Customer Orientation, Innovation Competencies, and Firm Performance: A Proposed Conceptual Model

Abstract Many firms invest substantial resources to build innovation competencies. Firms exist to satisfy the needs of their target markets, and as such, building innovation competencies requires a strong set of organizational knowledge, abilities, and motivations to ensure that innovation activities are geared towards serving market needs and organizational goals. This paper presents an interdisciplinary view integrating literature from the disciplines of marketing, innovation, and organization studies and discusses the valuable role that a customer orientation may play in the development of innovation competencies and subsequent organizational outcomes. A customer orientation has often been criticized as constraining certain innovation processes. Nevertheless, since innovation is regarded as a knowledge-based capability, this paper posits that the execution of market-sensing, customer-relating, and customer-response capabilities lend to, rather than inhibit, innovation competencies. In describing innovation, the view taken here is on two distinct but interrelated concepts, namely creativity (i.e. idea generation and problem solving) and innovation (i.e. the implementation of creative ideas). A conceptual model, based on theoretical foundations from the dynamic capabilities perspective and resource advantage theory, is proposed linking customer orientation, creativity, innovation and firm performance. Theoretical contributions, practical implications, and future research directions are also discussed.