Yan Qu
Dhurakij Pundit University, Shandong Yingcai
University, China
E-mail: qu8419@126.com
Chun-Shuo Chen
China-ASEAN International College, Dhurakij Pundit University,
Thailand
E-mail: Chencs0702@gmail.com
Submission: 30/06/2018
Revision: 25/07/2018
Accept: 01/08/2018
ABSTRACT
The framework of this
research is based on the discovery in the clues of former researches that
Innovation-driven is the pre factor for the firm to grow up or to gain the
competitive advantage, and among them, innovation comes mainly form market pull and technology
push (DOSI,1998). The study taking market orientation and technological opportunity as innovation-driven
factors, which are
two major determinant factors for the firm’s gaining the competitive advantage
and improving the performance and profits. Based on knowledge-based theory, a
questionnaire survey of 335 high-tech and Internet firms in China was conducted to
empirically analyze the relationship between innovation-driven, absorptive capacity, and new product
innovation performance. The article found that: the absorptive capacity
mediates the relationship between innovation-driven and new product
performance, and market turbulence negative adjusts the relationship between
market orientation and absorptive capacity. This study emphasizes the
importance of the firm’s focus on changes in customer needs to pursue the
cultivation of their own absorptive capacity. The evidence contributes
to the development of innovative literature and knowledge-based theory.
Keywords: Market Orientation;
Technological Opportunity; Absorptive Capacity; Market Turbulence; New Product
Innovation Performance
1. INTRODUCTION
In
the era of knowledge economy, with the market competition becoming gradually
more and more intense, firms that facing the dynamic, complicated and highly
uncertain competition environment shall take the continuous innovation as the
responding strategy for survival and development in order to maintain the
advantageous competition capacity Porter (1980). Innovation is indeed the
essential method for the development of a firm, an industry or even a country.
Based
on the knowledge-based theory, the study
attempt to deeply reveal the relationship between innovation-driven and new
product innovation performance from the perspective of two
Innovation-driven factors, market orientation and technological opportunity.
This
study helps firm in
catching more accurately the market information and technological information,
transforming available knowledge into their
own absorptive capacity to improve new product innovation performance to attain competitive advantage, meanwhile, this article has also discussed
whether market turbulence will affect the cultivation of firm’s absorptive
capacity. This article is of a comparatively essential significance both in
theoretically and practically.
2. LITERATURE REVIEW
Innovation-driven
refers to the collection of a series of constraints that driven by internal and
external factors, obtains a desire and requirements for innovation, so as to
carry out innovation activities. According to the famous paradigm, market pull
and technology push are main factors to promote firm innovation (DOSI, 1988).
Herein,
this article mainly takes the market orientation and technological opportunity
as the two main driving factors for the promotion of firm innovation
performance and obtainment of competitive advantage. At the same time, because
of the importance of innovation to the firm profit, it is more and more
concerned by the scholars and entrepreneurs to evaluate whether the firm can
achieve the expected and achieve certain performance under the driving factors
of innovation.
2.1.
Market
Orientation, Absorptive Capacity and New Product Innovation Performance
The
main difference between a firm and its competitors comes from knowledge
resources (GRANT, 1996). Knowledge resource refers to the internal ability of
the firm to be creative, unique, difficult to imitate, and the market knowledge
is the most important above all (LUCA; ATUAHENE-GIMA,
2007). Market orientation plays an important role in a firm’s
ability to generate, disseminate and use better information about its customers
and competitors (KOHLI; JAWORSKI, 1990).
Grant
(1996) proposed that knowledge is very important, but knowledge is not
important in knowledge itself, but the mechanism of knowledge integration,
indicating that knowledge integration is the source of competitive advantage.
When a firm comes into contact with knowledge, it will influence the decision
making of the firm (MARCH; SIMON, 1993) and the development of the future
ability (MCGRATH; MACMILLAN, 1995).
The
more market knowledge the firm has, the more it tends to assimilate the related
information, the more it would need to develop the ability of knowledge
acquisition, absorption, digestion and application, which is the absorptive capacity, which is necessary for the firm to improve long-term
performance (Day, 1994).
The firm of high
market orientation will have more market knowledge concerning customers and
competitors; in this case, the external market knowledge the firm acquired will
vary in the amount of information, information channels and the degree of
difficulty, thus the firm and firm members are easier to obtain more external
relevant information (CASTRO, 2015).
