Journal of Research in Marketing and Entrepreneurship

Marketing orientation, strategic orientation and their synergistic impact on business performance: a case
of SMEs in emerging context (India)
Hardeep Chahal R C Dangwal Swati Raina
Article information:
To cite this document:
Hardeep Chahal R C Dangwal Swati Raina , (2016),"Marketing orientation, strategic orientation and their synergistic
impact on business performance: a case of SMEs in emerging context (India)", Journal of Research in Marketing and
Entrepreneurship, Vol. 18 Iss 1 pp. -
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http://dx.doi.org/10.1108/JRME-03-2016-0004
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 INTRODUCTION

Business orientation consists of underlying philosophies that determine the nature and scope of
firms’ activities and plans (Miles and Arnold, 2001), and a decision-making framework that
affects business performance. Business management literature discusses variety of business
orientations based on organisational priorities ranging from production to sales to marketing to
strategic to social philosophies (Kotler, 2009). With the introduction of service dominant logic
and service logic, the business orientation continuum falls between production orientation and
total service orientation with central ones including orientation like sales, marketing, strategic,
green, societal, cost etc. However, depending upon objectives, firms may have polygamous
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orientations (Ashour, 2011). The focus on synergised effects of business orientations on

organisational performance for sustaining competitive advantage is also documented in the
literature (Lechler, 2001 and Acquaah, 2007). Number of researchers, such as Sin et al. (2002),
Hofer, Smith and Murphy (2013), and Singh and Agarwal (2013), have studied the combined
impact of relationship marketing and marketing orientation on business performance. There are
studies that established similar results for synergistic orientations such as market orientation and
learning, entrepreneurial and employee orientations (Grinstein, 2008). It is also proved in the
literature that firms combining market orientation with other orientations such as learning
orientation, entrepreneurial orientation, etc. perform better than firms adopting only market
orientation (Baker and Sinkula, 1999 and Bhuian, Menguc and Bell, 2005). Noble, Sinha and
Kumar (2002) and Grienstein (2008) also emphasised on the use of combinations of different
orientations for effective business performance and further stressed that single business
orientation can never be a viable business orientation. On the other hand, positive impact of
individual business orientations such as strategic orientation (Voss and Voss, 2000; Morgan and
Strong, 2003 and Acquaah, 2007) and social orientation (Kotler and Zaltman, 1971 and Dann,
2010) on business performance are also well- established. Similarly various researchers, namely,
Golden, et al. (1994), Lin, et al. (2007) and Augustine and Chandrasekar (2011), have identified
that firms successfully implementing marketing orientation are expected to result in increased
business performance. However, Becherer and Maurer (1997), Avlonitis and Gounaris (1999)
and Wrenn (2007) remarked that although strong association between marketing orientation and
business performance is established in literature, understanding marketing orientation remains
1
 unclear. This is primarily because of its broader scope which encompasses both philosophical
and behavioural characteristics. Marketing literature also talks about similarity and dissimilarity
between market orientation and marketing orientation concepts. Authors such as Kohli and
Jaworski (1990), Deshpande and Farley (1993), Kohli, Jaworski and Kumar (1993), Hunt and
Morgan (1995) and Ho (2012) highlighted the distinction between marketing orientation and
market orientation, while Golden et al. (1995), Ashour (2011), etc. considered both these two
orientations as similar. The present study supports the former school of thought. Marketing
orientation is broader and based on both internal and external aspects. Further, business
literature also stresses on the need to revisit strategic orientation and examine its structure and
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degree of orientation. The studies also reflect future strategic directions that can be implemented
by a firm to achieve continuous and superior performance. Therefore, more research is needed to
understand marketing and strategic orientations (Voss and Voss, 2000 and Jeong, Pae and
Zhou, 2006).

Furthermore, marketing scholars such as Sin et al. (2002) and Laukkanen et al. (2013) remarked
that, despite the significant role of marketing orientation (which implies that a firm should focus
on its customers) and strategic orientation (which focuses on how to exploit dynamics of
businesses) in enhancing business performance, synergistic impact of these orientations on
performance has yet not received significant contemplation. In the marketing literature, few
studies have examined the impact of marketing orientation on business performance (Voss and
Voss, 2000, Wrenn, 2007 and Ashour, 2011) and strategic orientation on business performance
(Acquaah, 2007 and Augustine and Chandrasekar, 2011). According to Ho (2012), it is unlikely
that these two orientations will influence the performance of firms in same way, and the
synergistic impact of these two orientations needs to be examined in the future. Based on this
backdrop, this study is undertaken to examine synergistic impact of marketing orientation and
strategic orientation on business performance. The study also aims at developing and validating
marketing orientation and strategic orientation scales in emerging context. Further, the
moderating role of entrepreneurial qualification and mediating role of strategic orientation in
marketing orientation (MO) and business performance (BP) relationship is also examined. The
structure of the paper is as follows. The following section discusses a review of literature and
hypotheses formulation. Thereafter methodology and data analysis are presented. Hypotheses
2
 results, implications and limitations and future research are discussed in the following respective
sections.

REVIEW OF LITERATURE AND HYPOTHESIS DEVELOPMENT

Marketing Orientation and Business Performance

Marketing orientation is defined as the degree to which an organisation obtains and uses
information from customers, and develops and implements a strategy that will meet customer
needs and wants (Chiou and Chang, 2009; Woodalla and Swailes, 2009 and Avlonitis and
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Gounaris, 1999). It is also considered as the internal driving force that affects marketing actions,
and influences employees of an organization and their relationship with the customers
(Kobylanski and Szulc, 2011). Marketing orientation is seen as a key factor that influences
organisational actions and performance (Cass, 2000). Many scholars such as Tzokas, Carter and
Kyriazopoulos (2001) and Wrenn (2007) have supported this. These authors also indicated that
a firm's marketing orientation is recognised as an essential aspect of high organisational
performance in terms of developing marketing plans and emphasising on marketing
communications. Further, researchers such as Pecotich, Karanovic and Renko (2007) and
Ashour (2011) remarked that strong marketing orientation is a pre-requisite for high
performance. That is, high marketing orientation enhances firm’s growth by developing trust
with customers, suppliers and other financial organisations and emphasises on integrated
marketing strategy. Based on this backdrop, it is hypothesised that:

Hypothesis 1: Marketing orientation significantly influences business performance.

