JOURNAL OF STRATEGIC MARKETING 3 41-60 (1995)

Narver and Slater, Kohli and Jaworski and the market orientation construct: integration and internationalization
JOHN W. CADOGAN*' AND ADAMANTIOS DIAMANTOPOULOS* European Business Management School, University of Wales Swansea, Singleton Park, Swansea SA2 8PP, UK

Recent developments in marketing theory have resulted in tvpo conceptualizations of the market orientation construct and preliminary evidence provides support for the often assumed relationship between market orientation and company performance. However, there is hardly any research regarding the potential consequences of market orientation for internationally active organizations. Current measures of the construct are biased towards domestic operations and do not explicitly consider factors specific to an international context. The present study proposes a framework integrating the two dominant conceptualizations of market orientation and introduces an international dimension to its study. The framework enables the specification of an expanded market orientation construct which, it is hoped, will be both valid and of practical use to organizations operating at an international level. KEYWORDS: market orientation, reconceptualization, internationalization

INTRODUCTION
An area of investigation currently receiving increased academic and practitioner attention is 'market orientation' (Shapiro, 1988; Deshpand and Webster, 1989; Kohli and Jaworski, 1990; Narver and Slater, 1990; Mohr-Jackson, 1991; Jaworski and Kohli, 1993; Kohli el at., 1993; Seines and Wesenberg, 1993; Wood and Bhuian, 1993; Dreher, 1994; Sderlund, 1994). In this context, a growing hody of empirical research indicates that positive linkages exist between measures of market orientation and performance (Narver and Slater, 1990; Ruekert, 1992; Deshpand et al., 1993; Jaworski and Kohli, 1993; Narver et al, 1993; Avlonitis et al, 1994; Oosthuizen, 1994; Slater and Narver, 1994). While marketing scholars have yet to come to a common understanding of the term "market orientation' (Dreher, 1994), several authors have placed information and its use at the heart of the construct. Shapiro (1988, p. 120) states that a company can be market oriented only if'[ijnformation on all important buying influences permeates every corporate function'. Similarly, Seines and

*Doctoral candidate and research assistant in International Marketing. ^Chair of International Marketing. 'To whom correspondence should be addressed. 0965-254X C 5 1995 Chapman & Hall

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CADOGAN AND DIAMANTOPOULOS

Wesenberg (1993, p. 23) define market orientation as 'response to market information' while Kohli andjaworski (1990, p. 6) state that '[mjarket orientation is the organizationwide ^fieraf/oi of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organizationwide responsiueness to it.' Narver and Slater (1990, p. 21) complement Kohli andjaworski (1990), by suggesting that market orientation consists of three behavioural components, namely customer and competitor orientations and interfunctional coordination; these 'comprehend the activities of market information acquisition and dissemination and the coordinated creation of customer value'. Looking at the market orientation construct in the context of international business ventures, it has been noted that '[p]erhaps the single most pervading finding of research into export performance is the fact that many companies simply fail to carry forward any marketing orientation they may have developed in their domestic market to overseas markets .., Management have been slow to adopt a market orientation in overseas operations, they have been slow to research their markets and to adapt their offerings to them' (Hooley and Newcomb, 1983, pp. 17 and 20). This myopic approach towards international marketing decisions (Hooley and Newcomb, 1983; Mayo, 1991), has resulted in numerous blunders and business failures (see, e.g. Kotier, 1991; Mayo, 1991; Taylor, 1992) at a time when organizational survival is becoming more dependent upon the firm's ability to develop and operate within international markets (Webster and Deshpand, 1990). Despite the growing interest in market orientation and recent advances made in its measurement, no systematic research to date has examined the role and impact of the construct in an international context (Dalgic, 1994). In this paper we attempt to reconcile the two dominant conceptualizations of the market orientation construct provided by Kohli andjaworski (1990) and Narver and Slater (1990) in order to create a more comprehensive, and hopefully more useful, specification of the construct domain; in this context, Kohli et ai, (1993) themselves suggest that such an integration would be beneficial for the purposes of future empirical research. In addition, we explore the possibility of applying the construct within an international context and investigate the operational modifications likely to be required. Finally, we conclude with some implications for future research.

THE NATURE OF THE MARKET ORIENTATION CONSTRUCT

Market orientation has been approached in the literature from two perspectives: 'market orientation as philosophy' and 'market orientation as behaviour'. The philosophical perspective can be differentiated from the behaviourist approach in that '[ojrientation as a philosophy ... can best be described as [being] ... embedded in the cognitive sphere and influenced by personal factors, leading to a certain view of reality and fonnmg organizational characteristics such as goals, strategies, structures, systems and activities ... From the behavioristic viewpoint, behavior and activities represent the orientation phenomenon itself or its elements ... whereas they had also been treated as consequences of orientation in the philosophical approaches' (Dreher, 1994, pp. 155 and 1578). Both Narver and Slater (1990) and Kohli and Jaworski's (1990) operationalizations fall into the latter category without, however, adopting an extreme perspective such as that of methodological behaviourism (see, e.g. Skinner, 1974). This is evident from their measuring instruments which utilise self-reporting techniques and rely upon perceptions and/or opinions concerning organizational activities.

