Wood1993.pdf

This article was downloaded by: [York University Libraries] On: 02 January 2015, At: 15:24 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Journal of Nonprofit & Public Sector Marketing Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/wnon20

Market Orientation and Nonprofit Organizations a

Van R. Wood & Shahid N. Bhuian

b

a

Associate Professor of Marketing, Texas Tech University b

doctoral candidate, Department of Marketing, Texas Tech University Published online: 26 Oct 2008.

To cite this article: Van R. Wood & Shahid N. Bhuian (1993) Market Orientation and Nonprofit Organizations, Journal of Nonprofit & Public Sector Marketing, 1:1, 7-32, DOI: 10.1300/J054v01n01_03 To link to this article: http://dx.doi.org/10.1300/J054v01n01_03

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Market Orientation and Nonprofit Organizations: Performance Associations and Research Propositions Van R. Wood Shahid N. Bhuian

ABSTRACT. This paper discusses the concept of market

orienta-

within Ule context of nonprofit organizations. Three elements of market orientation-market intelligence, intelligence dissemination, and responsiveness-are examined for their association with performance in nonprofit organizations. A conceptual framework is developed which identifies select senior management characteristics, organizational characteristics, and external factors as key determinants of market orientation and subsequent performance of nonprofit organizations. In all, fourteen propositions are advanced for future research. This conceptual work posits that nonprofit decision makers can create a market orientation by focusing on specific organizational and senior management characteristics, and adapting to certain external factors. The ultimate objective is to achieve and sustain organizational performance. tion

Van R. Wood is Associate Professor of Marketing at Texas Tech University. He received his PhD from the University of Oregon. Published articles of his appear in a variety of journals including the Journal of Marketing, Journal of Marketing Research, Journal of Internatio~lBusiness Studies, and the Joural of the Academy of Marketing Science. He has taught and presented seminars in Western and Eastern Europe, the USSR, the Middle East, Latin America, Canada, and the Pacific Rim. Shahid N. Bhuian is a doctoral candidate in the Department of Marketing at Texas Tech University. His research interests include nonprofit marketing, marketing strategy, consumer behavior, and international marketing. Journal of Nonprofit & Public Sector Marketing, Vol. l(1) 1993 O 1993 by The Haworth Press, Inc. All rights reserved.

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JOURNAL OF NONPROFIT & PUBLIC SECTOR MARKETING

The nonprofit sectors of society typically engage in social, cultural, and economic activities. Often individuals rely on nonprofit organizations (NP)' to bring them into the world, to educate and entertain them and even to bury them. NP organizations comprise tens of thousands of private and public endeavors, that in general, specialize in delivering services that axe not provided by private businesses or government entities. The NP sector of the economy has its problems. Today, many colleges, hospitals, churches, and other social agencies are experiencing rising costs and stable or declining revenues (Kotler & Andreasen 1991). Organizational resources have been eroded by inflation and rising demands of clients. The "for-profit" sector sees the tax exempt status of many NP organizations as an unfair advantage that should not be allowed (Hodgkinson 1989). Another highly significant problem is that many NP managers know little about business administration, having come to their first NP job without any significant marketing or management training (Wolf 1984). All in all, the NP environment is both challenging and threatening and many NP organizations are asking-what is it that we need to do in order to survive? The NP sector is one of the least studied and consequently one of the least understood areas of the economy. And while research is needed on many aspects of NP organizations, it is in marketing that calls for research are most apparent (Shasho 1983, Hansler 1986, Narver and Slater 1990). Marketing issues of particular interest include: (a) the nature and degree to which NP organizations exhibit a market orientation, (b) the degree (if any) to which certain management characteristics, organizational characteristics, and external factors influence the market orientation of NP organizations, and (c) whether or not a market orientation relates to enhanced performance in NP organizations. This paper addresses these issues by presenting a descriptive model that relates the concept of market orientation to NP organizations. The model identifies the dirnen-

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1. In this paper, for brevity purposes, the term nonprofit is considered to be synonymous with "not-for-profit," "tax free," "charity," and other typically named organizations, and is herein abbreviated to NP.

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sions of market orientation and poses a set of propositions designed to guide future research on NP performance.

