Industrial Marketing Management 34 (2005) 797 829

Cultural vs. operational market orientation and objective vs. subjective performance: Perspective of production and operations
scar Gonza O lez-BenitoT, Javier Gonza lez-Benito1
Departamento de.Administracio n y Econom a de la Empresa, Universidad de Salamanca, Campus Miguel de Unamuno, 37007-Salamanca, Spain Received 30 April 2004; received in revised form 15 November 2004; accepted 10 January 2005 Available online 2 March 2005

Abstract The relationship between market orientation and organizational performance has been the focus of many studies for the last few years. The conclusions reported are very diverse and even contradictory. This ambiguity is reinforced to some extent by the high degree of methodological heterogeneity in the definition and measure of market orientation and organizational performance and the empirical formalization of the relationship between both concepts. This study tackles this question by comparing different methodological approaches. Three key aspects are considered: (1) cultural and operational approaches for measuring market orientation; (2) objective and subjective measures of performance; and (3) the source of information in the organization, specifically the perspective of production and operations. The results obtained from a sample of Spanish industrial firms show a stronger positive relationship for operational market orientation and subjective performance. Moreover, the adoption of doperational recipesT of market orientation by the production and operations function seems to improve organizational performance regardless of the existence of any cultural support for market orientation. D 2005 Elsevier Inc. All rights reserved.
Keywords: Cultural/attitudinal market orientation; Operational/behavioural market orientation; Objective performance; Subjective performance; Production and operations perspective

1. Introduction Recent literature in business management has devoted special attention to the growing implantation of different practices and approaches such as organizational culture management, strategic human resource management, quality management, or environmental management. These trends have even been referred to as fashions and fads rather than as organizational necessities (Ogbonna & Harris, 2002). Their adoption is usually justified by the positive consequences they have on performance. A specially relevant management approach is market orientation, broadly defined as the adoption of the marketing concept as the business philosophy guiding the competitive strategies of the organization. AlT Corresponding author. Tel.: +34 923 294 500x3508; fax: +34 923 294 715. E-mail addresses: oscargb@usal.es (O. Gonza lez-Benito)8 javiergb@usal.es (J. Gonza lez-Benito). 1 Tel.: +34 923 294 500x3502; fax: +34 923 294 715. 0019-8501/$ - see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2005.01.002

though a positive relationship between market orientation and performance has been claimed for several decades now, the interest in providing empirical evidence is relatively recent. During the last fifteen years, a plethora of studies has empirically analysed the effects of market orientation on organizational performance. Nevertheless, the reported results are not conclusive. Although many studies argue and find a positive relationship, some others find a nonsignificant or negative relationship. While the meta-analysis reported by Rodriguez-Cano, Carrillat, and y Jaramillo (2004) supports a positive relationship between market orientation and performance, the reviews of Langerak (2003a), Sin et al. (2000) or Tse, Sin, Yau, Lee, and Chow (2003) point out that the existence of such a relationship and the circumstances in which it takes place are still open questions without unequivocal response. In this respect, Slater and Narver (2000) point out the importance of replicating studies with substantive modifications of the conceptual and methodological methods for increasing the confidence in previous findings. However, this methodolog-

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ical heterogeneity implies an additional challenge to provide conclusive answers (Noble, Sinha, & Kumar, 2002). The variety of approaches to the empirical formalization of the relationship between marketing orientation and performance constitutes a possible cause of the diversity, and inconsistency, in the conclusions reported. This paper focuses on the different approaches to defining and measuring market orientation and organizational performance. The underlying argument is that different definitions and measures capture different nuances of these constructs and, as a consequence, the relationship between them might vary across the approaches. In other words, market orientation and performance are broad concepts whose relationship depends on the specific way in which they are interpreted and empirically studied. In particular, the focus is on three key aspects: (1) The distinction between cultural and operational approaches to market orientationthe definition and measurement of market orientation can focus on the attitudes, values and beliefs of managers (Slater & Narver, 1994), or on the processes, activities and behaviours within the organization (Kohli & Jaworski, 1990). In this respect, Griffiths and Grover (1998) point out that both approaches to market orientation are compatible and complementary because behaviour is the basis for the formation of beliefs and values, and culture provides the rules of behaviour. However, the duality between culture and behaviour within the concept of market orientation also implies that both approaches can be separately implemented in the sense that organizations can emphasize market-oriented culture while neglecting its conversion into market-oriented activities, or vice versa. This possibility leads us to wonder whether cultural and operational market orientations have different consequences on performance. (2) The distinction between objective and subjective measures of organizational performancethe measurement of organizational performance can focus on objectively quantifiable accounting or operative indicators or on the subjective assessment of performance in comparison to objectives and competitors (Dawes, 1999). Some studies have reported different conclusions about the relationship between market orientation and organizational performance depending on the objective or subjective measurement of the latter variable. For example, the seminal study of Jaworski and Kohli (1993) only found a positive relationship for subjective performance. This circumstance leads us to wonder whether there are differences in the potential of objective or subjective measurement of performance to capture the consequences of market orientation. (3) The role of the source of information within the organizationalthough market orientation should underlie the whole organization, the cultural and operational adoption of market orientation might differ

across functional areas, presumably being less intense for those functional areas most removed from customers. Some studies have found modest congruence between market orientation reported by different managers within the same organization. For example, the study of Jaworski and Kohli (1993) found modest correlations between marketing and non-marketing informants. This kind of result leads us to wonder whether the relationship between market orientation and performance prevails when the former is measured in the production and operations functional area. The aim of this paper is to provide additional evidence of the relationship between market orientation and organizational performance by the explicit comparison of these different approaches to the empirical formalization of the constructs. Two key questions synthesise the main contribution of the paper. On the one hand, the paper analyses whether the benefits derived from market orientation require the cultural conversion of the organization or simply the implementation of some processes and activities. In other words, the question is to what extent organizations can learn fruitful market orientation behaviours without prioritizing their essential values. On the other hand, the paper analyses whether the benefits derived from market orientation are reflected by objective indicators of performance, or whether they imply more complex and long-term consequences only captured by subjective performance measurement. In addition, contrary to most of the previous studies, all these questions are analysed from the perspective of production and operations managers. Therefore, the paper deals with the market orientation that goes beyond the marketing function or top management and is perceived from internal functional areas. The subsequent contents are divided into four more sections. First, a theoretical framework is developed through a review of the literature. That leads to the enunciation of the research hypotheses. Next, the methodology for testing the empirical hypotheses is described. After that, the results are presented, interpreted and discussed. Finally, the main conclusions and implications are summarised.

2. Literature review and working hypotheses As mentioned above, many empirical studies have provided empirical evidence of the relationship between market orientation and performance over the last few years. This growing research interest has been inspired in some pioneering studies such as Deshpande, Farley, and Webster (1993), Jaworski and Kohli (1993), Lusch and Laczniak (1987), Narver and Slater (1990), or Ruekert (1992). Appendix 1 presents an extensive sample of published papers in this research field. Although most of them use the term dmarket orientationT, others use terms such as dmarketing orientationT, dcustomer orientationT, dmarket drivenT, or simply dimplementation of the marketing

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conceptT with almost similar meanings. Sometimes the relationship between market orientation and performance constitutes the main objective, while other times it is a complementary result of the achievement of other objectives. In any case, as reflected in the section of Appendix 1 devoted to the population analysed, a broad spectrum of contexts has been studied. Different geographical scenarios characterised by different economic and political situations have been analysed; industrial markets, consumer markets, and export markets have been distinguished; different activities such as products, services and specific sectors (machinery, biotechnology, textile, distribution, hotel industry, health, financial and insurance services, etc.) have been considered, and even different sizes, competitive strategies or competitive environment situations. The relationship has also been assessed in the field of not for profit organizations, such as public administrations, educational centres or charity institutions. Any study dealing with the relationship between market orientation and performance requires the empirical formalization of (1) the measure of market orientation, (2) the measure of organizational performance, and (3) the nature of the relationship between both measures. Appendix 1 also describes the revised studies according to these three questions. The section devoted to market orientation measures describes the scales used, their cultural or operational emphasis, and the source of information. The section devoted to performance measures describes the kind of variables used, their objective or subjective character, and the source of information. Finally, the section devoted to results describes the reported conclusions with respect to the market orientationperformance relationship and the moderating circumstances. The observed differences in measurement approaches and results motivate the hypotheses of this study. 2.1. Cultural vs. operative market orientation The notion of market orientation is related to the adoption of the marketing concept as a business philosophy. In this respect, market orientation can be defined as an organizational culture (Slater & Narver, 1994). Specifically, it comprises the set of beliefs that puts the customers interest first in order to develop a long-term profitable organization (Deshpande et al., 1993). Alternatively, market orientation can be defined as the set of activities, processes and behaviours derived from the implementation of the marketing concept (Kohli & Jaworski, 1990). Some authors only recognize this latter operative/behavioural meaning and use the term dmarketing orientationT, or simply dadoption of the marketing conceptT, to refer to the cultural / attitudinal approach (e.g. Deng & Dart, 1994; Diamantopoulos & Hart, 1993; Gray, Matear, Boshoff, & Mathesonet, 1998). From a methodological point of view, the operational approach predominates over the cultural approach when the

effect on organizational performance is analysed. Almost 95% of the studies described in Appendix 1 used market orientation scales with operative emphasis, while only 9% analysed the relationship between some kind of cultural scale and performance. Two circumstances should be borne in mind in this respect. First, the operational conceptualisation proposed by Kohli and Jaworski (1990)empirically formalised in the MARKOR scale (Kohli, Jaworski, & Kumar, 1993)has been widely accepted. Second, other scales developed from the cultural perspective and also widely accepted in the literaturesuch as the MKTOR of Narver and Slater (1990) and the DFW of Deshpande et al. (1993)have focused on the measurement of operational aspects [see the discussion in this respect in Deshpande and Farley (1998a,b) and Narver and Slater (1998)]. About 40% and 35% of the studies described in Appendix 1 used or adapted the MARKOR and MKTOR scales, respectively. Less than 5% of the studies revised in Appendix 1 have simultaneously considered cultural and operational meas lvarez, Santos, ures and their relationship to performance (A & Va zquez, 2000; Avlonitis & Gounaris, 1997; Diamantopoulos & Hart, 1993; Gray et al., 1998; Homburg & Pflesser, 2000). All of them have found congruence between both approaches. In fact, the congruence between both measures has been used as proof of convergent validity in the assessment of several operational scales of market orientation (e.g. Deng & Dart, 1994; Deshpande & Farley, 1998a; Kohli et al., 1993). This evidence suggests that the cultural adoption and the operational implementation of market orientation are closely related. Cultural market orientation has been interpreted as an lvarez et antecedent of operational market orientation (e.g. A al., 2000; Gray, Greenley, Matear, & Matheson, 1999; Homburg & Pflesser, 2000). Narver and Slater (1998) indicate that when market orientation is measured through certain specific activities and manifestations, the underlying belief system is being measured. In other words, the belief that customer satisfaction is the best way to achieve a longterm positional advantage enhances the implementation of activities and processes for reaching this objective. Another argument in this respect is the fact that the top management emphasis constitutes a determinant of operational market orientation (e.g. Bhuian, 1998; Cervera, Mola, & Sanchez, 2001; Horng & Chen, 1998; Jaworski & Kohli, 1993; Puledran, Speed, & Widing, 2000; Selnes, Jaworski, & Kohli, 1996; Shoham & Rose, 2001). These arguments lead us to think that organizations adopt first a cultural orientation and then develop consistent behaviours. However, the opposite line of reasoning has also been contemplated in the literature. As pointed out by Griffiths and Grover (1998), behaviour constitutes the basis for the progressive development of the beliefs, values and attitudes that make up the organizational culture. That is, operational market orientation might be an antecedent of cultural market orientation. Moreover, the research emphasis on demarcating the activities that characterise a market-oriented firm has

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facilitated the adoption of doperational recipesT that are not based on a cultural transformation. These arguments lead us to think that there might be firms which have implemented market-oriented behaviour without having embraced market orientation beliefs and values. The incongruence between cultural and operational market orientation may become stronger when functional areas other than sales or marketing are considered. Although market orientation should involve the whole organization (Webster, 1992), some studies that have measured market orientation using multiple respondents with different managing roles within the organization have reported some kind of disagreement between them. About 20% of the studies revised in Appendix 1 used more than one informant within each organization in the sample. Some of these studies report moderate correlations across respondents (e.g. Jaworski & Kohli, 1993; Jones, Busch, & Dacin, 2003; Raju, Lonial, & Gupta, 1995; Ruekert, 1992). For example, Jaworski and Kohli (1993) interviewed marketing and non-marketing managers and, in their own words, balthough the two reports were positively correlated, the correlations were not perfect, which suggests that the two informants were keying in on different perspectives in providing their responsesQ. In particular, it seems reasonable to assume that in functional areas such as production and operations, which are dless close to customersT and immersed in the achievement of specific effectiveness and efficiency objectives, the implementation of market orientation is weaker, specially in the cultural sense. The adoption of market-oriented activities and practices might be a consequence of the development of corporate policies or a consequence of an interest in following management trends, instead of the conviction of production and operations managers. In short, the perspective of the production and operations function stresses the claim that the adoption of the cultural dimension is not a necessary condition for the implementation of the operational dimension. These arguments are summarised in the following two hypotheses: H1. There is a positive relationship between the cultural and operational market orientation of the production and operations function.

