Being market-oriented for a better performance. A quantitative study on market orientation and performance in the Dutch primary education sector

(1)

Personal information

Name:

Cindy Balvert

Student number: s4045440

Supervisors

First supervisor: Dr. Ir. G.W. Ziggers

Second examiner: Prof. Dr. J. Jonker

July 12, 2019

Master’s thesis

Being market-oriented for a better performance

A quantitative study on market orientation and performance

in the Dutch primary education sector

(2)

Preface

Dear reader,

The last few months were all about writing my thesis. It has been both an intensive and a very instructive process. However, my thesis for the master Strategic Management is finished, and I am very proud that it lies now in front of you.

I would like to take this opportunity to thank the people who supported me during the process of my thesis. Firstly, I would like to thank my supervisor, Dr. G.W. Ziggers, for the guidance and support during this process. Secondly, I would like to thank my friends, who were also writing their thesis. Without them, I would have a much harder time. The conversations while enjoying a coffee were a good break every time. Thirdly, I also want to thank my other friends, family and especially my boyfriend. Thank you for listening to all my stories about my thesis. Especially thanks for motivating and supporting me every time this was necessary.

I hope you enjoy your reading, Cindy Balvert

(3)

Abstract

The education sector is currently under high pressure due to all ongoing developments. These developments force primary educational institutions to become market-oriented. The expectation in this research was that by being market-oriented, the performance of the primary educational institutions could increase. If the extent of being market-oriented in Dutch primary educational institutions has an effect on their performance is examined by the use of a confirmatory research approach. In order to investigate this relationship, twenty hypotheses are composed, and a survey was carried out among school boards of primary educational institutions to investigate the relationship. After the survey, the hypotheses were tested with a multiple regression analysis. The findings show support for the relationship between market orientation and overall performance, client satisfaction, resource acquisition, and peer reputation. Focusing on the components of market orientation (customer orientation, competitor orientation, employee orientation, and interfunctional coordination), being customer-oriented also has a positive influence on the overall performance, client satisfaction, resource acquisition, and peer reputation. Furthermore, being competitor-oriented has a positive influence on peer reputation. However, the results show no support for the other formulated hypotheses. By investigating these relationships theoretically and empirically, this study contributes to the literature on market orientation and performance.

(4)

1. Introduction

1.1 Background

There are a lot of ongoing developments that need to be taken into account in both the profit and non-profit sector in the Netherlands. The education sector is one of the non-profit sectors that is currently under high pressure due to all kinds of developments. The developments in the Dutch education sector that have been identified most often in literature are: (1) digitalization, (2) aging population, (3) decrease in the number of potential teachers, (4) high workload, (5) decrease in the number of births and (6) government savings (Bruggink, 2008; CBS, 2018; Harteis, 2018; Inspectie van het Onderwijs, 2018; Parviainen, Tihinen, Kääriäinen & Teppola, 2017; Platform Onderwijs2032; Rabobank, 2018; saMBO-ICT, MBO Raad, Kennisnet & SURF, 2018; Van den Berg, Scheeren & CAOP, 2018; Van Wetering, 2016).

These developments play a role in the entire Dutch education sector (Bruggink, 2008; Cörvers & Van der Meer; Inspectie van het Onderwijs, 2018; Van Wetering, 2016). Nonetheless, this study will only focus on the Dutch primary education sector. The reason for this is that the impact of the developments on Dutch primary educational institutions is slightly higher than on the other Dutch educational institutions (Cörvers & Van der Meer, 2018; Hummel, Hooftman & Schelvis, 2019; Ijzerman, 2019; Traag, 2018). First, educational institutions have to prepare children for the future. Laying the foundations for the future of the children usually happens in primary school. Therefore, children need to be prepared for working and living in a digital society through skills attained at primary school (Harteis, 2018; Platform Onderwijs2032, 2016; Rabobank, 2018; Van Wetering, 2016). Second, due to the aging population, the decrease in the number of potential new teachers, and the high workload, there is a concerning teacher shortage in the Netherlands. It is even predicted that the teacher shortage in the Dutch primary education sector, without policy changes, will amount to more than 4,100 FTEs in 2022 and 11,000 FTE in 2027 (Rijksoverheid, n.d.; Van den Berg, Scheeren & CAOP, 2018). Third, due to the decline in students and government savings, educational institutions can face high pressure. It is possible that they will have financial difficulties or that they will have less than the legal minimum required amount of students. These pressures may force a school to close or to merge with another school. This is currently mainly happening in the Dutch primary education sector (Van den Berg, Scheeren & CAOP, 2018). In the Netherlands, 731 primary educational institutions have merged, and 98 primary educational institutions have entirely closed since 2011 (Dienst Uitvoering Onderwijs, 2018).

