case study on market orientation

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Market Orientation: Why It Matters for Leaders at all Levels

It can be tempting, very tempting. You’re focused on your job, your department,  your team, and you just have so much to do. So you leave worrying about your organization’s market orientation—understanding who your customers are, what value you create for them, why they choose your organization, what your competition’s doing—to someone else. You have enough on your plate already, so you delegate accordingly. Need to know basis only , you tell yourself. And maybe you don’t feel you need to know.

But you should.

Leaders at all levels and functions must build their business acumen . And fundamental to business acumen is identifying your organization’s market orientation.

Why market orientation matters

When you know your organization’s customers and what they value, you’re able to make smarter choices in your role. To demonstrate this, a product manager, for instance, might come up with a new product feature that delights customers. Another case could be an HR professional who proposes new benefits that help their organization out-recruit the competition and close critical skill gaps that meet an emerging market need.

When you’re fluent in the language of business – your business – you’re better equipped to persuade decision makers to rally around your plans.

As a leader, you often need to gain approval for your ideas or build coalitions in support of your strategy . When you’re fluent in the language of business – your business – you’re better equipped to persuade decision makers to rally around your plans. And when you’re looking to level up in your career, having solid business acumen can carry as much weight as your domain expertise.

Know your organization’s story

Fundamental to building your market orientation savvy is knowing your organization’s story. The elements of this story include:

• Who your customers are
• What customers value most about your offerings
• How you bring those offerings to your customers
• What differentiates you from your competitors
• How your organization makes money by doing all this

Where will you find your organization’s story? By knowing the business model. All organizations — from small businesses to scrappy startups to Fortune 500 companies — need a business model to succeed. Your organization may not have a document explicitly labeled as its business model, but the elements that comprise your business model should be there for the asking — including your organization’s story.

Key elements of your organization’s story

The first part of your organization’s story covers who your customers are and how you satisfy their needs. The story should also include:

• How your organization attracts and retains customers,
• how it grows its base,
• and how it entices customers to buy more of its products and services.

Your value proposition: Critical for market orientation

Your value proposition may be the most important part of the business model to get right. That was the thinking of Mark Johnson, Clayton Christensen, and Henning Kagermann in “ Reinventing Your Business Model ,” a timeless article that appeared in  Harvard Business Review in 2008. In defining the value proposition, they wrote:

A successful company is one that has found a way to create value for customers – that is, a way to help customers get an important job done. By “job” we mean a fundamental problem in a given situation that needs a solution.

How critical is it to get the value proposition right?

CBInsights analyzed over 100 startup postmortems and found that 35% of failed startups cited “lack of market need” as one of the reasons for their failure. In other words, they hadn’t found a way to create value for customers.

35% of failed startups cite “lack of market need” as one of the reasons for their failure. In other words, they didn’t find a way to create value for customers.

Of these failed startups, 20% also cited losing to their competition. Your organization’s business model may not directly call out how it’s different from your competitors. However, the value proposition can help you understand why customers choose you over others in your category. As you increase your market orientation, it’s important to know who your competitors are and where you win or lose against them.

A business model should also include information about the channels you use to reach and serve customers, as well as what your customers are willing to pay for your offerings.

Once you understand your organization’s business model, you’ll gain a clear view of your market orientation. This new focus will help you expand your business acumen and increase the value you provide to your organization.

And not to worry: you’ll still get things done. Now, though, you’ll understand why you do what you do — and who benefits from it.

Let’s talk

Change isn’t easy, but we can help. Together we’ll create informed and inspired leaders ready to shape the future of your business.

© 2024 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

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The key role of market orientation in innovation ambidexterity in agribusiness firms

• Original Paper
• Open access
• Published: 05 February 2024

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• Beatriz Corchuelo Martínez-Azúa   ORCID: orcid.org/0000-0002-6590-7944 1 ,
• Álvaro Dias   ORCID: orcid.org/0000-0003-4074-1586 2 &
• Celia Sama-Berrocal   ORCID: orcid.org/0000-0001-9355-6419 3  

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The objective of this study is to examine the relationships between market orientation , organizational culture , proactive management , organizational climate , and organizational structure on the innovative orientation (exploitative and exploratory innovation). Little research has been conducted to examine the relationship between these organizational dimensions and innovation orientation. This study offers this and provides a particular type of companies (agribusiness) and context (Extremadura, Spain). Quantitative approach, by using structural modelling equations, to analyze data from 151 innovative agri-food firms was used in this study. Then, using a fuzzy set qualitative comparative analysis (fsQCA), was carried out to obtain additional insights. The main result find that market orientation plays a key role both in exploitative and exploratory innovation in agribusiness firms. Innovation exploitation is influenced by the firm’s organic structure. Results from fsQCA provide valuable findings showing that innovation exploitation and exploration result from distinct organizational configurations, thus providing valuable insights for decision and policy-making.

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1 Introduction

In the agri-food industry (food, beverages, and tobacco), and according to the latest available data (National Institute of Statistics-NIS: Survey on Innovation in Companies), in 2020 the number of companies in Spain with expenditure on innovative activities was 1490, representing 23% of all companies with 10 or more employees in this industry and 71% of all innovative companies in the agri-food sector. The amount spent on technological innovation in the agri-food industry was only exceeded by the pharmaceutical and motor vehicle industries (MAPA 2022 ).

Innovation in the agri-food industry is a subject little studied in the academic world and yet of great relevance given the changes that are taking place in this sector, especially after the COVID-19 pandemic. In particular, the pandemic caused changes in food consumption patterns and consumer perceptions, and modified the channels of marketing, communication, and promotion of products. This led to various actions and activities in agribusiness, mainly related to the search for new forms of product promotion, the creation of marketing platforms, the use of technologies in communication activities, and the development of new products (Corchuelo et al. 2021 ). Innovation is one of the main determinants of productivity and competitiveness in the agri-food sector and is essential for economic growth (Trott and Simms 2017 ; Corchuelo and Sama-Berrocal 2022 ). There are several aspects that influence the innovative orientation in companies (Smith et al. 2008 ; Castillo-Valero and García-Cortijo 2021 ). The study by Smith et al. ( 2008 ) identified nine factors that impact the ability to manage innovation in an organization and especially focused on companies in the agricultural field: management and leadership style, resources, organizational structure, corporate strategy, technology, knowledge management, employees, and innovation process.

In this study, we analyze the role of various business variables ( organizational culture , market orientation , proactive management , organizational climate , and organizational structure ) in guiding innovation in agri-food companies, distinguishing between exploratory and exploitative innovation . This study is focused on companies in the agricultural field because of the importance and weight of these organizations in the economic development of different economies. However, it is mainly these organizations that present the greatest difficulties when it comes to innovating. The study by Corchuelo and Sama-Berrocal ( 2022 ) concluded that especially uncertainty regarding demand and lack of knowledge are barriers that negatively influence the willingness to innovate. Other barriers detected by agri-food firms to innovate were high costs, high economic risk, markets dominated by established companies, and lack of internal financing. For that reason, the results obtained in the present study can help explain how to promote innovation in agro-industrial companies.

In our knowledge, little research has been done to examine the relationships between these variables ( organizational culture , market orientation , proactive management , organizational climate , and organizational structure ) and innovation orientation, so this is the main novelty of this study. The influence of these variables simultaneously is only studied from a qualitative methodology in agri-food industry in the study by Corchuelo et al. ( 2020 ). The present study offers this and provides a particular context: innovative Extremaduran agri-food companies.

