Market Driving and Firm Performance

Abstract

Marketing theory suggests market orientation to be one of the most effective strategy of achieving and maintaining competitive advantage (Jaworski, Kohli, and Sahay 2000). Current understanding of market orientation relates to the organization-wide generation and dissemination of customer and competitor information and is associated with a firm’s ability to learn and respond to the market (Kohli and Jaworski 1990). Reviewing prior research on market orientation, Jaworski et al. (2000) criticize most conceptualizations of the construct to be too narrow. They extend understanding of market orientation through distinguishing between two complementary approaches: The first approach which is characterized as ‘market driven’, describes market orientation as a reactive concept, where companies intend to keep the status quo by focusing mainly on existing customers and their current needs. The second ‘market driving’-approach is a more proactive understanding of the concept, where companies shape not only customers’ but also other market participants’ behaviors and/or market structure in a direction that enhances the competitive position of a firm (Jaworski et al. 2000). In our research, we focus on the latter market driving-approach, as so far the relevance of this approach has not been investigated empirically. Therefore, our study develops a measurement instrument of the market driving construct based on the recent conceptualization developed by Jaworski et al. (2000), discusses and empirically tests antecedents and performance outcomes of the market driving construct, and finally, examines the moderating effects of market turbulence and technological change on the market driving-performance linkage, using a sample of 181 managers from electronics industry.