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RELATIONSHIP BETWEEN MARKET ORIENTATION AND ORGANIZATIONAL

PERFORMANCE (Special Reference to Small and Medium Scale Manufacturing
Organizations in Sri Lanka)

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

RELATIONSHIP BETWEEN MARKET

ORIENTATION AND
ORGANIZATIONAL PERFORMANCE
(Special Reference to Small and Medium Scale
Manufacturing Organizations in Sri Lanka)

By

Umesh Gunarathne W.H.D.P.

MF/2010/2708

Department of Marketing

May 2015

Dissertation Presented to the Faculty of Management and Finance

of University of Ruhuna

in Partial Fulfillment of the Requirements for the Degree of

Bachelor of Business Administration

in Marketing

1
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Acknowledgement

I would like to take this opportunity to thank several people who have been truly important
over the past few months, especially in the preparation of my dissertation. This dissertation
would not have been possible without the guidance and the help of several individuals who in
one way or another contributed and extended their valuable assistance in the preparation and
completion of this study.

First and foremost, I heartily grateful to my supervisor, Dr. T.S.L.W Gunawardhana, Senior
Lecturer, Department of Marketing for his admirable guidance, supervision, continuous
encouragement and support. In addition to that he provided me with a very good academic
and work environment, which helped me in developing my ideas.

Then, I am very grateful to Branch Manager of the Regional Development Bank City
Branch, Matara for spending valuable time to help me in order to collect data from the
respondents. I must also express my full gratitude to the managers who allowed me to
collect data in their firms as well as those I met and who confirmed the practical
importance of my research.

Secondly, I would like to very thankful all the Lectures of Department of Marketing,
Faculty of Management and Finance, University of Ruhuna who encourage me to
complete this research study without any hesitation.

I also thank my all University friends especially including best friends Danuka
Sasanga, Dileesha Jayawardhana, Nadeeshanka Abeywickrama, Nuwan
Kumarasinghe, Tharika Seuwandi, and Sammani Hapugoda for always being present
in the good as well as in the bad moments, and who were really encouraging during
this special period of my life.

Finally, I would like to record my everlasting love and gratitude to my parents, my

sisters and cousins, and relatives who has assisted me in numerous ways to make this
study success.

2
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Table of Contents

Page

1. INTRODUCTION.............................................................................................. 1
1.1. Chapter Introduction .................................................................... 1
1.2. Background of the Study ............................................................. 2
1.3. Problem Identification ................................................................. 4
1.3.1. Research Question ...................................................... 5
1.4. Objectives of the Study ................................................................ 5
1.5. Significance of the Study ............................................................. 6
1.6. Chapter Outline ............................................................................ 8
2. LITERATURE REVIEW ................................................................................. 9
2.1. Chapter Introduction .................................................................... 9
2.2. Organizational Performance ........................................................ 10
2.3. Market Orientation ....................................................................... 12
2.3.1. Different views of Market Orientation ....................... 15
2.3.1.1. Kholi and Jaworski’s View .................. 15
2.3.1.2. Slater and Narver’s View ..................... 16
2.3.2. Customer Orientation .................................................. 19
2.3.3. Competitor Orientation ............................................... 21
2.3.4. Inter Functional Coordination ..................................... 22
2.3.5. Social Benefit Orientation........................................... 24
2.4. Market Orientation and Organizational Performance .................. 25
2.5. Conceptual Framework ................................................................ 35
2.6. Hypotheses Development ............................................................ 36
2.6.1. Customer Orientation & Organizational Performance 36
2.6.2. Competitor Orientation & Organizational Performance
..................................................................................... 37
2.6.3. Inter Functional Coordination & Organizational
Performance ................................................................ 37
2.6.4. Social Benefit Orientation & Organizational
Performance ................................................................ 38

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

3. RESEARCH METHODOLOGY ..................................................................... 40

3.1. Chapter Introduction .................................................................... 40
3.2. Philosophy.................................................................................... 41
3.3. Research Design........................................................................... 43
3.3.1. Exploratory Vs. Conclusive Research ........................ 43
3.3.2. Quantitative Vs. Qualitative Research ........................ 42
3.4. Research Context ......................................................................... 45
3.5. Determination of Population and Sample .................................... 47
3.5.1. Population ................................................................... 47
3.5.2. Sampling and Sample ................................................ 48
3.5.2.1. Sampling .............................................. 48
3.5.2.2. Sample.................................................. 49
3.5.3. Extent .......................................................................... 50
3.6. Data Collection ............................................................................ 50
3.6.1. Primary data and Data Collection ............................... 50
3.6.1.1. Primary Data Collection Method ......... 51
3.6.2. Secondary Data ........................................................... 51
3.7. Questionnaire Design ................................................................... 52
3.8. Pilot Study.................................................................................... 53
3.9. Data Collection ............................................................................ 54
3.10. Measurement and Scaling ............................................................ 55
3.10.1. Primary Measurements ............................................... 55
3.10.2. Organizational Performance ....................................... 55
3.10.3. Customer Orientation .................................................. 56
3.10.4. Competitor Orientation ............................................... 58
3.10.5. Inter functional Coordination ...................................... 59
3.10.6. Social Benefit Orientation........................................... 60

4. DATA ANALYSIS ............................................................................................ 62

4.1. Chapter Introduction .................................................................... 62
4.2. Demographic Factor Analysis...................................................... 63
4.2.1. Position of the Respondents ........................................ 63
4.2.2. Age Composition of the Sample ................................. 64

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

4.2.3. Gender Composition of the Sample ............................ 66

4.2.4. Educational Level of the respondents ......................... 67
4.3. Background Data Analysis .......................................................... 68
4.3.1. Line of the Business .................................................... 68
4.3.2. Main Production of the Business ................................ 70
4.3.3. Established Year of the Business ................................ 71
4.4. Measurement Model .................................................................... 72
4.4.1. Confirmatory Factor Analysis..................................... 72
4.5. Validity and Reliability ................................................................ 85
4.6. Structural Model .......................................................................... 88
4.7. Hypothesis Testing....................................................................... 89

5. DISSCUSSTION AND CONCLUSION ......................................................... 91

5.1. Chapter Introduction .................................................................... 91
5.2. Summary of the Study ................................................................. 92
5.3. Findings of the Study ................................................................... 93
5.4. Contribution of the Study............................................................. 94
5.4.1. Managerial Contribution ............................................. 94
5.4.2. Theoretical Contribution ............................................. 95
5.5. Limitations and Future research................................................... 97
5.5.1. Limitations .................................................................. 97
5.5.2. Future Research .......................................................... 98
References

5
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

List of Tables

Table 2.1: Summary of previous research findings ................................................... 26

Table 3.1: Determinants of manufacturing organizations selection .......................... 47
Table 3.2: Results of the Pilot Test ............................................................................ 54
Table 3.3: Measurement items of Organizational Performance ................................ 56
Table 3.4: Measurement items of Customer Orientation ........................................... 57
Table 3.5: Measurement items of Competitor Orientation ........................................ 58
Table 3.6: Measurement items of Inter Functional Coordination .............................. 59
Table 3.7: Measurement items of Social benefit Orientation .................................... 61
Table 4.1: Demographic Data – Position of the Respondents ................................... 63
Table 4.2: Demographic Data – Age Composition of the Sample ............................ 64
Table 4.3: Demographic Data – Gender Composition of the Sample ....................... 66
Table 4.4: Demographic Data – Educational Level of the Respondents ................... 67
Table 4.5: Background Data – Line of the Business ................................................. 68
Table 4.6: Background Data – Main Production ....................................................... 70
Table 4.7: Background Data – Established Year of the Business.............................. 71
Table 4.8: Confirmatory Factor Analysis (Original Model) ...................................... 73
Table 4.9: Confirmatory Factor Analysis (Final Model) ........................................... 82
Table 4.10: Assessment of the Reliability ................................................................. 85
Table 4.11: Results of PLS path model Estimation ................................................... 86
Table 4.12: Discriminant Validity of the Constructs ................................................ 87
Table 4.13: Summery of the Hypotheses Testing ...................................................... 90

6
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

List of Figures

Figure 2.1: Kholi and Jawoski’s view on Market Orientation ................................... 16

Figure 2.2: Narver and Slater’s view on Market Orientation .................................... 17
Figure 2.3: Developed Conceptual Framework ......................................................... 35
Figure 3.1: Basic research Designs ............................................................................ 43
Figure 3.2: Sampling Techniques .............................................................................. 48
Figure 3.3: Primary Measurement Scales .................................................................. 55
Figure 4.1: Demographic Data – Position of the Respondents .................................. 64
Figure 4.2: Demographic Data – Age Composition of the Sample ........................... 65
Figure 4.3: Demographic Data – Gender Composition of the Sample ...................... 66
Figure 4.4: Demographic Data – Educational Level of the Respondents .................. 67
Figure 4.5: Background Data – Line of the Business ................................................ 69
Figure 4.6: Background Data – Main Production ...................................................... 70
Figure 4.7: Background Data - Established Year of the Business ............................. 72
Figure 4.8: Structural Model ..................................................................................... 88
Figure 5.1: Slater and Naver’s view of Market Orientation (MKTOR model) ......... 95
Figure 5.2: NEWMKTOR model .............................................................................. 96

7
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

List of Appendices

Appendix 1: Covering Letter

Appendix 2: Survey Questionnaire (English)
Appendix 3: Survey Questionnaire (Sinhala Translation)
Appendix 4: Detailed Pilot Study Results
Appendix 5: Standardized Loading Values (Original Model)
Appendix 6: T – values (Original Model)
Appendix 7: Standardized Loading Values (Final Model)
Appendix 8: T – Values (Final Model)

8
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Declaration

I hereby declare that this dissertation is my own work and effort and that, to the best

of my knowledge and belief, it contains no material previously published or written

by another person nor material which has been accepted for the award of any other

degree or diploma of the university or other institute of higher learning, except where

due acknowledgment has been made in the text.

Signature of the student: ________________________________

Name of the student: ________________________________

Registration number of the student: ________________________________

Date: ________________________________

9
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Certification

This is to certify that this dissertation submitted by Gunarathne W.H.D.P.U

(MF/2010/2708) in partial fulfillment of the requirement for the Degree of Bachelor

of Business Administration in Marketing at the Faculty of Management and Finance

of the University of Ruhuna is a record of the own work carried out by the student

under my supervision. This dissertation has been submitted with my approval.

____________________________

Supervisor

Dr. Thusitha Gunawardhana

Department of Marketing

Faculty of Management and Finance

University of Ruhuna

____________________________

Head, Department of Marketing

Faculty of Management and Finance

University of Ruhuna

10
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Abstract

Studying the relationship between Market Orientation and Organizational

Performance has become a popular research topic in recent years. However, there is a
lack of research conducted related to this topic in Sri Lankan Context. This Research
addresses the relationship between Market Orientation and Organizational
performance in Small and Medium scale manufacturing organizations in Sri Lanka.
Based on the literature review developed four hypotheses that can be tested in this
research study. Descriptive research design has undertaken and 240 respondents were
in the sample. After developing the questionnaire, conducted a pilot test in order to
measure the accuracy of the questionnaire. Data was analyzed by using both smart
PLS and SPSS software and Demographic data analysis, CFA and SEM are used to
analyze the data and test the hypotheses. Results shows that sub variables of market
orientation (Competitor orientation, Inter functional Coordination and Social Benefit
Orientation) are positively correlated with Organizational Performance while
Customer Orientation is negatively correlated with the Organizational Performance in
small and medium scale manufacturing industry in Sri Lanka.

Managerial and theoretical implications are made based on the major findings and
discussed the importance of the customer orientation for an organization in detail. The
research study contributes to the managers for making and implementing market
oriented strategies specially highlighting the importance of the customer centric
approach. Future researchers can apply NEWMAKTOR model which is developed
through this research study to measure the Market Orientation in different contexts.

Key Words: Competitor Orientation, Customer Orientation, Inter Functional

Coordination, Market Orientation, Organizational Performance and Social Benefit
Orientation

11
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

CHAPTER 1
INTRODUCTION

1.1. Chapter Introduction

This is the first chapter of present research study and it introduces the topic to be
covered by the study. The purpose of this chapter is to put forward an overview of the
research and its contents. The reasons why this research area was undertaken, the
main objectives of the study and the research gap also are detailed in this chapter.
This chapter has been concluded with a contraction on the structure of the research
study on the relationship between Market Orientation and Organizational
Performance.

Further, second section of this chapter attempts to get an approach to the research
study and it describes the background of the research study in detail. The third section
of this chapter exhibits the problem identification and the research gap of this research
study while the fourth section of this chapter identifies the importance of the study in
detail.

Determined main objective and the sub objectives of the research study included in
the section five of this chapter. Section six of this chapter shows the structure of the
research study.

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

1.2. Background of the Study

During the last two decades with the rapid growth of the business economy
“Marketing” has become a significant area in the business industry and Marketing
plays vital role in the today organizations. Due to this reason Market oriented strategies
received a significant amount of attention from researchers (e.g. Eris and Ozmen N.
T, 2012; Lopez M. B, 2010; Rettab and K. Mellahi, 2010; A.P. Schalk, 2008; Kholi
and Jawoski, 1996; Slater and Narver, 1990). Researches in the area of marketing, has
exploded in the decade of the 1990s. This growth is due in large part to the seminal
work of Narver and Slater (1990) that developed scales to measure the components of
market orientation.

Today, each and every organization pay more consideration in order to maximize the
profit through satisfying customer’s needs and wants and keeping profitable
relationship with customers, because every organization has realized that without
concerning needs and wants of the consumers it is very harder to survival within the
industry while earning profits. Not only that when considering about customer’s
perspective, especially today consumers are more knowledgeable and rational when
compare with the past. They always expect higher level of satisfaction by fulfilling
their needs and wants through products and services. Therefore organizations should
give priority to fulfill the consumer’s needs and wants. In other words organizations
should implement business strategies and established organizational policies by
identifying the things that consumers are expecting from the organizations (Albert and
Nora, 2009).
The concept of market orientation is considered as the corner stone of the marketing
management field and emerged in the literature as the implementation of the
marketing (Schalk, 2008). The marketing concept is essentially a business philosophy
where superior financial performance is considered to be the result of being more
effective than competitors in determining and satisfying customer needs.

Furthermore market orientation is conceptualized as a supplement to the marketing

concept as it expands the focus from customer to market, including customers,
competitors and other factors affecting customer needs (Goldman and Grinstein, 2010
and Narver and Slater, 1990). Slater and Narver (1990) concluded that market

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

orientation consists of three behavioral components: Customer Orientation,

Competitor Orientation, and Inter Functional Coordination. They conceptualized an
organization’s degree of market orientation as the sum total of its emphasis on these
three components.

Marketing concept has represented a fundamental tenet of marketing thought. As the

philosophical foundation of a market orientation by Kholi and Jawoski (1993), the
marketing concept serves as the primary justification for the clear role of customers in
the planning and execution of market strategies.

As the marketing concept and theory of market orientation aim at explaining why
some organizations achieve greater performance than their competitors, this is the
closest thing the field of marketing management has to its own competitive theory.
Also, Market Orientation is acknowledged by practitioners as an important
characteristic of successful enterprises, as Deutschman (1991) found that America’s
fastest growing companies primarily put the customers first, and listen to, understand
and serve them. These all type of strategies has been linked with the development of
marketing concept.

Market oriented organizations typically have a long term focus related to profits and
to implementing a high degree of market orientation (Felton, 1999). A short run focus
on profits is not inconsistent with long run profit performance. According to Levitt
(1980), the relationship between them is as follows: At all times a business
organization attempts to create superior value to their customers. As competitors
respond and diminish business´s customer value superiority, the business discovers
and implements additional value for its customers (e.g. it augments its product).

To grow and survive in a competitive environment they must focus on long term
investment strategies that are important for building the market orientation. Market
orientation is not a business mode that can be switched on or off, which also implies a
long term focus. Considering as a whole it is very essential to understand the
importance of the market oriented practices in order to ensure the survival within the
industry by an organization.

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Result of the implementation of business practices can be identified based on the

performance of the organization. That is how an organization achieves their
established goals and objectives. Performance is the most important criteria that
determine survival of a business organization. Therefore this research study cover the
marketing practices implemented by the managers for achieve goals and objectives of
the organization.

1.3. Problem Identification

Although the Market Orientation is an old concept, today it has become very
important and complex. Most of the large organizations try to establish policies, by
focusing on market, needs and wants of customers and the business strategies to gain
competitive advantage. An organization becomes market oriented only if its
employees are market oriented (Brown et al., 2002). Therefore, the variables
influence attitude toward Market Orientation need to be studied at the individual
organizational level and not only at the employee level. Core aspects to persons are
individual values and personality traits (Roccas et al., 2002). Individual values and
personality traits influence attitudes people have toward different aspects of their lives
including attitudes toward Market Orientation (Homer and Kahle, 1988). These
attitudes, in turn, influence the way in which individuals behave (Homer and Kahle,
1988).
Researches have shown that market oriented organizations perform better than non-
market oriented organizations in terms of efficiency, effectiveness, adaptability, and
overall performance (Jaworski and Kohli, 1993; Slater and Narver, 1994). Moreover,
firm performance largely depends on market performance and employee performance
(Hansen and Wernerfelt, 1989). This is the rationale for studying the influence of
Market Orientation on market performance and individual employee performance.
When developing the Marketing strategies to implement with the purpose of
increasing organizational performance through the market oriented practices specially
Customer Orientation, Competitor Orientation, Inter Functional Coordination and
Social Benefit Orientation, it is very important to examine the current situation,
because if new strategies are based on this relevant information there may be an
efficient and effective progress. Not only that, therefore, before plan new marketing
strategies or to evaluate current system it essential to conduct a research study. Based

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

on the research findings managers can make decisions in order to achieve better
organizational performance.

Most of the large scale manufacturing businesses are market oriented than small and
medium scale manufacturing businesses in Sri Lanka. When considering the last few
years there was an emerging situation for establishing the small and medium scale
manufacturing organizations. But at the same time many of those established
businesses are quickly vanished from the industry due to lack of practicing the market
oriented applications. Most of the decision makers could not identified the importance
and real need of the market orientation.

Although there are many researchers have conducted researches in order to examine
the relationship between market orientation and organizational performance, they
have given concentration only to the Market Orientation and Organizational
Performance as a whole. But in this research study the researcher has developed
conceptual framework with new sub independent variables such as Customer
orientation, Competitor Orientation, Inter Functional Coordination and Social Benefit
Orientation. Therefore the conceptual framework of this research study is a new one
to the world and to marketing research process. And also researchers have done
researches only related with their contexts and it is rare to see researches in Sri
Lankan context. But in this research study the researcher applied these concepts in Sri
Lankan context. And also for the first time this research study considered about small
and medium scale manufacturing business organizations located in Sri Lanka.

Several researchers have identified and applied three components of Market

Orientation such as Customer Orientation, Competitor Orientation and Inter
Functional Coordination developed by the Narver and Slater in 1990. Hence, the
researcher has adopted a new sub component called “Social Benefit Orientation” to
the Market Orientation. The rationale behind that today, it is very important to
consider about social benefits by an organization on behalf of increase of performance
of the organization and it will help to make a good image in customer’s mind about
the organization and its products. And also it comes with the Societal Marketing
Concept and the concept Corporate Social Responsibility as well.

16
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

1.3.1. Research questions

Once problem has identified, it is needed to developed research questions for answer
through the research study. Therefore this research study gives the answer to the main
question which is “What is the relationship between Market Orientation and
Organizational Performance?”

In addition to main research question sub questions are,

 What is the relationship between Customer Orientation and Organizational

Performance?”
 What is the relationship between Competitor Orientation and Organizational
Performance?”
 What is the relationship between Inter Functional Coordination and
Organizational Performance?”
 What is the relationship between Social Benefit Orientation and
Organizational Performance?”

1.4. Objectives of the Study

The main objective of this research study is,

 To examine the relationship between Market Orientation and the

Organizational Performance.

In addition to that sub objectives are,

 To examine the relationship between Customer Orientation and the

Organizational Performance.
 To examine the relationship between Competitor Orientation and the
Organizational Performance.
 To examine the relationship between Inter Functional Coordination and
Organizational Performance.
 To examine the relationship between Social Benefit Orientation and
Organizational Performance.

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

1.5. Significance of the Study

Mainly this research study provides contribute to decision makers of the organization
(Managers), Academic and Policy makers. It is very important to consider about
Market Orientation by any organization and how the market oriented activities leads
to performance of the organization because that is the most suitable way to achieve
goals and objectives of the organizations while earning fair profits and maintaining
profitable relationships with customers. Ultimately, any organization tries to achieve
goals and objectives. When organizations are going towards to achieve goals and
objectives they should consider about their customers, their major competitors,
coordination of inter functions within the organization as well as social benefits and
responsibilities. In order to get clear understand about customers, competitors, inter
functional coordination and social benefits it is very essential to study about market
orientation and organizational performance.

Different scholars has been conducted researches and developed many theories related
to Market orientation. According to the scholars like, Boshoff and Matheson (1998),
further testing of the Kohli and Jaworski (1990) and Narver and Slater (1990)
instruments in wider business environments and cultures will help in developing more
strong and trustworthy measures of the market orientation concept. Businesses and
scholars alike are interested in its effects on daily operations and in the costs of
introducing market oriented behavior. At the micro level, many marketing issues have
not been fully discussed in Sri Lanka. It is unknown how Sri Lankan managers
implement and practice marketing theories such as market orientation. This study
might shed some light on whether Sri Lankan managers and staff understand
marketing theories differently from their counterparts in other economies.

Building on the initial research by, Kholi and Jaworski (1990) and Narver and Slater
(1990), significant progress has been made in the conceptualization and measurement
of market orientation and also in evaluating its impact upon business performance.
Although, studies of the impacts of market orientation have demonstrated a significant
and positive relationship between market orientation and business performance in
developed economies. A number of studies, however, mainly in non-United States
contexts, have suggested that the relationship is context specific. Market orientation is
often considered to be marketing’s contribution to business strategy (Hunt and

18
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Lambe, 2000), and its salient dimensions, competitor orientation and customer
orientation, are considered important strategic orientations.

