Ebook: Market Orientation And Service Firm Performance - A Research Agenda

Market orientation is a corner-stone of marketing and management strategy.However, relatively little research has been conducted into the relationshipbetween market orientation and performance in the context of services firms.This is surprising, given the rapid growth of the services sector in the past 30years, and its importance as a source of job creation and wealth. This paperreviews the major research themes relating to market orientation and servicefirm performance and suggests an agenda for future research to improve ourunderstanding of this important marketing and management issue. Although the roots of market orientation stretch back 45 years or more to thedevelopment of the marketing concept, intense research into this area has onlyoccurred in the past 12 years. Renewed interest was sparked by two seminalarticles published by Narver and Slater (1990) and Kohli and Jaworski (1990).These authors produced complementary models of market orientation andtested the links between orientation and performance. In turn, their findingscreated a flurry of interest from researchers interested in exploring the linksbetween marketing and business strategy, market-oriented behaviours andvarious aspects of firm performance. Since then, there have been numerousarticles exploring the nature of market orientation, its links to performance andwhether these links are mediated or moderated by firm or market variables.A problematical issue has been the lack of consensus over how to define andmeasure market orientation. Is it a corporate culture or guiding philosophywhich reflects the marketing or customer orientation concepts? In other words,does it promote the primacy of the customer, satisfying customer needs at aprofit – thus creating value for both sellers and consumers – and diffusingcustomer-oriented attitudes and marketing practices throughout theorganisation? Is it merely the management or marketing behaviours associatedwith implementing the marketing concept? Or is it a slightly broaderphilosophy which focuses on customers and competitors? Is it a more strategicmarketing/management approach with prescribed behaviours such asscanning the market for information on customer needs and competitor actionsand responding to market changes in a rapid and (hopefully) profitablemanner? Although Narver and Slater (1990) conceptualised market orientation as aculture, they tended to measure its implementation, using both attitudinal andbehavioural scales. However, one of their major contributions was to broadenthe original marketing concept to include both customer needs and competitoractions as well as a strategic focus. Hooley et al. (1990) also saw marketorientation as the implementation of the marketing concept, but limited theirinvestigation to differences between companies with dominant marketing,sales or production orientations. Kohli and Jaworski (1990) considered marketorientation in terms of market scanning, information sharing and responseactivities. Desphande´ et al. (1993) considered it to be a culture, but threecompeting scales were reduced down to a common customer orientationdimension (Deshpande´ and Farley, 1996). Gray et al. (1998) performed a similarintersectional analysis on the Narver and Slater (1990), Jaworski and Kohli(1993) and Deng and Dart (1994) scales, resulting in a 20-item scale with fivedimensions (customer orientation, competitor orientation, interfunctionalco-ordination, responsiveness, and profit emphasis). This has been validated inthe New Zealand context, but needs to be tested in other countries to establishits generalisability. It draws most heavily on the Narver and Slater scale, whichhas tended to dominate MO studies in most countries. Brendan J. Gray and Graham J. Hooley Previously published in: European Journal of Marketing, Volume 36, Number 9/10, 2002