Export Market-Oriented Behavior and Export Performance: Quadratic and Moderating Effects under Differing Degrees of Market Dynamism and Internationalization

Abstract

In general, findings in the market orientation research stream indicate that market orientation has a positive linear relationship with business success, and managers have been urged to be more market oriented, regardless of the firm's current market orientation level. The authors develop a theory that predicts that the relationship between market orientation and business performance is an inverted U shape, such that high levels of market orientation may reduce performance. The authors’ empirical study of firms’ export market-oriented (EMO) activities in their export operations finds support for the hypothesized inverted U-shaped relationship between EMO behavior and export sales performance. They show that the inverted U-shaped relationship becomes greater in magnitude (more pronounced) as market dynamism increases and that the optimal value of EMO behavior (i.e., the value that generates the highest performance return) decreases as market dynamism increases and increases as exporting firms’ internationalization increases. Therefore, they conclude that management's task is not to aim for ever-increasing levels of market orientation but to manage market orientation so that its level is optimal given the firm's environment and the international diversification strategy being pursued.