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The Effects of Customer Orientation on Product Innovation in Arabic Countries - Coursework Example

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"The Effects of Customer Orientation on Product Innovation in Arabic Countries" paper investigates the impact of market orientation on product innovation in Arabic countries, particularly, the impact of components of market orientation on product innovation…
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The Effects of Customer Orientation on Product Innovation in Arabic Countries
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THE EFFECTS ORIENTATION ON PRODUCT INNOVATION IN ARABIC COUNTRIES Introduction Background of the Study Companies make great efforts to bemore successful in meeting the needs of their consumers than their competitors, consequently to achieve a better position in the market and better business performance. The needs of consumers and threat from competitors often motivate companies to introduce to the market either quite modified or new products. It is by innovation that companies try to improve their business performance and their market share. Market orientation plays an essential rule in improving business performance, and product innovation. There are many studies mentioned that the relationship between product innovation and market orientation is positive. This study investigates the impact of market orientation on product innovation in Arabic countries, particularly, the impact of components of market orientation on product innovation. Market orientation and innovation have been identified as crucial success factors in companies (Day, 1994; Hunt and Morgan, 1995; 1996). Researches have shown the importance of market orientation for the success of product innovations (Cooper, 1975; 1979; Slater and Narver, 1994; Pelham and Wilson, 1996; Atuahene-Gima, 1996; Gatignon and Xuereb, 1997). An increasing number of empirical studies have demonstrated that an improvement in the level of market orientation will lead to superior organizational performance and new product innovation (Narver and Slater, 1990; Oczkowski and Farrell, 1998; Slater and Narver, 2000; Kohli and Jaworsky, 1990; Ruekert, 1992; Deshpandé, Farley and Webster, 1993; Atuahene–Gima, 1996; Gatignon and Xuereb, 1997). On the other hand, a number of authors are questioning the benefits of being market oriented, suggesting that there may be several limitations to a market orientation. Hamel and Prahalad (1991) suggest that market oriented firms may suffer from ignoring or missing markets and competitors. Slater and Narver (1995) argue that market oriented firms may fail to identify and capitalize on the latent needs of customers, due to their excessive focus on expressed needs. Therefore, it is highly significant to look into the components of market orientation, particularly customer orientation. The current study will look into the effects of customer orientation which is a form of orientation that a company takes in order to develop and maintain current relationships with customers. It can also be used for establishing new customer relationships and may have a considerable impact on their overall performance of companies, including their innovation performance (Palmatier, Dant, Grewal, and Evans, 2006). Research Question Studies about market orientation and innovation performance in European and American counties offer little guidance to understand the effects of market orientation on a company’s innovation performance because the resources and capabilities of Arabic firm countries are different from those of European and American firms counties. In particular, there is limited research on the effects of pursuing new customers and strengthening relationships with existing customers on the innovation performance of Arabic companies (Atuahene-Gima, 2005). Also there are a few studies that examine the variables that influence customer orientation in relation to a company’s innovation performance. The following research questions will be addressed in this proposal. 1- What are the effects of customer orientation on the innovation performance of Arabic firms? 2- What are the factors that influence customer orientation which may consequently affect innovation performance among Arabic firms? 3- What are the possible recommendations and future implications of the findings on customer orientation and innovation performance in Arabic firms? Research Objectives The objective of this research is to gain a deeper understanding of customer orientation and innovation performance in Arabic firms, particularly to identify the factors that influence customer orientation and its impact on innovation performance. The research will try to obtain the following objectives: 1- To examine the concept of customer orientation and its effects on a company’s innovation performance. 2- To identify and explore the factors which contribute to customer orientation and influence a company’s innovation performance. 3- To present recommendations and implications of the study’s findings with regards to components of customer orientation that can help enhance a company’s innovation performance. Project Rationale The study will be conducted using a mixed methods approach in order to have a more detailed and extensive view of the relationship between customer orientation and innovation performance. Integrating both qualitative and quantitative strategies can provide certain advantages on the sample size, methods of collecting data, as well as analyzing such gathered data. As there have been limited number of studies on customer orientation and innovation performance in the Arab region, conducting a study that presents a comprehensive view of such constructs. Based on existing research, there are still ambiguous results regarding the effects of customer orientation on innovation performance of an organization. While numerous studies emphasize the