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THE THEORETICAL DIMENSIONS OF A MARKET ORIENTATION IN NONPROFIT ORGANIZATIONS Among all the classic business functions, marketing was one of the last to be embraced by NP organizations. Indeed, it was not until such organizations confronted the problems and challenges noted previously, that they began to discover marketing (Nichols 1989). And with that discovery, they began to realize that their ultimate success and failures originate in the exchange relationships they have with their multiple publics (Lovelock and Weinberg 1984). Indeed, a general understanding of marketing as an orientation applicable to NP organizations began to evolve. The concept of "orientation" relates to one's adaptation to a specific situation. It reflects the degree to which one accommodates the surrounding environment in order to achieve objectives. In business and commerce, numerous orientations have evolved as the environment surrounding organizations evolved. The fust orientation, the product or production orientation, typically exists in periods of low competition or when demand is greater than supply. Here, what an organization makes, it can sell. Therefore it is rational to focus on the "producing" of goods. The second orientation, the sales/promotion orientation, exists when customers demand information about products before they buy. Therefore promoting what has been produced is considered to be the key element to success. The third orientation, the marketing or market orientation, is prevalent when customers have numerous alternatives, and when information concerning customers guides product development and marketing efforts. While each orientation is manifest in modem organizations, it is a "market orientation" that is most often recommended for enhancing long-term success (for a more complete discussions on "orientation" see Troye and Wood 1989). In order for any organization to have a market orientation, it must implement the marketing concept. From the traditional-theoret-

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ical perspective, the marketing concept entails: (1) a customer or target market focus, (2) a coordinated marketing effort with respect to price, product, promotion and channel of distribution, and (3) profitability (McNamara 1972, Kotler 1991). From apractitioner perspective, a recent field study posits that a market orientation entails: (a) one or more departments engaging in activities geared toward developing an understanding of customers' current and future needs and the factors affecting them, (b) sharing of this understanding across departments, and (c) various departments engaging in activities designed to meet select customer needs. (Kohli and Jaworski 1990, p. 3)

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A common denominator in both the theoretical and practitioner perspectives is the notion of "market intelligence." More specifically, the concept of market orientation refers to the organizationwide generation, dissemination, and responsiveness to market intelligence. Recently, Narver and Slater (1990) have linked these dimensions of market orientation to performance in their studies of for-profit organizational success. 1n-the present paper, we propose that market intelligence generation (to understand customers), dissemination (to sh&e understanding of customers), and responsiveness (to meet customer needs) also form the core of a market orientation in NP organizations. Likewise, having a market orientation leads to high performance in NP organizations. Based on these notions, an NP version of market orientation has been developed as shown in Figure 1. As discussed below, this NP conceptualization of "market orientation" is offered as an exploratory attempt to articulate the specific nature of market intelligence in NP organizations. NONPROFIT MARKET ORIENTATION As diagrammed in Figure 1, market intelligence is the central element of market orientation and includes intelligence generation, intelligence dissemination, and intelligence responsiveness.

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FIGURE 1

1 I

INTELLIGENCE GENERATION

,,

I

I

a. Gathering, monitoring, and analysis of information concerning:

I

NONPROFIT ORGANIZATIONS' MARKET ORIENTATION MARKET INTELLIGENCE I

J

INTELLIGENCE DISSENINATION

I I I.Sharing of information . Developing, designing, I

mncerning:

-external forces -exogenous factors outside the industry

b. Generating information using: -formal means -informal means

mplementing, and Itering:

-donors and clients

-donors and clients

-competition

I

INTELLIGENCE RESPONSIVENES

I

I.

Ensuring: -horizontal and vertica. information flows -participation of all departments and personnel

-programs, products and sewices -systems to promote, price and distribute programs, products, and services b. Utilizing:

-product/service differentiation -other marketing tools

Adapted from: Andreasen 1982, Unterman h Davis 1984, Hansler 1986, Kotler 6 Andreasen 1991, Hansler 1988, Schwartz 1989, ~ o h l i5 Jaworski 1990. Narver & Slater 1990. ..

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Intelligence Generation entails four distinct points, including:

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1. Gathering and analyzing information pertaining to donor and client current and future needs. Modem marketing requires a "customer-focus," with a systematic study of customer needs using appropriate data gathering and data analysis techniques. Effective market intelligence requires a focus on both current and future needs, and a market oriented organization is characterized by proactive responses based on anticipated changes in customer needs (Deshpande and Webster 1989). Like for-profit organizations, NP organizations have exchange relationships with numerous "publics," that have an actual or potential interest in their organization. Two classes of publics, input publics (donors) and consuming publics (clients) constitute the major exchange groups of NP organizations. In order to understand NP exchange relationships, both the donors' and clients' perspectives must be considered and NP organizations must continuously keep up-to-date with the needs of both groups. They must gather and analyze relevant donor and client information.

