1-s2.0-s0019850105000052-main impo

Industrial Marketing Managem

Cultural vs. operational market orientation and objective vs. subjective

performance: Perspective of production and operations

Oscar Gonzalez-BenitoT, Javier Gonzalez-Benito1

Departamento de.Administracion y Economıa de la Empresa, Universidad de Salamanca, Campus Miguel de Unamuno, 37007-Salamanca, Spain

Received 30 April 2004; received in revised form 15 November 2004; accepted 10 January 2005

Available online 2 March 2005

Abstract

The relationship between market orientation and organizational performance has been the focus of many studies for the last few years. The

conclusions reported are very diverse and even contradictory. This ambiguity is reinforced to some extent by the high degree of

methodological heterogeneity in the definition and measure of market orientation and organizational performance and the empirical

formalization of the relationship between both concepts. This study tackles this question by comparing different methodological approaches.

Three key aspects are considered: (1) cultural and operational approaches for measuring market orientation; (2) objective and subjective

measures of performance; and (3) the source of information in the organization, specifically the perspective of production and operations. The

results obtained from a sample of Spanish industrial firms show a stronger positive relationship for operational market orientation and

subjective performance. Moreover, the adoption of doperational recipesT of market orientation by the production and operations function

seems to improve organizational performance regardless of the existence of any cultural support for market orientation.

D 2005 Elsevier Inc. All rights reserved.

Keywords: Cultural/attitudinal market orientation; Operational/behavioural market orientation; Objective performance; Subjective performance; Production and

operations perspective

1. Introduction

Recent literature in business management has devoted

special attention to the growing implantation of different

practices and approaches such as organizational culture ma-

nagement, strategic human resource management, quality

management, or environmental management. These trends

have even been referred to as fashions and fads rather than as

organizational necessities (Ogbonna & Harris, 2002). Their

adoption is usually justified by the positive consequences

they have on performance. A specially relevant management

approach is market orientation, broadly defined as the adop-

tion of the marketing concept as the business philosophy

guiding the competitive strategies of the organization. Al-

0019-8501/$ - see front matter D 2005 Elsevier Inc. All rights reserved.

doi:10.1016/j.indmarman.2005.01.002

T Corresponding author. Tel.: +34 923 294 500x3508; fax: +34 923

294 715.

E-mail addresses: [email protected] (O. Gonzalez-Benito)8

[email protected] (J. Gonzalez-Benito).1 Tel.: +34 923 294 500x3502; fax: +34 923 294 715.

though a positive relationship betweenmarket orientation and

performance has been claimed for several decades now, the

interest in providing empirical evidence is relatively recent.

During the last fifteen years, a plethora of studies has

empirically analysed the effects of market orientation on

organizational performance. Nevertheless, the reported

results are not conclusive. Although many studies argue

and find a positive relationship, some others find a non-

significant or negative relationship. While the meta-analysis

reported by Rodriguez-Cano, Carrillat, and y Jaramillo

(2004) supports a positive relationship between market

orientation and performance, the reviews of Langerak

(2003a), Sin et al. (2000) or Tse, Sin, Yau, Lee, and Chow

(2003) point out that the existence of such a relationship and

the circumstances in which it takes place are still open

questions without unequivocal response. In this respect,

Slater and Narver (2000) point out the importance of

replicating studies with substantive modifications of the

conceptual and methodological methods for increasing the

confidence in previous findings. However, this methodolog-

ent 34 (2005) 797–829

O. Gonzalez-Benito, J. Gonzalez-Benito / Industrial Marketing Management 34 (2005) 797–829798

ical heterogeneity implies an additional challenge to provide

conclusive answers (Noble, Sinha, & Kumar, 2002). The

variety of approaches to the empirical formalization of the

relationship between marketing orientation and performance

constitutes a possible cause of the diversity, and inconsis-

tency, in the conclusions reported.

This paper focuses on the different approaches to

defining and measuring market orientation and organiza-

tional performance. The underlying argument is that differ-

ent definitions and measures capture different nuances of

these constructs and, as a consequence, the relationship

between them might vary across the approaches. In other

words, market orientation and performance are broad

concepts whose relationship depends on the specific way

in which they are interpreted and empirically studied. In

particular, the focus is on three key aspects:

(1) The distinction between cultural and operational ap-

proaches to market orientation—the definition and

measurement of market orientation can focus on the

attitudes, values and beliefs of managers (Slater &

Narver, 1994), or on the processes, activities and

behaviours within the organization (Kohli & Jaworski,

1990). In this respect, Griffiths andGrover (1998) point

out that both approaches to market orientation are

compatible and complementary because behaviour is

the basis for the formation of beliefs and values, and

culture provides the rules of behaviour. However, the

duality between culture and behaviour within the

concept of market orientation also implies that both

approaches can be separately implemented in the sense

that organizations can emphasize market-oriented cul-

ture while neglecting its conversion into market-orien-

ted activities, or vice versa. This possibility leads us to

wonder whether cultural and operational market ori-

entations have different consequences on performance.

(2) The distinction between objective and subjective

measures of organizational performance—the meas-

urement of organizational performance can focus on

objectively quantifiable accounting or operative indi-

cators or on the subjective assessment of performance

in comparison to objectives and competitors (Dawes,

1999). Some studies have reported different conclu-

sions about the relationship betweenmarket orientation

and organizational performance depending on the

objective or subjective measurement of the latter

variable. For example, the seminal study of Jaworski

and Kohli (1993) only found a positive relationship for

subjective performance. This circumstance leads us to

wonder whether there are differences in the potential of

objective or subjective measurement of performance to

capture the consequences of market orientation.

(3) The role of the source of information within the

organization—although market orientation should

underlie the whole organization, the cultural and

operational adoption of market orientation might differ

across functional areas, presumably being less intense

for those functional areas most removed from custom-

ers. Some studies have found modest congruence

between market orientation reported by different

managers within the same organization. For example,

the study of Jaworski and Kohli (1993) found modest

correlations between marketing and non-marketing

informants. This kind of result leads us to wonder

whether the relationship between market orientation

and performance prevails when the former is measured

in the production and operations functional area.

The aim of this paper is to provide additional evidence of

the relationship between market orientation and organiza-

tional performance by the explicit comparison of these

different approaches to the empirical formalization of the

constructs. Two key questions synthesise the main contribu-

tion of the paper. On the one hand, the paper analyses whether

the benefits derived from market orientation require the

cultural conversion of the organization or simply the imple-

mentation of some processes and activities. In other words,

the question is to what extent organizations can learn fruitful

market orientation behaviours without prioritizing their

essential values. On the other hand, the paper analyses

whether the benefits derived from market orientation are

reflected by objective indicators of performance, or whether

they imply more complex and long-term consequences only

captured by subjective performance measurement. In addi-

tion, contrary to most of the previous studies, all these ques-

tions are analysed from the perspective of production and

operations managers. Therefore, the paper deals with themar-

ket orientation that goes beyond the marketing function or top

management and is perceived from internal functional areas.

The subsequent contents are divided into four more

sections. First, a theoretical framework is developed through

a review of the literature. That leads to the enunciation of

the research hypotheses. Next, the methodology for testing

the empirical hypotheses is described. After that, the results

are presented, interpreted and discussed. Finally, the main

conclusions and implications are summarised.

2. Literature review and working hypotheses

As mentioned above, many empirical studies have

provided empirical evidence of the relationship between

market orientation and performance over the last few years.

This growing research interest has been inspired in some

pioneering studies such as Deshpande, Farley, and Webster

(1993), Jaworski and Kohli (1993), Lusch and Laczniak

(1987), Narver and Slater (1990), or Ruekert (1992).

Appendix 1 presents an extensive sample of published

papers in this research field. Although most of them use the

term dmarket orientationT, others use terms such as

dmarketing orientationT, dcustomer orientationT, dmarket

drivenT, or simply dimplementation of the marketing

O. Gonzalez-Benito, J. Gonzalez-Benito / Industrial Marketing Management 34 (2005) 797–829 799

conceptT with almost similar meanings. Sometimes the

relationship between market orientation and performance

constitutes the main objective, while other times it is a

complementary result of the achievement of other objec-

tives. In any case, as reflected in the section of Appendix 1

devoted to the population analysed, a broad spectrum of

contexts has been studied. Different geographical scenarios

characterised by different economic and political situations

have been analysed; industrial markets, consumer markets,

and export markets have been distinguished; different

activities such as products, services and specific sectors

(machinery, biotechnology, textile, distribution, hotel indus-

try, health, financial and insurance services, etc.) have been

considered, and even different sizes, competitive strategies

or competitive environment situations. The relationship has

also been assessed in the field of not for profit organizations,

such as public administrations, educational centres or

charity institutions.

Any study dealing with the relationship between market

orientation and performance requires the empirical formal-

ization of (1) the measure of market orientation, (2) the

measure of organizational performance, and (3) the nature of

the relationship between both measures. Appendix 1 also

describes the revised studies according to these three

questions. The section devoted to market orientation

measures describes the scales used, their cultural or opera-

tional emphasis, and the source of information. The section

devoted to performance measures describes the kind of

variables used, their objective or subjective character, and

the source of information. Finally, the section devoted to

results describes the reported conclusions with respect to the

market orientation–performance relationship and the mod-

erating circumstances. The observed differences in measure-

ment approaches and results motivate the hypotheses of this

study.

2.1. Cultural vs. operative market orientation

The notion of market orientation is related to the

adoption of the marketing concept as a business philoso-

phy. In this respect, market orientation can be defined as an

organizational culture (Slater & Narver, 1994). Specifically,

it comprises the set of beliefs that puts the customer’s

interest first in order to develop a long-term profitable

organization (Deshpande et al., 1993). Alternatively,

market orientation can be defined as the set of activities,

processes and behaviours derived from the implementation

of the marketing concept (Kohli & Jaworski, 1990). Some

authors only recognize this latter operative/behavioural

meaning and use the term dmarketing orientationT, or

simply dadoption of the marketing conceptT, to refer to the

cultural / attitudinal approach (e.g. Deng & Dart, 1994;

Diamantopoulos & Hart, 1993; Gray, Matear, Boshoff, &

Mathesonet, 1998).

From a methodological point of view, the operational

approach predominates over the cultural approach when the

effect on organizational performance is analysed. Almost

95% of the studies described in Appendix 1 used market

orientation scales with operative emphasis, while only 9%

analysed the relationship between some kind of cultural

scale and performance. Two circumstances should be borne

in mind in this respect. First, the operational conceptualisa-

tion proposed by Kohli and Jaworski (1990)—empirically

formalised in the MARKOR scale (Kohli, Jaworski, &

Kumar, 1993)—has been widely accepted. Second, other

scales developed from the cultural perspective and also

widely accepted in the literature—such as the MKTOR of

Narver and Slater (1990) and the DFW of Deshpande et al.

(1993)—have focused on the measurement of operational

aspects [see the discussion in this respect in Deshpande and

Farley (1998a,b) and Narver and Slater (1998)]. About 40%

and 35% of the studies described in Appendix 1 used or

adapted the MARKOR and MKTOR scales, respectively.

Less than 5% of the studies revised in Appendix 1 have

simultaneously considered cultural and operational meas-

ures and their relationship to performance (Alvarez, Santos,

& Vazquez, 2000; Avlonitis & Gounaris, 1997; Diamanto-

poulos & Hart, 1993; Gray et al., 1998; Homburg &

Pflesser, 2000). All of them have found congruence between

both approaches. In fact, the congruence between both

measures has been used as proof of convergent validity in

the assessment of several operational scales of market

orientation (e.g. Deng & Dart, 1994; Deshpande & Farley,

1998a; Kohli et al., 1993). This evidence suggests that the

cultural adoption and the operational implementation of

market orientation are closely related.

