Journal of Small Business Management 2008 46(4), pp.

485–511

Market Orientation and Internationalization

in Small and Medium-Sized Enterprises
by Julia M. Armario, David M. Ruiz, and Enrique M. Armario

This article builds on studies from the literature on market orientation (MO) and
internationalization to develop a model and a set of hypotheses regarding the rela-
tionships among MO, knowledge acquisition (KA), and market commitment (MC),
and the direct and indirect effects of these variables on the performance of small and
medium-sized enterprises (SMEs) in foreign markets. The model and its hypotheses
are tested by means of an empirical study of a multi-industry sample of Spanish SMEs
operating in foreign markets. The results, obtained by structural equation modeling,
indicate that a direct positive relationship exists between MO and a strategy of
internationalization, and that the effect of MO on performance in foreign markets is
moderated by KA and MC.

Bilkey and Tesar 1977). The second

Introduction
There are two major perspectives
on the process of internationalization of
small and medium-sized enterprises
(SMEs). The first perceives the interna-
tionalization of SMEs as being a sequen-
tial process that leads from a domestic
market to international markets in accor-
dance with a “learning process,” where-
by knowledge of the new markets is
acquired and resources are increasingly
committed to those markets (Johanson
and Vahlne 1990, 1977; Cavusgil 1980;
perspective, derived from the inter-
national entrepreneurship literature, con-
tends that a firm can be “born global”
(Rialp, Rialp, and Knight 2005;
Andersson and Wictor 2003; McDougall,
Oviatt, and Shrader 2003; Kuemmerle
2002; McDougall and Oviatt 2000;
Madsen and Servais 1997; Knight and
Cavusgil 1996; McDougall, Shane, and
Oviatt 1994). The current state of
research suggests that, in mature indus-
tries in which environmental change is
minimal, the sequential perspective on

Julia M. Armario is associate professor of Business and Economics at the University of

Malaga, Spain.
David M. Ruiz is associate professor in marketing at the University of Seville.
Enrique M. Armario is senior lecturer in marketing at the University of Seville.
Address correspondence to: Enrique M. Armario, University of Seville, C/ S. Fernando, 4,
C.P. 41004-Seville, Spain. E-mail: earmario@us.es.

