Development of market orientation and competitiveness of Ukrainian firms

Document Summary) Recent studies have reflected the need to investigate the development of market orientation in the transitional economies under conditions of economic decline and great systemic change. However, the relationship between the level of market orientation and firm's competitiveness in a turbulent environment has not been analyzed. Personal interviews conducted with 221 managers of Ukrainian enterprises provided data to investigate the level of the development of market orientation and competitiveness. Managers' attitudes toward marketing are used to create a typology of marketing approaches in the Ukraine. Competitiveness is measured as a multi-dimensional concept using variables of organisational adaptability to the changes in business environment, advantages across the marketing mix and performance indicators as the dimensions. The results of the study suggest that the level of a firm's competitiveness in the turbulent environment of a transitional economy is associated with the level of the development of market orientation. Full Text (7361 words) Copyright MCB UP Limited (MCB) 2000 Irina Akimova: Kharkov State Polytechnic University, Ukraine ACKNOWLEDGMENT: This research was funded by the Fellowship from Central and East European Economic Research Centre, Warsaw University, Poland. Over the last decade there has been a transition from centrally planned economies in eastern and central Europe to free market economies. This process of transition requires fundamental changes in the behaviour of business units whose primary goal must be to achieve a competitive position within the marketplace. The managers of former socialist enterprises are pushed to change their traditional priorities from fulfilling the centrally planned tasks to identifying the appropriate target markets and developing products that meet the consumers' needs. In order to flourish in this environment, they must adopt and practise effective marketing, i.e. to become market oriented. The inevitable economic depression and political uncertainty that accompany the process of transition in former socialist countries creates additional difficulties for the business units in achieving and maintaining their competitiveness. Both the market orientation and competitiveness of the firm have been the subject of conceptual and empirical studies (e.g. Hammer and Champy, 1993; Johnson, 1992; Pace and Stephan, 1996; Kohli and Jaworski, 1990; Narver and Slater, 1994; Greenley, 1995). However, the association of market orientation with company competitiveness in the rapidly changing environment of a transitional economy has not received appropriate attention in marketing literature. A number of studies have suggested that the marketing environment influences the speed with which marketing concepts are adopted, the forms of market orientation and the level of competitiveness of the firm. However, only a few empirical studies have investigated the development of market orientation in transitional economies (Marinov et al., 1993; Shipley and Fonfara, 1993; Akimova, 1997). These studies showed that one of the most important barriers to the development of market orientation was managers' belief that marketing could not precipitate their firm's survival in the turbulent environment of a transitional economy. However, the problem of whether market orientation can improve company competitiveness within a turbulent and unfriendly environment has not been examined. This study aims to analyse the relationship between the level of development of market orientation and company competitiveness in the turbulent economic environment of a transitional economy. It is centred on two research propositions: (1) A distinction can be drawn between groups of Ukrainian companies with respect to the level of development of their market orientation. (2) Companies with higher levels of development of market orientation are more likely to display higher levels of competitiveness than companies with less developed market orientation.