Configuration of Market Oriented Culture, Organizational Structure and Business Strategy Types and Their Performance Implications in Service Organizations

Understanding how organizations in service sectors create and sustain a competitive advantage in today's highly dynamic environment is of interest to both researchers and managers. It has been suggested that competitive advantages are achieved either by placing a renewed emphasis on delivering superior quality services to customers or by seeking efficiency through standardized practices aiming at the lowest overall cost for superior performance. This dissertation investigates how these strategies are implemented to produce enhanced organizational performance by utilizing both market oriented culture and organizational structure simultaneously. The model and the hypotheses are tested with data collected from 151 service businesses. The study contributes to the market orientation literature by showing that for each strategy type (prospectors, defenders and analyzers) there is an ideal configuration of market orientation (customer orientation, competitor orientation, interfunctional coordination) and organizational structural characteristics (formalization, centralization, and specialization), that leads to a superior performance. For example, the ideal configuration for prospectors is high customer orientation, high competitor orientation, and high specialization. Also, the level of the type of strategy used does not mediate the relationship between market orientation and firm performance. However, it does affect performance directly. Finally, it is found that environmental turbulence moderates the relationship between level of type of strategy used and business performance. However, environmental turbulence does not moderate the market orientation - strategy type relationship. Based on the study findings, managerial implications, limitations and recommendations for future research are discussed.