A Survey on the Effect of Exploration and Exploitation Approaches of Market Orientation on Innovation and Business Performance

Nowadays, firms try to improve their performance by means of different factors. Among these components, market orientation with the two approaches of exploration and exploitation behaviors, has particular influence on different types of innovation and business performance. The purpose of this survey is to consider the effects of exploration and exploitation behaviors in market orientation on innovation factors (radical / incremental) and business performance to identify the relationship between them and help the managers make appropriate decisions to improve the performance of their firm. In order to verify the conceptual model, managers and experts from 138 companies in food industry have been evaluated by a questionnaire including 35 items. The data were analyzed, and the research findings revealed that from the managers’ point of view, the exploratory market orientation through radical innovation as a mediator variable has an indirect positive effect on firm performance while exploitative market orientation has direct positive effect on firm performance. The findings also showed that incremental innovation doesn’t have direct effect on firm performance. However, radical innovation has direct positive effect on firm performance