COMPETITIVE ADVANTAGE FOR FAST GROWTH SMES: A STUDY OF THE EFFECTS OF BUSINESS

ORIENTATION AND MARKETING CAPABILITIES ON FIRM PERFORMANCE

Caroline Tan Swee Lin, RMIT University

ABSTRACT

Utilizing a triangulated methodology, this thesis examines the influence of market, learning, and entrepreneurial orientation
on firm marketing capabilities, and performance in rapidly growing SMEs. These firms invest in maintaining sound
relationships with organization stakeholders and developing superior products/services, marketing capabilities that contribute
significantly to firm performance.

INTRODUCTION

This thesis investigates the influence of market (Narver and Slater 1990), learning (Baker and Sinkula 1999), and
entrepreneurial orientation (Lumpkin and Dess 2001) as sources of competitive advantage (CA) in rapidly growing SMEs.
These three factors synergistically comprise an organization’s business orientation, enhancing firm marketing capabilities
(MCs), and ultimately, performance. These three orientations are regarded as valuable, rare, inimitable, and non-substitutable
(Barney 1991).

There are 2 clear reasons for undertaking this study. First, a review of the literature indicates no research investigating
relationships between business orientation, MCs and firm performance of fast-growth firms (FGFs). This cohort is distinct
from their slow growth counterparts and larger mature successful firms. Second, extant literature indicates that more work
remains to be done in the areas of competencies, orientation, and performance of SMEs (Tzokas, Carter, and Kyriazopoulos
2001). Hult, Hurley and Knight (2004) demonstrated that while these business orientations do not constitute competitive
advantage independently, but collectively contribute towards the creation of a unique advantage.

Sexton, Upton, Wacholtz, and McDougall (1997, p. 2) highlighted the economic contribution of FGFs as gazelles: companies
that achieve a minimum of 20% annual compound sales growth over a 5-year period. According to Birch (1995), gazelles
comprise 3% of all small companies. In Australia, approximately 10% of all SMEs are FGFs, contributing substantially to
national revenue (Gome 2003). Feindt, Jeffcoate, and Chappell (2002) suggested that founders play a crucial role and that
internal business processes are better organised than their counterparts. FGFs demonstrate a number of other critical factors,
including a propensity to invest in future oriented expenses such as marketing, building of distribution channels, and product
R&D (O'Gorman 2001). The hypothesized model is discussed below.

DEVELOPMENT OF THE HYPOTHESISED MODEL

Narver and Slater (1990) views market orientation (MO) as an organizational culture comprising three behavioral
components: customer and competitor orientation, and inter-functional coordination. Customer orientation is achieved when
a firm succeeds in creating superior value for customers. The creation of superior value requires an understanding of the
nature of competitors, technologies, and products that customers perceive as alternate satisfiers MO also includes the
coordination of personnel and other resources throughout the company to create value for buyers (Narver and Slater 1990).

Despite its importance, Chaston (2000) argued that there is limited evidence to support direct links between MO and firm
growth rate. A number of investigators (Hooley et al. 1999) found that MCs are regarded as more important than operational
ones. Consequently, when a firm is up-to-date with information on its customers and competitors (market oriented), it should
be able to effectively handle marketing activities within the organization. Accordingly, it is hypothesized that, Hypothesis 1:
Firm MO is related positively to organizational marketing capabilities.

According to Baker and Sinkula (1999), a learning oriented firm, is an organizational commitment to higher level learning
initiatives. Basically, there are three main components of organizational learning: commitment to learning, shared vision, and
open-mindedness (Baker and Sinkula 1999).

A learning orientation (LO) is in itself difficult to implement. Many factors have to be taken into consideration as an entire
organization is affected. Positive LO directly results in increased market information generation and dissemination, which in
turn, affects the degree to which firms make changes to their marketing strategies. Pisano (1994, p. 86) posited that without

292
learning, it is difficult to imagine from where a firm’s unique skills and competencies would come. Market oriented behaviors
facilitate, but do not guarantee optimal learning. Firms with lower learning capabilities might have an inflexible construction
of MO and entrepreneurial orientation (EO). When employees possess enhanced LO, they not only gather and disseminate
information about markets and continuously innovate their products, but also constantly examine their interpretation of the
knowledge. Consistent with this perspective, Tan and Smyrnios (2004c) found that entrepreneurial drive provides a cultural
foundation for organizational learning, enabling enterprises to achieve higher level of performance. Accordingly, it is
hypothesized, Hypothesis 2: Firm LO is related positively to organizational marketing capabilities.