H2. Cultural market orientation is not necessarily an antecedent of operational market orientation in the production and operations function. 2.2. Relationship between market orientation and performance The interest in market orientation is based on how it affects organizational performance. Narver and Slater (1990) consider profitability as a decision criteria in market-oriented firms. In general, a positive effect on market position, longterm viability and performance has been claimed. The effect has even been used to argue criterion-related validity in several measurement scales of market orientation (e.g. Deng & Dart, 1994; Deshpande & Farley, 1998a,b; Gray et al., 1998; Kohli et al., 1993; Lado, Maydeu-Olivares, & Rivera, 1998; Soehadi, Hart, & Tagg, 2001). A theoretical justification of the relationship is proposed in Fig. 1. At least three kinds of positive consequences of market orientation have been identified in the literature review summarised in Appendix 1: (1) Effectiveness (1 in Fig. 1). Market orientation is an organizational resource that might lead to competitive advantage through the understanding of consumer needs and what competitors offer and the development of coordinated and adapted competing strategies (Hunt & Morgan, 1995). The source of competitive advantage is the creation of superior value for consumers. Its achievement is primarily based on a differentiation strategy (Kumar, Submaranian, & Strandholm, 2002; Langerak, 2003b; Narver & Slater, 1990, 1998; Pelham, 1997a, 1999, 2000; Pelham & Wilson, 1996; Hooley et lvarez, 2001). al., 1999a,b; Va zquez, Santos, & A (2) Sustainability (2 in Fig. 1). The sustainability of superior value has been criticised because the emphasis on consumer needs obviates the role of innovation, at least in relation to proactive innovation as compared to adaptive innovation (e.g. Christensen & Bower, 1996; Connor, 1999; Hamel & Prahalad, 1994; Hayes & Weelwright, 1984). However, such a dtyranny of the market servedT has been rejected because it implies a quite simple conception of market orientation. Market

Market orientation

Differentiation strategy Adaptative and proactive innovation Organizational competence

1 Effectiveness
Effective, efficient and sustainable superior value for / satisfaction of consumers Competitive advantage

Entrepreneurship orientation

Learning orientation

2 Sustainability

Efficiency

CULTURAL CAPABILITIES

STRATEGIC ACTIONS
Fig. 1. Market orientationperformance relationship.

PERFORMANCE

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orientation is not only about the understanding of current customersT needs, but also about anticipating their latent needs (Slater & Narver, 1998, 1999). In fact, many studies have found a close relationship between market orientation and innovation (e.g. Agarwal, Erramilli, & Dev, 2003; Appiah-Adu & Singh, 1998; Han, Kim, & Srivastava, 1998; Matear, Osborne, Garrett, & Gray, 2002; Maydeu-Olivares & Lado, 2003; Slater & Narver, 1996; Va zquez et al., 2001). In any case, market orientation has been related to learning orientation (e.g. Baker & Sinkula, 1999a,b; Farrell, 2000; Hurley & Hule, 1998; Noble et al., 2002; Santos, lvarez, & Va Sanzo, A zquez, 2001) and entrepreneurship orientation (e.g. Atuahene-Gima & Ko, 2001; Barret & Weinstein, 1998; Becherer & Maurer, 1997; zsomer, 2002; Wood, Bhuian, Matsuno, Mentzer, & O & Kiecker, 2000). They are thought of as complementary concepts underlying the achievement of innovation orientation. Hult and Ketchen (2001), Hult, Snow, and Kandemir (2003), Liu, Luo, and Shi (2003) or Slater and Narver (1995) state that the combination of market, learning, entrepreneurship and innovation orientation leads organizations to positional advantage, and consequently, sustainable superior performance. (3) Efficiency (3 in Fig. 1). Previous arguments imply greater and sustainable effectiveness and better market position in terms of image, reputation, sales, market share, etc. However, greater efficiency also requires some control over the costs involved in the achievement of effectiveness. In this respect, market orientation has been associated with a more efficient resource allocation (Chang & Chen, 1998). It not only affects the formulation of the strategy but also its implementation (Dobni & Luffman, 2003), by providing discipline, cohesion and internal coordination (Pelham & Wilson, 1996). In particular, market orientation has been related to greater emphasis on employee recruitment, training and compensation (e.g. Horng & Chen, 1998; Jaworski & Kohli, 1993; Puledran et al., 2000; Ruekert, 1992; Selnes et al., 1996; Shoham & Rose, 2001), and positive effects on employee commitment and satisfaction have been found (e.g. Caruana, Ramaseshan, & Ewing, 1999; Horng & Chen, 1998; Jaworski & Kohli, 1993; Jones et al., 2003; Selnes et al., 1996; Shoham & Rose, 2001; Siguaw, Brown, & Widing, 1994). Empirical evidence to a great extent supports the relationship between market orientation and performance, although sometimes subject to specific circumstances of the competitive environment. Nearly 88% of the studies revised in Appendix 1 found a positive relationship between measures of market orientation and measures of performance. Another 6% only found positive relationships under specific circumstances determined by moderating variables. However, many of these studies did not find positive relationships for all performance measures, circumstances and situations

considered. Moreover, there are empirical contributions that did not find any relationship or reported the opposite conclusions concerning the situations in which the relationship takes place. In particular, Kahn (2001) found different conclusions depending on the role of the respondent within the organization, the relationship for marketing managers being stronger than for production or R and D managers. This impedes an unequivocal conclusion about the existence and nature of the relationship (Langerak, 2003a; Sin et al., 2000; Tse et al., 2003). Therefore, it is necessary to provide more empirical evidence while monitoring the influence of different methodological approaches. In particular, it is relevant to study the role of cultural and operational approaches in measuring market orientation, especially because some degree of incongruence between both approaches has been argued above, mainly in functional areas more removed from customers, such as production and operations. If the sequence culturestrategyperformance is assumed, the practices and processes should constitute the trigger for superior performance. Narver and Slater (1990) point out that market orientation is the organizational culture that most effectively and efficiently creates the necessary behaviour for the creation of superior value for customers and, thus, continuous superior performance for the organization. More specifically, Homburg and Pflesser (2000) suggest that market-oriented values lead to market-oriented norms, and market-oriented norms lead to market-oriented behaviours. Therefore, a competitive advantage is reached by transforming market orientation culture into specific actions. Moreover, the adoption of market-oriented practices might have similar effects, even though it is not based on a cultural market orientation. In sum, it is reasonable to expect that the relationship between market orientation and performance is stronger for the operational approach than for the cultural approach. However, the measurement of an operational market orientation quantifies the degree of implementation and development of a set of practices and activities, but not the quality and rigour of this implementation. The inconsistencies found between market orientation perceived within the organization and market orientation perceived externally by customers or other agents of the environment supports this argument (e.g. Deshpande & Farley, 1999; Deshpande et al., 1993; Farrelly & Quester, 2003; Krepapa, Bherthon, Webb, & Pitt, 2003). Therefore, it is reasonable to assume that the effectiveness and efficiency of an operational market orientation is related to the managing teams belief in the importance of the marketing concept. As pointed out by Narver and Slater (1998), only a strong culture can produce such consistent behaviour and performance. These arguments are summarised in the following three hypotheses: H3. There is a positive relationship between the market orientation of the production and operations function and performance.

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H4. The positive relationship between the market orientation of the production and operations function and performance is stronger for operational market orientation than for cultural market orientation. H5. The cultural and operational market orientations of the production and operations function have a synergic effect on organizational performance. 2.3. Objective vs. subjective performance Another relevant question in the analysis of the relationship between market orientation and performance is the definition and measurement of the latter concept. The diversity of performance measures used in the literature constitutes an additional source of methodological heterogeneity. In general, the measurement of organizational performance has been a traditional research field in strategic management (Connolly, Conlon, & Deutsch, 1980; Marr & Schiuma, 2003; Venkatraman & Ramanujam, 1986). Several classification criteria have been proposed. In order to shed light on this matter, it is possible to distinguish between effectiveness and efficiency measures. The former refer to the consolidation of a strong market positionfor example, customer satisfaction, image and reputation, sales, market share, or new product success. The latter refer to optimal resource allocationfor example, benefit, profitability or ROI. A distinction between situation measuresrelated to current performanceand trend measuresrelated to the change in performancecan also be made. In this line, Baker and Sinkula (1999a,b) distinguish between the effectiveness dimension of performancerelated to success in comparison to competitorsand adaptability measuresrelated to the success in responding over time to changing conditions and opportunities in the environment. Venkatraman and Ramanujam (1986) suggest a two-dimensional classification scheme. On the one hand, they differentiate between financial and operational indicators, and on the other hand, they distinguish between primary and secondary sources of information. Financial measures are related to accounting measures and economic performancefor example, profit or sales. Operational measures refer to the operational success factors that might lead to financial performance for example, customer satisfaction, quality, market share or new product development. Data for primary measures is collected directly from the organization, while information for secondary measures is collected from external databases. An additional interesting classification distinguishes between objective and subjective measures. The former refer to performance indicators impartially quantified. They are generally financial indicators obtained directly from organizations or through secondary sources. The latter refer to the judgmental assessment of internal or external

respondents. They usually cover both financial and operational/commercial indicators. Some studies have found consistency between objective and subjective measures (e.g. Covin, Slevin, & Schultz, 1994; Dawes, 1999; Dess & Robinson, 1984; Han et al., 1998; Hart & Banbury, 1994; Pearce, Robbins, & Robinson, 1987; Venkatraman & Ramanujam, 1987). Nevertheless, they also recognize the existence of some divergences and the convenience of both approaches. In particular, several studies centred on the relationship between market orientation and performance have reached different conclusions depending on the consideration of objective or subjective measures of performance. Nearly 12% of the studies revised in Appendix 1 used both approaches to measure performance. Almost 50% of these studies reported a stronger relationship for subjective performance than for objective performance (Agarwal et al., 2003; Balabanis, Stables, & Phillips, 1997; Gray et al., 1998, 1999; Jaworski & Kohli, 1993; Martin & Grbac, 2003; Schlegelmilch & Ram, 2000; Selnes et al., 1996). On the contrary, only 20% reported a stronger relationship for objective than for subjective performance (Atuahene-Gima & Ko, 2001; Hooley, Lynch, & Shepherd, 1990; Voss & Voss, 2000). Objective measures of performance are difficult to obtain or insufficiently reliable. Some authors have pointed out the poor reliability of secondary sources, and the difficulty of obtaining such data directly from organizations because of both the refusal to divulge such information or the lack of interest and time on the part of managers (e.g. Caruana, Ramaseshan, & Ewing, 1998a,b, 1999; Pitt, Caruana, & Berthon, 1996). Moreover, the subjective approach facilitates the measurement of complex dimensions of performance, such as brand equity or customer satisfaction. Subjective measurement also facilitates cross-sectional analysis through sectors and markets because performance can be quantified in comparison to objectives or competitors (Hooley et al., 1999a,b). Judgmental assessments also make it easier to take into account lagged effects and the particular strategy of the organization (Jaworski & Kohli, 1993). This leads us to think that subjective performance is more adequate for capturing the consequences of market orientation than objective performance. On the contrary, the analysis of the relationship between market orientation and subjective performance might be biased by the dhalo effectT. The response style or the interest in communicating a positive image can lead to a false correlation between both concepts when a single respondent is used. This circumstance would falsely reinforce the estimated relationship between market orientation and subjective performance. Some studies have solved this limitation by considering different respondents for measuring market orientation and performance, both within the organization (Pelham, 1997a; Salomo, Steinhoff, & Trommsdorffet, 2003; Slater & Narver, 2000) and outside the organization (Deshpande & Farley, 1999; Deshpande et al., 1993; Farrelly & Quester, 2003; Jones et al., 2003;

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Siguaw, Simpson, & Baker, 1998). However, these methodological approaches noticeably increase the costs and effort involved in the field work. Both arguments in favour and arguments against the subjective approach lead us to expect that the relationship between market orientation and performance is stronger than the relationship between market orientation and objective performance. Either owing to the versatility for quantifying long-term relative performance or to the biases derived from data collection based on single respondent, it is logical to think that subjective measures of performance are more correlated with market orientation. These arguments are summarised in the following hypothesis: H6. The positive relationship between the market orientation of the production and operations function and performance is stronger for subjective measures of performance than for objective measures of performance.