To maintain viability and to remain attractive to their stakeholders, Dutch primary educational institutions should respond to these developments. Market orientation is likely to

(7)

Page | 2

help primary educational institutions to overcome the challenges and pressures in their changing environment (Akonkwa, 2009). An education system based on the practice, principles, and assumptions of the 20th century is no longer sufficient. Market orientation is seen as a competitive strategy and can be defined as “the set of activities developed by organizations to permanently monitor, analyze and respond to market changes such as consumer preferences, faster technological growth, and growing competitive rivalry” (Maydeu-Olivares & Lado, 2003, p. 284). Primary educational institutions should focus more on strengthening their market position and on becoming more market-oriented, what can help to appeal customers’ needs (Fortuin & De Wild, 2017; Iyer, Davari, Zolfagharian & Paswan, 2018). It is also expected that the performance of primary educational institutions can increase by being market-oriented (Fortuin & De Wild, 2017; Gray & Rumpe, 2015; Harteis, 2018; Inspectie van het Onderwijs, 2017). This expectation is based on studies in the non-profit sector. In these studies, a relationship has already been found between market orientation and performance (Benett, 1998; Camarero & Garrido, 2008; Caruana, Ramaseshan and Ewing, 1998b; Hammond, Webster and Harmon, 2006; Kaur & Kumar, 2017; Morris, Coombes, Schindehritte & Allen, 2007; Modi & Mishra, 2010; Mokoena, 2019; Seymour, Gilbert & Kolsaker, 2008; Vazquez, Alvarez & Santos, 2002; Wood, Bhuian & Kiecker, 2000; Zebal & Goodwin, 2012). However, it is not clear if being market-oriented has its influence on the performance of primary educational institutions as well (Christoffels & Baay, 2016; Snijders, 2018). No research has been done on this matter yet.

1.2 Motivation and gap

The above shows the necessity to gain insight into the market orientation that Dutch primary educational institutions need to have, in order to be able to respond to the developments and to increase their performance. However, research on this subject in the Dutch primary education sector is currently very limited. The majority of research regards the ongoing developments in the Dutch primary education sector (Dienst Uitvoering Onderwijs, 2018; Harteis, 2018; Inspectie van het Onderwijs, 2018; saMBO-ICT, MBO Raad, Kennisnet & SURF, 2018; Van den Berg, Scheeren & CAOP, 2018; Van Wetering, 2016). There is nothing known regarding whether being market-oriented has an influence on the performance of these primary educational institutions. After an extensive literature study, it became clear that research on the relationship between market orientation and performance in the education sector is underexposed in the literature compared to other sectors. However, as previously mentioned, a lot of research has been done in the non-profit sector. Research about market orientation in the

(8)

Page | 3

education sector has only been conducted in the higher education sector in other countries than the Netherlands. However, in most of these studies, mainly advise is given about the way these educational institutions should make use of market orientation (Akonkwa, 2009; Davis & Farrell, 2016; Dobbins, 2012; Oplatka & Hemsley-Brown, 2007; Platis, 2009). Only Caruana, Ramaseshan and Ewing (1998b), Hammond, Webster and Harmon (2006) and Mokoena (2019) have focused on indicating a relationship between market orientation and the overall performance. However, the relationship between market orientation and performance in the primary education sector has not been investigated at all.

Research about market orientation has only been conducted in the higher education sector and other (non-profit) sectors. However, it is relevant to know more about the market orientation in the primary education sector because it concerns a current event, i.e., the need for Dutch primary educational institutions to be market-oriented because of the pressure that these primary educational institutions now experience due to the developments described previously. By being market-oriented, the expectation is that it will have a positive influence on the performance of Dutch primary educational institutions.

1.3 Research objective and research question

The objective of this study is to generate knowledge that contributes to the literature on the relationship between market orientation and performance in the non-profit sector and the education sector. This will be done by examining the extent to if being market-oriented in Dutch primary educational institutions has an effect on their performance. This leads to the following research question:

“To what extent does Dutch primary educational institutions’ market orientation contributes to improving their performance?”.

The following sub-questions will help answer the main research question of this thesis: 1. What is market orientation?

