Market orientation, innovation andcompetitive strategies in industrial �rms
RODOLFO VÁZQUEZ, MARIA LETICIA SANTOS AND LUIS IGNACIO ÁLVAREZUniversity of Oviedo, Facultad de Ciencias Economicas, Avda. del Cristo, s/n, 33071 Oviedo,
Asturias, Spain
Market or ientation prom otes the satisfaction of market needs with a higher degree of
excellence than competitors. However, its potentia l effects on the com panies’ innovation
strategy are discussed. The question is whether or not market or ientation, due to an
excessive customer focus, leads m ainly to the development of increm ental innovations
and, consequently, to reactive innovation strateg ies. To obtain further insight into this
topic, a m arket or ientation m easurement scale is ® r s t developed, taking into account
the instrument proposed in the last decade. Then, the scale psychom etr ic proper ties
are evaluated. Once it proves to be a solid instrument of m easurem ent, the relation-
ship between m arket or ientation and the following var iables is analysed: ® rm s ’ com -
m itm ent to the innovation activities, effective innovation rates, deg ree of innovativeness
of the new products developed, ® rm s ’ com petitive strategy and com panies ’ perform -
ance. The study supports the bene® cia l effects of market or ientation on the innovation
strategy, providing empir ical evidence in a research ® eld where contr ibutions of this
nature are very scarce. In addition, the convenience of incorporating m arket or ientation
into industr ia l ® rm s ’ m anagement is reinforced.
KEYWORDS: Market orientation; innovation activities; competitive strategies; industrial
markets
INTRODUCTION
Study of the market orientation concept is currently recognized as being of utmost interest within
the marketing discipline, both from an academic and entrepreneurial point of view (Marketing
Science Institute, 1990). Accordingly, a great number of investigations of this topic have been
developed in the last decade which have approached market orientation from a fundamentally dual
perspective: either as a cultural aspect or as a constituent part of organizations’ culture (Slater and
Narver, 1995) or as a series of speci® c conducts in accordance with this orientation (Kohli and
Jaworski, 1990). Though these conceptual approaches are not mutually exclusive and may even be
considered to be complementary ( Jaworski and Kohli, 1996), the market orientation measurement
instruments proposed in the literature do not coincide and a large number of both cultural and
operative scales may be identi® ed (Gray et al., 1998).
Therefore, this ® eld of investigation offers substantial potential for further development.
The researcher needs ® rst to adopt a perspective for de® ning the market orientation concept ±
including the justi® cation of the dimensions underlying this concept from the chosen conceptual
JOURNAL OF STRATEGIC MARKETING 9 69–90 (2001)
Journal of Strategic Marketing ISSN 0965± 254X print/ISSN 1466± 4488 online 2001 Taylor & Francis Ltdhttp://www.tandf.co.uk/journals
DOI: 10.1080/09652540010011493
viewpoint selected ± and then employ a valid, reliable measurement scale of the proposed market
orientation concept. The aforementioned potential is even greater if the relationship between
® rms’ degree of market orientation and their innovation activities is taken into account.
Thus, an innovation strategy poses a permanent challenge for any company. Standardized
markets with known, stable demand and little possibility of improved alternative technologies
are becoming continually more scarce. Even these markets are subject to innovation demands,
though it may only be in terms of more productive or less costly manufacturing processes. Hence,
innovation currently plays a key role in business performance (Edgett et al., 1992; Brown and
Eisenhardt, 1995).
However, one of the most controversial recent debates in the literature concerns whether market
orientation fosters innovation or leads to incremental developments in product portfolios derived
from modi® cations in customer preferences. The question raised is whether the most market-
oriented ® rms tend to develop products with a higher degree of incorporated novelty or whether,
if an excess of customer orientation and short-term vision, they mainly focus on applying slight
modi® cations to their product portfolio, in order to adapt it slowly to the changes detected in
the market (Atuahene-Gima, 1996). Although incremental innovation may prove to be pro® table
in the short term, it does not sustain corporate development or competitiveness in the long
term, which require the development or incorporation of new technological platforms (Davidow,
1986). Similarly, explicit acknowledgement of the positive effects that innovation has on entre-
preneurial results (Han et al., 1998) makes it desirable for market orientation to produce an effect
on the ® rm’s innovation activity, in terms of both the quantity and novelty of the new products
developed.
Evidence on this topic is mixed (Diamantopolus and Hart, 1993; Slater and Narver, 1994;
Greenley, 1995; Fritz, 1996; Avlonitis and Gounaris, 1997; Langerak and Commandeur, 1998)
and dif® cult to compare due to the diversity of measurement instruments employed, research
methodologies, sample frames and indicators of performance (Gray et al., 1998). Consequently,
further evidence about the nature of the relationship between market orientation, innovation
activities and business performance needs to be obtained, paying special attention to the measure-
ment variables employed in order to guarantee the general applicability of the results.
Another approach to analysing the in¯ uence of market orientation on ® rms’ innovation-related
behaviour is the study of the competitive strategies developed by market-orientated ® rms. We
wish to study whether the type of competitive strategy implemented by the most market-oriented
® rms implies granting priority to technology and its management with a long-term focus.
In this respect, Slater and Narver (1996) and Morgan and Strong (1998) have recently examined
the market orientation± competitive strategy relationship. The underlying premise of this stream
of research is the recognition of marketing’s contribution to a ® rm’s strategic management
and strategy selection (Day and Wensley, 1988; Day, 1994; Ruekert, 1992; Hunt and Morgan,
1995). Accordingly, if a market-oriented ® rm’s selected strategy involves a long-term focus
on technology management, that will reinforce the potential bene® ts of market orientation on
innovation.
Based on this general approach, the research work has been structured into three sections. First,
we examine the literature dealing with the market orientation concept as well as its relationship
with a ® rm’s innovation strategy. Next, a series of hypotheses pertaining to this interplay’ are
proposed and empirically tested. Finally, the outcomes obtained are discussed and future research
implications are identi® ed.
70 VÁZQUEZ ET AL.
THEORETICAL BACKGROUND AND HYPOTHESES
The m arket or ientation concept
As stated previously, approaches to the market orientation concept are basically made from two
perspectives: the behavioural or process perspective (Kohli and Jaworski, 1990; Deng and Dart,
1994; Doyle and Wong, 1998; Jaworski et al., 2000), versus the cultural (Slater and Narver, 1995;
Turner and Spencer, 1997; Harris, 1998; Narver et al., 1998).
