Innovation and its interaction with market orientation : a study of Australian manufacturing SMEs

In pursuing sustainable competetive advantage, firms undertake a range of strategic initiatives such as innovation, customer relationship management, entering new markets overseas, and competetive actions within current marketplaces. Studies that examine these initiatives generally investigate the firm's strategy by either: (i) focussing on one strategy only, and examining its impact on firm performance and the role of employees in the implementation of this strategy; or (ii) studying the interaction of two or more strategies. This study explores the interaction between two strategies, innovation and market orientation, and identifies key components of the market orientation construct that interact with the innovation process. This study utilised both quantitative and qualitative techniques. The quantitative data collection used scales which had been previously developed that show high reliability and have gained a level of acceptance in the literature. A survey was sent to companies that matched the target population characteristics. The survey measured five things : (a) the market orientation of the firm, (b) the innovativeness of the firm, (c) the firm performance, (d)aspects of the firm's competetive environment, and (e) changes in the firm's competetive environment. The data analysed was gathered using appropriate statistical techniques. The qualitative research comprised a sermi-structured interview with key informants from a sample of the organisations who participated in the participated in the quantitative data. This study crossed two distict general disciplines, that of marketing and management, and presents four key findings (a) that firm innovation and firm market orientation are strategic reactions to changes in the market environment, (b)that market orientation is a part of the firm's innovation process, (c) information about customers and competitors is used in the innovation process when assessing the need to innovate, and (d) the employee is the link between market orientation and the firm's innovation process.