When consider about the last four decades in Sri Lanka, most of organizations are
tended to produce more products without considering customer needs and wants. As a
result of that they could not be able to make profitable relationship with customers
and most organizations vanished from the market. With the time they realized that in
order to be a successful organization with in the industry they should consider about
not only profits but also needs and wants of the customers, competitor’s reactions,
coordination of different functions within the organization and social benefits that can
be delivered to the society as a whole. Therefore this study provides a contribution to
get clear understanding about the relationship between Market Orientation and
Organizational Performance. It will help make decisions by the managers to achieve
goals and objectives of the organization while concerning the ways to gain profits.
Further, this provides what kind of marketing strategies should be taken on behalf of
the organizational success and the increase the marketing performance of the
organization.

Finally, this research study contributes to the academics. There are no significant
amounts of research studies have been conducted related to market orientation area.
Therefore the findings of the research study will help to academic for conducting
researches in different contexts regarding market orientation. As well as this will
helps to make proper directions for future researchers to confirm the relationship
between Market Orientation and Organizational Performance.

19
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

1.6. Chapter Outline

The first chapter describes the introduction of the research study, problem
identification and research questions, the objectives which are going to achieve
through the research and significance of the research study. Further it includes the
structure of the research study (Chapter outline of the research).

Chapter two consists with two parts and the first part relate with the literature review
regarding variables (Dependent and Independent variables) and theoretical
background behind the concepts developed by the different researchers in different
perspectives. It provides guidance to the research study. In part two of chapter two,
conceptual framework and hypotheses development can be seen.

Third chapter of the research study deal with the Methodology of the research study
and it includes philosophy, research design, research context, population and Sample,
data collection, questionnaire design, pilot test and the measurement and scaling.

Chapter four is the Data Analysis. It includes the relevant data analysis procedures
need to analyze the collected data. Further it is included Confirmatory Factor Analysis
(CFA), Structural Equation Modeling (SEM) and the Hypotheses Testing.

Chapter five is the final chapter of research study and it consists with the findings &
conclusion and managerial implications. Further, it includes limitations of the
research study and future directions for future researchers. And also theoretical
contribution for the market orientation is included in this chapter five.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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CHAPTER 2
LITERATURE REVIEW

2.1. Chapter Introduction

This is the second chapter of this study and it consists with the literature review
related to main variables of this study namely Market Orientation (i.e., Customer
Orientation, Competitor Orientation, Social Benefit Orientation, and Inter functional
Coordination) and Organizational Performance. In addition to that in this chapter
include the models and theories, definitions related to the variables of this study
developed by the professional Scholars. (E.g. Slater and Naver, 1990; Gronroos, 1992
and Kohli and Jaworski, 1996).

The second section of this study focuses the literature review of the dependent
variable, Organizational Performance.

The third section of this chapter is described and the review of literature about the
independent variables in this study such as Customer Orientation, Competitor
Orientation, Social Benefit Orientation and Inter Functional Coordination. Especially
in third section in addition to the definitions and the concepts, there are main two
theories has been identified. Those theories are essential to get proper understanding
and directions to the progress of the research study.

And also in fourth section of research study exhibit integration of dependent variable
(Organizational Performance) and Independent variables, (Customer Orientation,
Competitor Orientation, Inter Functional Coordination and Social Benefit Orientation)
while fifth section discuss about the conceptual framework developed for the research
study. Sixth section describes the hypotheses development. There are four hypotheses
can be seen in this research study and developed those hypotheses based on the
previous research findings.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.2. Organizational Performance

Performance is a fairly broad concept, and it is meaning changes in accordance with

user’s perspective and needs (Lebas, 1995). Traditionally, firm performance has been
viewed and measured in accounting terms (Avci et al., 2011). An additional issue
should be raised here; due to confidentiality concerns, it is often challenging to obtain
actual accounting data from organizations unless they are publicly quoted companies.
As a result, previous research studies looking into performance related issues used
self-reported financial and non-financial performance measures. However, Sink and
Tuttle (1989) noted that performance should not be treated only as a financial concept.
Thus, it is suggested that particularly in the service sector, non-financial performance
should receive serious consideration. In addition, Law et al. (1995) recommend the
use of nonfinancial performance measures based on the fact that tourism
establishments are labour intensive and customer-oriented. The marketing literature is
replete with evidence of the positive relationship between market performance and
financial performance (Anderson, 1997). Similarly, studies demonstrate the influence
of market performance variables such as market share on return on sales (Buzzell,
2004). On the other hand, marketing performance measurement continues to be a
large and growing concern for marketing scholars and managers’ a like (O’Sullivan,
2009).

Organizational performance refers to the firm’s market and financial performance,

which is positively related to the firm’s economic value (Slater and Narver, 1994)
According to the definition there are three important concepts can be highlighted.
Those are Market performance, Financial Performance and Economic value. In this
study specially consider about the market performance of the manufacturing industry.
Not only that according to Hunt and Morgan (1995) organizational performance in
competitive terms (i.e., compared to relevant competitors), because a market oriented
culture has been posited as one of a firm’s competitive capabilities and sources of
advantage. The literature argues that a market oriented culture provides a unifying
focus of organizational efforts in the delivery of value to customers while also
providing a comparative impetus with competitors’ activities (Kohli and Jaworski
1990). Therefore, a market oriented firm is more likely to achieve high levels of
customer satisfaction, to keep existing customers loyal, to attract new customers, and

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subsequently to attain the desired level of growth, market share, and hence of
organizational performance (Homburg, 2000).

According to another scholars like Yamin (2001), Gunasekruan (1998) and Mavondo,
(1990), organizational performance refers to how well an organization achieves its
market oriented goals as well as its financial goals (Yamin, 2001; Gunasekruan, 1998;
Mavondo, 1990). When consider about this definition there are two important
concepts illustrated. In this study consider about the market oriented goals.

Organizational Performance can be seen as a multidimensional construct consisting of

more than simply financial performance (Baker and Sinkula, 2005). Organizational
performance is described as the extent to which the organization is able to meet the
needs of its stakeholders and its own needs for survival (Griffin, 2003). Professional
scholars namely Stoel horst (2001) and Van Raaij (2004) describe market orientation
as marketing’s explanation of performance differentials between firms. Market
orientation enhances a firm’s performance by providing differentiation and cost
advantages. First, the concept of organizational performance is based on the idea that
an organization is the voluntary association of productive assets, including human,
physical, and capital resources, for the purpose of achieving a shared purpose
(Alchian and Demsetz, 1972). Those providing the assets will only commit them to
the organization so long as they are satisfied with the value they receive in exchange,
relative to alternative uses of the assets. As a consequence, the essence of
performance is the creation of value.

However, marketing performance measurement is the assessment of the relationship

between marketing activities and business performance (Clark and Ambler, 2001).
Academic interest in marketing performance measurement is largely based on the
assumption that greater marketing accountability enhances firm performance and
marketing’s stature (Rust et al., 2004). One study to date (O’Sullivan and Abela,
2007) has demonstrated a positive relationship between the ability to measure
marketing performance, and actual firm performance (O’Sullivan and Abela, 2009).
However, marketing performance is the subjective assessment of an organization’s
performance relative to its competitors over the previous three years across three
attributes: market share growth, revenue growth and sales growth. Therefore, the
study evaluates marketing performance using the subjective approach to measuring

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performance. A number of authors defend the adequacy of subjective measures as

opposed to objective ones (Pertusa Ortega et al, 2010). Conceptually, growth reflects
increases in sales and is often reflected in market share gains. Growth in sales and
market share are important to a business to ensure long term viability and resource
availability. Profitability primarily reflects current performance (Venkatraman, 1989).
Similarly, profitability is viewed by some scholars (e.g. Hunt and Morgan, 1995) as
the ultimate organizational outcome and is commonly used in strategic management
studies. In addition, customer satisfaction represents the effectiveness of the
organization in delivering value to its customers and is often viewed as an antecedent
to profitability (Vorhies and Harker, 2000).

2.3. Market Orientation

Market Orientation receives a significant amount of attention from researchers (e.g.,

Etgar, Slater and Naver, 1990; Gronroos, Kohli and Jaworski, 1990; Ruekert, 1992;
Gainer and Pandanyi, 2005; Carr and Lopez, 2007). Market orientation can be defined
as a form of organizational culture where employees are committed to continuously
create superior customer value, or as a sequence of marketing activities that lead to
better performance. Most of researches have concluded that high market oriented
companies perform better than companies that are less market oriented. They focus on
adapting their products and services to the needs and expectations of their customers
instead of those who are product oriented and focus on developing a product or
service that is then marketed and hopefully sold (Gronroos, 2006). To achieve this
customer focus, a firm with a high degree of market orientation cultivates a set of
shared values and beliefs about putting the customer first and reaps results in form of
a defendable competitive advantage, decreased costs and increased profits
(Desphande, 1999).

Market orientation is not a new concept to the marketing and management literature.
Scholars argued that the postulate by Drucker (1954) that the customer must be focus
of organization’s operations and the subsequent support given to this idea by Levitt
(1960) that the customer is the reason for the organization’s existence were all
pointing to the fact that market orientation behavior was necessary at that time. This
idea was extended to become known as the marketing concept (McNamara, 1972).
The market orientation concept focuses on coordinated business intelligence

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generation, dissemination and responsiveness to market information for efficient and

effective decisions (Sundqvist, Puumalainen and Saminen, 2000; Kohli and Jaworski,
1990). The concept is also concerned with issues including organizational culture,
innovation, human resource planning and organizational learning (Narver and Slater,
1990; Ruekert, 1992; Baker and Sinkula, 1999; Greenley, Cadogan and Fahy, 2005;
Keskin, 2006).

Market orientation scholars such as Kohli and Jaworski (1990), Narver and Slater
(1990), Ruekert (1992), Gainer and Pandanyi (2005), Carr and Lopez (2007) have
argued that market orientation traces its origins from the market concept and has
consequences to overall business strategy. The marketing concept is concerned with
customer orientation, competitor orientation, innovation and profit as an inducement
for creating satisfied customers (Narver and Slater, 1994; Hunt and Morgan, 1995).

Although there are four concepts of marketing concepts, in this study consider about
Customer Orientation and Competitor Orientation. Market orientation has been
widely accepted by scholars as the implementation of the market concept, as an
organizational culture, or as a mix of those two (Greenley, 1995; Han, Kom and
Srivastave, 1998). Other scholars argued that market oriented behaviour in marketing
new solutions leads to better performance, has positive effects on customer
satisfaction and loyalty as well as innovation, employee satisfaction and cooperation
(Twaites and Lynch, 1992; Deshpande, Farely and Webster, 1993; Gatignon and
Xuereb, 1997).
In addition to that, there are so many scholars tried to view Market Orientation in
different ways. Those are very important to get a sound understanding about the
concept of Market Orientation and progress of the research Study.

According to Drucker (1954) and Levitt (1960) market orientation is a central element
of a management philosophy .Similarly; the market orientation construct is at the very
heart of modern marketing and a frequently studied research subject. It was presented
in the 1990s as the actions that firms undertake to implement a customer orientation,
and include a set of behaviours and the organizational culture that supports
them(Grinstein, 2008). Accordingly, Baker and Sinkula (2005) stated that market
orientation is a value-based strategic philosophy exhibiting itself in behaviours which
help firms stay close to their consumers (Hsieh et al. 2008). Conceptually, market

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oriented organizations are organizations that are well informed about the market and
that have the ability to use that information advantage to create superior value for
their target customers. Two main perspectives on market orientation have emerged as
a result: a behavioural perspective based on Kohli and Jaworski (1990), and a cultural
perspective based on Narver and Slater (1990). But in this research study paid
attention to the behavioural perspective than Cultural Perspective.

Narver and Slater (1990) proposed that market orientation is the extent to which
culture is devoted to meeting customer needs. They defined Market orientation as the
competitive strategy that most efficiently generates the right kinds of behaviour to
create enhanced value for the consumer and therefore assures better long-term results
for corporations (Maydeu-Olivares and Lado, 2003).Therefore, market orientation
comprises three components: customer orientation, competitor orientation, and inter
functional coordination. Customer orientation and competitor orientation include all
the activities involved in acquiring information about the customers and competitors
in the target market and disseminating this information throughout the organization.

Inter functional coordination involves coordinated efforts, which typically involves

more than the marketing department, to use this information to create superior
customer value (Narver and Slater, 1990; Kumar et al., 1998). A long range
investment perspective is implied in market orientation due to the need to prevent the
organization’s competitors from overcoming the superior customer value created by
the organization (Subramanian, 2009) .The three components of market orientation
collectively form a unique strategic marketing resource and are vital to the
performance of the firms (Hsieh et al., 2008). Market orientation is indeed a learning
process in which organizations learn from all aspects of their environment, including
customers and competitors, and take both short and long term organizational goals
into consideration (Kohli and Jaworski, 1990). According to Narver and Slater
(1990); Shapiro (1988), being market oriented implies delivering products and
services valued by consumers, usually accomplished through (1) on-going monitoring
of market conditions and (2) adaptation of organizational responses. However, top
management plays a critical role in fostering market orientation. Given the importance
of market orientation, it comes as no surprise that this construct has received scrutiny
from marketing scholars (Grewal and Tansuhaj, 2001). A standard argument in the
market orientation literature suggests that market-oriented firms are in a better

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position to satisfy the needs of their customers (Narver and Slater, 1990). Therefore,
researchers expect market orientation to be manifested in enhanced firm performance
(Grewal and Tansuhaj, 2001). In addition, some academics consider market
orientation as a resource and/or a capacity of the company to provide a sustainable
competitive advantage (Aldas Manzano, 2005). The definition of market orientation
adopted in this study is that put forward by Narver and Slater (1990). According to
whom “market orientation is the organization culture that most effectively and
efficiently creates the necessary behaviours for the creation of superior value for
customers and, thus, continuous superior performance for the business” (Narver and
Slater, “The effect of a market orientation on business profitability”, Journal of
Marketing, 1990).They conceptualized market orientation as a one dimensional
construct that incorporates three behavioural components (customer orientation,
competitor orientation, and inter functional coordination) and use a single aggregated
measure of market orientation (MKTOR). The three components of market
orientation collectively form a unique strategic marketing resource and are vital to the
performance of the firms (Hsieh et al., 2008). However, a firm generally seeks to
develop its own market orientation to ensure the continuous needs assessment of its
customers, the early detection of shifts in the marketplace, and to prompt internal
review and realignment of marketing strategies and activities where required.
Nevertheless, research in the area of marketing orientation continues to be very
prolific (Farrelly and Quester, 2003).

2.3.1. Different views of Market Orientation

Although there are several scholars have developed the theories regarding Market
orientation concept this research study consider the theories which have been
developed by the Most famous research scholars called Kohli and Jaworski, (1990)
and Slater and Naver, (1998) based on their perspectives.

2.3.1.1. Kohli and Jaworski’s View of Market Orientation

It is important to say that two papers have established the concept of market
orientation into the academic of business research by Kohli and Jaworski in 1990. The
first paper, by Kohli and Jaworski (1990), viewed market orientation as the
implementation of the marketing concept. In the model they proposed emphasizes the

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collection of marketing data, dissemination of this data across functions within the
organization and the action that is taken based on this intelligence. The model was
built on the results of interviews with 62 managers in both marketing and non-
marketing positions in United State America companies. The main finding was that
profitability is a consequence of market orientation but not a component of it. Later
Jaworski and Kohli (1993) published another paper where the goal was to review and
measure the antecedents that lead to market orientation and the consequences of it for
the company.

Figure 2.1:- Kohli and Jaworski’s view on market orientation.

Source: Kohli and Jaworski (1990).

Figure 2.1 shows the interaction between intelligence generation, dissemination and
responsiveness. Intelligence gathering is just what the name implies, gathering
intelligence about customers, competitors and the market place.

Responsiveness only happens if the formalized process for sharing business

intelligence in not too burdensome. If management emphasized sharing, and if the
organizational system’s reward system provides an incentive to do so or there is no
penalty for doing so. In other words, a department, manager or employee is only
willing to share information if it implies no cost.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.3.1.2. Narver and Slater’s View of Market Orientation

The professional scholars John C. Narver and Stanley F. Slater published their famous
article about Market Orientation in 1990, several months after their distinguished
colleagues Kohli and Jaworski. Narver´s and Slater´s goal was to shed light on the
components that build a market orientation and propose a useable definition of the
concept. They interviewed managers in 113 strategic business units in one
corporation. Narver and Slater viewed market orientation as an organization culture,
just like Desphande and Webster (1987).

However, they took the definition further and argued that market oriented firms are
focus not only on customers but also equally much on competitors. Additionally, they
placed emphasis on inter functional coordination that is meant to create unison
between all functions in the organization and become part of the organizational
culture. So they have developed this definition: “Market orientation consists of three
behavioural components such as customer orientation, competitor orientation, and
inter functional coordination and two decision criteria long term focus and
profitability.”

Narver and Slater (1990) defined three equally important behavioural dimensions of
market orientation, them being customer orientation, competitor orientation and inter
functional coordination. They add two decision criteria that are long term focus and
profitability to their model.

Figure 2.2: Narver and Slater’s view on market orientation.

Source: Narver and Slater (1990).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Figure 2.2 shows the interaction between the three behavioural components; customer
orientation, competitor orientation and inter functional coordination.

Research shows that the consequence of market orientation materializes in all tasks
performed by a firm. The degree of market orientation shows through employee and
customer satisfaction, as well as content shareholders. Customers of a company with a
high degree of market orientation experience great value for money and excellent
service that is gladly delivered by skilled and professional employees of that
company.
Gray (1998) found that the more market oriented companies have more satisfied and
loyal customers and employees there. Also not only that, Day and Wensley (1988)
found that market orientation means that organizations do not only understand the
customer, but also its customer´s customers and their business environment and how
that will develop in the future. This concept matches with Kohli´s and Jaworski´s
(1990) suggestion that companies must collect and assess data on customer´s current
and future needs. These companies’ employees should emphasize service delivery and
manage their customer relations well. Employees should spend considerable time with
their customers (Narver and Slater, 1994). Competitor orientation is the second
component of market orientation and states that organizations should identify, analyse
and use the strengths, weaknesses, opportunities and capabilities of both current and
future competitors. This is very logical although not entirely new. Already in 1960,
Levitt said that parallel to customer analysis, companies must do competitor analysis
and contemplate possible solutions that might full fill current and future customer
needs and expectations (Levitt, 1960).

Inter functional coordination or integrated marketing means that all departments

within the company play a critical role in satisfying customers. This idea concurrent
with Shapiro´s (1988) research that found that market orientation is not marketing
orientation, because a market orientation does not suggest that only the marketing
department has the most important role here. On the contrary, market orientation
emphasizes that all departments and all employees are aware of the fact that their job
attitude towards internal and external customers is crucial. According to Narver and
Slater (1998), competitor and customer orientation include all activities that involve
generating market intelligence about customers and competitors, analysing it and
distributing that knowledge throughout the organization. This means that the market

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oriented company must provide adequate business processes and systems for data
input and coordinate the communication of disseminated business info in order to
create superior value for customers.

According to Narver and Slater (1998), continuous innovation is implicit in each of

these components. If there is no innovation and continuous data generation,
employees will not have the right prerequisites to offer that extra service to the
customer.

The two decision criteria shown in the figure 2.2 are a long term profit focus and
profitability. It is through the continuous creation of superior customer value that a
business creates its long-run profit performance. A short period marketing campaign
or sales action might boost sales, but the organizational image and generation of
repeat customers only evolves over time along with reputation and word of mouth.

The two views on market orientation are quite similar and complementary and very
useful to anyone seeking knowledge on market orientation. Both papers view market
orientation as a concept that leads to a greater competitive advantage and both agree
that business intelligence about customers and competitors is a key prerequisite to
build market orientation. Both of them conclude that all managers and staff members
need to participate in creating and maintaining the market and that market orientation
is a construct with three equally important components. However, the two views have
important differences. Kohli and Jaworski (1996) put more emphasize on customers
than Narver and Slater (1990), which focuses on human role and explain market
orientation as a corporate culture which leads to certain customer/competitor oriented
behaviour throughout the organization creating specific atmosphere that leads to
better performance.

Although both papers by Slater and Naver (1998) and Kohli and Jaworski (1990) have
considered about the importance of market orientation and Organizational
performance the current study pay high consideration to the three behavioural
components model developed by the Slater and Naver (1990). In addition to the three
behavioural components model the researcher added another component called Social
Benefit Orientation to three component behavioural model on behalf of investigate the
relationship between Market Orientation and Organizational Performance.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Accordingly, entire current research study is based on the four behavioural

components of the Market Orientation.

2.3.2. Customer Orientation

The heart of the market orientation is its customer focus. To create superior value for
buyers continuously requires that a seller understand a buyer’s entire value chain, not
only as it is today, but also as it evolves over time. Buyer value can be created at any
point in the chain by making the buyer either more effective in its markets or more
efficient in its operation (Slater and Narver, 1996). Global competition increases
market turbulence as well as the richness and diversity of knowledge possessed by
customers and competitors (Achrol, 1991). Customer orientation can be defined as a
group of actions taken by a business to support its sales and services staff in
considering client needs and satisfaction their major priorities (Slater and Narver,
1996). Business strategies that tend to reflect a customer orientation might be include,
developing a quality product appreciate by consumers, responding promptly and
respectfully to consumer complaints and queries, and dealing sensitively with
community issues.

To be customer oriented implies that a firm is actively engaged in the organization

wide generation, dissemination of, and responsiveness to, market intelligence (Kohli
and Jaworski, 1990). Usually, this term is described as an organizational culture that
stresses the customer as the focal point of strategic planning and execution
(Deshpande, 1993). This culture should be pervasive throughout the company such
that employees consistently exhibit customer oriented behaviours, and consumers
thereby become accustomed to this philosophy (Ritchie, and Zerbe, 2000).

