Business strategies, profitability and efficiency of production

S. Alarcón, M. Sánchez


The strategy choices of market-oriented companies are a topic now under wide investigation in the analysis of business performance antecedents. The purpose of this study is to examine the outcomes of the combination of three different organizational strategies (market orientation, innovativeness and entrepreneurial orientation) on business performance indicators. Models using profitability and efficiency indicators are proposed with the specific aim of obtaining a deeper analysis of the relative roles played by each. The empirical work takes place in the agro-food industry in the Ebro Valley, one of Spain’s most competitive regions. The estimates from profitability quantile and truncated regressions of the efficiency scores reveal that market orientation has a positive effect on economic and productivity performance. The impact of pro-active, innovation-seeking, and risk-averse entrepreneurship is nevertheless more debatable, despite some influence of these entrepreneurial styles on observed performance values. This enables conclusions regarding the possibility of combining a market-oriented business culture with innovation and entrepreneurial activity with a view to obtaining business performance gains.


market orientation; innovativeness; entrepreneurial orientation; ROA; efficiency

Full Text:



Aldás-Manzano J, Küster I, Vila N, 2005. Market orientation and innovation: an interrelationship analysis. Eur J Innov Man 8(4): 437-452. 

Aloulou W, Fayolle A, 2005. A conceptual approach of entrepreneurial within small business context. J Enterpr Cul 13(1): 21-45. 

Álvarez L, Santos M, Vázquez R, 2000. Análisis cultural y operativo de la orientación al mercado. Efectos moderadores en la relación OM-Resultados. Rev Españ de Inv de Mark, ESIC 4(2): 7-42. 

Anderson JC, Gerbing DW, 1988. Structural equation modeling in practice: a review and recommended two-step approach. Psych Bull 103(3): 411-423. 

Anderson D, Tyler P, 2008. Modeling rural business innovation: a farm diversification application. Proc 82 Annual Conf of the Agric Econ Soc. Royal Agricultural College. UK. 

Appiah AK, 1998. Market orientation and performance: empirical test in a transition economy. J Strat Mark 1: 25-45. 

Arcas N, 2003. Contribución de las cooperativas agrarias de segundo grado a la orientación al mercado de sus cooperativas asociadas: efectos en el desempeño de la relación. CIRIEC-España. Rev Inf Soc Pub Coop 41: 139-161. 

Atuahene-Gima K, 1996. Market orientation and innovation. J Bus Res 33: 93-103. 

Bagozzi RP, Yi Y, 1988. On the evaluation of the structural equation models. J Acad Mark Sci 16(1): 79-94. 

Baker WE, Sinkula JM, 2007. Does market orientation facilitate balanced innovation programs: an organizational learning perspective. J Prod Inn Manage 24: 316-334. 

Banker RD, Charnes, A, Cooper WW, 1984. Some models for estimating technical and scale inefficiencies in data envelopment analysis. Manage Sci 30: 1078-1092. 

Bello L, Polo Y, Vázquez R, 2003. Recientes aportaciones del marketing a la cultura corporativa y a la obtención de ventajas competitivas. Pap de Econ Españ 78-79: 190-211. 

Berné C, Múgica JM, Yagüe MJ, 1996. La gestión estratégica y los conceptos de calidad percibida, satisfacción del cliente y lealtad. Econ Ind 307: 63-74. 

Bigné E, Vila-López N, Küster-Voluda I, 2000. Competitive positioning and market orientation: two interrelated constructs. Eur J Inn Manage 3(4): 190-198. 

Blesa A, Ripollés M, 2005. Relación entre la orientación al mercado y la orientación emprendedora: su influencia en el rendimiento de la empresa. Rev Eur de Direcc y Econ de la Empr 14(3):165-180. 

Calantone RG, Cavusgil ST, Zhao Y, 2002. Learning orientation, firm innovation capability and firm performance. Ind Mark Manag 31: 515-524. 

Charnes A, Cooper WW, Rhodes E, 1978. Measuring efficiency of decision making units. Eur J Oper Res 2: 429-444. 

