Market orientation: relation to structure and performance

Abstract

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.

Citation

Green, K.W., Inman, R.A., Brown, G. and Hillman Willis, T. (2005), "Market orientation: relation to structure and performance", Journal of Business & Industrial Marketing, Vol. 20 No. 6, pp. 276-284. https://doi.org/10.1108/08858620510618110