Does Market Orientation Lead to Firm Performance? Exploring the Mechanisms and Boundary Conditions

Abstract

ABSTRACT This study explores the mechanisms and boundary conditions that will enhance the effective transformation of the firm’s market orientation (MO) into firm market performance (PERF). We examined how MO influences PERF directly and indirectly through the firm’s new product development capability (NPDC). We also examined the indirect conditional effect of social capital (SC) on the MO-PERF relationship through the NPDC of the firm. Data from 313 managers and owners of small and medium enterprises (SMEs) in Ghana was used for the study. Data were analyzed using the conditional process analysis software PROCESS in SPSS 23.0. Findings indicate that MO has a significant influence on PERF. Further, NPDC partially mediates the relationship between MO and PERF. We also found the indirect relationship between MO and PERF to be declining at higher levels of SC. The study clarifies the divergent views of the impact of MO on performance by introducing NPDC and SC in the relationship.