Journal of Business Research xxx (xxxx) xxx–xxx

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Synergistic effects of market orientation implementation and internalization

on firm performance: Direct marketing service provider industry
Haroon R. Abbua,
⁎,1
, Pradeep Gopalakrishnab,1
a
Advanced Analytics, IoT, & Data Services Innovation Lab, Bell and Howell, Research Triangle Park, Durham, NC 27713, United States of America
b
Department of Marketing, Lubin School of Business, Pace University, One Pace Plaza, New York, NY 10038, United States of America

ARTICLE INFO ABSTRACT

Keywords: We draw on recent advances in Market Orientation domain to examine the synergistic effects of market or-
Market orientation ientation implementation and internalization on firm performance in the context of digital transformation within
Internalization direct mail service provider industry. We introduce market orientation internalization as a mediator between
Direct marketing market orientation implementation and firm performance relationship. In addition, the effect of learning orientation
Digital transformation
is considered as a moderator that strengthens the relationship between market orientation implementation and
Hayes process model
Moderated mediation
market orientation internalization. The research model is empirically tested using Hayes (2013) conditional
Conditional process analysis process analysis utilizing a unique dataset from an industry that is undergoing an unprecedented digital
transformation from physical to digital communication. The results suggest that firms that practice high levels of
market orientation implementation and internalization perform better in both financial performance and cus-
tomer service performance.

1. Introduction customer orientation, competitor orientation, innovation, and profit as

inducements for creating satisfied customers (Kumar et al., 2011; Kohli
Rapid changes in business environments fueled by technological & Jaworski, 1990; Narver & Slater, 1990). In the literature spanning
innovations and disruptions have challenged senior management's over quarter of a century, market orientation has been studied primarily
ability to sense and dynamically respond to market changes. The in- as either a behavioral or cultural construct and researchers have ad-
ability to respond to such changes has led several venerable companies dressed them separately (Hult, Ketchen, & Slater, 2005). The behavioral
to flounder, restructure, or disappear completely. The demise of perspective views market orientation as a behavioral construct that
Blockbuster, Eastman Kodak, Motorola, Circuit City, RadioShack, emphasizes organizational information-processing activities like the
Blackberry, Borders, and Toys R Us —once considered the most in- generation of, dissemination of, and responsiveness to market in-
novative in their respective industries—illustrate how senior manage- telligence (e.g., Baker & Sinkula, 1999; Kohli & Jaworski, 1990). The
ment's inability to anticipate future market dynamics can lead to missed cultural perspective views market orientation as market-oriented values
opportunities that can send even a mighty enterprise off course and norms characterized by organization-wide adherence to values and
(Govindarajan & Trimble, 2010). For example, Blockbuster, in 2000, norms that emphasize the importance of creating and delivering su-
was the dominant name in movie rental business, but failed to adapt perior value to customers (Han, Kim, & Srivastava, 1998; Hurley &
their business model to account for digital platforms (e.g., Netflix), Hult, 1998; Narver & Slater, 1990). However, in practice, market or-
which resulted in Blockbuster declaring bankruptcy in 2010. In today's ientation is a set of market-oriented behaviors as well as an aspect of
dynamic business environments where business models are constantly organizational culture characterized by organization-wide adherence to
disrupted by technological innovation, it is necessary that senior lea- market-oriented values and norms. Towards this objective, the current
ders identify and understand strategic orientations that enable a firm to study integrates the behavioral and cultural perspectives of market
sustain performance (Kumar, Jones, Venkatesan, & Leone, 2011). orientation into a multi-dimensional construct and assesses its re-
Scholarly research has affirmed that market orientation is an ef- lationships with firm performance.
fective strategy for surviving in a competitive environment in that it Taking inspiration from Kirca, Bearden, and Hult (2011) conceptual
provides firms with a sustainable competitive advantage and focuses on model, the research model presented in the current study represents the

⁎
Corresponding author.
E-mail address: [email protected] (H.R. Abbu).
1
Both authors contributed equally to the paper.

https://doi.org/10.1016/j.jbusres.2019.06.004
Received 20 March 2018; Received in revised form 2 June 2019; Accepted 3 June 2019
0148-2963/ © 2019 Elsevier Inc. All rights reserved.

Please cite this article as: Haroon R. Abbu and Pradeep Gopalakrishna, Journal of Business Research,
https://doi.org/10.1016/j.jbusres.2019.06.004
H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

