Does Competitive Environment Moderate the Market Orientation-Performance Relationship?

TLDR

Market orientation is generally linked to better performance, but scholars debate whether competitive environment moderates this relationship. The study examines whether competitive environment moderates the market orientation–performance link and shifts the balance between customer and competitor emphasis. The authors analyze the moderating effect of competitive environment on the market orientation–performance relationship and on the relative emphasis on customer versus competitor analysis. Results show only limited evidence that competitive environment moderates the market orientation–performance link, yet market orientation remains cost‑effective long term despite transient environmental effects.

Abstract

Recent studies have shown evidence of a positive relationship between market orientation and performance. However, some scholars have suggested that competitive environment could moderate this relationship. The authors investigate how competitive environment affects the strength of the market orientation-performance relationship and whether it affects the focus of the external emphasis within a market orientation—that is, a greater emphasis on customer analysis relative to competitor analysis, or vice versa, within a given magnitude of market orientation. Their results provide very limited support for a moderator role for competitive environment on the market orientation-performance relationship. The benefits of a market orientation are long term though environmental conditions are often transient, and thus being market oriented is cost-effective in spite of any possible short-term moderating effects of the environment.