Fostering innovation

Abstract

PurposeThe purpose of this paper is to study empirically the relationships between market orientation, organizational learning, innovation and performance.Design/methodology/approachThis paper formulates some hypotheses from the literature review. These hypotheses are tested using structural equations modelling with data collected from 744 firms.FindingsFindings show that, although market orientation and organizational learning foster innovation, the effect of the latter is comparatively higher. Moreover, the impact of market orientation and organizational learning on performance is completely mediated by innovation.Research limitations/implicationsThe main limitations of this paper are the cross‐sectional design of the research and the use of single informants for collecting the data. Apart from overcoming these limitations, for future research it is suggested that: studying the likely causal relation between market orientation and organizational learning; taking into account information about how radical the innovation is; and including the degree of dynamism of the market as a likely moderator of the relations proposed in the model.Practical implicationsThe paper provides evidence, first, that companies should be more innovative in order to increase performance. Second, that both adopting market orientation and improving the organizational learning processes of the company have a positive impact on innovation. And third, that innovation mediates the relation between market orientation and organizational learning, and performance.Originality/valueThis paper jointly examines in the same model the little‐researched links between market orientation, organizational learning, innovation and performance.