behavioral and cultural perspectives of market orientation using two driven organizations shift the span of all processes further towards the
distinct components: (i) implementation of market orientation and (ii) external end of the orientation dimension. This ensures that all market-
internalization of market orientation. Market orientation implementa- sensing and customer-linking capabilities are deeply embedded within
tion component enables firms to sense and respond to customer needs the organization and are better directed towards anticipating and re-
effectively while market orientation internalization component allows sponding to changing market requirements (Day, 1994). Accordingly,
the firm to internalize a shared set of market oriented norms and values market orientation increases an organization's ability to understand and
at the cultural level. This multi-dimensional perspective will provide a satisfy customers, thereby increasing its organizational capabilities
more nuanced understanding of the market orientation concept and its (Luo, Sivakumar, & Liu, 2005). Scholars affirm that a firm's market-
complex relationships with performance (Ashwin & Hirst, 2014; sensing capability is the most critical source of sustainable competitive
Crittenden, Crittenden, Ferrell, Ferrell, & Pinney, 2011; Foley & Fahy, advantage (e.g., Narver, Slater, & Tietje, 1998; Sinkula, 1994).
2009; Hult et al., 2005; Kirca et al., 2011; Stoelhorst & Van Raaij, Olavarrieta and Friedmann (2008) found that a firm's knowledge-re-
2004). The current study broadens the research by introducing market lated resources—namely, market-sensing capability, imitation cap-
orientation internalization as a mediator between market orientation ability, and organizational innovativeness and reputation assets—have
implementation and firm performance relationship. In addition, this a significant mediating effect on the market orientation–firm perfor-
study considers the impact of learning orientation as a moderator that mance relationship. Market-oriented firms have normally superior re-
strengthens the relationship between market orientation implementa- turns given their superior market sensing, imitation, and innovation
tion and market orientation internalization. skills as well as reputation assets. Similarly, Ramaswami, Srivastava,
and Bhargava (2009) used the resource-based view of the firm to pro-
1.1. Study setting: direct mail/marketing services provider industry pose that market-based assets and capabilities of a firm impact per-
formance in three market-facing business processes—new product de-
The current study is conducted in a direct mail/marketing services velopment, supply chain, and customer management—which, in turn,
provider industry, which is an exciting study setting as it undergoes an influence the firm's financial performance.
unprecedented digital transformation from physical to digital commu- Learning orientation refers to an organization-wide activity in-
nication. The U.S. mailing industry supports 7.5 million jobs (roughly volved in creating and using knowledge to enhance competitiveness.
6% of U.S. jobs) and $1.4 trillion in sales revenue (roughly 4.6% of U.S. Organizational learning refers to the development of new knowledge or
total output), making this industry about the same size as the airline or insights in the organization, with the potential to influence firm beha-
oil and natural gas industries (EMA, 2015). In 2017, the U.S. Postal vior (Olavarrieta & Friedmann, 2008). The literature points to three
Service delivered roughly 80 billion pieces of direct mail, representing fundamental organizational values - commitment to learning, shared
52% of all postal deliveries in that year. Direct mail spending in the US vision, open-mindedness (Sinkula, Baker, & Noordewier, 1997) – as
hit $45 billion in 2015 (EMA, 2015). However, technological innova- necessary variables for the organizational learning structure. Casey
tion in digital marketing and dynamic shift towards digital transfor- (2005) argues that organizations require competent people to learn and
mation have challenged traditional direct mail firms to play a larger interpret new market information and technology changes from the
role in the marketing value chain by offering a broad range of mar- external environment and to create new knowledge faster than other
keting and digital services. This state of disarray has opened the door to competitors. Learning orientation is also studied as a means to achieve
transform their businesses and expand their capabilities beyond print to strategic renewal (Crossan & Berdrow, 2003). The need for learning
address new opportunities (Foley Jr, 2011) and to build market-sensing orientation has been augmented with the need for creative learning
and organizational capabilities to quickly adapt to emerging changes in (Farrell & Oczkowski, 2002) with a goal of creating new information
the market. As Narver and Slater (1990) posited, market orientation is a and to establish a system to share it across the organization; need for
business culture that develops over time and as such, firms in this space learning from customers (Ottesen & Gronhaug, 2004); and need for
should realize this and immediately invest in the resources necessary to challenging existing assumptions about the way market operates
develop market capabilities as well as culture necessary to internalize (Farrell, 2000). Research also stresses on organizational unlearning,
it. The current study provides new insights into how implementation which may precede learning that drives successful transformations
and internalization levels of market orientation and performance nexus (Leal-Rodríguez, Eldridge, Roldán, Leal-Millán, & Ortega-Gutiérrez,
are connected in the context of the transition and revitalization of this 2015).
industry. A central theme of market orientation is the idea that any firm that
is able to raise its level of market orientation will improve its perfor-
2. Theory and hypotheses mance in the marketplace. Numerous studies have documented the
positive relationship between market orientation and business perfor-
In the extant literature, a firm's market orientation is seen as an mance (e.g., Baker & Sinkula, 1999; Homburg & Pflesser, 2000;
organizational capability that enables the organization to sense and Jaworski & Kohli, 1993; Narver & Slater, 1990; Subramanian &
respond to customers' needs in efforts to deliver superior value to cus- Gopalakrishna, 2001). The marketing strategy literature has posited
tomers (Day, 1994; Kohli & Jaworski, 1990). It consists of objective that market orientation provides a firm with market-sensing and cus-
actions, routines, and standard operating procedures that include tomer-linking capabilities that lead to superior organizational perfor-
market-oriented behaviors related to the generation and dissemination mance (Day, 1994; Hult & Ketchen, 2001). The results of Kirca,
of and responsiveness to market intelligence (Kohli & Jaworski, 1990). Jayachandran, and Bearden's (2005) meta-analysis of the consequences
In addition, the deepest manifestations of market orientation occur at of market orientation are consistent with traditional hypotheses that
the cultural level, consisting of a shared set of market-oriented norms market orientation has a positive impact on firm performance.
and values (Deshpande, Farley, & Webster Jr, 1993). Narver and Slater
(1990) viewed market orientation as fundamentally a culture where 2.1. Implementation/internalization dimensions of market orientation
market-oriented values and norms create and deliver superior value to
customers (Han et al., 1998; Hurley & Hult, 1998, Kirca et al., 2011) The implementation–internalization dimensions of market orienta-
and provide the cultural infrastructure of an organization (Gebhardt, tion is supported by organizational research from an institutional
Carpenter, & Sherry Jr, 2006; Homburg & Pflesser, 2000). theory perspective, which has been widely used for studying the
Based on resource-based theory, the marketing literature indicates adoption and diffusion of organizational practices among organizations
that market orientation provides the firm with market-sensing, cus- (e.g., DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1995;
tomer-linking, and channel-bonding capabilities (Day, 1994). Market- Tolbert & Zucker, 1983). The central tenet of institutional theory is that

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Fig. 1. Research model: first stage moderated mediation model showing the direct effect of market orientation implementation, mediating effect of market or-
ientation internalization, and conditional moderating effect of learning orientation on firm performance.

organizational actions and structures are embedded in the organiza- involves teaching organizational members the basic processes and skills
tional environment and are affected by the pressures of conformity and for creating superior value for customers while the market-back ap-
legitimacy (Scott, 2001). From this perspective, organizations sharing proach is characterized by the firm's focus on continuous experiential
the same environment tend to employ similar practices and become learning where the firm's customer value skills, resources, structures,
isomorphic with each other. In essence, institutional theory focuses on processes and procedures are continually adapted and improved to
the processes by which societal expectations of proper values, norms, profitably and effectively create superior value for customers.
and behavior influence the adoption of practices in organizations. The Consistent with the above discussed perspectives, Kirca et al. (2011)
adoption of these practices is explained by organizations' conformity to theorized that the implementation–internalization dimensions apply to
institutional pressures driven by legitimacy motives (DiMaggio & a firm's market orientation practice as well. In a point of difference from
Powell, 1983). the extant market orientation literature, Kirca et al. (2011) proposed
Implementation and internalization dimensions have also been that the implementation (i.e., behavioral) and internalization (i.e.,
studied in prior organizational research, i.e., in the adoption of orga- cultural) aspects of market orientation are distinct components that are
nizational practices and innovative technology (e.g., Kostova & Roth, not necessarily causally related. They further noted that the inter-
2002; Zeitz, Mittal, & McAulay, 1999). For example, Kostova and Roth nalization of market orientation complements the implementation of
(2002) suggested that the adoption response is comprised of a beha- market-oriented behaviors and that “internalization ultimately creates
vioral (i.e., the actual implementation of the practice) and an attitu- an organizational identity that does not change very easily and is pre-
dinal component (i.e., the internalized belief in the value of the prac- served even if individuals come and go”. Kirca et al. (2011) defined the
tice) and the different levels and configurations of these two implementation of market-oriented behaviors from an organizational
components reflected the variation in adoption response. Kostova and learning perspective as the development of behaviors related to the
Roth (2002) further observed that the implementation and inter- generation and dissemination of market information and responsive-
nalization elements of practice adoption reflect the overall level and ness to it in organizations (e.g., Kohli & Jaworski, 1990). In other
depth of the adoption. In other words, implementation is the set of words, market orientation implementation concerns “explicit, tangible,
actions and behaviors required by the practice whereas internalization and observable organizational behaviors and activities that enhance the
is the state in which the employees' view the practice as valuable and market information-processing capabilities of the firm” (Baker &
become committed to it. Internalization is conceptualized as the state in Sinkula, 1999). The internalization component captures the cultural
which the organization attaches meaning, norms, and values to the aspects of market orientation (e.g., Narver & Slater's, 1990 cultural
practice such that this practice becomes widely accepted by organiza- perspective) that emphasizes an organization-wide commitment to the
tional members (Zeitz et al., 1999). It is important to note that the creation of superior value for customers and ensures a common un-
implementation–internalization components of a practice are viewed as derstanding of and adherence to market-oriented values and norms.
related but distinct and are not necessarily causally related (Kostova & The research model is shown in Fig. 1 and statistical model is shown in
Roth, 2002). Along the same lines, Tolbert and Zucker (1996) identified Fig. 2.
pre-institutionalization, semi-institutionalization, and full in-
stitutionalization as three basic stages in the adoption of an organiza-
tional practice while Zeitz et al. (1999) identified initial adoption and 2.2. Direct effect of market orientation implementation
entrenchment as two stages of practice utilization. The im-
plementation–internalization distinction is also supported by prior re- The first hypothesis concerns the effects of a market orientation
search in marketing. Day (1994) observed that the most distinctive implementation on firm's financial performance and customer service
features of market-driven organizations are their mastery of the market- performance. Firms that implement market orientation are predicted to
sensing and customer-linking capabilities. Day (1994) proposed two perform better because they have the highest level of market-sensing
key approaches—the bottom-up redesign of underlying processes and and customer-linking capabilities compared to emergent and inactive
top-down direction and commitment—for building a market-oriented forms that lack these capabilities. These firms are in a better position to
organization. Narver et al. (1998) identified the programmatic ap- generate and disseminate market information, to sense the trends in
proach and market-back approach as two approaches that contribute to their markets, and to respond to changing customer requirements than
enhancing market orientation. The programmatic approach typically their competitors (Kohli & Jaworski, 1990). Furthermore, the high de-
gree of market orientation implementation exhibited by these firms

