miles a. zachary aaron f. mckenny jeremy c. short g. tyge payne
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FAMILY FIRMS AND MARKET ORIENTATION: A COMPARATIVE ANALYSIS OF THE S&P 500
Miles A. ZacharyAaron F. McKennyJeremy C. ShortG. Tyge Payne
OVERVIEW Premise of the paper The Market Orientation (MO) construct Theory Methods Results Discussion Concluding Remarks Questions
PREMISE Family firms represent a 80% of all firms in
the US (Lee, 2006); 12% of GDP (Shanker & Astrachan, 1996)
Despite significant family firm research, none have examined the possible differences between family firms and non-family firms regarding MO
We bridge this gap by examining the differences from a unidimensional as well as multidimensional MO approach
MARKET ORIENTATION- THE CONSTRUCT Concept developed in the late
1980’s/early 1990’s Two foundational definitions-
MARKOR: Kohli & Jaworski (1990) Three (3) core components—customer focus,
coordinated marketing, and profitability MKTOR: Narver & Slater (1990)
Five (5) dimensions—customer orientation, competitor orientation, interfunctional coordination, long-term focus, and profitability
MARKET ORIENTATION- THE CONSTRUCT Kohli & Jaworski (1990, 1993)
Generation, dissemination, and responsiveness
Antecedents Individual factors Intergroup factors Organization-wide factors
Consequences of MO Sustainable competitive advantage
(performance) Esprit de Corps
MARKET ORIENTATION- THE CONSTRUCT Narver & Slater (1990, 1995)
Expand/focus on the dimensions of MO Customer Orientation Competitor Orientation Interfunctional Coordination Long-term Focus Profitability
A singular construct comprised of five (5) dimensions
Contributes to a learning organization
MARKET ORIENTATION- THE CONSTRUCT MO has been associated with greater
firm performance (Kohli & Jaworski, 1990, 1993; Narver & Slater, 1990; Kumar, Subramanian, & Yauger, 1998; Ellis, 2006) Increased sustainable competitive
advantage Higher employee satisfaction Improved organizational learning (Narver &
Slater, 1995)
ORGANIZATIONAL IDENTITY AND MO MO is a function of an organization’s identity
(Cunnington, 1996) Within identity, the organizational culture of a
firm is affects and is affected by MO (Carr & Lopez, 2007; Leisen et al., 2002)
MO enhances organizational culture (Carr & Lopez, 2007) Promotes awareness of and learning from
customers/competitors Emphasizes the generation and dissemination of
market information
ORGANIZATIONAL IDENTITY AND FAMILY FIRMS
Family firms are unique and possess inherent characteristics that are difficult to replicate (Habbershon & Williams, 1999)
The “familiness” of a firm lends itself to a unique organizational identity (e.g. Dyer & Whetten, 2006)
Family firms are strengthened by the long-surviving influence of the founder (Davis & Harveston, 1999)
MO AND FAMILY FIRMS Very limited research between MO and
family firms Only study to date (Tokarczyk et al.,
2007) examined the “familiness” influence on the implementation of a MO Case-analyzed 8 firms in two industries Found significant relationship between the
“familiness” factor and the implementation of a MO
MO AND FAMILY FIRMS We intuitively believe a relationship
exists based on the predisposition of family firms to the antecedents of MO
We state the first hypothesis along these lines of thought H1: Family businesses will exhibit a greater
level of market orientation than non-family firms as demonstrated in their shareholder letters.
CUSTOMER ORIENTATION Characterized by actions towards
seeking superior value for customers Analyzing the market for current and
future customer opportunities H2: In large, publically held companies,
family businesses will exhibit greater levels of customer orientation, a dimension of market orientation, compared to non-family businesses.
COMPETITOR ORIENTATION Involves a continual commitment to
understanding the threats/opportunities presented by current and future competitors
Improves the cognition of an organizations strengths and weaknesses in the market H3: In large, publically held companies,
family businesses will exhibit greater levels of competitor orientation, a dimension of market orientation, compared to non-family businesses.
INTERFUNCTIONAL COORDINATION The coordination of information collection
and shared utilization of such information between departments
Firms focusing on synergistic departmental dynamics H4: In large, publically held companies, family
businesses will exhibit a greater level of interfunctional coordination, a dimension of market orientation, compared to non-family businesses.
LONG-TERM FOCUS Organizational focus on long-run,
sustainable goals influenced by customer orientation, competitor orientation, interfunctional coordination, and profitability H5: In large, publically held companies,
family businesses will exhibit a greater long-term focus, a dimension of market orientation, compared to non-family businesses
PROFITABILITY An organizations focus on the
profitability of the firm’s operations Seen as both a goal and consequence
of an MO (Narver & Slater, 1990) H6: In large, publically held companies,
family businesses will exhibit less emphasis on profitability, a dimension of market orientation, compared to non-family businesses.
MO AND PERFORMANCE The link has been established between
MO and performance (Ellis, 2006) If family firms differ from non-family
firms in their level of MO, does this translate to performance differences? H7: Being a family business moderates the
relationship between market orientation and organizational performance
METHOD Content analysis via DICTION 5.0 (Hart, 2000)
Word lists determined based on Narver & Slater (1990) dimensional definitions
Rated by 3 authors independently Shareholder letters for 2001-2005 were analyzed
on the five dimensions of MO for 224 firms Family firms were measured based on the direct
proximity of senior management and/or board members to the founder (Dyer & Whetten, 2006; Chua et al., 1999)
RESULTS Family firms display significantly less MO than
non-family firms on the summated measurement of MO
Family firms display significantly less competitor orientation and profitability focus on the multidimensional measurement approach
Mixed evidence from the performance regression; indicates a more complicated relationship between family firms and ROA/Tobin’s q performance measures regarding MO
LIMITATIONS Content analysis word lists were based on subjective
definitions of each dimension of MO; difficult to determine specifically MO-related words
Word counts begin the analysis of MO and family firms, however, a bigger story exists within the context of word usage; future studies should examine this
The performance aspects of analysis were mixed and should be given further scrutiny
While large cap firms are crucial to macroeconomic performance, they are only one class of companies to be analyzed
CONTRIBUTIONS First to identify a difference between the
implementation of a MO between family and non-family firms
The generalizability of these results allows future research to examine specific facets of MO that family firms can improve upon
Establishes the grounds upon which future research can examine the sustainability of family firms and MO dynamics, hopefully leading to specific family firm contributions
CONCLUSION This study represents the first step in a long
process of examining the family firm dynamics of MO
Family firms are at a distinct disadvantage regarding MO currently, however, we believe they have the necessary antecedents to successfully transition to a greater MO level
Future research should focus on other specific implications for family firms using MO as a strategic orientation
THE FUTURE OF THE PAPER Currently in the process of seeking clearer
significance in the multidimensional analysis of MO and family firms using a matched pairs data set
Working on improving the performance study by using the same matched pairs data set as above
Need to clarify and improve the contributions of the study to the management field; hopefully this can be accomplished through greater results in the performance analysis
QUESTIONS?
COMMENTS?
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