THE MARKET ORIENTATION CONSTRUCT

43

Narver and Slater's conceptualization

In a now classic study, Narver and Slater (1990) provided the first operational measure of market orientation and analysed its effect on business profitability. Their definition of market orientation encapsulates both philosophical and behavioural aspects of the concept, the latter being defined as 'the organizational culture that most effectively and efficiently creates the necessary behaviours for the creation of superior value for buyers' (Narver and Slater, 1990, p. 21). However, their i}pemtioiializatioti of market orientation is purely behavioural, reflecting the degree to which a strategic business unit (SBU) engages in practices associated with the three behavioural components of customer oiietUatioii, competitor orientation and intetfiinctional coordination. According to

Narver and Slater (1990, p. 21), '[cjustomer orientation and competitor orientation include all the activities involved in acquiring infonuatioii about the buyers and competitors in the target market and disseminating it throughout the business(es). The third hypothesized behavioral component, interfunctional coordination, is based on the customer and competitor information and comprises the businesses coordinated ejforts ... to create superior value for the buyers' (italics added). They go on to say that 'customer orientation is the sufficient understanding of ... buyers to be able to create superior value for them continuously' and that competitor orientation involves understanding the 'strengths and weaknesses ... of both the key current and the key potential competitors' (Narver and Slater, 1990, pp. 21 and 22). The three behavioural components are measured on multi-item scales and are assumed to be of equal importance and the overall market orientation score for an SBU is computed by averaging the three scales' scores, obtained from the responses of its top management teams (Narver and Slater, 1990).

Kohli and Jaworski's conceptualization

Kohli andjaworski (1990) andjaworski and Kohli (1993) offer a second approach to market orientation. They consider a market-oriented organization as 'one whose actions are consistent with the marketing concept' (Kohli andjaworski, 1990, p. 1) and formally define market orientation as consisting of three organization wide activities: market intelligence generation, the dissemination of this intelligence across departments in the firm, and responsiveness to intelligence. Market intelligence generation includes the consideration of the current and future needs of customers, and exogenous market factors, such as competition, regulation, technology and other environmental forces; the generation of information is considered to be the responsibility of <i/) departments throughout the organization. This intelligence must be effectively disseminated to the relevant departments and individuals within the organization in order that the appropriate responses can be initiated. Responsiveness to market intelligence is conceptualized to be 2-fold, consisting of response design (developing plans in response to market intelligence) and response implementation (the implementation of these plans), with virtually all departments participating in responding to market trends. Their operationalization of the construct resulted in a 32-item measuring instrument, whereby the score for market orientation was calculated by equally weighting and summing the item scores of the three components of intelligence generation, dissemination and responsiveness.

In a recent article, Kohli et al. (1993) further analysed the market orientation scale developed byjaworski and Kohli (1993) and eliminated 12 items from it; however, they did not preclude the potential usefulness of the eliminated items in different settings, suggesting that 'revisions to the deleted measures to reflect specific stakeholders ... or within-stakeholder variation' may be

44

CADOGAN AND DIAMANTOPOULOS

useful (Kohh et ai, 1993, p. 473). This may be of particular significance when attempting to measure market orientation within an international context, as discussed in a later section.

A COMPARATIVE ANALYSIS
We now compare Narver and Slater's (1990) components of market orientation with those provided by Kohli and Jaworski (1990) and analyse the extent to which an overlap exists on a conceptual and/or operational basis; Fig. 1 provides a route map for the subsequent discussion.

Intelligence generation versus Narver and Slater

Intelligence generation reflects the activities involved with obtaining information about 'customers' needs and preferences ... [and] how they may be affected by exogenous factors such as government regulation, technology, competitors, and other environmental forces ... [T]he generation of market intelligence is not and probably cannot be the exclusive responsibility of a marketing department ... Rather, market intelligence is generated collectively by individuals and departments throughout an organization' (Kohli and Jaworski, 1990, pp. 45). All three behavioural components suggested by Narver and Slater (1990) overlap with intelligence generation in several respects. Customer orientation Customer orientation involves 'acquiring information' about the firm's target buyers and an understanding of'the economic and poHtical constraints at all levels in the channel' (Narver and Slater 1990, p. 21); this indicates a clear conceptual overlap with intelligence generation.
KohJi & Jaworski (KJ)
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FIGURE I. Narver and Slater and Kohli and Jaworski conceptual and operational overlaps in the market orientation construct.

