How market orientation induces small businesses’ performance: the role of strategic fits

Abstract

This study draws from the contingency theory and the resource-based view to propose that the prospector strategy mediates the link between market orientation and small businesses’ performance. Data were collected from 161 small businesses located in Vietnam and PLS-SEM was used to assess the research’s framework. The results reveal that the prospector strategy fully mediates the link between market orientation and the performance of small businesses located in Vietnam. This study suggests that the owners should follow the prospector strategy when their small businesses follow market-oriented approaches to find the performance implications of their businesses. This study contributes to the strategic management literature by showing that the prospector strategy must be considered when assessing the positive effects of market orientation on performance. This study also overcomes the prior strategic management studies’ limitations relating to the proposals of the analytic framework to assess strategic fits by using the Cartesian contingency framework. Lastly, this study advances our knowledge of the contingency theory in the context of small businesses. The results should be interpreted with due concern for the generalized issues, lack of a pilot test, and low response rate.