​Miles and Arnold 1991. reading and response

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reading the Miles and Arnold 1991 then response

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    • Most of the words should be your own. You may use a “tasteful” amount of direct quotation from the articles, but I am really looking for your own thoughts.
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    • Table 1 on page 50 lists several definitions of the marketing orientation (MO) construct. In what ways do the definitions of the marketing orientation construct differ? (I am not looking for a step-by-step list of what WORDS differ, but more of a bird's-eye view of how they are operationally different.)
      Table 2 on page 51 lists several definitions of the entrepreneurial orientation (EO) construct. In what ways do the definitions of the marketing orientation construct differ? (I am not looking for a step-by-step list of what WORDS differ, but more of a bird's-eye view of how they are operationally different.)
      The authors mention the use of a semantic differential format as well as a Likert format to measure marketing orientation. Do a little research and define what these two formats are and why they would be used.
      Page 53 uses the terms discriminant and convergent validity several times. What do these terms mean in the context of this paper. You can use this resource (Links to an external site.)Links to an external site. to find the definitions of the two terms.
      Given what you know about MO and EO, what is your educated opinion regarding the scale items in table 3?
      What does this paper find regarding the sameness or uniqueness of MO and EO? Explain.
      What are other confusions, questions, or comments you have about this paper?
    Background InformationAn organization's business orientation is its "underlying philosophy, which tends to flavor the overall decision-making framework of its management" (Miles & Arnold, 1991). In marketing, we tend to think of business orientations in terms of product, sales, and marketing orientation. If you are unfamiliar with these terms, please refer to this website (Links to an external site.)Links to an external site.which outlines the evolution of marketing orientation. The idea of an entrepreneurial orientation is likely a new concept to you. The fact is, a company can orient itself to whatever the heck it wants! This is why we still see firms with a production orientation or a sales orientation, even though (as a trend) the majority of companies will seek to meet customer needs. The purpose of this paper was to determine whether "the marketing orientation and entrepreneurial orientation represent the same or two unique business philosophies" (Miles & Arnold, 1991).There will be sections of this paper that you will not understand. You can read through the words on pp. 56-58 if you have any background in Factor Analysis, Principle Components Analysis, or Correlation Analysis. I can talk about the importance of Factor Loadings in class or through supplemental materials if anyone is interested. Otherwise, you can ignore those pages.

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1042-2587-91-154$1.50 Copyright 1991 by Baylor University The Relationship Between Marketing Orientation and Entrepreneurial Orientation Morgan P. Miles Danny R. Arnold Increasing environmental uncertainty has focused greater attention on firms' overall business orientations, particularly on the marketing orientation and the entrepreneurial orientation. The major purpose of this empirical Investigation was to determine whether the marketing orientation and entrepreneurial orientation represent the same or two unique business philosophies. A firm's business orientation consists of those underlying philosophies that determine the nature and scope of its activities and plans (Peterson, 1989). Different business orientations result in varied perceptions of organizational priorities, how the customer is viewed, and how the firm implicitly defines its business. Hence, an organization's business orientation is its underlying philosophy, which tends to flavor the overall decision-making framework of its management. While a marketing orientation implies that a firm should focus on its customers, an entrepreneurial orientation suggests that organizations must constantly seek to exploit the dynamics of their macroenvironment and task environments. Thus, an entrepreneurial orientation provides an excellent basis for the appropriate strategic response to organizational crises caused by environmental turbulence (Khandwalla, 1977; Smart & Vertinsky, 1984). Morris and Paul (1987) define an entrepreneurial orientation as "the propensity of a company's top management to take calculated risks, to be innovative, and to demonstrate proactiveness." They also suggest that both the marketing orientation and the entrepreneurial orientation are interrelated strategic responses to environmental uncertainty. The nature of the interrelationship between a marketing orientation and an entrepreneurial orientation has begun to receive greater attention. Specific attention has been devoted to determining if the two orientations are the same or represent unique environmental responses (Murray, 1981; Webster, 1981; Zeithaml & Zeithaml, 1984; Hills, 1987; Morris & Paul, 1987). Consequently, the purpose of this study was to evaluate the interrelationship between the marketing orientation construct and the entrepreneurial orientation construct. Specifically, the major purpose was to determine whether the marketing orientation Summer, 1991 49 construct and the entrepreneurial orientation construct describe the same underlying business philosophy or two unique perspectives. MARKETING ORIENTATION Marketing scholars suggest that a marketing-oriented firm has adopted the marketing concept and the corresponding customer focus. For example, Foxall (1984) states that marketing orientation is an organizational adoption of the marketing concept that will color the ''attitudes and behavior of all members of the company. '' The marketing concept itself represents a distinct organizational culture and true adoption by an organization results in a strategic customer focus (Deshpande & Webster, 1989). McCarthy and Perreault (1984) define marketing orientation simply as the organization's willingness to adopt the marketing concept as its underlying business philosophy. They suggest that a marketing orientation implies the goal of satisfying customer needs while meeting organizational objectives. Consequently, the