Welcome
How sustainability orientation makes
market-oriented firms more market
oriented
Dr. Satyendra Singh
Director, Centre for Emerging Markets
Professor, Marketing and International Business
Editor, International Journal of Business and Emerging Markets
University of Winnipeg, Canada
s.singh@uwinnipeg.ca
www.uwinnipeg.ca/~ssingh5
Outline
• Model, Definitions, and Theory
• Hypotheses Development
• Methodology
– Data collection and Sample Characteristics
• Analyses – Moderated Regression
• Results
• Discussions
• References
2
The Model
Sustainability
Market Orientation
-Customer
-Competitor
-Interfunctional
H1
H2
Control Variables
-Rel. Size, and cost
-competitor conc.
Business
Performance
-ROI
-Market Share
Growth
-New Product
Success Rate
3
Sustainability
4
Definitions
•Sustainability Orientation (OS)
• Consumption that can continue indefinitely
without the degradation of natural, physical,
human, and intellectual capital (Costanza, 1991)
•Market Orientation (MO)
•Firms’ ability to satisfy present and future needs
of customers by developing products or services
(Slater and Narver, 1994)
•Business Performance (BP)
• Return on Investment, Market Share Growth, New
Product Success Rate
4
Resource Agency Theory
(Hunt and Morgan, 1995)
•Marketing strategies and activities are inextricably
linked to the future of natural environment that
sustains all life.
•↓ consumption of scarce resources
•Not harming natural environment
•Ensuring sustainable supply chain management
•↓Reducing climate change impact
•Global warming, Child labor, Water supply
5
Hypotheses
• H1: MO leads to superior BP
• H2: SO moderates MO—BP relationship
•↑ SO  ↑ BP
• SO=sustainability Orientation
• MO= Market Orientation,
• BP= Business Performance
6
Data Collection
•Data Collection from Kompass Directory/Database
• New Delhi (Okhla Phase, PIN 110020; Naraina, PIN
110028; and, Wazirpur, 110052)
• Mumbai (Laxmi, PIN 400053; Powai, PIN 400076;
and, Thane Wagle, PIN 400604)
•Stratified Sampling
•18% percent response rate
•Telephone calls (1100) made, then followed up by
personal interviews if agreed to participate
•Three graduate students were recruited in each city
•78% asked for a copy of the results
•Questionnaire
•Respondents were knowledgeable (6.3 on 7-pt scale)
7
The Scales…
•Market Orientation (Narver and Slater, 1990)
•Measured on a 7-pt. scale, 1=strongly disagree, 4=neutral, and 7=strongly agree
•Customer Orientation (6)
•We have customer commitment
•We create customer value
•We understand customer needs
•We have customer satisfaction objectives
•We measure customer satisfaction
•We do after-sales-service
•Competitor Orientation (4)
•Our salespeople share competitors’ information
•We respond rapidly to competitors’ actions
•Our top managers discuss competitors’ strategies
•We target opportunities for competitive advantage
•Inter-functional Coordination (5)
•We make inter-functional customer calls
• We share information among functions
• We integrate functional strategy
• All functions contribute to customer value
• We share resources with other business units
8
The Scales…
•Sustainability Orientation (Dow Jones Sustainability Index,
(2009); Based on disclosure)
•Measured on a 7-pt. scale, 1=strongly disagree, 4=neutral, and 7=strongly agree
•Economic Orientation (5)
•Products and services breakdown
•Market share by region
•Information on major suppliers or creditors
•Employee stock option or bonus program
•Dividend distribution
•Social Orientation (5)
•Employee benefits – health, disability, retirement
•Human rights
•Job satisfaction
•Community involvement and charitable donations
•Employee training and education
•Environment Coordination (5)
• Energy, water or pollution related strategies
•Recycling strategies
•Waste management
•Environmental expenditures
•Environment non-compliance incidents
9
The Scales (Slater and Narver, 1994)
•Relative Size
•Measured on 7-pt scale, -3=Much smaller, 0=same, and +3=Much bigger
•to that of your largest competitor
•Relative cost
•Measured on 7-pt scale, -3=Much smaller, 0=same, and +3=Much bigger
•Average total operating cost relative to the largest competitor in your main market
segment
•Concentration
•Within served market(s), the sales are dominated by
•Measured on 7-pt scale, 1=less than 10 firms, 4=about 10 firms, and 7=by many firms
