Role of Intuition in Managerial Decision Making - Brief Literature Review

Antecedents of Effective Decision Making: A Cognitive Approach

Allard C.R. van Riel
Hans Ouwersloot
Jos Lemmink
Faculty of Economics and Business Administration, Maastricht University, The Netherlands
2003
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.611.4742&rep=rep1&type=pdf

Propositions

P1: There will be a positive relationship between the amount of information available to the
decision-maker and the extent to which decision-makers are likely to make use of rational
analysis to increase useful knowledge.

P2: There will be a positive relationship between the perceived importance of tacit knowledge
to the solution of a decision problem and the extent to which decision-makers are likely to use
their intuition to increase knowledge utility.

P3: There will be a positive relationship between the perceived structuredness of the decision
context and the extent to which a decision-maker is likely to use rational analysis to increase
knowledge utility.

P4: There will be a negative relationship between the perceived structuredness of the decision
problem and the extent to which decision-makers are likely to use their intuition to increase
knowledge utility.

P5: There will be a positive relationship between the perceived complexity of the decision
problem and the extent to which a decision-maker is likely to make use of rational analysis to
increase knowledge utility.

P6: There will be a positive relationship between the perceived complexity of the decision
problem and the extent to which decision-makers are likely to use their intuition to increase
knowledge utility.

P7: There will be a negative relationship between perceived time pressure and the extent to
which the decision-maker is likely to use rational analysis to increase knowledge utility.

P8: There will be a positive relationship between perceived need for justification of individual
decisions, and the extent to which the decision-maker is likely to use rational analysis to
increase knowledge utility.

P9: There will be a negative relationship between perceived need for justification of individual
decisions and the extent to which the decision-maker is likely to use intuition to increase
knowledge utility.

P9: There will be a negative relationship between perceived need for justification of individual
decisions and the extent to which the decision-maker is likely to use intuition to increase
knowledge utility.

P10: The extent to which a decision-maker will be able to increase knowledge utility by making
use of rational analysis will be moderated by various bounds imposed on the rationality of the
decision-maker.

P11a: The extent to which a decision-maker will be able to increase knowledge utility by
making use of intuitive cognition will be moderated by the presence of valid individual
experience or expertise in the mind of the decision-maker.

P11b: There will be a positive relationship between the extent to which the area of expertise, or
the domain within which the decision-maker acquired experience, match the decision-problem,
and the validity of experientially gathered knowledge.

P11c: The extent to which a decision-maker will be able to increase knowledge utility by
making use of intuitive cognition will be moderated by the amount of turbulence in a decision
problem domain.

P11d: There will be an inverse relationship between the extent to which the decision-maker was
emotionally involved while acquiring the experience, and the objective validity of the
experientially gathered knowledge.

A Research Agenda for Future

A range of issues requires further research.
In the first place, the conceptual model that was developed should be operationalized. Reliable measurement instruments must be developed, allowing a quantification of the relations between constructs.

Second, to confirm the proposed independence of the two cognitive systems, and to obtain insight in the relative effects of various antecedents and moderators on decision-making effectiveness, the model should be empirically validated and refined.

Third, research into the information requirements and validity of the hybrid style of active sense making, which seems to play a pervasive role in dynamic and complex business environments, as well as in scientific and medical problem solving, is now of great importance.

Fourth, various task characteristics have been identified and studied in many
different research streams and research is needed to increase and systematize the existing
knowledge. Interaction and/or hierarchical effects should also be investigated.

Fifth, the outcome variables need to be carefully operationalized and measured.

EXPLORING INTUITION AND ITS ROLE IN MANAGERIAL DECISION MAKING.
DANE, ERIK; PRATT, MICHAEL G.

Academy of Management Review. January 2007, Vol. 32 Issue 1, p33-54.

Like other authors, we view the process of intuition as relating to the domain of the “nonconscious” information processing system (e.g., Epstein 1990, 1994, 2002; Kahneman, 2003).

We view learning as an input to intuition effectiveness, but do not see intuition as a learning process per se.

we conceptualize intuition both by its process (which we refer to as intuiting), as well as its outcome (which we term intuitive judgments)

our review of the various literature on intuition has tended to
converge on four characteristics that make up
the core of the construct: intuition is a (1) nonconscious
process (2) involving holistic associations
(3) that are produced rapidly, which (4)
result in affectively charged judgments. We explore
these characteristics in detail below.

Proposition 1: Individuals who can bring complex, domain-relevant schemas to bear on a problem are more likely to make effective intuitive decisions than those who employ heuristics and simpler, domain-independent schemas.

Proposition 2: Explicit learning will positively influence the effectiveness of intuitive decision making through the formation of complex, domain relevant schemas.

Proposition 3a: The relationship between explicit learning and the formation of complex, domain-relevant schemas will be strengthened when individuals engage in focused, repetitive practice over long periods of time.
Proposition 3b: The relationship between
explicit learning and the formation
of complex, domain-relevant
schemas will be strengthened when
individuals perform in the presence of
“kind” learning structures (rapid and
accurate feedback and exacting consequences).

Proposition 4: Implicit learning will
positively influence the effectiveness
of intuitive decision making through
the formation of complex, domainrelevant
schemas.

Proposition 5: The relationship between
implicit learning and the formation
of complex, domain-relevant
schemas will be enhanced when individuals
focus attention on the stimulus
environment.

Proposition 6: As the problem structure
associated with a task becomes more
judgmental, the effectiveness of intuitive
decision making will increase.

Proposition 7: The relationship between
environmental uncertainty and
the effectiveness of intuition is mediated
by judgmental task characteristics.

Proposition 8: The relationship between
complex, domain-relevant schemas
and the effectiveness of intuitive
decision making is moderated by task
characteristics such that as tasks become
more judgmental, the strength of
the relationship will increase.


Peters, J. T., Hammond, K. R., & Summers, D. A. 1974. A note
on intuitive vs. analytic thinking. Organizational Behavior
and Human Performance, 12: 125–131.

Isaack, T. S. 1978. Intuition: An ignored dimension of management.
Academy of Management Review, 3: 917–922.

Isenberg, D. J. 1984. How senior managers think. Harvard
Business Review, 62(6): 81–90.

Agor, W. A. 1986. The logic of intuition: How top executives
make important decisions. Organizational Dynamics,
14(3): 5–18.

Simon, H. A. 1987. Making management decisions: The role
of intuition and emotion. Academy of Management Executive,
1(1): 57– 64.

Blattberg, R. C., & Hoch, S. J. 1990. Database models and
managerial intuition: 50% model - 50% manager. Management
Science, 36: 887– 899.

Bowers, K. S., Regehr, G., Balthazard, C., & Parker, K. 1990.
Intuition in the context of discovery. Cognitive Psychology,
22: 72–110.





Behling, O., & Eckel, N. L. 1991. Making sense out of intuition.
Academy of Management Executive, 5(1): 46 –54.

Schoemaker, J. H., & Russo, J. E. 1993. A pyramid of decision
approaches. California Management Review, 36(1): 9 –31.

Denes-Raj, V., & Epstein, S. 1994. Conflict between intuitive
and rational processing: When people behave against
their better judgment. Journal of Personality and Social
Psychology, 66: 819 – 829

Sloman, S. A. 1996. The empirical case for two systems of
reasoning. Psychological Bulletin, 119: 3–22.

Shapiro, S., & Spence, M. T. 1997. Managerial intuition: A
conceptual and operational framework. Business Horizons,
40(1): 63– 68.

Burke, L. A., & Miller, M. K. 1999. Taking the mystery out of
intuitive decision making. Academy of Management Executive,
13(4): 91–99.

Khatri, N., & Ng, H. A. 2000. The role of intuition in strategic
decision making. Human Relations, 53: 57– 86.

Woolhouse, L. S., & Bayne, R. 2000. Personality and the use of
intuition: Individual differences in strategy and performance
on an implicit learning task. European Journal of
Personality, 14: 157–169.

Updated  14 November 2016, 15 November 2012

Role of Values in Shaping Organizational Culture - A Brief Literature Review

Organisational Values as "Attractors of Chaos”: An Emerging Cultural Change to Manage Organisational Complexity

Dolan S.L, Garcia S., Diegoli S, Auerbach A
Working paper // Department d'Economica i Empresa, UPF, 485.
Year 2000

Complexity

The parameters that characterize a complex environment:

Non-linearity
Fractal

Chaos

Catastrophe

Fuzzy Logic

Chaos theory tries to understand the relation between chaos and order. In this way, it is
possible to follow both directions, from order to chaos, or from chaos to achieve order.


In the first case of order to chaos, the system passes through a period of uniformity (order) to oscillation cycles and to turbulence and chaos, until it self-organises. Conversely, the chaos -to-order analysis uses an element called "strange attractors", a phenomenon that absorbs or catches the system’s final status of order.