ARMARIO, RUIZ, AND ARMARIO 485

internationalization is more appropriate,
whereas, in growing industries, the
second perspective provides a better
understanding of the internationalization
phenomenon. This assessment of the
applicability of the two perspectives is
predicated on the observation that, in the
earlier stages, the internationalization of
SMEs can be influenced by the life-cycle
stage of the industry (Andersson 2004).
Research has also shown that the
possession of certain competencies can
facilitate the development of a com-
pany’s internationalization strategy, espe-
cially in the earlier stages of the process
(Li, Li, and Dalgic 2004; Yip, Gómez, and
Monti 2000). The present study contrib-
utes to this line of research by investigat-
ing whether market orientation (MO),
understood as a specific corporate com-
petence, constitutes an antecedent to
internationalization in SMEs.
From a behavioral perspective, MO
has been defined as “the organization-
wide generation of market intelligence
pertaining to current and future
customer needs, dissemination of the
intelligence across departments, and
organization-wide responsiveness to it”
(Kohli and Jaworski 1990). As such, MO
can also be understood as a company
resource—because, in terms of the
theory of the resource-based view (RBV),
MO is an intangible property of the firm
that enables it to manage market infor-
mation and deliver value to its customers
(Hunt and Lambe 2000). In this regard,
market-oriented behaviors facilitate orga-
nizational learning and enhance market
knowledge (Day 1994). The acquisition
of such knowledge in a single, specific
context is not as relevant as the acquisi-
tion of the ability to analyze, understand,
and respond to a range of contexts. In
other words, companies must learn to
learn.
The present study aims to establish
whether this learning process can be
applied to foreign markets—thus sup-
porting an SME’s internationalization
486 JOURNAL OF SMALL BUSINESS MANAGEMENT
strategy. The first objective of the study
is therefore to develop a model that links
an SME’s overall MO with its internation-
alization strategy, and the second objec-
tive is to explore the joint effect of these
factors on an SME’s performance in
foreign markets.
Given that the sample of SMEs used in
the present study belonged to mature
industries, it is presumed that they have
followed the sequential-learning ap-
proach in their internationalization
(Andersson 2004). In this context, three
research questions are posed:
(1) Does an overall MO facilitate
knowledge acquisition (KA) in
foreign markets?
(2) Does an overall MO foster organi-
zational commitment toward
foreign markets?
(3) Does an overall MO improve perfor-
mance in foreign markets?
To address these questions, a model
is developed, and this is tested in an
empirical study of a multi-industry
sample of Spanish SMEs operating in
foreign markets.
The remainder of this article is orga-
nized as follows. Following this intro-
duction, the next section reviews the
relevant literature on the international-
ization of SMEs, the concept of MO, and
the relationship between the two. The
research objectives and hypotheses are
then proposed, followed by the presen-
tation of the proposed model. This is
followed by an explanation of the meth-
odology used in the empirical study. An
analysis of the results of the study is then
provided. The article concludes with a
discussion of the major findings of the
study, its limitations, and suggestions for
future research arising from it.
Literature Review
Internationalization of SMEs
As stated in the introduction, there are
two major streams of research on the
internationalization of SMEs—(1) inter-
nationalization as a learning process by
an SME; and (2) internationalization from
the time of creation of an SME.
The first stream focuses on internal
organizational factors, especially during
the incremental process of learning in
the earlier stages of internationalization.
Within this stream, certain specific con-
tributions can be identified. These
include the “lifecycle model” (Vernon
1966), the “ethno-centrism, regio-
centrism, poly-centrism, geo-centrism
(ERPG) model” (Wind, Douglas, and
Perlmutter 1973), the “innovation model”
(Rogers 1962), and the “Uppsala model”
(Johanson and Vahlne 1977; Johanson
and Wiedersheim-Paul 1975). The pre-
sent study rests on the last of these, the
“Uppsala model,” in developing its theo-
retical framework.
The Uppsala model is based on orga-
nizational behavioral theory (Cyert and
March 1963). According to the model,
the process of internationalization is
understood as a causal cycle in which
a firm’s knowledge is posited as an
explanatory variable. Essentially, compa-
nies initially develop in their domestic
markets, and internationalization is a
consequence of subsequent incremental
decisions. Such decisions are limited by
two factors—information and resources.
It follows that the major barriers to inter-
nationalization are a lack of information
and a scarcity of resources.
Lack of information and scarcity of
resources generates uncertainty. To mini-
mize its risks, a firm is likely to begin its
internationalization by choosing markets
that exhibit less uncertainty. Companies
with little international experience
would rather enter markets that resemble
their domestic markets. In this regard,
the concept of “psychological distance”
becomes important in the early stages of
the internationalization process. “Psy-
chological distance” can be defined as a
group of factors—such as language,
culture, politics, and so on—that hinder
ARMARIO, RUIZ, AND ARMARIO
the flow of information between the
company and the market. Once the
company has acquired international
experience, its decisions on market entry
are likely to be more dependent on other
factors—such as market size or the
global economic climate.
In summary, the Uppsala model first
describes a firm’s sequence of entry into
foreign markets (in terms of the concept
of “psychological distance”), and then
describes the subsequent incremental
commitment of a firm to foreign markets
(in terms of other factors).
Models that portray the international-
ization of SMEs as a steady process have
been criticized for being deterministic
and for paying insufficient attention to
particular contexts. Andersen (1993), for
example, has criticized the underlying
theoretical weakness of all process
models and the lack of coherence
between theory and practice. In spite of
this criticism, there is empirical evidence
that many SMEs have internationalized
in incremental stages (Korhonen, Luo-
starinen, and Welch 1996; Crick 1995;
Larimo 1991; Erramilli and Rao 1990;
Luostarinen 1980; Wiedersheim-Paul,
Olson, and Welch 1978; Bilkey and Tesar
1977; Weinstein 1977). In particular,
SMEs in mature industries are more
likely to follow such a sequential process
(Andersson 2004).
The second stream of research draws
on the international entrepreneurship
literature and argues that an SME can be
international from its creation (Rialp,
Rialp, and Knight 2005; Andersson
and Wictor 2003; McDougall, Oviatt,
and Shrader 2003; Kuemmerle 2002;
McDougall and Oviatt 2000; Madsen and
Servais 1997; Knight and Cavusgil 1996;
McDougall, Shane, and Oviatt 1994).
These companies have been described in
various ways: (1) “born global” (Anders-
son and Wictor 2003; Madsen and Servais
1997; Knight and Cavusgil 1996); (2)
“global start-ups” (Oviatt and McDougall
1994); (3) “international new ventures”
487
(McDougall, Shane, and Oviatt 1994);
and (4) “instant exporters” (McAuley
1999).
The most significant feature of the
“born-global” firms is that management
adopts a global focus from the outset
and embarks on rapid and dedicated
internationalization. They are usually
technology-intensive firms that are
formed by active entrepreneurs—often in
response to a significant breakthrough
in process or technology. Their offerings
commonly involve substantial value-
adding (McKinsey & Co 1993).