The analysis of each of these variables with the innovative orientation of firms has been also not sufficiently studied, especially in the agrifood industry. Regarding the variable organizational culture , there are studies that analyze this aspect in terms of definitions, theoretical scopes, conceptualizations, characteristics, and types (e.g., Lavine 2014 ). Also, arguing that organizational culture contributes to innovation (Kim and Chang 2019 ; Naranjo-Valencia et al. 2019 ), but not referring to agribusiness. The influence of organizational climate (Lafta et al. 2016 ; Tan et al. 2021 ) and management (Ureña-Espaillat et al. 2022 ) in agribusiness have been studied, but we do not find references to the relationship of these variables with the innovative orientation . Market orientation has been mentioned in qualitative studies (i.e., van Duren et al. 2003 ) in the agribusiness field, but are less the studies that have directly tested hypothesized relationships in a quantitative manner (Johnson et al. 2009 ; Mirzaei et al. 2016 ; Ho et al. 2018 ; Kamarulzaman et al. 2023 ). There are also few studies that analyze the organizational mechanisms that influence innovation , especially focused on the agri-food industry (Ogidi 2014 ; Camanzi et al. 2018 ). In this sense, this study contributes to the literature on the factors influencing innovative orientation and the type of innovation developed by agribusiness firms, filling a research gap. To fill this research gap, this study poses the following research questions: (i) Do organizational variables ( organizational culture , market orientation , proactive management , organizational climate and organizational structure ) influence the innovation orientation of innovative agribusiness firms? (ii) What types agribusiness firms can be identified based on their innovation orientation? In this sense, we consider that our results will contribute to addressing the lack of empirical studies related to the influence of these business variables in the innovative orientation of innovative agribusiness companies. As such, this study aims: (i) to explore the influence of organizational dimensions such as market orientation, organizational culture, proactive management, organizational climate, and organizational structure on the innovative orientation (exploitative and exploratory innovation); (ii) to explore the different configurations of the organizational dimensions that contribute to innovation ambidexterity.

This study adopts a quantitative approach, by using structural modelling equations to analyze data from 151 innovative agri-food firms. Then, we use a fuzzy set qualitative comparative analysis (fsQCA) to obtain additional insights. The main result find that market orientation plays a key role both in exploitative and exploratory innovation in agribusiness firms. Innovation exploitation is influenced by the firm’s organic structure. Results from fsQCA provide valuable findings showing that innovation exploitation and exploration result from distinct organizational configurations, thus providing valuable insights for decision and policy-making. These results provide understandings on how managers and policy makers should focus on innovation policies and strategies to exploit competitive advantage.

2 Theoretical framework

This study draws on the Resource-Based View (RBV) and organizational innovation theories to elaborate on the conceptual model and hypotheses development. The RBV theory is a management theory that posits that a firm's unique resources and capabilities are the primary source of its competitive advantage, regardless of its industry or external environment (Pinheiro et al. 2022 ). The RBV theory is important in studying innovation because it provides a framework for understanding how firms can develop and sustain their innovative capabilities (Zhang and Jedin 2022 ). According to the RBV theory, firms can innovate by developing new resources and capabilities, or by recombining existing resources and capabilities in new ways (Valaei et al. 2022 ). Organizational innovation theory is a field of study that examines how organizations develop and implement new ideas, products, processes, or practices. It aims to understand the factors that influence innovation, such as organizational culture, structure, strategy, leadership, learning, and change management. It also explores the outcomes and impacts of innovation on organizational performance, competitiveness, and survival (Damanpour 2018 ). RBV and organizational innovation theory consider that each company has different resource configurations that make it important to relate their study methodologically through configurational theory. Configurational theory allows transcending the qualitative-quantitative divide through the formulation of formal statements that explain how causally relevant conditions combine in configurations associated with the outcome of interest (Iannacci and Kraus 2022 ). Specifically, RBV and organizational innovation theory suggest that companies should be studied in terms of their unique resource configurations, which can be achieved through the use of configurational theory. Configurational theory provides a way to understand how different causal conditions combine to produce a given outcome, which is particularly useful when studying complex phenomena such as organizational innovation. By using configurational theory, researchers can move beyond the traditional qualitative-quantitative divide and develop a more nuanced understanding of the relationship between resource configurations and organizational innovation.

2.1 Innovation ambidexterity in agribusiness firms

Innovation is generally characterized by changes in a complex and interrelated system between product/service, market, knowledge, and society. Nowadays, the concept of innovation is beginning to be seen as a system that is an accumulation of several interrelated innovations. In this system, the fundamental role of the firm as a driver of innovation is emphasized and attention is also given to informal activities as sources of knowledge and generators of new innovative processes (Corchuelo and Sama-Berrocal 2022 ).

Innovation can be conceptualized as the development of new products or services (Cumming 1998 ), as new knowledge embedded in products, processes and services (Quintane et al. 2011 ), or the ability to understand and identify future customer needs, expectations and potential customers through the organization's internal and external knowledge (Rajapathirana and Hui 2018 ). Innovation is considered a key factor in the creation of new firms and industries, economic development, firm performance and competitiveness, as well as effective firm management (Corchuelo et al. 2020 ).

Innovation is a complex activity in an organization, involving multiple internal and external variables (Castillo-Valero and García-Cortijo 2021 ; Corchuelo and Sama-Berrocal 2022 ). Complexity is the result of a blend of learning, knowledge, creativity, and management. This combination encourages the use of both the company's own and external resources, thus seeking to enhance the process of differentiation, with the aim of gaining a competitive advantage. In this sense, innovation is a dynamic in which internal and external aspects interact at the beginning and at the end of the process. Furthermore, it seeks to satisfy internal needs to achieve better levels of efficiency and quality that result in increased competitiveness through better satisfaction of market needs (Corchuelo et al. 2020 ). Innovative capabilities are important for companies to maintain their competitive advantage. In this sense, the study by Sun and Ju ( 2022 ) found that congruence between exploitative and exploratory innovation positively influences firm performance. In the case of incongruence, the combination of high exploitative innovation and low explorative innovation outperforms the opposite.

Applied to the agri-food industry, the study by Corchuelo et al. ( 2020 ) used a multiple case study to measure the level of importance that managers attached to six business variables ( Management , Strategy , Structure , Culture , Climate and Market Orientation ). The study validated the proposed model in which all the variables tested had a high weight for the achievement of innovative performance. These assumptions were also validated in the study by Sama-Berrocal and Corchuelo ( 2023 ) in a multi-case study in which agri-food cooperative enterprises were analyzed. Based on these studies, this research quantitatively analyzes whether the variables proactive management, organizational culture, organizational climate, organic structure, and market orientation influence the innovative orientation of agri-food companies.

Innovation orientation is an innovation-driven strategy launched by an organization to respond to ongoing market challenges and is a form of control that affects the innovative behavior of employees (Siguaw et al. 2010 ). Some studies have shown a positive correlation between innovation orientation and the introduction of innovations (Wei et al. 2020 ). In practice, one aspect to consider is how to measure innovation and how to classify it. One classification system that determine the innovation orientation of a firm and which is used in this research, is based on the radical factor of innovation in terms of innovation strategies (exploitative innovation and exploratory innovation) (Jansen et al. 2006 ; Bernal et al. 2019 ). Exploitative innovation refers to incremental innovations that meet emerging customer and market demand. In this innovation, new knowledge is generated and created by the development of new products, services, markets, and distribution channels based on existing knowledge (Duan et al. 2022 ). Exploratory innovations, on the other hand, are radical innovations designed to meet emerging customer needs or target new markets. These innovations offer new designs, create new markets, and develop new distribution, thus requiring new knowledge and modifying existing knowledge in the organization (Kollmann and Stöckmann 2014 ). Ambidexterity of innovation refers to the development of both exploratory and exploitative innovation (Duan et al. 2022 ; Saleh et al. 2023 ; Weigel et al. 2023 ). Firms that develop innovation ambidexterity can constantly adapt to changes in the environment and achieve high short-term performance and long-term competitive advantage, although it can also create problems due to competition for firm resources and the problem of resource scarcity (Duan et al. 2022 ).

2.2 Hypotheses development and conceptual model

2.2.1 organizational culture of agribusiness firms and innovation orientation.

According to Miron et al. ( 2004 ) organizational culture is defined as the values, beliefs and hidden assumptions that members of an organization hold in common. Lee and Kim ( 2017 ) refer to organizational culture as the shared set of values and behaviors within an organization. Hofstede ( 2015 ) characterize the organizational culture as a shared cognitive system that acts as a guide for people's perceptions, thoughts, and language. These aspects form the basis for communication and mutual understanding and affect employee behavior through its two main functions: internal integration and coordination (Martins and Terblanche 2003 ). Since organizational culture is a characteristic of the organization as a set of hierarchical, functional or departmental sub-groups, the organization will harbor several, possibly conflicting, cultures within it. If the different subcultures collaborate, one can speak of a strong organizational culture. Otherwise, the organizational culture will be weak (Sousa et al. 2022 ). Thus, culture can stimulate an organization's innovative orientation as it can lead its members to accept innovation as an organizational philosophy (Hartmann 2006 ).

