a multiple-layer model of market-oriented...

CHRISTIAN HOMBURG and CHRISTIAN PFLESSER*

Previous research addressing market orientation from a cultural per-spective typically has used behavioral measures of this construct.Drawing on literature in the fields of organizational theory and marketing,the authors develop a multilayer model of market-oriented organizationajlculture. They draw an explicit distinction among values that support mar,-ket orientation, norms for market orientation, artifacts indicating high analow market orientation, and market-oriented behaviors. On the basis Ofqualitative research and a subsequent survey, the authors develop scalesfor measuring the different layers of market-oriented culture and analyzferelationships among the different components of market-oriented culture.Findings indicate that artifacts play a crucial role in determining behaviorwithin organizations. Results also indicate that a market-oriented cultureinfluences financial performance indirectly through market performance

and that this relationship is stronger in highly dynamic market$.

A Multiple-Layer Model of Market-OrientedOrganizational Culture: MeasurementIssues and Performance Outcomes

During the past decade, there has been a growing streamof research exploring the construct of market orientation.Research in this area has addressed the construct's concep-tual clarification (Day 1994; Jaworski and Kohli 1996;Kohli and Jaworski 1990; Narver and Slater 1990), meas-urement issues (Deshpande and Farley 1998a; Kohli,Jaworski, and Kumar 1993; Narver and Slater 1990), andantecedents and performance outcomes (Jaworski and Kohli1993; Slater and Narver 1994). Basically, two perspectiveson market orientation can be distinguished (Griffiths andGrover 1998a, p. 311), a behavioral and a cultural perspec-tive. Whereas the behavioral perspective describes marketorientation in terms of specific behaviors related to, forexample, generation and dissemination of market intelli-gence and responsiveness to it (Kohli and Jaworski 1990),the cultural perspective is related to more fundamental char-acteristics of the organization. As an example, Narver andSlater (1990, p. 21) defme market orientation as "the orga-

*Christian Homburg is Professor of Business Administration andMarketing, Chair of the Marketing Department, and Director of theInstitute of Market-Oriented Management, University of Mannheim (e-mail: [email protected]). Christian Pflesser is Market-ing Consultant, BASF AG, Ludwigshafen, Germany (e-mail: Christian.pflesser@basf-agde). The authors thank Rajiv Grover, Wayne D. Hoyer,Sean A. Meehan, K. Scott Swan, and John P. Workman for their helpfulcomments on a previous draft of the article. Helpful comments by the threeanonymous JMR reviewers are also gratefully acknowledged.

nizational culture ... that most effectively and efficieritly cre-ates the necessary behaviors for the creation of Superiorvalue for buyers and, thus, continuous superior performancefor the business."

Our research falls into the cultural stream of maljket ori-entation research. The importance of this perspective hasbeen emphasized in a recent statement by Narver aria Slater(1998, p. 235): "If a market orientation were simply a set ofactivities completely disassociated from the underlyingbelief system of an organization, then whatever an organi-zation's culture, a market orientation could easily beimplanted by the organization at any time. But such is notwhat one observes." It is worth emphasizing that workwithin the cultural perspective, though based on a culturaldefmition of market orientation, typically has conceptual-ized and measured market orientation in terms of behaviors(Deshpande, Farley, and Webster 1993; Narver and Slater1990; Slater and Narver 1994) and has not considered morefundamental components of a market-oriented jculture.Narver and Slater (1990) model market orientation as a con-struct consisting of three behavioral components (customerorientation, competitor orientation, and interfunctioi^al coor-dination). The basic assumption behind this approach is thatthese behaviors reflect an underlying organizational culture(Narver and Slater 1998, p. 235). Thus, the cultural per-spective has had a stronger impact on the definition than onthe conceptualization and the development of measures ofmarket orientation.

449Journal of Marketing ResearchVol. XXXVII (November 2(K)0>, 449-462

450 JOURNAL OF MARKETING RESEARCH, NOVEMBER 2000

This approach does not account for the distinctionamong different layers of culture, which scholars in thefield of organizational culture have emphasized as crucialfor understanding this complex phenomenon. As an exam-ple. Trice and Beyer (1993) distinguish the substance (e.g.,values, norms) and concrete manifestations (e.g., practices)of organizational cultures. Schein (1992) distinguishesthree different layers of organizational culture, includingbasic underlying assumptions, espoused values, and arti-facts. These layers differ in their visibility and inter-pretability. Previous research on market orientation from acultural perspective has not made this distinction amongdifferent layers of culture. Thus, the cultural dimensionsbehind the observable behaviors have not been considered(Griffiths and Grover 1998a, b). A distinction among dif-ferent layers of market-oriented organizational culture isparticularly relevant, because it allows for the analysis ofinterrelations among these layers, which can ultimatelylead to a better understanding of the forces driving market-oriented behavior.

Against this background, the purpose of this article is todevelop a broader cultural perspective of market orientation.More specifically, we have four objectives. First, wedevelop a model of market-oriented organizational culturethat makes an explicit distinction among different layers oforganizational culture as has been suggested by scholars inthis field. Second, our research develops and validates ameasurement instrument of market-oriented organizationalculture based on this multilayer conceptualization. Third,we analyze structural relationships among the different lay-ers of market-oriented culture. The importance of this objec-tive is emphasized by the work of Schein (1992), whoobserves strong relationships among the different layers ofculture. Fourth, our study analyzes performance outcomesof a market-oriented organizational culture. Overall, theseobjectives are in accordance with Deshpande and Farley's(1998b, p. 238) comments on future research questions per-taining to market orientation: "(I) What kind of organiza-tional culture encourages and rewards Market Orientationbehaviors? ... and (II) Are there specific Customer-FocusedBeliefs that are articulated in the cultural documents ... andrituals ... of companies, and how do these in turn relate tospecific Market Orientation behaviors?"

MODEL DEVELOPMENT

We now develop a model of market-oriented organizationculture that makes explicit distinctions among different lay-ers of culture. We also develop hypotheses on the relation-ships among the different components of culture and, subse-quently, hypotheses about performance outcomes of amarket-oriented culture.

Conceptualization of Market-Oriented OrganizationalCulture

The concept of culture, which is rooted in anthropology(Kluckhohn 1951a), was transferred to the context of organ-izations in the early 1980s. During that time, there was anincreasing interest in the phenomenon of organizational cul-ture from both organizational science (Allaire and Firsirotu1984; Schein 1984; Smircich 1983) and business practice(Deal and Kennedy 1982; Pascale and Athos 1981; Petersand Waterman 1982).

