A Study of the Effect of Market Orientation on Malaysian Automotive Industry Supply Chain Performance

Abstract

The liberation of world trade has significantly reduced Malaysian government protectionism of its national automotive industry. Local manufacturers have to strive for excellence in order to be able to compete in a business world that is dominated by a few big players. They cannot compete without excellent organizational behavior and culture. One of the important aspects of organizational culture and behavior is market orientation. A company’s ability to win orders depends on how much it and the other companies in the supply chain are able to understand, translate and act upon customer requirements. This study is devoted to analyzing the relationship between market orientation, supply chain management, and the supply chain performance of all the industry’s supply chain players. It also examines the mediating effect of supply chain management. Data were collected from manufacturers and suppliers in the automotive industry in Malaysia through questionnaires. Structural Equation Modeling (PLS-SEM) was employed to test the above relationship. The results indicate that supply chain management mediates the relationship between market orientation and supply chain performance. However, they also show that the relationship between market orientation and supply chain performance is insignificant.This finding has a major implication for policymakers and manufacturers, as will be discussed in this paper.