Mediation effect of supply chain innovation and efficiency on the relationship between market orientation and organizational performance

Abstract

Recently, market orientation has drawn significant attention in the manufacturing sector because of its noteworthy impact on performance. The relationship between market orientation and organizational performance has been widely investigated by many academics and practitioners. However, the relationship is not yet fully understood. This study explored the mediation effect of supply chain innovation and efficiency on the relationship between market orientation and organizational performance. Six hypotheses including direct and mediation effects were tested in the study. Additionally, structural equation modelling (SEM) approaches were used to collect data from 314 Iranian companies in the manufacturing sector of Tehran, Shiraz and Kermanshah which are listed on the Tehran Stock Exchange (TSE). Managers of these organizations including middle, executive and top managers were identified as respondents for the questionnaire survey. This study used Amos to analyze the data. Findings suggest that market orientation is positively and significantly related to supply chain innovation, and efficiency has a direct positive and significant impact on organizational performance. In addition, it is evident from the study that the relationship between market orientation and organizational performance is partially mediated by supply chain innovation and efficiency. The findings have provided valuable insights to guide manufacturers to collectively improve organizational performance through supply chain innovation and efficiency. Recommendations on how to improve market orientation and organizational performance through supply chain management are provided accordingly. Further, through supply chain management, market orientation can assist firms to enlarge customer value, customer satisfaction, and competitive advantage and supply chain member‘s capabilities that can support their ultimate goals in achieving sustainable performance.