A Survey on the Effect of Exploration and Exploitation Approaches of Market Orientation on Innovation and Business Performance

Document Type : Research Paper


1 MSc in Business Management . University of Tehran

2 Associate Prof. in Business Management, University of Tehran, Tehran, Iran

3 Assistant Prof. in MBA, Faculty of Management, University of Tehran, Tehran, Iran


Nowadays, firms try to improve their performance by means of different factors. Among these components, market orientation with the two approaches of exploration and exploitation behaviors, has particular influence on different types of innovation and business performance. The purpose of this survey is to consider the effects of exploration and exploitation behaviors in market orientation on innovation factors (radical / incremental) and business performance to identify the relationship between them and help the managers make appropriate decisions to improve the performance of their firm. In order to verify the conceptual model, managers and experts from 138 companies in food industry have been evaluated by a questionnaire including 35 items. The data were analyzed, and the research findings revealed that from the managers’ point of view, the exploratory market orientation through radical innovation as a mediator variable has an indirect positive effect on firm performance while exploitative market orientation has direct positive effect on firm performance. The findings also showed that incremental innovation doesn’t have direct effect on firm performance. However, radical innovation has direct positive effect on firm performance


Main Subjects

Atuahene-gima, K) .2005). Resolving the Capability – Rigidity. Journal of Marketing, 69 (10), 61-83.
Baker, W.E. & Sinkula, J.M. (2002). Market orientation, learning orientation and product innovation: delving into the organization’s black box. Journal of Market-Focused Management, 5 (1), 5-23.
Brown, S.L. & Eisenhardt, K.M. (1995). Product development: Past research, present findings and future directions. Academy of Management Review, 20 (2), 343-378.
Day, G. (1994). The Capabilities of Market-Driven Organizations. Journal of Marketing, 58 (4), 37-52.
Deshpande, R. Farley, J. U. & Webster, F. E. (1993). Corporate Culture, Customer Orientation, and Innovativeness in Japanese Firms: A Quadrad Analysis. Journal of Marketing, 57(1), 23-37.
Divandari, A., Nikoukar. GH., Nahavandian M. & Aghazadeh, H. (2008). Market Orientation and Business Performance in Iran. Journal of Business Management, 1(1), 39 -54. (in Persian)
Garcia, R. & Calantone, R. (2002). A critical look at technological innovation typology and innovativeness terminology: A literature review. Journal of Product Innovation Management, 19 (2), 110-132.
Garoosi Mokhtarzadeh, N. & Zamani, M. (2015). Examining the effects of Market Orientation and Management innovation on Firm Performance: The Mediating Role of Technological Innovation. Journal of Business Management, 7 (2), 463-484. (in Persian)
Grinstein, A. (2008). The relationships between market orientation and alternative strategic orientations: A meta‐analysis. European Journal of Marketing, 42 (1/2), 115-134.
Hillbun, H. & Ruichang, L. (2015). Performance implications of marketing exploitation and exploration: Moderating role of supplier collaboration. Journal of Business Research, 68(1), 1026–1034.
Hosseini, S. M. & Salar, J. (2012). Surveying the Effect of Market Orientation and Innovation on Performance of Food Companies of Iran Stock Exchange. New Marketing Research Journal, 2(3), 107- 120. (in Persian)
Jaworski, B.J & Kohli, A.K. (1993). Market Orientation: Antecedents and Consequences. Journal of Marketing, 57(3). 53-70.
Kirca, A. H., Jayachandran, S. & Bearden, W. O. (2005). Market orientation: A meta- analytic review and assessment of its antecedents and impact on performance. Journal of Marketing, 69(2), 24-41.
Kohli, A. K. & Jaworski, B. J. (1990). Market Orientation: The Construct, Research Propositions, and Managerial Implications. Journal of Marketing, 54(2), 1-18.
Lee, H. & Choi, B. (2003). Knowledge management enablers, process, and organizational performance: an integrative view and empirical examination. Journal of management information systems, 20(1), 179-228.
Li, C. R., Lin, C. J & Chu, C. P. (2008). The nature of market orientation and the ambidexterity of innovations. Management Decision Journal, 46 (7), 1002-1026.
Luecke, R. (2003). Harvard business essentials: Managing change and transition. Boston, Mass: Harvard Business School Press.
Mithas, S., Ramasubbu, N. & Sambamurthy, V. (2011). How Information Management Capability Influences Firm Performance, MIS Quarterly, 35(1), 237-256.
Morgan, N.A., Vorhies, D.W. & Mason, C.H. (2009). Market orientation, marketing capabilities, and firm performance. Strategic Management Journal, 30 (8), 909-920.
Namaki, A. (2012). Survey in Effects of Market Orientation and innovation capability on Business Performance, (A thesis for the degree of Master in Marketing), University of Tehran, Faculty of Management. (in Persian)
Narver, J. & Slater, S. (1990). The Effect of Market Orientation on Business Profitability. Journal of Marketing, 54 (4), 20-35.
Narver, J. C., Slater, S. F. & Maclachlan, D. L. (2004). Responsive and Proactive Market Orientation and New-Product Success. Journal of Product Innovation Management, (21) 5, 334-347.
Nikraftar, T., Talebi, K. & Saidi Arani, F. (2015). The Relationship between Organizational Innovation and Performance Considering the Role of Marketing Innovation as Intermediary Variable (Case Study: Small and Medium-sized Businesses in the Textile Industry in the City of Kashan). Journal of Business Management, 7 (2), 485-500. (in Persian)
O’Reilly III, C. A. & Tushman, M. L. (2004). The ambidextrous organization. Harvard Business Review Journal, 12 (2), 112-131.
Ruekert, R. W. (1992). Developing a market orientation: an organizational strategy perspective. International Journal of Research in Marketing, 9(4), 225-245.
Safari, A. & Gharebashlooei, R. (2014). Investigate the relationship between entrepreneurial marketing and marketing performance through innovation. Journal of Business Management, 6 (4), 809 -826. (in Persian)
Sarkees, M., Hulland, J. & Prescott, J. (2010). Ambidextrous organizations and firm performance: the role of marketing function implementation. Journal of Strategic Marketing, 18 (2), 165–184.
Shapiro, B.P. (1988). What the hell is market oriented. Harvard Business Review, 66 (6), 119-125.
Tan, M. & Liu, Z. (2014). Paths to success: an ambidexterity perspective on how responsive and proactive market orientations affect SMEs’ business performance. Journal of Strategic Marketing, 22 (5), 420–441.
Ussahawanitchakit, P. (2008). Impacts of organizational learning on innovation orientation and firm efficiency: An empirical assessment of accounting firms in Thailand, International Journal of Business, 47(2), 319-339.
Wei, Z., Zhao, J. & Zhang, C. (2014). Organizational ambidexterity, market orientation, and firm performance. Journal of Engineering and Technology Management, 33 (1), 134-153
World Trade Organization. (2014). International Trade Statistics. Available in:  https://www.wto.org/english/res_e/statis_e/its2014_e/its2014_e.pdf.
Zebal, M.A. & Goodwin, D.R. (2012). Market orientation and performance in private universities. Marketing Intelligence & Planning Journal, 30 (3), 339 -357.
Zhang, J. & Duan, Y. (2010). The impact of different types of market orientation on product innovation performance. Management Decision Journal, 48 (6), 849-867.