adoption of the marketing concept served as the operational definition of the marketing orientation construct for the present investigation. Adherence to certain specific maxims generally indicates that an organization has adopted the marketing concept as its core business philosophy. The four traditional components of the marketing concept are (1) customer orientation, (2) customer satisfaction, (3) coordinated or integrated marketing, and (4) a focus on profitability (Borch, 1957; Felton, 1959; Keith, 1959; King, 1965; Bell & Emory, 1971; Konopa & Calabro, 1971; Bennett & Cooper, 1979; Bennett & Cooper, 1981; Lamb & Crompton, 1986; Lusch & Laczniak, 1987; Kotler, 1988; Peterson, 1989). A summary of the various conceptual definitions of the marketing orientation construct is provided in Table 1. Table 1 Conceptual Comparison of Selected Definitions of the Marketing Orientation Construct AUTHOR Barksdale and Darden (1971) McNamara (1972) Lawton and Parasuraman (1980) Parasuraman (1983) Bartlett, Schewe, and Allen (1984) Foxall (1984) Morris a11d Paul (1987) Canning (1988) Deshpande and Webster (1989) 50 DEFINITIONAL KEYWORDS Adoption of marketing concept, consumer orientation, profit driven, meet consumer needs, desire more government regulation Adoption of marketing concept, implementation of marketing concept, status of marketing, coordinated marketing, scope of marketing research Adoption of marketing concept, background of the firm's top management Status of marketing research, focus on consumer needs, adoption of marketing concept Organizational orientation, consumer orientation, planning orientation, segmentation orientation, aggressiveness orientation, dynamic orientation Adoption of marketing concept by entire organization Marketing department, use of consultants and marketing research, planning, product managers, status of marketing, background of management, feedback devices C.E.O. 's role in marketing, adaptive strategy, market orientated MIS, cost effectiveness, new product development and marketing coordination, marketing considered professional, marketing as corporate culture Strategic focus on customer, marketing concept as corporate culture ENTREPRENEURSHIP THEORY and PRACTICE Entrepreneurial Orientation Entrepreneurship has been referred to as the ''parent of innovation'' (Meyers, 1986) because it serves as the innovative change agent that moves organizations and society forward (McClelland, 1976). Without entrepreneurship, business and society would be neither dynamic nor adaptive, thereby resulting in stagnation. With entrepreneurship, however, firms tend to seek innovative and flexible means to exploit opportunities and achieve desired objectives (Khandwalla, 1977; Meyers, 1986). Ginsberg (1985) adapted Miller and Friesen's (1983) definition, which assesses the relationship between environmental uncertainty and strategic orientation, by adding Khandwalla's (1977) tripartite measure of entrepreneurial orientation. The result of this adaptation is a five-item definition that purports to describe more fully the hypothetical domain of a firm's entrepreneurial orientation. A correlation between environmental hostility within dynamic task environments and the tendency for manufacturing firms to adopt an entrepreneurial orientation was reported by Covin and Slevin ( 1989). Their results indicate that financially successful firms tend to exhibit an entrepreneurial posture in hostile environments. Covin and Slevin extended Miller and Friesen's (1983) and Khandwalla's (1977) findings by adding the propensity to seek high risk/high return projects to their definitions. Table 2 provides a summary of entrepreneurial orientation definitions. Interrelationship Between Marketing Orientation and Entrepreneurial Orientation In this era of increasingly volatile and sometimes hostile external environments, marketers have been criticized for not adopting a more entrepreneurial perspective (Webster, 1981). Webster suggests an entrepreneurial orientation as a general scheme for managing the macroenvironment in states of uncertainty. Zeithaml and Zeithaml Table 2 Conceptual Comparison of Selected Definitions of the Entrepreneurial Orientation Construct AUTHOR McClelland (1976) Meyers (1976) Khandwalla (1977) Shapero and Sokol (1982) Miller and Friesen ( 1983) Foxall (1984) Ginsberg (1985) Morris and Paul (1987) Covin and Slevin (1989) Summer, 1991 DEFINITIONAL KEYWORDS Innovation, need to achieve, risk accepting, proactive Innovative Financial innovation, proactive, pragmatic Proactive, functional, initiator management, decentralized, rewards to risk-takers Aggressiveness, innovative new products, novel solutions, logistical innovation, emphasis on research and development Opportunity seeking, control of external parties for own gain Aggressive, seek novel solutions, innovative, new products, innovative distribution New product introductions, innovative production and logistics, risk taking, aggressive, seek novel solutions, research and development emphasis, active opportunity scans, bold, growth oriented, pragmatic, compromising, charismatic leaders Innovative, aggressive, proactive 51 (1984) suggest that firms should adopt a proactive "entrepreneurial philosophy" to deal with both the macroenvironment and task environments. A recent empirical study addressed the relationship between the marketing and entrepreneurial business philosophies (Morris & Paul, 1987). The major hypothesis was that there should be a significant difference in entrepreneurial orientation scores between firms "in which marketing appeared to receive greater emphasis" and those in which marketing receives less of an emphasis. The correlation between the entrepreneurial orientation and marketing orientation constructs was proposed to result from increasing levels of environmental uncertainty. THE THEORETICAL PROPOSITION The literature discussed thus far involves the interrelationship between the marketing orientation construct and the entrepreneurial orientation construct. Zeithaml and Zeithaml (1984) suggest that an entrepreneurial orientation may be a useful business philosophy to assist a firm in dealing with both its macroenvironment and task environments. Morris and Paul (1987) propose that both the marketing and entrepreneurial orientations are strategic responses to increasing levels of environmental uncertainty. Smith, Arnold, and Bizzell (1988) suggest that organizations now face "increasingly turbulent, complex, threatening environments." This "acceleration of environmental change" (Smith, Arnold, & Bizzell, 1988) may result in the adoption by an