Although different definitions of organizational culturehave been suggested in the literature (Kilman, Saxton, andSerpa 1985; Schein 1992), one of the most widely accepteddefinitions in marketing is provided by Deshpand(5 andWebster (1989, p. 4): "the pattern of shared values andbeliefs that help individuals understand organizational func-tioning and thus provide them norms for behavior in theorganization." This definition emphasizes three differentlayers of culture, including values, norms, and behaviors inthe organization. Schein (1984) introduces an additionalcomponent of organizational culture, which he refers to as"artifacts." These include stories, arrangements, rituals, andlanguage (Trice and Beyer 1993). Schein emphasizes thatartifacts are the most visible layer of organizational culture.However, the meaning of artifacts is typically hard to deci-pher. Researchers in the field of organizational culture tendto agree that the different layers of the construct are stronglyinterrelated (Hofstede et al. 1990; Schein 1992).

In summary, organizational culture consists of four dis-tinguishable but interrelated components. They includeshared basic values, behavioral norms, different types ofartifacts, and behaviors. Following Kluckhohn (1951b, p.395), values can be defined as "a conception, explicit orimplicit, distinctive of an individual or characteristic of agroup, of the desirable which influences the selection fromavailable modes, means, and ends of action." Norms differfrom values by a higher degree of specificity and a higherrelevance for actual behaviors (Katz and Kahn 1978, p. 43).The shared values within an organization form the basis forthe development of these norms, which legitimate specificbehaviors. More specifically, we define norms as expecta-tions about behavior or its results that are at least partiallyshared by a social group (O'Reilly 1989; Thibaut and Kelley1959). Artifacts include stories, arrangements, rituals, andlanguage that are created by an organization and have astrong symbolic meaning (Schein 1992; Trice and Beyer1993). The symbolic meaning of artifacts is more importantthan any instrumental function (Hatch 1993). In contrast,behaviors refer to organizational behavioral patterns with aninstrumental function. It is worth mentioning that other con-ceptualizations of organizational culture exist in the litera-ture (for overviews, see Deshpande and Webster 1989;Smircich 1983). Our work is rooted in the organizationalsymbolism perspective of organizational culture (Smircich1983, p. 342).

Against this background, we conceptualize market-oriented organizational culture as a construct including thefour components of (I) organization-wide shared basic val-ues supporting market orientation, (2) organization-widenorms for market orientation, (3) perceptible artifacts ofmarket orientation, and (4) the market-oriented behaviors(see Figure 1). We now consider each of the four compo-nents in more detail.

First, we argue that particular shared basic values aremore likely to support a market orientation than others. Thefollowing two examples illustrate this argument (see Figure1). Organizations sharing the value of an open internal com-munication (Webster 1993, p. 113) are more likely to bemarket oriented, because market infonnation is not kept bythe marketing managers but is disseminated across theorganization (Kohli and Jaworski 1990). As another exam-ple, the value of employee responsibility (Calori and Sarnin

Market-Oriented Organizational Culture 451

Figure 1THE FRAMEWORK

Market-Oriented Organizational Culture

Shared Basic Values Supporting Market OrientationExamples:• Openness of internal communication• Responsibility of the employees

Norms for Market OrientationExamples:• Openness of market-related internal communication• Market-related responsibility of the employees

H,

Performance Outcomes

Financial Performance

Market Performance

Artifacts of Market Orientation• stories• Arrangements• Rituals• Language

Mari<et-Oriented Behaviors• Generation of market intelligence• Dissemination of market intelligence• Responsiveness to market intelligence

MarketDynamism

1991, p. 57) supports decentralized decision making andtherefore enables fast and market-oriented processes.Unlike the norms for market orientation, which are dis-cussed subsequently, we conceptualize these shared basicvalues as not directly related to but rather supportive of mar-ket orientation.

Second, we argue that norms guide market-orientedbehaviors within organizations. More specifically, we focuson market orientation as the concrete object of these norms.If, for example, the members of an organization share thevalue of openness of internal communication, a specificnorm related to that value is the openness of market-relatedinternal communication. As another example, the norm ofmarket-related responsibility of employees is a specificationof the more general shared value of responsibility of theemployees (see Figure I). The difference between values andnorms is that norms guide behaviors in a specific context,whereas values represent general guidelines (O'Reilly 1989).

Third, we argue that there are artifacts that indicate ahigher or lower level of market orientation. As we noted, inthe literature review, four categories of artifacts can be dis-tinguished: stories, arrangements, rituals, and language(Dandridge, Mitroff, and Joyce 1980; Trice and Beyer1993). Stories in organizations frequently refer to excep-tional behaviors of a senior manager (Martin et al. 1983). Inour context, these stories might include employees perform-ing ideal customer-oriented behaviors. An example ofmarket-oriented arrangements might include an open andfriendly customer entrance and welcome area (Trice andBeyer 1993; Zammuto and O'Connor 1992). The rituals of

market orientation include events for customers (e.g., ameeting of product owners) or regular awards for customer-oriented employees (Trice and Beyer 1984). The l£(st cate-gory of artifacts is the language within an organization thatcan also indicate the degree of market orientatibn. Forexample, a customer-focused (as opposed to an internallyfocused) discussion style during meetings indicates a higherdegree of market orientation.

Fourth, for behaviors, we use the conceptualization sug-gested by Kohli and Jaworski (1990) and Kohli, J£)worski,and Kumar (1993). This approach focuses on three compo-nents of market-oriented behaviors, including generationand internal dissemination of market intelligenice andresponsiveness to it.

In accordance with the model suggested by Schein(1984), we distinguish different layers of organizational cul-ture. The first layer includes shared basic values that supporta market orientation. A second layer consists of norms formarket orientation. Artifacts of market orientation andmarket-oriented behaviors represent the third lay^r of amarket-oriented organizational culture (see Figure |1). Thedifference among the three layers is the degree of visibility:high in the case of market-oriented behaviors and ^rtifacts,medium in the case of norms, and low in the case of sharedbasic values (Schein 1992).

Hypotheses on Relationships Among Components

In general terms, our model postulates a causal chain thatleads from values supporting market orientation throughnorms for market orientation to market-oriented behaviors.


This structure is consistent with the theory of organizationalbehavior developed by Katz and Kahn (1978, p. 43), whoemphasize that behaviors of organizational members aredriven by "the norms prescribing and sanctioning thesebehaviors and the values in which the norms are embedded."Our hypothesized causal chain is also consistent with thelogic of the extended Fishbein model (Ajzen and Fishbein1980), which is known from the consumer behavior litera-ture. According to this model, basic values and beliefs havean impact on norms, which then influence observablebehaviors (Ajzen and Fishbein 1980).

Our first hypothesis relates to the link between sharedbasic values supporting market orientation and the presenceof norms for market orientation. As Katz and Kahn (1978, p.43) emphasize, "Values are the more generalized ideologicaljustifications for ... norms and express the aspirations thatallegedly inform the required activities." Using similar logic,O'Reilly (1989) argues that the formation of norms within anorganization is easier if they are in agreement with the fun-damental values. This leads us to the following hypothesis:

Hj: The presence of shared basic values supporting market ori-entation has a positive impact on the presence of norms formarket orientation.