A strange attractor concept has two behaviour patterns:

1. It is deterministic because it defines the system behaviour. In mathematical terms, one should say that the attractor is the system limit. The “limit function” represents the situation where the system tends to be, instead of determining its path

2. It is chaotic because such behaviour is unforeseeable; it's impossible to know where the system limit is moving through at each moment.

The most important thing to notice is that the presence of a "strange attractor" guiding a system’s behaviour is what distinguishes between chaos and randomness. A random situation is totally unforeseeable, whereas in a chaos situation the system’s set of future behaviour possibilities can be approximately predicted.

We're proposing that chaos cannot be controlled, but it can be guided by behaviour parameters, which we prefer to call "values". Value become the "strange attractors" of the chaos theory in organizations.

According to authors,  companies are not the product of deterministic rules and regulations, but rather they are product of chaotic dynamics that should be guided by establishing and incorporating values.

There are four inter-connected trends associated with an increase in the complexity and
uncertainty in companies, namely,

1. The need for quality and customer orientation.
2. The need for professional autonomy and responsibility.
3. Need for transformational leaders instead of “bosses”.
4. The need for flatter, more agile organisation structures.

MBI, MBO, and MBV

In the early 20th Century, Management by Instruction MBI was necessary due to the characteristics of assembly-line production. In expected stable environments,  the objective was to maximize quantity through rationality and discipline, managers instructed and employees obeyed.  [Also when new systems were designed by engineers and managers, instructions have to be given by the designers and others have to follow them to operate the system to get the output for which they were designed].

As members of the organization use a system repeatedly, they understand the system's working as well as its current idiosyncracies better than either designers or top level managers and hence Management by Objectives (MBO) is more suitable approach.

Management by Value's (MBV’s) function is to absorb the organisational complexity that comes from its increasing change adaptation necessities in highly turbulent environments where centralized design departments alone cannot come with adequate solutions. Especially to provide a
vision through directing the strategic action to where the company aims to be in the future, its attractor (vision is an attractor). The explanation of these approaches shows that in turbulent environments, neither instructions nor simple objectives can guarantee organisational success. The company has to accept the chaotics and must develop the capability  of self-organising. Its capacity of self organisation comes directly from the fact that its internal components have a set of shared values and their independent actions or in line with shared values.

Values

The word "value" can be understood in many ways. Axiology is the study of values; for ancient Greeks, axios meant guidance. Consider values as strategic references indicating that acting in one way is more appropriate to achieve goals than behaving otherwise.

Values can also be categorized into two main groups: finals and instrumentals. Final values can be explained as existential objectives, or, the answer to the question, “What do you/your company intend to be/achieve in the future?” The answer, often embodied in the corporate mission statement, can be economic benefits, excellence in products and services, customer or employee satisfaction, personal fulfilment, happiness, and so on. To achieve these final values, one must define the instrumental ones. Actually, it's necessary to clarify the set of the instrumental values that will be used to reach the future. Instrumental values can be organised in two groups: ethical and competence values
(Rockeach, 1973). The ethical values refer to the conduct, the means that are justified to achieve the final values). Usually, these are associated with social values such as honesty, integrity, sincerity, and loyalty (social values are related to behaviors that lead to social outcomes or effects on others in the society or relations). Competence values are more individualistic and have to do with the personal activity, and beahaviour related to personal outcomes  necessary to achieve final values, or to be competitive. Examples include creativity, patience, flexibility, order, intelligence, and health. Instrumental values are the system internal values that will lead or organise the chaotic system to its self-government and self-organisation.

Competence values can be either control oriented or development oriented. Depending on their balance, they are responsible for expanding or disciplining organisation processes. Efficiency, discipline, responsibility or punctuality are examples of control-oriented values. Trust, creativity, freedom, or having fun on the job are examples of development-oriented values. The two sets of values have to coexist in a balanced manner. Values oriented toward development are essential to create new opportunities for action. These include self-learning, initiative, diversity, self-organisation, and flexibility. The control values, on the other hand, are also necessary to maintain and bring together the various organisational sub-systems. Thus, they guide such activities as centralization, planning, order, certainty, and obedience.

Organisational Changes

Adaptive organisational  changes occur when the company is redirecting its internal processes in order to become more competitive. On the other hand, significant changes that cause reconfigurations
and transformations are the cultural recreation of new beliefs and values that are responsible for defining the organisation’s collective identity. The transformational change does not only establish new rules of interaction with the environment but mainly define new political and internal interactive rules, such as employee autonomy.

Conclusion

True leadership of a progressive 21st century company must operate through values.

ORGANISATONAL VALUES: A CONCEPT AND RESEARCH METHODS    

Anne Reino
2003

Rokeach's  definition of values “A value is an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or endstate of existence” (Rokeach, 1973: 5). Rokeach (1973) distinguishes between two types of individual values: instrumental values (modes of conduct) and terminal values (end-states of
existence). Terminal values are self-sufficient end-states of existence that a person strives to achieve (e.g. wisdom and comfortable life). Instrumental values (e.g. honesty, helpfulness) describe behaviours that facilitate attainment of terminal values.

Roe and Ester (1999) stress that holders of values are not necessarily individuals but may also be groups of people (e.g. organisation, occupational group, subculture, etc). Like an individual holds several values, so do organisations. Thus we have reached the issue of organisational values.

Enz defines organisational values as “the beliefs held by an individual or group regarding means and ends that organisations “ought to” or “should” identify in the running of the enterprise, in choosing what business actions or objectives are preferable to alternate actions, or in establishing organisational objectives” (Enz, 1988: 287).

 Values enable members’ activity through self-control and social mechanisms and being clearly communicated to organisational members, they will become the criteria for making decisions and choices in everyday work (Vadi, 2000). Organisational values may replace the traditional control mechanism within an organisation and they have an impact on human resource management (Vadi, 2000).

Some authors (e.g. Argyris, Schon) distinguish values “in use” from “espoused” values (Meglino, Ravlin, 1998). Values are socially desirable and therefore there is a pressure to express ideal values publicly (“espoused values”) whether or not they are held internally (“in use”). In case of organisations, there could be a great difference between the values expressed publicly and those which are actually shared inside an organisation. In some organizations, values are communicated and used informally and therefore at least partly held unconsiously.  That makes the question of studying internally held values even more complicated.

Methods of organisational values research 

One has two possibilities to do research in the field of organisational values – the choice is between using either qualitative or quantitative research methodology.

Qualitative methods are very often used as a starting point of investigation as they may help to develop conceptual frameworks. Content analysis, focus groups discussions, in-depth interviews, critical incident technique and mapping value systems are but a few of the methods used in the first phase of research to clarify the range of organisational values relevant to the study.

Quantitative research methods are considered to be useful in values research as they enable us to compare the values of different organisations and assess the relationships between different factors.

Several authors have developed questionnaires and scales for measuring organisational values. Hofstede et al, (1990) constructed a questionnaire that consisted of 135 precoded questions, 57 of which dealt with the subject of organisational values.  The Organisational Culture Profile (OCP) was worked out by O’Reilly et al (1991). OCP consists of 54 statements about the organisational values to be rated. The degree to which organisational values are shared can be investigated by the intercorrelation among raters, using a variation of the Spearman-Brown general prophecy formula.  The third instrument for measuring organisational values, the Focus instrument, was developed by Van Muijen et al (1999). This instrument is based on Quinn’s Competing value model which describes four organisational culture orientations: support, innovation, rules, and goal orientation (Van Muijen et al, 1999). These values clusters are similar to OCP culture dimensions (innovative, stable, respect of people, outcome oriented, detail oriented team oriented, aggressive) and those of Hofstede and his colleagues’ questionnaire.

Understanding Organizational Culture: A Key Leadership Asset  

Fred C. Lunenburg Sam Houston State University
NATIONAL FORUM OF EDUCATIONAL ADMINISTRATION AND SUPERVISION JOURNAL VOLUME 29, NUMBER 4, 2011

 The competencies and values of employees and leaders play a key role in determining the effectiveness and success of an organization.

The concept of organizational culture was first noted as early as the Hawthorne studies (Mayo, 1933; Roethlisberger & Dickson, 1939), which described work group culture.  It was not until the early 1980s, however, that the topic came into its own.

Changing Organizational Culture

The following components are likely to be involved in the culture change cycle (Frost, 1991): (a) external enabling conditions, (b) internal permitting conditions, (c) precipitating pressures, (d) triggering events, (e) cultural visioning, (f) cultural change strategy, (g) culture change action plans, (h) implementation of interventions, and (i) reformulation of culture.

THE IMPORTANCE OF ORGANIZATIONAL VALUES FOR ORGANIZATION 

Mitja Gorenak, International School for Social and Business Studies, Slovenia,
Suzana Košir, International School for Social and Business Studies, Slovenia
Management, Knowledge and Learning, International Learning 2012.