Lumpkin and Dess (2001) advocates that EO involves 4 key dimensions, namely, innovation, risk-taking, pro-activeness and
competitive aggressiveness. The ultimate goal of EO and MO is value creation for the customer. Tan and Smyrnios (2004c)
found significant relationships between EO and LO. Value can be created via superior MCs. Research (Hills and LaForge
1992) indicates that firm EO and MO are two major considerations that directly affect operational competencies. Tzokas et
al. (2001) noted that these two orientations contribute synergistically to the emergence of unique marketing techniques and
overall firm performance. In the light of these findings, it is hypothesized that, Hypothesis 3: Firm EO is related positively
to organizational marketing capabilities.

Performance measurement has been subject to considerable debate (Murphy, Trailer, and Hill 1996). Absolute performance
figures such as return on investment (ROI) and profit levels, sales volume, and market share are difficult to compare between
firms operating in different markets (Fisher & McGowan, 1983). Vorhies and Harker (2000) advocated that firm
performance should be assessed relative to competing firms when multiple industries are represented in the study as objective
measures of performance will vary greatly in different industries.

Investigators (Weerawardena 2003) identified the development of MCs as one of the major avenues towards achieving CA.
Marketing capability can be organized into a hierarchy, involving marketing culture, strategy, and operations (Hooley et al.
1999). Vorhies and Harker (2000) identified six processes whereby a firm’s value added products and services can reach its
target customers. These capabilities include marketing research, pricing, product development, and channels of distribution,
promotion, and marketing management. Chaston (1998) postulated that entrepreneurial marketing has a major influence on
the performance of small firms. For these reasons, it is hypothesized that, Hypothesis 4: Marketing capabilities are related
positively to firm performance

A triangulated approach involving quantitative and qualitative procedures was employed. From a qualitative perspective,
interview data enables new research questions to be uncovered that might be tested in subsequent quantitative research
(Scandura and Williams 2000).

METHODOLOGY

Participants are the 2003 and 2004 BRW Fast 100 firms (Gome 2003, 2004). The studies generated response rates of 78.4%
and 81%, respectively. In 2003 (versus 2004), Fast 100 firms achieve an average turnover growth of 61% (versus 102%),
while the top two companies attain growth rates exceeding 500% (versus 598% and 887%). The growth rate for the company
ranked 100 is 32.2% (versus 35%). Predominately, firms were within the previous 10 years.

Items of the Fast 100 questionnaire were derived from studies measuring MO (Narver and Slater 1990), LO (Sinkula, Baker,
and Noordewier 1997), EO (Lumpkin and Dess 2001), MCs and firm performance (Vorhies and Harker 2000). All constructs
are measured on 7-point Likert scale ranging from Strongly Agree to Strongly Disagree. For in-depth interviews, an interview
schedule derived from the questionnaire was developed by the present investigator, and involved a checklist of areas.

As noted previously, a dichotomous approach was adopted. In 2003, procedures involved questionnaire mailouts and indepth
interviews with 9 CEOs. In 2004, a further 9 CEOs were interviewed. Questionnaires were mailed to owners/CEOs, in
stamped, self-addressed envelopes. One hundred and thirty-one questionnaires were returned, generating a response rate of
78.4%. Of the 131 respondents, 88 comprise the final list for the 2003 BRW Fast 100. Tape recorded semi-structured
interviews of approximately 3 hours provided informants with an opportunity to relay relevant stories. Interviews were
transcribed, main themes identified and an overall causal network model was derived.

Data analyses proceeded through via two principal stages using SPSS 11.0 and AMOS 4.0. First, data were tested for
violations of statistical assumptions. The statistical plan involved three main processes: Exploratory Factor Analysis (EFA),

293
Confirmatory Factor Analysis (CFA), and path analysis (PA). EFA involving Principal Axis Factoring with Oblimin Rotation
was used to determine the number of factors associated with measures of MO, LO, EO, MC, and firm performance.

RESULTS AND DISCUSSION

After extracting factors, a theoretically developed structure was tested. Five independent one factor congeneric models were
evaluated to test for content validity. Congeneric measurement models are useful for assessing the reliability of measures and
verifying unidimensionality (Anderson and Gerbing 1988). Nonsignificant items are deleted from each construct until a
sound model fit is obtained. Range of statistics for the one-factor congeneric measurement models are as follows: Ratio F2 /df
0.89-1.39, RMSEA 0.00-0.05, TLI 0.93-0.98, AGFI 0.89-0.95. Items were combined to test the overall fit of the model.
Reliability coefficients (Cronbach alpha) were calculated for measures: MO (D=0.82), LO (D=0.85), EO (D=0.60), MCs
(D=0.74), and firm performance (D=0.74).