The existence of norms for market orientation is assumedto be a powerful predictor of observable market-orientedbehaviors in an organization. Norms can be characterized bytheir prescriptive nature for goal-directed behaviors (Heideand John 1992, p. 35). The importance of norms as predictorsof behavior is also emphasized in sociology (Jackson 1965)and in social system theory (Bates and Harvey 1975; Katzand Kahn 1978). Norms describe the behavior that membersof an organization pressure one another to follow (Kilman,Saxton, and Serpa 1985, p. 5). For example, it is supposedthat the existence of a norm promoting internal communica-tion of market information leads to a significantly higherdegree of such communication behaviors, compared withorganizations in which this norm is not present.

Norms for market orientation are supposed to generate arti-facts of market orientation. Norms that describe desired behav-iors and presumably affect behavior are partly transmitted in anorganization through artifacts such as stories, language, rituals,or objects (Kilman, Saxton, and Serpa 1985, p. 5 f.). The exis-tence of norms is fundamental for the development of certainartifacts. Therefore, we put forward the following hypothesis:

H2: The presence of norms for market orientation has a positiveimpact on (a) the presence of artifacts of market orientationand (b) market-oriented behaviors.

Because artifacts of market orientation have symbolicpower, they can strengthen the degree of market-orientedbehaviors in an organization. As Dandridge, Mitroff, andJoyce (1980, p. 79) state, one important function of symbolsin an organization is that members are inspired or motivatedthrough the symbols' impact. If an artifact symbolizes mar-ket orientation, it can inspire members of an organization tobehave in a market-oriented way. Thus,

H3: The presence of artifacts of market orientation has a positiveimpact on market-oriented behaviors.

Hypotheses on Performance Outcomes

Several researchers discuss performance outcomes oforganizational culture with a theoretical orientation (Barney1986; Fiol 1991; O'Reilly 1989). Barney (1986) argues thatonly a valuable, rare, and imperfectly imitable culture of afirm can be a source of sustained competitive advantage.Kotter and Heskett (1992) find empirical support for theperformance impact of organizational culture. Their resultsindicate that firms with a strong culture that emphasizes cus-tomer orientation, employee orientation, stockholder orien-tation, and leadership have higher long-term performance.With respect to the specific domain of market orientation,several empirical studies reveal positive and significant cor-relational links between market orientation and differentperformance measures (e.g., Jaworski and Kohli 1993;Narver and Slater 1990; Slater and Narver 1994).

In studying performance outcomes of market-orientedorganizational cultures, we draw a distinction between mar-ket performance and financial performance. Market per-formance is defined as the effectiveness of an organization'smarketing activities and is measured by items pertaining toachieving customer satisfaction, providing value to cus-tomers, retaining customers, and attaining the desired mar-ket share. Financial performance is operationalized as returnon sales in our study. Basically, we argue that a market-oriented organizational culture has an indirect effect onfinancial performance through market performance.

A market-oriented organization provides a unifying focusof individual efforts in the delivery of value to the customerswhile also providing a comparative impetus with competi-tors' activities (Kohli and Jaworski 1990). Therefore, amarket-oriented organization is likely to achieve higher cus-tomer satisfaction, keep existing customers loyal, attractnew customers, and subsequently attain the desired growthand market share. Similar to Narver and Slater (1990), wepredict that market-oriented organizational culture will havea positive impact on market performance. More specifically,we state that among the four components of a market-oriented organizational culture, only behaviors have a directperformance impact. Values, norms, and artifacts are notassumed to have a direct impact on market performance.Rather, as can be seen from Figure 1, we hypothesize thatthey indirectly affect performance through market-orientedbehaviors. In summary, this leads us to the following:

H4: The presence of market-oriented behaviors in an organiza-tion has a positive impact on market performance.

We also assume that performance in the market is a nec-essary antecedent of financial performance. The literatureon performance implications of customer satisfaction andloyalty (Anderson and Sullivan 1993; Fornell 1992; Rustand Zahorik 1993) provides evidence that these componentsof market performance are positively related to financialperformance. Furthermore, Reichheld (1996) argues thatloyal customers can increase a firm's profitability throughthe absence of acquisition costs, lower operating costs,referrals, and higher price tolerance. In addition, PIMS stud-ies identify product/service quality and market share as themost important factors that influence the percentage ofreturn on sales (Buzzell and Gale 1987, p. 45). Thus,


H5: Market performance has a positive effect on financialperformance.

An additional aspect in studying performance outcomes isthe consideration of variables that moderate the relationship.In this study, we concentrate on market dynamism, which isviewed as the most relevant moderating variable (Slater andNarver 1994), In markets with a low level of dynamism, amoderate degree of market orientation is sufficient to servethe stable preferences of the customers (Kohli and Jaworski1990). The effect of market-oriented organizational cultureon market performance is stronger in situations with greatmarket dynamism. Therefore, we put forward the following:

H : The greater the extent of market dynamism, the greater isthe positive impact of market-oriented behaviors on marketperformance,

METHODOLOGY

We applied qualitative research before conducting thequantitative scale development. More specifically, we con-ducted two stages of qualitative research, a content analysisand field interviews.

Content Analysis

The purpose of the content analysis was to identify themost relevant shared basic values and categories of artifactsof a market-oriented organizational culture. Content analysishas frequently been used in management research (e,g,,Bettman and Weitz 1983; Kotabe and Swan 1995) and con-sumer research (e.g,, Belk 1987; Kolbe and Burnett 1991),The usefulness of the technique for studying organizationalculture has been emphasized frequently (Sackman 1992),Berelson (1952, p, 55) defines content analysis as "a researchtechnique for the objective, systematic, and quantitativedescription of the manifest content of communication,"Although this definition emphasizes the method's quantita-tive nature, content analysis frequently is extended to inter-pretive and qualitative research (Wind, Rao, and Creen 1991),

The content analysis conducted in this study consists ofsystematic analyses of 50 reports on cultural changeprocesses, which focus on increasing market orientation incompanies from different industries and were published intwo popular Cerman business magazines between January1995 and May 1997, A code sheet was developed that cov-ered 16 potential value dimensions and four major artifactcategories that had been derived from the literature review(e,g,, Hofstede et al, 1990; O'Reilly, Chatman, and Caldwell1991; Slater and Narver 1995; Webster 1993), Interjudgereliability greater than 85% was achieved and therefore wassatisfactory (Kassarjian 1977; Kolbe and Burnett 1991),

Of the potential value dimensions, the following 12 werementioned most frequently in the context of market orienta-tion (in more than 40% of all cases): success, innovative-ness, flexibility, openness, internal communication, quality,competence, speed, interfunctional cooperation, teamwork,responsibility of the employees, and appreciation of theemployees. It is worth emphasizing that these values do notexclusively support market orientation. Rather, some ofthem (such as success) may also support other orientations.Furthermore, specific stories and arrangements were themost frequently mentioned artifacts for market orientation

(mentioned in more than 45% of all cases) followed by ritu-als and language (mentioned in more than 20% of all cases).

