The Impact of Market Orientation on Business Performance

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A working title for the research:

“Investigating the relationship between Market Orientation and Business Performance of SMEs in Pakistan”.

Definition of the research:

Market orientation a term used by marketers as indicator of the degree to which firm implements its marketing concept (Komppula and Reijonen, 2010). A market oriented firm has a greater ability in achieving higher performance compared to non-market oriented firm (Agarwal et al., 2003). The concept of market orientation has received a great deal of consideration since the topic was re-introduced by Kohli and Jaworski (1990) and Narver and Slater (1990). The relationship between market orientation and firm performance is extensively highlighted and contended that market orientation is significant to organizations because of its strong relationship with performance. Overall, there is a positive correlation between market orientation and firm’s business performance at least in the perspective of industrialized countries (Cano et al., 2004). But research done in other perspectives, the nature of the relationship between market orientation and business performance is very ambiguous, with studies finding a positive relationship (Farrell, Oczkowski, and Kharabsheh ,2008; Martin-Consuegra and Esteban, 2007; Pelham, 1997; Pulendran et al., 2000; Singh, 2009; Kara et al., 2005; Kirca et al., 2005; Sin et al. 2005; Kaynak and Kara 2004; Verhees and Meulenberg 2004; Langerak 2003; Shergill and Nargundkar, 2005.), a strong positive relationship (Haugland, Myrtveit, and Nygaard, 2007; Megicks and Warnaby, 2008; Ramaseshan, Caruana, and Pang, 2002; Wood, Bhuian, and Kiecker, 2000), and even in some cases a weak relationship (Caruana, Pitt, and Ewing, 2003; Nwokah, 2008) were found between market orientation and business performance. It indicates a great deal of ambiguity in the literature about the course of the relationship between these two constructs. As discuss above majority of the empirical evidence comes from developed countries (Cano et al., 2004). Many researchers have argued that results derived from one setting may not be appropriate to another setting particularly if there are considerable differences in terms of nature and characteristics of firms and business environment (Singh and Gaur, 2009). To establish the external validity of results, one most need to accumulate empirical support from a variety of settings (Gaur, Guar and Vasudevan, 2009). This study will be based in Pakistan, where 90% of all enterprises are SMEs which employed 78% of industrial labour force out of which more than half are involved in diverse businesses including whole-sale, restaurants, textile industry, retail and trade (Rohra et al., 2009). Considering these facts it is obligatory to carry out a research in this unexplored and undocumented sector of economy. Finally there is a noticeable absence of scholarly findings on the role of market orientation in improving the business performance of SMEs in developing countries (Guar, Gaur and Vasudevan, 2009) particularly in Pakistan. Considering the possible importance of market orientation for improving the business performance of SMEs, the aim of this study will be to provide an integrated view on the adoption of market orientation in SMEs in Pakistan and to investigate the impact of market orientation on business performance of SMEs in Pakistan by using subjective measures of business performance.

Literature search strategy and aims:

This literature review highlights research relevant to the topic of market orientation and its relationship with business performance of SMEs. The literature review provides an overview of the current state of SMEs in Pakistan, along with a brief overview of how marketing philosophies and practices have evolved in this sector. The literature review then provides an overview of important work in regards to market orientation and its constructs, and extant research regarding market...
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