2. Monitoring and analyzing exogenous factors outside the industry itself (e.g., government regulations, technology, the general economy, and other environmental forces), that influence donor and client current and future needs. Market intelligence is also needed on exogenous factors and environmental forces that influence customer needs. As before, external forces can affect for-profit and NP organizations. Their impact on the behavior of donors and clients is said to be particularly significant (Young 1984,Nichols 1989). Hence, market intelligence generation in the form of environmental scanning activities requires continuous monitoring and evaluation of changes in government regulations, technology, the general economy, and so on.

3. Monitoring and analyzing competitive actions (both primary and secondary) that influence donor and client current and future needs.

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While competition can be considered an exogenous factor, its immediate and often sigruficant effect on an organization's performance dictates that it be considered separately. Competitors influence customers by catering to their unmet needs or offering new, innovated solutions to their current or future needs. Competitors can position products more effectively, offer superior products, promote them better or offer them in more convenient locations. The existence of competitors in the marketplace, clamoring for attention, not only stimulates clients to seek other alternatives but also sharpens donors' awareness of alternative outlets for their donations. Consequently, all NP organizations should make the monitoring and evaluation of competition a priority. Because their source of funds and the markets they serve can be taken by both primary competitors that satisfy identical needs, or secondary competitors that satisfy generic needs, both should be carefully scrutinized. 4. Gathering and monitoring of market intelligence through for-

mal and informal means. Useful intelligence generation can vary from extremely informal contacts to highly structured methodologies. A random sharing of a cup of coffee with relevant groups or an elaborate marketing research undertaking such as a sophisticated customer attitude survey can both be effective. Intelligence generation is also possible through "non-marketing" departments of an organization such as research and development, personnel, or accounting. In general, effective market intelligence generation in NP organizations utilizes all possible means, both informal and formal, when gathering and monitoring information on donors, clients, external forces, andfor competition. Intelligence Dissemination entails two distinct points, including:

1. Sharing throughout the organization both existing and anticipated information concerning (a) donor and client current and future needs (b) exogenous factors, and (c) competition. Here the goal is to ensure vertical and horizontal flows of information within and between departments. To effectively reach objectives, all parts of an organization need

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to act in a coordinated fashion. For organizations to respond to market needs, market intelligence must be communicated and disseminated. Various means can be used to disseminate intelligence within organizations including periodic newsletters, formal meetings, and informal "story telling" (Kohli and Jaworski 1990). To facilitate this, the role of both the more traditional "vertical communication" system and the newer, more recently studied "horizontal communication" system, need to be taken into consideration (see Zeithaml, Berry, and Parasuraman 1988). Given the relatively flat organizational structure of many NP organizations, Unterman and Davis (1984) recommend a horizontal communication system be used to disseminate information. In such systems, information is shared through monthly director reports to the board of trustees, weekly informal meetings between the board and the executive director, weekly staff and volunteer meetings, and informal receptions with trustees, staff, and community groups.

2. Ensuring effective use of disseminated information by encouraging participation of a l l departments and personnel in sharing information concerning donor and client current and future needs, exogenous factors and competition. The dissemination of market intelligence can originate from any department or any individual in the organization. Having information and sharing its meaning is critical to NP organizational success and all employees and volunteers should be attuned to this fact. Intelligence Responsiveness entails three distinct points, including:

1. Developing, designing, implementing, and altering products and services (tangibles and intangibles) in response to donor and client current and future needs.

In the final analysis having a market orientation entails meeting the needs of the market. After generating and disseminating market intelligence the next logical step is to take actions in lieu of the information obtained. At this stage more "formal" actions based on

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product or service planning are taken. Market responsiveness requires the intelligent development, implementatio< and modification of products and/or services and by definition "intelligent" implies an accurate information base.

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2. Developing, designing, implementing, and altering systems to promote, distribute, and price products and services that respond to donor and client current and future needs.