3. Methodology The proposed hypotheses have been empirically tested in a sample of Spanish industrial firms. Three questions are specially relevant with respect to the methodology: (1) data collection, (2) construct measurement, and (3) analysis methods. 3.1. Data The approached population consisted of the medium and large Spanish firms in three industrial sectors: (1) chemical (except pharmaceutical firms), (2) electronic and electrical equipment, and (3) furniture and fixtures. Specifically, firms with over 100 employees from the 2002 Dun and Bradstreet census of the 50,000 largest Spanish companies were considered. There were 428 firms, 156 of which were in the chemical sector, 211 in the electronic and electrical equipment sector, and 61 in the furniture sector. These sectors were selected according to a more extensive objective than that considered in this paper. Although they are relevant sectors in the Spanish industry, the results reported here should not be generalised to the whole Spanish industry. Relevant data in addition to the financial data contained in the census were collected through postal survey. A previous phone call to the firms allowed us to identify the production and operations manager and to announce the sending of the questionnaire. Between 15 and 30 days after the mailing, a second phone call was made to those firms that had not replied. No more follow up calls were made to avoid excessive pressure on the managers in question. It should be taken into account that the length of the questionnaire discouraged many potential respondents from collaborating. This procedure yielded 174 valid questionnaires with respect to the data required for this study;

specifically, 61 chemical firms, 87 electronic and electrical equipment firms, and 26 furniture firms. The response rate was 40.6%, which in turn corresponds to rates of 39.1%, 41.2% and 42.6% for the chemical, electronic equipment and furniture industries, respectively. Two analyses were conducted to assess whether there were systematic patterns for non-response. On the one hand, respondents and nonrespondents were compared in relation to size and performance variables available from the Dun and Bradstreet census. On the other hand, the relationship between the order in which the questionnaires were received and the requested variables was assessed. No significant relationships were found in any of the cases. The questionnaire was designed to cover a more extensive objective than that considered in this study. The data used in this study only constitutes a part of the whole questionnaire. A presentation letter and a postage paid return envelope were attached to each questionnaire. The possibility of completing the questionnaire electronically and returning it by e-mail was also available. The questionnaire was previously tested over a small number of firms to refine contents, structure and wording. 3.2. Measures Market orientation. Cultural and operational market orientation were measured with multi-item scales based on previous literature and exploratory interviews with managers. The cultural scale tried to capture the beliefs and values of production and operations managers in relation to the importance attached to customers and competitors. Specifically, managers were asked to score the degree of agreement or disagreement with 8 statements on a six-point Likert-type scale ranging from dcompletely disagreeT to dcompletely agreeT. An even number of possible responses was considered to force respondents to position themselves in relation to the items. The selection of items was based on the structure proposed by Narver and Slater (1990): customer orientation, competitor orientation, interfunctional coordination, and longterm and profitability emphasis. They were written in such a way as to oppose the values of market orientation to the emphasis on productive capabilities and objectives of production efficiency. The operative scale sought to reflect the degree of implementation of specific activities linked to market orientation. Specifically, managers were asked to score the degree of implementation of 9 practices on a sixpoint Likert-type scale ranging from dnot at allT to dto a great extentT. The selection of items was based on the structure proposed by Kohli and Jaworski (1990): intelligence generation, intelligence dissemination and responsiveness. The previous test of the questionnaire allowed us to refine the configuration and writing of both scales. The reliability analysis is reported in Table 1. The results allow us assume one-dimensionality according to the usual standards of internal consistency. The cultural and opera-

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Table 1 Reliability of market orientation measures Cronbach alpha Behavioural/operational market orientation We continuously gather information about the trends of our target market We assess our environment and our competitors strategies We collect information about our customers satisfaction We use internal reports about the structure and trends of the market We regularly contact with marketing/sales managers to discuss the trends in the market We are promptly informed about any complaint or suggestion from our customers We frequently meet other functional units in order to anticipate a response to the changing environment Our strategies are based on market knowledge rather than on productive capabilities Our premise for new product development is customer satisfaction, instead of taking advantage of our productive capabilities Attitudinal/cultural market orientation It is necessary to understand consumers needs to optimise productive capabilities Customer satisfaction is more important than productivity Customer satisfaction requires the knowledge of competitors offer Improving productive efficiency is less important than outperforming our competitors in creating value for consumers Successful decision making in operations requires permanent contact with marketing/sales managers Inter-departmental coordination is a key factor in successfully meeting consumers needs Production plans should give priority to the long- term as opposed to the achievement of yearly objectives Strengthening customers trust is a top priority, even when it implies continuous adjustments of production plans 0.8709 4.5115 4.6207 4.6667 4.1149 4.7069 5.1724 4.4598 4.1264 4.8218 1.2247 1.0938 1.1941 1.2439 1.2540 1.0167 1.2428 1.2382 1.0630 0.5884 0.7103 0.6488 0.6691 0.7152 0.5211 0.6012 0.4953 0.5175 0.8587 0.8482 0.8530 0.8510 0.8464 0.8642 0.8576 0.8676 0.8645 Mean S.D. Item-to-total correlation Alpha if item deleted

0.7239 5.4425 5.1954 4.7989 5.0287 0.7638 0.9166 1.1378 0.9583 0.4383 0.4197 0.4003 0.5666 0.6940 0.6954 0.7033 0.6631

5.1954 5.5402 4.5460 5.1437

0.7502 0.6140 1.1904 0.9168

0.4886 0.4413 0.2654 0.4467

0.6859 0.6985 0.7395 0.6899

tional market orientation variables used in the subsequent analysis are the sum of item scores across their respective scales.
Table 2 Reliability of subjective performance measures (compared to competitors)

Subjective organizational performance. Three subjective measures of performance were considered, namely profitability, market performance and operational performance.

Cronbach alpha Profitability Profitability over the last three years Market performance Company reputation and image Alignment between companys offer and market expectations Success of new product launches Operational performance Pace of new product launching and range of products in catalogue Time needed for designing and/or manufacturing products Flexibility to adapt production to different volumes of demand Product Quality (degree of conformity to specifications) Capacity to meet customers requirements in time Operational costs (supply, production, distribution, . . .)

Mean

S.D.

Item-to-total correlation

Alpha if item deleted

3.5977 0.7767 3.9023 3.7414 3.6437 0.7463 3.6149 3.2989 4.0517 3.8966 3.8448 3.2356

0.9307 3.9023 3.7414 3.6437 0.9772 1.0871 0.9328 0.8264 0.9086 0.9776 0.6173 0.6513 0.5783 0.4932 0.4922 0.4266 0.5197 0.5309 0.4577 0.6941 0.6609 0.7446 0.7075 0.7095 0.7255 0.7032 0.6978 0.7176

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Table 4 High/low relative cultural/operational market orientation Relative operational market orientation High Relative cultural market orientation High Low 44 (62.9) 43 (41.3) Low 26 (37.1) 61 (58.7) 87 (100.0) 87 (100.0)

805

Profitability centres on economic performance. Market performance focuses on success with respect to the satisfaction of the target market. And operational performance brings together the achievement of the five competitive objectives of the production and operations function proposed by Slack, Chambers, Harland, Harrison, and Johnston (1998): cost, quality, flexibility, reliability and speed. Managers mark on a five-point Likert-type scale whether they considered their companies (1) very inferior, (2) somewhat inferior, (3) equivalent, (4) somewhat superior, or (5) very superior to their competitors. An odd number of possible responses was considered to allow respondents to reflect a level of performance similar to competitors. Profitability was a single-item measure while market and operational performance were composite measures based on 3 and 6 items, respectively. The analysis of internal consistency is summarised in Table 2. The variables of market and operational performance used in the subsequent analysis are the sum of item scores across their respective scales. Objective organizational performance. Three objective measures of financial performance were used, namely sales, profit and ROA. Sales centred on the firmTs effectiveness in attracting demand. This can be an indicator of market position, but it does not reflect how efficiently such a position has been reached. Profit depicts efficiency in this respect by taking into account the operating profit margin. ROA, furthermore, removes size effects by comparing profit against the resources involved. The measurement was based on data available in the 2002 Dun and Bradstreet census. Due to data missing for some firms, sample sizes were 174, 169 and 168 for sales, profit and ROA, respectively. 3.3. Analysis The test of H1, which refers to the relationship between cultural and operational market orientation, was based on the correlation coefficient between both constructs. The result is presented in Table 3. The test of H2, which refers to the role of cultural market orientation as a necessary antecedent of operational orientation, was based on the correlation between the former and the absolute residual of regressing both constructs (OLS estimation). The underlying reasoning is that, if cultural orientation is a necessary condition for operative orientation, the variance of the latter will be higher when the former increases. That implies a positive correlation between cultural orientation and the
Table 3 Correlations between cultural and operational market orientation Operational market orientation Cultural market orientation 0.318 (0.000) Residual (absolute value) (regression between cultural and operational market orientation) 0.032 (0.680)

Whole sample

Row percentages in parentheses.

mentioned residual. The result is also presented in Table 3. As a complementary test, both measures of market orientation were dichotomised by discriminating between firms above or below the mean. In this case, H2 requires a significant number of firms with a high degree of operational market orientation but a low degree of cultural market orientation. The result is presented in Table 4. In order to test hypotheses H3 H4 H5 H6, each performance measure was related to market orientation measures using multiple regression analysis (OLS estimation). In order to isolate the effect of size and activity, the number of employees and the industrial sector were included as control independent variables. Five different models were estimated for each dependent variable, that is to say, each of the three objective performance variables and each of the three subjective performance constructs. First, a reference model where only control variables were included as explanatory variables (model 0). Next, two models where only one of the approaches to market orientation was included as an explanatory variable (models 1 and 2). An additional model considered the effect of both approaches to market orientation simultaneously (model 3). Finally, the last model analysed the existence of synergic effects by adding the interaction of both approaches to market orientation (model 4). Tables 5 and 6 report the results of subjective and objective measures of organizational performance, respectively. The models are not complete in the sense that they obviate many other determinants of performance. This justifies the limited, but significant, goodness-offit of the models.

