Jurnal 2 Wail Alhakimi and Rohaizat Baharun

An Integrative Model of Market Orientation Constructs In Consumer Goods

Industry: An Empirical Evidence

Wail Alhakimi and Rohaizat Baharun

Faculty of Management and Human Resources Development, University of Technology, Malaysia

[Abstract] Literature review had shown separate focus on measuring marketing concept adoption and implementation (market orientation). Additionally, it is clear from the intensive work on market orientation that there is lack of studies in targeted least developed countries. Therefore, the main purpose of this study is to build on the lack of empirical evidence by developing an integrative model to examine the linkage between marketing concept adoption and market orientation constructs in Yemenis industry. Multiple-informant data were collected using face-to-face questionnaire method and strategic business unit (SBU) was the unit of analysis within Yemenis consumer goods industry. The proposed model was examined using correlation analysis, path analysis and suggested fit indices using AMOS program. All of the variables had shown to be positively and significantly correlated. The integrative model achieved high fit indices and the cultural dimensions are found to have a partial mediation role of the relationship between marketing concept adoption and behavioral dimensions of market orientation.

[Keywords] marketing concept; market orientation; intelligence processing; least developed countries

Introduction

Nowadays, customer focused, market driven and flexibility become critical elements for businesses to survive in highly competitive markets. These elements must give the organization the ability to deliver superior value to customers whose preferences and expectations change continuously as they are exposed to new product offerings and communications about them (Webster, 1994). The marketing concept originated in the western developed countries after the industrial revolution (Zebal, 2003). It is now strongly established among marketing scholars and practitioners as perhaps the optimum marketing management philosophy (Turner and Spencer, 1997).

Despite its growing interest, there have been insufficient discussions on issues concerning the successful implementation of the marketing concept. Practitioners are simply expected to accept the concept as the core of marketing (Turner & Spencer, 1997). Meldrum (1996) pointed out the concern about marketing that the inability of organizations to put into practice the policies devised in its name. As a result, marketing implementation becomes useful researchable and relevant research area for the marketing discipline (Bonoma, 1984).

A new perspective for viewing the marketing concept has emerged within the marketing literature to clarify the implementation issue (Turner & Spencer, 1997). Utilizing the marketing concept becomes an important factor in order to create more effective organization structure and increase profitability. The term market orientation was used by the literature to mean the implementation of the marketing concept (e.g. Kohli & Jaworski, 1990).

Market orientation models have only been developed and tested for developed countries (Zebal, 2003). Therefore, a lack of empirical research exists in least developed countries. In order to begin to address this research gap, this study was conducted in the Republic of Yemen, particularly; consumer goods industry was targeted to examine the level of marketing concept adoption and market orientation. The sample reflects diverse set of companies, departments and positions. Therefore, is well suited for obtaining rich set of ideas and insights.

Yemen: An Overview

The Republic of Yemen is an Asian country located in the southern part of the Arabian Peninsula. Yemen is categorized as one of the Least Developed Countries (LDCs) in the world (MPD, 2000). Yemenis industrial sector constitutes 40.9 percent of gross domestic product (GDP) in 2007. Together with services,

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construction and commerce, industry accounts for less than 25 percent of the labor force. The largest contributor to the manufacturing sectors output is oil refining, which generates roughly 40 percent of the total revenue. The remainder of this sector consists of the production of consumer goods and construction materials. Manufacturing constituted approximately 9.9 percent of Yemens GDP in 2006. In 2000, Yemen had almost 34,000 industrial establishments with a total of slightly fewer than 115,000 workers. Almost half of all industrial establishments are involved in processing food products and beverages; the production of flour and cooking oil has increased in recent years (Library of Congress, 2008).

Brief Literature Reviews

The following sub-sections are discussed the theories which serve as a based for the proposed integrative model.

Marketing Concept Adoption

The adoption of the marketing concept is seen to be a foundation for successful business performance. However, the manifestations of its adoption are rarely researched or specified in a clear way (Diamantopoulous & Hart, 1993). The marketing concept can be adopted not only by people in marketing functions, but also by others in other specializes (e.g. accountants, production staff, designers, etc.). The organization should not adopt an approach in which it is concerned only with its own capabilities and values. This is usually termed product orientation (Trustrum, 1989). The result of adopting the marketing concept could reflect in activities that translate the philosophy into practice (Diamantopoulous & Hart, 1993).

Traditionally, marketing has played more important role in consumer goods industries than in industrial markets (Homburg, Workman, & Krohmer, 1999). In fact, the practice of market orientation was first found in consumer packaged goods industries (Chandler, 1977). Kohli and Jaworski (1990) noted that despite the strong acceptance of marketing concept by academicians and practitioners, there is a little attention to measurement issues and virtually no empirically based theory. Studies that have attempted to measure the adoption of the marketing concept have often relied on very simple measures (e.g. "to what extent has your organization adopted the marketing concept?"). The answers to such direct questions are almost certainly subject to a strong yea-saying bias, especially in those research situations that relied on single item measures (Deng & Dart, 1994).

