Global Journal of Management and Business Research, E: Marketing, Volume 21 Issue 4

The Impact of Market Orientation and Diffusion on Commercial Success of Patented Innovation in Sri Lanka Romaine Ferdinands α , Halinah Binti Atan σ , Ferdous Azam ρ & Ali Khatibi Ѡ Abstract- Purpose: The study seeks to understand the relationship between two critical success factors for the commercial success of patented innovation: the invention's market orientation and diffusion. The study also assesses the moderating effect of patent ownership in the relationship between the predictors' market orientation (MO) and diffusion (DF) with patent commercialisation success. The observation of the relationship is vital as a high percentage of registered patents in Sri Lanka are individually owned and could be a factor for poor commercial success. Methodology: The empirical study utilises a national sample of patented inventions by Sri Lankan nationals and is cross- sectional. The study used a sample of 220 patent holders from the Sri Lanka National Intellectual Property Office (NIPO) and the Patent Cooperative Treaty (PCT) databases to test the hypotheses. The study selected patents registered between 2010 and 2014. The analysis uses SPSS version 21. Findings: The study reveals that both market orientation and diffusion have a significant positive impact on the success of patent commercialisation. The results also indicate that patent ownership moderates the relationship of both market orientation and diffusion on commercial success. Originality: Comparative studies combining different ownership groups in a wide range of industries are scarce and this study contributes to furthering this knowledge. The study also contributes to an area with limited literature by studying innovation diffusion based on the characteristics of the innovation. Keywords: market orientation, diffusion, patents, commercialisation, technology transfer, sri lanka. I. I ntroduction nnovation plays a vital role in the performance and growth of organisations and countries and is one of the fundamental premises of economic development (Cohen & Levinthal, 1990; Han, 2017). An innovation adds economic benefit only when it is commercialised. Therefore, commercialisation is seen as a vital component in stimulating economic growth and a critical stage in the entire innovation development process (Schilling & Phelps, 2007). This relationship between innovation and economic value generation was cited by the economist Robert Solow (1957) and Schumpeter (1934). Schumpeter proposed that the more significant or radical the innovation was, the greater its impact, resulting in higher economic return. On the other hand, the effect would be marginal with a lesser economic return if the innovation is incremental. Innovation is also noted to have a snowballing effect that generates knowledge that when it gets diffused it generates more knowledge through its application in newer forms of products and processors as the diffusion of the innovation spreads to different industries. Many developing countries with little R&D budgets bring forth limited innovations with the more radical innovations that carry higher commercial potential being patented and yet, struggle to gain economic benefit from the commercialisation of these patents (Latif et al., 2016). Sri Lanka is no exception. The reason for non-achievement has been tagged to the uncertainties surrounding new technology and markets (Mohr & Sengupta, 2013; Slater 2005). These uncertainties could be in terms of market acceptance, technology performance, cost of development and production time, cost of production and how rapidly the cost of production could decline due to economies of scale. The rate of application and adaption of the new technology in different industries also influences the success of an innovation. Thus, in the heart of innovation, there is uncertainty. The success of invention also lies with the users and how users view and apply the innovation (Mowrey & Rosenberg, 1999). Therefore, it is essential to note that not all inventions will become commercially successful, as a deep understanding is required of the commercial process of innovation (Jones & Stevens, 1999; Chiaroni et al., 2010). Thus it is said that commercialisation is the 'heartbeat' of innovation. Given the significance of commercialisation, it is crucial to understand what factors determine an invention's commercial success The outcome of commercial success is influenced by key factors and decisions taken in the earlier stages of idea generation, conceptualisation and prototyping. Market orientation (MO) is a critical factor determining the ability to understand customer needs and maintain that understanding throughout the innovation process from the outset of technology development. This understanding is through in-depth knowledge of expressed and latent customer needs that need to be addressed (Slater & Narver, 1995). I © 2021 Global Journals Global Journal of Management and Business Research Volume XXI Issue IV Version I Year 2021 ( ) E 31 Author α : Graduate School of Management, Management & Science University of Malaysia. e-mail: romchandi@gmail.com