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Fig. 2. Statistical model: direct effect of market orientation implementation, mediating effect of market orientation internalization, and conditional moderating effect
of learning orientation on financial performance.

facilitates the identification of existing and latent customer needs by setting. As established in literature review section of the manuscript,
directing resources for creating innovative solutions to customer pro- the internalization of market orientation complements the im-
blems, which in turn contribute significantly to sales growth and plementation of market-oriented behaviors. Internalization ultimately
profitability (Atuahene-Gima, Slater, & Olson, 2005). Firms that have creates an organizational identity that does not change very easily and
high levels of market orientation implementation can sense the trends is preserved even with employee turnover (Kirca et al., 2011). As
in their industry and respond to changing customer requirements ef- Kostova and Roth (2002) observe, whether an innovative artifact can
fectively (Day, 1994). High levels of market orientation implementation survive and has significant continuous organizational impact depends
coupled with market-sensing capability enable organizations to learn mainly on the effectiveness of the process that transmits the value from
faster than their rivals. Firms may use this capability to create in- the artifact to the organization (i.e., internalization). When an artifact is
novative solutions to customers' problems continuously, thereby en- internalized, the employees view the artifact as valuable for the orga-
hancing their financial performance (Atuahene-Gima et al., 2005). On nization and become committed to it. The high levels of internalization
the other hand, low levels of market orientation implementation pre- allow the firm to internalize market-oriented values and norms, thereby
vent firms from developing information-generating and -processing creating a cultural infrastructure that focuses on the continuous crea-
capabilities. Furthermore, the weak market-sensing capabilities are tion of value for customers (Gebhardt et al., 2006; Narver & Slater,
predicted to have a more limited impact on financial performance. The 1990). The effective use of customer information through the market-
limited capability to sense the shifts in customers' preferences and the learning process provides them with a competitive advantage (Day,
lack of commitment to the creation of superior value for customers 1994). Therefore, firms with high levels of implementation and inter-
prevents these firms from developing strategies that satisfy the needs nalization are likely to outperform their rivals on key metrics, such as
and requirements of customers. Accordingly, the following hypotheses customer satisfaction, retention, and loyalty, because they have strong
are tested: customer-linking capabilities. On the other hand, the lack of inter-
nalization of market-oriented values and norms will prevent firms from
H1a. The extent of market orientation implementation is positively
developing customer-linking capabilities.
related to firm's perceived financial performance.
From the practical point of view, the current study is conducted in a
H1b. The extent of market orientation implementation is positively direct mail/marketing services provider industry, that is undergoing an
related to firm's perceived customer service performance. unprecedented digital transformation from physical to digital commu-
nication. A lion's share of firms in this space are nearly a century old,
have legacy processes, and tenured employees; and they must build
2.3. Mediating effect of market orientation internalization new market capabilities to survive. Authors' first-hand knowledge of the
industry and insights gained from various studies and executive inter-
Mediation (mediator variable) explains the relationship between the views have showed that firms in this space are investing in building
dependent variable and the independent variables. A mediator lies market-oriented capabilities, but the overall resistance and lack of
causally between the two variables (Baron & Kenny, 1986; Hayes, 2013; willingness to alter core operations internally remains a serious threat
Preacher & Hayes, 2008). The indirect effect of market orientation in realizing expected performance. Internalization of market orienta-
implementation on firm performance quantifies the sequence of causal tion provides employees with a cultural foundation that focuses on the
steps by which implementation affects performance through a mediator continuous creation of superior value for customers. In addition, in-
variable internalization. Market orientation Internalization is used as ternalization complements the implementation of market-oriented be-
mediator between Implementation and Firm Performance (perceived haviors and the two dimensions work synergistically towards achieving
financial and customer service) primarily based on theory and the study

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financial and customer service performance. Based on these predic- 3. Data and methods
tions, the following hypotheses are tested:
3.1. Data collection and sample
H2a. The market orientation internalization mediates the positive
relationship between market orientation implementation and
The sampling unit in the current study are firms that are in direct
perceived financial performance. Market orientation Internalization
mail/marketing service provider industry space. First, an exploratory
strengthens the relationship between implementation and perceived
list of marketing service provider firms is compiled by scanning through
financial performance.
Direct Marketing Association (DMA) directory, trade associations, and
H2b. The market orientation internalization mediates the positive professional groups associated with specified industries. Three industry
relationship between market orientation implementation and leaders reviewed the exploratory list to ensure they adequately re-
perceived customer service performance. Market orientation present the study setting. Next, database of key informants is compiled -
Internalization strengthens the relationship between implementation deciphering key information from industry contacts and secondary
and perceived customer service performance. sources. Prior studies have revealed that senior managers were highly
familiar with marketing strategy and performance of his/her firm
(Zhang & Duan, 2010). Informants are contacted by email to solicit
2.4. Moderating effect of learning orientation
their cooperation; a pre-notification message was sent to 500 firms
informing them of the study with primary objective to better under-
Moderation (moderator variable) alters the relationship between
stand business practices in the Direct Mail service provider industry.
two variables without entering the relationship. The moderating effect
The respondents were informed of the importance of this topic to
is “when” market orientation has an effect on performance. According
academic and business community and were assured of confidentiality
to Hayes (2013), “moderation refers to an interaction; a moderator
of their responses. In appreciation for their time, respondents were
variable is a variable that interacts with another variable, often with an
informed that they will receive a special report on containing the listing
independent or predictor variable.” The present study uses learning
of top 10 and top 200 direct mail service providers that was specifically
orientation as a moderator between market orientation implementation
compiled for the purposed of this study as well as a chance to win $50
and internalization. Since the study is conducted in a specific industry
Visa Gift Card and to receive summary of findings after study is com-
setting – many of the moderators used in prior studies (e.g., environ-
plete. One week after the pre-notification letter, a questionnaire titled
mental moderators) are less useful. In prior research, learning or-
“Direct Mail Business Practices Survey” created using Qualtrics was
ientation has been studied both as an independent variable as well as a
emailed to the same 500 firms. Two reminders were sent reminding
moderating variable. Baker and Sinkula (1999) argued that a learning
them of the importance of the survey to the direct mail industry as well
orientation moderates the relationship between market orientation and
as the offer to receive complementary reports relevant to their business.
change in relative market share, and market orientation and overall
A total response of 151 was obtained that yielded a usable response of
performance. Farrell (2000) found that both a market orientation and a
143 fully completed cases for an effective response rate of 28.6%.
learning orientation directly affect performance, with a slightly
Sample size and response rates were deemed sufficient based on sta-
stronger effect for a learning orientation. Sinkula (1994), Slater and
tistical power analysis conducted using G*Power software tool (Faul,
Narver (1995), Farrell (1999) have also found the positive relationship
Erdfelder, Lang, & Buchner, 2007). Using the number of predictors as
between at market orientation and learning orientation. According to
four including the interaction effect as shown in the research model
Casey (2005), learning orientation as an organizational capability en-
(market orientation implementation, market orientation internaliza-
ables an organization to keep pace with the changing environment.
tion, learning orientation, and implementation x learning orientation),
Slater and Narver (1994) argued that market orientation is a capability
medium effect size level (0.15), a moderate significance level (α
and the principal cultural foundation of learning organizations. Simi-
=0.05), and a power requirement of 0.80, the minimum required
larly, Kumar et al. (2011) pointed out that the constant gathering and
sample size was 85.
sharing of information regarding customers and competition within
Table 1 shows the profile of the sample organizations showed a
market-oriented firms encourage organizational memory and a culture
of continuous improvement. Market orientation, when coupled with
learning orientation creates an environment to foster a mutually ben- Table 1
eficial relationship between employees and their organizations to fa- Profile of sample characteristics.
cilitate learning and innovation (Huang & Wang, 2011). Characteristics No of firms in sample % of firms in sample
A strong market orientation can promote an organization to absorb
market knowledge from its competitors and customers and can enhance Annual revenue range
market-based organizational learning (Liao, Chang, Wu, & Katrichis, Less than $10 million 52 36%
$10 million to $25 million 39 27%
2011). While market orientation impacts the scope of firms' market
$25 million to $100 million 24 17%
information-processing activities, the learning orientation influences Over $100 million 28 20%
the higher-order examination and retention of the results. Learning
Company age (years)
orientation also facilitates higher order learning (Baker & Sinkula, 0 to 5 years 11 8%
1999). Organizational learning theory views that “learning orientation 5 to 10 years 23 16%
influences the propensity of the firm to create and use knowledge; it 10 to 25 years 26 18%
influences the degree to which firms are likely to promote generative Over 25 years 83 58%