Svetlik (2004, p. 323) says that organizational values are values that are being pushed forward by the management and have proven itself as a good foundation for development of organization. Same author also says that organizational values are intended to inspire employees with creative energy that will push organization forward towards desired goals. Cingula (1992, pp. 499–500) sees organizational values as: “what people within organization think is good for organization, what needs to happen within organization and what might be needed within organization in the future”. He also says that due to mentioned above organizational values reflect the mission and strategic goals of the organization.

The research question: To see if there is any correlation between how organizational values are stated within organization and how organization performs in its sector.

Data used in this article is a part of a much wider survey that included 303 companies within Slovenia. Companies were randomly selected

Among all organizations there are 65,2 % of those that have organizational values explicitly noted within the organization, 76,4 % of those that have organizational values implicitly shown within organization and 61,4 % of those organizations that do not have organizational values noted within organization and are slightly above average of the sector.

Overall we can say that How are organizational values stated within your organization influences Organizational performance – combined with a 5 % risk interval.

Structural Approach to Changing Organizational Cultural Values 

Mohammad Essawi Al-Qasemi Academic College of Education P.O. Box 124, Baqa El-Gharbieh 30100, Israel
Oleg Tilchin Al-Qasemi Academic College of Education P.O. Box 124, Baqa El-Gharbieh 30100, Israel
International Journal of Business and Social Science,  Vol. 3 No. 20, Special Issue – October 2012

The goal of changing organizational culture and the ways of its attaining are determined by a functional approach. Function approach decides which values are to be changed to attain the new goals,  A structural approach examines the process of changing the values and its effect on behavior. We may say it is concerned with interdependencies between  levels (elements) of culture.


The  process of value internalization by employees can be realized as a result of performance of corresponding behavioral tasks.

The desired organization's values are interdependent. It means that internalization of some value by employees may require prior internalization of one or several values preceding this value. Consequently, value interdependence entails the order of internalizing the values.


Change of organizational cultural values is guided by a leader of an organization and  leadership team members serving as change agents. The leader should delegate organizational accountability  for changing the organizational cultural values to a leadership team. Then, he should assign individual responsibility  for changing the values to the team members according to the determined extent of accountability. The team members in  turn have to guide each individual employee to  internalize the desired organizational values.

A Structural Approach to Changing Organizational Culture Values                                               

 The goal of the structural approach is to provide effective internalization of desired organizational values by employees through a determined order of realizing this process.
    
 According to the approach, changing organizational cultural values involves: building structure of  desired values of organizational culture, determining the order of internalization of the values by employees, forming behavioral tasks performance which is needed for internalizing the values, providing effective performance of behavioral tasks, and monitoring of the value internalization process. The approach is realized by the following sequence:

 Building the structure of the desired organizational culture values 

The structure of the desired values caused by their relations may be represented by an ordered set  (vi, vj), if internalizing value vi is required prior to internalizing value vj. The values may also be represented by a network when two or more values are to be internalized parallelly before another value is internalized.

Performance of the behavior tasks by employees. 

The result of a task's performance by an employee is represented by a behavioral cultural norm.  It serves as explicit exercise of value which is implicit in its essence. The measure of task performance varies from zero (the task is not performed) to one (the task is performed completely). The meanings of the measure are determined by the member of the leadership team. A value is internalized by an employee, if all tasks needed for internalizing the value are performed completely. Therefore, required state of the value is equal to the quantity of the tasks which should be performed for its internalizing.

In case of resistance to change, creation of constructive confrontation processes of internalizing desired organizational values by employees through use of different stimulation and facilitation mechanisms is to be employed.

Monitoring of the value internalization process 

 Determining the fitness of current states of internalizing of the values by employees to their required states is realized by the step. The step involves the following:
 Calculating the extent of internalizing a desired value by an employee. Internalizing the desired value requires performance of a set of tasks. Consequently, the extent of internalizing the desired value is the sum of performance measures of suitable behavioral tasks.

Core Values and Beliefs: A Study of Leading Innovative Organizations

S. Sai Manohar • Shiv R. Pandit
J Bus Ethics (2014) 125:667–680


15 leading innovative organizations are chosen. Between 50 and 60 respondents in each organization in the ratio 1:2:3 top, middle, and first line managers participated in the study. A total of 1,100 questionnaires were administered to executives in 15 organizations, 794 complete responses
were received, which worked out to achieving a response rate of 72.18 % for the whole survey

The ‘‘Innovation Culture Questionnaire’’ sought responses and compared six key areas of culture: Organizational Climate, Leadership, Core Values, Customer Focus, Creativity, and Envisioning Future at each of these organizations. In addition an ‘‘Innometer’’ tool was used to measure the success rate of innovation at these organizations. The findings of this study suggest that innovative
organizations have a common set of core values and beliefs that are responsible for the consistent success of these organizations.

Core Values

Regardless of the innovation activity they might be engaged in, they all seemed to be very concerned with seven values in their day-to-day operations: (1). Intense customer focus; (2).Product quality; (3). Innovation leadership; (4). Striving to be a pioneer in the industry; (5). Profits; (6). Organizational
agility; and (7). Emphasis on cutting edge technology

Impact of Core Values on Performance

A regression analysis between core values of highly innovative organizations and success rate of new products launched by them reveals that when core values increases by 1 unit, success rate increases by 30 units. This shows that there is a significant relationship between core values of an organization and success rate of new products launched by the organization. The R value is 0.678, which indicates a high degree of correlation.

Balanced Organizational Values: From Theory to Practice

Ivan Malbasˇic´ • Carlos Rey • Vojko Potocˇan
J Bus Ethics (2015) 130:437–446


This article addresses the issue of balancing of organizational values by providing an initial
empirical study which examines relationships between three different value models when tested on a sample of Fortune 100 companies.

Barrett (1998) advocated that balance in organizations is as important as in individual lives. Accordingly, he offered a tool called The Balanced Needs Scorecard, which represents the primary needs of an organization: corporate survival (profits, finance, and funding), corporate fitness
(productivity, quality, and efficiency), and customer/supplier relations (sales, service, and product excellence).

Quinn and Rohrbaugh (1983) presented the competing values framework (CVF model), the most famous concept of balanced values, in order to explain different types of values existing in different organizations.

Schwartz’s values model (Schwartz 1992) defines ten different motivational types of values represented by 56 specific values. What is unique in Schwartz’s values model is that motivational types of values form a circular structure on the basis of the dynamic relations between them;
in this mode of representation compatible types of values are next to each other, and conflicting types of values are positioned opposite each other.

An alternative view regarding this question was proposed by Cardona and Rey
(2008) in a model called Management by missions (MBM),
with the idea of distributing the corporate mission to all
company levels. The basic line of reasoning of these
authors is that OV must ‘‘be seen as being encompassed
within the concept of the mission’’ (Cardona and Rey 2008,
p. 86), based on the anthropological foundations of the
company and not only under a psychosocial view. Thus,
OV should consider a taxonomy of values based on organizational
mission fulfillment that are grouped into four
different categories. These four categories are seen as
representing different and sometimes opposed values that
are necessary to carry out the organizational mission, and
they are (Cardona and Rey 2008, p. 94):
(a) Business values—refer to the organization’s business
and profit-making activity (e.g., perseverance,
efficiency, professionalism, results orientation),
(b) Relational values—promote quality in interpersonal
relations (e.g., communication, team work, respect
for people),
(c) Development values—aimed at differentiating and
continuously improving the company (e.g., innovation,
creativity, learning, continuous improvement),
(d) Contribution values—aimed at doing more for stakeholders
than strictly required by the business relationship
(e.g., customer satisfaction, interest in people,
social responsibility).

A fundamental challenge of the chosen research area is the
question whether the aforementioned models of OV do
represent the balance that is pursued in the contemporary
business field. we state
following research question:
How does literature taxonomies of balanced values
(psychosocial and mission-based) fit the values that
are actually pursued by companies in the business
field?

 Among the 100 largest companies on that
list, 94 of them had publicly released their OV on the
official company website. These companies indicated 446
concrete (specific) OV, and all further results of our
research are related to these companies.

In determining which OV are most relevant for observed
companies, methods of content analysis, descriptive statistics,
and a classification method have been used.

After determining OV of the researched companies, each
of the identified specific OV was classified into a specific
category of values, according to the all three observed values
models: (A) CVF model, (B) Schwartz’s values model, and
(C) Mission-based model of OV. This has enabled the
comparison of three different value models, in order to
conclude which of these models is most appropriate for
researching balanced values in contemporary business
practice.

In their work, Yilmaz and Ergun operationalized the
degree of imbalance as the sum of the absolute values of
the pair-wise differences between the different categories
(of values). Following a similar method, we took the differences
between the score of each category (of values) and
overall average score of all value categories.

