Journal of Services MarketingManagement behavior and barriers to market orientation in retailing companiesLloyd C. Harris Nigel F. Piercy

Article information:To cite this document:Lloyd C. Harris Nigel F. Piercy, (1999),"Management behavior and barriers to market orientation in retailing companies",Journal of Services Marketing, Vol. 13 Iss 2 pp. 113 - 131Permanent link to this document:http://dx.doi.org/10.1108/08876049910266031

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Users who downloaded this article also downloaded:Lloyd C. Harris, (2000),"The organizational barriers to developing market orientation", European Journal of Marketing, Vol.34 Iss 5/6 pp. 598-624 http://dx.doi.org/10.1108/03090560010321956Lloyd Harris, (1998),"Barriers to market orientation: the view from the shopfloor", Marketing Intelligence & Planning, Vol.16 Iss 3 pp. 221-228 http://dx.doi.org/10.1108/02634509810217336Lloyd C. Harris, Emmanuel Ogbonna, (2001),"Leadership style and market orientation: an empirical study", EuropeanJournal of Marketing, Vol. 35 Iss 5/6 pp. 744-764 http://dx.doi.org/10.1108/03090560110388196

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THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999, pp. 113-131 © MCB UNIVERSITY PRESS, 0887-6045 113

Keywords Barriers, Management styles, Market orientation, Marketing strategy, Retail trade

Abstract Marketing writing has long argued the value to services companies ofdeveloping “market orientation”. However, the existence of organizational barriers tothe development of market orientation in services businesses has been neglected. Thefindings of research in food retailing companies suggests associations between severalimportant aspects of management behavior and successfully developing marketorientation. These findings are of particular interest in enhancing the understanding ofthe problems faced in developing market orientation in retail businesses, but also ofgeneral interest to the services marketing reader. A series of conclusions and implicationsof this research for services marketing are presented.

IntroductionModern research into market orientation centered on new ways of definingand measuring which organizational activities constitute high levels of“market orientation” (for example, Narver and Slater, 1990; Kohli andJaworski, 1990). These new approaches triggered a debate on the linkbetween market orientation and company performance (see, for example,Ruekert, 1992; Jaworski and Kohli, 1993; Slater and Narver, 1994;Greenley, 1995; Pitt et al., 1996). The broad consensus of such studiespoints to a link between market orientation achieved and important aspectsof organizational performance (such as sales growth and profitability).

However, there is much evidence that executives encounter a wide range ofbarriers to developing and sustaining market orientation in their companies.These obstacles remain comparatively understudied (see for exampleWhittington and Whipp, 1992). Few studies have responded to theconclusion of Jaworski and Kohli (1993, p. 65) that “it seems desirable toassess the role of additional factors in influencing the market orientation ofan organization”. We suggest that consequently, the barriers to marketorientation remain somewhat poorly understood. We suggest that in commonwith many other areas of marketing, executives and researchers have beenrelatively slow in addressing the interaction between marketing strategiesand the workings of company organizations (e.g. see Piercy, 1998).

We note also that despite Meehan’s (1996) argument that the extent ofmarket orientation can best be revealed by observing specific market-focused behaviors (such as levels of customer care), much of the researchinto the barriers to market orientation has focused on more tangibleorganizational attributes. For example, Ruekert (1992) concentrates onsystems and processes, while Jaworski and Kohli (1993) focus on theinteractions between functional departments and the characteristics oforganizational systems. In fact, several areas of theory suggest that

Management behavior andbarriers to market orientation inretailing companiesLloyd C. HarrisLecturer in Marketing and Strategy, Cardiff Business School, CardiffUniversity, Cardiff, UKNigel F. PiercySir Julian Hodge Chair of Marketing and Strategy, Cardiff BusinessSchool, Cardiff University, Cardiff, UK

An executive summary formanagers and executivescan be found at the end ofthis article

Market orientation

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management behavior affects the development of market orientation in anumber of important ways.

The aim of this paper is to focus on the barriers to market orientation andspecifically to identify the principal types of management behavior whichaffect the extent to which a company can successfully achieve marketorientation. We do not attempt to develop an exhaustive list of barriers or todevelop a typology of obstacles, but rather to identify and review theprincipal management behaviors that appear to inhibit or encourage marketorientation. We believe that this makes an important contribution toachieving a better understanding of the real problems that managers face inachieving market orientation and customer focus, both in the retailingorganization that we have studied, but also more generally.