In this study, and, following the study by Lam et al. ( 2021 ) organizational culture is considered as the “internal characteristics of a company that plays a determining role in its long-term development. It represents the way in which the members of the organization interact with each other and the way in which the organization associates with its stakeholders. In this sense, company culture is conceived as a guide that directs the functioning, workflow, and customer management within an organization” (Lam et al. 2021 , p. 3). In this context, organizational culture can affect innovative orientation in two ways. On the one hand, socialization teaches individuals how to behave and act towards each other. On the other hand, organizational structure and management orientation can be affected by core "values, beliefs and assumptions" (Martins and Terblanche 2003 ).

The literature shows a significant relationship between organizational culture and innovation (Miron et al. 2004 ; Büschgens et al. 2013 ; Chen et al. 2018 ; Aboramadan et al. 2020 ). Shayah and Zeliou's ( 2019 ) literature review study concludes, based on the studies reviewed, that organizational culture is one of the factors that can most stimulate the innovative behavior of organizational members playing an integral role in all organizations. Referring to the agri-food industry, the study by Castillo-Valero and García-Cortijo ( 2021 ) concludes that the internal factors or characteristics of a company are those that most influence its propensity to innovate. In particular, innovative culture has the potential to exert a multiplier effect through mechanisms such as knowledge spillovers or learning by doing. Given this discussion, the following hypotheses are put forward:

H1a: Organizational culture of the agribusiness firms is positively related to their innovation exploitation.

H1b: Organizational culture of the agribusiness firms is positively related to their innovation exploration.

2.2.2 The influence of market orientation of agribusiness firms on innovation orientation

Approaches to the concept of market orientation are basically from two perspectives: cultural and behavioral or operational. Under the first approach, market orientation is seen as a form of organizational culture in which the market, customers and competitors are at the core of the firm's operations. Market orientation represents a set of values and attitudes shared throughout the organization, from which it seeks to stimulate the creation of greater value for customers (Narver and Slater 1990 ; Slater and Narver 1995 ).

Under the second approach, market orientation is the degree to which an organization applies the marketing concept in its strategic and tactical decisions. Several studies argue that market orientation is a complementary contribution to strategy and is important for strategic orientation (Kohli et al. 1993 ; Jaworski and Kohli 1993 , 1996 ; Hunt and Lambe 2000 ; Varadarajan 2020 ).

Market orientation establishes the environment-organization relationship as a source of ideas, recommendations, adjustments, and benchmarks. A matter of debate is whether market orientation encourages exploration or exploitation business innovation. On the one hand, some studies conclude that market orientation limits innovation to incremental developments that derive from changes in customer preferences. It tends to avoid the risks that radical innovations might produce by not knowing how the target audience will react (Prifti and Alimehmeti 2017 ). On the other hand, other studies point out, in a different line, that the vision of the present and future environment and market orientation allow the development of new products with a higher degree of novelty incorporated (Jaworski and Kohli 1996 ). Firms that are more market-oriented, in addition to being more willing to innovate, market a greater number of innovations than their competitors and, moreover, incorporate a greater degree of novelty in these innovations (Akman and Yilmaz 2008 ).

In relation to the previous hypotheses ( H1a and H1b ), Hurley and Hult ( 1998 ) argued that market orientation is an antecedent of the firm's predisposition towards the development of new ideas and this predisposition is an aspect of the organizational culture that positively influences the ability to innovate. According to these authors, market-oriented companies are better positioned to anticipate customer needs and are therefore in a better position to respond to them with innovative products and services.

Regarding to the agri-food industry, the study by Mirzaei et al. ( 2016 ) showed that market-oriented agribusinesses in Ontario were more likely to adopt new products and services. Ho et al. ( 2018 ) also found a positive relationship between market orientation and innovation, as well as between innovation and financial performance in agricultural value chains in emerging economies (Vietnam). Kamarulzaman et al. ( 2023 ) conclude that all dimensions of market orientation had significant relationships with innovative marketing strategies. Innovative marketing strategies, in particular promotion, had the strongest influence on the performance of Malaysian agri-food manufacturers. In a different view, Johnson et al. ( 2009 ) revealed that the most successful agri-food companies focus more on the internal (cross-functional coordination and innovation) than on the external (competitive and market orientation). Based on these considerations, the following hypotheses are established.

H2a: Market orientation of the agribusiness firms is positively related to their innovation exploitation.

H2b: Market orientation of the agribusiness firms is positively related to their innovation exploration.

2.2.3 Proactive management of agribusiness firms and innovation orientation

According to Tidd and Bessant ( 2014 ), the innovation process in organizations needs to be managed in a systematic or integrated way, which would require strategic leadership and management, the creation of an innovative organization, and the creation of networks for innovation. Thus, management is not an isolated task, as it is related to parallel concepts such as the organizational structure, the organizational culture and climate that enables people to innovate, and the market orientation.

Proactive management is about anticipating problems and taking action to prevent them from occurring. A proactive management style is based on prevention and thinking in the long term, looking for ways to improve the business. Proactive management encourages innovation and adaptation (Crant 2016 ). The study by Talke et al. ( 2011 ) showed that the diversity of the management team and a proactive focus on customer needs has a strong positive effect on the innovative orientation of the firm through new products with higher market novelty which increase the firm's performance. In this vein, Chen et al. ( 2012 ) found that proactive management is determinant for innovation, and the main driver of proactiveness are internal resources (e.g., organizational culture of firm’s capabilities) rather external forces (e.g. regulations or stakeholder influence). The study by Safari and Raza ( 2015 ) concluded that knowledge-oriented leadership influences knowledge creation and application and innovation performance. In the agro-industrial sector, Ureña-Espaillat et al. ( 2022 ) found that knowledge and innovation management can play a key role in fostering and managing creativity in the agro-industrial sector. We establish the following hypotheses.

H3a: The existence of a proactive management in agribusiness firms is positively related to their innovation exploitation.

H3b: The existence of a proactive management in agribusiness firms is positively related to their innovation exploration.

2.2.4 The organic organizational structure of agribusiness firms and innovation orientation

The structure of an organization can be defined as the permanent distribution of job functions and administrative mechanisms that enable an organization to direct, coordinate and control its business activities and the flow of resources (Miller 1987 ). Organizational structure affects the management choices and market opportunities of the firm.

In this research, we consider the organic organizational structure. In contrast to a formal structure, characterized by the existence of a hierarchy, specialization of work and centralized decision-making, in the organic structure there is a combination of formal and informal variables (Burns and Stalkers 1961 ). Informal variables consist of a set of decisions that have not been consciously defined in advance and that respond to the relationships between the individuals who meet each other at work. Both types of relationships develop together and are not always clearly distinguishable. Inside an organic organizational structure, there is a "more flexible" structure: the hierarchy consists of fewer levels, barriers between departments disappear and decision-making is usually more decentralized (Burns and Stalker 1961 ; Aiken and Hage 1971 ; Martínez-León and Martínez-García 2011 ; Gimenes et al. 2017 ).

The structure of an organization is an essential factor in the role of innovation that serves to benefit or impede it (Savvides 1979 ). An organizational structure in which people feel motivated and valued and with which work is organized in a way that enhances human capital has a positive effect on innovative performance through the recognition and support employees receive from management (Aiken and Hage 1971 ; Kalay and Lynn 2016 ). Most studies conclude that decentralized and not strictly formalized organizational structures are more conducive to innovative performance (Jansen et al. 2006 ; Menguc and Auh 2010 ; Cabello-Medina et al. 2011 ; Kalay and Lynn 2016 ). Cabello-Medina et al. ( 2011 ) stated the idea that organizations with organic structures are more innovative than those with mechanistic ones. Menguc and Auh ( 2010 ) found that the effect of radical product innovativeness on new product performance is positive under an informal structure. Kalay and Lynn ( 2016 ) concluded that centralization has a significant negative impact on management innovation. Based on these considerations, the following research hypotheses have been put forward.

