VALUE CREATION FOR STAKEHOLDER

Value creation for stakeholder

Value creation for stakeholder

a. Critically evaluate classic and current literature to discuss the importance of “creating and adding value for the stakeholder” as a key requirement for sustained competitive advantage in the 21st century organisational environment

A key objective of research into marketing strategy is to uncover how firms develop and sustain a competitive advantage, and how an advantage translates into superior performance. Market orientation - a business culture focused on the continuous creation of customer value is one intangible that is posited to be a source of competitive advantage that positively influences business performance. A substantial number of studies are reported in the literature that test hypotheses relating a market orientation to firm performance as measured by financial measures such as profit, relative profit, return on investment or assets, and non-financial measures such as new product success and innovation. Empirical results generally confirm a positive relationship with measures of performance, though the strength of the association is often weak.

Most empirical studies of the market orientation-performance link are set in the context of traditional manufacturing sectors. However, there is evidence of a market orientation-performance link in the context of service industries. The often cited service characteristics of intangibility, heterogeneity, inseparability and Perishability highlight both the reduced emphasis on tangibles and the increased role that a consumer plays within the service process. Within the service industries, competitive advantage is less likely to come from tangible factors, and is more likely to be derived from intangibles that contribute to unique capabilities. Intangible assets are also important because they are increasingly considered in determining the market value of companies.

The integral involvement of the consumer within the service process suggests the need to develop close and trusting relationships to increase customer perceived value, and such relationships are logically fostered by a market orientation. As an active participant in the service “performance” the consumer interacts with personnel, the service script and supporting tangibles in a manner that does not occur in a product marketing context. The consequent transparency of the service encounter enables an impression to be formed of the firm's commitment to creating customer value. Equally the interaction that occurs with service personnel enables enhanced market sensing by the firm, a capability of a market-oriented company. As a result it is possible that a market orientation is even more central to the performance of services firms.

Despite continuous debate over the specific dimensions of the market orientation construct, the link to organisational performance is almost universally accepted. However, empirical tests of the robustness of the relationship to the unique characteristics of the services environment are a relatively recent addition to the market orientation literature. Early considerations of a market orientation in the services industries include Greenley and Matcham (1986) and Qureshi (1993). Bharadwaj et al. (1993) included elements of market-oriented behaviour in their conceptual model of the drivers of sustainable competitive advantage in service industries. A number of empirical tests of the market orientation-performance relationship appeared in the literature in ...