Field Interviews

Field interviews were conducted with ten managers (fivegeneral managers and five managers in different functionalareas) from five different industries. The purpose of theinterviews was fourfold: first, to validate the structure of thedeveloped model (shown in Figure 1); second, to validateand supplement the findings of the content analysis; third, toget a richer understanding of possible artifacts of a marketorientation; and fourth, to generate specific items for thesubsequent scale development process. Each interviewlasted approximately 60 to 90 minutes.

The result of the interviews was that managers found thatthe suggested model of market-oriented organizational cul-ture is plausible and covers most of the phenomena dis-cussed during the interviews. In addition, all 12 valuedimensions were confirmed by the interviewees. However,because respondents found it difficult to distinguish amongsome of the value dimensions, the following 8 dimensionswere adopted: success, innovativeness and flexibility, open-ness of internal communication, quality and competence.speed, interfunctional cooperation, responsibilityemployees, and appreciation of the employees, Fina

of thely, as a

result of the interviews, a list of items and observed artifactswas incorporated into the development of measures formarket-oriented organizational culture.

Data Collection and Sample

We developed a questionnaire on the basis of the literaturereview, the content analysis, and the field interviews a;nd con-ducted a pretest with nine managers and two academics,which resulted in small changes in the wording of it^ms andthe instructions to answer the questionnaire. As Deshpandeand Webster (1989, p, 11) propose, we study organiicationalculture at the strategic business unit (SBU) rather thart corpo-rate level. We mailed the questionnaire to a sample pif 1100managers in 1100 SBUs from five different industries inGermany, We ensured the respondents' competence beforethe mailing by conducting a telephone identificatiori of keyinformants on the basis of addresses obtained from j a com-mercial provider. The targeted key informants included gen-eral managers, marketing managers, and managers from otherfunctional areas. Firms that did not respond after four weekswere mailed a follow-up letter and another questionnaire.

We obtained 173 responses, which gave an overall responserate of 15,7%, Eight respondents answered after the deadline.Five respondents reported a low level of confidence in theirresponses and therefore were dropped, which left a final usablesample of 160 completed questionnaires, Civen the length ofour survey and the high level of managers targeted, wej believethat the response rate is in line with those reported t>y otherresearchers who study complex organizational phenomena(Diamantopoulos and Schlegelmilch 1996; Harzing 1997),

We tested nonresponse bias by comparing early and laterespondents (Armstrong and Overton 1977), The aata setwas divided into thirds according to the number of daysfrom initial mailing until receipt of the returned question-naire. The basic rationale is that late respondents are moresimilar to nonrespondents than are early respondents. In t-tests for all the included variables, only two significant dif-


ferences were indicated (p < .05) in the mean responses.This finding provides reasonable evidence that nonresponsebias was not a problem in these data.

RESULTS

Scale Development and Validation

Scales for the study consisted of newly generated itemsand items that have been used previously in the literature.When a new scale was developed, guidance was obtainedfrom the literature review, the content analysis, and particu-larly from the field interviews. All measures were conductedwith a seven-point rating scale ("strongly agree" and"strongly disagree" as anchors).

For measurement validation, we used conventional meth-ods such as coefficient alpha, item-to-total correlations, andexploratory factor analysis (for recommendations on meas-ure validation, see Churchill 1979), as well as the moreadvanced approach of confirmatory factor analysis(Bagozzi, Yi, and Phillips 1991; Cerbing and Anderson1988). Regarding the threshold values of the different crite-ria for assessing adequate measurement properties, we fol-lowed the suggestions of Anderson and Gerbing (1993),Bagozzi, Yi, and Phillips (1991), and Bagozzi and Yi(1988). We analyzed measurement issues at the level ofindividual factors. The corresponding results are shown inTable 1.

The measurement of values has been discussed contro-versially (Kale, Beatty, and Homer 1986; Rokeach 1979).Values can be measured by simple rating scales (Kale,Beatty, and Homer 1986), comparative instruments such asranking procedures (O'Reilly, Chatman, and Caldwell1991), or multi-item scales (Hofstede 1980). Among thesedifferent approaches, multi-item scales are viewed as supe-rior in terms of validity (Hofstede et al. 1990). We thereforeconducted the measurement of values in our study by multi-ple items on the basis of rating scales (for a complete list ofitems, see the Appendix). In addition to this approach, weused a ranking instrument that covers the eight dimensionsto validate our measurement approach. We assessed the par-allel-test reliability by computing a ranking based on themean values of the multi-item scales and the rank correla-tion between the two alternative measurement approaches.The value of r = .62 is considered satisfactory.

Overall, the results indicate acceptable reliabilities for alleight dimensions of shared basic values (see Table 1). Theaverage variances extracted and composite reliabilities areabove the recommended minimum of .5 and .6, respectively(Bagozzi and Yi 1988). For the dimensions that have two-item measures, a confirmatory factor analysis cannot beconducted, but the coefficient alpha values indicate accept-able measurement properties.

We adopted the same eight-dimensional structure fornorms that had been developed for values. The difference

Table 1MEASUREMENT INFORMATION FOR INDIVIDUAL FACTORS

ConstructNumberof Items

Mean/StandardDeviation Range"

ReliabilityAverageVariance

Extracted''

Shared Basic Values Supporting Market Orientation

SuccessInnovativeness and flexibilityOpenness of internal communicationQuality and competenceSpeedInterfunctional cooperationResponsibility of the employeesAppreciation of the employees

6.0/ .95.5/1.25.7/1.25.9/ .95.1/1.15.6/1.25.5/1.25.4/1.1

2.5-71.7-7I -72-71.5-71.3-7I -71-7

Norms for Market Orientation

.7.V—.8I/.85.90/.9.1.83/. 88111—.86/.89.84/—.82/.85

.66

.77

.71

.72

.66

Market-related success orientationMarket-tielated innovativeness and flexibilityOpenness of market-related internal communicationMarket-related quality orientationMarket-related speedMarket-related interfunctional cooperationMarket-related responsibility of the employeesMarket-related appreciation of the employees

4.8/1.65.5/1.15..3/I.I5..3/I.I5.6/1.03.9/1.56.0/1.05.4/1.2

1 -71.5-71.5-71 -72-71-7

2.5-71.7-7

Artifacts for Market Orientation

.ill—.161.9.2.76/.84.69/.78.75/.84.78/.83.75/—.76/.83

.53

.59

.54

.56

.63

.63

Stories about heroes of market orientationStories about problems with market orientationArrangements of market orientationRituals of market orientationMarket-oriented languageNon-market-oriented language

Market-Oriented Behaviors

134434

12

4.1/1.83.0/1.24.8/1.43.5/1.44.7/1.33.2/1.1

5.0/1.2

1-71-6.31.5-71-71-7

1-5.8

1.8-7

.78/.82

.78/.83

.611.14

.141.19

.63/.70

.9I/.92

.61

.55

.42

.57

.38

.50

"The possible range for all measures was 1-7.''Reports coefficient alpha (if more than one item) and composite reliability (if more than two items).••Average variance extracted is reported when there are more than two items.


between norms and values is that norms focus on marketorientation whereas basic values more generally support amarket orientation. Measurement results of the eight dimen-sions of norms for market orientation are satisfactory (seeTable 1).

