The desired level of market orientation and business unit performance |
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Authors: | Michael Song Mark E Parry |
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Institution: | (1) 318 Bloch School, University of Missouri—Kansas City, 5110 Cherry Street, Kansas City, MO 64110-2499, USA;(2) 321 Bloch School, University of Missouri—Kansas City, 5110 Cherry Street, Kansas City, MO 64110-2499, USA |
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Abstract: | Existing studies of market orientation have hypothesized that the strength of the market orientation/performance relationship
depends on environmental variables such as market turbulence, technological turbulence, and competitive intensity. To date
most empirical studies have failed to confirm these hypotheses; however, these studies (1) assumed that performance is a linear
function of the achieved level of market orientation and (2) tested whether environmental uncertainty moderates this relationship.
A complementary explanation for the impact of environmental variables on a firm’s market orientation arises from studies of
organizational behavior that link the need for coordination and control to environmental uncertainty and organizational strategy.
Building on this perspective, the authors argue that (1) environmental uncertainty influences the desired level of market
orientation and (2) the gap between the desired and achieved levels of market orientation influence business unit performance.
The authors test these hypotheses with data collected from multiple respondents in 308 US firms. The data analysis confirms
that the desired level of market orientation is a function of market turbulence, competitive intensity, technological turbulence,
and innovation strategy. In addition, the desired level of market orientation positively influences the achieved level. Finally,
when the achieved level of market orientation is less than the desired level, business unit performance is a negative function
of the gap between the desired and achieved levels of market orientation.
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Keywords: | Market orientation Marketing strategy Innovation strategy Environmental moderators |
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