Abstract
Should companies adjust their orientations toward customers or toward competitors in global markets? To answer this question, we use contingency theory and examine how the effects of customer and competitor orientations on performance are moderated by different environmental conditions. Our results from the global hotel industry indicate that a customer orientation works better in economically developed markets, as well as in markets with good local business conditions, greater resource availability, and demanding customers. In contrast, a competitor orientation is more effective in markets that are economically developing, have poor local business conditions, and face resource scarcity.
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Notes
Researchers seem to agree that the coordinated use of resources (i.e., interfunctional coordination) is critical for a firm to deliver superior customer value (e.g., Kohli and Jaworski, 1990; Narver and Slater, 1990; Deshpandé et al., 1993). Therefore we focus on the customer and competitor orientation facets of market orientation and assess their effectiveness across different environments.
We assessed the validity of market orientation as a second-order construct with three first-order factors (i.e., customer orientation, competitor orientation, and interfunctional coordination). The confirmatory model fitted the data satisfactorily (χ 2(51)=79.589, P=0.006; confirmatory fit index (CFI)=0.962, Tucker–Lewis index (TLI)=0.951; root mean square error of approximation (RMSEA)=0.055), and the composite reliability of market orientation is 0.746, which suggests that market orientation as a second-order factor possesses adequate validity.
In the sample, OECD markets include Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Mexico, the Netherlands, New Zealand, Poland, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. Non-OECD markets include Aruba, Azerbaijan, Bahrain, Benin, Botswana, Brazil, Cambodia, China, Egypt, India, Indonesia, Kenya, Malaysia, Mauritius, Morocco, Myanmar, Oman, Pakistan, Peru, the Philippines, Saudi Arabia, Senegal, South Africa, Sri Lanka, Thailand, Uganda, Vietnam, West Africa, the West Indies, and Zaire.
We thank an anonymous reviewer for suggesting this approach.
Because of space constraints, we report only the invariance test results across OECD vs non-OECD groups in Table 1b. Additional results are available on request.
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Acknowledgements
We thank Professor Krishna Erramilli, Jeff Weinstein of HOTELS magazine, and Vikram Mujumdar for their invaluable assistance in this research. We also thank the three anonymous JIBS reviewers and the Departmental Editor, Professor G Tomas M Hult, for their insightful and constructive comments.
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Accepted by G Tomas M Hult, Deputy Editor-in-Chief, 25 July 2006. This paper has been with the authors for two revisions.
Appendix
Appendix
The measurement items and results of the validity analyses are given Table A1.
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Zhou, K., Brown, J., Dev, C. et al. The effects of customer and competitor orientations on performance in global markets: a contingency analysis. J Int Bus Stud 38, 303–319 (2007). https://doi.org/10.1057/palgrave.jibs.8400259
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DOI: https://doi.org/10.1057/palgrave.jibs.8400259