Strategic Orientation and Business Performance

The concept of strategic orientation (SO) places emphasis on consolidating strong competitive
positions and conserving scarce resources (Perez, Jover and Amado, 2012). In other words it
reflects strategic directions that are implemented by a firm to achieve continuous and superior
performance (Slater, Olson and Hult, 2006). Noble, Sinha and Kumar (2002) remarked that
strategic orientation represents a significant element of an organisational culture that guides
interactions between marketplace actors - customers and competitors. The authors also
3
 remarked that to achieve superior business performance firms can pursue different strategic
orientations such as proactive, analytical, aggressive, defensive, reactive, etc. The classification
is not mutually inclusive, that is, a firm may have multiple strategies during the course of its
functioning. Voss and Voss (2000) and Slater, Olson and Hunt (2006) underscored positive
relationship between strategic orientation and performance. Hence, it is hypothesised that:

Hypothesis 2: Strategic orientation significantly influences business performance.

Strategic Orientation as a Mediator

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Besides the direct relationship, the literature also reveals an indirect relationship between
marketing orientation and business performance through strategic orientation (Gao, Zhau and
Yim, 2007 and Laukkanen et al., 2013). However, few studies have empirically examined the
mediating role of strategic orientation between market orientation and business performance.
For instance, Idar, Yusoff and Mahmood (2012), in their study, illustrated that market
orientation enhances performance of firms through strategic orientation. Based on extant
literature, the present study puts forth that strategic orientation, through its core characteristics,
will enhance the marketing orientation and business performance relationship.

Hence, it is hypothesised that:

Hypothesis 3: Strategic orientation mediates relationship between marketing orientation and

business performance.

Synergistic Impact of Marketing Orientation and Strategic Orientation on Business

Performance

Studies namely, Noble, Sinha and Kumar (2002) and Grienstein (2008), put forth that
combinations of different orientations always result in substantial competitive advantage and
business performance in comparison to individual business orientation. Studies such as Baker
and Sinkula (1999), Bhuian, Menguc and Bell (2005), Mehrabi et al. (2012) and Urde,
Baumgarth and Merrilees (2013) have established positive and significant impact of synergic
4
 orientations (customer orientation with sales orientation, market orientation with learning
orientation) on business performance. Based on arguments of scholars like Noble, Sinha and
Kumar (2002) and Urde, Baumgarth and Merrilees, 2013, the study proposed the following:

Hypothesis 4a: Synergistic impact of marketing orientation and strategic orientation on

business performance significantly influences business performance.

Hypothesis 4b: Synergistic impact of marketing orientation and strategic orientation on

business performance is more robust than individual impacts of two orientations.

Impact of Entrepreneurial Qualification

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It is well accepted that educational qualification influences the exposure level of individuals and
their unique set of skills, which ultimately enhances performance of firms. Omerzel and
Antoncic (2008) remarked that since new ideas generally come from highly educated
owners/managers, therefore educated and literate employees significantly impact business
performance. The authors stated that the education level of entrepreneur (owner/manager) about
functional disciplines is important element for firms’ performance. The critical thinking (the
ability to analyse problems and situations in a critical and logical manner and to apply workable
and logical solutions to such problems) and leadership abilities (the ability to lead a team whilst
taking responsibility for a task, giving direction, providing structure and assigning responsibility
to others) of employees are significant for the growth of any organisation. Therefore, it is
proposed that:

Hypothesis 5: Entrepreneurial qualification moderates the relationship between marketing

orientation and business performance.

RESEARCH METHODOLOGY

The sample size comprised of 900 functional SMEs operating at three industrial estates namely –
Gangyal, Digiana and Bari Brahmana in Jammu, North India. The questionnaire was distributed
to all SMEs which include 658 (small scale industries) and 242 (medium scale industries). The
owners/managers were contacted to provide relevant information on marketing orientation,

5
 strategic orientation and business performance. The questionnaire comprised of modified scale
items extracted from the literature (Table 1).
The total items generated for marketing orientation, strategic orientation and business
performance scales are 30, 25 and 28 respectively. Most of the contacted firms are operating in
the Electrical and Electronics sector (30%) followed by Iron, Steel and Hardware (24.22%),
Chemicals and Paints (13.44%), Plastic Goods (13.11%), Food and Food Products (5.55%),
Pharmaceuticals (5.22%), Paper Industries (3.55%), Rubber Industries (2.36%) and others
(1.94%).
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DATA ANALYSIS

At the outset, descriptive analysis was undertaken to delete outliers (based on skewness and
kurtosis) for data normality and to apply exploratory factor analysis and confirmatory factor
analysis. A total of 18 items were deleted, which included 4 items of marketing orientation, 8
items of strategic orientation and 6 items of performance. The finalised instrument comprised 26
items of marketing orientation, 17 items of strategic orientation and 22 items of performance.
Further, before conducting data analysis, data were split in two samples of 500 and 400
respondents. First the sample was used to identify factor structure (EFA) and a second sample
was used for confirming the factor structure (CFA) of strategic orientation, marketing orientation
and business performance obtained from the first sample.