Cultural Perspective of Market Orientation

In the cultural perspective of market orientation, Narver and Slater (1990) defined market orientation as: the organizational culture that most effectively and efficiently creates the necessary behavior for the creation of superior value for buyers and, thus, continuous superior performance for the business (p. 20).

They view organizational culture as driver of behavior and only when the culture is defined with commitment to superior value for customers, market oriented behaviors manifest themselves in an organization (Matsuno et al., 2005). In this study, four dimensions of the cultural perspective were employed: customer orientation, competitor orientation, interfunctional coordination (Narver & Slater, 1990) and profit orientation (Deng & Dart, 1994).

Behavioral Perspective of Market Orientation

The behavioral perspective of market orientation was first introduced by Kohli and Jaworski (1990). Their scale has gained a wide acceptance as one of two scales typically used by marketing scholars as a valid and useful metric that captures a firm's market orientation (Darroch et al., 2004). This perspective consists of three dimensions. Kohli and Jaworski (1990) defined market orientation as: the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across the departments and organization-wide responsiveness to market intelligence (p. 6).

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MARKOR and MKTOR: Why to Integrate

In market orientation studies, MKTOR (Narver & Slater, 1990) and MARKOR (Kohli et al., 1993) are the two most widely used scales. While MKTOR is based on Narver and Slaters (1990) description of market orientation as encompassing three behavioral components (customer orientation, competitor orientation and interfunctional coordination), MARKOR is based on Kohli, Jaworski and Kumars (1993) definition of market orientation as the organization wide generation of market intelligence pertaining to current and future needs of customers, dissemination of intelligence within the organization and responsiveness to it. Most of the measurement items in the MARKOR scale were provided with examples to facilitate the respondents understanding of the items.

Like Kohli's et al. (1993) MARKOR scale, Narver and Slater (1990) operationalization of market orientation has gained widespread acceptance as a valid and useful measures of market orientation. There are obvious similarities between these two measures. First, both focus on the central role of the customer in the manifestation of market orientation. Second, both entail an external orientation. Third, both recognize the importance of being responsive to customers at an organization level. Finally, there is recognition that interests of other stakeholders and/or other forces shape the needs and expectations of customers (Mavondo & Farrell, 2000).

In addition to, the generation of intelligence, its dissemination and the design of the response are activities shared by the different departments and functions of the organization; such that interfunctional coordination encompasses all three. Cadogan and Diamantopoulos (1995) proposed an integrating model which proposed that Narver and Slater (1990) and Kohli and Jaworski's (1990) conceptualization of market orientation share a similar nomological network.

The Integrative Model

Different researchers have developed different market orientation scales. Some scales are based on a set of cultural components (Deng & Dart, 1994; Narver & Slater, 1990), behavioral activities (Kohli & Jaworski, 1990) and organizational strategy (Ruekert, 1992). The research instruments by Narver and Slater (1990) cultural perspective- and Kohli and Jaworski (1990) behavioral perspective- have been considered to be the most used research instruments for determining a companys market orientation practices. Nevertheless, Bigne et al. (2003) concluded that while extant literature submits, there does not seem to be one generally acceptable research instrument for measuring market orientation tendencies of companies. Moreover, different measures and components of the market orientation construct depending on the sector and country in focus. Nowadays, a call for the integration of the Narver and Slaters (1990) and Kohli and Jaworskis (1990) conceptualizations has appeared because of their nomological similarity (Bigne et al., 2003; Cadogan & Diamantopoulos, 1995). Gonzalez-Benito and Gonzalez-Benito (2005) concluded that organizations adopt first a cultural orientation and then develop consistent behaviors (p.799).

Recently, Gotteland et al. (2007) propose integrating existing approaches to market orientation. Similarly, Carr and Lopez (2007) discussed that several studies have debated integrating the two conceptualizations of market orientation cultural and behavioral-, consequently, their scales. According to them, further studies to examine the integrative framework of the two scales that are foremost to the study of marketing (p.113).

Accordingly, this study used the concepts of market orientation jointly: behavioral activities used by Kohli and Jaworski (1990) and Kohli et al. (1993), cultural perspective proposed by Narver and Slater (1990) and profit orientation dimension used by Deng and Dart (1994). Existing scales are used to allow for cumulative knowledge development and also to allow findings to be explained within the context of extant literature and empiricism (see Figure 1).

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Marketing

Concept

Adoption

Knowledge of customers behavior and needs. Efficiency in producing goods.

Monitoring the changes in business environment. Committed resources to research and development.

Customer orientation

Business strategies are driven by creating value to customers. Competitive advantage is based on customers needs. Business objectives are driven by customer satisfaction. Measure customer satisfaction.

Competitor orientation

Salespeople share information about competitors strategies Top management discusses competitors strengths and strategies Target customers for competitive advantage.

Profit orientation

MIS determines the profitability of product lines. MIS determines the profitability of customers. Sales potential for each market.

Intelligence generation

In-house market research.

Polling end users to assess products and services quality. Review the effect of changes in business environment.

Intelligence dissemination

Interdepartmental meetings to discuss market trends and developments.

Sharing information about customer or market. Data on customer satisfaction are disseminated at all companys levels.

Responsiveness to intelligence

Respond to competitors price changes. Departments get together to plan a response to environmental changes.