In this step, organizations are required to develop, design, implement, and modify plans for the mnaining controllable variables in marketing, namely pricing, distribution, and promotion. The NP sector is somewhat unique here because these products can be zero priced, positive priced, or negative priced (Hansler 1988). Likewise, promotional themes of NP organizations may be unique in that they often emphasize the altruism of donors. As such, they may require somewhat more subtle, yet sophisticated appeals than is common in other promotions (see Nichols 1989, Schwartz 1989). Again, to be effective, these plans must be based on accurate market intelligence. 3. Utilization of market segmentation, productlservice differentiation and other marketing tools in the development, design, implementation, and alteration of products and services, and their corresponding systems of promotion, distribution, and pricing. Meaningful market responsiveness often requires the utilization of marketing tools such as segmentation and productfservice differentiation. For example, in NP organizations segmentation helps categorize both donors and clients into meaningful groups based on unique patterns of behavior. This in turn,guides appropriate product, pricing, promotion, and distribution strategies. Individually and collectively, intelligence generation, dissemination, and responsiveness determine the nature and extent of market orientation in any NP organization. Utilizing these factors we next present a conceptual model describing the variables that lead to and result from a market orientation in NP organizations.

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FACTORS INFLUENCING NP MARKET ORIENTATION AND PERFORMANCE

A fuller understanding of market orientation and its role in NP organizations can be gained within the context of a model. Figure 2 displays the descriptive model for NP organizations that guided the development of propositions offered in this paper. As shown, the model has at its core market intelligence generation, disseminaof the model is that the tion, and responsiveness. A central more an NP organization displays these dimensions, the more it is attuned to the market. Figure 2 posits that the degree of market orientation in any given NP organization depends on the presence or absence of specific senior management characteristics, organizational characteristics, and extemalfactors. In turn the degree of market orientation displayed directly influences organizational performance. These antecedents and outcomes, and their proposed relationships with market orientation were gleaned from a large body of for-profit and NP literatme and were adapted to the model based on their particular relevance to NP organizations. Each of the major antecedents and outcomes are reviewed. ANTECEDENTS TO A MARKET ORIENTATION IN NP ORGANIZATIONS' SENIOR MANAGEMENT CHARACTERISTICS The critical role of senior management in fostering a market orientation is reflected in numerous studies (see for example Levitt 1969, Hambrick and Mason 1984, Unterman and Davis 1984, Epsy 1986, Webster 1988). In general, these studies view senior management as highly influential on the value organizations place on intelligence generation, dissemination, and responsiveness. In NP organizations, senior management is typically made up of an executive director and senior level staff. Several characteristics of senior management may be particularly pertinent to the formation of a market orientation including risk aversion, management training, professionalism, and attitude towards marketing.

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FIGURE 2 A M A R W ORIENTATION MODEL FOR

NP ORGANIZATIONS OUTCOMES

ANTECEDENTS SENIOR MANAGEMENT CHARACTERISTICS Risk Aversion

Management Training Professionalism Attitude Towards

I

t

ORGANIZATIONAL CHARACTERISTICS Entrepreneurship Organizational Structure Ingratiation Acceptance Market-Based

t

EXTERNAL FACTORS Competition

I

Macro Environmental Changes

Market Environment

t-

MARKET ORIENTATION Generation PERFORMANCE

Intelligence oissemination

Intelligence

r--l Qualitative h puantitative Measures

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Risk Aversion

Risk aversion is considered to be negatively related to a market orientation of both for-profit and NP organizations (Ansoff 1984, O'Neill 1989). Risk averse managers tend to disassociate themselves from information that might bode poorly on their organization's future. Likewise, complex or voluminous information concerning markets, competitors, or the environment tend to be viewed as "seeds of confusion" rather than items to clanfy a situation. As such, risk averse managers tend to give information generation and dissemination low priority, have moderate track records in regard to market responsiveness, and do not encourage a market orientation. Manugement Training

Management training has been shown to be positively related to a market orientation (Young 1981, Wolf 1984). Management training can develop a clear, deeply ingrained appreciation of what marketing is and what it can do. There is evidence that some NP managers view marketing as primarily sales promotion, advertising, or public relation. In such cases, customer satisfaction is typically not a priority (Fine 1983). At its best, management training is said to orient one towards strategic thinking and the mission, goals, and objectives of the firm. It forces managers to look at the "big picture" and visualize how to realize it. Senior management with high levels of management training tend to pay more attention to market evolution, environmental changes, and how a firm's resources can be utilized to take advantage of each (Levinson 1987). Professionalism

