The Positive Effect of a Market Orientation on Business Profitability

The Positive Effect of a Market Orientation on Business Profitability Narver and Slater's (1990) finding of a positive relationship between market orientation and business profitability is retested in a broad sample of product and service businesses operating in a variety of industries. The assessment of the extent of market orientation is provided by the chief marketing officer, and profitability is assessed by the general manager, thus avoiding the problem of common respondent bias. The analysis of the influence of culture on business performance is extended by including a measure of entrepreneurial orientation in the study. The influence of a market orientation on business profitability is then compared with that of an entrepreneurial orientation. The regression coefficient for market orientation (.662) is higher in this replication than in the original study (.501), and the pairwise correlation coefficient for the relationship between market orientation and profitability is very similar in both studies (.362 and .345, respectively). No relationship is found between entrepreneurial orientation and business profitability. Thus, by drawing a sample from a more diverse population, avoiding the common respondent bias problem, and comparing the effect of a market orientation to that of an entrepreneurial orientation, the findings from this balanced replication increase confidence in the importance and generalizability of the market orientation–profitability relationship found in the 1990 Narver and Slater study. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Research Elsevier

The Positive Effect of a Market Orientation on Business Profitability

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Publisher
Elsevier
Copyright
Copyright © 2000 Elsevier Science Inc.
ISSN
0148-2963
eISSN
1873-7978
DOI
10.1016/S0148-2963(98)00077-0
Publisher site
See Article on Publisher Site

Abstract

Narver and Slater's (1990) finding of a positive relationship between market orientation and business profitability is retested in a broad sample of product and service businesses operating in a variety of industries. The assessment of the extent of market orientation is provided by the chief marketing officer, and profitability is assessed by the general manager, thus avoiding the problem of common respondent bias. The analysis of the influence of culture on business performance is extended by including a measure of entrepreneurial orientation in the study. The influence of a market orientation on business profitability is then compared with that of an entrepreneurial orientation. The regression coefficient for market orientation (.662) is higher in this replication than in the original study (.501), and the pairwise correlation coefficient for the relationship between market orientation and profitability is very similar in both studies (.362 and .345, respectively). No relationship is found between entrepreneurial orientation and business profitability. Thus, by drawing a sample from a more diverse population, avoiding the common respondent bias problem, and comparing the effect of a market orientation to that of an entrepreneurial orientation, the findings from this balanced replication increase confidence in the importance and generalizability of the market orientation–profitability relationship found in the 1990 Narver and Slater study.

Journal

Journal of Business ResearchElsevier

Published: Apr 1, 2000

References

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