Review of product development efforts.

Modify product or service according to customer wants.

Interfunctional coordination

Communicate information about customer experiences across all business functions.

All of business functions are integrated.

Sharing resources with other business units.

Figure 1. The resulted integrative model of marketing concept adoption and implementation

Methodology

The sample frame for this study was drawn from The 2006 Commercial and Industrial Directory of Yemen. Consumer goods industry is targeted based on the intense competition in this industry. Therefore, these companies in such highly competitive environments should place greater emphasis on marketing activities to survive in the market. Furthermore, the degree of market orientation is found to be greater in the consumer goods marketplace than among industrial goods manufacturers (Verma, 2000). Multi-stage cluster sampling is used and three levels of cluster are conducted: geographical areas (primary units), companies (secondary units) and strategic business units (tertiary units). Kohli and Jaworski (1990) argue that the strategic business unit (SBU) is the appropriate unit of analysis because different SBUs may be more or less market oriented. Three levels of respondents were surveyed: top management, marketing executive and non-marketing executives (sales, production and R&D executives).

At the end of the data collection process, 152 completed questionnaires were valid for the analysis stage. The total response rate was 69% which is an accepted rate in social science studies, especially when the respondents are executives. Nearly half of the surveyed SUBs were producing foodstuffs products (43%). The rest of the surveyed SBUs were producing beverages (24%), chemical products

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(16%), plastic products (14%) and only one SBU producing cigarettes (see Table 1).

Table 1. Types of the surveyed companies

Types of Companies

Products

No. of SUBs

Flour, vegetable ghee, cooking oils,

Foodstuffs

margarine, butter, biscuits, sweets, cakes,

21

chocolate, confectionery and canned

foods

Beverages

Soft drinks, juices and dairy product

12

Plastic products

Sponge, paper products, plastic

7

household articles and tissue.

Chemical products

Powder detergents, soaps and painting.

8

Tobacco

cigarettes

1

Previously developed and well-established scales serve as measures of the study's constructs. Validity, correlation and path analyses were measured using well known Analysis of MOment Structure program (Amos version 16). Construct validity refers to the degree to which a measure actually assesses the theoretical construct it is supposed to assess and is often assessed through confirmatory factor analysis (CFA) (Meyers et al., 2006). A separate confirmatory factor analysis was done for each of the eight-factors of the conceptual model. Out of the 46 items generated from original scales; a 27 items were retained for further analyses. Furthermore, all Cronbach's alpha values achieved acceptable range for reliability.

Findings

According to Guo (2002), while the old marketing concept is concerned with management philosophy, the new marketing concept is more than a philosophy; it is a way of conducting business (i.e. kind of business culture). This study adopted the new marketing concept, where a synthesis model consists of cultural and behavioral perspectives was developed and examined. The main findings of this study are discussed next.

Marketing Concept in Least Developed Countries

Given the fact that marketing has played a dominant role in the economic development of the developing countries, it is expected to play a similar role in fostering the development of the least developed countries. Essentially, the marketing concept should serve as an umbrella with philosophy that has emphasis and attention on other orientations whenever appropriate (Capella et al., 1994). It is a managerial philosophy relating to the attainment of the organizations goal of long term survival enhancement in light of the competitive environment in which the organization must function. The marketing philosophy approach demonstrates tendency to give higher status to marketing and adopting more proactive approach towards the future with more importance given to marketing training (Hooley, 1990). In this study, Yemenis consumer goods companies were optimistic about the future economic growth and had shown the expansion into new markets as their prime objective, while other companies rely on the growing of existing markets.

Additionally, the companies approaches to the future (i.e. reactive or proactive) showed no dominant approach adopted by consumer goods industry since the results apparently had shown no meaningful distinction between the two. Similarly, half of the respondents adopted the reactive approach (i.e. wait and see what happens, then react and/or predict the future then adopt) and other respondents adopted the proactive approach (i.e. identify possible future scenarios then plan to bring one about). An encouraging number of the respondents reported the view of the top management to marketing as philosophy that should guide all the companys operations. Furthermore, the marketing executives participation with top management in making decisions give good indication of positive attitude toward marketing. Nearly half of marketing executives reported always participation and unfortunately nearly half claim to be occasionally. Companies that give higher priority to marketing would give the higher degree of

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International Management ReviewVol. 6 No. 2. 2010

importance to marketing training (Hooley et al., 1990). Majority of the Yemenis consumer goods companies claimed the utmost important is given to marketing training programs. Particularly, majority of the marketing executives reported the utmost importance is given to marketing training and also majority of top executives gave the same opinion.

One of the key steps in adopting the marketing concept is the development of internal education and communications programs. The results of this study revealed more reliance on special lectures (consultants and academic) and both lecture and on-the-job training. The literature suggests that large companies as in this study- utilize university executive development programs to great extent than medium and small companies. Surprisingly, no one of the Yemenis large consumer goods companies used university executive development programs.

Generally, the starting point of adopting the marketing concept is to establish specialized department to conduct the needed activities of achieving the marketing concept. A study by Zebal (2003) revealed that consumer goods producers are implementing marketing by empowering the marketing department to lead the company's long-term planning and maintain control over an increased number of tasks. Majority of the Yemenis consumer goods companies had specialized marketing departments and some of them have a marketing administration, which contains more than one unit such as marketing research unit and promotional unit.

