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

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