A SEM Analysis of Environment Moderation on Market Orientation and Performance

Abstract

There has been relatively little research that examines the relationship between strategic orientations, such as market orientation and their consequences on firm performance in developing countries. This research represents an attempt to do so from the Malaysian perspectives. This research examines the relationships between market orientation and firm performance and on the role of external environment factors as a moderator between market orientation and business performance relationship. The consideration of putting moderator factors in this research allows more precise descriptions on the relationship between the two variables mentioned and the outcome of the research. Hypothesized relationships are tested using survey responses from a sample of 386 owners / managers of SMEs in Malaysia which were obtain by mail survey. The analysis method of research used SEM AMOS 18 and SPSS 17 applications. The findings show that the market orientation exerts a positive effect on firm business performance. The external environmental factors do have a moderating effect on the relationship between market orientation and firm performance. The results reported in this research while contributing to the body of knowledge also present important ground for SMEs manager in formulating and implementing strategies to improve their business performance. Research’s limitations and recommendations for future research were also discussed