McDougall, Shane, and Oviatt (1994)
contend that entrepreneurship theory
and RBV theory provide valid expla-
nations of the phenomenon of the
“born-global” firms, and that these expla-
nations are in accordance with the recent
trends that have characterized this
phenomenon—(1) the increasing role of
niche markets; (2) advances in process
technology; (3) advances in communica-
tion technology; (4) the inherent advan-
tages of small firms (quicker response
time, flexibility, adaptability, and so on);
(5) the means of internationalization
(knowledge, technology tools, facilitat-
ing institution, and so on); and (6) the
growth in global networks.
The relevance of entrepreneurs
has been underlined in the literature,
which has found a positive relationship
between international development and
an entrepreneur’s international orienta-
tion (Zahra, Hayton, and O’Neill 2001;
Lumpkin and Dess 1996). According to
this view, international entrepreneurship
evolves from the discovery and exploita-
tion of opportunities in the international
marketplace. The pursuit of such oppor-
tunities requires the creation of new
enterprises (which involves a recombina-
tion of resources) (Davidsson and
Wiklund 2001; Moran and Ghoshal 1999),
together with entry into new markets or
market segments (which involves inte-
grated decisions regarding the degree of
resource commitment to the market).
488 JOURNAL OF SMALL BUSINESS MANAGEMENT
MO
The term “market orientation” (MO)
has been interpreted in various ways.
Some authors use the term as a synonym
for “customer orientation” (Shapiro
1988) or for “marketing orientation”
(Trustrum 1989). Others have under-
stood MO to be a business philosophy
that promotes interfunctional coordina-
tion to optimize organizational perfor-
mance (Grönroos 1989). These (and
other) interpretations can be classified in
two major categories:
(1) A cultural perspective: this con-
ceptualizes MO as part of “or-
ganizational culture”—permanently
orientating the company toward the
creation and delivery of superior
value for its customers (Narver and
Slater 1990); and
(2) A behavioral perspective: this con-
ceptualizes MO in terms of specific
behaviors of the organization—for
example, Kohli and Jaworski
(1990), who defined MO as the
organization-wide generation of
market intelligence pertaining to
current and future customer needs,
dissemination of the intelligence
across departments, and organiza-
tion-wide responsiveness to it.
The two perspectives are not mutually
exclusive; indeed, they are complemen-
tary. MO implies the development of
an organizational culture that generates
organizational capabilities through learn-
ing; these capabilities are exhibited in
certain market-oriented behaviors that
ultimately lead to superior market
performance.
The RBV can help in understanding the
nature of MO and its relationship with the
achievement of a competitive advantage.
According to the RBV, MO can be consid-
ered as a resource—because it is an intan-
gible property of a firm that enables it to
manage market information and deliver
superior value for its customers (Hunt and
Lambe 2000). According to Day (1994),
market-oriented companies develop
“inside–out” capabilities, which connect
the internal processes that define organi-
zational capabilities with the external
environment, thus allowing the company
to be competitive by creating solid rela-
tionships with customers, distributors,
and suppliers. These distinctive capabili-
ties can be characterized as “market-
sensing” and “customer-linking and
channel-bonding.”
Market-sensing refers to the way in
which MO enables a firm to learn about
its market and anticipate future events.
The process of collecting, interpreting,
and using market information about
customers, competitors, distributors, and
suppliers is more systematic and predict-
able in companies that have a greater
degree of MO. Market-sensing processes
follow the same general sequence of
information-processing activities that an
organization uses to learn (Sinkula 1994;
Huber 1991). According to this view,
market-oriented companies develop the
experience and resources to acquire
more market information and use it more
effectively than companies that are not as
market oriented. Kohli and Jaworski’s
(1990) definition of MO emphasizes
the importance of market-sensing
capabilities.
Customer linking and channel
bonding refers to the manner and inten-
sity of a firm’s relationships with its cus-
tomers and distributors. Market-oriented
companies devote special attention to
these relationships to ensure that they
understand the particular needs and
preferences of their customers and dis-
tributors, thus enhancing the process of
value creation. The delivery of superior
value produces customer satisfaction and
enhanced relationships with customers.
These, in turn, contribute to better finan-
cial performance—given the higher pro-
fitability of loyal customers (Day 1994).
These capabilities develop through
learning processes as the firm’s employ-
ARMARIO, RUIZ, AND ARMARIO
ees apply their knowledge to the solu-
tion of marketing problems. According
to Day (1994), these learning processes
are characterized by: (1) open-minded
inquiry (based on the belief that all deci-
sions are made on the basis of market
information); (2) widespread information
distribution (which ensures that relevant
facts are available when needed); (3)
mutually informed mental models
(which guide interpretation and ensure
that everyone pays attention to the
essence and potential of the informa-
tion); and (4) an accessible “memory
bank” of what has been learned (which
ensures that the knowledge can continue
to be used).
In summary, market-oriented firms
acknowledge the relevance of using
information about customers and com-
petitors when designing their strategies.
These firms can employ this knowledge
to create and deliver a better offering
than that of competitors in their target
markets (Hunt and Lambe 2000).
Because MO is a distinctive resource
of the company, it allows the firm to
develop a specific competitive advantage
(Jaworski and Kohli 1993; Narver and
Slater 1990), and because it is difficult for
competitors to copy this resource, any
competitive advantage will be sustain-
able (Hunt and Morgan 1995).
To operationalize a firm’s MO, the
present study adopts the behavioral per-
spective of Kohli and Jaworski (1990)
because: (1) this conceptualization has
been extensively validated (Kara, Spillan,
and DeShields 2005; Siguaw and Dia-
mantopoulos 1995; Kohli, Jaworski, and
Kumar 1993); (2) it focuses on specific
behaviors, which facilitates estimation
accuracy (Jaworski and Kohli 1993); and
(3) it is compatible with the RBV of the
present study.
MO and Internationalization
of SMEs
As previously noted, models such as
the Uppsala model (Johanson and
489
Vahlne 1990, 1977) rest on organiza-
tional behavior theory. These models
portray internationalization as a learning
process whereby knowledge for future
development is gained from sequential
international decisions. Internationaliza-
tion is thus perceived as an evolutionary
process in which companies develop
growing levels of commitment to foreign
markets as they travel through a series of
sequential steps and accumulate deci-
sions (Root 1987; Brooke 1986). Experi-
ence becomes an essential factor,
because it diminishes the level of uncer-
tainty and risk related to foreign-market
decisions. In this regard, there are simi-
larities between internationalization and
innovation.
There is evidence supporting the
application of behavior theory and
gradual learning to business internation-
alization (Forsgren 2001, 2000; Eriksson
et al. 1997; Calof and Beamish 1995;
Erramilli and Rao 1993, 1990; Hirsch
1993; Erramilli 1991, 1990; Beamish
1990; Kogut and Singh 1988; Root 1987;
Sharma and Johanson 1987; Reid 1984;
Wiedersheim-Paul, Olson, and Welch
1978). There is also evidence of its use-
fulness in the context of SMEs (Westhead