2. What is performance?

3. How market-oriented are Dutch primary educational institutions?

4. How have Dutch primary educational institutions performed in the past five years?

1.4 Theoretical and practical relevance

This study is theoretically relevant because limited research has been done into the relationship between market orientation and performance in the education sector. However, it is expected that being market-oriented has a positive influence on the performance of primary educational

(9)

Page | 4

institutions (Fortuin & De Wild, 2017; Kennisnet, 2018; Platform Onderwijs2032; Snijders, 2018). So, this study contributes to the literature on market orientation and performance and provides insights for the non-profit sector and particular insights for the education sector. In this study, performance is operationalized in two ways: (1) as the overall performance, and (2) divided into three components proposed by Herman (1990): client satisfaction, resource acquisition and reputation among sector peers. This operationalization will be further elaborated in the theoretical section. This study will provide an addition to the existing literature because this study focuses on whether being market-oriented has an effect on the performance of Dutch primary educational institutions. Currently, attention has only been paid to what kinds of developments have an impact on primary educational institutions, and to the expectation that being market-oriented has a positive influence on the performance of primary educational institutions. However, it is not known whether being market-oriented indeed has an influence on the performance of primary educational institutions. Furthermore, this study will provide an addition to the literature because this study also focuses on the relationships between the components of market orientation and performance. Prior research has investigated some of these relationships but not all these relationships.

This study will also contribute to practice. Research into market orientation in the primary education sector is relevant because of the many developments that are currently going on, and because of the expected influence market orientation can have on the performance. This study will provide insights on whether being market-oriented will contribute to the performance of primary educational institutions. These insights offer some guidelines for primary educational institutions with regard to market orientation. The goal of this study is that primary educational institutions will know whether it makes sense to focus more on market orientation, and if so, which components of market orientation are useful to focus on.

1.5 Structure

In the following chapter, the theoretical framework which will be used in this study will be explained. In chapter three, the methodology will be discussed. In chapter four, the results will be presented. Finally, a conclusion is given, and the theoretical and practical implications of the findings and the recommendations for future research are addressed.

(10)

Page | 5

2. Theoretical framework

This study has the goal to gain insight into what extent Dutch primary educational institutions’ market orientation contributes to improving their performance. Therefore, in this chapter, the key concepts of this study will be explained. Because of that, a theoretical background will be given about the existing literature of market orientation, performance, and the relationship between market orientation and performance.

2.1 Market orientation

Since the early 1950s, the marketing concept has become more important (Jaworski & Kohli, 1993). The foundation of the marketing concept was about seeing things from the customer’s point of view. Marketing was primarily strongly linked with the increase in profit (Arifin, 2016). Marketing was believed to be the same as sales and promotion (Gordan & Pop, 2013). Therefore, it was only considered essential by profit-seeking organizations (Arifin, 2016). However, in the 1970s, the role of marketing in nonbusiness organizations was also starting to be recognized (Kotler, 1972). Over time, the marketing concept was made applicable to other sectors, like the non-profit sector (Arifin, 2016; Kotler, 1972). Thus, since the 1970s, marketing could be applied to all organizations, both profit and non-profit (Kotler, 1972). The marketing concept defines an organizational culture that puts the customer at the center of the organization’s thinking about strategy (Nwokah, 2008). It is widely recognized that marketing is considered as an essential set of principles and practices that are needed to attract and retain customers (Siu & Wilson, 1998).

The implementation of the marketing concept is known as market orientation (Kohli and Jaworski, 1990; Kotler, 1972). Since the 1990s, market orientation gained many interests (Arifin, 2016). The main target of a market-oriented organization is to satisfy the customers (Levitt, 1960). However, marketing is more than customer orientation because it also includes the external environment (Arifin, 2016). There are many ways to define market orientation. In this study, market orientation will be defined as “the set of activities developed by organizations to permanently monitor, analyze and respond to market changes such as consumer preferences, faster technological growth, and growing competitive rivalry” (Maydeu-Olivares & Lado, 2003, p. 284). Organizations need to understand the importance of the external environment so they can respond to it (Arifin, 2016).

Because market orientation also appears to be important in the non-profit sector, marketing orientation has also recently received increased attention in the education sector (Arifin & Drysdale, 2015). Educational institutions are different from profit-organizations

(11)

Page | 6

because educational institutions are not commercially-oriented (Akonkwa, 2009). However, they still have a business side because the survival of the educational institutions often dependents on its ability to attract students. The use of marketing can help (Arifin, 2016).