THE MARKET ORIENTATION CONSTRUCT

45

At an operational level, the generation of information concerning target buyers is seen in both measuring instruments. For example, when measuring customer orientation Narver and Slater (1990, p. 24) ask respondents to indicate the extent to which their business unit 'measure[s] customer satisfaction', while Jaworski and Kohli's (1993, p. 66) measure of intelligence generation asks respondents to indicate their agreement with the statement '[w]e poll end users at least once a year to assess the quality of our products and services'. An area of conceptual overlap which is not operationalized in Narver and Slater's (1990) customer orientation measure pertains to information gathered concerning exogenous market influences. While Jaworski and Kohli (1993, p. 66) ask respondents whether they 'periodically review the likely efFect of changes in [their] business environment (e.g., regulation) on customers', Narver and Slater (1990) do not capture this aspect in their measuring instrument. Competitor orientation Competitor orientation is conceptualized as being 'all the activities involved in acquiring information about the ... competitors in the target market' (Narver and Slater, 1990, p. 21) and must include an analysis of 'the entire set of technologies capable of satisfying the current and expected needs of the seller's target buyers' (Narver and Slater, 1990, p. 22). Again the conceptual overlap with intelligence generation is evident. However, Narver and Slater's (1990) measure of the competitor orientation component does not appear to operationalize the generation of competitor information. While they ask respondents whether salespeople in their business unit 'share competitor information' (and it could be argued that responses to this item reflect competitor intelligence generation), no specific item capturing the acquisition of competitor information is included in their measure. A further area of the competitor orientation-intelligence generation overlap which is not operationalized by Narver and Slater (1990) concerns information regarding exogenous market influences (e.g. developments in technology). For example, while Jaworski and Kohli (1993, p. 66) ask respondents the extent to which they agree with the statement; '[w]e are slow to detect fundamental shifts in our industry (e.g., competition, technology, regulation)', Narver and Slater (1990) do not include an item of this type. Intcrftinctional coordination Interfunctional coordination is defined as 'the coordinated utillization of company resources in creating superior value for target buyers ... any individual in any function in a seller firm can potentially contribute to the creation of value for buyers' (Narver and Slater, 1990, p. 22). Consideration of the formal definition raises the following question: what are the limits of the specified construct? That is, what are activities which contribute to the creation of value and do they include generating customer and competitor intelligence? Natver and Slater (1990, p. 22) state that interfunctional coordination requires that a seller 'integrate effectively ... its entire human and other capital resources in its continuous effort to create superior value for buyers'. Given that the generators of information are company resources, it could be argued that an element reflecting the effective utilization of the latter would be the functionally integrated or organization-wide, generation of information. In this case, interfunctional coordination shares a similar conceptual specification to Kohli andjaworski's (1990) coUective responsibility for the generation of market intelligence. A more comprehensive version of Narver and Slater's (1990) measuring instrument can be found in Narver et al (1993), although one interfunctional coordination item, 'sharing resources and ideas with other business units in the corporation', is omitted.

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CADOGAN AND DIAMANTOPOULOS

On an operational level, the generation of intelligence is also evident in Narver and Slater's measuring instrument which asks respondents to indicate the extent to which 'top managers from every function regularly visit ... current and prospective customers' (Narver et ai, 1993, p. 18). Jaworski and Kohli (1993, p. 65) provide a similar operationahzation through the statement '[ijndividuals from our manufacturing department interact directly with customers to learn how to serve them better'.

Intelligence dissemination versus Narver and Slater

The intelligence dissemination component of a market orientation pertains to the effective diffusion of the intelligence generated throughout the business. Specifically, 'for an organization to adapt to market needs, market intelligence must be communicated, disseminated and perhaps even sold to relevant departments and individuals in the organization ... however, market intelligence need not always be disseminated by the marketing department to other departments. Intelligence may flow in the opposite direction, depending on where it is generated' (Kohli and Jaworski, 1990, p. 5). Once more, this implies organization-wide collaboration and includes both formal dissemination procedures {such as periodic newsletters, the circulation of reports, management lunches and forums) and informal procedures (such as 'hall talk'). All three of Narver and Slater's (1990) behavioural components exhibit some degree of overlap with tbe intelligence dissemination element. Customer orientation Customer orientation includes not only the activities of obtaining information about the firm's buyers, but also consists of all the activities involved in 'disseminating it throughout the business(es)' (Narver and Slater, 1990, p. 21). A clear conceptual overlap with intelligence dissemination is thus apparent, although no distinction is made between formal and informal dissemination procedures. On an operational level, however, while Jaworski and Kohli (1993, p. 66) include items which tap the dissemination of customer information (e.g. '[d]ata on customer satisfaction are disseminated at all levels within this business unit on a regular basis'), the same cannot be said for Narver and Slater's (1990) measure of customer orientation. The only item which could conceivably pertain to customer information dissemination asks respondents to indicate the extent to which their 'strategy for competitive advantage is based on [their] understanding of customer needs' (Narver et ai, 1993, p. 18); since such an understanding may be the result of disseminating information concerning customer needs, this may indirectly capture information dissemination. Competitor orientation

A conceptual overlap also exists between intelligence dissemination and competitor orientation, as one element of tbe latter involves acquiring information about competitors and 'disseminating it throughout the business(es)' (Narver and Slater, 1990, p. 21). Attempts to evaluate the dissemination of competitor information are provided in both measuring instruments. For instance, Narver and Slater (1990, p. 24) ask respondents to indicate the extent to which '[t]op managers discuss competitors' strategies', while Jaworski and Kohli (1993, p. 66) ask respondents to indicate their agreement with the statement '[wjben one department finds out something important about competitors, it is slow to alert other departments'.

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47

Interjunctional coordination Interfunctional coordination emphasises that human and other capital resources must be effectively integrated in order to create superior value for buyers; given that market mtelligence, once gathered, is a company resource (Johanson and Vahlne, 1977), it can be implied that in order for market intelligence to be used it should be disseminated to the relevant departments within the business. Thus, although information dissemination is not an explicit element of interfunctional coordination, it is nevertheless implied, and therefore overlaps with Kohli and Jaworski's (1990)
intelligence dissemination construct.

