Nonlinear and dynamic effects of responsive and proactive market orientation: A longitudinal investigation

Nikolai A. Jaeger, Nicolas A. Zacharias and Malte Brettel

International Journal of Research in Marketing, 2016, vol. 33, issue 4, 767-779

Abstract: Business practice and the extant literature widely acknowledge that market orientation (MO) is a key driver of firm performance, yet some studies question its benefits. Research that has tried to clarify these inconsistencies by investigating the dimensions of responsive MO (RMO) and proactive MO (PMO) has found conflicting results. This study seeks to resolve the debate by identifying the total effects of RMO and PMO on firm performance, thereby helping to extend the understanding of the differing performance consequences of RMO and PMO. The total effects of the two kinds of MO are composed of the contemporary nonlinear relationships between RMO and PMO and firm performance, along with the carry-over effects of the previous levels of RMO and PMO, which may also be nonlinear. Based on objective performance measures and panel data of fifty-six US companies observed over 9years, we find support for an inverted-U-shaped contemporary effect of RMO that suggests that a medium level of RMO is most beneficial for firms. In contrast, the contemporary effect of PMO on firm performance is U-shaped, so a high level of PMO provides the most promising competitive advantage. Our empirical results only partially support our hypotheses regarding carry-over effects. While the results confirm the proposed inverted-U-shaped carry-over effects of RMO, PMO exerts no carry-over effects, so firms must instead continuously implement PMO at high levels in order to benefit profits in a sustainable way and avoid losing ground to competitors.

Keywords: Strategic orientation; Responsive and proactive market orientation; Longitudinal data; Lagged effects; Objective firm performance (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:33:y:2016:i:4:p:767-779

DOI: 10.1016/j.ijresmar.2016.01.006

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