H4a: The existence of an organic organizational structure in agribusiness firms is positively related to their innovation exploitation.

H4b: The existence of an organic organizational structure in agribusiness firms is positively related to their innovation exploration.

2.2.5 The organizational climate of agribusiness firms and innovation orientation

According to Ekvall ( 1996 ) organizational climate is conceived as an attribute of the organization, consisting of behaviors, attitudes, and feelings, which are characteristics of life in the organization. Organizational climate expresses the workplace and its environment, as well as the factors surrounding it. It can be defined as the set of distinctive features of the internal work environment in which employees perform their functions and jobs (Lafta et al. 2016 ).

Organizational climate can be seen as a situation in which there is cooperation between employees which contributes to knowledge sharing and contributes to the generation of ideas (Xu et al. 2022 ). The fact that employees feel supported by the organization in a way that is actively promoted, actively participate in the creation of ideas and stimulates innovation (Johannenssen and Olsen 2011 ). A climate conducive to innovation fosters innovation at the organization level (Jung et al. 2008 ). Climate affects the results of an organization's operations, as it "influences organizational processes such as problem solving, decision making, communications, coordination, control, and the psychological processes of learning, creativity, motivation and commitment" (Ekvall 1996 , p. 10). Successfully developing a new product, service or production process involves complex and dynamic changes and therefore requires an organizational climate that fosters innovation. The study by Acosta-Prado ( 2020 ) found a positive relationship between organizational climate and innovativeness (organizational ambidexterity, exploration and exploitation) in Colombian new-technology based firms. Related to proactive management, Malabari and Bajaba's ( 2022 ) study found that entrepreneurial leadership significantly influences employees' innovative behavior through their innovation climate and intellectual agility. The following hypotheses are set out.

H5a: A positive organizational climate in agribusiness firms is positively related to their innovation exploitation.

H5b: A positive organizational climate in agribusiness firms is positively related to their innovation exploration.

Based on these hypotheses, Fig.  1 shows the proposed conceptual model.

The conceptual model

In this research we posit that achieving innovation ambidexterity is challenging because it requires balancing the trade-offs and synergies between different types of innovation that may have conflicting demands and goals. Therefore, it is important to understand the factors that enable or constrain innovation ambidexterity in different organizational contexts (Duan et al. 2022 ). According to RBV and organizational innovation theory, there is no single best way to achieve innovation ambidexterity. Rather, multiple paths exist that depend on the interaction of various organizational dimensions, such as market orientation, organizational structure, organizational culture, organizational climate, and proactive management. To better understand these complex relationships, we draw on configurational theory, which provides a more contextual understanding of how causal conditions can combine to produce a given effect. Unlike traditional methods that focus on the net effects of causal variables, configurational theory allows researchers to analyze the multiple possible ways in which causal conditions can interact to produce a given outcome (Iannacci and Kraus 2022 ). Based on these assumptions, we can formulate the following hypothesis:

H6 : Different configurations of organizational dimensions may lead to innovation ambidexterity.

3 Methodology

The study uses data collected from agribusiness firms in Spain to test the proposed research hypotheses. The population was self-elaborated and obtained through by crossing and analyzing different databases (National Institute of Statistics, Extremaduran Agri-food Cooperatives, and Iberian Balance Analysis System) using the Extremaduran companies of the National Classification of Economic Activities (CNAE-2009), codes 10 (agri-food industry), 11 (beverages), and 12 (tobacco), as a search base. This total population was the one we sent the questionnaire to, and they answered both by the Google Docs form and by telephone. The data was collected through an ad hoc questionnaire sent to agrifood innovative companies in the region. Data collection occurred between September and October 2021. The participation of the companies was voluntary. Of the 283 innovative agribusinesses in Extremadura that were contacted, a final sample of 151 completed questionnaires from innovative agri-food companies was obtained. It is assumed that the sample is adequate (confidence level 95% and margin of error 5.5%) calculated following Krejcie and Morgan ( 1970 ) formula for the objectives of this study. We also tested the Harman’s single factor to detect common method bias. We followed the recommendations of Podsakoff and Organ (1986) and estimated the variance of a single factor which was 39.32%, below the limit of 50%, revealing no common method bias in our dataset.

The sample characterization is as follows. Firstly, in relation to the informant, the majority was company managers/owners, followed by department heads (Finance, Quality, R&D, Operations, Sales) and administrators. The educational level of the informants is mostly secondary education, followed by higher education. The predominant age of the informants is in the range of 31 to 55 years. Secondly, regarding the characteristics of the companies, in terms of size, they are mainly micro enterprises (less than 10 employees that represent 47.3% of the total), followed by small (10–49 employees, 34.7%), medium-sized enterprises (50–199 employees, 15.3%) and large enterprises (more than 200 employees, 2.7%). In terms of legal form, they are mostly limited companies (60.7% of the total), followed by cooperatives (24%), public limited companies (13.3%) and other legal forms (2%).

The questionnaire was developed following a three-step approach. First, based on the literature review an initial version of the questionnaire was developed by adapting existing scales as described below. Second, the measures of each construct discussed within a panel of academic experts with knowledge innovation and management. Third, a revised version of the questionnaire was subject to a pilot tested with five business owners to validate the wording and eliminate ambiguities and errors (Corchuelo et al. 2020 ).

The measures were adapted from existing research. As such, the measure for innovation exploitation and exploration was taken from Jansen et al. (1996) and Bernal et al. ( 2019 ), consisting of three items each one. The market orientation (11 items) was adapted from Narver and Slater ( 1990 ). The measurement of organizational climate (nine items), organic structure (four items), organizational culture (eight items), and proactive management (eight items) was adapted from Hage and Aiken (1967), Martins and Terblanche ( 2003 ), Ekvall ( 1996 ) and Safari and Raza ( 2015 ), respectively. The respondents were asked to identify their degree of agreement in a Likert-type scale, ranging from 1 (equals to totally disagree) to 7 (equals totally agree) (“Appendix 1 ”). To ensure normality of our data, we verified that the skewness and kurtosis values were within ± 1 and ± 2 respectively; all the measures met this criterion, indicating a normal distribution.

First, partial least squares structural equation modelling (PLS-SEM) was applied to evaluate the conceptual model (Ringle et al. 2015 ). Based on the hypotheses set out in the previous section, Fig.  2 shows the proposed structural model. The items used to measure the constructs are listed in “Appendix 1 ”.

The structural model

Second, to obtain additional information on the influence of independent variables on innovation exploration and exploitation, we conducted a configurational analysis using fuzzy set qualitative comparative analysis (fsQCA). This technique is based on a statistically-informed configurational approach to draw predictive conclusions (Kraus et al. 2018 ; Kumar et al. 2022 ). It is grounded on set theory and allows for a detailed investigation of causal complexity (Misangyi et al. 2017 ). The basic assumptions of this procedure are: (i) conjunctural causation: the effect of a single condition unfolds in combination with other conditions; (ii) equifinality, which means that different configurations of conditions may lead to the same outcome; (ii) casual asymmetry, which means that the condition leading to a positive outcome, are not necessarily the opposite of its negation (Iannacci and Kraus 2022 ).

Using the SmartPLS 3 software (Ragin and Davey 2016 ), partial least squares structural equation modelling (PLS-SEM) was applied to evaluate the conceptual model (Ringle and Sarstedt 2017 ; Ringle et al. 2015 ). Multiple experiments were run to gauge the measurement model's validity and reliability. More particularly, we examined the reliability, convergent validity, internal consistency reliability, and discriminant validity in accordance with Hair et al. ( 2017 ). The results demonstrate that all items' standardized factor loadings were significant (p 0.001) and more than 0.6 (varying from 0.701 to 0.905), supporting the reliability of each individual indicator, according to Table  1 . Internal consistency reliability was supported by Cronbach alphas and composite reliability (CR) values that were higher than 0.7 (Hair et al. 2017 ).