learning as a core competency” (Sinkula et al., 1997). A firm's ability to Ownership type
sense the market, absorb new information, distribute it, interpret it, and Family Owned 26 18%
Privately Held 103 72%
store it for accessible retrieval accelerates organizational learning
Publicly Traded 14 10%
processes (Day, 1994). Accordingly, the above predictions are sum-
Percent of women employees
marized in the following hypotheses:
< 5% 5 4%
H3. The learning orientation moderates the positive relationship 5% to 10% 14 10%
10% to 25% 25 18%
between market orientation implementation and market orientation
25% to 50% 74 51%
internalization such that it strengthens the relationship between market Over 50% 25 17%
orientation implementation and market orientation internalization.

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

reasonable spread of firms based on size, ownership, and age. Although, size is indicated by the annual revenue. Ownership structure is assessed
there is no single database that lists all firms in this industry, based on by asking informants if the firm is publicly owned, privately owned, or
industry knowledge and expert opinion, the sample representation is family owned.
adequate in effectively representing the population of firms in this in-
dustry setting. The presence of any response bias was detected by 3.3. Analytical procedures
contacting a small sample of firms that chose not to participate in the
survey. Company policy and restrictions were cited as the primary First, descriptive statistics are analyzed and summarized. Factor
reasons for not responding to the survey. Sample bias was assessed structure analysis and scale reliability analysis are performed to ensure
using the time-trend extrapolation test (Armstrong & Overton, 1977) by validity of the constructs and reliability of performance measurement
comparing early responders' responses to those of late responders using scales. PROCESS v2.16 macro 2016 release (Hayes, 2013) is used along
chi-square tests of independence and no differences were evident be- with SPSS to estimate the main effect, indirect effect, and conditional
tween these two groups. indirect effect. PROCESS analytically integrates mediation and mod-
eration analysis into a unified statistical model (Hayes, 2016) as op-
3.2. Measures posed to separate moderation analysis (testing the contingencies of an
effect) or mediation analysis (testing the mechanism by which an effect
Firm performance is operationalized as financial performance and operates). According to Hayes (2016), the PROCESS is an extension of
customer service performance, each dependent variable analyzed se- the idea initially termed as “mediated moderation” and “moderated
parately. Following Moorman and Rust (1999) and a vast majority of mediation” that appeared in the literature decades ago primarily by
market orientation research, the present study collected managers' Baron and Kenny (1986) as well as tools and systematic procedures put
subjective perceptions of performance as it minimized the issue of ty- forth by Hayes and Preacher. The model used in the current study
pical unwillingness to share actual performance data especially in the specifies a single mediator causally located between X and Y and
context of current study setting. Financial performance is measured therefore simple mediation model Hayes Process model 4) is used to
using Moorman and Rust (1999) scale that is designed to measure re- test the mediation only effect. PROCESS model 7 (first stage moderated
turn on sales, market share, profitability. This is operationalized by mediation model) is used to analyze the effect of X on mediator M by
asking informants the following questions: relative to your company's moderator variable W. An index of moderated mediation (Hayes, 2015)
objectives, how did your company or business unit perform last year on quantifies the association between an indirect effect and a moderator
the following criteria: return on sales, market share, and profitability. followed by an inference as to whether this index is different from zero.
Consistent with Moorman and Rust (1999), informants are asked to rate The first stage moderation model (Edwards & Lambert, 2007) allows
firm performance relative to their firm's stated objectives. This ap- the effect of X on M in a mediation model to be moderated by W, which
proach has been taken in prior literature and found to compare well to can be represented as:
evaluations of firm performance relative to competitors. Customer
M = iM + a1X + a2W + a3XW + eM
service performance is measured using Moorman and Rust (1999) scale
that is designed to measure customer satisfaction, customer retention, Y = iY + C1X + bM + e Y
and product/service quality. This is operationalized by asking in-
formants the following questions: relative to your company's objectives, and the indirect effect (ω) of X on Y is a linear function of W and ex-
how did your company or business unit perform last year on the fol- pressed as:
lowing criteria: customer satisfaction, customer retention, and product/ = (a1 + a3W)b = a1b + a3bW
service quality. Both financial performance and customer service per-
formance is measured using a seven-point Likert scale where 1 re- In the first stage (and, by extension, the first stage and direct effect)
presented significant decrease and 7 represented significant increase. moderation model, the indirect effect of X on Y through M is a linear
Scores are averaged to obtain cumulative score on financial perfor- function of W. The weight for W in this function, a3b, is referred as the
mance and customer service performance. index of moderated mediation for this model (Hayes, 2015). Hayes
Market orientation implementation is measured using Homburg and (2015) recommends the use of a bootstrap confidence interval for the
Pflesser (2000) scale that is adapted from Kohli, Jaworski, and Kumar index of moderated mediation in models such as these, as the index of
(1993). This 14-item scale measures the construct of market orientation moderated mediation directly quantifies the relationship between the
implementation using a seven-point Likert scale. Market orientation indirect effect and the moderator. Following Hayes (2013) guidance,
internalization is measured using Internalization of market orientation covariates (control variables) are mathematically treated exactly like
(new scale based on Deshpande et al. 1993; Narver & Slater, 1990) independent variables in the estimation, with paths to all mediators and
recommended by Kirca et al. (2011) in their conceptual paper. This 9- the outcome. Similarly, Hayes (2013) recommendation is followed in
item scale is based on the original 25 item scale developed by Narver treating more than one dependent variable by simply running PROCESS
and Slater (1990). Seven-point Likert scale is used where a score of 1 k times, one each for dependent variable. The bias corrected bootstrap
indicate the firm did not engage in the practice at all while 7 indicate confidence intervals are based on 5000 bootstrap samples.
that the firm engaged in the practice to a large extent. Scores are
averaged to obtain a cumulative market orientation implementation 4. Results
score and market orientation internalization score. Learning orientation
is measured from the scale developed by Baker and Sinkula (1999). This Tables 2 to 4 present correlation and multiple regression results. A
15 item scale measures firm's commitment to learning, shared vision, significant regression equation was found (F (7,135) = 21.766,
and open mindedness. A seven-point Likert scale is used to measure the p < 0.001) with an R-square of 0.53 for financial performance and
learning orientation anchored at 1 for strongly disagree and 7 for 0.65 for customer service performance. The results indicate that the
strongly agree. The scores are averaged to obtain a cumulative score for overall model is significant and can explain over 53% of the variance in
the firm. Consistent with literature, a number of control variables were the performance measures. Market orientation implementation is sig-
considered to be used in the study. Due to the specific industry setting nificant for both financial performance and customer service perfor-
of the current study, Firm size, firm age, firm ownership structure, mance (p < 0.001). Market orientation internalization is also sig-
percent of women employees are included as control variables as they nificant to financial performance (p < 0.01) and to customer service
are deemed important determinants of performance. Firm age is as- performance (p < 0.001). While MO implementation and MO inter-
sessed by asking the number of years since the firm was founded. Firm nalization were significant predictors of firm performance, neither the