Owing to the relatively small sample size, the final path model included three elements of MO (i.e., customer orientation,
competitor orientation, interfunctional coordination), one element of LO (i.e. shared vision), two elements of EO (i.e.,
proactiveness and innovativeness), two elements of MCs (i.e., product and relationships) and six subjective firm performance
items (i.e., financial performance: profits, ROI, ROE and market performance: customer satisfaction, value delivery to
customers and overall marketing effectiveness relative to competitors in the last 3 years). For each variable, weighted
composites were developed using standardized factor score weights for each item related to that factor (e.g., customer
orientation, innovativeness). This procedure was adopted, rather than simply aggregating items that comprised a factor
because each item makes a unique contribution to its construct. The final path model fits the data well, F2(28, n=131)=28.9,
p< 0.001, F2 /df=1.03, AGFI=0.921, TLI=0.994, CFI=0.996, RMSEA=0.015 (see Figure 1).

Scales used were assessed for social desirability response bias. A short version of the Marlowe-Crowne social desirability
scale, Form A (Reynolds 1982) was employed. An EFA using Principal Axis Factoring with Oblimin rotation was performed,
culminating in three factors. Two items were deleted because of low factor loadings. Pearson correlation coefficients between
socially desirable and MO, EO, LO, MCs scores and firm performance range between r=0.01 and r=0.26. Of the 27
correlations, the SD scale correlated significantly with only one measure: CA in products (r=0.26). This finding might
suggest that CEOs rate their products as superior to their competitors, possibly in a socially accepted way. The discussion
proceeds with an analysis of findings relating to the effect of firm orientations driving specific MCs (H1, H2, H3), followed
by the effects of a CA in MCs and firm performance (H4).

H1: Firm MO is related positively to organizational marketing capabilities. The present path model demonstrates a positive
relationship between MO and a CA in MCs, supporting Hypothesis 1. However, as shown, customer orientation is not
mediated via MCs, but is directly related to market performance. These results make sense because being customer focused
(e.g., closely assessing customer needs and measuring customer satisfaction) should lead to superior CV and overall customer
satisfaction (measures of market performance). In contrast, Appiah-Adu (1997) found an association between MO and
financial performance measures. Notwithstanding, customer orientation is likely to be a vital determinant of success for
SMEs because of a general lack of financial resources.

The model also indicates that competitor orientation is correlated positively with relationships firms have with stakeholders.
Relationships are especially vital in FGFs, providing strategic power, enhancing learning processes (Tan and Smyrnios
2004a). By being cognizant and constantly monitoring their competitor strategies, companies are able keep abreast of their
competitor when they launch new products/services. FGFs hold an advantage because they observe the big players, quickly
outmaneuvering their competition. Being in a niche market helps organizations remain focused. For example, Leigh Jasper,
CEO of Aconex elaborates, we talk about what competitors are doing. We know from looking at their website, when we are
selling against them, we get feedback, we know where their products are moving. We document what our competitors are
doing. This finding emphasises that even when organizations lead the market, firms constantly need to monitor competitors.

Being coordinated as a team is important for corporate success. The present findings indicate that interfunctional
coordination is related positively to a CA in products. This finding implies that an organization may have the best
products/services, but if an organization is not integrated, the bottomline may be affected.

H2: Firm LO is related positively to organizational marketing capabilities. As LO is associated positively with a CA in
MCs, hypothesis 2 is supported. The present model shows a positive correlation between shared vision and a relationship
advantage with distributors/retailers, contributing to ease of communication with other firms throughout the supply chain.

294
Committed staff who are treated as part of the business, work towards attaining organizational goals, also leading to sound
relationships with retailers and distributors. As well, learning culture involves sharing of information (Tan and Smyrnios
2004a). Dianna Burmas of Mor Cosmetics elaborates, it is important that staff know what they are working towards.
Everyone is kept up to speed so they know what is going on. It keeps the goals common to everybody because if we were very
private about that, people start feeling that there is a lack of communication. When employees are aware of organizational
objectives, they are better able to negotiate with other stakeholders.

