QUT Digital Repository: http://eprints.qut.edu.au/

Lings, Ian (1999) Balancing internal and external market orientations. Journal of Marketing Management, 15( 4). pp. 239-263.

© Copyright 1999 Westburn Publishers Ltd

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Balancing Internal And External Market Orientations

Ian N Lings

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Balancing Internal And External Market Orientations

Abstract

In his ‘Marketing Myopia’ Levitt (1960) argued against the product centred view of the firm and for the marketing view of the firm, suggesting that businesses must be viewed as customer satisfying processes. This view has endured for nearly forty years despite changes in the service requirements of today’s markets. In the current market environment such a narrow focus on customers satisfaction is increasingly being challenged. This article reviews the literature relating to services marketing, market orientation and internal marketing and develops the concept of an internal orientation suitable for today’s service markets where managers have to compete for scarce resources, both in the internal market and the external market. A conceptual model is presented which balances an internal market orientation and an external market orientation and directions for future research into this concept are discussed.

Biography

Ian Lings is a teaching fellow and research member of the services marketing research group at Aston Business School. His research interests include the development of internal marketing orientations and the effect of such orientations on the firm. Prior to taking up his current lecturing and research position he held a commercial post managing the provision of services within a large multinational organisation.

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INTRODUCTION.

In 1981 Booms and Bitner rephrased the merger between services production and service

marketing found in the literature at that time in a 7Ps framework. This framework neatly

summarises the shifts occurring in marketing thinking at that time. Firstly the expanded

marketing mix represents the expnsinion of marketing management to subjects traditionally

considered to be in the remit of other departments (in particular process and people). Secondly it

makes explicit the need for marketers to manage internal factors, people and process, as well as

the external factors represented by the traditional marketing mix. This need for services

marketers to balance the management of internal elements with external elements is well

accepted and has been extensively discussed in the services marketing literature. See for example

Azzolini and Shillaber, 1993, Bak et al, 1994, Bhote 1991, Davis 1992, Foreman and Money

1995, George, 1990, Grönroos 1985, Gummesson, 1987, Harari 1991 and 1993, Harrell and Fors

1992, Piercy and Morgan 1990 and 1991, Piercy 1995 and in the strategic management literature,

see for example Pfeffer, 1994; Bharadwaj et al, 1993; Hall, 1992; Andrews, 1997; Foss, 1997.

In today’s markets the service element of product offerings are increasingly important and the

quality of these services is suggested to be the single most important factor in determining long

run market share and profitability (Doyle, 1994). Due to the instrumental nature of customer

contact employees in influencing customers’ perceptions of this quality (Baker et al; 1995, Bitran

and Hoechs; 1990, Bailey; 1994, Booms and Bitner; 1981) there is a pressing need to

incorporate a balanced orientation, which focuses on internal and external factors, into the

marketing philosophy.

Market orientation, the operationalisation of the marketing concept, has recently received increased

attention in the marketing literature (see for example Greenley 1995, Narver and Slater 1990, Kohli

and Jaworski 1990, Jaworski and Kohli 1993, Day and Wensley 1988, Day 1994) and represents a

convergence of marketing and strategic management with Greenley (1995) suggesting that market

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orientation is a cornerstone of both domains. The more recent marketing literature relating to

market orientation has, however, focused primarily on external stakeholders, customers and

competitors, and to a large extent had little focus on internal stakeholders such as employees

(Greenley and Foxall 1988), although several authors have discussed the need to focus on

employees if a successful market orientation is to be developed (Kelly, 1992; Miller and Lewis,

1991; Canning, 1988; Masiello, 1988; Shapiro, 1988; Day, 1994) the need to balance the market and

employee orientation is not addressed.

This focus on external factors is also reflected within the strategic management literature, which

despite discussing the importance of considering both internal and external aspects of the firm

when developing strategies, has been dominated by the view that external factors are the most

important considerations in developing a competitive advantage Andrews (1997). The need to

address this limitation of existing strategic management thinking is discussed by Foss (1997) who

stresses the need for a unified rigorous approach to strategy that can satisfactorily accommodate

the basic idea that both internal and external aspects should be featured on an equal footing.

