Responsive and proactive market orientation and hospital financial performance: The mediating effect of service program innovativeness

PURPOSE: The study aims to investigate the direct and indirect relationships among market orientation, service program innovativeness, and the financial performance of hospitals. Two types of market orientation – responsive and proactive – were considered, along with two dimensions of service program innovativeness: meaningfulness and novelty. METHODOLOGY: The study gathered data through a survey conducted on a random sample of 204 Polish hospitals. Structural equation modeling was used to analyze the data, test a conceptual model designed as a parallel two-mediator model, and validate the hypotheses. FINDINGS: The work revealed both direct and indirect effects. In terms of direct effects, the study found that implementing a responsive market orientation positively influences the meaningfulness of a hospital’s service program but has no impact on its novelty. Conversely, the implementation of a proactive market orientation has a positive influence on both the meaningfulness and novelty of the program. Furthermore, the meaningfulness and novelty of the program contribute positively to the hospital’s financial performance. In terms of indirect effects, the study identified mediation phenomena: a responsive market orientation positively affects a hospital’s financial performance through the meaningfulness of the service program, while a proactive market orientation enhances financial performance through the novelty of the program. IMPLICATIONS: The study contributes to the current understanding, confirming the positive impact of a proactive market orientation on innovations within the organization while contradicting the view that a responsive market orientation supports these innovations. Additionally, the results support the idea that innovations within the organization have a positive impact on its outcomes. The study also reveals specific mechanisms that influence market orientation on organizational outcomes, indicating that a responsive orientation affects a service provider’s outcomes through the meaningfulness of its service program, while a proactive orientation influences outcomes through the novelty of the program. The practical recommendations for hospital managers are as follows: (a) to achieve a high level of meaningfulness in the service program, it is advisable to implement both responsive and proactive market orientations; (b) to attain a high level of novelty in the program, a proactive market orientation is recommended; (c) to enhance the hospital’s financial performance, it is suggested to develop a service program that is both meaningful and novel, and to implement both responsive and proactive market orientations. ORIGINALITY AND VALUE: The study’s originality and value stem from its exploration of specific direct and indirect mechanisms through which market orientation affects hospital financial performance, filling a prior research gap. By investigating these mechanisms, the study enhances the overall understanding of hospital management.