Market Orientation and Innovativeness in Supply Chains: Supplier's Impact on Customer Satisfaction

Abstract

As today's firms increasingly outsource their noncore activities, they not only have to manage their own resources and capabilities, but they are ever more dependent on the resources and capabilities of supplying firms to respond to customer needs. This paper explicitly examines whether and how firms and suppliers, who are both oriented to the same customer market, enable innovativeness in their supply chains and deliver value to their joint customer. We will call this customer of the focal firm the "end user." The authors take a resource-dependence perspective to hypothesize how suppliers' end-user orientation and innovativeness influence downstream activities at the focal firm and end-user satisfaction. The resource dependence theory looks typically beyond the boundaries of an individual firm for explaining firm success: firms need to satisfy customer demands to survive and depend on other parties such as their suppliers to achieve customer satisfaction. Accordingly, the research design focuses on three parties along a supply chain: the focal firm, a supplier, and a customer of the focal firm (end user). The results drawn from a survey of 88 matched chains suggest the following. First, customer satisfaction is driven by focal firms' innovativeness. A focal firm's innovativeness depends, on the one hand, on a focal firm's market orientation and, on the other hand, on its suppliers' innovativeness. Second, no relationship could be established between a focal firm's market orientation and a supplier's end-user orientation. Market orientation typically has within-firm effects, while innovativeness has impact beyond the boundaries of the firm. These results suggest that firms create value for their customer through internal market orientation efforts and external suppliers' innovativeness.

Strategy orientation, product innovativeness, and new product performance

“…Product innovativeness is a key environmental factor that enables new product development projects to understand consumers' desires (Joshi & Sharma, 2004;Matting, Sanden, & Edvardsson, 2004;Griffiths-Hemans & Grover, 2006;Atuahene-Gima & Wei, 2011). Under higher perceptions of product innovativeness, the need to understand and anticipate customer demands increases for market-oriented innovative projects to generate new product ideas that appropriately respond to customer preferences (Batt, 2002;Joshi & Sharma, 2004;Matting, Sanden, & Edvardsson, 2004;Kibbeling, van der Bij, & van Weele, 2013). From a dynamic capabilities perspective, intense product innovativeness motivates a firm to adopt market-oriented strategies by enabling them to discover customers' unfilled needs and monitor markets to develop new product ideas (Cannon & Homburg, 2001;Verhees & Meulenberg, 2004;Maniak et al, 2014).…”

The influence of market orientation on firm performance and members’ livelihood in Ethiopian seed producer cooperatives

“…The success of the livelihood improvement of member families is largely determined by the availability of high quality seed, which can be accessed from potential suppliers. Thus, in satisfying their members' needs and contributing to members' livelihood improvement, cooperatives do not only have to manage their own resources and capabilities but are also dependent on the resources and capabilities of suppliers (Kibbeling et al, 2013).…”

Foreign and Domestic Collaboration, Product Innovation Novelty, and Firm Growth

“…Similarly, the relationship between supplier collaboration and the level of innovation novelty might depend on the stage of supplier involvement (predesign or commercialization stage) (Song and Thieme, 2009) and on the suppliers' level of innovativeness (Kibbeling, der Bij, and Weele, 2013). Although not all suppliers make a similarly strong contribution to the development of radical products, such contribution, on average, is likely to be more strongly linked with the introduction of radical innovation products than with incremental innovations (Amara and Landry, 2005;Freel and Harrison, 2006;Harhoff et al, 2014;Petersen, Handfield, and Ragatz, 2003).…”