H3: Firm EO is related positively to organizational marketing capabilities. Hypothesis 3 is supported. The present findings
indicate that innovative firms develop products regarded as superior. Innovation involving an ability to think and manage
strategically is a key factor distinguishing entrepreneurial firms from small business ventures (Beaver and Prince 2002). As
an example, Graeme Pope, CEO of Waterwerks constantly questions its assumptions in the market, quickly manoeuvring
their markets in different directions.

Proactiveness, another component of EO, can lead to better products and relationships with stakeholders, who prefer to work
closely with successful firms. Proactiveness, as a major source of CA, constitutes being ahead of competition in introducing
new products/services (Lumpkin and Dess 2001). Tim Fouhy, CEO of Reactive Media, described that we have been using
macromedia flash and database technologies right from the beginning. We’ve won a lot of awards so it gives us the ability to
demonstrate when winning new businesses.

H4: Marketing capabilities are related positively to performance. Finally, H4 is supported: CA in products and relationships
with stakeholders have varying effects on firm performance. The present model indicates that CA in products leads to high
financial and market performance, whereas a CA in relationships with retailers/distributors affects only market performance.
This finding could mean that customers may be satisfied with a firm’s products, but satisfaction alone does not drive
profitability. Furthermore, this study found a nonsignificant relationship between a CA in market research, promotion,
pricing and marketing management, and firm performance, the outcome which is in opposition to Vorhies and Harker (2000).
Emerging FGFs possess distinct capabilities, focusing on specific abilities (Tan and Smyrnios 2004c), concentrating on
relationship marketing with stakeholders, provision of superior products, and detailed marketing planning (Tan and Smyrnios
2004a). Possessing these capabilities provides FGFs with an edge, leading to greater customer satisfaction. As shown in
Figure 1, there are significant covariations between MO, LO and EO. This finding implies that these orientations are
synergistically sources of CA, the findings of which are consistent with Hult, Hurley and Knight (2004), who suggest that the
linkage is not linear but embedded with complexity.

In general, our results indicate that MO, EO, and LO are significant antecedents to MCs. Accordingly, firms can leverage
advantages associated with a business orientation to strengthen their MCs. While superior MCs are important drivers of
performance, it also appears to be a necessary mediator between business orientation and performance. Without MCs, firm
EO, LO and MO might provide little value to the attainment of desired performance objectives.

Notwithstanding, qualitative research has revealed 3 further issues (leadership, firm culture and MCs ÆCV) (See Figure 2).
First, CEOs are the driving force behind their organizations. A vision to grow and become a successful company influences
organizational culture and experiences of employees (Tan and Smyrnios 2004b). Business orientations are driven by
leadership. The personal characteristics (beliefs, values, & behavior) and managerial competencies of entrepreneurs are
integral, exerting a powerful impact on the direction of the business and employees. Becherer, Halstead and Haynes (2002)
also suggested that the influence of organizational and leadership characteristics on MO can lead to more effective marketing.
Second, firm culture, and employee empowerment and morale are considered to be further important elements. Company
culture fit contributes to cooperation and creativity amongst employees, and ultimately firm performance. Finally, advantages
in MCs are recognized as leading to CV. A marketing edge alone does not increase sales. Customers need to regard these
products of value, in order to purchase the product, and ultimately contribute to the bottom line through increased sales (i.e.,
firm performance). Firms need to investigate the key buying factors that customers value when they choose between their
business and toughest competitors, and how customers rate their performance versus competitors on each key buying factor.
In the context of these findings, Gale’s (2000) work begs an important question: What is the importance of each of these
components on CV? According to Slater (1997), benefits and costs to customers must be considered.

It is acknowledged that MO, LO and EO are not stable taking time to evolve and change over time. Our findings do not
capture the dynamics of these changes. The current investigation is concerned with only the top 100 fastest growing private
and public companies, majority of which are emerging enterprises established less than 10 years ago, complying strict
inclusion/exclusion criteria. Thus, findings can be generalized only to those firms meeting specific constraints.

295
 IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

The purpose of this study was to investigate how MO, LO, and EO are related to a CA in MCs and firm performance. From a
theoretical and empirical standpoint, this investigation goes some way towards bridging the gap between related streams of
research between firm orientation and strategy. Consequently, several implications and future research opportunities emerge.

