The Value of Market OrientationA resource based view on intelligence dissemination and customer acceptance
Management Summery
Matthijs van LeeuwenBusiness AdministrationGroningen UniversityJanuary 2010
Introduction
! This report is the result of the Bachelor Thesis course as offered by the Faculty of Economics and
Business of Groningen University in the Business Administration bachelor. The goal of this research is to link
knowledge management and market orientation. By linking these two concepts the literature on innovative
capacity can be enhanced. More specifically it can be said that this research intends to proof that knowledge
management can support a market orientation and market orientation can improve the innovative capacity of a
SME. The mean research question therefore will be: “How do SMEs use market knowledge as a resource in
understanding their market’s needs in order to be more innovative?”.
" The paper is made up from 5 chapters, of which this introduction is the first one. The second chapter
will introduce the conceptual model, hypothesis and rationale for this thesis. The research methodology will be
discussed briefly in the third chapter and the results in the fourth. The final chapter the conclusion, discussion
and limitations will be presented.
Conceptual model, hypothesis and rationale
" The basis for this thesis is the conceptual
model depicted in figure 1. This model is compiled
out of three segments: Knowledge Management,
Market Orientation and Innovative Capacity. First of
all these three concepts will be explained, after
which the relations between them will be discussed.
Knowledge management
" In the management literature knowledge
management can be divided into two groups. First
there are the quality indicators, consisting of new
knowledge acquiring, existing knowledge sharing
among functions and existing knowledge sharing
between people. These indicators have influence on
the knowledge level and the quality of disseminating the knowledge through the organization. These indicators
are included into the study because these have a large - hypothesised - influence on market orientation.
" Second, there are the process indicators, being the acquisition process, conversion process,
application process and protection process. Of these indicators three are applicable for this study and included
in the conceptual model. These indicators describe the process of how knowledge is handled in an organization
(theoretically).
Market Orientation
" Market Orientation is the process of managing the customers needs, articulated or latent. In the
conceptual model this process is depicted by the three quality indicators: Intelligence generation, which can be
The Value of Market Orientation: A resource-based view on intelligence dissemination and customer acceptance
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Figure 1 Conceptual model: Knowledge Management, Market Orientation and Innovative Capacity
linked to new knowledge acquiring and the acquisition process. Intelligence dissemination, which stands for
dispersing existing knowledge sharing across departments and between people. Finally, responsiveness is
linked to the conversion and application process.
Innovative Capacity
" In this thesis the concepts of market orientation and knowledge management where linked to innovative
capacity. This is the extend to which an organization is innovative. For this thesis innovative capacity is
measured using four indicators. In figure 1 it can be seen that the first three innovative capacity indicators are
linked to the first two of market orientation. The measures are marketing-, market-, and financially-based. Last
indicator is timing, which can be linked to responsiveness.
Research
! Due to time restrictions this study will only investigate the relation between intelligence dissemination
and customer acceptance. This way the relationship between market orientation and innovative capacity will be
approximated. The choice for these indicators is because in the eyes of market orientation, these are most
interesting. Intelligence dissemination is a vital chain in the market orientation process. Where every organization
is able to generate a certain amount of information about the
market, only some are able to disseminate this information through
the organization. The dispersion of intelligence (about the
customer’s needs) through the organization should improve the
customer acceptance since their needs are better displayed in the
products/services offered. This brings forth the hypothesis for this
study:
The better the intelligence dissemination of an organization, the better the customer
acceptance of an organization.
Research Methodology
" The method used for this study was a web-based self-administrated questionnaire in combination with
a written self-administrated questionnaire. The web-based survey was distributed using certain groups of the
network site Linked In. The written surveys where distributed to 18 organizations in the Groningen area.
" Of these 18 written surveys only two where returned. Reason for this is probably the short time period in
which the questionnaires could have been returned - only one week. On the Linked In request we had 10
reactions. In total, only 7 of the 12 returned surveys could be used due to incomplete surveys.
Results
! The descriptive statistics of the surveys can be found in Appendix 1. Further analysis of the data will
consist if a Cronbach’s alpha analysis to investigate the validity of the items that make the two constructs -
The Value of Market Orientation: A resource-based view on intelligence dissemination and customer acceptance
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Figure 2 Conceptual model Intelligence dissemination and Customer acceptance
intelligence dissemination and customer acceptance. After this these constructs will be used to calculate the the
correlations and to identify a relationship using a linear regression analysis.
Cronbach’s alpha
! For the 2 constructs the internal validity is measured by the Cronbach’s alpha. For intelligence
dissemination 8 items where used and 4 items for customer acceptance. In order to take these items into one
construct, Cronbach’s alpha must be 0,6 or more. The intelligence dissemination construct with 8 items had an
alpha of 0,309, which is too small for the construct to be valid. After deleting two items the alpha was increased
to 0,604. The alpha for customer acceptance was 0,683 for all 4 items.
Correlations
" In table 1 the correlations between the
constructs and control variables are displayed. It
can be seen that there is high correlation between
all constructs (> 0,30) and some are signifcant (*
on a 0,10 level and ** on a 0,05 level).
Regression
" A multiple linear regression was carried out for the constructs and control variables. This yielded only a
slightly significant result on the control variables and not on the independent variable. Therefore a single linear
regression was carried which was significant (R2 0,518 sig. 0,68).
Conclusion
The hypothesis stated in this study can be supported, intelligence dissemination positively influences customer
acceptance. Furthermore, the data suggest that over the years, the innovative capacity of an organization
slightly decreases. The goal of this thesis was to proof a relationship between knowledge management, market
orientation and innovative capacity. Through literature the relationship between knowledge management and
market orientation is proposed. The relationship between market orientation and innovative capacity is
approximated by intelligence dissemination and customer acceptance.
! These results imply a few things. First, if an organization wants to improve it’s innovative capacity it can
start with improving it’s market orientation by introducing or improving knowledge management system.
Second, more mature organizations must account for the effect that over the years the innovative capacity
decreases. Although this study only investigated the effects over 5 years, the consequences could be sever.
" Although this study is carried out with great care, there are some points that limit the results. First the
sample size is too small to make large external inferences. Second limitation is the Linked In sample, becuase
this sample is not controlled homogeneous the results may be biassed. Third limitation is the questions that
originally where meant for larger organization. The application for small organizations is disputable, since some
are about departments is that only a small part of the conceptual model was tested. Future research should
account for these limitations.
The Value of Market Orientation: A resource-based view on intelligence dissemination and customer acceptance
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Intelligence Dissemination
Customer Satisfaction
Firm Size
Firm Age
Intelligence Dissemination -
Customer Satisfaction 0,720 * -
Firm Size 0,454 0,871 ** -
Firm Age 0,684 * 0,795 ** 0,678 * -
Table 1 Correlations