Meanwhile, the firm with
more knowledge of the market will lead to more willingness of the team members
to transform market information into
useful knowledge to achieve the goals of the organization, and to explore these
knowledge to meet the requirements of the market.
Therefore,
firms of high market orientation will encourage
itself and its employees to develop the ability of acquisition, assimilation,
transformation and exploitation of knowledge to external market. Therefore, the higher the market
orientation is, the more information the firm gets, which makes the firm to
produce absorptive capacity, to conduct the digestion, absorption and
application of the obtained knowledge, and the conversion
of valuable knowledge into performance. Based on the above discussion, the
first hypothesis of this article as follows:
·
H1: Absorptive capacity mediates the relationship
between market orientation and new product innovation performance.
2.2.
Technological
Opportunity, Absorptive Capacity and New Product Innovation Performance
A
firm who is eager to has competitive advantage within the industry not only needs to have rare and valuable
resources, but also needs the integration mechanism within the firm to conduct
the knowledge assimilation, transformation and application to provide new
products and services for the customer, and then to gain a competitive
advantage (BARNEY, 1991; GRANT, 1996; TEECE, 2007). Technological opportunity is another important driving factor in this article.
The
firm has the ability to perceive the technology development and respond
accordingly, which can improve the competitive advantage of firm (SRINIVASAN;
LILIEN; RANGASWAMY, 2002). With more technology choices, firms have more
opportunity to obtain competitive advantage through technological innovation.
More technological opportunity means more external information and obtainable
external technological knowledge, and the emergence of new technologies opens
the door for product innovation. The learning
environment being more challenging can increase R & D investment to
cultivate the absorptive capacity of the firm.
The stronger the absorptive capacity that the firm has, the more
technological information it can collect. Dissemination of information and
response to market demand are conducted, and the new product development
performance gets higher. Thus, the whole firm innovation performance gets also
higher (LICHTENTHALER, 2009). Therefore, this article proposes the second
hypothesis as follows:
·
H2: Absorptive capacity mediates the relationship
between technological opportunity and new product innovation performance.
2.3.
The
Moderating Effect of Market Turbulence on the Relationship between Market
Orientation and Absorptive Capacity
Market
turbulence means the extent to which the composition and preferences of an
organization’s customers tended to change over time (JAWORSKI; KOHLI, 1993;
OLSON; SLATER; HULT, 2005; SANTOS-VIJANDE; ÁLVAREZ-GONZÁLEZ, 2007). A turbulent
market is characterized by frequent and unpredictable changes in product
preferences and customer needs, in product and production technologies, and in
the competitive landscape (ATUAHENE-GIMA; LI; DE LUCA, 2006).
In
a turbulent environment with changing consumer preferences, the market will
reflect a large number of consumers and competitors’ information, firms with
high market orientation will obtain the rich market knowledge concerning
consumer and competitor.
Volatile market environment will encourage firms to
strengthen reserves and effective use of market knowledge, and promote firms to
transform market information quickly into the available knowledge for the firm.
It improves the firm’s ability in acquiring, understanding, assimilating
external information and effective use of knowledge, so as to create favorable
conditions for firms in the turbulent environment to achieved excellent
performance.
The
fierce competition will also encourage firms to strengthen the attention to
competitors and at the same time, continue to reflect their own way of
operation, which strengthens the digestion and absorption of external
information and knowledge, and makes the preparation to improve firm
performance (JAWORSKI; KOHLI, 1993; OLSON et
al., 2005; SANTOS-VIJANDE; ÁLVAREZ-GONZÁLEZ, 2007).
With high market
turbulence, the constantly changing customer preferences will make the firm of
high market orientation grasp competitors or customers’ potential demand now or
in the future, which encourage firms to improve digestion tendency of market
information and filter, transform customer and competitor information into
valuable knowledge.
The
combination of high market linkage and high market turbulence can enhance the
performance of new product development (CHEN;
WANG; HUANG; SHEN, 2016). On the contrary, with low market turbulence, customer
preferences will not change frequently, even
with high market orientation, the team members will think the customer demand
is the same or similar and it will reduce the members’ motivation to digest the
information. Even it is digested, the firm cannot turn market information into
useful knowledge, and new product innovation performance will thus be
relatively low. Therefore, this article proposes the third hypothesis as
follows:
·
H3: Market turbulence has a positive moderating effect
on the relationship between market orientation and absorptive capacity.
