Due to a high failure rate of new products, there is an urgent need to probe the drivers of new product success, by probing internal and external factors. Thus, our study empirically examines the synergistic effects of market orientation and entrepreneurial orientation (external focus) on new product success and investigates the mediating and moderating role of employee job satisfaction and intention to stay (internal focus) on this relationship.
Design/methodology/approachData were generated through questionnaire from a sample of 226 employees in the competition-and technology-intensive sector. Hierarchical multiple regression was used to test the study's hypotheses.
FindingsThe results indicate significant and positive synergistic effects of market and entrepreneurial orientation on new product success and also confirm the partial mediation of employee job satisfaction. The interaction effects of market (and entrepreneurial) orientation with intention to stay are found to be significant but negative, revealing that even at a lower level of staying intention, the influence of market (and entrepreneurial) orientation on new product success is strong.
Practical implicationsThe study offers novel insights for policy makers to adopt a market-oriented culture along with entrepreneurial orientation to enhance the level of employees’ satisfaction, which would enhance their skills and energies toward the attainment of new product success.
Theoretical contributionsThe strategic management literature has analysed the synergistic effects of market orientation and entrepreneurial orientation on the business performance but only from a managerial perspective. However, exploring this relationship from employees’ perspective remains sparse, more particularly when studying the influence of these strategic orientations on new product success.
New products are essential for businesses’ financial health and long-term success yet the ability of an organization to systematically ideate, design, develop and launch a new product or service is doubtful (Schroeder, 2017). According to Nielsen statistics, more than 80% of new consumer packaged goods fail every year (Kocina, 2017). A study by Product Development and Management Association found that failure rate ranges from 35% for healthcare to 49% for consumer goods (Castellion, 2012; Castellion & Markham, 2013). While less than 3% of new consumer packaged goods exceed first year sales of $50 million, which is considered a benchmark of a highly successful launch (Gilbert, 2018). Research also shows that new product failure ranges from 30% to 80% where the six worst product launch failure include Samsung Galaxy Note 7, Fitbit Charge HR and Surge, Nike + Fuel Band, Amazon Fire Phone, Hoverboards, and EA's Battlefield 1 (Barker, 2022). In addition, the statistics regarding new product success rate reveal that 40% of new products fail at the launch; out of every 7 to 10 new product concepts only one is successful and only 13% of new product efforts achieve their annual profit objectives (Cooper, 2017; Cooper et al., 2004). This high failure rate is attributed to flawed understanding of consumer preferences and market needs (Johnson & Ambrose, 2009; Drechsler et al., 2013).
Cooper (2019) raised a pertinent question, why are some new products so successful and why do certain businesses outperform in product development? Cooper suggested that research into new product success (NPS) drivers must continue, as the keys to success remain elusive. Previous literature has acknowledged new product development (NPD) failure rate (Markovitch et al., 2015) and the difficulties associated with it (Borgianni et al., 2013), yet the focus on the factors that inhibit or prevent successful NPD has received minimal consideration (Derbyshire & Giovannetti, 2017). A high NPD failure rate is due to various issues associated with the product development process, like firm strategy, culture, resources and commitment (Barczak et al., 2009; Hu et al., 2017). Indeed, NPD is a source of competitive advantage (Chang & Tayler, 2016), which is considered essential (Byrne & Shepherd, 2015; Heidenreich & Kraemer, 2016) but has an element of uncertain outcomes (Nguyen et al., 2017). The results of meta-analysis conducted by Huang and Tsai (2013) reveal that NPS in Asian markets accrues to the firms with higher levels of market orientation, marketing and technological synergies, cross-functional integration, tech proficiency and top management support. They pointed out that the literature related to NPD is still growing and it is important to probe why some new products are more successful than others in an Asian context?
Understanding the factors that contribute to NPS is a critical managerial concern and one such factor is a firm's strategic orientation (Kim et al., 2013; Kirca et al., 2005; Mu & Di Benedetto, 2011; Zhou et al., 2005). The role of strategic orientation is more promising in allocating the resources for NPD (Lee & Ram, 2018). Literature has demonstrated that adopting a strategic orientation alone is insufficient for successful NPD outcomes (Evanschitzky et al., 2012; Kumar et al., 2011; Wiklund & Shepherd, 2005). In addition, past studies have emphasised on a specific strategic orientation and its impact on firm performance, thereby ignoring its effects on NPD (Deutscher et al., 2016). More particularly, no study has empirically tested a comprehensive model incorporating prominent strategic orientations at an operative level to analyse their joint effects on NPS. Thus, there is a dearth of literature to guide researchers regarding the factors that affect the joint impact of prominent strategic orientations on NPD performance where two such orientations can be market and entrepreneurial orientation. In this regard, Meyer (2015) suggested to probe additional factors that can impact these relationships. There have been paradoxical findings regarding the joint impact of entrepreneurial orientation (EO) and market orientation (MO) on business performance. While Boso et al. (2013b) reported positive joint effects of EO and MO on SMEs from Ghana; Morgan et al. (2015) and Beliaeva et al. (2018) found negative impact of the simultaneous pursuit of EO and MO. Therefore, research on the combined effects of EO and MO suggests that their simultaneous pursuit can be beneficial (Atuahene-Gima & Ko, 2001; Boso et al., 2013a, 2013b) as well as detrimental (Beliaeva et al., 2018; Morgan et al., 2015). Bhattacharya et al. (2019) posit that a MO firm when tempered with an EO, goes beyond satisfying expressed needs to more effectively understand and satisfy customers' latent needs and is long-term in focus and more proactive in nature. Overall, a firms' MO and EO complement each other where EO is more related to differentiating and exploring opportunities in terms of markets, customers and products.