Cultural market orientation has been interpreted as an

antecedent of operational market orientation (e.g. Alvarez et

al., 2000; Gray, Greenley, Matear, & Matheson, 1999;

Homburg & Pflesser, 2000). Narver and Slater (1998)

indicate that when market orientation is measured through

certain specific activities and manifestations, the underlying

belief system is being measured. In other words, the belief

that customer satisfaction is the best way to achieve a long-

term positional advantage enhances the implementation of

activities and processes for reaching this objective. Another

argument in this respect is the fact that the top management

emphasis constitutes a determinant of operational market

orientation (e.g. Bhuian, 1998; Cervera, Mola, & Sanchez,

2001; Horng & Chen, 1998; Jaworski & Kohli, 1993;

Puledran, Speed, & Widing, 2000; Selnes, Jaworski, &

Kohli, 1996; Shoham & Rose, 2001). These arguments lead

us to think that organizations adopt first a cultural orientation

and then develop consistent behaviours.

However, the opposite line of reasoning has also been

contemplated in the literature. As pointed out by Griffiths

and Grover (1998), behaviour constitutes the basis for the

progressive development of the beliefs, values and attitudes

that make up the organizational culture. That is, operational

market orientation might be an antecedent of cultural market

orientation. Moreover, the research emphasis on demarcat-

ing the activities that characterise a market-oriented firm has


facilitated the adoption of doperational recipesT that are not

based on a cultural transformation. These arguments lead us

to think that there might be firms which have implemented

market-oriented behaviour without having embraced market

orientation beliefs and values.

The incongruence between cultural and operational

market orientation may become stronger when functional

areas other than sales or marketing are considered. Although

market orientation should involve the whole organization

(Webster, 1992), some studies that have measured market

orientation using multiple respondents with different man-

aging roles within the organization have reported some kind

of disagreement between them. About 20% of the studies

revised in Appendix 1 used more than one informant within

each organization in the sample. Some of these studies

report moderate correlations across respondents (e.g. Jawor-

ski & Kohli, 1993; Jones, Busch, & Dacin, 2003; Raju,

Lonial, & Gupta, 1995; Ruekert, 1992). For example,

Jaworski and Kohli (1993) interviewed marketing and

non-marketing managers and, in their own words,

balthough the two reports were positively correlated, the

correlations were not perfect, which suggests that the two

informants were keying in on different perspectives in

providing their responsesQ. In particular, it seems reason-

able to assume that in functional areas such as production

and operations, which are dless close to customersT and

immersed in the achievement of specific effectiveness and

efficiency objectives, the implementation of market orien-

tation is weaker, specially in the cultural sense. The adop-

tion of market-oriented activities and practices might be a

consequence of the development of corporate policies or a

consequence of an interest in following management

trends, instead of the conviction of production and opera-

tions managers. In short, the perspective of the production

and operations function stresses the claim that the adop-

tion of the cultural dimension is not a necessary condition

for the implementation of the operational dimension.

These arguments are summarised in the following two

hypotheses:

H1. There is a positive relationship between the cultural and

operational market orientation of the production and

operations function.

1

2

3

Market orientation

CULTURAL CAPABILITIES STRATEGIC A

Entrepreneurship orientation

Learningorientation

Differentiationstrategy

Adaptative andproactive innovation

Organizational competence

Fig. 1. Market orientation–pe

H2. Cultural market orientation is not necessarily an

antecedent of operational market orientation in the produc-

tion and operations function.

2.2. Relationship between market orientation and

performance

The interest in market orientation is based on how it

affects organizational performance. Narver and Slater (1990)

consider profitability as a decision criteria in market-oriented

firms. In general, a positive effect on market position, long-

term viability and performance has been claimed. The effect

has even been used to argue criterion-related validity in

several measurement scales of market orientation (e.g. Deng

& Dart, 1994; Deshpande & Farley, 1998a,b; Gray et al.,

1998; Kohli et al., 1993; Lado, Maydeu-Olivares, & Rivera,

1998; Soehadi, Hart, & Tagg, 2001).

A theoretical justification of the relationship is proposed

in Fig. 1. At least three kinds of positive consequences of

market orientation have been identified in the literature

review summarised in Appendix 1:

(1) Effectiveness (1 in Fig. 1). Market orientation is an

organizational resource that might lead to competitive

advantage through the understanding of consumer

needs and what competitors offer and the development

of coordinated and adapted competing strategies (Hunt

&Morgan, 1995). The source of competitive advantage

is the creation of superior value for consumers. Its

achievement is primarily based on a differentiation

strategy (Kumar, Submaranian, & Strandholm, 2002;

Langerak, 2003b;Narver&Slater, 1990, 1998; Pelham,

1997a, 1999, 2000; Pelham &Wilson, 1996; Hooley et

al., 1999a,b; Vazquez, Santos, & Alvarez, 2001).

(2) Sustainability (2 in Fig. 1). The sustainability of

superior value has been criticised because the emphasis

on consumer needs obviates the role of innovation, at

least in relation to proactive innovation as compared to

adaptive innovation (e.g. Christensen & Bower, 1996;

Connor, 1999; Hamel & Prahalad, 1994; Hayes &

Weelwright, 1984). However, such a dtyranny of the

market servedT has been rejected because it implies a

quite simple conception of market orientation. Market

Efficiency

CTIONS

Effectiveness

PERFORMANCE

Sustainability

Effective, efficient and sustainablesuperior value for / satisfaction

of consumers

Competitiveadvantage

rformance relationship.


orientation is not only about the understanding of

current customersT needs, but also about anticipating

their latent needs (Slater &Narver, 1998, 1999). In fact,

many studies have found a close relationship between

market orientation and innovation (e.g. Agarwal, Er-

ramilli, & Dev, 2003; Appiah-Adu & Singh, 1998;

Han, Kim, & Srivastava, 1998; Matear, Osborne, Gar-

rett, & Gray, 2002; Maydeu-Olivares & Lado, 2003;

Slater & Narver, 1996; Vazquez et al., 2001). In any

case, market orientation has been related to learning

orientation (e.g. Baker & Sinkula, 1999a,b; Farrell,

2000; Hurley & Hule, 1998; Noble et al., 2002; Santos,

Sanzo, Alvarez, & Vazquez, 2001) and entrepreneur-

ship orientation (e.g. Atuahene-Gima & Ko, 2001;

Barret & Weinstein, 1998; Becherer & Maurer, 1997;

Matsuno, Mentzer, & Ozsomer, 2002; Wood, Bhuian,

& Kiecker, 2000). They are thought of as complemen-

tary concepts underlying the achievement of innova-

tion orientation. Hult and Ketchen (2001), Hult, Snow,

and Kandemir (2003), Liu, Luo, and Shi (2003) or

Slater and Narver (1995) state that the combination of

market, learning, entrepreneurship and innovation

orientation leads organizations to positional advantage,

and consequently, sustainable superior performance.

(3) Efficiency (3 in Fig. 1). Previous arguments imply

greater and sustainable effectiveness and better market

position in terms of image, reputation, sales, market

share, etc. However, greater efficiency also requires

some control over the costs involved in the achieve-

ment of effectiveness. In this respect, market orienta-

tion has been associated with a more efficient resource

allocation (Chang&Chen, 1998). It not only affects the

formulation of the strategy but also its implementation

(Dobni & Luffman, 2003), by providing discipline,

cohesion and internal coordination (Pelham & Wilson,

1996). In particular, market orientation has been related

to greater emphasis on employee recruitment, training

and compensation (e.g. Horng & Chen, 1998; Jaworski

& Kohli, 1993; Puledran et al., 2000; Ruekert, 1992;

Selnes et al., 1996; Shoham & Rose, 2001), and

positive effects on employee commitment and satis-

faction have been found (e.g. Caruana, Ramaseshan, &

Ewing, 1999; Horng & Chen, 1998; Jaworski & Kohli,

1993; Jones et al., 2003; Selnes et al., 1996; Shoham &

Rose, 2001; Siguaw, Brown, & Widing, 1994).

Empirical evidence to a great extent supports the relation-

ship between market orientation and performance, although

sometimes subject to specific circumstances of the compet-

itive environment. Nearly 88% of the studies revised in

Appendix 1 found a positive relationship between measures

of market orientation and measures of performance. Another

6% only found positive relationships under specific circum-

stances determined by moderating variables. However,

many of these studies did not find positive relationships

for all performance measures, circumstances and situations

considered. Moreover, there are empirical contributions that

did not find any relationship or reported the opposite

conclusions concerning the situations in which the relation-

ship takes place. In particular, Kahn (2001) found different

conclusions depending on the role of the respondent within

the organization, the relationship for marketing managers

being stronger than for production or R and D managers.

This impedes an unequivocal conclusion about the existence

and nature of the relationship (Langerak, 2003a; Sin et al.,

2000; Tse et al., 2003). Therefore, it is necessary to provide

more empirical evidence while monitoring the influence of

different methodological approaches.

In particular, it is relevant to study the role of cultural and

operational approaches in measuring market orientation,

especially because some degree of incongruence between

both approaches has been argued above, mainly in functional

areas more removed from customers, such as production and

operations. If the sequence culture–strategy–performance is

assumed, the practices and processes should constitute the

trigger for superior performance. Narver and Slater (1990)

point out that market orientation is the organizational culture

that most effectively and efficiently creates the necessary

behaviour for the creation of superior value for customers

and, thus, continuous superior performance for the organ-

ization. More specifically, Homburg and Pflesser (2000)

suggest that market-oriented values lead to market-oriented

norms, and market-oriented norms lead to market-oriented

behaviours. Therefore, a competitive advantage is reached by

transforming market orientation culture into specific actions.

Moreover, the adoption of market-oriented practices might

have similar effects, even though it is not based on a cultural

market orientation. In sum, it is reasonable to expect that the

relationship between market orientation and performance is

stronger for the operational approach than for the cultural

approach.

However, the measurement of an operational market

orientation quantifies the degree of implementation and

development of a set of practices and activities, but not the

quality and rigour of this implementation. The inconsisten-

cies found between market orientation perceived within the

organization and market orientation perceived externally by

customers or other agents of the environment supports this

argument (e.g. Deshpande & Farley, 1999; Deshpande et al.,

1993; Farrelly & Quester, 2003; Krepapa, Bherthon, Webb,

& Pitt, 2003). Therefore, it is reasonable to assume that the

effectiveness and efficiency of an operational market

orientation is related to the managing team’s belief in the

importance of the marketing concept. As pointed out by

Narver and Slater (1998), only a strong culture can produce

such consistent behaviour and performance.

These arguments are summarised in the following three

hypotheses:

H3. There is a positive relationship between the market

orientation of the production and operations function and

performance.


H4. The positive relationship between the market orienta-

tion of the production and operations function and perform-

ance is stronger for operational market orientation than for

cultural market orientation.

H5. The cultural and operational market orientations of the

production and operations function have a synergic effect on

organizational performance.

2.3. Objective vs. subjective performance

Another relevant question in the analysis of the


is the definition and measurement of the latter concept.

The diversity of performance measures used in the litera-

ture constitutes an additional source of methodological

heterogeneity.

In general, the measurement of organizational perform-

ance has been a traditional research field in strategic

management (Connolly, Conlon, & Deutsch, 1980; Marr

& Schiuma, 2003; Venkatraman & Ramanujam, 1986).

Several classification criteria have been proposed. In order

to shed light on this matter, it is possible to distinguish

between effectiveness and efficiency measures. The former

refer to the consolidation of a strong market position—for

example, customer satisfaction, image and reputation,

sales, market share, or new product success. The latter

refer to optimal resource allocation—for example, benefit,

profitability or ROI. A distinction between situation

measures—related to current performance—and trend

measures—related to the change in performance—can

also be made. In this line, Baker and Sinkula (1999a,b)

distinguish between the effectiveness dimension of per-

formance—related to success in comparison to compet-

itors—and adaptability measures—related to the success in

responding over time to changing conditions and oppor-

tunities in the environment. Venkatraman and Ramanujam

(1986) suggest a two-dimensional classification scheme.

On the one hand, they differentiate between financial and

operational indicators, and on the other hand, they

distinguish between primary and secondary sources of

information. Financial measures are related to accounting

measures and economic performance—for example, profit

or sales. Operational measures refer to the operational

success factors that might lead to financial performance—

for example, customer satisfaction, quality, market share

or new product development. Data for primary measures

is collected directly from the organization, while informa-

tion for secondary measures is collected from external

databases.