4. Results: interpretation and discussion Table 3 shows a positive correlation between cultural and operational market orientation. This result lends support for H1. There is a positive relationship between the attitudes and values of managers and the processes, activities and practices of the organization with respect to marketing orientation. As pointed out by Griffiths and Grover (1998), the causality might be reciprocal. On the one hand, the development of an organizational culture leads to consistent behaviour. On the other hand, the behaviour of the organization, the development of norms, and the implementation of practices foster the formation of beliefs and values within the organization.

Significance in parentheses.

806 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Table 5
Relationship between market orientation and subjective performance Dependent variable Model 0 Model 1 Model 2 Model 3 Model 4

Profitability Market Operational Profitability Market Operational Profitability Market Operational Profitability Market Operational Profitability Market Operational Performance Performance Performance Performance Performance Performance Performance Performance Performance Performance Constant Industrial sector chemistry Industrial sector electronics Size (number of employees) Cultural market orientation Operational market orientation Interaction R2 F *p =0.10. TT p =0.05. TTT p =0.01. 3.487TTT 0.195 11.482TTT 0.185 22.199TTT 0.187 3.275TTT 0.194 7.912TTT 0.207 15.266TTT 0.229 2.004TTT 0.259 6.148TTT 0.046 13.680TTT 0.182 2.528TTT 0.269 5.511TTT 0.034 11.558TTT 0.143 2.401TTT 0.302 5.248TTT 0.104 10.662TTT 0.382

0.030

0.334

0.353

0.023

0.455

0.588

0.048

0.268

0.248

0.072

0.297

0.344

0.110

0.219

0.076

0.000

0.000

0.000

0.000 0.005

0.000 0.089TT

0.000 0.173TT

0.000 0.036TTT

0.000 0.131TTT

0.001 0.209TTT

0.000 0.016 0.039TTT

0.000 0.020 0.127TTT

0.001 0.066 0.196TTT

0.000 0.015 0.040TTT

0.000 0.022 0.128TTT

0.001 0.074 0.199TTT

0.009 0.538

0.003 0.179

0.001 0.069

0.010 0.427

0.034 1.509

0.039 1.708

0.087 4.050TTT

0.193 10.104TTT

0.155 7.779TTT

0.092 3.422TTT

0.194 8.107TTT

0.160 6.418TTT

0.003 0.104 3.226TTT

0.006 0.204 7.120TTT

0.021TTT 0.195 6.735TTT

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Table 6
Relationship between market orientation and objective performance (absolute) Dependent variable Model 0 Profit Constant Industrial sector chemistry Industrial sector electronics Size (number of employees) Cultural market orientation Operational market orientation Interaction 2 R F 148.43 4139.66T Sales 15,722.73 76,998.00TT ROA 0.063TTT 0.004 Model 1 Profit 768.52 4131.20T Sales 72,901.12 76,652.62TT ROA 0.076 0.004 Model 2 Profit 6014.72 4373.66T Sales 15,876.0TT 83,196.08TTT ROA 0.000 0.003 Model 3 Profit 3781.23 4434.36T Sales 141,229.3 83,515.16TTT ROA 0.041 0.004 Model 4 Profit 5026.68 4696.62TT Sales 155,828.7 87,394.30TTT ROA 0.039 0.000

1038.96

13,818.31

0.009

1063.83

11,881.92

0.008

1021.96

15,577.79

0.008

908.11

16,371.07

0.006

610.58

20,733.4

0.006

10.13TTT

177.59TTT

0.000

10.13TTT 15.54

177.78TTT 1423.07

0.000 -0.000

9.71TTT 144.575

167.17TTT 3503.12TT

0.000

9.66TTT 70.12

166.78 543.96 3608.85TT

0.000 0.001 0.002T

9.686TTT 58.107 164.123

167.09TTT 411.453 3659.06TT

0.000 0.001 0.002T

0.002T

153.50

0.324 26.321TTT

0.419 40.791TTT

0.007 0.389

0.324 19.624TTT

0.420 30.565TTT

0.007 0.301

0.332 20.337TTT

0.439 33.076TTT

0.024 1.001

0.332 16.215TTT

0.439 26.321TTT

0.028 0.930

26.520 0.338 13.807TTT

339.25 0.444 22.188TTT

0.000 0.028 0.781

Sample size is 169, 174 and 168 for profit, sales and ROA, respectively. T p =0.10. TT p =0.05. TTT p =0.01.

807

808

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Nevertheless, the relationship is moderated even though significant. That implies the existence of firms for which there is no correspondence between the degree of cultural and operational implementation of market orientation. This circumstance becomes evident when Table 4 is observed. The distinction between more and less oriented firms shows that, even though many firms classifications agree in both dimensions, there is an important proportion of firms characterised by opposing levels. Table 4 is also consistent with the reciprocal causality mentioned above. Although the behaviour could initially be thought of as the consequence of the organizational culture, the existence of a relevant number of market-oriented firms in the operational sense but not in the cultural sense sustains the inverse reasoning. The nonsignificant correlation found between cultural orientation and the residual of regressing it with operational orientation, reported in Table 3, provides additional support for such a conclusion. The variance in operational market orientation seems to be independent of the degree of cultural market orientation. None of these arguments supports the rejection of H2. Cultural market orientation is not necessarily an antecedent of operational market orientation. On the contrary, and in relative terms, there are firms with market-oriented practices whose managers do not prioritise the values of market orientation. These firms seem to adopt market orientation more as an doperational recipeT than as a management philosophy. Two clarifications must be taken into account at this point. First, any mention of the degree of market orientation is made in relative terms. As shown in Table 1, the degree of reported cultural and operational market orientation is quite high. Therefore, when some firms are referred to as bmarketorientedQ, that means that they are more market oriented than other competing firms in the population studied. Second, data collection focused on the production and operations functional area. Therefore, the measures of cultural and operational market orientation do not necessarily reflect the situation at the corporate level. The absence of cultural support for market orientation practices might merely be confined to the production field owing to cultural and perceptual divergences within managing teams. Given the existence of two related, but not coincident, approaches to market orientation, the next key question refers to their effect on organizational performance. Tables 5 and 6 show that the relationship between market orientation and organizational performance differs according to the type of market orientation and the measure of performance. On the one hand, model 2 lends support for H3 in relation to profitability, market performance, operational performance, sales and ROA. The pragmatic approach to market orientation seems to make a significant contribution to the improvement of attractiveness and commercial success, and to the achievement of objectives linked to the production and operations function. This not only results in higher sales but also more efficiency in terms of profitability over the last few years and, although more moderately, in

terms of ROA. Therefore, the implementation of activities and processes to create superior value for customers seems to play a fundamental role in the improvement of performance. Nevertheless, it is important to point out that the relationship is not significant for profitability when it is measured with secondary objective sources. On the other hand, model 1 lends support for H3 in relation to market and operational performance. This result implies that cultural market orientation enhances performance dimensions such as reputation, image, new product success, cost control, flexibility, time to market, quality, etc., but these outputs do not seem to lead to better financial performance. The results presented in Tables 5 and 6 also imply that the effect of operational market orientation is higher than the effect of cultural market orientation. First, operational orientation is related to a higher number of performance measures than cultural orientation. Second, significance levels are always higher for the effects of operational orientation. And third, when the effects of both approaches to market orientation are simultaneously considered in model 3, the role of cultural orientation is absorbed by the role of operational orientation. This leads us to think that the effect of cultural market orientation is given by its relationship with operational market orientation. All these arguments provide support for H4. Therefore, it is the actions and procedures, not the beliefs and attitudes, which enforce organizational performance. Apart from the dominant role of the operational market orientation in the improvement of organizational performance, only one of the interaction effects considered in model 4 was found to be significant. Cultural orientation constitutes a moderating, reinforcing variable only when operational performance is considered. Thus H5 receives no support except for this case. Cultural orientation is key in the achievement of objectives directly linked to the production function, that is, the optimisation of processes, activities and outcomes of the production function, but it does not seem to be relevant to the accomplishment of better market position and profitability. In short, the results lead us to think that the adoption of doperational recipesT of market orientation might lead to positive effects of performance regardless of the cultural conversion of production and operations managers. Although it has been posed that the relationship between market-oriented behaviour and performance is necessarily based on a strong culture (Slater & Narver, 1998), the results imply that such a culture does not necessarily prioritise the marketing concept, at least in a relative sense and as far as the production and operations function is concerned. The last question concerns the distinction between objective and subjective approaches to the measurement of organizational performance. The comparison of Tables 5 and 6 shows that the relationship is stronger for subjective measures than for objective measures. This lends support for H6. Subjective measures are more flexible than objective measures in capturing complex dimensions of performance,

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considering lagged effects, and facilitating comparison between firms. In this respect, subjective performance seems to be a more reliable measure of performance and the relationship between market orientation and performance gains credibility. However, subjective measures obtained from a single respondent might involve biases as a consequence of the response style or the interest in communicating a favourable and coherent corporate image. In this respect, the relationship between market orientation and performance might appear falsely reinforced in the data. The assessment of favourable and contrary arguments is out of the scope of this paper. Moreover, the literature review summarised in Appendix 1 does not shed light on this question. Less than 10% of papers revised used different respondents for market orientation and performance measurement. Many of these multiple-respondent studies still reported a positive relationship between market orientation and subjective performance (e.g. Deshpande & Farley, 1999; Deshpande et al., 1993; Langerak, 2001a,b; Pelham, 1997a,b, 2000; Salomo et al., 2003; Siguaw et al., 1998; Slater & Narver, 2000). This supports the fact that the relationship is not a consequence of the dhalo effectT. However, some other multiple-respondent studies did not find a relationship (e.g. Farrelly & Quester, 2003; Jones et al., 2003). This raises some doubts in this respect.

5. Conclusions Previous studies on the relationship between market orientation and organizational performance show some incoherence in the conclusions reported. Although most of them justify and find some kind of positive relationship, others do not find any relationship. There is also some discrepancy about the circumstances of the competitive environment in which the relationship takes place or is stronger. The diversity of conceptual and methodological approaches to the definition and measurement of market orientation, organizational performance, and the relationship between both of them enriches the field of research but also contributes additional confusion. The comparison between studies becomes harder. Apparently contradictory results can turn out to be complementary when their theoretical and methodological frameworks are borne in mind. This study has dealt with the relationship between market orientation and operational performance while taking into account three key conceptual and methodological aspects of the empirical development. First, the distinction between the cultural/attitudinal and operational/behavioural approaches to market orientation. Second, the distinction between the objective and subjective approaches to the measurement of organizational performance. And third, the perspective from functional areas further removed from the customer than the sales and marketing function, specifically the production and operations function.

The results based on a sample of Spanish industrial firms show a moderate, significant relationship between the cultural and operational measures of the market orientation of the production and operations function. Furthermore, the cultural orientation does not seem to be a necessary antecedent of the operational orientation. The results are consistent with the existence of a reciprocal causality between them. In addition, the results provide evidence of a positive relationship between operational market orientation and performance. Moreover, although the cultural market orientation could be thought of as a quality warranty of the operational implementation, it does not enhance the relationship with commercial effectiveness and profitability. It only constitutes a moderating variable of the relationship between operational market orientation and the effectiveness and efficiency of the production function. Finally, the results show that the relationship between market orientation and organizational performance becomes stronger when the latter is subjectively measured. Two managerial implications can be drawn from these results. First, the adoption of doperational recipesT of market orientation seems to improve performance independently of the cultural conversion of the organization to the marketing concept philosophy, at least in the operations and production functional area. More attention should be paid to promoting behaviour than to promoting culture. Besides, behaviour might be the basis for the formation of beliefs and values, and consequently, the organizational culture. Second, the benefits derived from market orientation are not completely captured by objective financial measures, at least in the short-term. Market orientation contributes to the long-term viability of the firm by improving market and operational performance. The output of market orientation is better reflected by reputation, image, customer satisfaction, new product success, cost-efficiency, time-to-market, product quality, etc. This study has tried to gain an insight into some relevant questions about the conceptualisation and measurement of the relationship between market orientation and performance, but uncovers some other questions in this respect. First, cultural and operational approaches to market orientation constitute the opposite ends of a continuum. A more complete approach should consider a more detailed partition of this continuum (Homburg & Pflesser, 2000). Second, the results do not explain whether the relationship between market orientation and performance and the predominant role of operational implementation is only attributable to the production function or independent of it. The former case implies cultural heterogeneity within the organization. Third, the study does not explain whether the stronger relationship between market orientation and subjective performance is due to the superiority of this measurement approach or to the measurement bias that this approach could entail. Finally, the empirical study has been circumscribed to three Spanish industrial sectors. Additional evidence from different settings and business activities is required.

