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Market orientation and performance in the service industry: A data envelopment analysis

  • Haugland, Sven A.
  • Myrtveit, Ingunn
  • Nygaard, Arne

The relationship between market orientation and performance is a cornerstone in the market orientation literature. However, few empirical studies applying objective performance measures raise concerns about whether or not the most market-oriented firms are the best performers. This article reports a study testing the market orientation model using a multi-method approach to measure performance. The study applies two objective performance measures-relative productivity, calculated by data envelopment analysis (DEA) and return on assets (ROA)-and one subjective performance measure-perceived profitability compared to key competitors. Building on empirical data from the hotel industry, the results indicate that market orientation has only a modest effect on relative productivity and no effect on return on assets. The strongest effect of market orientation on performance occurs when applying the subjective performance measure.

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Article provided by Elsevier in its journal Journal of Business Research.

Volume (Year): 60 (2007)
Issue (Month): 11 (November)
Pages: 1191-1197

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Handle: RePEc:eee:jbrese:v:60:y:2007:i:11:p:1191-1197
Contact details of provider: Web page: http://www.elsevier.com/locate/jbusres

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  1. Webb, Dave & Webster, Cynthia & Krepapa, Areti, 2000. "An Exploration of The Meaning and Outcomes of a Customer-Defined Market Orientation," Journal of Business Research, Elsevier, vol. 48(2), pages 101-112, May.
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  3. Slater, Stanley F. & Narver, John C., 2000. "The Positive Effect of a Market Orientation on Business Profitability: A Balanced Replication," Journal of Business Research, Elsevier, vol. 48(1), pages 69-73, April.
  4. Chebat, Jean-Charles & Filiatrault, Pierre & Katz, Arnon & Tal, Shlomo Mai, 1994. "Strategic auditing of human and financial resource allocation in marketing : An empirical study using data envelopment analysis," Journal of Business Research, Elsevier, vol. 31(2-3), pages 197-208.
  5. Piercy, Nigel F. & Harris, Lloyd C. & Lane, Nikala, 2002. "Market orientation and retail operatives' expectations," Journal of Business Research, Elsevier, vol. 55(4), pages 261-273, April.
  6. Bhargava, Mukesh & Dubelaar, Chris & Ramaswami, Sridhar, 1994. "Reconciling diverse measures of performance : A conceptual framework and test of a methodology," Journal of Business Research, Elsevier, vol. 31(2-3), pages 235-246.
  7. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  8. Per Andersen & Niels Christian Petersen, 1993. "A Procedure for Ranking Efficient Units in Data Envelopment Analysis," Management Science, INFORMS, vol. 39(10), pages 1261-1264, October.
  9. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October.
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