organization of a latent operating philosophy that serves as a coping strategy for uncertain environments. This provides the basis for an interesting question: "Is there a difference between a marketing orientation and an entrepreneurial orientation?" This question leads to the present study's null hypothesis: The construct defined by an organization's level of marketing orientation and the construct defined by an organization's level of entrepreneurial orientation are one and the same construct, and represents an organization's business philosophy. SCALE DEVELOPMENT The Marketing Orientation Scale An analysis of the properties of commonly used marketing orientation scales indicated that the psychometric assessment of marketing orientation scales has been typically neglected or not reported by business orientation researchers (Hise, 1965; Barksdale & Darden, 1971; McNamara, 1972; Lawton & Parasuraman, 1980; Parasuraman, 1983; Bartlett, Schewe, & Allen, 1984; Morris & Paul, 1987; Canning, 1988; Peterson, 1989). Morris and Paul (I 987) developed a 22-item dichotomous scale by intermingling McNamara's implementation and adoption indicators with behavioral measures of a firm embracing the marketing concept. Due to the dichotomous nature of the scale, neither reliability nor validity analyses were conducted by Morris and Paul. However, I I items purporting to measure the marketing orientation construct were found in a series of t-tests to be significant at the .1 level. Since the Morris and Paul scale appeared to be one of the most promising scales, the items were psychometrically assessed for reliability in the present study's pre-test. Morris and Paul's scale was adapted into a semantic differential format and exhibited an alpha coefficient of .8437 (Miles, 1989), thereby indicating an internally consistent measure. Morris and Paul's (1987) 11-item scale was adapted for the present study's pre-test and restated in both a semantic differential and a Likert format to allow for a multi-trait, 52 ENTREPRENEURSHIP THEORY and PRACTICE multi-method assessment. The same 11 items were assessed for convergent and discriminant validities using a multi-trait, multi-method approach. The scale was found to exhibit convergent validity and a weak form of discriminant validity. In addition, the items have a substantial history of theoretical support (Hise, 1965; McNamara, 1972; Lawton & Parasuraman, 1980; Parasuraman, 1983; Morris & Paul, 1987). Hence, a scale purporting to measure marketing orientation was adapted from the Morris and Paul item set and used in the present study. The Entrepreneurial Orientation Scale Three scales purporting to measure a firm's degree of entrepreneurial orientation have published indicators of reliability (Ginsberg, 1985; Morris & Paul, 1987; Covin & Slevin, 1989). All three are similar in content, appearance, and conceptual foundation. Ginsberg ( 1985) developed a multi-item scale of eight measures based on a synthesis of the works of Miller and Friesen (1983) and Khandwalla (1977). Ginsberg used canonical factor analysis to assess construct validity and found that five of the eight initial items loaded on a single factor, which he labeled "entrepreneurial orientation." Ginsberg's entrepreneurial orientation scale exhibited a coefficient alpha of .755. Although the convergent and discriminant validities of the scale were not assessed, this scale established the conceptual foundations and psychometric standards for subsequent scale-development efforts. Morris and Paul (1987) used Ginsberg's (1985) scale as the foundation to develop a scale purporting to measure an organization's entrepreneurial orientation. Morris and Paul's scale exhibited a coefficient alpha of .789. Convergent and discriminant validity of the scale were not assessed. They conducted a factor analysis to assess construct validity, with five items loading on one underlying dimension of the entrepreneurial orientation construct, named the "risk-taking/innovative" factor. Covin and Slevin (1989) developed a nine-item scale to measure a firm's degree of entrepreneurial orientation. Items were adapted from both the Miller and Friesen (1983) and Khandwalla ( 1977) scales and resulted in the same set of items specified by Ginsberg (1985). In addition, four new items were added by Covin and Slevin to develop a scale that more fully reflects the entrepreneurial orientation construct's hypothetical domain for manufacturers. The scale exhibited a coefficient alpha of .87. Construct validity was established utilizing factor analysis (Allen & Yen, 1979) and all items loaded on a single factor. Hence, the Covin and Slevin scale, in its original semantic differential format, was selected to measure entrepreneurial orientation for the present study. The Combined Scale The instrument used in the present study consisted of two sections: (1) the marketing and entrepreneurial orientation scale items; and (2) classification information. In the first section of the survey, each executive was requested to answer questions pertaining to the organization's business orientation. This section of the questionnaire contained an independent random combination of Covin and Slevin's (1989) nine-item entrepreneurial orientation scale intermingled with the 11 items used by Morris and Paul ( 1987) and adapted into a semantic differential format to measure a firm's degree of marketing orientation. Scale direction for the items was altered randomly to minimize response bias. In the second section, subjects were requested to supply classification information pertaining to their job title and number of years with the firm, the size of the organiSummer, 1991 53 zation's total asset base, as well as the organization's ownership status and age. The items constituting the survey instrument are summarized in Table 3. METHODOLOGY Data was collected using a field study methodology, with a pencil and paper survey instrument. This methodology assumed that the study industry's top managers were willing and able to provide insight into their own underlying business orientations through a written, self-administered survey instrument. This assumption is based on the fruitful utilization of management surveys by previous business orientation researchers (Hise, 1965; Barksdale & Darden, 1971; McNamara, 1972; Lawton & Parasuraman, 1980; Parasuraman, 1983; Bartlett et al., 1984; Ginsberg, 1985; Morris & Paul, 1987; Canning, 1988; Covin & Slevin, 1989; Peterson, 1989). The underlying assumption of this methodology is that "top managers" will direct the organization's overall business philosophy to such an extent that a survey of an industry's top management will serve as the "key informant" (Zelditch, 1962) for assessing the industry's underlying business philosophy(ies) (Chaganti & Sambharya, 1987). A total of 901 firms were sent survey instruments and requested to complete and return them. The sample comprised 375 members of a nationwide furniture manufacturer trade association and 526 furniture manufacturing firms located in Mississippi or Alabama. Analysis of the American Furniture Manufacturers Association mailing list revealed that it was composed primarily of firms operating in the South Atlantic region. The other Table 3 Combined Scale Items ITEMS ADOPTED FROM MORRIS AND PAUL (1987) THAT PURPORT TO MEASURE THE MARKETING ORIENTATION CONSTRUCT I. 2. 