IDEAS home Printed from https://ideas.repec.org/a/eee/ijrema/v32y2015i3p319-331.html
   My bibliography  Save this article

Market orientation and innovation performance: The moderating roles of firm ownership structures

Author

Listed:
  • Song, Jing
  • Wei, Yinghong (Susan)
  • Wang, Rui

Abstract

The marketing literature documents inconsistent results on the link between Market Orientation (MO) and innovation performance. The agency theory suggests that agency problems exist in firms between the principal (owner) and the agent (managers). A proper firm ownership structure design may solve the principal-agent problem. In this study, we investigate an understudied research question: whether and how ownership structures may affect the relationship between MO and innovation performance? We posit that firms should align three different dimensions of ownership structures with MO in order to achieve a superior innovation performance. We assembled a unique data set, with 242 publicly-traded companies, by merging three different data sources in an emerging market — China to test our framework. The results support our proposed model, and confirm the moderating role of ownership structures in the relationship between market orientation and firm innovation performance in China. First, all things being equal, non-state-owned firms may achieve a higher level of innovation performance than their state-owned counterparts through their implementation of MO. Second, allowing top managers to have a certain fraction of the firm's ownership stake (called managerial ownership), that can switch risk preference and time preference of top manager's to those of shareholders, may foster the effect of MO on innovation performance. Third, a high ratio of major owners over minor owners (named as ownership concentration), that can empower and motivate shareholders to closely monitor a manager's behavior, may also strengthen the relationship between MO and innovation performance. The Chinese data from a transition economy sheds light on the ownership structure reforms in China, and provides novel new insights to the marketing theory and practice regarding the role of two new additional emerging dimensions of ownership structures — managerial ownership and ownership concentration in the relationship between MO and innovation performance. Theoretical and managerial implications are discussed, and several avenues for future research are proposed.