et al. 2001; Gankema, Snuif, and Zwart
2000), especially when the industry is
mature (Andersson 2004), as in the cases
considered in this study.
In accordance with the RBV approach,
MO can also be understood as a corpo-
rate competence that supports a firm’s
activities in its markets, including its
foreign markets. We support this state-
ment on the following arguments: (1) the
learning process leading the SMEs from
their domestic markets to the inter-
national markets represent one of the
essential pillars in the sequential
approach of internationalization; (2) the
beginning of the internationalization
process can be explained through certain
corporate competences—technology,
innovatation capabilities, entrepreneur-
ship, etc. (Li, Li, and Dalgic 2004; Yip,
490 JOURNAL OF SMALL BUSINESS MANAGEMENT
Gómez, and Monti 2000); and (3) com-
petences fostering organization learning
—such as MO—are specially relevant in
the internationalization process.
Market-oriented capabilities (market
sensing; customer linking and channel
bonding) facilitate acquisition of knowl-
edge about foreign markets. These capa-
bilities are especially important in the
earlier stages of the internationalization
process, when the firm has little interna-
tional experience and is therefore likely
to follow its domestic routine in terms
of collecting information, disseminating
that information across the organization,
and designing a corporate response to
the market.
In this context, the dynamic-
capabilities approach (Eisenhardt and
Martin 2000) emphasizes the competitive
value of MO. According to this approach,
it is possible to identify four groups of
corporate competencies: (1) managerial
competencies; (2) resource-based com-
petencies; (3) transformation-based
competencies; and (4) output-based
competencies (Lado, Boyd, and Wright
1992). Of these, the resource-based com-
petencies and the transformation-based
competencies are especially relevant to
the present study. The resource-based
competencies consist of core human and
nonhuman assets, both tangible and
intangible, that allow a firm to outper-
form rivals over a sustained time. The
resource-based competencies have poten-
tial to influence a firm’s ability to develop
transformation-based and output-based
competencies. The transformation-based
competencies are the organizational
capabilities that are required to turn
inputs into outputs. These are embedded
in the social structure and culture of the
firm (Menguc and Auh 2006). Under this
typology, MO is a resources-based com-
petence that fosters the development of a
corporate culture (transformation-based
competence) which, simultaneously,
emphasizes the learning and adaptation
capabilities of the company. The appli-
cation of an MO culture (which is a trans-
formational competence) in foreign
markets enables a faster and more effec-
tive transformation of the market’s infor-
mation into an appropriate response.
In summary, a firm’s global MO is a
distinctive competence that supports the
firm’s activities in its markets. MO can
thus be represented as an antecedent of
the internationalization process of an
SME because: (1) MO fosters and facili-
tates the learning process in foreign
markets; and (2) highly market-oriented
companies develop stronger capabilities
(market sensing, customer linking, and
channel bonding) that allow the acquisi-
tion of foreign market knowledge, as
well as designing a proper market
response.
Research Objectives and
Hypotheses
The main objective of this study is to
examine whether MO facilitates inter-
nationalization of SMEs, thus leading to
better performance in foreign markets.
MO and Performance in Foreign
Markets
The relationship between perfor-
mance and MO has traditionally been
approached from the MO perspective,
although authors have disagreed about
the performance measure that should be
used. According to the resources-based
view, MO is a resource (or a compe-
tence) that is likely to generate a sustain-
able competitive advantage leading to
superior performance (Slater and Narver
1995). MO is the core of a culture that
orientates a firm’s behaviors toward the
creation of value for its customers. A
firm’s MO can thus be assessed in terms
of its customers—because MO focuses
on understanding and meeting custom-
ers’ needs and expectations (Dickson
1992). Higher performance can then be
attained through success in new product
development and improved customer-
retention rates (Sinkula 1994).
ARMARIO, RUIZ, AND ARMARIO
There is evidence of a positive rela-
tionship between MO and performance
(Pelham 2000, 1993; Slater and Narver
2000; Deshpandé and Farley 1999; Pitt,
Caruana, and Berthon 1996; Jaworski
and Kohli 1993; Ruekert 1992; Narver
and Slater 1990). However, these studies
have been limited to domestic contexts.
Only recently has there been an effort to
explore MO in the international context,
and this has produced some empirical
evidence of a positive link between
market-oriented export behaviors and
export performance (Cadogan and Cui
2004; Akyol and Akehurst 2003;
Cadogan, Diamantopoulos, and Siguaw
2002; Cadogan et al. 2002; Ngansathil
2001; Diamantopoulos, Siguaw, and
Cadogan 2000; Know and Hu 2000). In
these contributions, examination of the
influence of MO has been limited to
the export market—an export-market
oriented approach. Nevertheless, Rose
and Shoham (2002) have confirmed a
positive relationship between a firm’s
overall MO and some dimensions of the
export performance. Their studies indi-
cate that MO is a significant determinant
of performance and customer satisfaction
in export markets. MO activities help
managers to trust in the correct imple-
mentation of marketing strategies in
foreign markets.
As a result of the earlier discussion,
the following hypothesis is proposed:
H1: MO is positively related to foreign-
market performance.
MO and KA of Foreign Markets
MO promotes the acquisition and
analysis of information about customers,
competitors, and environmental forces,
and this knowledge can be used by orga-
nizational members to create and deliver
superior customer value. From this per-
spective, a market-oriented company is a
learning-oriented company (Tuominen,
Möller, and Rajala 1997; Jaworski and
Kohli 1996). Both orientations facilitate
491
an awareness of the resources that will
be required to compete and achieve a
solid competitive advantage (Slater
1996).
Market-oriented companies should
thus have superior capabilities to “sense”
the market. Because such capabilities
involve information generation and dis-
semination, MO is a dynamic capability
that enables a firm to enhance its skills
in acquiring new knowledge (Varela,
Gutiérrez, and Antón 1998) and incorpo-
rating it in organizational memory (Slater
and Narver 1996). In addition, as noted
earlier, the culture of market-oriented
firms can be understood as a transforma-
tional competence which, through learn-
ing, enables a company to transform
market information efficiently into an
appropriate response.
Organizational learning strengthens
the connection between a company and
its environment, thus enabling proactive
responses rather than reactive responses.
A learning orientation anticipates
changes in the market, and enables a
company to avoid convulsions (Day
1994; Sinkula 1994). Moreover, a willing-
ness to learn entails the initiation of rela-
tionships with customers, suppliers, and
other market agents, and the fostering
of cooperative attitudes when unfore-
seen difficulties emerge (Webster 1992).
The inherent flexibility of learning-
oriented organizations enables them to
adapt rapidly to new market oppor-
tunities (Slater and Narver 1995). This
behavior assists them in comprehending
the complexity of the environment and
minimizes delays in strategic decision-
making (Álvarez, Santos, and Vázquez
2000).
Similarly, Slater and Narver (1996)
consider that market-oriented companies
possess enhanced capabilities to under-
stand their environment. This implies