 In order to answer the proposed research
question and achieve the objective of the research, we have
calculated the degree of imbalance of values for each of the
three observed value models, and they were: (A) 2.206 for
CVF model, (B) 1.982 for Schwartz’s values model, and
(C) 0.404 for Mission-based model of OV. Since a higher
degree score means a greater imbalance among values in the
observed companies, these results indicate that the Missionbased
model of OV is more representative of balance
between OV in contemporary business espoused values than
the other two models.

Papers Presented and Discussed during 2016 - 17 Fellow Program Course

Organisational Values as "Attractors of Chaos”: An Emerging Cultural Change to Manage Organisational Complexity
Dolan S.L, Garcia S., Diegoli S, Auerbach A
Working paper // Department d'Economica i Empresa, UPF, 485.
Year 2000

ORGANISATONAL VALUES: A CONCEPT AND RESEARCH METHODS  
Anne Reino
2003

Understanding Organizational Culture: A Key Leadership Asset
Fred C. Lunenburg Sam Houston State University
NATIONAL FORUM OF EDUCATIONAL ADMINISTRATION AND SUPERVISION JOURNAL VOLUME 29, NUMBER 4, 2011

THE IMPORTANCE OF ORGANIZATIONAL VALUES FOR ORGANIZATION
Mitja Gorenak, International School for Social and Business Studies, Slovenia,
Suzana Košir, International School for Social and Business Studies, Slovenia
Management, Knowledge and Learning, International Learning 2012.

Structural Approach to Changing Organizational Cultural Values
International Journal of Business and Social Science,  Vol. 3 No. 20,Special Issue – October 2012


Core Values and Beliefs: A Study of Leading Innovative Organizations
S. Sai Manohar • Shiv R. Pandit
J Bus Ethics (2014) 125:667–680

Balanced Organizational Values: From Theory to Practice
Ivan Malbasˇic´ • Carlos Rey • Vojko Potocˇan
J Bus Ethics (2015) 130:437–446

Additional Reading

Understanding Human Values
Milton Rokeach
Free Press, 1979
Simon and Schuster, 30-Jun-2008 - Psychology - 230 pages

This volume presents theoretical, methodological, and empirical advances in understanding, and also in the effects of understanding, individual and societal values.
https://books.google.co.in/books?id=e_b2tCgC4MQC


The Value of Corporate Values
strategy+business: Corporate Strategies and News Articles on Global Business, Management, Competition and Marketing
Summer 2005 / Issue 39 (originally published by Booz & Company)
http://www.strategy-business.com/article/05206?gko=9c265

Resource Based View - Brief Literature Review

A Resource-based View of the Firm

BIRGER WERNERFELT
Graduate School of Business Adfnitiistration, The University oi
Michigan, Ann Arbor, Michigan, U.S.A.
Strategic .Management Journal, Vol.5, 171-180 (1984)

The resource-based view of the Firm provides a basis for addressing some key issues in the formulation of strategy for diversified firms, such as:

(a) On which of the firm's current resources should diversification be based?
(b) Which resources should be developed through diversification?
(c) In what sequence and into what markets should diversification take place?
(d) What types of firms will it be desirable for this particular firm to acquire?

Specifically, the following propositions will be argued:
1. Looking at firms in terms of their resources leads to different immediate insights than the traditional product perspective. In particular, diversified firms are .seen in a new light.

2. One can identify types of resources which can lead to high profits. In analogy to entry barriers, these are associated with what we will call resource position barriers.

3. Strategy for a bigger firm involves striking a balance between the exploitation of existing resources and the development of new ones. In analogy to the growth-share matrix, this can be visualized in what we will call a resource-product matrix.

4. An acquisition can be seen as a purchase of a bundle of resources in a highly imperfect market. By basing the purchase on a rare resource, one can ceteris paribus maximize this imperfection and one's chances of buying cheap and getting good returns.


A resource position barrier to be valuable, it should translate into an entry barrier in at least one market. So, an entry barrier without a resource position barrier leaves the firm vulnerable to
diversifying entrants, whereas a resource position barrier without an entity barrier leaves the
firm unable to exploit the barrier. There is thus a nice duality between the two concepts, corresponding to the duality between products and resources.

The firms need to find those resources which can sustain a resource position barrier, which no one currently has, and where they have a good chance of being among the few who succeed in building
one. They have to look at resources which combine well with what they already have and in
which they are likely to face only a few competitive acquirers.


This paper has attempted to look at firms in terms of their resources rather than in terms of their products. .Resource position barriers were defined as partially analogous to entry barriers. On the
basis of this definition, a model of firms as trying to develop such barriers perhaps through products in which already strong resources support less strong resources is indicated. This mechanism is extended to the resource-product matrix.


The author added that nothing is known as yet about the practical difficulties involved in identifying resources (products are easy to identify), and also to what extent one in practice can combine capabilities across operating divisions, or about how one can set up a structure and systems which can help a firm execute these strategies. The new focus on technology in strategy, the increasing tendency for firms to define themselves in terms of technologies, and the setting up of cross-divisional strategic
organizations (Texas Instruments, 1971), technology groups, and arenas (General Electric, 1981) seem to indicate that objectives like the above are strived for, although perhaps implicitly, in several firms.

Firm Resources and Sustained Competitive Advantage

Jay Barney, Texas A&M University
Journal of Management
1991, Vol. 17, No. 1,99-120



The research which focused on identifying attractive external opportunities, implicitly  has adopted two simplifying assumptions. First, these environmental models of competitive advantage have assumed that firms within an industry (or firms within a strategic group) are identical in terms of the strategically relevant resources they control and the strategies they pursue (Porter, 1981;
Rumelt, 1984; Scherer, 1980). Second, these models assume that should resource heterogeneity develop in an industry or group (perhaps through new entry), that this heterogeneity will be very short lived because the resources that firms use to implement their strategies are highly mobile (i.e., they can be bought and sold in factor markets). These two assumptions have been very fruitful in clarifying our understanding of the impact of a firm's environment on performance.

The resource based view of the firm, which is investigating the role of internal factors (strengths and weaknesses)  substitutes two alternate assumptions in analyzing sources of competitive advantage. First, this model assumes that firms within an industry ( or group) may be heterogeneous with respect to the strategic resources they control. Second, this model assumes that these resources may not be perfectly mobile across firms, and thus heterogeneity can be long lasting. The resource-based
model of the firm examines the implications of these two assumptions for the analysis
of sources of sustained competitive advantage.

A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors or when some firms using the strategy are unable to duplicate the benefits of this strategy.. A firm is said to have a sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy over a long period of time.   Following Lippman and Rumelt (1982) and Rumelt (1984) a competitive advantage is sustained only if it continues to exist
after efforts to duplicate that advantage have ceased. In this sense, this definition of sustained competitive advantage is an equilibrium definition (Hirshleifer 1982)

In his recent work, Porter (1985) introduced the concept of the value chain to assist managers in isolating potential resource-based advantages for their firms. The  resource-based View of the firm
developed in this papger pushes this value chain logic further  by examining the attributes that resources isolated by value chain analyses must possess in order to be sources of sustained competitive advantage (porter, 1990).

Not all firm resources hold the potential of sustained competitive advantages. To have the potential, a firm resource must have four attributes: (a) it must be valuable (must have utility to  exploit opportunities and/or neutralizes threats in a firm's environment), (b) it must be rare among a firm's current and potential competition, (c) it must be imperfectly imitable, and (d) there cannot be strategically equivalent substitutes for this resource that are valuable.

The model presented by J.B. Barney is

Assumptions

1. Firm Resource Heterogeneity            

2. Firm Resource Immobility


Characteristics of resources that provide competitive advantage

Value
Rareness
Imperfect Imitability
-History Dependent
-Causal Ambiguity
-Social Complexity
Substitutability

THE RESOURCE-BASED VIEW OF THE FIRM: TEN YEARS AFTER

BIRGER WERNERFELT
Sloan School of Management, Massachusetts Institute of Technology, Cambridge,
Massachusetts, U.S.A.
Strategic Management Journal, Vol. 16, 171-174 (1995)



During 1988 - 1989,  the 1984 paper started to have an impact on the academic side of the field. This happened after a couple of other papers had clarified the nature of the 'markets' for resources (Barney,
1986a; Dierickx and Cool, 1989; Wernerfelt, 1989). Shortly thereafter, survey papers were
 written (Connor, 1991; Mahoney and Pandian, 1992), In the year 1990, the Harvard Business
Review published an article ( Prahalad, C. K. and G. Hamel (May-June 1990).
'The core competence of the corporation'. HBR, pp. 79-91) which presented many of the ideas on
a compelling managerial style. In particular, Prahalad and Hamel picked up the 'stepping stone' strategy advocated by Wernerfelt (1984) and elaborated in the NEC example (originally from Business Week, 1981)

RBV became popular because it was consistent with classic business policy in the Harvard Business School tradition (Andrews, 1971). The resource based view 1984 paper was an attempt to build a consistent foundation for the classic theory of business policy. Consistent with this, many central aspects of strategic reasoning have been reinterpreted in light of a resource-based perspective (Peteraf, 1993; Amit and Schoemaker, 1993; Connor, 1991;


Is the resource-based view here to stay?
Many aspects of strategic management can be thought about without reference to firm heterogeneity.
But there are some aspect which need to take account differences in resource endowments. Therefore, one can do better strategic management by also taking into account differences in firms' resource
endowments.