A firm’s ability to cheaply and swiftly introduce new products that meet customer
needs is the key to long term success (Datar and Srinivasan, 1997). There are so many
perspectives that can be included in this study. Customer orientation evolved from the
marketing concept. Saxe and Weitz (1982) suggest that customer oriented selling is a
behavioural concept that refers to the level to which salespeople practice the
marketing concept by trying to help their customers make purchase decisions that
will satisfy customer needs, sometimes either through cross selling and up-selling
strategy.

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Narver and Slater (1990) described customer orientation as the sufficient

understanding of a company’s target customers to be able to create superior value for
them continuously. It requires that marketers understand a buyer's entire value chain
(Day and Wensley, 1988). This dimension has received a good deal of attention in the
research literature (Deng and Dart, 1994; Kohli and Jaworski, 1990) found in their
interviews with company managers that a customer focus is a critical element in
determining market orientation.

2.3.3. Competitor Orientation

According to Narver and Slater (1990) competitor orientation, as an element of

market orientation means that a seller understands the short term strengths and
weaknesses and long term capabilities and strategies of both the key current and
potential competitors. According to Slater and Narver (1993), competitor orientation
centers around the following questions, (1) where are the competitors are? (2) What
technologies do they offer? And (3) whether they represent an attractive alternative
from the perspective of the target customers?.

The purpose of a competitor orientation is to provide a solid basis of intelligence

pertaining to present and potential competitors for executive actions. Competitors are
defined as firms offering products or services that are close substitutes, in the sense
that they serve the same customer need (Porter, 1980; Kotler, 2000). For example, in
serving the coffee sweetener market, a provider of beet sugar faces competition from
other providers of beet sugar, as well as from providers of cane sugar and synthetic
sugar. A firm’s current and potential competitors may therefore be found among firms
with similar and dissimilar production technology platforms. A competitor orientation
may lead to a cost advantage because competitor oriented businesses tend to watch
costs closely, so they may quickly match the marketing initiatives of competitors.

However, small organizations seem to view competitor orientation differently and are
not as concerned with long term strategies. The literature suggests that most
businesses are short-term oriented (Carson, 1990; Harris and Watkins, 1998), and that
short term results are perceived to be more important than long term strategic issues
(Harris and Watkins, 1998). Managers in businesses are more concerned with running
daily operations than with long term business planning (Amer and Bain, 1990;

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Robinson and Pearce, 1984). Hence, for businesses, short term results are often
apriority over projected long term benefits.
However, in order to gain a sustainable competitive advantage, managers may need to
improve appropriate business marketing and planning skills.

Competitor orientation can enhance a firm’s competitive advantage by allowing it to

benchmark with, learn from, imitate, and improve on the products of successful
competitors (Drew, 1997; Day and Wensley, 1988). Unlike the long term benefits of
customer orientation, empirical research has produced widely divergent findings on
the relationship between competitor orientation and organisational performance.
Narver and Slater (1990) and Noble, Sinha, and Kumar (2002) identified a positive
relationship between competitor orientation and organizational performance.
Harrison Walker (2001) discovered that no such relationship exists between
competitor orientation and organizational performance. Armstrong and Green (2007)
and Armstrong and Collopy (1996) found the existence of a negative relationship
between competitor orientation and organizational performance and Luo, Rindfleisch,
and Tse (2007) claimed that there is a curvilinear relationship between the two
variables competitor orientation and organizational performance. Armstrong and
Collopy (1996) argued that competitor orientation reduces the profitability of a firm
and suggested that firms should focus on maximising their own profit and ignore their
competitor’s tactics completely.

Another way of explaining competitor orientation, to be better informed of new trends

and market oriented, company must consider not only how well its products suit and
satisfy customer needs but how well it performs better relatively to its competitors
(Hsieh et al., 2008). Organization must gather market intelligence on the short and
long term strengths, weaknesses, absorption capabilities and strategies of both the
current and the potential competitors (Hsieh et al., 2008; Narver and Slater, 1990).
The analysis of competitors' long term absorption capabilities, strengths and
weaknesses is a key factor in determining market orientation and culture of an
organization (Harrison and Shaw, 2004). Employees from every function in a market
oriented organization share information about their competitors because such
information can be used to build a competitive advantage in the industry it operates.

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2.3.4. Inter Functional Coordination

Inter functional coordination is defined as “the integration and collaboration of
various functional areas (or departments) within an organization as a way of
enhancing communication and information to better meet the organization’s goal”
(Narver and Slater, 1990). According to Porter (1985), inter functional coordination
can be defined as every department, facilities, branch office and other organizational
units has a role that must be defined and understood. This is defined as the co-
ordinated utilization of organizational resources in creating superior customer value
for the target segment. All employees, regardless of their distance from the strategy
formulation process, must recognize their role in helping a firm achieve and
sustainable competitive advantage. Inter functional coordination is defined in this
study as the communication and sharing of information and resources, and integration
and collaboration of different functional areas or departments.

Inter functional coordination describes the ability of different functional areas to

accommodate disparate views and work around conflicting perspectives and mental
models by putting aside functional interests for the better of the organization as a
whole.

As the literature on internal marketing is rapidly growing, Inter Functional

Coordination is also viewed as an important criterion of internal marketing. Rafiq and
Ahmed (1993) defined the boundary between marketing and human resources
management while arguing that organizations need to look at ways of increasing cross
functional coordination. Though mentioned as early as in 1993, Inter Functional
Coordination was not “officially” identified as one of the criteria of internal marketing
until in 1993, when Rafiq and Ahmed (1993) proposed a comprehensive definition of
internal marketing. Rafiq and Ahmed (1993) reviewed conceptual and empirical
literature on the definition of internal marketing and identified Inter Functional
Coordination as one of the five main criteria of internal marketing.

Another way, Inter functional coordination is defined as the integration and

collaboration of various functional areas (or departments) within an organization as a
way of enhancing communication and information to better meet the organization’s
goal (Narver and Slater, 1990). According to the definition of Slater and Narver in
1990, to become customer oriented organization communication of information is

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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must. Inter functional coordination describes the ability of different functional areas to
accommodate disparate views and work around conflicting perspectives and mental
models by putting aside functional interests for the better of the organization as a
whole. Nakata and Sivakumar (2001) highlighted that inter functional coordination
represent a key form of internal social capital of an organization. Organizational
resources often have conflicting priorities, different perspectives, and strategies
(Nakata and Sivakumar, 2001). Academics and practitioners have long contended that
synergy among company members is needed. A culture of integrating all departments
towards better and continuous creation of customer value should lead to a market
orientation within the company and successful implementation of the marketing
concept (Harrison and Shaw, 2004).

2.3.5. Social Benefit Orientation

Social benefits can be defined as the increase in the welfare of a society that is derived
from a particular course of action. Most social benefits cannot be quantified (Paul and
kwon, 2002). Through this definition it is crystal clear that Social benefit orientation
is attached with the welfare of the customers or the society and each and every
business organization should pay high consideration to the social benefits. It comes
with the concept of Corporate Social Responsibility. Furthermore, according to Paul
and kwon (2002), Social benefit is the total benefit to society from producing or
consuming a good or service. Social benefits include all the private benefits plus any
external benefits of production or consumption. Although in this definition they
highlighted that Private benefit is a part of Social Benefit this study concern about the
External benefits provided by the Organizations. If a good or service has significant
external benefits, then the social benefit will be greater than the private benefit (Paul
and Kwon, 2002). The social benefit achieved by a social project can be defined as
the improvements attained in the living conditions of its beneficiaries that are directly
attributable to the project. All different kinds of improvements can be related to one
of the four groups of benefits shown below, which refer to as the components of the
social benefit: (1) Individual tangible goods (economic nature); Individual intangible
goods (intellectual or spiritual nature); (3) Collective tangible goods (ecological
nature and basic infrastructure); (4) Collective intangible goods (socio-cultural nature,
for the community).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Another way of explaining about Social benefit is defined by measurement against a

“third-party standard,” and all statutes permit incorporators to also pursue more
“specific Social benefits” Providing (low income or underserved) individuals or
communities with beneficial products or services; Promoting economic opportunity
for individuals or communities beyond the creation of jobs in the normal course of
business, Preserving (or improving) the environment, Improving human health,
Promoting the arts, sciences, or advancement of knowledge; Increasing the flow of
capital to entities with a public benefit purpose, or The accomplishment of any other
particular, identifiable benefit for society or the environment (Matthew F. Doeringer,
2010). Based on above perspectives importance of social benefit oriented activities
has been increased. Most of the organizations are aimed to use strategies in order to
positioning in consumer’s mind about the organizations as well as the products.

When it comes to Sri Lankan context because of the cultural situations, Social Benefit
has become very important and essential concept today business industry.

2.4. Market Orientation and Organizational Performance

Prior to the late 1980s, there was little success in the development of constructs
related to market orientation. However, the late 1980s witnessed an increased
academic and practitioner interest in the development of practical models to define
key marketing constructs such as market orientation (Bruning and Lockshin, 1994).
While a number of studies present market orientation as synonymous with other
constructs such as `customer orientation' (Shapiro, 1988), more recent studies suggest
that market orientation is distinct and implies a less politicized nature (Kohli and
Jaworski, 1990) and a more proactive, longer term focus (Slater and Narver, 1998).
Research into market orientation is dominated by the conceptualizations of two sets of
theorists. First, the information-based conceptualization of Kohli and Jaworski (1990),
which presents market orientation as collecting, disseminating, and responding to
intelligence about the market. Second, there exists the culture oriented approach of
Narver and Slater (1990), which defines market orientation as ``the organizational
culture that most effectively and efficiently creates the necessary behaviours for the
creation of superior value for buyers.'' While there is merit in both views, the Kohli
and Jaworski (1990) view has been subjected to criticism (Diamantopoulos and Hart,
1993) while the Narver and Slater (1990) conceptualization has been praised (e.g.,

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Greenley, 1995). The resurgence of interest into the concept of market orientation can
be attributed to its association with organizational performance. Indeed, an
examination of the substantial proportion of literature examining various aspects of
the marketing concept finds an over-riding and sometimes explicit assumption that
implementing the marketing philosophy will increase organizational performance (see
for instance, Felton, 1959; Houston, 1986; Brownlie and Saren, 1992). Since the
development of empirical models of market orientation in the early 1990s, there has
been a proliferation of studies claiming an association between market orientation and
organizational performance. A review of the literature finds that studies linking
market orientation and organizational performance fall into three distinct categories.
The first are those studies that evaluate the utility of conceptualizations of market
orientation and the association with performance. The second group comprises those
studies that examine the association between market orientation and performance in
certain national contexts. The third category consists of those studies that examine the
forms of orientation and performance.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Table 2.1:- Summary of the previous research findings

Author/s Research Questions/ Findings

Objectives
1 Slater and To examine the relationship  Major finding was there is a
Narver between Market orientation, Strong relationship between
(1990) Customer value and market orientation and superior
superior Performance. performance.
 A substantive Market orientation
must be the foundation for a
business competitive advantage
strategy.
2 Fred To determine how critical  The Results provide evidence that
Langerak, NPD activities are for a a market orientation is related
Erik Jan market-oriented firm to positively to product advantage
Hultink, achieve superior and to the proficiency in market
and Henry performance testing, launch budgeting, launch
S. J. strategy, and launch tactics.
Robben  Product advantage and the
(2010) proficiency in launch tactics are
related positively to new product
performance, which itself is
related positively to
organizational performance.
 Market Orientation has no direct
relationship to new product
performance and to
organizational performance.

3 Laith Investigate the Relationship  There is a Positive Relationship

Alrubaiee between New Service between New Service
(2013) Development, Market Development, Market Orientation

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Orientation and Marketing and Marketing Performance.

Performance.
4 Michael The main objective is  Finding was in service sector
K. Brady, investigates the effect of customer orientation is a more
J. Joseph being customer oriented on important and it highly influence
Cronin, service performance to Perceptions and outcome
Jr.(2009) perceptions and outcome behaviours.
behaviours.
5 Mohamme What is the relationship  They highlighted that the
d Abdulai between Market Orientation development of market
and and Business Performance orientation in this sector rests
Mahmoud among SMEs in Ghana? more on the attitude of owners/
(2011) managers and, more importantly,
the repeatedly reported
performance implication of
market orientation does not elude
Ghanaian SMEs. More
specifically, market orientation.
6 Jin K Han, Main objective was to  Exhibited in conclusion there are
Namwoon Examine the role that two components of Market
Kin and organizational innovations orientation are unimportant. And,
Rajendra play in the context of the  Competitor orientation is very
K relationship between Market important to the Organizational
Srivastva. orientation and performance.
(1996) Organizational performance.
7 Ronald E. Measuring Customer  Tentatively conclude that the
Michaels Orientation of Salespeople: SOCO scale works as well with
and Ralph A Replication With buyers as with salespeople. We
L. Day Industrial Buyers. hope further testing of the SOCO
(2010) construct in the future will lead to
its refinement and that its use will
contribute to improvements in the
quality of research on

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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salesperson-buyer interactions.
8 Aaron J. Incorporates market  The more successful firms are
Johnson, orientation theory more internally focused (inter
Clay C. (competitor orientation, functional coordination and
Dibrell, customer orientation, and innovativeness) than externally
and Eric inter functional focused (competitor and customer
Hansen coordination) and firm orientation).
( 2004) innovativeness to explain
differences in firm financial
performance.
9 Seigyoung Top management team  Results generally supported
Auh1, diversity and hypothesis in that the effect of
Bulent innovativeness: The TMT diversity on
Menguc moderating role of inter innovativeness was positive as
(2005) functional coordination. inter functional coordination
increased.
10 Thorsten How does Customer  Considering as a whole, they
Hennig- Orientation impact on found that especially customer
Thurau customer satisfaction, oriented activities highly impact
(1999) commitment, and retention? to the customer satisfaction and
retention.
11 Anis Ben How do Market Orientation  CSR significantly moderates the
Brik and CSR impact on association between customer
Belaid Business Performance orientation and financial
Rettab performance.
Kamel  All interactions are insignificant,
Mellahi with the exception of the
(2010) relationship between customer
orientation and financial
performance.
 Customer orientation has a
significant negative moderating
effect on financial performance.

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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But, this association becomes

positive, albeit weak, at a high
level of CSR.
12 Mark A Framework for the  They found in microfinance
Schreiner Discussion of the Social social benefits are not important.
(2002) Benefits of Microfinance Because there is no any direct
impact of Social benefits to the
Micro finance industry.
13 Vasilis Examine the relationship  Customer orientation practices
Theoharak between Customer are particularly effective in
is and orientation and enhancing firm-level
Graham innovativeness: differing performance for firms from New
Hooley roles in new And old European transition economies.
(2009) Europe.  Core finding is that returns on
customer orientation and
organizational innovativeness
are different in Old and New
European countries.
14 Thorhallur Examine the Effects of  The bank has a strong external
Gudlaugss Market Orientation on focus combined with a focus on
on and Business stability. The “adaptability”
Adrianus Performance: Empirical dimension (the measure of
Philip Evidence from Iceland market orientation) scores a 3.57
Schalk on a 5-point scale and has a weak
(2009) positive relation with five out of
six performance indicators, and a
moderately strong relation with
employee satisfaction.

 The bank is very profit-oriented,

which might explain its low
score on some dimensions. The

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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results from this study are in line

with the results from other
Icelandic studies that have used
DOCS to measure the shape of
organizational culture.
15 Ken How do Entrepreneurial  The results indicate that
Matsuno, Proclivity and Market Entrepreneurial Proclivity has
John C Orientation effect on not only a positive and direct
Mentzer, Business Performance? relationship on market
and orientation. But also indirect and
Aysegul positive effect on Market
Ozsomer Orientation through the
(2002) reduction of
departmentalization.
 The results also suggested that
Entrepreneurial Proclivity’s
performance influence is
positive when mediated by
market orientation but negative
or non-significant when not
mediated by Market Orientation.
16 Deshpand Organizational culture,  The results show that
e´, R.and market orientation, Organizational culture, Market
Farley, innovativeness, and firm orientation and innovativeness
J.U. performance: an are positively effect to the
(1996), international research success of the firm’s
odyssey”. performance.
 In addition to that there should
be a good innovativeness within
the organization.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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17 Sin, L.Y.M., Examine The relationship  The scholars point of view they
Tse, A.C.B., between Market found that both China and Hong
Yau, orientation and business Kong Marked oriented activities
O.H.M., performance: a are highly effect to the Business
Chow, comparative study of firms performance as well as specially
R.P.M. and in mainland China and customer oriented marketing
Lee, J.S.Y. Hong Kong. strategies leads to success of the
(2003) business.
 Not only that when compare
with both countries they found
that those countries are used
different Market oriented
strategies in order to enhance the
performance of the companies.
18 O’Sullivan, The main objective is to  According to the findings of this
D. and Examine the Marketing research paper they have found
Abela, A.V. performance measurement that Marketing performance can
(2007) ability and firm be measured by using different
performance. developed scales as well as they
have exhibited the firms
performance totally depends on
the Market oriented activities.
19 Albert “Market orientation and  This study found that the effects
Maydeu- business economic of market orientation on
Olivares, performance”, Main economic performance are
Nora Lado ( objective is to provide a completely channeled through
2008) necessarily partial model these variables, particularly
for how this impact takes through innovation degree and
place using innovation innovation performance. Based
degree, innovation on the results the paper provides
performance and customer guidelines for improving the
loyalty as intermediate market share, premium growth
variables. and profitability of European

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Union insurance firms.

20 Fred The Impact of Market  The results provide evidence that
Langerak, Orientation, Product a market orientation is related
Erik Jan Advantage, and Launch positively to product advantage
Hultink, and Proficiency on New and to the proficiency in market
Henry S. J. Product Performance and testing, launch budgeting, launch
Robben Organizational strategy, and launch tactics.
(2004) Performance.  Product advantage and the
proficiency in launch tactics are
related positively to new product
performance, which itself is
related positively to
organizational performance.
 Market orientation has no direct
relationship to new product
performance and to
organizational performance.
21 Baker How do Synergistic Effect  Market orientation has impact on
Sinkula of Market Orientation and performance.
(1999) Learning Orientation on  Market orientation has more
Organizational impact on performance with the
Performance? mediation of learning
orientation.
 Market orientation has impact in
the increase of market share with
the mediation of learning
orientation.
 Market orientation and new
products’ performance decrease
with the mediation of learning
orientation.

22 Deshpande To examine the  Customer orientation has impact

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Farley relationship between on performance.

Webster Corporate Culture,  Innovativeness has impact on
(1993) Customer Orientation, and performance.
Innovativeness in Japanese
Firms
23 Matear ‘How Does Market  Market orientation has positive
Osborne Orientation Contribute to and meaningful impact on
Garrett Gray Service Firm Performance? performance.
(2002) An Examination of  When market orientation,
Alternative Mechanisms’, innovativeness and performance
are approached together, it is
observed that innovativeness
acts as a mediator between
market orientation and financial
performance.
24 Adrianus To measure the shape of  The results in this study show
Philip this bank´s organizational that the independent variable,
Schalk culture; the level of its market orientation, explains only
(2009) market orientation; and to 4% of the total variation in
test the relationships business performance (r= 0.20),
between the cultural (R²=0.40). This means that the
dimensions defined in the business performance of the
measurement instrument bank is for 96% influenced by
which is the Denison other explanatory variables than
Model market orientation
Of Organizational Culture
Survey (DOCS) and
business performance?

25 Noble Market Orientation and  Competitor orientation is related

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Sinha Alternative Strategic to performance in any occasion.

Kumar Orientations: A  Customer orientation is not
(2002) Longitudinal Assessment of related to performance.
Performance Implications’  Impact of a mediator between
market orientation and
performance must be searched
for.
 There is a positive relation
between learning orientation and
performance; and learning
orientation acts as a mediator
between market orientation and
performance.
26 Pelham Firm effectiveness, sales  Firm effectiveness (+), Sales
(1997) growth/ market share growth/market share (0)
27 Krista R. Epistemology Research:  Theoretical framework of personal
Muis · Lisa Philosophical and epistemology that incorporates
D. Empirical both positions and hypothesizes
Bendixen · Reflections in the how the belief systems might
Florian C. Development interact in terms of the
Haerle of a Theoretical Framework development of personal
(2006) epistemology and relations to
various facets of cognition,
motivation, and achievement. The
article ends with a discussion of
educational implications.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.5. Conceptual Framework

Conceptual framework developed based on the literature review and it has been
finalized according to the arguments in previous literature.
Market Orientation

Customer Orientation

𝐻1 : +
Competitor Orientation 𝐻2 : +

Organizational
𝐻3 : + Performance
Inter functional
Coordination

𝐻4 : +

Social benefit
Orientation

Figure 2.3:-Conceptual Framework

Source: - Developed for the research study (2014)

Figure 2.3 shows the conceptual framework and further it represents the relationship
among Independent variables such as Customer Orientation, Competitor Orientation,
Inter functional Coordination, Social Benefit Orientation and the dependent variable
Organizational Performance.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.6. Hypotheses Development

There are four hypotheses have been developed in order to test through the research
study. Three hypotheses developed based on the previous research studies conducted
in different contexts related to the Market orientation and Organizational
Performance. One hypothesis is developed by considering the nature of the businesses
field and the importance of the variable for the manufacturing industry.

2.6.1. Customer Orientation and Organizational Performance

According to Slater and Narver (1994), Organizational performance refers to the

firm’s market and financial performance, which is positively related to the firm’s
customer orientation (Slater and Narver, 1994).

The view of Hunt and Morgon (1995), they have conducted a research and the results
were customer focused strategies in competitive organizations positively related with
their performance, because a market oriented culture has been represented as one of a
firm’s competitive capabilities and performance (Hunt and Morgan, 1995).

The literature argues that a market oriented culture provides a unifying focus of
organizational efforts in the delivery of value to customers while also providing a
comparative impetus with competitors’ activities (Kohli and Jaworski, 1990).