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

Table 2
Means, standard deviations, and correlations.
Variables M SD 1 2 3 4 5 6 7

1. MO Implementation 3.69 0.87 1.00

2. MO Internalization 4.15 0.8 0.529 1.00
3. Learning Orientation 4.63 0.87 0.648 0.684 1.00
4. Firm Size (rev) 2.2 1.13 −0.196 −0.137 −0.103 1.00
5. Firm Age 3.27 0.99 −0.249 0.127 −0.03 0.385 1.00
6. Ownership Type 1.92 0.52 0.037 −0.063 0.081 0.036 −0.065 1.00
7. % Women Employees 3.7 0.99 0.093 0.136 0.03 0.091 0.125 0.033 1.00

Bold are significant correlations (p < 0.01 level).

Table 3 variables making up the market orientation scale. Convergent validity

Results of multiple regression analysis: standardized regression coefficients was determined through factor analysis. Both convergent and dis-
(standard errors) (N = 143). criminant validity are included in construct validity. The scale items
Independent variables Financial Customer service used in the study were factor analyzed using principal component
performance performance analysis employing maximum likelihood and varimax rotation.
Principal components analysis was used to eliminate scale items that
1. MO Implementation 0.539⁎⁎⁎ 0.319⁎⁎⁎
did not contribute to a simple factor structure and failed to meet a
2. MO Internalization 0.219⁎⁎ 0.478⁎⁎⁎
3. Learning Orientation NS NS minimum criterion of having a primary factor loading and to derive the
4. Firm Size (rev) NS NS final four factor solution. For the final stage, principal components
5. Firm Age NS NS analysis of 28 items using varimax rotation yielded four factors that
6. Ownership Type NS NS
explained 69% of the total variance. The eigen values associated with
7. % Women Employees NS NS
F 21.76⁎⁎⁎ 35.10⁎⁎⁎
each of the four factors were > 1.00. Bartlett's test for sphericity was
R 0.728 0.8 significant 3279.75 (significance = 0.000). The Kaiser – Meyer – Olkin
R2 0.53 0.65 measure of sampling adequacy was 0.908 that is very high and above
the commonly recommended value of 0.6 (Kaiser, 1974). The first
NS = Not Significant. factor had very high eigen value (12.74) and explained 45.5% of the
⁎⁎⁎
p < 0.001.
variance. The communality for the items was between 0.48 and 0.80,
⁎⁎
p < 0.01.
indicative of a high degree of linear association among the items of the
scale. These four factors have theoretical support - market orientation
Table 4
implementation, market orientation internalization, learning orienta-
a: Pearson correlation table (financial performance).
tion, and firm performance - have been theorized to be dependent and
b: Pearson correlation table (customer service performance).
linked to the construct of market orientation.
a The reliability analysis is conducted to measure internal consistency
and is reported using Cronbach's alpha. The reliability score
Variables Mean SD N 1 2 3
(Cronbach's alpha) of the market orientation implementation scale is
1. Financial performance 5.27 1.31 143 0.889, market orientation internalization scale is 0.937, learning or-
2. Implementation 3.69 0.87 143 0.677 ientation scale is 0.919, financial performance scale is 0.913, and cus-
3. Internalization 4.14 0.8 143 0.546 0.529
tomer service performance scale is 0.879. They follow the re-
4. Learning orientation 4.62 0.87 143 0.577 0.648 0.684
commended criteria that Cronbach's alpha values above 0.7 indicate
sound and reliable measures (Nunnally, 1978).
b
4.2. Direct effect
Variables Mean SD N 1 2 3

1. Financial performance 5.63 0.96 143 Tables 5a and 5b show the effect, p value, and 95% bias-corrected
2. Implementation 3.69 0.87 143 0.656 bootstrap confidence interval for the direct effect of MO implementa-
3. Internalization 4.14 0.8 143 0.733 0.529
tion on financial performance (c11 = 0.864 with a p value < 0.001)
4. Learning orientation 4.62 0.87 143 0.651 0.648 0.651
and customer service performance (c11 = 0.400 with a p value <
Bold are significant (p < 0.001). 0.001). A 95% bias corrected bootstrap confidence interval is entirely
above zero in both cases (0.5912 to 1.1370 for financial performance
learning orientation nor any of the control variables (firm size, firm age, and 0.2390 to 0.5615 for customer service performance). In both con-
ownership type, and percent of women employees) were found to be sequents, the confidence interval does not contain zero, pointing to a
significant predictors of the dependent variable. statistically significant relationship. Therefore, it can be concluded that
firms that exhibit high levels of MO implementation perform relatively
4.1. Robustness checks better based on the survey responses from managers in these firms.

The key premise of research hypothesis used in the current study 4.3. Indirect (mediating) effect
rest on the validity of the constructs. The content validity concerning
the substance of the items under each construct is not a major concern In a simple mediation model, a mediator variable M influences the
as the survey was sent to managers in North America and instructions relationship between antecedent variable X and the outcome variable Y.
clearly stated the purpose of the study was to investigate business A simple mediation model results (PROCESS model 4) for the im-
practices in direct mail service provider industry given the transfor- plementation – performance relationship through internalization is
mation happening in this space from physical to digital communication. shown in Fig. 3a (financial performance consequent) and Fig. 3b (cus-
Construct validity was determined by looking at the correlations among tomer service consequent). The model coefficients are indicated on each

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

Table 5a
Direct effect of MO implementation (X) on financial performance (Y).