Exploratory Factor Analysis (EFA)

EFA was conducted on the first sample (500 respondents) to reduce the variables into minimum
number of factors to summarise and analyse the three constructs (marketing orientation, strategic
orientation and business performance). The results are discussed as under:

Marketing Orientation

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 EFA was initially run on marketing orientation construct and four factors were identified. The
emerged factors are related to marketing strategy (MS) (10 items), customer philosophy (CP) (8
items), operational efficiency (OE) (6 items), and integrated marketing (IM) (3 items). The four
factor solution showed KMO value as 0.928 with Bartlett’s Test of Sphericity Coefficient as chi-
square = 10170.030, df = 4141and BTS = 0.000. The communality values ranged between 0.51
to 0.86.

Strategic Orientation

The strategic orientation construct has four factors after four runs of EFA with KMO as 0.897
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and Bartlett’s Test of Sphericity Coefficient as chi-square = 7196.174, df = 300 and BTS =
0.000. The factors are christened as defensive ( 06 items) , proactive (05 items) , analytical (03
items) and risk averse(03 items) , with communality values ranged between 0.59 to 0.79.

Business Performance

The EFA results showed four factors of BP. The factors included employee satisfaction (08
items), corporate reputation (06 items), employee retention (05 items) and employee
participation (03 items). The results illustrated KMO as being equal to 0.904.

Confirmatory Factor Analysis (CFA)

The factor structures identified for marketing orientation, strategic orientation and business
performance were confirmed using CFA run on the second sample comprising 400 respondents.

The initial application of CFA showed a weak model fit for both marketing orientation and
strategic orientation constructs. However, one item of marketing orientation construct (utilises
contingency thinking and planning) was deleted and after two runs it showed appropriate fit of
the model. Similarly, two items (sacrifices profitability to gain market share and conduct “what
if” analysis of critical issues) of strategic orientation were deleted because of low standardised
regression weights (SRW) and after three runs it illustrated the fitness of the model. The CFA
was also run on business performance construct and all items were retained.

The CFA results are discussed as under:

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 Marketing Orientation

The second order structure of marketing orientation comprised of four factors that is, marketing
strategy, customer philosophy, operational efficiency and integrated marketing. All items
significantly contribute to their respective factors. The values for CMIN/df, NFI, CFI and
RMSEA are recorded as 2.329, NFI=0.836, CFI=0.898, RMSEA=0.068 respectively, reflecting
moderate fit of the model (Table 2). All the items are significantly contributing to their
respective factors as CR values are above 1.96 and SRW are above 0.5.

Strategic Orientation
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The strategic orientation dimension consisted of four factors namely, defensive, proactive,
analytical and risk-averse (Table 3). The CMIN/df, NFI, CFI and RMSEA values are recorded
as 2.714, 0.882, 0.920, 0.079 respectively, indicating adequate fitness of the model. All CR and
SRW values are above the threshold criteria showing significant contribution of items to the
respective factors.

Business Performance

The business performance construct comprised four factors namely, employee satisfaction,
employee retention, corporate reputation and participatory approach (Table 4). The CMIN/df,
NFI, CFI and RMSEA values are recorded as 3.365, 0.830, 0.854 and 0.081 respectively
indicating average fitness of the model. The SRW and CR values are above 0.5 and 1.96
respectively reflecting all items to be significant predictors of their respective factors.

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 PSYCHOMETRIC PROPERTIES

The reliability of all constructs in the study is assessed by computing Cronbach alpha (α) and
composite reliability (CR). The Cronbach alpha (α) and CR values of marketing orientation,
strategic orientation and business performance indicate robust psychometric scale properties.

The Cronbach value (α) for the overall marketing orientation scale is 0.95 while factor- wise
alpha values falls between 0.90 and 0.94. The composite reliability ranged between 0.74 and
0.85. Similarly, the Cronbach alpha value for the overall strategic orientation scale is recorded as
excellent that is, 0.91. The composite reliability and alpha value for all factors are above
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threshold criterion.

The alpha value for the business performance construct comprising four factors (employee
satisfaction, corporate reputation, employee retention and participatory approach) is recorded
as 0.93 with factor-wise Cronbach values ranged between 0.73 to 0.91 and the composite
reliability ranged between 0.59 to 0.79.

The convergent and discriminant validity of the measurement scales is also proved. Convergent
validity is determined using average variance extracted (AVE). As shown in table 4, AVE values
for all constructs are above threshold criterion of .50, thus supporting convergent validity of
measurement scales. Further, to satisfy the requirement of discriminant validity, square root of a
construct’s AVE must be greater than correlation between the constructs (Hair et al., 2003). The
square root of AVEs of the constructs is greater than correlation between the constructs, which
demonstrate discriminant validity between the constructs.

COMMON METHOD VARIANCE

The study examined common method variance (CMV) using Harman’s single factor test and
common latent factor method.

As per Podsakoff et al. (2003), the procedure to check CMV using Harman’s single factor , all
variables of marketing orientation, strategic orientation and business performance were loaded
on single factor using EFA . The factor explained 19.00% of variance that is, less than 25%,
indicating that CMV is not an issue in the study.

9
 In common latent factor method, relationships between latent factor (new variable created) and
variables are developed to assess variance explained by different relationships using CFA. The
variance obtained using common latent factor method is recorded as 21.89% (marketing
orientation), 22.24% (strategic orientation) and 21.16% (business performance). Since all
variance values are less than 25%, the CMV is not an issue for analysis.