2.4.
The
Moderating Effect of Market Turbulence on the Relationship between
Technological Opportunity and Absorptive Capacity
In turbulent environment, it is not enough to respond to the technology
and market development from the internal environment and the firm shall
actively obtain the external information (CASSIMAN; VEUGELERS, 2006). One of
the key factors for the success of firm in a turbulent environment is the
ability of acquisition, assimilation, transformation, application of external
knowledge. While in a stable environment, the need for firm’s external
knowledge acquisition and knowledge of the market demand rate has declined (ZAHRA;
GEORGE, 2002). Therefore, this article argues that market turbulence will
affect the relationship between technological opportunity and absorptive
capacity.
Market turbulence
reflects the change of degree of customer preference in the industry (JAWORSKI;
KOHLI, 1993; OLSON et al., 2005),
which is a key source of environmental uncertainty. High market turbulence is characterized by customer’s
seeking for new products or services and changing the consumption preferences (JAWORSKI;
KOHLI, 1993), and that consumer demand is also
relatively broad (SANTOS-VIJANDE; ÁLVAREZ-GONZÁLEZ, 2007).
In order to make a profit, the firm must create value for
the customer; understand the customer's needs through the detection and data
analysis of the industry environment. Technological
opportunity is opportunity for managers to perceive the amount of external
relevant technical knowledge and to continually increase R & D investment
associated with the technology. Firm R & D investment can not only generate
new knowledge, but also help to improve absorptive capacity, and thus create
innovation and access to competitive advantage.
With
high market turbulence, customer preferences often change, and more
technological opportunity exist, which encourages the firm to recognize
competitors or customers’ demand and behavior now or in the future, to predict
the development trend of the industry, to seize the opportunity, and promote
the firm’s filtering, digestion, and transformation of information related to
technology into useful knowledge, and to cultivate technological advantages of
the firm,technical
knowledge not only refers to the knowledge related to technological progress, but the information of competitors is
the source of technical knowledge (TÖDTLING; LEHNER; KAUFMANN, 2009).
With
low market turbulence, customer preferences do not change often, and demand
response is not obvious. At this time, even if the firm has the technological
opportunity, without the user's demand, firms have no motivation to digest the
information and cultivation of the absorptive capacity is low. The changing
customer demand encourages firms to rely on innovation to continuously modify
their products or services to adjust the operation plan. In low market
turbulence, no corresponding measures to innovate will be conducted, so new
product innovation opportunities are also less. Based on the above discussion,
this article puts forward the fourth hypothesis as follows:
·
H4: Market turbulence has a positive moderating effect
on the relationship between technological opportunity and absorptive capacity.The research framework
is shown in Figure 1.
Figure1. Research Framework
3. RESEARCH METHODOLOGY
3.1.
Samples
and Data Collection
This
dissertation focuses on the relationship between innovation-driven, absorptive capacity and new product innovation
performance. We followed the suggestions from earlier studies conducted in new
product innovation (ATUAHENE-GIMA;
WEI, 2011;LUCA; ATUAHENE-GIMA, 2007). Firstly, this
article will focus on the high-technology industry, because the rewards of new
products appear more spectacular in the hi-tech sector (SONG; PARRY, 1997). Secondly, this
article will focus on internet industry, because in recent years, the scale of China's
internet transactions has maintained a rapid growth rate.
Sampling in China should focus on those industries or geographical
areas that most suitable to the research (ZHAO; FLYNN; ROTH, 2006), because the
capacity and achievement in high-tech industries is much stronger in major
cities of China (YAM; GUAN; PUN; TANG, 2004). Beijing, Shenzhen and Shandong
province are important for high-tech industry or internet firm, and the sample
selection is similar to that used in other studies (ATUAHENE-GIMA; WEI, 2011;
YUAN; CHEN, 2015), from May 2016 to March 2017, a total of 650 questionnaires
were distributed, 355 questionnaires were returned, and a total of 335 valid
questionnaires were obtained after removing invalid questionnaire. The recovery
rate and the valid recovery rate of questionnaires were 55% and 52%. The basic
characteristics of the sample are shown in Table 1.
