The impact of internal and external market orientations on firm performance

Abstract

The role of internal marketing in developing organisational competencies is identified as a key area for continued research (Rafiq & Ahmed, 2003). One competence of particular interest to marketers is market orientation. This paper examines the impact of internal marketing, operationalised as a set of internal market‐oriented behaviours (IMO), on market orientation (MO) and consequently organisational performance. It provides the first quantitative evidence to support the long held assumption that internal marketing has an impact on marketing success. Data from UK retail managers were analysed using structural equation modelling employing LISREL software. These data indicate significant relationships between internal market orientation, employee motivation and external marketing success (market orientation, financial performance and customer satisfaction). Our results also support previous findings indicating a positive impact of external market orientation on customer satisfaction and financial performance. For marketing practitioners, the role of internal market orientation in developing marketing strategies is discussed.