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

need to measure the value and risk that market orientation creates for a firm which, in turn, gives
the marketing department greater influence in the firm.
2.2.11 Measuring the Marketing Orientation – Finance Link
The market orientation-performance link has typically been measured by seller’s self-reported
perceptual performance metrics, such as profitability, profits, and market share (Kohli &
Jaworski, 1990; Narver & Slater, 1990). However, these metrics have largely ignored how
market orientation affects customer risk perceptions and performance metrics that lead us to the
conclusion that this is an area within the literature than needs further inquiry. Prior studies have
examined management aversion to risk as an antecedent to organizational market orientation, but
the consequences of market orientation for relational risk, to our knowledge, have not been
examined (Kohli & Jaworski, 1990). This lack of focus on risk within the market orientation
literature may be because many managers assume risk assessments as incomprehensible and
these include complex financial models which are better left off to the financial services industry
and investment professionals (Buehler, Freeman, & Hulme, 2008). To address the lack of focus
on risk in the extant market orientation literature, we examine the role of the supplier’s market
orientation in generating risk insulation for their customers. This is consistent with prior research
in marketing that examines the role of market-based assets in creating insulation from stock
market risk. However, we examine whether a supplier’s market orientation generates risk
insulation for customers at the firm level.
2.2.12 Contributions
To our knowledge, ours is the first study in the marketing literature to examine the process of
market orientation with the focus on the mediating role of idiosyncratic relational risk. In the
current study, we aim to make four contributions. First, we examine the role of supplier
responsiveness in creating value in an ongoing channel relationship. According to some scholars,
market orientation, with its strong conceptual and empirical support, has become an important
construct that affects a firm’s strategies (Zhou et al., 2005). Other research has shown that when
dynamics of disequilibrium exist in the relationship between a buyer and seller, they could lead
to a deterioration of the relationship, provided that positive relational sentiments do not prevent
such a deterioration (Kumar, Scheer, & Steenkamp, 1995). In situations where the dynamics of
relational disequilibrium exist along any relationship dimension (i.e., power, trust, etc.), buyers
need cues to indicate to them how likely a supplier is to meet their needs and create value. We
propose that a supplier’s market orientation can provide buyers with such a cue. The effect of
responsiveness on the buyer’s profitability is a measure of the value that is created by the
strategic supplier’s market orientation. Our second contribution is that we focus on IdRR. Prior
research on channel relationships has focused on intangible relational benefits but not IdRR. We
assess whether market orientation can insulate strategic relationships from IdRR. We believe that
ours is the first study that focuses on the market orientation-idiosyncratic risk link at the firm
level. Our third contribution is that we challenge the assumption that market orientation and firm
risk are positively related; we propose that they are negatively related in the strategic relationship
context. This is a unique and counterintuitive insight because the current dominant logic is that
market orientation is synonymous with innovating (i.e., excluding radical innovations).
Innovating means taking risks. However, we find that innovating based on an idiosyncratic
understanding of the other party’s business processes mitigates idiosyncratic risk. What this
33