Therefore, a market oriented firm is more likely to achieve high levels of customer
satisfaction; to keep existing customers loyal; to attract new customers; and
subsequently to attain the desired level of growth, market share, and hence of
organizational performance (Homburg and P.flesser, 2000).

Another scholar called Deng and Dart in (1994) conducted a research study by putting
148 firms across industries as their sample and could be able to find that there is a
high influence of customer oriented activities on firm performance.
By considering previous research findings, the following hypothesis is proposed.

+𝑯𝟏 : - There is a positive relationship between Customer Orientation and

Organizational performance

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.6.2. Competitor Orientation and Organizational Performance

Customer focus may play a key part in the strategy to create superior customer value,
but an effective strategy requires more than simply customer centered methods. A
complete reliance of customer orientation can often lead to incompleteness in
business strategy, which leaves an organization prone to a reactive posture in coping
with competitor’s strategies (Day and Wensley, 1988). Further, Day and Wensley
(1998) highlighted that competitor oriented strategies increase the performance of a
firm.

Griesinger and Livingston (1973) concluded from a review of experimental game

literature that the proportion of ”competitive” subjects varies depending on
personality, cultural factors, and situational factors, such as feedback and game
instructions. They also concluded that many subjects seemed eager to know what was
expected of them in order that they might adopt an appropriate orientation to the
game. For example, the results from laboratory studies by Deutsch (1958, 1960)
imply that explicit support for competitor oriented objectives has a strong effect on
organizational performance.

In addition to that in 1993, Slater and Narver has conducted a research and found
there is a positive association among subjective evaluation of market performance,
sales growth and new product success, relative to competitors and in 1996 also they
have conducted a research again and they found that the competitor oriented activities
positively association with sales growth, and firms performance and but not profit.

Based on above mentioned research findings the researcher suppose the following
hypothesis for current study,
+𝑯𝟐 : - There is a positive relationship between Competitor
Orientation and Organizational Performance

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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2.6.3. Inter Functional Coordination and Organizational Performance

Several studies have linked Inter Functional Coordination with Organizational

Performance. Jaworski and Kohli (1993), using bank managers, investigated the
relationship between Inter Functional Coordination and Organizational performance,
putting market orientation in between. The results showed that Inter Functional
Coordination has a positive impact on market orientation, and market orientation is
positively related to Organizational performance. From the perspective of internal
marketing, Caruana and Calleya (1998), collected data from marketing executives,
examined the relationship between internal marketing and organizational
performance.

Farzad et al. (2008) studied the effect of the five criteria of Internal Marketing and
market orientation on organizational performance in Iranian banks. The results
showed that there is a positive relationship between inter functional coordination and
organizational performance.

According to another scholar Balakrishnan (1996) implemented a research in order to

find the relationship between market orientation and firm’s performance by putting
Inter functional coordination between them and they found that inter functional
coordination activities should be effectively managed on behalf of the success of the
organizational performance. By considering above research findings the researcher
proposed following hypothesis,

+𝑯𝟑 : - There is a positive relationship between Inter Functional Coordination and

Organizational Performance

2.6.4. Social Benefit Orientation and Organizational Performance

The main thrust of benefit corporation statutes is to require these entities to pursue
purposes beyond profit making. A benefit corporation must be formed for a “general
public benefit,” meaning a “material, positive impact on society and the
environment.” Other than in the New Jersey statute, general public benefit is defined
by measurement against a “third-party standard,” and all statutes permit incorporators
to also pursue more “specific public benefits.” They include: Providing (low income
or underserved) individuals or communities with beneficial products or services;

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Promoting economic opportunity for individuals or communities beyond the creation

of jobs in the normal course of business; Preserving (or improving) the environment;
Improving human health; Promoting the arts, sciences, or advancement of knowledge;
Increasing the flow of capital to entities with a public benefit purpose; or The
accomplishment of any other particular (identifiable) benefit for society or the
environment.

Although the social benefit is very important to the organization, so far researchers do
not consider social benefit orientation as a sub component of the market orientation.
Social benefit orientation is a new concept which specially adopted for this research
study. There were no any researchers has been considered this concept related to
Market Orientation. Therefore there is no literature review in order to prove whether
there is a positive relationship between Social benefit orientation and organizational
performance or not. This is the first time Social Benefit Orientation considers as a sub
component of the Market Orientation.

Today each and every organization pays significant amount of consideration in order
to gain competitive and sustainable advantage. With the concept of societal
marketing, most businesses implement different kind of social beneficial activities
such as donations, seminars, training programs, scholarships and specially
environment friendly activities. And also they think social benefits as their obligation
to the society. Through these kinds of strategies the organizations obtain good
reputation and make profitable relationships with customers. And also it will enhance
the quality of the organization and it will leads to long term survival in the industry.

By considering general current situation of the business industry, social benefit

orientation helps to increase the performance of the organization.

Based on the above mentioned situation the researcher proposed the following
hypothesis,
+𝑯𝟒 : - There is a positive relationship between Social Benefit Orientation and
Organizational Performance

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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CHAPTER 3
RESEARCH METHODOLOGY

3.1. Chapter Introduction

This chapter has been framed in a detailed way to present different aspects of a
research by detailing the underlying features of different social research methods and
their respective features. This research study is conducted using descriptive research
design. Exploratory and conclusive research methods are the major social research
methods being employed by researchers. This chapter also discusses the
appropriateness of the research methods selected and the steps that were followed for
accomplishing the research objectives.

Further, Second section is discussed the philosophy of the research study while the
third section of this chapter describes the research design.

Fourth section explained the research context of the research study and fifth section
deal with determination of population, sampling and sample and extent of the research
study. Section six is discussed about the data and data collection method of the
research study in detail while section seven is explained questionnaire design. Section
eight included the pilot study and section nine included Measurements and Scaling in
detail.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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3.2. Philosophy

Research philosophy can be defined as the development of the research background,

research knowledge and its nature (Saunders and Thornhill, 2007). Research
philosophy is also defined with the help of research paradigm. In the words of Cohen,
Manion and Morrison (2000), research paradigm can be defined as the broad
framework, which comprises perception, beliefs and understanding of several theories
and practices that are used to conduct a research. It can also be characterized as a
precise procedure, which involves various steps through which a researcher creates a
relationship between the research objectives and questions.

According to the definition given by Gliner and Morgan (2000) “paradigm is a way of
thinking about and conducting a research. It is not strictly a methodology, but more of
a philosophy that guides how the research is to be conducted (p.17)”. Research
paradigm and philosophy comprises various factors such as individual’s mental
model, his way of seeing thing, different perceptions, variety of beliefs towards
reality, etc. This concept influences the beliefs and value of the researchers, so that he
can provide valid arguments and terminology to give reliable results. There are Three
Components of Research Paradigm, Epistemology: Common parameters and
assumptions those are associated with the excellent way to investigate the nature of
the real world to give reliable results. Ontology: Common assumptions that are
created to understand the real nature of the society. Methodology: Combination of
different techniques that are used by the researcher to investigate different situations.

It is necessary for the researcher to understand the philosophical position of research

issues to understand the different combination of research methods. There are mainly
three type of paradigm to understand the philosophy. Those are reality, Positivism,
Interpretivism and realism.

Positivism:

The concept of Positivism is directly associated with the idea of objectivism. In this
kind of philosophical approach, scientists give their viewpoint to evaluate social
world with the help of objectivity in place of subjectivity (Cooper and Schindler
2006). According to this paradigm, researchers are interested to collect general
information and data from a large social sample instead of focusing details of

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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research. According to this position, researcher’s own beliefs have no value to

influence the research study. The positivism philosophical approach is mainly related
with the observations and experiments to collect numeric data (Easter-by-Smith et al
2006).

Interpretivism:

Interpretivism can be referred as the Social Constructionism in the field of

management research. According to this philosophical approach research give
importance to their beliefs and value to give adequate justification for a research
problem (Easterby- Smith et al. 2006). With the help of this philosophical, researchers
focus to highlight the real facts and figures according to the research problem. This
kind of philosophical approach understand specific business situation. In this
approach, researchers use small sample and evaluate them in detail to understand the
views of large people (Kasi, 2009).

Realism:

This research philosophy mainly concentrates in the reality and beliefs that are
already exist in the environment. In this philosophical approach, two main approaches
are direct and critical realism (McMurray, Pace and Scott 2004). Direct reality means,
what an individual feels, see, hear, etc. On the other hand, in critical realism,
individuals argue about their experiences for a particular situation (Sekaran and
Bougie 2010). This is associated with the situation of social constructivism, because
individual tries to prove his beliefs and values.

The current research study belongs to the epistemology and positivistic approach.
Audi (1999) defines epistemology as “the study of the nature of knowledge and
justification: specifically, the study of (a) the defining features, (b) the substantive
conditions or sources, and (c) the limits of knowledge and justification” (Audi, 1999,
p. 273). Educational psychologists (e.g., Hofer and Pintrich, 1997) have similarly
defined personal epistemology as individuals’ beliefs about the nature of knowledge
and the nature of knowing. Accordingly, an examination of personal epistemology
includes exploration of the structure of knowledge, certainty of knowledge, sources of
knowledge, justifications for knowing (e.g., Hofer, 2000; Hofer and Pintrich, 1997;
Schommer and Aikins, 2004), and developmental aspects of knowledge acquisition

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(e.g., King and Kitchener, 1994; Perry, 1970; Royce et al., 1978). These dimensions
are considered in the context of both philosophical perspectives of dominant
epistemologies of various academic domains (e.g., science’s dominant epistemology
is post positivism [Burbules and Lin, 1991]) as well as in the context of beliefs
individuals may hold across domains. In this research study there are many
assumptions can be seen.

3.3. Research Design

Nachmias and Nachmias (1996) describe research design as a logical model of proof
that allows the researcher to draw inferences concerning causal relations among the
variables under investigation. According to Sekaran (2003), the various issues
involved in the research design concern the purpose of the study, the type of
investigation, the type of the sample, which will be used, the methods by which the
required data will be collected, as well as the process that will be followed for the
analysis.

3.3.1. Exploratory vs. Conclusive Research design

Research Design

Exploratory Conclusive

Descriptive Causal

Figure 3.1:- Basic Research Designs

Source: - Malhotra, Marketing Research, 6th edition (2010)

Figure 3.1 shows that the theoretical aspect of basic research designs. Basic research
designs namely exploratory research design and conclusive research design can be
identified. Exploratory research is designed which is used to explore or find new

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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things, the phenomenon while conclusive research is used to test specific hypotheses
examine specific relationship and or make prediction for decision making (Malhotra,
2010).

Conclusive research design is further divide into two categories, namely descriptive
and causal research designs. Descriptive research design is used to describe market
characteristics or functions and causal research used to obtain evidence regarding the
cause and effect relationships.

In this research study descriptive research design has been applied to examine the
relationship between Market orientation and Organizational Performance, because
over this study the researcher described market characteristics of the selected
variables and their links as well as provide solutions for the identified research
problem. It is helped to decision makers to make correct decisions on behalf of the
organizational success. That is why it has been adapted for this research study. In this
study the dependent variable is Organizational Performance and Independent
variables are customer orientation, competitor orientation, Inter functional
coordination and social benefit orientation.

3.3.2. Quantitative Vs. Qualitative Research

White (2000) defines quantitative research as an investigation in which the results

consist of numeric values. These numerical results are subjected to mathematical and
statistical analysis for evaluation of the findings of the study. Since the qualitative
research is based on numerical values it has to employ objective ways of gathering
and interpreting various issues connected with the research. The quantitative research
method is also regarded as ‘positivist approach’ since the research approach is based
on scientific evaluations. As the name suggests quantitative research method uses
techniques which are focussed on quantitative information. The basis for research
analysis thus is the numerical data collected and analysed using statistical and
mathematical formulas and processes. Cresswell (1994) defined qualitative research
as An inquiry process of understanding a social or human problem, based on building
a complex, holistic picture, formed with words, reporting detailed views of
informants, and conducted in a natural setting (Cresswell, 1994).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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The basis on which the qualitative research works is through a close look at the
words, actions and records of real world people whereas under the quantitative
technique the research is given a mathematical significance which extends beyond the
actions and words of the people. The patterns of meaning that emanate from the
information gathered from the participants form the core area of focus for the
qualitative method. It is for the researcher to identify these patterns which exist within
these expressions of words and actions and present the patterns in a readable manner
to those interested in studying the result of the research. While doing this the
researcher has to adhere to the world as perceived by the participants so that a realistic
picture of the results can be presented to the readers. Quantitative research is based on
the measurement of quantity or amount. It is applicable to phenomena that can be
expressed in terms of quality.

Qualitative research is concerned with qualitative phenomena and especially

important in the behavioral sciences where the aim is to discover the underlying
motives, interests, personality and attitudes of human beings (Shajahan, 2004).

Further, the main difference between these two research methods is that quantitative
research methods transform the information into numbers and amounts, whereas
qualitative research methods use the researcher’s interpretation of information which
cannot or should not be translated into numbers or amounts. The difference between
quantitative and qualitative research lies in the procedure involved in investigation.
The quantitative technique is an approach which seeks to inquire into an identified
problem, based on testing the theory measure with numbers and analysing the data
using statistical techniques. The main objective of the quantitative technique is to find
out if a theory can be generalised. This research study used quantitative approach.
Numerical methods and mathematical processes have been applied to analyse the
results of the study.

3.4. Research Context

Throughout this research study the researcher tried to examine the relationship
between Market orientation and Organizational Performance. Research Context
indicates the place where the researcher is going to conduct the research study
(Malhotra, 2010). The current study focused on Small and Medium manufacturing
businesses in order to conduct the research and therefore the research context is Small

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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and Medium manufacturing industry. Based on the following criteria researcher has
determined the Sri Lankan Small and Medium Scale manufacturing organizations.

Small and Medium business are defined in a variety of ways by various countries
using such parameters such as number of persons employed, amount of capital
invested, amount of turnover or nature of the business, etc. Not only that different
countries apply different definitions on the concept of Small and Medium business
enterprises, even within countries, different regions and different institutions adopt
varying definitions in this regard (Gamage, 2003).

In Sri Lanka, there is no clear definition for Small and Medium business enterprises.
Different government agencies use different criteria to identify Small and Medium
Enterprises. Some of these criteria are the number of employees, the size of fixed
investment, and the nature of the business and the sector. I.e. formal or informal, in
which the industry operates. There are deferent terms used in different documents to
identify this sector. Small and Medium Industries or Enterprises, Micro Enterprises,
Rural Enterprises, Small and medium activities, Cottage and Small Scale Industry,
etc., are some of the terms frequently used (Gamage, 2003).

Using the size of the capital and the number of employees as the criteria, the
Industrial Development Board (IDB) defines a small industry as an establishment
whose capital investment in plant and machinery does not exceed Rs. 4 million (US $
30000) and the total number of regular employees does not exceed 50 persons(
Central Bank of Sri Lanka, 2012). The department of Small Industries (DSI) classifies
enterprises with capital investment less than Rs. 5 million (US$ 40000) and fewer
than 50 employees as small and Medium scale organizations (Ponnamperuma, 2000).
For the purpose of a World Bank Financed Investment Assistant scheme, financial
institutions defines small and medium scale enterprises as those enterprises whose
investment in fixed assets at original book value, excluding land and building, do not
exceed Rs.8 million (US$ 62000). In the case of projects where the main investment
in land and building (for example warehouse), the total investment in fixed assets,
inclusive of the cost of land and building should not exceed Rs. 16 million (US $
128000).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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For the purpose of the assistant programs implemented by the Sri Lanka Export
Development Board (SLEDB) for export oriented enterprises, small and medium
scale organizations are defined as those enterprises with a capital investment
excluding lands and buildings of less than Rs. 8 million (US $ 62000) or with annual
export turnover of less than Rs. 50 Million (US $ 385000) (Hwaliyanage, 2001).

The World Bank defines enterprise size in Sri Lanka based on the number of
employees: those with the fewer than 49 employees are small and those with 50- 99
employees are medium sized. The number of employees as the criterion for size
appears reasonable because it distinguishes between organizations regardless the line
of the business and the amount of capital investment must be revisited frequently due
to inflation (Ponnamperuma, 2000).

Considering as a whole in this research study the researcher determined the small and
medium scale organizations based on the following criteria.
Table 3.1: Determinants of Manufacturing Organizations Selection
Criteria

1. An establishment whose capital investment in plant and Industrial

Machinery does not exceed Rs. 4 million (US $ 30000) Development Board

2. The total number of regular employees does not exceed Central Bank of Sri
50 persons. Lanka, 2012

3. Capital investment less than Rs. 5 million (US$ 40000) Department of small
and fewer than 50 employees. industries

4. Capital investment excluding lands and buildings of less Sri Lanka Export
than Rs. 8 million (US $ 62000) Development board

5. Fewer than 49 employees are small and those with 50- World Bank
99 employees are medium sized

Source: Developed for the Research Study (2014)

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Table 3.1 shows the Small and Medium scale manufacturing organizations
determinants which are used in this research study and there are five criteria
employed to select the manufacturing organizations for the research study.

3.5. Determination of Population and Sample

3.5.1. Population

Population refers to the entire group of people, events, or things of interest that the
researcher wishes to investigate (Sekaran, 2004). According to the Brenda (1986)
population is defined as ‘the entire set of units for which the survey data are to be
used to make inferences’ (Brenda, 1986).

This research is focused about to examine the relationship between Market

Orientation and Organizational Performance. Therefore the population is all
managerial level employees (both male and female) who are working in small
and medium scale manufacturing business organizations located in Sri Lanka.

3.5.2. Sampling and Sample

3.5.2.1. Sampling

According to Cooper and Schindler (2003), “The basic idea of sampling is by

selecting some elements in a population, we may draw conclusion about entire
population.” A sample is a subject of the population. It comprises some members
selected from it. In other words, some, but not all, elements of the population would
form the sample (Sekaran, 2004).

There are two categories of sampling procedures namely probability sampling and
non- probability sampling.

In probability sampling each participant has an equal chance of being selected. Simple
random sampling is the simplest of probability sampling. The non-probability
sampling is the selection of elements for the sample is not necessary made with the
aim of being statically representative of the population.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Sampling Techniques

Probability Non Probability

Sampling Sampling

Simple
Systematic Convineance Judgment Snawball
Random
Sampling Sampling Sampling Sampling
Sampling

Figure 3.2:- Sampling Techniques

Source: - Malhotra, Marketing Research, 6th edition (2010)

Figure 3.2 shows that the main Sampling Techniques available to a researcher which
can be used to determine the sample from the population. Mainly there are two types
of sampling techniques namely, Probability Sampling techniques and Non probability
sampling techniques. The white color box indicates the sampling technique which has
been used in this research study.

In this research study the sample is selected by using non probability sampling
method which is Snowball Sampling Technique. Snowball sampling may be defined
as a technique for gathering research subjects through the identification of an initial
subject who is used to provide the names of other subjects. These persons may
themselves open possibilities for an expanding web of contact and inquiry. The
strategy has been utilized primarily as a response to overcome the problems
associated with understanding and sampling concealed populations such as the
deviant and the socially isolated (Faugier and Sargeant, 1997).

3.5.2.2. Sample

Sample is defined as a portion or subset of the population, the size of which is

determined by the type and objective of the study, as well as time and financial
constraints (Fink, 1995). Sampling therefore is the method of drawing the sample and
it is a vital part of a research as it allows to the researcher to generalize findings, as it
is impossible to examine the whole population (Nachmias and Nachmias, 1996).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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The sample size would be 240 managerial level employees (both male and female)
who are working in small and medium scale manufacturing business
organizations located in Southern Province (Galle, Matara and Hambantota), Sri
Lanka.

The sample size has been limited 240 respondents due to many reasons. According to
the statistical information found from the district secretariat offices Matara, Galle and
Hambantota there are nearly 200 small and medium scale organizations are situated.
And also it was difficult to reach and access some of the organizations due to legal
conditions and formal requirements.

3.5.3. Extent

The Researcher has selected southern province as geographical area due to many
reasons. The researcher is a permanent resident in southern province, Budget
consideration and diversity of the southern province.

Southern province is a one of emerging province in Sri Lanka and it includes Galle,
Matara and Hambantota. Most of the well success small and medium scale
organizations are located in southern province. Mainly because of easy transportation
system and easy access to raw materials Southern province has become business
reputed province. The three districts in southern province there are so many
geographical and climate differences can be seen. Galle and Matara have similar
climate during the whole year. But when it comes to Hambantota, there is a sere
climate. Manufacturers get advantages from these differences by establishing plants in
appropriate areas.

3.6. Data Collection

In any social research study normally two data collection methods are being employed
for the collection of information and data. The methods used are; (i) primary data
collection and (ii) secondary data collection. These two methods of collecting data are
quite often being used by the researchers alternatively for the purpose of collecting
data with respect to the studies undertaken by them.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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3.6.1. Primary data and data collection

“Primary data are the data organized by the researcher for the specific purpose of
addressing the research problem at hand” (Naresh K. Malhotra, Marketing Research,
2010, Page 98).

According to Walliman (2005) when the information and data is collected from the
sources which are direct and detached then such data are known as primary data.
These sources are the ones which are prevalent in the real world which remain
undeterred by the interpreters who occupy intermediate positions. Walliman (2005)
has identified popular research publications and papers presented by research scholars
as the sources of primary data. It is to be noted that primary data are collected through
sources that are in an “inanimate form”. This collection process involves the
measurement of various factors involved in the research. The inanimate forms
involved in the course of collecting data represent the events occurring with relevance
to the topic under study. It is usual that such forms are represented in the analysis of
the specific conditions that describe the events. The analyses take the form of reports
and observation notes. The narratives of the people connected with the research are
also sometimes included in the contents of primary data. All the required data for the
research study have been gathered through a pre specified questionnaire.

