Synergistic Effects of Market Orientation Implementation and Internalization Levels and its Impact on Firm Performance: An Empirical Analysis Leading to Forms of Market Orientation

Abstract

The purpose of this study is to examine the synergistic effects of market orientation implementation and internalization on firm performance, specifically financial performance and customer service performance. Market orientation implementation component enables firms to sense and respond to customer needs effectively while market orientation internalization component allows the firm to internalize a shared set of market oriented norms and values at the cultural level. Another objective of the study is to analyze if various forms of market orientation exist based on implementation and internalization levels exhibited by firms. Market orientation practices of firms in a direct mail service provider industry are analyzed. Market orientation internalization is introduced as a mediator between market orientation implementation and firm performance relationship. In addition, the effect of learning orientation is also considered as a moderator that strengthens the relationship between market orientation implementation and market orientation internalization.

Theoretical predictions of Kirca, Bearden, and Hult (2011) conceptual model are empirically tested. The firms are clustered into one of the four forms of market orientation based on varying levels of implementation and internalization. The inter-relationships between forms of market orientation and its differential effects on various performance measures are analyzed. Overall, the results suggest that firms that practice high levels of implementation and internalization perform better in both financial performance and customer service performance. Results also suggest that performance metrics vary depending on the form of market orientation.