3. 4. 5. 6. 7. 8. 9. JO. JI. MKTD MKTC MKTVP MR PD MGT CUSTI MRD A800NO NEWP MIMP Have a marketing department Employ marketing consultants Top level marketing employee is Vice President or higher Regularly performs marketing research Have a new product development department Top management has a marketing background Customers commonly a source uf new ideas Have a marketing research department Have an 800 number for customer feedback Marketing generates most new product ideas Marketing has a significant impact on the strategic direction of the firm COVIN AND SLEVIN'S (1989) SET OF ITEMS THAT PURPORT TO MEASURE THE ENTREPRENEURIAL ORIENTATION CONSTRUCT I. RD 2. 3. 4. 5. 6. 7. 8. 9. 54 NP5 CHANGE PROA INNOV LIVE HIGHRR BOLD AGGPOS Cultural emphases on innovation and R&D High rate of new product introduction Bold, innovative product development Initiator, proactive posture First to introduce new technologies and products Competitive posture toward competitor Strong proclivity for high risk, high return projects Environment requires boldness to achieve objectives When faced with risk, adopts aggressive, bold posture ENTREPRENEURSHIP THEORY and PRACTICE major concentration of household furniture manufacturing in the United States is in and around the Tupelo, Mississippi, area. Since firms in the Tupelo furniture manufacturing area (categorized to be in the East South Central region) were under-represented in the trade association list, a census of the 526 furniture manufacturers from the Mississippi and Alabama manufacturing directories was also included in the sample. Members of the American Furniture Manufacturers Association operating within the states of Alabama or Mississippi were sent only one instrument, to eliminate overlapping samples. Including the Alabama and Mississippi firms in the sample provided a better representation of industry characteristics. The combined regions accounted for approximately 47% of all domestic household furniture value added in 1982 (U.S. Department of Commerce, Bureau of the Census, 1986) and 89% of all domestic furniture manufacturing new ventures in 1986 (O'Connor, 1987). To increase the response rate and minimize the nonresponse bias of the present study, a cash inducement was offered to respondents. Subjects were offered an opportunity to win cash prizes of $100.00, $75.00, or $50.00 if their completed and returned survey's form number was one of three selected in a random drawing. The research hypothesis was tested by conducting a maximum likelihood factor analysis and using the chi-square test for determining the number of significant factors to extract. The level of significance was set at .05 to replicate Ginsberg's (1985) methodology. If items measuring both the entrepreneurial orientation and marketing orientation constructs were to load on one and only one factor at the .05 level of significance or greater, then the research hypothesis stating that the entrepreneurial orientation and marketing orientation are one and the same underlying construct would be supported. Operationally, if the computed chi-square level of significance for the maximum likelihood solution was less than .05, an additional factor was extracted. Factors continued to be extracted until the computed chi-square was equal to the researcher-specified level of significance, .05. FINDINGS Of the 901 surveys mailed 169 ( 18%) were completed and returned. Data pertaining to the respondent's job title with the organization were collected as a check to ensure that each respondent could reasonably serve as the firm's key informant (Ginsberg, 1985). Approximately 85% of those responding were the organization's Chief Executive Officer or President. Approximately 11 % had job titles that indicated they held positions that reported to the firm's Chief Executive Officer or President. Approximately 5% of the respondents reported job titles that indicated that they were not part of the organization's top management, and hence were not included in the study. Data pertaining to the respondent's years of service to the organization were also collected to ensure that the respondents had sufficient experience in the organization to act as the firm's key informant (Ginsberg, 1985). Approximately 80% of the respondents had five or more years of service with the firm. These findings indicate a sufficient depth of organizational experience for the respondents to serve as the firm's key informant. Characteristics of Nonrespondents Classification characteristics of a random telephone sample of fifteen nonrespondents were compared with a limited set of respondent classification characteristics. A one-tailed t-test was used to test for a significant difference in organizational age between the groups, with a .05 level of significance specified. The number of years since Summer, 1991 55 the organization's inception varied within the sample from 1 year to 141 years and the mean age was 31.1 years. The findings indicated there was not a significant difference between the mean organizational age of respondents and nonrespondents. A second procedure was conducted as a check to better assess the nonresponse bias in the present study's data set. Armstrong and Overton (1977) suggest that the extrapolation method, which compares the responses of the ''early'' respondents with those of the "late" respondents, can be used as an alternative procedure to assess nonresponse bias in mail surveys. The extrapolation method assumes that the "late" or last respondents in a sample are similar to the "theoretical" nonrespondents. In the present study the responses were ordered sequentially by date received, with the first quartile selected to represent the "early" respondents and the last quartile selected to represent the "late" or "non" respondent. T-tests were used to determine if there were significant