organization to ensure that the firm can continue to keep pace with customer needs. Olson et al. Firms with a customer orientation generate intelligence about the current and future needs of targeted customers and disseminate the new intelligence throughout the organization. and other communication mechanisms (Slater and Narver. Competitor orientation Competitor orientation is an organizational culture that stresses the understanding of the shortterm strengths and weaknesses and long-term capabilities and strategies of the current and potential key competitors (Deshpande et al. it is essential that organizations capture and codify intelligence for dissemination and use (Argote and Ingram. Spender. and anticipate future needs.
Firms that are actively engaged in the reduction of costs associated with the development of product and service offerings can benefit when competing for new business. Lee & Na. Interfunctional coordination refers to demonstrating willingness by members of different functional areas of an organization (e. Employees throughout the organization participate in the development of intelligence regarding competitors’ new products and services. 1985).. identifying cost-saving sourcing options. customer orientation may be central in linking other orientations to innovativeness (cf. Employees within cost-oriented firms seek opportunities to eliminate waste associated with all areas of the firm. as well as products and services offered by companies not considered to be direct competitors. 1995b. interfunctional coordination may serve as an impetus to innovativeness because increases in communications . and developing lower cost alternative product and service delivery methods. Cooper & Kleinschmidt.g. a cost-oriented culture focuses on reducing non-value-added services. as its focus is primarily internal. Cost orientation differs from customer and competitor orientation.not solely the responsibility of senior management. engineering. 1994) indicates substantial nuance in the how the individual market orientation subfactors relate to innovativeness. 1993). firms sometimes create cross functional teams to achieve interfunctional coordination (Anand. Porter. and marketing) to communicate and work together to achieve organizational objectives. for example. The competitor-oriented firm is concerned with all sources customers could use to meet their needs. A cost-orientated firm places a high level of importance on in-depth knowledge regarding the costs of providing products and services to the market.. manufacturing. 1992). 1990). 1995a. For example. innovativeness. Market orientation subfactors. and performance: Prior work (Anand. Cost orientation Cost orientation refers to the pursuit of efficiency throughout all parts of a firm’s value chain (Olson et al. Innovation projects may stimulate such team creation and interfunctional coordination. 2005. Narver & Slater. Lowering average and marginal costs are typical benefits to this type of strategic orientation (Dickson. 1993. as they are able to offer attractive pricing or additional features for potential customers.
and team work are likely to generate new ideas and technology explorations. let us recognize the possibility of a virtuous cycle or positive feedback loop (see Sterman. 2000) between innovativeness and interfunctional coordination rather than proposing only a one-way. This study will also include sector analysis which will help in determining that in which sector innovation capabilities affects the organizational performance more. interfunctional coordination etc the study in this area is being conducted. competitors and cost. Research Gap: Due to a developing nation and emerging economy. companies in Pakistan is trying to operate in different manner by creating and giving different innovative products and services to the customers. Objective Of The Study: The purpose of this paper is to determine how a firm’s strategic and market orientation affects service innovation capability and the resulting impact on business and market performance. Reason Of Research On This Topic: Companies cannot survive in this dynamic environment with exercising innovation either in service sectors or in manufacturing sectors. demonstrate that interfunctional coordination relates highly with customer orientation and competitor orientation. I found very nominal work on innovation capabilities of Pakistani companies and their impact on business performance by orienting their companies strategically focused either on customers. But how much impact it has on organizational performance in order to find the relationship between service innovation capabilities and key determining variables such as customer orientation. . Moreover this area is not being sufficiently explored by the researchers in Pakistan. Thus. examining the relative associations of each with innovativeness and performance provides more nuance and insight than following the procedure of combining the three scales into a global market orientation—and the factor analysis structure of the three sets of items identifies three unique factors. competitor orientation. cost orientation. Even though Hult et al. independent to dependent. Moreover this study will be of great significance for the marketers of the different firms operating specially in Pakistan. relationship. In addition to this sample has .
J Mark 1993. Journal of Marketing. and performance". (1998). A. Time constraint would also be limit to complete this project. market orientation. Variables: rationale Dependent variable: Market or business performance Independent variables: Customer orientation Competitor orientation Cost orientation Service innovation Inter functional coordination Limitations: This study would be of limited number of empirical studies limited to service innovation and would be limited to one or two sectors. Corporate culture.Lukas. 5. Daugherty.&Ferrell. (2009). Webster FE. 6. J Int Bus Stud 2007. Farley JU.Robert E. 28(2). 3."The relationship between strategic orientation. B. 32 Iss: 11 pp.. European Journal of Marketing. 42−54. Vol. Brown JR. Morgan.57(1):23–7. 1051 – 1073 7. service innovation. Carolyn A. O. G. C.Deshpandé R. The effect of market orientation on product innovation. Haozhe Chen. Patricia J. References: 1. 282 – 300. Grawe.been taken from different sectors so this study will also give an insight into which sectors the innovations are contributing more and in which sectors its effect is less. and innovativeness. Journal of the Academy of Marketing Sciences. (2005).."Market orientation and dimensions of strategic orientation". R. Agarwal S.Scott J. (1998). 2.38(2):303–19. 4. customer orientation. (2000)."Innovation in SMEs: the impact of strategic orientation and . F. Strong.Hurley. Abby Ghobadian.Zhou KZ. 239−247. Vol. 39 Iss: 4 pp. M. and firm learning: an integration and empirical examination.Nicholas O'Regan. T. Dev CS. & Hult. The effects of customer and competitor orientations on performance in global markets: a contingency analysis. Innovation. 62(3). International Journal of Physical Distribution & Logistics Management.
Vol. Andrej Bertoncelj.749 Research instruments: Population: Our population includes the all service sector companies which have higher growth rate and listed on Stock exchange. 54 Iss: 2 pp."Strategic orientation of organizations: risk management perspective". 39 Iss: 5 pp. 81 – 97 8. International Journal of Productivity and Performance Management. Kybernetes. (2010). Vol.environmental perceptions". . 735 .Klemen Kavcic.
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