The effects of customer orientation on the product performance of technological innovations: A comparison between SMEs and large companies

In a high-technology marketplace, consumers and producers simultaneously face a high uncertainty concerning these technological advanced products. Companies have to anticipate costumer demands way in advance to satisfy the market adequately. Among other things, this is the reason why there are failure rates among technological innovations as high as 65%, when these high-tech products are launched into the market. One way to counteract this fatal development is to integrate customers as early as possible in the product development process in order to achieve an optimal `fit' between market needs and technological possibilities. This study analyses customer orientation as part of market-orientation within the biggest German industrial markets. In this context, 108 managers were asked to answer a survey in order to find out about their companies' customer-integration methods, which are used to let the users be part of the product development process. In addition, this paper analyses the relationship between customer orientation, new product performance and company size. Surprisingly, correlation analysis shows that there is no significant relationship between customer orientation and new product performance in the group of small and medium-sized enterprises (SMEs), whereas this correlation is highly significant in the group of big companies. This fact leads to the conclusion that customer-orientation is not as important for SMEs as it is for larger companies. SMEs are by definition closer to the market. They have fewer customers and have to work side by side with them. In contrast, large companies have to compensate their lack of closeness by using customer orientation methods to boost product performance and, therefore, business performance. On the other side, SMEs have to concentrate on other ways to enhance their firm performance.