The Relationship Between Entrepreneurial Orientation, Market Orientation And Organizational Performance

Entrepreneurial orientation (EO) and market orientation（MO） are both centralcomponents of the strategic orientation for organizational success. More and more scholarsdiscuss the transition paths of the two strategic orientations to organizational performance(OP) in the complex dynamic market environment, but the answer is quite different. Manystudies have found that entrepreneurial orientation has a positive direct impact onperformance, but various other studies have found the impact is no statistical significance,and the same situation occure to the market orientation and performance. In order to servethe problem, scholars begin to add a lot of constructive concepts as mediate or moderatevariables to interpret the phenomina. But due to the neglection of the excavating the keyelements, the theoretical concept framework is still not clear. Knowledge is the source ofgood organizational performance and sustainable competitive advantage from the point ofknowledge-based view. And the knowledge is should be obtained through continouslearning. Therefore, there is logical relationship between organizational learning (OL) andperformance. At the same time, literature studies have shown that organizational learningindeedly plays a very important role among the relationship of entrepreneurial orientation,market orientaton,and performance. As Atuahene-Gima and Ko (2001) have been pointedout,both of entrepreneurial orientation and market orientation are belong to the strategicorientations,and they are both the organizational learning’s selection mechanism to ensurethe consistency of the strategic level andimplementation level. In this point of view, is inline with the development and integration of entrepreneurial management theory,marketing management theory and organizational behavior theory.But there are still some problems haven’t been settled.First and most importantproblem is how to choice the type of the organizational learning.There are no relatively complete and universally acceptable operating definition to mesure the concept oforganizational learning to this day. So scholars are always select different dimensionsaccording to their study requirements.And most of the scholars using the learning-orienteddimensions provised by Senge(1990) and Sinkula(1994),or using the learning processdimesions proposed by Garvin,Edmondson and Gino（2008）in practice.In fact, the formeremphasized the cultural while the latter is the break down of the organizational learningprocess.Neither of them can essentially reveal the mechanism of the topic. In view of this,comes the study.This paper divided the organizational learning into two different types: exploringlearning and the exploitation learing.Additionally, a series of recent studies have found thatthe entrepreneurial-oriented enterprise will manifest more exploratory learning tendencywhile the market-oriented enterprise will manifest more exploitation tendency in thespecific strategic development and plan. At the same time, the company’s performance willalso be different due the different type of organizational learning the company takesbecause of the different market information and process it correspond to.In short, this paper presents the reader an integral conceptual framework forincorporating organizational learning as the mediating variable among the entrepreneurialorientation, market orientation and organizational performance.They key of the conceptual framework shows that the entrepreneurial orientation canbe regarded as the antecedent of the organizational learning. Therefore the implement ofentrepreneurial orientaion depends on market orientation. In addition, the two types oforganizational learning have different impact on performance. The paper also proposedthat the organizations may achieve balance between exploration and exploitation-viaambidexterity or punctuated equilibrium. And the balance may enhance the promotioneffect on performance while the unbalance will weaken the effect.The sample of this paper has387Chinese companies in the Yangtze River Deltaregion.Many quantitative methods, including SPSS, AMOS analysis and nested-modelapproach anlysis are used to test the hypothesis of this research.The major valuable findings of this paper can be summarized as following:(1) Entrepreneurial orientation has a positive direct impact on market orientation.Sothe entrepreneurial orientation can be regarded as the antecedent of the market orientation.The result suggests that the implementation of entrepreneurial orientation depends on the further implementation of market orientation. To this day, some scholars believe that thereis a potential compiteition between entrepreneurial orientaiotion and market orientation.However, the result of this study show that the market oriention does not hinder withentrepreneurial orientation and the pursuit of success, and even plays a key intermediaryrole between entrepreneurial orientation and performance. Therefore,when companies aretrying to be innovative,risk-taking,and proactive to pursuit performance, it is veryimportant to build customer orientation,competitor orientation and enhance thecross-sectoral coordination.