Market orientation, competitive advantage, and performance: A demand-based perspective

This study assesses how customer value affects a firm's market orientation and consequently, competitive advantage and organizational performance in a service industry — the global hotel industry. The findings show that if a firm perceives its customers as valuing service, the firm is more likely to adopt both a customer and a competitor orientation; if the firm thinks its customers are price sensitive, the firm tends to develop a competitor orientation. Moreover, the greater a firm's customer orientation, the more the firm is able to develop a competitive advantage based on innovation and market differentiation. In contrast, a competitor orientation has a negative effect on a firm's market differentiation advantage. Finally, innovation and market differentiation advantages lead to greater market performance (e.g., perceived quality, customer satisfaction) and in turn, higher financial performance (e.g., profit, market share).     

SME Internet use and strategic flexibility: the moderating effect of IT market orientation

Abstract

One of the most important topics in the marketing literature has been the concept of market orientation. However, questions remain as to the dynamics of how market orientation translates into intermediate capabilities. This study explores relationships among different types of Internet usage, IT market orientation (the extent to which IT is aligned to manage customer and competitor information and internal activities), and strategic flexibility (firm capability to respond to the need for change). Specifically, use of the Internet for communication with relevant stakeholders, owing to its market-sensing potential, should be positively and significantly related to strategic flexibility for SMEs with more IT market-oriented alignment. The market-sensing potential of Internet communication to impact strategic flexibility positively for SMEs is likely to be lost under low IT market-oriented-alignment conditions. In contrast, IT market orientation should not moderate the relationship between Internet use for transactions with relevant stakeholders and strategic flexibility, given that the typical order taking and processing is a static, routine function for SMEs. Results supported hypothesised relationships. By delineating the type of Internet usage and required IT alignment that contribute to leveraging the Internet effectively, findings hold implications for future research by clarifying boundary conditions for Internet effects. Specifying how and when Internet use promotes strategic flexibility, an important enabler of competitive advantage, helps small business owner/managers better utilise their limited resources.     

Strategic hybrid orientation between market orientation and brand orientation: guiding principles

Strategic orientations underpin the firm’s managerial decisions and influence its performance. Firms can combine multiple strategic orientations to achieve superior performance. Market orientation and brand orientation are well-developed, separate, strategic approaches. A 2013 study conceptually proposed a strategic hybrid orientation comprising two types: (a) market and brand orientation and (b) brand and market orientation. The current study is qualitative, using small-to-medium enterprises to investigate strategic hybrid orientations. Through propositions, the paper explains the theory and processes underlying the two hybrid orientation types. The propositions form the guiding principles for the strategic management of the hybrid orientation. The implications for managerial practice show that quite different capabilities apply to the execution of each strategic hybrid type.     

Sustainable market orientation: a competitive strategic tool in an emerging economy context

The purpose of this research is to test the effect of sustainable market orientation (SMO) as a strategic tool on banks’ sustainable balanced firm performance (SBFP) in an emerging economy. The research data was collected via the survey approach through self-administered questionnaires to 445 bank employees. Exploratory Factor Analysis was employed to establish the dimensionality of the research constructs, whereas multiple linear regressions were utilised to test the research hypotheses. Results suggest that SMO is positively and significantly related to sustainable balanced performance of banks. The study confirms the SMO concept promulgated in prior studies. Employees’ opinions on bank Managers incorporating sustainability management variables into market orientation as a strategy are encouraged by scholars to engender SBFP. Strategic approaches of this kind leads to balance performance of organisations and the larger society which is central to all stakeholders. This study may be the initial quantitative investigation into SMO and SBFP in the strategic marketing literature.     

Where the eyes go,the body follows?: Understanding the impact of strategic orientation on corporate social performance

This research seeks to address two questions with respect to firm corporate social performance (CSP): (1) “do different strategic orientations have differential impacts on a firm's overall CSP?”; and, if so, (2) “is there an effect of a firm's strategic orientation on the types of CSP that a firm implements?” Using a unique dataset that combines survey data on firms' strategic orientations for 115 US-based firms with CSP data from MSCI-ESG, we empirically examine the impacts on CSP levels of four different firm strategic orientations: customer, competitor, interfunctional coordination, and shareholder. Our empirical analysis demonstrates that (1) firms with a stronger orientation toward customers have higher levels of CSP overall, and (2) when firms have a stronger customer orientation, we find that the firm has higher CSP levels in domains dedicated toward secondary stakeholders, while firms with a stronger shareholder orientation exhibit higher levels of CSP dedicated toward primary stakeholders.     