that they take fewer strategic risks, given
that they already benefit from informa-
tion that guides their behavior without
threatening their performance. As a con-
492 JOURNAL OF SMALL BUSINESS MANAGEMENT
sequence, a market-oriented company is
likely to cope better with environmental
uncertainty in foreign markets, because
its knowledge of those markets will be
enhanced.
As a result of the earlier discussion,
the following hypothesis is proposed:
H2: MO is positively related to foreign-
market KA.
MO and Commitment to Foreign
Markets
The effect of MO on commitment to
foreign markets can be addressed in
terms of the relationship between a com-
pany’s MO and its entrepreneurial orien-
tation (EO). This complex relationship
has received considerable attention from
scholars (Bhuian, Menguc, and Bell
2005; Blesa and Ripollés 2005; Weer-
awardena and O’Cass 2004; Dimitratos
and Plakoyiannaki 2003; Liu, Luo, and
Shi 2003, 2002; Atuahene-Gima and Ko
2001; Knight 2000; Miles and Arnold
1991). An accepted conceptualization
defines EO as an orientation whereby a
firm displays a propensity for innova-
tion, proactivity, and risk taking in its
strategic decision-making (Lumpkin and
Dess 1996; Covin and Slevin 1986; Miller
1983). In accordance with Schumpeter’s
(1934) criterion, innovation can be
apparent in a variety of forms, including
new products, new processes, new
markets, and so on. EO thus creates
new resources and recombines existing
resoures to create value (Zahra, Jen-
nings, and Kuratko 1999). Proactivity
refers to a firm’s ability to anticipate
environmental changes and to benefit
from these changes. Finally, risk-taking
reflects the fact that innovative and pro-
active behaviors mean that strategic deci-
sions inevitably involve the assumption
of certain risks.
The relationship between MO and EO
has been widely canvassed in the litera-
ture. For example, the effect of MO on
the innovative behavior of a firm has
been demonstrated by the observation
that the rate of success in new product
development is positively related to a
firm’s MO (Verhees and Meulenberg
2004; Hurley and Hult 1998; Gatignon
and Xuereb 1997; Slater and Narver
1994). Moreover, proactivity is an inher-
ent feature of market-oriented firms—in
that market information fosters an inno-
vative response to changes in the envi-
ronment. Market-oriented companies
attempt to satisfy the latent and actual
needs of their customers by creating
value offerings (Slater and Narver 1995).
These firms generally adopt a long-term
approach to the market and are more
likely to develop learning processes.
Finally, a propensity for risk taking is a
characteristic of the senior management
of all market-oriented firms (Jaworski
and Kohli 1993). Following these argu-
ments, we contend that entrepreneurial
behaviors and market-oriented behaviors
display common characteristics.
In terms of internationalization, an
EO evolves as international opportunities
are identified and seized, which usually
involves the creation of new companies,
entry to new markets, and/or the target-
ing of new market segments. Such
integrated decision-making involves the
commitment of resources to the interna-
tional market.
In terms of MO, market-sensing capa-
bilities can assist a firm to discover
market opportunities and design a value
proposal. Such a value proposal affects
the whole organization, because corpo-
rate resources must be aligned to create
a market-responsive firm (Narver and
Slater 1990). MO thus enables a firm to
identify new (foreign) market opportuni-
ties which, if they are to be seized,
requires the commitment of corporate
resources to create customer value.
Market-oriented companies will there-
fore be more active in seeking and
exploiting foreign market opportunities,
and will be more willing to commit
resources to this process.
ARMARIO, RUIZ, AND ARMARIO
On the basis of the previous dis-
cussion, the following hypothesis is
proposed:
H3: MO is positively related to foreign-
market commitment.
Internationalization as a Learning
Process
As previously noted, the Uppsala
model presents a firm’s internationaliza-
tion as being a continuous learning
process about the ways to compete
internationally—a process that requires
time and risks. In other words, it is a
chain of action leading to experience
leading to further action. In this
sequence, the outcome of each iteration
incrementally increases a company’s
involvement in a foreign market. A com-
pany’s learning experience in foreign
markets has a profound effect on its
future foreign expansion and its perfor-
mace in foreign markets (Lord and Ranft
2000) as reliable knowledge of those
markets reduces costs and uncertainty
(Buckley and Casson 1981) and
improves profitability (Benito and
Gripsrud 1992).
Ghemawat (1991) has defined com-
mitment as “the tendency of an organi-
zation to persist in its action course and
strategies.” In accordance with this defi-
nition, market commitment (MC) would
refer to the tendency of an organization
to maintain strategies in a particular
market. According to Pauwels and Mat-
thyssens (1999), MC is a major determi-
nant of performance in foreign markets,
and Cavusgil and Zou (1994) (in the
North American context) and Louter,
Ouwerkerk, and Bakker (1991) (in the
European context) have both provided
evidence of a positive relationship
between MC and performance. Similarly,
Gerlinger, Beamish, and Da Costa (1989)
have asserted that the process of
growing internationalization, as a conse-
quence of incremental foreign-market
493
 Figure 1 scope of the study was limited to a multi-
industry sample of SMEs that were oper-
Proposed Model ating in foreign markets from their base
in Andalusia—an underdeveloped region
KA in the south of Spain with a gross domes-
tic product less than that of 75 percent of
countries in the European Union (EU).
The sample included:
MO PERF
• Agricultural as well as food and
beverage companies (food and
drinks; ecological products; white
MC goods; fishing products)—which
accounts for 45.7 percent of exports
from the Andalusia region;
• Consumer goods (gifts and handi-
crafts, furniture and decoration,
commitment, will improve performance jewelry, floriculture and ornamen-
in foreign markets. tal plants, clothing, shoes, per-
As a result of the previous discussion, fumes and cosmetics, paper, music
the following hypotheses are proposed: and audiovisual)—which accounts
for 25.7 percent of exports from
H4: Foreign-market KA is positively the region; and
related to foreign-market commit- • Industrial goods (general equip-
ment. ment; auxiliary equipment for agri-
culture, energy, and environment;
H5: Foreign-market KA is positively construction materials; information
related to foreign-market perfor- technology; automobiles; climate
mance. control; and other equipment)—
which accounts for 28.6 percent of
H6: Foreign-market commitment is exports from the region.
positively related to foreign-market
performance. The composition of exports from the
SMEs in this region is typical of under-
Figure 1 shows the proposed model, developed regions with low economic
along with the hypotheses. In this model: activity. In addition, the degree of inter-
nationalization of the firms in this study
(1) “MO” represents “market orienta- was lower than the national average,
tion”; with exports being the most common
(2) “KA” represents “knowledge acqui- method of entry to foreign markets, and
sition”; the overwhelming majority of those
(3) “PERF” represents [foreign-market] exports being to countries within the EU.
“performance”; and
(4) “MC” represents “market commit- Sample and Data Collection
ment.” The recommendations of the Euro-
pean Union (DOCE 96/280/CE) were
Methodology used to identify SMEs for the sample. In
Scope of the Study addition, two extra criteria were added
To test the model presented earlier, an for the purposes of the model proposed
empirical study was conducted. The in this study: (1) number of employees