(2) Entrepreneurial orientation has a positive impact on organizational learning(including exploration and exploitation). And the impact consists of two parts: one is adirect impact and the other is an indirect impact through the mediating effect of marketorientation. In this point of view, the entrepreneurial orientation can also be regarded as theantecedent of the organizational learning. The result shows that the entrepreneurialorientation is a kind of organizational culture. Companies which emphasis oninnovativeness, proactiveness and risk-taking will encourage the enterprises to carry outexploration learning as well as exploitation.Furthermore the entrepreneurial orientationcompany will stimulate the enterprises to carry out market orientation fulfillment.Therefore, the importance of entrepreneurial orientation in terms of organizational learningis a kind of inside learning driving force. In this way, the positive effect on the relationshipbetween entrepreneurial orientation and organizational learning can also been confirmed.(3) Market orientation has a direct positive impact on organizational learning.So themarket orientation can be also be regarded as the antecedent of the organizational learning.The result shows that the market orientation is also a kind of organizationalculture.Companies which emphasis on custumer, competitor and cross-sectoralcoordination will encourage the enterprises to focus on market information outside andcarry out organizational learning. Therefore, the importance of market orientation in termsof organizational learning is an outside learning driving force.(4) Not only entrepreneurial orientation but also market orientation has a positiveimpact on organizational performance, which is consistent with the conclusions of mostsclolars. In this point of view, entrepreneurial orientation, market orientation can be treatedas the two effective strategic orientaton the company should have. At the same time, theresults of study show that the specific path of this two strategic orientation to performance are quite different. Specifically, the Market orientation has no statistically significantimpact on performance, financial performance or nonfinancial performance.But it has aindirect impact on performance by organizational learning as the mediate variable. Andentrepreneurial orientation has no direct impact on financial performance.But it has directpositive impact on nonfinancial performance. Moreover, entrepreneurial has a indirectimpace on performance by market orientation and organizational learning as the mediatevariable. The result reveals the black box of the way entrepreneurial orientation to theorganizational performance, and explained the inconsistency conclusion between them.(5) The two kinds of organizational learning both have the ability to enhance businesscontinuity, but ther are some differences in different dimensions of performance.In detail:①At first,regardless of the type of organizational learning,they both have a positiveimpact on organizational performance. So it is very import to carry out organizationallearning in order to improve performce no matter on what kind of type it belong to.②Thedirect effect of exploration learning on nonfinancial performance is greater than the directeffect of exploitation learning on performance, while the direct effect of exploitationlearning on financial performance is greater than the effect of exploration learning onfinancial performance. So the organizational learning type and degree can be different indifferent departments. The R&D department should be more emphasis on exploratorylearning while the business units should be more focused on exploritation learning.③Atthe same time, the balance of exploratory learning and exploitation learning do not enhancethe promotion on performance, while the unbalance will weaken the effect. So themanagement personnel should pay special attention to avoid the possible negative impactof the imbalance in the implementation of the two oraganizational learning.(6) From the moderating effect may exist between the variables, we can the thefollowing result:①The intrapreneruship environment plays a centain positive moderatingrole in the relationship between entrepreneurial orientation and organizational performance.This means that it is not enough to rely on the entrepreneurial orientation to improve theperformance, and it is necessary to creat a good internal entrepreneurial environment tostimulate the employees’ creative.②Uncertain environment has a negative moderatingeffect between the relationship with entrepreneurship orientation and financialperformance. So in the dynamic environment, it is more important to keep creative andrisk-taking.③Uncertain environment has a negative moderating effect between the relationship with exploitation learning and non-financial performance. So the companiesshould carry out more exploritation learning to achieve maket share and new productdevelopment success.All in all, this paper proposed a comprehensive and systematic study of therelationship between entrepreneurial orientation, market orientation, organizationallearning as well as organizational performance with387China’s companies as empiricalsamples. Based on the major findings of this study, the paper try to establish the enterpriseorientation and maket orientation implementation mechanism, which is not only the urgentproblems of China’s companies but also a temp to localized the western managementrelated experience.I will be grateful if it will be useful to our companies.