The results also revealed that marketing department was given medium control over new product development, packaging and pricing. Generally, it seems that consumer goods industry favor dividing the responsibility of new product development and packaging with manufacturing department and pricing with finance department.

The marketing concept can be adopted not only by people in marketing functions, but also by others in other specialties (e.g. accountants, production staff, designers, etc.). It appeared that adoption typically began at higher levels in the firm and gradually moving down the hierarchy (Nakata, 2002). In this study, majority of top management executives reported moderate adoption of the marketing concept, whereas, majority of marketing and non-marketing executives reported good adoption of the marketing concept. Generally, the results seem to be positively since majority of the surveyed respondents reported a moderate, good and deep adoption degree.

The average score of the marketing concept items was high, which indicated high degree of adoption within consumer goods industry. Furthermore, the multiple comparison results within different organizational levels revealed significant differences of the adoption degree between top and marketing executives and between top and production executives. Marketing executives were the highest, whereas top executives, unfortunately, reported the lowest degree of marketing concept adoption comparing with other respondents. A study by Nakata (2002) supported these results partially by founding differences between top and production executives in their adoption degree, while no differences were found between top and marketing executives.

A new perspective for viewing the marketing concept has emerged within the marketing literature to clarify the implementation issue (Turner & Spencer, 1997). Likewise, utilizing the marketing concept becomes an important factor in order to create more effective organization structure and increase profitability. Studies of the marketing practice in UK firms have consistently shown a sizeable and persistent gap between what the marketing concept says, and what they are doing (Brownlie & Saren, 1992). In this study, high percentage of consumer goods companies had adopted and implemented the marketing concept. Surprisingly, some of the companies did not adopt the marketing concept nor implement it, whereas, other companies adopted the marketing concept but do not implement it.

According to the respondents comments, the reasons for adopting but not implementing the marketing concept were categorized into leadership attitude, resources allocation, marketing staff, interfunctional coordination and external environment. Top management policy and support were the main issues which affect the allocation of the necessary resources for implementing the marketing concept. Such resources as hiring sufficient marketing individuals, training programs and the absence of important departments like R&D. These results are consistent with the findings of Nakata (2002) who

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pointed out the insufficient resources as key internal impediment to intelligence generation, particularly budgets to buy data and to hire market researcher. Furthermore, an open attitude toward transmitting and receiving information along with good departmental integration was said to support information sharing (Nakata, 2002).

The results of this study also highlighted the reasons for adopting and implementing the marketing concept. Leadership attitude, organizational objectives, competition and customers were the main reasons. Intensive competition (especially with the smuggling products) can play a motivation role to implement the marketing concept as well as top management willingness to improve the profitability and the competitive advantage of the products.

In the least developed countries, market conditions are playing a major role in influencing companies strategies and policies. In this study, the results showed that some consumer goods companies do not adopt nor implement the marketing concepts for several justifications. The justifications were categorized into market conditions (e.g. no new markets and/or no new customer) and company policy (e.g. imitating rivals and/or no clear mission). Majority of the responses are claiming that the top management attitude is the main reason. This finding is in accord with the research of Nakata (2002) which found that top management is one of the main internal facilitator and inhibitor factors of adopting the marketing concept. On the other hand, studies in developed countries had shown different reasons for not adopting the marketing concept such as adopting production/sales mentality, marketing is harder to understand, customer needs vary too much and other concepts are useful.

Literature reviewed had shown three main constraints influence the companies adoption of the marketing concept: resistance to change, individualism and organizational culture (e.g. Lichtenthal & Wilson, 1992; McDonald, 1992; Nakata & Sivakumar, 2001). Many organizational cultures lack flexibility, which posed an inherent resistance to change. Furthermore, some reasons were suggested for not adopting the concept such as the changing needs of customers, lack of time to plan, not familiar with the concept and resistance of employees.

Similar to the literature, the difficulties facing Yemenis consumer goods enterprises in adopting and implementing the marketing concept from the perspective of top management executives were categorized as an external environment (e.g. consumers awareness and/or intensive competition) and internal weaknesses (e.g. marketing staff, marketing programs and high cost). On the other hand, the difficulties from the perspective of marketing executives were categorized into leadership attitude, interfunctional coordination, resistance to change, organizational structure and resources and external environment.

The Third World businesses lack trained marketing personnel, which impedes ready applicability of marketing (Akaah et al., 1988). Other viewpoints of marketing in the Third World suggest that the lack of applicability is because the concepts and activities of the discipline have evolved and been nurtured in the context of buyers' market economies (where the demand for products and services is far less than the supply), whereas many Third World countries reflect sellers' market economies (where the demand for products and services is far exceeding the supply). According to Ang (1999), in the Third World countries, two marketing mix tools - price and product- are believed to be most affected by economic conditions.

According to Investment Climate Survey (World Bank, 2005), Yemeni firms perceived more obstacles to business than firms in most other countries and particularly problems of macroeconomic uncertainty, taxes, regulation, corruption and other barriers, which posed by poor governance. Likewise, the constant change introduced by the state laws and business climate of Yemen results in making the projects tested for feasibility to be over time unfeasible (Naji, 1999).

