The Sustainability of Market Orientation from a Dynamic Perspective: The Mediation of Dynamic Capability and the Moderation of Error Management Climate

Abstract

In a dynamic, highly competitive environment, corporate strategies need to be re-studied. Market orientation reflects a firm’s emphasis on creating customer value and is an important factor for firms to build competitive advantages, it is crucial to understand the mechanism of market orientation on firm performance in a dynamic environment. In contrast to previous studies, this study aims to explain the impact of different types of market orientation on firm performance, and has two major contributions. First, it demonstrates the relationship between responsive, proactive market orientation and performance from a dynamic perspective, as well as the influencing mechanism. Second, the boundary conditions of market orientation are defined from the perspective of organizational culture. Findings of this empirical study of 336 firms show that: (1) both responsive and proactive market orientation have a significant positive correlation with financial performance and growth performance; (2) dynamic capability mediates the influence of responsive market orientation on financial performance, but shows a “suppressing effect” on the influence of responsive market orientation on growth performance, and in the relationship between proactive market orientation, financial performance, and growth performance, the mediating effect both are significant; (3) error management climate positively moderates the influence of proactive market orientation on financial performance and growth performance.