Drivers of market orientation and performance in service firms

Service industries are undeniably important in the USA. They account for 72 percent of GNP and 76 percent of employment. In recent years, service firms have been experiencing a changing and increasingly competitive market place. Until now, few top management teams (TMTs) of service businesses have accorded all three aspects of market orientation (customer‐orientation, competitive orientation, and interfunctional co‐ordination) as much importance as have their colleagues in manufacturing. Using data obtained from a diverse set of service industries, e.g. law firms, accounting firms, automobile glass replacement specialists, medical group practices, and advertising companies, a structural equations model was developed and analyzed. Results revealed: a strong positive relationship between top management team (TMT) cohesiveness and market orientation; a strong positive relationship between both low environmental munificence and high dynamism with market orientation, and most significantly, a strong positive relationship between market orientation and organizational performance. The implications for service firms are clear: cohesive top management teams committed to implementing the marketing concept will have a competitive advantage ‐ no matter how unstable the competitive environment.