Table 1: Sample Discription
Scale |
Below 100 persons |
14% |
Stage |
Founding period |
11% |
100-500 |
45% |
Growth period |
62% |
||
500-1000 |
22% |
Mature period |
23% |
||
Above 1000 |
19% |
Recession |
4% |
||
Time |
Below 1 year |
1% |
Business |
High-Tech Firms |
65% |
1-5 year |
5% |
Electric
business firms |
25% |
||
5-10 year |
27% |
Manufacturing |
3% |
||
Above 10 year |
67% |
Wholesale and retail |
7% |
3.2.
Reliability
Test
The Cronbach’s α coefficient; AVE, CR, and Factor Loading of each
construct were calculated by CFA. Details can be seen in Table 2.Cronbach's α
of five variables is between .64 and .81, indicating that the scale has good
internal consistency. The CR value of each construct is similar to α, and
CR>0.7, so the questionnaire has good internal consistency and satisfies
reliability requirements. c2/DF is less than 5, NFI, NNFI,
CFI, IFI, and RFI all meet the requirement of greater than 0.9, RMR satisfies
the requirement of less than 0.1, and SRMR satisfies the requirement of less
than 0.08, so the questionnaire satisfies the validity requirement.
3.3.
Validity
Test
The discriminant validity
were verified by Amos and summarized in Table 2.
Table 2: Summary table of correlation coefficients
MO |
TO |
MT |
ACAP |
NPIP |
FA |
FS |
|
1 |
0.53 |
||||||
2 |
0.32
*** |
0.66 |
|||||
3 |
0.28*** |
0.28*** |
0.62 |
||||
4 |
0.65*** |
0.47*** |
0.30*** |
0.65 |
|||
5 |
0.47*** |
0.40*** |
0.23*** |
0.63 *** |
0.69 |
||
Mean |
3.98
|
3.90
|
3.79
|
4.08
|
3.98
|
5.31
|
4.09
|
SD |
0.41 |
0.56 |
0.56 |
0.45 |
0.54 |
18.1 |
1.37 |
Note: N=335;* p<.05;**p<.01;***p<.001.
The background color numbers indicate the
square root of AVG
MO: Market Orientation TO: Technological
Opportunity MT: Market Turbulence
ACAP: Absorptive Capacity NPIP: New Product Innovation
Performance
FA: Firm Age FS: Firm Scale
4. ANALYSIS AND RESULTS
The paper adopts Hierarchical multiple regression analysis to
analyze the mediating role of absorptive capacity and the moderating role of
market turbulence by using spss19 and Amos 21.
4.1.
Market
Orientation, Absorptive Capacity and New Product Innovation Performance
When analyzing the mediation effects of absorptive capacity on
market orientation and new product innovation performance, three step
regression process will be used to test the mediation role of absorptive
capacity (BARON; KENNY, 1986). Meanwhile, three regression models will be established. In model
1, the independent variables are two control variables, firm age, firm scale,
as well as market orientation, while the dependent variable is new product
innovation performance.
This model aims at discussing the effects of these control
variables and market orientation on new product innovation performance. In
model 2, the independent variables are two control variables, as well as market
orientation, while the dependent variable is absorptive capacity. This model
aims at discussing the effects of these control variables and market
orientation on the absorptive capacity. In model 3, absorptive capacity is
added based on model 1. In other words, model 3 is a full model containing all
the control variables, market orientation, and absorptive capacity. Table 3
shows the regression operating results about mediation effects of absorptive
capacity on market orientation and new product innovation performance.
