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Ajay K. Kohli & Bernard J.

Jaworski

Market Orientation: The


Construct, Research Propositions,
and Managerial Implications
The literature reflects remarkably little effort to develop a framework for understanding the implemen-
tation of the marketing concept. The authors synthesize extant knowledge on the subject and provide a
foundation for future research by clarifying the construct's domain, developing research propositions,
and constructing an integrating framework that includes antecedents and consequences of a market ori-
entation. They draw on the occasional writings on the subject over the last 35 years in the marketing
literature, work in related disciplines, and 62 field interviews with managers in diverse functions and
organizations. Managerial implications of this research are discussed.

T HOUGH the marketing concept is a cornerstone


of the marketing discipline, very little attention
has been given to its implementation. The marketing
keting concept and its implementation (e.g., Deshpande
and Webster 1989; Houston 1986; Olson 1987; Webster
1988). We seek to further that interest by providing
concept is essentially a business philosophy, an ideal a foundation for the systematic development of a the-
or a policy statement (cf. Barksdale and Darden 1971; ory of market orientation. Given its widely acknowl-
McNamara 1972). The business philosophy can be edged importance, one might expect the concept to
contrasted with its implementation reflected in the ac- have a clear meaning, a rich tradition of theory de-
tivities and behaviors of an organization. In keeping velopment, and a related body of empirical findings.
with tradition (e.g., McCarthy and Perreault 1984, p. On the contrary, a close examination of the literature
36), we use the term "market orientation" to mean the reveals a lack of clear definition, little careful atten-
implementation of the marketing concept. Hence, a tion to measurement issues, and virtually no empiri-
market-oriented organization is one whose actions are cally based theory. Further, the literature pays little
consistent with the marketing concept. attention to the contextual factors that may make a
In recent years, there has been a strong resurgence market orientation either more or less appropriate for
of academic as well as practitioner interest in the mar- a particular business. The purpose of this article is to
delineate the domain of the market orientation con-
struct, provide an operational definition, develop a
propositional inventory, and construct a comprehen-
Ajay K. Kohli is Assistant Professor, Department of Marketing Admin-
istration, The University of Texas at Austin. Bernard J. Jaworski is As-
sive framework for directing future research.
sistant Professor, Department of Marketing, Karl Eller Graduate School We first describe our method. Essentially, we draw
of Management, University of Arizona. The authors thank Dipankar
Chakravarti, Rohit Deshpande, Jonathan Frenzen, Richard Lutz, Deborah
on the literature in marketing and related disciplines,
Maclnnis, Kent Nakamoto, C. W. Park, P. Rajan Varadarajan, Melanie and supplement it with findings from field interviews
Wallendorf, Frederick Webster, Robert Westbrook, Gerald Zaitman, and with managers in diverse functions, hierarchical lev-
four JM reviewers for their helpful comments on previous versions of els, and organizations. Our discovery-oriented ap-
the article. Research support provided by the Marketing Science Insti- proach (cf. Deshpande 1983; Mahrer 1988) is similar
tute is gratefully acknowledged. Both authors contributed equally to the
article.
to the qualitative, practitioner-based approach used by
Parasuraman, Zeithaml, and Berry (1985) and is de-

Joumal of Marketing
Vol. 54 (April 1990), 1-18 Market Orientation / 1
signed to tap the "cause and effect" maps of managers keting positions, 15 held nonmarketing positions, and
(see Zaltman, LeMasters, and Heffring 1982). 14 held senior management positions. A total of 47
We then compare and contrast the alternative con- organizations were included in the sample; multiple
ceptualizations in the literature with the view that individuals were interviewed in certain organizations.
emerges from the field interviews and provide a syn- The organizations of 18 interviewees marketed con-
thesis. Next we develop a series of research propo- sumer products, those of 26 marketed industrial prod-
sitions in the spirit of propositional inventories de- ucts, and those of 18 marketed services. In size, the
veloped in such diverse areas as sales management organizations ranged from four employees to several
(cf. Walker, Churchill, and Ford 1977; Weitz 1981), tens of thousands. The sample thus reflects a diverse
organization of marketing activities (cf. Ruekert, set of organizations, departments, and positions, and
Walker, and Roering 1985), diffusion of technology hence is well suited for obtaining a rich set of ideas
(cf. Robertson and Gatignon 1986), information pro- and insights. In addition to managers, 10 business
cessing (cf. Alba and Hutchinson 1987), and market- academicians at two large U.S. universities were in-
ing control systems (cf. Jaworski 1988). These liter- terviewed. The ptirpose of these interviews was to tap
ature-based and field-based propositions are synthesized insights that might not emerge from the literature re-
in an integrative framework that provides for a par- view and the field interviews.
simonious conceptualization of the overarching fac- A standard format generally was followed for the
tors of interest. Finally, we conclude with a discus- interview. After a brief description of the research
sion that alerts managers to important issues involved project, each interviewee was asked about four issues
in modifying business orientations. along the following lines.
1. What does the term "maricet/marketing orientation"
mean to you? What kinds of things does a market/mar-
Method keting-oriented company do?
2. What organizational factors foster or discourage this
Literature Review orientation?
A review of the literature of the last 35 years reveals 3. What are the positive consequences of this orientation?
relatively little attention to the marketing concept. The What are the negative consequences?
4. Can you think of business situations in which this ori-
limited research primarily comprises (1) descriptive entation may not be very important?
work on the extent to which organizations have adopted
the concept (e.g., Barksdale and Darden 1971; Hise These questions provided a structure for each inter-
1965; Lusch, Udell, and Laczniak 1976; McNamara view, but it was frequently necessary to explain and
1972), (2) essays extolling the virtues of the business clarify some of the questions, as well as probe deeper
philosophy (e.g.. Business Week 1950; McKitterick with additional questions to elicit examples, illustra-
1957; Viebranz 1967), (3) work on the limits of the tions, and other insights.
concept (e.g., Houston 1986; Levitt 1969; Tauber The personal interviews typically lasted about 45
1974), and to a lesser extent (4) discussions of factors minutes and were audiotaped unless the interviewee
that facilitate or hamper the implementation of the requested otherwise. The information obtained from
marketing concept (e.g., Felton 1959; Lear 1963; these interviews affords novel insights into the mean-
Webster 1988). We draw on these limited writings, ing, causes, and consequences of a market orienta-
especially the last category, and also on related lit- tion. Though a large number of new insights emerged
erature in the management discipline. from the study, we focus on the more "interesting"
ones (see Zaltman, LeMasters, and Heffring 1982) and
Field Interviews those with the greatest potential for stimulating future
research.
The field research consisted of in-depth interviews with
62 managers in four U.S. cities. Because the purpose
of the study was theory construction (i.e., elicitation Market Orientation: The Construct
of constructs and propositions), it was important to
tap a wide range of experiences and perspectives in Comparing Literature and Fieid Perspectives
the course of the data collection. Therefore, a pur- A review of the literature reveals diverse definitions
posive or "theoretical" sampling plan (Glaser and of the marketing concept. Felton (1959, p. 55) defines
Strauss 1967) was used to ensure that the sample in- the marketing concept as "a corporate state of mind
cluded marketing as well as nonmarketing managers that insists on the integration and coordination of all
in industrial, consumer, and service industries. Care the marketing functions which, in turn, are melded
also was taken to sample large as well as small or- with all other corporate functions, for the basic pur-
ganizations. pose of producing maximum long-range corporate
Of the 62 individuals interviewed, 33 held mar- profits." In contrast, McNamara (1972, p. 51) takes