THE RESOURCE-BASED VIEW OF THE FIRM IN TWO ENVIRONMENTS: THE HOLLYWOOD FILM STUDIOS FROM 1936 TO 1965

DANNY MILLER Ecole des Hautes Etudes Commerciales, Montreal, and Columbia University JAMAL SHAMSIE New York University
 Academy of Management Journal 1996, Vol. 39, No. 3. 519-543.

Categorizing Resources

Several researchers have attempted to derive resource categorization schemes. Barney (1991) suggested that resources could be grouped into physical, human, and capital categories. Grant (1991) added to these financial, technological, and reputational resources.

In this article we revisit a pivotal one of these criteria—barriers to imitability—to develop our own typology: Property-Based and  Knowledge-Based Resources

Examples of property-based resources are enforceable long-term contracts that monopolize scarce factors of production, embody exclusive rights to a valuable technology, or tie up channels of distribution.

Knowledge-based resources allow organizations to succeed not by market control or by precluding competition, but by giving firms the skills to adapt their products to market needs and to deal with competitive challenges. Economic rents accrue to such skills in part because rivals are ignorant of why a firm is so successful. It is often hard to know, for example, what goes into a rival's creativity or teamwork that makes it so effective. Such resources may have what Lippman and Rumelt (1982) called "uncertain imitability": they are protected from imitation not by legal or financial barriers, but by knowledge barriers.

Themes of the Paper

A key theme of this article is that the benefits of property-based resources are quite specific and fixed and thus, the resources are appropriate mostly for the environment for which they were developed.

Knowledge-based resources, on the other hand, often tend to be less specific and more flexible. For example, a creative design team can invent products to meet an assortment of market needs. Such resources can help a firm respond to a larger number of contingencies (Lado & Wilson, 1994). Many knowledge-based resources are in fact designed to cope with environmental change.

Two varieties of each category: discrete resources and bundled, or systemic, resources are proposed. Discrete resources stand alone and have value more or less independent of their organizational contexts. Exclusive contracts or technical skills are examples of such resources. Systemic resources, on the other hand, have value because their components are part of a network or system.

Because property-based resources are primarily designed to provide an organization with a high degree of control, they are likely to be of most value in stable or predictable settings where the objects of control maintain their relevance

Hypothesis 1: Discrete property-based resources will produce superior financial performance in predictable environments but will not do so in uncertain environments.

Hypothesis 2: Systemic property-based resources will produce superior financial performance in predictable environments but will not do so in uncertain environments.

Hypothesis 3: Discrete knowledge-based resources will produce superior financial performance iri uncertain environments but will not do so in predictable environments.


Systemic knowledge-based resources may take the form of integrative or coordinative skills required for multidisciplinary teamwork

Hypothesis 4: Systemic knowledge-based resources will produce superior financial performance in uncertain environments but will not do so in predictable environments

The sample consisted of the seven major Hollywood film studios from 1936 through 1965. These studios included MGM, Twentieth Century-Fox, Warner Brothers, Paramount, United Artists, Universal, and Columbia.



Hypothesis 2 was borne out for three of the four performance measures:

Hypothesis 3 was borne out for all four indexes of performance:

PARADOX AND THEORIZING WITHIN THE RESOURCE-BASED VIEW

AUGUSTINE A. LADO, Clarkson University
NANCY G. BOYD, University of North Texas
PETER WRIGHT, University of Memphis
MARK KROLL, Louisiana Tech University
Academy of Management Review
2006, Vol. 31, No. 1, 115–131.


Our overarching claim is that, as a theoretical perspective, the RBV is attuned to addressing
the paradoxical challenges of creating and sustaining superior firm performance. This claim is
grounded in an alternative view holding that paradox in scientific inquiry is “intrinsic and
indelible” (Poundstone, 1988: 18). Some of the RBV paradoxes might reflect endogenous factors—that is, they are embedded in RBV logic itself, reflecting the paradoxical nature of theory
building and science (e.g., Poundstone, 1988; Rosen, 1994). Additionally, other RBV paradoxes
might reflect exogenous factors—that is, the paradoxes within the theory enable scholars to
explore and gain a better understanding of our surrounding world (e.g., DiMaggio, 1995; Quinn
& Cameron, 1988; Starbuck, 1988). Thus, we identify and explain various RBV paradoxes and discuss how their use can foster knowledge and understanding.

VALUE, RARENESS, COMPETITIVE ADVANTAGE, AND PERFORMANCE: A CONCEPTUAL-LEVEL EMPIRICAL INVESTIGATION OF THE RESOURCE-BASED VIEW OF THE FIRM

SCOTT L. NEWBERT*
Villanova School of Business, Villanova University, Villanova, Pennsylvania, U.S.A.
Strategic Management Journal
Strat. Mgmt. J., 29: 745–768 (2008)


Tested the following hypotheses

Hypothesis 1: The value of the resource capability combinations that a firm exploits will
be positively related to its competitive advantage.

Hypothesis 2: The rareness of the resource capability combinations that a firm exploits will
be positively related to its competitive advantage.

Hypothesis 3: A firm’s competitive advantage will be positively related to its performance.

Hypothesis 4: A firm’s competitive advantage will mediate the relationship between the value
of the resource-capability combinations that the firm exploits and its performance.

Hypothesis 5: A firm’s competitive advantage will mediate the relationship between the rareness
of the resource-capability combinations that the firm exploits and its performance.

A sample of micro- and nanotechnology firms was surveyed from the fall of 2003 through the spring of 2004.

Due to its widespread use, Barney’s (1997) typology (financial, human, organizational, and physical resources and capabilities) was identified  as an appropriate starting point. After consulting with five
senior-level executives at five different technology firms, the category ‘intellectual resources and
capabilities’ was added to the typology to make it more comprehensive and relevant to micro- and
nanotechnology firms.

A questionaire was developed.

From these
511 respondents, 117 completed surveys were received, reflecting a response rate of 22.9 percent,
a response rate that compares favorably with similar studies in the field (Alreck and Settle, 1985).
Factor analysis was done to identify valuable, rare, inimitable and non substitutable resources possessed by the firms from the answers to the questionaire items.

Support is concluded for Hypotheses 1, 2 and 3.
No support for hypothesis 4.
Partial support for hypothesis 5.

New directions of development of resource-based view in creating a competitive advantage

Iwona Otola, Zuzanna Ostraszewska and Agnieszka Tylec
Business Management Dynamics
Vol.3, No.2, Aug 2013, pp.26-33

The conceptual model presented in the paper:

Resources - dynamic capabilities - relations – competitive advantage

In the a three dimensional conceptual model is proposed.  The first dimension is
the base of resources and competencies in the firm. However, there are no universal sets of resources and competencies that would guarantee and maintain the permanent competitive advantage. Furthermore, variability and turbulent environment necessitates and elastic and adaptive approach to strategic management of firms. Configuration of the resources and competencies should be flexible and variable in time in order to ensure best possible adjustment to variable conditions in the environment. In consequence, the second dimension is represented by the dynamic processes that occur in the firm. The dynamic processes which allow for reconfiguration and replenishment of the resources and their integration and renewed creation point to the ability of firm's learning in order to generate competitive advantage. The third dimension is the partnership with firms in creating supply chains. The relationships allow for synergy effects in the form of combined resources and competencies of the firms involved in these relationships.  Functioning of organization in the network of inter-organizational relationships is regarded as an important element of the process of organizational learning since the entities learn by cooperation with others, observation and importing good practices from others (Nowicka-Skowron and Pachura, 2009).

Market Orientation: The Construct and Propositions - Tests - A Brief Literature Review

Ajay K. Kohli & Bernard J. Jaworski

Market Orientation: The Construct, Research Propositions, and Managerial Implications

Journal of Marketing
Vol. 54 (April 1990), 1-18

Based on the the field research that consisted of in-depth interviews with 62 managers in four U.S. cities and 10 business academicians at two large U.S. universities, the authors came out with concept definition and propositions..

A standard format generally was followed for the interview. After a brief description of the research
project, each interviewee was asked about four issues along the following lines.

1. What does the term "market/marketing orientation" mean to you? What kinds of things does a market/marketing-oriented company do?
2. What organizational factors foster or discourage this orientation?
3. What are the positive consequences of this orientation? What are the negative consequences?
4. Can you think of business situations in which this orientation may not be very important?

Formal definition of market orientation.

Market orientation is the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it.