An additional interesting classification distinguishes

between objective and subjective measures. The former

refer to performance indicators impartially quantified. They

are generally financial indicators obtained directly from

organizations or through secondary sources. The latter refer

to the judgmental assessment of internal or external

respondents. They usually cover both financial and opera-

tional/commercial indicators. Some studies have found

consistency between objective and subjective measures

(e.g. Covin, Slevin, & Schultz, 1994; Dawes, 1999; Dess

& Robinson, 1984; Han et al., 1998; Hart & Banbury, 1994;

Pearce, Robbins, & Robinson, 1987; Venkatraman &

Ramanujam, 1987). Nevertheless, they also recognize the

existence of some divergences and the convenience of both

approaches. In particular, several studies centred on the


have reached different conclusions depending on the

consideration of objective or subjective measures of

performance. Nearly 12% of the studies revised in Appendix

1 used both approaches to measure performance. Almost

50% of these studies reported a stronger relationship for

subjective performance than for objective performance

(Agarwal et al., 2003; Balabanis, Stables, & Phillips,

1997; Gray et al., 1998, 1999; Jaworski & Kohli, 1993;

Martin & Grbac, 2003; Schlegelmilch & Ram, 2000; Selnes

et al., 1996). On the contrary, only 20% reported a stronger

relationship for objective than for subjective performance

(Atuahene-Gima & Ko, 2001; Hooley, Lynch, & Shepherd,

1990; Voss & Voss, 2000).

Objective measures of performance are difficult to obtain

or insufficiently reliable. Some authors have pointed out the

poor reliability of secondary sources, and the difficulty of

obtaining such data directly from organizations because of

both the refusal to divulge such information or the lack of

interest and time on the part of managers (e.g. Caruana,

Ramaseshan, & Ewing, 1998a,b, 1999; Pitt, Caruana, &

Berthon, 1996). Moreover, the subjective approach facili-

tates the measurement of complex dimensions of perform-

ance, such as brand equity or customer satisfaction.

Subjective measurement also facilitates cross-sectional

analysis through sectors and markets because performance

can be quantified in comparison to objectives or competitors

(Hooley et al., 1999a,b). Judgmental assessments also make

it easier to take into account lagged effects and the particular

strategy of the organization (Jaworski & Kohli, 1993). This

leads us to think that subjective performance is more

adequate for capturing the consequences of market orienta-

tion than objective performance.

On the contrary, the analysis of the relationship between

market orientation and subjective performance might be

biased by the dhalo effectT. The response style or the interestin communicating a positive image can lead to a false

correlation between both concepts when a single respondent

is used. This circumstance would falsely reinforce the

estimated relationship between market orientation and

subjective performance. Some studies have solved this

limitation by considering different respondents for measur-

ing market orientation and performance, both within the

organization (Pelham, 1997a; Salomo, Steinhoff, &

Trommsdorffet, 2003; Slater & Narver, 2000) and outside

the organization (Deshpande & Farley, 1999; Deshpande et

al., 1993; Farrelly & Quester, 2003; Jones et al., 2003;


Siguaw, Simpson, & Baker, 1998). However, these meth-

odological approaches noticeably increase the costs and

effort involved in the field work.

Both arguments in favour and arguments against the

subjective approach lead us to expect that the relationship

between market orientation and performance is stronger

than the relationship between market orientation and

objective performance. Either owing to the versatility for

quantifying long-term relative performance or to the biases

derived from data collection based on single respondent, it is

logical to think that subjective measures of performance are

more correlated with market orientation.

These arguments are summarised in the following

hypothesis:

H6. The positive relationship between the market orienta-

tion of the production and operations function and perform-

ance is stronger for subjective measures of performance than

for objective measures of performance.

3. Methodology

The proposed hypotheses have been empirically tested in a

sample of Spanish industrial firms. Three questions are spe-

cially relevant with respect to the methodology: (1) data col-

lection, (2) construct measurement, and (3) analysis methods.

3.1. Data

The approached population consisted of the medium and

large Spanish firms in three industrial sectors: (1) chemical

(except pharmaceutical firms), (2) electronic and electrical

equipment, and (3) furniture and fixtures. Specifically, firms

with over 100 employees from the 2002 Dun and Bradstreet

census of the 50,000 largest Spanish companies were

considered. There were 428 firms, 156 of which were in

the chemical sector, 211 in the electronic and electrical

equipment sector, and 61 in the furniture sector. These

sectors were selected according to a more extensive

objective than that considered in this paper. Although they

are relevant sectors in the Spanish industry, the results

reported here should not be generalised to the whole

Spanish industry.

Relevant data in addition to the financial data contained

in the census were collected through postal survey. A

previous phone call to the firms allowed us to identify the

production and operations manager and to announce the

sending of the questionnaire. Between 15 and 30 days after

the mailing, a second phone call was made to those firms

that had not replied. No more follow up calls were made to

avoid excessive pressure on the managers in question. It

should be taken into account that the length of the

questionnaire discouraged many potential respondents from

collaborating. This procedure yielded 174 valid question-

naires with respect to the data required for this study;

specifically, 61 chemical firms, 87 electronic and electrical

equipment firms, and 26 furniture firms. The response rate

was 40.6%, which in turn corresponds to rates of 39.1%,

41.2% and 42.6% for the chemical, electronic equipment

and furniture industries, respectively. Two analyses were

conducted to assess whether there were systematic patterns

for non-response. On the one hand, respondents and non-

respondents were compared in relation to size and perform-

ance variables available from the Dun and Bradstreet

census. On the other hand, the relationship between the

order in which the questionnaires were received and the

requested variables was assessed. No significant relation-

ships were found in any of the cases.

The questionnaire was designed to cover a more

extensive objective than that considered in this study. The

data used in this study only constitutes a part of the whole

questionnaire. A presentation letter and a postage paid

return envelope were attached to each questionnaire. The

possibility of completing the questionnaire electronically

and returning it by e-mail was also available. The

questionnaire was previously tested over a small number

of firms to refine contents, structure and wording.

3.2. Measures

Market orientation. Cultural and operational market

orientation were measured with multi-item scales based

on previous literature and exploratory interviews with

managers. The cultural scale tried to capture the beliefs

and values of production and operations managers in

relation to the importance attached to customers and

competitors. Specifically, managers were asked to score

the degree of agreement or disagreement with 8 statements

on a six-point Likert-type scale ranging from dcompletely

disagreeT to dcompletely agreeT. An even number of

possible responses was considered to force respondents

to position themselves in relation to the items. The

selection of items was based on the structure proposed

by Narver and Slater (1990): customer orientation, com-

petitor orientation, interfunctional coordination, and long-

term and profitability emphasis. They were written in such

a way as to oppose the values of market orientation to the

emphasis on productive capabilities and objectives of

production efficiency. The operative scale sought to reflect

the degree of implementation of specific activities linked

to market orientation. Specifically, managers were asked to

score the degree of implementation of 9 practices on a six-

point Likert-type scale ranging from dnot at allT to dto a

great extentT. The selection of items was based on the

structure proposed by Kohli and Jaworski (1990): intelli-

gence generation, intelligence dissemination and respon-

siveness. The previous test of the questionnaire allowed us

to refine the configuration and writing of both scales. The

reliability analysis is reported in Table 1. The results allow

us assume one-dimensionality according to the usual

standards of internal consistency. The cultural and opera-

Table 1

Reliability of market orientation measures

Cronbach alpha Mean S.D. Item-to-total correlation Alpha if item deleted

Behavioural/operational market orientation 0.8709

We continuously gather information about the

trends of our target market

4.5115 1.2247 0.5884 0.8587

We assess our environment and our competitors’

strategies

4.6207 1.0938 0.7103 0.8482

We collect information about our customers’

satisfaction

4.6667 1.1941 0.6488 0.8530

We use internal reports about the structure and

trends of the market

4.1149 1.2439 0.6691 0.8510

We regularly contact with marketing/sales managers

to discuss the trends in the market

4.7069 1.2540 0.7152 0.8464

We are promptly informed about any complaint

or suggestion from our customers

5.1724 1.0167 0.5211 0.8642

We frequently meet other functional units in order

to anticipate a response to the changing environment

4.4598 1.2428 0.6012 0.8576

Our strategies are based on market knowledge rather

than on productive capabilities

4.1264 1.2382 0.4953 0.8676

Our premise for new product development is customer

satisfaction, instead of taking advantage of our

productive capabilities

4.8218 1.0630 0.5175 0.8645

Attitudinal/cultural market orientation 0.7239

It is necessary to understand consumers’ needs to

optimise productive capabilities

5.4425 0.7638 0.4383 0.6940

Customer satisfaction is more important than

productivity

5.1954 0.9166 0.4197 0.6954

Customer satisfaction requires the knowledge

of competitors’ offer

4.7989 1.1378 0.4003 0.7033

Improving productive efficiency is less important

than outperforming our competitors in creating

value for consumers

5.0287 0.9583 0.5666 0.6631

Successful decision making in operations requires

permanent contact with marketing/sales managers

5.1954 0.7502 0.4886 0.6859

Inter-departmental coordination is a key factor in

successfully meeting consumers’ needs

5.5402 0.6140 0.4413 0.6985

Production plans should give priority to the long- term

as opposed to the achievement of yearly objectives

4.5460 1.1904 0.2654 0.7395

Strengthening customers’ trust is a top priority,

even when it implies continuous adjustments of

production plans

5.1437 0.9168 0.4467 0.6899


tional market orientation variables used in the subsequent

analysis are the sum of item scores across their respective

scales.

Table 2

Reliability of subjective performance measures (compared to competitors)

Cron

alph

Profitability

Profitability over the last three years

Market performance 0.77

Company reputation and image

Alignment between company’s offer and market expectations

Success of new product launches

Operational performance 0.74

Pace of new product launching and range of products in catalogue

Time needed for designing and/or manufacturing products

Flexibility to adapt production to different volumes of demand

Product Quality (degree of conformity to specifications)

Capacity to meet customers’ requirements in time

Operational costs (supply, production, distribution, . . .)

Subjective organizational performance. Three subjective

measures of performance were considered, namely profit-

ability, market performance and operational performance.

bach

a

Mean S.D. Item-to-total

correlation

Alpha if item

deleted

3.5977 0.9307

67

3.9023 3.9023 0.6173 0.6941

3.7414 3.7414 0.6513 0.6609

3.6437 3.6437 0.5783 0.7446

63

3.6149 0.9772 0.4932 0.7075

3.2989 1.0871 0.4922 0.7095

4.0517 0.9328 0.4266 0.7255

3.8966 0.8264 0.5197 0.7032

3.8448 0.9086 0.5309 0.6978

3.2356 0.9776 0.4577 0.7176

Table 4

High/low relative cultural/operational market orientation

Relative operational

market orientation

Whole sample

High Low

Relative cultural High 44 (62.9) 26 (37.1) 87 (100.0)

market orientation Low 43 (41.3) 61 (58.7) 87 (100.0)

Row percentages in parentheses.


Profitability centres on economic performance. Market

performance focuses on success with respect to the satisfac-

tion of the target market. And operational performance brings

together the achievement of the five competitive objectives of

the production and operations function proposed by Slack,

Chambers, Harland, Harrison, and Johnston (1998): cost,

quality, flexibility, reliability and speed. Managers mark on a

five-point Likert-type scale whether they considered their

companies (1) very inferior, (2) somewhat inferior, (3)

equivalent, (4) somewhat superior, or (5) very superior to

their competitors. An odd number of possible responses was

considered to allow respondents to reflect a level of

performance similar to competitors. Profitability was a

single-item measure while market and operational perform-

ance were composite measures based on 3 and 6 items,

respectively. The analysis of internal consistency is summar-

ised in Table 2. The variables of market and operational

performance used in the subsequent analysis are the sum of

item scores across their respective scales.

Objective organizational performance. Three objective

measures of financial performance were used, namely

sales, profit and ROA. Sales centred on the firmTseffectiveness in attracting demand. This can be an indicator

of market position, but it does not reflect how efficiently

such a position has been reached. Profit depicts efficiency

in this respect by taking into account the operating profit

margin. ROA, furthermore, removes size effects by

comparing profit against the resources involved. The

measurement was based on data available in the 2002

Dun and Bradstreet census. Due to data missing for some

firms, sample sizes were 174, 169 and 168 for sales, profit

and ROA, respectively.

