18 Jun Market orientation is an integral part of any busi
Market orientation is an integral part of any business that seeks to gain competitive advantage over other enterprises in similar market niche. Today, extraordinary competition levels exist in the modern business environment hence requiring each entity to keep up the pace. Organizations that posses sound market orientated culture have been found to perform better in terms of understanding their competitors as well as customers ( Lings & Greenly, 2009). ‘‘Proper market orientation culture result in better customer relationship which can enhance performance outcomes as sales, growth, market share and profits’’ (Grainer & Padanyi, 2005). Having spent several years as an executive engaged in business development throughout Southeast Asia and also assisting postgraduate marketing students develop business plans for International Moot Corp competitions provides an opportunity of first hand information in the research topic. Both roles involved interacting with entrepreneurs, executives, and consultants from a broad range of backgrounds and interests. It was evident that some individuals placed a greater emphasis on the importance of marketing than others, fully embracing the marketing concept whilst others were skeptical. This observation sparked an interest in investigating links between marketing and financial performance. It became apparent that firstly, academic research of this nature was limited and secondly, international research in this area was somewhat restricted in terms of performance measures used. Coming from a finance background there is the possibility of developing and applying alternative performance measurement criteria to investigate the link between marketing and business performance.
The research entails the development of a financial model that could be applied on surveyed companies, in much the same way that banks use a credit model to evaluate loan applicants, in order to compare failing companies to surviving companies in terms of the importance of marketing in their performance (Hair et al., 2008). Such an approach represented a departure from previous market orientation research. Thus, it was necessary to initially replicate and corroborate previous studies by measuring performance in the same fashion in order to provide a platform upon which this research could be built. Whilst the above reflects the origin of this dissertation, emphasis on other aspects of the market orientation and performance relationship increased as further gaps in the literature were identified and as new relevant research such as Grewal and Tansuhaj (2001) was published.
Importance of this Research
The Marketing Science Institute found in a recent survey of its member firms that pressure on executives to demonstrate effectiveness of marketing activities has never been greater. As a result, linking marketing to financial performance and to firm value has been declared the highest priority topic for academic study for 2002-2004(Marketing Science Institute 2002). Thus, research of the type pursued in this dissertation is justified on the basis of its value to managers. Several scholars (Jaworski and Kohli 1993) have called for future studies to explore complexities of the relationship between market orientation and alternative dimensions of business performance. Jaworski and Kohli (1993) for example, suggest that performance on one dimension may run counter to performance on other dimensions. Dawes (2000) believes that further research will enable researchers to better understand drivers of company performance and help managers set priorities in terms of strategic focus.
This study firstly replicates previous research by surveying executives in terms of the market orientation and performance of their firm. In the next phase incorporation of alternative performance dimensions into the study as called for by previous researchers is done. Objective measures of performance are obtained from financial statements for each firm that responded to the survey. In the final phase of the study measurement of business performance in the strongest terms: failure versus survival is sought. Business failure has a dramatic effect on employees, shareholders, creditors, suppliers, and customers. Obtaining a sufficient sample of former executives from failed companies who were willing to be interviewed was considered to be an impossible task. The eventual design was born from the desire to investigate differences in market orientation of successful versus failed companies. The spirit of the original research problem is retained by shifting focus to companies predicted to survive versus those predicted to fail. Thus, this study attempts to bridge the business failure prediction research with that of market orientation to probe how important the marketing concept is to firm survival.
The Research Context
This study examines the market orientation concept as it relates to the automotive parts industry. In recent years, the automotive parts industry has gone through what many observers feel are major changes in a political, legal, and economic sense. The Asian economic crisis, takeovers by Japanese firms, and global consolidation of the automobile industry due to over-capacity are issues with which the automotive parts industry has had to contend. In this environment, the performance objective for some automotive parts manufacturers is profit or growth whilst for others it is simply survival. The importance of market orientation to business performance has been documented in the strategic management and marketing literatures and ascertaining its applicability to the automotive parts industry should provide important pointers to manufacturers as they strive to improve business performance.
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