Marketing Orientation and Its Determinants: An Empirical Analysis

by

George J. Avlonitis and Spiros P. Gounaris

Dr. George J. Avlonitis is Professor of Marketing at the Department of Management Sci-ence & Marketing of the Athens University of Economics & Business.

Dr. Spiros P. Gounaris is Lecturer of Marketing at the Department of Management Sci-ence & Marketing of the Athens University of Economics & Business.

Abstract Recent studies around the Marketing Orientation concept, and especially in Europe, have mainly focused

around two general topics: The understanding of Marketing Orientation and the investigation of the relation-ship between Marketing Orientation and company performance. However, while a strong association between Marketing Orientation development and company performance has been established, the understanding of the Marketing Orientation remains unclear since some studies have suggested a philosophical nature for Market-ing Orientation and some other studies concluded that Marketing Orientation represents a behavioural notion. As a result of this antithesis, research has not proceeded in the investigation on the factors that determine the degree of Marketing Orientation development. The findings presented in this paper show that Marketing Ori-entation should be conceptualised synthetically since it represents the integration of a certain culture with spe-cific behaviour. Furthermore, a step towards a closer examination of the major determinants of Marketing Orientation development is taken: Although exploratory in nature, the findings suggest that Marketing Orien-tation development is determined by company-specific, as well as by market-specific factors with the former having a facilitating effect and the latter a coercive effect.

Key Words Marketing Orientation Development, Determinants of Marketing Orientation, Company Factors and

Marketing Orientation, Market Factors and Marketing Orientation, Marketing Orientation and Its Determinants: An Empirical Analysis

1. INTRODUCTION Several research efforts have been focused on the investigation of the relationship between the degree of

Marketing Orientation adoption and company performance (e.g. Narver and Slater, 1989 Cadogan and Dia-mantopoulos 1995, Anttila, Moller and Rajala 1995). All these and similar studies have produced significant evidence of an association between the two notions.

On the other hand, Marketing Orientation is admittedly the characteristic of a limited number of compa-nies: The vast majority fails to develop and exploit the benefits of the concept (Hooley, Lynch and Shepherd 1990). In order to explain this paradox, one has to consider the conditions under which the concept of Market-ing Orientation can flourish. However, to the best of our knowledge, with the exemption of the research car-

ried out by Kohli and Jaworski (1992), little attention has been given on the conditions under which Marketing Orientation could be developed.

This paper presents and tests a hypothesis regarding the importance, and the role, of company- and mar-ket-specific variables in developing a Marketing Orientation. The major hypothesis of this paper is that Mar-keting Orientation represents a synthesis of attitudes as well as of behaviours, the development of which is significantly influenced by both the internal environment (as a facilitating variable) and the external/market environment (as an initiating variable). In the following pages a relevant literature review, and the hypotheses of the study, are presented.

2. BACKGROUND & HYPOTHESES

2.1. Explicating the Marketing Orientation Concept During the last twenty years two main conceptualisations of the notion have been developed: One that in-

terprets Marketing Orientation as basically a company attitude and a second that explains it as basically a company behaviour.

Drucker (1954) for instance stated that «marketing is not a specific company activity. Rather, it involves the entire organisation viewed from the customers’ point». Similarly, Felton (1959) has also described Marketing Orientation giving, too, attitudinal qualities to the concept. More specifically, he approached it as «a way of thinking in doing business that is based on the integration and co-ordination of all marketing activities which, in turn, will integrate with the rest of the company activities in an effort to maximise long-term profitability».

Much later, at the 1990 Marketing Science Institute (MSI) conference on «Organising to Become Market Driven», Fr. Cespedes used Marketing Organisation to describe the functional department of the company that executes marketing related activities (e.g. pricing, distribution, promotion etc.), while the concept of marketing was identified with a certain way of thinking concerning the company’s priorities and goals (1990). In a simi-lar direction are also the ideas of Deshpande and Webster (1989) who grant philosophical/cultural qualities to Marketing Orientation. In doing so they use the degree of Marketing Orientation to explain the company’s propensity to innovate (Deshpande, Farley and Webster 1992). In their study they use the term «customer ori-entation» to describe a specific set of beliefs that puts the customers’ interests first and ahead of those of all other stakeholders (e.g. owners, managers, employees) which, in their view, should be considered as part of a broader, and more fundamental, corporate culture.

The above citations of writings that approach Marketing Orientation as a company philosophy are merely indicative and by no means exhaustive. Others have also developed and stated similar views, all treating Mar-keting Orientation as mainly a company philosophy (Houston 1986, Dixon 1990). To summarise the basic facets of Marketing Orientation as a company philosophy, one can, on the basis of the attitudes underlying the concept, isolate specific priorities for the Marketing Oriented company:

(a) a priority in customers when evaluating the company and its products and the extent to which both the company and its products satisfy specific customers’ needs,

(b) a priority in elevating marketing as the prevailing culture of the company so the entire organisa-tion will mobilise towards satisfying customers’ needs, and

(c) a priority in adjusting products according to the market needs and wants, rather than according to the company’s perceptions and beliefs, so that customers satisfaction can be delivered.

However, as previously noted, parallel to the notion that Marketing Orientation represents a specific com-pany philosophy, another one has been developed that regards Marketing Orientation as primarily a specific company behaviour. Trout and Ries (1985) for example perceive Marketing Orientation as an effort to compile market intelligence upon which the effort to build a competitive advantage is based. In fact, they take it a step further by supporting that customer orientation, although important, is not as crucial as a competitor orienta-tion is, as the later will enable the company to identify the weaknesses of its competitors and strike them back were they suffer.

Elliot (1987) also adopts a behavioural approach in explaining Marketing Orientation, but from a different viewpoint. He suggests that the concept of Marketing Orientation and the philosophy to set a priority to sat-isfy customers’ needs, although important, is insufficient and requires revising. He proposes that the designing of strategies that are purposed to achieve customer satisfaction should be considered as part of the Marketing Orientation concept.

This strategic-behavioural approach in explaining Marketing Orientation has found acceptance and support by other authors too (Bonoma 1985, Bonoma and Clark 1992). In fact, attempts have been made to explain Marketing Orientation as the understanding of the significance of marketing for the company. This calls for the development of marketing skills (with particular emphasis in the designing and implementation of market-ing strategies) by the people of the company while, at the same time, emphasis needs to be given on the re-quired changes in the organisational structure and marketing systems of the company (Canning 1989, Kohli and Jaworski 1990). Within this framework of behavioural-strategic approach to Marketing Orientation, Kohli and Jaworski (1990) have set three main priorities for a Marketing Oriented company:

(a) priority in market intelligence collection (to understand the market), (b) priority in intelligence dissemination throughout the company (to familiarise it with the market),

and (c) priority in responsiveness to this intelligence (through the strategies and plans that the company de-

signs and implements). This extensive presentation of the two dominant approaches of Marketing Orientation reveals significant

overlaps between them: Unless the company has developed a certain attitude, strategies that will aim to maxi-mise its adaptation to the market cannot be designed. On the other hand, strategies designed to increase the degree of the company’s adaptation to the market cannot be actually implemented unless the compulsion to do so is appreciated. In other words, it would appear that the two main approaches that have been developed and presented in the previous lines actually complement each other instead of opposing. Thus, we suggest that

H1 A genuine Marketing Orientation adoption represents the synthesis of certain atti-tudes and of certain practices which, in turn, are related and inseparable.

2.2. Determinants of Marketing Orientation Determinants of Marketing Orientation refer to those factors that influence the development of the set of at-

titudes and the set of practices that comprise the concept of Marketing Orientation. Our examination of the pertinent literature revealed two broad groups of such factors: Company-specific factors and Market-specific factors.

2.2.1. Company-Specific Factors

(a) Company’s Internal Environment As previously explained, the concept of Marketing Orientation consists of specific attitudes that guide the

company’s culture and of specific practices that guide its behaviour. According to Pascale (1990) the com-pany’s culture, like its practices and behaviour, is a manageable variable which can be appropriately manipu-lated in order to achieve internal consistency in the pursuit of strategic synergy. Hence Marketing Orientation cannot be viewed as something that the company has it or not. Rather, Marketing Orientation represents the outcome of an evolutionary process that, within a broader framework of a changing environment, takes the company from complete ignorance of the concept to full adoption (Preston, Saker and Smith 1993, Tuominen and Moller 1996 Hooley, Lynch and Shepherd 1990).

Within this process, it is clear that the company needs to reconsider its strategical direction. However, strat-egy formation requires that the company’s (new) mission has been consulted so that the prevailing company culture (underlying the company’s mission) is in accordance with the company’s (new) strategic directions (Cravens 1991). Once this first step is completed, the Top Management Team (TMT) needs to ensure that the structural arrangements of the company reflect and facilitate the adoption of the new strategy so that structure and strategy can work harmonically to promote the objective of greater market adaptation.