From the cultural viewpoint, market orientation is understood as an organizational culture in
which the market, customers and competitors constitute the central axis of the ® rm’s modus
operandi. Thus, such an orientation implies the existence of a set of shared values and attitudes
throughout the organization which, like an invisible hand guiding individuals behaviour
(Lichtenthal and Wilson, 1992), try to stimulate the creation of higher value for customers (Pearce
and David, 1987; Webster, 1988; Greenley, 1995) in such a way that the customers themselves
become the focal point of strategy and organizational actions (Deshpandé and Webster, 1989). The
behavioural or operative perspective implies the de® nition of the market orientation concept
pointing out the tasks that must be accomplished within the organization in order to put culture
into practice effectively (Kohli and Jaworski, 1990).
In order to develop an investigation in this research ® eld, it is necessary to adopt ® rst a perspec-
tive to de® ne the market orientation concept ± including the justi® cation of the dimensions
underlying this concept from the chosen conceptual viewpoint selected. Next, it is necessary to
identify ± or, alternatively, develop ± a valid, reliable measurement scale of the proposed market
orientation concept. At this stage it is necessary to take care, due to the fact that, in the literature, a
wide variety of scales, both cultural and operative, have been proposed. Their items do not always
correspond to the cultural or operative nature of the scale to which they belong ( Jaworski and
Kohli, 1996). This brings to the appropriateness of using these scales into question. Moreover, as
will be discussed later on, the psychometric properties of some of the most widely used measure-
ment instruments have recently been placed in doubt. However, an in-depth validation of the scale
employed is essential for the study of market orientation’s relationship with other variables, such as
companies’ performance and innovation outcomes and to guarantee that the results obtained are
not speci® c to the measurement instrument employed.
In this study, the behavioural conceptualization of market orientation is adopted as a group of
activities which put theory into practice in order to provide greater value to the ® rm’s customers.
The logic of this decision is, as Jaworski and Kohli (1996) indicated that an organisation may
believe something is important, but fail to act on its beliefs for a variety of reasons . . . thus, from a
manager’ s perspective, it may be more important to focus on what an organisation actually does
than what it feels it is important’ (p. 121). Therefore, as we wish to relate market orientation to the
innovation activities developed in practice and the strategy type that has been pursued, our interest
lies mainly in the organization’s actual conduct rather than its expressed ideology, which may
represent market orientation’s cultural measure. Thus, we believe that operative market orientation
cannot be present in a ® rm without an existing culture supporting such behaviour, whereas
appreciation for delivering superior value does not guarantee the implementation of the related
activities.
Once a working perspective of market orientation has been established, it is necessary to identify
the underlying dimensions of this concept. On this line, Kohli and Jaworski (1990) suggested the
implementation of three sets of activities (1) organization-wide generation of market intelligence
pertaining to current and future customer needs, (2) dissemination of intelligence across depart-
ments and (3) organization-wide responsiveness to it. Based on this seminal work, other relevant
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 71
contributions have been produced in order to identify the pertinent operative dimensions of
market orientation, such as Ruekert (1992), Deng and Dart (1994), Deshpandé and Farley (1996)
and Gray et al. (1998).
We have adopted the proposal of the dimensions developed by Kohli and Jaworski (1990) due to
its in¯ uence on later works, as well as the explicit recognition of its conceptual validity (Cadogan
and Diamantopoulus, 1995; Siguaw et al., 1998). However, the appropriateness of using the
MARKOR measurement scale which was developed by Kohli et al. (1993) may be questionable, as
we shall see further on.
The activities of collecting information, disseminating it to all levels within the organization and
designing a coordinated response should not only be relative to customers but also to competitors
and environmental forces, without overlooking the likely evolution of the characteristics of each of
these variables. In the literature, however, it seems that more emphasis has always been dedicated to
customer orientation (Narver and Slater, 1990; Kotler and Andreasen, 1996) than to competitor
analysis. In spite of this, an analysis of competitors’ rationale is supported by the fact that, to satisfy
the customer’ s needs, providing greater satisfaction or added value, it is essential to have com-
petitors’ commercial offers as a reference, given that customers evaluate products in relative terms
(Day and Wensley, 1988). In relation to the environment, it should be remembered that the goal of
generating marketing intelligence is to be aware of the future or latent needs of a ® rm’s customers.
To this end, it is necessary to determine the environmental forces that affect customers’ systems of
preferences and expectations or those that may do so in the future. This is why the study of the
environment has been justi® ed as an object of analysis from the operative ® eld (Kohli and Jaworski,
1990; Greenley and Foxall, 1998).
Market or ientation and innovation
Together with an increasing interest in the literature concerning the signi® cance and implications
of market orientation strategy, the debate has been revived as to its in¯ uence on a ® rm’s innovative
activity. The question has been raised as to whether the most market-oriented ® rms are less
receptive to the idea of innovation or whether they limit themselves to developing modi® cations in
well-known products in order to adapt them to customer needs appropriately, rather than assuming
more radical projects. Therefore, it may be considered that ® rms which are centred on listening to
their customers and responding to their needs in the majority of cases do not manage to foresee the
future or anticipate many of the innovations which are later successfully commercialized. Thus,
they are surpassed by more perceptive competitors who obtain competitive advantages by taking
customers where they wish to go, even without yet knowing it ± in short, by continually surprising
them (Hamel and Prahalad, 1991, 1995).
If this reasoning should prove to be true, then market orientation would inhibit innovation. In
this case, it would not be advisable in domains whether this type of capacity is an indispensable
source of competitive advantage, as in industrial ® rms (Slater, 1996), apart from the fact that new
product development and innovation capacity are basic competitive instruments for an industrial
® rm’s long-term success and survival (Deshpandé et al., 1993). Thus, by means of new product
development, the organization adapts and diversi® es itself and even renews or reinvents’ itself in
order to adjust to the changing technology and market conditions (Vázquez et al., 1998).
In this respect, Hayes and Abernathy (1980) and Bennett and Cooper (1981) also argued that
market orientation strategy leads to the development of merely incremental innovations and to
inferior products in the long term, given that innovation risks tend to be avoided. Thus, customer
emphasis promoted by market orientation is seen to lead solely to the creation of possible or feasible
72 VÁZQUEZ ET AL.
products within the customers’ own reference system. Therefore, radical innovations would never
be generated as customers would not suggest them and evaluation of their potential acceptance by
the target market would be even less feasible (Workman, 1993; Cahill et al., 1994). This idea has
prevailed in the management of many industrial ® rms, particularly in those in which technology
plays a predominant role (Santos and Vázquez, 1997, 1998). Nonetheless, there are diverse
theoretical arguments are well as some empirical evidence which contradict this posture.
