Link Between Customer Orientation And

Journal of Marketing Theory and Practice, vol. 15, no. 3 (summer 2007), pp. 187вЂ"203.

Ð'© 2007 M.E. Sharpe, Inc. All rights reserved.

ISSN 1069-6679 / 2007 $9.50 + 0.00.

DOI 10.2753/MTP1069-6679150301

A long-standing marketing principle is that understanding

and satisfying customers leads to superior business results.

Two firms illustrate this principle. Whirlpool discovered

certain customers wanted stylish washers and dryers, and

were willing to pay a premium for them. Consequently,

Whirlpool developed a line of high-end designer washers

and dryers. The products were so well received that they

helped generate record revenues for the firm, with customers

placing back orders on sold-out models (BusinessWeek

2004). Similarly, IBM identified a growing demand for

information technology (IT) and support services among

large as well as small businesses. In response, IBM created

and offered a portfolio of complete e-systems solutions.

Not only did the move reduce the firm’s dependence on the

hardware business but also sales of the e-systems helped

reverse its financial decline (Massey, Montoya-Weiss, and

Holcom 2001).

These and other examples suggest that attentiveness to

customers, or customer orientation, reaps large rewards. Curiously,

however, empirical support is very mixed. Studies

show that customer orientation has positive, neutral, and

even negative ties with profitability, sales growth, customer

retention, and other indicators of business performance

(e.g., Appiah-Adu and Singh 1998; Balakrishnan 1996; Voss

and Voss 2000). Given the popular appeal of customer orientation,

but lack of consistent evidence of its performance

benefits, we reexamine the customer orientationвЂ"business

performance relationship. The purpose of our study is to

better understand the existence and nature of this relationship.

For the sake of clarity, customer orientation refers to

the firm-level ability to “identify, analyze, understand, and

answer user needs” (Gatignon and Xuereb 1997, p. 78). As

elaborated later, this orientation is distinct from market

orientation, and its conditions and consequences are likewise

unique (Rindfleisch and Moorman 2003; Slater and

Narver 1998, 1999).

Our study is guided by two observations from the extant

literature. The first observation is that past studies isolating

customer orientation have examined its highly varied

and specific performance outcomes, such as subscription

theater ticket sales, number of me-too products launched,

and return on investment in small enterprises (e.g., Lukas

and Ferrell 2000; Voss and Voss 2000). Not surprisingly,

some studies have concluded that customer orientation

makes a contribution to performance, whereas others have

determined that it does not. Even though each study has

generated insight on the issue, in aggregate they present

a contradictory picture of customer orientation’s impact.

We propose studying customer orientation in relation to

business performance again, but with the latter broadly

REEXAMINING THE LINK BETWEEN CUSTOMER ORIENTATION AND

BUSINESS PERFORMANCE: THE ROLE OF INFORMATION SYSTEMS

Zhen Zhu and Cheryl Nakata

Customer orientation is said to strengthen business performance, but empirical research has not consistently

supported the claim. In this study, we reexamine the important relationship between customer orientation

and business performance. The study is based on the literature that suggests that business performance

is multidimensional (consisting of market and financial dimensions), and that customer orientation is

facilitated by information systems (consisting of information technology, or IT, capability and information

services). We determined through a survey that customer orientation contributes to business performance,

first by influencing market performance, which in turn, determines financial performance. Importantly, a

dimension of information systemsвЂ"IT capability, but not information service qualityвЂ"positively moderates

the impact of customer orientation. The study points to a more complex relationship between customer

orientation and business performance than previously described.

Zhen Zhu (Ph.D., University of IllinoisвЂ"Chicago), Assistant

Professor of Marketing, Sawyer School of Management, Suffolk

University, Boston, MA, zzhu@suffolk.edu.