SEM RESULTS

The results of individual and synergistic impact of marketing orientation and strategic orientation
on performance are discussed as under:
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1. Marketing Orientation – Business Performance

Marketing orientation and business performance model (MO – BP) indicates average model
fitness. The CMIN/df (3.376) and RMSEA( 0.069) are recorded as acceptable while CFI
(0.858) and NFI(0.810) are marginally acceptable. The SRW of items fall between 0.71 to 0.91
with critical ratio values above prescribed criterion that is above 1.96 (Table 6). The results
reveal that all marketing orientation factors contribute to business performance significantly,
henceleading to acceptance of hypothesis 1.
2. Strategic Orientation – Business Performance
Strategic orientation and business performance (SO- BP) model shows moderate model fitness
with acceptable values of CMIN/df = 2.070 and RMSEA = 0.071 and marginally acceptable
values of CFI = 0.867 and NFI = 0.839 . The SRW ranged between 0.57 to 0.76 and all CR
values are above threshold criterion (Table 7).. Hence, hypothesis 2 which relates to SO – BP is
accepted.
3. Marketing Orientation – Strategic Orientation - Business Performance
Marketing orientation – strategic orientation - business performance (MO-SO-BP) model fit
values for CMIN/df, CFI, RMSEA and NFI values are recorded as 2.710, 0.929, 0.075 and
0.894 respectively. All critical ratio values are greater than 1.96 and SRW are between 0.50 to
0.71 for different marketing orientation, strategic orientation and business performance items.

4. Strategic Orientation as Mediator

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 To examine the nature of strategic orientation in MO-SO-BP model (which is accepted), the
study used Arnold et al. (2007) sequence of mediation tests. A series of three contrasting
models- fully mediating, partially mediated and non mediating were created to examine chi-
square difference among them for confirming strategic orientation as a mediating variable
between marketing orientation and business performance. Based on chi-square difference test
between three pairs of models, the partial mediated model is accepted establishing partial
mediating role of strategic orientation between marketing orientation and business performance
(Table 8). Hence, hypothesis 3 is partially accepted.

5. Entrepreneurial Qualification as a Moderator between Marketing Orientation and

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Business Performance

To test moderation effect of entrepreneurial qualification on marketing orientation and business

performance, data is classified into high (postgraduates and diploma holders ) and low (below
undergraduates and undergraduates )entrepreneurial qualification.. Following this, a two group
SEM models that is, constrained and unconstrained were used to evaluate whether there is any
significant difference in structural parameters between high and low moderating groups. In this
stage, insignificant paths in both groups are identified and deleted. In the next following step,
chi-square and degree of freedom values of models were compared using chi square difference
test to find out whether groups are significantly different. The value of chi-square and degree of
freedom (df) of non-constrained model came out to be 191.494 and 38 respectively. While,
constrained model’s chi square was recorded at 200.012 and df at 39. The study results indicate
chi-square difference between constrained and unconstrained groups as 8.518 which is
significantly different at 95%. Hence, entrepreneurial qualification is found to be moderator in
marketing orientation and strategic orientation relationship. Hence, the H5 that is,
entrepreneurial qualification moderates relationship between marketing orientation and
business performance is accepted.

6. Synergistic Impact of Marketing Orientation and Strategic Orientation on Business

Performance
The synergistic effect of marketing orientation and strategic orientation on business performance
is recorded as significant and moderate, hence, accepting hypothesis 4a. However, the synergistic
11
 impact is weak (0.261) in comparison to individual impact of both orientations namely, maketing
orientation (0.482) and strategic orientation (.359). Thus, hypothesis 4b is not accepted.

DISCUSSION

The study is conducted to validate multidimensional structure of marketing orientation and

strategic orientation and to examine synergistic impact of strategic orientation and marketing
orientation on business performance in context to SMEs operating in North India.

The results of the study established MO as multi-dimensional construct comprising of four

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factors that is, marketing strategy, customer philosophy, operational efficiency and integrated
marketing, unlike the five dimensions confirmed by studies like Suarez and Casotti (2009),
Ashour (2011) and Kobylanski and Szulc (2011). Marketing information could not be confirmed
in SMEs in the present study. This might be because as no regular marketing research studies on
customers, buying influences, etc. are conducted and efforts undertaken in SMEs are not
effective to measure cost-effectiveness of different marketing expenditures. Among four factors
‘customer philosophy’ (SRW = 0.88) and ‘operational efficiency’ (SRW = 0.82) have robust
contribution while ‘integrated marketing’ (SRW = 0.59) and ‘marketing strategy’ (SRW = 0.54)
have moderate predicting power for marketing orientation. The marketing strategy comprised of
items namely, effective annual marketing plan, long range growth, formal market planning, cost-
effectiveness of different marketing expenditures, sales potential and market segments
profitability and relative to its competitors, regular track on customers and good quality service.
Though all these items have high SRW values (0.72 to 0.86) but present level of marketing
strategy practices are average (mean value (MV) = 3.03). Similarly, customer philosophy is
established as a function of inter functional coordination, effectively reaches its target market,
market customised marketing plans, business image market needs and customer satisfaction. All
items illustrate moderate level of managerial orientation (MV=3.48) with high contribution
(SRW= 0.71 to 0.89) towards customer philosophy. Further, operational efficiency comprised of
six items which exhibit high contribution ( SRW values ranging between 0.71 to 0.82) with
moderate level of orientation ( MV = 3.57) relating to high sales ability, good community
neighbour, committed to marketing excellence, management commitment, regular and
12
 systematic efforts to seek improvement, effective communication, and effective market
developments. And lastly, integrated marketing factor comprising three items that is, high level
integration and control, coordination among departments and well organised new product
development process ( SRW = 0.82 to 0.87)., shows moderate contribution to marketing
orientation ( MV = 3.33).

The study also confirmed strategic orientation as multi-dimensional construct with four
dimension unlike studies namely, Morgan and Strong (2003) and Lau and Burton (2011) which
considered six dimensions of strategic orientation. Our study established four factors of strategic
orientation namely, defensive, proactive, analytical and risk-averse. The risk-averse (SRW=
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0.85) and defensive (SRW= 0.78) are strong predictors of strategic orientation while proactive
(SRW = 0.67) and analytical (SRW = 0.52) are moderate predictors. The defensive dimension
shows high contribution as SRW of its items ranged between 0.72 to 0.80. The defensive
strategy focuses on competitive edge skills, up gradation in manufacturing technology,
manpower planning and performance, cost control systems and emphasises on product quality .

