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Nonlinear and dynamic effects of responsive and proactive market orientation: A longitudinal investigation

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  • Jaeger, Nikolai A.
  • Zacharias, Nicolas A.
  • Brettel, Malte

Abstract

Business practice and the extant literature widely acknowledge that market orientation (MO) is a key driver of firm performance, yet some studies question its benefits. Research that has tried to clarify these inconsistencies by investigating the dimensions of responsive MO (RMO) and proactive MO (PMO) has found conflicting results. This study seeks to resolve the debate by identifying the total effects of RMO and PMO on firm performance, thereby helping to extend the understanding of the differing performance consequences of RMO and PMO. The total effects of the two kinds of MO are composed of the contemporary nonlinear relationships between RMO and PMO and firm performance, along with the carry-over effects of the previous levels of RMO and PMO, which may also be nonlinear. Based on objective performance measures and panel data of fifty-six US companies observed over 9years, we find support for an inverted-U-shaped contemporary effect of RMO that suggests that a medium level of RMO is most beneficial for firms. In contrast, the contemporary effect of PMO on firm performance is U-shaped, so a high level of PMO provides the most promising competitive advantage. Our empirical results only partially support our hypotheses regarding carry-over effects. While the results confirm the proposed inverted-U-shaped carry-over effects of RMO, PMO exerts no carry-over effects, so firms must instead continuously implement PMO at high levels in order to benefit profits in a sustainable way and avoid losing ground to competitors.

Suggested Citation

  • Jaeger, Nikolai A. & Zacharias, Nicolas A. & Brettel, Malte, 2016. "Nonlinear and dynamic effects of responsive and proactive market orientation: A longitudinal investigation," International Journal of Research in Marketing, Elsevier, vol. 33(4), pages 767-779.
    • Handle: RePEc:eee:ijrema:v:33:y:2016:i:4:p:767-779
    DOI: 10.1016/j.ijresmar.2016.01.006
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    6. Yi Wang & Xianfang Xue & Han Guo, 2022. "The Sustainability of Market Orientation from a Dynamic Perspective: The Mediation of Dynamic Capability and the Moderation of Error Management Climate," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
    7. Rafał Kusa & Marcin Suder & Belem Barbosa & Beata Glinka & Joanna Duda, 2022. "Entrepreneurial behaviors that shape performance in small family and non-family hotels during times of crisis," International Entrepreneurship and Management Journal, Springer, vol. 18(4), pages 1545-1575, December.
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