significance of customer acquisition and retention orientation in influencing a company’s innovation performance, this may not be adequate if innovation goals and outcomes are not monitored. This study will focus on examining the outcomes of customer orientation on innovation performance, particularly among Arabic companies, as numerous similar have mainly been carried out in European and American regions. The study also aims to identify variables that could support the application of customer orientation towards innovation performance. In addition to a strong market orientation, a firm must also be able to satisfy higher level of learning processes, the type of learning that enables radical innovation (cf. Baker and Sinkula, 1999). Literature Review Market Orientation: An Overview Market orientation’ differs from the original term which was traditionally a focus on the customer needs only. Marketing orientation views all areas of the firm as important in the marketing process (Day, 1990; Kotler, 2003). Market orientation has been characterized as a culture of the organization that focuses on customer satisfaction and produces superior value for customers (Liu et al, 2002; Day, 1994; Narver and Slater, 1990). Kohli and Jaworski (1990) define market orientation as the generation of market information about customers’ needs and wants, the dissemination of such information among organizational functions, and the development of strategies in response to the information. These elements include continuous information gathering regarding customers and competitors, cross-functional sharing of information and coordination of activities, and responsiveness to changing market needs. Market orientation consist of three parts: customer orientation is the sufficient understanding of target buyers to be able to create superior value to them, competitor orientation which means to identify strengths and weaknesses of direct competitors, and inter-functional Coordination which require the coordination of company resources to creating superior value for target customers. (Narver and Slater, 1990; Kohli and Jaworski,1990). Customers’ needs and wants change continually which is require the introduction of new products and services to market place. It is by innovation that companies try to improve their business performance and their market share (Jaworski and Kohli, 1993; Martin and Grbac, 2003). An innovation is defined as an idea or object that is perceived as new by an individual or an agency (Rogers, 1995; Robertson and Yu, 2001). Innovation is the generation, acceptance, and implementation of new ideas, processes, products or services. Newness has been measured in a variety of ways: for example, it can be derived from the number of new product and service introductions, number of innovations adopted, the number of patents, the amount spent on research and development, the number of new products introduced, organisational innovation. Product innovation focuses on the creation of new products as well as improvements to existing products. New products or services and modifications to products or services are examples of product innovation. Accordingly this study will focus on product innovation. Market Orientation and Product Innovativeness The impact of market orientation on product innovativeness has been a popular area in recent years. There are many studies pay attention to the components of market orientation and their impact on product innovation. Numbers of studies reveal a positive influence of market orientation on new product introduction (Kohli and Jaworsky, 1990; Ruekert, 1992; Deshpandé, Farley and Webster, 1993; Slater and Narver, 1994; Atuahene–Gima, 1996; Gatignon and Xuereb, 1997). Market orientation is one of the core aspects of new product performance and firm innovativeness and the relationship between market orientation and product innovation are positive (Liu et al, 2002; Webster, 1992; Gatignon and Xuereb, 1997, Gima, 1995; Gatignon and Xurebeb, 1997; Bear and Frese, 2002; Calontone et al, 2002). Choe (2003) added that market orientation improves organizational performance. It is also play an important role in the strategy of firms and in their innovation strategy and performance. Market orientation drives innovation and firm innovativeness which in turn drive customer acceptance (Harmsen et al, 2000). On the other hand, there are studies mentioned that market orientation leads to imitation and makes continuous innovation development more difficult and consumer orientation makes commercialisation of new products more difficult (Bennett and Cooper 1979; Lawton and Parasuraman, 1980; Christensen and Bower, 1996). Lukas and Ferell (2000) added that consumer orientation increases the number of discontinuous innovations and decreases the number of continuous innovations, thus contesting consumer orientation as being the cause of incremental innovations. Kohli and Jaworksi (1990) suggested that in some industries, market orientation is not important to the innovative process. They added that market orientation had a negative impact on product newness. Verhees and Meulenberg (2004) in their study of SME’s found that market orientation inhibited product innovation in firms that were already highly innovative, while market orientation stimulated innovation in firms that were less innovative. Christensen (1997) mentioned that market orientation firms focus on existing customers, which may limit a firms ability to innovate, because managers are not capable to serve new customers. However, focusing on existing customers is not a market oriented. Slater and Narver (1999) argue that market orientation is not just focus on existing customers, but market oriented firm also focuses on potential customers and latent needs by evaluating market information in an anticipatory manner. Customer Orientation: An Overview The debate regarding the effects of customer orientation on a company’s innovation process and outcomes remains