Defining market orientation as organizationwide generation, dissemination, and responsiveness to market intelligence addresses the concerns of Barksdale and Darden (1971) by focusing on specific activitiesvrather than philosophical notions, thereby facilitating the operationalization of the marketing concept.

Market Orientation - Propositions - Kohli and Jaworski

P1a: The greater the variability over time in the gap between top managers' communications and actions relating to a market orientation, the greater the junior managers' ambiguity about the organization's desire to be market oriented.

P1b,: The greater the junior managers' ambiguity about the organization's desire to be market oriented, the lower the market orientation of the organization.

P2: The greater the risk aversion of top managers, the lower the market orientation of the organization.

P3: The greater the senior managers' (1) educational attainment and (2) upward mobility, the greater the market orientation of the organization.

P4: The more positive the senior managers' attitude toward change, the greater the market orientation of the organization.

P5: The greater the ability of top marketing managers to win the confidence of senior nonmarketing managers, the lower the interdepartmental conflict.

P6: The greater the interdepartmental conflict, the lower the market orientation of the organization.

P7: The greater the interdepartmental connectedness, the greater the market orientation of the organization.

P8. The greater the concern for ideas of employees in other departments, the greater the market orientation of the organization.

P9a: The greater the departmentalization, (1) the lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.
P9b- The greater the formalization, (1) lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.
P9c: The greater the centralization, (1) the lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.

P10: The greater the reliance on market-based factors for evaluating and rewarding managers, the greater the market orientation of the organization.


P11: The greater the acceptance of political behavior in an organization, the greater the interdepartmental conflict.

P12a.: The greater the perceived expertise of the source generating market intelligence, the greater the responsiveness to it by the organization.
P12b: The greater the perceived trustworthiness of the source generating market intelligence, the greater the responsiveness to it by the organization.
P12c: The smaller the challenge to the status quo posed by market intelligence, the greater (1) its dissemination and (2) the responsiveness to it by the organization.
P12d: The greater the p>olitical acceptability of market intelligence, the greater (1) its dissemination and (2) the responsiveness to it by the organization.

P13: The greater the market orientation of an organization, the higher its business performance.

P14: The greater the market orientation, the greater the (1) espirit de corps, (2) job satisfaction, and (3) organizational commitment of employees.

P15: The greater the market orientation, (1) the greater the customer satisfaction and (2) the greater the repeat business from customers.

P16: The greater the market turbulence, the stronger the relationship between a market orientation and business performance.

P17: The greater the technological turbulence, the weaker the relationship between a market orientation and business performance.

P18: The greater the competition, the stronger the relationship between a market orientation and business performance.

P19: The weaker the general economy, the stronger the relationship between a market orientation and business performance.

Managerial Implications 

The research suggests that a market orientation may or may not be very desirable for a business, depending on the nature of its supply- and demand-side factors.

The research clearly delineates the factors that can be expected to foster or discourage a market orientation. These factors are largely controllable by managers and therefore can be altered by them to improve the market orientation of their organizations


Senior managers must themselves be convinced of the value of a market orientation and communicate their commitment to junior employees. Junior employees need to witness behaviors and resource allocations that reflect a commitment to a market orientation. Senior managers must develop positive attitudes toward change and a willingness to take calculated risks to initiate changes and projects in response to market intelligence. A market orientation is almost certain to lead to a few projects or programs that do not succeed. The interdepartmental dynamics have to be be managed through appropriate in-house efforts. Interdepartmental variables—conflict, connectedness—clearly have a key role in influencing the dissemination of and responsiveness to market intelligence. Cross-department training programs would help in increasing understanding.

The third set of variables that have relevance are organizationwide systems that have appropriate decentralized and centralized activities to involve all in market orientation as well as to facititate decision making at top level on enterprisewide projects. Senior managers can help foster a market orientation by  reward systems  at least partly based on  market measures (e.g., customer satisfaction, intelligence obtained). Simultaneously, culture has to be changed to facilitate concerted response by the departments to market developments.

The Quality of Market Orientation

The quality of market orientation is also an important characteristic. The quality of market intelligence  may be suspect or the quality of execution of marketing programs designed in response to the intelligence may be poor. In such instances, a market orientation may not produce the desired functional consequences. Though, in this paper, the issue is not addressed, the issue of variations in the quality of market intelligence, its dissemination, and organizational response,  clearly are important and warrant consideration by both managers and researchers.

Market orientation: Antecedents and Consequences 

Jaworski, Bernard J;Kohli, Ajay K Journal of Marketing; Jul 1993; vol. 57, no. 3;

 Kohli and Jaworski (1990) define a market orientation as composed of three sets of activities: (1) organization-wide generation of market intelligence pertaining to current and future customer needs, (2) dissemination of the intelligence across departments, and (3) organizationwide responsiveness to it. Furthermore the responsiveness component is defined as being composed of two sets of activities—response design (i.e., using market intelligence to develop plans) and response implementation (i.e., executing such plans). This definition focuses on specific behaviors and therefore facilitates
operationalizing the market orientation construct.

Based on the literature subsequently discussed, three sets of antecedents pertaining to top management, interdepartmental factors, and organizational systems are hypothesized to be related to
market orientation, and market orientation is hypothesized to be related to employee commitment, esprit de corps, and business performance. Finally, the link between a market orientation and business performance is hypothesized to be moderated by market turbulence, competitive intensity, and technological turbulence.

Antecedents of Market Orientation

H,: The greater the top management emphasis on a market orientation, the greater the (1) market intelligence generation, (2) intelligence dissemination, and (3) responsiveness of the organization.

H2: The greater the risk aversion of top management, the lower the (1) market intelligence generation, (2) intelligence dissemination, and (3) responsiveness of the organization.


H3: The greater the interdepartmental conflict, the lower the (1) market intelligence dissemination and (2) responsiveness of the organization.

H4: The greater the interdepartmental connectedness, the greater the (1) market intelligence dissemination and (2) responsiveness of the organization.

H5: The greater the formalization, (1) the lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.
H6: The greater the centralization, (1) the lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.
H7: The greater the departmentalization, (1) the lower the intelligence generation, dissemination, and response design and (2) the greater the response implementation.


H8: The greater the reliance on market-based factors for evaluating and rewarding managers, the greater the (1) market intelligence generation, (2) intelligence dissemination, and (3) responsiveness of the organization.


Consequences of a Market Orientation


H9: The greater the market orientation of an organization, the higher its business perfonnance.

H1o: The greater the market orientation, the greater the (1) esprit de corps and (2) organizational commitment of employees.
H|,: The greater the market turbulence, the stronger the relationship between a market orientation and business performance.
H]2: The greater the competitive intensity, the stronger the relationship between a market orientation and business perfonnance.

H13: The greater the technological turbulence, the weaker the relationship between a market orientation and business performance.


The first sample was drawn from the member companies of the Marketing Science Institute (MSI) and the top 1000 companies (in sales revenues) listed in the Dun and Bradstreet Million Dollar Directory. A multiple-informant design was employed in this sample

From 54 MSI executives  The response rate was 88.9% for the marketing executives and 77.8%
for the nonmarketing executives

 A total of 102 companies agreed to participate from D&B top 1000 database, and 229 SBU names were obtained. Names were provided for 206 marketing and 187 nonmarketing executives. The response rate was 79.6% for the marketing executives and 70% for the nonmarketing executives.

These procedures resulted in responses from a total of 222 business units. The market share for these
business units ranges from 1% to 100%, with an average share of 30%. For the purposes of analysis, the responses of the two informants were averaged to obtain scores for each business unit. In the relatively few instances where only one informant provided the data, the responses were used in the original form.

As a second sample A total of 230 responses were obtained, for a response rate of 47.2% from American Management Association roster.

The study used existing scales for measuring the organizational structure constructs of formalization,
centralization, and departmentalization. Market orientation was measured by a 32-item scale. Top management emphasis on market orientation and risk aversion were measured by two separate scales.
The first scale was composed of four items. The risk aversion scale was composed of six items. The two constructs pertaining to interdepartmental dynamics—conflict and connectedness—were each
measured by 7-item scales. Formalization and centralization were measured by the widely used scales developed by Aiken and Hage (1966, 1968). Departmentalization was measured by a count of
the number of departments in the business unit. Reward system orientation was measured by a 6-item
scale that assessed the extent to which customer relations, customer satisfaction, and market-oriented
behaviors were used to evaluate and reward individuals in the organization. Market turbulence, competitive intensity, and technological turbulence were measured by three scales composed of six, six, and five items, respectively. Business performance was measured using two distinct approaches reflected in the literature—^judgmental as well as objective measures. The judgmental measure asked informants for their assessment of the overall perfonnance of the business and its overall
perfonnance relative to major competitors, rated on a 5-point scale ranging from "poor" to "excellent." The objective measure was the dollar share of the served market.Organizational commitment and esprit de corps were measured by two 7-item scales.

List of hypotheses supported has to be added.

