THE ROLE OF ENTREPRENEURIAL ORIENTATION AND MARKET ORIENTATION IN FIRM PERFORMANCE: A MALAYSIAN CASE
Purpose: This study investigates the extent to which entrepreneurial orientation and market orientation play their roles in improving firm performance. The evidence is based on Malaysian firms from different industrial sectors.
Methodology: Questionnaires are used to collect data from CEOs, managing directors and managers of those Malaysian firms that have been engaged in multinational business in last three years. To ensure reliability, factor analysis method is used. We employ Kaiser-Meyer-Olkin (KMO) model to measure sampling adequacy. For composite variables we used summated scales and through factor analysis these composite variables are derived. The association among variables was checked through reliability analysis. This study also use linear and multiple regressions model to test the relationship between dependent and independent variables.
Findings: Overall, results indicate that entrepreneurial orientation and market orientation had a great influence on firm performance of Malaysian firms. Moderate correlation found between firm performance and entrepreneurial orientation constructs, whereas, significant and strong correlation exists between market orientation and overall firm performance. Similarly, it can be suggested from the results of bivariate correlation analysis that market orientation practices and competitor orientation are positively and significantly related with each other. A positive association is found between firm performance and all other factors. Significant correlation found from the results of bivariate correlation analysis between firm performance and entrepreneurial orientation and market orientation. A greater explanatory power is demonstrated by all constructs together on firm performance. The relationship between firm performance and all four factors is significant and positive based on correlation analysis. Overall, our survey confirms that our both constructs are appropriate for developing marketing strategies at international level in emerging economies.
Research Limitations: This study has some limitations. First, only Malaysian firms are included in the sample, while a mix of different countries’ firms might form a better sample. Second, results can be generalized on Asian emerging countries, while the mix sample consist of developing and developed counties might give those results that can be generalized on both types of countries. Third, this study use only few parameters of firm performance for analysis, whereas, different results are likely to be obtained by incorporating some other performance parameters in regression model. Fourth, a short time horizon might yield less reliable results which can be removed in future studies by using long time horizon.
Originality: This research is conducted on Malaysian industrial sector firms to demonstrate the impact of entrepreneurial orientation and market orientation on firm performance. This provides base to Malaysian firms to improve their firm performance in the light of given results and formulate strategies regarding entrepreneurial and market orientation that would be in favor of all stakeholders.