Additionally, we investigated for convergent validity, which was shown to be true given that all constructions' components loaded significantly and positively. Convergent validity was further supported by the constructs' CR values exceeding 0.70 and the average extracted variance (AVE) exceeding the 0.50 threshold (Bagozzi and Yi 1988 ). The Fornell and Larcker ( 1981 ) criteria, which is illustrated in the diagonal of Table  1 and states that each construct's square root of AVE should be greater than its largest correlation with any other construct, was used to assess the discriminant validity. Additionally, we determined the heterotrait-monotrait ratio (HTMT) need (Henseler et al. 2015 ). Table 1 's findings demonstrate the discriminant validity of the HTMT ratios as being below 0.85 (Hair et al. 2017 ; Henseler et al. 2015 ).

Before assessing the quality of the research model, we first confirmed the collinearity as suggested by Hair et al. ( 2017 ). As such, we estimated the variance inflation factor (VIF) values that ranged from 2.111 and 2.693, values pointing to no collinearity since are below the limit of 5 (Hair et al. 2017 ). We also tested for the coefficient of the determination (R 2 ) and Q 2 for additional confirmation of the model quality. Accordingly, the results for the two endogenous variables reported a R 2 surpassing the threshold of 10% (Falk and Miller 1992 ), and positive Q 2 values, as shown in Table  2 .

We used 5000 subsamples in a bootstrapping approach to assess the significance of the parameter estimations to test the hypothesis (Hair et al. 2017 ). The results presented in Table  3 show that organizational culture and organizational climate do not influence both types of innovation (for organizational culture β  = 0.129, n.s.; 0.165, n.s.; and for organizational climate 0.108, n.s.; 0.050, n.s. respectively for exploitation and exploration). As such, H1a,b and H5a,b are not supported. Market orientation positively influences innovation exploitation and exploration ( β  = 0.225, p  < 0.05; and β  = 0.402, p  < 0.001, respectively), thus H2a,b are supported. This result provide support for H1a and H1b , respectively. Regarding, the influence of a proactive management on both types of innovation was not significant ( β  = 0.005, n.s. ; and β  = 0.030, n.s. ), providing no support for H3a and H3b . The existence of an organizational organic structure was also found to has a significantly and positive relationship with innovation exploitation, however such relationship with exploration was not supported ( β  = 0.304, p  < 0.01; and β  = 0.126, n.s.) which supports H4a but not H4b respectively.

To gain additional insights about the influence of the independent variables on innovation exploration and exploitation, we performed a configurational analysis by means of fuzzy set qualitative comparative analysis (fsQCA). As such, in this study, we assumed that proactive management, culture, organic structure, organizational climate and market orientation could be combined in multiple ways to achieve an innovation exploration and exploitation.

The first procedure consisted of analyzing the necessary conditions, meaning that the consistency of each construct must be equal to or greater than 0.9 (Ragin 2014 ). The consistency values ranged from to 0.73 to 0.79, meaning that none of the five conditions nor their negation were a necessary condition for innovation exploration and innovation exploitation nor for their negation.

The second procedure focused on the analysis of sufficiency of the causal conditions. We followed the recommendations of Rihoux and Ragin ( 2009 ) and Fiss ( 2011 ) to verify this parameter for all the independent constructs. This analysis was performed suing three steps. First, the truth table was elaborated considering all logical combinations of the five conditions. Second, the reduction of the truth table was conducted considering a minimum frequency of three cases, and a lowest acceptable frequency of 0.8 (Ragin 2014 ). Third, the proportional reduction in inconsistency (PRI) was also taken into consideration by eliminating the configurations that had this indicator inferior to 0.7.

After testing the quality of the results, the simplified configurations were extracted using Boolean minimization and Quine–McCluskey algorithm (Ragin 2014 ). The results of the intermediate solution are shown in Table  4 for innovation exploration and in Table  5 for innovation exploitation. The consistency values for all combinations and for the overall solution were superior to 0.8 (Ragin 2014 ). As such, all configurations could be considered sufficient for innovation exploration and for innovation exploitation.

Considering the results of Table  4 , hypothesis 6 is supported. In fact, three configurations competed to high innovation exploration and three to low innovation exploration. Market orientation was not only considered a core condition, but it was also present in the three configurations related to high innovation exploration. The first configuration (C1 expl ) considered that firms with high market orientation but with low proactive management, low organic structure (formal structure) and low organizational climate are capable of high innovation exploration.

As mentioned, fsQCA considers an asymmetric approach. As such, we also analyzed the configurations leading to low innovation exploration. The first combination (C4 expl ) considered low market orientation combined with low organic structure and low organizational climate. The fifth combination (C5 expl ) incorporates high proactive management and culture and low organizational climate and market orientation. Finally, C6 expl combines low proactive management, culture, and market orientation.

Similar number of combinations can be found in Table  5 in relation to innovation exploitation. Similarly, market orientation is core condition and common to two of the configurations leading to high innovation exploitation.

The first configuration C1 expt considers that high innovation exploitation is the result of the combination of high organizational climate with low culture and market orientation. C2 expt combines high market orientation and low organic structure and organizational climate. The third configuration (C3 expt ) integrates high market orientation, proactive management, and culture. For low innovation exploitation three configurations were identified. The fourth and sixth configurations are equal to the one identified in innovation exploration. The fifth configuration (C5 expt ) corresponds to low proactive management, culture, and market orientation.

5 Discussion and implications

5.1 the importance of market orientation for the agribusiness.

Both the results obtained in the structural model and through fsQCA highlight the role of market orientation in both exploratory and exploitative innovation. The market orientation proves to be a predictor of both innovation orientations, and the structural model revealed that it constituted the single factor for exploitation and, in combination with a more organic structure, fostered innovation. The fsQCA results also show the importance of market orientation, with almost all combinations incorporating high innovation in both orientations. A low level of market orientation is an integral part of all combinations associated with low innovation of agri-food firms, in both orientations. This result supports the findings of previous studies that showed the influence of market orientation on both exploitative (Akman and Yilmaz 2008 ; Prifti and Alimehmeti 2017 ) and explorative innovation (Jaworski and Kohli 1996 ). Moreover, this result is also in line with other studies applied to the agri-food industry (Mirzaei et al. 2016 ; Ho et al. 2018 ; Kamarulzaman et al. 2023 ) that also showed the existence of a positive relationship between market orientation and innovation. In addition, and in line with the study by Hurley and Hult ( 1998 ) who considered that market orientation is an antecedent of the firm's predisposition towards the development of new ideas, this predisposition constitutes an aspect of the organizational culture that positively influences the capacity to innovate.

In the first combination of exploration and in the second of exploitation, market orientation emerges as the only factor. This fact reveals that, for a given group of agri-food companies, it is sufficient to develop market orientation capabilities to generate ambidextrous innovation, and the type of company structure and management is irrelevant. This finding is an important contribution of this study, given that previous studies had not detected this unique effect of market orientation.

5.2 Do organizational factors really influence innovation in agri-food firms?

With respect to the remaining organizational and management factors, the fsQCA results allow for a more refined analysis when compared to the structural model. While the structural model only indicates the organic structure as a predictor of innovation exploration, the configurational analysis reveals that there are combinations that integrate some of those factors. Thus, the second innovation exploration configuration encompasses proactive management, organizational culture and organic structure, excluding only organizational climate. The third combination integrates this last factor but excludes proactive management. Concerning to the agri-food industry, these findings extend existing knowledge by specifying which factors are effectively contributing to both types of innovation orientation. Previous research in this industry revealed that the internal factors or characteristics of a company are those that most influence its propensity to innovate (Lam et al. 2021 ; Castillo-Valero and García-Cortijo 2021 ). In particular, they found that innovative culture is particularly important for innovation. The study by Chen et al. ( 2018 ) concluded that the fit of organizations with exploratory and exploitative innovation strategy and organizational culture, improve and accelerate innovation quality. Our study confirms these results and specifies that culture should be associated with an organic structure to promote innovation exploration and with proactive management to generate innovation exploitation.

In the structural model, the organic organizational structure only influences innovation exploitation, but not innovation exploration. The fsQCA results provides different findings since organic structures are part of two configurations leading to high innovation exploration and does not integrate in any of the configurations for high exploitation. Previous research revealed this inconsistency regarding the role of the organizational structure in innovation generation (c.f. Savvides 1979 ). Studies by Jansen et al. ( 2006 ), Menguc and Auh ( 2010 ), Cabello-Medina et al. ( 2011 ) and Kalay and Lynn ( 2016 ) conclude that an organic structure in organizations favors innovation and innovative performance. However, Kalay and Lynn ( 2016 ) showed otherwise by concluding the negative effect of organic structure in radical innovation. As such, our study clarifies that an organic structure is not sufficient for both types of innovation orientation and needs to be combined with other organizational elements to generate innovation.