Table 3: CFA
of Measures
Measure and Source |
Description |
Standzrdized Factore Loadings |
t Value |
Market Orientation (Ellis, 2007) AVE=.28 CR=.74 α=.64 |
In the development of this new
product or service, Please indicate your agreement with each of the
following: l Our objectives are driven by customer satisfaction. l We have a good understanding of how our customers value our
products and services. l Our business strategies are primarily driven by our
understanding of possibilities for creating value for customers. l How often do managers visit important customers to learn what
products/services they will need in the future? l We know our competitors well. l If a major competitor were to launch an intensive campaign
targeted at our customers,we would respond
immediately. l How frequently do top managers discuss competitors’ strengths
and strategies? l How frequently do you take advantage of opportunity to
exploit competitors’ weaknesses? |
.57 .56 .46 .43 .26 .48 .45 .76 |
9.35 10.27 10.19 9.16 11.18 12.44 14.26 9.16 |
Technological Opportunity (Zahra, 1996) AVE=.43 CR=.78 α=.70 |
In the development of this new
product or service, Please indicate your agreement with each of the
following: l Opportunities for product innovation are abundant in our
major industry. l Opportunities for technological innovation are abundant in
our major industry. l Spending on research and development (R&D) is higher in
our major industry than in most industries. l Opportunities for major technological breakthroughs are abundant
in our major industry. l The technology in our industry is changing rapidly. |
.60 .71 .31 .59 .61 |
16.24 16.78 13.24 11.22 11.10 |
New Product Innovation Performance
(Tsai and Yang, 2013) AVE=.47 CR=.77 α=.66 |
Please indicate your agreement with
each of the following Statements with respect to
description of the new product or service. l Relative to our principal competitors, our new product
innovation performance over the past three years on sales growth rate. l Relative to our principal competitors,our new product innovation performance over the past three
years on return on assets. l Relative to our principal competitors,our new product
innovation performance over the past three years on market share growth. l Relative to our principal competitors,our new product
innovation performance over the past three years on overall performance. |
.64 .68 .48 .48 |
13.10 12.37 15.41 16.01 |
Absorptive Capacity AVE=.42 CR=.88 α=.81 |
In the development of this new
product or service, Please indicate your agreement with each of the
following: l We are successful in learning new things within our office. l Our office is effective in developing new knowledge or
insights that have the potential to influence our business. l Our office is able to identify and acquire internal (e.g.
within the office) and external (e.g. Market) knowledge. l Our office has effective routines to identify, value, and
import new information and knowledge. l Our office has adequate routines to analyze the information
and knowledge Obtained. l Our office has adequate routines to assimilate new
information and knowledge. l Our office can successfully integrate our existing knowledge
with the new information and knowledge acquired. l Our office is effective in transforming existing information
into new knowledge. l Our office can successfully exploit internal and external
information and knowledge into concrete applications. l Our office is effective in utilizing knowledge in new services. |
.59 .59 .52 .51 .53 .61 .56 .48 .43 .55 |
14.27 9.80 15.41 16.35 15.52 19.32 15.52 8.97 7.96 8.96 |
Market Turbulence (Jaworski & Kohli, 1993) AVE=.39 CR=.75 α=.68 |
Please indicate your agreement with
each of the following statements with respect to your
environment: l In our kind of industry, customers’ product preferences
change quite a bit over time. l Our customers tend to look for new product all the time. l Sometimes our customers are very price-sensitive,but on other occasions, price is relatively unimportant. l We are witnessing demand for our products and services from
customers who never bought them before. l New customers tend to have product-related needs that are
different from those of our existing customers. |
.71 .67 .35 .52 .47 |
12.66 13.93 10.66 17.03 14.60 |
Notes:CR=composite reliability |
|
|
Table 4: Results for Mediated Regression
Analysis
Variables |
Criterion |
Criterion |
|
||||||
ACAP |
New
Product Innovation Performance |
|
|||||||
Model 2 |
Model 1 |
Model 3 |
|||||||
ß |
t value |
ß |
t value |
ß |
t value |
||||
FA |
-.03 |
-2.24 |
.000 |
-.02 |
.02 |
1.23 |
|||
FS |
.04 |
2.28 |
-.001 |
-.03 |
-.03 |
-1.31 |
|||
MO |
.72 |
15.50*** |
.62 |
9.74*** |
.14 |
1.84 |
|||
ACAP |
.68 |
10.28*** |
|||||||
F value |
83.60*** |
31.86*** |
57.88*** |
||||||
R² |
0.431 |
0.224 |
0.412 |
||||||
ΔR² |
0.188 |
||||||||
F change |
105.71*** |
||||||||
*p<0.05
**p<0.01 ***p<0.001
Note: This article used a two-tailed test for control variables
and a one-tailed test for all hypotheses.
In
Model 1, we use regression analysis to test the direct impact of market
orientation on new product innovation performance. The results show that market
orientation has a significant positive impact on new product innovation
performance (ß = .62, p <.001). In addition, Model 2 suggests that market
orientation has a positive effect on realistic absorptive capacity (ß = .72, p
<.001). Finally, when absorptive capacity was added to Model 3, it showed a
positive and significant effect on the innovation performance of new products
(ß = .68, p <.001).