The existing views regarding market orientation in NPS literature reveal contradictory findings namely where market orientation reduces failure risk, matches with high new product performance (Atuahene-Gima, 1995; Kohli & Jaworski, 1990; Slater & Narver, 1994), it also leads to commonality and bland new products. It is believed that rapid technological advancements and current trends have constrained innovative thinking and encouraged the development of ‘me-too’ products that often suffer from tough competition due to direct substitution possibilities, resulting in squeezed profit margins (Frishammar & Horte, 2007). This notion gives valuable insight that a firm's successful commercialisation of new product hinges upon the development of critical yet complementary sets of strategic orientations, i.e., pair of strategic orientations supporting each other in exerting their joint impact on NPS (Mu & Di Benedetto, 2011). For example, Benito et al. (2009) suggest that strong relationships and complementarities between entrepreneurship and market orientation reduce the efforts involved in the joint adoption of both orientations although these may be implemented separately. Baker and Sinkula (2009) too stated positive correlation between market and entrepreneurial orientation and concluded that MO and EO complement one another. Furthermore, the evidence for relationship between orientations is fragmented and there is a need for empirical studies investigating the interplay and effects of strategic orientations simultaneously (Hakala, 2011).
Moreover, the literature has paid minimal attention to explain the role played by employee centric variables in amplifying the success of new products. Brockman and Morgan (2006) examined the influence of cohesiveness on knowledge use and organisational learning within the context of NPD and suggest that employees' disbelief in organisation's capabilities and potential may lead to the failure of innovative products. In addition, Rodriguez et al. (2008) declared cooperation as the key to new product success on the basis of their examination of moderating role of commitment between the marketing and R&D relationship at different levels of top management and recommended that positive organisational climate of trust and effective communication is insufficient for the success of NPD unless backed by cooperative and joint activities. Thus, it can be stated that a strategically oriented approach requires the coordination of organisational members at different levels, thereby making it evident to facilitate employee job satisfaction (EJS) that fosters the development of quality products and hence, enhanced performance (Zhou et al., 2008). To conclude, this study is the first to focus equally on internal and external factors for predicting new product success where previous literature has focused only on external factors. Moreover, we argue that both market focus and entrepreneurial competencies are required to ensure the successful launch of new products. We further posit that employees’ satisfaction and their staying intention are essential for the long-term success of new services.
Based on the perspectives of resource-based advantage theory of competition (Barney, 1991; Hunt & Morgan, 1995) and job satisfaction theory (Hoy & Miskel, 1996) we have tested the model, which explains the intervening effects of employee-based variables in relating strategic orientations with new product success. In this study, we have extended the literature by analysing the relationship between a firm's market and entrepreneurial orientation and its new product success considering employee satisfaction and their intention to stay (ITS) as internal variables affecting the impact of the strategic competencies. In 2021, telecom industry has witnessed an attrition rate of 20.5% among employees in India (Bhorayal, 2022). The study contributes in the following ways: firstly, our efforts reflect accurate description of strategic phenomena and offer novel insights into how MO and EO synergise to contribute to new product success. By simultaneously considering both orientations, we would also add to the argument on whether only market orientation is sufficient for NPD performance (Frishammar, 2005; Frishammar & Horte, 2007). A second contribution is that the inclusion of ‘employee satisfaction’ as a mediator and ‘intention to stay’ as a moderator between the strategic orientations and new product success relationship would be useful for the policy makers, as the performance benefits of these strategic orientations are pivot on satisfied employees who are responsible for operationalising the organisational goals. Thirdly, given that much of the work on these orientations has focused on developed economies, our study defends the notion that lack of strategic orientations research in emerging economies has restricted the understanding and implementation of strategic orientations (Mu & Di Benedetto, 2011). Finally, our data were collected from telecommunication organisations in India, where empirical research on the new product success has received minimal attention while the sector is known to be highly dynamic and innovative in this regard.
Theory and hypotheses developmentIn view of the objectives of the study, a research model has been tested considering market and entrepreneurial orientations as complementary strategic orientations. The study examines the synergistic impact of these orientations on the new product success. As previously noted, the minimal prior interest on employee related interventions in the strategic management literature, our model further develops the effects of ‘employee job satisfaction’ as a mediator and ‘intention to stay’ as a moderator on the relationship between MO (and EO) and new product success. To formulate a conception of market acquaintance linking marketing perspective of the organisations with the business performance via employees’ perceptions and concerns that can allow the marketers to build emotionally impacting appeals spawning more business, we have based our research on the well-established 'resource based advantage’ theory of competition (Barney, 1991; Hunt & Morgan, 1995). Also known as resource based view (hereafter RBV), the theory suggests the firms to focus on its internal resources as the major determinant of competitive success and sustained competitive advantage. It is propounded on the premise that competitive advantages for superior performance are dependent upon the availability of valuable, rare, inimitable and non-substitutable resources. The theory defines the organisational resources broadly under three headings, namely ‘physical capital resources’ consisting of firm's plant and equipment, technology and geographic location; ‘human capital resources’ including the experience, judgement, and intelligence of the individual managers and workers in the firm; and ‘organisational capital resources’ comprising of firm's structure, planning, controlling and coordinating systems, and the informal relations among groups within the firm and between the firms (Barney, 1991). These resources form the source of competitive advantage for the firm based on the assumptions of resource heterogeneity (the resources vary across the firms) and resource immobility (the competing firms are unable to avail the resources from other firms or the market). However, for a sustained competitive advantage it is further necessary that the close competitors are unable to acquire valuable resources and cease all their efforts to duplicate them. Based on the RBV theory, our study attempts to explain the impact of employees’ perceptions regarding the organisation and their loyalty towards it on the success of new products.