3.3. Analysis

The test of H1, which refers to the relationship between

cultural and operational market orientation, was based on

the correlation coefficient between both constructs. The

result is presented in Table 3. The test of H2, which refers to

the role of cultural market orientation as a necessary

antecedent of operational orientation, was based on the

correlation between the former and the absolute residual of

regressing both constructs (OLS estimation). The under-

lying reasoning is that, if cultural orientation is a necessary

condition for operative orientation, the variance of the latter

will be higher when the former increases. That implies a

positive correlation between cultural orientation and the

Table 3

Correlations between cultural and operational market orientation

Operational market

orientation

Residual (absolute value)

(regression between cultural and

operational market orientation)

Cultural market

orientation

0.318 (0.000) �0.032 (0.680)

Significance in parentheses.

mentioned residual. The result is also presented in Table 3.

As a complementary test, both measures of market

orientation were dichotomised by discriminating between

firms above or below the mean. In this case, H2 requires a

significant number of firms with a high degree of opera-

tional market orientation but a low degree of cultural market

orientation. The result is presented in Table 4.

In order to test hypotheses H3 H4 H5 H6, each

performance measure was related to market orientation

measures using multiple regression analysis (OLS estima-

tion). In order to isolate the effect of size and activity, the

number of employees and the industrial sector were

included as control independent variables. Five different

models were estimated for each dependent variable, that is

to say, each of the three objective performance variables and

each of the three subjective performance constructs. First, a

reference model where only control variables were included

as explanatory variables (model 0). Next, two models where

only one of the approaches to market orientation was

included as an explanatory variable (models 1 and 2). An

additional model considered the effect of both approaches to

market orientation simultaneously (model 3). Finally, the

last model analysed the existence of synergic effects by

adding the interaction of both approaches to market

orientation (model 4). Tables 5 and 6 report the results of

subjective and objective measures of organizational per-

formance, respectively. The models are not complete in the

sense that they obviate many other determinants of perform-

ance. This justifies the limited, but significant, goodness-of-

fit of the models.

4. Results: interpretation and discussion

Table 3 shows a positive correlation between cultural and

operational market orientation. This result lends support for

H1. There is a positive relationship between the attitudes

and values of managers and the processes, activities and

practices of the organization with respect to marketing

orientation. As pointed out by Griffiths and Grover (1998),

the causality might be reciprocal. On the one hand, the

development of an organizational culture leads to consistent

behaviour. On the other hand, the behaviour of the

organization, the development of norms, and the imple-

mentation of practices foster the formation of beliefs and

values within the organization.

Table 5

Relationship between market orientation and subjective performance

Dependent variable

Model 0 Model 1 Model 2 Model 3 Model 4

Profitability Market

Performance

Operational

Performance


Performance

Operational

Performance


Performance

Operational

Performance


Performance

Operational

Performance


Performance

Operational

Performance

Constant 3.487TTT 11.482TTT 22.199TTT 3.275TTT 7.912TTT 15.266TTT 2.004TTT 6.148TTT 13.680TTT 2.528TTT 5.511TTT 11.558TTT 2.401TTT 5.248TTT 10.662TTTIndustrial

sector—

chemistry

0.195 �0.185 �0.187 0.194 �0.207 �0.229 0.259 0.046 0.182 0.269 0.034 �0.143 0.302 0.104 0.382

Industrial

sector—

electronics

0.030 0.334 �0.353 0.023 �0.455 �0.588 0.048 �0.268 �0.248 0.072 �0.297 �0.344 0.110 �0.219 �0.076

Size (number

of employees)

0.000 0.000 �0.000 0.000 0.000 �0.000 �0.000 �0.000 �0.001 �0.000 �0.000 �0.001 �0.000 �0.000 �0.001

Cultural market

orientation

– – – 0.005 0.089TT 0.173TT – – – �0.016 0.020 0.066 �0.015 0.022 0.074

Operational

market

orientation

– – – – – – 0.036TTT 0.131TTT 0.209TTT 0.039TTT 0.127TTT 0.196TTT 0.040TTT 0.128TTT 0.199TTT

Interaction – – – – – – – – – – – – 0.003 0.006 0.021TTTR2 0.009 0.003 0.001 0.010 0.034 0.039 0.087 0.193 0.155 0.092 0.194 0.160 0.104 0.204 0.195

F 0.538 0.179 0.069 0.427 1.509 1.708 4.050TTT 10.104TTT 7.779TTT 3.422TTT 8.107TTT 6.418TTT 3.226TTT 7.120TTT 6.735TTT

*p=0.10.

TT p=0.05.

TTT p=0.01.

O.Gonzalez-B

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/Industria

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ent34(2005)797–829

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Table 6Relationship between market orientation and objective performance (absolute)

Dependent variable

Model 0 Model 1 Model 2 Model 3 Model 4

Profit Sales ROA Profit Sales ROA Profit Sales ROA Profit Sales ROA Profit Sales ROA

Constant �148.43 �15,722.73 0.063TTT �768.52 �72,901.12 0.076 �6014.72 �15,876.0TT 0.000 �3781.23 �141,229.3 0.041 �5026.68 �155,828.7 0.039

Industrial

sector—

chemistry

4139.66T 76,998.00TT �0.004 4131.20T 76,652.62TT �0.004 4373.66T 83,196.08TTT �0.003 4434.36T 83,515.16TTT �0.004 4696.62TT 87,394.30TTT 0.000

Industrial

sector—

electronics

�1038.96 13,818.31 �0.009 �1063.83 11,881.92 �0.008 �1021.96 15,577.79 �0.008 �908.11 16,371.07 �0.006 �610.58 20,733.4 �0.006

Size (number

of employees)

10.13TTT 177.59TTT 0.000 10.13TTT 177.78TTT 0.000 9.71TTT 167.17TTT 0.000 9.66TTT 166.78 0.000 9.686TTT 167.09TTT 0.000

Cultural market

orientation

– – – 15.54 1423.07 -0.000 – – – �70.12 �543.96 �0.001 �58.107 �411.453 �0.001

Operational

market

orientation

– – – – – – 144.575 3503.12TT 0.002T 153.50 3608.85TT 0.002T 164.123 3659.06TT 0.002T

Interaction – – – – – – – – – – – – 26.520 339.25 0.000

R2 0.324 0.419 0.007 0.324 0.420 0.007 0.332 0.439 0.024 0.332 0.439 0.028 0.338 0.444 0.028

F 26.321TTT 40.791TTT 0.389 19.624TTT 30.565TTT 0.301 20.337TTT 33.076TTT 1.001 16.215TTT 26.321TTT 0.930 13.807TTT 22.188TTT 0.781

Sample size is 169, 174 and 168 for profit, sales and ROA, respectively.

T p=0.10.

TT p=0.05.

TTT p=0.01.

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Nevertheless, the relationship is moderated even though

significant. That implies the existence of firms for which

there is no correspondence between the degree of cultural and

operational implementation of market orientation. This cir-

cumstance becomes evident when Table 4 is observed. The

distinction between more and less oriented firms shows that,

even though many firms’ classifications agree in both

dimensions, there is an important proportion of firms

characterised by opposing levels. Table 4 is also consistent

with the reciprocal causality mentioned above. Although the

behaviour could initially be thought of as the consequence of

the organizational culture, the existence of a relevant number

of market-oriented firms in the operational sense but not in

the cultural sense sustains the inverse reasoning. The non-

significant correlation found between cultural orientation and

the residual of regressing it with operational orientation,

reported in Table 3, provides additional support for such a

conclusion. The variance in operational market orientation

seems to be independent of the degree of cultural market

orientation. None of these arguments supports the rejection of

H2. Cultural market orientation is not necessarily an

antecedent of operational market orientation. On the

contrary, and in relative terms, there are firms with

market-oriented practices whose managers do not prioritise

the values of market orientation. These firms seem to adopt

market orientation more as an doperational recipeT than as a

management philosophy.

Two clarifications must be taken into account at this point.

First, any mention of the degree of market orientation is

made in relative terms. As shown in Table 1, the degree of

reported cultural and operational market orientation is quite

high. Therefore, when some firms are referred to as bmarket-

orientedQ, that means that they are more market oriented than

other competing firms in the population studied. Second,

data collection focused on the production and operations

functional area. Therefore, the measures of cultural and

operational market orientation do not necessarily reflect the

situation at the corporate level. The absence of cultural

support for market orientation practices might merely be

confined to the production field owing to cultural and

perceptual divergences within managing teams.

Given the existence of two related, but not coincident,

approaches to market orientation, the next key question

refers to their effect on organizational performance. Tables

5 and 6 show that the relationship between market

orientation and organizational performance differs accord-

ing to the type of market orientation and the measure of

performance. On the one hand, model 2 lends support for

H3 in relation to profitability, market performance, opera-

tional performance, sales and ROA. The pragmatic approach

to market orientation seems to make a significant contribu-

tion to the improvement of attractiveness and commercial

success, and to the achievement of objectives linked to the

production and operations function. This not only results in

higher sales but also more efficiency in terms of profitability

over the last few years and, although more moderately, in

terms of ROA. Therefore, the implementation of activities

and processes to create superior value for customers seems

to play a fundamental role in the improvement of perform-

ance. Nevertheless, it is important to point out that the

relationship is not significant for profitability when it is

measured with secondary objective sources. On the other

hand, model 1 lends support for H3 in relation to market and

operational performance. This result implies that cultural

market orientation enhances performance dimensions such

as reputation, image, new product success, cost control,

flexibility, time to market, quality, etc., but these outputs do

not seem to lead to better financial performance.

The results presented in Tables 5 and 6 also imply that

the effect of operational market orientation is higher than the

effect of cultural market orientation. First, operational

orientation is related to a higher number of performance

measures than cultural orientation. Second, significance

levels are always higher for the effects of operational

orientation. And third, when the effects of both approaches

to market orientation are simultaneously considered in

model 3, the role of cultural orientation is absorbed by the

role of operational orientation. This leads us to think that the

effect of cultural market orientation is given by its relation-

ship with operational market orientation. All these argu-

ments provide support for H4. Therefore, it is the actions

and procedures, not the beliefs and attitudes, which enforce

organizational performance.

Apart from the dominant role of the operational market

orientation in the improvement of organizational perform-

ance, only one of the interaction effects considered in model 4

was found to be significant. Cultural orientation constitutes a

moderating, reinforcing variable only when operational

performance is considered. Thus H5 receives no support

except for this case. Cultural orientation is key in the

achievement of objectives directly linked to the production

function, that is, the optimisation of processes, activities and

outcomes of the production function, but it does not seem to

be relevant to the accomplishment of better market position

and profitability. In short, the results lead us to think that the

adoption of doperational recipesT of market orientation

might lead to positive effects of performance regardless of

the cultural conversion of production and operations

managers. Although it has been posed that the relationship

between market-oriented behaviour and performance is

necessarily based on a strong culture (Slater & Narver,

1998), the results imply that such a culture does not

necessarily prioritise the marketing concept, at least in a

relative sense and as far as the production and operations

function is concerned.

The last question concerns the distinction between

objective and subjective approaches to the measurement of

organizational performance. The comparison of Tables 5

and 6 shows that the relationship is stronger for subjective

measures than for objective measures. This lends support for

H6. Subjective measures are more flexible than objective

measures in capturing complex dimensions of performance,


considering lagged effects, and facilitating comparison

between firms. In this respect, subjective performance

seems to be a more reliable measure of performance and

the relationship between market orientation and perform-

ance gains credibility. However, subjective measures

obtained from a single respondent might involve biases as

a consequence of the response style or the interest in

communicating a favourable and coherent corporate image.

In this respect, the relationship between market orientation

and performance might appear falsely reinforced in the data.

The assessment of favourable and contrary arguments is out

of the scope of this paper. Moreover, the literature review

summarised in Appendix 1 does not shed light on this

question. Less than 10% of papers revised used different

respondents for market orientation and performance meas-

urement. Many of these multiple-respondent studies still

reported a positive relationship between market orientation

and subjective performance (e.g. Deshpande & Farley,

1999; Deshpande et al., 1993; Langerak, 2001a,b; Pelham,

1997a,b, 2000; Salomo et al., 2003; Siguaw et al., 1998;

Slater & Narver, 2000). This supports the fact that the

relationship is not a consequence of the dhalo effectT.However, some other multiple-respondent studies did not

find a relationship (e.g. Farrelly & Quester, 2003; Jones et

al., 2003). This raises some doubts in this respect.