3.6.1.1. Primary Data Collection method

Survey method has become popular because it serves to collect information which is
both quantitative and numerical. The information and data also represents some part
of the total population in the form of samples and the information is gathered through
intelligent questions being put to the samples (Neuma and Fink, 1995). Usually the
survey method facilitates the results to be generalized. The reason for this
phenomenon is that there is a possibility to allow a large volume of sample to take
part and respond to the survey questionnaire. However, the survey method suffers
from a drawback in that sometimes the response rate may be very low vitiating the
results of the study. (Aaker, Kumar and Day, 1995)

Primary data would be collected through questionnaire based self-administered survey

method. The researcher met the respondents and distributes questionnaires. And also

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

the respondents who could not meet directly the researcher used mediator for
distribute questionnaire to gather required data.

3.6.2. Secondary Data

“Secondary data are the data collected for some purpose other than the problem at
hand” (Naresh K.Malhotra, Marketing Research, 6th edition, 2010, p. 98).

The researcher has the liberty to choose any kind of source that is found suitable for
gathering the required information and data. Normally the data that is gathered from
any other source than the primary sources of data shall be construed as ‘secondary
data’. Secondary sources of data include the presentations in the form of papers in
professional magazines, newspaper articles and books or other printed form of
materials available in any media. The resources contained in the internet being the
major electronic media are also considered as the sources of secondary data. Since
there are a number of sources from which the secondary data can be collected there is
a greater value for secondary data (Saunders, 2003).

However the secondary data suffers from a basic shortcoming of unreliability. With
respect to secondary data since the information and data pass through several hands,
there is the likelihood that the data may contain errors which may distract the
direction of the research (Walliman, 2005).

The secondary data is gathered from published journals, published books, some
reliable websites and organization’s annual reports. In addition to that, secondary data
have been collected from the district secretariat offices in Matara, Galle and
Hambantota.

3.7. Questionnaire Design

As a descriptive research it is very important to prepare a questionnaire in order to

collect the data. A questionnaire is a research instrument consisting of series of
questions and other prompts for the purpose of gathering information from
respondents. The choice of the questionnaire as one of the means of gathering data is
borne out of the fact that it is cheap, do not require as much effort from the questioner
as verbal or telephone surveys, not time consuming and often have standardized

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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answers that make it simple to compile data It allows the respondents to supply
answers that are confidential to them. (Sekeran, 2003).These questionnaires were
handed directly to the respondents by the researchers which gave the researchers the
privilege to introduce the topic and encouragement in answering the questionnaire.
Accordingly, the researcher prepared a questionnaire (See Appendix 2) by including
both open and closed (mixed Model) 13 questions and the questionnaire consist with
three parts. The part one consists with the questions that are needed to identify the
background of the organization Part two consist with the questions which are need
measure the variables of the study (Dependent variable and Independent variables).

Part three included the questions which are needed for identify the demographic
factors related to respondents. (Non-comparative scale method has been used and it is
five point scale). Developed questionnaire distributed after translating to the Sinhala
(See Appendix 3). The reason for translation of the developed questionnaire in to
Sinhala because most of the mangers of small and medium scale manufacturing
organizations did not have sound knowledge regarding English language and Sinhala
is the mother tongue of Sri Lanka). First and foremost the researcher distributed the
questionnaire to randomly select 6 respondents of the sample, on behalf of
understanding the validity and accuracy of the questionnaire (conducted a pilot test).
After making adjustments the researcher distributed questionnaire among sample and
collect the data from the respondents.

3.8. Pilot Study

The pilot test is a useful tool for researchers, as it helps them to check the data
collection methods and uncover any mistakes or miscomprehension of the
questionnaire. The sample examined in the pilot study must be a part of the sample
used for the conduction of the research; thus, the researcher may reveal unexpected
findings, based on which any necessary adjustment is made (Gerson and Horowitz,
2002). A pilot study was conducted before the administration of the questionnaire in
order to detect potential problems that may arise as a result of difficulty in the
interpretation of questions by respondents. The feedback given from the respondents
was considered in remodelling the questions to suite the research objectives.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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The pilot test conducted by getting randomly selected five respondents from the
sample and they are belongs to different manufacturing organizations. The pilot test
respondents consisted with one manager of the Lalanthi Grinding mills, two from
Sandila Garments, and three from food manufacturing firms in Matara area.

The results shows that the way of asking Q12 (Age) is should be changed. And also
some of them could not be able to understand the five point likert scale as well. Other
than that they have given favourable comments about quality of the questionnaire.

Based on the given answer by the respondents, the researcher analysed likert scale
statements in order to measure the range and the accuracy of the statements. On
behalf of that researcher is analysed simple statistics technique such as Mean and
Standard deviation by using SPSS.

Table 3.2 shows the results generated from the SPSS regarding the Simple descriptive
Statistics. (See Appendix 4 for detail pilot test results.)

Table 3.2:- Results of the Pilot Study

Variable Mean Std. Deviation

Inter Functional Coordination 4.3143 .39641

Customer Orientation 3.9714 .18626

Social Benefit Orientation 4.1429 .28571

Competitor Orientation 4.1250 .25000

Organizational Performance 4.1667 .42492

Source: Developed for the Research Study (2014)

Table 3.2 shows the analysis of pilot test data. (See Appendix) It includes the five
main variables of the current research study. Here the researcher has calculated Mean
Value and Standard Deviation by using SPSS. The results show that Inter functional
coordination variable has the highest mean value (4.3143) and customer orientation
variable shows the lowest mean value (3.9714).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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3.9. Data Collection

Data was collected by fully structured questionnaires that were delivered to the 310
managerial level employees in small and medium scale manufacturing organizations
in southern province by personally and through a mediator along with a letter (See
Appendix 3) that explained the nature of the study and promised confidentiality. The
questionnaire was first distributed in October 2014 by the researcher through the
Regional Development Bank (At that time Bank had organized an event for the small
scale manufacturers in Matara District). There were only retuned 255 questionnaires
within the required time period and response rate was 82% (255/310*100). Out of the
255 questionnaires there were only 242 questionnaires completed.

3.10. Measurements and Scaling

3.10.1. Primary Measurements

Primary Scales

Nominal Ordinal Interval Ratio

Figure 3.3:- Primary measurement scales

Source: - Malhotra, Marketing Research, 6th edition (2010)

Figure 3.3 shows the primary measurement scales available to a researcher. There are
four types of primary measurements scales namely, Nominal, Ordinal, Interval and
Ratio. In this study used specially Nominal and Ordinal scales to measurement
purposes.

Primary measurements intend assigning numbers or other symbols to characteristics

of objects accordance with clearly identified rules (Malhotra, 2004). There are four
scales of measurement which are nominal, ordinal, interval and ratio. Nominal scale is
a formal labeling procedure to identify or to classify the objects. Ordinal scale is a

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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raking scale to indicate the relative extent from objects groups‟ characteristics.
Interval scale is a rating object with numerically equal distances to compare
differences among objects. Ratio scale is an identifying or classifying object, ranking
order the objects and comparing intervals or differences between objects. In this study
the researcher used nominal and ordinal primry scale measurements.

After reviewing the relevant literature the researcher adapted most measures from
previous research articles and developed some for consistency with this study. Non
comparative scale techniques were used for all constructs and used five point likert
Scale methods.

3.10.2. Organizational Performance

Organizational performance involves the recurring activities to establish

organizational goals, monitor progress, towards the goals and make adjustments to
achieve these goals more effectively and efficiently (Namara, 2003). The researcher
adapted the measures of organizational performance from Mooraman and Rust
(1999). It asks the top level managers to indicate their perception of their
organization’s performance relative to their major competitors (1: Strongly disagree to
5: strongly agree) in terms of occupancy, gross operating profit and Market share.

In addition, researchers have also used global measures that assess managers’
perceptions of overall business performance, mostly through comparisons of
organizational performance with company objectives and/or competitors’
performance (e.g., Jaworski and Kohli, 1993). According to the Taylor and Francis,
1996, organizational performance qualitative dimensions are competitiveness,
profitability, liquidity, growth, market share, employee satisfaction, customer
satisfaction and service quality. Quantitative dimensions are productivity,
effectiveness, and financial capabilities.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Table 3.3: Measurement Constructs of Organizational Performance

Constructs References

1. Sales revenue growth is high  Agarwal, Sanjeev, Krishna M.

2. Market share gain is high Erramilli, and Chekitan D.
3. Profitability is High Dev(2003)

4. Have successful innovation  Kevin Zheng Zhou, James (2001)

5. High customer Satisfaction  Naver J.C and Slater S.F. (1990)

 Moorman and Rust (1999).
6. High employee Satisfaction

Source: Developed for the Research Study

Table 3.3 shows that the constructs used to measure the organizational performance
and there are six constructs included in the questionnaire. Those are representing the
Sales revenue growth, Market share gain, Profitability, successful innovation,
Customer Satisfaction and Employee Satisfaction.

3.10.3. Customer Orientation

Customer orientation refers to the philosophy or strategic mind-set of the

organization. Some authors(Gatignon and Xuereb, 1997; Voss and Voss, 2000) argue
that market orientation is not a matter of strategy, but just a methodology, however,
we counter argue that market orientation changes the way a company competes in the
marketplace, thus making customer orientation a strategic issue and provides that a
place at the chief executive level( Gatignon and Xuereb, 1997; Voss and Voss,
2000).The measurements of the Customer orientation found by referring previous
articles and adapted according to the objectives of the research study. In order to
measure the constructs of this variable used five point likert scale technique (1-
Strongly Disagree to 5- Strongly Agree).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Table 3.4: Measurement Constructs of Customer Orientation

Item References

1. Our firm gathers information about customers’ needs.

2. Our firm has insight into the buying process of customers
 Naver J.C and
3. Our firm consults customers to improve the quality of Slater S.F. (1990)
service.
4. Our firm handles customers’ complaints well.  Day, G.S. and
Wensley, R. (1988)

5. We regularly measure customer satisfaction.  Fred Langerak,

Erik Jan Hultink,
6. Our firm looks for ways to offer customers more value.
and Henry S. J.
7. Our firm treats customers as partners.
Robben (2004)

Source: Developed for the Research Study (2014)

Table 3.4 exhibits the constructs of the Customer Orientation. There are seven
constructs were used to measure the customer orientation. Those are information
about Customer needs, buying process of customers, Quality of service, customer
complaint handling, measure customer satisfaction, and ways to add more values to
customers and treat customers.

3.10.4. Competitor Orientation

According to Narver and Slater (1990) competitor orientation, as an element of

market orientation means that “a seller understands the short-term strengths and
weaknesses and long-term capabilities and strategies of both the key current and
potential competitors” (Narver and Slater, 1990). However, different organizations
seem to view competitor orientation differently and are not as concerned with long
term strategies. To measure the competitor orientation constructs found from previous
research articles and modified according to objectives of the current research. Five
point likert scale technique used (1- Strongly Disagree to 5- Strongly Agree).

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Table 3.5: Measurement Constructs of Competitor Orientation

Constructs References

1. Our firm knows whether competitors are open to complaints

by customers.
 Naver J.C
2. Our firm knows why customers continue buying from
and Slater
competitors.
S.F. (1990)
3. Our firm knows whether customers buying from competitors
are satisfied.
4. Our firm knows how competitors maintain relationships with
customers.
 Day, G.S. and
5. Our firm monitors customers buying from competitors.
Wensley,
6. Our firm knows why customers switch to competitors. R.,(1988)
7. Our firm knows which products competitors offer customers.
8. We respond rapidly to our competitors’ actions.

Source: Developed for the Research Study (2014)

Table 3.5 illustrates the measurement constructs selected to measure the Competitor
Orientation and there are eight indicators were used. Those are included about nature
of the competitors, way of competitors treat; maintain relationships with their
customers, which products offers to customers by the competitors and response
pattern of competitors to customer’s actions.

3.10.5. Inter Functional Coordination

Inter Functional Coordination was defined as the coordinated utilization of company

resources in creating superior value for target customers (Narver and Slater, 1990).
Then there was the concept of interdepartmental dynamics, which consists of two
dimensions: interdepartmental conflict and interdepartmental connectedness (Kohli
and Jaworski, 1990; Jaworski and Kohli, 1993). Different researchers have been
developed different constructs according to their views. Inter functional customer
calls, Functional Integration in Strategy; Information shared among functions, all
functions contributes to customer value and Share resources with other businesses are

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the main sub components of the Inter functional coordination. In questionnaire used
five point likert scale method for measure Inter Functional Coordination.

Table 3.6: Measurement Constructs of Inter Functional Coordination

Constructs References

1. Our firm’s departments coordinate their contacts with

customers.
 Naver J.C and Slater
2. Our firm’s departments jointly satisfy customers’ needs.
S.F. (1990)
3. Our firm’s departments are collectively responsible for
 Agarwal, Sanjeev,
the relationship with customers.
Krishna M. Erramilli,

4. Resources are frequently shared by different and Chekitan D. Dev,

departments. (2003).

5. Our firm’s departments take decisions that affect the

 Fred Langerak, Erik
relationship with customers collectively.
Jan Hultink, and
6. Our firm’s departments are collectively aware of the Henry S. J. Robben,
importance of the relationship with customers. (2004)

7. Our firm’s departments coordinate their activities aimed

at customers.

Source: Developed for the Research Study (2014)

Table 3.6 exhibits the measurement constructs of inter functional coordination

variable of the Market orientation. There are seven constructs were included to
measure the variable. Mainly those constructs were consisted with department
coordination, resource allocation, collectivism of the different departments, decision
making process of the departments and the way of all department thinks about
customers.

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3.10.6. Social Benefit Orientation

The social benefit achieved by a social project can be defined as the improvements
attained in the living conditions of its beneficiaries that are directly attributable to the
project (Robert Katz and Antony, 2010).

The social benefit of an economic activity to both the individual and the spillover to
third parties social benefit are the total of private benefit and any external benefits
(Glosid, 2001) all different kinds of improvements can be related to one of the three
groups of benefits shown below and measurements developed according to the three
groups of benefits.

Personal Ecological Community leve

-General cultural level -quality of the environment -Inter-family relations

-Professional level -Sanitation -community solidarity
-Self-esteem -waste management -Security and peace
condition.
Table 3.7: Measurement Constructs of Social Benefit Orientation

Item References

1. Our firm establishes policies by focusing social

responsibilities.
2. Our firm thinks social benefit as an obligation to the
society.
3. Our firm considers Ecological nature.
 Robert Katz and
4. Our firm considers basic infrastructure facilities.
Antony Page, The
5. Our firm focuses Socio-cultural and community. Role of Social
6. Our firm organizes donation programs. Enterprise (2010)

7. Our firm thinks corporate social responsibility (CSR) as an

obligation.

Source: Developed for the Research Study (2014)

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Table 3.7 present the constructs were used to measure the Social benefit orientation
which is added to the market orientation as a sub variable especially for this research
study and Social benefit is a new concept the researcher adapted to market orientation,
as a sub variable. These constructs adjusted according to the researcher’s interest
because there were no any measures of previous research studies. There are seven
constructs included in questionnaire in order to measure the variable social benefit
orientation. Those constructs represent the societal benefits that should a
manufacturing company should think to deliver superior value to the customers.

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CHAPTER 4
DATA ANALYSIS

4.1. Chapter Introduction

The purpose of this chapter to present the relevant data, collected from respondents to
find out relationship between Market Orientation and Organizational Performance.
Data presentation is based on data collected from Questionnaire based Survey
method. Further this chapter emphasizes the data analysis and presentation of
findings.

The analysis of collected data was carried out through various statistical techniques
and Structural equation modelling (SEM) is used to test the study hypotheses. A
confirmatory factor analysis (CFA) is undertaken on the data to verify the un-
dimensionality and reliability of the scale used to measure the market orientation and
organizational performance. Confirmatory factor analysis is a technique used to
estimate the measurement model. It seeks to confirm if the number of constructs and
the loadings of indicators variables on them confirm to what is expected on the basis
of the theory (Malhothra, 2010). Both Smart PLS 2.0 and SPSS (20) software
packages were used in this Study.

Further, section two of this chapter shows the demographic data analysis while
section three showing the background data analysis. Section four is the confirmatory
factor Analysis and section five describes the structural model while section six
included the hypotheses testing of the research study in detail.

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4.2. Demographic Data Analysis

Demographic data analysis is the basic data analysis technique and it help to
understand the composition of the sample. Further it shows the demographic
information of the respondents. Position of the respondents within the organization
(Owner, Manager, Partner or Director of the organization), educational level of the
respondents (Primary Level, Ordinary Level, Advanced Level or Graduate Level), age
(Less than 34 years, 35 -44 years, 45-54 years or more than 55 years) and sex (male or
female) are used to determine the nature of the respondents.

4.2.1. Position of Respondents

Table 4.1 - Demographic Data- Position of the Respondents

Frequency Percentage (%) Mean Value

Owner 52 21.7

Manager 126 52.5

Partner 50 20.8 2.09

Director 12 5.0

Total 240 100.0

Source: - Developed for the research study (2014)

Table 4.1 shows the one of the demographic data that used to identify the background
of the respondents called position of the respondent within the organization. Out of
the 240 respondents of the sample 52 respondents are owners of the business and 126
respondents are Managers while 50 respondents are partners. And also 12 respondents
are directors of a manufacturing business. The mean value of the question Position of
the respondents is taken 2.09.

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Position
5%
22%
21%
Owner
Manager
Partner
52% Director

Figure 4.1:- Demographic Data- Position of the Respondents

Source: - Developed for the Research Study (2014)

According to the figure 4.1, out of 240 respondents 52% are managers and 22% of the
respondents are owners and they have control power to maintain the business. 21% of
the respondents are partners and they are doing their business with another person. 5%
of the respondents are directors of the small and medium scale manufacturing
companies in southern province and belongs to the medium scale companies.

4.2.2. Age Composition of Sample

Table 4.2:- Demographic Data – Age Composition of Sample

Frequency Percentage (%) Mean Value

Less than 34 years 45 18.8

35 -44 101 42.1

45-54 78 32.5 2.27

More than 55 years 16 6.7

Total 240 100.0

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Source: - Developed for the Research Study (2014)

Table 4.2 shows the age composition of the respondents. Majority of the respondents
of the sample consisted with age between 35 and 44. It represents 101 respondents of
the sample. There are 45 respondents represent the age less than 34 years while 78
respondents represent the age between 45 and 54 years. And also there were 16
respondents are more than 55 years according to the analyzed data. And also mean
value of the age is2.27.

Age Composition

7% 19%

32% Less than 34 years

35 -44
45-54
42%
More than 55 years

Figure 4.2:- Demographic Data – Age Composition of Sample

Source: - Developed for the Research Study (2014)

Figure 4.2 shows the percentage of the age composition of the sample. Majority of the
Managerial level employees in the sample consist with the age between 35- 44 years
and it represent the 42% of the total respondents. 32 % of the managerial level
employees are age between 45- 54 years. There are 19 % of Managerial level
employees representing the age less than 34 years and 7% of respondents are more
than 55 years old.

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4.2.3. Gender Composition of the Sample

Table 4.3:- Demographic Data-Gender composition of the Sample

Frequency Percentage (%) Mean Value

Male 138 57.5

Female 102 42.5 1.43

Total 240 100.0

Source: - Developed for the Research Study (2014)

Table 4.3 illustrates the gender composition of the sample. Majority of the
respondents are male and it is 138 respondents out of the 240 respondents of the
sample. There are 102 female respondents included in the sample. And also it has
1.43 mean value.

Gender

43%

57% Male
Female

Figure 4.3:- Demographic Data-Gender Composition of the Sample

Source: - Developed for the Research Study (2014)

Figure 4.3 represent the graphical presentation of the gender composition of the
sample. According to the figure sample consisted with 57% of Males and 43%of
female respondents.

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4.2.4. Educational Level

Table 4.4:- Demographic Data-Education level of Respondents

Frequency Percentage (%) Mean Value

Primary Level 39 16.3

Ordinary Level 109 45.4

Advanced Level 58 24.2 2.36

Graduate Level 34 14.2

Total 240 100.0

Source: - Developed for the Research Study (2014)

Table 4.4 shows that the educational level of the respondents. According to the data
there are 39 respondents have educated up to primary level. 109 respondents are
passed ordinary level and 58 respondents have educated for Advanced level. 34
respondents are graduates out of the 240 respondents’ sample. The mean value is 2.36
for the educational level of the respondents.

Educational Level
0%
14% 16%
Primary Level
24% Ordinary Level
Advanced Level
46% Graduate Level
Other

Figure 4.4:- Demographic Data-Education level of the Respondents

Source: - Developed for the Research Study (2014)

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Figure 4.4 shows that the education level of the respondents. Majority of the
respondents have Ordinary level education it represent 46% and 16% of the
respondents have primary educational level and 24% of respondents have advanced
level education. And also results show that 14% of respondents of the sample are
graduates.

4.3. Background Data Analysis

Background data represent the background information about the selected small and
medium scale manufacturing organizations, the respondents are working. There are
three information were considered and those are line of the business (Sole Proprietor,
Family, Partnership, Private Company, Public Company or Joint Venture), main
production of the business (Food, Garment, Footwear, Plastic or Machinery) and
established year of the business (Before 1980, In between 1981 and 1990, In between
1991 and 2000, In between 2001 and 2010 or After 2011).

4.3.1. Line of the Business

Table 4.5:- Background Data – Line of the Business

Frequency Percentage (%) Mean Value

Sole Proprietor 39 16.3

Family 115 47.9

Partnership 70 29.2
2.30
Private Company 8 3.3
Public Company 5 2.1
Joint Venture 3 1.3
Total 240 100.0

Source: - Developed for the Research Study (2014)

Table 4.5 shows that the background information of the manufacturing organization,
line of the business. Out of 240 respondents 39 respondents are working in sole
proprietor business. 115 respondents are worked in family business while 70

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respondents work in partnership business. According to the data table majority of the
respondents are working in family business and minimum respondents are working in
joint venture business. Further line of the business has 2.3 mean value.

Line of Business
3% 2% 2%
16% Sole Propreator
29% Family
Partnership
48% Private Company
Publc Company
Joint Venture

Figure 4.5:- Line of the Business

Source: - Developed for the Research Study (2014)

Figure 4.5 represent the percentage of the composition of business line. 48% of the
respondents are working in family business and 29% of respondents represent the
partnership while 16% of respondents are working in sole proprietor businesses. The
respondents work in private company, public company and join venture has taken less
than 5% of the total respondents.