Thus, by incorporating market orientation into the school culture, educational institutions can overcome the challenges it may present (Gordan & Pop, 2013). However, besides the definition, there seems to be a lack of consensus about the conceptualization of market orientation (Akonkwa, 2009; Arifin & Drysdale, 2015; Noble, Sinha & Kumar, 2002). There are two dominant conceptualizations which are mostly used: the conceptualization of Kohli and Jaworski (1990) and the conceptualization of Narver and Slater (1990) (Akonkwa, 2009; Duque-Zuluaga & Schneider, 2008; Hammond, Webster & Harmon, 2006; Pavičić, Alfirević & Mihanović, 2008; Siu & Wilson, 1998). These two are the cornerstone of other conceptualizations (Akonkwa, 2009). Because of that, only these two will be described below. The first conceptualization is the MARKOR model of Kohli and Jaworski (1990). According to Kohli and Jaworski (1990), market orientation consists of market intelligence, intelligence dissemination, and organization-wide responsiveness. Market intelligence refers to the collection and assessment of both customer needs/preferences and the forces (i.e., task and macro environments) that influence the development and refinement of those needs. Intelligence dissemination refers to the process and extent of market information exchange within the different units of a given organization. Finally, organization-wide responsiveness refers to the action taken in response to intelligence that is generated and disseminated (Kohli & Jaworski, 1990).

The other conceptualization is the MKTOR model of Narver and Slater (1990). According to Narver and Slater (1990), market orientation consists of three behavioral components: customer orientation, competitor orientation, and interfunctional coordination (Akonkwa, 2009; Arifin & Drysdale, 2015; Narver & Slater, 1990). Customer orientation refers to the sufficient understanding of one's target buyers to be able to create superior value for them. Competitor orientation refers to that a seller understands the short-term strengths and weaknesses and effect of long-term capabilities and strategies of both the current and potential competitors. Finally, interfunctional coordination refers to the coordinated utilization of company resources in creating superior value for target customers (Narver & Slater, 1990).

The second conceptualization is mostly used in the non-profit sector (including the education sector) (Benett, 1998; Camarero & Garrido, 2008; Hammond, Webster & Harmon, 2006; Kaur & Kumar, 2017; Modi & Mishra, 2010; Mokoena, 2019; Oplatka & Hemsley-Brown, 2007; Seymour, Gilbert & Kolsaker, 2008). Mokoena (2019) has investigated the

(12)

Page | 7

relationship between market orientation and the overall performance with both conceptualizations in the higher education sector. Mokoena (2019) has found that the relationship is stronger with the conceptualization of Narver and Slater (1990). Furthermore, the conceptualization of Narver and Slater (1990) is more related to strategy and the creation of competitive advantage (Duque-Zuluaga & Schneider, 2008). Besides, according to Mokoena (2019), the conceptualization of Narver and Slater (1990) is premised more on customer-focused efforts. Because of the reasons above, the model of Narver and Slater (1990) will be used in this study to conceptualize market orientation. Customer orientation could enable primary educational institutions to innovate and implement improvements based on the needs of the (future) students. Competitor orientation could enable primary educational institutions to innovate and implement improvements based on the strengths and weaknesses of the competitors. Lastly, to create superior value for target students, it is important to integrate and coordinate the school’s resources. Not only the school board but also everyone in the school community should be responsible for attracting and sustaining students (Oplatka & Hemsley-Brown, 2007).

In some studies, another component has been added to the conceptualization of Narver and Slater: employee orientation (also called internal market orientation) (Greenley, Hooley & Rudd, 2004; Siu & Wilson, 1998; Voon, 2006). Employee orientation refers to an employee-centered organizational climate which provides a warm and supportive environment to support staff to deliver superior customer service (Voon, 2006; Zhang, 2010). Researchers added this orientation because of the importance of employees due to intensive buyer-seller interactions, which is also the case in primary educational institutions. Teachers play an essential role in the process of satisfying students (Siu & Wilson, 1998). As described in chapter 1, there is a huge teacher shortage in the Netherlands. Because of that, Dutch primary educational institutions need to focus on employee satisfaction. The commitment of teachers is related to the success of a primary educational institution (Siu & Wilson, 1998). Because of that, besides customer orientation, competitor orientation, and interfunctional coordination, employee orientation will also be taken into account in this study. However, to be sure adding employee orientation does not lead to a completely different relationship, the relationship of market orientation without the component employee orientation on performance will also be measured.

2.2 Performance

There are many ways to conceptualize performance. In the organizational theory three approaches to measure organizational effectiveness/performance are provided: the goal-based

(13)

Page | 8

approach where the organization is evaluated on the basis of its objectives, the system approach where the organization is evaluated on the basis of multiple generic performance assets, and the multiple consistency approach where the organization is evaluated on the basis of the performance goals of the different stakeholders. In strategic management, multiple components in terms of operational performance and financial performance are taken into account (Caruana, Ramaseshan & Ewing, 1998a).

