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

moderator of the market orientation-performance relationship. Most studies have found that
technological turbulence is of insignificant influence on the market orientation-performance
relationship, whereas some have found that it positively moderates the relationship and fewer
have found that it negatively moderates the relationship (Kirca et al., 2005). The study that does
find evidence of moderation finds it in technologically turbulent export markets (Kirca et al.,
2005). Most studies have found an insignificant relationship, perhaps due to the rarity of
technological shocks within their samples. A study that has found a positive influence is Grewal
and Tansuhaj (2001). However, their sample is taken from an Asian economy, specifically
Thailand, and the relationship may not hold for other settings in European and North American
countries. Furthermore, they propose that market orientation, in times of market turbulence,
negatively influences performance because a firm’s market understanding is built on knowledge
that no longer applies to the currently changing market scenario. Another study which finds that
partial support for low technological turbulence influencing the market orientation-performance
relationship is that conducted by Slater and Narver (1994). They have similar findings to Grewal
and Tansuhaj (2001), in that market orientation is more important in times of low technological
turbulence than in times of higher technological turbulence. Most studies, however, find that
technological turbulence has an insignificant influence on the market orientation-performance
relationship (Kirca et al., 2005). This result is not surprising since, unless technological
turbulence can influence the knowledge capabilities of the firm, it would not be expected to
moderate the relationship between market orientation and performance. Our stance on this issue
is that, in technology driven markets, market orientation matters less as the new technology
could cause disruptions in consumer-buying patterns. As a result, this makes it difficult for the
market-sensing mechanism (e.g., intelligence generation and dissemination) to determine and
predict what the future needs of the customers will be. Therefore, market orientation has a
limited impact on firm performance.
The second moderator that is commonly cited in the market orientation-performance
relationship is market turbulence. The evidence for it as a positive versus insignificant moderator
is almost evenly split. There is less evidence for it as a negative moderator, which could be
because firms which have ‘strategic flexibility’ are able to change their internal processes to
meet adverse situations (Grewal & Tansuhaj, 2001). In situations where it is insignificant, it
could be that market orientation is an immutable part of the firm’s culture but that it does not
possess strategic flexibility or the ability to change in time. Our stance on this issue is that
market orientation gives insights according to customer understanding and takes time to develop;
in rapidly changing environments, it is not possible for supplier firms to understand how their
customers’ needs are changing. Therefore, we concur with the finding of previous scholars that
market orientation has limited applicability in the context of high market turbulence.
The third moderator is competitive intensity. Extant literature suggests that customer
insights provided by market orientation become more important as competitive rivalry increases
(Kirca et al., 2005). The evidence on whether competitive intensity moderates the market
orientation performance relationship is mixed in prior literature (Kirca et al., 2005). We agree
with the view that as competitive rivalry increases, the firm must be more market oriented.
Because greater competition means that customers have more choices and in order to maintain
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