However, doing so is risky because each time that an important aspect of the company’s strategy clashes or is incompatible with the prevailing culture, then, a situation of instability and unbalance between strategy and culture arises. This situation involves a great deal of what Schwartz and Davis (1981) have termed «cultural» risks. Thus, the company’s TMT is obliged to interfere with both the company’s culture and strategy and at-tempt to harmonise them and bring them into accordance. Such situations are quite common among companies that try to become Marketing Oriented: In some cases, if Marketing Orientation development starts with modi-fications of the company’s set of attitudes and beliefs then, the emerging culture, will be incompatible with the strategy of the company that was designed under the previous company’s culture that is currently under revi-sion. In other cases, when the initiation of the Marketing Orientation development process starts with altera-

tions of the company’s practices and strategies then, the emerging strategy, will be incompatible with the exist-ing culture and, consequently hard to gain acceptance and receive commitment.

In this context, Marketing Orientation development appears to be a political phenomenon as the company’s re-orientation requires the re-design of the company’s structure, the reconsideration and the re-allocation of the company’s resources, the re-modelling of the company’s information and communication networks and so on (Piercy 1991, 1992). Clearly, under such conditions of literally re-shaping the entire organisation, existing in-terests are harmed and the company’s present status quo frequently reacts negatively. Thus, the political nature of Marketing Orientation is given and, likewise, the need for the company’s TMT to assume a significant amount of risk (associated with the acceptance that conflicts between the new and the old situations will arise), in order to allow Marketing Orientation to prevail, is also given.

Assuming that the company is risk-tolerant enough to initiate the process of establishing a Marketing Ori-entation and proceed with it, other aspects of its internal environment become important factors that also de-termine the degree of Marketing Orientation development.

More specifically, organisational studying has a long tradition of research which has established that the way information is used is likely to be a function of the presence of organisational structures, systems and pro-cesses (Cyert R and March G, 1992, Daft R. and Weick K. 1984, Weick K. 1979). Two fundamental character-istics of these structures, systems and processes are the degree to which they are centralised and the degree to which they are formalised.

Centralisation is defined as the delegation of decision-making authority throughout an organisation and the extent of participation by organisational members in decision making (Aiken and Hage 1968). Formalisa-tion is defined as the existence of specific rules, authority relations, communications, norms, procedures and sanctions that characterise the operations of an organisation (Hall, Haas and Norman 1967).

Empirical research has shown that the company’s ability to acquire market information, to achieve information transition company-wide and utilise it, is inversely related to the degree of centralisation that characterises the pertinent information monitoring and collecting systems, structures and processes. For instance the work of Deshpande (1982) and Deshpande and Zaltman (1982) has shown that the greater the degree of centralisation in such structures, systems or processes, the lower the company’s ability to utilise information from the market.

It is also argued that formalised structures, systems or procedures, although they may possibly facilitate in-strumental utilisation processes (since such procedures involve using information to take marketing actions), reduce information acquisition, information dissemination and conceptual utilisation by weakening myopic interpretations, (Moorman 1995, Menon and Varadarajan 1992, Day 1991, Imai, Nokaka and Takeuchi 1985).

To summarise, the review of the organisational literature reveals significant evidence that the two facets of Marketing Orientation are related with and influenced by the company’s attitude towards risk as well as the company’s structural arrangements and, in particular, the degree of centralisation and formalisation that char-acterises them. On these grounds we suggest that:

H2 The company’s (Top Management) attitude towards risk, as well as the degree of centralisation and formalisation that characterise its structural arrangements, de-termine the degree of Marketing Orientation.

(b) Significance Attached by the Top Management Team to Different Key Factors of Suc-cess

The formation of the company’s internal environment, as well as the decision to initiate the process of Marketing Orientation development, is certainly the accountability of the company’s Top Management Team since it is most unusual that, any attempt to define what the company is and how it will compete in the market will originate from the bottom and not from the top (Shapiro 1988). Indeed, the role of Senior Management in moulding the principles upon which the company’s identity will be established has long been accepted (Meg-ginson, Mosley and Pietri 1989 ).

On the other hand, companies have subjective theories, which link successful previous experience to causes. Such theories and experiences provide guidelines about how should they move on into the future (Ferguson and Dickinson (1982). Consequently, the Top Management’s team perception of the importance of different Key Factors of Success (K.F.S.) should be expected to determine whether Marketing Orientation will be selected as the basis for creating and sustaining a competitive advantage.

The decision to build a competitive advantage based on the development of Marketing Orientation is the outcome of an evaluation process that takes into consideration three main questions: (a) Does it make sense to invest in building a certain competitive advantage under the given market conditions ? (b) Is the development of this advantage efficient and effective ? and (c) Can this competitive advantage that will be derived by the development of a Marketing Orientation be sustained in the long-run ? (Aaker 1989).

However, answering these questions requires that the company has considered and evaluated alternative factors of success and has determined those critical factors that in its specific market(s) lead to better perform-ance (Ohmae 1983). This evaluation process is frequently the outcome of the company’s previous experience of what has served the company better in the past (Lorsch 1986). For example, if the company had benefited in the past from being a cost leader, it is very likely that it will perceive that cost controlling is a Key Factor of Success and, consequently, it will direct its efforts in maintaining its cost-controlling ability in order to sustain its cost advantage over its competitors.

In other instances however, the way the company responds to its environment modifies the limitations, the opportunities and the threats that the environment imposes to the company, a fact that, in turn, leads the com-pany to reconsider and re-evaluate the importance of different KFS (Pearce and Robinson 1988 ). For exam-ple, if the company, at a certain period of time, concluded that cost-controlling was no more a strong basis of differentiation, alternative bases for building a competitive advantage would be sought and considered. In such situations, it may be possible that the company’s Top Management Team decided that an aggressive sales strategy would pay off. Thus, it becomes very likely that the company will reconsider the importance of being a cost leader and try to establish a, new, competitive advantage based on its selling skills.

From the above discussion it becomes evident that the company’s resources are allocated and re-allocated depending on the subjective evaluation of different KFS by the company’s TMT on how they perceive that a competitive advantage can be established and on what are the Key Factors of Success that influence the mag-nitude and the sustainability of this advantage (Day and Wensley 1983). On this basis, we expect that:

H3 The importance assigned by the Top Management Team to different Key Factors of Success determine the degree of Marketing Orientation.

2.3. Market-Specific Factors The salient role of the company’s market environment in the development of a Marketing Orientation has

also been established for quite some time now (Felton 1959, Levitt 1960, Kotler 1977). In fact, Levitt (1960) has argued that, as long as the company operates in familiar, stable and predictable markets, it does not have to develop a Marketing Orientation. However, because in the long-run most markets do not remain stable or pre-dictable, companies have to become more adaptive to market changes (i.e. have to become Marketing Ori-ented) while those who fail to do so simply die (Day 1990).

According to Porter (1985) the structure of any market consists of five main factors: Suppliers, Buyers, New Entrants, Substitute Products and Existing Competitors. Consequently, changes of the market environ-ment should originate from changes derived from these five major structural factors of the market which ex-plain the nature and the type of any given market.

In the work of Davis, Morris and Allen (1991) the effect of certain environmental characteristics on spe-cific entrepreneurial and organisational factors was investigated. More specifically, their analysis focused on the investigation of the effect of certain market characteristics exercised on: (a) the importance assigned by the company to specific marketing activities (e.g. formal marketing research, use of market segmentation strate-gies etc.), (b) the company’s propensity to innovate and take calculated entrepreneurial risks and (c) its organ-isational structure. Their findings indicated that in markets characterised by increased growth rates, companies are more prone to (a) undertake more marketing activities, and (b) assume more innovative and proactive be-haviour. Since Marketing Orientation has already been defined as the mixture of a set of beliefs (guiding the company to undertake whatever action is necessary so that customers’ satisfaction is increased) coupled with a certain set of practices (that actualise the behaviour into concrete practice) it would appear that the work of Davis, Morris and Allen implies some association between growing-evolving market environments and Mar-keting Orientation development.

Another association is also evident in the work of Diamantopoulos and Hart (1993). More specifically, in a replication of the work of Kohli and Jaworski (1990) but within a British context, the authors found that com-petitive hostility moderates the relationship between Marketing Orientation adoption and company perform-ance. More specifically, according to their findings, the Marketing Orientation - company performance

association is stronger in the more competitive markets. Consequently, the degree of competition can reasona-bly be expected to be one market-specific factor that determines the extent of Marketing Orientation develop-ment.

In a similar direction are also the findings of an earlier study carried out by Narver and Slater (1989). How-ever, in that study, the research focused on a larger number of variables and the interest centred on the effect that specific market characteristics bear on both the company’s performance itself and the relationship be-tween Marketing Orientation adoption and the company’s performance in the market. The evidence compiled and the analysis that followed showed that the relationship between Marketing Orientation adoption and com-pany performance is influenced by the power of the company’s suppliers, the power of the company’s buyers, the barriers to entry as well as the ones to exit the market, the competitive intensity, and the rate of technologi-cal change.

