Internal market orientation adoption and new service development (NSD) : gearing up the internal performance of NSD teams

Purpose: This paper reports on the impact of perceived resource adequacy (PRA) and competence (PRC) on new service development (NSD) teams’ internal performance (IP). This study aims to explore the indirect effect of internal market orientation (IMO) adoption, as a dynamic capability, on both PRA and PRC through the shaping of the emerging dynamics within NSD teams. Design/methodology/approach: Using a hierarchical research design, the authors use a meso-theory approach to test a path-analytic framework against 116 NSD managers (offering data at the macro- or organisational level) and 543 NSD team members (offering data at the micro- or team level). Findings: Both PRA and PRC are important in explaining NSD teams’ IP at the organisational level, though their explanatory power varies. The adoption of IMO is also an important antecedent to this factor through the (indirect) effect on the team climate and degree of integration. Research limitations/implications: IMO is an important dynamic capability that allows management to transform the mindset of employees, even if they do not directly interact with customers. In NSD efforts, this reflects on the team’s perceptions of the adequacy of the resources they have to deliver the project through the managerial interventions at the team level, which (mainly) explains the team’s IP. Practical implications: Adopting an IMO allows the development of a dynamic capability that carries wider benefits for the service organisation, as this has positive implications not just for frontline employees. Specifically, NSD efforts are likely to become more resource-efficient as a result of IMO adoption because of the interventions of management during the development effort. Originality/value: This empirical study is the first to test the impact of IMO adoption as a dynamic capability and in a context other than frontline employees from a meso-theory perspective. This allows considering the different effects at the appropriate levels (macro and micro), thus enabling a more accurate definition of the mechanism through which companies benefit from IMO adoption.