It
can also be seen from the analysis results that with the addition of absorptive
capacity, the influence of market orientation on new product innovation
performance is reduced (from .62 to .14), However, it is still significant,
indicating that it is a partial intermediary. It shows that the influence of
market orientation on the new products innovation performance has two effects.
One
is the direct relationship between the two, and the other is the influence of
market orientation on new product innovation performance is partly through
absorptive capacity, which help the firm collect market information and transformed them into knowledge, apply to new
product development, and thus improve the performance of new product
innovation. We further conducted a confirmatory test based on the Sobel
mediation process and found that market orientation has a positive effect on
new product innovation performance through absorptive capacity. The indirect
effect is 0.49 (0.72 * 0.68, t = 4.52, p <0.01) (HAYES, 2013; SOBEL,
1982). Therefore, hypothesis H1 is supported.
4.2.
Technological
opportunity, Absorptive Capacity and New Product Innovation Performance
When analyzing the mediation effects of absorptive capacity on
technological opportunity and new product innovation performance, three step
regression process will be used to test the mediation role of absorptive
capacity (BARON; KENNY, 1986). Meanwhile, three regression models will be
established. In model 1, the independent variables are two control variables,
firm age, firm scale, as well as technological opportunity, while the dependent
variable is new product innovation performance.
This model aims at studying the effects of these control variables
and technological opportunity on new product innovation performance. In model
2, the independent variables are two control variables, as well as
technological opportunity, while the dependent variable is absorptive capacity.
This model aims at studying the effects of these control variables and
technological opportunity on the absorptive capacity. In model 3, absorptive
capacity is added based on model 1.
In other words, model 3 is a full model containing all the control
variables, technological opportunity, and absorptive capacity. Table 5 shows
the regression operating results about mediation effects of absorptive capacity
on technological opportunity and new product innovation performance.
Table 5: Results for Mediated Regression
Analysis
Variables |
Criterion |
Criterion |
|
||||||
ACAP |
New Product Innovation
Performance |
|
|||||||
Model 2 |
Model 1 |
Model 3 |
|||||||
ß |
t value |
ß |
t value |
ß |
t value |
||||
FA |
-.01 |
-.48 |
.03 |
1.139 |
.03 |
1.69 |
|||
FS |
.02 |
1.11 |
-.02 |
-.847 |
-.03 |
-1.75 |
|||
TO |
.37 |
9.36*** |
.39 |
8.00*** |
.14 |
2.98 |
|||
ACAP |
.68 |
12.1*** |
|||||||
F value |
31.80*** |
21.55*** |
60.207*** |
||||||
R² |
0.224 |
0.163 |
0.422 |
||||||
ΔR² |
0.159 |
||||||||
F change |
21.55 |
147.55*** |
|||||||
Note: This article used a two-tailed test for
control variables and a one-tailed test for all hypotheses.
In
Model 1, we use regression analysis to test the direct impact of technological
opportunity on new product innovation performance. The results show that the
technological opportunity has a significant positive impact on new product
innovation performance (ß= .39, p <.001). In addition, Model 2 suggests that
technological opportunity have a positive effect on absorptive capacity (ß =
.37, p <.001). Finally, when absorptive capacity was added to Model 3, it
showed a positive and significant effect on the innovation performance of new
products (ß = .68, p <.001)
It
can also be seen from the analysis results that with the addition of absorptive
capacity, the influence of technological opportunity on new product innovation
performance is reduced (from .39 to .14), However, it is still significant,
indicating that it is a partial intermediary. It shows that the influence of
market orientation on the new products innovation performance has two effects.
One
is the direct relationship between the two, and the other is the influence of
technological opportunity on new product innovation performance is partly
through absorptive capacity, which help the firm collect technological
information and transformed them into
knowledge, apply to new product development, and thus improve the performance
of new product innovation. We further conducted a confirmatory test based on
the Sobel mediation process and found that technological opportunity has a
positive effect on new product innovation performance through absorptive
capacity. The indirect effect is .25 (0.37 * 0.68, t = 4.52, p < .01) (HAYES,
2013; SOBEL, 1982). Therefore, hypothesis H2 is supported.