2 / Journal of Marketing, April 1990


a broader view and defines the concept as "a philos- as future needs of customers. These extensions do not
ophy of business management, based upon a com- challenge the spirit of the first pillar (customer focus);
pany-wide acceptance of the need for customer ori- rather, they refiect practitioners' broader, more stra-
entation, profit orientation, and recognition of the tegic concerns related to customers.
important role of marketing in communicating the needs
of the market to all major corporate departments." Coordinated marketing. Few interviewees explic-
Variants of these ideas are offered by Lavidge (1966), itly mentioned coordinated marketing in the course of
Levitt (1969), Konopa and Calabro (1971), Bell and the discussions, but the majority emphasized that a
Emory (1971), and Stampfl (1978). market orientation is not solely the responsibility of a
marketing department. Moreover, the executives in-
Three core themes or "pillars" underlie these ad terviewed emphasized that it is critical for a variety
hoc definitions: (1) customer focus, (2) coordinated of departments to be cognizant of customer needs (i.e.,
marketing, and (3) profitability (cf. Kotler 1988). aware of market intelligence) and to be responsive to
Barksdale and Darden (1971, p. 36), point out, how- those needs. Thus, the interviewees stressed the im-
ever, that these idealistic policy statements repre- portance of concerted action by the various depart-
sented by the marketing concept are of severely lim- ments of an organization. Importantly, the field find-
ited practical value, and assert that "the major challenge ings limit the domain of the second pillar of market
is the development of operational definitions for the orientation to coordination related to market intelli-
marketing concept . . . " (emphasis added). Hence, gence. This focused view of coordination is important
though the literature sheds some light on the philos- because it facilitates operationalizing the construct by
ophy represented by the marketing concept, it is un- clearly specifying the type of coordination that is rel-
ciear as to the specific activities that translate the phi- evant.
losophy into practice, thereby engendering a market
orientation. Even so, it appears reasonable to con- Profitability. In sharp contrast to the received view,
clude from the literature that a market-oriented or- however, the idea that profitability is a component of
ganization is one in which the three pillars of the mar- market orientation is conspicuously absent in the field
keting concept (customer focus, coordinated marketing, findings. Without exception, interviewees viewed
profitability) are operationally manifest. profitability as a consequence of a market orientation
The view of market orientation that emerges from rather than a part of it. This finding is consistent with
the field interviews is consistent with the "received Levitt's (1969, p. 236) strong objection to viewing
view" in the literature, though certain differences are profitability as a component of a market orientation,
evident. Importantly, the field interviews provide a which he asserts is "like saying that the goal of human
significantly clearer idea of the construct's domain and life is eating."
enable us to offer a more precise definition. This pre- Thus, the meaning of the market orientation con-
cision facilitates theory development, construct mea- struct that surfaced in the field is essentially a more
surement, and eventually theory testing. In the fol- precise and operational view of the first two pillars of
lowing discussion, we first compare the field-based the marketing concept—customer focus and coordi-
view of market orientation with the received view on nation. The findings suggest that a market orientation
the three commonly accepted pillars—customer fo- entails (1) one or more departments engaging in ac-
cus, coordinated marketing, and profitability—and then tivities geared toward developing an understanding of
elaborate on the elements of the field-based view of customers' current and future needs and the factors
the construct. affecting them, (2) sharing of this understanding across
departments, and (3) the various departments engag-
Customer focus. Without exception, the managers ing in activities designed to meet select customer needs.
interviewed were consistent in the view that a cus- In other words, a market orientation refers to the or-
tomer focus is the central element of a market ori- ganization wide generation, dissemination, and re-
entation. Though they agreed with the traditional view sponsiveness to market intelligence.
that a customer focus involves obtaining information Further, though the term "marketing orientation"
from customers about their needs and preferences, has been used in previous writings, the label "market
several executives emphasized that it goes far beyond orientation" appears to be preferable for three rea-
customer research. The comments suggest that being sons. First, as Shapiro (1988) suggests, the latter label
customer oriented involves taking actions based on clarifies that the construct is not exclusively a concern
market intelligence, not on verbalized customer opin- of the marketing function; rather, a variety of depart-
ions alone. Market intelligence is a broader concept ments participate in generating market intelligence,
in that it includes consideration of (1) exogenous mar- disseminating it, and taking actions in response to it.
ket factors (e.g., competition, regulation) that affect Hence labeling the construct as "marketing orienta-
customer needs and preferences and (2) current as well tion" is both restrictive and misleading. Second, the

Market Orientation / 3
label "market orientation" is less politically charged [When] should [our company] enter the [certain ser-
vices] area? Is there a market there yet? Probably not.
in that it does not inflate the importance of the mar- But there's going to be one in 1990, '91, '92, '96.
keting function in an organization. The label removes And you don't want to be too late because it's going
the construct from the province of the marketing de- to take you a couple of years getting up to speed,
getting your reputation established. So you've really
partment and makes it the responsibility of all de- got to jump into it two years before you think [the
partments in an organization. Consequently, the ori- market for it is going to develop].
entation is more likely to be embraced by nonmaiketing
departments. Third, the label focuses attention on Though assessment of customer needs is the cor-
markets (that include customers and forces affecting nerstone of a market orientation, defining customers
them), which is consistent with the broader "manage- may not be simple. In some cases, businesses may
ment of markets" orientation proposed by Park and have consumers (i.e., end users of products and ser-
Zaltman (1987, p. 7) for addressing limitations in cur- vices) as well as clients (i.e., organizations that may
dictate or infiuence the choices or end users). For ex-
rently embraced paradigms. We next discuss in more
ample, executives of several packaged goods com-
detail each of the three elements of a market orien-
panies indicated that it is critical for their organiza-
tation—intelligence generation, dissemination, and
tions to understand the needs and preferences of not
responsiveness.
just end customers but also retailers through whom
their products are sold. This sentiment reflects the
Explicating the Market Orientation Construct growing power of retailers over manufacturers owing
to the consolidation of the former, retailers' access to
Intelligence generation. The starting point of a market scanner data, and increased competition among man-
orientation is market intelligence. Market intelligence ufacturers due to proliferation of brands. As one ex-
is a broader concept than customers' verbalized needs ecutive indicated, keeping retailers satisfied was im-
and preferences in that it includes an analysis of ex- portant to ensure that they carded and promoted his
ogenous factors that influence those needs and pref- products, which in turn enabled him to cater to the
erences. For example, several managers indicated that needs of his end customers.
a market orientation includes monitoring factors such
as government regulations and competition that infiu- Interestingly, in the 1920s and 1930s, the term
ence the needs and preferences of their customers. "customer" primarily referred to distributors who pur-
Several interviewees who cater to organizational cus- chased goods and made payments (McKitterick 1957).
tomers emphasized that a market orientation includes Starting about the 1950s, the focus shifted from dis-
an analysis of changing conditions in customers' in- tributors to end consumers and their needs and wants.
dustries and their impact on the needs and wants of Today the appropriate focus appears to be the market,
customers. Likewise, the importance of monitoring which includes end users and distributors as well as
competitor actions and how they might affect cus- exogenous forces that affect their needs and prefer-
tomer preferences emerged in the course of the inter- ences.
views. (Day and Wensley 1983 also point out the lim- Identifying who an organization's customers are is
itations of focusing on customers to the exclusion of even more complex when service is provided to one
competitors.) Hence, though market intelligence per- party, but payments are received from another. For
tains to customer needs and preferences, it includes example, the director of marketing for a health care
an analysis of how they may be affected by exogenous organization recalled:
factors such as government regulation, technology,
competitors, and other environmental forces. Envi- In the past we asked patients what they wanted for
services, how they wanted the service delivered. Now
ronmental scanning activities are subsumed under the patient is no longer making those decisions. [It
market intelligence generation. is] more complicated. [We define] our customers to-
day as those paying for the patient's care.
An important idea expressed by several executives
is that effective market intelligence pertains not just The generation of market intelligence relies not jtxst
to current needs, but to future needs as well. This idea on customer surveys, but on a host of complementary
echoes Houston's (1986) assertion and refiects a de- mechanisms. Intelligence may be generated through a
parture from conventional views (e.g., "find a need variety of formal as well as informal means (e.g., in-
and fill it") in that it urges organizations to anticipate formal discussions with trade partners) and may in-
needs of customers and initiate steps to meet them. volve collecting primary data or consulting secondary
The notion that market intelligence includes antici- sources. The mechanisms include meetings and dis-
pated customer needs is important because it often takes cussions with customers and trade partners (e.g., dis-
years for an organization to develop a new product tributors), analysis of sales reports, analysis of world-
offering. As a senior vice president of a large indus- wide customer databases, and formal market research
trial services company observed: such as customer attitude surveys, sales response in