differences in the mean marketing orientation and entrepreneurial orientation scores between first quartile and last quartile respondents. The findings indicate that there was not a significant difference in the marketing orientation of ''early'' respondents and the marketing orientation of the "late," or proxy, nonrespondents at the .05 level of significance. In addition, the findings indicate that there was not a significant difference between ''early'' and ''late'' respondents in the degree of entrepreneurial orientation. The results suggest that there appears to be no significant difference in the degree of marketing or entrepreneurial orientations between the respondents and the "theoretical" nonrespondents (Armstrong & Overton, 1977). Psychometric Analysis Two constructs were of relevance in this study. The scales used in the study have enjoyed various published psychometric properties. Both the Morris and Paul (1987) scale purporting to measure the marketing orientation and the Covin and Slevin (1989) scale purporting to measure the entrepreneurial orientation construct were psychometrically assessed for reliability using coefficient alpha (Nunnally, 1978) and for validity using factor analysis (Allen & Yen, 1979; Ginsberg, 1985; Kerlinger, 1986). Marketing Orientation The Morris and Paul ( 1987) scale had exhibited a coefficient alpha of . 84 in a pre-test, using a set of similar subjects, compared to .72 in the primary study. The scale's reliability as exhibited in the primary study adhered to Nunnally's (1978) guidelines of a coefficient alpha of .7 or greater to insure adequate scale reliability. The scale in the pre-test had a mean of 44.18 and a standard deviation of 14.10, compared to the scale's mean in the present study of 44.59 and a standard deviation of 11.98. Item means (measured with a seven-point scale) were 4.02 in the pre-test and 4.05 in the study, indicating a reasonably stable and non-biased scale. In addition, item deletion would not meaningfully increase the scale's alpha, suggesting that all the items are sound. The results indicate an internally consistent, stable, and reliable scale which purports to measure the marketing orientation construct. Construct validity pertains to the degree to which the scale actually measures what it was designed to measure (Churchill, 1979). Kerlinger ( 1986) states that factor analysis is a superior methodology to establish the construct validity of a specific scale. A factor analysis was conducted on the marketing orientation scale to assess construct validity. Factor analysis takes a large group of items and groups the items together with respect 56 ENTREPRENEURSHIP THEORY and PRACTICE to the constructs that they measure. Items that are grouped together measure the same underlying construct (Kerlinger, 1986). Cattell ( 1978) states that the scree test criteria is the best indication of the true number of latent dimensions described by a measure. Maximum likelihood analysis was specified as the extraction procedure and varimax rotation was specified as the rotation procedure. The maximum likelihood factor analysis converged in six iterations. The factor loadings are provided in Table 4. A single factor solution was also indicated for the Morris and Paul ( 1987) 11-item scale based upon the scree chart criteria. Entrepreneurial Orientation Covin and Slevin's (1989) entrepreneurial orientation scale was used to measure the entrepreneurial orientation construct. The scale enjoys published measures of both reliability and validity. In addition, there is extensive theoretical and psychometric support for the inclusion of the scale items, both individually and combined (Khandwalla, 1977; Miller & Friesen, 1983; Ginsberg, 1985). Table 4 Factor Loadings MARKETING ORIENTATION FACTOR LOADINGS Item* FACTOR 1 FACTOR 2 FACTOR 3 FACTOR4 MRD MKTVP MKTC MR PD MKTD MGT CUSTI A800NO NEWP MIMP .35740 .22143 .12942 .29483 .43652 .99950 .08451 .03536 .17858 .23004 .45355 .13437 .33379 .20125 .71719 .10460 - .00173 .52931 .14831 .06852 .38802 .39900 .00938 .18706 -.16612 - .31423 .18236 - .00057 -.08757 .27742 .06338 .30209 .50279 .15442 - .03475 .36038 .10766 .10686 - .00030 -.39450 .19968 .03093 -.31796 .14592 ENTREPRENEURIAL ORIENTATION FACTOR LOADINGS FACTOR 1 FACTOR 2 .44602 .66046 .34850 .58059 .48755 .68314 .73742 .73791 .54243 .22937 -.02975 .40314 .45957 -.07657 -.05982 - .17417 - .23325 -.04087 RD CHANGE PROA INNOV LIVE HIGHRR BOLD AGGPOS NP5 * See Table 3 for scale item definitions. Summer. 1991 57 The Covin and Slevin scale exhibited a published alpha of . 87 with a set of similar subjects compared to . 83 in the present study. The scale's reliability as exhibited in the present study is well within Nunnally's (1978) suggested minimum guidelines for a coefficient alpha of . 7 or greater. The scale had a mean of 37 .18 and a standard deviation of 10.12, when assessed in the present study. Item means (measured with a seven-point Likert scale) were 4.13. In addition, item deletion resulted in no increase in the scale's coefficient alpha, suggesting that all the items are sound. The results indicate an internally consistent, stable, and reliable scale which purports to measure the marketing orientation construct. Construct and convergent validity of the Covin and Slevin scale were assessed by a factor analysis as suggested by numerous researchers (Allen & Yen, 1979; Ginsberg, 1985; Kerlinger, 1986). Maximum likelihood analysis was specified as the extraction procedure and varimax rotation was specified as the rotation procedure. The factor analysis converged in six iterations. All nine items of the scale loaded on a single factor, with factor loads of .35 or greater (see Table 4). Such universally high factor loads for all scale items on one factor indicate that the items converge upon and define a single underlying construct resulting in a valid construct measure (Ginsberg, 1985; Kerlinger, 1986; Covin & Slevin, 1989). One factor was extracted from the nine-item scale based upon the scree chart criteria supporting Covin and Slevin' s previous single factor findings. Hence, the findings and published psychometric properties indicate that the Covin and Slevin scale provides a superior measure of the entrepreneurial orientation construct. Pairwise Correlation A Pearson pairwise correlations procedure for organizational" age, asset size, score on the marketing orientation scale, and score on the entrepreneurial orientation scale was conducted to determine items with associated variation. The pairwise correlation coefficients are presented in Table 5. Correlates of Marketing