Effect P 95% bias-corrected bootstrap CI

0.8641 0.000 0.5912 to 1.1370

Table 5b
Direct effect of MO implementation (X) on customer service performance (Y).

Effect P 95% bias-corrected bootstrap CI

0.4002 0.000 0.2390 to 0.5615

path. Both regression coefficients a and b are positive, meaning those process models representing MO internalization, financial performance,
that are relatively higher in MO internalization are estimated to be and customer service performance are significant with R2 ranging from
higher in firm performance. The indirect effect of X on Y through M is 0.61 to 0.80 (p < 0.001). The regression coefficients for MO im-
the product of these two coefficients a and b. Accordingly, ab (0.226 for plementation (0.864, p < 0.001) and MO internalization (0.426,
financial performance and 0.336 for customer service performance) p < 0.05) are significant on financial performance consequent. Simi-
represents the impact of MO implementation on firm performance larly, the regression coefficients for MO implementation (0.400,
through MO internalization. p < 0.001) and MO internalization (0.635, p < 0.001) are significant
The estimated regression coefficients and their standard errors, the p on customer service performance consequent. The regression coeffi-
values, the R2, and model summary information for the simple med- cients for MO implementation is significant on MO internalization
iation model is displayed in Table 6. Each of the three conditional (0.53, p < 0.001). The bias corrected bootstrap confidence interval has

a)

b)

Fig. 3. a. Simple mediation model for MO implementation-financial performance with MO internalization as mediator.
b. Simple mediation model for MO implementation-customer service performance with MO internalization as mediator.

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

Table 6
Model coefficients for the simple mediation model.

Consequent
M (MO INTERNALIZATION) Y (FINANCIAL PERFORMANCE) Y (CUSTOMER SERVICE PERFORMANCE)
Antecedent
Coeff. SE p Coeff. SE p Coeff. SE p
1 1
MO Implementation (X) a1 0.530 0.061 0.000 c1 0.864 0.113 0.000 c1 0.400 0.072 0.000
MO Internalization (M) b1 0.426 0.122 0.000 b1 0.635 0.077 0.000
Firm Size (U1) a4 -0.105 0.057 0.071 b2 0.074 0.083 0.372 b2 -0.043 0.053 0.416
Firm Age (U2) a5 0.258 0.062 0.000 b3 0.071 0.094 0.455 b3 0.001 0.060 0.994
Firm Ownership Type (U3) a6 -0.019 0.115 0.868 b4 0.077 0.163 0.640 b4 -0.015 0.104 0.886
% Women employees (U4) a7 0.046 0.056 0.410 b5 -0.147 0.080 0.069 b5 -0.002 0.051 0.967
Constant i1 1.442 0.421 0.001 i2 0.308 0.625 0.623 i2 1.649 0.398 0.000

2 2 2
R = 0.611 R = 0.724 R = 0.80
F(5,137) = 16.32, p<.001 F(6,136) = 25.26, p<.001 F(6,136) = 40.33, p<.001

Table 7a service performance are significant with R2 ranging from 0.53 to 0.64
Indirect effect of MO internalization on implementation-financial performance (p < 0.001). The regression coefficients for MO implementation
relationship. (0.864, p < 0.001) and MO internalization (0.426, p < 0.001) are
Effect P 95% bias-corrected bootstrap CI significant on financial performance consequent. Similarly, the regres-
sion coefficients for MO implementation (0.400, p < 0.001) and MO
Total effect 1.0899 0.000 0.8979 to 1.2819 internalization (0.635, p < 0.001) are significant on customer service
Direct effect 0.8641 0.000 0.6398 to 1.0884
performance consequent. The regression coefficients for MO im-
Indirect (mediating) effect 0.2258 0.000 0.0708 to 0.4295
plementation is significant on MO internalization (0.189, p = 0.01).
* Bootstrap SE for the indirect effect is 0.0708 Similarly, the regression coefficient for learning orientation is sig-
nificant on MO internalization ((0.500, p < 0.001)). However, the
conditional effects of X and W as shown with their product in the model
has negative coefficient (negative effect) of −0.065 and statistically not
Table 7b significant (p = 0.47).
Indirect effect of MO internalization on implementation-customer service per- Hayes (2015) recommends to use the Index of Moderated Mediation
formance relationship. as the most direct test for evidence of moderated mediation. This index
Effect P 95% bias-corrected bootstrap CI is then tested for statistical significance using bias-corrected boot-
strapping for statistical inference. According to Hayes (2015), an in-
Total effect 0.7367 0.000 0.5936 to 0.8797 ference as to whether this index of moderated mediation is statistically
Direct effect 0.4002 0.000 0.2575 to 0.5430
different from zero is a formal test of moderation of the indirect effect
Indirect effect 0.3364 0.000 0.2159 to 0.4883
by the moderator in the model. In other words, a bootstrap confidence
* Bootstrap SE for the indirect effect is 0.0696 interval for the index of moderated mediation that does not include
zero provides more direct and definitive evidence of moderation of the
indirect effect. PROCESS automatically produces this index of moder-
ated mediation through each mediator in the model as well as bootstrap
become the more widely recommended method for inference about the
confidence interval for inference. The index of moderated mediation
indirect effect in mediation analysis (Hayes, 2013). As illustrated in
and the bootstrap confidence interval produced by PROCESS is an au-
Tables 7a and 7b, a 95% bias-corrected bootstrap confidence interval is
tomatic implementation of the formal test of moderated mediation
entirely above zero in both cases, i.e., 0.0708 to 0.4295 for financial
(Hayes, 2015). As shown in Tables 9a and 9b, the index of moderated
performance and 0.2159 to 0.4883 for customer service performance.
mediation is −0.0316 and − 0.041 for financial performance and
Therefore, the mediation effect of MO internalization on MO im-
customer service performance respectively. The 95% bias corrected
plementation – firm performance relationship is supported.
bootstrap confidence interval is −0.1349 to 0.0246 for financial per-
formance and − 0.1519 to 0.0539 for customer service performance. In
4.4. Conditional indirect effect (moderated mediation) both cases, a 95% bootstrap confidence interval based on 5000 boot-
strap samples and the confidence interval for the regression coefficient
The conditional indirect effect quantifies how differences in X map of the product of X and W include zero leading to conclude that the
onto differences in Y indirectly through M depending on the value of W indirect effect of MO implementation on firm performance through MO
(Hayes, 2013). To illustrate the indirect effect of X on Y through M, the internalization is not moderated by learning orientation. There is no
PROCESS macro (model 7) automatically calculates various conditional support to claim that learning orientation is moderating any mediation
indirect effects for various values of the moderator (W). Bootstrap of the effect of MO internalization on the MO implementation-firm
confidence intervals for the conditional indirect effects are produced at performance relationship.
values of the moderator corresponding to the mean and plus and minus
one standard deviation from the mean of the moderator (learning or- 5. Discussion
ientation). The estimated regression coefficients and their standard
errors, the p values, the R2, and model summary information is dis- Hypotheses concerning the direct effects of market orientation im-
played in Table 8. Each of the three conditional process models re- plementation on financial performance (H1a) and customer service
presenting MO internalization, financial performance, and customer performance (H2a) as well as the hypotheses concerning the indirect or

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

Table 8
Model coefficients for the conditional process model.

