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The impact of market orientation on small firm performance: a configurational approach

Sanjay Chaudhary (Jindal Global Business School, OP Jindal Global University, Sonipat, India)
Deepak Sangroya (Jindal Global Business School, OP Jindal Global University, Sonipat, India)
Elisa Arrigo (University of Milan – Bicocca, Milan, Italy)
Giuseppe Cappiello (Università di Bologna, Bologna, Italy)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 14 January 2022

Issue publication date: 21 November 2023

962

Abstract

Purpose

In this study, the authors examine the influence of market orientation on small firms' performance. The authors theorize that the association between market orientation and small firm performance provides an incomplete picture in a competitive environment. The application of configuration approach which involves simultaneous consideration of market orientation, strategic flexibility and competition intensity is crucial to examine driver of firm performance.

Design/methodology/approach

The sample of the research study consists of 272 small firms from an emerging economy, India. Ordinary least squares regression has been used to investigate the hypothesized relationships.

Findings

The authors noted that the three-way interaction between market orientation, strategic flexibility and competition intensity elucidates variance in small firm performance over and above a contingency model and a direct relationship.

Research limitations/implications

The findings contribute to the existing literature by exhibiting the effect of market orientation on firm performance. The configuration model suggests that small firms can outperform competitors in a lower competitive environment if they have high market orientation and high strategic flexibility investment. To leverage market opportunities and achieve better firm performance, small firms’ owners should analyze the usefulness of current capabilities in a changing competitive environment concurrently and align market orientation to those conditions.

Originality/value

The strategic management and marketing literature suggests that relationship between market orientation and performance is ambiguous. The findings offer insights to managers regarding the appropriate use of strategic flexibility in leveraging the benefits of market orientation in a highly competitive environment. Furthermore, by collecting data from the context of an emerging economy, India, the authors attempt to strengthen the applicability of market orientation in different contexts.

Keywords

Citation

Chaudhary, S., Sangroya, D., Arrigo, E. and Cappiello, G. (2023), "The impact of market orientation on small firm performance: a configurational approach", International Journal of Emerging Markets, Vol. 18 No. 10, pp. 4154-4169. https://doi.org/10.1108/IJOEM-03-2021-0411

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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