•Business Performance
•Measured on 7-pt scale, -3=very poor, 0=same, and +3=very good
•Return on Investment
•Market Share Growth
•New Product Development
10
Sample Characteristics
•Total Sample Size
•Manufacturing Products
•Providing Services
•Sales Turnover (<Rs.99m)
•Sales Turnover (between Rs.100 and Rs. 149m)
•Sales Turnover (>Rs.150m)
•Employee Turnover (<49)
•Employee Turnover (between 50 and 99)
•Employee Turnover (>100)
•Respondents’ designation (CEO/MD/Proprietor)
•Respondents’ designation (senior manager)
•Respondents’ designation (mid-level manager)
•Respondents’ relevant business experience (in years)
•Respondents’ international business experience (in years)10.7
•Proportion of outsourcing activities
205
115 (56%)
90 (44%)
88 (43%)
74 (36%)
43 (21%)
66 (32%)
84 (41%)
55 (27%)
125 (61%)
57 (28%)
23 (11%)
11.8
48%
11
MO – Factor Analysis…
Reliability and Validity Assessment of the Theoretical Construct Measures
Variables
Factor loading
Customer Orientation
(α = .79, adjusted α =.76)
Customer commitment
Create customer value
Understand customer needs
Customer satisfaction objectives
Measure customer satisfaction
After sales service
.73
.77
.79
.83
.78
.74
Customer Orientation
(α = .82, adjusted α = .81)
Salespeople share competitors’ information
Respond rapidly to competitors’ actions
Top managers discuss competitors’ strategies
Target opportunities for competitive advantage
.78
.80
.83
.78
Interfunctional Coordination
(α = .79, adjusted α = .77)
Interfunctional customer
Information shared among functions
Functional integration in strategy
All functions contribute to customer value
Share resources with other business units
.80
.77
.74
.80
.83
12
SO – Factor Analysis…
Reliability and Validity Assessment of the Theoretical Construct Measures
Variables
Factor loading
Economic Orientation
(α = .75, adjusted α =.73)
Products and services breakdown
Market share
Information on major suppliers and creditors
Employee stock option or bonus program
D1vidend distribution
.74
.76
.74
.75
.73
Social Orientation
(α = .73, adjusted α = .71)
Employee benefits – health, disability and retirement
Human rights
Job satisfaction
Community development and charitable donations
Employee training and education
.73
.72
.71
.73
.75
Environment Orientation
(α = .72, adjusted α = .70)
Energy, water, pollution related strategies
Recycling strategies
Waste management
Environmental expenditure
Environmental non-compliance incidents
.72
.71
.73
.72
.70
13
BP – Factor Analysis…
Reliability and Validity Assessment of the Theoretical Construct Measures
Variables
Factor loading (std.)
Business Performance
(α = .75, adjusted α = .73 )
Return on Investment
Market Share
New Product Success rate
.76
.77
.73
14
Moderated Regression Analyses
Standardized Coefficients (Standard Error)
DV=Business Perf
IV
Relative Size
Relative Cost
Concentration
BP
Model 1
.21*(.07)
-.11(.06)
.13(.09)
Market Orientation (MO)
BP
Model 2
.20*(.05)
-.14(.08)
.07(.06)
BP
Model 3
.18 *(.06)
-.16 (.09)
.10(.07)
BP
Model 4
.15(.04)
-.18(.06)
.11(.07)
.23*(.07)
.21 *(.07)
.22*(.08)
.23*(.08)
.21*(.05)
Sustainability orientation (SO)
MO * SO
F
R2
VIFmax
N
.23*(.06)
8.54*
.21
2.23
205
↑5%
* = p<.05
8.23*
.26
2.41
203
↑6%
9.37*
.32
2.19
201
↑4%
9.35 *
.36
2.31
202
15
Discussion
• H1: MO leads to superior BP
Supported (b=.23*, .21*, .22*; p<.05)
• H2: SO moderates MO—BP relationship
•↑ SO  ↑BP
•Supported (b=.23*, p<.05)
• SO=Sustainability Orientation
• MO= Market Orientation,
• BP= Business Performance
16
References
•Costanza, R., Daly, H.E. and Bartholomew, J.A. (1991), “Goals,
agenda, and policy recommendations for ecological
economies,” In R. Costanza (Ed.) Ecological Economies: The
Science and Management of Sustainability (pp. 1-20). New
York: Columbia University Press.
•Hunt, S.D. and Morgan R.M. (1995), “The comparative
advantage theory of competition,” Journal of Marketing,
59(2):1-15.
•Narver, J.C. and Slater, S.F. (1990), “The effects of a market
orientation on business profitability,” Journal of Marketing,
54(4): 20-35.
• Slater, S.F. and Narver, N.C. (1994), “Does competitive
environment moderate the market orientation-performance
relationship?” Journal of Marketing, 58(Jan): 46-55.
17
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