4.3.
The
Moderating Effect of Market Turbulence on the Relationship between Market
Orientation and Absorptive Capacity
In this work, a series of models are established based on the
hypothesis of moderate variables: Model 1 is composed of two control variables:
firm age and firm size; model 2 added independent variables market orientation
and the moderating variables absorptive capacity; Model 3 composed of elements
in model 2, as well as the interaction of market orientation and absorptive
capacity. Table 6 shows the regression results of market turbulence as a
moderator.
Table 6: Results for Hierarchical
Moderated Regression Analysis
Variables |
Model 1 |
Model 2 |
Model 3 |
VIF |
|||
ß |
t value |
ß |
t value |
ß |
t value |
||
FA |
-.027 |
-1.36 |
-.03 |
-2.14 |
-.03 |
-2.12 |
1.35 |
FS |
.051 |
2.47* |
.04 |
2.28 |
.033 |
2.14 |
1.36 |
MO |
.68 |
14.22 |
.63 |
12.77 |
1.21 |
||
MT |
.11 |
3.04** |
.13 |
3.59 |
1.12 |
||
MO_X_MT |
-.27 |
-3.15** |
1.12 |
||||
F value |
3.061 |
66.577 |
56.683 |
||||
R² |
0.018 |
.440 |
.455 |
||||
ΔR² |
0.422 |
0.015 |
|||||
F change |
127.76*** |
9.914 |
|||||
*p<0.05, **p<0.01,***p<0.001 |
|||||||
Note: This article used a two-tailed test for control variables
and a one-tailed test for all hypotheses. |
In
Table 6, all the coefficients of the variance inflation factor (VIF) are
estimated to be lower than 10 (MASON; PERREAULT, 1991), which indicating that de-centralizing of the variables has no
effect on the operating results. Model 1 shows that when explaining absorptive
capacity, the control variable can explain 1.8% for the variance. Model 2 shows
that R² increased by 42.2% (ΔF = 127.76, p <.001) after adding independent
variables (market orientation) and moderation variables (market turbulence). As
we mentioned above, market orientation has a significant and positive effect on
Absorptive Capacity (ß = .68, p <.001).
Model
2 also shows that market turbulence has significant and positive effect on
absorptive capacity (ß = .11, p <.01), which means that the stronger the
market turbulence, the more information consumers and competitors receive from
the business, the more conducive for the firm to absorb knowledge outside.
In
Model 3, we added the regression equation of market orientation and market
turbulence interaction terms to adjust the effects of market orientation on
absorptive capacity, R² increased by 1.5% (ΔF = 9.914 p> .05). One-tailed
tests are often used to verify the hypothesis of the direction of the forecast,
The effect of market orientation and market turbulence on the absorptive
capacity is significant (ß = - .27, t = -3.15, p <0.01).
With
stronger market turbulence, the relationship between market orientation and
absorptive capacity is weakened (b = .48, t = 5.66, p <0.01) .When market turbulence is lower,
there is a positive relationship between market orientation and absorptive
capacity (b = .78, t = 9.22, p <.01). This result shows that Market
orientation has a significant effect on absorptive capacity with stronger
market turbulence relative lower turbulence. Therefore, hypothesis H3 is
supported.
4.4.
The Moderating
Effect of Market Turbulence on the Relationship between Technological
Opportunity and Absorptive Capacity
In
this work, a series of models are established based on the hypothesis of
moderate variables: Model 1 is composed of two control variables: firm age and
firm size; model 2 added independent variables technological opportunity and
the moderating variables absorptive capacity; Model 3 composed of elements in
model 2, as well as the interaction of technological opportunity and absorptive
capacity. Table 7 shows the regression results of market turbulence as a
moderator.