To achieve this goal we present, first, a critical evaluation of existingresearch into the characteristics of a market orientation. The available theoryregarding barriers to market orientation is also evaluated, and importantlimitations of this research are discussed. We then introduce a summary ofthe findings of three case studies of major British retailing organizations.These qualitative studies lead to four hypotheses which have been evaluatedin a study of management behavior and market orientation in British foodretailing organizations. We conclude with a discussion of the majorimplications which these findings have for practitioners.

Conceptualizing market orientationAs noted earlier, a key theme of modern research in marketing has beendefining, conceptualizing and developing measures of market orientation(Deng and Dart, 1994; Cadogan and Diamantopoulos, 1995). The mostnotable advances are associated with two groups of researchers:

(1) Narver and Slater (1990), and;

(2) Kohli and Jaworski (1990).

Narver and Slater (1990, p. 21) argue that market orientation is best viewedas a form of organizational culture, and define market orientation as:

The organizational culture (culture and climate, see Deshpande and Webster, 1989)that most effectively and efficiently creates the necessary behaviors for the creationof superior value for buyers and, thus, continuous superior performance for thebusiness.

In contrast, Kohli and Jaworski (1990) and Jaworski and Kohli (1993, p. 3)view market orientation as composed of three components:

(1) information collection;

(2) dissemination; and

(3) responsiveness

arguing that:

a market orientation refers to the organization-wide generation, dissemination, andresponsiveness to market intelligence.

The two approaches are similar in many important aspects. First, bothemphasize knowledge of customers and competitors (the market), anddepartmental cooperation as central to market orientation. Second, bothconsider the nature of market orientation not as an either-or dichotomousconstruct but as a continuum. Third, both view market orientation at thebusiness unit level. Finally, and most important, both can be classified asbehavioral, in that both perspectives imply that market orientation is

Barriers to marketorientation

Measures of marketorientation

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THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999 115

Research into specificbarriers to marketorientation

contingent on the behavior of management. It is this last implication whichwe argue has not been adequately reflected in the study of the barriers toimplementing market oriented policies and strategies.

Barriers to market orientationResearch into the barriers to market orientation can be divided into twotypes:

(1) specific; and

(2) general.

In fact, from the 1950s onwards a variety of studies have attempted toidentify and analyze the effect of a number of specific barriers to developingmarket orientation (such as individual types of systems). However, therecent advances in conceptualizing and measuring market orientation (seeearlier) have led to some attempts to develop more general analyses ofpotential obstacles to developing market orientation.

These approaches can be subdivided into two principal groups:

(1) people-focused; and

(2) system-focused studies.

Studies of “people” as the major barrier to the development of enhancedmarket orientation can be traced to an early study by Felton (1959) whichreviewed the problem of developing “integrated marketing”. Felton (1959)identified pitfalls of market orientation under four main groupings:

(1) inexperience of executives;

(2) incomplete integration of functions;

(3) lack of management ability; and

(4) certain power-related problems.

Felton theorized that barriers to market orientation originate from theimperfection of employees as a result of their inexperience, lack of ability,irrational status-seeking behavior and political activity.

Subsequent studies also highlighted employees at different organizationallevels as the main barrier to market orientation. A number of studies suggestthe orientation of organizations is largely dependent on the commitment andabilities of top management (Chaganti and Sambharya, 1987; Robertson,1995). Similarly, Kelley (1990) examines the barriers to market orientationwithin the banking industry, suggesting that employees at all levels may gainbenefits from market orientation, but also are prone to resist strategicchange. Gummesson (1991, p. 60) concludes of the implementation ofmarket orientation:

Marketing-orientation only becomes alive when all members of an organizationhave asked themselves: “How do I contribute to excellence in customer relationsand to revenue?”

His approach to implementing marketing orientation identifies part-time-marketers (PTMs), who carry out marketing activities outside of themarketing function, as opposed to full-time-marketers (FTMs), who conductmarketing activities within the marketing department.

Messikomer (1987, pp. 53-4) presents a broader people-barrier argument interms of the importance of corporate culture as the major barrier to marketorientation:

Different organizationallevels

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The difficulty often is not so much in getting management to accept this vision, butrather in overcoming the inertia bred of individual corporate cultures, becausecreating a marketing community involves changing the fundamental way in whicha company and its employees see themselves, their business environment, and thefuture.

He concludes that the principal barrier to developing market orientation isthe values, beliefs and assumptions of the organization. Slater and Narver(1995, p. 63) share a similar perspective:

the critical challenge for any business is to create the combination of culture andclimate that maximizes organizational learning on how to create superior customervalue … because the ability to learn faster than competitors may be the only sourceof sustainable competitive advantage.

