Influence of market orientation and stakeholder management on the performance of croatian cities

Abstract

The implementation of market orientation plays a valuable role in the complex public sec-tor, because it enables numerous entities responsible for the development of different levels of public administration to respond more efficiently to the demands of its users and other stakehol-ders. The current fragmented territorial structure and low level of decentralization reduce the de-velopmental potential of local administrations in Croatia. However, these obstacles do not re-lieve the Croatian local administration of their responsibility to fulfil their social mission. The empirical measurement of quantitative and qualitative indicators in Croatian city administrations have determined a medium level of their market orientation. The results of correlation analysis have revealed a statistically significant difference between market orientation levels towards each of the nine analyzed groups of stakeholders. As presumed, the city administrations exhibit the highest market orientation level toward citizens. Additionally, the research has confirmed the positive influence of higher multiple stakeholder market orientation of city administrations on their subjectively measured performance. These results should be observed and assessed, taking into account the fact that the Republic of Croatia does not prescribe a legal obligation to monitor the city administration performance nor directly encourages it.