Further, Narver and Slater's (1990) measuring instrument shows operational overlap between interfunctional coordination and the dissemination of information. Specifically, respondents are asked to indicate the extent to which they 'freely communicate information about [their] successful and unsuccessful customer experiences across all business functions' (Narver et al., 1993, p. 18), while Jaworski and Kohh's (1993) measure ointelligence dissemination contains items concerning whether 'customers' future needs' and information concerning 'competitors' are discussed at an interfunctional level. Finally, Kohli and Jaworski's (1990) intelligence dissemination component encompasses the nature of the dissemination procedure (i.e. formal and informal) and this distinction is also apparent in their measuring instrument. However, the latter is not an explicit element of Narver and Slater's (1990) conceptualization and, thus, no attempts are made to capture this distinction in their measures.

Responsiveness versus Narver and Slater

Kohli andjaworski {1990, p. 6) define responsiveness as 'action taken in response to intelligence that is generated and disseminated'. Such actions take the form of developing plans (response design) and implementing these plans (response implementation) and are the collective responsibility of virtually all departments in an organization. Customer orientation Customer orientation is not conceptually linked to responsiveness as Narver and Slater's (1990) definition does not include actions taken in response to market information. Rather, a customer orientation represents the generation and dissemination of customer intelligence in order to obtain 'sufficient understanding' of the target buyers; thus, this component is oriented towards improving the organization's ability or potential to create superior value for the buyer. However, when operationalizing customer orientation, elements of customer value-enhancing activity are included. For instance, respondents are asked to indicate the extent to which their 'business strategies are driven by [their] beliefs about how [they] can create greater value for customers' (Narver et ai, 1993, p. 24). Kohli andjaworski (1990, p. 66) include a similar item in their measure of response design: '[we] periodically review our product development efforts to ensure that they are in line with what customers want'. Competitor orientation Similar to customer orientation, the definition o competitor orientation has no conceptual link with responsiveness. Once more, Narver and Slater (1990) clearly specify that this component is oriented towards improving the firm's ability to create superior customer value, it does not include value-enhancing activities in its definition.

48

CADOGAN AND DIAMANTOPOULOS

However, the operationalization o competitor orientation includes an item that asks respondents whether they agree with the statement '[we] rapidly respond to competitive actions that threaten us' (Narver et ai, 1993, p. 18); this is similar to Kohli and Jaworski's (1990, p. 66) response implementation measure, which asks of respondents '[w]e are quick to respond to significant changes in our competitors' pricing structures'. Interfunctional coordination Interfunctional coordination is explicitly defined by Narver and Slater (1990) as involving coordinated e^orts to create superior customer value and, thus, has a clear conceptual overlap with Kohli and Jaworski's (1990) responsiveness. This overlap is also evident in the respective measuring instruments. For example, Narver and Slater (1990, p. 24) ask respondents to indicate the extent to which their business engages in the '[f]unctional integration in strategy', while Jaworski and Kohli (1993, p. 66) ask respondents to indicate the extent of their agreement with the statement '[sjeveral departments get together periodically to plan a response to changes taking place in our business environment'. As already mentioned, a feature of Kohli andjaworski's (1990) responsiveness element is the design/ implementation distinction. However, Narver and Slater (1990) do not explicitly draw such a distinction in their conceptual delineation o interfunctional coordination and none is apparent in their measures. One final point pertains to Narver and Slater's (1990, p. 22) description o interfunctional coordination in which they suggest that it requires 'the creation of interfunctional dependency so that each area perceives its own advantage in cooperating closely with the others'. In this context, behaviours which may form an integral part o interfunctional coordination (e.g. activities associated with increasing the level of interdepartmental dependency and reducing interdepartmental conflict) are excluded from Kohli andjaworski's (1990) conceptualization; the latter view interdepartmental dynamics as being antecedents to a market orientation rather than integral elements of the construct.

MARKET ORIENTATION RECONCEPTUALIZED

The preceding discussion shows that Narver and Slater's (1990) conceptualization of market orientation shares a similar nomological network as that provided by Kohli and Jaworski (1990), with customer orientation, competitor orientation and interfunctional coordination tapping a simila domain as intelligence generation, dissemination and responsiveness. However, the two views of market orientation also appear to capture unique elements of the construct's domain. Thus, Kohli andjaworski's (1990) intelligence dissemination and responsiveness elements, respectively, incorporate the distinction between formal/informal dissemination procedures, and design/implementation response types. On the other hand, Narver and Slater's (1990) interfunctional coordination component focuses upon activities directed at increasing interdepartmental cooperation in addition to the generation, dissemination and response to market intelligence. On an operational level, the degree of overlap is also high, although some qualifications are in order. Thus, Narver and Slater's (1990) operationalization o customer orientation is somewhat ambiguous regarding the measurement of customer information dissemination, the generation of competitor information is not explicitly included in the measure of competitor orientation and measures for the generation of information concerning exogenous market influences are not provided. Another issue pertains to the terminology used in the measuring instruments. All of Jaworski and Kohli's (1993) items capture specific activities related to their respective intelligence generation, dissentination and responsiveness components. However, in Narver and Slater's (1990)

