Dis-Aggregated Effect of Market Orientation on Firms' Performance: A Study on Indian Small and Medium-Scale (SMEs) Manufacturers

Introduction

The scholarly focus on market orientation research picked pace after the evolution of the contributions made by Narver & Slater (1990) and Kohli & Jaworski (1990). Initially a great deal of research tested the validity of market orientation and firm’s performance relationship, focusing on developed countries large scale firms (Kirca et al., 2005, Oyedijo, A. 2012). However, the contemplation of these studies attributed to the existence of a mixed outcome such as, Deng & Dart, (1994); Slater & Narver, (1998) posit a positive relationship, Grewal & Tansuhaj (2001) found a negative relationship and Baker & Sinkula (1999) found no relationship between market orientation and firm’s performance. The possible reasons for such ambiguous relationship may be attributed to the factors like, the effect of environmental factors, cultural and sectorial diversities and innovation on market orientation and firm performance relationship (Gaur et al., 2011;). In addition to the relational ambiguity the focus of available researches on developed countries large scale firms, makes it infeasible to develop a comprehension about the relationship.

Contrary, however small businesses have always been considered as the growth engine of developing economies, very little attention is given on market orientation research in this aspect (Becherer et al., 2001; Cano et al., 2004; Ramesh & Ramesh 2014). The contribution of small-scale firms in the world’s economy is increasing day by day and more specifically in a country like India, where the study is situated, small-scale firms have acquired a dominant position in the development of the country. According to an estimate the SMEs sector contributes approximately 29% in India’s GDP, with export contribution around 50% and employment generation around 11 crore people (Dewan, 2019). Although the marketing principles are equally applicable to the large and small firms, alike sophisticated marketing practices always been questionable in smaller firms (Cromie, 1991). The scale of operation and contextual differences between large and small scale firms makes it difficult to generalize the research findings across different contexts (Gaur et al., 2011). Hence the purpose of this study is to empirically investigate the market orientation and performance relationship in developing country like India, giving due importance to the small and medium scale firms. The study has its own significance in a transient business environment like India where these fluctuations bring more volatility in terms of technological advancements and customers' preferences. In lieu of this the basic affirmation of this study is to empirically test the relationship of market orientation and performance, taking into account internal and external environment factors in Indian context.

The objectives of the papers can be conceptualized as:

• 1.

  The direct effect of market orientation on the firm’s performance;

• 2.

  The role of environment moderator on market orientation and firm performance.

The souvenir of this paper is organized as follows. The first section mentions the previous research contributions concerned with the market orientation, environment factors and performance constructs to provide a basis for this study. Further, the theoretical framework and research hypotheses are explained, which is followed by research methodology, including sampling considerations, scales and measures. In the fourth section, we have mentioned the data analysis which is further followed by outcomes, discussion, managerial implications and directions for future research.