4 / Journal of Marketing, April 1990


test markets, and so on. The following quotation from departments throughout an organization. Mechanisms
the director of marketing in a high-tech industrial therefore must be be in place for intelligence gener-
products company illustrates the information collec- ated at one location to be disseminated effectively to
tion and analysis activity. other parts of an organization.
We do a lot of visiting with customers, talking with Intelligence dissemination. As the interviews pro-
customers on the phone, we read the trade press—it gressed, it became increasingly clear that responding
is full of good information about what our competi- effectively to a market need requires the participation
tors are doing. We always want to position relative
to competitors. A lot of marketing is information of virtually all departments in an organization—R&D
gathering. to design and develop a new product, manufacturing
to gear up and produce it, purchasing to develop ven-
Importantly, intelligence generation is not the ex- dors for new parts/materials, finance to fund activi-
clusive responsibility of a marketing department. For ties, and so on. Several managers noted that for an
example, R&D engineers may obtain information at organization to adapt to market needs, market intel-
scientific conferences, senior executives might un- ligence must be communicated, disseminated, and
cover trends reported in trade joumals, and so on. perhaps even sold to relevant departments and indi-
Managers in several industrial products companies in- viduals in the organization. Marketing managers in two
dicated that it was routine for dieir R&D personnel to consumer products companies developed and circu-
interact directly with customers to assess their needs lated periodic newsletters to facilitate dissemination
and problems and develop new business targeted at of market intelligence. These activities echo sugges-
satisfying those needs. One company we interviewed tions in the literature that organizational direction is a
goes to extreme lengths to encourage exchange of in- result of marketing managers educating and commu-
formation between nonmarketing employees and cus- nicating with managers in other functional areas (Levitt
tomers. For its annual "open house," invitations to 1969) and that marketers' most important role may be
customers are hand delivered by manufacturing—not selling within the firm (Anderson 1982). As noted be-
marketing—personnel. Customers visit the plant and fore, however, market intelligence need not always be
interact with shop floor personnel as well as white collar disseminated by the marketing department to other de-
employees. This approach not only enables manufac- partments. Intelligence may fiow in the opposite di-
turing personnel to understand better the purchase mo- rection, depending on where it is generated. Effective
tivations of customers, but also helps customers to ap- dissemination of market intelligence is important be-
preciate the limits and constraints of processes involved cause it provides a shared basis for concerted actions
in manufacturing items they require. As the president by different departments. A vice president of an in-
of this company described it: dustrial products company recounted the intelligence
[The "open house"] does two things for you. First,
dissemination process for a new product required by
it impresses the customers that the people in manu- a customer:
facturing are interested in your business, and the other
thing is that it impresses on the people in manufac- I get engineering involved. Engineering gets produc-
turing that there are people who buy the product— tion involved. We have management lunches and in-
real, live-bodied, walking-around people. Our peo- formal forums. Call reports circulate. By the time you
ple leam, but our customers are educated at the same design, [you have] engineering, production, and pur-
time. chasing involved early in the process.
To help it anticipate customer needs accurately, A formal intelligence dissemination procedure is
one blue chip industrial product company assigns cer- obviously important, but the discussions with man-
tain individuals exclusively to the task of studying trends agers indicated that informal "hall talk" is an ex-
and forces in the industries to which major customer tremely powerful tool for keeping employees tuned to
groups belong (see related discussion by Lenz and customers and their needs. Despite sparse treatments
Engledow 1986). This company goes so far as to of the effects of informal information dissemination
identify future needs of customers and plan future of- in virtually any literature (for a rare exception, see
ferings jointly with customers. The important point is Aguilar 1967), the importance of this factor is well
that generation of market intelligence does not stop at recognized by managers and it is tapped extensively.
obtaining customer opinions, but also involves careful For example, the vice president of a manufacturing
analysis and subsequent interpretation of the forces that firm indicated that customer information is dissemi-
impinge on customer needs and preferences. Equally nated in her organization by telling stories about cus-
important, the field findings suggest that the genera- tomers, their needs, personality characteristics, and
tion of market intelligence is not and probably cannot even their families. The idea is to have the secretaries,
be the exclusive responsibility of a marketing depart- engineers, and production personnel "get to know"
ment (see also Webster 1988). Rather, market intel- customers. Her description of informal intelligence
ligence is generated collectively by individuals and dissemination follows.

Market Orientation / 5
One goal when I took over was to know everything tomous either-or constmct. As the sales manager for
about customers, [whether] they liked cats, know
[their] wives' names, favorite pet peeve about our Asia in an industrial products company put it:
products. Our sales reps need to know this . . . I do
a lot of storytelling. LJater, [I] developed software to The first thing to recognize is that there is no abso-
computerize all this. Everyone in the organization has lute,' that there are many shades of gray.
access to this database.
In other words, organizations differ in the extent to
This emphasis on intelligence dissemination par- which they generate market intelligence, disseminate
allels recent acknowledgement of the important role it intemally, and take action based on the intelligence.
of "horizontal communication" in service organiza- It therefore is appropriate to conceptualize the market
tions (S^ithaml, Berry, and Parasuraman 1988). Hor- orientation of an organization as one of degree, on a
izontal communication is the lateral flow that occurs continuum, rather than as being either present or ab-
both within and between departments (Daft and Steers sent. This conceptualization facilitates measurement
1985) and serves to coordinate people and depart- by avoiding certain difficulties inherent in asking in-
ments to facilitate the attainment of overall organi- formants to indicate whether or not their organization
zational goals. Horizontal communication of market is market oriented (e.g., it may be somewhat market
intelligence is one form of intelligence dissemination oriented). The proposed definition suggests that a
within an organization. measure of market orientation need only assess the
Responsiveness. The third element of a market ori- degree to which a company is market oriented, that
entation is responsiveness to market intelligence. An is, generates intelligence, disseminates it, and takes
organization can generate intelligence and disseminate actions based on it. Relatedly, the appropriate unit of
it intemally; however, unless it responds to market analysis appears to be the strategic business unit rather
needs, very little is accomplished. Responsiveness is than the corporation because different SBUs of a cor-
the action taken in response to intelligence that is gen- poration are likely to be market oriented to different
erated and disseminated. The following statement by degrees.
an account executive in a service organization de- We next discuss antecedents and consequences of
scribes this type of responsiveness. a market orientation, and moderators of the linkage
between market orientation and business perfor-
We are driven by what the customer wants. [We] try
to gather data, do research, put together new prod- mance. We draw on the marketing literature, man-
ucts based on this research, and then promote them. agement literature, and field interviews for develop-
ing research propositions.
The field findings indicate that responsiveness to
market intelligence takes the form of selecting target
markets, designing and offering products/services that
cater to their current and anticipated needs, and pro-
Research Propositions
ducing, distributing, and promoting the products in a Figure 1 is a conceptual framework for the following
way that elicits favorable end-customer response. Vir- discussion. Briefly, the framework comprises four sets
tually all departments—not just marketing—partici- of factors: (1) antecedent conditions that foster or dis-
pate in responding to market trends in a market-ori- courage a market orientation, (2) the market orienta-
ented company. tion constmct, (3) consequences of a market orien-
tation, and (4) moderator variables that either strengthen
Synthesis and Commentary or weaken the relationship between market orientation
From the preceding discussion, we offer the following and business performance. We discuss each of the four
formal definition of market orientation. factors and develop propositions based on the litera-
ture and the field interviews.
Market orientation is the organizationwide genera-
tion of market intelligence pertaining to current and
future customer needs, dissemination of the intelli- Antecedents to a Market Orientation
gence across departments, and organizationwide re- Antecedents to a market orientation are the organi-
sponsiveness to it.
zational factors that enhance or impede the imple-
Defining market orientation as organizationwide mentation of the business philosophy represented by
generation, dissemination, and responsiveness to mar- the marketing concept. Our examination of the liter-
ket intelligence addresses the concerns of Barksdale ature and the insights from the field interviews reveal
and Darden (1971) by focusing on sp)ecific activities three hierarchically ordered categories of antecedents
rather than philosophical notions, thereby facilitating to a market orientation: individual, intergroup, and or-
the operationalization of the marketing concept. In- ganizationwide factors. We label these as senior man-
terestingly, it appears more appropriate to view a mar- agement factors, interdepartmental dynamics, and or-
ket orientation as a continuous rather than a dicho- ganizational systems, respectively.

