Market Orientation and Performance Measurement System Adoption Impact on Performance in SMEs

Aapo Länsiluoto, Sanna Joensuu‐salo, Elina Varamäki, Anmari Viljamaa and Kirsti Sorama

Journal of Small Business Management, 2019, vol. 57, issue 3, 1027-1043

Abstract: Previous research has shown a connection between market orientation (MO) and firm performance, as well as between performance measurement systems (PMS) adoption, but their mutual interactions are as yet little understood in small and medium‐sized enterprises (SMEs). Using empirical data collected by a survey from 123 Finnish SMEs, we analyze the relationship between MO, PMS adoption, and performance. According to the results, MO has positive relationships with PMS adoption and nonfinancial performance. However, the impact of MO on financial performance is mediated by PMS adoption. PMS adoption is thus an important factor in explaining variance in firm performance. Finally, empirical analysis shows that the larger SME firms adopt PMS more extensively.

Date: 2019
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DOI: 10.1111/jsbm.12393

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