However, measuring performance in non-profit organizations, and therefore also in the education sector, is complex and challenging because the goals and objectives of non-profit organizations are diverse (Caruana, Ramaseshan & Ewing, 1998a; Modi & Mishra, 2010; Padanyi & Gainer, 2004). Leading non-profit theorists (Herman, 1990; Herman & Heimovics, 1994) say that organizational performance in non-profit organizations is compromised by financial and non-financial indicators and that these indicators are separate variables of the overall performance.

There is no agreement in the non-profit literature about how to measure the specific components of performance (Caruana, Ramaseshan & Ewing, 1998b; Padanyi & Gainer, 2004). In non-profit organizations, and thus in educational institutions, an operationalization of performance that is used more often is one with three components: client satisfaction, resource acquisition, and peer reputation (Herman, 1990; Herman and Heimovics 1994; Modi, 2012; Modi & Mishra, 2010; Padanyi & Gainer, 2004). Client satisfaction refers to the ability of the organization to "adapt to, manipulate, or fulfill the expectations" of its clients or customers (Padanyi & Gainer, 2004, p.46). By having a good understanding of the customers’ needs, organizations can serve them better (Modi & Mishra, 2010). Resource acquisition refers to attracting the necessary resources. Examples of resource acquisition in the primary education sector are government funding, other available funds, and qualified personnel (Modi, 2012; Padanyi & Gainer, 2004). Peer reputation refers to how an organization is regarded by those organizations, decision-makers, and clients who operate within the sector or interact directly with it (Padanyi & Gainer, 2004).

Because of the lack of agreement about how to measure specific components of performance, many studies do not divide performance into components. In these studies, performance is only measured by asking to indicate the overall performance of an organization (Caruana, Ramaseshan & Ewing, 1998b; Hammond, Webster & Harmon, 2006). According to them, it is difficult to say something about the overall performance when different components are used. Because of that, in this study, performance will be conceptualized as one variable: the overall performance.

(14)

Page | 9

However, it may differ per person what his or her perception of the overall performance is. To be able to investigate some more specific components of performance, in addition to measuring the overall performance, this study will be zooming in on the three previously mentioned components: client satisfaction, resource acquisition, and peer reputation. This conceptualization is most often used in the non-profit sector. By also conceptualizing performance using these three components, more comparisons with other studies can be made.

Thus, performance will be conceptualized in two ways: (1) as the overall performance and (2) divided into three components proposed by Herman (1990): client satisfaction, resource acquisition, and reputation among sector peers. The overall performance is not a compound of the three components of Herman (1990), but the school boards’ perception of their performance.

2.3 Relationship market orientation and performance

Previous studies on the market orientation and performance relationship have shown a positive relationship between the two variables in the non-profit sector (Benett, 1998; Camarero and Garrido, 2008; Kaur and Kumar, 2017; Modi and Mishra, 2010; Morris, Coombes, Schindehritte and Allen, 2007; Seymour, Gilbert and Kolsaker, 2008; Vazquez, Alvarez and Santos, 2002; Wood, Bhuian and Kiecker, 2000; Zebal & Goodwin, 2012). Therefore, an increase in the degree of market orientation has a positive influence on the performance of a non-profit organization. However, Morris, Coombes, Schindehritte and Allen (2007), Vazquez, Alvarez and Santos (2002), Wood, Bhuian and Kiecker (2000) and Zebal & Goodwin (2012) have used the conceptualization of Kohli and Jaworski (1990). Benett (1998), Camarero and Garrido (2008), Kaur and Kumar (2017), Modi and Mishra (2010), Seymour, Gilbert and Kolsaker (2008) have used the conceptualization of Narver and Slater (1990). However, none of these studies has included employee orientation as a component of market orientation.

The relationship between market orientation and performance has not been studied at all in the primary education sector. However, three studies can be found that have investigated the relationship in the education sector (Caruana, Ramaseshan & Ewing, 1998b; Hammond, Webster & Harmon, 2006; Mokoena, 2019). Caruana, Rameseshan and Ewing (1998b) have found a significant relationship between market orientation and the overall performance in the higher education sector. However, Caruana, Rameseshan and Ewing (1998b) have conceptualized market orientation according to the conceptualization of Jaworski & Kohli (1993). On the other hand, Hammond, Webster and Harmon (2006) and Mokoena (2019) have conceptualized market orientation almost as the same as this study. In their studies, market orientation was conceptualized according to the conceptualization of Narver and Slater (1990).