Suggested Citation

  • Song, Jing & Wei, Yinghong (Susan) & Wang, Rui, 2015. "Market orientation and innovation performance: The moderating roles of firm ownership structures," International Journal of Research in Marketing, Elsevier, vol. 32(3), pages 319-331.
  • Handle: RePEc:eee:ijrema:v:32:y:2015:i:3:p:319-331
    DOI: 10.1016/j.ijresmar.2015.03.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167811615000415
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ijresmar.2015.03.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Mason A. Carpenter & Timothy G. Pollock & Myleen M. Leary, 2003. "Testing a model of reasoned risk‐taking: governance, the experience of principals and agents, and global strategy in high‐technology IPO firms," Strategic Management Journal, Wiley Blackwell, vol. 24(9), pages 803-820, September.
    3. Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-349, June.
    4. Craig Crossland & Donald C. Hambrick, 2007. "How national systems differ in their constraints on corporate executives: a study of CEO effects in three countries," Strategic Management Journal, Wiley Blackwell, vol. 28(8), pages 767-789, August.
    5. Mike W. Peng & Justin Tan & Tony W. Tong, 2004. "Ownership Types and Strategic Groups in an Emerging Economy," Journal of Management Studies, Wiley Blackwell, vol. 41(7), pages 1105-1129, November.
    6. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    7. Gordon E. Greenley, 1995. "Forms Of Market Orientation In Uk Companies," Journal of Management Studies, Wiley Blackwell, vol. 32(1), pages 47-66, January.
    8. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    9. Justin Tan & Mike W. Peng, 2003. "Organizational slack and firm performance during economic transitions: two studies from an emerging economy," Strategic Management Journal, Wiley Blackwell, vol. 24(13), pages 1249-1263, December.
    10. Peng, Songlan & Tondkar, Rasoul H. & van der Laan Smith, Joyce & Harless, David W., 2008. "Does Convergence of Accounting Standards Lead to the Convergence of Accounting Practices?: A Study from China," The International Journal of Accounting, Elsevier, vol. 43(4), pages 448-468, December.
    11. Jefferson, Gary & Hu, Albert G. Z. & Guan, Xiaojing & Yu, Xiaoyun, 2003. "Ownership, performance, and innovation in China's large- and medium-size industrial enterprise sector," China Economic Review, Elsevier, vol. 14(1), pages 89-113.
    12. Brickley, James A. & Lease, Ronald C. & Smith, Clifford Jr., 1988. "Ownership structure and voting on antitakeover amendments," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 267-291, January.
    13. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-1177, December.
    14. Kevin Zheng Zhou & Julie Juan Li & Nan Zhou & Chenting Su, 2008. "Market orientation, job satisfaction, product quality, and firm performance: evidence from China," Strategic Management Journal, Wiley Blackwell, vol. 29(9), pages 985-1000, September.
    15. Yigang Pan & Shaomin Li & David K Tse, 1999. "The Impact of Order and Mode of Market Entry on Profitability and Market Share," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 81-103, March.
    16. Donald D. Bergh, 1995. "Size and relatedness of units sold: An agency theory and resource‐based perspective," Strategic Management Journal, Wiley Blackwell, vol. 16(3), pages 221-239.
    17. Charles W. L. Hill & Scott A. Snell, 1988. "External control, corporate strategy, and firm performance in research‐intensive industries," Strategic Management Journal, Wiley Blackwell, vol. 9(6), pages 577-590, November.
    18. Alok R. Saboo & Rajdeep Grewal, 2013. "Stock Market Reactions to Customer and Competitor Orientations: The Case of Initial Public Offerings," Marketing Science, INFORMS, vol. 32(1), pages 70-88, October.
    19. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
    20. Kannan Ramaswamy, 2001. "Organizational ownership, competitive intensity, and firm performance: an empirical study of the Indian manufacturing sector," Strategic Management Journal, Wiley Blackwell, vol. 22(10), pages 989-998, October.
    21. Dibrell, Clay & Craig, Justin B. & Hansen, Eric N., 2011. "How managerial attitudes toward the natural environment affect market orientation and innovation," Journal of Business Research, Elsevier, vol. 64(4), pages 401-407, April.
    22. Steen Thomsen & Torben Pedersen, 2000. "Ownership structure and economic performance in the largest european companies," Strategic Management Journal, Wiley Blackwell, vol. 21(6), pages 689-705, June.
    23. Alberto de Miguel & Julio Pindado & Chabela de la Torre, 2004. "Ownership structure and firm value: new evidence from Spain," Strategic Management Journal, Wiley Blackwell, vol. 25(12), pages 1199-1207, December.
    24. Shaomin Li & Seung Ho Park, 2006. "Determinants of Locations of Foreign Direct Investment in China," Management and Organization Review, International Association of Chinese Management Research, vol. 2(1), pages 95-119, March.
    25. Slater, Stanley F. & Narver, John C., 1994. "Market orientation, customer value, and superior performance," Business Horizons, Elsevier, vol. 37(2), pages 22-28.
    26. Changhui Zhou & Jing Li, 2008. "Product innovation in emerging market-based international joint ventures: An organizational ecology perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(7), pages 1114-1132, October.
    27. Atuahene-Gima, Kwaku, 1996. "Market orientation and innovation," Journal of Business Research, Elsevier, vol. 35(2), pages 93-103, February.
    28. Wei, Yinghong (Susan) & Atuahene-Gima, Kwaku, 2009. "The moderating role of reward systems in the relationship between market orientation and new product performance in China," International Journal of Research in Marketing, Elsevier, vol. 26(2), pages 89-96.
    29. Xu, Xiaonian & Wang, Yan, 1999. "Ownership structure and corporate governance in Chinese stock companies," China Economic Review, Elsevier, vol. 10(1), pages 75-98.
    30. William Boulding & Richard Staelin, 1995. "Identifying Generalizable Effects of Strategic Actions on Firm Performance: The Case of Demand-Side Returns to R&D Spending," Marketing Science, INFORMS, vol. 14(3_supplem), pages 222-236.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Shengling & Wu, Zihao & He, Yinan & Hao, Yu, 2022. "How does the green credit policy affect the technological innovation of enterprises? Evidence from China," Energy Economics, Elsevier, vol. 113(C).
