Market Orientation, Competitive Advantage and Business Performance: Exploring the Indirect Effects

In this paper, we address insufficiently explored indirect relationships between market orientation (MO), organizational strategic resources and business outcomes. Previous studies have identified MO as a key strategic asset that contributes to competitive advantage and ultimately to business performance. However, the extant research is at best partial in addressing the contingencies that might uphold these relationships. The goal of this study is to extend the existing knowledge by showing that MO complements with other strategic management processes that are relevant for business success. To address the research question, a conceptual model with three hypotheses was developed. Data was obtained with a survey questionnaire on a sample of 265 medium and large-sized firms from Croatia. The findings indicate that MO influences competitive advantage stronger at higher levels of VRIN resources. Also, findings suggest that competitive advantage mediates the relationship between MO and business performance. In the end, the theoretical and managerial implications are presented along with future research directions in light of the limitations of this study.