The second factor most often cited as a barrier to market orientation isstructure/systems resistance or inappropriateness. Lear (1963, p. 54) assertsthat a market orientation, while “better suited to the customer”, createscomplications in terms of structure. Ruekert (1992, p. 225) analyzedorganizational processes as a barrier to market orientation, and suggestedthat the degree to which an organization can increase its market orientationis “inextricably linked to the organizational structures, systems andprocesses created to sustain them”. He examined the link between recruiting,training and reward processes and market orientation, concluding that therewas evidence to suggest important linkages.

Liu (1995) also examined systems as potential barriers to market orientationand suggested that organizational control mechanisms are associated withmarket orientation. He argued that the way in which an organization exertscontrol over people and processes may act as an impediment to developingmarket orientation, but his study found only partial support. Liu (1995) alsosurveyed respondents’ perceptions of the major constraints on marketorientation. Interestingly, by far the greatest perceived constraint was limitedtime resources. Structural and systems factors which allocate responsibilitiesand determine workloads may act (or be perceived to act) as barriers todeveloping market orientation.

Jaworski and Kohli (1993) produce the most advanced treatment of theantecedents to market orientation as a basis for examining organizationalbarriers. They argued that market orientation comprises three components:

(1) intelligence generation;

(2) information dissemination; and

(3) responsiveness

and developed and tested the antecedents to market orientation. They foundthe emphasis top management place on market orientation greatly affectseach component of market orientation. In contrast, risk aversion is found toinfluence only the responsiveness element of market orientation.Interdepartmental conflict is found only to directly affect market intelligencedissemination, while connectedness influences all components oforientation. In terms of organizational systems there are mixed results.Reward systems and centralization both affect all elements of orientationwhile levels of departmentalization and formulization are not proved toaffect any elements of orientation.

Day (1994) also contributes a broad study of the barriers to marketorientation. Utilizing the capabilities approach to strategic management, Day(1994) puts forward a comprehensive analysis of factors which facilitate

Broader studies ofbarriers to marketorientation

Values, beliefs andassumptions

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THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999 117

market orientation. He argues that the processes of market sensing andcustomer linking are the most distinctive capabilities of market orientedorganizations, and the lack of such capabilities impedes market orientationdevelopment.

Wong et al. (1989) also review barriers to market orientation. Wong et al.(1989, p. 45) found the most common barrier to market orientation cited byfunctional managers was “the sheer difficulty in attempting to changetraditional thinking and practices or the self-interests of staff within theirunits”. The second most common barrier found was the lack of co-operationand co-ordination between functional units. The other barriers preventing thedevelopment of market orientation included:

• limits set by available financial resources;

• departmental preoccupation with their own functional problems;

• lack of appropriate skills; and

• unclear marketing objectives.

Overall, barriers to implementing market orientation have received limitedanalysis. However, the available literature does identify barriers to marketorientation development which are complex, interrelated and numerous. It isimportant that each study of barriers shares the common theme of behavior:the people-focused studies emphasize the control of employee behavior andthe structure-focused studies emphasize manifestations of behavior in theform of structures, systems and processes.

Research design and methodologySo far we have established that theory suggests the behavior oforganizational members is both a component of market orientation and keyantecedent, but the empirical study of behavior as a barrier to marketorientation is relatively limited. To investigate the relationships betweenemployee and management behavioral factors and market orientation, a two-phase research design was adopted. First, an exploratory phase of case studyresearch was conducted to develop hypotheses which are grounded in bothextant theory and case study data. Second, to test the hypotheses, aquestionnaire survey was conducted.

A review of methodological literature indicates that a small sample of in-depth case-studies is more appropriate than a large sample of companies,since a case-study approach provides the required detail of behavioralbarriers (Yin, 1994). Three retail organizations in the UK were studied in-depth, predominantly through unstructured interviews. Case companies wereidentified and selected according to a variety of criteria, including:

• principal operating activity;

• a stated policy of improving levels of market orientation;

• firm size;

• store numbers;

• average store size, and

• turnover.

At this stage the key objective of the study was to explore and clarifybehavioral factors associated with the development of market orientation.The characteristics of this literature-derived objective indicate that a cross-sectional exploratory research design is appropriate (Churchill, 1991). The

Lack of cooperation

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objective of exploratory research requires the investigator to explore actors’interpretation and to understand insiders’ stances toward key issues.Moreover, the subject of research at this point requires an appreciation ofactors’ socially constructed reality with the aim of obtaining rich and deepdata (Bryman, 1988). In each of the three companies, a total of 50 interviewswere conducted, including employees from all functions and at differentorganizational levels. Additional data were obtained through small groupdiscussions. All interviews were audio taped, transcribed and analyzed viamethods of inductive reasoning (Lincoln and Guba, 1986) and comparativemethods (Martin and Turner, 1986), following a form of the iterative stageprocess suggested by Turner (1981). Briefly, this analysis of case study dataentails the classification, exploration and saturation of key constructsfollowed by the identification and description of potential linkages betweenconstructs. The analysis of the case study data led to the development of fourhypotheses.

