The measurement of a market orientation and its impact on business performance

Abstract

“Market orientation” is conceptualized as consisting of two components (“customer and competitor orientations”), each involving a four-stage process (acquisition of information, organization-wide sharing of information, a shared interpretation of market information, and utilization of market information), and reliable and valid measurement scales are developed. The impact of customer and competitor orientation on business performance is investigated based on multiple-informant data from two US industries. The results suggest that while customer and competitor orientation each have a positive and significant impact on overall market orientation, only customer orientation has a positive and significant effect on business performance. From a managerial perspective, the measurement scales can be used to assess a firm's level of market orientation and identify “bottlenecks” in intraorganizational information flows.