In this article, an approach to strategy formulation which overcomes Foss’ 1997 criticisms and

incorporates both internal and external aspects of the firm will be developed. To do this current

thinking on market orientation will be reviewed and the contribution of market orientation to a

balanced internal and external focus will be examined. Further developments in marketing

thinking, especially those relating to stakeholders other than customers and competitors, will also

be reviewed to identify how these areas can contribute to a more balanced focus for strategic

decision making. Knowledge from these divergent fields of thinking will be incorporated into a

more holistic model of strategic decision making which overcomes the criticism that there is no

unified rigorous approach to strategy that can satisfactorily accommodate the basic idea that both

internal and external aspects should be featured on an equal footing.. Five sections follow this introduction.

Sections one and two examine current thinking in the areas of market orientation and stakeholder

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orientation respectively, identifying contributions of these areas of literature to the internal /

external focus of the firm. The next section introduces the concept of internal marketing and

discusses its utility in the development of an approach to strategy formulation in this context. In

the fourth section ideas from these literatures are synthesised and a new holistic model of

marketing decision making is developed. The final section develops possible research hypotheses

and discussed the implications of the model presented.

MARKET ORIENTATION

The most widespread definition of marketing in marketing textbooks, (and possibly among

researchers; see for example Hooley et al 1990, Möller and Anttila 1989), is provided by the

American Marketing Association (AMA) as:

“Marketing is the process of planning and executing the conception, pricing, promotion

and distribution of ideas, goods and services to create exchanges that satisfy individual

and organisational objectives.”

This marketing mix operationalisation of the marketing concept was first presented in and is

essentially concerned with the development and maintenance of an external orientation and

sensitivity in the organisation (Tuominen and Möller 1996). It therefore appears to suffer from

similar limitations to those identified in the strategy literature (Foss 1997); namely, that it is

restricted to an external focus (see for example Hooley et al 1990, Möller and Anttila 1989)

with little or no simultaneous and complementary internal focus.

More recently market orientation has been proposed as an operationalisation of the marketing

concept. Market orientation can be considered as either a set of management behaviours, (see

for example Narver and Slater, 1990; Kohli and Jaworski, 1990; Jaworski and Kohli, 1992;

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Slater and Narver, 1994; Kohli et al, 1993), or a business philosophy (see for example

Webster, 1988; Hooley et al, 1990; Lichtenthal and Wilson, 1992) directing behaviour and

action which translates the philosophy into business strategies (Tuominen and Möller 1996).

As a behaviour, market orientation is discussed by Narver and Slater, (1990), Kohli and

Jaworski (1990) and Day and Wensley (1988) who stress the importance of :

• generating intelligence relating to customers and competitors.

• disseminating this intelligence throughout the organisation,

• co-ordinating the activities of the various groups and individuals within the firm and

• developing and implementing a response (Kohli, Jaworski and Kumar, 1993).

Market orientation is represented in Fig1.

MarketIntelligence

ResponseDesign

ResponseImplementation

A B C D E

Fig.1.Market Orientation

Intelligence acquision

Intelligence disseminatination

Co-ordinated response

Functional Groups

Having collected intelligence about customers and competitors and disseminated this to all

members of the organisation for interpretation, the individual responses of all members and

functions of the organisation are co-ordinated and an organisational plan or response to the

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market is designed and implemented. This interpretation of the market orientation concept does

not specifically address the motivation of employees to a market oriented response, despite

including the implementation of a response in the concept. The management of service

employees and motivating the implementation of market oriented response have been

extensively discussed in the services marketing literature. (Azzolini and Shillaber, 1993, Bak et

al, 1994, Bhote 1991, Davis 1992, Foreman and Money 1995, George, 1990, Grönroos 1985,

Gummesson, 1987, Harari 1991 and 1993, Harrell and Fors 1992, Piercy and Morgan 1990 and

1991, Piercy 1995.)