6 / Journal of Marketing, April 1990


FIGURE 1
Antecedents and Consequences of a Market Orientation

ANTECEDENTS MARKET ORIENTATION MODERATORS OONSEOUENCES

SENIOR
MANAGEMENT CUSTOMER
FACTORS RESPONSES

SUPPLY - SIDE
MODERATORS

INTERDEPARTMENTAL I MARKET BUSINESS


DYNAMICS I ORIENTATION PERFORMANCE

DEMAND - SIDE
MODERATORS

ORGANIZATIONAL EMH-OYEE
SYSTEMS RESPONSES

Senior management factors. The role of senior orientation originates with top management and that
management emerged as one of the most important "customer-oriented values and beliefs are uniquely the
factors in fostering a market orientation (see Figure responsibility of top management" (p. 37). Likewise,
2). Interviewees repeatedly emphasized the powerful Felton (1959) asserts that the most important ingre-
impact of top managers on an organization. The fol- dient of a market orientation is an appropriate state of
lowing quotations are representative of the ideas that mind, and that it is attainable only if "the board of
surfaced in the interviews. directors, chief executive, and top-echelon executives
appreciate the need to develop this marketing state of
We'll do almost a $100 million [worth of sales] this mind" (p. 55). In other words, the commitment of top
year. We have a customer that bought [a mere] managers is an essential prerequisite to a market ori-
$10,000 worth of services. [He] calls the president
[and launches into a long tirade of complaints]. [The entation.
president] writes down what he says and responds to Additionally, Levitt (1969, p. 244) argues that one
him in writing. He investigates the difficulty. He gets of the factors that facilitates the implementation of the
back to him. In that process, if you are a junior en-
gineer who just worked on a $10,000 project and the marketing concept is the presence of "the right signals
president calls you up and says "let's talk about this from the chief operating officer to the entire corpo-
and work out some kind of response to him," the ration regarding its continuing commitment to the
word spreads throughout the base of the company [that]
we're a customer-oriented company, we're market- marketing concept." In a similar vein, Webster (1988,
place oriented, we want to satisfy customer needs. p. 37) suggests that "CEOs must give clear signals
—Senior vice president, industrial services company and establish clear values and beliefs about serving
The founder of this organization is a salesman. His the customer." Thus, these scholars assert that in ad-
shortcoming is that he does not know what marketing dition to being committed to a market orientation, top
is. We reflect the leader.
—Marketing manager, service organization managers must clearly communicate their commit-
ment to all concerned in an organization.
The critical role of top managers in fostering a Interestingly, the management literature goes a step
market orientation is also reflected in the literature. further to provide novel insights. Argyris (1966) ar-
For example, Webster (1988) asserts that a market gues that a key factor affecting junior managers is the

Market Orientation / 7
FIGURE 2
Senior Management Factors and Market Orientation

COMMUNICATION - ACnON PIA PIB


"GAP" OF TOP MIDDLE MANAGERS'
MANAGEMENT AMBIGUITY

P2
RISK AVERSION OF
TOP MANAGEMENT

P3
UPWARD MOBILITY MARKET
AND EDUCATION OF ORIENTATION
TOP MANAGEMENT

TOP MANAGEMENT P4
ATTITUDE TOWARD
CHANGE

MARKETING MANAGERS' P5 P6
ABILITY TO WIN TRUST INTERDEPARTMENTAL
OF NON-MARKETING CONFLICT
MANAGERS

gap between what top managers say and what they do market intelligence. Changing market needs call for
(e.g., they say "be market oriented," but cut back the introduction of innovative products and services
market research funds, discourage changes). Argyris to match the evolving needs. The introduction of new/
examined 265 decision-making meetings with senior modified offerings and programs, however, is inher-
executives and concluded that the actual behavior of ently risky because the new offerings may fail. As
managers does not conform to their verbal espousals. two executives noted:
One could argue, however, that if the gap is consis-
tent over time, junior managers may to be able to infer Hospitals cannot survive unless they are innovative
what top managers truly desire. In contrast, if the size throughout the organization. It means taking risks,
doing some real concrete things with customers.
and/or direction of the gap is inconsistent over time, —Marketing director, service organization
junior managers are unlikely to be able to infer top
To be marketing oriented is not to be safe because
managers' actual preferences. Such variability is likely you're running a risk. You have to invest in your
to lead to ambiguity about the amount of effort and ideas. To not be marketing oriented is to be safe. [It
resources junior managers should allocate to market- means doing] the same old [thing]. You're not in-
vesting in your business, not [taking] risks.
oriented tasks, thereby leading to lower market ori- —President, industrial services company
entation. Hence:
In the course of the discussion with the latter execu-
Pu: The greater the variability over time in the gap be- tive, it became clear that top managers' response to
tween top managers' communications and actions re-
lating to a market orientation, the greater the junior innovative programs that do not succeed sends clear
managers' ambiguity about the organization's desire signals to junior employees in an organization. If top
to be market oriented. managers demonstrate a willingness to take risks and
Pu,: The greater the junior managers' ambiguity about the accept occasional failures as being natural, junior
organization's desire to be market oriented, the lower managers are more likely to propose and introduce new
the market orientation of the organization. offerings in response to changes in customer needs.
A market orientation involves being responsive to In contrast, if top managers are risk averse and in-