Premised on Resource based view, our theoretical model proposes that strategic-level resources (namely market orientation and entrepreneurial orientation) combined with operative-level resources (namely employee job satisfaction and intention to stay) are essential for the success of new product development. The management capability to sense and seize the changes in external market as well as reconfigure the available resources and the operational capability to leverage the existing skills, processes, systems, and technology, are essentially required for ensuring effective innovation capability. Hence, both outside-in and inside-out capabilities are needed to understand the dynamics of the environment and accordingly, to make necessary changes to remain competitive.
Market & entrepreneurial orientations and new product successEntrepreneurial and market orientation are strategic orientations that assist firms in developing successful new products and in remaining competitive in the market place (Morgan et al., 2015). Market orientation refers to the thought process where the products and services are fashioned as per the end users’ needs and wants. It is an amalgam of the strategies capable of identifying and satisfying the target customers’ expressed and latent needs more effectively than the competitors. Merging together the conceptualisations of Narver and Slater (1990) and Kohli, Jaworski, and Kumar (1993) for MO comprising of customer, competitor and employee orientations, both cultural and behavioural characteristics are expected to actively influence the strategic performance of the firms. Such that they would anticipate and organise for the changes and trends in the marketplace (Langerak et al., 2004), proactively respond to market intelligence related to target buyers and current competitors (Jaworski & Kohli, 1993), and endeavour to develop market sensing and customer-linking capabilities (Day, 1994; Hult & Ketchen, 2001). Firms practising MO are believed to excel in their ability to direct sufficient resources to fulfil customers’ needs while creating and promoting new ideas, products, and processes (Langerak et al., 2004; Slater & Narver, 1998). Being more attuned to effective use of market information, MO is likely to drive continuous and proactive orientation toward meeting customer needs, thereby enhancing new product success (Atuahene-Gima et al., 2005; Langerak et al., 2004). In this regard, Pelham and Wilson (1996) support the notion that high level of market orientation is one of the few important determinants of effective product development.
Similarly, the successful commercialisation of a new product involves risk management and control, thereby calling for the need to be managed as if it is an entrepreneurial enterprise (Wienclaw, 2015). The 'innovation' aspect of EO enables the firms to pursue new market opportunities and facilitates the renewal of existing areas of operation, making firms strategically oriented (Lumpkin & Dess, 1996). It further emphasises the confiscation of external opportunities and mobilisation of the resources to attain innovative behaviours and competitive advantages (Wu et al., 2008). Considering three component model of innovativeness, risk-taking and pro-activeness given by Covin and Slevin (1989), EO is identified with creative processes and new ideas, temperament to support projects with a calculated probability of failure and pioneering behaviour undertaken to face future contingencies to overcome competition. On the contrary, non-entrepreneurial firms tend to adopt a reactive, risk-averse posture and merely imitate the competition (Barringer & Bluedorn, 1999). It is, therefore, argued that the firms which aim to contradict the tyranny of the market and to lead, rather than to be led by customers, require to build an EO to ensure a realistic focus on new product innovations meeting the unarticulated customer needs (Hamel & Prahalad, 1994; Slater & Narver, 1995; Zahra, 1993). Moreover, by combining the views of Covin and Slevin (1991) and Hitt et al. (2001), we can state that EO has the ability to convert the detriment of environmental uncertainty into the advantage of renewal and rejuvenation of the firms, enabling them to diverge from the status quo and embrace new ideas.
Literature on new product success alleges that MO alone cannot lead to the successful development of new products, which demands for the co-existence of complementary strategic orientations. Zahra (2008) and Kirca et al. (2005) stated that MO-performance link requires the support of entrepreneurial behaviours, as it may vary in strength between manufacturing and service industries or in high-technology industries, depending upon the national cultures or type of performance measures used. Even Foxall (1984) suggested that detailed market intelligence and entrepreneurship insight collectively can act as the major ingredients in product innovation success. Based on the empirical measurement, where MO is found to be an adaptive capability enabling firms to react or respond to the market conditions; EO, in contrast, is seen as an environmental management capability by which firms embark on proactive and aggressive initiatives to alter the competitive landscape to their advantage (Hunt & Morgan, 1995; Narver & Slater, 1995). Moreover, as MO is criticised of refraining from the innovativeness, the risk of EO is that new product may be technology driven with high risk of market failure (Olleros, 1986), therefore requiring a self-reinforcing balance between market and EO to engender effective product innovation (Hamel & Prahalad, 1994; Slater & Narver, 1995). Hence, it can be asserted that a firm with an effective alignment of both orientations shall experience improved position in the innovation competition owing to greater knowledge of the environmental conditions and thus, greater overall adaptive and environmental management capabilities in meeting customer needs (Atuahene-Gima & Ko, 2001).
Thus, our study concurs with the former arguments where scholars suggest that the synergy of complementary orientations is potentially more efficient and effective than that of any single orientation operating independently in commercialising new products (Mu & Di Benedetto, 2011), combined with the notion that MO and EO relationship is a primary factor in an organisation's performance, survival, and prosperity (Hamel & Prahalad, 1994; Slater & Narver, 1995). Thoumrungroje and Racele (2013) reported that entrepreneurial and market orientation are critical paths for firms to discover new products that subsequently improve firm performances. Morgan and Anokhin (2020) revealed that both EO and MO impact NPD performance positively, however their joint impact is negative. Lately, Amaya and Wu (2019) found that market orientation improves innovation implementation and entrepreneurial orientation affects NPS through team creativity and innovation execution. Hence, we hypothesise that (see Fig. 1):
H1a: Market orientation is significantly related to new product success.
