As scholars, Akgun, Lynn and Reilly (2002:57) writes, market orientation has been recognized by scholars and practitioners as the cornerstone of modern marketing thought, a key source of competitive advantage and determinant of superior firm performance. In a market place characterized by changing customer tastes and preferences, rapid technological advances and a complex competitive landscape, the capacity for firms to anticipate market opportunities and threats is crucial. Market orientation has been seen as the degree to how businesses inclined to carry out the marketing concept (Amabile et al 1996:1154). Firms are been urged to have information about customers need and wants, and to critically examine exogenous features that persuade customers’ needs and preferences by way of coordinating and reacting appropriately to clients preference based of the intelligence gathered. Explaining cultural dimension of market orientation, the firm is viewed as most efficient and effective in creating the relevant behaviour for developing superior value for clients hence resulting in superior performance. The cultural viewpoint with respect to market orientation mention orientation from customers, orientation from competitors, as well as inter-functional orientation as a strategic means of identifying the needs and want of clients and satisfying them more than competitors.
The extant literature lacks an agreement on the unique definition of the term performance and the indicators of measuring firm performance are not universally identified and defined. Previous scholars and researchers have often used a special definition tailored to fit the individual research purpose. According to Argument, Harrison and Wainwright (1997:6) performance may relate to actual results or outputs of certain activities, how the activity is carried out or the potential for the activities. Performance can be divided into three domains: financial performance, business performance and organizational effectiveness. Financial performance focuses on the use of simple outcome-based financial indicators, whereas business performances comprise the indicators of non-financial indicators in addition to indicators on financial performance. Performance can also be defined in terms of effectiveness and efficiency or examined through the perspectives presented in different frameworks, such as the Balanced Scorecard (financial, customer, internal process, and learning and growth) or Performance Prism comprising stakeholder satisfaction, strategies, processes, capabilities and stakeholder contribution (Aryeetey et al 1994).
The business environment is continuously changing among consumers, within the firms and the environment and these changes have an effect on firm performance. These changes need to be evaluated to minimize the risks involved in any decision making. Market orientation is important because the firm focuses on collecting information about target customers’ needs and competitors’ capabilities continually and using this information to create superior customer value continually. Firms that are market oriented are well informed about the market in which they operate in and have the ability to use the information advantage to create superior value for their target customers (Atuahene-Gima 1996).
Innovation in business performs a relevant role in how well a company competes in the competitive business environment. Bringing innovation into ones operation may one way or the other be seen as taking a new form be it a product, an administrative system, technology or programme with the aim of increasing performance. Bringing innovation contributes immensely in terms of profit, market share, increase in receivables among others when it is effectively and efficiently carried out by businesses. Most businesses begin to innovate due to demands from the external environment which takes the form of higher customer demands, competition from competitors, deregulation of the sector, scarcity of resources or because organizations wants to improve on their ways of serving clients (Baker and Sinkula 1999:411).
Whatever motivates businesses to innovate, the rational is to guarantee adaptive behaviour, improving performance in the long run or serve current and potential customers better. The survival of SMEs has drawn attention from many quarters of reports in Zambia because of the tremendous significant role SMEs plays in terms of job creation, poverty reduction, revenue generation and serves as engine of growth of many economies for that matter Zambia. SMEs need to be strategically positioned in terms of new strategic direction so that they can be competitive and gain financial strength in the years to come. It has also been ascertained that, major policy makers have concerns with respect to how SMEs can accelerate growth in low income countries. In Zambia, SMEs are seen as the engine through which the realization and sustainability of the economy can grow hence the numerous efforts been engineered to promote SMEs development. Adoption and implementing effective market orientation practices among SMEs will help increase their growth potentials and performance in the long run.
Even though SMEs cannot engage in conventional marketing activities compared to large firms, the basic principles of being market oriented is needed to propel them to significant improvement. It is therefore important for SMEs in Zambia for that matter those in Lusaka peri- urban to be market oriented by implementing market orientation practices in their lines of operations. Market orientation will help SMEs to generate intelligence, disseminate information, planned and implemented response, gain customer insight, have some level of competitor information and employ some inter-functional coordination to help them improve their level of performance.