8 / Journal of Marketing, April 1990


tolerant of failures, subordinates are less likely to be do not elaborate on the factors that afford this ability.
responsive to changes in customer needs. Hence: The implication is that:
P2: The greater the risk aversion of top managers, the lower P5: The greater the ability of top marketing managers to
the market orientation of the organization. win the confidence of senior nonmarketing managers,
the lower the interdepartmental conflict.
Because a market orientation involves being re-
sponsive to changing customer/client needs with in- Interdepartmental dynamics. Interdepartmental
novative marketing programs and strategies, it can be dynamics are the formal and informal interactions and
viewed as a continuous innovative behavior. Hambrick relationships among an organization's departments. In
and Mason (1984) suggest that organizations headed P5 we introduced the first interdepartmental construct,
by top managers who are young, have extensive for- conflict. We begin our discussion in this section with
mal education, and are of low socioeconomic origin the linkage between interdepartmental conflict and
(and, by implication, have demonstrated upward so- market orientation, then examine additional interde-
cial mobility) are more likely to pursue risky and in- partmental dynamics (see Figure 3).
novative strategies. In the diffusion of innovations lit- Levitt (1969), Lusch, Udell, and Laczniak (1976),
erature, formal education and upward mobility are and Felton (1959) suggest that interdepartmental con-
reported as being related consistently to innovative fiict may be detrimental to the implementation of the
behavior (see Rogers 1983, ch. 7). However, the age marketing concept. Interdepartmental conflict may stem
variable does not produce consistent findings across from natural desires of individual departments to be
studies. Taken together, these findings suggest that more important or powerful, or may even be inherent
the market orientation of an organization may be a in the charters of the various departments. For ex-
function of the formal education of its senior man- ample, Levitt (1969) argues that the job of a manu-
agers and the extent to which they are upwardly mo- facturing vice president is to run an efficient plant.
bile. More formally: Therefore it is only natural for that individual to op-
pose costly endeavors that might be called for by a
P3: The greater the senior managers' (1) educational at- market orientation. Recent research (e.g., Ruekert and
tainment and (2) upward mobility, the greater the mar- Walker 1987) suggests that interdepartmental confiict
ket orientation of the organization.
inhibits communication across departments. Hence in-
A positive attitude toward change has been linked terdepartmental confiict appears likely to inhibit mar-
consistently to individual willingness to innovate. In ket intelligence dissemination, an integral component
a comprehensive review, Rogers (1983, p. 260) re- of a market orientation. Additionally, tension among
ports that 43 of 57 studies found a positive relation- departments is likely to inhibit concerted response by
ship between these two constructs. Willingness to adapt the departments to market needs, also a component of
and change marketing programs on the basis of anal- market orientation. We therefore expect that:
yses of consumer and market trends is a hallmark of
Pe: The greater the interdepartmental conflict, the lower
a market-oriented firm. Hence, top managers' open- the market orientation of the organization.
ness to new ideas and acceptance of the view that
change is a critical component to organizational suc- A second interdepartmental dynamic that emerged
cess are likely to facilitate a market orientation. That in several interviews as an antecedent of a market ori-
is: entation is interdepartmental connectedness. This
variable is the degree of formal and informal direct
P4: The more positive the senior managers' attitude to-
ward change, the greater the market orientation of the
contact among employees across departments. For ex-
organization. ample, one executive noted that to improve its market
orientation, her organization opened communication
Certain characteristics of department managers and channels across departments—in marked contrast to
the nature of interactions among them appear likely the earlier practice of departments operating indepen-
to affect an organization's market orientation through dently of one another and coordinated only by top
their impact on interdepartmental conflict (see Figure management. One interviewee indicated that her or-
2). Interdepartmental conflict is tension between two ganization/ormaZfy required periodic meetings of em-
or more departments that arises from incompatibility ployees from different departments, thereby facilitat-
of actual or desired responses (cf. Gaski 1984; Raven ing the sharing of market intelligence.
and Kniglanski 1970, p. 70). Felton (1959) and Levitt The importance of interdepartmental connected-
(1969) suggest that it is critical for a marketing vice ness in facilitating the dissemination of and respon-
president to be able to win the confidence and co- siveness to market intelligence is supported by the
operation of his or her corporate peers to minimize evaluation literature (cf. Cronbach and Associates 1981)
conflict and engender a maricet orientation, though they and the marketing literature (cf. E)eshpande and

Market Orientation / 9
FIGURE 3
Interdepartmental Dynamics and Market Orientation

P6
INTERDEPARTMENTAL
CONFLICT

P7
INTERDEPARTMENTAL MARKET
CONNECTEDNESS ORIENTATION

P8
CONCERN FOR IDEAS
OF OTHER DEPARTMENTS

1982). Indeed, the key predictors of research infor- departments, the greater the market orientation of the
mation utilization in program evaluation settings are organization.
the extent and quality of interaction between the eval- Organizational systems. The third set of anteced-
uators and the program personnel (see Patton 1978). ents to a market orientation relate to organizationwide
Hence: characteristics and therefore are labeled "organiza-
tional systems" (see Figure 4). A set of barriers to a
P7: The greater the interdepartmental connectedness, the market orientation briefly hinted at in the marketing
greater the market orientation of the organization.
literature is related to the structural form of organi-
As Figure 3 illustrates, an additional construct per- zations. Lundstrom (1976) and Levitt (1969) discuss
taining to interdepartmental dynamics suggested by departmentalization or specialization as a barrier to
the literature on group dynamics is concern for others' communication (and hence intelligence dissemina-
ideas (Argyris 1965, 1966). Concern for others' ideas tion). Additionally, Stampfl (1978) argues that greater
refers to openness and receptivity to the suggestions formalization and centralization make organizations
and proposals of other individuals or groups. In the less adaptive to marketplace and environmental
previously noted study on decision making, Argyris changes.
(1966) observed that low levels of concern are related These references to organizational structure have
directly to restricted information flows, distrust, and their roots in the organizational sciences literature.
antagonism, which result in ineffective group pro- Formalization is the degree to which rules define roles,
cesses. Therefore, low levels of concern for the ideas authority relations, communications, norms and sanc-
of individuals in other departments can be expected tions, and procedures (Hall, Haas, and Johnson 1967).
to impede the dissemination of market intelligence Centralization is defined as the delegation of decision-
across departments as well as the responsiveness of making authority throughout an organization and the
individuals to intelligence generated in other depart- extent of participation by organizational members in
ments. That is: decision making (Aiken and Hage 1968). Histori-
cally, both formalization and centralization have been
Pg. The greater the concern for ideas of employees in other found to be related inversely to information utilization