Orientation Marketing orientation was found to be significantly correlated with asset size, exhibiting a positive coefficient of .473. This is a reasonable finding in light of the items used to measure the construct. However, this finding may be an artifact of the measuring instrument, since firms with modest asset bases will typically not be able to afford Table 5 Pairwise Correlation of Selected Variables ''Asset'' "Organizational Age" "Marketing Orientation" "Entrepreneurial Orientation" * Significant at tht 58 (VI) (V2) (V3) (V4) VI V2 LOO .413* .473* .262* LOO .241* -.040 V3 V4 LOO .518* LOO .05 level. ENTREPRENEURSHIP THEORY and PRACTICE marketing consultants or a separate marketing or marketing research department. Marketing orientation was also found to be significantly correlated with organizational age, exhibiting a positive coefficient of .241. Correlates of Entrepreneurial Orientation Entrepreneurial orientation was found to be significantly correlated with asset size, exhibiting a positive coefficient of .262. This may imply a positive relationship between asset size and a firm's ability to accept risks, be innovative, and maintain a proactive posture. Entrepreneurial orientation was also found to be significantly correlated with marketing orientation, exhibiting a positive coefficient of .518 significant at the .01 level. This finding supports Morris and Paul's (1987) findings of a correlation of .238 significant at the .028 level. Results of Hypothesis Test The factor analysis of the survey instrument converged in 11 iterations. The results of the maximum likelihood factor analysis for the items of the instrument are presented in Table 6. Factor loading for the present study's instrument are presented in Table 7. The findings failed to support the monofactor hypothesis. The chi-square criteria indicated a multifactor solution. The scree test and eigenvalue criteria were used as validity checks. Both checks supported the finding that there is more than one factor represented within the data set. The scree chart criteria confirms a multi-factor solution (see Figure 1). Six factors were extracted with eigenvalues of 1.0 or more, confounding the findings. Both the scree chart and the eigenvalue criteria suggest a multi-factor solution. Hence, the results of the analysis fail to support the null hypothesis, and indicate that the marketing orientation construct and the entrepreneurial orientation construct do not describe the same latent business philosophy. These results conflict with Morris and Paul's (1987) findings, and fail to add support to the implication drawn from Zeithaml and Zeithaml (1984) that the marketing orientation construct and the entrepreneurial orientation construct describe the same latent business philosophy. Table 6 Factor Analysis Results: Factors Extracted and Corresponding Chi-square Coefficients for the Random Instrument NUMBER OF FACTORS CHI-SQUARE STATISTIC DEGREES OF FREEDOM SIGNIFICANCE EIGENVALUE 319.04 197.60 138.09 ll2.03 80.83 58.02 170 151 133 ll6 100 85 .0000 .0065 .3635 .5868 .9199 .9889 5.0073 1.8143 1.5397 1.2393 1.1143 1.0827 l* 2* 3 4 5 6 * Significant at the .05 level. Summer, 1991 59 Table 7 Random Instrument Factor Loadings MRD MKTVP MKTC MR PD MKTD MGT CUSTI A800NO NEWP MIMP RD CHANGE PROA INNOV LIVE HIGHRR BOLD AGGPOS NP5 FACTOR 1 FACTOR 2 FACTOR3 FACTOR 4 FACTOR 5 FACTOR 6 .24717 .40861 .14841 .37313 .45448 .52092 .22704 .13759 .29122 .38094 .54671 .45054 .65872 .37557 .61609 .57016 .62931 .64871 .65061 .52963 .30424 .15355 .16955 .55183 .25588 .32812 .26444 .05524 -.01101 .25463 .32336 .01317 -.12820 .04889 .03723 .07231 - .30661 -.43120 - .39038 -.10506 - .17353 .20987 - .02368 .24326 -.28740 -.19126 .49436 -.08223 - .11590 .20625 - .03194 - .07931 .11609 -.38845 - .38436 .14032 .03033 .05278 .14389 .14197 .06337 -.21002 .27528 .33151 - .32783 - .12892 .06536 - .09505 .03258 - .14998 -.22694 .12109 -.01104 .34360 .09195 - .20224 .10143 -.07182 .11242 -.00286 .01341 .14420 .32822 .10300 .18480 .04287 -.11656 - .11080 .05139 - .34784 - .13075 .10556 .03591 - .33357 .08901 - .09795 -.17519 .03811 .09396 .10592 .10683 .02892 .20990 .02141 - .11562 .08085 -.07142 .38520 - .01014 -.08579 .23792 - .20487 - .23149 - .08592 - .07349 -.10896 .12276 .05750 .13482 -.16021 DISCUSSION The major finding of the present study, limited to the present study's sampling frame, is that marketing orientation and entrepreneurial orientation were found to be correlated, supporting Morris and Paul (1987), but they do not appear to represent the same underlying business philosophy. Since the orientations appear to be separate, the marketing orientation's hypothetical domain does not need to be expanded. Essentially, the marketing orientation can exist independently and does not always need aspects typical of an entrepreneurial orientation such as an organization's tendency to be innovative, accept risks, and act in a proactive manner. Further, the entrepreneurial orientation can be developed in an organization based upon the dynamics of the environment. The positive correlation between the marketing orientation and entrepreneurial orientation constructs supports Murray's (1981) proposition that the marketing function tends to act in an entrepreneurial manner when faced with competitive environments. Murray further suggests that an entrepreneurial orientation is crucial for an organization's long-term survival in a competitive environment and that "marketing is uniquely equipped'' to manage the interdependence between a firm and its environment. This implies that the marketing function may already possess many of the resources necessary to foster an entrepreneurial orientation. The correlation between the two orientations found in the present study may be due to financial performance pressures, as implied by Covin and Slevin (1989). As financial performance expectations continue to increase, management may be forced by environmental dynamics to become more innovative, proactive, and risk accepting, while retaining a marketing orientation. Increased levels of environmental uncertainty may also influence the relationship positively, as suggested by other marketing theorists (Murray, 1981; Webster, 1981; Smart & Vertinsky, 1984; Zeithaml & Zeithaml, 1984; Hills, 1987; Morris & Paul, 60 ENTREPRENEURSHIP THEORY and PRACTICE Figure 1 Scree Chart 6.---~~~~~~~~~~~~~~~~~~~~~~~--, 5 Q) 4 ::J (ij ~ Q) w 3 O> 2 1 o..J___,~~~~---.-~~~-.~.----.~---.----.~---.--~r--.--~.---.-~.------,.