6 Conclusion

6.1 theoretical contributions.

This study makes several theoretical contributions. First, this study examines the separate effect of various organizational factors on innovation exploration and innovation exploitation. By doing so, it is possible to see that organizational antecedents do not influence both types of innovation equally, contributing to the organizational innovation theory. Second, this study highlights the unique effect of market orientation, not to say ubiquitous, as the main determinant in the generation of both types of innovation in agribusiness firms. Third, that some factors are less relevant such as organizational climate or proactive management. Fourth, this study shows that different combinations of organizational resources contribute to the same outcome, in this case innovation exploration and exploitation. The last two contributions are significant additions to the RBV theory. Fifth, the methodological use of the configurational theory explains how causally relevant conditions combine into configurations associated with the outcome of interest. Figure  3 provides a diagram that illustrates and details these contributions.

Groups of innovation exploration-oriented agribusiness firms

This study also shows that the business environment in this sector is far from homogeneous with respect to the innovation generated. That is, different groups have different combinations of factors leading to innovation. As such, Fig.  3 depicts the three groups of firms oriented to innovation exploration. On the left bottom are the firms fully committed to market orientation as a source of innovation. Above are the firms focused on organizational factors such as culture, structure and climate, showing less concern about managerial proactiveness. The bottom right group is composed of firms combining market orientation with proactive management. Finally, on the upper left, a group that combines of all the elements, but no innovation is expected.

In the same perspective, Fig.  4 presents the groups of firms associated with innovation exploitation. Similar to the previous one, a group just market oriented can be identified, as well as the group focused on management proactiveness. The main difference is related to the organizational focused group, which, in this case, is just based on organizational climate development. As in innovation exploration figure, the group combining all the factors is associated with no innovation.

Groups of innovation exploitation-oriented agri-business firms

6.2 Practical implications

The knowledge about the various configurations leading to exploration and exploitation innovation allows a more accurate definition of the competencies to be developed by agribusiness companies, helping to identify areas of improvement for firm management and for policymaking. The importance of market orientation was clearly seen in this study, pointing the way to managers in the close monitoring of competitors and customers, as well as alerting to the need to improve organizational processes towards a better ability to respond to changes in the environment. Policy makers are responsible for the development of market orientation competencies, which can be accomplished through training, identification and dissemination of best practices, and the implementation of consulting programs that support the transition of companies to an effective market orientation. For agribusiness firms’ management some important processes can be implemented, such as (i) closely monitor competitors and customers through market research, surveys, and customer feedback; (ii) improve organizational processes to better respond to changes in the environment by becoming more agile and adaptable, and investing in new technologies; (iii) develop market orientation capabilities through training, identifying and disseminating best practices, and providing consulting support.

On the organizational side, it was found that some factors such as organizational structure or culture may also play an important role, being essential areas to focus on by the companies' management. These are complex and long-term processes, and it is therefore important that policy makers can support companies in defining lighter structures, as these companies are often traditional and with long years of activity. Thus, the provision of skills that allow companies to lighten their structure can be achieved through incentive programs for operational efficiency. Agribusiness firms’ managers must (i) define lighter structures by simplifying hierarchies, reducing bureaucracy, and empowering employees; (ii) provide skills that allow companies to lighten their structure, specially by developing incentive programs for operational efficiency.

Here are some additional recommendations; (iii) foster a culture of innovation by encouraging employees to come up with new ideas, and by providing them with the resources and support they need to implement those ideas; (iv) collaborate with other organizations such as universities, research institutes, and other businesses to access new knowledge and resources, and to develop new products and processes.

Our study has social implications because innovation is essential for achieving sustainability goals and ambitions of international agreements (e.g., the European Green Deal), and developing lighter structures and fostering a culture of innovation creates a framework for understanding innovation holistically and systemically, and for engaging different stakeholders in the innovation process. This can help ensure that innovation serves a collective social purpose, rather than generating private returns and externalizing social and environmental costs. Additionally, since most agribusiness firms are located in less populated and developed areas, local communities can benefit from more innovative and competitive firms.

6.3 Limitations and future research

This study has some limitations. First, although the sample is considerable, a larger sample would allow for an even more detailed analysis. For example, it would be interesting to analyze the data according to the size of the firms or their position in the agri-business value chain.

Second, in this study we focus on studying some organizational and managerial dimensions of firms, following an organizational theory perspective. However, realizing that there are several configurations leading to innovation, alluding to organizational idiosyncrasy, this study suggests that this phenomenon can be studied in the light of resource-based theory, exploring the resources and capabilities that best explain both forms of innovation orientation.

Finally, this study is limited to the agri-food industry and to a specific region. Although the agri-food industry shares similarities with other natural resource industries, it is clearly different from other manufacturing industries. Therefore, the results presented here are considered industry-specific. In this sense, we identify the need for further and broader research. Future lines of research are proposed to replicate this study to generalize the results to Spanish agri-food companies, extending them also to other manufacturing industries and service sector companies.

Data availability

Data will be made available on request.

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Appendix 1: Measures

Innovation exploration.

Innovation exploitation

• Organizational culture

Market orientation

• Organic structure

• Proactive management

• Organizational climate

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Corchuelo Martínez-Azúa, B., Dias, Á. & Sama-Berrocal, C. The key role of market orientation in innovation ambidexterity in agribusiness firms. Rev Manag Sci (2024). https://doi.org/10.1007/s11846-024-00732-6

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The role of market orientation on company performance through the development of sustainable competitive advantage: The Inditex-Zara case

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Market orientation, Competitive advantage, Clothing industry, Organizational culture

This paper has been developed as a part of research seeking to verify the effects of organisational culture in general, and market orientation in particular, on the behaviour and results of managerial organisations. The difference with other existing work on the same subject is that this work uses the case method to bring managerial reality into closer contact with the university environment. This report contains the first of the case studies carried out in the context of this research, and examines Zara, a strategic unit in the Inditex group, which is shown to be a paradigmatic example of the development of market orientation in a company, as a basis for the company's performance and competitive advantages.

A study of business realities is crucial to bridge the distance between university studies and the business world and enable the student to realise that the subjects under discussion are not abstract, ideal concepts, but a reflection of reality (Munuera and Rodriguez, 2000, p. 15).

This case study is a reflection of this intention to bring the two worlds closer together, and uses the case method as an approach to the business world.

Although this method is more often used in teaching than in research, we agree with literature (Hartley, 1994; Yin, 1994; Bonache, 1999; Perez, 1999; Gummesson, 2000) on its validity as a research strategy, especially for the study of organisational culture and its effects.

The aim of this paper is to apply the case method to a study of market orientation as a characteristic culture in managerial organisations, and the effects of its implementation on the company's behaviour and results.

The present paper discusses the influence of market orientation on managerial organisations through analysis of the Inditex group, with emphasis on Zara. Companyspecific literature has been used, including other case studies on the group, interviews, press and Internet articles, and reports by financial analysts[l]. Specific questionnaires were sent out to members of different departments of the store chains which compose the group, and in-depth interviews were carried out with Mr Fernando Aguiar[2], a company executive and university lecturer.

1. The Inditex group and the clothing sector

Founded 38 years ago, the Inditex group is...

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The Impact of Market Orientation and Organizational Culture on the Performance : Case Study of SMEs

The purpose of this paper is to analyze the simultaneous effect of market orientation and organizational culture on the small to medium-sized industrial manufacturing firms‟ performance and to identify the most important routes influencing their performance. Here, a cross-sectional survey and variance based structural equation modeling is used for testing the hypotheses. The samples were selected based on a stratified sampling of commodity and specialty industries and consisted of 392 executive and marketing managers of small to medium-sized industrial enterprise located in Tehran province. The total structural model of the study conceptual framework is estimated using structural equation modeling. Compared to organizational culture, Results show that market orientation plays a more important role in influencing the financial performance of the industrial SMEs. Moreover, the results of the present study indicate that market trends are to some extent aroused by organizational culture...