During the past three decades a considerable amount of research has focused on professionalism in organizations. Different views exist in which professionalism is seen as both a global, unidimensional concept (see Sorenson and Sorenson 1974), and a multidimensional construct (see Bart01 1979). Most observers agree that professionalism is an attitude containing five components,

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including: (a) autonomy, or the perceived right to make decisions about both the means and goals associated with one's work, (b) commitment, or the degree of dedication exhibited toward one's work, and one's long-term career aspirations in the profession, (c) identijication with the profession and fellow professionals, or the tendency to use the profession and fellow professionals as major reference points, (d) ethics, or the degree of felt responsibility to avoid selfinterest in the course of rendering services, as well as the dedication to high quality service to the client, and (e) collegial maintenance of standards, or the belief that standards should be enforced by fellow professionals who are properly equipped to evaluate work adequately in the field. When carefully scrutinized, high concern for each of the five attitudinal components of professionalism can be associated with a high drive to create and maintain a market orientation within an organization. The essence of each of the five components including the right to make decisions, dedication to the long term, utilization of other professionals, dedication to properly serve the client, and being equipped to maintain standards requires a penchant for information-the core of a market orientation.

Attitude Towards Marketing A positive attitude towards marketing is theorized to foster a market orientation in NP organizations. On the other hand, managers who view marketing as undesirable are less likely to embrace the marketing concept (see Lovelock and Weinberg 1984). Based on the preceding discussion the following four propositions are advanced.

Proposition 1: Higher risk aversion in senior NP management leads to a lower market orientation in NP organizations. Proposition 2: The more management training experienced by senior NP management, the higher the market orientation in NP organizations. Proposition 3: The higher the level of professionalism exhibited by senior NP 'management, the greater the

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tendency for NP organizations to be market oriented. Proposition 4: The greater the positive attitude of senior NP management towads marketing, the greater the market orientation in NP organizations.

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ORGANIZATIONAL CHARACTERISTICS Like senior management characteristics, organizationalcharacteristics can be utilized as predictors of a market orientation. In regard to NP organizational characteristics, several factors appear to be particularly relevant to a market orientation. They include entrepreneurship, organizational structure, ingratiation acceptance, and market-based reward system.

Entrepreneurship Traditionally, entrepreneurship has been identified with a dominant organizational personality, generally an independent minded owner-manager who typically makes critical decisions (Leibenstein 1968). However, entrepreneurship has also been conceptualized at the fm level (Miller 1983, Moms and Paul 1987). Entrepreneurship as a fm phenomenon is defined as an organization's willingness to encourage and support creativity, flexibility, and risk taking, and to strive for organizational renewal through the pursuit of new ventures and opportunities (Stevenson, Roberts, and Grousbeck 1985). Entrepreneurial organizations typically are more aggressive in dealing with competitors, emphasis research and development, value rapid or steady growth over stability and actively seek unusual or novel solutions to problems (Ginsberg 1985). High levels of organizational entrepreneurship and high levels of market orientation have been said to represent responses to an incmsingly complex and turbulent environment (Drucker 1974,1980, 1985). In the context of NP organizations, an association between entrepreneurship and market orientation has been demonstrated in a number of situationally specific studies. For example, Hansler (1986) noted organizations with entrepreneurial orientation tend to

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value information and tend to view information evaluation as part of the larger process of meeting the needs of their donors.

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Organizational Structure

Two sbuctural properties of organizations-centralization and formalization-have been investigated in conjunction with marketorientation in both the for-profit and NP context. Formalization refers to the degree to which mles define organizational roles, authority relationships, communication channels, cultural norms, accepted sanctions, and hierarchical procedures (Zeffane 1989, Smith et al. 1989). Centralization is defined as the nature and degree of delegation of decision making (Zeffane 1989, Martin and Glisson 1989). In the for-profit context, past research had shown a positive relationship between formalization as well as centralization, and the market "responsiveness" dimension of market orientation. Also, formalization and centralization have both been found to be negatively related to intelligence generation and intelligence dissemination (Zaltman, Duncan, and Holbek 1973, Kohli and Jaworski 1990). Apparently formalization and centralization inhibit intelligence generation and dissemination but enhance market responsiveness. Similar patterns of associations have been observed in the NP context. Both formalization and centralization were found to be negatively related with market intelligence generation and dissemination activities through the creation of work alienation in welfare organizations (Aiken and Hage 1966). On the other hand, Glisson and Martin (1980) found a positive relationship between both centralization and formalization, and market responsiveness. Ingratiation Acceptance

