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Executive Summary
There is general consensus that market orientation is a valuable resource that gives firms competitive advantage and leads to increased business success. However, current models of the relationship between market-oriented behavior and performance assume that the relationship is linear and positive. The implication is that managers should aim for ever-increasing market orientation levels. Yet most firms operate within the context of constrained resources; therefore, developing high levels of market-oriented behavior may require the use of resources needed to develop and exploit other important strategic options. Building on this insight, Cadogan, Kuivalainen, and Sundqvist argue that the relationship between market orientation and business success is an inverted U shape, not a linear one. They also suggest that the inverted U shape is flattest for firms with little international engagement and those operating in stable markets and steepest for firms with greater international involvement and those operating in dynamic markets.

To test their theory, Cadogan, Kuivalainen, and Sundqvist examine firms’ export market-oriented (EMO) behaviors using cross-sectional data from 783 Finnish exporters. The study reveals that the relationship between EMO behavior and export sales performance is positive for firms with low levels of EMO behavior. This positive relationship is greater in magnitude (steeper) when firms operate in more dynamic markets. Furthermore, the study demonstrates that increases in EMO behavior are associated with decreases in sales performance for firms with high levels of EMO behavior. This negative relationship is greater in magnitude (steepest) when firms operate in more dynamic markets. The authors also conduct a post hoc examination of their data and show that the optimal EMO behavior level (the degree of market orientation at which sales performance is greatest) becomes smaller under higher levels of market dynamism but becomes greater as firms’ degree of international involvement increases.

Cadogan, Kuivalainen, and Sundqvist discuss important managerial implications that emerge from their study. Most pertinent is their recommendation that managers should not always aim to increase their EMO behavior levels. Rather, the authors argue that managers’ task is to find the optimal level of market orientation. They indicate that some firms may benefit by increasing their EMO behavior levels but others may benefit from reducing their market orientation. Accordingly, optimal EMO behavior levels will differ across firms and will depend on the dynamism level in the firms’ markets and on the firms’ international diversification strategies.

Biography
John W. Cadogan PhD, is Professor of Marketing at Loughborough University, UK, and editor of International Marketing Review. His main research interests are in international marketing, marketing strategy, and sales management. His publications on these issues have appeared in many journals, including the Journal of International Business Studies, Journal of the Academy of Marketing Science, International Journal of Research in Marketing, Journal of Business Research, British Journal of Management and Industrial Marketing Management.

Olli Kuivalainen DSc, is Professor of International Marketing at the School of Business, Lappeenranta University of Technology, Finland. His research interests are in the areas of strategic management, marketing and internationalization of firms and international entrepreneurship, the focus especially being in knowledge-intensive firms and information and communication technologies. He has published articles in the Journal of World Business, International Journal of Production Economics, Technovation, Advances in International Marketing and Journal of International Entrepreneurship, among others.

Sanna Sundqvist PhD, is Professor of Marketing, School of Business, Lappeenranta University of Technology, Finland. Her research interests deal with the international diffusion of innovations, market orientation (especially in an international context), and consumers’ adoption behavior. She has published in the Journal of World Business, Journal of Business Research, International Journal of Research in Marketing, Journal of the Academy of Marketing Science, European Journal of Marketing, and the Canadian Journal of Administrative Sciences, among others.

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