H1b: Entrepreneurial orientation is significantly related to new product success.
H1c: Market and entrepreneurial orientations are synergistically related to new product success.
Mediating effects of employee job satisfactionEmployee job satisfaction is an important criterion for ascertaining the success of an organisation, as it defines the positive emotional state of employees, which motivates them to work towards the attainment of organisational objectives. Rendering effective and quality services depends upon the human resource and their job satisfaction experiences (Fitzgerald et al., 1994). In this regard, Hunter and Tietyen (1997) claim that satisfied employees tend to be more loyal and productive and further affect the customer satisfaction and organisational productivity (Potterfield, 1999). However, the conceptualisation that happy employees lead to improved firm performance has been supported with low correlations by prior studies (Iaffaldano & Muchinsky, 1985). Recently, Kessler et al. (2020) found that the effects of job satisfaction on firm performance are not immediate; rather it predicts a positive influence on performance over a period of four years.
Few researchers allege that satisfied employees are more devoted to their work as well as the business and provide reliable, responsive, and quality service to customers with total care and empathy (for e.g., Harter et al. 2002, Schneider et al. 2003, Singh 2000). They exhibit enhanced citizenship behaviour and engender a sense of involvement with the organisation resulting in greater employee initiative and innovation even in the absence of direct rewards (Eisenberger et al., 1990; Shore & Wayne, 1993). Moreover, Zhou et al. (2008) suggested that MO- performance link is further strengthened through employee job satisfaction and product quality. They note that the success of MO relies upon the co-ordination of organisational members at different levels for which organisations should facilitate communication and harmony that fosters employee satisfaction and, in turn, quality products and enhanced performance. Moreover, research on EO states that firms with satisfied and committed employees can more effectively actualise entrepreneurial orientation into practical action and embody knowledge into valuable assets to advance new product development or marketing activities (Nonaka & Toyama, 2005; Nonaka et al., 2000). Employees are considered to be integral in the innovation orientation conceptualisation as they are sufficiently dynamic to keep up with the changing technologies if backed by organisational support and pride in its association (Atuahene- Gima & Ko, 2001). Investment in employees encourages their self-initiative (Hom et al., 2009) and enables them to intertwine with organisational entrepreneurship for the development of new innovative products. Subsequently, existing products can be tailored efficiently, and control processes can be improved to produce new products with fewer deficiencies (Zhou et al., 2008), leading to improved performance. Kattenbach and Fietze (2018) examine the effects of EO on job satisfaction within the framework of job demands-resources model and find that job resources foster EO, which in turn enhances job satisfaction while for job demands, EO reduces the impact of health impairment, thus increases job satisfaction. In a SMEs’ context, Soomro and Shah (2019) reveal that EO influences job satisfaction through organisational commitment.
Hence, we hypothesise that:
H2a: Market orientation and new product success relationship is mediated by employee job satisfaction.
H2b: Entrepreneurial orientation and new product success relationship is mediated by employee job satisfaction.
H2c: Market and entrepreneurial orientation and new product success relationship is mediated by employee job satisfaction.
Moderating effect of intention to stayIntention to stay explains the bond of an employee's commitment toward the employing organisation. Even satisfied employees intend to leave owing to improved growth opportunities and urge to acquire varied functional experiences. Organisation's care and devotion toward its human capital lead to the emergence of a committed, dedicated and talented workforce that has the potential to serve as non-imitable resource capable of framing and executing an appropriate positioning strategy (Lado & Wilson, 1994). Factors such as care for employee wellbeing and satisfaction, fairness of rewards, and investment in competence development and compensation not only explain employees’ efforts at strategy execution (Lee & Miller, 1999) but also boost their attachment and staying intention with the organisation. Research contributions have designated commitment as vital competence building resource that engenders collaboration and harvest effort and initiatives (Barney & Zajac, 1994; Eisenberger et al., 1990). Organisations that endeavour to form strong emotional bonds are able to garner motivation, dedication, and innovation (Acemoglu & Pishke, 1999) among their employees and receive competitive advantage that rivals are least able to imitate (Lado & Wilson, 1994; McAllister, 1995). Further, MO literature lacks research on internal process factors (Gebhardt et al., 2006) related to employee variables (Kirca et al., 2005), thereby limiting the understanding and implementation of MO in augmenting the product related indicators of competitive advantage (Ketchen et al., 2007). Moreover, Kohli and Jaworski (1990) allege that committed and happy employees have the potential to contribute to organisational success by adopting a customer centric approach and behaviour congruent with the firm's market orientation. Subsequently, entrepreneurship is also expected to improve innovation of new products due to employees’ emotional and value commitment (Kanter, 1984), which shape the firm's strategic direction (Hart, 1992) and, in turn, is considered essential for employees’ and organisational growth (Gurbuz & Aykol, 2009). Finally, Caruana and Calleya (1998) find that employee satisfaction operates through a contingent variable such as employees' intention to stay rather than directly on performance.
The existing literature on new product development posits that market orientation and entrepreneurial orientation operate through employee-related variables such as employee job satisfaction and organisational commitment, for affecting the new product success. On this line, we postulate that the effects of MO, EO and both orientations on new product success are contingent on a higher level of employees’ intention to stay. Thus, employees’ stronger intention to stay help market-oriented, entrepreneurial-oriented and entrepreneurially-market-oriented firms to succeed in the new product development. Hence, we hypothesise the following:
H3a: Market orientation relationship with new product success is moderated by intention to stay such that at a higher level of intention to stay, MO shall strongly promote new product success.
H3b: Entrepreneurial orientation relationship with new product success is moderated by intention to stay such that at a higher level of intention to stay, EO shall strongly promote new product success.