5. Conclusions

Previous studies on the relationship between market

orientation and organizational performance show some

incoherence in the conclusions reported. Although most of

them justify and find some kind of positive relationship,

others do not find any relationship. There is also some

discrepancy about the circumstances of the competitive

environment in which the relationship takes place or is

stronger. The diversity of conceptual and methodological

approaches to the definition and measurement of market

orientation, organizational performance, and the relation-

ship between both of them enriches the field of research

but also contributes additional confusion. The comparison

between studies becomes harder. Apparently contradictory

results can turn out to be complementary when their

theoretical and methodological frameworks are borne in

mind.

This study has dealt with the relationship between market

orientation and operational performance while taking into

account three key conceptual and methodological aspects of

the empirical development. First, the distinction between the

cultural/attitudinal and operational/behavioural approaches

to market orientation. Second, the distinction between the

objective and subjective approaches to the measurement of

organizational performance. And third, the perspective from

functional areas further removed from the customer than the

sales and marketing function, specifically the production

and operations function.

The results based on a sample of Spanish industrial firms

show a moderate, significant relationship between the

cultural and operational measures of the market orientation

of the production and operations function. Furthermore, the

cultural orientation does not seem to be a necessary

antecedent of the operational orientation. The results are

consistent with the existence of a reciprocal causality

between them. In addition, the results provide evidence of a

positive relationship between operational market orientation

and performance. Moreover, although the cultural market

orientation could be thought of as a quality warranty of the

operational implementation, it does not enhance the relation-

ship with commercial effectiveness and profitability. It only

constitutes a moderating variable of the relationship between

operational market orientation and the effectiveness and

efficiency of the production function. Finally, the results

show that the relationship between market orientation and

organizational performance becomes stronger when the latter

is subjectively measured.

Two managerial implications can be drawn from these

results. First, the adoption of doperational recipesT of market

orientation seems to improve performance independently of

the cultural conversion of the organization to the marketing

concept philosophy, at least in the operations and production

functional area. More attention should be paid to promoting

behaviour than to promoting culture. Besides, behaviour

might be the basis for the formation of beliefs and values, and

consequently, the organizational culture. Second, the benefits

derived from market orientation are not completely captured

by objective financial measures, at least in the short-term.

Market orientation contributes to the long-term viability of

the firm by improving market and operational performance.

The output of market orientation is better reflected by

reputation, image, customer satisfaction, new product suc-

cess, cost-efficiency, time-to-market, product quality, etc.

This study has tried to gain an insight into some relevant

questions about the conceptualisation and measurement of

the relationship between market orientation and perform-

ance, but uncovers some other questions in this respect.

First, cultural and operational approaches to market ori-

entation constitute the opposite ends of a continuum. A

more complete approach should consider a more detailed

partition of this continuum (Homburg & Pflesser, 2000).

Second, the results do not explain whether the relationship

between market orientation and performance and the

predominant role of operational implementation is only

attributable to the production function or independent of it.

The former case implies cultural heterogeneity within the

organization. Third, the study does not explain whether the

stronger relationship between market orientation and sub-

jective performance is due to the superiority of this

measurement approach or to the measurement bias that this

approach could entail. Finally, the empirical study has been

circumscribed to three Spanish industrial sectors. Additional

evidence from different settings and business activities is

required.


Appendix A

Some published empirical studies related to the market orientation–performance relationship

Empirical

study

Analysed population Market Orientation Measure Performance measure Relevant results in relation to

market orientation–

performance relationship

Lusch and

Laczniak

(1987)

Large US firms. Cultural scales referred to as

marketing concept and extended

marketing concept. Response of

vice president of marketing and

planning

Subjective composite measure

based on overall financial

performance, closeness to the

breakeven point, ROA, corporate

liquidity and ROE, as expected in

the future

Positive relationship

Hooley et al.

(1990)

UK businesses. Cultural scale to classify

approaches to marketing.

Response of chief marketing

executive

(1) Objective primary measure of

ROI. (2) Subjective single

measure of performance relative to

major competitors


Narver and

Slater

(1990),

Slater and

Narver

(1993)

SBUs in the forest prod-

ucts division of a major

western corporation

Operative scale MKTOR. Three

behavioural components—

customer orientation, competitor

orientation, and interfunctional

coordination—, and two decision

criteria—long- term focus and

profitability. Averaged responses

of members of the top

management team

Subjective single measure of ROA

in principal served market

segment over the past year in

relation to all other competitors

Positive relationship.

Moderating effects of type of

business—commodity and

noncommodity—and the

strategy types of Miles and

Snow (1978)—prospectors,

analysers and defenders

Esslemont and

Lewis

(1991)

New Zealand firms Operative scale based on Kotler

(1977). Five components—

marketing philosophy, integrated

marketing organization, adequate

marketing information, strategic

orientation, and operational

efficiency. Single respondent

Objective measures of state and

growth of ROI and profit margin

No clear relationship

Retailers from Palmer-

ston North, New Zea-

land

New Zealand firms

Naidu and Nar-

ayana (1991)

US hospitals in Mid-

western states

Operative scale based on Kotler

(1977). Response of hospital

administrator

Objective measure of occupancy

rate


Ruekert (1992) Managers and sales

representatives from the

five SBUs of a large

high technology

company based in the US

Operative scale. Three

components—use of information,

development of strategy, and

implementation of strategy

Objective composite measure

based on SBU’s profitability and

sales growth over the five

preceding years


Deshpande et al.

(1993)

SBUs of Japanese firms

traded on the Nikkei

stock exchange in

Tokyo

Operative scale DFW referred to

as customer orientation. Averaged

responses of two marketing

executives—self-reported

customer orientation— and

averaged responses of two

purchasing executives of a

customer firm—customer

orientation reported by customers


based on profitability, size, market

share and growth rate in

comparison with the largest

competitor. Averaged responses

of two marketing executives

Positive relationship for

customer orientation reported

by customers. No relationship

for self-reported customer

orientation

Diamantopoulos

and Hart

(1993)

UK manufacturing

companies

(1) Cultural scale referred to as

marketing concept. (2) Operative

scale based on MARKOR

structure. Response of managing

directors or equivalents

Objective secondary composite

measure based on sales growth

and profit margin

No clear relationship.

Moderating effects of market

turbulence, intensity of

competition and demand

conditions

Jaworski and

Kohli (1993),

Kohli et al.

(1993)

SBUs of the top US

companies (in sales

revenue) and companies

of the Marketing

Science Institute

Operative scale MARKOR based

on Kohli and Jaworski (1990).

Three components—intelligence

generation, intelligence

dissemination and responsiveness.

Averaged responses of two senior

executives (one marketing and the

other non-marketing) for the first

sample

(1) Objective measure of share of

the served market. (2) Subjective

composite measure based on

overall performance and overall

performance relative to major

competitors, over the past year


subjective performance. No

relationship for objective

performance. No moderating

effects of market turbulence,

competitive intensity and

technological turbulence

American Marketing

Association

membership roster

Empirical

study




McDermott,

Franzak, and

Little, (1993)

Large US general

hospitals

Operative scale based on

MKTOR, MARKOR and prior

health care research. Four

components—market intelligence,

interfunctional coordination and

responsiveness (strategic and

tactical). Response of chief

marketing officer

Objective primary measure of

operating margin

Positive relationship. Stronger

for market intelligence and

interfunctional coordination

than for strategy and tactical

responsiveness

Deng and Dart

(1994)

Canadian companies Operative scale. Four

components—customer,

competitor, interfunctional

coordination, and profit

orientations. Response of general

manager or marketing manager


based on overall performance,

liquidity, sales, market share,

penetration, export, development

of new products and new markets,

quality, productivity, and

expectations over the previous

three years


Slater and

Narver

(1994)

SBUs in a forest product

company and a

diversified

manufacturing company

Operative scale MKTOR.

Averaged responses of members

of the top management team

Subjective single measures of

ROA, sales growth, and new

product success relative to all other

competitors in the principal served

market over the past year

Positive relationship. No

moderating effects of market

turbulence, technological

turbulence, competitive

hostility and market growth

Atuahene-Gima

(1995, 1996)

Australian service and

manufacturing single

firms and SBUs of large

multisite firms

Operative scale based on Ruekert

(1992). Response of the marketing

manager

Subjective composite measures

of new product market

performance—based on market

share, sales, growth and profit

objectives-and new product

project performance—based on

cost efficiencies, proprietary

advantage, sales and profitability

of other products, and new market

opportunities—in relation to one

new product introduced in the last

5 years


Moderating effect of

environment hostility, stage of

the product life cycle, and

service vs. product

innovations. No moderating

effect of degree of product

newness

Au and Tse

(1995)

Hotels and motor lodges

in Hong Kong


(1977). Response of general

manager. Complemented with

objective number of employees

responsible for public relations

and expenditure on public

relations

Objective primary (New Zealand)

and secondary (Hong Kong)

measure of occupancy rate

No relationship. No

moderating effect of country—

related to size and complexityHotels and motor lodges

in New Zealand

Greenley

(1995a,b)

UK companies with

more than 500

employees


MKTOR. Single responses

of managing director/CEOs

Subjective measures of ROI, new

product success and sales growth

over the last 3 years, relative to

those of major competitors

No overall relationship.

Moderating effects of market

turbulence and technological

change. No moderating effect

of market growth

Golden, Doney,

Johnson, and

Smith, (1995)

Russian firms Operative scale. Response of

primary manager or owner


based on sales, market share,

market share growth and

profitability in relation to

competitors

Positive relationship through

product attributes. No

relationship through promotion

activities and price

Lonial and Raju

(2001), Raju

and Lonial

(2001), Raju

et al. (1995),

Raju, Lonial,

Gupta, and

Ziegler (2000)

US Hospitals in

Midwestern states


MARKOR. Four resulting

components—intelligence

generation, customer satisfaction,

responsiveness to customers, and

responsiveness to competitors.

Averaged responses of top

executives

Subjective composite measures of

financial performance—based on

profit, margin, ROI and cash

flow—, market/product

development—based on new

product and market development

and R and D—and internal

quality—based on service quality,

employee turnover, mortality and

cost per adjusted discharge

Positive relationship. Financial

performance related to

responsiveness to competition

and customers. Market/product

performance and internal

quality related to intelligence

generation, responsiveness to

competition and customer

satisfaction. Moderating effect

of size and environmental

uncertainty

Appendix A (continued)

(continued on next page)


Empirical

study




Balakrishnan

(1996)

US manufacturers of

machine tools

Operative scale referred as

customer and competitive

orientation. Four resulting

components—basic market

orientation, competitive

benchmarking, customisation and

international orientation.

Response of chief executive


satisfaction with profit and profit

relative to competition—both

based on profit and ROA—and

subjective single measures of

customer retention and repeat

business generated from

customers

Positive relationship for basic

market orientation.

Competitive benchmarking

related to profit relative to

competitors. Customisation

related to repeat business.

International orientation related

to satisfaction with profit and

profit relative to competitors

Fritz (1996) Industrial firms in West

Germany

Cultural scale. Response of

corporate executive


based on competitiveness,

customer satisfaction, continuance

of the firm, and long-term

profitability in relation to

objectives within the last 3 years


Moderating effects of position

of the top marketing executive,

influence of the marketing

sector, and co-operation of

marketing, production and R

and D

Llonch and

Walino (1996)

Industrial firms based in

Catalonia (Spain)


MKTOR. Response of chief

executive


ROI, ROS, sales growth and

overall performance in relation to

competitors over the last 3 years

Positive relationship mainly

based on competitor

orientation. Moderating effects

of size, industrial sector and

foreign property

Pelham and

Wilson (1996)

Michigan firms (US) Operative scale based on

MKTOR. Response of firm

president


of new product success—based

on product/service and market

development—, growth/share—

based on sales and employment

growth and market share—,

and profitability—based on

profits, margin, cash flow,

ROI and ROA—, and subjective

single measure of relative

product quality, in relation to

objectives

Positive relationship except for

growth/share performance

Pitt, Caruana, and

Berthon,

(1996)

Largest UK based

service firms

Operative scale MARKOR.