Jaworski and Kohli (1993) report that market orientation correlates significantly with

judgmental measures of company performance, such as managers perceptions of how well the

company is performing, but not with more objective measures, such as market share. However

Narver and Slater (1990), examining market orientation in commodity businesses, report a

significant correlation between levels of market orientation achieved and return on assets and

retention of customers. Neither of these US studies found any significant external

environmental moderators of the market orientation: performance relationship. Such

moderating variables have, however been identified in the UK context Greenley (1995).

The mechanism by which market orientation leads to improvements in company performance

is suggested to operate via increased customer satisfaction and new product success, leading to

sales growth and profitability (Slater and Narver, 1994). Slater and Narver (1995) also propose

that market driven organisations are faster and more effective in responding to opportunities

and threats, a view supported by Kohli and Jaworski, (1993).

It appears that market orientation is also primarily focused on the external environment of the

firm. The information collected relates to customers and competitors and a response is designed

to meet the needs of these customers and competitors. Little attention is given to the

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examination of factors internal to the firm and information is not collected on internal factors

such as employees, processes and internal customers etc. Measures of market orientation

concentrate on external success measures and largely ignore internal success measures (such as

employee motivation and retention, internal service quality and better service delivery

processes) and the impact that these will have on external success measures.

Hunt and Morgan (1995) take an alternative view to market orientation and discuss it as a

scarce and potentially sustainable resource, useful for developing comparative advantage in the

market place. Unlike other authors in this area Hunt and Morgan (1995) specifically note the

importance of several internal factors in sustaining this resource. One factor which they have

identified is the interaction between employees within the firm. They suggest that employees

do not learn to be market orientated from policy handbooks but from other employees,

requiring this interaction to be facilitated. Bharadwaj et al (1993) have also identified

influences on employee behaviour as critical factors in the development of competitive

advantage a view supported by Hall (1992).

At this juncture several observations can be made relating to market orientation and how it may

contribute to the strategic management literature.

• Market orientation is a resource in developing a sustainable comparative advantage.

(Hunt and Morgan 1995)

• It has an external focus, on customers and competitors of the firm. (Kohli and

Jaworski 1990, Narver and Slater 1990)

• It has a longer term temporal focus incorporating current needs and anticipating

future market developments.( Hooley et al 1990, Tuominen and Möller 1996)

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• It requires the whole organisation to be involved in implementing market

orientation, all employees collect market intelligence, interpret it and respond to it.

(Kohli and Jaworski 1990, Narver and Slater 1990, Day and Wensley (1988)

However market orientation does not identify resource strengths and liabilities (such as

employee and process factors) which are important as a key element of intelligence gathering,

especially in service industries and also in the development of strategic responses to market

information. These resource strengths and liabilities (which may include the skills and

motivation of the staff, their understanding and adherence to the corporate strategy and goals

and procedures for co-ordinating the process of delivery of products and services to customers,

need to be identified and examined in the light of market opportunities and threats and

responses need to be designed to overcome any shortfalls in these. So whereas market

orientation focuses on the development of responses to the external market of customers and

competitors, a more holistic approach would develop responses to the internal environment as

well as the external market. Mechanisms to organise and motivate internal resources to achieve

customers satisfaction can be developed based on intelligence collected on the internal

environment as well as the external market. This need for the firm to focus on its employees

has been highlighted by Mohr-Jackson (1991), who suggests that employees, as internal

customers, are of equal importance to the firm as external customers.

Where market orientation does consider internal aspects, these relate to the co-ordination of

functional activities pertaining to the internal dissemination and processing of market

intelligence. The co-ordination of the value adding activities of these functions, each providing

their internal customers with an appropriate level of service, so that ultimately the service

delivery personnel are well supported by back office staff, and the end user is provided with a

high level of service, are not considered. (See for example Lings and Brooks 1998)

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FOUNDING PROPOSITION

A company orientation which accommodates both internal and

external aspects on an equal footing will be more effective in

formulating strategic responses to market intelligence than a

company orientation which has a predominately external focus.