Proactive strategy emphasises on introducing new brands or products, business acquisition and
conservative view when making major decisions. All its items are strong predictors (SRW = 0.81
to 0.89) and reflect moderate level of orientation. On the other hand, constantly seeks new
opportunities related to present operations and new projects approved are moderate predictors
with mean score as 2.86.

However, analytical approach encapsulating inter functional coordination, effective information

system and in-depth analysis found to have high contribution with SRW ranging between 0.70 to
0.81 but below average are level of strategic orientation of managers/owners (MV=2.89).

The risk-averse dimension with items that is, price setting below competition, focus on projects
with assured expected returns and prefer “tried and true” paths have SRW values between 0.70
to 0.86 and shows moderate level of SO (MV=3.53).

In context to business performance, participatory approach, employee satisfaction, employee

retention, and corporate repuation are identified as significant dimensions. The study finds
significant relationship of marketing orientation and strategic orientation with business
13
 performance. Among marketing orientation and business performance measures, strong
relationship between marketing orientation is found with respect to employee satisfaction (SRW
= 0.81) followed by participatory approach (SRW = 0.72) while moderate relationship is found
for employee retention (SRW = 0.63) and corporate reputation (SRW = 0.66) are established.
However, in case of strategic orientation, strong relationship exists only between strategic
orientation and participatory approach (0.82) while moderate relationship exists with respect to
employee retention (0.65), employee satisfaction (0.61) and corporate reputation (0.58). Further,
synergistic effect of marketing orientation and strategic orientation on the business performance
is found to be weak. Between SO and MO, marketing orientation has relatively strong impact
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on SMEs performance. Furthermore, the study also reveals that strategic orientation can be seen
to have direct ( no mediating) and indirect impact ( through strategic orientation) on business
performance. Lastly, study also identifies that better qualified owners and managers are more
equipped with marketing and strategic skills and hence influence positively the SMEs
performance.

IMPLICATIONS

In the competitive environment, many companies are actively pursuing the marketing orientation
and strategic orientation practices. The study findings support the existing literature on direct
impact of marketing orientation on business performance (Tzokas, Carter and Kyriazopoulos ,
2001 and Wrenn, 2007 ) and strategic orientation on business performance (Voss and Voss,
2000, Morgan and Strong, 2003 and Acquaah, 2007). Further, researchers identified that
strategic orientation is expected to have positive and direct impact on business performance in
terms of employee satisfaction (Storey and Hughes, 2011), employee retention, reputation, sales
and profits (Deshpande et al., 2013 and Laukkanen et al., 2013). Similarly, is represented as
important aspect of high performance in terms of employee satisfaction and loyalty, firm
reputation (Akroush and Al-Mohammad, 2010 and Ashour, 2011).

Specifically, in order to enhance marketing orientation, firms should concentrate on providing

good quality services, engage in formal market planning and should have robust inter-functional
coordination between various departments because these activities can help firms to focus more

14
 on decision-making, organisational learning within firm and understand changes in the external
environment.

According to study results, marketing orientation depends on management of marketing

initiatives and marketing strategies along with assessment of customer needs. The results suggest
that to have high marketing orientation firms need to be aware of marketing strategy practices
which include, providing good quality service, formulating an annual marketing plan and formal
market planning , and focusing on long range growth,. Further, to improve customer- oriented
activities such as serving needs and wants of chosen markets, monitoring customer satisfaction
and customised offerings and marketing plans should be implemented to monitor changes in
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customer behaviour and which are helpful to predict future customer trends. Moreover, to
enhance operational efficiency, firms should react quickly and effectively to market
developments to achieve good sales in terms of higher revenue and sales level. Further, it is also
revealed that integrated marketing activities emphasising on inter-functional coordination, high
level integration and control in marketing functions and new product development process can
pave way for enhanced business performance.

While investigating strategic orientation dimension, it is found that all firms are following mixed
SO approach and results suggest that firms should indulge in mixed strategies that is, defensive,
proactive, analytical and risk-averse. The defensive strategies focus on consistent upgradation in
manufacturing technology, effective manpower planning and performance appraisal and cost
control systems that provide competitive platform to remain ahead of competitors. Similarly,
proactive strategies are reflected through activities such as constantly seeking new opportunities
and approving new projects on stage by stage basis. These strategies reflect proactive behaviour
in relation to participation in emerging industries, continuous search for market opportunities and
experimenting with potential responses to changing environmental trends. Further, to search
deeper for roots of problems and to generate best possible solution alternatives analytical
strategies should be implemented through better use of information system for decision making.
Lastly, risk-averse strategy includes support projects where expected returns are not certain,
set prices below competition and followed the “tried and true paths”. This strategy can be useful
in various resource allocation decisions and selection of products/markets. Moreover, while
investigating influence of marketing orientation and strategic orientation on business
15
 performance, the results show that marketing strategy, integrated marketing and operational
efficiency are contributing more towards performance than customer philosophy for marketing
orientation. However, in case of strategic orientation, analytical, defensive and risk-averse are
influencing more to performance rather than proactive strategy.

Further, extant studies in business literature suggest that synergistic effect of any two
orientations always leads to superior performance. However in the present study combined
orientation that is, marketing and strategic, does not found to enhance business performance.
This might be because SMEs are following mixed types of strategies and are not focusing on
individual strategies.
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Since results confirm that entrepreneurial qualification influence business performance,

owners/managers need to enhance their level of awareness towards competitive business
practices such as technology, to meet the needs of the customers in an effective manner. The
participation of owners and managers in different training programmes, workshops, seminars,
etc. can equip their knowledge and pave way for competitive business practices.