Response of marketing

director


based on ROCE, sales growth and

overall performance relative to

other companies in the industry

over the last 5 years


moderating effect of country—

related to cultural context and

economic performance

Malta firms

Selnes et al.

(1996)

SBUs of the top US

companies (in sales

revenues) and

companies of the

Marketing Science

Institute

Operative scale MARKOR. Aver-

aged responses of two senior

executives (one marketing and

the other non-marketing)

(1) Objective measure of share of

the served market. (2) Subjective

composite measure based on

overall performance and overall

performance relative to major

competitors, over the past year


subjective performance. No

relationship for objective

performance. No moderating

effect of country —related to

national culture and political

economyLargest firms (in sales

revenues) in Norway,

Denmark and Sweden

Slater and Narver

(1996)

US manufacturers in a

Midwestern state


Response of president or general

manager


ROA and sales growth rate

relative to all other competitors in

the principal served market over

the past year


sales growth rate. No

relationship for ROA

Appiah-Adu

(1997)

Small UK firms Operative scale based on

MKTOR. Response of managing

director


sales growth, new product success

rate and return on investment over

the previous 3 year period in

relation to all other competitors


Moderating effects of

market turbulence,

competitive intensity

and market growth. No

moderating effect of




Empirical

study




Avlonitis and

Gounaris

(1997)

Industrial and consumer

goods Greek companies

(1) Cultural scale to classify

approaches to marketing. (2)


Response of marketing manager


based on profit, annual turnover,

ROI and market share in relation

to objectives and competitors over

a 4 year period


Moderating effect of type of

business—industrial vs.

consumer goods

Balabanis et al.

(1997)

Top British charities Operative scale based on

MARKOR. Single respondent

(1) Objective measures of

situation and change in donor

contribution ratio and number of

volunteers. (2) Subjective single

measures of achievement of long-

term and short-term objectives


subjective performance.

No relationship for objective

performance

Becherer and

Maurer (1997)

Small entrepreneur US

business

Operative scale. Response of

business president

Objective primary measure of

change in profit over the last 3

years

No relationship. Moderating

effect of environment hostility.

No moderating effect of

environment turbulence

Bhuian (1997) Managerial level

personnel in bank

branches in Saudi Ara-

bia


MARKOR

Objective measures of banks’

ROA, ROE and sales per

employee

No relationship

Gatignon and

Xuareb (1997)

Marketing executives

US firms

Operative scale of strategic

orientation. Three components—

customer and competitor, based on

MKTOR, and technological

orientation. Operative scale of

interfunctional coordination based

on MKTOR

Subjective composite measure of

innovation performance based on

ROI of the last new product

introduced in the market in

relation to other products of the

firm, competitors and objectives


interfunctional coordination.

No relationship for customer

and competitor orientation.

Moderating effect of demand

uncertainty. No moderating

effects of market growth and

competition intensity

Greenley and

Foxall (1997,

1998)

UK companies with

more than 500

employees

Operative scale of stakeholder

orientation. Three dimensions—

research, management judgement,

planning and corporate culture and

mission-in relation to five

stakeholder groups-competitors,

consumers, employees,

shareholders and unions.

Response of managing

director/CEO


ROI, sales growth, market share

and new product success rate

compared to that of the

competitors, in their principal

market

Positive relationship between

different types of stakeholder

orientation and different

measures of performance.


competitive hostility, market

growth and market turbulence

Kumar and

Subramanian

(2000),

Kumar,

Subramanian,

and Yauger

(1997, 1998),

Kumar et al.

(2002)

US hospitals Operative scale based on


administrator


satisfaction with growth in

revenue, return on capital, success

of new services, success in

retaining patients and success

in controlling expenses

Positive relationship. Different

associations between profiles

of market orientation and

measures of performance.



turbulence, supplier power and

emphasis on differentiation

strategy

Pelham

(1997a,b,

1999, 2000)

Small US industrial

manufacturing firms.


components-customer

understanding, customer

satisfaction and competitive

orientation. Response of

sales manager and president


firm effectiveness—based on

relative product quality, new

product success and customer

retention, growth/share—based on

sales level, growth rate and target

market share, and profitability—

based on ROE, gross margin and

ROI. Response of the firm’s

president


Moderating effect of customer

differentiation. No moderating

effect of product differentiation

Appiah-Adu

(1998)

Large firms operating in

Ghana

Operative scale. Response of

managing director


sales growth and ROI in relation

to expectations over the previous 3

years

No overall relationship.



market dynamism. No

moderating effect of market

growth




Empirical

study




Appiah-Adu and

Ranchhod

(1998)

UK firms in the

biotechnology industry


MKTOR. Response of managing

director

Subjective single measures of new

products/services success, market

share growth, profit margin, and

overall performance relative to the

main competition in the past 3

years


new products/services success

Appiah-Adu and

Singh (1998)

Small and medium UK

enterprises

Operative scale based on DFW.

Response of marketing executive

Subjective single measures of new

product success rate, sales growth

and ROI relative to the main

competition over the previous

3 year period


Bhuian (1998) Manufacturing

companies in Saudi

Arabia


MARKOR and performance

anticipation. Response of CEO


based on quality of products,

revenues, financial position,

customer satisfaction and overall

performance over the last 3 years

Positive relationship. Moderat-

ing effects of competitive

intensity and technological tur-

bulence

Caruana et al.

(1998a,b,

1999)

Public sector

organizations in

Australia

Departments in


MARKOR. Response of head of

public sector organization or

university department


overall performance and ability to

attract non-government funding

during the last 5 years

Positive relationship based on

responsiveness

Australian and New

Zealand universities


based on improvements achieved,

service to customers, cost

effectiveness and overall

performance in the last 3 years

Chang and Chen

(1998)

Retail stock brokerage

firms in Taiwan

Operative scale extending

MKTOR with performance

anticipation. Response of the head

of retail brokerage operations

Subjective single measure of ROA

in relation to major direct

competitors over the past year, and

subjective composite measure of

service quality based on

SERVQUAL

Positive relationship. Service

quality as intermediate variable

in the market orientation– busi-

ness performance relationship

Deshpande and

Farley (1998a)

Marketing executives

from US and European

major firms, members

of the Marketing

Science Institute

Operative scales MARKOR,

MKTOR, DFW and the resulting

summary scale


performance, one based on cus

tomer retention, sales growth, ROI

and ROS, the other based on profit

ability, size, market share and

growth

Positive relationship. No mod-

erating effect of country—US

vs. Western European indus-

trial countries

Doyle and Wong

(1998)

SBUs of large UK firms Operative scale based on

MARKOR structure. Averaged

responses of marketing/sales,

accountant/financial, and

manufacturing/operations

managers


based on ROC, market share, sales

growth and overall performance in

relation to excellent competitors


Gray et al.

(1998, 1999)

Senior managers in New

Zealand companies

(1) Cultural scale of business

philosophy. (2) Operative scale

based on MARKOR, MKTOR

and Deng and Dart (1994). Five

resulting components—

customer and competitor

orientation, interfunctional

coordination, responsiveness and

profit emphasis

(1) Objective measures of ROI,

relative ROI and pretax profit. (2)


brand awareness, customer

satisfaction and loyalty, market

share, sales growth and

profitability relative to nearest

competitor


relative ROI. Stronger relation-

ship for subjective than for

objective performance. Moder-

ating effects of competitive

intensity, market growth, entry

barriers and buyer power. No


and technological turbulence

Han et al. (1998) US banks in a Midwest-

ern state


Response of the person in charge

of the marketing function at the

senior management level

(1) Objective primary measures of

net income growth and ROA. (2)


growth and profitability

No direct relationship. Positive

relationship when innovations

are accounted for (mediating

role of innovativeness) based

on customer orientation

Horng and Chen

(1998)

Small and medium firms

of Taiwan


MARKOR structure. Response of

CEO or top manager

Subjective single measure of

performance for the last year


intelligence generation



Empirical

study




Lado et al.

(1998)

Large private insurance

companies in Spain

Operative scale. Nine components—

analysis of final client, distributor,

competitors and environment,

interfunctional coordination, and

strategic actions on consumers,

distributors, competitors and macro-

environment. Averaged responses

of marketing and non-marketing

managers

Objective secondary measure of

market share


Large private insurance

companies in Belgium

Ngai and Ellis

(1998)

Textile and garment

companies in

Hong Kong


MKTOR. Response of

managing director


of business position—based

on sales growth, market share

and market share growth rate,

and profitability—based on

operating profits, profit/

sales, cash-flow, ROI and

ROA, in relation to

competition over a five

year period and in relation

to expectations for the most

recent year


Oczkowski and

Farrell (1998)

Large publicly listed

companies in Australia

Operative scales MKTOR y

MARKOR. Response of

CEO/general manager


based on customer retention, new

product success, sales growth,

ROI and overall performance

relative to competitors in the

principal served segment over the

past year


Moderating effect of structure

of ownership—publicly listed

vs. private owned

Large private owned

companies in Australia

Siguaw et al.

(1998)

US distributors and their

primary suppliers


Response of the distributor’s

employee most knowledgeable

about the relationship with

primary supplier—distributor

market orientation—and the

supplier’s employee most

knowledgeable about the

relationship—supplier market

orientation


of trust, cooperative norms,

commitment and satisfaction

with financial performance.

Response of distributor’s

employee most knowledgeable

about the relationship with

primary supplier

Supplier market orientation

positively related to

commitment. Distributor

market orientation positively

related to trust and cooperation

Thirkell and Dau

(1998)

New Zealand

manufacturing firms


components—customer focus,

integration and goal directed

behaviour. Single respondent

Composite measure of export

performance based on (1)

objective export intensity and

sales, and (2) subjective

assessment of export market

share, profitability, market

diversification and customer

satisfaction, and overall

performance


Tse (1998) Large property

developers in Hong

Kong


(1977) and other operative single

measures. Response of a manager

Objective secondary measures of

total asset, total equity, sales, net

income, ROI, ROE and profit

margin

No relationship

Van Egeren and

O’Connor

(1998)

Large and independent

US service firms in an

upper Midwestern state


Averaged responses of top

management team

Composite measure based on (1)

objective primary measures of

financial performance, and (2)

subjective single assessment of

performance


Alvarez,

Vasquez, and

Santos (1999)

Non for profit

organizations in

Asturias

(Spain)


MARKOR structure. Single

respondent

Objective primary measures of

number of associates, expenses

and number of activities


number of activities




Empirical

study




Baker, Simpson,

and Siguaw

(1998)

US distributors Operative scale DFW to measure

distributor market orientation as

perceived by the primary supplier.

Response of supplier’s employee

most knowledgeable about the

relationship


of trust, cooperative norms,

commitment and satisfaction

with financial performance of

primary supplier


Baker and

Sinkula

(1999a,b)

SBUs of firms Operative scale MARKOR.

Response of marketing or

non-marketing executive


market share in relation to

competition over the past year,

and composite measures of

performance—based on sales

revenue, market share and profit in

relation to competitors—, new

product success—based on new

products over the last 3 years—,

and overall performance—based

on overall performance and

overall performance relative

to competitors over the last year

Positive relationship for market

share, new product success and

overall performance. Positive

effect with performance

through new product success.

Moderating effect of learning

orientation

Barret and

Weinstein

(1999)

Diverse businesses in

Tennessee (US)


Response of senior level manager

at the firm’s headquarter


based on overall performance

and overall performance

relative to leading competitors

over the last year


Moderating effect of size and,

to a lesser extent, flexibility.

No moderating effect of

corporate entrepreneurship

Becker and

Homburg

(1999)

SBUs across different

industries in Germany


management systems. Five

components— organization,

information, planning, controlling

and human resource management

systems. Response of general

manager

(1) Objective measure of ROI. (2)

subjective composite measures of

market performance—based on

customer satisfaction, value and

attraction in relation to

competitors—, and financial

performance relative to the

industry’s average


financial performance through

market performance

Caruana et al.

(1999)

Largest UK based

service firms


Response of marketing director

Subjective single measure No relationship

Cervera (1999),

Cervera et al.