First of all, this approach may be rejected by considering the fact that the intelligence generation
dimension of market orientation involves obtaining information not only on current customer
needs, but on their future ones as well, while taking into account all the environmental forces which
could potentially model these expectations. Consequently, a present and future vision of the market
allows for new product development with a high degree of incorporated novelty ( Jaworski and
Kohli, 1996).
That is, authentic market orientation requires a continual innovative effort that need not be
limited to incremental innovations, provided that latent radical necessities are detected. To this
effect, Slater and Narver (1996) empirically demonstrated that there is a positive relationship
between the magnitude of market orientation and an organization’s relative emphasis on develop-
ing more innovative products.
On the other hand, Hurley and Hult (1998) put forward the idea that market orientation,
together with other characteristics and organizational culture, is an antecedent of a ® rm’s receptiv-
ity or willingness towards new idea development. This receptivity or willingness is what these
authors called ® rm’s innovativeness’, a cultural aspect that positively in¯ uences the capacity to
adopt or implement new ideas, processes or products. Consequently, Hurley and Hult (1998)
considered that market orientation in¯ uences the quantity of innovations that the ® rm is able to
absorb or develop through the moderating effect of ® rm’s innovativeness. An improved capacity to
innovate ± which is understood as the number of new ideas adopted or implemented by the
organization ± is also proposed to enable ® rms to be more successful in responding to their
environment and developing new capabilities that lead to competitive advantage and superior
performance. The empirical research con® rms the in¯ uence of several cultural characteristics ±
market orientation not included ± on innovativeness and its positive effect on the ® rm’s capacity to
innovate. However, no evidence is provided on the consequences of the latter results.
However, Han et al. (1998) empirically established that market orientation facilitates organiza-
tional innovation, as measured in terms of the absolute number of both technical and administrative
innovations implemented. That is to say that the authors proved that market orientation exercises a
direct in¯ uence on the quantity of innovations implemented by the ® rm ± both technical and
administrative ± eluding the moderator effect of the ® rm’s innovativeness. Innovation, in turn
positively in¯ uences business performance, con® rming its mediating role in the market
orientation± corporate performance link. The study also shows that market orientation does not
have a direct effect on performance, which raises another controversial debate in the literature.
It should be noted, nevertheless, that, although in this investigation it is the operative imple-
mentation of market orientation that is measured, both Hurley and Hult (1998) as well as Han
et al. (1998) considered market orientation as part of the organization’s culture. Thus, Hurley and
Hult (1998) suggested that the deepest manifestations of market and learning orientations are at
the cultural level’ (p. 43), whereas Han et al. (1998) concluded that `market orientation scholars
designate a market-oriented culture as a signi® cant factor in achieving a superior corporate
performance’ (p. 31). While Hurley and Hult (1998) did not measure market orientation.
Han et al. (1998) used the scale developed by Narver and Slater (1990) ± MKTOR ± to measure
market orientation from a cultural viewpoint. However, MKTOR has been criticized because its
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 73
primary focus is on behaviour despite its cultural design (Deshpandé and Farley, 1996; Jaworski and
Kohli, 1996).
Based on the conclusions arrived at in these previous works, in this investigation we intend to go
a step further by analysing the relationship between a ® rm’s market orientation level and the
number of innovations that are effectively developed and commercialized rather than adopted
within the organization. In this respect, we believe that market-oriented ® rms are not only more
willing to adopt innovations but also to develop and commercialize them. Market orientation
through intelligence generation is a source of ideas for new products and services; this fact together
with the focus on providing superior value to the customers by means of ful® lling their needs and
the evolution of their preferences should positively affect the degree of innovation in companies.
In order to test this reasoning, the role of a ® rm’s innovativeness will be also taken into account as
an element of a ® rm’s culture that predisposes companies favourably to innovation.
Innovation, for its part, has been proven to enable the ® rm to achieve better outcomes and
improve its competitive position. However, the fact should not be overlooked that some studies have
demonstrated that market orientation also exercises a direct positive in¯ uence on entrepreneurial
results (Slater and Narver, 1994; Langerak and Commandeur, 1998). Therefore, it is necessary to
compare the direct in¯ uence of market orientation on organizational outcomes with the in¯ uence
exercised through variables related to innovations.
By taking the aforementioned investigations into account, the hypotheses proposed in this
investigation aim to con® rm the empirical evidence that has been collected to date, as well as
contrast the postulated relationships. Therefore, the idea is put forward that market innovation
is related to companies’ willingness to innovate. In turn, this variable generates a higher rate of
innovation. However, the possibility of a direct effect of market orientation on the quantity of
innovations to be developed is also accepted. Therefore, we believe that a greater disposition to
innovate is coherent with companies which commercialize products offering a higher degree of
innovation, apart from the direct effect of the ® rm’s market orientation level on the latter variable,
as demonstrated by Slater and Narver (1996). Both variables ± the innovation rate and product
innovativeness ± should lead to the achievement of superior performance. Thus, more innovative
products involve more potential risks associated with their market success (Urban and Hauser,
1993), as well as more potential bene® ts for the ® rm (Kleinschmidt and Cooper, 1991). However,
due to their primary focus on providing superior customer value, market-oriented ® rms are well
positioned for adapting innovations to customers’ actual and emerging needs. Therefore, a positive
relationship between new product novelty and companies’ performance is expected. Accordingly
we propose the following.
H1: Market orientation is positively associated with a ® rm’s innovativeness or its cultural predis-
position to innovate.
H2: A ® rm’s innovativeness is positively associated with the ® rm’s innovation rate and new
product innovativeness.
H3: A ® rm’s innovation rate and new product innovativeness lead to superior company
performance.
H4: Market orientation has a direct, positive impact on a ® rm’s innovation rate, new product
innovativeness and company performance.
Figure 1 depicts the hypothesized relationships.
Another aim pursued in this investigation is the study of the type of competitive strategy pursued
by industrial ® rms in relation to their degree of market orientation. Market orientation, as an
organizational resource, should contribute to competitive strategy formulation (Hunt and Morgan,
74 VÁZQUEZ ET AL.
1995). In fact, an understanding of market orientation’s contribution to companies’ competitive
strategy formulation is a key step in appropriate comprehension of this orientation’s long-term
bene® ts for the organization (Slater and Narver, 1996). If market orientation promotes innovation
rather than limiting it, as defended in this paper, then it is to be expected that market-oriented ® rms
should focus on competitive strategies that involve a higher degree of innovation activity. To this
end, the typologies suggested by Porter (1980) and Miles and Snow (1978) are considered given
that, in both classi® cations, a ® rm’s emphasis on technology is explicitly recognized. In short, it
is put forward that the most market-oriented ® rms will show a higher degree of implementation
of the strategies most directly involved with innovation.
