The Process of Developing Market Orientation

It is perhaps interesting to note that most of the studies exploring the concept, antecedents, implementation, and consequences of market orientation have been undertaken in developed economies such as USA and Europe; others have been undertaken in developing economies such as Australia, China, Hong Kong, India, and Taiwan, which have different context, compared to resource based economies. If fact, in reviewing the available literature the researcher has found limited studies investigating and exploring the concept of market orientation, its antecedents and consequences in developing economies as compared to the resourced-based economies. (See Bhuian, 1997 and 1998; Appiah-Adu, 1998; Bjorn and Abdulrahim (1993); Osuagwu, 2006; Eillis, 2005; Aggarwal and Singh, 2004; Chelariu et al., 2002) Accordingly, it is questionable whether these issues that are related to market orientation and its attributes and antecedents in the resource based economies that are going through economic and political reformation associated with the trend of privatization are similar to what have been found in other contexts and economies. .

Market Orientation: Implementation

Helfert et al (2003) argue that despite all the previous work and empirical research, we still have little understanding of the interplay between market orientation and inter-firm relationship management inside a firm. However, Raaij and Stoelhorst (2008) claim that the information processing approach suggested by Jaworski and Kohli (1993) is derived from their definition of the market orientation concept which is based on their pioneer work undertaken in 1990. They present nine different approaches for the implementation of market orientation. The researcher in this thesis presents the same nine approaches emphasizing their view that there is an implied overlap between these implementation approaches which must be considered when managers attempt to employ any of these approaches. The Information Processing Approach- Jaworski and Kohli Approach Jaworski and Kohli (1993) suggest that a business organization’s responsiveness to the generated and disseminated intelligence consists of two sets of activities which include the design and the implementation of its response.

However, while Kohli and Jaworski (1990) suggest that top management commitment, interdepartmental dynamics, organizational systems and structure are antecedents to market orientation, they argue that the above factors are controllable by senior management and can be done through their intervention in order to promote market orientation within the firm. They further indicate that senior management must communicate through the organization their commitment to market orientation and reflect such commitment through their behavior and allocation of resources. They also suggest promoting interdepartmental consecutiveness, reducing conflict, restructuring the organization, and utilizing a market based reward systems to facilitate the implementation of the market orientation. In addition Kohli et al (1993) claim that their measurement instrument, MARKOR, can be employed during the initial diagnosis of the current degree of market orientation in a business organization as well as management post-intervention measurement of the degree to which market orientation has been improved. Last but not least, Jaworski and Kohli (1996) suggest that the basic approaches to enhance the level of market orientation in an organization are based on top-down and down-up continuous change efforts. They add that top management commitment and behaviors, conflict resolution and enhancement of inter-functional relationships, and adoption of appropriate organizational-wide systems would send the appropriate signal of top management dedication and support for the adaptation process of market orientation. The Norms-Based Approach- Lichtenthal and Wilson approach Lichtenthal and Wilson (1992) argue that changing the norms within the organization will lead to a change in the behavior of the individuals within that organization.

Accordingly, they assert that through the employment of Bates and Harvey (1986) framework, firms would be able to embed the buyers’ views into the norms that guide organizational members’ behavior throughout the different functional areas and different managerial levels. Therefore, they propose cultural change through the embedment of the appropriate values and norms that will guide the entire organization members’ behaviors.

They add that if we accept that norms prescribe and guide individual behaviors then the business organization must transmit persistently the appropriate required values and norms to facilitate the market-oriented behaviour. Furthermore, they argue that for the firm to be market oriented, it must create a market orientation culture that will guide the entire organizational members’ behavior and ensure that is in line with market orientation. Therefore, they suggest a contingency management approach that can be developed and emerge within the firm. The ultimate goal is to ensure the development of a shared set of beliefs, values, and norms that will lead to the appropriate behavior in line with a market orientation.

Therefore, they suggest that the organization must first identify and understand the existing values and norms that drive the current behaviour, and then select those values that are required to be altered in order to initiate changes in these values. Accordingly, in order to adopt market orientation, management should create and enhance the implementation of values and create a set of norms to guide market oriented behavior within the organizational culture. However, despite the findings of Homburg and Pflesser (2000) that the establishment of norms will not lead to a market oriented behaviour if not supported by artifacts, stories, rituals and language, Lichtenthal and Wilson (1992) argue that change can be realized through top management commitment and their top-down direction to ensure norm compliance and enrollment of all levels in the change process. In fact, literature in this area suggests a perspective that tackles the issue of the employees’ ability in the different functional areas within the business organization to translate their duties into the context of being market oriented. (See Masiello, 1988; and Canning, 1988) However, Raaij and Stoelhorst (2008) categorize Lichtenthal and Wilson’s approach as the norm-based approach, and claim that it is a form of social structure perspective. The strategy and support process approach- Ruekert approach Ruekert (1992) argues that despite the evolvement of market orientation resulting from the recent shift experiences in both domestic and global markets, managers and practitioners who might be interested to implement market orientation in their firms were not provided with clear guidance on how to go about the implementation process. Therefore, he believes that the level of market orientation is related to the degree to which the business organizations collect and use information about their customers, formulate a strategy that will meet customers’ needs and wants, and implement such a strategy through being responsive to those identified needs and wants. This is supported to a certain extent by Pelham and Wilson (1996) when they suggest that the strategies employed by business organizations may lead the firm to adopt market orientation behaviours. In fact, Ruekert (1992) provides precise suggestions that cover the diagnosis of the current level, intervention to implement changes, and evaluation.