THE MARKET ORIENTATION CONSTRUCT

49

measuring instrument, a number of items are included which have uncertam meanings. For example, when measuring customer orientation, respondents are asked to indicate whether the business unit 'constantly measures [its] level of commitment ... to serving customers' needs' (Narver et a., 1993, p. 18). However, commitment can be defined in several ways. The behavioural approach focuses on commitment-related behaviours, thus a customer-committed organization will link itself to customers through the exertion of effort on their behalf (c.f Becker, 1960; Steers, 1977; Chonko, 1986). An alternative approach views commitment as an attitude (Kanter, 1968; Wiener, 1982), indicating a predisposition concerning customer-related behaviours (c.f Chonko, 1986). Thus, Narver and Slater's (1990) item concerning customer commitment may be interpreted in several ways (actual behaviours, attitudes or both). We now attempt a reconceptualization of the market orientation construct by synthesizmg the two views discussed above. In doing so, we aim to provide a more solid platform from which to analyse the impact of a market orientation on business performance and improve the diagnostic capabilities of the measuring instrument. Under this modified perspective (Fig. 2), customer orientation and competitor orientation reflect the specific/ofwi of the behaviours associated with the generation, dissemination and responsiveness to market intelligence. In turn, the manner in which the latter are actually performed is reflected in the coordinating mechanism component which steers the entire process. In the conceptualizations of both Narver and Slater (1990) and Kohli andjaworski (1990), there are a number oi^ generic activities associated with a market orientation. These take the form of the generation, dissemination and response to market intelligence and are oriented towards customers and competitors. In addition, there is a common thread evident in both conceptualizations which acts as a coordinating mechanism to ensure that these generic activities are carried out effectively and efficiently. Drawing from Narver and Slater's (1990) perspective, the coordinating mechanism includes an interfunctionai coordination element, achieved through the creation of interfunctional dependency. By integrating this element with Kohli and Jaworski's (1990) 'organization-wide responsibility' for market-oriented activities, we add a further dimension into the mechanism, specifically, in addition to interfunctional activities, the dynamics of the interactions between members within

Intelligence Generation

Coordinating Mechanism

InteDipence Dissemination

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FIGURE 2.

Market orientation reconceptualized.

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CADOGAN AND DIAMANTOPOULOS

individual functions will also affect the organization's ability to create superior value for target buyers. Dysfunctional behaviour and conflict can occur within functional groups as well between departments (see, e.g. Lamhert et al., 1986; Jaworski and Maclnnis, 1989; Kohli, 1989; Tjosvold, 1990) and m order to achieve intrafunctional coordination, the organization must create interpersonal dependency so that individuals perceive their own advantage in cooperating closely with others (Hemphill and Westie, 1950). Thus, effective mteWigcnce generation, dissemination and responsii'eness requires both inter- and intrafunctional coordination and organizations which have an effective coordinating mechanism may be expected to show a blurring of internal functional boundaries (Slater and Narver, 1992).

MARKET ORIENTATION AND THE INTERNATIONAL DIMENSION

In the previous section, the domain of market orientation was redefined to encapsulate generic activities, the focus of these activities and their coordinating mechanism. The basic nature of the construct should not be affected as a result of merely modifying the setting in which it is applied; therefore, 'internationalizing' market orientation will not negate the need for measures
oi^ intelligence generation, intelligence dissemination, responsiveness and the coordinating mechanism (c.f.

Dalgic, 1994). However, since firms operating at an international level are exposed to a

FIGURE 3.

Market orientation in an international setting.

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51

number of environment forces which may differ from those in domestic markets, the items required for construct measurement in these two settings may change. Legal, political, economic, competitive, technological, and socio-cultural forces, as well as distribution structures and geographical differences, all affect the firm in unfamiliar ways (Czinkota and Ronkainen, 1988; Albaum et ai, 1989; Miller, 1993; Terpstra and Sarathy, 1994) and, thus, mfluence its ability to implement the marketing concept. Given that foreign market environments can be very complex (Walters, 1983; Dahringer and Mhlbacher, 1991) information requirements may increase rapidly for organizations operating at an international level, introducing problems not necessarily apparent in domestic setting (Darling and Postnikotf, 1985). Such information requirements may have a major impact on any measure of market orientation intended for use in an international context (e.g. an organization may be market oriented but may also be constrained in its ability to generate sufficient market intelligence). In short, while the conceptual components of a market orientation will remain the same, the emphasis placed upon the operationalization of particular elements of these components in an international setting may have to change. Moreover, merely modifying existing measures by 'internationalizing' their terminology is unlikely to be sufficient. Additional items will most probably be required to reflect operations which are quahtatively very different from those occurring in domestic markets; likewise, it is possible that items which are pertinent within a domestic setting may be of little use in an international context. We now explore these issues in more depth, using the framework of Fig. 3 to structure the discussion.