More specifically, the data collected by Narver and Slater showed that low barriers to entry, technological changes and powerful buyers shaped a hostile and turbulent environment that had a negative effect on the company’s performance while strengthened the association between Marketing Orientation and company per-formance. Consequently it is logical to infer that under such conditions companies are more inclined to de-velop a Marketing Orientation.

Finally, in a recent study Slater and Narver (1994) investigated, among other variables, the moderating role of the strength of the economy in which companies operate, on the relationship between Marketing Orienta-tion development and company performance. In that study, the findings showed that for companies operating in week economies with stable or decreasing markets, a Marketing Orientation adoption is more likely than it is for companies that operate in strong economies.

These empirical findings are in accordance with normative work developed in the 1980’s which had sug-gested specific relationships between certain characteristics of the market environment and the basis upon which companies attempt to build and sustain a competitive advantage (Porter 1985, Scherer 1980). For in-stance, it has been argued that as the power of the company’s customers increases so will the company’s need to develop a Marketing Orientation, since in such market conditions, the company’s customers have the power to demand, and get, maximum adaptation to their specific and individual needs (Porter 1985, Schere 1980). Similarly, it has also been suggested that the lower the barriers to entry for new competitors (Porter 1985), as well as the greater the competitive intensity (Scherer 1980), the higher the company’s need to develop a Mar-keting Orientation, since, under such conditions, competition is intensified and companies need to react either through price cuts (and tolerate eroded profit margins) or through differentiated products that better meet the demand of the market (and maintain/increase market share and profit).

To summarise, the literature reviewed suggests that the development of Marketing Orientation is influ-enced not only by company-specific factors but also by market-specific ones. More specifically, empirical, as well as normative, work suggests that: (1) the competitive intensity characterising the market, (2) the difficulty with which new competitors may enter the market, as well as new competitors may enter it, (3) the distribution of power between buyers and producers on one hand and producers and suppliers on the other, (4) the degree of technological change and (5) the growth rates, both in the past and the expected ones for the future, charac-terising the company’s market, influence the development of Marketing Orientation. On these grounds we suggest that:

H4 The Nature of the company’s Market, as defined by the degree of competitive hostil-ity, the existence of barriers to entry and barriers to exit, the rate of technology change, the distribution of power between the market’s main protagonists and the market’s growth rates, determines the degree of Marketing Orientation.

3. RESEARCH METHODOLOGY

3.1. Sample The hypotheses put forward in this paper were assessed against data from 444 Greek companies. The data

were secured by means of a mail questionnaire as this technique has the significant advantage to allow time to the respondent to pile the information in question and, consequently, decrease the not-answered questions per questionnaire (Hansen 1980).

The data collection strategy for the mail survey had two objectives. First, a cross sectional sample was cho-sen with the intention to increase the generalizability of the findings. At the same time, it was necessary that

certain marketing skills should be present among the companies in the sample. Thus, we ensured that larger companies would be adequately represented in the sample since, it was felt that, the larger the company the higher the probability to possess these skills. Consequently, the sample was defined to encapsulate the follow-ing companies described in the mailing lists of ICAP1:

� all manufacturing companies with more than 40 employees (n=1,843)

� a random sample of 600 manufacturing companies with fewer than 40 employees

(n=3,362)

� all service companies with more than 20 employees (n=1,157),

This sampling procedure produced a sample of 3,500 companies. However, changes in addresses and/or the close-down of some of these companies, eventually reduced the original sample down to 3,200 companies. Clearly, including in the sample such a large number from such diversified industries increases the levels of heterogeneity in the sample. Although increased heterogeneity has been argued to induce negative effects on the quality of the findings Dubinsky and Ingram 1982, Bilkey 1978) cross-sectional samples with increased levels of heterogeneity are frequently used in research efforts in order to increase the researchers’ ability to generalise (Hooley, Lynch and Shepherd 1990, Kohli and Jaworski 1990). The second objective of the data collection strategy was to collect the required information only from the Marketing Director of the company or the Sales Director when a Marketing Director did not exist.

In order to collect the data, a detailed and lengthy questionnaire was designed. In doing so, particular em-phasis was given in avoiding leading questions as well as complex or sensitive ones (especially in the begin-ning of the questionnaire) that could influence the respondent negatively (Churchil 1991). Prior to mailing it, the questionnaire was extensively pre-tested. For that purpose, 12 personal interviews were conducted with Marketing Directors who had agreed to provide assistance and comments on the development of the question-naire.

3.1.1. Response Rate and Structure of the Sample Two mailing waves produced 278 and 175 completed questionnaires respectively. Table I summarises the

structure of the respondents. From these, 9 questionnaires had to be excluded from further analysis as the large number of unanswered questions per questionnaire was making any further analysis impossible.

Consumer Industrial Services TOTALSb

Main Market 236 161 40 437

Small Medium Large

Sizea 106 189 143 438

a The definition of size took into consideration the characteristics, in terms of employment level and annual turn-over, of Greek companies. Thus, as small were defined those companies that employed up to 50 employees and had an annual turn over no more than US$ 2 mil. As medium were defined those companies that employed from 50 up to 250 employees and had an annual turn over from US$ 2 mil. up to US$ 11 mil. As large were defined those companies that employed more than 250 employees and had an annual turn over exceeding US$ 11 mil.

b Totals do not add to 444 as some respondents did not indicate the size of the company while others failed to indi-cate the market that their company participated in.

Thus, 444 questionnaire were left for further analysis, giving a response rate of approximately 14%. A

higher response rate was probably impossible because of the length of the questionnaire (12 pages) and the confidential nature of the information requested in some questions. Besides, one has to take into consideration that large-scale surveys, using random sampling, tend to show a decline in response rates (Baim 1991, Meir 1991). Similar studies that involved large and cross-sectional samples achieved response rates ranging from 14% to 20% (Janson 1988, Gurrian 1991).

1 The Gallup’s subsidiary in Greece.

Table I: Structure of the Respondents

However, an effort was also made to locate a possible source of non response bias. One objective means of assessing nonresponse bias is to assume that respondents / nonrespondents differences might be manifested to some degree between early and late responses (Armstrong and Overton 1977). Indeed, differences in measured levels of Marketing Behaviour between the first wave (early) and the second wave (late) respondents were insignificant indicating that the measured variables of our study are not valued differently between respon-dents and not respondents.

3.1.2. Marketing Director Respondents within companies were selected to have a deep knowledge of the company’s overall market-

ing culture and practices. At the same time, they had to be senior enough to provide information on the com-pany’s strategies. The ICAP catalogues used in our research provide information regarding the companies’ various departments as well as the names of the Directors of each department. Thus, in the companies having a Marketing Department, the Marketing Director was the recipient of the questionnaire while in the companies that did not have a Marketing Department the questionnaire was addressed to the Sales Director.

The choice to use the single respondent approach was compelled by both the size of the sample and the re-spondent’s familiarity with the research topic and the information sought. The large size of the sample ren-dered the mailing of additional questionnaires to more respondents per company prohibitive in financial terms. Besides, similar studies in the broader field of marketing have also employed the key respondent approach without any flaws to the reliability of the data (Narver and Slater 1989 Donaldson 1995).

3.2. Variables Measurement

3.2.1. Marketing Orientation Measured as An Attitudinal Concept In order to measure the respondents’ level of Marketing Orientation adoption (as attitude), they were pre-

sented with the 15 statements that have been found to adequately describe different attitudinal approaches to Marketing Orientation (Hooley, Lynch and Shepherd 1990). Then, using a Likert scale (1=«I Fully Disagree» to 5=«I Fully Agree») they were asked to indicate the degree of agreement or disagreement with each state-ment. In order to avoid potential bias in the responses induced by the possibility that some respondents might be inclined to systematically tick at the extremes of the scale, attention was given to phrase the sentences in a manner that higher levels of agreement would not always represent a more positive attitude towards Marketing Orientation. Later, during the analysis of the results, where necessary, the scales were reverted so that higher levels of agreement would always represent more positive attitude toward Marketing Orientation. The state-ments, as well as the pertinent descriptive statistics, are presented in the Appendix.

3.2.2. Marketing Orientation Measured as A Behavioural Concept The measurement used by Kohli and Jaworski (1990) for Marketing Orientation as behaviour was em-

ployed to gauge the degree of Marketing Orientation (as behaviour) of the respondents (see appendix). Thus using a 5-point scale (1=«It Does Not Represent Our Company At All» to 5=«It Fully Represents Us»), we measured (a) the degree of market intelligence collection, (b) the degree of company-wide dissemination of the intelligence, and (c) the degree of responsiveness to the market intelligence gathered. The means and the standard deviation, as well as a reliability analysis, for the statements used to measure the 3 different as-pects of Marketing Orientation (as behaviour) are presented in the Appendix.

3.2.3. Top Management’s Attitude Towards Risk

In order to measure the Top Management Team’s attitude towards risk, the respondents were presented with the statements developed by Kohli and Jaworski’s (1992) that have been found to adequately describe the company’s overall attitude towards risk. Then, using a 5-point scale (ranging from 1=«It does not represent our company at all», to 5=«it fully represents our company») they were asked to indicate to what extent each statement represented their company (see Appendix for statements and descriptive statistics).

