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The Narver and Slater market orientation scale is tested in the context of service firms in the transition economies of central Europe and found to be both valid and reliable. The survey examined levels of market orientation in 205 business to business services companies and 141 consumer services companies in Hungary, Poland and Slovenia. As predicted by the predominantly western marketing literature, those service firms with higher levels of market orientation; were more often found in turbulent, rapidly changing markets; were more likely to pursue longer term market building goals rather than short term efficiency objectives; more likely to pursue differentiated positioning through offering superior levels of service compared to competitors; and also performed better on both financial and market based criteria. A number of different business approaches, however, are evident in the transition economies suggesting that other business orientations may co‐exist with a market orientation creating a richer and more complex set of organizational drivers.

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Purpose The purpose of this paper is to indicate how conflicts in foreign business relationships are handled by small firms from a relational point of view and how these conflicts can be used by small firms in a positive way. Design/methodology/approach The paper uses qualitative study and presents the results of in-depth interviews conducted with six small, Poland-based firms. Findings The paper indicates the nature of conflicts in foreign business relationships from the perspective of small firms, including the sources of conflict and its outcomes. The main sources of conflict indicated include service or product quality, financial aspects of cooperation and cultural differences. The study exposes the existence of both negative (e.g. financial consequences) and positive (e.g. gaining new experience) outcomes of conflicts. It shows that positive conflict handling often constitutes a significant challenge for small firms and that the authors cannot really speak of one optimal method of conflict handling. Regardless of the method adopted, the costs involved should be taken into detailed consideration. Practical implications The paper points to actions that could be taken by small firms to handle conflicts in a way that will produce positive outcomes. Originality/value Managing international relationships is a more challenging task compared with domestic ones, especially for smaller firms. The paper exposes the impact of two categories of conflict (called day-to-day problems and severe conflicts) in a foreign relationship on small firms and considers different methods of handling the conflict situations.

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