Work that has expanded the focus of market orientation to include other stakeholders has gone

some way to balancing the internal and external focus and is discussed in the next section.

Stakeholder orientation.

In Europe approaches to market orientation have included some recognition of the need for

internal orientations to compliment the external market orientation. Greenley and Foxall

(1996a) identify five orientations in UK companies, two of which are internal orientations.

These five orientations are consumer orientation, competitor orientation, shareholder

orientation, employee orientation and union orientation. Consumer orientation was found to be

a predictor of competitor and employee orientations indicating the interrelationship between

internal and external orientations. Greenley and Foxall (1998) state, of the predictive nature of

consumer orientation on employee orientation, that “satisfying consumers leads to demands on

the company, which results in employment opportunities.” So organisations that are oriented to

consumers will also focus on the needs of employees and develop plans to address these needs.

Greenley and Foxall (1996) also report that employee orientation is associated with new

product success at high levels of market turbulence, suggesting that employees become

relatively more important in meeting the needs of the customers when those needs are changing

rapidly.

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Fritz (1996) also identifies the need for an employee orientation and presents a management

model which includes market orientation and employee orientation. The model also includes

one other internal orientation, ‘production and cost’ orientation, and one additional external

orientation, technology and innovation orientation.

Despite this focus on employees in the stakeholder orientation literature, most research has

concentrated primarily on the extent or degree to which organisations focus on their

employees rather than the nature of the employee orientation.

Greenley and Foxall (1997) have however operationalised employee orientation as the

following:

• the importance of formal research to understand the interests of employees.

• the importance of management judgement for understanding the interests of employees

• the extent of planned strategies to address the interests of employees

• the extent of open managerial discussions about employees when addressing corporate

culture.

• the importance of employees in the corporate mission relative to other stakeholder groups.

In comparison to Greenley and Foxall’s (1997)operationalisation which focuses on the

philosophy of an employee orientation, Fritz (1996) presents a three factor operationalisation of

employee orientation which focuses on the implementation of an employee orientation. These

factors are:

• The importance of employee satisfaction as a goal of corporate decisions.

• The degree to which employee development is pursued as a corporate strategy

• The degree to which delegation of responsibility is pursued as a corporate strategy

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A more holistic orientation, incorporating both internal and external aspects of the firm on a

more equal footing, can be achieved by incorporating this employee orientation with the

existing external (market) orientation and is represented in Fig.2.

MarketIntelligence

Compare internaland external inteligence

ResponseImplementation

Fig.2.Simultaneous Employee and External Market Orientations.

Intelligence acquision

Intelligence disseminatination

Co-ordinated Informationprocessing

A B C D E

Functional Groups

InternalIntelligence

Opps &Threats

StrengthsWeaknesses

ResponseDesign

Information about the external environment is acquired by and disseminated throughout the

organisation as described by Kohli and Jaworski (1990). Interpretations of this information are

co-ordinated and used to identify opportunities and threats which exist in the external

environment. This is the intelligence acquisition and dissemination part of the existing process

of market orientation which has been discussed earlier. Simultaneous to this process of

acquiring and disseminating intelligence relating to the external market is a process of

collection and dissemination of intelligence relating to the employees of the firm or the internal

market. This information on the human resources of the firm provides an indication of the

capabilities that those human resources bestow on the firm, such capabilities represent strengths

and limitations of the firm’s ability to meet the opportunities and threats apparent in the

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external market. Employee and market intelligence can now be compared and an appropriate

response to the market can be designed.

As discussed earlier and identified by Kohli and Jaworski (1993) response design is only one of

the aspects relating to a successful response to the market, the other being response

implementation, which is directly dependent on the responsiveness, motivation and behaviour

of employees, especially in the service context. It is therefore important to identify mechanisms

through which the both the implementation and design of the response can be optimised.