Innovative capabilities: Their drivers and effects on current and future performance

This study investigates the role of a firm's orientation, both customer and competitor, in driving innovative capabilities and the impact of those capabilities on a firm's current and future performance. The study's contribution is threefold in that it (1) examines market-related exploitative and explorative capabilities in conjunction with product development exploitative and explorative capabilities in terms of their strategic drivers (firm orientation) and performance outcomes; (2) disentangles the effects of exploitative and explorative capabilities on current and future performance; and (3) examines the role of innovative capabilities within the particularly relevant, but understudied, context of exporting. The findings suggest that, although customer orientation relates to both exploitative and explorative capabilities, competitor orientation relates only to exploitative capabilities. Exploitative capabilities affect current performance, whereas explorative capabilities affect future performance. These findings are of crucial relevance to export managers in their quest to identify, extend, and create new market opportunities.     

Market Orientation: An Iterative Process of Customer and Market Engagement

ABSTRACT

Research Purpose. The objective of this research was to examine market orientation in organisations that deliver manufacturing-based services to both client organisations and their customers.

Research Approach. The case study research method employed three data collection methods: in-depth, semi-structured interviews, document analysis and physical artefact analysis. Embedded study units comprising groups of different stakeholders with distinctly different perspectives provided a basis for replication logic to enhance validity of the findings.

Findings. The research revealed that a firm's transition toward a market-oriented state is progressive. At a given point in time, a firm may be adjusting to its markets intuitively or cognitively; market responsiveness may be occurring in specific pockets of the firm, or as an enterprise-wide strategy; and some of the conditions specified may be met, some may be partly met and others may remain to be addressed in the future. A specific customer focus was important to the conceptualisation of market orientation in the case organisation.

Research Implications. Key implications of the research are as follows:

• In conceptualising market orientation as a process as opposed to an ideal state, important issues of structural and policy alignment and senior executive vision and drive are revealed;

• in addition to customer and competitor orientations and intra-organisational co-ordination, other dimensions of a market orientation revealed in the research context are a customer focus and a new knowledge orientation; and

• both inter- and intra-organisational co-ordination facilitate the development of market driven and market driving customer value.

Practical Implications. While the senior executives were aware of the significant performance benefits to be achieved through a national, market-oriented vision, the lack of a co-ordinated plan to achieve cultural change resulted in incremental achievements towards the vision. One key factor inhibiting the envisioned cultural change was the power base of those within the organisation who perceived that a national, market focus would eliminate local autonomy. Specific policy was required to align rewards with required behavioural change.

Contribution. This research provides a unique perspective of market orientation as process of organisational development directed towards aligning the organisation with its served markets. Intervention strategies and incremental changes attempted to achieve a national market perspective, highlight the importance of aligning structure, human resource management strategy, top management commitment and leadership drive in achieving such a cultural change.     

Competitive strategy in the market-focused business

Market orientation is a business culture which enlists the participation of all employees for the purpose of creating superior value for its customers and superior performance for itself. A substantial body of research finds a positive relationship between a business's magnitude of market orientation and its performance. However, there has been no research into the competitive strategies through which a market-oriented business creates customer value. This paper extends previous work by showing that market-oriented businesses aggressively develop new products and services, focus on opportunities in market segments rather than in the mass market, and attempt to achieve competitive advantage both by increasing customer benefits and by reducing costs.     

The influence of service orientation and interaction orientation on consumer identification

A service orientation aims to provide professional and comprehensive service items to consumers in a sale or a non-sale situation, while an interaction orientation has the goal of creating good interaction ability with individual customers in order to maintain long-term, profitable customer relationships, and in the process obtaining valuable information about individual customers. These orientations build customer-centric operations and develop competitive advantages, thus enhancing firm performance and customer value. The main purpose of this study was to examine the relative and collective contributions of different strategic orientations on a firm's performance, with a focus on consumer–company identification. The structural equation model results indicate that (1) both service orientation and interaction orientation positively influence consumer–company identification and (2) interaction orientation results in higher perceived consumer identification.     

