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Market Orientation and Firm Value

McNaughton, Rod B., Osborne, Phil, Morgan, Robert E. and Kutwaroo, Gopal 2001. Market Orientation and Firm Value. Journal of Marketing Management 17 (5-6) , pp. 521-542. 10.1362/026725701323366917

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Abstract

Several studies in the market orientation literature demonstrate a positive relationship between a market orientation and firm performance. However, the mechanisms of this relationship have yet to be explored in detail. This article addresses such a gap by proposing a conceptual model that links market orientation to wealth creation in firms. The model posits that a market orientation guides investment in market-based assets that may be deployed to create customer value. The realisation of customer value helps to both capture and retain customers. Quicker and more extensive market penetration, shorter sales cycles, and decreased marketing and sales costs enhance the cash flow of a market-oriented firm. This may be recognised in higher valuations, which ultimately translate into higher share prices and wealth creation for the owners of the firm. This model is used to describe the creation of value in the Major Business Division of BT, a large information technology service company. Recent success in this Division of BT is attributed to the creation of a market orientation and customer value-based strategy and processes. The experience of BT provides a clear illustration of how a market oriented firm creates value for both customers and shareholders.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Publisher: Taylor & Francis
ISSN: 0267-257x
Last Modified: 04 Jun 2017 04:31
URI: http://orca.cf.ac.uk/id/eprint/40470

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