To evaluate these hypotheses, a postal questionnaire survey of large foodretailing organizations in the UK was piloted and then conducted in amanner closely following the design and administration recommendations ofDillman (1978) and Churchill (1991). Adopted survey recommendationsencompassed questionnaire design and layout, pre-testing, survey pilotingand pre-notification and post-survey contacts with respondents. Variations ofthe Narver and Slater (1990) measure of market orientation wereincorporated, as were adaptations of Van de Ven and Ferry’s (1980) measureof conflict and of communication, Piercy’s (1986) measure of politics, andJaworski and Kohli’s (1993) measure of formalization. All items weremeasured using seven-point Likert-type scoring (Likert, 1932a; 1932b).Since the objective of the study was not industry representativeness, but toexamine associations and processes, it was concluded that the sample neednot necessarily be representative of the entire population. Hence, discussionswith industry experts and researchers experienced in survey and samplingmethodology indicated that a rule-of-thumb guide of 210 questionnairesshould provide a suitable data set for advanced statistical analysis. Theselection of potential survey respondents utilized a form of judgmentsampling according to criteria such as:

• company size;

• store size;

• number of full-time employees; and

• store turnover.

Given that store managers are key boundary-spanning personnel in retailing,210 questionnaires were mailed randomly to store managers as the samplingunit, resulting in a response rate of 51 percent (107).

Case study findings and hypothesis developmentGiven limitations of space, the presentation of full case study findings is notattempted, but a summary of key management behaviors in each company ispresented. Each of the three case companies expressed the wish to remainanonymous. However, permission was gained to publish certain detailsabout the companies. Briefly, each of the companies was national to the UK,large in size, complexly structured with a stated goal of improving levels ofmarket orientation.

Postal questionnairesurvey

Summary of behaviors

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Briefly, analysis of the case studies led to the identification of four aspects ofbehavior which seemed to be associated with market orientation. First, theextent of two-way vertical communication influenced the ability of eachcompany to focus on the market. In all three companies evidence was foundto indicate that while lateral communication was important, verticalcommunication facilitated the flow of information between those at thecustomer interface and management involved in strategic decision making.Hence:

H1: The amount of vertical communication is associated positively withthe degree of market orientation.

The study of the three organizations suggested also that the manner ofcommunication related to market orientation. It appeared that overlypolitical, conflictual or formalized behaviors seemed to impede theachievement of market orientation. For example, in one case company, headoffice managers actually openly admitted to having a greater focus oninternal politics than customer needs. In keeping with Jaworski and Kohli’s(1993) theory of formalization effects, but in contrast to Piercy (1989) andWhittington and Whipp’s (1992) views of marketing and politicalmaneuvering, the analysis of case study data led to the proposals that:

H2: The extent of political behavior by organizational members will benegatively associated with the degree of market orientation.

H3: The extent of conflictual behavior by organizational members willbe negatively associated with the degree of market orientation.

H4: The extent of behavior formalization of organizational memberswill be negatively associated with the degree of market orientation.

ResultsTo test these hypotheses, we undertook a postal questionnaire survey of largefood retailing organizations in the UK. This section presents the results ofthe survey.

First, to construct meaningful indices of the behavioral measurements,principal components analysis with varimax rotation was conducted on itemsrelating to market orientation and the types of behavior (see Table I). Fivefactor solutions were extracted and labeled:

(1) market orientation;

(2) vertical communication;

(3) political behavior;

(4) conflictual behavior; and

(5) formalized behavior.

(These labels were used as shorthand notations rather than precise labels.)Factors were retained only if they possessed an eigenvalue greater than one,accounted for more than 5 percent of variance and if they were conceptuallyclear and interpretable (Kaiser, 1958; Churchill, 1991). Certain items weredropped from the principal components analysis, where they lackedvariation or confounded conceptual interpretation. Indices were constructedfor market orientation and the four behavioral factors by calculating thesummated means of scales.

The five scales were assessed for reliability and validity. The Cronbachalpha coefficient (Cronbach, 1951) test of reliability led to coefficients

Four aspects of behavior

Results of the survey

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THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999 121

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which ranged from 0.74 to 0.94 (see Table II). The range of coefficients andthe finding that deletion of items would reduce the coefficient led to theconclusion that the scales were acceptably reliable (Churchill, 1991). Asdiscussed previously, the questionnaire was piloted and adjustments made toimprove content validity. The validation of the index operationalization testof correlating items to the scale indicated that the correlations were in theexpected direction and were high, indicating convergent validity (see Table II). Discriminant validity was indicated because no correlationbetween the measures and any other measure used in the study was as highas its alpha coefficient (Gaski, 1986) (see Table III). It was concluded thatthe five scales were all acceptably reliable and valid.