The measurement of artifacts of market orientation is notstudied in the previous literature and therefore is exploratoryin nature. In accordance with Trice and Beyer (1993), wedistinguish stories, arrangements, rituals, and language aspotential dimensions of artifacts for market orientation.Furthermore, the measurement incorporates positive andnegative versions of artifacts, for example, stories of thesenior manager as a good or a bad example (Martin et al.1983). The results of the literature review and the interviewsform the bases for new scales for artifacts for market orien-tation. Different stories, arrangements, rituals, and elementsof language that can symbolize market orientation wereused for the measurement (see the Appendix). As a firstresult of the measurement, we realized that the presence ofpositive and negative versions of artifacts were fairly inde-pendent from each other. Therefore, we distinguished posi-tive and negative constructs whenever positive and negativeitems had been used. Consequently, we identified the fol-lowing six dimensions of artifacts for market orientation: (1)stories about heroes of market orientation, (2) stories aboutproblems of market orientation, (3) arrangements of marketorientation, (4) rituals of market orientation, (5) market-oriented language, and (6) non-market-oriented language.Although some of the criteria are below the threshold val-ues, results indicate acceptable reliabilities on an overallbasis given the exploratory nature of the measurement ofartifacts (Nunnally 1978, p. 245).

For the measurement of market-oriented behaviors, weused Kohli, Jaworski, and Kumar's (1993) 20-item scale,which covers the three behavioral dimensions of generationand dissemination of market intelligence and responsivenessto it. The original scale items were translated into Germanand back-translated by a second person to ensure translationequivalence. Measurement results indicate acceptable relia-bilities for the three constructs. However, the application ofthe criterion suggested by Fornell and Larcker (1981)revealed a lack of discriminant validity among the threedimensions. Therefore, we used a one-dimensional concep-tualization of market orientation, which is consistent withrecommendations by Deshpande and Farley (1998a). Morespecifically, items of all three originally proposed dimen-sions were included in a 12-item measure of market-

oriented behaviors with desirable psychometric properties(see Table 1).

After the operationalization of individual factors, ah over-all measurement model of market-oriented organi2lationalculture with 23 factors and 78 indicators was analyzed. Fitstatistics indicate a good fit (X (2673) = 2456.55, p p 1.00;goodness-of-fit index [GFI] = .95, adjusted goodnesjs-of-fitindex [AGFI] = .94, comparative fit index [CFI] = 1.00, rootmean square error of approximation [RMSEA] = .OCj).

We assessed discriminant validity by comparing the aver-age variances extracted with the squared correlation^ for allpairs of factors (Anderson and Gerbing 1993; Forn!ell andLarcker 1981). For the eight dimensions of shared bakic val-ues, the results provide good evidence of discriminant valid-ity. The results for the eight dimensions of norms for marketorientation partly reveal problems pertaining to discriminantvalidity. For example, the squared correlation betweenmarket-related quality orientation and market-related speedis higher than both average variances extracted. This resultis interesting because the structure of norms for market ori-entation was adopted from the structure of shared basic val-ues for which discriminant validity is given. This phenome-non can be explained by the more focused perspective ofnorms that leads to a stronger overlap among the dimensionsin comparison with values. Alternative measurementjmodelsfor norms were considered (e.g., one-dimensional and three-dimensional) and compared with the original eightjdimen-sional model. However, the results of the eight-dimejnsionalmodel were superior. Therefore, and for conceptual reasons,we conclude that the model of market-oriented otjganiza-tional culture should capture eight partially overilappingdimensions of norms for market orientation. On the level ofthe artifacts, the results provide strong evidence for discrim-inant validity. Overall, discriminant validity among the dif-ferent components of a market-oriented organizational cul-ture is satisfactory. In particular, pairs of correspondingvalues and norms, though conceptually close, exhibited dis-criminant validity.

Modeling 78 items with 23 underlying factors is not avery parsimonious structure. Considering the complexity ofthis structure, we now analyze alternative meast^rementmodels with lower levels of complexity that are mtbre ade-quate for hypothesis testing. More specifically, we considerthree alternative models with a reduced number of factors(Bagozzi and Edwards 1998; see Table 2). The first alterna-tive is a plausible four-factor model with one dimension foreach of the components of a market-oriented organisational

Tab le 2 i> ' 'COMPARISON OF ALTERNATIVE MEASUREMENT MODELS

Number Alternative Measurement ModelsDegrees ofFreedom RMSEA GFI ACFI CFt CAIC

0 23-factor tnodel (eight value dimensions, eight norm dimensions,one market-oriented behaviors dimension, six artifact dimensions)

1 4-factor model (one value dimension, one norm dimension, onemarket-oriented behaviors dimension, one artifact dimension)

2 5-factor model (one value dimension, one norm dimension, onemarket-oriented behaviors dimension, two artifact dimensions)

3 I-factor model

2456.55

3829.16

3570.27

4678.27

2673

2919

2915

2925

.000

.047

.040

.065

.95

.92

.93

.91

.94 1.00 4889.39

.92 .98 4795.14

.93 .98 4560.10

.90 .96 5608.47


culture (i.e., shared basic values, norms, artifacts, andbehaviors). The second alternative is a modified version ofthe first alternative that is obtained by splitting the artifactdimension into the two dimensions of artifacts that indicateexistence of market orientation and artifacts that indicateabsence of market orientation. The third alternative is a one-factor model that captures all 78 indicators.

For the selection of one of several alternative models, anaccepted criterion that penalizes overparameterization is theconsistent Akaike's information criterion (CAIC; Bozdogan1987). The five-factor model exhibits the lowest CAIC, andthe results of this model also indicate an acceptable fit (seeTable 2). Also, composite reliabilities of the five factors rangefrom .75 to .95. Moreover, individual item reliabilities (i.e.,squared standardized factor loadings) exhibit an averagevalue of .41. Each of the factor loadings in this model washighly significant: t-values ranged from 10.2 to 46.1. Thus, afive-factor model is used for subsequent analysis.

