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Leadership Style and Market Orientation
Leadership Style and Market Orientation
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European
Journal of Leadership style and market
Marketing
35,5/6
orientation: an empirical study
Lloyd C. Harris and Emmanuel Ogbonna
744 Cardiff Business School, Cardiff University, Cardiff, Wales, UK
Keywords Market orientation, Leadership, Retailing, Management styles
Received September 1998
Revised April 1999 Abstract There has been considerable research into the barriers to the development of market
orientation. However, whilst researchers have alluded to the importance of top management
knowledge, skills and commitment, the issues of leadership style has been largely overlooked. This
lacuna in marketing theory is despite numerous indirect references to the importance of leaders in
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developing a market oriented culture. The objective of this study is to explore and describe the role
of top management leadership style in influencing the process of market orientation development.
Begins with a review of existing definitions of and perspectives on the content and components of
market orientation. Thereafter extant research into the barriers and processes of market
orientation are examined and critically appraised. Following a discussion of the research
methodology adopted, the findings of a survey of leadership style and market orientation are
presented. Concludes with a discussion of the implications of this study for theory and practice,
highlighting the importance of this avenue of research.
Introduction
Despite significant advances in the early 1990s in improving understanding of
the components of market orientation (see for example Kohli and Jaworski,
1990; Narver and Slater, 1990), as the millennium approaches, many theorists
continue to argue that further research is needed (recent examples include
Hurley and Hult (1998); Day (1998)). Indeed, ever increasing academic attention
is matched by expanding practitioner interest into the concept of market
orientation (see Foreman, 1997; Eppes, 1997). The continuing fascination with
developing a market orientation can be ascribed to the growing number of
contexts wherein market orientation is found to be appropriate. Studies find
that market orientation is valuable in a huge range of contexts, including:
professional services (Whittington et al., 1994; Harris and Piercy, 1998); the
public sector (Graham, 1995); the non-profit sector (Wood and Bhuian, 1993);
education (Coates and Koerner, 1996); the health care sector (Herzlinger, 1997);
services industries (Egan and Shipley, 1995); and industrial markets
(Balakrishnan, 1996).
However, many theorists and practitioners persist in noting that further
research is required to explore the barriers and processes of market orientation
development (see for example, Narver et al., 1998; Slater and Narver, 1995;
Siguaw et al., 1998). Indeed, even after the presentation of the results of a
seminal study of the barriers to market orientation, Jaworski and Kohli (1993,
p. 65), in their directions for further research, conclude that, ``it seems desirable
to assess the role of additional factors in influencing the market orientation of
European Journal of Marketing,
Vol. 35 No. 5/6, 2001, pp. 744-764.
The authors wish to express their gratitude to the editors and to the two anonymous reviewers
# MCB University Press, 0309-0566 whose constructive comments helped in restructuring this paper.
an organization''. Unfortunately, few studies have responded to this suggestion, Leadership style
leading Morgan and Strong (1998, p. 1052) to note recently ``the relative dearth and market
of research investigating such antecedents''. Furthermore, while there is no orientation
shortage of anecdotal claims that leadership styles and culture are linked (Bass
and Avolio, 1993; Nicholls, 1988; Quick, 1992; Schein, 1992; Simms, 1997), there
have been very few empirical examinations (cf. Hennessey, 1998) and no study
which focuses specifically on the links between leadership and market oriented 745
culture.
The aim of this study is to explore and describe the impact of top
management leadership style in influencing the process of market orientation
development. In examining the links between leadership style and market
orientation, this paper intends to contribute empirical evidence and extend
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descriptive research, Harris and Piercy (1999) conduct and analyse a small
survey of UK retailing companies. Briefly, their findings indicate that
management behaviour which is formalised, conflictual or politically
motivated is negatively associated with the extent of market orientation.
Overall, a review of existing research into the barriers to market orientation
finds a recurring theme centred on management behaviour. While recognising
that systems, structures and strategies may also impede market orientation
(see Ruekert, 1992; Jaworski and Kohli, 1993), a range of theories and empirical
findings suggest that management behaviour may be the key to market
orientation (see Harris and Piercy, 1999).