Intelligence generation and the international dimension

While, conceptually, customer- and competitor-intelligence generation is the same for both domestic and international operations (i.e. obtaining an understanding of target buyers, competitors and the entire value chain), a number of factors may inhibit a firm's ability to generate appropriate market intelligence at an international level; these include foreign market experience, information availability and quality and the extent of reliance on third parties. Foreign market experience In addition to resource limitations which impose obvious restrictions on an organization's information generating capabilities (Babson, 1983; Douglas and Craig, 1983), the vm^ familiarity with available information sources is hkely to be a critical factor (Johanson and Vahlne, 1977; Reid, 1984). As organizations become more experienced within their foreign markets, their knowledge of these markets and familiarity with information sources increase; indeed, as companies progress through the various stages of internationalization, more varied and satisfactory sources of information are found and used (Cavusgil, 1984b). Thus, intelligence generating activities may be dependent upon the firm's knowledge of information sources which, in turn, is influenced by the company's stage in the internationalization process (Cavusgil, 1984b; Diamantopoulos et ai, 1993). Therefore, items which reflect foreign market experience as well as the type of information acquired such as 'experiential' versus 'objective' knowledge (Johanson and Vahlne, 1977) may need to be incorporated in a measure of international intelligence generation. Availability and quality of information Secondary data are often less available for many foreign markets (Babson, 1983), especially in lower per capita income countries where statistical sources tend to be weaker (Terpstra and

CADOGAN AND DIAMANTOPOULOS

Sarathy, 1994); similarly, there are numerous problems associated with the collection of primary data (Douglas and Craig, 1983). Access may be restricted in countries with low rates of telephone penetration; mail surveys require a literate sampling frame and a developed postal system; and personal interviews may be impeded due to the geographic nature of some target markets, as well as the reluctance of both foreign consumers and business people to respond to research enquiries (Loudon, 1975; Hegedus, 1986; Czinkota and Ronkainen, 1988; Usunier, 1993; Terpstra and Sarathy, 1994). Thus, a firm's, say, competitor intelligence-generating acitivities may be hmited, not so much because of a lack of market orientation but rather because this type of information is more difficult to obtain than, say, determining political risks or market potential (Jeannet and Hennessey, 1992). In addition, the quality of available information is often poor (Babson, 1983; Douglas and Craig, 1983) or perceived to be of little use (Walters, 1983; Cavusgil, 1985); thus, the 'acquisition of lots of information' may not necessarily be beneficial (McAuley, 1993, p. 618). In this context, the quality of intelligence may be more important than the amount obtained and will need to be accommodated in the measuring instrument. Reliance on third parties In the early stages of internationalization, many firms tend to export via independent representatives or agents (Johanson and Wiedersheim-Paul, 1975) and this is one of the most common approaches to export distribution (Moore, 1989). Thus, exporters may rely on their agents for information concerning competitor activity, consumer preferences and so on (Walters, 1983; Cavusgil, 1985); over-reliance on third parties, who may filter information to suit their own business interests, is an obvious danger (Walters, 1983) and may reduce the firm's ability to generate accurate information (Buckley et ai, 1990). Information dissemination and the international dimension Intelligence, once generated, must be disseminated to the relevant individuals and departments within the organization. However, the communication process may be impeded by information load and purification/distortion as well as organization structure complexities. Information load, purification and distortion Although internationally active organizations may, to some extent, be restricted in their ability to generate accurate and relevant information, the actual quantity and diversity of information available concerning foreign markets is often considerable (Walters, 1983; Cavusgil, 1984a, 1985). Several studies have indicated that information load influences human information processing and that too much information can lead to poor performance (Jacoby, 1984; Malhotra, 1984; Sivaramakrishnan and Perkins, 1992; Bernhardt, 1994). Thus, if the individuals/departments disseminating market intelligence are overloaded, important information may be overlooked or misinterpreted as it makes its way along the cominunication chain. Further, due to the high costs often associated with the collection of primary data in foreign markets, organizations tend to rely upon secondary data which niay not exactly fit the decision makers needs (Douglas and Craig, 1983); activities associated with 'cleaning' the data obtained will play an important role in the dissemination process since data are often out of date, figures may need to be adjusted and the original format of the data may inappropriate (Babson, 1983). In the case of primary data, on the other hand, equivalent measurement is a major problem and, thus, such data may need to be standardized in order to account for response bias and compara-

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bihty problems (Mayer, 1978; Douglas and Craig, 1983; Sood, 1989). While such purification and filtering activities will slow down the dissemination process, they may be unavoidable, so as not to swamp decision makers with a mass of data but little useful information (Walters, 1983). In addition, decision makers may use selective attention and value judgements to screen out elements of the information received, focusing on that which they perceive as being of greatest value (Moorhead and Griffin, 1992); this, however, may lead to lower decision accuracy and increase time usage (Sivaramakrishnan and Perkins, 1992), thus impacting on the quality and speed of response. Lastly, some organizational members may not be sufficiently knowledgeable about the intricate details concerning international operations (Albaum et ai, 1989); clearly, if relevant information is not recognized as being important, it will not be passed along the communication chain. Furthermore, specific stakeholders within the company may view international activities as peripheral to the main business of servicing the domestic market (Cavusgil and Nevin, 1981; Albaum et ai, 1989; Schlegelmilch et ai, 1993), attaching a low value to international market intelligence and either not passing on or filtering information to suit their own interests. Organizational complexity As firms internationalize and the organizational structure becomes more complex (Strandskov, 1986), the effective utilization of company resources will require greater coordination and planning. For instance, companies operating with foreign sales branches may have little opportunity tor lnfomial intelligence dissemination (e.g. 'hall talk') and formal procedures may, therefore, have to be used to a greater extent than in the case of less complex organizations. If such fonnalization creates more elaborate reporting systems, the speed of information dissemination (and, hence, response effectiveness) may be reduced (Stopford, 1972). Therefore, the variety and complexity of dissemination procedures adopted and their degree of use may need to be incorporated in a measure of intelligence dissemination for internationally active organizations.