Market performance was measured with six items partlyadapted from Irving (1995). The reliability coefficients (a =.89, p = .90) and average variance extracted (.62) providegood evidence for the reliability of the measure. Financial

performance is measured by a single item related to theaverage return on sales of the SBU during the last threeyears. The moderator variable of market dynamism, whichis adapted from Maltz and Kohli (1996), is measured bythree items. The scale has acceptable reliability (a = .76, p =.81), and the average variance extracted is .60.

Hypothesis Testing

After establishing the structure of the measurementmodel, we analyzed the overall causal model shown inFigure 2 using LISREL 8 (Joreskog and Sorbom 1993). Toobtain a more favorable relationship between our samplesize and the number of parameters to be estimated, we con-ducted an additional simplification of our five-factor model.More specifically, for each of the eight value dimensions,we averaged the corresponding indicators leading to a singlecomposite indicator per value dimension. This leads to avalue factor with eight indicators. The same procedure wascarried out for the factor related to norms and for the twoartifact factors. Thus, with the exception of market-orientedbehaviors, composite indicators were used for the measure-ment of market-oriented organizational culture. As a result.

Figure 2THE CAUSAL MODEL


4Indicators

Artifacts Indicating

Shared BasicVaiues SupportinqMarket Orientation

^,

Y. Norms forMarket Orientation

8Indicators

8Indicators

Existence ofMarket Orientation

Artifacts IndicatingAbsence of

Market Orientation

2Indicators

-•43

Market-OrientedBehaviors

-'54

12Indicators

PerformanceOutcomes

1Indicator

FinancialPerformance

-•65

MarketPerformance

6Indicators

MarketDynamism


the different components of market-oriented organizationalculture are measured by a total of 34 indicators in the modelshown in Figure 2.

It is worth emphasizing that measurement statistics forthis simplified model are still favorable. More specifically,the following composite reliabilities were computed for thefive factors: .71 for market-oriented values, .72 for market-oriented norms, .51 for artifacts that indicate a high level ofmarket orientation, .58 for artifacts that indicate a low levelof market orientation, and .59 for market-oriented behav-iors. Individual item reliabilities for indicators of market-oriented organizational culture exhibit an average value of.48. With respect to the overall fit, the chi-square statisticand the RMSEA indicate some discrepancies between thedata and the proposed model (xV72) ~ 2330.19, p = .00;RMSEA = .12). A possible explanation for this observationis that the use of composite indicators typically worsensmodel fit. However, other global fit statistics suggest an ade-quate fit of the model (GFI = .97, AGFI = .96, CFI = .97).On an overall basis, the global model fit is acceptable.

We now discuss the results regarding the hypotheses (seeTable 3). As predicted by H], shared basic values supportingmarket orientation have a significant positive effect onnorms for market orientation (YI, = .83, p < .01). Because ofthe split of artifacts into the two dimensions of artifacts thatindicate existence of market orientation and artifacts thatindicate absence of market orientation, H2a is now twofold.Norms for market orientation have a significant positiveeffect on artifacts that indicate existence of market orienta-tion (P21 = .88, p < .01) and a significant negative effect onartifacts that indicate absence of market orientation (P31 =-.53, p < .01). Thus, H2a is supported by our findings.

However, we find no support for H2b, which predicts apositive effect of norms of market orientation on market-oriented behaviors (P41 - .05, p > . 10). Thus, we find no evi-dence for the existence of a direct behavioral effect of normsfor market orientation. However, we show subsequently thatthere is a strong indirect effect.

Similar to H2a, H3 must be split. The artifacts that indicateexistence of market orientation have a significant positiveeffect (P42 = .76, p < .01), and the artifacts that indicateabsence of market orientation have a significant negativeeffect (P43 = -.16, p < .01) on market-oriented behaviors.Thus, H3 is supported.

Market-oriented behaviors have a significant positiveeffect on market performance (( 54 = .59, /? < .01) (H4). Tocomplete the causal chain, market performance has a signif-icant positive effect on financial performance (p65 = .57, p <.01) (H5). These empirical results strongly support the twohypotheses pertaining to performance outcomes.

In addition, we tested the hypothesized moderating effect ofmarket dynamism within the market orientation-market per-formance relationship (Hg) using a LISREL multigroup analy-sis (Joreskog and Sorbom 1993). On the basis of a mediansplit, we divided the data into two groups characterized by ahigh (Group 1) and a low (Group 2) degree of marketdynamism. The multigroup analysis of the model with sepa-rate estimation of the performance effects results in two dif-fering estimates: P54 (Group 1) = .65 and P54 (Group 2) = .57,both significant at the 1% level. Furthermore, the commonestimation of the mentioned effect results in an overall chi-square statistic that is significantly higher than that of the sep-

Table 3 °"ESTIMATED EFFECTS WITHIN THE CAUSAL MODEL

Hypotheses

HiH2aH2aH2bH3H3H4

H5

Parameters

YitP2tP31P41P42P43P54P65

Estimate

.83

.86-.53

.05

.76-.16

.59

.57

t-Value

36.2925.43

-19.55.28

3.79-3.3828.9024.08

arate estimation (x^ j ,) = 33.85, p < .01). Thus, we cpncludethat Hg is supported. A similar effect has been hypothesizedbut not empirically supported by Slater and Narver (1994).

In summary, we found strong support for our hypotheses.It is also worth emphasizing that the explanatory pOwer ofthe model is good. The squared multiple correlations of theendogenous variables vary from .28 to .80 (r^rii = .68,r2Ti2 = .74, r2r|3 = .28, r2ri4 = .80, r2T|5 = .35, r2Ti6 = 133). Inparticular, the market-oriented behaviors exhibit the highestsquared multiple correlation (r2ri4 = .80). Observe thatnorms for market orientation do not have a direct irrlpact onmarket-oriented behaviors. Rather, there is a strong Indirecteffect through positive and negative artifacts. It is also worthmentioning that in addition to testing our hypotheses, weanalyzed whether there is a significant effect of valtaes thatsupport market orientation on market-oriented behaviors.Including such a direct effect in the model did not signifi-cantly improve the model's fit. This finding shows that val-ues also affect market-oriented behavior only in an indirectway. Thus, our findings emphasize the important role of arti-facts as determinants of market-oriented behavior.

DISCUSSION

The key objective of the study was to develop and empir-ically test a multilayer model of market-oriented organiza-tional culture. Our research has implications for researchand managerial practice alike. We first discuss these twoareas and then discuss future avenues for research.

Research-Related Implications

Previous empirical research within the culturally Orientedperspective on market orientation has not made explicit dis-tinctions among different layers of culture. On the basis of the-oretical work in the area of organizational culture, we havesuggested a new model of market-oriented culture thatincludes basic values, norms, artifacts, and behavic^rs. It isworth emphasizing that we find discriminant validity amongthe different layers of market-oriented organizational!culture.Thus, though interrelated, these different layers are both con-ceptually and empirically distinct. On a general level, althoughour research admittedly increases the complexity of constructconceptualization, it provides a more detailed understandingof the phenomenon of market-oriented organizational culture.