Managerial implications and future scope for research have to be added.

Creating a Market Orientation 

Narver, J.C., Slater, S.F. & Tietje, B.
Journal of Market-Focused Management (1998), September 1998, Volume 2, Issue 3, pp 241–255


 In their synthesis study in which they inductively derive a definition of market orientation, Deshpande and Farley (1997) define it as, “The set of cross functional processes and activities directed at creating and satisfying customers through continuous needs-assessment.”

Empirical analyses to date have found, in general, a positive relationship between market orientation and business performance.

Given the substantial empirical evidence suggesting a positive relationship between market orientation and performance, the logical next question is how a business can best create and increase a market orientation. To the present, there has been little scholarly research on this essential question.

First and foremost, a market orientation must be understood as an organization’s culture (see, e.g., Deshpande and Webster, 1989) and not merely a set of processes and activities separate from the organization’s culture.

A market orientation consists of one overriding value: the commitment by all members of the organization to continuously create superior value for customers. Based on this value, the central principle of a market orientation is that every person in the organization understands that each and every individual and function can, and must, continuously contribute skills and knowledge to creating superior value for customers.

 We stress that only in an organization whose core value is the continuous creation of superior value for customers will there be the requisite leadership, incentives, learning, and skills to enable the continuous attraction, retention, and growth of the most profitable customers in each target market.

 To promote continuous change, a leader must maintain a “creative tension” in the organization, the tension between the articulated vision and the current reality (Senge, 1990)

Creating a market orientation involves achieving two objectives. The first is to gain the organizational commitment to the core value, and the second is to develop the requisite resources, incentives, skills, and continuous learning to implement the core value

it is only through experiential learning that the key requirements for culture change—congruency with the experience of the members of the group and perception of a superior solution—can be met. By first attaining a clear general understanding of the what, why, and how of a market orientation, the critical experiential learning will be much more effective and efficient.

Programmatic Approach 

The first step labeled the “programmatic approach”, is a learning strategy based on the teaching of various “principles” to achieve a critical level of understanding. In general, it consists of teaching individuals the nature and importance of a market orientation and the basic processes, approaches, and skills of creating superior value for customers.

The productive role for a highly focused programmatic approach is to initiate and enhance experiential learning.  The programmatic approach needs to be seen as the educational foundation for effective experiential learning.

The Market-Back Approach or Experiential Approach

The second step is a learning strategy focused on continuous experiential learning in how most effectively and profitably to create superior value for customers. In this approach a business adapts its processes, procedures, and structures based on its continuous learning from its actual customer-value-creation performance. The label for this approach is “marketback approach.”

It is only through experiential learning that the culture-change requirement of congruency of the solution with the successful experience of the members of the group and perception of a superior solution can be attained. Assigning people to problem-solving contexts, both current and new, is the key to learning and thereby, the key to changing and reinforcing the culture, that is identifying right solutions to problems.

In the market-back approach the emphasis is on outcomes and on continuous improvement ( “logical incrementalism).” The outcomes in the market-back approach are the performance the business achieves with respect to important short-term “customer-performance” objectives that are within the context of long-term objectives. Experiential learning can include experimentation, simulation and role playing. To repeat, it is only through experiential learning that the culture-change requirement of congruency with the experience of the members of the group and perception of a superior solution can be attained.

The following research propositions are derived from the previous discussions of the two learning objectives and the two learning strategies in creating a market orientation.

RESEARCH PROPOSITION 1: The programmatic approach is positively related to market orientation with a diminishing marginal effect.

RESEARCH PROPOSITION 2: The market-back approach is positively related to market orientation with an increasing marginal effect over a substantial range.

RESEARCH PROPOSITION 3: For businesses with a “low” market orientation, the average effect of the programmatic approach on market orientation will exceed the average effect of the market-back approach on market orientation. For businesses with a “high” market orientation, the average effect of the market-back approach on market orientation will exceed that of the programmatic approach.

RESEARCH PROPOSITION 4: The correlation between the use of the programmatic approach and the use of the market-back approach is higher among low market-orientation businesses than among high market-orientation businesses.

RESEARCH PROPOSITION 5: The combined effect of the programmatic and market-back approaches on market orientation is synergistic.

Need and Scope for Further Research

In addition to the empirical testing of the research propositions that are discussed above, we offer the following research suggestions: 1. Theory suggests that the CEO and top management play an important role in creating a market orientation. A critical question is what styles of CEO and top-management leadership and guidance will best enable an organization’s personnel to accept the norm of market orientation and prepare them for maximum effective learning from market experience? 2. The testing of the relationship between market orientation and the programmatic and market-back approaches in a longitudinal framework would provide insight into probable causation and enable the testing for any dynamic interaction between the two approaches.

Towards a further understanding of the development of market orientation in the firm: a conceptual framework based on the market-sensing capability

ANTHONY FOLEY* Waterford Crystal Centre for Marketing Studies, Waterford Institute of Technology, Cork Road, Waterford, Ireland
JOHN FAHY Department of Management and Marketing, Kemmy Business School, University of Limerick, Limerick, Ireland
JOURNAL OF STRATEGIC MARKETING I2 219–230 (DECEMBER 2004)

 Day defines capabilities as ‘complex bundles of skills and collective learning, exercised through organisational processes, that ensure superior co-ordination of functional activities’. One capability is critical in developing a market orientation: the market-sensing capability, which is essentially the ability of the organisation to be aware of change in its market and to forecast accurately responses to its marketing actions (Day, 1994).

 Leonard-Barton importantly defines four dimensions to a core capability from a knowledge perspective: employee knowledge and skills; technical systems; managerial systems; and values and norms associated with knowledge creation and control. Day and Van den Bulte (2002), in their recent and critical examination of the customer-linking capability (Day 1994), deconstruct this capability into three components: 1. Information about relationships – the use of data that is trackable, timely and comprehensive to strengthen customer relationships. This approximates to the technical systems dimension (Leonard-Barton, 1992), which covers information databases and procedures. 2. Configuration – the organisational structure, incentives and reward or resource commitments that provide the context within which customer information and knowledge flows are embedded. This, according to Day and Van den Bulte (2002), is likely to be a structure that is focused around customer groups rather than vertical functional hierarchies. There are elements of organisational configuration in the “values and norms” dimension of Leonard-Barton (1992) also. 3. Orientation towards relationships – this relates to relevant values, behavioural norms, shared mental models, and decision criteria. It approximates to the “values and norms” dimension promoted by Leonard-Barton (1992). In their study, Day and Van den Bulte found configuration to be the main component of the customer relating capability, with support from the orientation dimension. Information was found to be less significant:

 A capabilities perspective (Day, 1994) will facilitate a more meaningful understanding of the development of market orientation. It is proposed that the market-sensing capability (Day, 1994) in particular, acts as an antecedent to market orientation. In order to identify this key capability, it is necessary to unpack or decompose it, following the precedent of the decomposition of the customer-linking capability (Day and Van den Bulte, 2002). A conceptual framework for the decomposition of the market-sensing capability as an antecedent of market orientation is presented here

 It is proposed that the market-sensing capability is comprised of four dimensions, which have specific resonance in market-sensing activities: Organisation Systems, Marketing Information, Organisation Communication, and Learning Orientation (which was operationalised by Sinkula et al. in 1997). Propositions of a positive relationship between these dimensions and market orientation, and ultimately performance, are presented.

Baker and Sinkula (1999) point out that a superior learning environment will leverage the use of all resources, including the behaviours that accompany a market orientation.


Learning Orientation

Proposition 1a: The greater the commitment to learning in the organisation, the greater the market orientation.

Proposition 5a: Learning orientation is positively associated with the market-sensing capability.

Organisation Systems

Proposition 1b: The greater the shared vision in the organisation, the greater the market orientation.

Proposition 2a: The less the degree of centralisation in the organisation, the greater the market orientation.

Proposition 2b: The greater the degree of formalisation in the organisation, the greater the market orientation.

Proposition 2c: The greater the reliance on market-based factors for evaluating and rewarding managers, the greater the market orientation.

Proposition 2d: The greater the use of benchmarking in the organisation, the greater the market orientation.


Marketing Information  Organisation Communication

Proposition 3: The more developed the marketing information system in the organisation, the greater the market orientation.

Organisation Communication

Proposition 4a: The greater the degree to which organisational values and norms are customer-oriented, the greater the market orientation

Proposition 4b: The greater the use of decision criteria that facilitate the sharing of information in the organisation, the greater the market orientation.

Proposition 5a: Learning orientation is positively associated with the market-sensing capability.

Proposition 5b: Organisation system is positively associated with the market-sensing capability

Proposition 5c: Marketing information is positively associated with the market-sensing capability.

Proposition 5d: Organisational communication is positively associated with the market-sensing capability.

Proposition 6: The greater the market orientation of an organisation, the higher the business performance.

Proposition 7: The market-sensing capability, though the mediation of market orientation, has a positive effect on business performance.

