The Role of Reward Systems in Product Innovations: An Examination of New Product Development Projects

Focusing on new product development projects, this study suggests that the effect of a market orientation on innovation performance relationships may differ depending on whether the market orientation is responsive or proactive. This study also argues that process-based and outcome-based rewards moderate the effect. Based on a survey of 186 new product development projects in 122 high-tech firms, this study found that responsive and proactive market orientations have positive influences on incremental innovation performance and radical innovation performance, respectively. In addition, the positive effect of a proactive market orientation on performance is strengthened by process-based rewards, whereas the positive effect of a responsive market orientation on performance is positively moderated by outcome-based rewards. This study provides practical implications and directions for future research.