Market orientation and manufacturing performance of Indian SMEs : Moderating role of firm resources and environmental factors

Purpose – This paper sets out to investigate the link between market orientation and manufacturing performance for small and medium enterprises in India. Design/methodology/approach – The paper collected the data for this research through intensive surveys of the CEOs or top managers of small and medium‐sized enterprises in India. The paper utilized scales, well established in literature, and revalidated them for the Indian context. It also utilized confirmatory factor analysis for scale validation, and hierarchical regression analysis for testing the hypotheses. Findings – This study found a positive link between two sub‐dimensions of market orientation – customer orientation and inter‐functional coordination – and manufacturing performance. Competitor orientation, however, did not have a positive impact on manufacturing performance. Further, the paper found that firm resources and competitive intensity moderate the relationship between some of the sub‐dimensions of market orientation and firm performance. Research limitations/implications – This study is particularly relevant for personnel involved in the manufacturing functions as it studies the effect of market orientation on manufacturing performance. It is high time that firms with manufacturing focus realize the value of market forces and revamp various production processes to be more responsive to market needs and demands. Originality/value – This research looks at manufacturing performance, rather than a firm's financial performance, and thereby helps in understanding the intervening processes that potentially lead to superior firm performance. It also identifies some important contingency factors, enriching the literature on market orientation. Finally, the empirical context of this research is quite novel and useful for European and other foreign firms trying to operate in emerging economies such as India.