Market orientation: relation to structure and performance

• Published in: The Journal of business & industrial marketing Vol. 20; no. 6; pp. 276 - 284
• Main Authors: Green, Kenneth W., Inman, R. Anthony, Brown, Gene, Hillman Willis, T.
• Format: Journal Article
• Language: English
• Published: Santa Barbara Emerald Group Publishing Limited 01-10-2005
• Subjects: Hypotheses; Intelligence; Investigations; Manufacturing; Market orientation; Market shares; Marketing; Organizational performance; Organizational structure; Organizational structures; Regression analysis; Specialization; Structural equation modeling; Studies; Organizational structures; Market orientation; Organizational performance
• ISSN: 0885-8624; 2052-1189
• DOI: 10.1108/08858620510618110

Purpose - Organizational structure dimensions have been theorized as antecedents to and organizational performance as a consequence of market orientation. Multiple studies have investigated the theorized relationships and returned inconsistent results. The purpose of this study is to identify and resolve the inconsistencies.Design methodology approach - Results from prior studies were summarized and a structural equation modeling approach was used to analyze new data collected from 173 manufacturing organizations.Findings - Of the structure dimensions (formalization, specialization, decentralization, integration) tested, only formalization was found to be a positive predictor of market orientation. Market orientation was found to be a positive predictor of both financial and marketing performance.Research limitations implications - The body of evidence assembled does not support the proposition that organizational structure impacts market orientation. It does, however, support the proposition that a market orientation positively impacts organizational performance.Practical implications - It is not necessary for practicing managers to adopt a particular structural combination in preparation for implementation of a marketing orientation. Managers can, however, expect improved financial and marketing performance following the adoption of a market orientation.Originality value - Past inconsistencies related to the antecedent impact of organizational structure on a market orientation and a market orientation on performance are resolved. The evidence indicates that structure does not have the impact originally proposed.