Internal market orientation, interdepartmental relationships and market performance: the pivotal role of employee satisfaction

Abstract

Purpose This study aims to signal the relevance of internal market orientation (IMO) as an organizational process for improving interdepartmental relationships and employee satisfaction, which, in turn, serves to leverage performance. The study has three main objectives: to consider the adaptation of IMO at the departmental level, whereby internal departments are identified as internal customers; gauging the impact of IMO on interdepartmental relationships, employee satisfaction and organizational performance; and testing the mediating role of employee satisfaction in linking interdepartmental relationships, i.e. connectedness and conflict with organizational performance. Design/methodology/approach The study observes the proposed relationships by drawing on a sample of 816 managers from 272 companies. Through accessing three respondents in each organization and asking them to focus on different constructs, the study’s methodology avoids common methods bias. Partial least square was used to test the hypotheses posited in the concept. Findings The findings confirm that IMO at the departmental level is critical for facilitating interdepartmental relationships within the organization. In particular, high levels of IMO can enhance interdepartmental connectedness, reduce interdepartmental conflict and improve employee satisfaction. Employee satisfaction not only influences firm performance directly but also plays a mediating role in linking interdepartmental relationships, i.e. connectedness and conflict with performance. Research limitations/implications While this study is conducted in the Chinese context, future research may consider testing the framework in different sectors and geographical areas. In addition, more objective measures of firm performance could be used in future studies, and other mediating and moderating variables may be added to further advance the understanding of the subject at large. Practical implications The identification of IMO at the departmental level can help firms collect ideas from staff across different departments, facilitate open and constructive communication and react promptly to other departments. Through a social information processing lens, this leads to the creation of a positive organizational atmosphere, contributing significantly to enhancing employee satisfaction and firm performance. Originality/value The findings of the study contribute to the area by supporting the legitimacy of IMO at the departmental level and its positive impact on internal relationships and employee satisfaction, which, in turn, leverages performance advantages for the firm.

Performance Effects of Internal Market Orientation and Pricing Capability: The Moderating Role of Firm Innovativeness

“…IMO literature contends that SMEs may gain performance advantages by satisfying their employees' wants and needs and motivating them to deliver better value to clients (Kazakov et al, 2021). It is widely acknowledged that IMO has a direct impact on internal performance, such as employee satisfaction, retention and motivation, which in turn contributes significantly to the achievement of superior external performance outcomes (Modi & Sahi, 2017;Yu et al, 2019Yu et al, , 2022. For instance, satisfied and motivated employees of SMEs are better able to recognize and fulfill their customer demands, resulting in greater performance from loyal and satisfied customers (Rodrigues & Carlos Pinho, 2012).…”

“…IMO also promotes interactions between employers and employees within the organization in order to develop better communication as well as coordination in carrying out organizational tasks (Fang et al, 2014). Extant literature indicates that IMO is more critical than market orientation in generating employee-related performance outcomes by closely identifying and satisfying their employees’ expectations (Modi & Sahi, 2017; Yu et al, 2022). As Modi and Sahi (2017, p. 545) said, “IMO is helpful in generating value for the employees who deliver the value to the customers.” However, there has been little research on the performance implications of IMO in the context of SMEs (Kazakov et al, 2021).…”

How to Measure the Happy-Productive Worker Thesis

“…All these constraints are already more than enough concerns for managers. Still, in addition to these, there are elevated levels of absenteeism and turnover associated with the difficulty in retaining talent [13,38,45]. Employees only consider staying in their organisations when they feel committed and loyal to their organisation and to achieving results [20].…”

“…Moreover, this area also states that individuals with more positive experiences tend to be people characterised by high levels of resilience, with a greater remarkability to face complex situations, and are more innovative and intuitive, optimistic, and proactive [18,37]. All these are favourable characteristics for employees considering the current context of high uncertainty levels, unmeasured competition and the intense search for competitive advantage [6,7,38]. Thus, the relevance of exploring the theme and its current nature is highlighted.…”

Pourquoi et à quelles conditions un dirigeant transformationnel stimule-t-il l’orientation marché de son entreprise ? Le cas des PME sénégalaises

“…D’autre part, être orienté marché suppose d’être orienté vers les « clients internes » de l’organisation (Conduit et Mavondo, 2001), c’est-à-dire vers les collaborateurs. L’orientation marché interne consiste « à identifier et à satisfaire les désirs et les besoins des employés » (Lings, 2004 : 408), et, par conséquent, à échanger avec eux de manière empathique, ouverte et respectueuse (Gebhardt et al, 2006) pour identifier et satisfaire ces besoins (Gounaris, 2006 ; Yu et al, 2022). Il ressort qu’un dirigeant qui est orienté marché a une culture de l’échange et se montre empathique, ouvert et respectueux envers ses collaborateurs.…”