494 JOURNAL OF SMALL BUSINESS MANAGEMENT

had to be greater than 20; and (2) sales
volume had to be greater than 1.5 million
euros per annum. These refinements led
to the discarding of small companies
whose management was not professional
enough to allow accurate estimation of
the constructs of the model.
The final sample included 1,483 com-
panies. These were targeted through a
self-administered survey. A total of only
112 valid responses was received, despite
the best efforts of researchers engaged
in the field study. Of the final sample,
47.1 percent of the SMEs were engaged in
food/agriculture, 24.5 percent in con-
sumer goods, and 28.4 percent in indus-
trial goods. This was representative of the
region as a whole.
Data collection was by means of a
mail survey addressed to “foreign market
managers” during March and April of
2003; a telephone follow-up was under-
taken in May 2003 to improve the
response. Although 112 responses might
appear to be a small number in absolute
terms, other studies of internationaliza-
tion have worked with samples of similar
size (Li, Li, and Dalgic 2004; Akyol and
Akehurst 2003; Rose and Shoham 2002;
Yip, Gómez, and Monti 2000; Leonidou
and Adams-Florou 1999; Leonidou 1998).
Nevertheless, the possibility of nonre-
sponse bias was a concern, given the
relatively small (7.5 percent) rate of
response. The test recommended by
Armstrong and Overton (1977) was
therefore conducted. This compares the
answers from the first incoming surveys
with the latest received surveys. The
results showed no significant difference
between the two (p = .05) on any item. In
order to test the appropriateness of our
sample, we compared it to a random
sample of 200 companies that did not
answer the survey. This test did not show
any significant difference between them
in terms of industry dispersion, age, sales
volume, and profitability.
In addition to the reassuring results of
this test, it should be noted that any
ARMARIO, RUIZ, AND ARMARIO
nonresponse bias that might be present is
more likely to affect individual measures,
rather than causal relationships among
variables studied here—which are more
likely to be affected by a lack of diversity
in a sample (Blair and Zinkhan 2006). In
this regard, the present sample was fairly
representative of the studied population.
Therefore, given that the present study
was confirmatory in nature (rather than
inferential), the sample was judged to be
valid for the objectives of the study.
Measurement Scales and Tools
Five-point Likert-type scales were
developed to estimate the constructs of
the model (see appendices). Measure-
ment scales with reliable psychometric
properties, validated in previous empiri-
cal studies, were selected.
MO
MO was estimated with the MARKOR
scale (Kohli, Jaworski, and Kumar 1993).
Kohli and Jaworski’s (1990) conceptual-
ization has been extensively validated
(Kara, Spillan, and DeShields 2005;
Siguaw and Diamantopoulos 1995), and
it focuses on specific behaviors facilitat-
ing estimation accuracy. Moreover, it was
compatible with the RBV of the present
study. The Spanish version of the scale
was used. This was developed by
Álvarez, Santos, and Vázquez (2000), and
has been validated in Spanish compa-
nies. This scale is comprised of 30 items,
of which 14 relate to intelligence genera-
tion, 9 to intelligence dissemination, and
7 to market response. In general, this
battery aims to capture a firm’s overall
MO through an assessment of specific
behaviors.
KA
KA is divided by the Uppsala model
into “objective knowledge” and “experi-
ential knowledge.” Objective knowledge
is acquired through standardized
methods of compiling and transmitting
information (market research), and can
495
be easily transferred between markets or
imitated by other companies. A critical
assumption of Johanson and Vahlne’s
(1977) model (confirmed by Denis and
Depelteau 1985; Reid 1984; Ayal and Zif
1979; Sunzook 1978; Simpson and
Kujawa 1974), is that objective knowl-
edge is less important than experiential
knowledge in the internationalization
process. Such experiential knowledge
consists of business knowledge (custom-
ers, competitors, and market) and
institutional knowledge (government,
institutional structures, market norms
and rules) (Eriksson et al. 1997).
In the present study, KA was esti-
mated with a five-item scale adapted
from Eriksson et al. (1997). Given that
KA was measured in a given firm’s major
exporting market (EU, North America,
South America, Africa, Asia), this con-
struct should be different from MO.
MC
MC is apparent when a company
devotes resources to a particular market.
In the case of international investments,
this usually involves a high level of
commitment. Dynamic markets require
dynamic responses, which cannot be
achieved without a high level of commit-
ment (Benito and Welch 1997). The
success of such a commitment might not
be measured purely in economic terms;
in addition, competitive advantage and
useful knowledge for continuing the
internationalization process might be
obtained.
To assess foreign-market commit-
ment, Yip, Gómez, and Monti (2000) sug-
gested that several issues should be
taken into account: (1) structure-related
issues (structural changes consequent
upon foreign-market entry); (2) strategy-
related issues (specific strategic commit-
ments, such as the development of
cultural-integration programs or training
programs for local salesforce); and (3)
human-resources issues (regarding the
496 JOURNAL OF SMALL BUSINESS MANAGEMENT
share of committed resources devoted to
international operations).
Gundlach, Achrol, and Mentzer (1995)
identified an attitudinal dimension of
MC. Most of the empirical studies in
foreign markets have operationalized
this dimension as an evaluation of the
support of senior management with
respect to a particular market (Pauwels
and Matthyssens 1999).
Taking these views into account, the
present study developed a four-item
scale to measure MC. Three of these
measured economic commitment, and
one estimated attitudinal commitment.
MC measures were made with respect to
a given firm’s major exporting market—
the EU, North America, South America,
Africa, or Asia.
Foreign-Market Performance
Because most of the SMEs used
exports as the primary method of entry
to foreign markets, foreign-market per-
formance was estimated with validated
scales measuring export performance.
Organizational characteristics have direct
and indirect effects on export perfor-
mance, but they have not been evaluated
within an integrated, comprehensive
theoretical framework (Rose and
Shoham 2002). Export sales and/or
intensity have been used as indicators of
the export performance, as has the pro-
portion of export sales over total sales in
both absolute and relative terms.
The present study adapted the scale
developed by Shoham (1998), which
consists of four dimensions: sales,
profits, sales growth, and profits growth.
This was adapted by the addition of one
noneconomic item—the rate of success
of new products in foreign markets
(Katsikeas, Leonidou, and Morgan 2000).
This item was added to capture the
impact of MO on performance through
innovation (Verhees and Meulenberg
2004; Gatignon and Xuereb 1997). The
scale developed by Shoham (1998) is
similar to other research that has ana-
lyzed the relationship between MO and
performance (Pelham 2000, 1997). As
previously, this dimension was measured
with respect to the firm’s major export-
ing market.
Analysis of Results
Measurement Model
An exploratory factor analysis (EFA)
was first conducted to identify the under-
lying dimensions in each scale. Reliabil-
ity and internal consistency were then
estimated using Cronbach’s alpha, item
reliability (R2), composite reliability, and
average extracted variance (AEV). The
results are shown in Table 1.
After estimating the MO measurement
model, MO dimensions were averaged
into a single item. This procedure facili-
tates the estimation of model parameters
when the sample is small (Mackenzie,
Podsakoff, and Ahearne 1998). The EFA
had identified five dimensions of
MO—three belonging to information
generation (M1, M2, and M3), one to infor-
mation dissemination (M4), and one to
market response (M5). Cronbach’s alpha
estimation suggested that some items
should be refined as a result of their poor
reliability. Thus,
• M1 included items G2, G3, and G4;
• M2 included items G6, G10, G13,
and G14;
• M3 included items G5, G7, G8, and
G12;
• M4 remained unchanged (from D1
to D9);
• M5 included R1, R3, R5, and R7 (see
Appendix).
As can be seen in Table 1, MO dem-
onstrated good reliability and validity
(convergent and discriminant).
The scales for KA and MC were one-
dimensional, with five items and four
items, respectively. These showed ade-
quate convergent validity and reliability.
Missing values have affected the scale
of export performance, so we have elimi-
ARMARIO, RUIZ, AND ARMARIO
nated those items where the missing
values do not follow a random distribu-
tion. Thus, the export performance scale
was refined to five items: EXP (export
sales), TGRS (growth of export sales),
PRO (profits), GPROF (growth of
profits), and NP (success rate in new
products). The item representing export-
ing propensity was discarded from the
performance scale in view of its poor
reliability. The final battery displayed
good psychometric properties.
Table 2 shows the results for discrimi-
nant validity by comparing AEV and
correlations among the constructs. KA
and MO were confirmed as different
constructs—with MO being globally
related to the firm, whereas KA referred
to the firm’s major exporting market.
Structural Model
SEM methodology was used to
analyze the causal model and to test the
proposed hypotheses. The results of the
tests of the structural model are dis-
played at the bottom of Table 1. As can
be seen, all the hypothesized relation-
ships were significant (t > 1.96; p < .05),
except for the relationship between MO
and MC, which was weaker (t = 1.77;
p < .07).
The relationship between a firm’s
overall MO and its export performance
was significant and positive (standard-
ized loading = 0.35; p < .05), thus provid-
ing support for H1. In addition, MO had
an indirect effect on export performance
through KA and MC, similar to the direct
effect (0.39). It can thus be concluded
that MO capabilities significantly contrib-
uted to a firm’s foreign-market activities,
as shown by the total effect (0.74) in
Table 3.
H2 postulated that a firm’s overall
MO has a positive influence on foreign-
market KA. The results showed a statis-
tically significant relationship, and it is
therefore concluded that MO capabili-
ties strongly facilitated the efficient and
497
 Table 1
Measurement and Structural Model
Global Adjustment Measures

Proponed Model c2/df (p) CMIN/DF GFI RMSR CFI RMSEA

131.7/125 1.054 0.840 0.144 0.931 0.025

(p = .323)

Measurement Models

Critical Standardized R2
Coefficient Loading

Market Orientation (MO)

(Alpha = 0.894; AEV = 0.750; Comp. Reliab. = 0.930)
M1 0.86 0.75
M2 7.70 0.83 0.69
M3 8.25 0.83 0.69
M4 6.04 0.72 0.52
M5 5.17 0.63 0.40
Knowledge Acquisition (KA) 0.42
(Alpha = 0.921; AEV = 0.760; Comp. Reliab. = 0.940)
KA1 0.88 0.77
KA2 10.88 0.91 0.83
KA3 8.54 0.87 0.76
KA4 7.33 0.78 0.61
KA5 8.54 0.85 0.73
Market Commitment (MC) 0.44
(Alpha = 0.870; AEV = 0.740; Comp. Reliab. = 0.920)
MC1 0.89 0.78
MC2 8.42 0.86 0.74
MC3 7.20 0.89 0.79
MC4 6.67 0.80 0.63
Performance (PERF) 0.73
(Alpha = 0.765; AEV = 0.570; Comp. Reliab. = 0.830)
NP 0.61 0.37
TGRS 3.58 0.42 0.18
PROF 4.55 0.80 0.65
GPROF 4.63 0.81 0.65

