Abstract:
The concept of market orientation has been a subjec
t of research since it was introduced in the 1990s
and it has
been identified as an important theoretical constru
ct. Previous studies have assessed the impact of ma
rket
orientation, market positioning and innovation on f
irm performance. The objective of this study was on
the
process of market orientation and to empirically te
st the effect of the business environment on the re
lationship
between market orientation and performance. The stu
dy used the resource based view approach and develo
ped a
framework for testing the theoretical relationships
between the constructs. The study adopted a causal
research
design and it involved the use of a questionnaire-b
ased survey of a random sample of 220 managers of
Manufacturing Companies in Kenya. Descriptive stati
stics of the demographic characteristics of 147 res
pondents
together with firm characteristics are presented. E
xploratory factor analysis, scale reliabilities and
confirmatory
factor analysis are presented. Regression analysis
was used to test the relationships between the cons
tructs. The
study confirms previous studies on the positive rel
ationship between market orientation and performanc
e (β
1
=
0.180, ρ= 0.029).
The business environment significantly (β
2
= 0.250, p = 0.003) affects firm performance in
presence of market orientation. The findings of the
study add new understanding to the literature on m
arket
orientation, business environment and firm performa
nce in influencing the success of firms in a develo
ping
country context.