The items relating to all variables were measured on seven-point scalesresulting in a mid-point of four. The scales relating to verticalcommunication, political behavior, conflictual behavior and formalizedbehavior run low-high. A number of descriptive observations are of interest(see Table IV). The mean and median scores of the formalization andconflict scales are noticeably below the mid-point, indicating relatively lowlevels reported. In contrast, the scale of vertical communication is well

Table II. Reliability and scale validation test results

Number of Cronbachscale alpha Inter-item correlationsa

Variables items coefficient Lowest Highest

Political behavior 4 0.93 0.91 0.96Conflictual behavior 3 0.91 0.91 0.93Vertical communication 6 0.77 0.53 0.76Formalized behavior 4 0.74 0.77 0.83Market orientation 13 0.94 0.39 0.83

Note: aPearson’s correlation coefficient. All inter-item correlations significant at the0.001 level

Table III. Evidence of discriminant validitya

Market Political Conflictual Formalized Verticalorientation behavior behavior behavior communications

Market orientation 0.94Political behavior –0.2546 0.93Conflictual behavior –0.3849 0.2613 0.91Formalized behavior –0.3679 0.2019 0.3771 0.74Vertical communication 0.3981 –0.5063 –0.2925 –0.2645 0.77

Note: aDiagonal entries are Cronbach’s alpha coefficients, others are correlationscoefficients

Table IV. Descriptive statistics

StandardFactors Mean Median deviation Valid cases

Political behavior 3.543 3.500 1.790 88Conflictual behavior 2.898 3.000 1.325 101Vertical communication 4.961 4.917 1.037 102Formalized behavior 2.509 2.500 1.118 86Market orientation 5.493 5.624 0.847 85

Descriptive observations

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above the mid-point, suggesting extensive communication. While the scorefor political behavior is close to the mid-point, the relatively high varianceindicates varying degrees of political behavior. Finally, the marketorientation measure displays a mean of 5.5, a median of 5.6 and a standarddeviation of 0.80. This scale was significantly above the mid-point with alow degree of variability. The descriptive statistics of the market orientationconstructs suggest that the extent of market orientation displayed by thesample organizations is high, as is often suggested in the popular businesspress. Given that the sample consisted of large UK retailers, the descriptivestatistics support the view that organization size and market orientation arepositively associated.

Utilizing the Narver and Slater (1990) measure of market orientation, Table V shows the correlations between the four measures of behavior andmarket orientation. The correlation of the factor vertical communication (r = 0.39) was both positively and significantly associated with marketorientation at the 0.001 level. The strength of this association indicatespreliminary support for the first hypothesis.

The correlation of measures of behavior and market orientation also findsstrong associations. Measures of management conflictual and formalizedbehavior were found to be negatively and significantly associated withmarket orientation at the 0.001 level, while the measure of political behaviorwas negatively associated and significant at the 0.01 level. The strengths ofthese associations indicate some support for the remaining hypotheses.While the findings contradict the views of Piercy (1989) and Whittingtonand Whipp (1992), in that low amounts of political activity are associatedwith high market orientation, the results of correlations betweenformalization and conflict and market orientation are broadly consistent withJaworski and Kohli (1993).

While correlation analysis provides a strong indication of association, toundertake a more complete examination of the proposed relationships andevaluate the directness of associations, a simple path analysis was conducted(see Figure 1). The form of path analysis used followed the path analysistechnique recommendations of Duncan (1966) and Pendhazur (1982) in anapproach widely used in marketing research (see Piercy and Morgan, 1994).The path model illustrates a number of direct and indirect relationshipsbetween management behaviors and market orientation. Table VI shows thestandardized regression coefficients and Table VII presents the direct andindirect effects of independent variables on the Narver and Slater (1990)measure of market orientation. Indirect effects are calculated as a simplemultiplicative measure of the magnitude of sequential beta weights. It shouldbe noted that tests for multicollinearity, linearity, normality andhomoscedasticity were conducted and no problems encountered.

