Market orientation, competitive advantage, and performance: A demand-based perspective

Article history: Received 1 March 2008 Received in revised form 1 August 2008 Accepted 1 October 2008 This study assesses how customer value affects a firm's market orientation and consequently, competitive advantage and organizational performance in a service industry— the global hotel industry. The findings show that if a firm perceives its customers as valuing service, the firm is more likely to adopt both a customer and a competitororientation; if thefirm thinks its customers are price sensitive, thefirm tends to developa competitor orientation. Moreover, the greater a firm's customer orientation, the more the firm is able to develop a competitive advantage based on innovation andmarket differentiation. In contrast, a competitor orientation has a negative effect on a firm's market differentiation advantage. Finally, innovation and market differentiation advantages lead to greater market performance (e.g., perceived quality, customer satisfaction) and in turn, higher financial performance (e.g., profit, market share). © 2008 Elsevier Inc. All rights reserved.