During the past decade, a market-oriented corporate culture increasingly has been considered a key element of business performance (Han, Kim, & Srivastava, 1998), according to the predominant view that a market orientation is positively associated with economic performance (e.g. Han et al., 1998, Jaworski and Kohli, 1993, Matsuno and Mentzer, 2000 and Narver and Slater, 1990). The basic assumption underlying such studies is that market-oriented firms that identify and satisfy customer needs more effectively than their competitors will achieve sustained success (Day, 1994, Kirca et al., 2005 and Sanzo et al., 2003).
Conceptually, market orientation and relationship marketing overlap, especially in business-to-business markets (Steinman, Deshpande, & Farley, 2000). The focal point of relationship marketing literature is the more effective satisfaction of customers' needs compared with competitors through a long-term perspective on customer relations (Kalwani and Narayandas, 1995 and Steinman et al., 2000). Insights from this literature stream have led to studies investigating the possible correlation between a market orientation philosophy and customer relationship success. For example, Webb, Webster, and Krepapa (2000) and Baker, Simpson, and Sigauw (1999) discuss the impact of market orientation on key relationship constructs. In the same vein, the present study attempts to provide a more thorough understanding of the impact of market orientation on customer relationships.
We focus on the relationship among market orientation, accommodations, and customer satisfaction of Taiwan companies for three reasons. First, though researchers have argued that it is necessary to integrate the market orientation construct into relationship marketing models (e.g. Maydeu-Olivares & Lado, 2003), little research focuses on the relationship between market orientation and customer satisfaction. We believe customer satisfaction is appropriate in this research context because it serves as an overall evaluation of a firm's products and service (Anderson et al., 1997, Dwyer et al., 1987 and Fornell et al., 1996). Second, customer satisfaction has been identified a source of competitive advantage for suppliers, because the buyer's loyalty depends to a great extent on the degree of its satisfaction with the relationship (e.g., Abdul-Muhmin, 2005, Sanzo et al., 2003 and Selnes and Gønhaug, 2000). Third, prior studies also indicate that Taiwan's managers view customer satisfaction as a major determinant for achieving significant improvements in their organizational performance (Madu, Kuei, & Lin, 1995).
To achieve customer satisfaction, according to some arguments, the process of becoming market oriented must involve relationship-specific adaptations, such as tailoring marketing systems, purchasing new equipment, changing inventory and distribution systems, or customizing products for the key customers, to help the firm accommodate customer needs (Hallén et al., 1991 and Steinman et al., 2000). However, other researchers argue that a market orientation can be harmful if a firm narrowly adapts product offerings to existing customer preferences and market structures (Christensen & Bower, 1996). The negative effects of adaptations are even more obvious in long-term relationships; as relationships develop, the deepening commitments lead to customized products or processes, which tie firms to current ways of operating and restrict their ability to change (Håkansson & Ford, 2000). This potential concern raises the issue of how a market-oriented firm should accommodate its customers' needs; moreover, it questions how a market-oriented firm can accommodate customer needs over the course of relationship lifecycles.
This paradox may be resolved by considering the accommodation strategies that market-oriented firms might use. Recent studies have been devoted to the balance of a loosely coupled flexibility system and a tightly coupled customer relationship (Beverland, 2005 and Danneels, 2003). A variety of studies also show that flexibility may be a strategy to provide value in business relationships that also enables firms to build competitive capabilities; improve customer retention, satisfaction, and loyalty; and increase profits and sales (e.g., Beverland, 2005, Claycomb et al., 2005, Fredericks, 2005, Håkansson and Snehota, 1995 and Ivens, 2005). Therefore, we examine whether a market-oriented firm can manage flexibility and relationship-specific adaptations over the course of the relationship lifecycle to accommodate customer needs and achieve customer satisfaction.
Specifically, our research has the following objectives: First, we explore suppliers' accommodation strategies and examine the relationship between market orientation and accommodations. Second, we investigate whether market-oriented businesses use different accommodation strategies over the course of supplier–customer relationship phases. Third, we determine whether accommodation strategies mediate the relationship between market orientation and customer satisfaction. In the following sections, we review prior research about market orientation, supplier accommodations, and relationship phases. Then we present the research methodology, including a delineation of the measurement we use to test the hypotheses. Following an examination of the results, we conclude with key implications and limitations and further research.