Responsiveness and the international dimension

The responsiveness of an organization to the intelligence generated and disseminated will influence the firm's ability to create continuous superior value for target buyers. Issues of import for this component in an international setting include the rationale underlying response formulation and human resource policies in subsidiaries and affiliates. Rationale underlying response formulation Many international marketing decisions are highly subjective in nature (Cavusgil and Godiwalla, 1982) and comparatively little importance is attached to international market research (Cavusgil, 1985); indeed, several studies have shown that market research is ignored or underused by many internationally active organizations (Holton, 1971; McFarlane, 1978; Cavusgil, 1984a; Reeder, 1987; Garrett and Hart, 1993). Thus, while a firm may generate and disseminate market intelligence, responses may, nevertheless, not be based upon the information received. Thus, the rationale underlying response formulation (i.e. are decisions based primarily upon market intelligence or upon subjective assessments?) may be an important component of an international operationalization of responsiveness. Companies generating and disseminating relevant information concerning foreign markets will increase the firm's knowledge concerning these markets; consequently, one would expect such firms to adapt their products, prices and promotional programmes to a greater extent than

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firms basing their decisions on intuition/judgement. Thus, the degree of standardization versus adaptation exhibited may provide an indication of responsiveness to market intelligence regarding external influences. The desirability of product, price and promotion adaptation will, of course, depend upon the company's background, product/industry features and the characteristics of the foreign market (Cavusgil et a., 1993). These factors are very similar to those suggested by Kohli andjaworski (1990) as being likely to influence the importance of a market orientation (namely, market and technological turbulence, degree of competition and the strength of the economy). Human resource policies Human resource management has unique implications for response design and implementation in international businesses as many organizations adopt ethnocentric staffing policies by filling key positions in their overseas subsidiad es/affiliate s with parent country transferees. Such policies can create serious problems both in the subsidiaries and at headquarter level, as they reflect 'convictions that [the host country national] subordinates lack qualifications, experience, loyalty, commitment, and competence ... [and are thus] excluded from important information and decisions' (Banai, 1992, pp. 458 and 460). The impact of such staffing policies on an organization's responsiveness may differ across industries and countries since 'some industries need more national responsiveness than others. For example, industries such as nuclear engineering and electric power should be responsive to national political factors, and food and cosmetic industries should be responsive to national tastes' (Banai, 1992, p. 468). Therefore, given that host country nationals are more familiar with the local culture, environment and political conditions, activities associated with response design and implementation may be more efficiently executed by including them in management positions, both within the host country subsidiaries and at the parent country headquarters; this would call for the adoption of a more geocentric staffmg approach (Cateora, 1987; Toyne and Walkers, 1993).

Coordinating mechanism and the international dimension

The coordinating mechanism reflects the degree of mtra- and interfunctional coordination within the firm. The former should be reflected by an absence of personal conflict and dissension among individuals in a particular group/department as well as by the absence of activities serving only to advance the interest of particular individuals; likewise, the latter should be reflected by an absence of conflict and dissension between groups/departments and by the absence of activities serving to advance only the interests of a specific group/department (c.f. Hemphill and Westie, 1950). Issues which differentiate an international operationalization of the coordinating mechanism from a domestic one include the complexity of the organizational structure and associated human resource policies. Organizational cotnplexity Strandskov (1986) highlights a number of commonalities which typify the progressive internationalization of the firm, including greater internal differentiation (such as specialized roles and functions) and the growth in the complexity of the occupations and skills employed. In many companies, staff responsible for international operations will not always be placed in convenient functional areas, such as a built-in export department or an export sales subsidiary (Albaum et al, 1989). For example, in a company with limited overseas sales (relative to the domestic market) or a firm new to exporting, individuals dealing with foreign markets may also be involved with