Ingratiation is the political behavior of seeking one's own selfinterest and in theory may be detrimental to an organization if it becomes excessive (Ralston 1985). However, in practice, organizations differ in the extent to which their members view ingratiation as being acceptable or not. Some see a self-serving, yet motivated individual as a positive influence in an organization (see Hodgkin-

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son, Lyman, and Associates 1989). On the other hand, having a market orientation calls for a concerted response by all to generate, share, and collectively use market intelligence and as such, a high ingratiation "acceptance system" may lead to interdepartmental conflict and ultimately inhibit a market orientation (Kohli and Jaworski 1990). In NP organizations the power to make things happen basically lies with four groups, namely a board of trustees, management, staff, and volunteers. Management and staff personnel typically work on a paid basis, while the board of trustees and volunteers typically serve for some nonrnonetary interests. As such, the motivation behind the efforts of these groups may differ substantially. Board members and volunteers are typically driven by the desires (1) to promote the mission of the organization, (2) to fulfill social responsibilities, or (3) for professional advancement, career exploration, work experience, class credit, or leadership opportunity. Management and staff, while possibly having similar motives, may also be more overtly motivated to realize immediate monetary rewards (O'Neill 1989). Needless to say, power, motivation and politics are complicated in NP organizations, and the effect of ingratiation acceptance is theoretically mixed. In general however, a tendency toward high ingratiation acceptance could hamper the concerted efforts required for intelligence generation, dissemination, and market responsiveness.

Market-Based Reward System A considerable amount of research has been conducted on the relationship between organizational reward systems and subsequent attitudes and behavior of em~lovees(see Anderson and Chambers 1985). The way employees &e rewarded and what they are rewarded for is theorized to directly influence their productivity. An association between reward systems and the various components of market orientation has also been documented by Webster (1988) and Kohli and Jaworski (1990). One specific type of reward system, a market-based reward system, appears to be particularly appealing in NP organizations. A market-based reward system focuses on consumer feed-back as a

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key measure of organizational performance. In such a system, customer beliefs, attitudes, and satisfaction levels are considered important indicants of organizational success or failure. Organizations employing this philosophy, tend to reward employees based on positive consumer responses to their marketing efforts as opposed to basing rewards strictly on shoa term profitability. NP organizations, by their very nature tend to look for other measures of success besides profitability. If customer satisfaction is to be rewarded, then information on the customers must be gathered and analyzed. Intuitively, a market-based reward system employed by an NP organization would tend to facilitate a market orientation. Based on the preceding discussion, the following five propositions are advanced. Proposition 5: NP organizations which exhibit greater entrepreneurship will also be more market oriented. Proposition 6: The greater the structural formalization of NP organizations (1) the lower the market intelligence generation and dissemination and (2) the greater the market responsiveness. Proposition 7: The greater the structural centralization of NP organizations (1) the lower the market intelligence generation and dissemination and (2) the greater the market responsiveness. Proposition 8: The greater the reliance on market-based factors to evaluate and reward senior management, staff, and volunteers of NP organizations, the greater the market orientation of such organizations. Proposition 9: The greater the tolerance of ingratiation in NP organizations, the lower the market orientation.

EXTERNAL FACTORS The external environment in which NP organizations operate is highly complex and is to a large extent unique from the for-profit environment in that it tends to be more volatile (Faherty 1985). Hence, environmental factors are perhaps even more influential in

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the NP arena. Three broad types of influential environmental forces have been identified as being particularly relevant to the formation of a market orientation. They include competitive factors, macro factors, and market factors.