3.2.4. Degree of Formalisation and Centralisation

To measure the company’s degree of formalisation, the respondents were presented with the 7 statements developed by Heige and Aiken (1970) for assessing the company’s degree of formalisation. Then, using a 5-point scale (1=«It does not represent our company at all» to 5=«It fully represents our company») the respon-dents were asked to indicate to what extent each of the 7 statements represented their company. As far as the measurement of the company’s degree of centralisation is concerned, the respondents were presented with the

4 statements used by Kohli and Jaworski (1992) in order to gauge the company’s degree of centralisation. Then, using a 5-point scale (1=«It does not represent our company at all» to 5=«It fully represents our com-pany») the respondents were asked to denote to what extent each of the 4 statements represented their com-pany (see Appendix for statements and descriptive statistics).

3.2.5. Importance Assigned to Different Key Factors of Success

In order to evaluate the importance assigned by the Top Management Team to different Key Factors of Success, the respondents were initially presented with a total of 16 different potential factors of success and, using a 4-point scale ranging from 1=«Little or not important» to 4=«Very Important», were asked to indicate the importance they perceived that each potential K.F.S had for their company (see Appendix for presentation of the 16 statements and descriptive statistics for each statement). Preliminary analysis of the correlation ma-trix of the 16 statements showed that it might be likely to form distinctive groups of factors that were possibly underlying the original statements. For this purpose we performed a Principal Components Factor Analysis (PCFA) of the original 16 statements. This analysis is particularly useful when the researcher seeks to identify possible underlying factors that characterise a specific group of variables. The PCFA resulted in a 5-Factors solution, namely Market Focusing (referring to such factors as the company being trusted by its customers, the company’s overall image in the market, the promptness with which it reacts in customers’ needs and re-quests, its willingness to define the quality of its products as perceived by its customers and the quality of the relationships the company maintains with its customers), Channel Networking (describing such factors as the spread of the company’s distribution channel, the quality of the relationships that it has with the members of its distribution network, the existence of a management information and the emphasis it places on advertis-ing), Product Uniqueness (pertaining to such factors as the uniqueness of the features of the company’s prod-uct and its design) Price Advantage (including such factors as the financial strength of the company, cost advantage and competitive pricing) and Skilful Salesmanship (referring to such factors as emphasis on per-sonal selling and after-sales service) (see the Appendix for a detailed description of this Factor Analysis solu-tion and pertinent statistics).

3.2.6. Measurement of Environmental forces

(a) Power of Company’s Buyers and Suppliers Both concepts were measured using the same measures employed by Narver and Slater (1989). More spe-

cifically, the Power of the company’s Buyers was gauged by asking the respondents to indicate, using a 5-point scale ranging form 1=«I Totally Disagree» to 5=«I Totally Agree», their agreement with the following statement:

Buyers’ power: “Many of our customers have the power to negotiate and impose their terms when do-ing business with our company” (mean = 2,745 Std. dev. = 1,056).

In order to assess the company’s power over its Suppliers, we asked the respondents to indicate, using a 5-point scale, ranging form 1=«I Totally Disagree» to 5=«I Totally Agree», their agreement with the following statements:

Suppliers’ power: “Our company has the power to negotiate and impose its own terms when doing busi-ness with our major suppliers” (mean = 3,581 Std. dev. = 1,056).

(b) Barriers to Entry and Barriers to Exit The existence of Barriers to Entry for possible competitors, as well as Barriers to Exit for the existing

competitors, was, again, evaluated using the measures originally employed by Narver and Slater (1989). Re-spondents were presented with a 5-point scale ranging form 1=«Easily» to 5=«Difficult» and asked to indicate (i) how easy it is for new competitors to enter the company’s market (mean = 3,714 Std. dev. =1,098) and (ii) how easy it is for the existing competitors to leave the market (mean = 3,114 Std. dev. =1,176).

(c) Competitive Intensity In order to measure the market’s degree of Competitive intensity, the measurement of Kohli and Jaworski

(1992) was employed. More specifically, the respondents were presented with 4 statements that are known to describe the intensity of the competitive environment and were asked, using a 5-point scale (1=«I totally dis-agree» to 5=«I totally agree»), to indicate their level of agreement with each statement. However, the results of the reliability analysis performed in order to examine the reliability of the measure indicated that one of the 4

statements had to be eliminated. Thus, only the first 3 of the 4 statements were eventually employed (see Ap-pendix for pertinent statements and descriptive statistics).

(d) Rate of Technological Change Initially, the Rate of Technological Change characterising the market into which the company competed

was attempted to be measured by employing the measure of Narver and Slater who asked the respondents to indicate, using a 7-point scale, the extent to which their production/service technology changed in their princi-pal served market (1990). However, the 70 personal interviews we completed prior to the mail survey upon which this paper is based, indicated that the wording used by Narver and Slater was inappropriate for Greece. Instead, asking the respondents to indicate using a 6-point scale (1= “Not at All” to 6= “Heavily”) the extent to which they were involved in new product development as a proxy measure of technology change was more appropriate (mean = 3,446 Std. dev. = 1,281).

(e) Market’s Growth Rate Finally, the Market Growth Rate (for both the previous 5 years and the 5 ahead) was assessed by using a

5-point scale (ranging from 1=«Rapidly declining» to 5=«Rapidly growing») and asking the respondents to indicate how did their market evolved during the last 5 years (mean = 3,486 Std. dev. = 1,068) and what their forecast was for the next 5 years (mean = 3,342 St. dev. = 0,895).

4. FINDINGS & DISCUSSION

4.1. Explication of the “Marketing Orientation” Concept (H1) An examination of the correlation matrix of the 15 statements used to probe the degree of Marketing Orien-

tation adoption in attitudinal terms, revealed that it might be possible to derive distinctive attitudes towards Marketing Orientation underlying the original variables. To exploit this possibility we performed a Principal

Components Factor Analysis. Table II shows the results of that analysis.

Factors Variables Loadings F1: Market Analysis & Adaptation Intelligence on Competition 0,841

(22,6% of variation) Adapt to the Market 0,818

Market Analysis 0,740 F2: «High-Tech» Selling Promoting Products 0,814

(22,2% of variation) Supporting Sales 0,785 Confined in Sales & Marketing Dep. 0,682 F3: Ignorance Not Existent 0,884

(9,3% of variation) A Confusing Concept 0,785

F4: «High-Tech» Production Design & Production Management 0,880 (7,9% of variation) Decisions on Quality & Quantity 0,866

F5: Traditional Selling Build Customer Relations 0,845 (6,8% of variation) Maintain Customers Contacts 0,757

F6: Marketing Philosophy Satisfy Customers’ Needs 0,753 (6,1% of variation) Build Product Positioning & Image 0,676

A Company Culture 0,445 Kaiser-Meyer-Olkin Measure of Sampling Adequacy = 0,73621 Bartlett Test of Sphericity = 1979,5292, sign = 0,000

As can be seen from Table II, the P.C. Factor Analysis produced 6 different generic attitudes toward Mar-

keting Orientation, each one representing a different perception of the concept, namely: i Market Analysis & Adaptation representing a conceptualisation that places emphasis on specific ac-

tions that are directed towards increasing the company’s level of adaptation to changing market condi-tions (market analysis and adaptation, intelligence collection on competition and adaptation to the market),

Table II: Attitudes Towards Marketing - A Factor Analysis

i High-Tech Selling representing an approach that regards Marketing Orientation as nothing more than a modern approach in sales with the company’s emphasis remaining on the selling effort (promoting products, supporting sales and being the responsibility of the Marketing/Sales department),

i Ignorance denoting the lack of any specific approach towards Marketing Orientation. Rather, it proves that some companies still consider Marketing Orientation as a «confusing concept» and, conse-quently, do not apply it,

i High-Tech Production representing a production-based approach to Marketing Orientation (design and management of the production process and decision-taking on production qualities and quantities) with the emphasis of the company been placed on the production process,

i Traditional Selling corresponding to an approach that maintains a traditional selling conceptualisation of Marketing Orientation (building customer relations and maintaining customer contacts), and finally

i Marketing Philosophy representing a cultural approach to Marketing Orientation (a company culture, customer satisfaction and building product positioning and image).

Having identified a set of generic attitudes towards Marketing Orientation, we then tried to classify the re-spondents on the basis of these attitudes. To do so, we performed a cluster analysis using the factor scores derived from the P.C. Factor Analysis as independent variables.

For the clustering of the data we used the Quick Cluster routine of spss/win, a statistical program for P/C. Quick Cluster is an alternative to the more common hierarchical clustering, offering efficient use of computer resources while identifying clear and distinct clusters.