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domestic operations and, thus, not operate within the boundaries of an 'export unit' (Cavusgil, 1984b). Therefore, straightforward questions concerning, say, the degree of coordination between the export department and other departments in the firm may not capture the actual organizational arrangements. In instances where there is a separate export/international department, it is itself likely to be split into functional units and be fairly autonomous from other departments within the organization (Cavusgil, 1984b; Albauin et al, 1989). If certain stakeholders within the company are not committed to the international activities of the firm (Cavusgil and Nevin, 1981) it is possible that the export/international department may lose out if interdepartmental conflict for scarce resources arises (Albaum et ai, 1989). Given that international operations often depend upon the cooperation of stakeholders primarily oriented towards the domestic market (Stopford, 1972), the coordinating mechanism must not only capture the intrafunctional coordination within the export/international department but also the quality of the relationship between the latter and other stakeholders and groups within the firm. Finally, a feature of the modern day business environment is that many firms are engaging in partnerships, strategic alliances, joint ventures and networks (Webster and Desphand, 1990), creating new organizational forms with boundaries which are hard to identify. In these situations, interorganizational coordination becomes a prerequisite for business success and, thus, should be reflected in a measure of the coordinating mechanism. Human resource policies Assigning large numbers of parent country nationals to key positions in subsidiaries can create 'in groups' (parent country nationals) and 'out-groups' (host country nationals) and a situation where '[t]he ethnocentric beliefs and behaviours that are functional for the cohesion of each of the in-groups are dysfunctional for the co-operation between the in-group and the out-groups' (Banai, 1992, p. 456). This can lead to conflicts as a result of perceived discrimination and feelings of injustice, reducing the effectiveness of both headquarters and subsidiaries. In addition, reward systems may encourage parent country nationals to concentrate upon 'profits and sales rather than with employee morale in the subsidiary' (Banai, 1992, p. 458). The operational significance of these considerations is that the degree of cohesion between specific individuals within particular areas of the organization (e.g. management within subsidiaries and their employees) will need to be incorporated in a measure of the coordinating mechanism.

CONCLUSIONS

This paper offered a reconciliation of the market orientation conceptuahzations of Narver and Slater (1990) and Kohli and Jaworski (1990) and added an international dimension to the construct. A comparative analysis of the two nomological networks showed that they have much in common, leading to a reconceptuahzation of market orientation. The latter was reformulated as comprising o intelligence generation, intelligence dissemination and responsiveness activities, characterized by a customer and competitor orientation and guided by a coordinating mechamsm which ensures that these activities are carried out effectively and efficiently. In internationalizing the construct, several key issues were highlighted and their operational implications considered. Specifically, with regard to intelligence generation activities, specific emphasis was placed on the constraints which limit the firm's ability to perform these activities (namely, foreign market experience, availability/quality of information and the role of third parties). With regard to intelligence dissemination, it was pointed out that a number o( barners may slow down the process (e.g. information overload,

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purification/distortion of data and organizational complexity). Likewise, it was shown that responsiveness may have several additional manifestations in an international setting (e.g. the rationale underlying response formulation and staffing policies). Finally, the coordinating mechanism was shown to require consideration of several factors unique to internationally active organizations (e.g. the existence of separate functions to perform international activities, the blurring of organizational boundaries and coordination problems between host and parent country nationals).

FUTURE RESEARCH DIRECTIONS

On the methodological front, empirical research is necessary to determine whether the rcspccification of market orientation proposed earlier does in fact represent a more valid representation of the construct. In particular, exploratory research should be employed initially to obtain preliminary insights into the respecified construct's domain, and followed by rigorous measurement development procedures (Churchill, 1979; Gerbing and Anderson, 1988; DeVellis, 1991; Spector, 1992) to produce and validate a reliable 'international' market orientation scale. Throughout this process, special attention should be placed on ensuring that the additional complexities associated with international operations are adequately captured. On the substantive front, attention needs to be directed to the relationship between market orientation and international business performance as, at present, empirical findings do not relate specically to international operations (Dalgic, 1994). Moreover, although recent studies find little support for the hypothesized moderating influence of environmental factors on the market orientation-performance relationship (Jaworski and Kohli, 1993; Slater and Narver, 1994), the impact of such variables in an international context has not been explored. Therefore, the influence of possible moderating factors specic to international activities should be considered, such as the number and geographical spread of countries served, the nature of trade barriers and the mix of international versus local competitors. In this context, a multidimensional view of performance appears to be warranted (Schlegelmilch and Ross, 1987; Jaworski and Kohli, 1993; Shohani and Rose, 1993), incorporating such aspects as rate of new market entry, foreign market coverage and firm/product awareness (Cavusgil and Zou, 1994), in addition to the more usual measures of market share and profitability. It may also be worth investigating in more detail the limitations of the behaviourist approach to market orientation. Dreher (1994) criticizes the behaviourist perspective because of its a priori elimination of unobservable phenomena from investigation (i.e. attitudes, ways of thinking, beliefs, values, culture, etc.) and suggests that this could be overcome by defining 'orientation' as 'organizational cognition'. However, the assumption that cognitions and cognitive changes are inevitable antecedents of behavioural change necessitates knowledge concerning cognitive processes and the last two decades have seen a growing body of evidence challenging many of the taken for granted assumptions of the cognitive paradigm (see, e.g. Foxall, 1984, 1986; Robinson and Berridge, 1993). Defining market orientation as an organizational cognition would involve investigating such concepts as shared cognitions, systems of values and beliefs and ways in which organizational members perceive the world (Deshpand and Webster, 1989), while measurements of the latter constructs have been subjected to much criticism with regard to their validity (Foxall, 1990). In spite of such problems, however, there may be scope for integrating both cognition- and behaviour-based conceptualizations of market orientation. In an international setting this may be particularly fruitful given the importance of managerial cognition and perceptions in determining the firm's success (Aaby and Slater. 1989).

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