Is Market Orientation a Source of Sustainable Competitive Advantage or Simply the Cost of Competing?

Abstract

The authors use panel data constructed from the responses of repeatedly surveyed top managers at 261 companies regarding their firm's market orientation, along with objective performance measures, to investigate the influence of market orientation on performance for a nine-year period from 1997 to 2005. The authors measure market orientation in 1997, 2001, and 2005 and estimate it in the interval between these measurement periods. The analyses indicate that market orientation has a positive effect on business performance in both the short and the long run. However, the sustained advantage in business performance from having a market orientation is greater for the firms that are early to develop a market orientation. These firms also gain more in sales and profit than firms that are late in developing a market orientation. Firms that adopt a market orientation may also realize additional benefit in the form of a lift in sales and profit due to a carryover effect. Market orientation should have a more pronounced effect on a firm's profit than sales because a market orientation focuses efforts on customer retention rather than on acquisition. Environmental turbulence and competitive intensity moderate the main effect of market orientation on business performance, but the moderating effects are greater in the 1990s than in the 2000s.

An empirical investigation of network-oriented behaviors in business-to-business markets

“…The result that a customer focus does not impact on a firm's profitability can be due to the fact that being customer oriented has become a necessity, rather than a competitive advantage, which is in part echoing the argument provided by Kumar et al (2011). This implies that being overly customer-oriented can be detrimental to a firm's profitability since it might require unnecessary capital investments in order to fulfill customer needs.…”

“…However, empirical evidence also suggests that these behaviors are moderated by contextual factors (e.g., Cadogan, Kuivalainen, & Sundqvist, 2009;Ellis, 2006;Kirca, Jayachandran, & Bearden, 2005), or have no influence on firm performance (e.g., Grewal & Tansuhaj, 2001). A longitudinal study by Kumar, Jones, Venkatesan, and Leone (2011) provides evidence that market oriented-behaviors have recently become a prerequisite, rather than a competitive advantage, for any firm to compete in the market place. Furthermore, being market-oriented could be a mere 'self-portrait' rather than a true representation of a market-centric approach (Deshpandé, Farley, & Webster, 1993).…”

“…However, these effects of network-oriented behaviors are likely amplified in a fast moving technological environment (Achrol & Kotler, 1999), e.g., the level of technological turbulence has become an important contextual factor in affecting the effectiveness of firms' endeavors to respond to markets (Jaworski & Kohli, 1993;Kumar et al, 2011). On the other hand, the effectiveness of network-oriented behaviors is also hypothesized to be affected by how well a focal firm interacts with the end users of a firm's offerings.…”

Antecedents and consequences of marketing audits: Empirical evidence from Taiwanese firms

“…Environmental munificence and dynamism (Slater & Narver, 1994;Egeren & O'Connor, 1998;Song & Parry, 2009;Kumar et al, 2011) Environmental munificence (1) A high level of price competition is in our industry (R) (2) A high level of competition is in the quality of products/services in our industry (R) (3) Any product or service distinguishing one competitor from the rest can be matched readily by other competitors (R) Minimum 1, maximum 5, M ¼ 3.233, SD ¼ 0.875, Composite Reliability ¼ 0.895, AVE ¼ 0.743 Environmental dynamism (1) Technology changes quickly (2) Actions of competitors are unpredictable (3) Products and service changes quickly (4) Products and services are unpredictable Minimum 1, maximum 5, M ¼ 3.836, SD ¼ 0.930, Composite Reliability ¼ 0.900, AVE ¼ 0.693 The Activities of MA (Kotler et al, 1977) Rate the extent to which the following activities are used by your firm to gather information about its business environment. Business (task) environment audits (BEAs) (1) Industrial competitive analysis (2) Market analysis (3) Customer needs and opinions (4) Customer attributes, habits, and interests (5) Customer satisfaction of products and services Minimum 1, maximum 5, M ¼ 2.387, SD ¼ 1.674, Composite Reliability ¼ 0.946, AVE ¼ 0.777 Rate the extent to which the following evaluations are implemented by your firm to ensure the effectiveness of its marketing information system and function.…”

Do market oriented firms adopt Web 2.0 technologies? An empirical study in hospitality firms

“…Market orientation (MO) seems to be a key concept to adequately respond to an ever changing and turbulent environment MO involves the generation of market intelligence, dissemination of the intelligence across departments and organization wide responsiveness to it (Kohli and Jaworski 1990). MO has been an essential concept for the marketing discipline for both service and manufacturing industries; consequently many authors have empirically studied its relation to short and long term performance (Tsiotsou 2010) and have confirmed its value as a source of sustainable competitive advantage (Kumar et al 2011).…”