Additionally, external environment has significant effects on the application of marketing (e.g. market or nonmarket economy and income level). According to Ebrahim (2000), the most important constraint to marketing in Yemen is the unstable economic conditions and its reflection on the instability of the national currency exchange rate against foreign currencies. Likewise, the smuggling activities make local companies feel unable to compete with smuggled products, which did not pay taxes or customs duties. Therefore, the companies are unable to put stable prices for their products and this affects their

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reputation in the market. Thus, most marketing activities undertaken by these companies are to control the prices and change from time to time. Other constraints are the various taxes for raw materials through official outlets and through the various stages of manufacturing until their arrival to the final consumer. In addition, two reasons have affected the Yemeni's competitive environment; concessions given to goods imported from abroad and the great imbalance in the control of various goods that enter the market of Yemen. These give price advantage to the imported products against the local industry.

Market Orientation in Least Developed Countries

Seven variables of market orientation construct were examined in this study. The implementation degree results of these variables in Yemenis consumer goods industry as well as the resulted differences between the five organizational levels of respondents (Top, marketing, production, sales and R&D executives) were discussed in the light of previous studies.

Cultural Perspective. According to Zebal (2003), consumer goods producers are primarily the ones who have embraced the cultural dimensions of market orientation through giving more emphasis to generating customer derived intelligence through formal market research. The results of this study are partially consistent with this view; that is, only two cultural dimensions of market orientation (i.e. customer and competitor orientation) achieved a high degree of implementation in Yemenis consumer goods industry. The remaining two cultural dimensions of market orientation reported a moderate degree of implementation (i.e. profit orientation and interfunctional coordination).

According to Gotteland et al. (2007), differences of perceptions in the organization's market orientation have been observed between departments, between hierarchical levels and between marketing and non-marketing managers. However, the results of the multiple comparison of this study revealed no significant differences between the five types of the respondents in all of the four cultural dimensions of market orientation. It seems that Yemenis executives have close perception toward the implementation degree of cultural market orientation.

Marketing executives were the highest in contrast with other respondents in the degree of interfunctional coordination. For profit orientation, marketing executives were the second after R&D executives. Likewise, top management achieves the highest score of customer and competitor orientation. Unlike, top executives achieve the lowest degree in interfunctional coordination and surprisingly sales executives reported the lowest degree of customer orientation. Obviously, individuals entering the sales profession accept the importance of customer orientation (Lopez, 2002). However, variety of working conditions must be existed to allow for the orientation (e.g. rewards system and organizational strategy).

Behavioral Perspective. Three behavioral dimensions of market orientation were examined in this study, that is, intelligence generation, dissemination and responsiveness. All these variables reported moderate degree of implementation. According to Gotteland et al. (2007), differences in perception of the extent of the organization's market orientation have been observed between departments, between hierarchical levels and between marketing and non-marketing managers. Similarly, the results of the multiple comparison of this study revealed significant differences between marketing and production executives and between marketing and R&D executives in their intelligence dissemination. Furthermore, significant differences were found between top and marketing executives in their degree of responsiveness to intelligence.

Marketing executives were the highest comparing with other respondents in the degree of intelligence generation, dissemination and responsiveness. Conversely, top executives achieve the lowest degree of responsiveness to intelligence. Similarly, production executives reported the lowest degree of intelligence dissemination. Obviously, the production function is less close to customers and immersed in the achievement of specific effectiveness and efficiency objectives (Gonzalez-Benito & Gonzalez-Benito, 2005). Therefore, it was justified that production executive have a low degree of marketing concept adoption and implementation. Surprisingly, sales executives reported the lowest degree of intelligence generation. Salespeople have the most contact with the market; therefore, they have the leverage of gathering the required information from customers and competitors. According to Almahmodi (2001),

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majority of Yemeni's industrial companies suffer from weakness in owning of marketing information because of the lack of the efficiency of information systems and the absence of prior studies that identify and analyze markets. Furthermore, the lack of the qualified marketing personnel and the lack of the unique competitive advantage were major weaknesses of the industrial companies in Yemen. It was also highlighted that the managers of the foods companies are more comparing with other companies-knowledgeable to the importance of the marketing's environmental changes in determining the marketing opportunities and facing the marketing determinative.

The Integrative Model

Recently, several studies called for integrating the main scales of market orientation (e.g. Bigne et al., 2003; Matsuno et al., 2005; Gonzalez-Benito & Gonzalez-Benito, 2005; Gotteland et al., 2007; Carr & Lopez, 2007); therefore, this study developed and examined an integrative model of marketing concept adoption and market orientation constructs within Yemeni's consumer goods industry.

Matsuno et al. (2005) view the two conceptualizations (cultural and behavioral) as complementary and supportive constructs rather than competing. Furthermore, they concluded - and other studies also - that the cultural construct is an antecedent to the behavioral construct (e.g. Gray et al., 1999; Homburg & Pflesser, 2000). Likewise, Griffiths and Grover (1998) pointed out that both approaches to market orientation are compatible and complementary because behavior is the basis for the formation of beliefs and values and culture provides the rules of behavior.