498 JOURNAL OF SMALL BUSINESS MANAGEMENT

 Table 1
Continued
Relationships and Hypotheses

Standardized Critical p Hypotheses

Loadings Coefficient

PERFOR ← MO 0.35 2.18 .03 H1

KA ← MO 0.65 5.14 .00 H2
MC ← MO 0.25 1.77 .07 H3
MC ← KA 0.47 3.20 .00 H4
PERF ← KA 0.34 2.04 .04 H5
PERF ← MC 0.30 2.05 .04 H6

Table 2
Correlations
Correlations between MO Dimensions

MO2 MO3 MO4 MO5 AEV

MO1 0.686 0.660 0.424 0.395 0.511

MO2 0.647 0.465 0.633 0.537
MO3 0.498 0.345 0.461
MO4 0.408 0.549
MO5 1 0.652

Correlations among Constructs

KA MC PERF AEV RELIABILITY

MO 0.650 0.550 0.740 0.734 0.935

KA 0.630 0.760 0.756 0.917
MC 0.710 0.652 0.888
PERF 1.000 0.546 0.827

MO, market orientation; KA, knowledge acquisition; MC, market commitment; PERF,
performance; AEV, average extracted variance.

effective acquisition of knowledge of confirmed a positive relationship (stan-

foreign markets (standardized load- dardized effect = 0.25), although this was
ing = 0.65; p < .05). significant only at a level of p < .08. It
H3 postulated that a firm’s overall MO can therefore be concluded that MO is
has a direct effect on MC. The results related to entrepreneurial behavior by an

ARMARIO, RUIZ, AND ARMARIO 499

 Table 3 mance. Both hypotheses were con-
firmed; KA had a direct effect of 0.34
Direct, Indirect, and (p < .05) and MC had a direct effect
Total Effects of 0.30 (p < .05) on foreign-market
performance.
Direct Effects (Standardized) Finally, the explanatory power of the
firm’s MO was tested by comparing a
MO KA MC model that included the firm’s MO as the
independent variable with a model that
KA 0.65 0.00 0.00 excluded the firm’s overall MO. The
MC 0.25 0.47 0.00 results of this comparison—conducted
PERF 0.35 0.34 0.30 by means of the indicators of
parsimony—are shown in Table 4. As
can be noted, the model including MO
Indirect Effects (Standardized) showed better indicators of parsimony
than the alternative model (CMIN/DF,
MO KA MC PGFI, and PCFI). It is thus concluded
that a firm’s MO is a corporate com-
KA 0.00 0.00 0.00 petence that supports foreign-market
MC 0.30 0.00 0.00 activities.
PERF 0.39 0.14 0.00
Discussion, Limitations,
and Further Research
Total Effects (Standardized) Contributions of the Study
The major contribution of the present
MO KA MC study was to establish MO as a distinctive
competence that supports a firm’s activi-
KA 0.65 0.00 0.00 ties in foreign markets. In this context,
MC 0.55 0.47 0.00 noteworthy findings were the positive
PERF 0.74 0.48 0.30 influence of a firm’s overall MO on its
market KA and its resource commitment
(MC) in the foreign market. With respect
to KA, capabilities in cultural transforma-
SME, whereby a firm seeks opportunities tion and learning (as developed from
in foreign markets and commits market-oriented behaviors) facilitate the
resources to them. MO also showed an process of turning information about
indirect effect (0.30) on MC through the a foreign market into an appropriate
acquisition of knowledge of the market. market response. With respect to MC, the
The total effect of a firm’s MO and MC present results show that MO constitutes
was significant and strong (0.55), as an entrepreneurial feature that promotes
shown in Table 3. proactive behavior in foreign markets
H4 proposed that a firm’s knowledge and the commitment of greater resources
in a particular market was positively to seize market opportunities.
related to the committing of resources Another contribution of the study is
in that market. Again, the relationship an examination of the direct effect of an
was found to be significantly positive SME’s MO on its performance in the
and strong (standardized loading = 0.47; international context. The findings show
p < .05), thus confirming this hypothesis. the existence of a positive relationship
H5 and H6 postulated the effects of between the two, supporting the view
KA and MC on a firm’s export perfor- that a firm’s MO has a direct effect on its