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Appendix A Some published empirical studies related to the market orientationperformance relationship

Empirical study Lusch and Laczniak (1987)

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship

Large US firms.

Cultural scales referred to as marketing concept and extended marketing concept. Response of vice president of marketing and planning Cultural scale to classify approaches to marketing. Response of chief marketing executive Operative scale MKTOR. Three behavioural components customer orientation, competitor orientation, and interfunctional coordination, and two decision criterialong- term focus and profitability. Averaged responses of members of the top management team Operative scale based on Kotler (1977). Five components marketing philosophy, integrated marketing organization, adequate marketing information, strategic orientation, and operational efficiency. Single respondent Operative scale based on Kotler (1977). Response of hospital administrator Operative scale. Three componentsuse of information, development of strategy, and implementation of strategy Operative scale DFW referred to as customer orientation. Averaged responses of two marketing executivesself-reported customer orientation and averaged responses of two purchasing executives of a customer firmcustomer orientation reported by customers (1) Cultural scale referred to as marketing concept. (2) Operative scale based on MARKOR structure. Response of managing directors or equivalents Operative scale MARKOR based on Kohli and Jaworski (1990). Three componentsintelligence generation, intelligence dissemination and responsiveness. Averaged responses of two senior executives (one marketing and the other non-marketing) for the first sample

Hooley et al. (1990)

UK businesses.

Narver and Slater (1990), Slater and Narver (1993)

SBUs in the forest products division of a major western corporation

Subjective composite measure based on overall financial performance, closeness to the breakeven point, ROA, corporate liquidity and ROE, as expected in the future (1) Objective primary measure of ROI. (2) Subjective single measure of performance relative to major competitors Subjective single measure of ROA in principal served market segment over the past year in relation to all other competitors

Positive relationship

Positive relationship. Moderating effects of type of businesscommodity and noncommodityand the strategy types of Miles and Snow (1978)prospectors, analysers and defenders

Esslemont and Lewis (1991)

New Zealand firms Retailers from Palmerston North, New Zealand New Zealand firms

Objective measures of state and growth of ROI and profit margin

No clear relationship

Naidu and Narayana (1991) Ruekert (1992)

US hospitals in Midwestern states Managers and sales representatives from the five SBUs of a large high technology company based in the US SBUs of Japanese firms traded on the Nikkei stock exchange in Tokyo

Objective measure of occupancy rate Objective composite measure based on SBUs profitability and sales growth over the five preceding years Subjective composite measure based on profitability, size, market share and growth rate in comparison with the largest competitor. Averaged responses of two marketing executives

Positive relationship

Positive relationship

Deshpande et al. (1993)

Positive relationship for customer orientation reported by customers. No relationship for self-reported customer orientation

Diamantopoulos and Hart (1993)

UK manufacturing companies

Objective secondary composite measure based on sales growth and profit margin

Jaworski and Kohli (1993), Kohli et al. (1993)

SBUs of the top US companies (in sales revenue) and companies of the Marketing Science Institute American Marketing Association membership roster

(1) Objective measure of share of the served market. (2) Subjective composite measure based on overall performance and overall performance relative to major competitors, over the past year

No clear relationship. Moderating effects of market turbulence, intensity of competition and demand conditions Positive relationship for subjective performance. No relationship for objective performance. No moderating effects of market turbulence, competitive intensity and technological turbulence

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study McDermott, Franzak, and Little, (1993) Analysed population Market Orientation Measure Performance measure

811

Relevant results in relation to market orientation performance relationship Positive relationship. Stronger for market intelligence and interfunctional coordination than for strategy and tactical responsiveness

Large US general hospitals

Deng and Dart (1994)

Canadian companies

Operative scale based on MKTOR, MARKOR and prior health care research. Four componentsmarket intelligence, interfunctional coordination and responsiveness (strategic and tactical). Response of chief marketing officer Operative scale. Four componentscustomer, competitor, interfunctional coordination, and profit orientations. Response of general manager or marketing manager

Objective primary measure of operating margin

Slater and Narver (1994)

SBUs in a forest product company and a diversified manufacturing company Australian service and manufacturing single firms and SBUs of large multisite firms

Operative scale MKTOR. Averaged responses of members of the top management team

Atuahene-Gima (1995, 1996)

Operative scale based on Ruekert (1992). Response of the marketing manager

Au and Tse (1995)

Hotels and motor lodges in Hong Kong Hotels and motor lodges in New Zealand

Greenley (1995a,b)

UK companies with more than 500 employees

Operative scale based on Kotler (1977). Response of general manager. Complemented with objective number of employees responsible for public relations and expenditure on public relations Operative scale based on MKTOR. Single responses of managing director/CEOs

Subjective composite measure based on overall performance, liquidity, sales, market share, penetration, export, development of new products and new markets, quality, productivity, and expectations over the previous three years Subjective single measures of ROA, sales growth, and new product success relative to all other competitors in the principal served market over the past year Subjective composite measures of new product market performancebased on market share, sales, growth and profit objectives-and new product project performancebased on cost efficiencies, proprietary advantage, sales and profitability of other products, and new market opportunitiesin relation to one new product introduced in the last 5 years Objective primary (New Zealand) and secondary (Hong Kong) measure of occupancy rate

Positive relationship

Positive relationship. No moderating effects of market turbulence, technological turbulence, competitive hostility and market growth Positive relationship. Moderating effect of environment hostility, stage of the product life cycle, and service vs. product innovations. No moderating effect of degree of product newness

No relationship. No moderating effect of country related to size and complexity

Subjective measures of ROI, new product success and sales growth over the last 3 years, relative to those of major competitors Subjective composite measure based on sales, market share, market share growth and profitability in relation to competitors Subjective composite measures of financial performancebased on profit, margin, ROI and cash flow, market/product developmentbased on new product and market development and R and Dand internal qualitybased on service quality, employee turnover, mortality and cost per adjusted discharge

Golden, Doney, Johnson, and Smith, (1995)

Russian firms

Operative scale. Response of primary manager or owner

No overall relationship. Moderating effects of market turbulence and technological change. No moderating effect of market growth Positive relationship through product attributes. No relationship through promotion activities and price Positive relationship. Financial performance related to responsiveness to competition and customers. Market/product performance and internal quality related to intelligence generation, responsiveness to competition and customer satisfaction. Moderating effect of size and environmental uncertainty (continued on next page)

Lonial and Raju (2001), Raju and Lonial (2001), Raju et al. (1995), Raju, Lonial, Gupta, and Ziegler (2000)

US Hospitals in Midwestern states

Operative scale based on MARKOR. Four resulting componentsintelligence generation, customer satisfaction, responsiveness to customers, and responsiveness to competitors. Averaged responses of top executives

812 Appendix A (continued ) Empirical study Balakrishnan (1996)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship for basic market orientation. Competitive benchmarking related to profit relative to competitors. Customisation related to repeat business. International orientation related to satisfaction with profit and profit relative to competitors Positive relationship. Moderating effects of position of the top marketing executive, influence of the marketing sector, and co-operation of marketing, production and R and D Positive relationship mainly based on competitor orientation. Moderating effects of size, industrial sector and foreign property Positive relationship except for growth/share performance

US manufacturers of machine tools

Operative scale referred as customer and competitive orientation. Four resulting componentsbasic market orientation, competitive benchmarking, customisation and international orientation. Response of chief executive Cultural scale. Response of corporate executive

Subjective composite measures of satisfaction with profit and profit relative to competitionboth based on profit and ROAand subjective single measures of customer retention and repeat business generated from customers Subjective composite measure based on competitiveness, customer satisfaction, continuance of the firm, and long-term profitability in relation to objectives within the last 3 years Subjective single measures of ROI, ROS, sales growth and overall performance in relation to competitors over the last 3 years Subjective composite measures of new product successbased on product/service and market development, growth/share based on sales and employment growth and market share, and profitabilitybased on profits, margin, cash flow, ROI and ROA, and subjective single measure of relative product quality, in relation to objectives Subjective composite measure based on ROCE, sales growth and overall performance relative to other companies in the industry over the last 5 years (1) Objective measure of share of the served market. (2) Subjective composite measure based on overall performance and overall performance relative to major competitors, over the past year

Fritz (1996)

Industrial firms in West Germany

Llonch and Walin o (1996)

Industrial firms based in Catalonia (Spain)

Operative scale based on MKTOR. Response of chief executive

Pelham and Wilson (1996)

Michigan firms (US)

Operative scale based on MKTOR. Response of firm president

Pitt, Caruana, and Berthon, (1996)

Largest UK based service firms Malta firms

Operative scale MARKOR. Response of marketing director

Positive relationship. No moderating effect of country related to cultural context and economic performance Positive relationship for subjective performance. No relationship for objective performance. No moderating effect of country related to national culture and political economy

Selnes et al. (1996)

Slater and Narver (1996)

SBUs of the top US companies (in sales revenues) and companies of the Marketing Science Institute Largest firms (in sales revenues) in Norway, Denmark and Sweden US manufacturers in a Midwestern state

Operative scale MARKOR. Averaged responses of two senior executives (one marketing and the other non-marketing)

Operative scale MKTOR. Response of president or general manager

Appiah-Adu (1997)

Small UK firms

Operative scale based on MKTOR. Response of managing director

Subjective single measures of ROA and sales growth rate relative to all other competitors in the principal served market over the past year Subjective single measures of sales growth, new product success rate and return on investment over the previous 3 year period in relation to all other competitors

Positive relationship for sales growth rate. No relationship for ROA

Positive relationship. Moderating effects of market turbulence, competitive intensity and market growth. No moderating effect of technological turbulence

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Avlonitis and Gounaris (1997) Analysed population Market Orientation Measure Performance measure

813

Relevant results in relation to market orientation performance relationship Positive relationship. Moderating effect of type of businessindustrial vs. consumer goods Positive relationship for subjective performance. No relationship for objective performance

Industrial and consumer goods Greek companies

(1) Cultural scale to classify approaches to marketing. (2) Operative scale MARKOR. Response of marketing manager Operative scale based on MARKOR. Single respondent

Balabanis et al. (1997)

Top British charities

Becherer and Maurer (1997)

Small entrepreneur US business

Operative scale. Response of business president

Subjective composite measures based on profit, annual turnover, ROI and market share in relation to objectives and competitors over a 4 year period (1) Objective measures of situation and change in donor contribution ratio and number of volunteers. (2) Subjective single measures of achievement of longterm and short-term objectives Objective primary measure of change in profit over the last 3 years Objective measures of banks ROA, ROE and sales per employee Subjective composite measure of innovation performance based on ROI of the last new product introduced in the market in relation to other products of the firm, competitors and objectives

Bhuian (1997)

Gatignon and Xuareb (1997)

Managerial level personnel in bank branches in Saudi Arabia Marketing executives US firms

Operative scale based on MARKOR

No relationship. Moderating effect of environment hostility. No moderating effect of environment turbulence No relationship

Operative scale of strategic orientation. Three components customer and competitor, based on MKTOR, and technological orientation. Operative scale of interfunctional coordination based on MKTOR Operative scale of stakeholder orientation. Three dimensions research, management judgement, planning and corporate culture and mission-in relation to five stakeholder groups-competitors, consumers, employees, shareholders and unions. Response of managing director/CEO Operative scale based on MKTOR. Response of chief administrator

Greenley and Foxall (1997, 1998)

UK companies with more than 500 employees

Subjective single measures of ROI, sales growth, market share and new product success rate compared to that of the competitors, in their principal market

Positive relationship for interfunctional coordination. No relationship for customer and competitor orientation. Moderating effect of demand uncertainty. No moderating effects of market growth and competition intensity Positive relationship between different types of stakeholder orientation and different measures of performance. Moderating effects of competitive hostility, market growth and market turbulence

Kumar and Subramanian (2000), Kumar, Subramanian, and Yauger (1997, 1998), Kumar et al. (2002) Pelham (1997a,b, 1999, 2000)

US hospitals

Subjective single measures of satisfaction with growth in revenue, return on capital, success of new services, success in retaining patients and success in controlling expenses

Small US industrial manufacturing firms.