Variables

(% of Companies, n=444)

Marketing

Oriented

(24,2%)

Product

Oriented

(20,2%)

Sales

Oriented

(14,5%)

Production

Oriented

(11,5%)

Agnostics

(29,6%)

F

Sign.

x SUPPORTING SALES (3,084) 4,025 [4,526] 3,888 [4,353] 28,790 0,000

x PROMOTING PRODUCTS (2,894) 3,367 3,929 3,733 [4,086] 22,168 0,000

x SATISFY CUSTOMERS’ NEEDS [4,705] 4,291 (3,421) 4,405 4,396 41,388 0,000

x CONFINED IN SALES & MARKETING DPTs

(2,852) (3,088) [3,842] 3,288 3,594 10,482 0,000

x MARKET ANALYSIS [4,357] [4,468] (3,350) 3,977 4,267 23,206 0,000

x NOT EXISTENT (1,315) 2,329 2,245 (1,666) [3,034] 46,214 0,000

x A COMPANY CULTURE [4,094] (2,835) (2,175) 3,650 3,267 38,491 0,000

x BUILD PRODUCT POSITIONING & IMAGE

[4,126] (3,075) 3,631 3,800 3,775 14,909 0,000

x DESIGN & PRODUCTION MANAGEMENT

2,789 [3,758] 2,245 [3,706] (1,873) 51,512 0,000

x DECISIONS ON QUALITY & QUANTITY

3,452 [3,974] (2,473) [3,841} (2,519) 34,033 0,000

x MAINTAIN CUSTOMERS CONTACTS

3,200 2,265 [4,105] (1,911) 3,732 61,436 0,000

x INTELLIGENCE ON COMPETITION

[4,210] 3,949 (3,140) (2,666) 3,965 34,692 0,000

x ADAPT TO THE MARKET [4,378] 4,139 (3,333) (3,111) 4,163 29,687 0,000

x BUILD CUSTOMER RELATIONS [4,126] (2,949) [4,263] (2,688) 3,956 48,237 0,000

x A CONFUSING CONCEPT (1,663) 2,493 2,877 (1,666) [3,163] 34,875 0,000

Figures represent the average of each variable in each cluster. Maximum values are in brackets while minimum in parentheses (based on Duncan’s multiple range test, p<0,10). Significance level is based on one-way analysis of variance

Table III: Company Profiles Based on Company’s Attitudinal Approach to Mar-keting Orientation - Analysis of Variance

The objective of Quick Cluster is to form a predetermined number of clusters from a large sample such that the clusters display a high degree of internal similarity while being distinct from each other. Because the num-ber of clusters is predetermined for Quick Cluster, there can be a problem in identifying the number of clusters necessary to give a good solution for any set of data. In our analysis, we examined the 3, 4 and 5 clusters solu-tion. The 3 clusters solution resulted in large clusters with unacceptably diverse membership while the 4 clus-ters solution did not significantly improve the description of the data. Thus, the 5 clusters solution was tentatively adopted.

To test the clarity of the 5 cluster solution we run an analysis of variance along with Dunkan’s multiple range test for each of the original variables (from which the factors were derived) and across each cluster. This analysis revealed that the 5-clusters solution was fitting the data in a meaningful way. Table III summarises the results of this analysis.

As it can be seen in Table III, the 5-Clusters solution produced very interesting results as it allows a mean-ingful clustering of the respondents based on the degree of Marketing Orientation adoption (as attitude) exhib-ited by each company. More specifically: i Marketing Oriented companies are companies that perceive marketing to be primarily a company cul-

ture with a priority in satisfying customers’ needs. To do so, they also believe that Marketing Orienta-tion encompass certain activities, such as collecting market information and intelligence on competitors, so that the company can adapt to the market and offer customer satisfaction. Within that framework, they believe that building relations with the customers helps in better understanding their needs while, proper product positioning and product image improves their ability to satisfy more than the core needs (e.g. psychological needs, social needs etc.).

i Product Oriented companies hold a perception of marketing that is somehow close to the one held by the previous group. However, although Product Oriented companies approach marketing with an em-phasis on collecting market information for the purpose of managing the production and taking deci-sion regarding the quality and the quantity of the production, no particular emphasis is placed on associating these efforts with the objective of offering satisfaction to specific customer’s needs. Rather, they seem closer to the product orientation concept offered by Kotler (1988) to describe the companies which attempt to gain a competitive advantage by increasing the attraction of their product through the addition of extra features, or the use of the most modern technology, while neglecting to specify customer’s needs and a manner to serve these specific needs better.

i Sales Oriented companies are companies that conceive marketing to be primarily a sales-support func-tion and that it is better left to the Marketing or the Sales departments. Typical of their attitude towards marketing is the neglecting of any market analysis and the rejection of marketing as a company culture. Within this framework, they try to build relationships with their customers and maintain regular con-tacts not as means of increasing their understanding of their customers’ needs but rather as a way to in-crease the effectiveness of their sales effort.

i Production Oriented companies are those that hold the basic attitude that their marketing effort should focus on decision regarding the management of their production process and the quality and the quanti-ties of the production outputs. They see no benefits in engaging with activities such as market analy-sis, collecting intelligence from competitors and adapting to market conditions. In other words, these companies, on the basis of their marketing attitude, can be described as introverted companies and much remoted from market developments. Finally,

i Agnostic companies are companies which have a general picture of marketing as a notion that has to do something with the sales function. Still, marketing remains to them a confusing concept that they do not yet apply in their business activities.

The next stage of the analysis involved the investigation for potential relationships between adoption of Marketing Orientation as attitude and Marketing Orientation as behaviour. For this purpose, we performed ANOVA using the attitudinal profiles derived from the previous stage of the analysis as independent variables and the measurements of Marketing Orientation (as behaviour) as dependent ones. What we actually exam-ined is whether the means of the components of the scale employed to measure the degree of Marketing Orien-tation adoption (as behaviour) varied among companies exhibiting different attitudinal profiles. Table IV presents the findings of that analysis.

The findings presented in Table IV clearly demonstrate that the adoption of Marketing Orientation, as be-haviour, is associated with the adoption of Marketing Orientation, as attitude. More specifically, the «Market-ing Oriented» companies are characterised by greater emphasis in intelligence collection and dissemination as well as by greater responsiveness to intelligence.

Marketing Oriented

Product Ori-ented

Sales

Oriented

Production

Oriented

Agnostics

F

sign.

x Intelligence Collection [4,041] 3,879 3,0762 3,527 3,317 16,972 0,000

x Intelligence Dissemination [4,025] 3,890 3,014 3,543 3,340 14,726 0,000

x Response to Intelligence [4,195] 3,705 2,758 3,290 3,094 16,902 0,000

Adoption of Marketing Orien-tation (as behaviour)

[4,091] 3,878 3,456 3,267 (2,942) 21,475 0,000

Figures represent the average of each variable in each cluster. Maximum values are in brackets while minimum in parentheses (based on Duncan’s multiple range test, p<0,10). Significance level is based on one-way analysis of variance

Consequently, «Marketing Oriented» companies (in terms of their attitude towards marketing) are the ones

that undertake the set of activities which literature suggests that comprise Marketing Orientation as behaviour. At the other extreme, the «Agnostics», which have no specific attitude towards marketing, are the ones that demonstrate the lowest level of Marketing Orientation adoption (as behaviour). This finding is particularly important in the sense that it manifests that Marketing Orientation consists of a certain set of beliefs about marketing (which form a specific attitude toward marketing) and of a certain set of activities that actually ma-terialise the attitude of Marketing Orientation into practice. Consequently, building a genuine Marketing Ori-entation requires developing both the attitude and the behaviour elements of the concept. On these grounds, we accept H1.

4.2. Effect of Company-Specific Factors on Marketing Orientation Development (H2, H3) In order to examine (a) whether the ecology of the company’s internal environment determines the devel-

opment of Marketing Orientation and (b) whether the perception held by the company’s Top Management Team, regarding the importance of different Key Factors of Success, influence the Marketing Orientation adoption, we carried out a Canonical Correlation Analysis. This analysis, when compared against more tradi-tional correlational analyses, has the characteristic that examines the degree of association between two sets of variables rather than individual pairs of variables. Consequently, given that Marketing Orientation represents the synthesis of a specific set of attitudes with a specific set of practices, Canonical Correlation Analysis is more appropriate when attempting to examine the potential relationship between the degree of Marketing Ori-entation (as attitude and as behaviour) development with various characteristics of the company’s internal en-vironment. Table V provides a summary of the results of this analysis.

Redundancy in the criterion set, given the predictor set, was about 13% with four significant relationships accounting for 94,6% of total redundancy. Although not too high, this level is comparable to that reported in other research (e.g. Alpert and Peterson 1971, 34. Ford 1984, 50. Moller and Laaksonen 1984, Grossbart and Crosby 1984). Information on loadings for the four significant variates is also provided in Table V. Loading with an absolute value of 0.40 and over which appeared to be significantly related to each variate are bolded to assist interpretation.

In order to test for the validity of this analysis the sample was split randomly in two halves and the canoni-cal analysis was recomputed. Both the redundancy coefficient and the canonical loadings remained stable sug-gesting that the results reported here are not due to chance.

