Market Orientation And Performance In Nonprofit Organizations: The Effect Of Organizational Innovation And Environmental Turbulence

Market orientation (MO) is the corner stone of modern marketing. With the fast development of nonprofit organizations (NPOs) since 1990s, its relevant research themes have received much attention. Some scholars have tried to apply MO theory to the field of NPOs and have made some research progresses, but there are still many research gaps in this area:First, dominated by the positivism, current studies usually give no theoretical explanations to the motivations of nonprofit market orientation. Second, most current studies concentrate on the direct influences of MO on the performance of NPOs. Few studies consider the potential mediator variables and other influencing factors. It is great needed to construct an integrative model. Third, most scholars quote enterprises' MO scales directly and it's probably questionable in terms of the scales' reliability and validity. Fourth, regardless of the multidimensional characteristics of nonprofit organizational performance, many studies adopt single measure for the evaluation of nonprofit organizational performance. Fifth, most studies are conducted in developed countries and it is difficult to generalize the research conclusions.This study, starting from "the resources gap" of NPOs, based on the Resource Dependence Theory, explains the motivations of nonprofit market orientation. Meanwhile, drawing on the Resource-Based View, this study explains the basic logic relationships among MO, organizational innovation and organizational performance. On the basis of above theoretical analysis, we reconstruct a conceptual model for empirical research which includes four key variables: environmental turbulence, nonprofit market orientation, organizational innovation and performance. In the part of empirical research, according to the reality of Chinese NPOs, we choose "community medical institutes" and "industrial associations" as target sample. Questionnaires are used as instrument for data collecting in this study. We sent out altogether 347 questionnaires to NPOs in Zhejiang Province and got back 223. The ratio of valid questionnaires is 64.27%. In the data processing, we divide the valid sample into two sub-groups: Group 1 (n =115) and Group2 (n =108). Using SPSS 13.0 and LISREL8.7, we mainly utilize the exploratory factor analysis (EFA), confirmative factor analysis (CFA), multiple regression and structural equation modeling (SEM) to verify the conceptual model and hypothesis. After theoretical and quantitative analysis, some important results and conclusions are presented as follows:(1) The resource dependence of NPOs specifically embodies in two aspects: "customer's resources dependence" and "high resource dependence" . The implementation of MO can decrease the dependence of NPOs on external environments and increase the dependence of the external environments on NPOs. So, it is the practical strategic choice that NPOs should make under the situation of resource dependence on external environment.(2) MO and innovation are both the strategic resources which have the characteristics of valuable, rareness, difficult to substitute and imitate, and thus can help organizations to obtain superior performance. Meanwhile innovation can be seen as some kind of complementary resource of MO, so that MO can influence performance indirectly via innovation.(3) On the basis of qualitative study, using EFA and second order CFA, we develop and test the nonprofit market orientation scale which includes five dimensions: the customer orientation, internal coordination, information generation, organizational responsiveness and emphasis on survival. There are altogether 17 indicators in this scale. This research also adjust and test measuring instruments of innovation and performance for NPOs. The final nonprofit organizational innovation scale includes three dimensions: innovative atmosphere, management innovation and service innovation. There are altogether 12 indicators in this scale. The performance scale of NPOs includes four dimensions: financial performance, customer performance, learning and growth, and internal process. Also, there are altogether 12 indicators in this scale.(4) This research conduct path analysis on the conceptual model developed above. The results prove that environmental turbulence has direct and significant influence on nonprofit market orientation and organizational innovation, MO and organizational innovation can directly and significantly influence the performance of NPOs, meanwhile organizational innovation can play a mediating role between MO and nonprofit organizational performance, and environmental turbulence has no moderating effect on the relationships between nonprofit market orientation and performance. The results give strong supports to the theoretical hypothesis and conceptual model developed in our study. We also preliminarily clarify the necessity and possibility of implementing MO strategy in NPOs.The results and conclusions of this dissertation deepen our understandings of nonprofit market orientation theory, resource dependence theory and resource-based theory, and the relationships among them. However, constrained by the researcher's own academic ability, the current study still has many shortcomings. In the last part of this research, the author presents the limitations and reveals several issues needed studying further.