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The Effect of Market Orientation on Marketing Performance: A Case Study on Commercial Bank of Ethiopia

Journal title, journal issn, volume title, description, collections.

The Leading Source of Insights On Business Model Strategy & Tech Business Models

What is Market Orientation? Product Orientation vs. Market Orientation

Market orientation is an approach to business where the company focuses more on the behaviors, wants, and needs of customers in its market. A company will first target a niche market to prove a commercial use case. And from there, it will create options to scale.

Table of Contents

Understanding product orientation

Product orientation is an approach to business where the company is focused on developing products and services of the best or highest quality.

This focus is supported by other activities such as research and development or the determination of optimal price points.

Ford’s Model T is an early example of product orientation.

Founder Henry Ford wanted to create a car that was easier to manufacture, inexpensive to repair, and simple to drive for customers who were unaccustomed to cars as a form of transportation.

The Model T also only came in black since it was the quickest drying color.

What is market orientation?

This approach requires the company to constantly evaluate what customers want with the intention to develop long-term relationships with them.

Companies like McDonald’s, Nike, Coca-Cola, and other multinational brands use market orientation to adjust their marketing mix in response to different audiences around the world.

While the product itself is important, these brands also understand that customer purchases are also driven by intangibles such as emotion.

Key differences between product and market orientation

Some of the more obvious differences between product and market orientation are explained in the following sections.

Timeline  

Note that most companies before the 1960s used the product orientation approach. During this time, products were relatively scarce and companies found success by manufacturing as many units as possible.

The Ford Motor Company we mentioned above is a classic example of this. With production the more successful strategy , investment in advertising and marketing was considered unnecessary.

Once products started to flood the market, however, customers had more choices and companies were forced to spend money on finding ways to differentiate their products via marketing , advertising, and innovation .

Modern examples of the product orientation approach are rare. Only companies who manufacture premium products with high brand equity or a culture of consistent innovation can pull it off.

Strategy vs. culture

Product orientation tends to be a strategy that companies use to increase the quality of their products and services. This quality is then reiterated to customers and used as a point of market differentiation.

In general, market orientation is a component of a company’s culture . In other words, the company’s customer-centrism extends beyond product development and is embodied by all employees, leaders, and operations.

Companies that utilize product orientation develop products based on the particular skills or abilities in which they excel.

While product orientation does not ignore the needs of customers per se, those that employ this approach believe that if they make the best product they can, customers will come to them.

Again, market orientation companies develop products based on customer wants and needs.

They actively try to understand the customer and ensure there is demand for the product or service before committing to taking the idea forward.

Developing a market from scratch

Developing a whole new market is one of the most sought-after endeavors for tech business leaders with the ambition to set trends.

Theories like the Blue Ocean Strategy are part of this trend.

However, opening up a whole new market requires considerable effort, as there is not yet a well-defined set of customers.

Thus, building distribution , fast execution, and iteration are the key.

Being a first-mover

Being a first-mover in a market can be a good advantage.

However, being first is not the key in a tech-driven business world.

Indeed, as the market develops and technology starts to get commoditized, it’s critical to be able to dominate a market in order to really take advantage of being a first-mover.

This requires scale.

Being a first-scaler

One thing is to be a first-mover; another is to be a first-scaler.

A first-scaler is a tech player who has not only opened up and developed a market from scratch but also has dominated that market.

This is a core difference to understand.

In fact, later entrants will have valuable lessons learned at the expense of the first mover, which they can take advantage of to build scale quickly.

Thus, to take advantage of the first-mover, a company must also be able to gain a first-scaler advantage.

When to develop a new market vs. taking advantage of an existing market?

Sometimes it makes sense to launch a business in an existing market; other times, when windows of opportunities develop, it’s possible to develop a new market.

Those are two completely different endeavors.

Going after an existing market can be much easier, as a set of defined customers understands what you’re selling.

On the contrary, going after a new market means you’ll have to educate customers first about the product before you can make the first sale.

Of course, there are also advantages of developing a new market; that is, there is no competition.

Whereas in an existing market, you will find yourself competing against many other players.

For that matter, it’s critical to understand the landscape around to build a viable business from the nose.

The type of market will completely change the company’s structure.

Below are some examples of the type of startup you can build depending on the market type.

Case Studies

Examples of Market Orientation:

• Startup’s Niche Focus: A health-tech startup initially targets elderly patients to validate the need for telemedicine. After validating the concept, they then expand to a broader age demographic.
• McDonald’s: Adjusts its menu in India by offering more vegetarian options, recognizing the country’s dietary preferences and religious beliefs.
• Nike: Launches a hijab sportswear line for Muslim women athletes, understanding the cultural needs and expanding its market reach.
• Coca-Cola: Introduces green tea-flavored beverages in East Asian markets to cater to local tastes.

Examples of Product Orientation:

• Ford’s Model T: Henry Ford’s decision to manufacture the Model T only in black to reduce production time and costs.
• Apple’s iPhone: Prioritizing high-quality design and unique features, assuming that customers will want the product because of its superior quality.
• Luxury Watch Brands: Companies like Rolex or Patek Philippe focus on the superior craftsmanship and quality of their products, believing customers will purchase based on these factors.

Examples of Timeline Shifts:

• Before 1960s: A vacuum cleaner company focuses on producing the most powerful and durable vacuums, assuming households will buy them due to their quality.
• After 1960s: The same company starts offering vacuums in various sizes and functionalities, recognizing diverse household needs and preferences.

Examples of Strategy vs. Culture:

• Strategy: A tech company emphasizing the superior battery life of its gadgets as a selling point.
• Culture: A retail brand like Zara constantly updating its collection based on real-time customer feedback and trends, ensuring all its operations align with customer preferences.

Key takeaways:

• Product orientation is an approach to business where the company is focused on developing products and services of the best or highest quality. Market-oriented companies are more focused on the wants and needs of customers in their market.
• Companies like McDonald’s, Nike and Coca-Cola employ market orientation to adjust their marketing mix in response to different customers around the world. They understand that purchase decisions are influenced by more than the product itself.
• Modern examples of the product orientation approach are rare. They tend to be concentrated in companies that manufacture premium products with high brand equity.

Key Highlights

• Focuses on understanding and fulfilling customer behaviors, wants, and needs.
• Aims to develop long-term relationships with customers.
• Involves adjusting marketing strategies based on diverse audience preferences.
• Brands like McDonald’s, Nike, and Coca-Cola use market orientation to cater to global audiences and emotional aspects of buying.
• Recognizes that intangibles like emotions play a role in customer purchases.
• Evolved as the market became more competitive and customers had more choices.
• Centers around producing high-quality products and services.
• Assumes that superior product quality, performance, or features drive demand.
• Historical examples include Ford’s Model T, which focused on simplicity and affordability.
• Often accompanied by research and development efforts.
• Initially successful when products were scarce, but became less effective as markets became saturated.
• Premium brands or innovators can still employ product orientation.
• Timeline : Product orientation was prominent before the 1960s; market orientation emerged as markets became more competitive.
• Strategy vs. Culture : Product orientation is often a strategic approach, while market orientation is a cultural aspect embraced throughout a company.
• Focus : Product orientation prioritizes a company’s strengths in creating the best products; market orientation focuses on customer preferences.
• Developing a Market : Companies pursuing market orientation may need to educate customers about their product, while product orientation assumes customers will come for quality.
• First-Mover vs. First-Scaler : Being the first mover can provide advantages, but being a first-scaler, dominating the market, is even more advantageous.
• Existing Market : Easier due to defined customer understanding; competition may be high.
• New Market : Requires educating customers about the product; offers opportunities without competition.
• Business Landscape : The type of market determines business structure and strategy .
• Involves creating uncontested markets by redefining market boundaries.
• Emphasizes value innovation , offering greater value at lower costs.
• Requires effort in distribution , execution, and iteration for success.
• Being a first-mover provides branding recognition, economies of scale, and switching costs.
• Being a first-scaler involves dominating a market and leveraging lessons from first-movers.
• Market orientation focuses on understanding and catering to customer preferences.
• Product orientation emphasizes producing high-quality products.
• Modern market orientation adapts to global audiences and emotional factors.
• Product orientation was historically successful but became less effective as competition increased.
• Different approaches are needed when developing new markets versus existing ones.
• Being a first-scaler adds an advantage to being a first-mover in tech markets.