However, in order to assess the existing level of market orientation, he suggests that his proposed questionnaire should be administrated to survey managers, sales representatives, and sales managers in order to evaluate the existing level of market orientation. This will facilitate the top management intervention and allow them to design initiatives to improve customer responsiveness in the organization. He also explains that such questionnaire includes subscales covering market orientation practices and behaviours, organizational systems that include recruitment and selection, training, appraisal and reward, individual outcomes, and business performance. He further emphasizes the organizational support systems that includes and is not limited to human resource systems in order to achieve a high level of market orientation. In addition, he suggests that repeating the assessment process using the same questionnaire can help to evaluate the ongoing progress attained. Finally, he claims that his findings provide support for the proposition that different business units can vary significantly in their degree of market orientation in the strategic planning process, even within the same organization.

The capabilities approach- Day approach

Day (1990) outlines the key challenges facing executives and top management in today’s business environment. He pinpoint that in their attempt to cover issues such as building a shared strategic vision, fostering an orientation that puts customers first, and creating effective and strong processes for screening and choosing competitive strategies they are facing various challenges. He asserts that competitive advantage can be obtained through the superior application of their marketing knowledge and insights that facilitate their attempt to select between the various strategic choices available to them. However, he stresses the need to develop a persuasive basis for the creation of competitive advantage, and emphasizes the need for successful implementation. He emphasizes his belief that marketing is not a functional responsibility, but rather it is the job for the entire members of the organization. In addition, he suggests an intervention program that emphasizes the alignment of strategy, structure, people and programs in addition to the redesigning of the performance measures to encourage and reward market-driven behaviour. However, Day (1994b) also argues that in order to build a market-driven organization, a cultural shift is required. He argues that there must be a commitment to various sets of processes, beliefs, and values that reflect the adopted the concept of market orientation.

Therefore, all decisions are made while focusing on the customer as a focal point, guided by a deep shared understanding of the customer’s needs and behavior, including the competitors’ capabilities and intentions in order to attain a superior performance compared to the competitors. However, Day (1994b) believes that building market-driven organization requires designing and implementing the process of diagnosing current capabilities, predicting future needs for various capabilities, redesigning the underlying process through a bottom-up approach, providing a top-down direction and support, and continuously monitoring progress and taking the necessary alignment actions. He adds that market sensing and linking firm’s capabilities to market knowledge are especially important to facilitate the understanding these external realities in its market. However, while the diagnostic stage suggested by Day (1994b) consists of analyzing the current capabilities and predicting the required future capabilities, he recommends that defining the key performance indicators for the processes will support the management efforts to monitor progress and evaluate results as well as providing indications related to the required level of interventions. Furthermore, Day (1999) argues that acquiring a superior skill to understand, attract and retain customers is the only way for an organization to be able to formulate strategies that will create and deliver superior customer value through the alignment of such strategy with changing market requirements. Therefore, a market-driven firm will not only be able to retain valuable customers, but also outperforms its competitors. He suggests a change program that enables a business organization to create and maintain superior value for its customers through the alignment of its culture, capabilities, and the organizational structure. However, he emphasizes that an organization must customize the change program to fit its heritage, market strategy, and leadership personality. In fact, he suggests that a successful change programs has six overlapping stages, and emphasizes that they are not sequential and may occur simultaneously.

And they include:

Demonstrating leadership commitment

Understanding the need for change.

Shaping the vision.

Mobilizing commitment at all levels.

Aligning structures, systems and incentives.

Reinforcing the change. (Day, 1999, P 14) However, he stresses the need for those who are responsible for initiating and implementing the change program to keep their attention focused on the changes, and keeps an eye on benchmark measures to ensure an early success. He adds that in order to ensure success the entire organization throughout the different levels must be involved in the process. Hence, he emphasizes the need for the human resources and marketing departments to provide the necessary support during the process instead of dominating the process. In addition, he emphasizes the role of top management in initiating and driving the required change program. Finally, while he recognizes the role of top management to create the conditions that facilitate employees’ performance and enable them to achieve good results, he asserts that the change of behaviour will eventually be embedded into the underlying norms, beliefs, and mind-sets.

