The influence of business strategy on new product activity: the role of market orientation

R.T. Frambach, Jaideep Prabhu, T.M.M. Verhallen

Research output: Contribution to JournalArticleAcademic

Abstract

In this paper, we propose that business strategy influences new product activity both directly and indirectly via its influence on market orientation. Accordingly, we develop a framework linking firms' relative emphasis on cost leadership, product differentiation and focus strategies to firms' customer and competitor orientation as well as their new product development and introduction activity. We use this framework to develop a simultaneous equations model that is tested on survey data from 175 Dutch firms of varying size and across different industries in the manufacturing sector. The surprising findings are that a greater emphasis on a focus strategy results in a decreased emphasis on customer orientation and that competitor orientation has a negative direct influence on new product activity and an indirect positive effect via customer orientation. We discuss the implications of these findings for theory and practice. © 2003 Elsevier Science B.V. All rights reserved.
Original languageEnglish
Pages (from-to)377-397
Number of pages20
JournalInternational Journal of Research in Marketing
Volume20
Issue number4
DOIs
Publication statusPublished - 2003

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Customer orientation
New products
Market orientation
Business strategy
Competitor orientation
Product differentiation
Simultaneous equations model
Survey data
New product introduction
Manufacturing sector
Industry
New product development
Cost leadership

Cite this

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The influence of business strategy on new product activity: the role of market orientation. / Frambach, R.T.; Prabhu, Jaideep; Verhallen, T.M.M.

In: International Journal of Research in Marketing, Vol. 20, No. 4, 2003, p. 377-397.

Research output: Contribution to JournalArticleAcademic

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AU - Verhallen, T.M.M.

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AB - In this paper, we propose that business strategy influences new product activity both directly and indirectly via its influence on market orientation. Accordingly, we develop a framework linking firms' relative emphasis on cost leadership, product differentiation and focus strategies to firms' customer and competitor orientation as well as their new product development and introduction activity. We use this framework to develop a simultaneous equations model that is tested on survey data from 175 Dutch firms of varying size and across different industries in the manufacturing sector. The surprising findings are that a greater emphasis on a focus strategy results in a decreased emphasis on customer orientation and that competitor orientation has a negative direct influence on new product activity and an indirect positive effect via customer orientation. We discuss the implications of these findings for theory and practice. © 2003 Elsevier Science B.V. All rights reserved.

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