However, the study of the strategic choices of market-oriented ® rms can be approached using an
alternative methodology, such as the one described by Morgan and Strong (1998). These authors
avoided the employment of strategic typologies, such as those proposed by Miles and Snow (1978)
and Porter (1980), because, among other considerations, crude categorizations `do not acknow-
ledge the importance of dimensions that are excluded from the typology’ (Speed, 1993, p. 172).
Thus, Morgan and Strong (1998) considered six comprehensive dimensions of strategic orientation
in order to achieve an exhaustive vision of a ® rm’s competitive behaviour. Nevertheless, in this
investigation, the study of the market orientation± competitive strategy relationship is aimed at the
analysis of the preponderance given to innovation strategy by market-oriented industrial ® rms.
This dimension ± emphasis on technology ± is explicitly recognized in the typologies of com-
petitive strategies employed in the research, i.e. Porter (1980) and Miles and Snow (1978) and,
therefore, we believe that made them suitable for our purposes.
Next, the contents of each of the strategies de® ned by Porter (1980) and Miles and Snow (1978)
will be explained, as well as the level of innovative effort that is implied. We shall endeavour to
demonstrate that it is predictable that the most market-oriented ® rms carry out the competitive
strategies which are most connected with innovation development.
Porter (1980) classi® ed the competitive advantage sources into two principal categories: cost
leadership and differentiation. Differentiation strategy means product development with added’
advantages or those which are perceived to be unique or different in the industry and offer a greater
bene® t to consumers. This can be accomplished through various means, such as a brand name image,
technology, services or product properties. The effects of differentiation are basically external, that
is they attempt to realign the ® rm’s demand curve. The cost leadership strategy, without com-
promising quality, service or other aspects, attempt to achieve lower costs than he competition. In
other words, this strategy intends to render internal ef® ciency into lower costs or more reduced
FIGURE 1. Market orientation effects.
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 75
prices for the purchasers. It is based on economies of scale, value and scope. This brings about
reductions in product costs, research and development, services, sales personnel or communication.
On the basis of these considerations, it seems reasonable to suggest that a market-orientated ® rm
which adopts a clear external focus in determining its customers’ current latent needs and wishes to
satisfy them better than the competition should practise a differentiation strategy to a greater extent
than the leadership in costs alternative. In reality, we are not asserting that the two strategies are
incompatible, given that Porter himself (1985) stated that `many ® rms’ have discovered the way to
reduce costs, not only without damaging their level of differentiation, but actually increasing it.
Both strategies can coexist but, in this case, a differentiation strategy is presupposed to be more
coherent with market orientation behaviour. Accordingly, the degree of correlation with this
variable should be greater. Furthermore, it this is the case, we may once again support the assertion
that the most market-oriented ® rms need not have an inferior innovation rate. This is due to the
fact that innovation activity is one of the fundamental distinguishing features of the differentiation
strategy.
On the other hand, the typology proposed by Miles and Snow (1978) identi® ed four basic types
of competitive organization: prospector, analyser, defender and reactor. The key underlying
criterion employed in establishing this typology is the type of organizational response to changing
environmental conditions, that is the rate of modi® cations experimented on in commercialized
product types and in the selected markets in order to adapt to variations in the competitive
environment.
Practically, defender ® rms do not develop products or markets, but focus all their effort on
attempting to defend a competitive position, which is generally restricted to a very reduced niche.
They compete on the basis of prices, distribution, quality or service. Prospector businesses con-
tinually seek new opportunities in the market and are often pioneers in launching new products.
They constantly modify their offer and often bring about changes in the industry with their
activity. Analyser organizations represent an intermediate position between the two previous ones.
They carry out fewer and less frequent changes in their products and markets than prospector
businesses, yet concede less importance to stability and ef® ciency than defender ® rms in order
to bolster their competitiveness. Reactor ® rms lack any speci® c strategy and simply respond to
environmental changes as best they can. In fact, the majority of empirical studies that were con-
sulted considered this group to be marginal, as if it could not really be considered an exponent of
any type of business strategy and, consequently, excluded it from their investigations (McDaniel and
Kolari, 1987; Shortell and Zajac, 1990; Slater and Naver, 1996).
Just as various authors have established the strategic groups identi® ed by Miles and Snow (1978)
present very disparate characteristics with regard to the type of marketing strategy employed (Snow
and Hrebiniak, 1980; Hambrick, 1983; Mckee et al., 1989; Conant et al., 1990; Doyle and Hooley,
1992) and their degree of market orientation (McDaniel and Kolari, 1987). In general, the results
show that prospector or analyser ® rms reveal a higher degree of market orientation and marketing
strategy elaboration in which a special interest in new product development is placed. For these
reasons, in an effort to demonstrate market-oriented ® rms’ innovative development is placed. For
these reasons, in an effort to demonstrate market-oriented ® rms’ innovative character and capacity,
we propose that these ® rms will tend to show the application of a pro-active competitive strategic
orientation. In accordance with these assertions, we pose the following hypothesis.
H5: Market-oriented ® rms develop competitive strategies which involve a higher degree of
commitment to innovation. Those strategies can be fundamentally considered as pro-active
and based on differentiation activities.
76 VÁZQUEZ ET AL.
METHODOLOGY AND MEASURES EMPLOYED IN THE INVESTIGATION
The industrial ® rms from which information was obtained were selected from the Directory
of Industrial Companies and Industrial Support Services in the Principality of Asturias (Instituto de
Fomento Regional del Principado de Asturias, 1998). The sample was designed to include a broad
range of Spanish companies which varied by size and industry type. This fact involves a higher risk
of data variability and dispersion but, on the other hand, contributes to their applicability across a
broad range of situations. The selection of the industry sectors ® nally considered was made bearing
in mind the number of certi® ed ® rms (certi® cation ISO9000), which were included for future
investigation purposes. Thus, the ® elds of activity ® nally chosen were food manufacturing,
chemicals, metals and precision machinery, including a total of 264 companies.
The data collection was performed in January 1999 by means of personal interviews conducted
with the directors of each ® rm, following a structured questionnaire. When a measurement
instrument is developed, the subjects employed to obtain information should be those for whom
the designed instrument is intended (Nunnally, 1978). For this reason, due to the necessity that the
interviewees should have a profound general knowledge of the ® rms’ operations and strategies, the
® rms’ s general managers were chosen as the source of information. This type of approach, using
only one surveyed individual per company, has been previously employed in studies on market
orientation (Narver and Slater, 1990), demonstrating the reliability of the data obtained in this
way (Avlonitis and Gounaris, 1997). The ® nal sample of companies which agreed to participate
consisted of 174 ® rms.