10/Journal of Marketing, April 1990


FIGURE 4
Organizational Systems and Market Orientation

P9A
DEPARTMENTALIZATION

P9B
FORMALIZATION

P9C MARKET
CENTRALIZATION ORIENTATION

PIO
MARKET - BASED
REWARD SYSTEMS

ACCEPTANCE OF Pll P6
INTERDEPARTMENTAL
POLITICAL BEHAVIOR CONFLICT

(Deshpande and Zaitman 1982; Hage and Aiken 1970; centralization may have opposite effects on the two
Zaitman, Duncan, and Holbek 1973). In our context, stages of innovative behavior. In particular, they in-
information utilization corresponds to being respon- dicate that whereas these variables may hinder the ini-
sive to market intelligence. Thus, the literature sug- tiation stage of innovative behavior, they may facili-
gests that structural characteristics of an organization tate the implementation stage of innovative behavior.
can infiuence its market orientation. Hence departmentalization, formalization, and cen-
Interestingly, there is reason to believe that or- tralization may be related inversely to intelligence
ganizational structure may not affect all three com- generation, dissemination, and response design, but
ponents of a market orientation in the same way. Be- positively to response implementation.
cause a market orientation essentially involves doing Pg^: The greater the departmentalization, (1) the lower the
something new or different in response to market con- intelligence generation, dissemination, and response
ditions, it can be viewed as a form of innovative be- design and (2) the greater the response implementa-
havior. Zaitman, Duncan, and Holbek (1973, p. 62) tion.
characterize innovative behavior as having two stages, P^b- The greater the formalization, (1) lower the intelli-
(1) the initiation stage (i.e., awareness and decision- gence generation, dissemination, and response design
and (2) the greater the response implementation.
making stage) and (2) the implementation stage (i.e.,
Pg^: The greater the centralization, (1) the lower the in-
carrying out the decision). In our context, the initia- telligence generation, dissemination, and response
tion stage corresponds to intelligence generation, dis- design and (2) the greater the response implementa-
semination, and the design of organizational re- tion.
sponse, whereas the implementation stage corresponds The management literature refiects a rich history
to the actual organizational response. of work on measurement/reward systems and their ef-
Zaitman, Duncan, and Holbek (1973) draw on nu- fects on the attitudes and behavior of employees (see
merous studies to argue that organizational dimen- Hopwood 1974; Lawler and Rhode 1976 for reviews).
sions such as departmentalization, formalization, and Recent research in marketing builds on this work by

Market Orientation/11
emphasizing the importance of measurement and re- cussed in some detail by Porter, Allen, and Angel
ward systems in shaping both desirable and undesir- (1981).
able behaviors (cf. Anderson and Chambers 1985; Political behavior consists of individuals' attempts
Jaworski 1988). Webster (1988, p. 38) argues that "the to promote self-interests and threaten others' interests
key to developing a market-driven, customer-oriented (Porter, Allen, and Angel 1981). Political norm struc-
business lies in how managers are evaluated and re- ture is an informal system that reflects the extent to
warded." He observes that if managers are evaluated which members of an organization view political be-
primarily on the basis of short-term profitability and havior in the organization as being acceptable. A mar-
sales, they are likely to focus on those criteria and ket orientation calls for a concerted response by the
neglect market factors such as customer satisfaction various departments of an organization to market in-
that ensure the long-term health of an organization. telligence. A highly politicized system, however, has
Webster's observations are supported by the prac- the potential for engendering interdepartmental con-
tices of several organizations included in our study. flict (thereby inhibiting a market orientation). Hence,
Though only one organization sampled appears to tie Pii: The greater the acceptance of political behavior in an
compensation to market-oriented performance, if re- organization, the greater the interdepartmental con-
wards are construed more broadly to include appre- flict.
ciation, recognition, and approval, a larger number of
organizations in the sample measure and reward mar- Linkages Among the Market Orientation
ket-based performance. For example, several organi- Components
zations make it a point to single out and recognize Literature suggests that the three elements of a market
employees who are identified by customers as being orientation may be interrelated. For example, the lit-
particularly helpful. Other organizations have insti- erature on source credibility (cf. Petty and Cacioppo
tuted one or more variations of the "employee of the 1986; Zaltman and Moorman 1988) suggests that in-
month" theme. dividuals in an organization are likely to be more re-
However, considerable variance is evident in the sponsive to intelligence generated by individual(s) who
extent to which organizations measure and reward are regarded as having high expertise and trustwor-
market-based performance. One marketing manager thiness. That is, responsiveness to market intelligence
recounted a current situation in which employees are is likely to be a function of the characteristics of the
rewarded for short-term flnancial performance (i.e., source that generates the intelligence. Further, the lit-
units sold). She noted that this system works against erature on research utilization (cf. Deshpande and
a long-run market orientation and any long-run stra- Zaltman 1982) suggests that responsiveness may be a
tegic orientation that the organization may decide to function of such factors as the political acceptability
take. A sales manager in an industrial firm made a of intelligence and the extent to which it challenges
similar observation, noting that his sales reps may lead the status quo. Similarly, the extent to which intelli-
the company astray because their reward systems are gence is disseminated within an organization may de-
based on sales in the short run. Currently, no system pend on the political acceptability of intelligence and
is in place to encourage them to think strategically. the challenge posed to the status quo. Hence the source
The preceding discussion suggests that: of market intelligence and the very nature of intelli-
gence may affect its dissemination and utilization (i.e.,
Pio: The greater the reliance on market-based factors for responsiveness). More formally:
evaluating and rewarding managers, the greater the
market orientation of the organization. Pn.: The greater the perceived expertise of the source
generating market intelligence, the greater the re-
All of the preceding organizationwide character- sponsiveness to it by the organization.
istics involve formal systems within organizations. Pi2b: The greater the perceived trustworthiness of the source
Recent writings in the management literature reflect generating market intelligence, the greater the re-
an increasingrecognitionof the important role of looser, sponsiveness to it by the organization.
less formal systems in shaping organizational activi- P,2c: The smaller the challenge to the status quo posed by
market intelligence, the greater (1) its dissemination
ties (e.g., Feldman and March 1981; Ouchi 1979; Ouchi and (2) the responsiveness to it by the organization.
and Wilkens 1985; Pettigrew 1979; Smircich 1983).
Pi2d: The greater the p>olitical acceptability of market in-
More recently, these informal characteristics have telligence, the greater (1) its dissemination and (2)
gained the attention of marketing academicians (cf. the responsiveness to it by the organization.
Deshpande and Webster 1989; Jaworski 1988). Though
several different concepts can be identified, an infor- Consequences of a Market Orientation
mal organizational characteristic that appears to be Several insights obtained ftom the field interviews and
particularly relevant as a determinant of a market ori- the literature pertain to the consequences of a market
entation is political norm structure, a variable dis- orientation. The interviews uncovered an interesting

