Delivering value: Market orientation and distributor selection in export markets

Abstract

The concept of market orientation has attracted attention from both academics and managers and it has been widely used in the marketing discipline to explain marketing phenomena in business and consumer markets (Deshpande, Farley, & Webster, 1993; Jaworski & Kohli, 1993; Kohli & Jaworski, 1990; Steinman, Deshpande, & Farley, 2000). The most common output or effect attributed by the literature to the market orientation concept has been the firm's achievement of good or superior financial performance by delivering superior value to customers (Deshpande et al., 1993; Hunt & Lambe, 2000; Kohli & Jaworski, 1990; Narver & Slater, 1990). The market orientation concept has also generated a stream of research in both domestic and international markets (Breman & Dalgic, 2001; Cadogan & Diamantopoulos, 1995; Cadogan, Diamantopoulos, & de Mortanges, 1999; Dalgic, 1994; Siguaw, Simpson, & Baker, 1998). Along with the diverse effects attributed to the market orientation concept in both consumer and business markets, in domestic and international markets alike, a new research stream has recently emerged. It has been argued that the essence of market orientation is the successful management of a relationship between supplier and customer (Steinman et al., 2000). Some recent literature has stated that strong business relationships are better developed with those customers that are able to understand the value created and delivered by the firm (Webster, 1994). In that sense, partner fit appears to act to increase the occurrence of functional conflict and decrease dysfunctional conflict between business partners (Morris & Cadogan, 2001). However, despite the attention focused on market orientation, there is a gap in the literature concerning the link between customer selection, market orientation, and business performance. This may be especially true in international markets, where the cultural and physical distances between the supplier and buyer may act as export barriers. This paper proposes a conceptual model that addresses part of this gap. We begin with a brief discussion and definition of the concepts involved in our study. Then, we present a theoretical model characterising the relationship between customer selection, market orientation, and business performance. Our empirical context relies on export companies' distributor selection, as one of the most important choices a manufacturer will make in exporting (Cavusgil, Yeoh, & Mitri, 1995). Dealing with the correct overseas partner may allow the exporting firm to overcome the risk of unfamiliarity in overseas markets. This risk comes from environmental factors, which make the international arena different and unknown for the exporting firm. Moreover, these differences in overseas markets play against the implementation of the marketing concept (Cadogan & Diamantopoulos, 1995), and therefore also against the firm's market orientation. In that vein, our investigation proposes that exporting firms having a local partner, for example, a distributor, whose business characteristics are in accordance with the market orientation of the exporting firm, may help the exporter to implement the marketing concept and market orientation. Thus, from our perspective, the business characteristics of the selected international distributors are seen as a "facilitator" that helps the exporter to implement their market orientation overseas. The results of our exploratory study are provided and we conclude with a discussion of their implications for both theory and practice as well as directions for further research. © 2006 Elsevier Ltd. All rights reserved.