It appears therefore that for employee orientation to have some utility developing a more

holistic approach to strategy development it must provides intelligence about resource strengths

and limitations arising from employees which can be compared with market opportunities and

threats apparent from intelligence generated from the (external) market orientation. These

resource strengths and limitations include not only the ability of employees to implement the

desired response but also their motivation to do so and the delivery processes used to

implement responses.

Employee and process factors, in particular relating to the delivery of services, are discussed in

the next section.

INTERNAL MARKETING

The need for the firm to adopt a balanced internal external focus has been extensively discussed

in both the strategic and marketing literatures as has been discussed in the preceding sections of

this article. One way to achieve an internal focus has been suggested by Mohr-Jackson (1991),

who proposes a focus on employees through the adoption of internal marketing and a

philosophy of treating employees as internal customers. Other internal marketing literature

discusses the general application of marketing like tools to the employee market inside the firm,

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identifying issues relating to how organisations should orient towards their employees and what

effects this could have on performance in the external market.

There is no general agreement as to the exact nature of internal marketing (Rafiq and Ahmed

(1993), however several themes arise within the literature. Three approaches to internal

marketing are identified within this review, approaches focusing on customer contact personnel

in the service delivery process and are based on the assumption that happy and motivated front

line employees are essential in the delivery of good service to customers, (Sasser and Arbeit,

1976; Berry and Parasuraman, 1991; and Berry 1984); secondly approaches focusing on the

process of service delivery throughout the whole organisation, which are based on the TQM

philosophy and assume that service can be sequentially built into the service delivered to the

consumer. In this approach to internal marketing each department treats the recipients of its

output as internal customers and strives to satisfy these internal customers, (Rafiq and

Ahmed,1993; Grönroos, 1981 and Gummesson, 1987, Lings and Brooks (1998); and thirdly

approaches aimed at marketing the marketing concept and creating common values amongst all

employees (Piercy and Morgan, 1990 and 1991; Piercy 1995). In this approach to internal

marketing internal segments are identified as the recipients of the organisation’s mission and

strategy and targeted with tailored communications.

The next part of this review will concentrate on the second approach to internal marketing

discussed above. Literature which specifically addresses the issues of internal customers and

process design is most applicable to response implementation and will be the focus of this

section, other approaches to internal marketing, those which have an exclusive focus on the

customer contact personnel and those which concentrate on the effective communication of

marketing strategy will not specifically be discussed but will be included where appropriate.

Internal Customers And The Service Delivery Process.

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This approach to internal marketing has evolved from the TQM philosophy. It concentrates on

the interactions between groups within the company and the creation of internal service quality

throughout the service delivery process (Rafiq and Ahmed 1993). This approach is based on the

assumption that the provision of high quality services to customers is dependent on the quality

of the internal service which contact personnel receive from back office and support

departments(Grönroos 1981, Gummesson 1990).

This approach to internal marketing has given rise to the concept of internal customers and

internal suppliers, where each and every person and department is both a customer of, and a

supplier to, other people and departments within the organisation (Denton 1990, Lee and

Billington 1992, Barrett 1994, Lukas and Maignan 1996). A marketing like approach can be

applied to these inter-functional interactions.

Internal market research (part of the employee orientation of the firm) provides information

about the needs and wants of the internal customer.

These wants and needs can be categorised into two levels. Firstly these are the wants and needs

which relate to employment with the firm and may include such factors as pay and conditions,

status and location of employment. Such factors need to be considered when considering

employment and jobs can be viewed as products. The importance of designing jobs as products

which will satisfy the needs of employees and so motivate them to customer consciousness and

service delivery has been extensively discussed in the internal marketing literature. See for

example Grönroos (1985); Wong and McCullough (1987); George (1977).

