A Study on Global Orientation

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Seoul Journal of Business
Volume 18, Number 1 (June 2012)

A Study on Global Orientation in New Product
Development among Small and Medium-Sized Firms*

INSIK JEONG**1)
Korea University
Seoul, Korea

JOOYOUNG KWAK***
Yonsei University
Seoul, Korea

DONG JIN LEE****
Yonsei University
Seoul, Korea

Abstract
While many small and middle-sized enterprises are entering into emerging markets to satisfy diverse consumer needs, limited attention has been given to global orientation in new product development among these small and middle-sized enterprises in emerging markets. In order to find the antecedents and consequences of this managerial value, we have developed and tested a model of global orientation in new product development among small and middle-sized enterprises. Specifically, we hypothesize that customer orientation and long-term focus have a positive influence on the global orientation among small and middle-sized enterprises, which in turn has a positive effect on performance. Data collected from 482 firms supports the model. Theoretical and managerial implications are discussed. Keywords: Global orientation in new product development, Customer orientation; Long-term focus

*
**

This Research is Supported by Sanhak Foundation Research Grant in 2011. First Author. Professor, Korea University Business School, Korea University. Seoul, Korea.
*** Correspondent Author. Assistant Professor, Yonsei School of Business, Yonsei University. Seoul, Korea.
**** Coauthor. Professor, Yonsei School of Business, Yonsei University. Seoul, Korea.

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Seoul Journal of Business

INTRODUCTION
With rapid growth towards globalization in the marketplace, many firms have adopted global orientation in new product development, c onsidering a homogenous or similar set of customers across diverse markets from the start. Global orientation in new product development is a firm’s strategy to target similar set of customers across multiple markets and to make marketing decisions on a global basis (Quelch and Knoop 2006). From the beginning stage of product development, firms adopt global orientation in new product development for production efficiency, quick market entry, and better financial performances (Eppinger and Chitkara 2006; Filatotchev et al. 2009; Kotabe and Helsen 2008; Quelch and Knoop 2006; Zhou et al. 2007).

The focus of this study is to develop a model of global orientation in new product development, particularly in the context of small and medium-sized firms in emerging markets. Global orientation in new product development is a firm’s value for new product development w ith global customers in mind (Filatotchev et al. 2009; Hamel and Prahalad 1994; Quelch and Knoop 2006). In order to adopt and implement global orientation in new product development, firms need to be responsive to the needs of the customers across diverse markets. In addition, globally oriented firms need to have a long-term commitment to the various markets. Given that global orientation requires a significant amount of commitment to various customer segments over a long period of time, our conceptual model posits that long-term orientation and customer orientation are the factors that affect global orientation in developing new products. Despite some earlier studies on global orientation, most of which are done in the developed countries (Keegan 1969; Wind 1977). We still have a limited understanding global orientation in new product development among small and medium-sized firms. The question still remains: What would be the effect of customer orientation and long-term focus on the adoption of global orientation in developing new product development? What are the performance implications of global orientation in new product development?

The main purpose of this paper, therefore, is to develop and test a model on global orientation among small and medium-sized firms in the emerging markets. Guided by recent advancements in

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