Academic journal article Academy of Marketing Studies Journal

The Influence of Mediating Variables on Market Orientation during Organizational Change

Academic journal article Academy of Marketing Studies Journal

The Influence of Mediating Variables on Market Orientation during Organizational Change

Article excerpt


Previous studies investigating the relationship between organizational change initiatives and market orientation have shown that organizational change can substantially impact an organization's ability to maintain market orientation. Farrell (2003) offered a model showing that this relationship was contingent on the approach taken toward the change process. Farrell's study suggested that organizations that placed emphasis on headcount reductions had lower levels of market orientation than those that focused on new products, markets and process re-engineering. While Farrell offered a connection between organizational change and market orientation, the study did not present evidence to describe the causal influences of the connection.

Engelen, Brettel and Heinemann (2010) investigated the relationship between organization age and the antecedents of market orientation. They argue that increased size and age can be detrimental to an organization's ability to maintain the internal behaviors that facilitate market orientation. Further, drawing on the lessons of myopic marketing (Levitt, 1960), successful organizations seek to sustain themselves through market focused activities which are, in essence, the antecedents of market orientation. Levitt's arguments suggest that the on-going success of an organization hinges on its ability to assess external dynamics and formulate appropriate responses. Synthesizing the work of Engelen, Brettel and Heinemann (2010) and Levitt (1960), successful organizations tend to seek growth through responsive reactions to market dynamics and as they age they may lose sight of environmental dynamics.

Conduit, Metanda and Movando (2014) examined the relationship human resource practices and an organization's customer orientation. Their findings suggest that the way in which employees are treated plays a significant role in an organization's ability to achieve and maintain growth. They found that successful organizations need to recognize and nurture internal customers, as well as external customers, in developing effective lines of communication. Similarly, Harris (2002) argues that market orientation more that observable behaviors with which it is commonly associated. Harris suggests that market orientation resides in the hearts and minds of employees and is manifested in their attitudes and beliefs. In order for employees to fully embrace organizational goals, they need to feel supported and involved in the organization.

From a theoretical standpoint, it stands to reason that organizational change, frequently termed downsizing, would influence market orientation. Employees' reactions to organizational change can be explained by the theories associated with psychological contracts. A psychological contract is a tacit agreement between an employer and employee where employees expect fair and just treatment from their superiors; in return superiors expect citizenship behaviors and motivated performance (Rousseau, 1995). Several studies concluded that organizational change initiatives were perceived by employees as breaching the psychological contract and resulted in lower degrees of loyalty, depression, abrasiveness and compulsive behavior (Baruch & Hind, 1999; Kets de Vries & Balazs, 1997; Stroh & O'Reilly, 1997). Thus, the effect of change on market orientation may not be direct, but mediated by a number of behavioral and psychological factors which affect employees at lower, functional levels of the organization.

The purpose of this study is to explore the causal influences linking organizational change initiatives and market orientation. This study attempts to identify how certain approaches to organizational change can affect employees' motivation and interactions and thereby affecting market orientation. In doing so, this study also attempts to identify the best approaches to organizational change for the purpose maintaining or bolstering, market orientation. …

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