The dramatic breakdown of the market orientation concept in the pharmaceutical industry: lessons from Vioxx

In this article we present an in-depth case study to better understand the underlying market orientation concept in relation to bringing new technologies to the marketplace. We use the case history of the anti-arthritis drug Vioxx, developed and marketed by the company Merck & Co. Inc that allegedly killed thousands of customers. The case shows how market orientation can take shape and how the key components may form an explosive cocktail prone to problematic behaviour rather than a synergistic set of orientations that creates value for customers. From the data covering 20 years, it is clear that a consumer orientation and competitor orientation, for example, are difficult to internalise and balance by employees. A competitive orientation seems to lead to tunnel vision regarding profit and market share outcomes. Implications for the fundamental market orientation concept, innovation management, together with management challenges are discussed.     

Enhancing corporate social responsibility through market orientation practices in bottom of pyramid markets: with special reference to microcredit institutions

Market-oriented organizations are committed to understanding and serving customer needs. Customers become socially conscious, so market-oriented firms need to carry out ‘Corporate Social Responsibility’ (CSR) initiatives. The main aim of this study was to investigate the influence of market orientation on CSR among microcredit institutions. The findings of this study are useful for microcredit institutions and marketers operating in bottom of pyramid (BOP) market to enhance their CSR through market orientation practices. The sample comprised 250 managers of microcredit institutions operating in the rural areas of Sri Lanka. The surveys were administered for data collection. All the three components of market orientation, that is, customer orientation, competitor orientation, and inter-functional coordination significantly and positively influenced the CSR involvement. Adaptation to BOP Market Culture enhanced the positive influences of both customer orientation and inter-functional coordination, on CSR. From these findings, implications for theory and practice have been discussed.     

The influence of business strategy on new product activity: The role of market orientation

In this paper, we propose that business strategy influences new product activity both directly and indirectly via its influence on market orientation. Accordingly, we develop a framework linking firms' relative emphasis on cost leadership, product differentiation and focus strategies to firms' customer and competitor orientation as well as their new product development and introduction activity. We use this framework to develop a simultaneous equations model that is tested on survey data from 175 Dutch firms of varying size and across different industries in the manufacturing sector. The surprising findings are that a greater emphasis on a focus strategy results in a decreased emphasis on customer orientation and that competitor orientation has a negative direct influence on new product activity and an indirect positive effect via customer orientation. We discuss the implications of these findings for theory and practice.     

Bridging the gap between employees and customers

Abstract

Employing modern definitions of the marketing concept, we develop a unified model to measure the market orientation construct. We then employ a chain-link model linking employee satisfaction and motivation to customer behaviour and firm profitability, demonstrating that market orientation mediates the employee–customer relationship. Hence, while past research has studied market orientation, per se, we demonstrate why it is important – it serves as the bridge to link employees and customers.     

Testing interaction effects of the dimensions of market orientation on marketing program creativity

Despite the plethora of research on market orientation, our understanding of how different dimensions of market orientation interact with each other in generating new intelligence for marketing programs is limited. In this paper, we develop and test a model that examines the interaction effects of the three dimensions of market orientation—customer orientation, competitor orientation, and cross-functional integration—on generation of marketing program creativity, composed of novelty and meaningfulness dimensions. In empirically testing such effects, we illustrate how to use two-stage least squares (2SLS) estimation. We find significant positive interaction effects between customer orientation and competitor orientation and between competitor orientation and cross-functional integration in predicting marketing program novelty. We also find that competitor orientation and cross-functional integration significantly and positively interact with each other in improving marketing program meaningfulness. Our empirical results provide implications and directions for market orientation research.     

Competing in an emerging market: antecedents and consequences of market orientation and the role of environmental factors

Adoption of market orientation is an investment decision involved with benefit and cost considerations. How environmental factors influence the adoption of market orientation has received scant attention in the literature. This study fills the void by investigating the environmental antecedents to market orientation. In addition, the research explores the role market orientation and customer satisfaction play for firms operating in an emerging market in search of growth and prosperity. Based on data collected from India, one of the BRIC nations and an important emerging market, results show that turbulent and dynamic market conditions foster an adoption of market orientation, which leads to high levels of customer satisfaction, and in turn leads to customer loyalty. Managerial implications and future research directions are discussed.     

