dc.description.abstract |
Market orientation is a well-known construct in the marketing literature. One reason for the
extensive research on market orientation is that it is seen as the operationalization of the
marketing concept itself.
Extant literature provides evidence supporting the link between market orientation and firm
performance. However, most of the evidence which links market orientation with firm
performance comes from studies carried out in the goods context. The few studies that have
been done in the services context show either a weak link with firm performance or no link
at all. Further, the studies that have been carried out in the services context have generally
been limited to a single industry.
In this thesis, I explore the reasons as to why market orientation might be more strongly
associated with firm performance in the goods context than in the services context. I
suggest that one reason could be that services are by their very nature non-standardized,
and that market orientation is aimed at satisfying all the customers. Therefore, market
orientation may not be the dominant driver of firm performance in the services context,
where it becomes very difficult to satisfy every single customer. In the goods context,
however, market orientation will be a dominant driver of firm performance.
I also suggest another construct, namely customer selectivity, as a driver of firm
performance in the services context. Customer selectivity, it is argued, is anchored in the
customer relationship management (CRM) literature. Since services are by their nature
heterogeneous, i.e. non-standardized, firms which are customer selective will do well in the
services context.
However, one cannot exclude the possibility that, while market orientation might not be a
good driver of firm performance in the services context, it might be an antecedent of customer selectivity. Therefore I develop an alternative model in which market orientation
is conceptualized as a cultural orientation, and thus acts as antecedent to customer
selectivity, which then leads to firm performance.
To test the hypotheses which are developed in the study, I use a pre-existing scale for
market orientation, and operationalize customer selectivity using existing items. All the
hypotheses are tested on a multi-industry dataset. The first set of hypotheses, relating to the
first model, is tested using regression analysis. The second set, relating to the alternative
model, is tested using structural equation modelling.
The results are, broadly speaking, consistent with the hypotheses. It is seen that market
orientation is a direct driver of firm performance in the goods context, while customer
selectivity is a direct driver of firm performance in the services context. Similarly, it is also
seen that market orientation is an antecedent to customer selectivity. This is consistent with
the results obtained in the first model. However, it is also seen that in both models, while
the first dimension of market orientation (customer orientation) is associated with firm
performance according to the hypotheses derived in the thesis, the second dimension of
market orientation (interfunctional coordination) is not associated with firm performance.
The study clarifies and delimits the role of market orientation as a direct driver of firm
performance in all contexts, and suggests it leads to firm performance primarily in the
goods context. Similarly, customer selectivity leads to firm performance primarily in the
services context. However, the study also suggests that market orientation is an antecedent
to customer selectivity in both contexts. In other worlds, market orientation plays a role in
both the goods and services context, but differentially. Managerially, market orientation
and customer selectivity are proposed as a pair of strategies that marketers can help their
CEOs choose between or possibly combine depending on the goods-service mix that the
firm offers. |
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