(1999, 2001)

Local governments in

Valencia (Spain)


MARKOR. Response of chief

secretary and mayor


global performance and citizen

participation


Deshpande and

Farley (1999)

SBUs of Japanese firms

traded on the Nikkei

stock exchange in

Tokyo

Operative scale DFW.

Averaged responses of two

marketing executives—

self-reported customer

orientation, and averaged

responses of two purchasing

executives of a customer

firm—customer orientation

reported by customers


based on profitability, size,

market share and growth rate

in comparison with the largest



Positive relationship for both

self-reported and reported-

by-customers market

orientation. Moderating

effect of countrySBUs of Indian firms

traded on the Bombay

stock exchange

Harris and Piercy

(1999)

Store managers in large

UK retail organizations

Operative scale MARKOR Subjective composite measures of

company and store performance


Hooley et al.

(1999a,b)

Firms in Hungary,

Poland and Slovenia


MKTOR. Response of executive

director


based on financial—profit and

ROI—and market— sales volume

and market share—criteria, in

relation to main competitors,

budget and last year


Llonch and

Lopez (1999)

Large Spanish industrial

companies



executive


ROI, margin, sales growth, pace of

new product launching, and

overall performance

Positive relationship for ROI,

margin, and overall

performance



Empirical

study




Mavondo

(1999),

Mavondo and

Farrell (2003)

Food manufacturing

business in Zimbabwe

Not specified. Single respondent Objective single measure of ROA

and composite measure of marketing

effectiveness based on sales growth,

changes in market share and number

of successful new products in the

last three years


marketing effectiveness

Moorman and

Rust (1999)

Managers from different

functions from US

business organizations

Operative scales MARKOR and

MKTOR



costs, sales, profitability and market

share, customer relationship

performance—based on customer

satisfaction and retention, and

quality, and new product

performance—based on speed,

creativity and financial performance

of new product/service development,

relative to objectives.

Positive relationship except

for customer relationship

satisfaction

Sargeant and

Mohamad

(1999)

Hotel groups in the UK Operative scale. Response of

marketing director

Objective primary measures

of turnover and profit after tax

No relationship

Vorhies, Harper,

and Rao

(1999)

Large manufacturing

and service firms with

Australian operations


Response of top marketing

executive


profitability, growth, adaptability

and customer satisfaction relative

to that of major competitors


Alvarez et al.

(2000),

Vazquez et al.

(2001)

Industrial firms in

Asturias (Spain)

(1) Cultural scale based on

MKTOR structure. (2) Operative

scale based on MARKOR

structure. Response of

firm’s director

Subjective single measure of ROI,

profits, sales and new product

success relative to objectives and

competitors in the last period

Positive relationship, especially

for ROI and new product

success. Moderating effect

of uncertainty. No moderating

effect of dynamism,



Cravens and

Guilding

(2000)

US companies with

strong brands


MKTOR. Response of senior level

accounting/finance or marketing

executive


based on customer satisfaction,

sales volume, sales growth and

profits relative to expectation


Dawes (2000) Firms in South Australia Operative scale based on

MKTOR, MARKOR, DFW and

Deng and Dart (1994). Four

components— customer

orientation, customer

responsiveness, competitor

orientation and market

information sharing. Average

of responses of CEO and

other senior managers


performance. Response of CEO


market information sharing.

Only relationship with

customer orientation remains

significant when other

influences are controlled

Deshpande and

Farley (2000)

Senior managers of

Chinese companies

headquartered in

Shanghai

Operative scale DFW Subjective composite measure


share and growth rate in comparison

with the largest competitor


Deshpande et al.

(2000)

Japanese firms Operative scale DFW. Averaged

responses of two marketing

executives-self-reported market

orientation, and averaged

responses of two purchasing

executives of a customer firm-

market orientation reported by

customers



share and growth rate in

comparison with the largest



No relationship. No


country-related to

cultural environment

US firms

UK firms

German firms

French firms




Empirical

study




Dobni and

Luffman

(2000, 2003)

US telephone

companies

Operative scale. Seven

components— formal and

informal intelligence generation,

intelligence dissemination, profit

orientation, customer orientation,

response design and

implementation, and PSI factor.

Response of marketing or

non-marketing manager

Objective measure of ROI Positive relationship.


competitive pressure, products/

services dynamism and

environmental unpredictability

Farrell (2000) Large Australian

companies


Response of the CEO/

marketing director


based on customer retention, new

product success, sales growth,

ROI, and overall performance

relative to competitors in the

principal served market over the

last year


Homburg and

Pflesser

(2000)

SBUs from five

different

industries in Germany.

Cultural and operative scales.

Multilayer model of market

orientation based on values,

norms, artefacts and behaviours.

Response of manager (general,

marketing or non-marketing)


ROS during the last three years.

(2) Subjective composite measure

of market performance based on

value generation, customer

satisfaction, attraction and

retention, growth and market

share, relative to competitors

during the last three years

Positive relationship. Sequence

values–norms–artefacts–

behaviours–market

performance–financial

performance. Moderating

effect of market dynamism

Loubser (2000) South African

companies


components—business

philosophy, market orientation and

business behaviour. Single

respondent


growth in market capitalisation,

total assets, equity and sales,

ROE, ROA, and price earnings

Market orientation related to

ROE. Business behaviour

related to ROE and growth in

total assets

Matsuno and

Mentzer

(2000),

Matsuno et al.

(2002)

US manufacturing

companies

Operative scale. Extension of

MARKOR to include supplier

relationships, regulatory aspects,

social and cultural trends, and the

macroenvironment. Response of

marketing executive (vice

president or director level)


market share, relative sales

growth, percentage of new

product sales to total sales, and

ROI relative to those of relevant

competition


Moderating effect of Miles and

Snow (1978)’s strategy types

Pulendran et al.

(2000, 2003)

SBUs in Australian

companies


Response of SBU’s manager


based on overall performance,

overall performance relative to

competitors and expectations, and

ROI and sales relative to

competitors


Moderating effect of market

turbulence. No moderating

effect of technological

turbulence and competitive

intensity

Schlegelmilch

and Ram

(2000)

US firms Cultural scale of strategic market

orientation. Response of chief

marketing executive officer

(1) Objective measures of

profitability and ROI. (2)


profitability and ROI relative to

objectives in the last year


subjective ROI

Shoham (2000) SBUs of Israeli

exporters

Operative scale of market-

orientation strategy. Response

of marketing manager

Composite measures of static and

dynamic sales and profitability,

satisfaction and confirmation-

of-expectation, in relation to

export activity, based on objective

and subjective items


managerial expectations,

confirmation of expectations

and dynamic sales

Sin et al. (2000,

2003)

Firms in mainland

China


Response of top administrator in

Chinese companies, and

marketing director/manager

in Hong Kong companies


based on sales growth, customer

retention, ROI and market share

Positive relationship. Based on

customer orientation and sales

growth and customer retention

in China. Moderating effect of

country-related to economic

context

Firms in Hong Kong



Empirical

study




Slater and

Narver (2000)

US single business

corporations or SBUs of

multi-business

corporations


Response of chief marketing

officer

Subjective single measure of ROI

relative to primary competitors

over the past 3 years. Response of

general manager


Voss and Voss

(2000)

US nonprofit

professional theatre

industry

Operative scales of strategic

orientation and interfunctional

coordination based on Gatignon

and Xuareb (1997). Response of

managing director

(1) Objective measures of attendance

attributable to subscription and

single tickets, total income and net

surplus/deficit. (2) Subjective single

measures of season subscription

sales, single ticket sales and overall

financial performance compared

with peer organizations


objective performance and

competitor orientation and

interfunctional coordination.


interfunctional coordination

Webb, Webster,

and Krepapa

(2000)

Corporate bank and

their client firms


MKTOR. Response of the main

contact person in each of the client

firms


customer satisfaction and service

quality


Wood et al.

(2000)

US not-for-profit

hospitals


MARKOR structure. Response

of chief executive


based on quality of care, revenues,

financial position and patient

satisfaction over the last 3 years


Wren, Souder,

and Berkowitz

(2000)

New product

development projects

for high technology

industrial products

in US

Operative scale. Two

components—customer

orientation and marketing

intelligence. Response by

consensus of chief marketing

and chief R & D officers

Subjective single measure of the

degree of commercial success for

the new product in relation to

expectations


customer orientation in Korea

New Zealand

Scandinavia (Norway

and Sweden)

Korea

Belgium

Yau et al. (2000),

Tse et al.

(2003)

Medium and large

companies located in

Hong Kong and with

operations in Hong

Kong and China


Response of marketing

director/manager


current and future performance

based on sales growth, customer

retention, ROI, market share,

ability to get valuable information,

loans, better terms in loans and

government approval, contact with

important persons and employee

motivation relative to major

competitors


moderating effect of industry—

manufacturing, retail and

wholesale, and others

Atuahene-Gima

and Ko (2001)

Australian firms Operative scale MARKOR.

Response of senior manager most

knowledgeable about the firm and

its recent new product project to

complete

(1) Objective measures of percent

age of profits and sales, and

average profits over the last 3

years derived from new products.


based on market share, sales and

profit derived from the recent new

product in relation to objectives

Positive relationship, stronger

for objective performance.


entrepreneurship orientation

Beam (2001) US daily newspaper

companies


MARKOR. Averaged response of

senior editors

Objective secondary measures of

total and home-county circulation,

and current rate and change in

home-county household

penetration

Positive relationship only

between intelligence

dissemination and change in

household penetration

Grewal and

Tansuhaj

(2001)

Small and midsized

Thai firms


Response of middle managers

and owners


based on satisfaction with ROI,

sales, profit and growth before and

after crisis

Positive and negative

relationship for performance

before and after crisis,

respectively. Moderating

effects of competitive intensity,

and demand and technological

uncertainty




Empirical

study




Harris (2001) Medium and large UK

firms


Response of managing

director/chief executive

officer

(1) Objective secondary measures

of sales growth and ROI. (2)


sales growth and ROI relative to

competitors


effect of market turbulence and

competitive hostility. No



Harris and

Ogbonna

(2001),

Ogbonna and

Harris (2002)

Medium and large UK

firms


Response of head of marketing


based on customer satisfaction,

sales growth, market share,

competitive advantage and sales

volume pertaining to long and

short-term


Harrison-Walker

(2001)

SBUs of US

organizations in

hospitality and beverage

manufacturing indus-

tries

Operative scale. Two

components—customers and

competitors—and four

stages—information acquisition,

sharing and shared interpretation,

and developing and

implementation of strategies.

Averaged responses of senior level

marketing executives



sales, sales growth, profit, ROI

and market share—, customer

response performance-based on

propensity, willingness and

perception of superiority-and

innovation performance-based on

new product success and time to

market


customer orientation

Hult and

Ketchen

(2001)

SBUs of large

multinational

corporations


Response of senior executive

Objective measures of change in

ROI, income, and stock price over

the past 5 years


positional advantage

Kahn (2001) US apparel and textile

manufacturers

Operative scale based on MKTOR

and distinguishing interaction and

collaboration from interfunctional

coordination. Response of

marketing, R & D and

manufacturing managers


product development (pre-launch)

and product management (launch

and post-launch) performance


product development

performance based on

marketing managers’

perceptions, and for product

management performance

based on marketing and

manufacturing perceptions

Langerak

(2001a,b)

Dutch manufacturers. Operative scales of downstream

and upstream market orientation.

Response of general manager.

Scales of customer orientation of

salespersons and of supplier

orientation of purchasers.

Response of contact with

knowledge about the relationship

in a customer and a supplier firm,

respectively



sales growth, profit, new product

success and ROI. Response of

general manager. Subjective

composite measures of trust,

cooperative norms and

satisfaction. Response of contact

with knowledge about the

relationship in a customer and a

supplier firm


downstream market orientation

and financial performance

through customer orientation

and trust, cooperative norms

and satisfaction. Positive

relationship between upstream

market orientation and

financial performance through

supplier orientation and trust

and cooperative norms

Prasad,

Ranamurthy,

and Naidu

(2001)

US manufacturing firms

involved in exporting in

a large Midwestern state


Response of chief executive

officer


based on economic/financial and

strategic outcomes of exporting

and satisfaction with them


marketing competencies.


competitive intensity,

integration of the internet, size

and degree of export

dependence

Santos et al.