In a comment on future research issues in the field of mar-ket orientation, Deshpande and Farley (1998b, p. 238) raisethe question, "Are there specific Customer-Focused Beliefs... and how do these in turn relate to specific MarketOrientation behaviors?" Our research provides specific


answers to this question. We have identified eight valuedimensions that support market orientation.

In addition, our analysis provides insights about the rela-tionships among the different components of culture. Themost interesting result is the critical importance of artifactsfor guiding market-oriented behaviors. More specifically,both values and norms have only indirect impacts onmarket-oriented behaviors. This means that an organizationthat has strong norms for market orientation will not exhibitmarket-oriented behaviors unless the corresponding artifactsare present in the organization. Thus, this research providesfundamentally new insights of the nature of market-orientedorganizational culture.

Artifacts have not been considered in the marketing liter-ature so far. Our results reveal that they should receive moreattention in the future. We elaborate on this issue when wediscuss future research avenues.

An admittedly minor contribution of our study relates toperformance outcomes of market orientation. Although themain effects of market-oriented behaviors on performancemeasures have been shown several times before (e.g.,Jaworski and Kohli 1993; Narver and Slater 1990; Slaterand Narver 1994), we observe an interesting moderatoreffect on the relationship between market-oriented behav-iors and market performance. This finding that a high levelof market dynamism makes a market-oriented culture evenmore important provides a little more depth to marketingacademics' understanding of market orientation's perform-ance outcomes.

Finally, our research also contributes to knowledge devel-opment in the marketing discipline by developing a com-prehensive scale for market-oriented organizational culturethat integrates values, norms, artifacts, and behaviors. Thisscale might be used in further empirical research in thisarea.

Managerial Implications

Besides being theoretically insightful, our study has sev-eral important managerial implications. First, it providesmanagers with a detailed understanding of some of theprocesses that drive behavior in organizations. Within ourmodel, market-oriented behaviors are only influencedthrough positive or negative artifacts of market orientation.Much managerial activity to guide behavior in organizationsis based on the establishment of norms. Our research tellsmanagers that the establishment of norms will not producethe desired behavioral outcomes unless the norms are sup-ported by appropriate artifacts. Also, written value statementscan be effective only if supported by adequate artifacts.

Second, managers need to recognize the importance ofconsciously managing artifacts within their organizations.As an example, establishing stories about a top management"hero" of market orientation may be a potential lever. Ourresults also encourage managers to be conscious about elim-inating dysfunctional artifacts. Our results are in line withthose of Phillips and Brown (1993, p. 1572), who argue that"[i]n modern corporations, success in management directlydepends on the ability of managers to manipulate symbols."In short, our research encourages managers to devote someenergy and time to "symbolic management" (Peters 1978;Pfeffer 1981; Schein 1992).

Third, our findings regarding performance implications ofmarket-oriented organizational culture are managerially rele-vant. Our findings show that a market-oriented culture appearsespecially important in, among other things, a turbulent marketenvironment. Also, our findings show that a market-orientedculture influences financial performance indirectly throughmarket performance. Thus, customer satisfaction ratings andcustomer loyalty figures are appropriate outcome measures forcompanies that are trying to enhance their market orientation.

Fourth, our scale can be used by managers for measuringthe degree of market orientation of their firms' culture. Asthis instrument makes a distinction among different layersof culture, it is adequate for identifying possible inconsis-tencies among the different layers of culture.

Finally, our research provides managers guidance on thewording of a company philosophy. We have identified a set ofvalues that fosters the development of corresponding normsand thus infiuences market-oriented behaviors. Managersshould take these values into consideration when formulatinga company philosophy or writing a mission statement.

Limitations and Further Research

One limitation of our study is the national character of oursample. Similar to other studies of market orientation, ourstudy needs to be extended to an international context (e.g.,Deshpande, Farley, and Webster 1997; Seines, Jaworski, andKohli 1996). Furthermore, these studies need to considerinternational aspects of measurement equivalence. This isparticularly necessary for the measurement of values(Hofstede 1980).

Another limitation of our research is the use of singleinformants in each SBU. Because of this, we cannot assessinformant bias, which may be present in the context ofabstract concepts such as organizational culture. Furtherresearch should investigate the concept of market-orientedorganizational culture using data from multiple informants,as has been done by Kohli, Jaworski, and Kumar (1993) inthe behavioral research stream on market orientation.

The developed scale for market-oriented organizationalculture involves several items. From a managerial perspec-tive, it might be useful to develop more parsimonious meas-ures of market-oriented organizational culture while stillmaking a distinction among different layers.

The exploratory nature of our measurement of artifacts formarket orientation exhibits lower reliabilities than other meas-ures used in this study. Therefore, further research should beconducted to develop better measures of artifacts. If we con-sider the strong effects of artifacts on market-oriented behav-iors, this direction for further research is even more essential.

On a more general level, we believe that additional researchon market-oriented organizational culture should link thisconstruct to other organizational constructs in marketingresearch that are related to the intraorganizational role of themarketing function. As an example, Homburg, Workman, andKrohmer (1999) analyzed the marketing function's influencewithin the firm. Influence or power within organizations isone of the most important drivers of organizational behavior.Further research could, for example, analyze whether a pow-erful marketing department supports (or prohibits) thedevelopment of a market-oriented organizational culture.


AppendixMEASURES AND ITEMSa

459

Shared Basic Values Supporting Market Orientation

Success (new scale) Speed (new scale)

1. In our SBU, we place great value on performance-oriented etnployees.2. In our SBU, we strive for success very strongly.

Innovativeness and flexibility (new .scale)

1. In our SBU, we particularly emphasize innovativeness and creativity.2. In our SBU, we rate the flexibility of the employees very highly.i. In our SBU, we are very open toward innovations (e.g., related to

products or processes).

Openness of internal communication (new scale)

1. In our SBU, open communication is valued very highly.2. In our SBU, we aspire to a high degree of interfunctional information

exchange..3. In our SBU, we put very much value on information flow.4. In our SBU, we aspire to proactive communication.

Quality and competence (new .scale)

1. In our SBU, error-free work results are valued very highly.2. In our SBU, we put very much value on high-quality work results.3. In our SBU, we aspire to a maximum of qualification and competence

in the subject.

1. In our SBU, we aspire to speed in all work processes.2. In our SBU, every employee aspires to speed in the work processes.

Interfunctional cooperation (new .scale)

1. In our SBU, we place great value on interfunctional teamwork.2. In our SBU, cooperation among different functions (e.g., market ng,

research and development) is valued very highly.3. In our SBU, we aspire to cooperative work.