The moderating effect of brand orientation on inter-firm market orientation and performance

Abstract

While prior research has shown that market and brand orientation are key contributors to successful business performance, research to date has not fully explored how inter firm collaboration for these two key orientations can enhance business performance. The purpose of the paper is to investigate the relationship between inter-firm market and performance; to test for the moderating role of brand orientation in that relationship. A total of 169 completed pairs of surveys were collected of small and medium enterprises operating internationally in a variety of industries in Switzerland. The results show that inter-firm market and brand orientation are two antecedents of marketing and financial performance. The impact of inter-firm market on marketing and financial performance is significant when the brand orientation is favorable. This study extends previous research by examining the moderating role of brand orientation on inter firm market orientation, which is important, especially for firms wanting to increase their brand reputation by entering into partnerships with other firms. Further research is indicated, to identify the key moderators of the driving force of inter-firm market in relation to business performance and the reason why maintaining a strong brand presence is important in the international marketplace.     

Market Orientation and Firm Value

Several studies in the market orientation literature demonstrate a positive relationship between a market orientation and firm performance. However, the mechanisms of this relationship have yet to be explored in detail. This article addresses such a gap by proposing a conceptual model that links market orientation to wealth creation in firms. The model posits that a market orientation guides investment in market-based assets that may be deployed to create customer value. The realisation of customer value helps to both capture and retain customers. Quicker and more extensive market penetration, shorter sales cycles, and decreased marketing and sales costs enhance the cash flow of a market-oriented firm. This may be recognised in higher valuations, which ultimately translate into higher share prices and wealth creation for the owners of the firm. This model is used to describe the creation of value in the Major Business Division of BT, a large information technology service company. Recent success in this Division of BT is attributed to the creation of a market orientation and customer value-based strategy and processes. The experience of BT provides a clear illustration of how a market oriented firm creates value for both customers and shareholders.     

Market Orientation in Vertical Business Networks

Abstract

This research addresses three questions: (1) Why are some business network firms more market orientated than others? (2) What effect does the environmental uncertainty have on the network performance impact of market orientation activities performed by a network firm? (3) Does network embeddedness influence the effectiveness of a firm's market orientation activities? The findings from a study on a vertical grocery network suggest that the performance impact of market orientation activities depends on the network identity of the network firm. Network embeddedness of a network firm is found to enhance this performance link. Finally, uncertain market environments favor down-stream allocation of market orientation activities in our sample.     

STRATEGIC ORIENTATION,CAPABILITIES, AND PERFORMANCE IN MANUFACTURER — 3PL RELATIONSHIPS

This study examines how two dimensions of strategic orientation (customer and competitor orientation) influence logistics and market performance. Two capabilities, operational flexibility and collaboration, are studied. Data were collected from manufacturers working with third party logistics providers. The findings suggest that customer and competitor orientations have different influences upon performance when leveraged through the capabilities. Competitor orientation, while having a detrimental direct effect on logistics performance, appears to be the better strategic approach, when supported with operational flexibility since it results in enhanced logistics (efficiency) and market (effectiveness) performance. Customer orientation, on the other hand, greatly improves logistics performance, i.e., internal efficiency.     

Salesperson CLV orientation's effect on performance

Previous studies show how strategies based on the customer lifetime value (CLV) can lead to an increase of profitability for a firm. In this context, marketing serves the purpose of maximizing CLV and customer equity (the CLV of current and future customers). For most types of service firms, salespeople are direct participants in implementing the CLV concept. However, prior research does not answer the question of whether or how salesperson CLV orientation can enhance profits. Using data on salespeople in a large Chilean retail bank, this study shows that the effect of salesperson CLV orientation on salesperson performance follows an S-shaped function (which is first convex and then concave). Additionally, data does not support the idea that the optimum level of CLV orientation depends on salesperson customer orientation, salesperson adaptive selling behavior, or salesperson experience (i.e., CLV-oriented behaviors could be effective across a wide range of salespeople). As such, this study addresses an important concern among researchers and managers that is related to how to increase the salesperson performance. The findings of this study suggest that firms need to monitor individual salesperson CLV orientation more closely.