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Competitive Environment The competitive environment refers to any group or organization that competes for the attention, resources, or loyalty of an audience. As outlined by Kotler and Andreasen (1991) marketers can face as many as four major types of competitors in trying to serve a targeted market. They are: (1) "desire" competitors, or those that cater to the immediate desires that consumers might want to satisfy (e.g., on any particular evening one can have several desires-finishing a project at work, getting some exercise, or being entertained), (2) "generic" competitors, or those that offer other basic ways by which consumers can satisfy a particular desire (e.g., the desire to be entertained could include-TV at home, a movie, or a live performance), (3) "service form" competitors, or those that offer other service forms that can satisfy a consumer's particular desire (e.g., if one chooses to be entertained by a live performance, one could consider-a symphony, a nightclub performance, or a play), and (4) "enterprise" competitors, or those whose other enterprises can satisfy a consumer's particular desire. Although many NP organizations still ignore the existence of such competition, more astute managers are h o w n to evaluate their market position vis-his the four types of competitors identified above. Organizations that recognize competition and perceive it to be more threatening have a greater tendency to evaluate it (Schwartz 1989). Therefore, the greater the perceived competition the greater the tendency to adopt a market orientation. Macro Environment The macro environment refers to the large scale fundamental forces (other than competition and the market itself), that shape opportunities and pose threats to organizations. These broad forces can be divided into demographic,economic, technological, political-

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legal, and social-cultural categories. The nature and relative impact of these forces is thought to vary significantly across NP organizations. Anecdotal evidence suggests that for social service agencies, demographic and political-legal trends are influential, for charities, economic trends are influential; technological trends are influential for hospitals and libraries; and for recreation services and the performing arts, social-cultural trends are influential (Kotler and Andreasen 1991). There does exist some empirical evidence relating the macro environment and the concept of market orientation in NP organizations. Political-legal factors such as eliminating property tax exemptions, limiting the advocacy rights of organizations receiving government funds, and cutbacks in federal funding can drive NP organizations to embrace marketing (Scanlon 1983, Nielsen 1984). Market Environment /

As used in this model, the term "market environment" reflects the individuals, groups, and institutions that all organizations directly work with to accomplish their objectives. In the NP sector, these include clients, marketing intermediaries, suppliers, supporters, and donors. The issue here is the nature and extent to which such groups both individually and collectively influence the development of a market orientation in NP ormnizations. There is evidence suggesting ;hat as the behavior of supporters and donors becomes more volatile or less dependable, NP organizations become more market oriented (Hansler 1986, Nichols 1989). The more individuals, corporations, foundations, and governments decrease or vary the amount they give (giving less one year, and more the next, and less the next), the more NP organizations tend to seek out, disseminate, and utilize information. Such efforts typically lead to new programs aimed at first stabilizing and then increasing donations. Likewise, as client needs become more complex, NP organizations tend to more aggressively seek information necessary to develop programs to meet such needs (Johnson 1986, Schwartz 1989). In general, it is theorized that the more an NP organization perceives changes in its resource base(s) or its clients' needs, the more market oriented it is and will become.

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Based on the preceding discussion dealing with external factors the following four propositions are advanced. Proposition 10: The greater the recognition of competition (and its subgroups or types), the greater the market orientation in NP organizations. Proposition 11: The greater the macro environmental changes (e.g., demographic changes, economic changes, technological changes, political-legal changes, and social-cultural changes), facing NP organizations, the greater will be their market orientation. Proposition 12: The greater the perceived changes in donors' behavior, the greater the market orientation of NP organizations. Proposition 13: The greater the perceived changes in client needs, the greater the market orientation of NP organizations.

MARKET ORIENTATION AND PERFORMANCE ASSOCIATIONS IN NP ORGANIZATIONS Performance measurements used in NP organizations vary widely. Many are qualitative and tend to be highly organizational specific, for example "benefits," "mission accomplishment," "critical response by media," and "improved administrative practices" (see Gruber and Mohr 1982, and Wolf 1984). Quantitative performance measures are by far more numerous and have included "number of clients." "financial returns,' ' "donation increases," and a series of ratios such as "administrative cost ratio," "fund-raising cost ratio," and "programs funding ratio" (see Feigenbaum 1987, Kumer and Pereira 1988). While several attempts have been made to develop a common means to evaluate performance across NP organizations, few have been truly successful or widely accepted (Smith 1988). In general a consensus exists that any comprehensive performance measure should reflect both quantitative and qualitative

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outcomes of NP organizations and should have the characteristics of simplicity, economy, and utility. Perhaps the best known taxonomy to follow these criteria was developed by Unterman and Davis (1984). In it they identified both quantitative and qualitative measures and recommended that each be discretely considered according to the unique circumstance facing a specific NP organization. Their quantitative measures are all time period specific and include:

1. Increases (or decreases) in the number of beneficiaries or members gained. 2. Percentage increase (or decrease) in the number of grants or revenues received. 3. Increases (or decreases) in the cost effectiveness for each individual beneficiary. 4. Decreases (or increases) in the fixed cost requirements to accomplish the organization's mission. 5. Total increase (or decrease) in the number of hours given by volunteers. 6. The percentage increase (or decrease) in the number of volunteers. 7. The increase (or decrease) in time spent by board members. 8. Percent over (or under) set expenditure budgets. 9. Increase (or decrease) in the number of favorable (or unfavorable) articles in newspapers, and other public relations media (related to the organization). Their qualitative measures are also time period specific and include: 1. Improvement (or not) in the relationships among board members. 2. Improvement (or not) in relationships between board members and the executive director of the organization. 3. Improvement (or not) in the relationships of staff to the executive director. 4. Improvement (or not) in the quality of the relationships between volunteers and the executive director as well as the board members.

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5. Improvement (or not) in the ease of attracting board members and volunteers. 6. Improvement (or not) in the general attitude of the community toward the organization. 7. Improvement (or not) in the positive intentions of the community toward the organization. 8. Improvement (or not) in the ease of fund raising in general. 9. Improvement (or not) in the ease of attracting foundation funds, and other specific sources of funds.

In the final analysis, the adoption of a market orientation by any organization should be based solely on enhanced performance. Numerous reports and studies have testified that the adaptation of marketing principles can greatly enhance organizational operations (see Narver and Slater 1990). As such, the following, final proposition is advanced. Proposition 14: The greater the market orientation exhibited by NP organizations, the greater will be both their qualitative and quantitative performance.

CONCLUSIONS In their study of for-profit organizations, Narver and Slater (1990) "hold that market orientation is relevant in every market environment" (p. 33). This paper explores market orientation in a unique market environment, namely NP, and elaborates on its nat&and dimensions (Figure 1). model is developed to explain both the determinants (antecedents) and outcomes (~erformance)of market orientation ( ~ i & 2). In &, fourteen proiositions the various aspects of the model are posed in an attempt to conceptualize the dynamics of the market orientation development process in NP organizations. Three fundamental questions are addressed in this paper. First-what is the essence of a market orientation in NP organizations? Second-how do NP organizations acquire a market orientation? And third-does the presence of a market orientation influence NP performance? Grappling with the first question led to the details

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presented in Figure 1. Market intelligence is the key ingredient of a market orientation. Market intelligencerequires information generation, dissemination, and responsiveness. This is true for both forprofit and NP concerns. However, NP organizations must cater to two distinct groups-clients and donors, and therefore the essence of their market orientation is distinct from for-profit organizations. Likewise, as indicated earlier, the extreme volatility of the NP environment makes the development of a market orientation even more critical to organizations operating in this sector of society. The notion that a market orientation is critical in the NP setting leads logically to the second and third questions addressed in this paper. As graphically depicted in Figure 2, the key to achieving a market orientation in NP organizations lies in the mix of senior management characteristics, organizational characteristics, and external factors that form the milieu of NP operations. The greater the presence of these characteristics, as detailed in the paper and stated in propositions one through thirteen, the more apparent will be the presence of a market orientation in an NP organization. And the more apparent is the market orientation of an NP organization, the higher will be its performance (proposition fourteen). To date, a comprehensive model of this type has been lacking in the literature. Having synthesized theoretical, empirical and anecdotal works from marketing, management, economics, health care, public administration, sociology, strategic planning and other fields, it is our desire that the proposed model be utilized to guide future research and managerial efforts in the area of NP marketing. Empirical verification of the proposed linkages in the model is called for. To what degree do the fourteen propositions posed in this study hold true? How does market orientation vary across different types of NP organizations, and how does this effect the ultimate performance of such organizations? The model (Figure 2) implies that the NP decision makers can influence specific senior management and organizational characteristics, and can adapt to certain external factors for purposes of enhancing the market orientation of the organization. The ultimate objective is to achieve and sustain high performance. If the veracity of this model's implications is borne out, perhaps the multiple problems, challenges and opportunities facing NP organizations can be logically and effectively met.

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