500 JOURNAL OF SMALL BUSINESS MANAGEMENT

 Table 4
Alternative Model Comparison
Parsimony-Adjusted Measures Model with MO
CMIN/DF
PGFI
PRATIO
PCFI
international competitiveness. In addi-
tion, the present study speculates that an
indirect effect of a firm’s MO on export
performance might also exist—through
the internationalization variables of KA
and MC. It is of interest that this indirect
effect was found to be stronger than the
direct relationship—illustrating the inter-
action of MO with a firm’s learning
process in foreign markets. The high
explanatory level achieved in the depen-
dent variable (R2 = 0.73) supports the
role of a firm’s MO as a corporate com-
petence behind its international perfor-
mance. In this regard, by comparing the
proposed model with an alternative
model without the firm’s MO as an exog-
enous variable, the present study empiri-
cally confirmed the role of a firm’s MO as
an antecedent of an SME’s international-
ization strategy.
Finally, our results provide the follow-
ing contributions to different areas of
research:
(1) SMEs internationalization: the litera-
ture has underlined the relevance of
certain corporate competences to
initiate the internationalization
process (Li, Li, and Dalgic 2004;
Yip, Gómez, and Monti 2000). In
this context, our research reveals
that MO represents an antecedent
of the internationalization process
for those SMEs that follow a
sequential approach. This compe-
tence facilitates and incentivates
ARMARIO, RUIZ, AND ARMARIO
Model without MO
1.054 1.12
0.60 0.59
0.79 0.79
0.76 0.62
organizational learning, which is an
essential pillar in the sequential
model of internationalization. Our
results support the strong influence
that MO makes on foreign market
KA, as the organizational learning
stream of research contends (Day
1994; Sinkula 1994).
(2) MO: the literature has emphasized
the positive effect of market-
oriented behaviors on firm’s perfor-
mance (Slater and Narver 2000;
Jaworski and Kohli 1993; Narver and
Slater 1990). Our results confirm this
relationship in the context of foreign
markets, following previous
research on exportation markets
(Cadogan and Cui 2004; Akyol and
Akehurst 2003; Cadogan et al. 2002;
Cadogan, Diamantopoulos, and
Siguaw 2002; Ngansathil 2001; Dia-
mantopoulos, Siguaw, and Cadogan
2000; Know and Hu 2000).
Managerial Implications
The findings of the present research have
interesting managerial implications. First,
SMEs that wish to improve their interna-
tional performance and competitiveness
would be well advised to develop
market-oriented behaviors. By promot-
ing a market-oriented culture, managers
will facilitate the development of core
capabilities that promote international
competitiveness—such as market
sensing, and customer linking and
channel bonding. These are “outside–in”
501
capabilities that link a firm’s processes
with its external environment, thus
helping the firm to surpass its competi-
tion by creating and enhancing solid
relationships with its suppliers, custom-
ers, and distributors. Such relationships,
if sustained, should improve a firm’s
foreign performance. In addition, a firm
that adopts a market-oriented culture
will be in a better position to identify
and exploit new market opportunities—
because MO facilitates the acquisition of
market knowledge and the committing
of resources to capturing them.
The literature witnesses to the essen-
tial role that managers play in implement-
ing a market-oriented culture in a firm
(Kohli, Jaworski, and Kumar 1993). Mana-
gerial involvement, commitment, and
risk-aversion are essential to the success-
ful development of market-oriented
behaviors in a company. Proactive and
committed managers are thus critical to
the development of a market-oriented
culture that will identify and exploit inter-
national opportunities and thus enhance
a firm’s international performance.
Limitations and Further Research
Every empirical study has certain limi-
tations that restrict the generalizability of
the findings. In this case, it is possible
that if the study was conducted on other
regions and countries in the world, the
magnitude and direction of the relation-
ships in the model may be different. The
degree of economic development may
account for distinct SME behavior. In
addition, given the dynamic nature of
the internationalization process, the
cross-sectional nature of the study might
not have been the most appropriate
approach. Although the study has pro-
vided strong evidence in support of the
hypotheses, a longitudinal study might
offer further interesting insights.
The low response rate and the small
sample represent another potential
concern. However, the sample is fairly
representative of the population and
502 JOURNAL OF SMALL BUSINESS MANAGEMENT
there was no evidence of nonresponse
bias. Moreover, given the confirmatory
nature of the study, the sample can be
considered sufficient (Blair and Zinkhan
2006).
There are possible lines of future
research. In accordance with the “indus-
trial economy” approach, it would be
interesting to test the moderating role
of the environment in the relationship
between a firm’s MO and its foreign per-
formance. The research objective would
be to identify the optimum level of MO
depending on the environmental condi-
tions in foreign markets. This stream of
research is supported by the works of
Kohli and Jaworski (1990) and Slater and
Narver (1994), and has been followed in
international markets (Cadogan, Diaman-
topoulos, and Siguaw 2002; Rose and
Shoham 2002).
Other lines of research emerge from
the RBV, following Li, Li, and Dalgic’s
(2004) contribution. The objective would
be to explore the influence of other cor-
porate competences—such as an EO,
innovation, and technology capabilities
—on the internationalization process
of an SME. The dynamic capabilities
approach (Menguc and Auh 2006; Lado,
Boyd, and Wright 1992) could be used to
explore the joint effect of these compe-
tencies on the internationalization pro-
cess and foreign-market performance.
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Overall Market Orientation Scale

Intelligence Generation

G1 We know our competition: we gather information about them on

a regular basis.
G2 We obtain ideas to improve our products from our customers.
G3 We conduct frequent customer research to anticipate what
products and services they will need in the future.
G4 Functional Managers are regularly informed about our actual and
potential competitors.
G5 Market research insights are used for decision-making purposes.
G6 We contact periodically with customers to know their perception
about the quality of our products and services.
G7 We often gather market data to apply them in the development
of new products.
G8 There are information systems operating within the company to
sense major industry changes.
G9 We are able to quickly detect changes in customer preferences.
G10 We encourage customers to make comments and even complaints
about the company’s offering, since that make us improve our
job.
G11 We regularly analyze our competitors marketing programs.
G12 We frequently review the environmental changes effect on
customers.
G13 We commonly measure the service level delivered to our
customers.
G14 We constantly analyze to what extend the company is committed
to meet our customer’s needs.

ARMARIO, RUIZ, AND ARMARIO 509

 Intelligence Dissemination

D1 There are periodical encounters among the different areas to

discuss about environmental and market trends.
D2 When something important happens to a customer or customer
group, the company has access to this information on short
notice.
D3 We try to make reports regarding competitive situation and future
environmental trends available to the different departments in
the company.
D4 When a department sense relevant issues related to competitors,
it alerts quickly to other departments in the company
D5 Top management discuss regularly strengths, weaknesses, and
competitor’s strategies.
D6 Customer and market success/failures are communicated to the
other departments in the company.
D7 Salesforce share information with the company about competition
strategies.
D8 There is a constant flow of opinions among areas to decide how
to respond to competition strategies.
D9 Customer Satisfaction data are spread at all levels within the
company.

Market Response

R1 We use customer information to improve quality.

R2 In the process of new product development, we start from what
is valuable for the customer.
R3 We sep the promises we make to our customers.
R4 The effort devoted to product development is reviewed to ensure
it meets customer needs.
R5 Customer complaints are quickly answered.
R6 We are sensitive to how customer evaluates our products and
services, so required modifications in the case of negative
perceptions are performed immediately.
R7 We try to achieve competitive advantages by understanding
customer needs.

Source: Álvarez, Santos, and Vázquez (2000).

510 JOURNAL OF SMALL BUSINESS MANAGEMENT

Knowledge Acquisition Scale (Related to the Firm’s
Major Exporting Market)
KA1 In your opinion, which is the level of knowledge that your company
has regarding its foreign customers?
KA2 In your opinion, which is the level of knowledge that your company
has regarding its foreign environment?
KA3 In your opinion, which is the level of knowledge that your company
has regarding its foreign competitors?
KA4 In your opinion, which is the level of knowledge regarding the
institutional structure, norms, culture and language of that market?
KA5 Which is the level of experience acquired in your major foreign
market?

Source: own development.

Market Commitment Scale (Related to the Firm’s Major

Exporting Market)
MC1 The structural changes taking place in my company due to its
foreign market entry has been . . .
MC2 Human resources devoted to internationalization training programs
have been . . .
MC3 The percentage of human resources committed to foreign market
operations has been . . .
MC4 In your company, in order to achieve its general objectives, the
development of foreign market operations is considered . . .

Source: adapted from Yip, Gómez, and Monti (2000).

Foreign Market Performance Scale (Related to

the Firm’s Major Exporting Market)
EXP Which is the approximate percentage of exporting sales of your
major foreign market over the total sales of the company within
the last three years?
TGRS Which is the average sales growing rate that your company displays
in its major foreign market within the last three years?
PROF How do you consider the percentage of net profits obtained in the
firm’s export sales?
GRPROF Setting the last three years as horizon of time, how has been the
average growth of your export sales net profits?
NP Which is the success rate of new product/service development of
your company in its major foreign market?

Source: adapted from Rose and Shoham (2002).

ARMARIO, RUIZ, AND ARMARIO 511