Does Market Orientation Lead to Firm Performance? Exploring the Mechanisms and Boundary Conditions

Abstract

The purpose of this study is to explore the mechanisms and boundary conditions that will enhance the effective transformation of the market orientation (MO) of the firm into firm market performance (PERF). We examined how MO influences PERF directly and indirectly through the new product development capability (NPDC) of the firm. We also examined the indirect conditional effect of social capital (SC) on the MO-PERF relationship through NPDC of the firm. Data from 313 managers and owners of small and medium enterprises (SMEs) in Ghana was used for the study. Data was analyzed using the conditional process analysis software, PROCESS in SPSS 23.0. Findings indicate that MO has a significant influence on PERF. Further, NPDC partially mediates the relationship between MO and PERF. We also found the indirect relationship between MO and PERF to be declining at higher levels of SC. We discussed the implication of the study’s findings for theory and practice.