The impact of market orientation and corporate social responsibility on firm performance

Abstract

Purpose The purpose of this paper is to investigate the joint effects of market orientation (MO) and corporate social responsibility (CSR) on firm performance. Design/methodology/approach Data were collected via a questionnaire survey of star‐rated hotels in China and a total of 143 valid responses were received. The hypotheses were tested by employing structural equation modelling with a maximum likelihood estimation option. Findings It was found that although both MO and CSR could enhance performance, once the effects of CSR are accounted for, the direct effects of MO on performance diminish considerably to almost non‐existent. Although this result may be due to the fact that the research is conducted in China, a country where CSR might be crucially important to performance given the country's socialist legacy, it nonetheless provides strong evidence that MO's impact on organizational performance is mediated by CSR. Research limitations/implications The main limitations include the use of cross‐sectional data, the subjective measurement of performance and the uniqueness of the research setting (China). The findings provide an additional important insight into the processes by which a market oriented culture is transformed into superior organizational performance. Originality/value This paper is one of the first to examine the joint effects of MO and CSR on business performance. The empirical evidence from China adds to the existing literature on the respective importance of MO and CSR.

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