Distance and product life cycle effects on market orientation

Abstract

Over the past few years, considerable scholarly interest has been shown in the relationship between market orientation and business performance. However, an inconsistent pattern of findings drawn from past research hints at the presence of extraneous sources of influence. Moderators identified in the literature include a number of environmental variables such as market turbulence, technological turbulence and competitive intensity. However, less attention has been given to other potential relevant factors such as product life cycle stage or the distance to firm's markets. Consequently, the current study makes two important contributions to the literature. First, the study replicates, in a non-Western business setting, the hypothesized link between market orientation and business performance. The strength of this link is found to be comparable to results obtained in other, trade-dependent economies. Second, and in addition to examining traditional moderators of the market orientation-performance link, this study also identifies moderating effects arising from the moderator roles for both product life cycle stage and distance to market. Specifically, the MO - performance relationship was found to be strongest in the mature stage and weakest in the introductory stage. The findings also suggest that distance to firm's market strengthens the MO - performance relationship.