12 /Journal of Marketing, April 1990


consequence of a market orientation that is of major The espirit de corps construct has received some
significance to large corporations. As the sales man- attention in the management literature (e.g., Jones and
ager for Europe of an industrial products company in- James 1979) and is very similar to the teamwork con-
dicated: struct identified by Zeithaml, Berry, and Parasuraman
(1988) in a services marketing context. The latter au-
[Market orientation leads to a] cohesive product fo- thors suggest that this variable is instrumental in re-
cus, clear leadership, better coordination of sales ac-
tivities, much better job of reviewing products from ducing the gap between service quality specifications
a worldwide basis, help in terms of differentiation. and actual delivery, thereby improving consumers'
perceptions of service quality. Interestingly, our find-
In essence, the executive suggests that a market ings suggest that the espirit de corps within an orga-
orientation facilitates clarity of focus and vision in an nization may itself be improved by a market orien-
organization's strategy. This benefit corresponds to tation. Therefore we propose that:
consistency, the first of Rumelt's (1981) four crite-
ria—consistency, frame, competence, and workabil- P14: The greater the market orientation, the greater the (1)
ity—for evaluating strategies. Consistency is the ex- espirit de corps, (2) job satisfaction, and (3) organi-
tent to which a strategy reflects mutually consistent zational commitment of employees.
goals, objectives, and policies. Though strategies for- The third set of consequences of a market orien-
mulated by a single individual seldom have internal tation identified by the respondents involves customer
inconsistencies, the likelihood of inconsistencies in- attitudes and behavior. The thrust of the comments is
creases when strategies emerge from interactions and that a market orientation leads to satisfied customers
negotiations among multiple individuals in different who spread the good word to other potential cus-
parts of an organization. A market orientation appears tomers and keep coming back to the organization. The
to provide a unifying focus for the efforts and projects following quotations illustrate these ideas.
of individuals and departments within the organiza-
tion, thereby leading to superior performance. . . . customer satisfaction, [positive] word of mouth,
Not surprisingly, virtually all of the executives in- repeat business is enhanced. Customer retention is
better for us, [it is] much less expensive.
terviewed noted that a market orientation enhances the —Executive vice president,
performance of an organization. The typical response consumer products company
to our question about positive consequences was a . . . develops firm reputation, happy customers.
"laundry list" of favorable business performance in- Coming through when a customer is in a jam helps
dicators such as ROI, profits, sales volume, market [our] reputation.
—Vice president, industrial products company
share, and sales growth. Preliminary support for some
of these consequences is reported by Narver and Slater These ideas also reflect Kotler's (1988) assertion that
(1988). Hence: a market orientation is likely to lead to greater cus-
tomer satisfaction and repeat business. Hence:
P,3: The greater the market orientation of an organization,
the higher its business performance. P15: The greater the market orientation, (1) the greater the
customer satisfaction and (2) the greater the repeat
The second set of consequences that emerged from business from customers.
the interviews relate to the effects of a market ori-
entation on employees. These effects are not ad- The literature reflects few empirical studies of the
dressed in the extant literature. A large number of ex- consequences of a market orientation. Most studies
ecutives noted that a market orientation provides focus primarily on the extent to which the marketing
psychological and social benefits to employees. Sev- concept has been adopted by organizations, rather than
eral respondents noted that a market orientation leads its specific consequences. One noteworthy exception
to a sense of pride in belonging to an organization in is the Lawton and Parasuraman (1980) study. The au-
which all departments and individuals work toward thors found that the adoption of the marketing concept
the common goal of serving customers. Accomplish- had no apparent effect on the sources of new product
ing this objective results in employees sharing a feel- ideas, the use of marketing research in new product
ing of worthwhile contribution, as well as higher lev- planning, and the innovativeness of new product of-
els of job satisfaction and commitment to the ferings. In a sense, these findings run counter to the
organization. The vice president of a consumer prod- assertions of such authors as Bennett and Cooper
ucts company described some of these consequences (1981), Kaldor (1971), and Tauber (1974), who argue
as: that the adoption of the marketing concept inhibits or-
ganizations from developing truly breakthrough in-
. . . better esprit de corps. [You get the feeling] that novations. Lawton and Parasuraman (1980) caution,
what you are doing is satisfying. I think people feel however, that additional research using new measures
the need to contribute, to help individuals, the so-
ciety, to make a contribution. is needed before firm conclusions can be drawn.

Market Orientation/13
Environmental Moderators of the Market terviews. As two of the managers interviewed indi-
Orientation-Business Performance Linkage cated:
With a few exceptions, writings in the literature tend [It is important to] recognize that new products do
to view the marketing concept as a universally rele- not always originate from the customer, [particularly]
in high-tech industry. [An organization needs] to bal-
vant philosophy. In contrast, the field interviews elic- ance R&D [initiated] projects as well as customer/
ited several environmental contingencies or conditions market driven products.
under which the impact of a market orientation on —Sales manager, industrial products company
business performance is likely to be minimal. That is, Let ine explain why we are not marketing oriented.
the field findings suggest that certain contingencies We are a complex business, the industry is changing
dramatically. Some of our products did not exist three
moderate (i.e., increase or decrease) the strength of years ago. The technology is changing. Everyone is
the relationship between market orientation and busi- getting wrapped up in production/operations.
ness performance. In the following discussion, we —Marketing manager, service organization
consider four such contingencies or moderator vari-
The basic idea expressed in the quotations is that
ables.
in industries characterized by rapidly changing tech-
One moderator that surfaced in the course of the nology (note that firms in such industries often sell to
interviews is market turbulence—changes in the com- other firms), a market orientation may not be as im-
position of customers and their preferences. This vari- portant as it is in technologically stable industries.
able is more focused than the widely studied environ- "Technology" here refers to the entire process of
mental turbulence construct. The role of market transforming inputs to output and the delivery of those
turbulence in influencing the desirability of a market outputs to the end customer. The proposition is not
orientation was highlighted by the experience of two that a market orientation is unimportant in technolog-
consumer (food) products companies that marketed their ically turbulent industries, but rather that it is less im-
products in a specific region in the United States. The portant. That is:
population in this region had remained unchanged for
years, and the preferences of the customers were known P17: The greater the technological turbulence, the weaker
and stable. Neither company did much market re- the relationship between a market orientation and
business performance.
search. Over the last few years, however, the region
had received a tremendous influx of population from Several executives noted that the degree of com-
other parts of the country. Both companies were forced petition in an industry has a straightforward bearing
to initiate research to assess the needs and preferences on the importance of a market orientation. Strong
of the new potential customers, and to develop new competition leads to multiple choices for customers.
products to suit their particular preferences. These ex- Consequently, an organization must monitor and re-
periences suggest that when an organization caters to spond to customers' changing needs and preferences
a fixed set of customers with stable preferences, a to ensure that customers select its offerings over com-
market orientation is likely to have little effect on per- peting alternatives. As two executives indicated:
formance because little adjustment to a marketing mix
is necessary to cater effectively to stable preferences Historically, [we] were a technically driven com-
of a given set of customers. In contrast, if the cus- pany. In the early years it was a successful approach.
If we had a better mousetrap, customers would search
tomer sets or their preferences are less stable, there is [us] out. However, as more companies came up with
a greater likelihood that the company's offerings will more solutions, we had to become more market ori-
become mismatched with customers' needs over a pe- ented. Find out what solution [the] customer is look-
ing for, and try to solve it. In the past little time was
riod of time. An organization therefore must ascertain spent with customers. Now coordinate with cus-
the changed preferences of customers and adjust its tomer, solution for him, try to utilize that develop-
offerings to match them. That is: ment energy to provide solution for segment.
—Sales manager, industrial product firm
One thing is that marketing and advertising change
P,a: The greater the market turbulence, the stronger the so much. What worked last year may not work this
relationship between a market orientation and busi- year. A lot of it has to do with the competitive nature
ness performance. that you're in at the time because people's needs
change. . . . If you don't have competition, you don't
need it as much."
Several authors (e.g., Bennett and Cooper 1981; —Marketing director, service organization
Houston 1986; Kaldor 1971; Tauber 1974) point out
that many generic product class innovations do not Thus, an organization with a monopoly in a market
evolve from consumer research. Rather, these inno- may perform well regardless of whether or not it mod-
vations are developed by R&D personnel who are often ifies its offerings to suit changing customer prefer-
outside the industries into which the innovations even- ences (see also Houston 1986, p. 84). As one service
tually assimilate. Similar notions emerged in the in- executive noted, "If one has a patent or lock on the