Organizations need to synergistically align their orientations so that success is attained. When MO is practised narrowly
within existing boundaries, outdated beliefs about existing customers and competitors can become part of company culture.
There is a need to be constantly proactive in finding new markets/uses for products and innovation becomes an imperative for
maintaining an edge. FGFs can exploit their flexibility in rapidly changing environments. Greater firm wide understanding of
customers, competitors, and organizations help defend a market niche. More importantly, leadership drives a firm’s proclivity
towards business orientation, and fosters appropriate culture. Further investigation on the role of leadership in fostering a
firm business orientation could be insightful. Employee morale and empowerment also determines the ways in which firms
operate.

Findings of this study suggest that fast growth SMEs, tend to maintain sound relationships with distributors for positional
advantages. Strong relationships with retailers and distributors contribute to firm performance. As mentioned earlier, a CA in
market research, marketing management, promotion and pricing alone do not contribute significantly to the hypothesized
model. Clearly, there is a need for further research to test its applicability to different type of firms. Firms should also look
for ways to enhance MCs specific to their organization as this linkage is critical to firm performance. Tan and Smyrnios
(2003) suggested that a CA should result in greater CV, translating to better firm performance. Value exists in the mind of the
customer. Thus, organizations and customers may not perceive organizations/products as how organizations see themselves.
This logical connection should be taken into consideration. Rigorous testing of key relationships obtained in this study should
also be pursued using larger data sets and different cohorts.

REFERENCES

Anderson, J.C. and D.W. Gerbing. 1988. "Structural Equation Modelling in Practice: A Review and Recommended Two-
Step Approach". Psychological Bulletin, 103 (3): 411-423.

Appiah-Adu, K. 1997. "Market Orientation and Performance: Do the Findings Established in Large Firms Hold in the Small
Business Sector?" Journal of Euromarketing, 6 (3): 1-26.

Baker, William E. and James M. Sinkula. 1999. "The Synergistic Effect of Market Orientation and Learning Orientation on
Organizational Performance". Journal of the Academy of Marketing Science, 27 (4): 411-427.

Barney, Jay. 1991. "Firm Resources and Sustainable Competitive Advantage". Journal of Management, 17: 99-120.

Beaver, Graham and C. Prince. 2002. "Innovation, Entrepreneurship and Competitive Advantage in the Entrepreneurial
Venture". Journal of Small Business and Enterprise Development, 9 (1): 28-37.

Becherer, Richard C., Diane Halstead, and Paula Haynes. 2002. "Market Orientation in Smes: Effects of the Internal
Environment". Research at the Marketing/Entrepreneurship interface: 203-216.

Birch, David. 1995. Who's Creating Jobs? Cambridge: Cognetics, Inc.

Chaston, Ian. 1998. "Importance of Entrepreneurial Marketing Competencies Influencing Growth Potential in Small Service
Sector Firms". Research at the Marketing/Entrepreneurship interface: 408-426.

Chaston, Ian. 2000. "Organizational Competence: Does Networking Confer Advantage for High Growth Entrepreneurial
Firms?" Research at the Marketing/Entrepreneurship interface: 291-308.

Feindt, Sylvie, Judith Jeffcoate, and Caroline Chappell. 2002. "Identifying Success Factors for Rapid Growth in Sme E-
Commerce". Small Business Economics, 19 (1): 51-62.

296
Gale, B.T. 2000. Trends in Customer Satisfaction, Loyalty, and Value. Retrieved 14 August, 2003, from
http://www.cval.com/Intro.html

Gome, Amanda. (2003, October 23 - November 19). The Tough Get Going. Business review weekly, 60-65.

Gome, Amanda. (2004, October 14 - November 10). Innovative and Flexible. Business review weekly, 67-71.

Hills, Gerald E. and R.W. LaForge. 1992. "Research at the Marketing Interface to Advance Entrepreneurship Theory".
Entrepreneurship Theory and Practice, 16 (Spring): 33-60.

Hooley, Graham, John Fahy, T. Cox, J. Beracs, K. Fonfara, and B. Snoj. 1999. "Marketing Capabilities and Firm
Performance: A Hierarchical Model". Journal of Market-focused Management, 4: 259-278.

Hult, G.T.M., Robert F. Hurley, and Gary A. Knight. 2004. "Innovativeness: Its Antecedents and Impact on Business
Performance". Industrial Marketing Management, 33: 429-438.

Lumpkin, G.T. and G.G. Dess. 2001. "Linking Two Dimensions of Entrepreneurial Orientation to Firm Performance: The
Moderating Role of Environment and Industry Life Cycle". Journal of Business Venturing, 16: 429-451.