When considering the canonical functions elicited from the analysis, it becomes apparent that Marketing Orientation is indeed determined by the company-specific factors examined in this study. More specifically, the analysis reported in Table V shows that:

Table IV: Adoption of Marketing Orientation as Practice and Marketing Orientation as Attitude - Analysis of Variance

Variables Canonical R X2 d.f. sign. Criterion Set

Redundancy

% of Total

Redundancy

% of Total Re-

dundancy -

Accumulative

1 0.578 246.724 72 0.000 0.0890 68.0% 2 0.390 128.154 56 0.000 0.0170 13.0% 81.0% 3 0.322 79.911 42 0.000 0.0110 8.4% 89.4% 4 0.265 47.943 30 0.020 0.0060 4.6% 94.0% 5 0.221 26.727 20 0.143 0.0040 3.1% 97.1% 6 0.156 12.139 12 0.435 0.0020 1.5% 98.6% 7 0.114 4.952 6 0.550 0.0010 0.7% 99.3% 8 0.063 1.161 2 0.560 0.0005 0.38% 100.0%

0.131

Relationships between individual variables and the canonical variables

Canonical Loadings

1 2 3 4

Attitudes Criterion Set

Market Analysis & Adaptation 0.401 -0.366 0.124 -0.453

High-Tech Selling -0.275 0.406 -0.035 0.202

Ignorance -0.541 -0.409 0.607 -0.231

High-Tech Production 0.325 -0.527 0.517 0.421

Traditional Selling -0.051 0.412 0.342 -0.361

Marketing Philosophy 0.478 0.233 -0.405 0.311

Behaviour

Intelligence Collection 0.803 0.159 0.137 0.403

Intelligence Dissemination 0.718 0.166 -0.088 0.355

Response to Intelligence 0.611 -0.009 -0.155 0.353

Characteristics of the Internal Environment Predictor Set

Formalisation -0.512 0.273 0.537 0.427

Centralisation -0.682 -0.135 0.466 0.215

Risk Aversion -0.636 -0.019 0.527 0.104

Perceived Importance of Various K.F.S.

Market Focusing 0.617 -0.363 0.054 -0.403

Channel Networking 0.458 -0.449 0.364 0.456

Product Uniqueness 0.409 0.080 0.002 0.601

Price Advantage -0.183 0.403 0.426 -0.063

Skilful Salesmanship 0.125 0.407 -0.084 -0.350

a) The companies that keep an informal organisational framework, maintain a decentralised organisa-

tional structure, show great risk tolerance, and, at the same time, perceive Market focusing, Channel Networking, and Product Uniqueness as critical Key Factors of Success have all developed Market-ing Orientation since they maintain a positive attitude towards Marketing Orientation (i.e. maintain a clear, not confused, conception of marketing as an emphasis on market analysis as well as a company philosophy) and, at the same time, exhibit Marketing Oriented behaviour (i.e. emphasise the collection

Table V: Effect of the Internal Environment on Marketing Orientation Develop-ment

and dissemination of information from the market and the design of specific responses based on this information).

b) It is revealed that Sales Orientation (second canonical function), results from a perception that Skilful Salesmanship and Price Advantage are the most important K.F.S. Interestingly enough, as the data suggest, perceiving skilful salesmanship and price advantages to be the only true basis upon which success can be established (and, consequently, the resulting orientation) completely ignores any intel-ligence-related activity. Also the development of a Sales Orientation is not associated with a particular organisational structure since the degree of centralisation, the degree of formalisation and the degree of risk tolerance do not appear to influence its development.

c) The findings of our analysis also suggest that companies that tend to maintain a more formal and more centralised organisational structure while, at the same time, are generally risk-averted, are the ones that assign the out-most importance to Price Advantages as KFS (third canonical function). This combination of company-specific factors results to Production Oriented companies i.e. companies that are generally confused about the meaning of Marketing Orientation and have a blurred perception that it is something that has to do with the production process and perceive price to be the most impor-tant factor that ensures success.

d) The companies that perceive Channel Networking and Product Uniqueness as critical KFS, while are remarkably negative regarding the importance of Market Focusing, tend to maintain a formal or-ganisational structure (fourth canonical function). This combination of company-specific factors re-sults not in Marketing but rather in Product Orientation. Interestingly enough, the difference of product oriented companies from Marketing Oriented ones is reflected on the fact that despite their in-telligence oriented behaviour, market analysis is not part of their conception and understanding of Marketing Orientation.

From these findings it is evident that the nature of the company’s internal environment determines the de-velopment of Marketing Orientation and, more specifically, the degree of risk-aversion, centralisation and formalisation that characterises it, determine the degree of Marketing Orientation development. On these grounds we accept H2. Similarly, the findings presented in Table V also demonstrate that the importance as-signed by the Top Management Team to different Key Factors of Success also determines the degree of Mar-keting Orientation development. On these grounds we also accept H3.

4.3. Effect of Market-Related Factors on Marketing Orientation Development (H3) Next, in order to investigate to what extent the market-related factors influence the development of a Mar-

keting Orientation we, again, used Canonical Correlation analysis. A summary of this analysis is presented in Table VI.

Redundancy in the criterion set, given the predictor set, was about 16% with four significant relationships accounting for 96,2% of total redundancy. As pointed earlier, other research has reported similar levels. Infor-mation on loadings for the four significant variates is also provided in Table VI. Loadings with an absolute value of 0.40 and over which appeared to be significantly related to each variate are bolded to assist interpreta-tion.

Again, in order to test for the validity of this analysis the sample was split randomly in two halves and the canonical analysis was recomputed. Both the redundancy coefficient and the canonical loadings remained sta-ble suggesting that the results reported here are not due to chance.

When considering the canonical variables elicited from the analysis, it becomes apparent that the develop-ment of a genuine Marketing Orientation is induced by certain conditions of the company’s external environ-ment.

More specifically, Marketing Orientation (first canonical function) is associated with a competitive market where new competitors can easily enter the market, technology changes rapidly, buyers are powerful enough to impose their terms and conditions in their exchanges with the producers and high growth rates are expected.

These characteristics of the market environment (competitive intensity, rapidly changing technology, buy-ers’ power over producers and expectations for high growth rates in the future) that are associated with Mar-keting Orientation development produce a picture of an attractive and evolving, though highly competitive, arena in which companies compete on the basis of their ability to better meet, through their ability to innovate, the demands and the needs of their customers.

Variables Canonical R X2 d.f. sign. Criterion set

Redundancy

% of Total

Redundancy

% of Total Re-

dundancy -

Accumulative

1 0,427 225,312 72 0,000 0,091 55,8% 2 0,298 95,405 56 0,000 0,046 28,2% 84,0% 3 0,247 65,246 42 0,012 0,011 6,7% 90,7% 4 0,188 57,346 30 0,030 0,009 5,5% 96,2% 5 0,173 15534 20 0,265 0,002 1,3% 97,5% 6 0,115 3,987 12 0,456 0,002 1,3% 98,8% 7 0,073 2,995 6 0,607 0,002 1,3% 100% 8 0,030 0,999 2 0,986 0,000 0,0% 100%

0,163 100%

Relationships between individual variables and the canonical variables

Canonical Loadings

1 2 3 4

Attitudes Criterion Set

Market Analysis & Adaptation 0,655 -0,213 0,024 -0,022

High-Tech Selling 0,095 0,144 0,408 -0,078

Ignorance 0,067 0,419 0,179 0,039

High-Tech Production 0,224 0,545 -0,005 0,423

Traditional Selling 0,028 0,072 0,483 0,008

Marketing Philosophy 0,510 -0,265 0,121 -0,035

Behaviour

Intelligence Collection 0,404 -0,255 -0,421 -0,017

Intelligence Dissemination 0,437 -0,229 -0,105 0,401

Response to Intelligence 0,503 -0,233 -0,357 0,354

Market’s Characteristics Predictor Set

Increased Buyers Power 0,415 -0,549 0,688 -0,416

Increased Suppliers Power 0,079 -0,621 0,151 0,047

Strong Barriers to Entry -0,401 0,441 -0,613 0,428

Strong Barriers to Exit 0,314 0,003 -0,347 0,829

Competitive Intensity 0,520 -0,202 0,437 0,406

Rate of Technological Change 0,414 -0,673 -0,489 0,555

Market’s Growth Rate (last 5 years) -0,352 -0,285 -0,416 0,193

Predicted Market’s Growth Rate (next 5 years) 0,423 0,046 -0,402 0,411

On the other hand, according to the findings presented in Table VI (second canonical function), Agnostic companies are found in a more stable market environment. More specifically, as the findings in Table VI suggest, Ignorance of the Marketing Orientation is associated with strong barriers to entry for new competi-tors, low rate of technological changes, and weak customers as well as suppliers. Interestingly enough, com-petitive intensity, although does not load heavily in the variable, is negative indicating that Ignorance of

Table VI: Effect of the Market’s Conditions on the Development of a Genuine Marketing Orientation

Marketing Orientation is also associated with market environments that are relatively simmered down in terms of competitive rivalry.