Consequent

M (MO INTERNALIZATION) Y (FINANCIAL PERFORMANCE) Y (CUSTOMER SERVICE PERFORMANCE)

Antecedent
Coeff. SE p Coeff. SE p Coeff. SE p
1 1
MO Implementation (X) a1 0.189 0.072 0.010 c1 0.864 0.138 0.000 c1 0.400 0.082 0.000
MO Internalization (M) b1 0.426 0.167 0.012 b1 0.635 0.114 0.000
1 1
Learning Orientation (W) a2 0.501 0.083 0.000 c 2 c 2
1 1
X x W a3 -0.065 0.089 0.466 c 3 c 3

Firm Size (U1) a4 -0.071 0.051 0.167 b2 0.074 0.086 0.387 b2 -0.043 0.054 0.429
Firm Age (U2) a5 0.180 0.060 0.003 b3 0.071 0.099 0.478 b3 0.001 0.061 0.994
Firm Ownership Type (U3) a6 -0.111 0.087 0.206 b4 0.077 0.169 0.651 b4 -0.015 0.098 0.879
% Women employees (U4) a7 0.055 0.054 0.311 b5 -0.147 0.089 0.100 b5 -0.002 0.056 0.970
Constant i1 3.750 0.333 0.000 i2 3.510 0.851 0.000 i2 3.129 0.589 0.000

2 2 2
R = 0.55 R = 0.53 R = 0.64
F(7,135) = 23.83, p<.001 F(6,136) = 22.55, p<.001 F(6,136) = 41.74, p<.001

Table 9a This is likely to result in increased sales revenue, market share, and
Index of moderated mediation: financial performance. ultimately higher financial performance (Atuahene-Gima et al., 2005).
Mediator Index SE (Boot) 95% bias-corrected bootstrap CI In a similar vein, the presence of higher MO internalization enables
firms to fully realize the benefits of such market-sensing, market-
MO internalization −0.0316 0.040 −0.1349 to 0.0246 learning, and customer-linking capabilities, allowing them to create
value to customers and proactively build long term collaborative re-
lationships (Kirca et al., 2011). Conversely, when firms practice lower
levels of internalization, market oriented values are neither internalized
Table 9b nor culturally adopted which may lead to poor performance irrespec-
Index of moderated mediation: customer service performance. tive of MO implementation levels. Hypothesis 3 where a third moder-
ating variable was introduced to moderate the mediating relationship
Mediator Index SE (Boot) 95% bias-corrected bootstrap CI
between market orientation implementation and internalization was
MO internalization −0.0414 0.053 −0.1519 to 0.0539 not supported.
To better explore the relationships surrounding the construct of
learning orientation, several additional tests were conducted. Support
was found for the direct effect of learning orientation on both financial
performance (effect = 0.5288, p < 0.01) and customer service per-
mediating effect of market orientation internalization on financial formance (effect = 0.2964, p < 0.01) both having a 95% bias cor-
performance (H2a) and customer service performance (H2b) are em- rected bootstrap confidence interval above zero based on 5000 boot-
pirically supported. However, hypothesis concerning the conditional strap samples (0.2469 to 0.8107 for financial performance and 0.1293
indirect (moderated mediation) effect of learning orientation is not to 0.4636 for customer service performance). Support was also found
empirically supported. The regression equations predicted that MO for the mediating role of learning orientation on implementation –
implementation is a key determinant of financial performance (2.2× performance relationship (simple mediation analysis using Hayes
that of MO internalization) while MO internalization is a key determi- Process model 4; indirect effect of X on Y through M (ab) of 0.213 for
nant of customer service performance (1.67× of MO implementation). financial performance; 0.283 for customer service performance; 95%
This is consistent with the view shared by scholars like Gebhardt et al. bias-corrected bootstrap confidence interval is 0.0618 to 0.3764 for
(2006), Day (1994), Narver and Slater (1990), that the internalization financial performance and 0.1647 to 0.4240 for customer service per-
of market oriented behaviors focuses on a culture of continuous value formance). However, support was not found for the moderating role of
creation for customers which in turn contributes to superior customer learning orientation on implementation – performance relationship
service performance. Similarly, market orientation implementation (Hayes Process model 1; regression coefficient of the interaction MO
enables firms to sense market trends and to respond to changing cus- implementation x learning orientation was −0.0296, p = NS for financial
tomer requirements, which in turn contributes to superior financial performance and − 0.0435, p = NS for customer service performance;
performance. This is consistent with views shared by extant literature 95% bias corrected bootstrap confidence interval for the moderating
(e.g., Atuahene-Gima et al., 2005; Hult et al., 2005; Kohli & Jaworski, effect of learning orientation is −0.2338 to 0.1747 on MO im-
1990). plementation-financial performance and − 0.1884 to 0.1014 for MO
The key underpinning of hypotheses 1a and 1b rests with the ar- implementation-customer service relationship).
gument that the firms that practice high degree of market orientation The lack of evidence for the moderation effect or the moderated
implementation are in a better position to effectively generate, dis- mediation effect of learning orientation is not surprising. The literature
seminate, and respond to changing market needs and to serve custo- has struggled to reach consensus regarding the nature of causality be-
mers better. Thus, there is a direct impact of market orientation im- tween the constructs of market orientation and learning orientation
plementation on firm performance. The key underpinning of (Farrell & Oczkowski, 2002). Extant literature has been mixed on the
hypotheses 2a and 2b rests with the argument that higher levels of role of learning orientation: with some studies showing direct impact on
market orientation implementation enables firms to identify customer performance (e.g., Baker & Sinkula, 1999; Farrell & Oczkowski, 2002),
needs and to develop new products quickly to solve customer problems. others finding mediation or moderation effects of learning orientation

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H.R. Abbu and P. Gopalakrishna Journal of Business Research xxx (xxxx) xxx–xxx