Operative scale. Three components-customer understanding, customer satisfaction and competitive orientation. Response of sales manager and president

Appiah-Adu (1998)

Large firms operating in Ghana

Operative scale. Response of managing director

Subjective composite measures of firm effectivenessbased on relative product quality, new product success and customer retention, growth/sharebased on sales level, growth rate and target market share, and profitability based on ROE, gross margin and ROI. Response of the firms president Subjective single measures of sales growth and ROI in relation to expectations over the previous 3 years

Positive relationship. Different associations between profiles of market orientation and measures of performance. Moderating effects of competitive hostility, market turbulence, supplier power and emphasis on differentiation strategy Positive relationship. Moderating effect of customer differentiation. No moderating effect of product differentiation

No overall relationship. Moderating effects of competitive intensity and market dynamism. No moderating effect of market growth (continued on next page)

814 Appendix A (continued ) Empirical study Appiah-Adu and Ranchhod (1998)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship except for new products/services success

UK firms in the biotechnology industry

Operative scale based on MKTOR. Response of managing director

Appiah-Adu and Singh (1998)

Small and medium UK enterprises

Operative scale based on DFW. Response of marketing executive

Bhuian (1998)

Manufacturing companies in Saudi Arabia

Operative scale based on MARKOR and performance anticipation. Response of CEO

Caruana et al. (1998a,b, 1999)

Public sector organizations in Australia Departments in Australian and New Zealand universities

Operative scale based on MARKOR. Response of head of public sector organization or university department

Chang and Chen (1998)

Retail stock brokerage firms in Taiwan

Operative scale extending MKTOR with performance anticipation. Response of the head of retail brokerage operations

Deshpande and Farley (1998a)

Marketing executives from US and European major firms, members of the Marketing Science Institute SBUs of large UK firms

Operative scales MARKOR, MKTOR, DFW and the resulting summary scale

Doyle and Wong (1998)

Gray et al. (1998, 1999)

Senior managers in New Zealand companies

Han et al. (1998)

US banks in a Midwestern state

Operative scale based on MARKOR structure. Averaged responses of marketing/sales, accountant/financial, and manufacturing/operations managers (1) Cultural scale of business philosophy. (2) Operative scale based on MARKOR, MKTOR and Deng and Dart (1994). Five resulting components customer and competitor orientation, interfunctional coordination, responsiveness and profit emphasis Operative scale MKTOR. Response of the person in charge of the marketing function at the senior management level Operative scale based on MARKOR structure. Response of CEO or top manager

Subjective single measures of new products/services success, market share growth, profit margin, and overall performance relative to the main competition in the past 3 years Subjective single measures of new product success rate, sales growth and ROI relative to the main competition over the previous 3 year period Subjective composite measure based on quality of products, revenues, financial position, customer satisfaction and overall performance over the last 3 years Subjective single measures of overall performance and ability to attract non-government funding during the last 5 years Subjective composite measure based on improvements achieved, service to customers, cost effectiveness and overall performance in the last 3 years Subjective single measure of ROA in relation to major direct competitors over the past year, and subjective composite measure of service quality based on SERVQUAL Subjective composite measures of performance, one based on cus tomer retention, sales growth, ROI and ROS, the other based on profit ability, size, market share and growth Subjective composite measure based on ROC, market share, sales growth and overall performance in relation to excellent competitors

Positive relationship

Positive relationship. Moderating effects of competitive intensity and technological turbulence Positive relationship based on responsiveness

Positive relationship. Service quality as intermediate variable in the market orientation business performance relationship

Positive relationship. No moderating effect of countryUS vs. Western European industrial countries

Positive relationship

(1) Objective measures of ROI, relative ROI and pretax profit. (2) Subjective single measures of brand awareness, customer satisfaction and loyalty, market share, sales growth and profitability relative to nearest competitor (1) Objective primary measures of net income growth and ROA. (2) Subjective single measures of growth and profitability Subjective single measure of performance for the last year

Horng and Chen (1998)

Small and medium firms of Taiwan

Positive relationship except for relative ROI. Stronger relationship for subjective than for objective performance. Moderating effects of competitive intensity, market growth, entry barriers and buyer power. No moderating effects of market and technological turbulence No direct relationship. Positive relationship when innovations are accounted for (mediating role of innovativeness) based on customer orientation Positive relationship based on intelligence generation

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Lado et al. (1998) Analysed population Market Orientation Measure Performance measure

815

Relevant results in relation to market orientation performance relationship Positive relationship

Large private insurance companies in Spain Large private insurance companies in Belgium

Ngai and Ellis (1998)

Textile and garment companies in Hong Kong

Operative scale. Nine components analysis of final client, distributor, competitors and environment, interfunctional coordination, and strategic actions on consumers, distributors, competitors and macroenvironment. Averaged responses of marketing and non-marketing managers Operative scale based on MKTOR. Response of managing director

Objective secondary measure of market share

Oczkowski and Farrell (1998)

Large publicly listed companies in Australia Large private owned companies in Australia

Operative scales MKTOR y MARKOR. Response of CEO/general manager

Siguaw et al. (1998)

US distributors and their primary suppliers

Thirkell and Dau (1998)

New Zealand manufacturing firms

Operative scale MARKOR. Response of the distributors employee most knowledgeable about the relationship with primary supplierdistributor market orientationand the suppliers employee most knowledgeable about the relationshipsupplier market orientation Operative scale. Three componentscustomer focus, integration and goal directed behaviour. Single respondent

Subjective composite measures of business positionbased on sales growth, market share and market share growth rate, and profitabilitybased on operating profits, profit/ sales, cash-flow, ROI and ROA, in relation to competition over a five year period and in relation to expectations for the most recent year Subjective composite measure based on customer retention, new product success, sales growth, ROI and overall performance relative to competitors in the principal served segment over the past year Subjective composite measures of trust, cooperative norms, commitment and satisfaction with financial performance. Response of distributors employee most knowledgeable about the relationship with primary supplier

Positive relationship

Positive relationship. Moderating effect of structure of ownershippublicly listed vs. private owned

Supplier market orientation positively related to commitment. Distributor market orientation positively related to trust and cooperation

Tse (1998)

Large property developers in Hong Kong Large and independent US service firms in an upper Midwestern state

Operative scale based on Kotler (1977) and other operative single measures. Response of a manager Operative scale MKTOR. Averaged responses of top management team

Van Egeren and OConnor (1998)

lvarez, A Vasquez, and Santos (1999)

Non for profit organizations in Asturias (Spain)

Operative scale based on MARKOR structure. Single respondent

Composite measure of export performance based on (1) objective export intensity and sales, and (2) subjective assessment of export market share, profitability, market diversification and customer satisfaction, and overall performance Objective secondary measures of total asset, total equity, sales, net income, ROI, ROE and profit margin Composite measure based on (1) objective primary measures of financial performance, and (2) subjective single assessment of performance Objective primary measures of number of associates, expenses and number of activities

Positive relationship

No relationship

Positive relationship

Positive relationship for number of activities

(continued on next page)

816 Appendix A (continued ) Empirical study Baker, Simpson, and Siguaw (1998)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship

US distributors

Baker and Sinkula (1999a,b)

SBUs of firms

Operative scale DFW to measure distributor market orientation as perceived by the primary supplier. Response of suppliers employee most knowledgeable about the relationship Operative scale MARKOR. Response of marketing or non-marketing executive

Subjective composite measures of trust, cooperative norms, commitment and satisfaction with financial performance of primary supplier Subjective single measure of market share in relation to competition over the past year, and composite measures of performancebased on sales revenue, market share and profit in relation to competitors, new product successbased on new products over the last 3 years, and overall performancebased on overall performance and overall performance relative to competitors over the last year Subjective composite measure based on overall performance and overall performance relative to leading competitors over the last year (1) Objective measure of ROI. (2) subjective composite measures of market performancebased on customer satisfaction, value and attraction in relation to competitors, and financial performance relative to the industrys average Subjective single measure Subjective single measures of global performance and citizen participation Subjective composite measure based on profitability, size, market share and growth rate in comparison with the largest competitor. Averaged responses of two marketing executives

Positive relationship for market share, new product success and overall performance. Positive effect with performance through new product success. Moderating effect of learning orientation

Barret and Weinstein (1999)

Diverse businesses in Tennessee (US)

Operative scale MARKOR. Response of senior level manager at the firms headquarter

Becker and Homburg (1999)

SBUs across different industries in Germany

Operative scale based on management systems. Five components organization, information, planning, controlling and human resource management systems. Response of general manager Operative scale MARKOR. Response of marketing director Operative scale based on MARKOR. Response of chief secretary and mayor Operative scale DFW. Averaged responses of two marketing executives self-reported customer orientation, and averaged responses of two purchasing executives of a customer firmcustomer orientation reported by customers Operative scale MARKOR Operative scale based on MKTOR. Response of executive director

Positive relationship. Moderating effect of size and, to a lesser extent, flexibility. No moderating effect of corporate entrepreneurship Positive relationship for financial performance through market performance

Caruana et al. (1999) Cervera (1999), Cervera et al. (1999, 2001) Deshpande and Farley (1999)

Largest UK based service firms Local governments in Valencia (Spain) SBUs of Japanese firms traded on the Nikkei stock exchange in Tokyo SBUs of Indian firms traded on the Bombay stock exchange

No relationship Positive relationship

Positive relationship for both self-reported and reportedby-customers market orientation. Moderating effect of country

Harris and Piercy (1999) Hooley et al. (1999a,b)

Store managers in large UK retail organizations Firms in Hungary, Poland and Slovenia

Llonch and Lo pez (1999)

Large Spanish industrial companies

Operative scale based on MKTOR. Response of chief executive

Subjective composite measures of company and store performance Subjective composite measures based on financialprofit and ROIand market sales volume and market sharecriteria, in relation to main competitors, budget and last year Subjective single measures of ROI, margin, sales growth, pace of new product launching, and overall performance

Positive relationship Positive relationship

Positive relationship for ROI, margin, and overall performance

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Mavondo (1999), Mavondo and Farrell (2003) Analysed population Market Orientation Measure Performance measure

817

Relevant results in relation to market orientation performance relationship Positive relationship for marketing effectiveness

Food manufacturing business in Zimbabwe

Not specified. Single respondent

Moorman and Rust (1999)

Managers from different functions from US business organizations

Operative scales MARKOR and MKTOR

Sargeant and Mohamad (1999) Vorhies, Harper, and Rao (1999) Alvarez et al. (2000), Va zquez et al. (2001)

Hotel groups in the UK

Operative scale. Response of marketing director Operative scale MARKOR. Response of top marketing executive (1) Cultural scale based on MKTOR structure. (2) Operative scale based on MARKOR structure. Response of firms director

Objective single measure of ROA and composite measure of marketing effectiveness based on sales growth, changes in market share and number of successful new products in the last three years Subjective composite measures of financial performancebased on costs, sales, profitability and market share, customer relationship performancebased on customer satisfaction and retention, and quality, and new product performancebased on speed, creativity and financial performance of new product/service development, relative to objectives. Objective primary measures of turnover and profit after tax Subjective single measures of profitability, growth, adaptability and customer satisfaction relative to that of major competitors Subjective single measure of ROI, profits, sales and new product success relative to objectives and competitors in the last period

Positive relationship except for customer relationship satisfaction

No relationship

Large manufacturing and service firms with Australian operations Industrial firms in Asturias (Spain)

Positive relationship

Cravens and Guilding (2000) Dawes (2000)