Homburg and Pflesser (2000) examined the relationship between the two perspectives; they developed an integrated framework in which the cultural market orientation is prior to behaviors reflecting it. Their qualitative and quantitative (survey of 173 managers) results enabled the link between the two perspectives to be confirmed. Recently, Sanzo et al. (2007) empirically investigated the relationship between the two perspectives, their results shown that the degree of cultural market orientation directly and positively affects the degree of behavioral market orientation.

The results of the path analyses of the sub-models resulted in the previous section suggested that the saturated model (partial mediation) is generally the best to depict the synthesis conceptual model which consists of integrating theories of marketing concept adoption, cultural market orientation and behavioral market orientation. To confirm these results, this study used the confirmatory modeling strategy that statistically assesses a single model for its fit to the observed data (Hair et al., 1998). The full model and its significant standardized coefficients are presented in Figure 2.

.32a

.32a

.27b

.45a

Customer

.20c

.22c

Intelligence

generation

orientation

Marketing

Competitor

.35a

Intelligence

Concept

.41a

.25b

Interfunctional

dissemination

Adoption

orientation

coordination

.44a

Profit

.55a

.25

Responsiveness

orientation

to intelligence

Figure 2. The full saturated integrative model

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Notes: a) Denotes significant standardized path coefficients p < 0.001

Denotes significant standardized path coefficients p < 0.

Denotes significant standardized path coefficients p < 0.05

As recommended by Thompson (2004), in analyzing a path model, selected overall fit measures would examine (Chi-square (2), Normed Fit Index (NFI), Comparative Fit Index (CFI) and Root Mean Square Error of Approximation (RMSEA). The fit measures of the full saturated model were generally accepted (2=43.7, NFI =.930, CFI=.932 and RMSEA=.3). In general, the findings of this study support the integrative model and expand the scope of the constructs. The two perspectives of market orientation were found to be positively and significantly correlated. However, the proposition that the cultural and behavioral dimensions of market orientation can be modeled as two general factors was not supported. That is, the results of confirmatory factor analysis supported the six-factor scale of market orientation. This finding is in accord with the research of Carr and Lopez (2007), where market orientation was modeled as six-factor model (items for each subscale loading on its respective subscale factor).

Marketing concept adoption was found to be significantly and positively correlated with the cultural dimensions of market orientation (customer, competitor, profit orientation and interfunctional coordination). Similarly, marketing concept adoption was found to be significantly and positively correlated with the behavioral dimensions of market orientation (intelligence generation, dissemination and responsiveness). This result is in line with the research of Nakata (2002), whereby, the correlation between adoption and implementation was positive and significant. The significant correlations between marketing concept adoption and market orientation dimensions revealed the importance of the adoption degree in determining the level of market orientation of the consumer goods industry in Yemen.

According to Gonzalez-Benito and Gonzalez-Benito (2005), market-oriented culture does not automatically result in market-oriented behaviors. The integrative model proved a mediational role of interfunctional coordination in the relationship between the cultural and behavioral variables. According to Baron and Kenny (1986), the central idea in this model which has a mediator variable is that the effects of stimuli on behavior are mediated by various transformation processes internal to the organism. Generally, in this study, the path analysis results showed the following relationships:

The relationship between marketing concept adoption and the behavioral dimensions was partially mediated by customer orientation and interfunctional coordination. Furthermore, the relationship between customer orientation and two behavioral dimensions (generation and dissemination) was partially mediated by interfunctional coordination, whereas, the relationship between customer orientation and responsiveness to intelligence was fully mediated by interfunctional coordination.

The relationship between marketing concept adoption and the behavioral dimensions was partially mediated by competitor orientation and interfunctional coordination. Furthermore, the relationship between competitor orientation and intelligence generation was partially mediated by interfunctional coordination, whereas, the relationship between competitor orientation and two behavioral dimensions (dissemination and responsiveness) was fully mediated by interfunctional coordination.

The relationship between marketing concept adoption and intelligence generation was partially mediated by profit orientation, whereas, with other two behavioral dimensions (dissemination and responsiveness) was partially mediated by profit orientation and interfunctional coordination. Moreover, the relationship between profit orientation and intelligence generation was direct and positive. Furthermore, the relationship between profit orientation and intelligence dissemination was fully mediated by interfunctional coordination, whereas, the relationship between profit orientation and intelligence responsiveness was partially mediated by interfunctional coordination.

The direct relationship between customer orientation and all behavioral variables was positive and significant, whereas, competitor orientation has only one significant relationship with intelligence generation. A possible explanation of this result, is that intelligence dissemination is an internal

49


organizational process. It is not necessary to be actively sharing information if the organization is competitor orientation. These results are consistent with Carr and Lopez (2007) who found that customer and competitor orientation can drive the generation of market intelligence. They concluded that the higher the firms customer and competitor orientation, the more the firm will possess the related information. Overall, marketing concept adoption was significant antecedent of all cultural and behavioral variables. Likewise, all cultural dimensions (customer, competitor and profit orientation) were significant antecedents of interfunctional coordination. Furthermore, all behavioral variables (intelligence generation, dissemination and responsiveness) were positively predicted by interfunctional coordination.