H3c: Market and entrepreneurial orientation relationship with new product success is moderated by intention to stay such that at a higher level of intention to stay, MO and EO shall strongly promote new product success.
Research methodologyThe contextServices marketing literature calls for further research investigating new product research due to the increasing size of the services sector contributing 54.4% to the gross domestic product of India (CIA Report, 2015). One such important service utility in India is the telecommunication sector, which has grown in recent years to contribute significantly to the economy. With over half a billion mobile subscribers, the Indian market is the second largest in the world (COAI Report, 2016) and technology migration is under way accelerating with more than 40% of mobile connections forecast to be running over mobile broadband networks by 2020 (GSMA Report, 2015), thereby making it essential for organisations to upgrade the existing products or develop new ones for a sustained competitive advantage.
Since 1990, the telecommunications sector in India has experienced phenomenal growth due to the Government of India's liberal economic policy. Currently, India is the world's second-largest telecommunications market with a subscriber base of 1170.75 million in January 2023 and has registered strong growth in the last decade. A report prepared by the GSM Association (Global System for Mobile Communications) and Boston Consulting Group (BCG) indicates that India's mobile economy is expanding rapidly and will have a major impact on the country's Gross Domestic Product (GDP). The National Digital Communications Policy-2018 was launched to harness the power of emerging digital technologies, including 5G, AI, IoT, Cloud and Big Data to enable provision of future ready products and services; and to catalyse the fourth industrial revolution (Industry 4.0) by promoting investments, innovation and IPR.
According to the Telecom Regulatory Authority of India (TRAI), total number of Internet subscribers increased from 865.90 million at the end of December 2022 to 881.25 million at the end of March 2023, showing a quarterly growth rate of 1.77%. The number of broadband Internet subscribers increased by 1.73% from 832.20 million at the end of December 2022 to 846.57 million at the end of March 2023. The number of wireline subscribers increased from 27.45 million at the end of December 2022 to 28.41 million at the end of March 2023, with a quarterly growth rate of 3.48%. Wireless service's monthly Average Revenue per User (ARPU) increased by 0.83%, from INR 141.14 in the quarter ending December 2022 to INR 142.32 in the quarter ending March 2023. In this quarter, the monthly ARPU for wireless service increased by 11.91% on an annual basis. On an all-India average, the overall MOU per subscriber per month increased from 919 in the quarter ending in December 2022 to 946 in the quarter ending in March 2023, registering an increase of 2.97%. The number of telephone subscribers in India increased from 1170.38 million at the end of December 2022 to 1172.34 million at the end of March 2023, with a growth rate of 0.17% over the previous quarter.
Survey instrumentQuestionnaire method was adopted to collect the data for the study. The specific measures used were innovativeness, pro-activeness and risk-taking for EO; organisation's customer orientation (OCO), salespersons’ customer orientation (SCO), competitor orientation (CPO) and employee orientation (EO) to test for MO; employee job satisfaction (EJS); intention to stay (ITS); and new product success (NPS) (Annexure A.1). The questionnaire comprised of four sections and included 88 items focusing on EO, MO, EJS, ITS and NPS respectively, to be responded on a five-point Likert-type scale ranging from ‘1 equals to totally disagree’ to ‘5 equals to totally agree’. Apart from these, 2 marker items were also included to test for common method variance (CMV).
MO was measured through customer orientation (14 items) and competitor orientation (11 items) constructs adapted from market orientation scale (MKTOR) developed by Narver and Slater (1990); salespersons’ customer orientation (13 items) was extracted from the SOCO scale developed by Saxe and Weitz (1982); and employee orientation (8 items) items were borrowed from the IMO scale developed by Lings and Greenley (2005). EO was measured using the scale developed by Covin and Slevin (1989). The EO construct has 10 items, three of which were reversed. The scale comprised of items related to pro-activeness (3 items), risk taking (4 items), and innovativeness (3 items). EJS items were extracted from Riley (2006) and those for ITS were generated from Bishop et al. (2002), Riley (2006), and Lings and Greenley (2005). NPS items were identified from Frishammar and Horte (2007) and Mu and Di Benedetto (2011), Yang et al. (2012).
Sample design and data collectionThe present work is an empirical attempt to explicate and understand the strategic behaviour of the organisation toward the overall success of the new products. The research data were collected from employees of the private telecom organisations functioning in two cities of north India. An elicitation survey was conducted before the main survey to test the feasibility of the survey instrument. Having administered to city I, 15 questionnaires were distributed to the employees of five organisations and all filled responses were received. Careful examination of the responses revealed that the employees’ perceptions across the organisations were almost similar regarding the study variables. Based on the market share, the top four out of five organisations from city I and top six out of eight from city II were contacted for the final data collection. The survey was conducted in two parts and almost six months were spent to complete the data collection. It took around two and half months to obtain the responses from the organisations in city I and about three months from city II. 50 questionnaires each were distributed on random basis to the employees of ten organisations in both the cities. However, one of the organisations denied to participate in the survey and thus, out of 450 in all from both the cities, only 242 completely filled responses were received. Out of these, 226 were found to be meaningful for further analyses. The target respondents included the employees, with maximum number of staff in an organisation being 55–70 in city I and 65–80 in city II. The age of respondents ranged between 25 and 40 years, the number of women employees in the sample was 33 as against 176 male respondents, the qualification of the employees was majorly post-graduation and the minimum length of service with their current employer was found to be eight months (Table 1).
Sample characteristics.
