Firm orientations, innovativeness, and business performance: Advancing a system dynamics view following a comment on Hult, Hurley, and Knight's 2004 study

Hult, Hurley, and Knight's [Ind. Mark. Manage. 33 (2004) 429.] study reports correlations for each of the three subfactors of market orientation (competitor orientation, customer orientation, and interfunctional coordination) and innovativenss. However, their report fails to discuss the nature of these relationships. Such findings are worthy of discussion because they support prior evidence demonstrating the centrality of customer orientation in linking competitor orientation and interfunctional coordination with both innovativeness and business performance. Also, the finding that interfunctional coordination relates strongly with innovativeness supports the paradigm shift toward relationship marketing. The point needs mentioning that several different (more than one) standardized effects, structural equation models explain similar amounts of variance of business performance besides the models that Hult et al. examine. Thus, the implication by Hult et al. (p. 436) that “…learning orientation has no significant direct effect on performance” is accurate only for the model tested (shown in their Fig. 2). Applying the “quick clustering” method helps to inform interpretation when nearly all relationships among variables are statistically significant. The present article includes a proposal for advancing from one-directional structural equation modeling of innovativeness and business performance to system dynamics modeling that includes real-world feedback loops.