14 / Journal of Marketing, April 1990


product, it may not be efficient to allocate resources tions. Overall, our research gives managers a com-
to marketing." In other words, the benefits afforded prehensive view of what a market orientation is, ways
by a market orientation are greater for organizations to attain it, and its likely consequences.
in a competitive industry than for organizations op-
erating in less competitive industries. To Be or Not To Be Market Oriented
Pig: The greater the competition, the stronger the rela- Our study suggests that though a market orientation
tionship between a market orientation and business is likely to be related to business performance in gen-
performance. eral, under certain conditions it may not be critical.
A market orientation requires the commitment of re-
Several executives indicated that in strong econ- sources. The orientation is useful only if the benefits
omies characterized by strong demand, an organiza- it affords exceed the cost of those resources. Hence,
tion may be able to "get away with" a minimal amount under conditions of limited competition, stable market
of market orientation. In contrast, in a weak econ- preferences, technologically turbulent industries, and
omy, customers are likely to be very value conscious booming economies, a market orientation may not be
and organizations must be more in tune with and re- related strongly to business performance. Managers of
sponsive to customer needs in order to offer good value businesses operating under these conditions should pay
for money. Paradoxically, marketing seems to require close attention to the cost-benefit ratio of a market
more resources precisely at times when the organi- orientation.
zation is short of resources because of weak business
conditions. As one academician noted: Implementing a Market Orientation
I think in weak economies, on the one hand [there is Our research provides very specific suggestions about
a] need to be more marketing oriented [because] con- the factors that foster or discourage a market orien-
sumers might need better inducements, their dollar tation in organizations. Because the factors identified
has to go farther. On the other hand, to be marketing
oriented requires greater amounts of money that they are controllable by senior managers, deliberate en-
may not be able to provide at that point. gendering of a market orientation is possible.
The preceding observations suggest the following For example, our findings suggest that senior
proposition. managers must themselves be convinced of the value
of a market orientation and communicate their com-
P,,: The weaker the general economy, the stronger the re- mitment to junior employees. Though annual reports
lationship between a market orientation and business and public interviews proclaiming a market orienta-
performance.
tion are helpful, junior employees need to witness be-
Our 19 research propositions fit the broad frame- haviors and resource allocations that reflect a com-
work depicted in Figure 1. Note that the moderator mitment to a market orientation. Senior managers must
variables discussed are labeled supply-side and de- develop positive attitudes toward change and a will-
mand-side moderators. The latter relate to the nature ingness to take calculated risks. A market orientation
of demand in an industry (e.g., customer preferences, is almost certain to lead to a few projects or programs
value consciousness) whereas the former refer to the that do not succeed. However, supportive reaction to
nature of competition among suppliers and the tech- failures is critical for engendering a change-oriented
nology they employ. The framework in Figure 1 fa- philosophy represented by the marketing concept.
cilitates parsimonious conceptualization and, more We also identify interdepartmental dynamics that
importantly, offers the potential for extending re- can be managed through appropriate in-house efforts.
search by identifying additional constructs that may Interdepartmental variables—conflict, connected-
fit into each of the broad categories (senior manage- ness—clearly have a key role in influencing the dis-
ment factors, interdepartmental dynamics, etc.). semination of and responsiveness to market intelli-
gence. Some inexpensive ways to manage these two
antecedents (conflict, connectedness) include (1) in-
Managerial Implications terdepartmental lunches, (2) sports leagues that re-
Our propositions have direct managerial implications. quire mixed-department teams, and (3) newsletters that
First, our research suggests that a market orientation "poke fun" at various interdepartmental relations. More
may or may not be very desirable for a business, de- advanced efforts include (1) exchange of employees
pending on the nature of its supply- and demand-side across departments, (2) cross-department training pro-
factors. Second, the research clearly delineates the grams, and (3) senior department managers spending
factors that can be expected to foster or discourage a a day with executives in other departments. Such ef-
market orientation. These factors are largely control- forts appear to foster an understanding of the person-
lable by managers and therefore can be altered by them alities of managers in other departments, their culture,
to improve the market orientation of their organiza- and their particular perspectives.

Market Orientation/15
The third set of variables that senior managers might sponsive to customer needs. However, when the in-
alter to foster a market orientation pertains to orga- teractions of these employees with customers (hos-
nizationwide systems. The impact of structural factors pital patients) were videotaped and played back to the
such as formalization and centralization is unclear be- employees, they were horrified at the callous manner
cause, though they appear to inhibit the generation and in which they saw themselves treating customers. As
dissemination of market intelligence, these very fac- Weick (1979) notes, it is the perceptions of situations
tors are likely to help an organization implement its that are the triggers of action.
response to market intelligence effectively. How an
organization should structure itself appears to depend The Quality of Market Orientation
on the activity involved. Clearly, however, senior Though in general organizations that develop market
managers can help foster a market orientation by intelligence and respond to it are likely to perform better
changing reward systems from being completely fi- and have more satisfied customers and employees than
nance based (e.g., sales, profits) to being at least partly ones that do not, simply engaging in market-oriented
market based (e.g., customer satisfaction, intelligence activities does not ensure the quality of those activi-
obtained). Simultaneously, informal norms such as the ties. The quality of market intelligence itself may be
acceptability of political behavior in the organization suspect or the quality of execution of marketing pro-
should be changed to facilitate concerted response by grams designed in response to the intelligence may be
the departments to market developments. poor. In such instances, a market orientation may not
produce the desired functional consequences. For ex-
The Pace and Dynamics of Change ample, to meet a customer's needs, one industrial
A change in orientation takes place slowly. We were products company went to extreme lengths to custom-
apprised of certain organizations that were actively in- ize small batches of products for the customer, which
volved in becoming more market oriented, but planned resulted in poor financial performance. Similarly, one
to complete the change process over a period of about executive noted that a company's efforts may so raise
four years. In describing a change to a market focus, customer expectations about product quality, response
an executive director noted that there is always a "pull time, and other factors as to result in eidier uneco-
and tug between a new idea and old ways of doing nomical operations or dissatisfied customers. This dif-
things." It appears especially difficult to "carry" em- ficulty parallels the problem posed by overpromising
ployees who are concerned that a movement along the in service settings discussed by Zeithaml, Berry, and
market orientation dimension might jeopardize their Parasuraman (1988). Though we do not address the
power in the organization or expose other inadequa- issue of variations in the quality of market intelli-
cies related to their jobs. gence, its dissemination, and organizational response,
Further, the balance of power across departments these variations clearly are important and warrant con-
must be managed carefully in any effort to become sideration by both managers and researchers.
more market oriented. Though a market orientation
involves the efforts of virtually all departments in an
organization, the marketing department typically has Conclusion
a larger role by virtue of its contact with customers We attempt to clarify the domain of the market ori-
and the market. Individuals in marketing departments entation construct and provide a working definition
may try to relegate other departments to a secondary and a foundation for developing a measure of the con-
status. One health care administrator recounted that struct. Additionally, we identify three classes of fac-
when the organization had begun to emphasize a mar- tors affecting a market orientation and interrelation-
ket philosophy, it had started treating marketing per- ships among the elements of market orientation. We
sonnel as tile "blue-eyed boys" of the organization. highlight the impact of a market orientation on an or-
Within a very short time, personnel in other depart- ganization's strategy, employee dispositions, and cus-
ments began to resent this treatment and raised ques- tomer attitudes and behavior. Finally, and in a sig-
tions with the chief executive ("What are you doing nificant departure from previous work, we introduce
for us?"). supply- and demand-side factors as potential moder-
For any change to take place, an organization first ators of the impact of market orientation on business
must perceive a gap between its current and its pre- performance.
ferred orientation. We were apprised of several in- Our propositional inventory and integrative frame-
stances in which members of an organization felt they work represent efforts to build a foundation for the
were very customer oriented, but in fact were hardly systematic development of a theory of market orien-
so. An executive narrated the example of a service tation. However, the objective of our research is the-
organization's employees who felt they were very re- ory construction rather than theory testing. Much work

16/Journal of Marketing, April 1990


remains to be done in terms of developing a suitable Wensley 1988). Much less attention has focused on
measure of market orientation and empirically testing organizational processes, such as market orientation,
our propositions. that represent a long-term advantage. Because a mar-
In recent years, considerable interest has focused ket orientation is not easily engendered, it may be
on organizational resources and positions that repre- considered an additional and distinct form of sustain-
sent sustainable competitive advantages (e.g., Day and able competitive advantage.

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