Read Next: Product Orientation .

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Market Orientation

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Please note you do not have access to teaching notes, market orientation in university: a case study.

International Journal of Educational Management

ISSN : 0951-354X

Article publication date: 21 September 2010

The paper aims to analyse the relationship between market orientation (MO) and results in the field of higher education, considering the importance of university teaching staff MO in relation to satisfaction and establishing that this orientation is directly and positively affected by the MO of the upper hierarchical levels. The focus is on a university in a developing country.

Design/methodology/approach

The information was gathered from a convenience sample using a self‐administered questionnaire (219 teacher staff valid questionnaires and 34 directors, secretaries and head of course's questionnaires). Data were analysed using confirmatory factor analysis and structural equation analysis.

The results show that campus MO has a positive significant impact on the schools MO but not on the teaching staff. Likewise, the schools MO does not affect teaching staff MO. However, teaching staff MO does impact job satisfaction (JS).

Research limitations/implications

The study was carried out in a single university and therefore other Mexican universities may have particular characteristics which were not found here. Furthermore, this is the first application of the MO scale in another context. In addition, the study is centred on the administrative authorities and teaching staff from a personal point of view, self‐evaluation.

Practical implications

University administrators should take measures to increase and maintain MO in the teaching staff and consequently their JS. In order to join forces in a common goal, an atmosphere of cohesion must be developed and a system of incentives put in place to motivate market‐oriented behaviour and the adoption of an internal marketing focus.

Originality/value

Even some studies have examined MO in higher education institutions, almost all of them are in developed countries. This present paper therefore examines the application of MO, in a state education institution in a developing country.

• Market orientation
• Job satisfaction
• Higher education
• Measurement
• Testing and instruments

Küster, I. and Elena Avilés‐Valenzuela, M. (2010), "Market orientation in university: a case study", International Journal of Educational Management , Vol. 24 No. 7, pp. 597-614. https://doi.org/10.1108/09513541011079996

Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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Market Orientation When Customers Seem Content With the Status Quo: Observations From Indian Agri-business and a Case Study

DOI link for Market Orientation When Customers Seem Content With the Status Quo: Observations From Indian Agri-business and a Case Study

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In the agri-business arena, many products have descended to commodity status. The challenges in rising above commoditisation are accentuated in emerging markets such as India, which face the dual responsibilities of serving customers while enhancing the welfare of growers, who are typically small-scale farmers. Indian consumers, with their rising aspirations and incomes, present additional opportunities and challenges. In this chapter, we bring together these diverse considerations and their interplay and describe recent efforts by several Indian agri-business firms to become more market oriented. We then present an in-depth case study of a cold storage firm that is attempting to break out of the commodity trap. In closing, we discuss public policy initiatives underway in India to facilitate an economy-wide transition to market-driven orientation.

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Salmon Evolution’s IPO (B): Leveraging ESG for Sustainable Growth and Market Success

The case study focuses on the strategic use of environmental, social, and governance (ESG) principles by Salmon Evolution during its initial public offering (IPO) and subsequent growth phase. A Norwegian company founded in 2017, Salmon Evolution has made significant strides in sustainable aquaculture by adopting on-land salmon farming technologies that address the environmental and production challenges of traditional salmon farming. Leveraging its strong ESG proposition, it successfully went public with an IPO on the Euronext Oslo Stock Exchange in July 2021, after securing substantial funding through private placements and government grants. Salmon Evolution’s strategic focus not only facilitated its IPO but also positioned it as a potential global leader in sustainable salmon production, with plans to expand its market reach particularly in Asia and the United States, while maintaining a commitment to reducing carbon emissions and enhancing fish welfare through its innovative Hybrid Flow-Through System (HFS) technology.

The case study is designed to facilitate class discussion on the integration of environmental, social, and governance (ESG) principles into business strategy, particularly in the context of an initial public offering (IPO). The objectives are to explore the strategic use of ESG in capital raising and investor relations, understand the challenges of pre-revenue IPOs, discuss the role of ESG reporting and stakeholder communication, and examine the risks and opportunities associated with sustainable business practices in the aquaculture industry. The case study provides a comprehensive view of how Salmon Evolution, a Norwegian company specializing in sustainable salmon farming, successfully navigated the IPO process by emphasizing its ESG credentials to attract investment and position itself for global expansion while maintaining a commitment to sustainability and innovation in aquaculture.

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• IPO (Initial Public Offering)
• aquaculture
• growth funding
• investor targeting
• SDG3 Good Health & Well-Being
• SDG6 Clean Water and Sanitation
• SDG9 Industry, Innovation and Infrastructure
• SDG12 Responsible Consumption and Production
• SDG14 Life Below Water

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Jury rules NFL violated antitrust laws in 'Sunday Ticket' case and awards $4.7 billion in damages

LOS ANGELES -- A jury in U.S. District Court ordered the NFL to pay nearly $4.8 billion in damages Thursday after ruling that the league violated antitrust laws in distributing out-of-market Sunday afternoon games on a premium subscription service.

The jury awarded $4.7 billion in damages to the residential class and $96 million in damages to the commercial class. Since damages can be tripled under federal antitrust laws, the NFL could end up being liable for $14.39 billion.

The lawsuit covered 2.4 million residential subscribers and 48,000 businesses in the United States who paid for the package of out-of-market games from the 2011 through 2022 seasons on DirecTV. The lawsuit claimed the league broke antitrust laws by selling its package of Sunday games at an inflated price. The subscribers also say the league restricted competition by offering "Sunday Ticket" only on a satellite provider.

The NFL said it would appeal the verdict. That appeal would go to the 9th Circuit Court of Appeals and then possibly the Supreme Court.

Should the NFL end up paying damages, it could cost each of the 32 teams approximately $449.6 million.

"We are disappointed with the jury's verdict today in the NFL Sunday Ticket class action lawsuit," the league said in a statement. "We continue to believe that our media distribution strategy, which features all NFL games broadcast on free over-the-air television in the markets of the participating teams and national distribution of our most popular games, supplemented by many additional choices including RedZone, Sunday Ticket and NFL+, is by far the most fan friendly distribution model in all of sports and entertainment.

"We will certainly contest this decision as we believe that the class action claims in this case are baseless and without merit."

The trial lasted three weeks and featured testimony from NFL Commissioner Roger Goodell and Dallas Cowboys owner Jerry Jones.

"Justice was done. The verdict upholds protection for the consumers in our class. It was a great day for consumers," plaintiffs attorney Bill Carmody said.

During his closing remarks, Carmody showed an April, 2017, NFL memo that showed the league was exploring a world without "Sunday Ticket" in 2017, where cable channels would air Sunday afternoon out-of-market games not shown on Fox or CBS.

The jury of five men and three women deliberated for nearly five hours before reaching its decision.

Judge Philip S. Gutierrez is scheduled to hear post-trial motions on July 31, including the NFL's request to have him rule in favor of the league because the judge determined the plaintiffs did not prove their case.

Payment of damages, any changes to the "Sunday Ticket" package and/or the ways the NFL carries its Sunday afternoon games would be stayed until all appeals have been concluded.

The league maintained it had the right to sell "Sunday Ticket" under its antitrust exemption for broadcasting. The plaintiffs said that only covers over-the-air broadcasts and not pay TV.

Other professional sports leagues were also keeping an eye on this case since they also offer out-of-market packages. A major difference though is that MLB, the NBA and the NHL market their packages on multiple distributors and share in the revenue per subscriber instead of receiving an outright rights fee.

DirecTV had "Sunday Ticket" from its inception in 1994 through 2022. The league signed a seven-year deal with Google's YouTube TV that began with the 2023 season.

The lawsuit was originally filed in 2015 by the Mucky Duck sports bar in San Francisco but was dismissed in 2017. Two years later, the 9th Circuit, which has jurisdiction over California and eight other states, reinstated the case. Gutierrez ruled last year the case could proceed as a class action.

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