Does market knowledge 'work' for innovation and internationalization?

Between cycles of creative destruction and competitive advantage, innovation was considered by Joseph Schumpeter, economist and political scientist, as a precursor to the economic development of countries. In Schumpeterian essays and arguments from the late 1930s and early 1940s, in the interwar period, Schumpeter argued that the success of innovation is temporary in nature – innovation would cease to be successful in the subsequent process of competition and adaptation to the market.  

In a scenario of geopolitical changes, redefining trade rules between countries, and the opening and/or closing of doors in international trade, it is worth reflecting on the temporary context of innovation and, specifically, on the adaptation of innovation to (new) international clients as a condition for overcoming the restrictions imposed in current target markets (i.e., circumventing the tariffs imposed by the US). In this context, I present a... reflection which underlies innovation and involves decisions regarding the suitability and/or creation of new products, new processes, new organizational methods, or even new marketing methods.  

I begin this reflection with a question: 

How market-oriented is your business?  

Beyond the 'domestic' borders, market orientation presupposes the development of knowledge to adapt the business to the circumstances of the international environment, considering three central aspects:  

1. Structural conditions: knowledge of the laws, rules, and procedures existing in the target market. This is the first step in defining actions, organizing resources, and developing organizational skills to adapt to the demands. 
2. Cultural aspects: knowledge of the norms and values existing in the target market. Cultural differences can imply changes in the way of managing/relating to business partners, in addition to requiring adjustments in the implementation of the strategy.  
3. Sustainability: the need to implement and integrate corporate social responsibility and sustainability into core activities in order to meet market demand. Companies operating in international markets are more or less forced to meet sustainability standards imposed by trade in this environment.  

Market-oriented business models continually seek to:  

a) generating market intelligence (knowledge of customer demands and needs and observation/monitoring of competitor actions and the sector as a whole); 

b) the dissemination of intelligence (internal mechanisms that facilitate the dissemination of knowledge acquired from the market); 

c) Responsiveness through the processing, discussion, and implementation of more effective decisions based on acquired knowledge of the market (customers, competitors, industry).

When rules change and partnerships built in existing markets are discouraged by the imposition of new conditions for commercialization, taxation, etc., the solution is sometimes to seek (open) new clients in other countries/contexts. To this end, market-oriented business models are crucial for adapting products and/or developing innovative solutions to meet demand or even create demand. 

Gaining knowledge of the international buyer (customer) chain, disseminating the information obtained, and strategically applying it to the development of innovations and their introduction into the international market are essential tasks to be considered in this process.  

Returning to Schumpeter's argument about cycles of creative destruction, the dynamics of innovation constantly redefine competition. Market orientation, in turn, allows for monitoring the behavior of customers and competitors. Regarding demands and needs, this opens up space for the supply of innovative solutions. It's the 'fine-tuning' between the supply of innovation and the 'need' for innovation. 

So, when it comes to innovation and internationalization, how market-oriented is your company?  

References consulted: 

Kohli, A. K., Jaworski, B. B. (1990). Market orientation: the construction, research propositions, and managerial implications. Journal of Marketing, 54(4), p. 1-18. 

Sundström, A., Hyder, A.S., Chowdhury, E.H. (2021). Market-oriented business model for SMEs' disruptive innovations internationalization. Marketing Intelligence & Planning, 39(5), p.670-686. 

Wiggins, R. R., Ruefli, T. W. (2005). Schumpeter's ghost: is hypercompetition making the best of times shorter? Strategic Management Journal, 26(10), p.887-911. 

 *Simone Regina Didonet is a researcher at the ABES ThinkTank, and a Professor and Researcher in the Postgraduate Program in Administration at the Federal University of Paraná.