Influence of Perceived Environmental Turbulence on Market Orientation of Service Firms in Tanzania

Abstract

The article examines the influences of perceived environmental turbulence on market orientation of service firms in Tanzania. A conceptual framework linking perceived environmental turbulence and market orientation was developed and tested using a sample of 178 service firms. The sample comprised hotels, travel agents and tour operators and insurance agents. Structural Equation Modelling was used to analyse data. Results indicate that the perceived environmental turbulence components, namely, perceived technological turbulence and perceived market turbulence influence positively the market orientation of service firms whereas the perceived competitive intensity influences negatively the market orientation of service firms in Tanzania. The findings contribute to the theory of antecedents and consequences of market orientation developed by Kohli and Jaworski (1990) by adding a new set of factors that influence market orientation of business firms. On the basis of these findings, the paper recommends to service firms for them to be vigilant with changes taking place in the technological environment. They need also to be heedful of changes in customer needs, preferences, composition and tastes and embrace market orientation as a strategic orientation for navigating in highly turbulent environments. The paper also recommends further study to investigate factors that influence managers’ perception of competitive intensity.