The theory of market orientation, emerging from the context of for-profit organizations, has potential application and use in the nonprofit sector. This research proposes links between market orientation, innovativeness, resource scarcity, funding source, and performance related variables in the nonprofit context. Based on the empirical data from 579 nonprofit organizations in India engaged in service delivery to beneficiaries, the study shows that market orientation in nonprofit organizations improves peer reputation, beneficiary satisfaction, and innovativeness. However, market orientation alone is not enough. Innovativeness is the missing link that mediates the market orientation and effectiveness relationship. The study shows that market orientation does not help in attracting resources in the Indian context, a finding which runs counter to the evidences from previous studies carried out in the context of developed countries. The study finds that resource scarcity and funding sources do not moderate the market orientation and performance relationship. The implications for practitioners are discussed.
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