4.3.2. Main Production

Table 4.6:- Background Data - Main Production

Frequency Percentage (%) Mean Value

Food 47 19.6
Garment 77 32.1
Footwear 46 19.2
Plastic 69 28.8 2.59

Machinery 1 0.4
Total 240 100.0

Source: - Developed for the Research Study (2014)

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Table 4.6 shows that another background information of the company called main
production. 47 respondents are working in food manufacturing companies located in
southern province while 77 respondents are from the Garment manufacturing
organizations. 46 respondents represent the footwear manufacturing business and 69
respondents are representing plastic manufacturing business. Main Production has
taken a 2.59 mean value.

Production

0%
20%
29%
Food
Garment
Footwear
32%
19% Plastic
Machinary

Figure 4.6:-Background Data - Main Production

Source: - Developed for the Research Study (2014)
Figure 4.6 exhibits the percentage values of main production of the selected
manufacturing organizations. According to the data 20% of the small and medium
scale organizations of the respondents belong to the organizations is produced food.
Majority of the small and medium scale manufacturing firms are produced Garments
and represent 32%. And also 19% of the respondents are working in footwear
manufacturing business while 29% of the respondents are working in plastic
manufacturing small and medium businesses.

4.3.2. Established Year of the Business

Table 4.7:- Background Data: Established Year of the Business

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Frequency Percentage (%) Mean Value

Before 1980 45 18.8
In between 1981 and 1990 74 30.8
In between 1991 and 2000 25 10.4 2.93

In between 2001 and 2010 44 18.3

After 2011 52 21.7
Total 240 100.0

Source: - Developed for the Research Study (2014)

Table 4.7 shows that the established year of the selected small and medium
manufacturing organizations. Out of 240 respondents 74 respondents are working in
business that have established in between 1981 and 1990. There are 45 respondents
work in the business which have established before 1980 while 25 respondents are
working in the businesses which have established in between years 1991 and 2000.
And also 44 respondents are consisting with the businesses that established in years
between 2001 and 2010. There are 52 respondents worked after 2011 established
small and medium scale manufacturing businesses. And also mean value of the
question is taken 2.93.

Established Year of the Business

Before 1980
22% 19%
In between 1981 and
1990
18% In between 1991 and
31% 2000
10% In between 2001 and
2010
After 2011

Figure 4.7: - Established Year of the Business

Source: - Developed for the Research Study (2014)

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Figure 4.7 shows that the established years of the small and medium manufacturing
business that the respondents are working. Majority (22%) of the respondents work in
small and medium manufacturing business organizations which have established after
2011 and 18% respondents from the businesses that have established in years between
2001 and 2010. There are 19 % respondents are working in before 1980 established
small and medium manufacturing businesses while 10% respondents work in small
and medium businesses established in between 1991 and 2000. And also 31%
respondents work in the manufacturing businesses that have established in year
between 1981 and 1990.

4.4. Measurement Model

4.4.1. Confirmatory Factor Analysis (CFA)

A confirmatory factor Analysis is technique used to estimate the measurement model.

It seeks to confirm if the number of constructs and the loadings of indicators variables
on them confirm to what is expected on the basis of the theory (Malhotra, 2010).

Subsequently, a confirmatory factor analysis (CFA), using Structural Equation

Modelling (SEM) and applying the maximum likelihood method, was used to test the
reliability and validity of the dimensions suggested by the Confirmatory Factor
Analysis (CFA) (Hair et al., 1998; Anderson and Gerbing, 1988).

The results consistently supported the factor structure for all three constructs
determined through the CFA.

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Table 4.8:- Confirmatory Factor Analysis (Original Model)

Constructs/ Indicators Standardized Composite

Loadings/ Reliability/
t values AVE
Customer Orientation 0.66/0.22
 Our firm gathers information about customers’ needs. 0.319/(1.2)*
 Our firm has insight into the buying process of customers. 0.512/(2.0)
 Our firm consults customers to improve the quality of
service. 0.522/(1.8)
 Our firm handles customers’ complaints well. 0.427/(2.0)*
 We regularly measure customer satisfaction. 0.597/(3.2)
 Our firm looks for ways to offer customers more value. 0.396/(1.8)*
 Our firm treats customers as partners. 0.451/(1.7)*

Competitor Orientation 0.72/0.29

 Our firm knows whether competitors are open to complaints
by customers. 0.350/(1.4)*
 Our firm knows why customers continue buying from
competitors. 0.458/(2.2)*
 Our firm knows whether customers buying from
competitors are satisfied. 0.568/(2.2)
 Our firm knows how competitors maintain relationships
with customers. 0.381/(1.0)*
 Our firm monitors customers buying from competitors. 0.578/(2.8)
 Our firm knows why customers switch to competitors. 0.666/(3.2)
 Our firm knows which products competitors offer
customers. 0.477/(1.2)*
 We respond rapidly to our competitor’s actions. 0.440/(2.1)*

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Inter Functional Coordination 0.52/0.18

 Our firm’s departments coordinate their contacts with
customers. 0.541/(1.8)
 Our firm’s departments jointly satisfy customers’ needs. 0.089/(0.32)*
 Our firm’s departments are collectively responsible for the
relationship with customers. 0.080/(0.40)*
 Resources are frequently shared by different departments. 0.615/(2.44)
 Our firm’s departments take decisions that affect the
relationship with customers collectively. 0.305/(1.1)*
 Our firm’s departments are collectively aware of the
importance of the relationship with customers. 0.433/(1.42)*
 Our firm’s departments coordinate their activities aimed at
customers. 0.746/(3.42)
Social Benefit Orientation 0.68/0.25
 Our firm establishes policies by focusing social
responsibilities. 0.611/(3.0)
 Our firm thinks social benefit as an obligation to the society. 0.373 /(1.72)*
 Our firm considers Ecological nature. 0.467/(1.7)*
 Our firm considers basic infrastructure facilities. 0.536/ (2.1)
 Our firm focuses Socio-cultural and community. 0.264/(1.0)*
 Our firm organizes donation programs. 0.417/(1.7)*
 Our firm thinks corporate social responsibility (CSR) as an
obligation of the company. 0.698/(3.2)
Organizational Performance 0.69/0.28
 Sales revenue Growth is high 0.626/(3.71)
 Market share gain is high 0.260/(0.74)*
 Profitability is high 0.470/(1.7)*
 Have Successful Innovation 0.479/(1.7)*
 High Customer Satisfaction 0.573/(2.0)
 High Employee Satisfaction 0.584/(2.42)

Source: Developed for the research study (2014)

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Table 4.8 shows the Confirmatory factor analysis (CFA) and it is conducted by using
the Smart PLS software and mainly computed standardized loading values, t values,
Composite Reliability and Average Variance Extracted (AVE) (Appendix 4 and 5).

According to the measurement model it shows satisfactory fit. However, modification

indices and standardized residuals indicated that a more parsimonious model could be
achieved (Anderson and Gerbing, 1988). Therefore it was decided to delete some
constructs which the constructs with multiple loadings and correlated measurement
errors were deleted.

Customer Orientation:

According to the confirmatory factor analysis (CFA) table (Table 4.8), the Composite
Reliability and AVE value of the Customer Orientation has taken 0.66 and 0.22
respectively. There are seven constructs represent the variable Customer Orientation.
First item is “our firm gathers information about customers’ needs” and the
standardized loading value and t value are 0.319 and 1.2 respectively. The
standardized loading vale and t value of the item “Our firm has insight into the
buying process of customers” is taken .512 and 2.0 while the statement “Our firm
consults customers to improve the quality of service” values are 0.522 and 1.8. The
standardized loading value and t value for the item “Our firm handles customers’
complaints well” is 0.427 and 2.0. And also next item is “We regularly measure
Customer Satisfaction” and loading value and t- value has taken 0.597 and 3.2.
Another construct of the Customer Orientation is “Our firm looks for ways to offer
customers more value” and this statement has 0.396 loading value and 1.8 t- value.
The last item is “Our firm treats customers as partners” and standardized loading
value and t values of the item is .451 and 1.7 respectively.

Based on the results of the CFA it was decided to delete four constructs and to retain
three constructs. The constructs that were deleted were the following: “Our firm
gathers information about customers’ needs” (β= 0.319; t= 1.2); “Our firm handles
customer’s complains well” (β= 0.427; t= 2.0); “Our firm looks for ways to offer
customers more value” (β= 0.396; t= 1.8) and “Our firm treats customers as
partners” (β= 0.451; t= 1.7). These four constructs were deleted because they had
factor loadings below 0.5 and somewhat low t-values, thus falling below the

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stipulated thresholds (Nunnally and Bernstein, 1994). The initial Composite

Reliability of Customer Orientation, before deleting any constructs, was 0.66, and the
average variance extracted (AVE) was 0.22. These low values indicate that the
measurement model should be re-specified. The following three constructs were
retained: “Our firm has insight into the buying process of customers” (β= 0.512; t=
2.0); “Our firm consults customers to improve the quality of service” (β= 0.522; t=
1.8) and “We regularly measure customer satisfaction (β= 0.597; t= 3.2).

Competitor Orientation:

According to the confirmatory factor analysis table (Table 4.8), the composite
reliability and AVE value of the competitor orientation has taken 0.72 and 0.29
respectively. There are eight constructs represent the concept Competitor Orientation.
First item is “Our firm knows whether competitors are open to complaints by
customers” and the standardized loading value and t values are 0.351 and 1.4. The
standardized loading vale and t value of the item “Our firm knows why customers
continue buying from competitors” is taken .458 and 2.2 while the statement “Our
firm knows whether customers buying from competitors are satisfied” values are
0.568 and 2.2. The standardized loading value and t value for the item “Our firm
knows how competitors maintain relationships with customers” is 0.381 and 1.0.
And also next item is “Our firm monitors customers buying from competitors” and
loading value and t values has taken 0.578 and 2.8. Another construct of the
competitor orientation is “Our firm knows why customers switch to competitors” and
this statement has 0.666 loading value and 3.2 t value. The next construct is “Our
firm knows which products competitors offer customers” and loading and t values are
0.477 and 1.2 respectively. The last item is “We respond rapidly to our competitor’s
actions” and standardized loading value and t values of the item is .440 and 2.1
respectively.

Based on the results of the CFA it was decided to delete five constructs and to retain
three constructs. The constructs that were deleted were the following: “Our firm
knows whether competitors are open to complaints by customers” (β= 0.350; t= 1.4);
“Our firm knows why customers continue buying from competitors” (β= 0.458; t=
2.2); “Our firm knows how competitors maintain relationships with customers” (β=

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0.381; t= 1.0); “Our firm knows which products competitors offer customers” (β=
0.477; t= 1.2) and “We respond rapidly to our competitor’s actions” (β= 0.440; t=
2.2). These five constructs were deleted because they had factor loadings below 0.5
and somewhat low t-values, thus falling below the stipulated thresholds (Nunnally and
Bernstein 1994). The initial composite reliability of Competitor Orientation, before
deleting any constructs, was 0.72, and the average variance extracted was 0.29. These
low values indicate that the measurement model should be re-specified. The following
three constructs were retained: “Our firm knows whether customers buying from
competitors are satisfied” (β= 0.568; t= 2.2); “Our firm monitors customers buying
from competitors” (β= 0.578; t= 2.8) and “Our firm knows why customers switch to
competitors” (β= 0.666; t= 3.2).

Inter Functional Coordination:

According to the confirmatory factor analysis original table (Table 4.8), the composite
reliability and AVE value of the variable inter functional coordination has taken 0.52
and 0.18 respectively. There are seven constructs represent the concept inter
functional coordination. First item is “Our firm’s departments coordinate their
contacts with customers” and the standardized loading value and t values are 0.541
and 1.8. The standardized loading vale and t value of the item “Our firm’s
departments jointly satisfy customers’ needs” is taken .089 and 0.32 while the
statement “Our firm’s departments are collectively responsible for the relationship
with customers” values are 0.080 and 0.4 The standardized loading value and t value
for the item “Resources are frequently shared by different departments” is 0.615 and
2.44. And also next item is “Our firm’s departments take decisions that affect the
relationship with customers collectively” and loading value and t value have taken
0.305 and 1.1. Another construct of inter functional coordination is “Our firm’s
departments are collectively aware of the importance of the relationship with
customers” and this statement has 0.433 loading value and 1.42 t value. The last item
is “Our firm’s departments coordinate their activities aimed at customers” and its
standardized loading value and t value is .746 and 3.42 respectively.

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Based on the results of the CFA it was decided to delete four constructs and to retain
three constructs. The constructs that were deleted were the following: “Our firm’s
departments jointly satisfy customers’ needs” (β= 0.089; t= 0.32); “Our firm’s
departments are collectively responsible for the relationship with customers” (β=
0.080; t= 0.40);“Our firm’s departments take decisions that affect the relationship
with customers collectively” (β= 0.305; t= 1.1) and “Our firm’s departments are
collectively aware of the importance of the relationship with customers” (β= 0.433; t=
1.42). These four constructs were deleted because they had factor loadings below 0.5
and somewhat low t-values, thus falling below the stipulated thresholds (Nunnally and
Bernstein 1994). The initial composite reliability of Inter Functional Coordination,
before deleting any constructs, was 0.52, and the average variance extracted was 0.18.
These low values indicate that the measurement model should be re-specified. The
following three constructs were retained: “Our firm’s departments coordinate their
contacts with customers” (β= 0.541; t= 1.8); “Resources are frequently shared by
different departments” (β= 0.615; t= 2.44) and “Our firm’s departments coordinate
their activities aimed at customers” (β= 0.746; t= 3.42).

Social Benefit Orientation:

According to the confirmatory factor analysis table (Table 4.8), the composite
reliability and AVE value of the variable Social benefit orientation has taken 0.68 and
0.25 respectively. There are seven constructs represent the variable social benefit
orientation. First item is “Our firm establishes policies by focusing social
responsibilities” and the standardized loading value and t values are 0.611 and 3.0.
The standardized loading vale and t value of the item “Our firm thinks social benefit
as an obligation to the society” is taken .373 and 1.72 while the statement “Our firm
considers Ecological nature” values are 0.467 and 1.7 The standardized loading value
and t value for the item “Our firm considers basic infrastructure facilities” is 0.536
and 2.1. And also next item is “Our firm focuses Socio-cultural and community” and
loading value and t values has taken 0.264 and 1.0. Another construct of inter
functional coordination is “Our firm organizes donation programs” and this statement
has 0.417 loading value and 1.7 t value. The last item is “Our firm think corporate
social responsibility as an obligation” and standardized loading value and t values of
the item is .698 and 3.2 respectively.

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Based on the results of the CFA it was decided to delete four constructs and to retain
three constructs. The constructs that were deleted were the following: “Our firm
thinks social benefit as an obligation to the society” (β= 0.373; t= 1.72); “Our firm
considers Ecological nature” (β= 0.467; t= 1.7); “Our firm focuses Socio-cultural
and community” (β= 0.264; t= 1.0) and “Our firm organizes donation programs” (β=
0.417; t= 1.7). These four constructs were deleted because they had factor loadings
below 0.5 and somewhat low t-values, thus falling below the stipulated thresholds
(Nunnally and Bernstein 1994). The initial composite reliability of Social benefit
Orientation, before deleting any constructs, was 0.68, and the average variance
extracted was 0.25. These low values indicate that the measurement model should be
re-specified. The following three constructs were retained: “Our firm establishes
policies by focusing social responsibilities” (β= 0.611; t= 3.0); “Our firm considers
basic infrastructure facilities” (β= 0.536; t= 2.1) and “Our firm thinks corporate
social responsibility (CSR) as an obligation of the company” (β= 0.698; t= 3.2).

Organizational performance:

According to the confirmatory factor analysis table (Table 4.8), the composite
reliability and AVE value of the variable organizational performance has taken 0.69
and 0.28 respectively. There are six constructs are representing the variable
organizational performance and respondents are given answers by comparing their
competitors. First item is “Sales revenue Growth is High” and the standardized
loading value and t- value are 0.626 and 3.71. The standardized loading vale and t-
value of the item “Market share gain is high” is taken .260 and 0.74 while the
statement “Profitability is High” values are 0.470 and 1.7. The standardized loading
value and t value for the item “Have Successful Innovation” is 0.479 and 1.7. And
also next item is “High Customer Satisfaction” and loading value and t value has
taken 0.573 and 2.0. The last item is “High Employee Satisfaction” and standardized
loading value and t value of the item are .584 and 2.42 respectively.

Based on the results of the CFA it was decided to delete three constructs and to retain
three constructs. The constructs that were deleted were the following: “Market share
gain is high” (β= 0.208; t= 0.74); “Profitability is high” (β= 0.470; t= 1.7) and “Have
Successful Innovation” (β= 0.479; t= 1.7).

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These three constructs were deleted because they had factor loadings below 0.5 and
somewhat low t-values, thus falling below the stipulated thresholds (Nunnally and
Bernstein, 1994). The initial composite reliability of Organizational Performance,
before deleting any constructs, was 0.69, and the average variance extracted was 0.28.
These low values indicate that the measurement model should be re-specified. The
following three constructs were retained: “Sales revenue growth is high” (β= 0.626;
t= 3.71); “High Successful Innovation” (β= 0.573; t= 2.0) and “High Employee
Satisfaction” (β= 0.584; t= 2.42).

Standardized loading values and t values indicate that extent of item match to measure
the variables. Professional scholars like Baggozi and Yi (1988) accepted that the
standardized loading value should be greater than 0.5 and t values should be more
than 2.0 in order to match an item with the variable. Based on the theory the
researcher has deleted all the constructs from the confirmatory factor analysis initial
model which are less than loading value and 0.5 and less than t value 2.0.

Based on the accepted criteria the researcher deleted four constructs (our firm gathers
information about customers’ needs (0.319/1.2), our firm handles customers’
complaints well (0.427/2.0), our firm looks for ways to offer customers more value
(0.396/1.8) and our firm treats customers as partners (0.451/1.7)} from the Customer
Orientation, five constructs {Our firm knows whether competitors are open to
complaints by customers (0.350/1.4), Our firm knows why customers continue buying
from competitors (0.458/2.2), Our firm knows how competitors maintain relationships
with customers (0.381/1.0), Our firm knows which products competitors offer
customers (0.477/1.2) and we respond rapidly to our competitor’s actions (0.470/2.2)}
from Competitor Orientation, four constructs {Our firm’s departments jointly satisfy
customers’ needs (0.089/0.32), Our firm’s departments are collectively responsible for
the relationship with customers (0.08/0.4), Our firm’s departments take decisions that
affect the relationship with customers collectively (0.305/1.1) and Our firm’s
departments are collectively aware of the importance of the relationship with
customers (0.433/1.42)} from Inter functional Coordination, four constructs {Our
firm thinks social benefit as an obligation to the society (0.373/1.72), Our firm
considers Ecological nature (0.467/1.7), Our firm focuses Socio-cultural and
community (0.264/1.0) and Our firm organizes donation programs (0.417/1.7)} from

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Social benefit orientation and three constructs {Market share gain is high
(0.260/0.74), Profitability is High (0.570/2.0) and High Customer Satisfaction
(0.573/2.0)} from Organizational Performance due to the standardized loading value
less than 0.5 and t values less than 2.0.

Table 4.9 shows that the confirmatory factor analysis final model (See Appendix 6
and 7 for more details) developed after deleting all the constructs which are
standardized loading value less than 05 and t value less than 2.0.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Table 4.9:- Confirmatory Factor Analysis (Final Model)

Constructs /Indicators Standardised Composite

Loading/ Reliability/
( t- values) AVE
Market Orientation
Customer Orientation 0.71/(0.56)

 Our firm has insight into the buying process of customers. 0.733/(4.1)
 Our firm consults customers to improve the quality of service. 0.518/(2.2)
 We regularly measure customer satisfaction. 0.751/(4.3)

Competitor Orientation 0.73/(0.58)

 Our firm knows whether customers buying from competitors 0.752/(5.9)

are satisfied.
 Our firm monitors customers buying from competitors. 0.536/(2.9)
 Our firm knows why customers switch to competitors. 0.759/(4.6)

Inter functional Coordination 0.75/(0.61)

 Our firm’s departments coordinate their contacts with

customers. 0.540/(2.8)
 Resources are frequently shared by different departments. 0.691/(2.9)
 Our firm’s departments coordinate their activities aimed at
customers. 0.861/(5.3)

Social Benefit Orientation 0.72/(0.57)

 Our firm establishes policies by focusing social

responsibilities. 0.805/(10.6)
 Our firm considers basic infrastructure facilities. 0.515/(3.1)
 Our firm think corporate social responsibility as an obligation 0.702/(6.6)

Organizational Performance 0.7/(0.54)

 Sales revenue Growth is High 0.758/(7.03)

 Have Successful Innovation 0.605/(3.6)
 High Employee Satisfaction 0.616/(3.2)

Source: Developed for the Research Study (2014)

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Table 4.9 shows that the final confirmatory factor analysis (Measurement
Model).After deleting constructs less loading values the fit of the respecified model
improved to X2 = 331.67 with degree of freedom = 10 (Table 4.10). Three different
measures of internal consistency or reliability were computed and two are presented
in table 4.10. First, all composite reliabilities are .7 or higher, which indicates that
internal consistency among the measures far above the recommended level of .60
(Bagozzi and Yi, 1988). Second, average variance extracted ranged from 0.54 to 0.61.
Bagozzi and Yi (1988) suggested a target level is more than 0.50.

Customer Orientation:

According to the confirmatory factor analysis final model table (Table 4.9), the
Composite Reliability and Average Variance Extracted (AVE) value of the customer
orientation has taken 0.71 and 0.56 respectively. There are there constructs represent
the variable Customer Orientation. First item is “Our firm has insight into the buying
process of customers” and its standardized loading value and t values are 0.733 and
4.1. The standardized loading vale and t value of the item “Our firm consults
customers to improve the quality of service” is taken 0.518 and 2.2.The last item is
“We regularly measure customer satisfaction” and its standardized loading value and
t values of the item are 0.751 and 4.3 respectively.

