The relationships between market orientation, supplier partnership, environmental factors and firm performance in Indonesian retail firms
The purpose of this study is to examine the consequences of market orientation in the Indonesian retail context. In this context, this study presents a systematic framework to test the postulated "market orientation -supplier partnership - retail performance" chain. Moreover, this study takes a component-wise approach and examines how the four core components of market orientation (customer orientation, competitor orientation, inter-functional co-ordination and profit orientation) affect the supplier partnership en route to affecting retail performance. Data to be used for testing the model were collected by a questionnaire survey. Hypothesised links depicted in the research model were tested using structural equation modeling. In addition, personal interviews were conducted to enrich the findings from the previous approach. The findings show that market orientation affects positively not only supplier partnership and retail performance in general term but across components of supplier partnership and performance measurement. Further, this study finds that retail performance and supplier partnership vary with customer orientation, competitor orientation, inter-functional co-ordination and profit orientation. This underscores the importance of a component-wise approach to answering the question as to whether market orientation "significantly" or "insignificantly" correlates with firm performances or supplier partnership. The empirical results suggest that the effect of environmental variables on market orientation and supplier partnership is inconclusive. Each environmental variable has a differential effect toward market orientation and supplier partnership: market turbulence has a positive effect, competitive intensity has no effect and demand volatility has a negative effect. The perception of performance affects the results of the study. The indirect measures tend to have a high correlation value relative to the direct measures. Further, there is a positive relationship between non-financial and financial measures of performance.