Implications

The results of this study provide some insights into how Yemenis companies can enhance their business performance through the adoption of the marketing concept and being market oriented. Top management needs to show a committed behavior to the adoption and implementation of the marketing concept. Furthermore, since the findings showed that interfunctional coordination did mediate the relationship between cultural and behavioral dimensions; hence, this coordination will enhance the implementation of market orientation and as a result, high emphasize must be given to integrate all organizational departments in serving and satisfying customers. Indeed, top management must work to widening acceptance of marketing concept philosophy across the organizational structure through communicating the vision and initiating and modeling change (Nakata, 2002).

Since LDCs markets are characterized by changing market conditions; therefore, Yemenis managers should seek to make their companies market oriented while remaining flexible to shift resources between customer and competitor emphasis as market conditions change in the short run. Consumer goods industry can use the synthesis model as a process model to adopt and implement the marketing concept. The model can be used as a guideline for companies that employed the marketing concept as their business philosophy. Furthermore, it detailed the specific steps making it easy for company to be market oriented. The findings also provide insights on the difficulties that face Yemenis companies in adoption and implementing the marketing concept.

The Third World markets are the expected future markets; and their early preparations for that become the key to its future success (Altorgoman, 2001). Yemenis 2025 strategic vision is looking for increase the industrial based and motivates the manufacturing process through benefiting from the competitive advantage of natural resources and cheep working forces in Yemen (MPD, 2005). Therefore, dynamic and broad-based growth of the private sector is the key to reaching Yemens goal of diversifying its economy and reducing its dependence on shrinking oil reserves (World Bank, 2006). The Yemenis General Investment Authority (GIA) should have clear policy on the industrialization effort in Yemen. The heated and often unfair competition between national industries and international companies negatively affect the local companies (Naji, 1999).

According to Alkamali (2001), in Yemen, marketing experts believe that the local industrial sector has good chance to increase its production of foodstuffs, home appliances and fashion to cover the needs of the local market owing to the higher prices of imported goods as a result of the rise in US dollar following the September 11 events in 2001. Therefore, marketing researchers recommend the Yemenis industrial sector to activate demands on their products, attract foreign investors to local industry, direct resources to increase industrial production and increase exports to foreign markets. The government plan to decrease the dependents on oil-revenue by focusing on non-oil industries should be used by local companies to increase its productions under the current circumstances which is difficult for importers to offer lower prices.

For its part, the government has a main role in processing infrastructure through the provision of good network of roads to facilitate the movement of goods and services easily to the various regions of the country due to the difficult in geographical nature of Yemen, which had become a factor impeding the flow of goods and services easily to the consumer (Ebrahim, 2000). Consequently, this difficult geographical nature highlights the set of circumstances that hinder marketing activity, which raises the

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costs and increases the requirements for marketing investments. Alkamali (2004) called on the government of Yemen to work for development and qualification of the national industry to improve its capability of competing with foreign products. Many studies stressed the important for benefiting from the experiences of Arab countries in the field of developing the national industries along with studying the constraints that delay the development of Yemenis industry. Alkamali (2004) recommended on raising efficiency of production and pursuing modern trends in marketing systems to meet consumers desires and needs.

Companies may have difficulty implementing the marketing concept because of the lack in ability (requisite knowledge, skills and systems) or opportunity (in less competitive environments a production orientation may be more profitable than a customer orientation) (Gray et al., 1998). Therefore, changes will be needed if a firm is to implement the marketing concept probably; such changes in the organization structure and job requirements. The marketing concept needs to be integrated throughout the organization as a philosophical component. To accomplish this integration, Yemenis consumer goods industry must thoroughly understand implementation problems and develop proactive strategy to achieve successful implementation.

Several steps must be taken by Yemenis companies in implementing the marketing concept. First, top management must understand the existing culture within the company. Second, given the existing culture, the marketing concept must be marketed to employees from top to bottom. As a result, an organizational commitment for change must be developed. Third, use marketing research to identify the existing needs and attitudes of the employees. Furthermore, other actions can be done also such as giving the top marketing executive higher corporate status, assign wider variety of marketing-related activities under the marketing department, utilize committees and interdepartmental meetings and encourage both formal and informal communication within the marketing department.

In fact, implementation of the marketing functions without adoption of the marketing concept is not marketing. However, having adopted the marketing concept, it is not necessary to implement all the functions, merely those that are appropriate to common circumstances. For marketers, it is easy to adopt the marketing concept as a basis for marketing planning. However, marketing as it is supposed to be implemented in practical business situations according to the standard marketing models may not be always fit reality as perceived by top management.

Market orientation dimensions must be perceived by all organizational levels. Even certain level of management perceives specific orientation that is not necessary the same perception is existed throughout the entire organization. The Yemenis companies should emphasize customer and competitor orientation since this will enhance the level of market orientation. This can be done by the totally commitment of the executive within difference organizational level for the adoption and implementation of the marketing concept.