Limitations and Future Research

The research work is conducted in presence of certain unavoidable limitations. First, study
examined the role of strategic orientation and marketing orientation in context to SMEs in Indian
context. The replication and validation of research in other regions across country and globe is
required to generalise results and to develop stronger theory. Further, researchers can investigate
this relationship in other service sectors such as banks, nursing homes, hotels, etc. Second,
synergistic orientation (marketing and strategic aspects) of firms does not enhance business
performance of SMEs in Jammu context. Hence significant research question arises, why the
synergistic impact on business performance is weaker than individual orientations?, which needs
to be further explored. Further synergistic impact of marketing and one of the strategies
(proactive, defensive, analysis, futurity, riskiness) can also be studied to support the study
findings. Third, to further strengthen findings of the study, future research must focus on
variables such as entrepreneurial knowledge orientation, organisational characteristics, B2B
(customer) participation and control variables namely, size of SMEs and environment
turbulence. Lastly, subjective responses of owners/managers is another limitation. Nevertheless,

16
 appropriate efforts are taken to check subjectiveness of responses using common method
biasness and other tools.

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APPENDICES

Items
MS = MO1 Long-range growth.
MO2 Good quality service.
Marketing Strategy MO3 More importance on marketing than any other functional area.
MO4 Formulates an annual marketing plan.

24
 MO5 Well positioned relative to its competitors.
MO6 Engaged in formal market planning.
MO7 High quality current marketing strategy.
MO8 Cost-effectiveness of different marketing expenditures.
MO9 Regular marketing research studies.
MO10 Measurement of sales potential and profitability of different
market segments/customers.
CP = MO11 Works well with the management in other functional areas.
Customer Philosophy MO12 Monitors customer satisfaction.
MO13 Effectively reaches its target market.
MO14 Customer oriented.
MO15 Importance on business image.
MO16 Organised to serve the needs and wants of chosen markets.
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MO17 Different offerings and marketing plans for different segments of

the market.
OE = MO18 High sales ability.
MO19 Good community neighbour.
Operational MO20 Committed to marketing excellence.
Efficiency MO22 Regular and systematic efforts to seek improvement.
MO23 Top management is communicated and implemented down the
MO24 line. firm reacts quickly and effectively to the market
The
IM = MO25 Inter-functional coordination.
Integrated Marketing MO26 Synchronised, well organised effective top to bottom
MO27 Well organised new product development.
APPENDIX1: Item Description of Marketing Orientation

Items
DE = SO1 Regular manpower planning and performance appraisal of senior
Defensive managers.
SO2 Up gradation in manufacturing technology.
SO3 Use cost control systems for monitoring performance.
SO4 Emphasises on product quality through the use of quality circles.
SO5 Provide employee with future competitive edge guidelines.
SO6 Formal tracking of significant general trends is common.
PR = SO7 Constantly seeking new opportunities related to present
operations.
Proactive SO8 Tries to introduce new brands or products in the market.
SO9 Look out for business that can be acquired.
SO10 Have conservative view when making major decisions.
SO11 New projects approved on a “stage by stage” basis.
AN = SO12 Effective coordination with different functional areas.
Analysis SO13 Information system for decision making.
SO14 Major decision based on analysis.
RA = SO15 Set prices below competition.
25
 Risk-averse SO16 Support projects where the expected returns are certain.
SO17 Followed the “tried and true” paths.
APPENDIX2: Item Description of Strategic Orientation

Items
ES = BP1 Financial rewards related to their work.
BP2 Challenging and exciting work.
Employee Satisfaction BP3 Sense for personal satisfaction.
BP4 Co-ordial relationships with co workers.
BP5 Monitoring employees.
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BP6 Remuneration and benefits.

BP7 Sharing relevant information with the employees.
BP8 Conducive working environment.
CR = BP9 Competitive strong position.
BP10 Trustworthy management.
Corporate Reputation BP11 Customers’ interests and rights.
BP12 Societal well being.
BP13 Associates with green activities.
BP14 Satisfied with job.
ER = BP15 Satisfied with remuneration package.
Employee BP16 Satisfaction with the management of the firm.
Retention BP17 Fair treatment.
BP18 Adequate training and information.
BP19 Challenging job and offers growth and opportunities.
PA = BP20 Committed to job.
Participatory BP21 Participates in social networks of the firm.
Approach BP22 Group relationships.

APPENDIX3: Item Description of Business Performance

About the authors

Hardeep Chahal is a Professor at the Department of Commerce, University of Jammu. Her

research work is acknowledged in refereed international journals like Managing Service Quality,
International Journal of Health Care Quality Assurance, International Journal of Pharmaceutical
Marketing, Journal of Health Management, Journal of Relationship Marketing, Journal of Indian
Business Research, Management Research Review, Total Quality Management and Excellence,

26
 etc. and national journals of international repute such as Metamorphosis, Decisions, Vikalpa,
Vision, Journal of Services Research indexed in Emerald, Sage, etc. She is currently serving on
the editorial boards of the International Journal of Health Care Quality Assurance (Emerald),
Journal of Services Research (IIMT, India) and NICE Journal of Business (Shobhit University,
India).
R C Dangal is a Professor at the School of Commerce, HNB Garhwal University, Srinagar. His
research work is acknowledged in refereed international journals and he has attended various
national and international conferences.
Swati Raina is a Ph.D scholar in Department of Management, Uttarakhand Technical University.
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She has worked in the research projects on corporate social responsibility and customer
experience. Her research work is acknowledged in the Journal of Global Responsibility and
Journal of Small Business and Enterprise Development (Emerald).