Table V. Product-moment correlations between behavioral factors and marketorientation

Correlation NumberVariable coefficient (r) of cases

Political behavior –0.25* 73Conflictual behavior –0.38* 73Vertical communication 0.39** 73Formalized behavior –0.36** 73

Note: *Significant at the 0.01 level; **significant at the 0.001 level

Correlations

Simple path analysis

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124 THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999

The path analysis (Figure 1) suggests that the four behavioral factors allexhibit an association with market orientation; however, two of the fourfactors have a direct association while two factors display indirectrelationships with market orientation. The measure of verticalcommunication has a strong and positive direct effect that providesconsiderable support for the first hypothesis. In contrast the associationbetween conflictual behavior and market orientation is negative but equallystrong, indicating much support for the third hypothesis. The associationsbetween political and formalized behaviors and market orientation areindirect and negative. The negative direction of the relationships betweenpolitical and formalized behaviors and market orientation provides somesupport for the remaining hypotheses, although the comparatively weakindirect effects (see Table VII) are somewhat surprising given the strongcorrelation coefficients (see Table V).

Conclusions and discussionThe survey findings show a high level of support for the associationsproposed on the basis of the case studies. Three of the four behavioralvariables were significantly correlated with market orientation at the 0.001level of significance, with the final behavioral variable (political behavior)significant at the 0.01 level. Regression and path analyses found all fourbehavioral variables exerted a direct or an indirect influence on marketorientation.

H1 proposed a positive association between the amount of verticalcommunication and the degree of market orientation exhibited by anorganization. The survey results found that the extent of verticalcommunication was significantly and positively correlated (r = 0.39) whileregression and path analyses find a positive, purely direct association with abeta score of 0.31. These results provide support for H1. This finding lendssupport to theoretical views and case study findings in that the extent andfrequency of vertical communication between employees at the customer

FormalizedBehavior

ConflictualBehavior

PoliticalBehavior

VerticalCommunication

0.28 MARKETORIENTATION

0.38

–0.49

–0.29

0.31

Figure 1. Path analysis of behavioral factors associated with market orientation

Table VI. Total effects of independent behavioral factors and market orientation

Dependent Independents Beta R2 Sign of F

Market orientation Vertical communication 0.31 0.26 0.00Conflictual behavior –0.29

Conflictual behavior Formalized behavior 0.38 0.14 0.00Vertical communication Political behavior –0.49 0.24 0.00Political behavior Formalized behavior 0.28 0.08 0.01

High level of support

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interface and head office managers aids the degree to which the organizationis able to orientate towards customers and competitors and co-ordinateactivities.

H3 argued for a negative association between the greater the degree ofconflictual behavior within an organization and the extent of marketorientation. Testing suggested that conflictual behavior was strongly andnegatively correlated with market orientation (r = –0.38), while regressionand path analysis found a negative, direct effect with beta score of –0.29.These findings support H3. Indeed, consistent with the findings of Jaworskiand Kohli (1993), this study indicates the strongly negative effect ofconflictual behavior on the ability of an organization to coordinate activitiesand focus on market dynamics.

H2 and H4 respectively proposed that the extent of political behavior andformalization are negatively associated with the degree of marketorientation. The survey results find that the extent of political maneuvering(r = –0.25) and formalized behavior (r = –0.36) are negatively significantlycorrelated with market orientation, while regression and path analysis revealindirect effects of –0.15 for political behavior and –0.11 for formalizedbehavior. These tests suggest that H2 and H4 are weakly supported. Thefindings appear only partially to mirror the case findings that political andformalized behavior leads to a myopic concentration on organizationaldynamics to the detriment of a market focus. The indirect nature of therelationships may be partially explained through the theories of Piercy(1989) and Whittington and Whipp (1992), who claim that political behaviorby marketers can actually facilitate growth in market oriented initiatives.Indeed, it may be that low levels of politics indicate the political dominanceof marketing or cultural obedience rather than the absence of politicalbehavior.

Managerial implications The findings of this study have a number of important implications forservices marketing executives and for further research in this area, becausethe issues uncovered contradict many of the assumptions commonly heldabout the ease with which an organization can become market oriented. Thepurpose of our study was to examine and test the association between certainimportant management behaviors and the achievement of market orientationby services marketing companies. In this present study we are concernedmost particularly with this issue in services businesses, and for this reasonhave conducted the research in the food retailing sector in the UK.

The results of the study strongly suggest that certain management behaviorsare a significant determinant of the successful achievement of marketorientation in a services organization. We challenge the implicit assumptionthat market orientation will be built simply because top management wishesit to be built. Our first finding was that high levels of political maneuvering,

Table VII. Direct and indirect effects of behavioral factors

Independent variables Direct effect Indirect effect/s Total effect

Political behavior –0.15 –0.15Conflictual behavior –0.29 –0.29Formalized behavior –0.11 –0.11Amount of communication 0.31 0.31

Conflictual behavior

Important implications

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conflict and formalized behavior were linked with lower levels of marketorientation. Indeed, it is intuitively plausible that managers focused oninternal issues of organizational politics, in an organizational contextcharacterized by friction and, where formal interaction is more common thaninformal, would likely neglect the market. It is widely recognized thatdeveloping and sustaining high levels of market orientation is difficult. Thisstudy provides a contribution toward a greater understanding of non-marketoriented behaviors, and suggests the nature of the behaviors through whichmarket orientation is eroded and organizational myopia induced.