Responsibility of the employees (new scale)

1. In our SBU, we value very highly that every employee thinks and actslike an entrepreneur.

2. In our SBU, the responsibility of the single employee is stressed^ verystrongly.

Appreciation of the employees (new .scale)

1. In our SBU, the appreciation of the single employee is stressedstrongly.

2. In our SBU, we place great value on a feeling of belonging attiohg theemployees.

3. In our SBU, we aspire to high employee satisfaction.

ery

Norms for Market Orientation

Market-related success orientation (new .scale) Market-related .speed (new scale)

1. In our SBU, market performance (e.g., market share, customersatisfaction) is measured regularly.

2. In our SBU, market performance (e.g., market share, customersatisfaction) is controlled regularly.

Market-related innovativeness and flexibility (new scale)

1. In our SBU, we expect that generally accepted standardized programs areexamined regularly to become more effective in serving our markets.

2. In our SBU, we expect that unbureaucratic solutions are found quicklyin difficult situations (e.g., in cases of massive customer complaints).

3. In our SBU, we expect that new value-adding products and services aredetected and developed permanently.

4. In our SBU, we appreciate unconventional ideas (especially if theycome from the side of the customer).

Openness of market-related internal communication (new .scale)

1. In our SBU, we expect that interfunctional meetings (e.g., discussionsabout market trends) are organized regularly.

2. In our SBU, we expect that market-related problems are mentioneddirectly and openly.

3. In our SBU, we expect the dissemination and storage of marketintelligence.

4. In our SBU, the dissemination and storage of market intelligence arecontrolled.

Market-related quality orientation (new scale)

1. In our SBU, we expect that quality is assessed by customers or, at least,from the customer's perspective.

2. In our SBU, task-related and social competencies of employees withcustomer contact are absolutely expected.

3. In our SBU, the competence of employees with customer contact (e.g.,sales, customer service, reception) is controlled regularly.

1. In our SBU, we expect that customer requests are answered at oiice.2. In our SBU, we expect that customer-related processes are incre;ised in

speed continuously.3. In our SBU, the speed of customer-related processes is controlle j

regularly.4. In our SBU, a quick response on market changes is expected.

Market-related interfunctional cooperation (new scale)

1. In our SBU, every employee expects that customers are integrated inthe planning of a new product or service program (e.g., by conductinginterdisciplinary teamwork or focus groups).

2. In our SBU, the availability of market information in differentfunctional areas (e.g., marketing, research and development) iscontrolled.

3. In our SBU, the degree of coordination of decisions about marketingactivities in different areas is controlled. i

Market-related responsibility of the employees (new .scale)

1. In our SBU, we expect that every employee feels responsible for thedetection and solution of potential and actual customer problems.

2. In our SBU, every employee is expected to be highly responsibly forthe customers.

Market-related appreciation of the employees (new scale)

1. In our SBU, the individuality of each employee is viewed as acompetitive advantage.

2. In our SBU, we accept that high-quality performance can be rea9hedvery individually and in many different ways.

3. In our SBU, a high involvement of the employees for the fulfillqient ofcustomer needs is expected.

Artifacts for Market Orientation

Stories about heroes of market orientation (new scale)

Please indicate the frequency of stories among the employees of yourbusiness unit concerning the following topic:1. Exemplary customer-oriented behavior of an executive (e.g., founder,

chief executive, manager).

Stories about problems with market orientation (new scale)

Please indicate the frequency of stories among the employees of ycbusiness unit concerning the following topics:I. Communication problems among different areas that negatively jiffect

market orientation.


AppendixCONTINUED

2. Problems of the SBU because of a low level of market orientation.3. Unwritten laws (hidden rules) in the SBU that prevent market

orientation.

Arrangements of market orientation (new scale)

1. In our SBU, buildings and the exterior complex are styled very clearlyso that visitors/customers find their ways easily.

2. In our SBU, the customer reception is well organized and clearlystyled.

3. In our SBU, meeting rooms and offices are built in a style that supportscommunication.

4. In our SBU, attractive meeting and discussion areas (e.g., cafeterias)exist where infonnation can be exchanged informally.

Rituals of market orientation (new scale)

1. In our SBU, employees who are customer-oriented in an exemplaryway are rewarded regularly.

2. In our SBU, we regularly organize events for important customers.3. In our SBU, we receive customers very individually (e.g., by

specifically trained employees, by a written welcome on a blackboardat the reception).

4. In our SBU, we regularly organize special sales events for customersfor the delivery of products or services.

Market-oriented language (new .scale)

Please indicate the frequency of the articulation of the following orsimilar sentences during meetings in your SBU:1. "If we now try to look at this problem from the customer's point of

view ..."2. "What is the value added to the customer by doing that?"3. "Can we offer the customers what they are expecting from us?"

Non-market-oriented language (new scale)

Please indicate the frequency of the articulation of the following orsimilar sentences during meetings in your SBU:1. "This idea sounds very interesting, but it is not realistic for our SBU."2. "I know very well what the customers desire."3. "I am not interested in what competitor XY plans! We need to ..."4. "Why should we change something in this context? I think it still

works fine."

Market-Oriented Behaviors (adapted from Kohli. Jaworski, and Kumar 1993)

1. In this business unit, we meet with customers at least once a year tofind out what products or services they will need in the future.

2. We are slow to detect changes in our customers' product preferences,(reverse coded)

3. We poll end users at least once a year to assess the quality of ourproducts and services.

4. We are slow to detect fundamental shifts in our industry (e.g.,competition, technology, regulation), (reverse coded)

5. We have interdepartmental meetings at least once a quarter to discussmarket trends and developments.

6. Marketing personnel in our business unit spend time discussingcustomers' future needs with other functional departments.

7. When something important happens to a major customer or market, thewhole business unit knows about it within a short period.

8. Data on customer satisfaction are disseminated at all levels in thisbusiness unit on a regular basis.

9. We periodically review our product development efforts to ensure thatthey are in line with what customers want.

10. Several departments get together periodically to plan a response tochanges taking place in our business environment.

11. The activities of the different departments in this business unit arewell coordinated.

12. When we find that customers would like us to modify a product orservice, the departments involved make concerted efforts to do so.

Outcomes

Market performance (adapted from Irving 1995)

In the last three years, relative to your competitors, how has your businessunit performed with respect to ...1. Achieving customer satisfaction?2. Providing value for customers?3. Keeping current customers?

4. Attracting new customers?5. Attaining desired growth?6. Securing desired market share?

Financial performance (return on sales)

Over the last three years, what was the average annual return on sales ofyour strategic business unit?

Moderator Variable

Market dynamism (adapted from Maltz and Kohli 1996)

Please indicate the frequency of changes in the following aspects of thebusiness environment of your business unit:

1. Changes in products offered by your competitors.2. Changes in sales strategies by your competitors.3. Changes in sales promotion/advertising strategies of your competitors.

"The possible range for all measures was 1-7, except financial performance (1-5).

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