27
 S No Components
1 Marketing orientation
2 Strategic orientation
3 Business performance
Table 1: Generation of Scale Items
Studies
Kobylanski and Szulc (2011), Chiou and Chang (2009), Carr
and Lopez (2007), Kurtinaitiene (2005), Sin et al. (2002), Miles
and Arnold (2001)
Avci, Madanoglu and Okumus (2011), Crane (2011), Zhou and
Li (2010), Hynes (2009), Laforet (2008), Morgan and Strong
(2003)
Raveendran, Fu and Wallen (2003), Murphy, Athanasou and
King (2002), Fields and Blum (1997), Thurau and Klee (1997),
Rust and Zahorik (1993)

Items Mean F L CV CR SRW

Factor 1 Long-range growth. 3.04 .776 .731 20.25 .803
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Good quality service. 2.83 .724 .627 22.90 .729

Marketing
More importance on marketing than any other functional 3.22 .786 .744
Strategy 23.83 .784
area.
Formulates an annual marketing plan. 2.76 .784
.784 .690 26.66 .800
Well positioned relative to its competitors. 3.10 .831 .754 24.18 .845
Engaged in formal market planning. 2.95 .771 .679 27.80 .805
High quality current marketing strategy. 3.05 .846 .763 24.70 .861
Cost-effectiveness of different marketing expenditures. 3.11 .779 .726 23.33 .814
Regular marketing research studies. 3.05 .770 .707 20.25 .799
Measurement of sales potential and profitability of 3.03 .802 .764
1.00 .837
different market segments/customers.
Factor 2 Works well with the management in other functional areas. 3.70 .573 .774 18.98 .768
Customer Monitors customer satisfaction. 3.35 .755 .716 20.94 .762
Philosophy Effectively reaches its target market. 3.60 .732 .774 28.15 .897
Customer oriented. 3.51 .776 .778 27.63 6 .889
Importance on business image. 3.51 .750 .709 25.12 .847
Organised to serve the needs and wants of chosen markets. 3.18 .777 .783 18.79 .711
Different offerings and marketing plans for different 3.57 .688 .657
1.00 .787
segments of the market.
Factor 3 High sales ability. 3.61 .708 .627 17.12 .768
Good community neighbour. 3.44 .831 .750 19.49 .741
Operationa
Committed to marketing excellence. 3.70 .742 .744 23.12 .824
l Efficiency Regular and systematic efforts to seek improvement. 3.63 .776 .739 22.43 .810
Top management is communicated and implemented down 3.60 .672 .736 23.14 .825
the line.
The firm reacts quickly and effectively to the market 3.49 .706 .736 .770
1.00
developments.
Factor 4 Inter-functional coordination. 3.39 .874 .866 22.87 .879
Synchronised, well organised effective top to bottom 3.40 .863 .829 27.79 .882
Integrated communication.
Marketing Well organised new product development. 3.22 .826 .829 1.00 .823
CMIN/df =2.329, NFI=0.836, CFI=0.898, RMSEA=0.068
Table 2: Exploratory Factor Analysis and First Order Confirmatory Factor Analysis Results of
MO
 Items Mean F L CV CR SRW
Factor 1 Regular manpower planning and performance appraisal of 3.54 .749 .672 16.32 .737
Defensive senior managers.
Up gradation in manufacturing technology. 3.71 .744 .706 16.00 .723
Use cost control systems for monitoring performance. 3.66 .722 .793 16.26 .735
Emphasises on product quality through the use of quality 3.54 .642 .765 17.92 .802
circles.
Provide employee with future competitive edge 3.07 .584 .799 18.01 .805
Formal tracking of significant general trends is common. 2.85 .547 .761 1.00 .738
Factor 2 Constantly seeking new opportunities related to present 2.77 .546 .632 10.56 .571
operations.
Proactive Tries to introduce new brands or products in the market. 3.44 .833 .789 13.83 .853
Look out for business that can be acquired. 3.37 .822 .782 14.11 .891
Have conservative view when making major decisions. 3.50 .756 .756 13.52 .819
New projects approved on a “stage by stage” basis. 3.51 .656 .590 1.00 .591
Factor 3 Effective coordination with different functional areas. 3.46 .650 .662 16.23 .811
Analysis Information system for decision making. 3.54 .570 .765 16.49 .892
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Major decision based on analysis. 3.41 .801 .755 1.00 .709

Factor 4 Set prices below competition. 3.56 .778 .604 15.47 .770
Risk-averse Support projects where the expected returns are certain. 3.52 .643 .696 16.71 .861
Followed the “tried and true” paths. 3.54 .629 .700 1.00 .683
CMIN/df =2.714, NFI=0.882, CFI=0.920, RMSEA=0.079
Table 3 : Exploratory Factor Analysis and First Order Confirmatory Factor Analysis Results of
SO

Items Mean FL CV CR SRW

Factor 1 Financial rewards related to their work. 3.17 .851 .761 15.56 .861
Challenging and exciting work. 3.14 .902 .817 15.85 .859
EmployeeS
atisfaction Sense for personal satisfaction. 3.06 .857 .780 15.83 .878
Co-ordial relationships with co workers. 3.18 .844 .837 16.09 .833
Monitoring employees. 3.09 .757 .756 15.40 .558
Remuneration and benefits. 2.88 .645 .625 10.93 .651
Sharing relevant information with the employees. 3.13 .580 .576 12.44 .661
Conducive working environment. 3.01 .896 .636 1.00 .773
Factor 2 Competitive strong position. 3.01 .808 .740 14.42 .733
Trustworthy management. 3.02 .793 .664 13.75 .747
Corporate
Customers’ interests and rights. 2.91 .776 .766 14.08 .879
Reputation
Societal well being. 2.96 .771 .846 16.37 .805
Associates with green activities. 2.88 .668 .713 15.17 .680
Satisfied with job. 3.05 .854 .678 1.00 .864
Factor 3 Satisfied with remuneration package. 2.95 .853 .783 17.66 .786
Employee Satisfaction with the management of the firm. 3.00 .790 .763 16.18 .844
Retention
Fair treatment. 2.93 .745 .774 17.30 .663
Adequate training and information. 2.63 .680 .675 13.70 .708
Challenging job and offers growth and opportunities. 2.76 .679 .673 1.00 .728
Factor 4 Committed to job. 2.98 .775 .796 9.867 .701
Participato Participates in social networks of the firm. 3.09 .759 .676 9.369 .660
ry Group relationships. 3.03 .756 .654 1.00 .664
Approach
CMIN/df =3.365, NFI=0.830, CFI=0.854, RMSEA=0.081
Table 4: Exploratory Factor Analysis and First Order Confirmatory Factor Analysis Results of
BP
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Table 5: Composite Reliability, Average Variance Extracted and Cronbach Alpha