Prior to testing the hypothetical model, data were checked for normalcy and common method variance. Using box plots, eleven outliers were detected and deleted during the process reducing the sample to 179. Subsequently, the values of Skewness (threshold value between ±1) and Kurtosis (threshold value between ±3) were observed to test the normalcy of data (Gao et al., 2008; Hair et al., 2009). The value for Skewness ranged between -864 and -0.061 and Kurtosis between -0.269 and 1.860.
Further, the possibility of CMV cannot be ruled out owing to the sources summarised as having a common rater (e.g., social desirability, leniency), item characteristic effects (e.g., item ambiguity), item context effects (e.g., priming effects, grouping of items) and measurement context effects (e.g., simultaneous measurement of predictor and criterion variables) (Podsakoff et al., 2003). For a more robust examination of CMV, we examined the possibility of bias affecting the data using a marker variable with the help of latent common factor method (Podsakoff et al., 2003). As per the method, a measurement model was formed and all the measured variables were allowed to load on the substantive constructs and the common latent factor simultaneously. The variance extracted for the common latent factor came out to be 9% after the entry of marker variable as against 12.5%, which explains that the marker variable accounts for only 3.5% of the total variance. Though the variance shared by the marker variable seems to be low, however χ2 difference test was conducted to further confirm the absence of the method bias. The insignificance (p = .867) of difference of the χ2 values of the two models (without marker χ2 = 111.1, df = 39; with marker χ2 = 121.1, df = 55) reports that the marker variable does not lay a significant impact on the results of the model (Williams et al., 2010). Hence, we consider that common method bias is not an issue in the study.
Validity and reliability (Confirmatory factor analysis)Internal consistency of the data collected was analysed from the Cronbach's alpha value and according to Malhotra (2002), the value of 0.50 or above is considered as an acceptable criterion. Item-to-item correlation was checked to determine that each item predominantly correlates positively with other items for which the value of three and above was considered good (Kennedy et al., 2002). As a result, three indicators from EO, one from MO, while three were dropped from ITS (for results see Table 2).
Descriptive statistics: cronbach alpha, AVE, CR, Mean, SD and correlations.
Note: * Correlation is significant at the 0.05 level (2-tailed).
** Correlation is significant at the 0.01 level (2-tailed).
Composite Reliability is in the parentheses.
Confirmatory factor analysis (CFA) was performed to test the psychometric properties of the study variables. The fit of the measurement model was evaluated through CFA by specifying the study constructs together in a single measurement model. Each measured variable (entrepreneurial orientation, market orientation, employee job satisfaction, intention to stay and new product success) was specified as one-dimensional, with appropriate items loading only onto its respective variable. The number of indicators retained in the process on the premise of factor loadings (β ≥ 0.5) was six for entrepreneurial orientation (two each for pro-activeness, risk taking and innovativeness); nineteen for market orientation (five each for organisation's customer orientation, competitor orientation, salespersons’ customer orientation and four for employee orientation); twelve for employee job satisfaction, and four each for intention to stay and new product success. The observed statistics of the measurement model were found to be significant (χ2/df = 1.005, p <. 05) and other fit indices (RMR= 0.04, RMSEA= 0.06, NFI= 0.863, TLI= 0.998, CFI= 0.996, IFI= 0.998) were almost within the recommended range suggested in the literature (Kline, 2005). Thus, we concluded that the study's measurement model provides a good fit to the data.
Convergent validity was assessed with the help of composite reliability (CR) and average variance explained (AVE). Construct with a composite reliability of at least 0.50 is considered to be convergently valid (Chau, 1997; Hau et al., 2004). Furthermore, AVE above 0.50 is considered significant to indicate higher level of convergence. All the key constructs satisfy the threshold namely entrepreneurial orientation, market orientation, employee job satisfaction, intention to stay and new product success (Table 2).
Discriminant validity was assessed by applying χ2 difference test, which demonstrates that the hypothesised unconstrained model was superior to the constrained model. For most of the possible pairs of study's constructs, χ2 values were significant at 0.05 level (Δχ2 >3.84, Δdf=1), thereby exhibiting that each latent construct is distinct from other latent constructs (Hair et al., 2009). In addition, AVE was compared with the squared correlation and for almost all the variables, AVE is found to be greater, further confirming the discrimination between the principal variables (Table 3).
Discriminant validity.
Note: The table shows the squared correlation values compared with AVE (i.e., average variance explained).
values in the parentheses on the diagonal.
We have controlled for six variables while testing the hypotheses of mediation and moderation namely age, gender, qualification, designation, length of service in the current organisation and total length of service. Among these variables, age and length of service in the current organisation have been found to be significant throughout.
Hypothesis testingWe conducted hierarchical regression analysis (HLM) to test the hypotheses. Throughout the analyses, we controlled for the employees’ age, gender, qualification, designation and total length of service. The results indicate the significant individual (MO: β = 0.558; EO: β = 0.354) and synergistic effect of market and entrepreneurial orientation on the new product success (MO*EO: β = 0.503), leading to the acceptance of H1a through H1c. Thus, confirming that both the strategic orientations share a complementary relationship in promoting new products. For H2, we examined the conditions proposed by Baron and Kenny (1986) necessary for the mediation confirming full mediation of employee job satisfaction in case of entrepreneurial orientation and new product success relationship (β = 0.095, p = .134), but partial mediation in case of market orientation and new product success relationship (β = 0.262, p = .000) and market cum entrepreneurial orientation and new product success relationship (β = 0.197, p = .005), providing acceptance of H2a through H2c (Table 4). The findings claim that employee job satisfaction plays significant intervening role in explaining the impact of MO and EO on the new product success. Finally, to analyse H3, once again HLM was run separately for market orientation, entrepreneurial orientation and market cum entrepreneurial orientation. Though the interactions between intention to stay and market orientation, entrepreneurial orientation and market cum entrepreneurial orientation have been found to be significant, however the results reveal that at a higher level of intention to stay, neither market and entrepreneurial nor market cum entrepreneurial orientation shall contribute positively toward the new product success (MO*ITS: β = -0.142, p = .008; EO*ITS: β = -0.142, p = .014; {MO*EO}*ITS: β = -0.168, p = .002). This refutes our H3a through H3c, alleging that employees’ intention to stay does not play a significant role in enhancing the impact of MO (and EO) on the NPS (Table 5; Fig. 2). Thus, our findings corroborate the results reported by Morgan and Anokhin (2020) wherein they found that firms operating in hi-tech industry, turbulent environment or those focusing on services can benefit from a joint implementation of EO and MO. However, our results have only confirmed the significant role played by employee satisfaction in affecting NPS while refuting the contingent effect of employees’ intention to stay in predicting the success of new products. Hence, we find partial support from the studies on NPD that have reported significant role of a firm's human resources in predicting new product success (Evanschitzky et al., 2012; Henard & McFadyen, 2012).