US companies with strong brands

Firms in South Australia

Deshpande and Farley (2000)

Deshpande et al. (2000)

Senior managers of Chinese companies headquartered in Shanghai Japanese firms US firms UK firms German firms French firms

Operative scale based on MKTOR. Response of senior level accounting/finance or marketing executive Operative scale based on MKTOR, MARKOR, DFW and Deng and Dart (1994). Four components customer orientation, customer responsiveness, competitor orientation and market information sharing. Average of responses of CEO and other senior managers Operative scale DFW

Subjective composite measure based on customer satisfaction, sales volume, sales growth and profits relative to expectation Subjective composite measure of performance. Response of CEO

Positive relationship, especially for ROI and new product success. Moderating effect of uncertainty. No moderating effect of dynamism, competitive intensity and technological turbulence Positive relationship

Positive relationship except for market information sharing. Only relationship with customer orientation remains significant when other influences are controlled

Operative scale DFW. Averaged responses of two marketing executives-self-reported market orientation, and averaged responses of two purchasing executives of a customer firmmarket orientation reported by customers

Subjective composite measure based on profitability, size, market share and growth rate in comparison with the largest competitor Subjective composite measure based on profitability, size, market share and growth rate in comparison with the largest competitor. Averaged responses of two marketing executives

Positive relationship

No relationship. No moderating effect of country-related to cultural environment

(continued on next page)

818 Appendix A (continued ) Empirical study Dobni and Luffman (2000, 2003)

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Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship. Moderating effects of competitive pressure, products/ services dynamism and environmental unpredictability

US telephone companies

Farrell (2000)

Large Australian companies

Operative scale. Seven components formal and informal intelligence generation, intelligence dissemination, profit orientation, customer orientation, response design and implementation, and PSI factor. Response of marketing or non-marketing manager Operative scale MKTOR. Response of the CEO/ marketing director

Objective measure of ROI

Homburg and Pflesser (2000)

SBUs from five different industries in Germany.

Cultural and operative scales. Multilayer model of market orientation based on values, norms, artefacts and behaviours. Response of manager (general, marketing or non-marketing)

Loubser (2000)

South African companies

Matsuno and Mentzer (2000), Matsuno et al. (2002)

US manufacturing companies

Pulendran et al. (2000, 2003)

SBUs in Australian companies

Operative scale. Three componentsbusiness philosophy, market orientation and business behaviour. Single respondent Operative scale. Extension of MARKOR to include supplier relationships, regulatory aspects, social and cultural trends, and the macroenvironment. Response of marketing executive (vice president or director level) Operative scale MARKOR. Response of SBUs manager

Subjective composite measure based on customer retention, new product success, sales growth, ROI, and overall performance relative to competitors in the principal served market over the last year (1) Objective primary measure of ROS during the last three years. (2) Subjective composite measure of market performance based on value generation, customer satisfaction, attraction and retention, growth and market share, relative to competitors during the last three years Subjective single measures of growth in market capitalisation, total assets, equity and sales, ROE, ROA, and price earnings Subjective single measures of market share, relative sales growth, percentage of new product sales to total sales, and ROI relative to those of relevant competition Subjective composite measure based on overall performance, overall performance relative to competitors and expectations, and ROI and sales relative to competitors (1) Objective measures of profitability and ROI. (2) Subjective single measures of profitability and ROI relative to objectives in the last year Composite measures of static and dynamic sales and profitability, satisfaction and confirmationof-expectation, in relation to export activity, based on objective and subjective items Subjective composite measure based on sales growth, customer retention, ROI and market share

Positive relationship

Positive relationship. Sequence valuesnormsartefacts behavioursmarket performancefinancial performance. Moderating effect of market dynamism

Market orientation related to ROE. Business behaviour related to ROE and growth in total assets Positive relationship. Moderating effect of Miles and Snow (1978)s strategy types

Schlegelmilch and Ram (2000)

US firms

Cultural scale of strategic market orientation. Response of chief marketing executive officer

Positive relationship. Moderating effect of market turbulence. No moderating effect of technological turbulence and competitive intensity Positive relationship for subjective ROI

Shoham (2000)

SBUs of Israeli exporters

Operative scale of marketorientation strategy. Response of marketing manager

Positive relationship for managerial expectations, confirmation of expectations and dynamic sales

Sin et al. (2000, 2003)

Firms in mainland China Firms in Hong Kong

Operative scale MKTOR. Response of top administrator in Chinese companies, and marketing director/manager in Hong Kong companies

Positive relationship. Based on customer orientation and sales growth and customer retention in China. Moderating effect of country-related to economic context

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Slater and Narver (2000) Analysed population Market Orientation Measure Performance measure

819

Relevant results in relation to market orientation performance relationship Positive relationship

Voss and Voss (2000)

US single business corporations or SBUs of multi-business corporations US nonprofit professional theatre industry

Operative scale MKTOR. Response of chief marketing officer Operative scales of strategic orientation and interfunctional coordination based on Gatignon and Xuareb (1997). Response of managing director

Webb, Webster, and Krepapa (2000) Wood et al. (2000)

Corporate bank and their client firms

US not-for-profit hospitals

Operative scale based on MKTOR. Response of the main contact person in each of the client firms Operative scale based on MARKOR structure. Response of chief executive Operative scale. Two componentscustomer orientation and marketing intelligence. Response by consensus of chief marketing and chief R & D officers

Subjective single measure of ROI relative to primary competitors over the past 3 years. Response of general manager (1) Objective measures of attendance attributable to subscription and single tickets, total income and net surplus/deficit. (2) Subjective single measures of season subscription sales, single ticket sales and overall financial performance compared with peer organizations Subjective composite measures of customer satisfaction and service quality Subjective composite measure based on quality of care, revenues, financial position and patient satisfaction over the last 3 years Subjective single measure of the degree of commercial success for the new product in relation to expectations

Positive relationship between objective performance and competitor orientation and interfunctional coordination. Moderating effect of interfunctional coordination

Positive relationship

Positive relationship

Wren, Souder, and Berkowitz (2000)

Yau et al. (2000), Tse et al. (2003)

New product development projects for high technology industrial products in US New Zealand Scandinavia (Norway and Sweden) Korea Belgium Medium and large companies located in Hong Kong and with operations in Hong Kong and China

Positive relationship except for customer orientation in Korea

Operative scale MKTOR. Response of marketing director/manager

Atuahene-Gima and Ko (2001)

Australian firms

Operative scale MARKOR. Response of senior manager most knowledgeable about the firm and its recent new product project to complete

Beam (2001)

US daily newspaper companies

Operative scale based on MARKOR. Averaged response of senior editors

Grewal and Tansuhaj (2001)

Small and midsized Thai firms

Operative scale MARKOR. Response of middle managers and owners

Subjective composite measures of current and future performance based on sales growth, customer retention, ROI, market share, ability to get valuable information, loans, better terms in loans and government approval, contact with important persons and employee motivation relative to major competitors (1) Objective measures of percent age of profits and sales, and average profits over the last 3 years derived from new products. (2) Subjective composite measure based on market share, sales and profit derived from the recent new product in relation to objectives Objective secondary measures of total and home-county circulation, and current rate and change in home-county household penetration Subjective composite measure based on satisfaction with ROI, sales, profit and growth before and after crisis

Positive relationship. No moderating effect of industry manufacturing, retail and wholesale, and others

Positive relationship, stronger for objective performance. Moderating effect of entrepreneurship orientation

Positive relationship only between intelligence dissemination and change in household penetration Positive and negative relationship for performance before and after crisis, respectively. Moderating effects of competitive intensity, and demand and technological uncertainty (continued on next page)

820 Appendix A (continued ) Empirical study Harris (2001)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship No relationship. Moderating effect of market turbulence and competitive hostility. No moderating effect of technological turbulence Positive relationship

Medium and large UK firms

Operative scale MKTOR. Response of managing director/chief executive officer Operative scale MKTOR. Response of head of marketing

Harris and Ogbonna (2001), Ogbonna and Harris (2002) Harrison-Walker (2001)

Medium and large UK firms

SBUs of US organizations in hospitality and beverage manufacturing industries

Operative scale. Two componentscustomers and competitorsand four stagesinformation acquisition, sharing and shared interpretation, and developing and implementation of strategies. Averaged responses of senior level marketing executives Operative scale MKTOR. Response of senior executive Operative scale based on MKTOR and distinguishing interaction and collaboration from interfunctional coordination. Response of marketing, R & D and manufacturing managers

Hult and Ketchen (2001) Kahn (2001)

SBUs of large multinational corporations US apparel and textile manufacturers

(1) Objective secondary measures of sales growth and ROI. (2) Subjective single measures of sales growth and ROI relative to competitors Subjective composite measure based on customer satisfaction, sales growth, market share, competitive advantage and sales volume pertaining to long and short-term Subjective composite measures of financial performancebased on sales, sales growth, profit, ROI and market share, customer response performance-based on propensity, willingness and perception of superiority-and innovation performance-based on new product success and time to market Objective measures of change in ROI, income, and stock price over the past 5 years Subjective single measures of product development (pre-launch) and product management (launch and post-launch) performance

Positive relationship for customer orientation

Positive relationship through positional advantage Positive relationship for product development performance based on marketing managers perceptions, and for product management performance based on marketing and manufacturing perceptions Positive relationship between downstream market orientation and financial performance through customer orientation and trust, cooperative norms and satisfaction. Positive relationship between upstream market orientation and financial performance through supplier orientation and trust and cooperative norms Positive relationship through marketing competencies. Moderating effects of competitive intensity, integration of the internet, size and degree of export dependence Positive relationship

Langerak (2001a,b)

Dutch manufacturers.

Operative scales of downstream and upstream market orientation. Response of general manager. Scales of customer orientation of salespersons and of supplier orientation of purchasers. Response of contact with knowledge about the relationship in a customer and a supplier firm, respectively Operative scale MKTOR. Response of chief executive officer

Prasad, Ranamurthy, and Naidu (2001)

US manufacturing firms involved in exporting in a large Midwestern state

Subjective composite measure of financial performancebased on sales growth, profit, new product success and ROI. Response of general manager. Subjective composite measures of trust, cooperative norms and satisfaction. Response of contact with knowledge about the relationship in a customer and a supplier firm Subjective composite measure based on economic/financial and strategic outcomes of exporting and satisfaction with them

Santos et al. (2001)

Medium and large industrial firms in Spain Israeli firms from four industries

Shoham and Rose (2001)

Operative scale based on MARKOR structure. Response of general manager or marketing manager Operative scale MARKOR. Response of manager

Subjective composite measure based on ROI, sales, new product success and profit Composite measures of sales, growth in sales, profitability and growth in profitability based on objective and subjective items

Positive relationship except for sales

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Soehadi et al. (2001) Analysed population Market Orientation Measure Performance measure

821

Relevant results in relation to market orientation performance relationship Positive relationship

Indonesian retail firms

Subramanian and Gopalakrishna (2001)

Indian firms located in Chennai

Operative scale. Four componentscustomer, competitor and profit orientation, and interfunctional coordination. Response of the person who was most knowledgeable about the business strategy Operative scale based on MKTOR. Response of senior marketing executives

Subjective composite measure of performance

Tzokas, Carter, and Kyriazopoulos (2001) Cadogan, Diamantopoulos, and Siguaw (2002a)

Small manufacturing enterprises in Greece

Operative scale based on MKTOR and MARKOR. Response of managing director Operative scale of export market orientation based on MARKOR. Response of upper-level executive

US exporters

Cadogan, Sundqvist, Salminen, and Puumalainen (2002b)

Finnish exporting firms

Operative scale of export market orientation based on MARKOR. Response of export manager

Deshpande and Farley (2002)

Matear et al. (2002)

Senior managers of Chinese companies headquartered in six cities New Zealand service firms

Operative scale DFW

Operative scale developed by Gray et al. (1998). Response of marketing manager or CEO

Noble et al. (2002)

Mass merchandiser and discount sector of the retailing industry

Perry and Shao (2002)