(15)

Page | 10

They did not include employee orientation as a component of market orientation. Hammond, Webster and Harmon (2006) and Mokoena (2019) have found a significant relationship between market orientation and the overall performance in the higher education sector.

Because of the relationship between market orientation and the overall performance which has been found in the studies in the education sector and other non-profit sectors, it is also expected that a market-oriented primary educational institution will have a higher overall performance than a non-market-oriented primary educational institution. This expectation forms the basis for Hypothesis 1.

Hypothesis 1: Market orientation in primary educational institutions is positively related to their overall performance.

Besides market orientation, it is also expected that there is a relationship between all components of market orientation and the overall performance. First of all, customer orientation is about knowing what a customer wants and about creating superior value (Narver & Slater, 1990). According to Porter (1985), by creating superior value, continuous above-average performance can be achieved. Secondly, competitor orientation is about understanding the strengths and weaknesses of the competitors so an organization can satisfy the customers’ needs (Narver & Slater, 1990). According to Kumar, Jones, Venkatesan and Leone (2011) and Zhou, Brown, Dev and Agarwal (2007), once an organization is competitor-oriented, it finds itself in a position that will help the organization to perform better. Thirdly, interfunctional coordination is about the coordinated utilization of company resources in creating superior value for target customers (Narver & Slater, 1990). According to Woodside (2005), proper coordination has a positive effect on reaching goals, gaining competitive advantage, and also in increasing the overall performance. Finally, employee orientation is about creating an employee-centered organizational climate, which provides a supportive environment where employees feel committed (Voon, 2006; Zhang, 2010). According to Sarpong-Nyavor (2012), Siu and Wilson (1998) and Zhang (2010), employee orientation is the key to successful performance.

In the higher education sector, Hammond, Webster and Harmon (2006) and Mokoena (2019) have found a relationship between three components of market orientation (customer orientation, competitor orientation, and interfunctional coordination) and the overall performance. Sarpong-Nyavor (2012), has found a relationship between employee orientation and the overall performance in the Ghana education sector. It is expected that these relationships also existin the primary education sector. This expectation forms the basis for Hypotheses 1a, 1b, 1c, and 1d.

(16)

Page | 11 Hypothesis 1a: Customer orientation in primary educational institutions is

positively related to their overall performance.

Hypothesis 1b: Competitor orientation in primary educational institutions is positively related to their overall performance.

Hypothesis 1c: Interfunctional coordination in primary educational institutions is positively related to their overall performance.

Hypothesis 1d: Employee orientation in primary educational institutions is positively related to their overall performance.

Besides the overall performance of a primary educational institution, this study will elaborate on three specific components of performance: client satisfaction, resource acquisition, and peer reputation. It is expected that being market-oriented will also have a positive influence on the client satisfaction, resource acquisition, and peer reputation of a primary educational institution. First, there will be elaborated on client satisfaction. As mentioned, market orientation is defined as “the set of activities developed by organizations to permanently monitor, analyze and respond to market changes such as consumer preferences, faster technological growth, and growing competitive rivalry” (Maydeu-Olivares & Lado, 2003, p. 284). Thus, by being market-oriented, a primary educational institution knows how to respond to meet the needs of the customers. A customer is satisfied when the organization fulfills the customers’ expectations and needs (Padanyi & Gainer, 2004; Voon, 2006). Thus, it is expected that being market-oriented has a positive influence on the client satisfaction of a primary educational institution. Altarifi, Aqel and Tarawneh (2016), Casidy (2014), Gainer and Padanyi (2002), Kaur and Kumar (2017) Modi and Mishra (2010), and Vazquez, Alvarez & Santos (2002) have already found a relationship between market orientation and client satisfaction in the non-profit sector (and for some of them also in the education sector). These found relationships make the expectation of a positive relationship between market orientation and client satisfaction stronger. The expectation forms the basis for Hypothesis 2.

Hypothesis 2: Market orientation in primary educational institutions is positively related to client satisfaction.

All components of market orientation are also expected to have a positive influence on client satisfaction. By being customer-oriented, an organization knows how to respond to customer preferences, and they are, therefore, better in serving the customers and satisfying the

(17)

Page | 12

customers (Padanyi & Gainer, 2004; Voon, 2006). By being competitor-oriented, primary educational institutions will have a sufficient understanding of their competitors. They can, therefore, better meet the customers’ preferences than their competitors and thus satisfy customers more (Maydeu-Olivares & Lado, 2003; Voon, 2006). By focusing on interfunctional coordination, primary educational institutions can create more value for their customers and thus satisfy their customers more (Narver & Slater, 1990; Porter, 1985; Tomaskova, 2018). According to Lings and Greenley (2005), by being employee-oriented, employees comply with organizational strategies aimed at creating customer satisfaction. Thus, it is expected that the components of market orientation have a positive influence on the client satisfaction of a primary educational institution.

