Essays on supplier responsiveness and buyer firm value - Nyenrode ...

conclude that the culture or attitude geared towards acquiring sustainable competitive advantages leads
to these specific behaviors?
2.2.2 Can a Culture be Developed? Is it Within Management’s Control
Qualitative evidence suggests that an organization can become more market oriented if it desires and
can purposefully develop the required culture to maintain such an orientation (Gebhardt et al., 2006).
Gebhardt et al. (2006) outline the steps that are involved in developing a market orientation, namely
initiation, reconstitution, institutionalization, and maintenance. The second step of the process of
creating a market orientation involves value and norm development, the removal of dissenters within
the organization, and hiring of believers. On the one hand, according to Gebhardt et al. (2006), the
development of a market-oriented culture falls within the locus of management control, therefore
making it valid to collect information from respondents about the firm’s culture. On the other hand,
Slater and Narver (1995) suggest that generative organizational learning that is a part of the learning
process of market orientation is beyond the locus of organizational control; hence, developing a
market orientation is not fully in the locus of control of a firm.
The inherent difference in the literature can be resolved by incorporating the concept of IdRR
into the market orientation literature. IdRR is the consequence of risk caused by value-creating
business processes. By reducing IdRR, the supplier firm is adding certainty and standardizing some of
the critical or core business processes that are involved in creating customer value. Hence, the more
standardized a process is, the more control the supplier has over it. In turn, control is thought to enable
the supplier to easily launch remedial measures when necessary.
2.2.3 The Cultural Perspective of Market Orientation and the Ability to Take Risks
Slater and Narver suggest that market orientation is “inherently entrepreneurial” when it focuses
on latent customer needs, but the entrepreneurial values must be clear in the seller’s organization
(1995, p. 68). In essence, they suggest that if the seller focuses on the customer’s latent needs,
then the seller requires a tolerance for taking risks. Furthermore, Slater and Narver (1995)
reinforce the perspective of the process-based view that market orientation involves innovation
and the willingness to take risk beyond the normal level that is involved with regular business
activities. Moreover, they argue in favor of continuous investment in business innovations, as
any new innovation will eventually be imitated. Salter and Narver’s perspective of innovations
are similar to the arguments regarding creative destruction by Schumpter (1942). Meaning a firm
must be willing to cannibalize its own innovations and continuously reinvest in the production of
new developments in order to remain competitive (p.81). In our opinion, creative destruction is
risky because the new innovation may not always pay off as much as did the old cannibalized
product. However, Slater and Narver (1995) provide examples about innovations that are low
risk and high return and, in their opinion, a market orientation encourages firms to find such
opportunities. For example, they believe that user-generated innovation reduces risk and
increases firm education about markets and new technologies. Furthermore, they argue that firms
that are meeting the customers’ latent needs attempt to use low-cost market experiments,
implying that the risk involved with monetary losses when supplier firms’ responses do not work
out is not too high. Whether the seller firms’ risk-taking during innovation through market
orientation is more than when firms do not innovate or are not market oriented are elements that
they do not discuss. In summation, on one hand Slater and Narver (1995) agree with the process
perspective that market orientation needs organizational risk tolerance and risk taking. On the
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