Competitor Orientation:

According to the confirmatory factor analysis final model table (Table 4.9), the
composite reliability and AVE value of the Competitor Orientation has taken 0.73
and 0.58 respectively. There are there constructs represent the variable Competitor
orientation. First item is the “Our firm knows whether customers buying from
competitors are satisfied” and its standardized loading value and t values are 0.752
and 5.9. The standardized loading vale and t value of the item “Our firm monitors
customers buying from competitors” is taken 0.536 and 2.9.The last item is “Our
firm knows why customers switch to competitors” and its standardized loading value
and t - values of the item is 0.759 and 4.6 respectively.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Inter Functional Coordination:

According to the confirmatory factor analysis final model table (Table 4.9), the
composite reliability and AVE value of the Inter Functional Coordination has taken
0.75 and 0.61 respectively. There are there constructs represent the variable Inter
Functional Coordination. First item is “Our firm’s departments coordinate their
contacts with customers” and its standardized loading value and t- values are 0.540
and 2.8. The standardized loading vale and t value of the item “Resources are
frequently shared by different departments” is taken 0.691 and 2.9.The last item is
“Our firm’s departments coordinate their activities aimed at customers” and its
standardized loading value and t values are 0.861 and 5.3 respectively.

Social Benefit Orientation:

According to the confirmatory factor analysis final model table (Table 4.9), the
composite reliability and AVE value of the Social Benefit Orientation has taken
0.720 and 0.57 respectively. There are there constructs represent the variable Social
Benefit Orientation. First item is “Our firm establishes policies by focusing social
responsibilities” and its standardized loading value and t value are 0.805 and 10.6.
The standardized loading vale and t value of the item “Our firm considers basic
infrastructure facilities” has taken 0.515 and 3.1.The last item is “Our firm think
corporate social responsibility as an obligation” and its standardized loading value
and t values are 0.702 and 6.6 respectively.

Organizational Performance:

According to the confirmatory factor analysis final model table (Table 4.9), the
composite reliability and AVE value of the Organizational Performance has taken
0.70 and 0.54 respectively. There are there constructs represent the variable
Organizational Performance. First item is “Sales revenue Growth is High” and its
standardized loading value and t value are 0.758 and 7.03. The standardized loading
vale and t value of the item “Have Successful Innovation” is taken 0.605 and 3.6.
The last item is “High Employee Satisfaction” and its standardized loading value and
t value are 0.616 and 3.2 respectively.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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4.5. Validity and Reliability of the Measures

When undertaking any form of research is important to ensure the reliability and
validity of research findings. This can be achieved by both emphasizing the adequacy
of the research design and quality of the measurement procedures employed. In order
to validate the instrument, this research study performed validity and reliability tests,
examine correction coefficients between the realized constructs.

Validity is defined as how much any measuring instrument measures what it is

intended to measure. Bryman and Bell (2003) also suggested that the important issue
of measurement validity relates to whether measures of concepts really measure the
concept. “Validity refers to the issue of whether an indicator (or set of indicators) that
is devised to gauge a concept really measures that concept. Several ways of
establishing validity are: face validity; concurrent validity; predictive validity;
construct validity; and convergent validity.” (Bryman and Bell, 2003, p 77).

Reliability is defined as be fundamentally concerned with issues of consistency of

measures. (Bryman and Bell, 2003) There are three prominent factors related to
considering whether a measure is reliability: stability, internal reliability and inter-
observer consistency. (Ibid). In this study, internal reliability has been considered.
Bryman and Bell (2003) suggested that a multiple-item measure in which each
answers to each questions are aggregated to form an overall score, we need to be sure
that all our indicators are related to each other.

All the reliability values of each construct are greater than the benchmark of 0.6
which recommended by Baggozzi and Yi (1988) as good indicator of reliability.

Table 4.10: - Assessment of Reliability

Research Variable Number of constructs Reliability

Organizational Performance 3 0.7
Customer Orientation 3 0.71
Competitor Orientation 3 0.73
Inter Functional Coordination 3 0.75
Social Benefit Orientation 3 0.72

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Table 4.10 shows the reliability of the constructs. According to the table 4.10, there
are three constructs represent the organizational performance and reliability value is
0.7. There are three constructs used to measure the Customer orientation and its
reliability value is 0.71 and three constructs were used to measure the Competitor
Orientation and reliability is 0.73. Inter functional Coordination consisted with three
constructs and its reliability value is 0.75 while there are three constructs represent
the Social Benefit Orientation and 0.72 is the reliability value of those three constructs
. All the reliability values are more than benchmark of reliability 0.6 recommended by
the Baggozzi and Yi (1988) and it indicate that the constructs used in measurement
procedures are in high quality.

Table 4.11:- Results of PLS Path Model Estimation

Performance
Estimate ( t-Values)
Path
Customer Orientation -0.207(1.8*)
Competitor Orientation 0.159(1.4*)
Inter Functional Coordination 0.402(2.9*)
Social Benefit Orientation 0.569(5.2*)
Model goodness- of fit statistics
X2 (df) 331.67(10)
P value 0.00
R2 Performance 57.9%
*Ρ< 0.05

Source: Developed for the Research Study (2014)

Table 4.11 shows that the path model estimation. Table shows that the correlation
values for developed for paths. Correlation value for path customer orientation and
organizational performance has taken -0.207 and its t value is 1.8. The correlation
value for path competitor orientation and organizational performance is 0.159 and its t
value is 1.4 while path inter functional coordination and organizational performance
has correlation value 0.402 and its t value is 2.9. Correlation value and t value of the
path social benefit orientation have taken 0.569 and 5.2 respectively. All the path

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model correlations values and t values are subjected to the 5% significant level.
Further, according to the table, R square value represents the coefficient of
determination. The total impacts of dependent variable on independent variables are
determined by the R2 value (Malhotra, 2010). According to the table the value is 0.579
(57.9%) and professional scholars (e.g.; Baggozi, 1985; Gerson, 1990) accepted that
R2 value should be greater than 25% for model fitness. So therefore in this research
study there is a 57.9% total impact of dependent variable on independent variables. It
reveals that measurement model of the research study fit with the requirement of the
research study.

Table 4.12:- Discriminant Validity of the Constructs

1 2 3 4 5
Customer Orientation 0.56
Competitor Orientation 0.22 0.58
Inter Functional Coordination 0.26 0.39 0.61
Social Benefit Orientation 0.27 0.28 0.27 0.57
Organizational Performance 0.38 0.29 0.19 0.22 0.54

Source: Developed for the Research Study (2014)

Table 4.12 exhibits the discriminant validity of the Constructs. The discriminant
validity of the latent variables was tested using the approach suggested by Fornell and
Larcker’s (1981). The diagonals in table 4.12 show the AVE extracted from each
construct reported in table 4.10. The other entities represent the square of correlations
among the constructs. It can be seen that no non diagonal entry exceeds the diagonals
of specific construct. In sum, the measures of the proposed constructs achieve
satisfactory reliability, convergent and discriminant validity.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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4.6. Structural Model

Market Orientation

Customer
Orientation

Competitor
Orientation

β= 0.402; t= 2.9; ρ< 0.01 Organizational

Inter Functional Performance
Coordination

Social Benefit
Orientation

Figure 4.8:- Structural Model

Source: - Developed for the Research Study (2014)

Figure 4.8 Shows that the Structural model with analyzed data and hypotheses testing
results. According to the model, relationship between customer orientation and
organizational performance confirms negative relationship in small and medium
manufacturing organizations while relationship between competitor orientation and
organizational performance, relationship between inter functional coordination and
organizational performance and relationship between social benefit orientation and
organizational performance confirms the positive relationships.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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4.7. Hypotheses Testing

The Structural Equation Modeling (SEM) methodology was employed to test the
hypotheses. SEM is a procedure for estimating a series of dependence relationship
among a set of concepts represented by multiple measured variables and incorporated
in to an integrated model (Malhotra, 2010). Most of the path coefficients are
significant at the 99% confidence Level (Significance level 0.01%) providing strong
support for all the hypothesized relationships.

4.7.1. Customer Orientation and Organizational Performance

H1 states that there is a positive relationship between customer Orientation and

Organizational Performance. The hypothesis is not supported by the data (β= - 0.207;
t= 1.8; ρ< 0.01). Results show that there is a negative relationship between Customer
orientation and Organizational performance.

4.7.2. Competitor Orientation and Organizational Performance

H2 predicted that there is a positive relationship between Competitor orientation and

organizational performance. This prediction is supported by the analyzed data (β=
0.159; t= 1.4; ρ < 0.01). Results show that there is a positive relationship between
Competitor Orientation and organizational Performance.

4.7.3. Inter functional Coordination and Organizational Performance

H3 postulates that there is a positive relationship between Inter functional

coordination and organizational performance. This hypothesis supported by the data
(β= 0.402; t= 2.9; ρ< 0.01). Results exhibits that there is a positive relationship
between Inter functional Coordination and organizational performance.

4.7.4. Social Benefit Orientation and Organizational Performance

H4 states that Social benefit Orientation is positively related to the organizational

performance. The hypothesis is supported by the data (β= 0.569; t= 5.2; ρ< 0.01).
Analysis shows that there is a positive relationship between Social benefit Orientation
and organizational Performance.

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Table 4.13:- Summary of the Hypotheses Testing

Hypothesis Hypothesis number

and Direction
Customer Orientation and Organizational Performance + H1 Not Supported
Competitor Orientation and Organizational Performance + H2 Supported
Inter Functional Coordination and Organizational Performance + H3 Supported
Social Benefit Orientation and Organizational Performance + H4 Supported

Source: Developed for the Research Study (2014)

Table 4.13 shows that the summary of the hypotheses testing. Right hand column
shows the direction of the hypothesized relationship between independent variable
and dependent variable and whether the hypothesized relationships are supported by
the findings or not. First, developed hypothesis namely (+ H1) there is a positive
relationship between Customer Orientation and Organizational Performance not
supported by the data. Second, developed hypotheses namely there is a positive
relationship Competitor Orientation and Organizational Performance (+H2), there is a
positive relationship Inter Functional Coordination and Organizational Performance
(+H3) and there is a positive relationship Social Benefit Orientation and
Organizational Performance ( +H4 ) are supported by the data.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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CHAPTER 5
DISCUSSION AND CONCLUSION

5.1. Chapter Introduction

This is the final chapter of the research study and it deals with the discussion and
conclusion based on the analysis of the previous chapter four.

Second section of this chapter describes the summary of the research study while
section three explains findings of the research study in detail. Section four describes
the contribution of the research study for managers, academics and policy makers.
Further this section describes the new model development (NEWMAKTOR model) as
well. The fifth section of this chapter describes the limitations and future research
implications in detail.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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5.2. Summary of the Study

The main objective of the research study was to examine the relationship between
Market Orientation and Organizational Performance in Sri Lankan small and medium
scale manufacturing organizations. Based on the literature review developed four
hypotheses that can be tested in this research study. Descriptive research design has
undertaken and 240 respondents were in the sample. After developing the
questionnaire, conducted a pilot test in order to measure the accuracy of the
questionnaire and after making adjustments distributed for data collection purposes.
310 questionnaires were distributed and 255 questionnaires were returned. There were
only 242 completed questionnaires. Data was analyzed by using both smart PLS and
SPPS software and Demographic data analysis, Confirmatory Factor Analysis and
Structural Equation Modeling are used to analyze the data collected from the
respondents. Based on the analyzed results from this research study sub variables of
market orientation (Competitor orientation, inter functional coordination and social
benefit orientation) are strongly correlated with organizational performance while
customer orientation is not correlated with the organizational performance in small
and medium scale manufacturing industry in Sri Lanka.

Conclusion and the managerial and theoretical implications ware made based on the
major findings and discussed the importance of the customer orientation for an
organization in detail. The research study contributes to the managers for making and
implementing market oriented strategies specially highlighting the importance of the
Customer Orientation. Academics are used this research findings for future research
studies and development of market oriented theories while policy makers can use this
research findings in different ways to make policies in small and medium scale
manufacturing organizations in Sri Lanka. Major limitations are sample size is not
enough to draw a conclusion to the entire population and context limitation. Future
researchers can apply NEWMAKTOR model to measure the market orientation in
different contexts.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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5.3. Findings of the study

Market orientation scale was sub divided into four scales namely Customer
Orientation, Competitor Orientation, Inter Functional Coordination and Social Benefit
Orientation. First, the respondents were asked to provide information concerning their
perception towards customer orientation practices in their firm. The results show that
the respondent judged Customer Orientation as not correlated with the Organizational
Performance in small and medium manufacturing industry. These results suggest that
most firms in the study sample have not orientation towards customers. The main
reason might be the small and medium scale organizations are targeting to produce
the products based on the availability of resources within the organization. In some
situation organizations could not be able to achieve the aimed performance due to
lack of identification of customer needs and wants. Therefore managers of those
organizations should think about the customer oriented strategies while concerning
the resources available in the organizations for the production process. Specifically,
these results suggest that marketing managers should endeavor to collect, to analyze,
to disseminate, and to act on information about the needs and wants of consumers.
This underscores the need for manufacturing organizations to have an effective and
efficient market information system.

Second, results show that the Competitor Orientation is positively correlated with the
organizational performance. There are many small and medium scale manufacturing
organizations within the industry that produce the same products and cater the same
customer group and therefore competition is high among those businesses due to these
reasons. Most of the small and medium scale manufacturing organization’s
managerial level employees have realized that the importance of the competitor
orientation and they are practicing the relevant strategies to achieve the goals of the
organization.

Third, results are showing that inter functional coordination is positively correlated
with the performance of the organization. There are many departments or section can
be seen in a business organization. Each department or section should work
collectively in order to achieve the goals and objectives of the organization. By
accepting the value of customers, firms go out of their way to coordinate and integrate
business functions in order to serve target market needs. Most of the organizations

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within the sample practice inter coordination of the different departments although
difficult to see separate departments in the small and medium scale manufacturing
organizations in southern province.

Finally, the results show that Social Benefit Orientation is positively correlated with
the Organizational Performance. Although small and medium scale manufacturers do
not have enough capabilities to work by focusing on social benefits they have realized
the importance of the social benefit orientation. Most of the customers expect superior
value from the products and social benefits. Therefore each and every organization
should concern about the social benefit oriented activities when they are going to
achieve goals and objectives of the organizations.

By not having their objectives driven by customer orientation, most of the firms
frequently gauge customer orientation with a view of paying close attention to
customer service. This in essence provides competitive advantages based on proper
understanding of customer needs.

As a whole, the findings of the study add new understanding to the literature on
market orientation and organizational performance in the Sri Lankan context. The
sample of this study is confined to the manufacturing sector and therefore future
studies should examine whether the relationships reported here differ across
industries. The results of this study provide valuable information for managerial
decision making.

5.4. Contribution of the Study

5.4.1. Managerial Implications

There are number of implications for practicing managers. The instruments used in
the research study are available as a check list for management to measure their own
market orientation and organizational performance. The findings of the research study
are of particular importance to managers who are responsible for developing and
implementing strategies. The positive relationship between competitor orientations,
inter functional coordination, social benefit orientation and organizational
performance are not only reflected in superior market performance but has also been

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linked to other factors that are beneficial to the customers, the firm and its employees
and society in general.
It is important to suggest that the Sri Lankan small and medium scale manufacturing
organizational environment represent the new empirical context that allows for an in
depth inquiry of the link between market orientation and organizational performance.

The results of the research study are not only relevant to academicians. From the point
of view of a marketing practitioner engaging in manufacturing, the results from this
research study can be helpful. Up to now no serious research study has been
conducted in Sri Lankan business context about the best strategy despite the
phenomenal growth of many Sri Lankan manufacturing organizations. Further
According to the results Customer Orientation has negative relationship with
organizational performance. Therefore in order to be a market oriented small and
medium scale manufacturing organization there should be willingness to invest in
relationship building, identification of customer needs and the expenses of the
customer orientation. “Success of a business depends on the customers” This
statement should sit at the heart of the marketing thinking while managers having the
responsibility to handle the customer oriented strategies.

5.4.2. Theoretical Implications

This research study has contributed both for theory development and for practicing
managers. The main contribution to the theory development involves introducing a
new variable to the market orientation called “Social Benefits Orientation”. Many
researches have been conducted researches about the market orientation by only
considering the three sub variables (Customer Orientation, Competitor Orientation
and Inter Functional Coordination) which were developed by Slater and Naver (1990).
They have developed this theory (MKTOR model) after conducting many
researches.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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Figure 5.1:- Slater and Naver’s view of Market Orientation

Source: - Narver and Slater (1990)

Figure 5.1 shows that the Slater and Naver point of view on Market Orientation. It
explains an organization should achieve long term profits by focusing on Customer
Orientation, Competitor Orientation and Inter Functional Coordination with in the
organization and it should be done based on the target market. In other words, an
organization should make strategies within the organization in order to focus long
term profits, by considering Customer Orientation, Competitor Orientation and Inter
Functional Coordination.

The analyzed data shows that Social benefit orientation is strongly related to the
market orientation. Based on the findings the researcher developed a theoretical
model by considering the Slater and Naver (1990) developed tri component model of
Market Orientation.

Figure 5.2 shows the developed advanced conceptualized theoretical model about
Market Orientation. Further involves the confirmation of some of the hypothesized
relationships among the constructs of Market orientation and Organizational
Performance.

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NEWMKTOR Model

Target Market

Figure 5.2: NEWMKTOR model

Source: - Developed for the Research Study (2014)

The NEWMKTOR model explains the Slater and Naver’s view with a new sub
variable. According to the model an organization should focus long term profits based
on the market oriented activities in target market. In other words , in order to acquire
long term profits an organization should consider Customer orientation, Competitor
orientation inter functional Coordination and social benefit orientation. Through this
research study identified the importance of the social benefit oriented activities for
long term profit focus in small and medium manufacturing business organizations in
Sri Lankan Context. Therefore this model contributes to the Market orientation
theories for a new perspective. Further Corporate social responsibility and societal
marketing concepts are useful when adding social benefit orientation to the market
orientation as a component of the market orientation.

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5.5. Limitations and Future research

5.5.1. Limitations

This study has several limitations. First, the research study specified to the small and
medium scale manufacturing business organizations. Most of the small scale
organizations are not practicing the proper management activities. Second, data
collected from only the Managerial level employees. Some of the managerial level
employees did not have sound knowledge about over all business practices. Third,
Sample size has been selected based on the geographical area. The researcher has
selected the sample only from the southern province. But there are nine provinces in
Sri Lanka and each province have different business practices. So the results of this
research study are not enough to draw a conclusion to the entire population in Sri
Lanka. Forth, as a data Collection method, used only Questionnaire based survey
method. There are so many data collection methods could be applied and the
researcher had no any chance to used online survey due to lack of knowledge about
technology and Compute literacy of the respondents. Fifth, Sample of the research
study is 240 respondents. This Sample is might not be sufficient to draw conclusions
on the entire population of Sri Lanka as well. Finally, although the choices for each
question were adopted from the previous studies, all possible alternatives might not
have been included. Beside, showing the respondents the list of potential answers
could have caused biases in their responses and respondents did not like to spend time
on filling questionnaires and most of the respondents did not like to give 100%
accurate information regarding Profits, sales levels and technology about the
Organization.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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5.5.2. Future Research

In this section some suggestions for future researchers have been delivered. Future
research could build upon this research study through replication across the different
samples and across the different contexts. The validity of research framework
proposed in this research study can serve as a basis for hypotheses formulation for
future research in this area. A longitudinal study would provide more conclusive
evidence to the relationship between market orientation and organizational
performance.

In addition, future researchers can apply the new developed model of market
orientation for their research studies to measure the market orientation practices. It
will help to confirm the validity of the NEWMKTOR model developed by the
researcher.

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Published at ResearchGate - June 2015

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 1: Covering Letter

Survey Questionnaire of Market Orientation on Organizational
Performance
I am W.H.D.P. Umesh Gunarathne, Undergraduate at the Department of Marketing,
Faculty of Management and Finance, University of Ruhuna at Matara, Sri Lanka and I
conduct a survey about Market Orientation by considering small and medium scale
manufacturers in Southern province on behalf of the fulfilment of Dissertation
requirement in final year. This survey aims at investigate the relationship between
Market Orientation and Organizational Performance.
Please, answer all questions even if they seem irrelevant to you. It is unnecessary to
search for information in order to answer the questionnaire. Your experience is very
important for decision makers in Sri Lanka to strengthen the Small and Medium
business sector.

All information given in this questionnaire will be treated strictly confidentially. This
research will be presented only in an aggregated form and cannot be traced back to
any specific firm.

There is no payment for completion of this survey, please return every fully
completed questionnaire on or before 30th October 2014.

Thank you in advance for your time and collaboration.

With any questions, please contact the following persons.

W.H.D.P.U.Gunarathne Dr. T.S.L.W. Gunawardhana

Undergraduate Senior Lecturer,
Department of Marketing Department of Marketing
Faculty of Management and Finance Faculty of Management and Finance
University of Ruhuna University of Ruhuna
Matara - Sri Lanka. Matara - Sri Lanka.
TP: 071- 1848700 TP: 071- 8577625
E-mail: [email protected] E-mail: [email protected]

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Appendix 2: Questionnaire (English)

Survey Questionnaire on Market Orientation on Organizational
Performance
Thank you for participating. Please read all the questions very carefully and answer
them according to the best of your knowledge.

Part One

Q.01. Your line of the Business: Please, cross (X) in one box that is
applicable.

Sole enterprises Private Company

Family ownership Public Company
Partnership Joint venture

Other (please specify) ………………………………………………

Q.02.What is the main product produced by your firm? Please, cross (X) in
one box that is applicable.
Foods Foot wears Electrical items
Garments Plastic items Machines

Other, please specify?

Q.03. In which year was your firm established?
Before 1980
Between 1981 and 1990
Between 1991and 2000
Between 2001 and 2010
After 2011

Q.04. How many people were employed in your firm in 2014?

