Market-orientated companies perform better than those with low levels of market focus.1 Indeed, a plethora of studies find evidence linking the extent of market orientation with increased sales, profitability and return on investment. Executives are therefore bombarded with exhortations to improve the level of market orientation in their companies. However, contemporary research finds that many companies face problems due, in part, to their limited degree of market focus. Thus, theorists continue to raise concerns that the extensive benefits of developing market orientation are not being fully realised by practitioners. While the value of developing market orientation is almost universally accepted by theorists and practitioners alike, the evidence indicates that for some reason, many companies fail to develop or sustain a high level of market orientation. This may be explained by indications that many practitioners inaccurately perceive their companies to be market-orientated despite objective evidence to the contrary.2 However no study has yet directly addressed how executives form such misleading views of the level of market orientation in their companies.
Building on the work of Day, the aim of this paper is to generate insights into how strategy and decision makers evaluate the extent of market orientation of their company.3 In this regard, the purpose of this study is to explore if, how and why executives develop skewed, inaccurate or incomplete assessments of market orientation. The value of this is heightened by recognition that executives are not only reliant on the interpretation of their company's market orientation in their strategy making, but also on their ability to gauge the market orientation of competitors. Thus, how decision makers gauge levels of market orientation is of primary concern as problems with interpretation have a direct effect on a company's ability to develop market orientation successfully.
This paper begins by identifying three issues in the literature that indicate both theorists and practitioners may be misinterpreting the extent, degree and depth of market orientation. A brief methodology is then presented and subsequently, the findings from 101 exploratory interviews with executives and managers are discussed. The analysis reveals eight common misinterpretations of market orientation. These results lead to a number of conclusions and implications, centred on suggestions to advance research in this field. The intended audience of this paper includes not only market orientation researchers and theorists interested in how managers develop skewed interpretations, but also executives striving to gauge and enhance organisational strategic direction and orientation.
Conclusions and implications
The aim of this paper is to generate insights into how and why organisational decision makers
develop skewed, inaccurate or incomplete assessments of the market orientation levels of their
company. Adopting a theory-building approach, the analysis of exploratory, in-depth interviews
with executives and decision makers revealed eight pitfalls found to affect managers’ ability
accurately to gauge market orientation. Despite the necessary limitations, emerging from the self-
reporting and inquisitorial research design, these findings are important for several reasons.
The first contribution of this research relates to our finding that the effective examination of
market orientation appears to require a holistic and eclectic perspective. Our findings that managers
commonly misinterpret levels of market orientation are consistent with earlier theorists who
indicate that when managers attempt to evaluate precisely the level of market orientation achieved
by their organisation, their evaluation is commonly distorted (Day, 1999). Further, our research
reveals that each dimension of market orientation (co-ordination, customer, competitor, and
strategic orientation) may be a source of misinterpretation (see
Table 1
). However, the strategic
orientation of a company can cause over-emphasis on a single market orientation dimension. In
this sense, while focusing on single facets of market orientation (such as for example, customer
dynamics) may generate valuable insights, a broader, more holistic approach may deepen the
understanding of the nuances of market orientation measurement and operationalisation. Thus,
a central implication derived from the breadth of the pitfalls uncovered, is that a more complete
understanding of market focus can only be achieved through the exploration of a wide range of
diverse intra-organisational functions and competitive environmental factors. This suggests that
future studies of market orientation might benefit from drawing on alternative and diverse
academies to enrich, extrapolate and inform the theory of market orientation.
While focusing on single facets of market orientation may generate
valuable insights, a broader approach may deepen understanding
In addition to this broader theoretical contribution, there are precise implications for each of the
findings uncovered. These are summarised in
Table 3
and are discussed below.
A key contribution of the study at the micro level centres on the rigour required in the attempts
of marketers and theorists to measure the elusive concept of market orientation. The identification
of the pitfalls relating to customer satisfaction and complaint measurement highlight this issue. In
this regard, both theorists and researchers should seek to develop specific guidelines and measures
for accurately developing and evaluating customer orientation. This is concordant with earlier
commentators who have argued that there is a need for the development of specific, more
sophisticated measures in order to facilitate managers’ identification and interpretation of the
success factors associated with the development of each market orientation dimension (Webb
et al.
2000; Harris, 2002).
This parallels the issues raised by the identification of competitor orientation pitfalls. Our
findings suggest that the failure of theorists to develop multiple-perspective measurements of
market orientation limits the value and precisions of the tool in accurately gauging market
orientation levels. In this regard, the third contribution of this paper is connected to our
understanding of the use of measurement in the field of market orientation from both a theoretical
and practical perspective. This study suggests that theorists should critically revaluate and even
reconsider the wide range of existing theories and findings regarding market orientation, based on
data collection that assumes informants have an objective and an accurate understanding of the
market orientation of their company. That is, current approaches to and measures of market
orientation need to be reconsidered and probably redesigned (Harris, 2002). More practically, the
findings of the current study indicate that executives should respond to the suggestion that their
understanding of market orientation is, all too frequently, skewed by one or more of the eigh
pitfalls uncovered. In this sense, it seems logical to argue that managers should similarly critically
appraise their own approaches to gauges of market orientation in their individual context.
Finally, the findings associated with the co-ordination of market-orientated activities highlight two
dichotomous pitfalls: (1) the behavioural perspective, through front-line deviance; and (2) the
cultural perspective, through a mistaken belief in cultural unity (see
Table 3
). This dichotomy mirrors
the behavioural v. cultural debate raised in the market orientation literature throughout the 1990s
(
c.f.
Deng and Dart, 1994; Deshpande
́
et al.
1993; Kohli and Jaworski, 1990; Narver and Slater 1990).
While many academics today recognise that market orientation is a combination of both behavioural
and cultural aspects, the development of the construct seems to have a bias towards the behavioural
characteristics of market orientation and further that these behavioural characteristics have clear
limitations. In this regard, the need to develop improved measures for behavioural characteristics as
well as frameworks for identifying organisational sub-cultures and appropriate mechanisms for the
effective implementation of market-orientated strategies seems relevant (Harris and Ogbonna, 1999).
In addition to the conclusions and implications discussed above, the current study also generates
implications that may prove useful for those practitioners concerned that market orientation within
their organisation may be questionable. These are summarised in
Table 4
links each pitfall identified with a key lesson for executives and highlights potential
approaches designed to avoid such pitfalls. The idiosyncratic nature of companies makes the
provisions of a universal agenda for change somewhat difficult. However, some tentative
suggestions for such an agenda are detailed below First, executives may wish to re-evaluate their market-sensing capabilities focusing on the need
for multi-directional communication, tailoring of information to individuals needs (to reduce
overload), iteration and the frequency and formality of information flows.
Second, executives could focus on the extent and depth of organisational learning, possibly
adopting a programmatical approach to market orientation development.
35
Third, top executives may wish to reassess the cultural attributes of their organisation and
consider the employment of culture development programmes and the judicious use of symbols
to develop deeper levels of market orientation.
Fourth,executivesshould be disciplinedin theirfocusonthefutureandtheoverridingneed toinvest
time in comprehensively understanding the industries, sectors and markets in which they operate.
Finally, it is suggested that executives explicitly recognise the potential for strategic inertia
through insuring that approaches to the evaluation of market orientation are periodically re-
evaluated and critically assessed
The above management agenda constitutes a tentative starting point for analysis and should be
viewed as a series of suggestions and not a universally applicable panacea. However, without
attention to such issues the potential for misinterpretation of market orientation levels will remain
ever-present
