Academic journal article Journal of Management and Public Policy

Market Orientation and Organizational Performance of Financial Institutions in United Arab Emirates

Academic journal article Journal of Management and Public Policy

Market Orientation and Organizational Performance of Financial Institutions in United Arab Emirates

Article excerpt

Market Orientation

Management researchers (e.g. Dobni and Luffman, 2003; Hult and Ketchen, 2001) and marketing researchers (Jowarski and Kohli, 1993) have suggested that Market Orientation is a major source of competitive advantage. In the contemporary business environment, rivalry and competition among the business firms has reached unprecedented heights and acquiring and sustaining competitive edge has become a key to survival for most of the firms. It is also claimed that Market Orientation plays an important role in the performance of business firms (Kirca, Jayachandran and Bearden, 2005). Market orientation provides an additional strategic dimension and is a fundamental approach to understanding markets (Vorhies, Morgan and Mason, 2009). The concept of Market Orientation is quite old but it has received new support by Kohli and Jaworski (1990) and Narver and Slater (1990). It is claimed that Market Orientation provides better understanding of the environment and business that adopts Market Orientation can satisfy the customer needs in a better way (Blesa and Bigne, 2005). A recent analysis seems to be supporting a positive, robust and significant link between Market Orientation and organizational performance (Kirca et al. 2005). Market Orientation is a source of competitive advantage (Jaworski and Kohli, 1993). Firms using Market Orientation perform better because they better understand their customers, rivals and channels (Hult and Ketchen, 2001). It is claimed that Market Orientation and market capabilities can act together to enable the organization to perform better than its competitors (Day, 1994; Eisenhardt and Martin, 2000). Market Orientation can result in better customer relationship which can enhance performance outcomes like sales, growth, market share and profits (Crosby, Evans and Cowls, 1990; Morgan and Hunt, 1994).

Moreover many researchers have concluded that Market Orientation has a strong and positive impact on performance (Deshpande, Farley and Webster, 1993; Jaworski and Kohli, 1992; Narver and Stater 1990; Ruckert, 1992). However, due consideration should be given to the specific firm capabilities used to implement Market Orientation into the target market. Market capabilities can be observed at different levels in the business and many of these capabilities cross different functional areas (Eisenhardt and Martin, 2000). Capabilities associated with the implementation of market resources exploitation are normally linked with the marketing function (Daneels, 2007). This aspect has led many authors to believe that marketing capabilities are also positively related with business performance. Vorhies et al. (2009) have taken this as one of the main hypotheses of their research and had concluded that there is a significant direct relationship between firm's marketing capabilities and performance assessed in both subjective and objective ways. Now the question arises about capabilities. What are the capabilities and which one of them is used by market oriented firms to deploy their resources? It is not possible to enumerate all possible capabilities, because every business develops its own set of capabilities that is rooted in the realities of its competitive market, past commitments and anticipated requirements (day, 1994). In addition, a modest but growing body of empirical evidence supports the proposition that market orientation is positively associated with superior performance (Deshpande et al. 1993).

The review of literature available on the market orientation depicts that there seems to be a very significant positive correlation between Market Orientation and superior corporate performance but much of the evidence remains anecdotal or speculative (Han, Kim and Srivastava, 1998). Although the importance of Market Orientation has been widely accepted and it is also assumed to have a direct relation with success and performance, the discordant findings on the nature of Market Orientation-performance relationships have somewhat limited its value for managers (Greenly, 1995). …

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