Internal-market orientation and its measurement Spiros P. Gounaris * Athens University of Economics and Business, Department of Marketing and Communication, 76 Patission Street, Athens 10434, Greece Received 1 January 2005; received in revised form 1 June 2005; accepted 1 October 2005 Abstract The 1970s introduced internal marketing (IM) as a solution for the companies that sought to offer superior customer service. After 30 years though, IM practice remains limited, probably because their majority lack the proper underlying philosophy. An ‘‘internal-market orientation’’ (IMO), the equivalent to market orientation that is known to precede the effective implementation of marketing strategies. Such an internal-market orientation, if developed, may increase the effectiveness of market-oriented company’s response to (external) market conditions because it allows the company’s management to better align (external) market objectives with internal capabilities. However, before this symmetry is achievable, companies need to be able to assess their orientation towards their internal (employee) market and take, where necessary, corrective actions. This article, while discussing the notion and the importance of IMO, reports the results of a study aimed to develop and empirically validate an instrument for assessing the company’s degree of IMO adoption. D 2005 Elsevier Inc. All rights reserved. Keywords: Internal marketing; Internal-market orientation; Scale development; Services; Empirical 1. Introduction This article empirically investigates an instrument for assessing the company’s degree of internal-market orientation (IMO) adoption. That is, the extent to which the company commits to produce value for its employees through effectively managing the relations between employees, supervisors and management. Increasing the company’s degree of IMO does not hamper its external orientation or its focus on its customers (Bansal et al., 2001). Quite the contrary, E ´ I ` I ¨ allows deriving a symmetric orientation (Piercy, 1995) and, thus, enhancing the effectiveness of a company’s strategic response and, eventually, its ability to satisfy customers consistently so that sales and profits can grow. Many scholars investigate the major antecedents of cus- tomer satisfaction. Particularly in the service industries, various authors suggest different antecedents, such as the quality and the value offered by the company (Cronin et al., 2000), the perceived quality (Gro ¨ nroos, 1983; Parasuraman et al., 1988; Cronin and Taylor, 1992; Anderson and Sullivan, 1993) or complain handling (Homburg and Rudolph, 2001). However, a parallel stream of research, also in services, investigates the impact of the encounter with service personnel, demonstrating that customer’s experience with the service providing person- nel heavily influences customer satisfaction (e.g., Tornow and Wiley, 1991; Mohr and Henson, 1996; Foster and Cadogan, 2000; Donavan and Hocutt, 2001). These findings explain marketing scholars’ emphasis on service personnel as part of the company’s marketing mix (Booms and Bitner, 1981; Berry, 1981; Conduit and Mavondo, 2001) and, consequently, their interest on internal marketing (IM). However, although the body of knowledge on IM is constantly increasing since the 1970s, this is mainly through normative work as the proportion of empirical studies remains rather slim. Moreover, marketing scholars have not yet derived a single, unanimous, definition of IM. During this period though, IM content has evolved from the company’s effort to satisfy the needs of the ‘‘customer-affecting’’ personnel (Berry et al., 1976; Sasser and Arbeit, 1976; Berry, 1981), to managing the service-value chain and the internal relationships between co-workers more effectively (Gummesson, 1987) and developing a customer priority throughout the entire company (Gro ¨nroos, 1983; George, 1990; Ahmed and Rafiq, 1993; Varey and Lewis, 1999). Nonetheless, the application of IM focuses only on a small number of companies (Rafiq and Ahmed, 2000), despite the increasing interest of scholars on IM and its profound 0148-2963/$ - see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2005.10.003 * Tel./fax: +30 2108203712. E-mail address: sgounar@aueb.gr. Journal of Business Research 59 (2006) 432 – 448