Churchill GA, 1979. A paradigm for developing better measures of marketing constructs. J Mark Res 16: 64-73. 

Covin JG, Covin TJ, 1990. Competitive aggressiveness, environmental context, and small firm performance. Entrepr: Theor Prac 14(4): 35-50. 

Covin JG, Slevin DP, 1989. Strategic management of small firms in hostil and bening environments. Strat Manage J 10: 75-87. 

Covin JG, Slevin DP, 1991. A conceptual model of entrepreneurship as firm behaviour. Entrepr: Theor Prac 16(1): 7-25. 

Covin JG, Miles MP, 1999. Corporate entrepreneurship and the pursuit of competitive advantage. Entrepr: Theor Prac 23(3): 47–63. 

Cronbach L, 1951. Coefficient alpha and the internal structure of test. Psychom 16: 297-334. 

de Jong JPJ, Vermeulen PA, 2006. Antecedents of product innovation in small firms. Inter Small Bus J 24: 587-609. 

Desphandé R, Farley JU, 1998. Measuring market orientation: generalization and synthesis. J Mark-Focus Manage 3: 213-232. 

EC, 2007. Competitiveness of the European Food Industry. An economic and legal assessment. European Commission. Available in [15 February 2011]. 

Furtan WH, Sauer J, 2008. Antecedents of food industry performance: survey data and regressions for Denmark. J Agr Econ 59(3): 555-573. 

Gellynk X, Vermeire, E, Viaene J, 2007. Innovation in food firms: contribution of regional networks within the international business context. Entrepr Reg Dev 19(3): 209-226. 

Girardi A, Soutar GN, Ward S, 2005. The validation of a use innovativeness scale. Eur J Inn Manage 8(4): 471-481. 

Hair J, Anderson R., Tatham, RL, Black WC, 1998. Multivariate data analysis with readings, 5th ed. Englewood Cliffs, Prentice Hall, NY. 745 pp. 

Haugland SA, Myrtveit I, Nygaard A, 2007. Market orientation and performance in the service industry: a data envelopment analysis. J Bus Res 60(11): 1191-1197. 

Huiban JP, Boushina Z, 1998. Innovation and the quality of labour factor: an empirical investigation in the French food industry. Small Bus Econ 10(4): 389-400. 

Hurley RF, Hult TM, 1998. Innovation, marketing orientation and organizational learning: an integration and empirical investigation. J Mark 62(4): 42-54. 

Im S, Hussain M, Sengupta S, 2008. Testing interaction effects of the dimensions of market orientation on marketing program creativity. J Bus Res 61: 859-867. 

Kaiser H, 1974. An index of factorial simplicity. Psychom 39(1): 31-36. 

Kara A, Spillan JE, de Shields OW, 2005. The effect of a market orientation on business performance: a study of small-sized service retailers using MARKOR scale. J Small Bus Man 43(2): 105-118. 

Kijewski V, Gross I, 1990. Market driven versus customer driven. Institute for the study of business markets. The Pennsylvania State University, 9.90. 

Koenker R, Basset G, 1978. Regression quantiles. Econometrica 46 (1): 33–50. 

Kohli AK, Jaworski B, 1990. Market orientation: antecedents and consequences. J Mark 57: 53-70. 

Kumar K, Subramanian R, Yauger C, 1998. Examining the market orientation- performance relationship: a context-specific study. J Manage 24(2): 201-233. 

Laforet S, 2008. Size, strategic and market orientation effects on innovation. J Bus Res 61: 753-764. 

Lehmann DR, Gupta S, Steckel JH, 1999. Marketing research. Ed. Addison-Wesley, NY. 

>López L, 2006. Orientación al mercado y estrategia empresarial en la industria de productos alimenticios y bebidas. Doctoral thesis. Univ Granada, Granada, Spain. 

Lumpkin GT, Dess GC, 1996. Enriching the entrepreneurial orientation construct a reply to entrepreneurial orientation or pioneer advantage. Acad Manage 21(3): 605-607. 