Altarifi, Aqel and Tarawneh (2016) have already found a relationship between three components of market orientation (customer orientation, competitor orientation, and interfunctional coordination) and client satisfaction in the education sector. Gainer and Padanyi (2005) have found a relationship between customer orientation and client satisfaction. Furthermore, Lings and Greenley (2005), have already found a relationship between employee orientation and client satisfaction in the service sector. These found relationships make the expectations of a relationship between the components of market orientation and client satisfaction stronger. These expectations form the basis for Hypotheses 2a, 2b, 2c, and 2d.

Hypothesis 2a: Customer orientation in primary educational institutions is positively related to client satisfaction.

Hypothesis 2b Competitor orientation in primary educational institutions is positively related to client satisfaction.

Hypothesis 2c: Interfunctional coordination in primary educational institutions is positively related to client satisfaction. Hypothesis 2d: Employee orientation in primary educational institutions

is positively related to client satisfaction.

Besides customers satisfaction, acquiring the necessary resources is also important for primary educational institutions to survive. It is expected that market orientation has a positive influence on resource acquisition. In obtaining resources, it is important to respond to market changes and the ongoing developments regarding the necessary resources. By being market-oriented, a primary educational institution will monitor, analyze, and respond to these market changes and developments (Maydeu-Olivares & Lado, 2003; Voon, 2006). Because they are

(18)

Page | 13

aware of what is going on, they can act and adjust faster, and they will better know how to attract the necessary resources (Na, Kang & Jeong, 2019). Thus, it is expected that market orientation has a positive influence on the resource acquisition of a primary educational institution. Kaur and Kumar (2017) have already found a relationship between market orientation and resource acquisition in the non-profit sector. The found relationship makes the expectation of a relationship between market orientation and resource acquisition stronger. The expectation forms the basis for Hypothesis 3.

Hypothesis 3: Market orientation in primary educational institutions is positively related to the attraction of resources.

It is also expected that all components of market orientation will have a positive influence on resource acquisition. In the Netherlands, a primary educational institution needs to report to the municipality. They have to inform the municipality what improvements they will be making for their customers to get more subsidies (Algemene Rekenkamer, 2013; Schaap, 2015). By being customer-oriented, primary educational institutions will know what their customers want (Schaap, 2015). So by being customer-oriented, the chance is higher to get more subsidies from the municipality. By being competitor-oriented, the chance of acquiring more necessary resources will be higher when the resources are scarce (Zhou, Brown, Dev & Agarwal, 2009). Resource scarcity is also the case in the Dutch primary education sector. There is a high teacher shortage. Besides, due to the decline in students and due to government’s savings, some primary educational institutions also get less money from the government than their competitors (Nieuwenhuis & van Gaalen, 2018). By focusing on interfunctional coordination, all information can be used by the entire team (and possibly by external partners as well). Therefore, schools can make better improvements which can help with responding to the developments of resource acquisition (Dulmers, 2014; Leraar24, 2013; Te Loo, n.d.). Furthermore, to recruit new staff and retain seated staff, it is useful that the school makes clear what it stands for and what it strives for in terms of its staff. So, employee orientation can help with recruiting and retaining staff (Brown, 2007; Schaap, 2015).

No research has been done yet into the relationships between the components of market orientation and resource acquisition. Nevertheless, it is expected that these relationships will exist in the primary education sector. The expectation forms the basis for Hypotheses 3a, 3b, 3c, and 3d.

Hypothesis 3a: Customer orientation in primary educational institutions is positively related to the attraction of resources.

(19)

Page | 14 Hypothesis 3b: Competitor orientation in primary educational institutions

is positively related to the attraction of resources.

Hypothesis 3c: Interfunctional coordination in primary educational institutions is positively related to the attraction of resources.

Hypothesis 3d: Employee orientation in primary educational institutions is positively related to the attraction of resources.

It is expected that market orientation also has an influence on peer reputation. Peer organizations are important stakeholders for primary educational institutions because they interact with them (Gainer & Padanyi, 2005). By being market-oriented, a primary educational institution will analyze the activities, strengths, and weaknesses of their peers. Additionally, by being market-oriented, a primary educational institution will take the peers’ needs into account (Gainer & Padanyi, 2005). Taking the peers’ needs into account will have a positive effect on peer reputation (Kaur & Kumar, 2017). Kaur and Kumar (2017), Modi and Mishra (2010) and Vazquez, Alvarez and Santos (2002) have already found a relationship between market orientation and peer reputation in the non-profit sector. It is expected that this relationship will also exist in the primary education sector. The expectation forms the basis for Hypothesis 4.