Table 7: Results for Hierarchical
Moderated Regression Analysis
Variables |
Model 1 |
Model 2 |
Model 3 |
VIF |
|||
ß |
t value |
ß |
t value |
ß |
t value |
||
FA |
-.03 |
-1.36 |
-.009 |
-.497 |
-.009 |
-.504 |
1.363 |
FS |
.05 |
2.47* |
.023 |
1.223 |
.023 |
1.244 |
1.390 |
TO |
.328 |
8.103*** |
.327 |
8.066 |
1.122 |
||
MT |
.151 |
3.757*** |
.163 |
3.924 |
1.170 |
||
TO_X_MT |
.081 |
1.130 |
1.079 |
||||
F value |
3.061 |
28.322 |
22.932*** |
||||
R² |
0.018 |
0.247 |
.247 |
||||
ΔR² |
0.229 |
0.000 |
|||||
F change |
52.631*** |
1.278 |
|||||
*p<0.05, **p<0.01,***p<0.001 |
|||||||
Note: This article used a two-tailed test for control variables
and a one-tailed test for all hypotheses. |
In
Table 7, all the coefficients of the variance inflation factor (VIF) are
estimated to be lower than 10 (Mason & Perreault, 1991), which indicating
that decentralizing of the variables has no effect on the operating results.
Model 1 shows that when explaining absorptive capacity, the control variable
can explain 1.8% for the variance. Model 2 shows that R² increased 22.9% (△F = 52.631, p < 0.001) after adding independent variables
(technological opportunity) and moderation variables (market turbulence). As we
mentioned above, technological opportunity has a significant and positive
effect on Absorptive Capacity (ß = .68, p <.001).
Model
2 also shows that market turbulence has significant and positive effect on
absorptive capacity (ß= .15, p < .001), which means that firms pay more
attention to the market turbulence and help for enhancing the firms’ absorptive
capacity.
In
Model 3, we added the regression equation of technological opportunity and
market turbulence interaction terms to adjust the effects of technological
opportunity on absorptive capacity, R² increased by 0.0%(△F = 1.278, p>0.05). Technological opportunity and market
turbulence had no significant effect on the absorptive capacity (ß =. 081,
p> .05). This shows that the relationship between technological opportunity
and the absorptive capacity is not affected by the market turbulence.
Therefore, H4 is not supported.
5. CONCLUSIONS AND FUTURE RESEARCH
Innovation drives firm to improve new product
innovation performance, but there are many drivers. The study
taking market orientation and technological opportunity as innovation-driven
factors, discussing the relationship of innovation-driven, absorptive capacity
and new product innovation performance, and proved that firms driven by market
orientation can master customers’ needs and cultivate their own absorptive capacity,
which contribute to the improvement of new product innovation
performance .
Market
turbulence has an important and positive impact on absorptive capacity, which
means the stronger the change in customer demand, the more information the firm
gets about consumers and competitors and much beneficial for the absorption of
knowledge by the firm. However, the quantity and complexity of information that
customers obtain from their customers and competitors will face many
uncertainties in the process of acquisition.
Is
the acquired knowledge correct? Whether knowledge be absorbed by employees?
Whether new products or new services produced meet the needs of consumers? Such
factors will affect the process from acquiring knowledge to assimilating,
developing, and applying knowledge. As a result, the stronger the market
turbulence, the relationship between market orientation and absorptive capacity
is weakened.
This
research proposes that the process from innovation-driven to product
performance must be accomplished through absorptive capacity, that is,
absorptive capacity plays an intermediary role. The study extends the framework
Zahra and George proposed in 2002, which is only theoretically discussed and
has not been empirically tested. Meanwhile, this study emphasizes the
importance of the firm’s focus on changes in customer needs, changes in
competitors in the industry, which prompted firms to pursue the cultivation of
their own absorptive capacity. The evidence contributes to the development of
innovative literature and knowledge-based theory.
Firms
should be market-oriented and constantly grasp the changes in customers’ needs.
In order to seize opportunities, firms and managers need to pay attention to
market knowledge, grasp market changes. Firm leaders also be positive about
market orientation and be prepared for risks. Only by continuously obtaining
the information that firms need, can they win in the market competition and
gain competitive advantage.
There
are several limitations should be considered in the interpretation of the
results. First of all, the data are mainly from China, and the sample data are
mainly from Beijing, Shenzhen and Shandong Province. Therefore, the
universality of the results is limited. Secondly, although some variables, such
as firm age, firm scale was controlled, they did not include some potential
influence factors such as innovation agree, innovation tendency.
In
the future research, these contents can be further studied. Lastly, sample data
used in this article was cross-sectional data. Future research can target a
certain amount of firm sample data and select longitudinal data with a certain
time span to further discuss, and dynamically explain the evolution mechanism
of market orientation, absorptive capacity and its impact on new product
innovation performance.
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