The impact of the supplier's market orientation on the customer market orientation-performance relationship

Abstract Market orientation has been well studied within the firm but not across the supply chain. While firms rely more so on their suppliers for value creation in today's markets, research has not yet investigated the role of the supplier's market orientation relative to the focal firm's own market orientation and performance. Consequently, the current study seeks to expand the concept of market orientation from the level of the firm to the supply chain with dyadic archival and survey data from 482 firms (241 focal firm-supplier dyads). Our findings indicate that the supplier's market orientation has a direct and positive impact on the focal firm's ROA and that the strength of this relationship increases when firms operate in more uncertain (munificent, dynamic, and complex) business environments. Further, the supplier's market orientation partially mediates the relationship between the focal firm's market orientation and the focal firm's ROA, and the focal firm's market orientation also directly impacts its supplier's market orientation. These results therefore establish the complexity of market orientation within the supply chain to drive firm performance, thereby extending extant literature. As such, several noteworthy theoretical and managerial implications are presented.