Market or ientation m easurem ent
As mentioned above, different measurement instruments for market orientation have been
developed in the last decade. One noteworthy aspect of the scales ® nally proposed in the literature
is that the majority of the items employed are of a behavioural nature, in spite of the fact that the
authors may defend the cultural dimension of the concept. Thus, for example, the scale of Narver
and Slater (1990), despite being developed for the purpose of estimating market orientation as a
cultural aspect, contains nine items out of 15 of a clearly operative nature.
Apart from these considerations, we intended to develop a new measurement instrument for
market orientation that integrates the more relevant previous works and which also accounts for
the multiplicity of aspects that have been alluded to in order to measure this reality. The empirical
studies which are of the most importance in this process are Narver and Slater (1990), Ruekert
(1992), Kohli et al. (1993), Diamantopoulos and Hart (1993), Deshpandé et al. (1993), Deng and
Dart (1994), Deshpandé and Farley (1996) and Pelham and Wilson (1996).
Theoretically, however, the ® rst alternative would have been employment of the measurement
instrument developed by Kohli et al. (1993), as we accept the market orientation dimensions
proposed by these authors as valid. Nevertheless, there are several reasons that led us to discard this
possibility.
(1) First of all, the scale developed by these authors ± MARKOR ± has recently been
questioned with regard to its psychometric properties (Caruana et al. 1996; Bhuian, 1997;
Farrell and Oczkowski, 1997; Siguaw et al., 1998).
(2) Similarly, the items employed in measuring information generation, its internal dis-
semination and the development of an organizational response fundamentally refer to the
customer (13 of the 20 items considered had this orientation); no item was included, for
example, relating to intelligence generation on the competitor.
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 77
For these reasons, the market orientation scales of the last decade have been taken into account,
identifying the following questions: (1) the behavioural or cultural nature of the variables
employed, (2) the interest focus of these variables, i.e. customers, competitors or environment and
(3) the components of the behavioural concept of market orientation to which they refer, that is
market intelligence generation, dissemination or response. The employment of items from other
scales, as they have previously survived’ a re® nement process in most cases, was intended to
improve the ® nal scale’ s content validity. The next step was to eliminate redundant items and
complete aspects where the measurement of which was taken insuf® ciently.
However, the steps taken to this point in order to develop the scale employed in this study, that is
a review of the specialized literature, speci® cation of the dimensions or critical components of the
market orientation concept and selection of the representative variables for each identi® ed critical
component, aim to guarantee the scale’ s content validity. That is, the scale illustrates the different
aspects or dimensions which are considered to be essential with regard to the object of study.
This process has been completed in accordance with the recommendations of the literature (Deng
and Dart, 1994) by means of two additional steps: submitting the scale to expert opinion and
elaboration and pre-test of the questionnaire applied to a small sample of companies. This enabled
the drafting of the items to be modi® ed and adapted in order to facilitate their interpretation and
guarantee that all relevant aspects of market orientation were being measured. The scale originally
employed in the investigation was thus obtained, as shown in the Appendix.
Once the measurement scale was developed, one of the investigation’s primary aims was to
check its reliability, validity and unidimensional nature in order to con® rm its viability as a meas-
urement instrument for different industrial sectors. The ® nal approval of the scale would be granted
upon proving its performance in the evaluation processes of each one of these aspects, in agreement
with the methodology proposed by Churchill (1979), Gerbing and Anderson (1988), Deng and
Dart (1994) and Dawes et al. (1998). The results of the described analyses are discussed in the
following section.
Additional m easures
The testing of the hypotheses put forward in this study required the measurement of three
additional sets of variables: (1) variables referring to the ® rm’s innovation activity, (2) variables
indicative of the company’s performance and (3) variables for measuring the competitive strategy
developed by the respondents’ ® rms.
Innovation rate
In order to evaluate this variable, the sample companies were requested to indicate their average
number of commercialized innovations in the previous 5 years in proportion to their main
competitors’ new product average: a value of 1 is an innovation rate that is far below average,
a value of 2 is below average, a value of 3 is average, a value of 4 is above average, and a value of
5 is far above average.
Degree of novelty in commercialized innovations
We returned to the measurement instrument elaborated by Slater and Narver (1996). It combines
an organization’s relative emphasis on new product development, analysis of the competitor’ s
offer to produce imitative products and defence of the current portfolio against competitive attacks,
78 VÁZQUEZ ET AL.
with the degree of innovative effort that each of these activities represents. In this way, a weighted
indicator is obtained for the novelty level of the innovations developed by the ® rm (Gupta and
Govindarajan, 1984).
Measurement of the predisposition to innovate
To this effect, we refer to the scale suggested by Hurley and Hult (1998). Its psychometric
properties are also analysed by the authors. Respondents are requested to indicate to what extent,
on a seven-point scale, assertions of the following type are descriptive of their organization:
(1) technical innovation, based on research results, is readily accepted, (2) management actively
seeks innovative ideas, (3) innovation is readily accepted in programme/project management,
(4) people are penalized for new ideas that do not work and (5) innovation in our company is
perceived as too risky and is resisted.
Company performance
In order to evaluate the company performance of the respondents’ ® rms we employed some of
subjective measures more frequently used in other investigations such as return on investment
(Pelham and Wilson, 1996; Langerak and Commandeur, 1998), pro® ts (Pelham and Wilson, 1996;
Avlonitis and Gounaris, 1997; Langerak and Commandeur, 1998), sales (Salter and Narver, 1994;
Pelham and Wilson, 1996; Langerak and Commandeur, 1998) and new product success (Slater
and Narver, 1994; Langerak and Commandeur, 1998). Respondents were asked to indicate the
evolution, in the last period, of the variables mentioned relative to companies’ objectives (Avlonitis
and Gounaris, 1997). For this purpose, a seven-point scale was used, where 1 represents `outcomes
much worse than expected’ and 7 represents `outcomes much better than expected’ . The employ-
ment of subjective measures of company performance rather than objective ones is justi® ed by the
reluctance of interviewees to provide real data. In this sense, several studies have tested the existence
of strong correlations between both types of assessment (Covin et al., 1994; Hart and Banbury,
1994; Dawes, 1999), though it is also recognized that the optimal approach would be their joint
consideration.
Type of competitive strategy or strategic orientation
A very popular instrument for measuring companies’ strategic orientation, according to the
typology of Miles and Snow (1978), is the denominated self-typing approach’ . It consists of each
respondent reading paragraphs without a heading and indicating the one which best describes their
company. This type of measure is very simple to put into practice and, in theory, should be
effective. This is due to the fact that company directors, who were the subjects interviewed in the
majority of cases, are mainly the ones who de® ne the organization’s strategy ( James and Hatten,
1995). However, among its limitations is the fact that the interviewees may respond to what would
be an ideal description of their ® rms rather than the authentic one (Snow and Hambrick, 1980).
