Market orientation and firm performance in the manufacturing sector in Kenya

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.