Market orientation and business economic performance : a mediational model

Abstract

Previous studies have found that market orientation significantly predicts economic performance. The present study attempts to provide a necessarily partial model for how this impact takes place using innovation degree, innovation performance and customer loyalty as intermediate variables. The study targets the insurance industry in the European Union. Our sample accounted for 22 % of the companies and 17 % of the insurance premiums in this market. Our results suggests that the addition of these variables improves our predictions of objective economic performance over what is explained by market orientation alone. Furthermore, we found that the effects of market orientation on economic performance are completely channeled (mediated) through these variables, particularly through innovation degree and innovation performance.