Furthermore, there is a strong tendency not to mark the paragraph describing reactor ® rms
(Conant et al., 1990).
In order to avoid these drawbacks, alternatives to this methodology have been suggested, such as
the researcher’ s direct valuation, recurring to independent experts or an objective data study.
Accordingly, an academic debate has been opened as to the appropriateness of one methodological
alternative over the others (Conant et al., 1990). Nevertheless, the most recent studies in this respect
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 79
(Shortell and Zajac, 1990; James and Hatten, 1995) have demonstrated the ® rst alternative’ s validity
by proving that companies classify themselves in a similar way even though different methods be
used. This method is thus shown to be reliable and receives discriminating and convergent appraisal.
Additionally, the classi® cation outcomes obtained in this way behave well a dependent variables in
a regression analysis where independent variables are objective measures of each strategy. For these
reasons, the self-description method has been used in the current study, in agreement with the
assertions set forward and with the same wording as in all the aforementioned investigations.
Regarding the cost leadership and differentiation strategies, an in-depth study of the work of
Porter (1980) has enabled the most characteristic variables for de® ning each one of these com-
petitive strategies to be identi® ed. Such was the case for the empirical investigations carried out
by Dess and Davis (1984) and Miller (1988). Based on these studies, Narver and Slater (1990),
Govindarajan and Fisher (1990) and Slater and Narver (1996) developed a six-item scale for
measuring in a differentiation strategy and a ® ve-item one for evaluating leadership in costs. These
scales have proved to be reliable and to offer convergent validity, hence their use in the current study.
ANALYSIS AND RESULTS
In relation to the measurement scale for market orientation, Table 1 shows the analysis results
for psychometric properties. Owing to the successive re® ning processes, various items in the
subconstructs of which market orientation is made up had to be eliminated. These are highlighted
in the Appendix. Therefore, two measurement variables for intelligence generation were discarded,
the dissemination subscale was preserved and the initial proposal’s most signi® cant modi® cation
took place in the form of response measurement.
TABLE 1. Reliability and scale validation test results
Reliability (1) Cronbach’s á coef� cients for each of the three subconstructs of marketorientation (0.9386, 0.9214 and 0.8690, respectively), (2) item–total scalecorrelation coef� cients in all cases over 0.57, (3) factor loadings obtained inan exploratory factor analysis performed for each subconstruct of marketorientation above 0.6 in all cases and (4) percentage of variance explained byeach factor (55.8, 63 and 57.5%, respectively)
Unidimensionality Global model: a con� rmatory factor analysis was performed using EQS for the setof items that survived the previous process. The parameters of goodness of � tachieved were (1) ÷2 = 1113.48 for d.f. = 402 and p = 0.00, (2) BBNFI = 0.724, (3)BBNNFI = 0.786 and (4) CFI = 0.803. The same method was applied to thedimensions underlying the market orientation concept, obtaining the followingresults
Intelligence generation:(1) ÷2 = 240.37,
d.f. = 77 and p = 0.00,(2) BBNFI = 0.848, (3)BBNNFI = 0.870 and(4) CFI = 0.890
Dissemination:(1) ÷2 = 173.91, d.f. = 27
and p = 0.00, (2)BBNFI = 0.836, (3)BBNNFI = 0.809 and(4) CFI = 0.856
Response:(1) ÷2 = 58.00, d.f. = 14
and p = 0.00,(2) BBNFI = 0.894,(3) BBNNFI = 0.874and (4) CFI = 0.916
Convergent validity (1) Positive and statistically signi� cant correlation coef� cients for a p-value = 0.000among the three components of the construct (the coef� cients oscillatebetween 0.6801 and 0.7161) and (2) Cronbach’s á coef� cient for the set of 30items (0.9595)
80 VÁZQUEZ ET AL.
In fact, the items that were ultimately considered in subdimension responses refer exclusively
to actions taken by the ® rms in order to attend to or satisfy their customers, eliminating the
actions pertaining to environment and competition. In the theoretical approach, it is defended that
activities which are coherent with the market orientation concept have three types of public:
customers, competitors and environment. Consequently, they should be taken into account in
intelligence generation, dissemination and response. However, the validity and reliability of the
results require that the response is environment and competition should not be considered.
This leads us to believe that, in market orientation measurement, it is necessary to control the
gathering and dissemination of information concerning all of the factors which could, in effect,
condition a ® rm’s offer. Such is the case of customers, competitors and environment. Nonetheless,
when conveying this orientation into speci® c actions pertaining to the market, the central focus of
attention should be the client.
This evidence may be explained by the fact that another type of variable outside of the market
orientation domain, such as company size or the quantity of available resources, condition the
response capacity to the environment and competition. Therefore, in order to measure the con-
struct under study accurately, it would not be possible to integrate items that do not depend on
operative interest in supplying superior value to the ® rm’s customers, but rather the organization’s
capacity for responding to its environment and competitors.
Based on the 30-item scale that was ® nally obtained, the results of all the measures taken into
consideration were found to be excellent. The sole exception was in model unidimensionality,
in which the values obtained approached the advisable 0.9 limit. However, taking into account the
unidimensionality of the proposed subdimensions, the scale has been added to by giving the same
weight to each dimension. That is, assessments were ® rst obtained for the subscales, then the three
scores were averaged (Hooley et al., 1998).
Market or ientation and innovation strategy
With the aim of simplifying discussion of the results, an aggregated measure of companies’
performance was obtained as the mean value of the individual performance variables considered.
Prior to doing so, several analyses were conducted in order to guarantee the appropriateness of
such aggregation. Thus, Cronbach’s a coef® cient for the performance scale was 0.83 ± with item±
total scale correlation coef® cients in all cases over 0.5 ± and the factor loadings obtained in an
exploratory factor analysis performed for the scale were above 0.7 in all cases ± percntage of
variance explained of 68.5%. It is also worth mentioning that the scale relating to the organizations’
predisposition to innovate proved to be reliable (Cronbach’s a = 0.8282), just as was demonstrated
in the study of Hurley and Hult (1998).
The variable correlation outcomes put forward in hypotheses 1± 4 are shown in Table 2. As
may be observed, signi® cant positive correlations exist among the sample companies’ market
orientation degree and the quantity of commercialized innovations, their degree of novelty, the
companies’ predisposition to innovate and the ® rms’ outcomes as measured with respect to their
objectives. While correlation analysis provided an indication of an association between the
variables, the existence of positive and signi® cant correlation values does not imply the confor-
mation of the causality relationships posed.