Special emphasize must be given to create a clear mission to serve as guidance to employees in order to be market oriented. The mission must seek to motivate other departments to coordinate with the marketing department in order to implement the marketing concept. Furthermore, the Yemenis consumer goods enterprises should give an increasing attention to improve the marketing abilities through the development of qualified marketing individuals and focus on several training programs aimed at the marketing concept.

Limitations and Further Research

This study was influenced by several limitations. However, without decreasing its contribution, future research may easily address them. Firstly, the current research is the first attempt to develop an integrative measure for marketing concept adoption and market orientation within least developed countries context. Therefore, future research is needed to confirm the relationship among the variables in the model.

Secondly, the sampling design and thus data collection were limited to the consumer goods industry; thus the validity and generalization to other types of business, such as services and industrial products, is therefore limited. A replication of the study in different industries would confirm whether the model which developed in this study - is generalizable to other settings. Similarly, the small sample size could be

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limited factor in an investigation of management opinion, corporate culture and philosophy, as some theorists have suggested (Shapiro, 1988). Further studies with larger samples will provide more confidence in the results.

Thirdly, this study covered only the environment of Yemen which limits the generalizability of the findings, particularly, to other least developed countries. However, it should be noted that the use of a country outside the traditional research stream of the developed world (USA, UK, etc.) might be seen as an attempt to increase the scope of the understanding regarding how market orientation is practiced (Osuagwu, 2006). This may assist in demonstrating the strength of the market orientation construct in different environments.

Several areas would be fruitful for future research. Marketing as a discipline, has played an important role in the development of industrialized nations. However, its potential as a source of development in the Third World has been largely ignored. This study provide an empirical research evidence on the marketing concept adoption and implementation within a Third World country as there is few or virtually no such attempt to date in this region. The findings must be viewed as tentative; therefore, future research is needed to extend and confirm the findings. The replications of the study with different countries are also necessary. Cross-culture studies should be carried out in different least developed countries for comparison purposes. Particularly, further validation of the integrative and scale refinement is important.

Further research should investigate the factors which can improve the adoption and implementation of the marketing concept within the least developed countries environment. What training programs are needed and how should companies deal with the opportunities and difficulties facing Third World market.

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Contributing Authors

Dr. Maria Payne is Assistant Professor of Business Administration and Management, Maryville University, St. Louis, MO. Earned Ph.D. in Organization and Management specializing in Human Resource Management, Capella University; MBA in Finance, Western New England College; BS in Management Studies, Boston University; BS in Liberal Studies, University of the State of New York.

Dr. Yau De Wang is Associate Professor of Management Science at the National Chiao Tung University, Taiwan. He earned his Ph.D. from University of Texas at Austin, USA. His research areas include psychology, organizational behavior, technology and organization design, and human resource management.

Dr. Han Jen Niu is Assistant Professor in the Department of Management Science & Decision Making at the Tamkang University. Her research areas include strategy management, technology management and innovation management. He can be reached at [email protected]

Dr. Tony Carter, Ph.D., J.D., MBA is a Professor of Management and Director at the School of Business at the University of New Haven. He is a Visiting Professor of International Marketing Management at ISM University of Management and Economics in Vilnius, Lithuania. He was Academic Director and Professor at the Christos M. Cotsakos College of Business, William Paterson University, and founding faculty member of the Russ Berrie Institute of Professional Sales, known for its innovative technology sales lab. In addition, he is Adjunct Professor of Marketing at Columbia University, Graduate School of Business, where he teaches in the MBA program and has taught in the Executive MBA program. He has over 15 years experience teaching in top ranked Executive MBA and Executive Management programs. He has also done extensive work in Management Coaching which includes publications and consulting. He has written six books, for example, Contemporary Sales Force Management; The Aftermath of Reengineering: Downsizing and Corporate Performance; Customer Advisory Boards: A Strategic Tool for Customer Relationship Building; Sales Force Management: A Contemporary Approach and so on. He is currently completing 7th and 8th books on leadership and managing retention.

Dr. Wail Alhakimi is Assistant Professor of Marketing at Taiz University, joining the department of marketing in 2010. He received his Ph.D. degree from University of Technology Malaysia in 2010. Since 2002, he was a teaching assistance in Taiz University, and Science & Technology University in the Republic of Yemen, as well as University of Technology Malaysia. Dr. Alhakimis research primarily focuses on market orientation and marketing strategies.

Dr. Ying Wang, DBA, CPA, is Assistant Professor of accounting at Montana State University-Billings in Billings, Montana. She has taught various courses for about 3 years. Her major research interest is financial accounting and reporting. E-mail: [email protected]

Michael C. Campbell, M.S., CPA, is Professor of accounting at Montana State University-Billings in Billings, Montana. His background includes experience as an auditor for a Big-4 CPA firm, and as an accountant or controller for a national manufacturing company, a large not-for-profit organization and a real estate development company, as well as, over 15 years experience as a consultant specializing in accounting systems implementation. He has taught various accounting courses at several universities for over 30 years. His major research interest is financial accounting and accounting information system.

E-mail: [email protected]

Moslehuddin Khaled teaches Management and Marketing courses in Independent University, Bangladesh, Chittagong, Bangladesh. His research interest is entrepreneurship, strategic management and public sector management. E-mail: [email protected]

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