    2. Sebastian Markus Szambelan & Yi Dragon Jiang, 2020. "Effectual control orientation and innovation performance: clarifying implications in the corporate context," Small Business Economics, Springer, vol. 54(3), pages 865-882, March.
    3. Steeger, Jonas & Hoffmann, Malte, 2015. "Innovation and Family Firmsː Departing From R&D Mediations," WiSo-HH Working Paper Series 27, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    4. Jingxiao Zhang & Haiyan Xie & Hui Li, 2017. "Positioning and Priorities of Growth Management in Construction Industrialization: Chinese Firm-Level Empirical Research," Sustainability, MDPI, vol. 9(7), pages 1-23, June.
    5. Guo, Jingjing & Guo, Bin & Zhou, Jianghua & Wu, Xiaobo, 2020. "How does the ambidexterity of technological learning routine affect firm innovation performance within industrial clusters? The moderating effects of knowledge attributes," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    6. Quan Tran & Anh‐Tuan Doan & Thao Tran, 2021. "Small and medium enterprises' credit access, ownership structure and job development," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 710-735, December.
    7. Pierre Chandon & Romain Cadario, 2023. "Healthy in the wrong way: Mismatching of marketers’ food claim use and consumers’ preferences in the United States but not France," Journal of the Academy of Marketing Science, Springer, vol. 51(1), pages 153-173, January.
    8. Mahmoud M. Migdadi & Mohammed K. Abu Zaid & Mohammed Yousif & Ra’d Almestarihi & Khalil Al-Hyari, 2017. "An Empirical Examination of Knowledge Management Processes and Market Orientation, Innovation Capability, and Organisational Performance: Insights from Jordan," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 16(01), pages 1-32, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Song, Jing & Wang, Rui & Cavusgil, Salih Tamer, 2015. "State ownership and market orientation in China's public firms: An agency theory perspective," International Business Review, Elsevier, vol. 24(4), pages 690-699.
    2. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247, October.
    3. Jianfeng Wu & Dean Xu & Phillip Phan, 2011. "The effects of ownership concentration and corporate debt on corporate divestitures in Chinese listed firms," Asia Pacific Journal of Management, Springer, vol. 28(1), pages 95-114, March.
    4. Christian Weiss & Stefan Hilger, 2012. "Ownership concentration beyond good and evil: is there an effect on corporate performance?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 727-752, November.
    5. Vincent O. Ongore & Peter O. K'Obonyo, 2011. "Effects of Selected Corporate Governance Characteristics on Firm Performance: Empirical Evidence from Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 1(3), pages 99-122, September.
    6. Yacine Belghitar & Ephraim Clark & Konstantino Kassimatis, 2019. "A measure of total firm performance: new insights for the corporate objective," Annals of Operations Research, Springer, vol. 281(1), pages 121-141, October.
    7. Emmanuel Chuke Nwude & Musa Sani Zakirai & Comfort Amaka Nwude, 2023. "Ownership Structure and Bank Performance in Emerging Market Economy: Evidence From Nigerian Listed Deposit Money Banks," SAGE Open, , vol. 13(4), pages 21582440231, December.
    8. Matyukha, Andriy, 2017. "Business groups in agriculture impact of ownership structures on performance: The case of Russia's agroholdings," Studies on the Agricultural and Food Sector in Transition Economies 254051, Institute of Agricultural Development in Transition Economies (IAMO).
    9. Wiem Elmanaa Madani & Wafa Khlif, 2005. "Effets De La Structure De Propriete Sur La Performance Comptable : Etude Empirique Sur Les Entreprises Tunisiennes Indistruelles Non Cotees," Post-Print halshs-00581192, HAL.
    10. Yuan George Shan, 2019. "Managerial ownership, board independence and firm performance," Accounting Research Journal, Emerald Group Publishing Limited, vol. 32(2), pages 203-220, July.
    11. Pursey Heugens & Marc Essen & J. Oosterhout, 2009. "Meta-analyzing ownership concentration and firm performance in Asia: Towards a more fine-grained understanding," Asia Pacific Journal of Management, Springer, vol. 26(3), pages 481-512, September.
    12. Taylan Mavruk & Conny Overland & Stefan Sjögren, 2020. "Keeping it real or keeping it simple? Ownership concentration measures compared," European Financial Management, European Financial Management Association, vol. 26(4), pages 958-1005, September.
    13. Arosa, Blanca & Iturralde, Txomin & Maseda, Amaia, 2010. "Ownership structure and firm performance in non-listed firms: Evidence from Spain," Journal of Family Business Strategy, Elsevier, vol. 1(2), pages 88-96, June.
    14. Wu, Hsueh-Liang, 2011. "Can minority state ownership influence firm value? Universal and contingency views of its governance effects," Journal of Business Research, Elsevier, vol. 64(8), pages 839-845, August.
    15. Oesterle, Michael-Jörg & Richta, Hannah Noriko & Fisch, Jan Hendrik, 2013. "The influence of ownership structure on internationalization," International Business Review, Elsevier, vol. 22(1), pages 187-201.
    16. Pombo, Carlos & De la hoz, María Camila, 2015. "Institutional Investors and Firm Valuation: Evidence from Latin America," Galeras. Working Papers Series 040, Universidad de Los Andes. Facultad de Administración. School of Management.
    17. repec:zbw:iamost:254051 is not listed on IDEAS
    18. Matyukha, Andriy, 2017. "Business groups in agriculture. Impact of ownership structures on performance: The case of Russia's agroholdings," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 85, number 85.
    19. Omar Al Farooque & Tony Van Zijl & Keitha Dunstan & AKM Waresul Karim, 2007. "Corporate Governance in Bangladesh: Link between Ownership and Financial Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1453-1468, November.
    20. Maureen Muller-Kahle, 2015. "The impact of dominant ownership: the case of Anglo-American firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 71-89, February.
    21. Victor Chen & Jing Li & Daniel Shapiro & Xiaoxiang Zhang, 2014. "Ownership structure and innovation: An emerging market perspective," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 1-24, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ijrema:v:32:y:2015:i:3:p:319-331. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/international-journal-of-research-in-marketing/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.