The effects of market orientation on new service performance: the mediating role of innovation

The empirical results of the relationship between market orientation and new service performance are mixed, implying that this relationship is more complicated than expected. To respond to this complication, this study takes a component-wise approach to investigate how three market orientation components contribute to new service performance by way of two service innovations and also examine how three environmental factors interact with each market orientation component to affect service innovation. Based on a survey of 235 senior managers using structural equation modelling, the results indicate that customer orientation has a positive relationship with incremental service innovation, while competitor orientation and inter-functional coordination are significantly associated with radical service innovation, and all of which positively lead to two types of new service performances. In addition, both market and technological turbulence significantly and positively moderate the relationship between customer and competitor orientations and service innovation.