Therefore, he claims that “in a market-driven firm, a pervasive market orientation is woven into the fabric of the organization” (Day, 1999, P. 8). The Cultural Change Approach- Narver and Slater approach Narver et al. (1998) claim that there is congruence among scholars that a market orientation is a culture in which all employees shares the same values and are enrolled in the process of creating and delivering superior value for customers. However, they argue that even though there are various empirical evidences suggesting that there is a positive relationship between market orientation and performance, the question is how can a business best create, and increase its market orientation level. Based on Deshpand© and Webster’s (1989) suggestion that market orientation is to be understood as an organization’s culture, Narver et al (1998) argue that if adopting, maintaining, and increasing the level of market orientation is the result of various desired behaviors as suggested by the behavioural perspective, then we will not be faced with the fact that there is a large number of businesses’ failure. Accordingly, Narver et al. (1998) argue that market orientation adoption is the result an overriding value related to the level of commitment throughout the entire organization to persistently and continuously create and deliver superior values for customers. They add that if the organization’s culture is a pattern of deep assumptions based on experience, then there may be resistance to change unless it is perceived by the entire organizational members as it provides them with a superior solution to the problem at hand.

Therefore, such perception will facilitate the creation and delivery of superior value to their customers. Accordingly, Narver et al (1998) assert that the creation of market orientation is directly related to the extent to which the organization’s members learn to create, maintain, and deliver superior customer value.

This is in line with Slater and Narver’s (1995) argument that learning provides new knowledge and insights that facilitates behavioral change, and leads to performance improvement. They add that learning is critically important for businesses competing in a dynamic and turbulent market environment, and it facilitates behavioral change in order to improve performance. (See also Senge 1990) Furthermore, while Garvin (1993) argues that in order to achieve a meaningful learning, a behavioral change is required, Narver et al (1998) suggest that such learning can be achieved through two approaches “the programmatic approach” and the “market-back approach”. They argue that this is important for the realization of cultural change. They claim that the programmatic approach is based on teaching and training the individuals within the organization the different principles in order to achieve the required level of understanding of the nature and importance of a market orientation including the different approaches, processes and skill necessary to create a superior value for customers. On the other hand, the market-back approach is a learning strategy that focuses on applying experiential learning about the most effective and profitable ways of how to create superior value for customers. They add that even though a priori learning is required in order to prepare employees at different functional areas and through the different levels on problem solving and experimentation that is based on a result driven continuous improvement process, businesses’ failure to engender a market orientation is mostly the result of favoring a priori learning over experiential learning.

However, they finally emphasize that realizing cultural change can be achieved through experiential learning. The system-based approach- Becker and Homburg approach Becker and Homburg (1999) claim that their review of literature “shows that there is no integrative conceptualization of market orientation management” (1999, p 20), They add that except for the human resources management issues, which have been studied from a market orientation perspective, no other issues have been studied (See Martin et al., 1998; Harris and Ogbanna, 2001b). However, they suggest a different perspective of market orientation which they define as “the degree to which the different management systems of an organization are designed in a market-oriented way” (Becker and Homburg, 1999, p 20). They further suggest a market-oriented management model that consists of an organizational system, information system, planning system, controlling system, and human resources management system. They also suggest how these various management systems are designed in order to represent the market-oriented management. However, they argue that even though their findings provide evidence that market-oriented management has a significant effect on business performances; it has no direct effect on financial performance. Therefore, they suggest that practitioners and managers must not focus when measuring the relationship on financial figures and results, but through market related performance measures such as customers’ satisfaction and loyalty. They also claim that their measurement instrument can be employed to measure the existing degree of market-oriented management, and to assess the required level of management interventions in order to increase market orientation in the firm. On the other hand, Homburg et al. (2000) argue that while various studies suggest different scales to measure the level of market orientation, they have not examined empirically the required organizational structure and changes that needed to become a customer orientated firm (See also Jaworski and Kohli, 1993; Deshpand© et al., 1993; Slater and Narver, 1994; Deshpand© and Farley, 1999). Therefore, they discuss the implementation of a customer-focused organizational structure and identify the main determinants of such an organization as the information system, the accounting system, the planning system, the reward system, and the human resource management system, which are consistent with their system-based approach.

Furthermore, Homburg et al. (2004) discuss further market orientation from a strategy implementation perspective. They pinpoint that the role of market orientation, which is one of the various organizational intangible variables that plays a critical role in the strategy implementation, has not been addressed properly by researchers from a strategy implementation perspective. Therefore, they claim that their findings provide evidence that market orientation is one of the important organizational intangible variables that play a critical role in the context of strategy implementation. The management behaviour approach- Harris approach Harris (1996) focuses on the cultural perspective as an important basis to facilitate the adoption of market orientation. He claims that the cultural perspective attracts different scholars attempting to define a market orientation culture (See also Narver and Slater, 1990; Webster, 1993; and Deshpand© et al., 1993). Harris (1996) argues that Jaworski and Kohli’s (1993) definition of market orientation focuses on the behavioral aspect rather than the abstracts themselves, and that their work has drawn the path to the other academician in order to develop a logical, coherent and comprehensive model of market orientation. However, he pinpoints that Jaworski and Kohli failed to produce a definitive model because the complexities of the findings were not represented in modular form.

