Market Orientation and Business Performance in the Spanish Insurance Sector

Abstract

Previous studies have found that market orientation significantly predicts economic performance. The present study attempts to provide a necessarily partial model for how this impact takes place using innovation degree, innovation performance and customer loyalty as intermediate variables. The study targets the insurance industry in the European Union. The sample accounted for 22 percent of the companies and 17 percent of the insurance premiums in this market. The results suggest that the addition of these variables improves predictions of objective economic performance 52 percent over what is explained by market orientation alone. Furthermore, the study found that the effects of market orientation on economic performance are completely channeled (mediated) through these variables, particularly through innovation degree and innovation performance. Based on the results the paper provide guidelines for improving the market share, premium growth and profitability of European Union insurance firms.In a time characterized by increasingly rapid change in consumer preferences, even faster technological progress, and growing competitive rivalry, it becomes essential for companies to develop mechanisms within their organizations to generate market information, analyze it, and respond accordingly. The set of activities developed by companies permanently to monitor, analyze and respond to these market changes is referred to in the Marketing literature as "market orientation". Over the last decade there has been a growing interest in the construct of market orientation (