“Family businesses may be neglecting an important source of sustainable competitive advantage by failing to nurture a market orientation”
Mind Your Market
Family Business and Market Orientation: Construct Validation and Comparative Analysis in Family Business Review was my first journal article.
In this article, Miles Zachary, Jeremy Short, G. Tyge Payne, and I develop and validate dictionary-based computer-aided text analysis dictionaries for market orientation. We then use these dictionaries to examine the market orientation of family businesses and compare them to those of non-family businesses.
Market orientation is a strategic orientation used by organizations that generate, disseminate, and use market information throughout the firm. In this study, we draw from Narver and Slater’s (1990) five-dimensional conceptualization of market orientation as Customer Orientation, Competitor Orientation, Interfunctional Coordination, Long-Term Focus, and Profitability. We developed and validated a content analytic dictionary for each of these dimensions and used them to assess the market orientations of the S&P 500 firms, comparing those firms that might be characterized as family businesses with those that were not.
We found that family businesses were generally less market-oriented than non-family businesses and that these findings were driven in large part to a lower emphasis on competitors and profitability. Such results aren’t surprising given family businesses’ dual focus on economic and family goals. However, it does suggest that family businesses may be leaving money on the table: the marketing literature has routinely found that a market orientation leads to better financial performance.
In our 2018 Journal of Management paper, we refine the market orientation dictionaries to improve the reliability of the dictionary-based computer-aided text analysis measures. The new measures can be found here as well.