This contribution is important for two reasons. First, the existence of strongtendencies in an organization toward such behaviors by management maydefine a covert but real constraint on the degree to which a company can bemarket oriented. To develop marketing strategies that rely on marketoriented characteristics domestically or internationally, when managerialbehavior may substantially impede achieving high levels of marketorientation, is dangerous. There are some signs that this has proved to be acommon weakness in strategy implementation, which affects servicesbusiness particularly (e.g. see Piercy, 1998).

Second, the findings suggest the organizational issues which may have to beaddressed by executives in services businesses to build effective marketorientation, rather than paying lip-service only to this goal. This may involvesubstantial effort in development programs to overcome tendencies towardpolitical behavior and friction between management groups through detailedand structured internal marketing of external market orientation (e.g. seePiercy, 1995). Those approaches may necessarily go far beyond superficialadvocacy of market orientation, and extend to process sharing, cross-functional team-building, the building of social interaction between keygroups, and personnel rotation to build effective “ownership” of the processof implementing market orientation. Our findings suggest it is dangerous forany services business to be complacent about its implementation capabilitiesin this area.

Our second finding was that there was a positive relationship between theamount of vertical organizational communication and the level of marketorientation achieved. Intuitively, more frequent communication is likely toenable the dissemination of collected market intelligence and facilitate atimely market-focused response. This finding is important because itunderlines the significance of actively managing internal communications toimplement important strategies. Investing in truly effective internalcommunications programs that are full, interactive, and respected within anorganization, may be a critical building block in moving toward the marketoriented service business.

In short, we suggest that change initiatives geared toward the developmentof market orientation must recognize and confront negative organizationalbehaviors (such as conflict) and identify and foster positive behaviors (suchas communication). While market-oriented systems and structures facilitatemarket orientation, ultimately the extent to which these factors focus theorganization is dependent on the behaviors of the individuals who form thestructures and operate the systems. We do not believe that the existingliterature gives adequate recognition to these issues.

It may be that the single most important point is that we underline the needfor active approaches to implementation strategy in building marketorientation, as with any other marketing strategy that requires major shifts in

126 THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999

Marketing strategies

Vertical organizationalcommunication

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the way in which people in an organization behave. Perhaps mostparticularly, as services businesses, such as retailing, internationalize, theissues of implementation capabilities will become more important and morecomplex as a point of management focus. To believe that market orientationwill simply “happen” because it is of obvious advantage to a servicesbusiness, or that it can be easily achieved because others have achieved it, isto fall into a major trap which may have many undesirable consequences.

Research limitations and directionsThe limitations of research design and methodology employed in this studyconstrain the findings in several significant ways and indicate a number ofareas in need of further research. First, the cross-sectional analysis showsassociations but can only imply causal relationships. It appears logical tosuggest that market orientation is anteceded by certain management behaviorcharacteristics; the analysis does not indicate the direction of causality – forexample, those management behaviors may be a consequence and not anantecedent of market orientation. Longitudinal study may prove a potentiallyfruitful avenue for future research. Similarly, the limitations of the sample ofthis study restrict the findings but indicate potential research directions.

It should be noted that the study of organizations in a single country mayproduce findings that are culture-specific and dangerous to generalize toother settings. In the same way that the study of market orientation has beenreplicated in different countries, the study of barriers to market orientationwould gain from such extensions. It is also the case that our study waswholly conducted in the food retailing sector, and it may be that this sector isnot representative of other retailing areas, or of other kinds of servicesmarketing organizations, and this too suggests the need for further studies.

However, we also recognize that the company as a unit of analysis may alsobe a major limitation to our study. As collaborative supply chain venturesbecome more dominant in services sectors – especially in cases like foodand automotive retailing – then it may be advantageous to evaluate thebehavior of managers and employees throughout the supply chain inbuilding market orientation in interactions between partners as well as indealing with the end-customer.

While the intention of the study was not to supply generalizable findings butto explore associations, future study of a larger sample size, in differentservice sectors and countries with multiple informants, would providevaluable insights. The management behaviors studied were derived from theavailable literature and the case study research; however, it would appearimprudent not to consider other (potential moderating) factors or thepossibility of other management behaviors that are associated with marketorientation. Finally, while numerous behavioral factors are found to beassociated with market orientation, the conclusions suggest that furtherresearch into the process of developing market orientation is required.