Mediation analysis (Hypothesis 1 and 2).
Note: CV- Control Variable, IV- Independent Variable, Qual- Qualification, Desig- Designation, TLOS- Total Length of Service.
MO- Market orientation, EO- Entrepreneurial Orientation, EJS- Employee Job Satisfaction, ITS- Intention to Stay, NPS- New Product Success.
Moderation analysis (Hypothesis 3).
Note: Qual- Qualification, Desig- Designation, TLOS- Total Length of Service, MO- Market orientation, EO- Entrepreneurial Orientation, EJS- Employee Job Satisfaction, ITS- Intention to Stay, NPS- New Product Success.
Today's marketplace is characterised by growing uncertainty, technological turbulence and rapidly changing consumer preferences (Alqahtani & Uslay, 2017), which have rendered traditional marketing strategies ineffective (Whalen et al., 2016). As a result, unswerving commercialisation of the successful new products is central for firms’ survival in increasingly competitive markets as NPS is associated with growth in market share, greater learning from customers, improved performance and profitability in new markets (Chandy & Tellis, 2000; Cooper & Kleinschmidt, 2007). NPS significantly influences sales and profits where new products account for about 50% of sales and 40% of profits (Chang, 2015; Cooper, 2000).
The first set of hypotheses postulates that market orientation, entrepreneurial orientation and both strategic orientations are positively and significantly related to new product success. In line with the previous findings, our results also provide support to the direct impact of market orientation (H1a: Atuahene-Gima et al., 2005; Langerak et al., 2004; Morgan & Anokhin, 2020; Pelham & Wilson 1996; Slater & Narver, 1998), entrepreneurial orientation (H1b: Hitt et al., 2001; Lumpkin & Dess 1996; Morgan & Anokhin, 2020; Wu et al., 2008), and both orientations on new product success (H1c: Atuahene-Gima & Ko, 2001; Foxall, 1984; Hamel & Prahalad, 1994; Morgan & Anokhin, 2020; Morgan et al., 2015; Mu & Di Benedetto, 2011; Thoumrungroje & Racele 2013).
The second set of hypotheses posits that the effects of market orientation, entrepreneurial orientation and both strategic orientations on new product success are better explained through employee job satisfaction. In this regard, our findings corroborate with earlier studies that have reported the intervening role of job satisfaction between market orientation (H2a: Zhou et al., 2008), entrepreneurial orientation and new product success (H2b: Kattenbach & Fietze, 2018; Nonaka & Toyama 2005; Nonaka et al., 2000; Soomro & Shah, 2019).
Final set of hypotheses propose that the impact of market orientation, entrepreneurial orientation and both strategic orientation together on new product success is stronger at a higher level of employees’ intention to stay and weaker at a lower level of it. However, in this respect, our findings are contrary to H3. That is, the results reveal that even at lower level of intention to stay, the influence of market orientation, entrepreneurial orientation and their synergistic effects on new product success are found to be stronger. However, Kanter (1984) found that the impact of both strategic orientations on new product success is contingent on employee retention, which is contradictory to our results pertaining to H3. This may be quite likely owing to the career-oriented approach of the young and dynamic employees. In the most rapidly growing technology sector of telecommunications, weaker intentions to stay may not necessarily explain the unfavourable working conditions or dissatisfaction of the workforce but can also be due to pursuit of career growth. The zeal to grow and achieve the desired designation in the career path demands employees to become highly competent and hence, the leaving employees are replaced by equally competent and hardworking personnel, thereby enabling firms to override the ill effects of consistent switching. Further, consistent switching sometimes leads to the appointment of versatile and highly adaptive employees who are quite passionate, goal oriented and opportunist, permitting the firm to meet the deadlines and attain the performance targets.
Recent literature on innovation to predict success of new products has focused on the relevance of generation of new ideas and transformation of such ideas into effective innovations (Amaya et al., 2018; Chung & Choi, 2016). However, escalating research and development (R&D) costs, rapid and radical technological developments, short product life cycles, intense competition, and soaring new product failure rates make NPS highly unpredictable and difficult (Rindfleisch & Moorman, 2001; Song et al., 1998). Owing to such turbulent and hostile environments making NPS more uncertain, a stream of literature explores its determinants (Droge et al., 2008). Researchers claim that identifying and developing a new product has always been an experimental process while essential to the long-term success of businesses in view of the fact that today's cutting-edge technology frequently becomes tomorrow's distant memory (Stankovic & Djukic, 2004). Hence, proliferation of products in the market continues to stay ahead of its competition and be on the leading edge of its field, particularly in the growth industry where high technology products, change, innovation, and new product development have become a way of life (Wienclaw, 2015). Bhattacharya et al. (2019) argued that while MO indicates a market-based outlook to new product introductions, EO culture is about proactively pursuing new opportunities of growth. Since MO provides a market-based alignment to EO, they complement each other.