Research methodology
In order to evaluate the research issues, a descriptive quantitative research
design was deemed appropriate. Consequently, a multi-industry sample of
1,000 units was collated from the FAME database of registered UK firms. The
FAME database contains descriptive information on over 270,000 major
private and public limited UK companies. The FAME database was used in
preference to others because past studies of market orientation in the UK which
have utilised the database have reported acceptable response rates (for
example, Pitt et al., 1996). A list of 1,639 potential sampling units was
developed based on a variety of criteria including: turnover (over £500,000);
date of registration (over three years); and number of employees (over 5,000). Leadership style
Thereafter, 1,000 units were selected via a systematic random selection and market
procedure. orientation
A number of authors have argued that the overall success of data generation
and the achievement of satisfactory responses is greatly dependent on efficient
and effective administration and implementation of a survey (see for example
Dillman, 1978; Churchill, 1991; Faria and Dickinson, 1992). Indeed, there is a 749
wealth of prescriptive articles which offer advice on effective survey design
(see for example Diamantopoulos et al., 1991). An important feature of such
literature is the generally accepted value of survey pre-notification (Murphy et
al., 1990), response incentives (Duncan, 1979) and follow-up mailings (Paxson,
1992). Possibly the most influential work in this area is provided by the total
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Responding rapidly to
competitors' actions 0.79764 0.66761
Top managers discussing
competitors' strategies 0.72007 0.41707 0.69395
Targeting opportunities for
competitive advantage 0.50483 0.59041 0.68680
Sharing information about
customers 0.42069 0.47530 0.39681 0.56035
Sharing resources across the
whole company 0.81006 00.75516
Sharing information across
departments 0.31177 0.33888 0.77155 0.80733
All departments contributing
to company strategy 0.44142 0.60917 0.56606
Getting all functions to
contribute to customer value 0.43005 0.54001 0.64992
Eigenvalues 7.03605 1.20769 1.08893
Percentage variance explained 54.1 8.5 7.0
Cumulative percentage
variance 69.6 2.5 4.166
Notes:
a
Principal components analysis with varimax rotation, converging in eight iterations (all
Table I. loadings less than 0.3 suppressed)
b
Principal components Question wording was ``To what extent does your company place a high priority on the
analysis of measures of following?'' measured on a seven-point Likert-type scale respectively anchored by (1) Not at
market orientation all and (7) Very great extent
Findings
In order to enable the construction of indices of market orientation and
leadership style, two separate principal components analyses with varimax
rotation were conducted. In each of the two factors analyses, factors were only
retained if they possessed an eigenvalue greater than one, accounted for over 5
percent of variance and if they were conceptually clear and interpretable
(Kaiser, 1958; Churchill, 1991; Hair et al., 1995).
As expected, the principal components analysis of market orientation items
led to the extraction of three factor solutions (see Table I) which cumulatively
explain nearly 70 per cent of variance. As anticipated, whilst three factor
solutions emerged, notable cross loadings between factor solutions were
evident. The first factor of five items loads very heavily onto a vector
generating an eigenvalue of over seven. Comprising the Narver and Slater
(1990) items designed to measure customer orientation, the solution is approved
and labelled customer orientation. The second and third factors load onto
vectors, generating respective eigenvalues of 1.20709 and 1.08893. The items
for the second and third factor are composed of items derived from the Narver
and Slater (1990) measures of competitor orientation and inter-functional co-
ordination. Consequently, the two factors are approved and given the
respective labels of competitor orientation and inter-functional co-ordination.
The principal components analysis of the items of the House (1971) and
House and Dessler (1974) measure of leadership style, led to extraction of three
factor solutions which explain over 66 per cent of variance (see Table II). The
first factor solution loads very heavily onto a vector generating an eigenvalue
of over five. Each of the five items which comprise this solution appears to be
geared toward the measurement of leadership participation. This style of
leadership a is non-directive form of role clarifying behaviour which is gauged
by the extent to which leaders allow subordinates to influence decisions by
requesting input and contribution. The items in the factor are conceptually
consistent and easily interpreted into a label of ``participative leadership style''.
The second factor solution again loads heavily onto a vector generating an Leadership style
eigenvalue of over two. Accounting for over 15 per cent of variance, the four and market
items of this solution appear to measure leadership consideration. This orientation
measure of supportive leadership (sometimes called leadership consideration)
focuses on the extent to which the behaviour of a leader can be viewed as
sympathetic, amicable and considerate of subordinate needs. Consequently, the
second factor is accepted and given the label ``supportive leadership style''. The 753
third solution is composed of those items geared toward the measurement of
leadership instrumentality. This measure of leadership style is akin to directive
leadership and is designed to gauge the extent to which leaders specify
expectations, allocate tasks and establish procedures. The solution is therefore
labelled ``instrumental leadership style''. Consequently, indices were
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constructed for the three measures of leadership style, the three dimensions of
market orientation and for an overall measure of market orientation by
calculating the summated means of scales.
Prior to exploring and describing relationships between measures of market
orientation and leadership style, the scales were examined and assessed to
gauge reliability and validity. Since market orientation is often studied as a uni-
dimensional construct, the examination of reliability included the inspection of
the dimensions of market orientation and an overall measure. The Cronbach
alpha coefficient (Cronbach, 1951) was used to evaluate the extent of reliability
(see Table III). This test resulted in the calculation of coefficients which ranged
from 0.9259 (for overall market orientation) to 0.6688 (for instrumental
leadership). The high coefficient scores led to the conclusions that the scales
were acceptably reliable.