When it comes to Sales Orientation, the findings in Table VI (third canonical function) suggest that it is associated with a market environment that is rather similar to the one that is associated with Marketing Orien-tation development, especially in terms of competitive and the power that the buyers possess over producers. However, the market conditions that are associated with sales orientation are different in three critical aspects: 1. The rate of technological change is negative, indicating a stagnant market in terms of innovativeness and

new product development, 2. Market growth rates, both in the past and in the near future, are also negative, indicating a market in which

even in order to maintain market share companies need to seize market share from their competitors, and 3. Strong barriers to entry.

This situation results to competitive hostility which, coupled with the buyers’ power over producers leads companies to intensify their sales efforts and build their salesmanship skills, especially so since the scope for competing on their ability to diversify their product offerings is limited.

As far as Product Orientation is concerned, the results of the analysis presented in Table VI (fourth ca-nonical function) indicate that it is associated with a technology driven market environment in which the buyers’ lack the power to impose their terms and preferences over producers. More specifically, Product Ori-entation appears to flourish in markets where expectations for future growth are high, technology changes rapidly and entering as well as exiting the market is difficult probably due to the investments necessary in order to be able to follow the rapidly developing technology. These conditions abrade the competitive intensity in the market. However, since buyers’ lack the power to impose their preferences, companies competing under such situations respond to competition by developing a Product Orientation and trying to gain competitive ad-vantages through technological improvements and additional features for their products.

To summarise, the results of the analysis presented in Table VI clearly demonstrate that certain characteris-tics of the market environment produce specific market conditions which, in turn, determine whether Market-ing Orientation is developed or not. Although not all of the market variables examined in this study were found to be equally important, competitive hostility, buyers’ power, rate of technological change and expected market growth produce a combination of factors that result into a dynamic, evolving though competitive mar-ket which, in turn, forces companies to develop a Marketing Orientation. On these ground, we accept H4.

5. CONCLUSIONS & IMPLICATIONS The empirical findings presented in this paper provide significant insights concerning both the nature of the

concept of Marketing Orientation and the factors that determine the adoption of Marketing Orientation. Overall, the data has shown that the company’s orientation (marketing or not) represents the combined out-

come of its attitude with its behaviour. This finding is useful to those researchers doing research in the area of Marketing Orientation and have raised the issue of the necessity to clarify and explicate the notion of the term «orientation» before being able to probe deeper into potential relationships and associations between the Mar-keting Orientation concept and various aspects of the management science (Dreher 1995).

As far as the nature of the Marketing Orientation is concerned, our analysis has shown that it is based on the combination of: i The company’s attitude to perceive Marketing Orientation as the company’s philosophy, which is

grounded on the persistence to analyse and understand the market prior to any actions, and i The company’s behaviour to collect intelligence about the market, disseminate it company-wide and to

design the company’s response on the basis of this market-intelligence. These two pillars of the Marketing Orientation concept are inseparable and interrelated. However, for Mar-

keting Orientation to be developed, it is required that both the company’s culture as well as its behaviour are adjusted accordingly.

The practical implications of understanding and clarifying the element of the Marketing Orientation con-cept are self-evident: Companies wishing to re-orientate themselves and develop a Marketing Orientation are obliged to direct their efforts towards changing both their attitude and behaviour in such a manner that the two operate in a synergistic and harmonic way to produce profitable exchanges through increased levels of satis-faction for the company’s customers.

However, as our findings suggest, the success, or the failure, of their efforts for such a re-orientation to be accomplished is determined, to a large extent, by the nature of the company’s internal environment, the percep-

tion of the company’s Top Management Team concerning the Key Factors of Success (K.F.S.) in the market that the company operates as well as the nature of the company’s market.

Our analysis suggests that the company’s attitude towards risk, its structural systems as well as the impor-tance assigned by the company’s Top Management to various K.F.S., facilitate the development of Marketing Orientation. More specifically, our findings have shown that risk tolerance and decentralised, informal struc-tural arrangements, coupled with increased perceived importance of Market Focusing, Channel Networking, and Product Uniqueness as significant KFS, lead to Marketing Orientation development.

The company’s attitude towards risk is an important factor because companies are not Marketing Oriented by nature. Rather, Marketing Orientation is a state that the company arrives passing through several phases that represent different levels of adaptation to the market. This process is risky because it entails significant re-allocations of resources and power within the company while the results of the effort can only be evaluated after the process is completed. Consequently, initiating it requires that the company is prepared to assume this risk.

According to the literature reviewed and as proved by this study, Marketing Orientation involves a great deal of information generation and processing. This explains the influence also demonstrated in this study that the company’s structural design (centralisation and formalisation) bear on Marketing Orientation development.

Decentralised and informal organisational structures facilitate the collection as well as the dissemination of market information. Companies that allow greater autonomy to their divisions and functions are better in col-lecting and disseminating market intelligence at company-wide level while, at the same time, they also im-prove the responsibility and the skills of their middle level managers since, decentralised organisations, require a greater number of more qualified managers who have decision making authority (Megginson, Mosley and Pietri 1989). At the same time, by allowing for more informal arrangements, communication and intelligence flow is not deterred by bureaucratic or hierarchical obstacles and, thus, Marketing Orientation development is further facilitated. Thus, because Marketing Orientation involves a great deal of information flow within the company, decentralised and informal organisational designs also nourish the Marketing Orientation develop-ment.

These two structural characteristics, coupled with increased emphasis on such factors as Market Focusing, Channel Networking and Product Uniqueness as KFS, propel the management, at all levels, to be more sensi-tive and efficient in market intelligence collection as well as more willing, and capable, to communicate this intelligence at a company-wide level.

This point has important implications. To start with, it provides researchers with useful, albeit preliminary, insights regarding the role of the company’s structural systems, as well as the Top Management’s fundamental perceptions of how business can grow, in Marketing Orientation development. Having said this, understanding these conditions helps to explain why Marketing Orientation is not developed to the extent that one might ex-pected given the numerous evidence that its development brings about significant performance improvements.

For instance, as our findings have shown, Production Orientation results under entirely different conditions regarding both the company’s internal environment as well as its Top Management Team’s perception of the significance of various K.F.S. Our findings demonstrated that Production Oriented companies are risk averted in nature and maintain centralised and formalised organisational structure. Under such conditions, dealing with change becomes cumbersome and, consequently, the chances for the company to evolve and become more adaptive to its environment are minimal. Not surprisingly, in such companies, the prevailing perception is that the company’s financial strength, cost advantages and competitive pricing will ensure its existence in the fu-ture.

In addition, determining the role that specific characteristics have on the development of Marketing Orien-tation, provides practitioners with a check-list and priorities that have to be completed in order to facilitate its growth: Reconsideration of the organisational structure, delegation of authority, lesser formality, greater risk tolerance and re-conceptualisation of how the company can become more efficient in dealing with competi-tion, are changes that have to take place before Marketing Orientation commence to develop.

Nevertheless, initiating the Marketing Orientation development process does not appear to be entirely on the discretion of the company’s management. As our findings suggest, the market also influences Marketing Orientation development. More specifically, the market’s main forces, such as the buyers’ power over the pro-ducers, the absence of barriers to entry for new competitors that might be willing to enter the market, the in-tensity of competition, the rate of technological change as well as the expectations regarding future market

growth rates, were found to impel companies that operate under such conditions to evolve a Marketing Orientation.

Such market conditions depict a dynamic, developing market. In such markets, predictability of their future structure is low because, for instance, soft protection mechanisms against new and potential competitors re-duces the company’s ability to foresee who the competitors will be in the future and what strategies they will pursue. Similarly, increased rate of technological changes makes difficult for the company to remain on the edge of technological advancement since it has to constantly monitor new technologies and new products of-fered by competition. On the other hand, increased buyers’ power propels companies to consciously attempt to increase their products ability to meet the buyers’ needs and demands, especially so under the aforementioned conditions of the broader competitive scene. Thus, companies are stimulated to improve the quality of the market intelligence they collect and, also, to improve both their willingness and ability to respond decidedly on the basis of this intelligence. Consequently, Marketing Orientation is induced.

On the other hand, companies that operate in more tranquil, predictable and technologically intensive but stable market environments are not found to pursue a Marketing Orientation. For instance, Production orienta-tion appears to be the business approach for these companies that enjoy significant protection against new, potential, competitors while they also benefit from their resulting power over both their buyers and suppliers. In such markets, competitors know each other’s strategy and, more or less, the only basis upon which the com-pany can ensure its long-term survival is through its efficiency in the production process and its ability to keep the cost factor under control. Thus, the production process and cost controlling become the company’s focal point and, thus, a Production Orientation results.

The importance of the market forces in the development of the company’s orientation is also evident by considering how a single change of one of these forces alters the market’s conditions and influences the way the company competes in the market. For instance, in markets that technology does remain relatively stable, high future market growth rates are expected but competitive hostility is intensified (due to protection barriers fading-out or increasing buyers’ power), companies are unwilling to give their share away. On the contrary, they struggle for maintaining or improving their market position, usually through increased emphasis on sales since technological differentiation is hard to achieve. Such conditions, as our findings have shown, favour the development of a sales orientation.