on performance (e.g., Baker & Sinkula, 1999; Liu, Luo, & Shi, 2002). context in which they have been used in the current study setting.
There are also studies that have found no significant impact of learning PROCESS analytically integrates mediation and moderation analysis
orientation on performance. Farrell and Oczkowski (2002) argued that into a unified statistical model (Hayes, 2016) as opposed to separate
both market orientation and learning orientation have impact on per- moderation analysis (testing the contingencies of an effect) or media-
formance, thereby making a case for analyzing market orientation and tion analysis (testing the mechanism by which an effect operates). The
learning orientation together on a common ground. The lack of evi- research model includes total effect (main direct paths) between market
dence for the moderated mediation effect of learning orientation on MO orientation implementation and firm performance operationalized as
implementation/ MO internalization relationship may also be explained financial performance and customer relations performance. In addition,
intuitively given the study setting used in the current research. The the model predicts the indirect (mediating) effect of market orientation
direct mail industry, until recently has been very static, mature, tradi- internalization and conditional indirect effect (moderated mediation) of
tional, placid, and fragmented. The shift in consumer preferences from learning orientation. Although all these procedures can be conducted
physical to digital communication has forced many firms in this in- with any OLS regression program, the PROCESS model makes the
dustry to transform rapidly. Farrell (2000) argued that organizations analysis easy and summarizes relevant information using SPSS or SAS.
that are able to appreciate the value of timely and relevant information As Hayes PROCESS model is relatively new and becoming popular,
(market oriented) will already be intelligent enough to challenge ex- future researchers may benefit from the model and methodology used
isting assumptions about the way the market operates. in the current study. In addition, studying the market orientation im-
Additional tests were also conducted to see if internalization has a plementation and internalization aspects of a direct mail industry - that
direct effect on performance and if it mediates the relationship between is rapidly changing, century old, fragmented - and methodically
internalization and performance. Internalization was found to have a learning their responses to rapid technological and environmental tur-
positive effect on customer service performance (c11 = 0.52, bulences – will help further contribute to theory development.
p < 0.001, CI = 0.3435 to 0.7057) but not on financial performance
(c11 = 0.23, p = 0.051, CI = -0.0005 to 0.4659). It is important to note 5.2. Implications to practice
that the test of the direct effect of Internalization on Financial perfor-
mance was very close to significance (p = 0.051) having effect size of As the present study is conducted in a direct mail/marketing ser-
0.231 (low), and 95% bias-corrected bootstrap confidence in- vices provider industry, it greatly contributes to practitioners who are
terval − 0.0005 to 0.4659 (contains zero pointing to a statistically non- in the midst of physical to digital transformation and are looking for
significant relationship). However, when implementation was in- ways to reinvent their business to stay relevant and to avoid being
troduced as a mediator between internalization and performance, it cannibalized by innovative startups in the digital realm. The state of
strengthened the relationship between internalization and financial disarray opens the door for print service providers to transform their
performance as well as customer service performance (95% bias-cor- businesses and expand their capabilities beyond print to address these
rected bootstrap confidence interval 0.3237 to 0.7253 for financial new opportunities (Foley Jr, 2011) and play a larger role in the mar-
performance and 0.1299 to 0.3584 for customer service performance). keting value chain. Some of the leaders in this industry have pioneered
It furthers the argument that internalization and implementation are innovative products to reap positive results omni-channel coupon de-
distinct components, one complementing the other. livery via mobile and wearable devices, augmented reality, mobile
wallet, and so on. The relatively placid nature of this industry, until
5.1. Theoretical contributions recent years, has very likely led firms in this industry to resist investing
in key marketing capabilities. As a result, many firms are likely playing
The current study views the construct of market orientation as catch up in responding to fast changing customer preferences and
multi-dimensional by integrating both the behavioral and cultural competitor offering while others likely are in decline. This changing
perspectives of market orientation. The extant literature has pre- landscape underscores the importance of effectively interacting with
dominantly viewed market orientation as either a cultural or behavioral the market environment in order to obtain an advantage. It is im-
construct. The current study focuses on an integrative framework - that perative that service providers become more market oriented in their
provides a more nuanced understanding of the market orientation offerings and better tailored to their customers' needs, wants, tastes,
concept and its complex relationships with performance (Kirca et al., and preferences. In addition, they should build market-sensing as well
2011). This paper contributes to the market orientation body of as organizational capabilities to quickly adapt to emerging changes in
knowledge by empirically applying implementation and internalization the market.
dimensions to a firm's market orientation practice. The implementation Kumar et al. (2011) analyses indicated that market orientation has a
and internalization dimensions have been widely employed in prior positive effect on business performance in both the short and the long
studies in the adoption of organizational practices (e.g., technology run; that the firms that are early to develop a market orientation benefit
implementation or internationalization of a corporate practice) but to a the most; and that the benefits are enhanced over time under intense
lesser extent in marketing and very rarely in market orientation do- competitive conditions. The current study clearly establishes that firms
main. By introducing internalization as a mediator between market that exhibit higher levels of market orientation implementation and
orientation implementation and firm performance relationship, the internalization have superior financial and customer service perfor-
current study attempts to bring together the behavioral (i.e., the actual mance. The study points out that implementation or internalization of
implementation of the practice) and an attitudinal component (i.e., the market orientation should go hand in hand and complement each other
internalized belief in the value of the practice) a concept predominantly to achieve overall performance.
employed in organizational research. In a turbulent environment marked with physical to digital trans-
The current study empirically tests Hayes (2013) mediation, mod- formation and rapidly evolving technologies, market orientation should
eration and conditional process analysis with PROCESS macro using a be viewed as “cost of competing” (Kumar et al., 2011) based on which
unique dataset from an industry that is undergoing an unprecedented companies either innovate or die. Digital technologies have made it
transformation from physical to digital communication. In addition, easy to quickly generate and disseminate information especially in this
authors test variables in multiple ways as it applies to market orienta- industry. However, it is important that senior managers are not over-
tion literature (i.e., by looking at various direct, mediating, and mod- burdened with vast amounts of data and instead cut through the clutter
erating relationships) using appropriate PROCESS models. As Hayes and focus on actionable information to effectively respond to a rapidly
PROCESS model is relatively new and becoming popular, future re- changing workplace (Kohli, 2017). It is also equally important that
searchers may benefit from varied application of these models and the senior managers enable and foster internalization of market orientation

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as it complements the implementation of market-oriented behaviors Deshpande, R., Farley, J. U., & Webster, F. E., Jr. (1993). Corporate culture, customer
(Kirca et al. (2011) and work synergistically to achieve higher perfor- orientation, and innovativeness in Japanese firms: A quadrad analysis. The Journal of
Marketing, 23–37.
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and collective rationality in organizational fields. In W. Walter, W. W. Powell, & P. J.
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Chicago, IL: University of Chicago Press.
Edwards, J. R., & Lambert, L. S. (2007). Methods for integrating moderation and med-
The study has certain limitations and avenues for future research. iation: A general analytical framework using moderated path analysis. Psychological
First, the study is conducted in one specific industry setting – direct Methods, 12, 1–22.
EMA, Envelope Manufacturers Organization (2015). 2015 mailing industry jobs study.
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turbulent environments: A case study. European Journal of Marketing, 38(8), 956–973. Dr. Haroon R. Abbu Vice President of Advanced Analytics, IoT, & Data Services at Bell
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The sage sourcebook of advanced data analysis methods for communication research (pp. leading technology enabled business transformation, Dr Abbu presents regularly at
13–54). . leading industry conferences and publications. He holds a Bachelor of Science in
Ramaswami, S. N., Srivastava, R. K., & Bhargava, M. (2009). Market-based capabilities Industrial Engineering from University of Mysore, a Master of Science in Engineering
and financial performance of firms: Insights into marketing's contribution to firm Management from University of South Florida, a Doctor of Professional Studies in
value. Journal of the Academy of Marketing Science, 37(2), 97–116. Marketing and Management from Pace University, and several industry licenses and
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construction of organizations (pp. 11–23). .
Dr. Pradeep Gopalakrishna is a Professor of Marketing and Department Chair of
Sinkula, J. M. (1994). Market information processing and organizational learning. The
Journal of Marketing, 35–45. Marketing in the Lubin School of Business at Pace University. An academic with nearly
Sinkula, J. M., Baker, W. E., & Noordewier, T. (1997). A framework for market-based 30 years of experience. Dr. Gopalakrishna has published over 30 manuscripts including
organizational learning: Linking values, knowledge, and behavior. Journal of the journal articles and pedagogical case studies. He has published in the Journal of Business
Academy of Marketing Science, 25(4), 305–318. Research, Management International Review, Journal of Retailing and Consumer
Services, Journal of Global Marketing, among others. He teaches at the undergraduate,
Slater, S., & Narver, J. (1995). Market orientation and the learning organization. Journal
of Marketing, 59(3), 63–74. MBA and doctoral levels at Pace University.
Slater, S. F., & Narver, J. C. (1994). Does competitive environment moderate the market

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