Secondly the wants and needs of the employee may relate to the need for quality input from

internal suppliers and other support functions. These wants and needs, as well as affecting the

motivation of employees, directly affect their ability to provide quality outputs to their internal

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customers or the end user, depending on their position in the supply chain. Such wants and

needs are communicated to the internal supplier who must translate them into actions aimed at

meeting these needs and providing quality service(Reynoso and Moores 1996). Furthermore

the quality of the internal service can be measured as an indication of how well the internal

supplier is performing against internal customer targets. Internal service quality achievement

can then be used to create reward systems based on the creation of value through internal

service quality. (Reynoso and Moores 1996).

Reynoso and Moores, (1996) have identified six common steps in internal marketing

campaigns. These are;

1. The creation of internal awareness.

2.The identification of internal customers and suppliers.

3.The identification of the expectations of the internal customers.

4.The communication of these expectations to internal suppliers in order to discuss their own

capabilities and / or obstacles to meeting these requirements.

5.As a result of the previous point, internal suppliers should work to make the necessary

changes so as to be able to deliver the level of service required.

6.And finally, obtain a measure for internal service quality. Feedback should be given to

internal suppliers if services are to be improved.

The focus on the interactions between internal suppliers and their internal customers which

arises as a result of internal marketing, along with monitoring and reward systems, should

provide improved inter-functional interactions, increased internal service quality, higher levels

of employee satisfaction and motivation and ultimately better performance in the external

market. (Heskett et al 1984, Magidson and Polcha 1992, Lings and Brooks 1998).

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Furthermore the internal customer model of internal marketing influences the achievement of a

market orientation in several ways.

Through an influence on interfunctional factors.

Jaworski and Kohli (1993) identify interfunctional factors as an antecedent to market

orientation and report that conflict between departments reduces market orientation by

hindering the dissemination of intelligence between them and the responsiveness of the

organisation to market conditions. Connectedness between departments is thought to promote

market orientation by facilitating the dissemination of intelligence between them, however this

is yet to be confirmed. (Jaworski and Kohli, 1993)

The internal customer model of internal marketing (Lings and Brooks 1998) concentrates on

functional interdependency. Internal suppliers work with their internal customers to identify

areas for improvement and hence possibilities to increase internal service quality. Such

functional interdependency has been shown to improve communication between departments

and the dissemination of intelligence (Fisher, Maltz and Jaworski (1997), hence facilitating the

achievement of a market orientation.

Through the design of reward systems.

Kohli and Jaworski (1993) identify reward systems as having the strongest impact on market

orientation and suggest that employees should be rewarded for the achievement of customer

satisfaction and building customer relationships. Internal marketing provides intelligence on the

elements that augment employees jobs and levels of service quality achieved internally,

between internal customers and their internal suppliers. Rewards based on such intelligence can

be used to shape the behaviour of employees. For example; those not in direct contact with the

external customer can be motivated towards, and rewarded for the achievement of internal

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service quality, employees who are in direct customer contact internal marketing can be

motivated and rewarded for customer service and responsiveness.

Through the implementation of the response to external intelligence.

This is achieved in two ways. Firstly when used in conjunction with services blueprinting

(Lings and Brooks 1998), the internal customer model provides a means of facilitating the

design of processes to implement the response to the market. Secondly through the more

appropriate design of jobs to meet the needs of employees and the better quality of support and

input from other departments, employees will be more motivated to implement a response and

do so in a customer conscious manner.

SYNTHESIS:

THE DEVELOPMENT OF A BALANCED ORIENTATION.

The simultaneous employee and market orientation represented in fig 2 represents the

collection of intelligence relating to the internal environment of the firm and collection of

intelligence relating to the external environment and the opportunities and threats that exist

therein. Using the knowledge developed in the field of internal marketing it is possible to

develop a more detailed representation of the internal, employee orientation.

Internal intelligence relates to the wants and needs of employees, both in terms of job products

and in terms of the inputs from their internal suppliers and to the internal processes which are

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used to create value in the delivery of internal products and services. This intelligence is used to

provide some focus on the internal market and meeting the needs of the internal customers.