--' 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Factors 1987). Note also that the relationship may also be mediated by business type, size, and the interaction between the two. Environmental dynamics may result in market-driven organizations potentially augmenting their current marketing-oriented business philosophy with the salient components of an entrepreneurial orientation. This suggests that performance-pressured marketing-orientated firms existing in turbulent environments will actively seek out highreturn, high-risk projects to exploit with novel technologies and solutions. LIMITATIONS Three factors potentially limit the extension and generalization of the results of this study: (1) the non-random nature of the sample; (2) potential differences in the degree of environmental uncertainty for firms within the sampling frame; and (3) potential differences between manufacturing firms and non-manufacturing firms. First, the sampling frame was selected to represent the major domestic furniture manufacturing regions, which account for the majority of furniture manufacturing in the United States. However, due to the non-probability nature of the sample, no statistical inferences to the population can be made from the results of the sample. Second, the degree of macroenvironmental uncertainty faced by the firms was assumed to be fairly similar, since all firms are in the same industry. However, if this assumption were not accurate, any between-firm variance in macroenvironmental uncertainty could change the results and conclusions of the study. Third, the scales used to measure both marketing orientation and entrepreneurial orientation have been assessed for reliability and validity using manufacturing populaSummer, 1991 61 tions. The findings may not be generalizable to non-manufacturers because of differences in their task environments. RECOMMENDATIONS FOR FUTURE RESEARCH Recommendations for future research will be discussed for three major issues: ( 1) measurement of the marketing orientation construct; (2) measurement of the entrepreneurial orientation construct; and (3) assessment of the interrelationship between marketing orientation and entrepreneurial orientation. Measurement of the Marketing Orientation Construct Many marketing scholars have focused their efforts on developing better measures of the marketing orientation. Perhaps future research should focus on the most promising scale composed of the set of items that Morris and Paul ( 1987) developed. Psychometric assessment of its properties with a wide variety of firm types, including nonmanufacturers, could be particularly enlightening. Further research regarding item generation to better define and more fully capture the hypothetical domain of the marketing construct would also be beneficial. Specifically, more needs to be known about which measures to .use. One promising approach, for example, would involve assessing outcome measures by questioning the members of a firm's task environment in an intensive case study. Customers, suppliers, and competitors may be in a better position than the firm's management to objectively assess whether a firm's behavior indicates it has adopted the marketing concept as its core business philosophy. Measurement of the Entrepreneurial Orientation Construct The scale used to measure a firm's degree of entrepreneurial orientation has been supported by extensive scale development efforts and psychometric tests (Ginsberg, 1985; Morris & Paul, 1987; Covin & Slevin, 1989). However, the impact of a firm's size has not been fully examined. The present study's findings suggest that a firm's size as a function of total assets and its ability to behave in an entrepreneurial manner may be related. This issue should be addressed in subsequent studies to gain a better understanding of the domain of the entrepreneurial orientation construct. Assessment of the Interrelationship Between Marketing Orientation and Entrepreneurial Orientation The assessment of the interrelationship between marketing orientation and entrepreneurial orientation is probably more important to the development of the theory of entrepreneurship than it is to the extension of marketing theory. However, the lack of support found for the interrelationship between the two orientations is significant in developing a more complete understanding of the range of organizational responses to environmental turbulence. Future research should focus on the development of support or non-support for the strong, positive relationship between the marketing orientation and the entrepreneurial orientation over a variety of conditions. Assessments should be made over a variety of business types, sizes, and levels of environmental uncertainty. 62 ENTREPRENEURSHIP THEORY and PRACTICE REFERENCES Allen, M. J., & Yen, W. M. (1979). Introduction to measurement theory. Monterey, CA: Brooks/Cole. Armstrong, J., & Overton, T. S. (1977). Estimating nonresponse bias in mail surveys. Journal ofMarketing Research, 16 (August), 396-402. Barksdale, H. C., & Darden, B. (1971). Marketers' attitudes toward the marketing concept. Journal of Marketing, 35 (October), 29-36. Bartlett, P. J., Schewe, C. D., & Allen, C. T. (1984). Marketing orientation: How do hospital administrators compare with marketing managers? Health Care Management Review, 9 (Winter), 77-86. Bell, M. L., & Emory, C. W. (1971). The faltering marketing concept. Journal of Marketing, 35 (October), 37-42. Bennett, R. C., & Cooper, R. G. (1979). Beyond the marketing concept, Business Horizons, 22 (June), 76-83. Bennett, R. C., & Cooper, R. G. (1981). The misuse of marketing: An American tragedy. Business Horizons, 24 (November), 51-61. Borch, F. J. (1957). The marketing philosophy as a way of business life. New York: General Electric. Canning, G., Jr. (1988). Is your company marketing oriented? Journal of Business Strategy, 9 (May/June), 38-44. Cattell, R. B. (1978). The scientific use of factor analysis in behavioral and life sciences. New York: Plenum Press. Chaganti, R., & Sambharya, R. (1987). Strategic orientation and characteristics of upper management. Strategic Management Journal, 8, 393-401. Churchill, G. A., Jr. (1979). A paradigm for developing better measures of marketing constructs. Journal of Marketing Research, 16 (February), 64-73. Covin, J. G., & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, JO (January), 75-87. Deshpande, R., & Webster, F. E., Jr. (1989). Organizational culture and marketing: Defining the research agenda. Journal of Marketing, 53 (January), 3-15. Felton, A. P. (1959). Making the marketing concept work. Harvard Business Review, 37 (July-August), 55-65. Foxall, G. (1984). Corporate innovation: Marketing and strategy. New York: St. Martin's Press. Ginsberg, A. (1985). Measuring changes in entrepreneurial orientation following industry deregulation: The development of a diagnostic instrument. In G. B. Roberts (Ed.), Proceedings: Discovering entrepreneurship. Marietta, GA: U.S. Affiliate of the International Council for Small Business. Hair, J. F., Jr., Anderson, R. E., & Tatham, R. L. (1987). Multivariate data analysis: With readings. New York: Macmillan. Hayes, H. M. (1988). Another chance for the marketing concept. Business, 38(1), 10-18. Hise, R. T. (1965). Have manufacturing firms adopted the marketing concept? Journal of Marketing, 29 (July), 9-12. Hills, G. E. (1987). Marketing and entrepreneurship research issues: Scholarly justification? In G. E. Hills Summer. 