In order to undertake a more complete examination of the proposed relationships and evaluate
the directness of the associations, a path analysis was conducted following the scheme shown in
Fig. 1. The results of this analysis (see Fig. 2) indicate that market orientation has a direct and
positive effect on a ® rm’s innovativeness as proposed in hypothesis 1. Additionally, a ® rm’s
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 81
innovativeness is positively associated with a ® rm’s innovation rate and new product innovativeness
and both variables exert a positive in¯ uence on companies’ performance relative to their pre-
established objectives, which leads us to the acceptance of hypotheses 2 and 3. However, hypotheses
4 is only partially supported, given that the direct effect of market orientation on the companies’
innovation rate and performance is not signi® cant. Market orientation has an indirect effect on
companies’ innovation rates and performance as mediated by ® rms’ innovativeness, innovation
rates and new product innovativeness. Indirect effects can be calculated as a simple multiplicative
measure of the magnitude of sequential b weights. For example, the indirect effect of market
orientation on companies’ performance can be calculated as follows:
(0.52 × 0.26 × 0.25) + (0.52 × 0.36 × 0.25) + (0.27 × 0.25) = 0.1481.
Finally, the investigation’s ® fth hypothesis was intended to con® rm, by means of studying
organisations’ competitive strategy, the proposition that the most market-oriented companies take
an active interest in developing pro-active behaviour primarily concerned with the differentiation
of their products. Based on the fact that the sample companies identi® ed themselves in any of
the four categories identi® ed by Miles and Snow (1978), one-factor ANOVA analysis was employed
to contrast the existence of signi® cant differences in market orientation mean values between
groups. In the same way, correlations between the companies’ market orientation and the mean
FIGURE 2. Path analysis of market orientation effects on innovation and performance. Anasterisk represents signi� cance at the 0.01 level. EQS summary statistics: ÷2 = 1.56, d.f. = 2,p-value = 0.4586; BBNFI = 0.9888; BBNNFI = 1.018 and CFI = 1.00.
TABLE 2. Descriptive statistics and correlation coef� cients
Mean (SD) 1 2 3 4 5
Market orientation
Innovation rate
New productinnovativeness
Firm’s innovativeness
Companyperformance
4.962(1.060)3.341
(0.896)55.936
(17.342)5.204
(1.175)4.996
(1.098)
1.00
0.305(0.00)0.501
(0.00)0.513
(0.00)0.342
(0.00)
–
1.00
0.159(0.04)0.378
(0.00)0.370
(0.00)
–
–
1.00
0.478(0.00)0.359
(0.00)
–
–
–
1.00
0.363(0.00)
–
–
–
–
1.00
82 VÁZQUEZ ET AL.
scores obtained in the cost leadership and differentiation scales were calculated. The results
obtained are shown in Table 3 and enable hypothesis 5 to be accepted. As may be observed, there
are signi® cant differences ± at a 5% con® dence level ± in the mean values for market orientation
shown by prospector, analyser, defender and reactor ® rms, with the ® rst two categories containing
the most market-oriented ® rms. Additionally, although the researched companies’ degree of
market orientation was signi® cantly related to the application of both differentiation and leadership
in costs strategies, the association was much stronger in the former, as hypothesized.
CONCLUSIONS AND MANAGERIAL IMPLICATIONS
One of the principal objectives of this survey was the design of a valid instrument for measuring
market orientation from a behavioural perspective, based on the most relevant scales proposed in
the last decade. This new scale was intended to be comprehensive of the different sets of activities
that market orientation is conceptually considered to involve and to include the ® rms’ long-term
focus on clients, competitors and environment. The results uphold the reliability and validity of the
market orientation construct developed, so that market orientation appears to consist of three
dimensions, as suggested by Kohli and Jaworski (1990). However, contrary to our expectations, the
response dimension of market orientation concentrates exclusively on the companies’ clients.
The items referring to reactions to competition and environment movements were excluded
from the response scale, due to the fact that they did not link the phenomena under study.
Nonetheless, attention to these forces remains in the subcontracts of intelligence generation and
dissemination. Thus, the companies obtained and shared information on the main variables for
designing their offer ± customers, environment and competitors ± in order subsequently to develop
an offer centred on supplying quality and superior value to their customers ± in keeping with their
necessities and desires ± as well as on ful® lling promises and attending to complaints.
The capacity for response to the environment and competition are aspects which are clearly
linked with an organization’s size and resources. Consequently, we do not believe that the absence
of these variables should prove negative for an authentic measurement of the companies’ market
orientation given that, moreover, ® rms take environmental characteristics and competitors’
performance into consideration in their offer designs. Furthermore, authors such as Deshpandéet al. (1993) and Deshpandé and Farley (1996) have pointed out that this last aspect ± and offer
design directed towards providing better customer satisfaction ± is by de® nition the essence of
TABLE 3. Market orientations and competitivestrategies
Market orientation level
ProspectorsAnalysersDefendersReactorsDifferentiation strategyLow-cost strategy
5.6877*5.1318*4.7747*4.4995*0.5016*0.2616*
* Signi� cant at the 0.001 level. The values for the � rst fourrows are mean values and those for the � fth and sixthrow are correlation coef� cients.
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 83
market orientation. For our part, however, we insist on the necessity of explicitly following the
competitors and environment evolution, in order to act most appropriately.
Just as we expected, this study provides empirical evidence that the most market-oriented ® rms,
in addition to having a greater willingness to innovate, commercialize a higher number of innov-
ations than their competitors. These innovations in turn incorporate a higher degree of novelty.
There is also a positive correlation between the ® rms’ market orientation level and the results
obtained. However, the association among variables that indicate correlation coef® cients does not
imply the existence of causal effects which must be made explicit by the use of path analysis. This
analysis enables us to test whether market orientation directly affects the variables considered or
whether, on the contrary, it exercises an indirect in¯ uence.
The path analysis results show that market orientation signi® cantly favours ® rms’ innovativeness
which, in turn, affects the companies’ innovation rates and new product innovativeness, whereas
both variables exert a direct, positive in¯ uence on companies’ performance. Thus, as defended by
Hurley and Hult (1998), market orientation favours a ® rm’s capacity to adopt or implement new
ideas, processes or products; this cultural aspect in turn promotes the development of a higher
number of innovations relative to competitors, as well as a higher degree of incorporated novelty in
new products. This last variable is also directly in¯ uenced by market orientation. This empirical
evidence refutes the criticism that market orientation limits innovation to incremental develop-
ments. Their results differ from our expectations in the case of market orientation’s direct effects,
given that this variable does not have a direct in¯ uence on either ® rms’ innovation rates or
performance.
