IIs there a profit premium for market-oriented firms? A panel data investigation

This paper provides an empirical investigation of the impact of market orientation on firms’ economic performance during the period 1998-2012 using a panel of Italian manufacturing firms. We introduce a dynamic concept of market orientation, in that we define a market-oriented firm as one that persistently under- takes product and marketing innovation, while at the same time introducing organisational changes and training efforts to man- age and improve its knowledge asset over the long term. The conceptual framework within which we have developed the anal- ysis considers both the management approach, from which we take the notion of a firm’s market orientation to innovation, and the economics of innovation approach. The results show that be- ing a market-oriented firm significantly affects profitability, in a framework in which this latter is simultaneously estimated with productivity, thus allowing for more precise estimates of the re- lationship being tested for