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Executive summary and implications for managers and executives

Changing management behaviour – a prerequisite for market orientation“To believe that market orientation will simply ‘happen’ because it is ofobvious advantage to a services business, or that it can be easily achievedbecause others have achieved it, is to fall into a major trap which may havemany undesirable consequences.”

Harris and Piercy’s conclusions demonstrate one of the perennial problemswith business and marketing strategies. If the strategy is not fitted tostructure and systems or people do not “buy into” its purpose, then thatstrategy will not succeed.

Why market orientation?The simple answer, I suppose, is to point out that organizations that aremarket-oriented appear to perform better than those that lack such anorientation. But there is more to this bland statement than a simple matter ofperformance. Market orientation is not just about the collection ofinformation, its dissemination and the right response. Market orientationrequires a whole organization to pull in the same direction – with everyemployee taking on a marketing role.

The implications of this “whole organization” response are considerable. AsHarris and Piercy note, it is insufficient for senior management to “make acommitment” to market orientation. Marketing leadership within theorganization has to sell the idea of market responsiveness through everyfunctional area of the business.

If marketing orientation is so good, why isn’t everyone doing it?Answering this question lies at the core of Harris and Piercy’s research –and linked to why some organizations are not becoming market oriented isthe related question of why strategies aimed at market orientation are failingin many businesses.

Harris and Piercy examine four possible reasons for market orientation notbeing realised:

(1) Inadequate two-way vertical communications

(2) Organizational politics

(3) Interdepartmental and cross-functional conflict

(4) Too much formality.

The study of UK retailers conducted by Harris and Piercy confirms thatthese four factors do act as barriers to market orientation in retailers. Mostimportant is the finding that internal communications and conflicts are thebiggest barriers.

The challenge for an organization committed to achieving marketorientation is to reduce or remove these barriers.

Breaking down the barriersWhat follows are some questions organizations should consider indeveloping strategies aimed at realising market orientation:

• Are senior managers across functions committed to market orientation?

• Are these senior managers willing to promote the concept of marketorientation throughout the organization?

• Is the concept understood? Is there an agreed definition of marketorientation accepted by all?

130 THE JOURNAL OF SERVICES MARKETING, VOL. 13 NO. 2 1999

This summary has beenprovided to allowmanagers and executivesa rapid appreciation ofthe content of thisarticle. Those with aparticular interest in thetopic covered may thenread the article in toto totake advantage of themore comprehensivedescription of theresearch undertaken andits results to get the fullbenefit of the materialpresent

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• Does informal contact with front-line employees take place?

• Are these front-line employees encouraged to give feedback andinformation from customers?

• Do they understand the purpose of such information gathering anddissemination?

• What are the sources of internal conflict?

• Do these conflicts relate to personalities, systems of function priorities?

• Is it possible to make the market orientation strategy a priority in everyfunction?

• Does the payment, career or promotion approach contribute to politicalwrangling?

• Are there changes needed to other areas of business strategy – humanresources, finance, operations – needed to reduce the potential forpolitics to scupper the market orientation aim?

• Are meetings and other interactions between employees formal andrigid?

• Does this formality contribute to conflicts, or is it a way of coveringover political differences?

These questions show just how much change is needed for marketorientation to succeed. They reinforce Harris and Piercy’s conclusions –things do not just happen in business, you have got to make them happen.

Because market orientation requires an external focus from all people in anorganization, there is no place for matters that lead to internal attention.This is not to say that internal matters – communications, budgets, etc. – arenot important. But such internal considerations are slaves to the objective ofunderstanding and serving the market.

Changing people’s attitudes is the key to successful market orientationIf people perceive that their personal success within an organization willcome from sucking up to the right set of senior managers, working longhours and participating in political power games, then market orientationwill be a distant dream for the organization.

Conversely, an organization where success follows from achievements inimproving the service, developing the relationship with the market andmaking customers happy has got to the state of market orientation. Asresearch shows, this happy situation means that the firm will outperform itsinternally focused competitor.

Changing behaviour is never easy since people continue to act as they havealways done – even when those actions fail to realise their objectives. Theold ways of politics and formality no longer work for businesses (if they everreally did) but managers persist with them out of inertia and because nobodyhas shown them a better way. The first task in any strategy aiming formarket orientation is to sell the concept to staff. They must believe that, by acollegiate, less formal approach to business and a focus on the market andthe customer, personal success will come.

(A précis of the article “Management behavior and barriers to marketorientation in retailing companies”. Supplied by Marketing Consultants forMCB University Press.)

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