Market Orientation, Competitive Advantage and Business Performance: Exploring the Indirect Effects

Abstract

In this paper, we address insufficiently explored indirect relationships between market orientation (MO), organizational strategic resources and business outcomes. Previous studies have identified MO as a key strategic asset that contributes to competitive advantage and ultimately to business performance. However, the extant research is at best partial in addressing the contingencies that might uphold these relationships. The goal of this study is to extend the existing knowledge by showing that MO complements with other strategic management processes that are relevant for business success. To address the research question, a conceptual model with three hypotheses was developed. Data was obtained with a survey questionnaire on a sample of 265 medium and large-sized firms from Croatia. The findings indicate that MO influences competitive advantage stronger at higher levels of VRIN resources. Also, findings suggest that competitive advantage mediates the relationship between MO and business performance. In the end, the theoretical and managerial implications are presented along with future research directions in light of the limitations of this study.

The effects of market orientation and innovation on competitive advantage and business performance of textile SMEs

“…Market orientation has a positive and significant effect toward competitive advantage in textile SMEs in Selangor, Malaysia. The results are consistent with the results of other studies conducted by Zhou et al (2009), Kamya et al (2010), Safarnia et al (2011), Afsharghasemi, (2013), Talaja (2017), and Herman et al (2018). Inter-functional coordination is an indicator with the lowest value compared with other indicators.…”

“…Competitive advantage as a mediating variable in this research direction has a positive and significant influence on business performance. The results are supported by the previous studies such as Lakhal (2009), Agha et al (2011), Monsur & Yoshi (2012), Talaja et al (2017), and Herman et al (2018). The competitive advantage of textile SMEs in Selangor, Malaysia seems to be in good shape, but some things need to be improved, such as the new production process, the new ideas on modifying products and marketing.…”

“…Narver and Slater (1990) argue that market orientation must be the prevalent focus of the whole enterprise to steadily create excellent value for the customers, and accordingly can gain a sustainable competitive advantage. Talaja et al (2017) stated that market orientation improves competitive advantage that consequently escalates the business performance of an enterprise. There is a positive interaction between market orientation and competitive advantage, (Zhou et al, 2009;Kamya et al, 2010;Safarnia et al, 2011;Herman et al, 2018) even among manufacturing SMEs in Malaysia (Afsharghasemi, 2013).…”

“…Competitive advantage can be considered as a partial mediator in the relationship between market orientation and business performance (Talaja, 2017), which means there is a relationship between competitive advantage and business performance (Lakhal, 2009;Agha et al, 2011;Monsur & Yoshi, 2012;. Competitive advantage is the mediating variable between market orientation and product innovation toward SMEs performance, and competitive advantage positively influence SMEs performance (Herman et al, 2018).…”

“…,Šályová et al (2015),Lee et al (2015),Beneke et al (2016),Amin et al (2016),Buli (2017),Talaja et al (2017), andHerman et al (2018). Innovation has a positive and significant effect on business performance in textile SMEs in Selangor, Malaysia, both directly and indirectly.…”