There has been an argument over whether customer orientation enhances innovation; moreover, the customer orientation/innovation mechanism remains unclear. This study investigated how customer orientation influences innovativeness through three types of conflict using a sample of 193 sales departments in Japanese firms. A structural equation modeling revealed that (1) customer orientation was positively related to task conflict and negatively related to process conflict, and that (2) task conflict was positively related to innovativeness, while process and relationship conflict was negatively related to innovativeness. The results suggest that customer orientation influences innovativeness by enhancing positive conflict and reducing negative conflict.
Marketing research has shown that firms are more successful when they focus on their customers' needs (Donavan et al., 2004 and Kennedy et al., 2003). Although some empirical studies have investigated the relationship between customer orientation and innovation (e.g., Gatignon and Xuereb, 1997, Han et al., 1998 and Lukas and Ferrell, 2000), they have failed to show the mechanism by which customer orientation promotes innovation. This study explored how customer orientation affects innovativeness, or a perceived work environment that encourages innovative behavior, by examining conflicts in the sales departments of Japanese firms.
One example indicating the importance of customer orientation in generating creative conflict within an organization is the case of Nissan. Nissan's CEO Carlos Ghosn commented: “The firm can continue to exist by getting rid of barriers between departments and acting from customer's point of view (Ghosn, 2001a).” When different opinions clash among members at an executive meeting in Nissan, Ghosn always tries to encourage members to make decision in terms of customer satisfaction and profit (Ghosn, 2001b). This indicates that customer orientation plays an important role in integrating organizational members who have diverse perspectives in different sections.
There are two reasons why this study is focused on the conflict in explaining the relationship between customer orientation and innovativeness. First, positive conflict or tension within an organization is essential for encouraging members to come up with innovative ideas, while negative conflicts often hinder their creativity (Brown and Duguid, 1991, Dougherty, 1992, Leonard-Barton, 1995 and Leonard-Barton and Straus, 1997). Second, customer orientation, as a shared belief or value, can restrain negative conflicts within an organization and integrate members' diverse perspectives and ideas (Dougherty, 1992 and Eisenhardt and Santos, 2002). Despite the importance of the relationship between customer orientation, conflict, and innovation, it has not been examined in past research.
Sales departments were chosen because salespeople, as boundary spanners, play critical roles in the service-delivery process; a capable sales department, therefore, can be one source of competitive advantage (Dubinsky et al., 1996, Singh, 1998, Shepherd, 1999 and Weitz and Bradford, 1999). According to Anderson and Narus (1995), excellent manufacturing companies tend to profit from providing additional service, rather than through the product itself. By studying the customer orientation/innovativeness relationship through conflicts in sales departments, it may be possible to find a mechanism for customer-oriented service innovation.