Foreign affiliates of US-based advertising agencies

Measure based on cognitive mapping of the letter to share holders in corporate annual reports. Seven components customer and competitor orientation, interfunctional coordination, and profit, long-term, private label brand and national brand focus Operative scale based on MARKOR. Response of managing directors

Subjective composite measures of growth in overall revenue, ROC, new product success, customer retention and control of expenses based on their importance and satisfaction with them Composite measure based on objective sales, profit and adoption of innovations and subjective ability to respond to changes in the market Subjective composite measure of achievement of export objectives based on sales volume, profits, market share and new market entry, and single measure of global export success. Composite measure of growth in export sales based on objective and subjective items (1) Objective composite measure of efficiency performance based on export sales. (2) Composite measure of sales performance based on objective and subjective sales. (3) Subjective composite measure of profit performance based on satisfaction with export profits Subjective composite measure based on profitability, size, market share and growth rate in comparison with the largest competitor Subjective composite measures of financial performancebased on profitability, change in profitability and revenue, and market performancebased on customer satisfaction and loyalty, brand awareness, brand equity, reputation/ image and new product success Objective measures of ROA and ROS

Positive relationship. No moderating effect of competitive hostility, market turbulence and supplier power

Positive relationship. Moderating effect of entrepreneurial orientation Positive relationship except for export sales growth. No moderating effect of market turbulence

Positive relationship. Moderating effect of the complexity of the export environment and product vs. service exporters

Positive relationship. No moderating effect of city

Positive relationship, both directly and through innovation. No moderating effect of innovation

Positive relationship for customer orientation and national brand focus. Negative relationship for private label brand focus. Moderating effects of learning and innovation No relationship. Moderating effect of traditional competition. No moderating effect of competitive intensity and specialty competition

Subjective composite measures of qualitative and quantitative performance based on the extent to which Internet-based services increase new and existing client revenue, profitability, image, responsiveness and attraction

(continued on next page)

822 Appendix A (continued ) Empirical study Ramaseshan, Caruana, and Pang (2002)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship based on collection of marketing information for market performance, development of strategy for project performance, and both of them for overall performance

Singaporean firms

Operative scale of Ruekert (1992). Response of product development manager

Rose and Shoham (2002)

Israeli exporters

Operative scale MARKOR. Single respondent

Subjective composite measures of new product market performancebased on market share, sales, growth and profit objectives, and new product project performancebased on cost efficiencies, proprietary advantage, sales and profitability of other products, and new market opportunities, in relation to one new product introduced in the last 5 years. Measure of overall performance by combining both Composite measures of export sales and profitability, and change in export sales and profitability based on objective and subjective items

Tay and Morgan (2002)

UK general practice chartered surveying firms

Operative scale MARKOR. Response of head of marketing

Va zquez et al. (2002)

Private non-profit Spanish organizations

Operative scale based on MARKOR structure. Response of individual with full knowledge of the foundations internal operation and sector of activity

Agarwal et al. (2003)

International hotels

Operative scale based on MKTOR. Response of general manager

Calantone, Garcia, and Dro ge (2003) Chang, Jackson, and Grover (2003)

Medium and large US firms in diverse industries Firms engaged in e-commerce

Farrelly and Quester (2003)

Australian Football League and its protected sponsors

Operative scale based on MARKOR. Response of marketing, engineering or new product manager Measure based on content analysis of the letter to shareholders in corporate annual reports. Two componentscustomer and competitor orientation-in relation to e-commerce Operative scale based on MARKOR structure. Response of managers responsible for the relationship in the clubproperty market orientationand the sponsor firm sponsor market orientation and property market orientation perceived by the sponsor

Subjective composite measures of business performancebased on market share, ROI, new services, etc. relative to competitors, and marketing performancebased on customer satisfaction, firm awareness, etc. relative to competitors Subjective single measures of number of activities addressed to beneficiaries, volume of obtained income from donors, and ratio of donors contribution to non-profit expenditure, in relation to other similar organizations, and degree of fulfilment of the mission (1) Objective composite measure based on occupancy rate, gross operating profit and market share. (2) Subjective composite measure based on service quality and customer and employee satisfaction in relation to competitors Subjective measure of new product development performance based on profit, sales and market share relative to objectives in the last year Objective measures of gross profit margin and company profit growth

Positive effect for profit and change in sales and profit based on intelligence generation and responsiveness. No moderating effects of market turbulence, competitive intensity and technological turbulence Positive relationship. No moderating effects of market dynamism, environmental complexity and competitive hostility

Positive relationship

Positive relationship, both directly and through innovation

Positive relationship through new product development speed and corporate strategic planning Positive relationship

Subjective composite measures of trust and commitment. Response of manager responsible for the relationship in the sponsor firm

Positive relationship for property market orientation perceived by the sponsor and sponsor market orientation. No relationship for property market orientation

 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Appendix A (continued ) Empirical study Hult et al. (2003) Analysed population Market Orientation Measure Performance measure

823

Relevant results in relation to market orientation performance relationship Positive relationship. Moderating effects of size and age

SBUs

Operative scale based on MKTOR. Response of management or marketing executive

Jones et al. (2003)

Krepapa et al. (2003)

US consumer goods manufacturers sales force and retail trade customers Relationship managers from different SBUs of a major international bank and their respective industrial customers Quality oriented firms in Hong Kong

Operative scale based on MKTOR. Response of sales manager and salesperson Operative scale based on MKTOR. Response of relationship manager and customers

Subjective composite measures of competitor-based performance based on market share, growth, profit and size relative to the largest competitor in the last year, and overall performancebased on performance and performance relative to competitors in the last year Subjective single measures of overall service quality and propensity to switch. Response contact in retail trade customer Subjective single measure of overall satisfaction with the business relationship. Response of customer

No relationship

Lai (2003)

Operative scale MARKOR. Response of quality manager or personnel responsible for quality management

Langerak (2003b)

Manufacturing firms in the Netherlands

Operative scale based on MKTOR. Response of general manager or member of the management team

Subjective composite measures of motivation performancebased on employee training, satisfaction and security, market performance based on new product success, competitive price and customer satisfaction, productivity performancebased on materials usage, labour and capital utilization, and societal performance-based on consumer rights, environmental concern, expansion and employment opportunities Subjective composite measure based on sales growth, profitability, new product success, new product sales, market share and ROI relative to competitors over the last year

Positive relationship for market orientation perceived by customers. Negative relationship for the gap between customers and providers perceptions of market orientation Positive relationship

Liu et al. (2003)

State-owned enterprises in China Scandinavian banks

Lu neborg and Nielsen (2003)

Operative scale developed by Deshpande and Farley (1998a,b). Single respondent Operative scale MARKOR. Responses of marketing and IT managers

Subjective composite measure of marketing program dynamism Subjective composite measures of internet-bank attractiveness, relationship marketing performance, sales performance, and financial performance relative to competitors. Responses of marketing and IT managers (1) Objective primary measure of sales growth. (2) Subjective single measure of relative sales growth, and composite measures of profitabilitybased on comparison with objectives and competitors and customer loyaltybased on customer satisfaction and retention

Positive relationship through differentiation advantage based on customer and competitor orientation. Moderating effects of strategy type. No moderating effects of market and technological turbulence and competitive intensity Positive relationship

Positive relationship for attractiveness and relationship marketing performance. Moderating effect of size

Martin and Grbac (2003)

Manufacturers, wholesalers and industrial service firms from Ohio (US)

Operative scale. Six componentscustomer and competitor oriented information, cross-functional information, customer responsiveness, and response to competitor price change and campaign. Response of CEO/President

Positive relationship for customer-oriented information and cross-functional sharing of information. Positive relationship between competitor oriented information and profitability and relative sales growth. Positive relationship between responsiveness to customer and profitability and customer loyalty (continued on next page)

824 Appendix A (continued ) Empirical study Maydeu-Olivares and Lado (2003)

. Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829

Analysed population

Market Orientation Measure

Performance measure

Relevant results in relation to market orientation performance relationship Positive relationship through degree of innovation and innovation performance

Insurance companies operating in the European Union

Morgan and Turnell (2003)

UK firms marketing financial services

Operative scale developed by Lado et al. (1998). Nine componentsanalysis of final client, distributor, competitors and environment, interfunctional coordination, and strategic actions on consumers, distributors, competitors and macro-environment. Response of senior executives Operative scale based on MKTOR. Only two componentscustomer and competitor orientation. Response of executive of marketing and business development

Objective primary measures of domestic market share, premium growth and profitability per year averaged over the last three years

Qu and Ennew (2003)

Hotels in China

Operative scale MARKOR. Response of general manager

Salomo et al. (2003)

Innovation projects in five German industries

Singh (2003)

Indian firms

Operative scale based on MARKOR. Three components intelligence generation (market research activities and customer orientation), intelligence dissemination (customer integration and customer orientation) and responsiveness (market preparation, launch activities and customer orientation). Response of marketing manager Operative scale MKTOR. Response of CEO or proxy executive from marketing/sales department

Subjective composite measure based on market share, customer satisfaction, competitive position, customer retention and sales growth relative to major direct competitors over the last year Subjective composite measures of performancebased on sales growth, ROE and industry specific performance measures, and customer retention, and single measure of customer satisfaction Subjective composite measure of overall project successbased on technical and financial success, market share, competence, costs, meet regulatory requirements and image, and single measure of technical success. Response of project manager

Positive relationship

Positive relationship. Moderating effect of sector

Positive relationship between dissemination activities and technical success. Moderating effect of product innovativeness

Subjective single measures of ROI, customer retention and foreign market presence in relation to competitors since the economic reform

Positive relationship except for foreign market presence. Moderating effects of competitive intensity and market dynamism

Notes: The contributions have been ordered firstly by year and secondly by alphabetical order. Studies based on the same sample have been described together. Some market orientation scales include both cultural and operative items. They have been subjectively classified by authors according to the predominance of operative or cultural items. MARKOR, MKTOR and DFW refers to the scales developed by Deshpande et al. (1993), Kohli et al. (1993) and Narver and Slater (1990), respectively. Respondent for subjective measures of performance is not mentioned when it is the same as for market orientation measure.

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 . Gonza O lez-Benito, J. Gonza lez-Benito / Industrial Marketing Management 34 (2005) 797829 Wood, V. R., Bhuian, S., & Kiecker, P. (2000). Market orientation and organizational peformance in not-for-profit hospitals. Journal of Business Research, 48, 213 226. Wren, B. M., Souder, Wm. E., & Berkowitz, D. (2000). Market orientation and new product development in global industrial firms. Industrial Marketing Management, 29, 601 611. Yau, O. H. M., McFetridge, P. R., Chow, R. P. M., Lee, J. S. Y., Sin, L. Y. M., & Tse, A. C. B. (2000). Is relationship marketing for everyone? European Journal of Marketing, 34(9/10), 1111 1127. . Gonza Dr. O lez-Benito has a degree in Mathematics from the Universidad de Salamanca (1995), a MSc degree in Marketing at UMIST (UK) (1997), and a PhD degree in Economics and Management Sciences from the Universidad de Salamanca (1999). He is currently Assistant Professor of Marketing at the University of Salamanca. In addition to several published papers in some of the most recognised Spanish marketing and management academic journals, he has published articles in international journals such as Journal of Retailing, Journal of Business Research, Industrial Marketing Management, International Journal of Market Research, British Journal of Management, OMEGA, or Small Business Economics.

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Dr. J. Gonza lez-Benito has a degree in Mathematics (1995) and a PhD in Economics and Management Sciences (1999) from the Universidad de Salamanca, where he joined as an Assistant Professor of Management after taking the MPhil degree in Management Studies of the University of Cambridge (UK) (1997) and the MSc degree in Operations Management of UMIST (UK) (1998). He has published articles in journals such as: International Journal of Production Economics, International Journal of Operations and Production Management, International Journal of Production Research, OMEGA, British Journal of Management, Industrial Marketing Management, International Journal of Market Research, European Journal of Purchasing and Supply Management, and Management Decision.