Improving market orientation: the theory of constraints-based framework

Abstract

The existing literature affirms an improved payoff in business performance when a business unit displays a high degree of market orientation (MO). However, the literature is still scarce in providing market managers a systematic and effective mechanism for implementing and improving market orientation. In this paper, we propose a framework based on the theory of constraints (TOC) as a mechanism to achieve an optimal degree of market orientation and thereby accomplish the ultimate goal of maximising business (financial, employees and customers-related) outcomes. We discuss how three dimensions – methodology, measures and mindset – of the framework relate to market orientation using a well-known TOC case study. Finally, we conclude our paper with research directions for further strengthening the relationship between MO and TOC and making market orientation truly a firm-wide endeavour as intended and acknowledged in the marketing literature. This paper demonstrates that TOC (1) methodology ensures that management efforts are exerted to optimise the business unit's constraint which is limiting its ability to increase sales and improve financial performance; (2) measures guide and reward management initiatives across the functional areas; and (3) mindset ensures that management decisions result in increased business performance without jeopardising employees, customer and competitor orientations.