The Impact of Market Orientation on the Performance of MSMEs: A Cross-Sectional Analysis of Manufacturing and Service Firms in India

The current study is aimed at validating the past literature which states that increased market orientation has a positive impact on the performance of Micro, Small and Medium Enterprises (MSMEs). Preliminary statistical review indicated that the performance potential of the MSMEs has not been met i...

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Bibliographic Details
Published in:ICFAI journal of business strategy 2018-12, Vol.15 (4), p.57-74
Main Authors: Kansal, Purva, Bansal, John
Format: Article
Language:English
Subjects:
Annual reports
Balanced Scorecard
Censuses
Competition
Competitive advantage
Cross-sectional studies
Economic growth
Employment
Literature reviews
Manufacturing
Market orientation
Marketing
Researchers
Small & medium sized enterprises-SME
Strategic management
Strategic planning
Studies
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Summary:The current study is aimed at validating the past literature which states that increased market orientation has a positive impact on the performance of Micro, Small and Medium Enterprises (MSMEs). Preliminary statistical review indicated that the performance potential of the MSMEs has not been met in India. A review of the literature further indicated that one of the ways by which MSMEs could increase their performance was by increasing their market orientation. However, not much study has been done in India to see the relationship between market orientation and firm performance of MSMEs. The current study is planned to fill this gap via studying the relationship between market orientation and the performance of Indian MSMEs. Panel data was retrieved from the Prowess for a period of six years from 2012 to 2017, and the data was analyzed using EViews panel regression model with random effects model. There were three main findings of the study. First, the results of the study indicated that market orientation had a positive effect on business performance. Second, beta values indicated that the market orientationperformance relationship was stronger in manufacturing firms than in service firms. Third, a simple linear regression was performed for six years to check how beta value had changed over the years. The beta values increased gradually from 2012 to 2017 for both Manufacturing and Service Firms, indicating that Indian MSMEs understood the importance of market orientation and its implementation.
ISSN:0972-9259