Another interesting conclusion refers to the appropriateness of the various orientations depending on the company’s market environment. Marketing Orientation development has been historically associated with the companies’ need to sustain their growth and prosperity within a broader framework of changing market condi-tions (Day 1990). Recent studies (Narver and Slater 1989, Diamantopoulos and Hart 1993, Ruekert 1992, Wong and Saunders 1993) have demonstrated that Marketing Orientation development, in general, leads to better performance. Evidence also exist (Diamantopoulos and Hart 1993, Greenley 1995, Slater and Narver 1992) which reveal that the characteristics of the company’s market moderate the relationship between the Marketing Orientation development and the company’s performance. Indeed, the studies by Narver and Slater (1989) and Avlonitis and Gounaris (1997) have shown that companies with either a Marketing or a Production Orientation can be equally successful in accomplishing their performance objectives, when operating under different market conditions.

On the other hand, the findings presented in this paper substantiate an association between the nature of the market that the company competes with the company’s orientation. Our findings have shown that Marketing Orientation is associated with relatively more dynamic markets while Production Orientation is associated with relatively more stable markets.

When these findings are jointly considered one could make certain conjunctions regarding the appropriate-ness of the two Orientations depending on the company’s market conditions. More specifically, the compound consideration of the findings presented in this paper along with findings published elsewhere would imply that for the companies which operate in relatively more dynamic markets, Marketing Orientation is a more appro-priate orientation to develop. On the contrary, for companies that operate in relatively more stable and predict-able markets, a Production Orientation would seem to be a more appropriate orientation to pursue.

This inference is important for practitioners to consider because it provides them with a benchmark for evaluating the relevance of their company’s orientation and helps them understand whether their company’s orientation is the one that better serves its interests within the given market it competes and at a particular time. This conclusion has also value for marketing scholars since it explains why Marketing Orientation is not widely adopted: Change and unpredictability render Marketing Orientation the most appropriate orientation.

Unless the company is faced with such conditions, or until it has realised the change, it sees limited scope for developing a Marketing Orientation.

However, this conclusion should not be misinterpreted and companies ought not to be relaxing. Market conditions are transient and, in the long run, all companies confront a market situation that will require a high degree of Marketing Orientation (Kohli and Jaworksi 1990). Thus, it is better to invest in becoming Marketing Oriented while the environment is somewhat munificent than to wait until it has grown hostile (Slater and Narver 1994). What this research has shown is the degree of urgency with which the company should react: If operating in a market that a non-Marketing Orientation can still be effective, planning to become Marketing Oriented is possible. If you are not in such a market then planning becomes a luxury.

6. LIMITATIONS AND FUTURE RESEARCH Our study has certain limitations that need to be mentioned. To start with, despite the fact that every at-

tempt was made to maximise the quality of the data collected, the response rate does not allow for unreserved generalisations.

This cautious treatment of the findings of this study is also mandated by the cross-sectional nature of the research design. Although cross-sectional samples enable generalisation of the findings, they prevent high re-sponse rates and the probing of the various aspects of the relationships identified in this study. For instance, it may be possible that the associations established by this study will be stronger, or weaker for that matter, in specific sectors of economic activity. Replication of our study within a single sector or between two or three different sectors might give us a more detailed view of the nature of the relationships identified in this study and will most certainly help to increase the response rate. These two parameters would allow us to enhance the gravity of the conclusions.

The context of the study (Greece) is also a concern since it puts constraints on the generaliability of the re-sults to other companies and other European countries. However, the use of a market setting other than the larger European markets does not diminish the significance of the, preliminary in nature, findings presented in this paper. Especially so when little research effort has been devoted in examining how company-specific and market-specific factors affect the development of Marketing Orientation by European companies. Certainly, future research that replicates this study in other national contexts would be welcome and would further im-prove our understanding of the determinants of the Marketing Orientation development.

Another limitation pertains to the nature of certain variables since, some of the measures employed were single-item ones. Although these measures are found to successfully conceptualise the notions they are sup-posed to measure (Narver and Slater 1989, Kohli and Jaworski 1990), nonetheless, repeating the research us-ing multi-item measures could allow for more reliable measurements.

Finally, another area for future research, which also is relevant to the aforementioned direction, is the need to examine in detail the factors that influence the company’s degree of centralisation and formalisation as well as the management’s attitude towards risk. As the findings of this study have indicated, the development of a Marketing Orientation is determined by the company’s degree of centralisation, formalisation and attitude to-wards risk. Consequently, the next question that future research may answer is what are the factors that deter-mine whether the company is centralised or not, formalised or not and whether it is risk tolerant or not. For instance, it is believed that major changes on an organisation are often preceded or quickly followed by a change in CEO and the company’s senior management team. Clearly, this implies that the company’s structural arrangement reflect, to a greater or lesser degree, certain personal as well as educational attributes and quali-ties of both the CEO and the senior management team. Thus, these traits and attributes should determine whether the company will be more centralised or not, more formalised or not as well as its overall attitude to-wards risk. Hence the development of a Marketing Orientation should also be influenced by these factors. Identifying these traits and attributes will facilitate companies in their pursuit for a Marketing Oriented busi-ness approach.

Appendix

Factors Variables Mean St.Dev Loadings Factor 1: Market Focu- Y Trusted by the customers 3.664 0.608 0.729 sing (22.8% of total Y Company image in the market 3.577 0.628 0.696 variance) Y Promptness of reaction in customers’ needs and

requests 3.384 0.683 0.645

Y Definition of product quality as perceived by the company’s customers

3.657 0.583 0.583

Y Strong relationships with customers 3.318 0.749 0.547 Factor 2: Channel Net- Y Spread of distribution 2.894 0.929 0.728 working (10.9% of to- Y Emphasis on advertising 2.610 0.989 0.643 tal variance) Y Strong relationships with members of the dis-

tribution channel 2.748 0.963 0.565

Y Development of a Management Information System

2.957 0.839 0.525

Factor 3: Product Uni- Y Product design 3.031 0.886 0.789 queness(8.5% of total vari-ance)

Y Unique characteristics/features of the product 3.089 0.955 0.781

Factor 4: Price Y Competitive pricing 3.282 0.750 0.773 Advantage (8.2% of to- Y Cost advantages 3.176 0.852 0.697 tal variance) Y Financial strength of the company 3.233 0.809 0.543 Factor 5: Skilful Sales- Y Emphasis on personal selling 3.080 0.845 0.766 manship (7.0% of total vari-ance)

Y After sales service 2.909 1.049 0.629

Kaiser-Meyer-Olkin measure of sampling adequacy = 0.75100

Bartlett Test of Sphericity - 12206.85, sign.=0.000

Market’s Key Factors of Success - Descriptive Statistics and Factor Analysis

Wording, Descriptive Statistics and Cronbach’s Alfa for Multi-Item Measurement Scales

Mean

St.Dev.

Item-to-Total corel.

Cronbach’s Alfa

Top Management’s Attitude Towards Risk 3,648 0,867 0.693 The company’s Top Management Team feels that it is worthwhile taking high financial risks that could yield high profits.

3,569 1,339 0.623

The company’s Top Management Team is generally prone to take finan-cial risks.

3,981 1,235 0.624

The company’s Top Management Team shows preference in implement-ing only those projects that have high probability of success.

3,867 1,138 0.584

The company’s Top Management Team encourages the development and implementation of innovative projects though it is known that some of them are likely to fail.

3,126 1,327 0.521

Level of Centralisation 3,166 1,048 0.738 Only few actions can be done without the previous authorisation from the company’s Top Management Team.

3,241 1,329 0.649

An individual who would like to take his own decisions within the com-pany would find a stimulating environment within the company .

2,953 1,408 0.661

Even trivial problems have to be taken to the Top Management Team for resolution.

3,016 1,500 0.651

Every decision taken by a subordinate has to have the supervisor’s ap-proval before been implemented.

3,389 1,371 0.647

Level of Formalisation 3,155 0,709 0.641 In our company, employees are motivated to feel that they supervise them-selves.

2,770 1,322 0.565

For most of the things in our company it is within the authority of those who are responsible for them to decide how they will be done.

2,616 1,268 0.545

Most people in the company establish their own rules on how things will be done

3,749 1,222 0.611

For every problem that may arise there are certain rules to be followed 3,033 1,257 0.588 Every individual has specific rules to follow 3,197 1,241 0.564 The employees are constantly monitored for rules violation 2,970 1,314 0.540 To follow the right procedures is a thing frequently appraised by the Top Management Team

3,738 1,225 0.589

Competitive Intensity 4,043 0,720 0.698 Competition in our market is extremely intensive 4,616 0,692 0.464 It is quite usual to have price-wars in our market 3,907 1,066 0.428 Every day we learn of a new action taken by our competitors 3,615 0,953 0.440

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