Understanding market orientation: its relationship with business philosophy, the business environment, and performance : an investigation into the Taiwanese food manufacturing and department store industries

Abstract

The Construct of market orientation has been widely discussed, analysed and refined in recent years, but there remain fundamental disagreements about its value and significance as an explanatory tool in the study of business organisations. In particular, the relationship between market orientation, business philosophy, the business environment and performance has been understood in different ways. This thesis offers a critical view of existing theories of market orientation and seeks to overcome some of the limitations of those theories by investigating, by means of a qualitative research study, the way in which the senior managers of firms in two industrial sectors in Taiwan (food manufacturing and department stores) apply the marketing concept. The emphasis of the present study is on four key research questions: •Is the construct of market orientation, as it has been developed in the (mainly Western) research literature, useful for understanding the actual business practice of the case study Taiwanese firms? •Are there any ways in which the construct of market orientation needs to be revised and/or refined to “fit” the actual business practice of the case study firms? •How are the relationships between market orientation, business philosophy, business environment, and performance best understood in relation to the actual business practice of the case study firms? •What does our research tell us more generally about the validity or non-validity of Western theories and models of market orientation in relation to business practice in a non-Western country, Taiwan? The findings of the research point to the following conclusions in response to each of these four questions: 1. It shows that the construct of market orientation is useful in understanding the actual business practice of Taiwanese case firms, but it does not explain all aspects of that practice. 2. It suggests that the construct of market orientation needs to be revised and/or refined to “fit” the actual business practice of the case study firms. A 3x3 matrix representation of market orientation is suggested (see Table 7.1). This differentiates between the three components of market orientation (customer orientation, competitor orientation, inter-functional co-ordination) and three levels of analysis (cultural, strategic, tactical). The synergy between the resulting nine “cells” is the source of market orientation’s dynamism. 3. It shows that in the case study firms the relationships between market orientation, business philosophy, business environment and performance are exceedingly complex and are characterised by dynamics which vary according to a wide variety of organisational and people factors. 4. It shows that in the case of Taiwanese firms market orientation serves primarily as a mechanism by which firms respond to changes in the business environment in order to achieve balance between an internal and external focus, and between continuity and change. A refined conceptualisation of market orientation, involving the inter-relationships between three components (customer orientation, competitor orientation, inter­functional co-ordination) and three levels of analysis (cultural, strategic, tactical) is proposed as a useful analytical tool to apply to the investigation of market orientation in different organisation settings. In addition, the tendency of Taiwanese firms to employ a market orientation as a mechanism with which to respond to business environment change in order to achieve balance between the imperatives of continuity and change, and between an internal and external organisational focus is highlight as a particularly significant research finding