Impact of market orientation on firm’s customer-based performance: the moderating role of employee orientation

Mujahid Mohiuddin Babu,Hongfei Liu,Chanaka Jayawardhena,Bidit Lal Dey

doi:10.1080/0267257x.2019.1585928

Abstract

ABSTRACTIn this paper, we examine the influence of employee orientation (EO) on converting constituent dimensions of market orientation (MO) into customer-based performance (CBP) and consider the robustness of these relationships in the context of firm age and size. Based on a sample of 410 mid-to-senior-level managers working in UK service industries, we find that all three dimensions of MO positively influence CBP. While highlighting the utility of employing a multidimensional approach to evaluate the customer-based outcome of MO implementation we highlight the nuanced role of EO in strengthening the MO–performance relationship and emphasise the crucial role employees play in implementing different strategic orientations in a perceivable way to customers.

Highlights

A firm’s market orientation (MO) is said to influence its overall performance (e.g. Barney, 1991; Darley & Marion, 2017; Hult, Ketchen, & Slater, 2005; Narver & Slater, 1990)
Based on the foundations of resourcebased view (RBV) of the firm, we advance the current understanding of how MO and employee orientation (EO) translate into superior customer-based performance (CBP) and made a number of important theoretical contributions and managerial implications
5.1 Main Findings First, we focus on the impact of MO on customer-based performance by highlighting the positive relationships between dimensions of MO and CBP (H1a, b, c). |Our findings are in line with previous studies and reiterates the significance of CBP as a critical benchmark in evaluating service firms’ efforts to satisfy customers (Guenzi, Sajtos & Troilo, 2016; Katsikeas, Morgan, Lenidou, & Hult, 2016)

Summary

Introduction

A firm’s market orientation (MO) is said to influence its overall performance (e.g. Barney, 1991; Darley & Marion, 2017; Hult, Ketchen, & Slater, 2005; Narver & Slater, 1990). Customer value affects a firm's MO and, competitive advantage and organisational performance (market and financial) in the service industry. Research suggests that younger firms may be characterised by an entrepreneurial orientation while lacking established routines and processes that are instrumental in strategic decision making, while older firms are characterised by established processes, routines and organisational norms and are adept at market and brand orientation (Anderson & Eshima, 2013; Laukkanen et al, 2016) As firms age, they develop a more profound understanding of their business and environment, which allows them to generate more effective strategies and better manage their operations (Hirvonen et al, 2013; Laukkanen et al, 2016).

Employee Orientation

Hypotheses testing

Discussion and conclusions