Industry Factors and Adoption of Market Orientation Practices in Nigerian Small Business Enterprises

Abstract

Aim/purpose - This study aims at investigating the industry environmental factors that affectthe adoption of market orientation (MO) practices by Small Business Enterprises (SMEs) in Nigeria and their relative importance in the MO adoption process. In view of the gap in literature, Nigerian marketing practitioners may not know which of the task environments impact on the adoption of MO in SBEs, a critical growth engine in any country.

Design/methodology/approach - A survey method was used to gather data from 545 top management and owner-managers of 160 SBEs from eight sectors using the Nigerian stock exchange classification. The sectors are located within Lagos, the commercial nerve-centre of Nigeria. Purposive sampling with some stratification was used. Data was collected with a hand delivered structured questionnaire. With the aid of Predictive Analytical Software (PASW)version 19.0, data was analyzed using descriptive statistics, factor analysis and multiple regression analysis.

Findings – The study revealed that the critical industry environmental factors influencing the adoption of market orientation practices of Nigerian SBEs are mainly competitive risk/competitive rivalry, market attractiveness risk, buyer power risk, substitutability threat, and supplier power factor. The factor perceived as most crucial is market turbulence. The test of hypothesis revealed that there is significant relationship between these industry environmental factors and the adoption of market orientation practices by SBEs.Research implications/limitations – The implication of the findings is that the presence of certain industry

and competitive factors signal a need for the adoption of market orientation by SBEs in Nigeria. Therefore,for better and improved performance, the study recommends that SBEs should be conscious of, monitor and adapt their market orientation practices to the above identified industry factors. As is characteristic of factor analysis, the researcher used his subjective judgment to name the extracted industry factors. It is possible that the names may not fully represent the construct that underlie each factor.

Originality/value/contribution –This empirical study has been able to show that as a consequence of adopting market orientation practices, SBEs have achieved improved quality of products/services offered and higher profitability in their business operations but the adoption of MO is shown not to lead to reduction in operating costs.