Accordingly, he suggests that market orientation should be viewed as a state of mind rather than a flow of information. In his point of view a market-oriented culture is “the dominant, dynamic segment on an organization whose marketing attitudes and actions are geared toward the market” (Harris, 1996, p. 360). However, Harris (1996) concludes that the major contribution of Jaworski and Kohli is the provision of practical implications for the theory, and argues that management’s desire for a fully prescriptive model has not yet been fulfilled. Hence, he suggests that executives should consider relevant issues such as top management commitment and support, understanding the degrees of departmental conflict and connectedness, the organizational structure and style of the reward system, and the ability and capability of the organization’s information system to generate and disseminate the required information and respond to various environmental influences in their attempt to adopt the market orientation Furthermore, Harris and Ogbonna (1999) argue that while many marketing authors suggest that the marketing orientation can be adopted as a management philosophy, the organizational culture theory contradicts with such arguments. They claim that organizational culture is pluralist in nature. Therefore, they argue that if we accept that a market oriented culture has an organization-wide cultural dominance, then the market orientation subculture dominates and controls all the other organizational subcultures (Harris, 1998). On the other hand, if the organizational culture is created through the work experiences that are accumulation by all employees within the organization, then there is a weak potential for cultural dominance by any other subculture. They add that even if one can assume that cultural dominance is possible then a number of contextual factors will influence the different subculture interaction process.

However, after discussing the issue of cultural dominance, Harris and Ogbonna (1999) criticize the view that organizational culture unity can be always achievable and therefore, assuming that organizational culture is susceptible to conscious manipulation by management is not acceptable. Instead, they claim that cultural change can only be realized either through revolutionary or evolutionary approaches. It is worth noting in this context that different studies which have examined the development of market oriented culture have assumed that culture is an organizational variable and is governed and manipulated by management (See Narver and Slater, 1990; Payne, 1988; Webster, 1994b). However, Harris and Ogbonna, (1999) emphasize the management behavioral approach and argue that in order to accomplish market oriented change, it has to be achieved through political maneuvering of marketing and top management (See also Piercy, 1989 and Whittington and Whipp, 1992). Furthermore, Harris and Piercy (1999) explored the management behaviour and the barriers to market orientation in the retail industry within UK and claim that their findings contradict with many of the held assumptions that becoming a market oriented organization is an easy task.

They claim that their results strongly suggest that certain management behaviors are required since such behaviors are important determinants of successful adoption of market orientation in the service industry. They indicate that building market orientation is a difficult task, because even political maneuvering, conflict and formalized behaviors are associated with a low level of market orientation. They add that building effective market orientation requires the development of programs that help to overcome tendencies toward political maneuvering, conflict and friction between various management groups or functional areas. Finally, their findings indicate that a positive relationship exists between the amount of internal communications, the creation of a successful conflict resolution system and the level of market orientation achieved. On the other hand, Harris and Ogbonna (2000) examine the front-line employees’ response to a market oriented cultural change using a case study approach of two UK retailing organizations.

They argue that to a certain extent the marketing literature ignores the views and responses of front-line employees, who are directly interacting with customers. Their findings have led them to identify some important implications. They assert that in the absence of an effective feedback mechanism, management will not be able to take the required corrective action, modify, and customize change as required or recommended. They further claim that their findings provide evidence that the development of market orientation will require more than just systems, functions, and procedures. Therefore, they argue that the success of a culture change programme will depend on the employees who are responsible to implement it, especially the front-line employees.

Accordingly, they suggest that management through the understanding of the potential different employees’ reactions to change will be able to direct their change efforts more effectively and efficiently. However, Harris and Ogbonna (2001a) assert that although various studies indicate that management behavior is a key determinant for the adoption on market orientation, they can become a barrier to developing a market-oriented culture. Yet, they conclude that while their study finds that participative and supportive leadership styles have a strong positive relationship with the level of market orientation achieved, the instrumental leadership style has a negative relationship with market orientation. Therefore, they argue that such positive relationship indicates how the process can be managed through creating and maintaining an appropriate environment that facilitates market-oriented change. Harris (2002a) tackles the process of developing market orientation, exploring the different management approaches to become a market oriented organization. However, he claims that his analysis of the data reveals that the management approaches to develop market orientation can be viewed or categorized along five different dimensions.

Cite this page