The interaction effect of strategic orientations on new product performance in the high-tech industry: A nonlinear model

Innovation and market orientation are two strategic orientations or business philosophies that can guide a company in its business activities. Although the interaction effect of these two strategic orientations is conceptually recognized as a critical factor for new product's success, empirical results are mixed. This paper examines this issue in terms of innovation orientation, two types of market orientations (responsive and proactive), and new product performance. Based on a sample of 107 high-tech firms, the results of this study show that the interaction between innovation orientation and two types of market orientation yields different patterns of nonlinear responses for new product performance. Specifically, new product performance, when derived from the interaction between innovation orientation and responsive market orientation, is in the form of an inverted U, i.e., the interaction effect is contributory to firm performance until an optimal level is reached, and then the effect becomes detrimental thereafter. However, new product performance derived from innovation orientation and proactive market orientation is in the form of a U, i.e., the interaction effect is detrimental to firm performance until a threshold level is reached and then the effect becomes contributory thereafter. The different patterns of new product performance indicate that the costs and organizational learning effects of these two strategic orientation interactions are dissimilar. The paper concludes with a discussion of theoretical and practical implications of these findings.