Conceptualising market orientation in non-profit organisations: definition, performance, and preliminary construction of a scale

Conceptualising market orientation in non-profit organisations: definition, performance, and preliminary construction of a scale
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  See discussions, stats, and author profiles for this publication at: Conceptualising market orientation in non-profit organisations: Definition, performance,and preliminary construction...  Article   in  Journal of Marketing Management · May 2010 DOI: 10.1080/02672570903485113 CITATIONS 30 READS 189 2 authors: Pratik ModiInstitute of Rural Management Anand 16   PUBLICATIONS   55   CITATIONS   SEE PROFILE Debiprasad MishraInstitute of Rural Management Anand 14   PUBLICATIONS   60   CITATIONS   SEE PROFILE All content following this page was uploaded by Pratik Modi on 02 June 2015. The user has requested enhancement of the downloaded file.  0 Conceptualising Market Orientation in Nonprofit Organisations: Definition, Performance, and Preliminary Construction of a Scale   Pratik Modi 1  Assistant Professor in Marketing Institute of Rural Management, Anand (IRMA) Address: Quarter B – 7, IRMA Campus, Institute of Rural Management  Near NDDB, Anand – 388001, India. Email: Alternate email: Phone: +91 9228313488; Fax: +91 02692260188 Debiprasad Mishra Professor Institute of Rural Management Anand (IRMA) Address: Quarter No: A – 16 IRMA Campus, IRMA Anand – 388001 Email:; Fax: +91 02692260188 1  Contact the first author for any correspondence related to this paper by email:  1 Acknowledgement: We thank the Institute of Rural Management for financially supporting this research. We also thank Raghav, Jayapadma and the anonymous reviewers for their helpful comments. ABSTRACT This paper applies Narver and Slater’s (1990) conceptualisation of market orientation to nonprofit organisations. The study constructs a reliable and valid scale of the market orientation in nonprofits in order to test the relationship between nonprofits’ market orientation and their  performance outcomes in the context of a developing country. We surveyed 211 Indian nonprofits and received 102 usable responses. We used principal axis factoring with oblique rotation to analyse the data. The scale was tested for its dimensionality, reliability and various validities. The findings show a positive link between nonprofits’ market orientation and their  performance in the context of a developing country. Market-oriented nonprofits were found to be more effective in achieving their organisational mission, beneficiary satisfaction and peer reputation than those that were less market oriented. Key Words  – Market orientation; Market orientation in nonprofit organisations (MONPO);  Nonprofit marketing; Scale construction; NGOs; India ABOUT THE AUTHORS Pratik Modi is an Assistant Professor in marketing area at the Institute of Rural Management, Anand (IRMA), in India. His areas of interest are market orientation, strategic marketing, and social marketing. Debiprasad Mishra is a Professor at the Institute of Rural Management, Anand (IRMA), in India. He chairs the thesis advisory committee of the first author. His interest areas are strategic management and local self-governance.  2 INTRODUCTION The marketing concept has been widely regarded as the cornerstone of modern marketing thought (Hunt 2002; Kotler 2000). Implementation of the marketing concept in an organisation is known as market orientation (Kohli and Jaworski 1990). Narver and Slater (1990) showed that market orientation had three behavioural components: customer orientation, competitor orientation and inter-functional coordination. Deshpande, Farley and Webster (1993) saw market orientation as a set of beliefs that put customers’ interests first. Day (1994) conceptualised market orientation as the market-sensing and customer-linking capabilities of an organisation. The essence of all these conceptualisations is the outward focus of an organisation on its key external influences (Jaworski and Kohli 1996). Market orientation has been found to be an important predictor of performance in various types of for-profit organisations (Appiah-Adu 1997; Kirca, Jayachandran and Bearden 2005;  Narver, Jacobson and Slater 1999; Pelham 1997; Pelham and Wilson 1996). There have also  been various measures of market orientation that have been developed for use in for-profit contexts (e.g., Deng and Dart 1994; Deshpande and Farley 1999; Kohli, Jaworski and Kumar 1993; Narver and Slater 1990; Ruekert 1992). Many prominent marketing thinkers (Drucker 1990; Kotler 1972; Kotler and Andreasen 1996; Kotler and Levy 1969; Rados 1981) have argued in favour of extending the marketing concept to nonprofit organisations (NPOs). However, NPOs have remained sceptical about adopting the marketing philosophy and practices. This could be ascribed in part to their lack of appreciation  3 about the meaning, importance, and relevance of the marketing concept to nonprofit organisations. Kotler and Andreasen (1996) reported that a majority of NPOs were sales oriented in their approach and lacked focus on their customers. Gonzalez, Vijande and Casielles (2002) assessed the product, sales, and market orientations in NPOs. The authors lamented the scant attention received by market orientation in NPOs.  Narver and Slater (1990) have presented a robust conceptualisation and measure of market orientation in the for-profit context (Mavondo 1999; Oczkowski and Farrell 1998). Researchers have found that practitioners are able to easily discuss and relate to Narver and Slater’s (1990) scale items (Hooley, Cox, Fahy, Shipley, Beracs, Fonfara and Snoj 2000). Moreover, the Narver and Slater operationalisation has also been found to be more effective in extracting variance and explaining variation in performance (Matsuno, Mentzer and Rentz 2005; Oczkowski and Farrell 1998). Despite the advantages of using Narver and Slater’s (1990) conceptualisation and operationalisation, researchers have not adapted it to study the market orientation of NPOs, or nonprofit market orientation, as we refer to in this paper. Neither has any validated instrument  been developed to measure nonprofit market orientation from the Narver and Slater (1990)  perspective. In this paper, we attempt to apply Narver and Slater’s (1990) conceptualisation of market orientation to organisations in the nonprofit sector. We follow the scaling procedures recommended in the literature (e.g., Churchill 1979; Clark and Watson 1995; Netemeyer, Bearden and Sharma 2003) to develop a preliminary scale of nonprofit market orientation. The rest of the paper is organised as follows. First, we present a review of the literature on nonprofit
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