The relationship between small business market orientation and environmental uncertainty

Abstract

PurposeWhile literature has examined market orientation, it is limited with respect to small businesses. More specifically, previous research has not considered empirically the relationship between small business market orientation and environmental uncertainty. Due to resource constraints, smaller businesses are especially vulnerable to environmental uncertainty. To address this, the purpose of this paper is to examine the relationship between environmental uncertainty and small business market orientation.Design/methodology/approachDrawing from small business literature, the authors developed a research model advancing and testing hypotheses to address the research aim. An empirical study was conducted with 104 small grocery retailers from Brazil. A questionnaire was administered, divided into two sections relating to measurement of market orientation and the market turbulence and technological turbulence as dimensions of environmental uncertainty. ANOVA technique and a multinominal logistic regression model were employed to analyze the results.FindingsThe findings reinforce the view of market orientation as a dynamic construct which can explain the relationship between small businesses and environmental uncertainty. Small businesses with higher levels of market orientation emphasized responsiveness as a critical dimension in orienting to turbulent markets. The findings also show that aspects of technological turbulence, particularly pertaining to the opportunities for competitive advantage and new ideas for product supply related to higher levels of market orientation.Originality/valueThe paper's findings, addressing a knowledge gap in the small business literature, emphasize the importance of small businesses orienting themselves to the market, particularly in environments characterized by higher levels of market and technological turbulence.

Social Capital and Firm Performance: Moderating Effect of Environmental Turbulence

“…Marketing operations is necessary to respond the changing customer's preference (Zhang & Duan, 2010). This effort to respond market turbulence can be associated with business expansion in which not all of SMEs can do (Didonet et al, 2012). In the context of competitiveness, the more new entrants in the industry, the more pressure on SMEs to worry about their competitiveness due to many new entrant in their industry.…”

“…EM adapts from Gürbüz and Aykol (2009) and Bradley et al (2012). ET comprises three elements (technological turbulence, market turbulence, and competitive turbulence), which adapts from Zhang and Duan (2010) and Didonet et al (2012). The questions are designed with seven point Likert scaling (1-7 ratings).…”

“…19;2014 Environmental turbulence (ET) can provides both opportunity and threats in which EM style can take for grant it in such condition. SMEs with greater EM tend to adopt informal system may have more opportunity gain benefit from environmental turbulence (Didonet, Simmons, Villavicencio, & Palmer, 2012). To some extend, flexibility and informal style enhances the capability of firms to deal with ET, which then followed by positive impact on FP.…”

“…This causes increasing uncertainty due to changing customer's preference. The respond to market turbulence can be associated with business expansion through the advantage of larger business with market power and economies of scale (Didonet, Simmons, Villavicencio, & Palmer, 2012). Higher levels of market turbulence bring about high uncertainty due to less accurate forecast, then firms may back off to invest.…”

“…technology turbulence, market turbulence, and competition turbulence. Responsiveness as crucial for SMEs to deal with customer needs within technological turbulence (Didonet, Simmons, Villavicencio, & Palmer, 2012). Typically, SMEs have lack of capacity to anticipate the turbulence on account of poor scanning of accurate and reliable information about the industry condition (Wang & Fang, 2012).…”