Dimensions CR AVE Marketin Custome Operat Integr Defe Proact Analy Risk- Emp Corp Empl Emplo Cronbac
g r ional ated nsive ive tical Aver loyee orate oyee yee h alpha
Strategy Philosop Efficie Mark n se Satis Reput Reten Partici
hy ncy eting facti ation tion pation
on
MO
Marketing Strategy 0.90 0.85 0.92* - - - - - - - - - - - 0.94
Customer 0.89 0.84 0.44 0.91* - - - - - - - - - - 0.92
Philosophy
Operational 0.89 0.82 0.41 0.67 0.90* - - - - - - - - - 0.90
Efficiency
Integrated 0.80 0.74 0.40 0.47 0.43 0.86* - - - - - - - - 0.90
Marketing
SO
Defensive 0.91 0.75 0.34 0.67 0.69 0.48 0.86* - - - - - - - 0.89
Proactive 0.82 0.72 0.47 0.45 0.52 0.43 0.46 0.84* - - - - - - 0.86
Analytical 0.76 0.67 0.35 0.43 0.49 0.46 0.45 0.32 0.81* - - - - - 0.84
Risk-Averse 0.75 0.64 0.41 0.56 0.80 0.42 0.65 0.54 0.44 0.80* - - - - 0.79
BP
Employee 0.86 0.79 0.45 0.46 0.49 0.49 0.48 0.45 0.41 0.71 0.88* - - - 0.91
Satisfaction
Corporate 0.85 0.78 0.45 0.52 0.60 0.41 0.52 0.57 0.36 0.60 0.44 0.88* - - 0.90
Reputation
Employee 0.83 0.73 0.53 0.44 0.55 0.42 0.69 0.69 0.61 0.34 0.47 0.66 0.85* - 0.88
Retention
Employee 0.62 0.59 0.53 0.43 0.67 0.50 0.50 0.50 0.42 0.48 0.54 0.66 0.67 0.76* 0.73
Participation
*Values in the diagonal of correlation matrix are the square root of AVE.
 Items CR SRW
Factor 1 Long-range growth. 23.82 .803
Good quality service. 20.96 .729
Marketing
More importance on marketing than any other functional 28.13 .784
Strategic -
area.
Formulates an annual marketing plan.
BP 27.60 .801
Well positioned relative to its competitors. 25.10 .845
Engaged in formal market planning. 18.81 .805
High quality current marketing strategy. 17.17 .861 Chi-Square=
Cost-effectiveness of different marketing expenditures. 10.98 .814 3639.171
Regular marketing research studies. 19.11 .799 CMIN/Df=
3.376
Measurement of sales potential and profitability of different
.837 NFI=0.810
market segments/customers.
CFI=0.858
Factor 2 Works well with the management in other functional areas. 19.46 .767 RMSEA=0.069
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Customer Monitors customer satisfaction. 23.13 .763

Philosophy Effectively reaches its target market. 22.43 .897
- BP Customer oriented. 5
23.15 .889
Importance on business image. 22.01 .847
Organised to serve the needs and wants of chosen markets. 27.73 .712
Different offerings and marketing plans for different .787
segments of the market.
Factor 3 High sales ability. 22.93 .768
Good community neighbour. 19.10 .740
Operationa
Committed to marketing excellence. 21.01 .825
l Efficiency
- BP Regular and systematic efforts to seek improvement. 20/03 .810
Top management is communicated and implemented down 17.16 .826
the line.
The firm reacts quickly and effectively to the market
.770
developments.
Factor 4 Inter-functional coordination. 19.01 .879
Integrated Synchronised, well organised effective top to bottom
Marketing 18.19 .883
communication.
- BP Well organised new product development. .823
Table 6: SEM Results of MO with BP

Items CR SRW
Factor 1 Regular manpower planning and performance appraisal of 16.32 .737
Defensive- senior managers.
BP Up gradation in manufacturing technology. 16.00 .723
Use cost control systems for monitoring performance. 16.26 .735
Emphasises on product quality through the use of quality 17.92 .802
circles. employee with future competitive edge guidelines.
Provide 18.01 .805 Chi-Square=
343.171
Formal tracking of significant general trends is common. .738 CMIN/Df=
Factor 2 Constantly seeking new opportunities related to present 10.56 .571 2.070
operations. NFI=0.839
Proactive - Tries to introduce new brands or products in the market. 13.83 .853 CFI=0.867
BP Look out for business that can be acquired. 14.11 .891 RMSEA=0.071
Have conservative view when making major decisions. 13.52 .819
New projects approved on a “stage by stage” basis. .591
Factor 3 Effective coordination with different functional areas. 16.23 .811
 Analysis - Information system for decision making. 16.49 .892
BP Major decision based on analysis. .709
Factor 4 Set prices below competition. 15.47 .770
Risk-lover - Support projects where the expected returns are certain. 16.71 .861
BP Followed the “tried and true” paths. .683
Table 7: SEM Results of SO with BP

Mediation Results
Models Chi-square df CMIN/df NFI CFI RMSEA
Fully Mediating 339.171 62 2.825 0.760 0.771 0.085
Partially 89.17 12 2.972 0.764 0.775 0.082
Mediating
Non-Mediating* 154.109 61 2.430 0.730 0.743 0.062
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Moderation Results
Models Chi-square Degree of freedom
Unconstrained 191.494 38
Constrained 200.012 39
Difference 8.518 1
Table 8: Mediation and Moderation Results
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Downloaded by University of Wollongong At 11:20 25 May 2016 (PT)