Consequently, it becomes imperative for the firms to depend upon strategic competence to develop high performing products (Frishammar & Horte, 2007). Thus, aggressive proactive strategies and astuteness are often recommended (Day, 1994; Li & Calantone, 1998; Moorman, 1995) and proposed to lead directly to NPS through market intelligence and innovativeness. In this regard, Droge et al. (2008) claim that innovativeness and market intelligence are expected to constitute boundary-spanning activities (which sense, respond to, or alter the market), the specific given levels of which will lead to new product success in responsive environments. Market and entrepreneurial orientation are considered to be two separate but complementary strategic orientations or competencies that can coexist (Miles & Arnold, 1991). These are described in the literature as the subset of competencies that create complex, tacit and intangible skills allowing a firm to generate new ideas for the creation of new products, and the processes and respond to for changing circumstances (Teece & Pisano, 1994). Furthermore, the research involving cross-level models linking macro level cultures and practices to micro-level employee attitudes and then to macro-level firm performance (Kozlowski & Klein, 2000; Pearce, 2003) demand the focus on employee aspects as important intervening factors and indicator of strength between MO (or EO) competencies and the new product success.
Theoretical and managerial implicationsTheoretical implicationsOur study contributes to the existing literature on new product development by empirically establishing a positive and direct link between MO and employee satisfaction. Though the theorists have been constantly investigating the linkages between the strategic orientations and business performance via employee-related aspects, there remain a significant gap between strategic orientations (market and entrepreneurial orientation) and job satisfaction. It supports the notion that the success of market orientation requires internal focus on the workforce, substantiating that MO is an amalgam of both the external (customer and competitor orientation) as well as internal (employee orientation) forces. The study further contributes to the innovation management literature by confirming the positive combined impact of complementary strategic orientations on the success of new products and services. It has developed and tested the mediation and moderation of employee satisfaction and intention to stay and the findings have confirmed the relevance of employees’ job satisfaction in the new product success literature explaining that employee satisfaction is a necessary requisite. However, intention to stay does not play a positive role in enhancing the impact of MO and EO on the new product success, thereby raising doubts regarding the importance of intention to stay in the implementation and effectiveness of strategic orientations to promote NPS (Rodriguez et al., 2008). The significance of the synergistic relationship between MO and EO challenges the notion in the literature that declares market orientation as an independent factor impacting the new product success, thereby supporting the importance of complementary strategic orientations.
Managerial implicationsThe findings suggest that management interested in enhancing new product success should practice complimentary set of strategic orientations. In this regard, top management is required to enhance freedom and discretion over work design, encourage external orientation, trust and openness and also develop reward systems for the top performers so as to promote entrepreneurship among the employees. Autonomy in the selection of product's promotion strategies and experimentation of new ideas must be continuously supported. Consistent efforts should be made by the management to encourage the staff for procuring and generating adequate market information to promote the cross-functional co-ordination against the competition. Good performers should be rewarded along with their teams and accomplishments should be escalated across the functions in order to encourage innovativeness, risk-taking and proactiveness. As the success of the strategic orientations is found to be intertwined with the personal satisfaction of the employees, we recommend the policymakers to revise the firm's remuneration policies from time-to-time and should keep them transparent to minimise the chances of discontentment.
Further, it is challenging for telecom companies to implement strategic orientations for bringing new product success and to retain the workforce. Based on this, we suggest the service organisations to practice succession planning so as to enable the employees to plan their carriers accordingly and stay attached with the organisation. Team activities should be promoted in order to uplift the weak performers for the comprehensive participation of almost all the employees and overall success of the strategies. Furthermore, service industries work culture in India is highly tensed. For stress relaxation, the working hours should be strictly followed, inspirational and spiritual sessions should be conducted, along with the training sessions to keep them relieved of work stress and feelings of failure. Holidays for the employees should also be planned so as to retain them for a longer period of time. This will keep the employees satisfied, who will promote supportive climate where co-workers can assist one another to facilitate each other's performance. Furthermore, these employees will be more motivated and committed towards implementing strategic initiatives of their firm.
Limitations and directions for future researchThe study findings are a bit contradictory as employee satisfaction has confirmed to be an important factor in the success of new products, however their intentions to stay reveal negative interactions with strategic orientations. This requires further probing of more factors responsible for moderating the relationship between MO (and EO) and new product success. Moreover, the sample belongs to the telecommunication industry only thereby limiting the applicability of the findings to only the sectors with similar settings. The number of female respondents in the sample is also found to be very small, which puts constraint to generalise our findings. Hence, the model should be replicated in other sectors for an overall acceptance of the findings to enhance the generalisability of the results. Also, our study is bounded in space and time and we have investigated telecommunication organisations in only two circles of the country. The reliance on the results obtained from the data generated from only two circles may not be reasonable and hence, the future studies should attempt to conduct extensive research in the area.
The adoption of survey method for data collection restricts our study in establishing the causality among the relationships in the model. Hence, researchers are encouraged to conduct longitudinal study to confirm cause and effect relationship among the study variables. Finally, the data on the dependent variable (i.e., NPS) are perceptual, thereby making the results highly subjective. We recommend the future researchers to further extend the study model in other contexts and include new variables responsible for the contribution of strategic orientations in the new product performance. In addition, other orientations such as technology orientation and learning orientation should be included in the model, as there may be more than two orientations that can potentially impact new product success. Secondary data can also be used to reconfirm the findings for the dependent variable in order to have more relevant insights.