As mentioned previously, the survey instrument was piloted and adjusted to
improve content validity (see Dillman, 1978; Churchill, 1991). However, in order
to assess the validation of index operationalisation, items in each scale were
correlated to the whole scale. This analysis indicated that each of the
correlations was both high and in the expected direction, indicating convergent
validity (see Table III). Discriminant validity was gauged in an approach akin
Cronbach
Number of alpha Inter-item correlationsa
Scale scale items coefficient Lowest Highest
orientation display consistent results for the overall and the dimensional
indices of market orientation. The four measures of market orientation all
exhibit mean scores notably above the mid-point of four. Few inferences can be
gained from this analysis, however, the relatively high market orientation
scores suggest that the extent of market orientation displayed by the sample
organizations is high. Indeed, given that the sample is constituted of larger
companies, it may be argued that these scores lend support to theories which
Standard
Mean deviation Valid cases
style is negatively and significantly associated with the overall and dimensional
measures of market orientation at the 0.001 level. These findings suggest that a
leadership style characterised by leader behaviour geared towards expectation
specification, task allocation and procedure setting (that is an instrumental
leadership style) impedes all aspects of market orientation. This is partially
consistent with the findings of Bass and Avolio (1993) who find that a similar
style of leadership is not conducive to superior organizational performance.
However, a leadership style characterised by non-directive role clarification
(leadership participation) or consideration (supportive leadership style) fosters
all facets of market orientation. This provides empirical verification in support
of the anecdotal evidence found or implied in broader organizational research
(see Quick, 1992; Schein, 1992) which suggests links between such leadership
styles and organizational effectiveness.
Whilst the analysis presented in Table V provides a strong indication of
associations, it should be noted that zero-order correlation analysis may over-
estimate the strength and direction of association. Consequently, some form of
multivariate analysis was deemed necessary. A review of a range of
multivariate techniques found that regression analysis was potentially
appropriate. However, despite common usage (McIntyre et al., 1983), Bryman
and Cramer (1994, p. 245) argue that some forms of regression analysis are
controversial since they ``afford priority to statistical criteria for inclusion
rather than theoretical ones''. Consequently, according the recommendations of
Overall Inter-
market Customer Competitor functional
orientation orientation orientation co-ordination
the regression equations, the association between leadership styles and the
dependent variables (overall market orientation, customer orientation,
competitive orientation and inter-functional co-ordination) remains monotonic.
That is, the relationship between participative and supportive leadership styles
is consistent across each dimension of market orientation and the overall
market orientation measure. Similarly, the association between instrumental
leadership style and the dimensions and overall measures of market orientation
is consistently negative. Furthermore, the coefficient of multiple determination
(R2) of each of the regression equations is similar. As expected, the coefficient of
multiple determination where overall market orientation is the dependent
variable is the greater at 0.27. This suggests that over 27 per cent of the
variation of the measure of overall market orientation around its mean can be
attributed to varying leadership styles, indicating that leadership style is a key
antecedent to market orientation.
Dependent variables
Overall Inter-
market Customer Competitor functional
Independent variables orientation orientation orientation co-ordination
why certain leaders are able to transform their organizations and instil a
genuine belief in focusing on market needs. It is widely acknowledged by both
theorists and practitioners that developing a market orientation is a complex
and arduous process. The findings of this study suggest that an awareness of
the role of leaders and the effect of leadership style provides a partial
explanation of why the process of developing a market oriented culture proves
so elusive in some organizations and yet achievable in others. This is consistent
with the findings of leadership theorists who suggest that the presence of
certain leadership styles may significantly influence employee motivation and
ultimately company performance (see Bycio and Hackett, 1985; Howell and
Avolio, 1993). Thus, given the clear links between market orientation and
organizational performance (see Slater and Narver, 1994), an indirect link
between leadership style and company performance can be claimed.
A further implication of this study can be derived from the application of
wider organizational concepts to strategic marketing issues. If a genuine
understanding of intra and extra-organizational dynamics is ever to be
accomplished then an appreciation of concepts outside of the traditional
domain of marketing is imperative. This study provides humble evidence of the
utility of such an approach in that the application of a concept derived from
broader organizational theory (leadership style) has provided an important
insight into a central strategic marketing issue (market orientation). Indeed,
given the strength of associations, it is arguable that a true understanding of
the antecedents to market orientation is impossible without this appreciation.
In addition to the implications mentioned above, a number of issues
specifically relevant to practitioners require discussion. Given the finding of
positive associations between participative and supportive leadership styles
and market orientation, it would appear prudent to advise marketing and
general management practitioners to concentrate on developing or encouraging
supportive or participative leaders or leadership styles. One of the most cited
researchers on leadership, Fiedler (1996), has identified the limited theoretical
and practical attention devoted to leadership training as undermining the
potential contribution of leaders to the success of organizations. This study
endorses this view and argues that appropriate leadership training will help
existing and new managers to improve their effectiveness. Leadership training Leadership style
can be achieved in a variety of different ways and on a number of differing and market
occasions. For example, during recruitment and induction, managers may be orientation
vetted for leadership skills and training needs in this area identified. Training
may also be required for current managers. It would also appear to be judicious
to involve employees as far as possible in decision making, especially where
such decisions are likely to have a direct effect on them. In this way, an 759
environment can be created where employees (at all levels) can have a sense of
``ownership'' and involvement which will be manifested in their interactions
with customers of all types.
This study is designed to provide an initial insight into this issue and to
supply a foundation for further research in this area. The limitations of this
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