Firstly intelligence relating to the employees perceptions and desires for their job/ products can

be used in conjunction with management judgement to develop jobs that meet the needs of

employees and so motivate them. Secondly intelligence relating to inputs from internal

suppliers can be disseminated among the internal supplier / customer groups and be used to

develop internal products and services which will satisfy the wants and needs of the internal

customer. This could also be used in conjunction with the internal service quality

measurements, which would allow managers to measure how well individual departments are

satisfying their internal customers and develop reward systems which reflect this. Using the

intelligence collected from the internal market, rewards could be designed to meet the needs of

employees, and so be meaningful to them. In conjunction with this intelligence relating to

process design can be used to facilitate the production and delivery of these internal products

and services and eliminate bottlenecks and repetition within the value chain.

Response design and implementation

In addition to the internal responses, service delivery process design and the design of reward

systems outlined above, a balanced orientation provides richer intelligence on which to base

decisions about the design of responses to the external market. This intelligence allows the

opportunities and threats, apparent from intelligence collected from the external environment,

to be matched to the strengths and weaknesses of the firm. In addition to this process

information, either in terms of process strengths or in terms of the need to redesign the

processes to achieve optimum implementation, is incorporated into the design of the response.

Also the use of internal marketing to motivate employees, should create a corporate climate

where employees are happy and motivated to implement customer oriented responses.

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The balanced orientation, incorporating market and employee orientations and internal

marketing is represented in fig3.

MarketIntelligence

ResponseDesign

ResponseImplementation

Fig 3.A Balanced Internal and External Orientation

Intelligence acquision

Intelligence disseminatination

Co-ordinatedInformationprocessing

A B C D

Functional Groups

InternalIntelligence

Opps &Threats

StrengthsWeaknesses

Compare strenths andweaknesses with oppsand threats.

Internal marketingto motivateemployees andimplement response Internal

Marketing

Process design

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CONCLUSIONS AND RESEARCH DIRECTIONS.

In his ‘Marketing Myopia’ Levitt (1960) argued against the product centred view of the firm

and suggested that businesses must be viewed as a customer satisfying process, this marketing

view of business has endured to the present day. However the views of marketing scholars

presented here appear to indicate that this view may be just as myopic in its own way as the

product focused view which it replaced. Despite the evolution of marketing theory and practice,

adapting to changes in modern markets, most notably the increased importance of services in

both national economies (Burgess, 1995), and to the individual consumer (Lewis, 1995, Stuart

et al, 1996) the view that the customer is king endures to the exclusion of all other views of

marketing. Such over reliance on one paradigm of marketing as the paradigm to be used for

marketing has been warned against by Grönroos (1994). Viewing the firm as a customer

satisfying process focuses exclusively on the creation of customer satisfaction and is based on

externally sourced intelligence without due consideration for the satisfaction and motivation of

internal resources based on internally sources intelligence. This myopic focus on the external

customer compromises managers ability to balance their internal needs (to satisfy and motivate

employees and design efficient and effective service delivery processes) with their external

needs (to satisfy the customers, keep ahead of the competition and meet the objectives of the

firm in the external market). The conceptualisation of the balanced market orientation

developed in this article goes some way to redressing the swing away from the internal focus

on the firm and presents a more balanced view of marketing decision making.

The exclusive orientation on the external market is further evidenced by the development of

operational scales to measure such orientations and the lack of attention in the marketing

literature on the development of operational scales to measure internal orientations. Those

scales which have been developed to measure employee orientation have been derived form

scales originally designed to measure external orientations and do not address the range of

issues associated with employee orientation which are indicated by the internal marketing

literature.

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The next stage in this ongoing research programme will be to operationalise the concept of

employee orientation, incorporating those issues raised in the internal marketing literature, and

to develop a valid measurement instrument for the concept. The development of such a scale

may involve the modification of existing scales measuring market orientation to include

dimensions which measure employee orientation, or separate scales may be required to

measure employee orientation directly. The structural relations between the balanced

orientation and company performance will also be examined.

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