A Case Study of the Mediating Role of Innovation on the Relationship Between Environmental Uncertainty, Market Orientation, and Firm Performance

Abstract

In recent years, environmental uncertainty and market orientation have been considered key elements of superior firm performance. Although environmental uncertainty and market orientation may affect firm performance, innovation also mediates these effects. In this study, a conceptual model was developed to test the mediating effect of innovation on the relationships between these constructs. Data for the study were collected from Turkey’s Top 500 Companies. Hierarchical regression and multiple regression analyses were employed to test the research hypotheses. The findings of the study revealed that the direct effects of environmental uncertainty and innovation on firm performance were statistically significant, although the effect of market orientation was not. The results obtained from the present study seem to indicate a possible “dual effect” of market orientation on firm performance. The results also indicated that innovation, especially product innovation, mediates the relationship between environmental uncertainty and firm performance. The findings indicate that innovation, especially product innovation, is critical for firm performance.

Does environmental uncertainty drive the use of management control systems and innovation?

“…The study results demonstrate that environmental uncertainty is not a sufficient contingency factor to promote product innovation (H2a; p > 0.05), which diverges from the study by Uzkurt et al. (2016).…”

“…The study results demonstrate that environmental uncertainty is not a sufficient contingency factor to promote product innovation (H2a; p > 0.05), which diverges from the study by Uzkurt et al (2016). This result is surprising when contrasted with the previous literature, which points out that characteristics pertaining to environmental uncertainty such as client needs or technological advances boost product innovation (Gunday et al, 2011;Kim et al, 2021;Uzkurt et al, 2016).…”

“…Guo et al, 2019;Henri and Wouters, 2020;Kafetzopoulos et al, 2020;Kim et al, 2021), a conjuncture addressed in a segregated manner in previous studies. The rejection of hypotheses H1 and H2 represents an important contribution of this study because it counters theoretical arguments supported on the Contingency Theory (Chenhall, 2003;Fried, 2017;Otley, 2016) and empirical evidence (Mooi et al, 2020;Rikhardsson et al, 2021;Uzkurt et al, 2016) that postulate a positive relationship among the variables. This instigates new investigations to understand how innovative firms may align their organizational practices to operate better in the presence of external contingency factors.…”

Collaboration with External Organizations and Technological Innovations: Evidence from Spanish Manufacturing Firms

“…Concerning the degree of persistence, previous empirical evidence suggests that process innovation tends to be less persistent than product innovation because product innovation plays the key role in the long-term competitiveness of many industries and markets [43,49,50]. In contrast, process innovation is introduced sporadically, as a result of major investments.…”

The Role of Green Innovation between Green Market Orientation and Business Performance: Its Implication for Open Innovation

“…Conversely, other scholars reveal different results. Uzkurt et al [30] conducted research on 117 companies on Turkey's Top 500 Companies and proved that market orientation does not directly affect company performance. Research by Ho et al [31] on 190 actors in a beef cattle value chain in Vietnam's Central Highlands showed that there is no significant relationship between market orientation and performance.…”