Market Orientation and Performance Measurement System Adoption Impact on Performance in SMEs

23 Pages Posted: 18 Aug 2015

See all articles by Aapo Ilmari Länsiluoto

Aapo Ilmari Länsiluoto

Seinäjoki Business School

Sanna Joensuu

Seinäjoki University of Applied Sciences

Elina Varamäki

Seinäjoki Business School

anmari viljamaa

Seinäjoki University of Applied Sciences

Kirsti Sorama

Seinäjoki University of Applied Sciences

Date Written: August 17, 2015

Abstract

This study investigates how market-oriented behavior (MO) and performance measurement systems (PMS) adoption are associated with performance in SMEs. Empirical data was collected by a survey from 123 Finnish firms. Empirical data is analyzed by structural equation modeling (SEM) and factor analysis. Factor analysis resulted in two different factors for the performance i.e. non-financial and financial. According to the results, MO has positive relationships with PMS adoption and non-financial performance. However, MO and financial performance have an indirect relationship when mediated by PMS adoption. We found also that PMS adoption is an important factor which explains variance both in financial and non-financial performance. Both MO and PMS adoption are important determinants of performance in SMEs but they have a different effect. Adoption of PMS enhances the effect of MO on firm performance. Thus, three (of four) hypotheses is supported. Overall, the results show for practitioners that improving marketing accountability in MO firms with PMS is compatible with performance improvement.

Keywords: Market orientation, performance measurement systems, performance, small firms

JEL Classification: M41

Suggested Citation

Länsiluoto, Aapo Ilmari and Joensuu, Sanna and Varamäki, Elina and viljamaa, anmari and Sorama, Kirsti, Market Orientation and Performance Measurement System Adoption Impact on Performance in SMEs (August 17, 2015). Available at SSRN: https://ssrn.com/abstract=2645734 or http://dx.doi.org/10.2139/ssrn.2645734

Aapo Ilmari Länsiluoto (Contact Author)

Seinäjoki Business School ( email )

Seinäjoki, 60100
Finland

Sanna Joensuu

Seinäjoki University of Applied Sciences ( email )

Kampusranta 11
Seinäjoki
Finland

Elina Varamäki

Seinäjoki Business School ( email )

Seinäjoki, 60100
Finland

Anmari Viljamaa

Seinäjoki University of Applied Sciences ( email )

Kampusranta 11
Seinäjoki
Finland

Kirsti Sorama

Seinäjoki University of Applied Sciences ( email )

Kampusranta 11
Seinäjoki
Finland

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