Market orientation: relation to structure and performance

Abstract

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.