Performance implications of market orientation, marketing resources,and marketing capabilities 

Liem Viet Ngo,The University of New South Wales,Australia
Aron O’Cass, University of Tasmania, Australia
Journal of Marketing Management Vol. 28, Nos. 1–2, February 2012, 173–187



One focus of the strategic management literature is examining whether resource–capability or capability–capability complementarities exist and whether they help achieve superior firm performance (e.g. Menguc & Auh, 2006; Milgrom & Roberts, 1990; Moorman & Slotegraaf, 1999; Morgan et al., 2009).  The underlying rationale for this stream of research is that the firms’ effectiveness and efficiency can benefit from the complementarity of resources and capabilities, which refers to ‘the degree to which the value of an asset is dependent on the level of other assets’ (Moorman & Slotegraaf, 1999, p. 241).

 This complementary effect can occur in different forms such as resources–resources, resources–capabilities, and capabilities–capabilities.

In contributing to this stream of research, this study addresses two issues that warrant attention in strategic marketing: (1) the relationship between MO, marketing resources, and marketing capabilities; and (2) the performance impact of the complementarity (i.e. interaction) between marketing resources and marketing capabilities (in addition to main effects).

Building on competitive capability theory (Day, 1994), this study develops a model that links a firm’s MO through marketing resources and marketing capabilities to specific firm performance outcomes.

 Marketing resources refers to the extent to which a firm possesses knowledge and resources related to marketing mix activities (e.g. product, price, distribution, and marketing communication). On the other hand, marketing capabilities refers to a firm’s ability to perform marketing routines (e.g. marketing mix activities) through which the firm transforms available resources into valuable outputs (Vorhies & Morgan, 2005).

H1: MO is  positively related to (a) higherlevels of marketing resource possession and (b)superior marketing capability deployment.

H2: Marketing resources are positively related to firm performance

H3: Marketing capabilities are positively related to firm performance.


H4: The interaction between marketing resources and marketing capabilities positively influences firm performance (in addition to their main effect).


Anempiricalstudywasdesignedtocollectdatafrommanufacturingandservicefirms in Australia. A sample of 1000 firms was selected from a National Business Database identifying senior executives in single-business firms with >20 employees. A  self administrated questionnaire was used asthe primarymeansfor data collection, which followed the procedure adopted by Jaworski and Kohli (1993).  In total, 163 useable surveys were returned, producing a response rate of 16.3%.

Partial least squares (PLS) is used to estimate the theoretical model

All  hypotheses were supported by the analysis of evidence.



Managerial implications

Managers should recognise that effective resource-allocation decisions should take into account the firm’s need for both outside-in processes (e.g. MO) and inside out processes (e.g. marketing resources and marketing capabilities). In particular, resource-allocation decisions on marketing resources and marketing capabilities are of primary importance in establishing future sales, market share, and profitability, and such decisions should be guided by the firm’s unique know-what information about changing market requirements. This configuration of MO, marketing resources, and marketing capabilities is necessary because it facilitates the linkage between what customers expect from the firm’s marketplace offerings and what is delivered to customers in marketplace offerings.

What Counts Versus What Can Be Counted: The Complex Interplay of Market Orientation and Marketing Performance Measurement 

Johanna Frosen, JukkaLuoma, MattiJaakkola, Henrikki Tikkanen, & Jaakko Aspara
 Journal of Marketing, Vol. 80 (May 2016), 60–78

We develop systematic theory and empirical evidence of how executives should combine MO and MPM to attain high business performance. Our research questions are as follows: Which configurations of MO and MPM lead to (1) high and (2) low business performance in different types of firms?

Equifinality pertains to the existence of multiple configurations that, in parallel, may lead to the same outcome of interest (Doty, Glick, and Huber 1993).

P1a: For large firms, a combination of high MO and comprehensive MPM (across all domains of customer, competitor, and financial performance) is a necessary part of configurations that consistently yield high business performance.

 P1b: Forsmallfirms,acombinationofhighMOandselective MPM (i.e., limited use of customer, competitor, and financial performance metrics) is a necessary part of configurations that consistently yield high business performance.

P2a: For market leaders, a combination of high MO and comprehensive MPM (across all domains of customer, competitor, and financial performance) isa necessary part of configurations that consistently yield high business performance.

P2b: For market followers, a combination of high MO and focused MPM in the domains of customer and/or competitor performance is a necessary part of configurations that consistently yield high business performance.

P3a: A combination of low MO and noncomprehensive MPM is not a sufficient configuration to consistently yield low business performance.

P3b: Multiple idiosyncratic configurations of high/low MO and comprehensive/noncomprehensive MPM are sufficient to yield high business performance.

The data used in the  study is from  a survey conducted in Finland in 2010 and it was complemented it with objective performance data. The survey targeted top management in all Finnish firms with more than five employees (using a database from MicroMedia, a commercial service provider) and resulted in a response rate of 10.9%. The final responses were from  628 individual firms.

Measures. Narver and Slater’s (1990) MKTOR scale is used to measure MO. For MPM items,we use the taxonomy provided by Ambler, Kokkinaki, and Puntoni (2004) as a basis, with six marketing metrics categories covering the most commonly used MPM metrics.

Business performance is captured by a firm’s profit margin (%), acquired from a commercial Voitto+ database provided by Suomen Asiakastieto Oy.


Fuzzy-set qualitative comparative analysis. Fuzzy-set qualitative comparative analysis (fsQCA) is a set-theoretic method for studying organizational configurations using a comparison of cases to differentiate attributes that are related or unrelated to an outcome of interest (Fiss 2011; Ragin2000). The analysis gives sets providing configurations that result in outcome of interest.  The conclusions of the study are based on configurations (Cs).

 The findings supports P1a and is consistent with the idea that larger firms benefit from MPM more because their organizational structure requires more formal control mechanisms (Jaworski 1988) and because of the economies of scale that help offset the costs related to MPM. In contrast to P1b, however, comprehensive MPM is found to work for smaller market leaders also (C1b).

Compared with C1b (and partly compared with C1a), the MPM in C2 and C3 is more focused, in support of P2a and P2b.  This notion supports P2b; indeed, market followers seem to benefit from more focused MPM compared with the configurations available for market leaders.
Finally, the lack of configurations consistently associated with low performance supports P3a. C1a and C1b, as well as C2 and C3, represent equifinal paths for similar firms to reach high performance, in support of P3b.

 

Additional Reading

Chapter 2. The market orientation concept
p. 47-91
CHANGING MARKET RELATIONSHIPS IN THE INTERNET AGE  | Jean-Jacques Lambin
http://books.openedition.org/pucl/1648?lang=en


Developing a Market Orientation
Rohit Deshpande
SAGE Publications, 13-Apr-1999 -  328 pages
The Marketing Service Institute's(MSI's) pioneering work on developing a market orientation' has only been available as a series of working papers, is now presented in book form for the first time by Sage Publications. This book demonstrates the importance of market orientation on organizational culture ( the shared set of values in putting customer first), on strategy (creating superior value for a firm's customers), and on tactics (the set of cross-functional activities directed at creating and satisfying customers)
http://books.google.co.in/books?id=WCB1AwAAQBAJ

Paper Presented and Discussed in the Fellow Program Class of 2016-17

Ajay K. Kohli & Bernard J. Jaworski

Market Orientation: The Construct, Research Propositions, and Managerial Implications

Journal of Marketing
Vol. 54 (April 1990), 1-18

Market orientation: Antecedents and consequences
Jaworski, Bernard J;Kohli, Ajay K Journal of Marketing; Jul 1993; vol. 57, no. 3;

Creating a Market Orientation
Narver, J.C., Slater, S.F. & Tietje, B.
Journal of Market-Focused Management (1998), September 1998, Volume 2, Issue 3, pp 241–255

Towards a further understanding of the development of market orientation in the firm: a conceptual framework based on the market-sensing capability
ANTHONY FOLEY* Waterford Crystal Centre for Marketing Studies, Waterford Institute of Technology, Cork Road, Waterford, Ireland
JOHN FAHY Department of Management and Marketing, Kemmy Business School, University of Limerick, Limerick, Ireland
JOURNAL OF STRATEGIC MARKETING I2 219–230 (DECEMBER 2004)

Performance implications of market orientation, marketing resources,and marketing capabilities
Liem Viet Ngo,The University of New South Wales,Australia
Aron O’Cass, University of Tasmania, Australia
Journal of Marketing Management Vol. 28, Nos. 1–2, February 2012, 173–187

What Counts Versus What Can Be Counted: The Complex Interplay of Market Orientation and Marketing Performance Measurement
Johanna Frosen, JukkaLuoma, MattiJaakkola, Henrikki Tikkanen, & Jaakko Aspara
 Journal of Marketing, Vol. 80 (May 2016), 60–78


Updated  9 November 2016,  27 November 2014