1991 63 (Ed.), Research at the marketing/entrepreneurship interface. Marietta, GA: United States Association for Small Business and Entrepreneurship. Houston, F. S. (1986). The m¥keting concept: What it is and what it is not. Journal of Marketing, 50 (April), 81-87. Hunt, S. D. (1983). Marketing theory: The philosophy of marketing science. Homewood, IL: Richard D. Irwin, Inc. Keith, R. J. (1959). An interpretation of the marketing concept. In Advancing Marketing Efficiency, Proceedings of the forty-first National Conference. Chicago: American Marketing Association. Kerlinger, F. N. (1986). Foundations of behavioral research. New York: Holt, Rinehart, and Winston . . Khandwalla, P. N. (1976177). Some top management styles, their context and performance. Organization and Administrative Sciences, 7 (Winter), 21-51. Khandwalla, P. N. (1977). The design of organizations. New York: Harcourt Brace Jovanovich. King, R. L. (1965). The marketing concept. In G. Schwartz (Ed.), Science in marketing. New York: John Wiley. Konopa, L. J., & Calabro, P. J. (1971). Adoption of the marketing concept by large northeastern Ohio manufacturers. Akron Business and Economic Review, 2 (Spring), 9-13. Kotler, P. (1988). Marketing management: Analysis, planning, implementation and control. Englewood Cliffs, NJ: Prentice Hall. Lamb, C. W., Jr., & Crompton, J. L. (1986). Contrasting marketing and selling orientations in government organizations. Journal of Professional Services Marketing, 2 (Fall/Winter), 157-167. Lawton, L., & Parasuraman, A. (1980). The impact of the marketing concept on new product planning. Journal of Marketing, 44 (Winter), 19-25. Lusch, R. F., & Laczniak, G. R. (1987). The evolving marketing concept, competitive intensity and organizational performance. Academy of Marketing Science, 15 (Spring), 1-11. McCarthy, E., & Perreault, W. D. (1984). Basic marketing. Homewood, IL: Richard D. Irwin, Inc. McClelland, D. C. (1976). The achieving society. New York: Irvington Publishers, Inc. McNamara, C. P. ( 1972). The present status of the marketing concept. Journal of Marketing, 36 (January), 50-57. Meyers, M. (1986). Students need the truth about entrepreneurship. Marketing News, July 18, 34. Miles, M. P. (1989). An empirical investigation of the relationship between the marketing orientation and entrepreneurial orientation. Unpublished doctoral thesis, Mississippi State University. Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29 (July) 770-791Miller, D., & Friesen, P. H. (1983). Strategy-making and environment: The third link. Strategic Management Journal, 4, (July) 221-235. Morris, M. H., & Paul, G. W. (1987). The relationship between entrepreneurship and marketing in established firms. Journal of Business Venturing, 2(3), 247-259. Murray, J. A. (1981). Marketing is home for the entrepreneurial process. Industrial Marketing Management, 10(2), 93-99. 64 ENTREPRENEURSHIP THEORY and PRACTICE Nunnally, J.C. (1978). Psychometric theory. New York: McGraw-Hill. O'Connor, M. (1987). New facilities in 1986: Another strong year. In J. Lyne (Ed.), Site selection handbook. Atlanta: Conway Data Inc. Parasuraman, A. (1983). Marketing-orientation of industrial vs. consumer goods firms. Akron Business and Economic Review, 14 (Summer), 41-45. Peter, J. P. (1979). Reliability: A review of psychometric basics and recent marketing practices. Journal of Marketing Research, 21 (February), 6-17. Peterson, R. T. (1989). Small business adoption of the marketing concept vs. other business strategies. Journal of Small Business Management, 27 (January), 38-46. Shapero, A., & Sokol, L. (1982). The social dimensions of entrepreneurship. In C. A. Kent, D. L. Sexton, & K. H. Vesper (Eds.), Encyclopedia of entrepreneurship. Englewood Cliffs, NJ: Prentice Hall. Smart, C., & Vertinsky, I. (1984). Strategy and the environment: A case study of corporate responses to crises. Strategic Management Journal, 5, (July) 199-213. Smith, G.D., Arnold, D. R., & Bizzell, B. G. (1988). Business strategy and policy. Boston: Houghton Mifflin. U.S. Department of Commerce, Bureau of the Census. (l 986). 1982 Census of Manufacturers. Washington: U.S. Government Printing Office. Webster, F. E., Jr. (1981). Top management's concerns about marketing: Issues for the 1980's. Journal of Marketing, 45 (Summer), 9-16. Zeithaml, C. P., & Zeithaml, V. A., (1984). Environmental management: Revising the marketing perspective. Journal of Marketing, 48 (Spring), 46-53. Zelditch, M. (1962). Some methodological problems of field studies. American Journal of Sociology, 67 (March), 566-576. Morgan P. Miles is Assistant Professor of Marketing at Georgia Southern University. Danny R. Arnold is Associate Dean for Internal Affairs, College of Business and Industry, Mississippi State University. The authors would like to thank the three anonymous reviewers for their comments and suggestions. Summer. 1991 65 Copies of articles from this publication are now available from the UMI Article Clearinghouse. 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Running Head: MARKETING ORIENTATION AND ENTREPRENURIAL ORIENTATION 1

Marketing Orientation and Entrepreneurial Orientation
Name
Institutional Affiliation

MARKETING ORIENTATION AND ENTREPRENURIAL ORIENTATION

2

The article The Relationship Between Marketing Orientation and Entrepreneurial
Orientation (Miles & Arnold, 1991), seek to show the differences between the two market
concepts. Marketing orientation is defined in the book differently by different authors. It is
defined by one as a firms decision to adopt customer focus as its marketing concept and by
another as the organization's ability to meet both goals of customer satisfaction and its set
objectives. However, both show marketing orientation as having a focus on meeting customer
expect...


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