Market orientation in the context of SMEs: A conceptual framework ☆ P.S. Raju a, ⁎, Subhash C. Lonial a , Michael D. Crum b a Department of Marketing, College of Business, University of Louisville, Louisville, KY 40292, United States b College of Business, University of Louisville, Louisville, KY 40292, United States abstract article info Article history: Received 4 June 2008 Accepted 30 November 2010 Available online 13 January 2011 Keywords: Market orientation SME performance Small business strategy Small business marketing A number of studies in the marketing literature have examined the construct of market orientation (MO). These studies generally show a positive link between MO and organizational performance. This paper examines MO specifically in the context of small and medium sized enterprises (SMEs). An in-depth review of the extant literature is used to develop a conceptual framework by exploring the major antecedents of MO, the MO–Performance relationship, and the key mediators and environmental moderators of this relationship. This paper also examines several studies on SMEs with respect to various aspects of this framework and offers suggestions for future research in order to understand more thoroughly how MO influences SME performance. © 2011 Elsevier Inc. All rights reserved. 1. Introduction In a general sense, MO pertains to an organizational culture that emphasizes aspects such as customer orientation, competitor orien- tation, interfunctional coordination, and responsiveness as keys to organizational success (Kohli and Jaworski, 1990; Narver and Slater, 1990). Although the MO–Performance relationship has been the focus of many studies, efforts to synthesize existing findings to better understand this relationship in the context of smaller organizations have been virtually nonexistent. Past research shows some key differences between SMEs and larger organizations (Acs and Audretsch, 1987; Coviello et al., 2000) and one can expect the role of MO in SMEs to be quite distinct from that in larger organizations. The primary objective of this paper is to formulate a conceptual framework to examine MO in the context of SMEs. Such a framework could help us better comprehend the role of MO and its influence on SME performance. The MO literature is used to identify constructs of particular relevance to SMEs. Increased emphasis is given to the antecedents of MO and the mediators and moderators of the MO– performance relationship. Following the discussion of the conceptual framework, this paper examines SME research in relation to the framework and offers suggestions for future research. Prior to development of the conceptual framework, the next section examines the significance of the SME context for MO. 2. Relevance of the SME context Firm size is an important consideration with respect to the competitive advantage of organizations. Larger firms are known to have advantages such as economies of scale, bargaining power with suppliers and distributors, brand name recognition, experience curve effects, and monopoly power to set prices above the competition (Fiegenbaum and Karnani, 1991). Larger firms also have access to key resources (Ettlie and Rubenstein, 1987). In contrast, smaller firms often face many obstacles, termed “liability of smallness” by Aldrich and Auster (1986). Additionally, smaller new ventures could have the added burden of the “liability of newness” leading to higher mortality rate among these organizations (Stinchcombe, 1965). In spite of these liabilities SMEs are often highly market oriented and known to compete effectively with larger organizations, making it valuable to gain a better understanding of MO in the SME environment. With respect to characteristics, several differences between SMEs and their larger counterparts can be noted. For example, SMEs tend to be intrinsically more innovative, especially in the early stages of the industry lifecycle (Acs and Audretsch, 1987; Audretsch, 2002). Smaller firms are also likely to have more customer contact (Coviello et al., 2000), a greater propensity for action (Chen and Hambrick, 1995) and more output flexibility than larger firms (Fiegenbaum and Karnani, 1991). Such differences could be significant for studying the role of MO in smaller firms. SMEs and larger organizations are also likely to differ with respect to resources. Firm resources include a variety of elements (assets, capabilities, information, etc.) and these resources are often the key to sustained competitive advantage and superior performance. Hult et al. (2005) use a resource-based view (RBV) to examine the interrela- tionship between MO and elements such as information processing Journal of Business Research 64 (2011) 1320–1326 ☆ The authors thank the associate editor and anonymous reviewers who provided several valuable comments on this paper. ⁎ Corresponding author. Tel.: + 1 502 852 4860. E-mail addresses: psraju@louisville.edu (P.S. Raju), lonial@louisville.edu (S.C. Lonial), mdcrum02@gwise.louisville.edu (M.D. Crum). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2010.12.002 Contents lists available at ScienceDirect Journal of Business Research