The Vaue Of Market Orientation Matthijs Van Leeuwen

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The Value of Market Orientation A resource based view on intelligence dissemination and customer acceptance Management Summery Matthijs van Leeuwen Business Administration Groningen University January 2010

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Summery of the study: The Value of Market Orientation

Transcript of The Vaue Of Market Orientation Matthijs Van Leeuwen

Page 1: The Vaue Of Market Orientation   Matthijs Van Leeuwen

The Value of Market OrientationA resource based view on intelligence dissemination and customer acceptance

Management Summery

Matthijs van LeeuwenBusiness AdministrationGroningen UniversityJanuary 2010

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Introduction

! This report is the result of the Bachelor Thesis course as offered by the Faculty of Economics and

Business of Groningen University in the Business Administration bachelor. The goal of this research is to link

knowledge management and market orientation. By linking these two concepts the literature on innovative

capacity can be enhanced. More specifically it can be said that this research intends to proof that knowledge

management can support a market orientation and market orientation can improve the innovative capacity of a

SME. The mean research question therefore will be: “How do SMEs use market knowledge as a resource in

understanding their market’s needs in order to be more innovative?”.

" The paper is made up from 5 chapters, of which this introduction is the first one. The second chapter

will introduce the conceptual model, hypothesis and rationale for this thesis. The research methodology will be

discussed briefly in the third chapter and the results in the fourth. The final chapter the conclusion, discussion

and limitations will be presented.

Conceptual model, hypothesis and rationale

" The basis for this thesis is the conceptual

model depicted in figure 1. This model is compiled

out of three segments: Knowledge Management,

Market Orientation and Innovative Capacity. First of

all these three concepts will be explained, after

which the relations between them will be discussed.

Knowledge management

" In the management literature knowledge

management can be divided into two groups. First

there are the quality indicators, consisting of new

knowledge acquiring, existing knowledge sharing

among functions and existing knowledge sharing

between people. These indicators have influence on

the knowledge level and the quality of disseminating the knowledge through the organization. These indicators

are included into the study because these have a large - hypothesised - influence on market orientation.

" Second, there are the process indicators, being the acquisition process, conversion process,

application process and protection process. Of these indicators three are applicable for this study and included

in the conceptual model. These indicators describe the process of how knowledge is handled in an organization

(theoretically).

Market Orientation

" Market Orientation is the process of managing the customers needs, articulated or latent. In the

conceptual model this process is depicted by the three quality indicators: Intelligence generation, which can be

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Figure 1 Conceptual model: Knowledge Management, Market Orientation and Innovative Capacity

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linked to new knowledge acquiring and the acquisition process. Intelligence dissemination, which stands for

dispersing existing knowledge sharing across departments and between people. Finally, responsiveness is

linked to the conversion and application process.

Innovative Capacity

" In this thesis the concepts of market orientation and knowledge management where linked to innovative

capacity. This is the extend to which an organization is innovative. For this thesis innovative capacity is

measured using four indicators. In figure 1 it can be seen that the first three innovative capacity indicators are

linked to the first two of market orientation. The measures are marketing-, market-, and financially-based. Last

indicator is timing, which can be linked to responsiveness.

Research

! Due to time restrictions this study will only investigate the relation between intelligence dissemination

and customer acceptance. This way the relationship between market orientation and innovative capacity will be

approximated. The choice for these indicators is because in the eyes of market orientation, these are most

interesting. Intelligence dissemination is a vital chain in the market orientation process. Where every organization

is able to generate a certain amount of information about the

market, only some are able to disseminate this information through

the organization. The dispersion of intelligence (about the

customer’s needs) through the organization should improve the

customer acceptance since their needs are better displayed in the

products/services offered. This brings forth the hypothesis for this

study:

The better the intelligence dissemination of an organization, the better the customer

acceptance of an organization.

Research Methodology

" The method used for this study was a web-based self-administrated questionnaire in combination with

a written self-administrated questionnaire. The web-based survey was distributed using certain groups of the

network site Linked In. The written surveys where distributed to 18 organizations in the Groningen area.

" Of these 18 written surveys only two where returned. Reason for this is probably the short time period in

which the questionnaires could have been returned - only one week. On the Linked In request we had 10

reactions. In total, only 7 of the 12 returned surveys could be used due to incomplete surveys.

Results

! The descriptive statistics of the surveys can be found in Appendix 1. Further analysis of the data will

consist if a Cronbach’s alpha analysis to investigate the validity of the items that make the two constructs -

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Figure 2 Conceptual model Intelligence dissemination and Customer acceptance

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intelligence dissemination and customer acceptance. After this these constructs will be used to calculate the the

correlations and to identify a relationship using a linear regression analysis.

Cronbach’s alpha

! For the 2 constructs the internal validity is measured by the Cronbach’s alpha. For intelligence

dissemination 8 items where used and 4 items for customer acceptance. In order to take these items into one

construct, Cronbach’s alpha must be 0,6 or more. The intelligence dissemination construct with 8 items had an

alpha of 0,309, which is too small for the construct to be valid. After deleting two items the alpha was increased

to 0,604. The alpha for customer acceptance was 0,683 for all 4 items.

Correlations

" In table 1 the correlations between the

constructs and control variables are displayed. It

can be seen that there is high correlation between

all constructs (> 0,30) and some are signifcant (*

on a 0,10 level and ** on a 0,05 level).

Regression

" A multiple linear regression was carried out for the constructs and control variables. This yielded only a

slightly significant result on the control variables and not on the independent variable. Therefore a single linear

regression was carried which was significant (R2 0,518 sig. 0,68).

Conclusion

The hypothesis stated in this study can be supported, intelligence dissemination positively influences customer

acceptance. Furthermore, the data suggest that over the years, the innovative capacity of an organization

slightly decreases. The goal of this thesis was to proof a relationship between knowledge management, market

orientation and innovative capacity. Through literature the relationship between knowledge management and

market orientation is proposed. The relationship between market orientation and innovative capacity is

approximated by intelligence dissemination and customer acceptance.

! These results imply a few things. First, if an organization wants to improve it’s innovative capacity it can

start with improving it’s market orientation by introducing or improving knowledge management system.

Second, more mature organizations must account for the effect that over the years the innovative capacity

decreases. Although this study only investigated the effects over 5 years, the consequences could be sever.

" Although this study is carried out with great care, there are some points that limit the results. First the

sample size is too small to make large external inferences. Second limitation is the Linked In sample, becuase

this sample is not controlled homogeneous the results may be biassed. Third limitation is the questions that

originally where meant for larger organization. The application for small organizations is disputable, since some

are about departments is that only a small part of the conceptual model was tested. Future research should

account for these limitations.

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Intelligence Dissemination

Customer Satisfaction

Firm Size

Firm Age

Intelligence Dissemination -

Customer Satisfaction 0,720 * -

Firm Size 0,454 0,871 ** -

Firm Age 0,684 * 0,795 ** 0,678 * -

Table 1 Correlations