Market orientation and business performance: The role of positional advantage

by Vytlacil, Linda L., Ph.D., CAPELLA UNIVERSITY, 2011, 133 pages; 3439658


Understanding business performance is the cornerstone of research in strategic management, and explaining how strategy influences performance is the fundamental object of inquiry for the discipline. Yet little in the strategic management literature recognizes the influence of marketing on business performance. Connecting marketing management and strategic management literatures is not trivial and involves more than just a translation of language, but rather a true bridging of the relevant literature in a cross-discipline spirit. While perhaps reasonable to implore strategic management researchers to adopt marketing concepts, this cross-discipline spirit can be advanced by the adoption of strategic management empirics into marketing’s models. Marketing researchers have commenced building this bridge by investigating the relationship between business strategy and market orientation in the overall context of business performance, and this study contributes to that body of knowledge by investigating simultaneously the relationship among the key constructs of market orientation (customer orientation, competitor orientation, and interfunctional coordination), positional advantage (differentiation advantage and cost advantage), and business performance (market performance and financial performance). Using a single-informant approach, 144 executives from among U.S. manufacturers responded to an email invitation to participate in a web-based survey, and models tested from the collected data were covariance structure models with multiple indicators for all latent constructs. Results reveal that customer orientation has a positive effect on differentiation advantage, while interfunctional coordination has a positive effect on low cost advantage. One interesting finding is that competitor orientation has no effect on either component of positional advantage. The findings also show that both differentiation advantage and cost advantage have a positive effect on market performance. We also find that market performance is a distinct construct from financial performance in the operationalization of business performance, and the results indicate an indirect path from positional advantage to financial performance through market performance. Finally, results indicate that the market characteristics of market turbulence and technological turbulence have no moderating effect between the market orientation components and positional advantage, nor do they indicate that the choice of an analyzer or prospector strategy type moderates the relationship between the market orientation components and positional advantage.

AdviserJean Gordon
Source TypeDissertation
SubjectsMarketing; Management
Publication Number3439658

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