The non-existence of a direct effect of market orientation on managerial results adds to the
controversy in the literature on this topic. As previously mentioned, it is very dif ® cult to systematize
the diverse results obtained. In any case, the really important point concerning both managerial
results and the companies’ innovation rates is that market orientation does in¯ uence these variables,
though it may be through the effect of other forces.
However, previous evidence is consistent with the fact that pro-active ® rms, as characterised by
being clearly innovative and taking the initiative in commercial performance with the desire of
identifying and exploring new business opportunities, are those which are shown to have a higher
level of market orientation. In the same way, it has been demonstrated that the most market-
oriented ® rms develop differentiation strategies to a greater extent. Consequently, we may af® rm
that the strategic choices of the most market-oriented ® rms imply the intention to not only enact a
pro-active role in innovation development, but also to innovate regularly.
According to the results of this study, the implementation of market orientation in industrial
® rms does not limit innovation strategy, but rather acts as a stimulus for it. The endeavour of
developing an offer that generates superior value for customers implies being aware of and
anticipating their needs in order to develop innovations which can be most accurately adapted to
their present and future expectations.
These conclusions are particularly relevant in the industrial ® rm domain, where technology plays
a predominant role. Thus, industrial products are normally more complex than consumer products.
This accentuates interest in the technical quality of products, technology and engineering. How-
ever, there is an implicit danger that such companies become more oriented to the product than
the market (Vázquez et al., 1998). In this sense, the market orientation construct developed in this
study can be used in assessing a ® rm’s current practices and identifying strengths and weaknesses in
the market orientation domain.
In any case, an adequate balance should exist between an organization’s technological
and market orientation. This propitiates a long-term vision of technology management, without
84 VÁZQUEZ ET AL.
overlooking speci® c market needs, nor the technological level which it is in a position to assimilate.
It becomes a question of attaining the optimal balance between both orientations ( Johnsrud, 1994;
Samli et al., 1994) in such away that the objective is neither an excessive interest in technology
nor the customer. The focus should rather be on pro® t, seeking technology that provides the most
possible bene® ts to the market and to the ® rm so as to invest in it and dominate it (Hamel and
Prahalad, 1995).
However, this study involved several limitations that need to be addressed. Thus, its cross-
sectional and multi-industry nature limits the analysis of any lags that may occur between the
development of a market-oriented behaviour and the achievement of corporate bene® ts as
well as any industry-speci® c in¯ uences that may exist. The investigation also depends on single
respondents from each company and returns to the use of subjective measures of company
performance. In like manner, the environmental conditions in which the ® rm operates were not
taken into account in this study. These conditions, such as competitive hostility, market dynamism
or technical turbulence, doubtlessly affect the value of market orientation or as a resource capable of
providing competitive advantages and allowing business results to be improved. Similarly, industrial
® rms’ innovation rates may be affected by these same environmental conditions, independently of
their degree of interest in supplying added value to their customers.
Consequently, future research should consider issues such as the potential moderator effects of
environmental conditions in the relationships posed. Moreover, it would be of interest to measure
the degree of cultural market orientation of the ® rms analysed simultaneously in order to evaluate
its precedent role in operative market orientation and its effects on ® rms’ innovativeness. With
regard to the effects of the variables which ® gured in the result, we consider that it would be
worthwhile competing their analysis by differentiating the product innovation results from the
corporate ones, as well as the in¯ uence of the former on the latter. Finally, in future studies we will
endeavour to establish the relative in¯ uence of the market orientation dimensions identi® ed in the
different study outcomes, as well as their dependence on the environmental conditions in which
companies operate.
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88 VÁZQUEZ ET AL.
APPENDIX: MARKET ORIENTATION SCALE
Generation of m arket intelligence
We constantly analyse our commitment level and orientation to serve our customers’ needs
We measure customer satisfaction frequently and systematically*We know our competitors well
All functional area directors visit our current and potential customers regularly
We obtain ideas from our customers in order to improve our products
We carry out frequent studies on our customers in order to know what products and services
they will need in the future
Investigation and market study results are used as a source of information for taking decisions
We contact our customers periodically in order to learn their perceptions as to the quality of our
products and services
We regularly gather market data to be used directly in our new product development plans
Systems for detecting signi® cant changes in the industry are developed by our ® rm
We are able to detect changes in our customers’ preferences rapidly
The sales force informs us about our customers and competitors*We encourage our customers to make comments and even complaints as to the ® rm’s offer, as
that will help us to accomplish our work better
We regularly analyse the marketing plans of our competitors
We frequently evaluate the possible effects of environmental change on our customers
We measure the service level supplied to our customers routinely and regularly
Dissem ination
Interdepartmental meetings are held for discussion of market tendencies and future evolution
When something important happens to a customer or group of customers, the whole company
is aware of this information in a short time
We manage to supply the different departments or members of the ® rm with reports regularly
Top management regularly discusses the strengths, weaknesses and strategies of the competitors
Sales personnel regularly share information with the ® rm regarding the competitors’ strategy
There is a ¯ uent exchange of opinions between the functional areas in order to decide how to
respond to competitor strategies
Customer satisfaction data is made known at all levels of the ® rm in a regular way
Response
We use the feedback supplied by customers to improve quality
If a competitor launches a campaign directed at our customers, the ® rm develops a response to
counteract it rapidly*We use the data obtained from market research or studies for production management and
technological development *The ® rm reacts to changes in the environment rapidly*We de® ne our product quality in relation to customer satisfaction*In the planning and development of new products, we start from what is valuable for the
customers
We keep the promises made to our customers
MARKET ORIENTATION, INNOVATION AND COMPETITIVE STRATEGIES 89
Among the market opportunities we select those which allow us to obtain advantages over our
competitors*The modi® cations effected in products or services are often motivated by customer suggestions*The ® rm often takes advantage of the competitors’ weaknesses by converting them into
opportunities*The various departments of the ® rm meet periodically to plan an appropriate response to
changes that occur in the ® rm’s environment*Product development effort is often reviewed in order to assure its conformity with the
customers’ desires
Customer complaints are attended to rapidly
We are sensitive to how our customers evaluate our products and services, so that when faced
with negative perceptions, any necessary modi® cations are initiated immediately
We use the information acquired through market studies to identify customer groups or
segments with different needs or preferences*We respond to competitor actions that pose a threat to the ® rm rapidly*We endeavour to attain competitive advantages based on the understanding of our customers’
needs
Items marked with an asterisk are those which had to be eliminated owing to successive re® ning processes.
90 VÁZQUEZ ET AL.