Market orientation and business performance: through the prism of Macedonian SMEs

This paper analyses the importance of market orientation degree for the competitiveness, i.e. business performance of small and medium sized enterprises (SMEs). The degree of market orientation is considered to be especially important for company’s competitiveness in markets where most of the competitor companies are still using outdated practices that are 60 years behind market trends, as in Macedonia. The main objective of the study is to address three main research aspects that explore the significance of market orientation for companies’ performance and market competitiveness: 1. “Key elements of market orientation”; 2. “Market orientation of SMEs in transition economies market - the case of Macedonia”; 3. “Market orientation’s link with performance, i.e. market share”. The methodology includes quantitative and qualitative methods that explored the degree to which 38% of the registered companies in the confectionery industry in Macedonia practice market orientation. Primary data was derived from questionnaires and semi-structured follow-up interviews. Secondary data was collected from books, journals and academic articles. Data was analyzed with IBM Statistical Package for Social Sciences (SPSS) 19. The results of the study suggest that some of the particular areas of market orientation like reaction on consumer’s demands (reaction to dissatisfaction and complaint management), analysis of competition (their strengths and weaknesses) and inter-functional information exchange (distribution of information between sectors) are preferred by companies, while on the other side, analysis of consumers (market research) is less practiced. Most of the small companies have informed of very low degree of market orientation, while medium – sized companies have reported higher degree of market orientation. The tests also indicated that on average, the degree of market orientation in small companies is lower than the degree of market orientation in medium – sized companies. Furthermore, significant correlation and linear dependence between the level of market orientation (independent variable) and the size of the market share (dependent variable) was found, which leads to the conclusion that higher degree of market orientation in the company, leads to larger market share for the company. The limitations of the research arise from sample’s size and the chosen industry, but the findings can be useful to entrepreneurs and managers of SMEs, since they provide a more accurate perspective of the different areas of market orientation and the way that it affects business performance. Keywords: Market orientation, Market share, Competitiveness, SME