Effects of Organizational Culture, Market Orientation, and Innovativeness toward New Product Performance amongst Malaysian SMEs

Abstract

This research analyzed the effects of Malaysian SME’s organizational culture, market orientation, and innovativeness toward the introduction of new products and their performance. A series of hypotheses concerning the relationships between these variables are developed and tested on a sample of 65 SMEs. The results show that organizational culture influences new product performance (NPP) through innovativeness as the mediating factor, but an entrepreneurial culture directly influences NPP. Innovativeness is also shown to have a significant direct effect on NPP, more so amongst firms displaying the tendency to explore new innovation competencies than those who exploit existing ones. The expanded market orientation construct failed to significantly establish a link between market orientation and NPP, except that firm-supplier relationship has a positive impact on NPP. This demonstrates the importance of “supplier-orientation” construct to be included in future market orientation studies besides customers and competitors. The impact of organizational culture on innovativeness is also mediated by market orientation. The type of innovation does not appear to moderate the effect of market orientation and organizational innovativeness towards NPP. However, SMEs with
established firm-supplier relationship were found to register higher levels of NPP when incremental innovations are developed, indicating its significant moderating role.