a concern to many (Lukas and Ferrell, 2000). In the concept of marketing, most often, customer orientation can improve innovativeness as it entails conducting a new and different process or activity as a means of responding to current marketing conditions (Christensen, Cook, and Hall, 2005). Companies that are customer-oriented focus on the use of information along with learning, and identify the underlying needs of customers, thereby increasing their likelihood for innovation (Narver, Slater, and MacLachlan, 2004). However, some researchers and managers assert that customer-oriented behavior can cause unimportant innovation as customers may find it difficult to express their main needs aside from those based on their present consumption experiences (Christensen et al., 2005). The current study will make use of the theoretical framework put forth by Arnold, Fang, and Palmatier (2011) that emphasizes five various elements integrated into customer orientation- structure, leadership, culture, strategy, and control, similar to the variables that were highlighted in the study of Tushman and O’ Reilly (2002). These components may be considered as separate, however they remain interconnected as companies are viewed as complex groups that are comprised of interrelated elements that support each other. Firstly, the structure of a customer orientation approach refers to the ways with which the firm’s workers are organized as well as the arrangements of their customer engagement activities in order to maintain their acquisition of new customers who are highly valuable and the retention of existing customers who are similarly valuable. Next, the leadership component of customer orientation represents the efforts of the senior management towards the acquisition and retention of their valuable customers, viewed as a strategic goal whereas the cultural component has been referred to as a system representing the values and norms shared among organizational members to determine proper attitudes and behaviors. The strategy component of customer orientation focuses on a range of activities and processes that are used in designing and implementing marketing plans, placing an emphasis on a firm’s efforts to create new schemes and tactics that will either attract new customers or strengthen relationships with existing ones. Finally, the element of control is defined as the system to be used for the monitoring, rewarding and punishing of workers as an outcome of their tasks in relation to customer acquisition or retention (Oliver and Anderson, 1994). The presence of such components implies an important dimension of a company’s orientation implementation that is the level of consistency among these five elements. Therefore, the framework highlights the company’s efforts towards the acquisition and retention of new and existing customers based on structure, leadership, culture, strategy, and control. These elements integrated into customer orientation can improve the scope of customer knowledge, thereby enhancing the potential for favorable innovation performance, because the aspects of leadership and culture increase employees’ motivation in obtaining and distributing existing and/or new customer information (Arnold et al., 2011). Institutionalization of information is also made possible. The structure of organizational design along with strategic objectives for the implementation of customer orientation can also improve the behaviors of workers and enhance their reliability in collecting and disseminating customer-related information. The aspect of control can also provide employees with specific principles that can direct their attitudes and intentions towards gathering and transferring knowledge about their customers as control emphasizes either rewards or punishments based on one’s task accomplishment. However, as customer orientation can focus on both acquisition and retention of customers, it may have conflicting results. For instance, while acquisition orientation persuades workers to not only consider the existing customers but to focus on acquiring diverse customer knowledge, the retention orientation focuses more on collecting homogenous customer-related information (Verhoef, 2003). Nonetheless, customer orientation as a whole is expected to have a strong influence on the development of knowledge that leads to increased organizational innovativeness and innovation performance. Past studies on organizational learning implied that the process of creating knowledge can be significantly enhanced by integrating the knowledge acquired from a wide range of sources (Gargiulo and Benassi, 2000). A combined emphasis on both new and current customers entails that the company targets different types of customers, instigating the collection of information for various sources and creating different methods for the interpretation of such knowledge. A wider understanding of customers through the acquisition of information can help develop unique and valuable insights to important processes and activities which may not have been attainable if the sole focus is on the gathering of information based on current needs and preferences (Desphande, Farley, and Webster, 1993). For diverse knowledge to be obtained for increased innovation, systematic collection of ideas that are different from current demands can play an important as well. Therefore, identifying both current and possible needs of customers and allowing these to overlap can significantly influence innovation performance of companies as this helps identify a wider range of customer requirements with which those that were not identified before can now be recognized. Because various elements are integrated with each other, such as leadership, control, and structure, their individual influences on organizational results are increased (Tushman and O’ Reilly, 2002). In the same way, a company can implement its strategy more successfully when it is supported by such elements. Thus, it