Full-time employees
Part-time employees

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 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
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This section of the questionnaire contains various statements about the market
orientation, and performance of the business. Please evaluate YOUR OWN
BUSINESS according to the following scale, where

Please cross (X) on the numbers that corresponds to your opinion.

Neither Agree nor

Strongly Disagree

Strongly Agree
Disagree

Disagree
Agree
Q 05. Please state to what extent you agree or disagree with the
following statements.

Our firm’s departments coordinate their contacts with customers. 1 2 3 4 5

Our firm’s departments jointly satisfy customers’ needs 1 2 3 4 5

Our firm’s departments are collectively responsible for the 1 2 3 4 5

relationship with customers.

Resources are frequently shared by different departments. 1 2 3 4 5

Our firm’s departments take decisions that affect the relationship 1 2 3 4 5

with customers collectively.

Our firm’s departments are collectively aware of the importance of 1 2 3 4 5

the relationship with customers.

Our firm’s departments coordinate their activities aimed at 1 2 3 4 5

customers.

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Neither Agree nor

Strongly Disagree

Strongly Agree
Q 06. Please state to what extent you agree or disagree

Disagree

Disagree
Agree
with the following statements.

Our firm gathers information about customers’ needs. 1 2 3 4 5

Our firm has insight into the buying process of customers. 1 2 3 4 5
Our firm consults customers to improve the quality of service. 1 2 3 4 5

Our firm handles customers’ complaints well. 1 2 3 4 5

We regularly measure customer satisfaction. 1 2 3 4 5
Our firm looks for ways to offer customers more value. 1 2 3 4 5
Our firm treats customers as partners. 1 2 3 4 5

Neither Agree nor

Strongly Disagree

Strongly Agree
Q 07. Please state to what extent you agree or disagree with

Disagree

Disagree
Agree
the following statements.

Our firm establishes policies by focusing social 1 2 3 4 5

responsibilities.
Our firm thinks social benefit as an obligation to the society. 1 2 3 4 5
Our firm consider Ecological nature. 1 2 3 4 5
Our firm considers basic infrastructure facilities. 1 2 3 4 5
Our firm focuses Socio-cultural and community. 1 2 3 4 5
Our firm organizes donation programs. 1 2 3 4 5
Our firm think corporate social responsibility as an obligation. 1 2 3 4 5

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 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Neither Agree nor

Strongly Disagree

Strongly Agree
Q 08. Please state to what extent you agree or disagree with the

Disagree

Disagree
Agree
following statements.

Our firm knows competitors are open to complaints by customers. 1 2 3 4 5

Our firm knows why customers continue buying from competitors. 1 2 3 4 5
Our firm knows whether customers buying from competitors are 1 2 3 4 5
satisfied.
Our firm knows how competitors maintain relationships with 1 2 3 4 5
customers.
Our firm knows why customers switch to competitors. 1 2 3 4 5
Our firm knows which products competitors offer customers. 1 2 3 4 5
We respond rapidly to our competitor’s actions. 1 2 3 4 5

Neither Agree nor

Strongly Disagree

Strongly Agree
Q 09. Please state to what extent you agree or disagree with
Disagree

Disagree
Agree
the following statements.
More specifically, compared to your direct competitor, how
does your firm perform in terms of …
Sales revenue Growth is High 1 2 3 4 5
Market share Market share gain is high
1 2 3 4 5
Profitability is High
1 2 3 4 5
Have Successful Innovation 1 2 3 4 5
High Customer Satisfaction 1 2 3 4 5
High Employee Satisfaction 1 2 3 4 5

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Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015
Part Three

Q 10: What is your position in this firm? You are:

Owner
Partner
Director
Manager

Other, please specify?

Q 11: What is your highest level of education?
Primary level
Ordinary level (O/L)
Advance level (A/L)
Graduate level
Postgraduate level

Other, please specify?

Q 12: Your Age?

Less than 34 years
35 - 44 Years
45- 54 Years
More than 55 Years

Q 13: What is your gender? Male Female

THANK YOU FOR YOUR TIME AND COOPERATION!

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Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 3: Questionnaire (Sinhala)

වෙළඳව ොළ අභිමුඛකරණය හා ආයතනික කාර්යඵල

සම්බන්ධවයන් වූ ප්‍රශ්නාාෙිය
රුහුණ විශ්ව විද්‍යාලයේ ක මලයේාණාම ණ ා ල්ලයේය ීඨය ක වවන් වන ග නුමා ලයේන
ඩබ්.එච්. ඩී.ීඨ. උ ේෂ් ගුණ ත් ව ාා ට වවන් වන ද්‍ව නාාසිමය නේපූර්ණ කිරීාට
පර් කෂණ වධ්‍යය ය් කිරීාට වවශය ී ත.. න ා ාා විසි් ද්‍කුණු පළා ත් සුළු ා
ාධ්‍ය පිමාාණ ිෂෂ්පාද්‍ යය. ය් ි වළ ප ළ විමුඛකම ණය ා යය.ිෂම මාර්යලලයේ
නේන් ධ්‍ ය් පර් කෂණ වධ්‍ය ය් සිුකම ින් පවී..
ාි න ් ප්‍රශ් බනට වද්‍ාළ ුන ද්‍ මරුණාම න ් සියු ප්‍රශ් වලයේට ිළිතුරරු
නපය් . .වද්‍ ේ න ා වි ශේෂි. වූ . ුරරු රැන් කිරීා් බන විසි් වවශය ව
ව. බන ේ වත්ද්‍ැකීේ ප්‍රාාණවත්ය. බන විසි් නපයුම ලයේන ිළිතුරරු ා ්‍රී ලයේාමා
ාධ්‍ය ා සුළු පිමාාණ ිෂෂ්පාද්‍ යය. ය් ි ී. ණ නැීම ේ ්‍රියාවය ය මාර්ය් ෂා කිරීා
න ා ග.ා වැද්‍නත් .
.වද්‍ ාා ප්‍රශ් ාවය ය ා ද්‍ුම ලයේන සියු ා ිළිතුරරු ග.ා සින. . ඊට වා. ව
ලයේනාන් ා . ුරරු පර් කෂණය ා නාන්.ය් ලයේන ද්‍් ව ව. වි ශේෂි. ුන
යමා ය් පුද්නය ම වශ ය් යය.ිෂම . ුරරු ද්‍ැ් ී ා් සිුක ම යි.
ාි න ් ප්‍රශ් වලයේට ිළිතුරරු නැපීමා වුම ව් කිසිුක නී ා් සිුක ම ව.
නේපූර්ණ ම ලයේද්‍ ප්‍රශ් ාවය ය 2014 බ් . ේනර් ාන 30 දි ට ප ලයේැබීාට නලයේන්ව
ලයේන මරුණා ව් ගල්ලයේා සිටිින.

මාලයේය ා ද්‍ායමත්වය ලයේනාදීා වුම ව් න්තූතිය පුද්‍ ම ව. ේ නේන් ධ්‍ව කිසියේ

නැටළුව් ව . ත් ප . න ් වය වා.් .

ඩබ්.එච්.ඩී.ීඨ ගුණ ත් , යචාර්ය ුරසි. ගුණවර්ධ්‍ ,

උපාධි ව ේමෂම (වවන් වන ), ‍යේෂ්ය මකාමාචාර්ය,
ව ලයේවිම ණ වධ්‍යය ාාශය, ව ලයේවිම ණ වධ්‍යය ාාශය,
මළා ාම ණ ා ල්ලයේය ීඨයය, මලයේා ාම ණ ා ල්ලයේය ීඨයය,
රුහුණ විශ්ව විද්‍යාලයේය, රුහුණ විශ්ව විද්‍යාලයේය,
ාා. . ාා. .
ුක මථ : 071- 1848700 ුක මථ : 071- 8577625
E-mail: [email protected] E-mail: [email protected]

128
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

වනා තති ප්‍රශ් දි් කියවා ත්රුේ න බන ේ ද්‍ැුමා ාාවි.ා ම ිළිතුරරු

නපය් . ේ නද්‍ ා න ාාගී ී ා ිළිතනද්‍ න්තූතිය පුද්‍ම ින.

I වකොටස

Q1. බන ේ වයාපා යඅ වද්‍ාළ ිළිතුර ගදිිම ක තති ම ව ව ුරළ මති යකි් (X) මපා
ද්‍ා් .
.ිෂ පුද්නලයේ පෞද්නය ම නාානා
පුනල් ි ිනමේ ප ුක නාානා
ුනල් වයාපා නද්ධ්‍ වයාපා

ව ත් ( නද්‍ ් ම ් )

Q2. බන ේ යය. ය ුරලයේ ිෂපද්‍ව ප්‍රධ්‍ා ිෂෂ්පාදි.ය කුා් ද්‍ වද්‍ාළ ිළිතුර ගදිිම ක
තති ම ව ව මති යකි් (X) මපා ද්‍ා් .
ය ා ේලයේාන්ටි් වයි.ා

දිිළිත ග ලයේ් ර ිෂ් වයි.ා

නපත්ුර වර්න ය් රෝපම ණ

ව ත් ( නද්‍ ් ම ් )

Q3. බන ේ යය. ය ිළි ටවුම ලයේැබූ වර්ෂය කුා් ද්‍

Q4. වර්ෂ 2014 ව විට බන ේ යය. ය ුරළ රැකියා ිෂයුුර නේවම නාකයාව කීය ද්‍

පූර්ණ මාලී නේවමය් නාකයාව

වර්ධ්‍ මාලී නේවමය් නාකයාව

129
Umesh Gunarathne W.H.D.P. -2015
 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

IIPart Two
වකොටස

ාා ම ටන යය.ිෂම මාර්යලලයේ ා වළ ප ලයේ විමුඛකම ණය ය්‍රී. විවිධ්‍ වූ ප්‍රමාශ

වය ් නා් වි. .බන ේ වයාපා යට වද්‍ාළ ව එා ප්‍රමාශ ප . න ් පිමාාණ වුමව
තනීමාට ලයේ් ම ් .

ඹන ේ වද්‍ න වුමව නැළ ප වාමය ා. මති නලයේකුණ (X) ය ද්‍් .

කක වාොවේ

අ හසක් ාැත
ැඩි වලස කක
Q 5. හත සඳහන් ප්‍රකාශ් ෙලට වකොතරම් ුරරට කක ෙන්වන් යන්ා

ැඩි වලස කක
කක වේ
වාොවේ

වේ
සඳහන් කරන්ා

යය. ක විවිධ්‍ වාශ පාිම ාෝගිමයි් නාඟ නන .ා පැවැත්ී ා

1 2 3 4 5
නේන් ධීම ණය ම යි.
ව පාිම ාෝගිමයි් .ෘේතිාත් කිරීා න ා වප යය. ක සියු වාශ එ් ව
1 2 3 4 5
්‍රියා ම යි.
වප යය. ක සියු වාශ පාිම ාෝගිම නන .ා නේන් ධ්‍ ය්
1 2 3 4 5
නාුඛි මව වනකීාට නැඳී සිටී.
යය. ය නුර නේපත් ිෂ ් . ය් විවිධ්‍ වාශ ව. හුවාාරු ම නීම.
1 2 3 4 5

වප යය. ක සියු වාශ පාිම ාෝගිම නේන් ධ්‍.ා වලයේට ි .ම ලයේන

1 2 3 4 5
නලයේපා වයුිම් ී. ණ නැීම ේ මටයුුර සිුකම යි.
වප යය. ක සියු වාශ පාිම ාෝගිමයි් නාඟ නේන් ධ්‍.ා
1 2 3 4 5
පැවැත්ී ේ වැද්‍නත්මා වව නෝධ්‍ ම න සිටී.
වප යය. ක සියු වාශ පාිම ාෝගිමයි් ව ුඛණු ම නිෂින් සිුක
1 2 3 4 5
ම ්‍රියාමා මේ නේන් ධීම ණය සිුකම යි.

130
Umesh Gunarathne W.H.D.P. -2015
 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

කක වාොවේ
Q 6. හත සඳහන් ප්‍රකාශ් ෙලට වකොතරම් ුරරට කක ෙන්වන් යන්ා

අ හසක් ාැත
ැඩි වලස කක

ැඩි වලස කක
කක වේ
සඳහන් කරන්ා

වාොවේ

වේ
වප යය. ය පාිම ාෝගිම වවශය.ා ිළිතන . ුරරු රැන් ම යි.
1 2 3 4 5
Market share වප යය. යට පාිම ාෝගිමය් ේ ිනලයේදී නැීම ේ ්‍රියාවය ය නේන් ධ්‍ව
1 2 3 4 5
ද්‍ැුමා් ත..
වප යය. ය නේවා ගුණත්වය ග ළ ැාී ා න ා පාිම ාෝගිමයි් ට
1 2 3 4 5
වවශය උප ද්ශ මටයුුර ලයේනා ද්‍යි.
වප යය. ය විසි් පාිම ාෝගිම පැිනණිය ග.ා ඳි්
1 2 3 4 5
මළා ාම ණය ම යි.
වප යය. ය ිෂ ් . ය් පාිම ාෝගිම .ෘේතිය ාැ නැලීා් සිුක
1 2 3 4 5
ම යි.
වප යය. ය නෑා විටා පාිම ාෝගිමයි් ට වඩා ග ළ වටි ාමා් ලයේනා
1 2 3 4 5
දීාට තති ැකියාව් ිළිතන න යා නලයේයි.
වප යය. ය නෑා විටා පාිම ාෝගිමයි් ට ුනල්මරුව් නේ නලයේමයි.
1 2 3 4 5

කක වාොවේ
Q 7. හත සඳහන් ප්‍රකාශ් ෙලට වකොතරම් ුරරට කක ෙන්වන් යන්ා

අ හසක් ාැත
ැඩි වලස කක

ැඩි වලස කක
කක වේ
සඳහන් කරන්ා
වාොවේ

වේ
වප යය. ය නාා‍ වනකීා ව ුඛණු ම නිෂින් ප්‍රතිපත්ති න්ථාිළ.
1 2 3 4 5
ම යි.
වප යය. ය වප යය. ය නාාජීය ප්‍රතිලයේාා නාා‍යට සිුකමළ යුුර යුුරමා් ලයේන
1 2 3 4 5
සි.ා මටයුුර සිුකම යි.
වප යය. ය න්වාාවිම පිමන ක න්වාාවය ිළිතන වවධ්‍ා ය ය ුඛ
1 2 3 4 5
ම යි.
වප යය. ය විසි් ල්ය ම යටි.ලයේ ප සුමේ ිළිතන වවධ්‍ා ය ය ුඛ
1 2 3 4 5
ම යි.
වප යය. ය නාා‍ නාන්මෘතිම ා ප්‍ර‍ාව ව ුඛණු ම න මටයුුර සිුක
1 2 3 4 5
ම යි.
වප යය. ය පිම.යාන වැඩනට ් නාවිධ්‍ා ය ම යි.
1 2 3 4 5
වප යය. ය නාුඛි ම නාාජීය වනකීා( CSR) යය. ක යුුරමා් 1 2 3 4 5
ලයේන නලයේමයි.

131
Umesh Gunarathne W.H.D.P. -2015
 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Q8. හත සඳහන් ප්‍රකාශ් ෙලට වකොතරම් ුරරට කක ෙන්වන් යන්ා

කක වාොවේ

අ හසක් ාැත
සඳහන් කරන්ා

කක වේ
ැඩි වලස කක

ැඩි වලස කක
වාොවේ

වේ
. ඟමරුව් .ා පාිම ාෝගිම පැිනණිය වලයේට විවෘ. ප්‍රතිචා ද්‍් ව නව
1 2 3 4 5
වප යය. ය ද්‍ැුමවත්ය.
Market share පාිම ාෝගිමයි් විසි් ිෂ ් . ය් . ඟමරුව් න් ිනලයේදී නැුමේ සිුක
1 2 3 4 5
ම ් ් තයි ද්‍ැයි වප යය. ය ද්‍ැුමවත්ය.
පාිම ාෝගිමය් විසි් . ඟමරුව් න් ිනලයේදී න් ා ාාණ්ඩ ා
1 2 3 4 5
බුන් .ෘේතිාත් ව් ් ද්‍ ැත් ද්‍ ය් වප යය. ය ද්‍ැුමවත්ය.
. ඟමරුව් විසි් පාිම ාෝගිමය් නාඟ ම නේ නන .ා පවත්ව් ්
1 2 3 4 5
ද්‍ ය් වප යය. ය ද්‍ැුමවත්ය.
පාිම ාෝගිමය් . ඟමාරී යය.ම වලයේට නා් ම ් ් තයි ද්‍ැයි වප
1 2 3 4 5
යය. ය ද්‍ැුමවත්ය.
. ඟමරුව් විසි් පාිම ාෝගිමයි් ට ගදිිමපත් ම ාාණ්ඩ
1 2 3 4 5
නේන් ධ්‍ ය් වප යය. ය ද්‍ැුමවත්ය.
. ඟමරුව් ේ ්‍රියාව් වලයේට වප යය. ය ග.ා ග් ාිෂ් ප්‍රතිචා
1 2 3 4 5
ද්‍් වයි.

කක වාොවේ
Q9. හත සඳහන් ප්‍රකාශ් ෙලට වකොතරම් ුරරට කක ෙන්වන්
අ හසක් ාැත
ැඩි වලස කක

ැඩි වලස කක
කක වේ
යන්ා සඳහන් කරන්ා.
වාොවේ

වේ
වි ශේෂ ය් ේ න ා ිළිතුරරු නැපීම ේ දී .ා යය. ක ප්‍රධ්‍ා
. ඟමරුවා නාඟ නාන් ද්‍ ය ම ින් ිළිතුරරු නපය්

විකුණුේ යද්‍ාය ේ වර්ධ්‍ ය ග ළ ාට්ටාම පවී..

1 2 3 4 5
ග ළ වළ ප ළ ම ටන් වත්පත් ම න ත..
1 2 3 4 5
ලයේාාද්‍ාීමත්වය ග ළ ාට්ටාම පවී..
1 2 3 4 5
වය.ා නේපාද්‍ ය නාර්ථම ාට්ටාම පවී..
1 2 3 4 5
පාිම ාෝගිම .ෘේතිය ග ළ ාට්ටාම පවී..
1 2 3 4 5
නේවම .ෘේතිය ග ළ ාට්ටාම පවී..
1 2 3 4 5

132
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

III වකොටස

Q10. යය. ය ුරලයේ බන ේ . ුර කුා් ද්‍

ි ිනමරු
ුනල්මරු
වධ්‍ය් ෂම
මළාණාමරු

ව ත් (න ් ම ් )

Q11. බන ේ ග ළා වධ්‍යාප සුුකසුමා කුා් ද්‍?

ප්‍රාථිනම ාට්ටා
නාාා ය පළ
උනන් පළ
උපාධී ාට්ටා
පශ්චාත් උපාධී ාට්ටා

ව ත් (න ් ම ් )

Q12. බන ේ වයන කීයද්‍?

Q13. න්ත්‍රී පුරුෂ ාාවය ිළිමින නැ ැණු

ඔබවේ කාලය කැ කරමින් ලබාුරන් ායකත්ෙය පිළිබඳ සනතුතිය පු කරමි!

133
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 4: Detailed Pilot Study Results

Statement Mean Std. Dev
Our firm's Departments coordinate their contacts with customers. 4.2000 .44721
Our firm’s departments jointly satisfy customer's needs. 4.4000 .54772
Our firm's departments are collectively responsible for the 4.0000 .70711
relationship with customers.
Resources are frequently shared by different departments. 4.2000 .44721
Our firm's departments take decisions that affect the relationship 4.4000 .89443
with customers collectively.
Our firm's departments are collectively aware of the importance of 4.2000 .83666
the relationship with customers.
Our firm's departments coordinate their activities aimed at 4.8000 .44721
customers.
Our firm gathers information about customer needs. 4.0000 .70711
Our firm has insight into buying process of customers. 4.4000 .54772
Our firm consults customers to improve the quality of service. 3.8000 .44721
Our firm handles customer's complaints well. 4.0000 .00000
We regularly measure customer satisfaction 3.8000 .83666
Our firm looks for ways to offer customer more value 4.2000 .83666
Our firm treats customers as partners 3.6000 1.51658
Our firm establishes policies by focusing social responsibilities 4.4000 .54772
Our firm thinks social benefit as an obligation to the society. 4.6000 .54772
Our firm considers ecological nature. 4.6000 .54772
Our firm considers basic infrastructure facilities. 4.4000 .54772
Our firm focuses Socio cultural Community. 3.6000 1.14018
Our firm organizes donation programs. 4.0000 .00000
Our firm thinks corporate social responsibility as an obligation. 3.4000 .54772
Our firm knows competitors are open to complaints by customers 4.0000 .70711
Our firm knows why customers continue buying from competitors. 4.0000 .00000
Our firm knows whether customer buying from competitors are 3.6000 .89443
satisfied
Our firm knows how competitors maintain relationship with 4.0000 .00000
customers

134
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

Our firm monitors customer buying from competitors 4.4000 .54772

Our firm knows why customers switch to competitors 4.2000 .44721
Our firm knows which products competitors offer to customers 4.4000 .54772
We respond quickly to our competitor's actions 4.4000 .54772
Sales revenue growth is high 4.0000 .00000
Market share gain is high 3.6000 1.14018
Profitability is high 4.4000 .54772
Have successful innovation 4.0000 1.00000
Higher customer satisfaction 4.2000 .44721
High employee satisfaction 4.8000 .44721

135
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 5: Standardized Loading Values (Original model)

136
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 6:- t- values (Original model)

137
Umesh Gunarathne W.H.D.P. -2015
Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 7: Standardized Loading Values (Final Model)

138
Umesh Gunarathne W.H.D.P. -2015
 Department of Marketing, Faculty of Management and Finance, University of Ruhuna: Sri Lanka
Published at ResearchGate - June 2015

APPENDIX 8:- t- values (Final Model)

139
Umesh Gunarathne W.H.D.P. -2015

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