Lumpkin GT, Dess GC, 1997. Proactiveness versus competitive aggressiveness: teasing apart key dimensions of an entrepreneurial orientation. In: Frontiers of entrepreneurship research (Reynolds P et al., eds.). Babson College, Wellesley, MA, USA. pp: 47–58. 

Luque T, 2000. Técnicas de análisis de datos en investigación de mercados. Ed. Pirámide, Madrid. 

Mamaqui X, González MA, Albisu LM, 2009. La relación entre ventajas competitivas y resultados empresariales en la industria agroalimentaria aragonesa. Econ Agr Rec Nat 9(2): 79-104. 

Mavondo FT, Chimhanzi J, Stewart J, 2005. Learning orientation and market orientation. Eur J Mark 39(11-12): 1235-1263. 

Miles RE, Snow CC, 1978. Organizational strategy, structure and process. McGraw Hill, NY. 304 pp. 

Miller D, 1983. The correlates of entrepreneurship in three types of firms. Manage Sci 29(7): 77-89. 

Mintzberg H, 1973. The nature of managerial work. Harper and Rowe, NY. 217 pp. 

Narver JC, Slater SF, 1990. The effect of a market orientation on business profitability. J Mark 54(4): 20-35. 

Nunnally J, 1978. Psychometric theory. McGraw Hill, NY. 

Oczkowski E, Farrell MA, 1997. Discrimination between measurement scales using non tested tests and two-stage least squares estimators: the case of market orientation. Int J Res Mark 15(4): 349-366. 

Paladino A, 2008. Analyzing the effects of market and resources orientations on innovative outcomes in times of turbulence. J Prod Innov Manage 25: 577-592. 

Quinn JB, 1986. Innovation and corporate strategy: managed chaos. In: Technology in the modern corporation: a strategic perspective (Horwitcz, eds.). Pergamon Press, NY, pp: 167-183. 

Salavou H, Avlonitis G, 2008. Product innovativeness and performance: a focus on SMEs. Manage Dec 46(7): 969-985. 

Sanzo MJ, Santos ML, Vázquez R, Álvarez LI, 2003. The effect of market orientation on buyer-seller relationship satisfaction. Ind Mark Manage 32(4): 327-345. 

Schindehutte M, Morris MH, Kocak A, 2008. Understanding market-driving behaviour: the role of entrepreneurship. J Small Bus Manage 46(1): 4-26. 

Schumpeter J, 1934. The theory of economic development. Cambridge Univ Press, Cambridge (UK). 255 pp. 

Siguaw JA, Simpson PM, Enz CA, 2006. Conceptualizing innovation orientation: a framework for study and integration of innovation research. J Prod Innov Manage 23(6): 556-574. 

Simar L, Wilson PW, 1998. Sensivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models. Manage Sci 44(1): 49-61. 

Simar L, Wilson PW, 2007. Estimation and inference in two-stage, semi-parametric models of production processes. J Econ 136(1): 31-64. 

Simpson PM, Sigaw JA, Enz CA, 2006. Innovation orientation outcomes: the good and the bad. J Bus Res 59: 1133-1141. 

Slater SF, Narver JC, 1994. Does competitive environment moderate the market orientation performance relationship? J Mark 58: 46- 55. 

Spillan J, Parnell J, 2006. Marketing resources and firm performance among SMEs. Eur Manage J 24(2-3): 236-245. 

Vázquez R, Santos ML, Álvarez LI, 2001. Market orientation, innovation and competitive strategies in industrial firms. J Strat Mark 9: 69-90. 

Zahra SA, Jennings DF, Kuratko DF, 1999. The antecedents and consequences of firm level entrepreneurship: the state of the field. Entrepr: Theor Pract 24(2): 45-46. 

Zaltaman R, Duncan H, Holbeck J, 1973. Innovations and organizations. Wiley and Sons, NY. 212 pp. 

Zelenyuk V, Zheka V, 2006. Corporate governance and firm's efficiency: The case of a transitional country, Ukraine. J Produc Anal 25(1): 143-157. 

Zirger BJ, Maidique MA, 1990. A model of new product development: an empirical test. Manage Sci 36(7): 867-883. 

DOI: 10.5424/sjar/2013111-3093