can be expected that the consistency in customer orientation, particularly, the level of acquisition and retention of customers, can help develop customer knowledge, enhance decision making in relation to customers, and improve innovation outcomes. Innovation performance can be classified into two- radical and incremental. Radical innovation performance refers to the monetary benefits that a company acquires due to innovation. This involves the considerable use of technology and meets the current and emerging needs of customers. Incremental innovation performance, meanwhile, can be characterized by the financial benefits that a company acquires from innovation that includes slight changes in technology and average incremental benefits, as noted by Atuahene-Gima (2005). A wide understanding of customers’ acceptance and use of innovation signifies the main requirement of an effective innovation. Radical and incremental innovation calls for an organization to acquire comprehensive customer knowledge in order to adhere to the needs and desires of customers (Zahra and George, 2002). Diverse information about customers, however, has contradictory results on innovations. For instance, radical innovation is brought about by diverse customer information; if such information lacks variety, problems will be experienced with regards to radical innovation as a business cannot recognize problems, establish another proposition, or contradict predictable expectations. On the other hand, homogenous information about customers can provide companies with a specific direction that they can take regarding improvements for their products and services. This can minimize the complexities within the process of innovation by somehow facilitating the development to develop structured coordination mechanisms (Palmatier, 2008). Owing to varying outcomes, examining further the effects of customer orientation on the innovation performance of companies can help identify the factors within the organization to enhance innovation behaviors and outcomes. Methodology Research Approach The research aims and objectives will be addressed by making use of a mixed methods approach that integrates both qualitative and quantitative strategies. While qualitative research is often exploratory and conducted as a means of understanding meaning, quantitative research is generally employed to measure variables and analyze hypothesized relationships within controlled contexts. Moreover, a qualitative research makes use of an individual perspective whereas its quantitative counterpart is likely to assert that a common reality exists which individuals can agree on. Hence, multimethodology combines the gathering and analysis of qualitative and quantitative data in one study (Hesse-Biber, 2010). It then provides benefits for the researcher in such a way that words and narratives can be integrated onto numerical data, allowing findings to be more generalized for other studies and investigations in the future. Consequently, this can enhance the conclusions of the study, allowing them to become acceptable and appropriate for the advocates of either the quantitative and qualitative approaches. The mixed methods approach also enables the researcher to obtain better understanding of research problems as well as clarify the research outcomes (Ridenour, Benz, and Newman, 2008). In addition, the findings of the study may bring about new questions or issues that will entail clarification, thereby instigating new investigations and adding new findings to existing research. By using the mixed methods approach for the current study, a more detailed view on the impact of market orientation on product innovation in Saudi Arabia can be obtained through the use of both surveys and interviews. This may consequently yield results that can be applicable to other locations, populations, and contexts as well, hence increased generalization. Population of study and sampling This study is concerned about the effect of market orientation on product innovation in the Arabic countries. In other words, the dependent variable is product innovation, and the independent variables are components of market orientation. In marketing literature, there are few studies focused on the effect of market orientation on product innovation in the Arabic countries. The research will try to add new knowledge in marketing literature. The study will focus on profit organizations that are not highly protected or controlled by government. The study also will exclude young firms, because they can enjoy explosive growth which would bias the results. The researcher aims to obtain 200 participants for the study’s sample with which purposive sampling will be employed. This type of sampling entails that certain characteristics should be adhered to ensure the sample’s knowledge on the subject as well as the relevance of their information to the study. The researcher aims to collect qualitative and quantitative data from employees in 5 Arab manufacturing companies, hence 40 individuals for each firm. A large sample size can help increase precision and reliability of findings as well as permit confidence in such results. Because more information is needed to obtain data regarding customer orientation and innovation performance, a large sample size can help lead to a more reliable decision making. For the current research, participants must be knowledgeable of the concepts of product innovation and market orientation of their organization (e.g. product/product innovation managers), and should be willing to participate in the study. Instrument The collection of data for this study will be based on the framework presented by Arnold et al. (2011) who conducted a similar study on the effects of customer orientation, particularly on acquisition and retention of customers, on innovation performance. For both customer acquisition and retention orientation, the five organizational design elements will be used: 1) structure (e.g. “New customer segments are clearly defined in our unit’s customer relationship management efforts” and “We have a formal system for determining which of our current customers are of the highest value”.), 2) leadership (e.g. “The leaders in our organization have a clearly defined mission driven by customer acquisition” and “Senior management communicates the importance to our unit of retaining valuable existing customers to the competitive advantage of the unit”.), 3) culture (e.g. Acquiring valuable new customers is seen by employees as essential for the unit’s success” and “In our unit, maintaining relationships with valuable existing customers is viewed more like an investment, instead of an expense”.), 4) strategy (e.g. “Our competitive advantage depends largely on differentiating and targeting valuable new customers” and “Our unit has a clear strategic planning process to manage relationships with valuable existing customers”.), and 5) control (e.g. “Our unit regularly measures how successfully employees acquire valuable new customers” and “Employees’ reward and promotion opportunities depend largely on how they successfully maintain relationships with high value existing customers for the unit”.).In relation to innovation performance, a number of factors are examined as well including: 1) radical innovation performance (“Significant innovations in our customer service technologies have contributed significantly to our financial performance.), 2) incremental innovation performance (“The improvement of our existing customer service technologies has contributed significantly to our profits.”), and 3) customer knowledge (“Our unit has gathered a large amount of customer information to help identify our high-value customers”.). Customer knowledge was included to examine the progress of firms in relation to their understanding of their customers’ attributes, behavioral patterns, as well as levels and channels of engagement, which can influence the innovation of activities of companies. According to Wright and Margaret (2000), “a questionnaire is a very useful tool for researchers. It is flexible, very time efficient; its ease of analysis and greater efficiency for the researcher are also beneficial. But there have also been problems with questionnaires including biased answers, biased questions (Robson, 2002; Quee, 1999). Methods of Data Collection A classification of research methods can be referred to as primary research and secondary research (Quee, 1999, Stewart, 1984 and Robson, 2002).This research will employ two methods for data collection; secondary sources and primary data sources. Existing data from the literature will first be collected: books, articles, on line readings, magazines of the companies and brochures (Robson, 2002; Quee, 1999). Keywords for searching among online search engines will include: “customer orientation”, “innovation performance”, and “effects of customer orientation on innovation performance”. It will help to highlight the findings of the previous studies on customer orientation and innovation performance. When secondary data has been collected, primary data will also be gathered by means of surveys and interviews based on the questionnaire presented by Arnold et al. (2011). This will allow the researcher to look into the association of innovation performance and customer orientation. Consent forms will be sent to the potential participants of the study with which the management of selected Arab companies will be informed about the involvement of their members in the research process. Data Analysis Upon gathering the necessary data, two forms of analysis will be conducted to interpret the quantitative and qualitative data. First statistical analyses through the SPSS version 15.0 will be employed for the quantitative data; and second, the thematic analysis will be used to identify patterns or themes among the interview responses. The use of statistics and numerical data can increase the accuracy and reliability of the quantitative findings; meanwhile being able to distinguish common themes which are evident in the interview responses will enable the researcher to establish useful conclusions based on the qualitative data that has been collected. Ethical Considerations An imperative principle for the process of conducting research that will be employed for this study is the protection of all information that will be acquired. The confidentiality of each of the participant will be kept and the information they provide will be kept secure as well. To prevent any form of bias when the research methods are being carried out as well as to demonstrate consideration and respect for others is equally significant when conducting ethical research (Gregory, 2003). As such, an environment characterized by trust can be established. Participants will also be informed that they are free to make the decision of withdrawing from the survey and/or interview if they prefer to without being reprimanded. Conclusion The current study then aims to employ the mixed methods approach in determining the impact of customer orientation on innovation performance in Saudi Arabia. Purposive sampling will be used to gather the desired number of participants in the study whereas the instrument used for collecting qualitative and quantitative data will be based on the framework presented by Arnold et al. (2011). Statistical and thematic analysis will be carried out to interpret both the quantitative and qualitative results. 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The Effects of Customer Orientation on Product Innovation in Arabic Coursework Example | Topics and Well Written Essays - 5000 Words. https://studentshare.org/business/1757247-proposal-phd.
“The Effects of Customer Orientation on Product Innovation in Arabic Coursework Example | Topics and Well Written Essays - 5000 Words”. https://studentshare.org/business/1757247-proposal-phd.
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