(2001)

Medium and large

industrial firms in

Spain



general manager or marketing

manager


based on ROI, sales, new product

success and profit


Shoham and

Rose (2001)

Israeli firms from four

industries


Response of manager

Composite measures of sales,

growth in sales, profitability and

growth in profitability based on

objective and subjective items


sales



Empirical

study




Soehadi et al.

(2001)

Indonesian retail firms Operative scale. Four

components—customer,

competitor and profit orientation,

and interfunctional coordination.

Response of the person who was

most knowledgeable about the

business strategy


performance


Subramanian

and

Gopalakrishna

(2001)

Indian firms located in

Chennai


MKTOR. Response of senior

marketing executives


growth in overall revenue, ROC,

new product success, customer

retention and control of expenses

based on their importance and

satisfaction with them




turbulence and supplier power

Tzokas, Carter,

and

Kyriazopoulos

(2001)

Small manufacturing

enterprises in Greece

Operative scale based on MKTOR

and MARKOR. Response of

managing director

Composite measure based on

objective sales, profit and adoption

of innovations and subjective ability

to respond to changes in the market



entrepreneurial orientation

Cadogan,

Diamantopoulos,

and Siguaw

(2002a)

US exporters Operative scale of export market

orientation based on MARKOR.

Response of upper-level executive


achievement of export objectives—

based on sales volume, profits,

market share and new market entry,

and single measure of global export

success. Composite measure of

growth in export sales based on

objective and subjective items


export sales growth. No

moderating effect of market

turbulence

Cadogan,

Sundqvist,

Salminen, and

Puumalainen

(2002b)

Finnish exporting firms Operative scale of export market

orientation based on MARKOR.

Response of export manager

(1) Objective composite measure

of efficiency performance based

on export sales. (2) Composite

measure of sales performance

based on objective and subjective

sales. (3) Subjective composite

measure of profit performance

based on satisfaction with export

profits


Moderating effect of the

complexity of the export

environment and product vs.

service exporters

Deshpande and

Farley (2002)

Senior managers of

Chinese companies

headquartered in six

cities

Operative scale DFW Subjective composite measure based

on profitability, size, market share

and growth rate in comparison with

the largest competitor


moderating effect of city

Matear et al.

(2002)

New Zealand service

firms

Operative scale developed by

Gray et al. (1998). Response of

marketing manager or CEO



profitability, change in profitability

and revenue—, and market

performance—based on customer

satisfaction and loyalty, brand

awareness, brand equity, reputation/

image and new product success

Positive relationship, both

directly and through

innovation. No moderating

effect of innovation

Noble et al.

(2002)

Mass merchandiser and

discount sector of the

retailing industry

Measure based on cognitive

mapping of the letter to share

holders in corporate annual

reports. Seven components—

customer and competitor orientation,

interfunctional coordination, and

profit, long-term, private label brand

and national brand focus

Objective measures of ROA and

ROS


customer orientation and

national brand focus. Negative

relationship for private label

brand focus. Moderating

effects of learning and

innovation

Perry and Shao

(2002)

Foreign affiliates of

US-based advertising

agencies


MARKOR. Response of

managing directors


qualitative and quantitative

performance based on the extent

to which Internet-based services

increase new and existing client

revenue, profitability, image,

responsiveness and attraction


effect of traditional

competition. No moderating

effect of competitive intensity

and specialty competition




Empirical

study




Ramaseshan,

Caruana, and

Pang (2002)

Singaporean firms Operative scale of Ruekert (1992).

Response of product development

manager


new product market performance-

based on market share, sales,

growth and profit objectives, and

new product project performance-

based on cost efficiencies,

proprietary advantage, sales and

profitability of other products, and

new market opportunities, in

relation to one new product

introduced in the last 5 years.

Measure of overall performance

by combining both


collection of marketing

information for market

performance, development of

strategy for project

performance, and both of them

for overall performance

Rose and

Shoham (2002)

Israeli exporters Operative scale MARKOR. Single

respondent

Composite measures of export

sales and profitability, and change

in export sales and profitability

based on objective and subjective

items

Positive effect for profit and

change in sales and profit

based on intelligence

generation and responsiveness.

No moderating effects of

market turbulence, competitive

intensity and technological

turbulence

Tay and Morgan

(2002)

UK general practice

chartered surveying

firms


Response of head of marketing


business performance—based on

market share, ROI, new services,

etc. relative to competitors, and

marketing performance—based on

customer satisfaction, firm

awareness, etc. relative to

competitors



dynamism, environmental

complexity and competitive

hostility

Vazquez et al.

(2002)

Private non-profit

Spanish organizations



individual with full knowledge of

the foundation’s internal operation

and sector of activity


number of activities addressed to

beneficiaries, volume of obtained

income from donors, and ratio of

donors contribution to non-profit

expenditure, in relation to other

similar organizations, and degree

of fulfilment of the mission


Agarwal et al.

(2003)

International hotels Operative scale based on

MKTOR. Response of general

manager

(1) Objective composite measure

based on occupancy rate, gross

operating profit and market share.


based on service quality and

customer and employee

satisfaction in relation to competitors

Positive relationship, both

directly and through innovation

Calantone,

Garcia, and

Droge (2003)

Medium and large US

firms in diverse

industries


MARKOR. Response of

marketing, engineering or new

product manager

Subjective measure of new product

development performance based on

profit, sales and market share relative

to objectives in the last year


new product development

speed and corporate strategic

planning

Chang, Jackson,

and Grover

(2003)

Firms engaged in

e-commerce

Measure based on content analysis

of the letter to shareholders in

corporate annual reports. Two

components—customer and

competitor orientation-in relation

to e-commerce

Objective measures of gross profit

margin and company profit growth


Farrelly and

Quester (2003)

Australian Football

League and its protected

sponsors



managers responsible for the

relationship in the club—property

market orientation—and the

sponsor firm —sponsor market

orientation and property market

orientation perceived by the sponsor


trust and commitment. Response

of manager responsible for the

relationship in the sponsor firm


property market orientation

perceived by the sponsor and

sponsor market orientation. No

relationship for property

market orientation



Empirical

study




Hult et al. (2003) SBUs Operative scale based on

MKTOR. Response of

management or marketing

executive


competitor-based performance—

based on market share, growth,

profit and size relative to the

largest competitor in the last

year—, and overall performance-

based on performance and

performance relative to

competitors in the last year


Moderating effects of size

and age

Jones et al.

(2003)

US consumer goods

manufacturer’s sales

force and retail trade

customers


MKTOR. Response of sales

manager and salesperson


overall service quality and

propensity to switch. Response

contact in retail trade customer

No relationship

Krepapa et al.

(2003)

Relationship managers

from different SBUs of

a major international

bank and their

respective industrial

customers


MKTOR. Response of

relationship manager and

customers


overall satisfaction with the

business relationship. Response

of customer

Positive relationship for market

orientation perceived by

customers. Negative

relationship for the gap

between customers’ and

providers’ perceptions of

market orientation

Lai (2003) Quality oriented firms in

Hong Kong


Response of quality manager or

personnel responsible for quality

management


motivation performance—based

on employee training, satisfaction

and security, market performance—

based on new product success,

competitive price and customer

satisfaction, productivity

performance—based on materials

usage, labour and capital utilization,

and societal performance-based on

consumer rights, environmental

concern, expansion and employment

opportunities


Langerak (2003b) Manufacturing firms in

the Netherlands


MKTOR. Response of general

manager or member of the

management team


based on sales growth, profitability,

new product success, new product

sales, market share and ROI relative

to competitors over the last year


differentiation advantage based

on customer and competitor

orientation. Moderating effects

of strategy type. No moderating

effects of market and

technological turbulence and

competitive intensity

Liu et al. (2003) State-owned enterprises

in China


Deshpande and Farley (1998a,b).

Single respondent


marketing program dynamism


Luneborg and

Nielsen (2003)

Scandinavian banks Operative scale MARKOR.

Responses of marketing and IT

managers


internet-bank attractiveness,

relationship marketing performance,

sales performance, and financial

performance relative to competitors.

Responses of marketing and IT

managers


attractiveness and relationship

marketing performance.

Moderating effect of size

Martin and Grbac

(2003)

Manufacturers,

wholesalers and

industrial service

firms from Ohio

(US)

Operative scale. Six

components—customer and

competitor oriented information,

cross-functional information,

customer responsiveness, and

response to competitor price

change and campaign. Response

of CEO/President


sales growth. (2) Subjective single

measure of relative sales growth,

and composite measures of

profitability—based on comparison

with objectives and competitors—

and customer loyalty—based on

customer satisfaction and retention


customer-oriented information

and cross-functional sharing of

information. Positive

relationship between

competitor oriented information

and profitability and relative sales

growth. Positive relationship

between responsiveness to

customer and profitability and

customer loyalty




Empirical

study




Maydeu-Olivares

and Lado

(2003)

Insurance companies

operating in the

European Union


Lado et al. (1998). Nine

components—analysis of final

client, distributor, competitors and

environment, interfunctional

coordination, and strategic actions

on consumers, distributors,

competitors and macro-environment.

Response of senior executives

Objective primary measures of

domestic market share, premium

growth and profitability per year

averaged over the last three years


degree of innovation and

innovation performance

Morgan and

Turnell (2003)

UK firms marketing

financial services

Operative scale based on MKTOR.

Only two components—customer

and competitor orientation.

Response of executive of marketing

and business development

Subjective composite

measure based on market

share, customer satisfaction,

competitive position,

customer retention and sales

growth relative to major

direct competitors over the

last year


Qu and Ennew

(2003)

Hotels in China Operative scale MARKOR.

Response of general manager


performance—based on sales

growth, ROE and industry—

specific performance measures,

and customer retention, and

single measure of customer

satisfaction


Moderating effect of sector

Salomo et al.

(2003)

Innovation projects in

five German industries


MARKOR. Three components—

intelligence generation (market

research activities and customer

orientation), intelligence

dissemination (customer

integration and customer

orientation) and responsiveness

(market preparation, launch

activities and customer

orientation). Response of

marketing manager


overall project success—based on

technical and financial success,

market share, competence, costs,

meet regulatory requirements and

image, and single measure of

technical success. Response of

project manager


dissemination activities and

technical success. Moderating

effect of product

innovativeness

Singh (2003) Indian firms Operative scale MKTOR.

Response of CEO or proxy

executive from marketing/sales

department


ROI, customer retention and

foreign market presence in relation

to competitors since the economic

reform

Positive relationship except

for foreign market presence.



market dynamism

Notes:

– The contributions have been ordered firstly by year and secondly by alphabetical order. Studies based on the same sample have been described together.

– Some market orientation scales include both cultural and operative items. They have been subjectively classified by authors according to the predominance of

operative or cultural items.

– MARKOR, MKTOR and DFW refers to the scales developed by Deshpande et al. (1993), Kohli et al. (1993) and Narver and Slater (1990), respectively.

– Respondent for subjective measures of performance is not mentioned when it is the same as for market orientation measure.



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Dr. O. Gonzalez-Benito has a degree in Mathematics from the Universidad

de Salamanca (1995), a MSc degree in Marketing at UMIST (UK) (1997),

and a PhD degree in Economics and Management Sciences from the

Universidad de Salamanca (1999). He is currently Assistant Professor of

Marketing at the University of Salamanca. In addition to several published

papers in some of the most recognised Spanish marketing and management

academic journals, he has published articles in international journals such as

Journal of Retailing, Journal of Business Research, Industrial Marketing

Management, International Journal of Market Research, British Journal of

Management, OMEGA, or Small Business Economics.

Dr. J. Gonzalez-Benito has a degree in Mathematics (1995) and a PhD in

Economics and Management Sciences (1999) from the Universidad de

Salamanca, where he joined as an Assistant Professor of Management after

taking the MPhil degree in Management Studies of the University of

Cambridge (UK) (1997) and the MSc degree in Operations Management of

UMIST (UK) (1998). He has published articles in journals such as:

International Journal of Production Economics, International Journal of

Operations and Production Management, International Journal of Produc-

tion Research, OMEGA, British Journal of Management, Industrial

Marketing Management, International Journal of Market Research, Euro-

pean Journal of Purchasing and Supply Management, and Management

Decision.

1-s2.0-s0019850105000052-main impo

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