The majority of studies on market orientation claim compelling evidence exists that market orientation has a positive effect on business performance. This study takes a closer look at 51 studies which have addressed the relationship between market orientation and business performance between 1990 and 2002. The results show that there is no unequivocal evidence as to if and when market orientation has a positive impact on business performance. There is however some unequivocal proof, albeit limited, on how market orientation influences business performance. These findings are unsettling for academics and managers because market orientation is the foundation of marketing strategy.
The majority of studies on market orientation claim compelling evidence exists that market orientation has a positive effect on business performance. This study takes a closer look at 51 studies which have addressed the relationship between market orientation and business performance between 1990 and 2002. The results show that there is no unequivocal evidence as to if and when market orientation has a positive impact on business performance. There is however some unequivocal proof, albeit limited, on how market orientation influences business performance. These findings are unsettling for academics and managers because market orientation is the foundation of marketing strategy.
From a theoretical point of view the literature argues that market orientation provides a unifying focus of individual and departmental efforts in the delivery of value to customers while also providing a comparative impetus with competitors’ activities (Jaworski and Kohli, 1993 and Narver and Slater, 1990). Therefore, a market-oriented firm is more likely to achieve high levels of customer satisfaction, keep existing customers loyal, attract new customers, and subsequently attain the desired level of growth, market share and hence organisational performance (Homburg and Pflesser, 2000). To test this contention we examined the performance impact of market orientation in 51 key studies that used well-known scales developed by Kohli et al. (1993); Narver and Slater, 1990, Deshpandé et al., 1993 and Deshpandé and Farley, 1998 to measure market orientation.
Our review reveals that the evidence revealing if and when market orientation has positive effects on business performance is, at least, equivocal. There is however limited unequivocal evidence on how market orientation influences business performance, namely through innovation ( Baker and Sinkula, 1999b and Han et al., 1998). Thus we conclude that despite claims made in the literature such as:
with considerable confidence, one can say there exists a positive relationship between market orientation and performance (Narver and Slater 1998, p. 235);
compelling evidence exists that market orientation leads to positive business performance (Matsuno et al., 2002, p. 18);
that the overall issue of predictive power of market orientation is, after 13 years of extensive research, still an open question.
5. Implications
The findings of our study raise a variety of interesting management issues such as the following:
1.
Why is it that market orientation is not always positively correlated to business performance?
2.
What are the inter-scale and intra-scale characteristics of the well-established scales to measure market orientation?
3.
Do subjective measures of business performance suffice for gauging the impact of market orientation on organisational performance?
4.
Why is the effect of market orientation on business performance not robust across various contexts (e.g., industries, markets and firms)?
5.
Could it be that only firms with a superior business performance can afford, but not always choose to, to develop a market orientation?
6.
What is the role of Hofstede’s (1980) dimensions of national culture, in particular the UK-culture, on the relationship between market orientation and business performance?
7.
How does market orientation affect business performance in cross-national longitudinal research designs?
8.
What kind of organisational activities encourage and reward market-oriented behaviours?
The impetus to answer these questions comes from a number of sources, not the least of which is managers’ impatience to know for sure if, when and how market orientation influences business performance.