Murphy, G.B. , J.W. Trailer, and R.C. Hill. 1996. "Measuring Performance in Entrepreneurship Research". Journal of
business research, 36: 15-23.

Narver, John C. and Stanley F. Slater. 1990. "The Effect of Market Orientation on Business Profitability". Journal of
Marketing, 54: 20-35.

O'Gorman, Colm. 2001. "The Sustainability of Growth in Small- and Medium-Sized Enterprises". International journal of
Entrepreneurial Behaviour & Research, 7 (2): 60-75.

Pisano, G.P. 1994. "Knowledge, Integration, and the Locus of Learning:An Empirical Analysis of Process Development".
Strategic Management Journal, 15: 85-100.

Reynolds, William M. 1982. "Development of Reliable and Valid Short Forms of the Marlowe-Crowne Social Desirability
Scale". Journal of Clinical Psychology, 38: 119-125.

Scandura, Terri A. and Ethlyn A. Williams. 2000. "Research Methodology in Management: Current Practices, Trends and
Implications for Future Research". Academy of Management Journal, 43 (6): 1248-1264.

Sexton, Donald L., Nancy B. Upton, Larry E. Wacholtz, and Patricia P. McDougall. 1997. "Learning Needs of Growth-
Oriented Entrepreneurs". Journal of Business Venturing, 12: 1-8.

Sinkula, James M., William E. Baker, and T. Noordewier. 1997. "A Framework for Market-Based Organizational Learning:
Linking Values, Knowledge and Behaviour". Journal of the Academy of Marketing Science, 25 (4): 305-318.

Slater, Stanley F. 1997. "Developing a Customer Value-Based Theory of the Firm". Academy of Marketing Science Journal,
25 (2): 162-167.

Tan, Caroline Swee Lin and Kosmas X. Smyrnios. (2003, 2-5 December). Competitive Advantage Is Not Firm Performance:
Conceptual Ambiguities. Paper presented at the Australia New Zealand Academy of Management (ANZAM), Fremantle,
Western Australia.

Tan, Caroline Swee Lin and Kosmas X. Smyrnios. (2004a, 6-9 July). Commitment to Learning and Managing Commercial
Networks as Sources of Competitive Advantage in Fast Growth Firms. Paper presented at the Academy of Marketing,
Cheltenham, UK.

Tan, Caroline Swee Lin and Kosmas X. Smyrnios. (2004b, 30 June - 2 July). How Do Fast Growing Firms Gain
Competitive Advantage? Paper presented at the UIC Research Symposium on Marketing and Entrepreneurship, Metz, France.

297
Tan, Caroline Swee Lin and Kosmas X. Smyrnios. (2004c, 8-9 September). Relationships between Competitive Advantage
and Performance: Family Versus Non-Family Fast Growth Firms. Paper presented at the F.B.N.-IFERA World Academic
Research Forum 2004, Copenhagen, Denmark.

Tzokas, Nikolaos, Sara Carter, and Panagiotis Kyriazopoulos. 2001. "Marketing and Entrepreneurial Orientation in Small
Firms". Enterprise and Innovation Management Studies, 2 (1): 19-33.

Vorhies, Douglas W. and Michael Harker. 2000. "The Capabilities and Performance Advantage of Market-Driven Firms: An
Empirical Investigation". Australian Journal of Management, 25 (2): 145-172.

Weerawardena, Jay. 2003. "The Role of Marketing Capability in Innovation-Based Competitive Strategy". Journal of
Strategic Marketing, 11: 15-35.

Customer
Orientation

.43
Competitor
.52 Orientation
.17 e1
.37
.16 .19
Relationships Market
Interfunctional
Performance e4
Coordination
.29
.18 .44
.27 .26
.19 Shared
Vision
Financial
.24 Performance e3
.36
.18 Product
Innovative

.28
.20 e2
Proactive

Figure 1. Path model of business orientation, marketing capabilities and firm performance

Leadership Marketing Firm Performance

characteristics Market capabilities - customer
- passion orientation specific to satisfaction and
- focussed organizations loyalty
vision Entrepreneurial - product Perceived - fast growth
- open to new orientation - relationships Customer - profits
ideas - marketing Value
- managerial Learning planning
competence orientation
Staff retention
- Higher wages
Figure 2. Causal network model of business orientation, marketing capabilities and firm - low employee
performance turnover

298