Hypothesis 4: Market orientation in primary educational institutions is positively related to a good peer reputation.

It is also expected that all components of market orientation will have a positive influence on peer reputation. According to Voon (2006), being customer-oriented will have a positive influence on the reputation of a primary educational institution. This is because of the chance of word-of-mouth spreads among customers with their peers when they are meeting the needs of their customers. Furthermore, being competitor-oriented means that the primary educational institution understands the strengths and weaknesses whereby it can have a competitive advantage (Oplatka & Hemsley-Brown, 2007). Recognition of the name of the primary educational institution will be higher in this case, which can be positive for the reputation of the primary educational institution (Root, 2017). By being interfunctional-coordinated, they will create a better understanding of their customers and their peers (Chebet, Gabriel & Bonuke, 2018). According to Gainer and Padanyi (2002), by having a better understanding of their peers, peers will have more respect for the non-profit organization. Furthermore, employees are the key link to the reputation of organizations, and thus also to the

(20)

Page | 15

reputation of primary educational institutions (Cravens & Oliver, 2006). According to Suher, Bir & Gunes (2017) and Voon (2006), being employee-oriented will have a positive influence on the reputation of a primary educational institution. This is because of the chance of word-of-mouth spreads among employees with their peers and because of the positive publicity.

Padanyi and Gainer (2004) have already found a relationship between customer orientation and peer reputation in the non-profit sector. However, no research has been done yet to the relationships between the other three components of market orientation and resource acquisition. Nevertheless, It is expected that all these relationships will exist in the primary education sector. The expectation forms the basis for Hypotheses 4a, 4b, 4c, and 4d.

Hypothesis 4a: Customer orientation in primary educational institutions is positively related to a good peer reputation.

Hypothesis 4b: Competitor orientation in primary educational institutions is positively related to a good peer reputation.

Hypothesis 4c: Interfunctional coordination in primary educational institutions is positively related to a good peer reputation. Hypothesis 4d: Employee orientation in primary educational institutions

is positively related to a good peer reputation.

Figure 1 shows the conceptual model of this study.

H2a

Client satisfaction

Resource acquisition

Peer reputation

Figure 1. Conceptual model

Interfunctional coordination orientation Competitor orientation Customer orientation Employee orientation H3a H4a H2b H3b H4b H2c H2d H3c H3d H4c H4d Overall performance H1a H1b H1c H1d Market orientation H2 H3 H4 H1

(21)

Page | 16

3. Methodology

In this chapter, an overview of the methodology will be given. In this chapter, the research approach, data collection method, operationalization of the variables, data analysis technique, the quality of the research, and the research ethics will be discussed.

3.1 Research approach

This study aims to generate knowledge that contributes to the literature about the relationship between market orientation and performance in the Dutch primary education sector. A confirmatory research approach is used to achieve this aim. A confirmatory research approach can be used when hypotheses are deductively derived from the theory and when hypotheses have to be tested through empirical investigation (Gelo, Braakmann & Benetka, 2008). This approach fits this study well because the hypotheses in chapter two are derived from the theory and have to be tested through an empirical investigation.

To be able to investigate the relationship between market orientation and performance in the primary education sector, a quantitative research approach is used. Quantitative research is the process of explaining phenomena by collecting numerical data that are analyzed using mathematically based methods (in particular statistics) (Aliaga & Gunderson, 2002). It is appropriate to use quantitative research if one aims to explain relationships and if one wants to test hypotheses (Gelo, Braakmann & Benetka, 2008). This type of research allows for investigating the relationship between market orientation and performance in the primary education sector, and it allows testing the hypotheses described in chapter two. Furthermore, the target group of this study is large. By using quantitative research, it is possible to collect data from as many respondents as possible in a more efficient way than when qualitative research was used (Kooiker, Broekhoff & Stumpel, 2011).

3.2 Data collection method

The data for this study is collected with the use of a survey. This survey has been conducted through a digital survey. The survey is made with the online software tool Qualtrics. By using a digital survey, the respondents could choose when they would fill in the survey. Along with that, it was possible to send a reminder to the respondents. After one and a half week, a reminder is sent to the respondents with the request to fill in the survey if they did not participate yet. Furthermore, by using a digital survey, a larger selection of the target group could be approached (Kooiker, Broekhoff & Stumpel, 2011).

The target group for this study is the school boards of the Dutch primary educational institutions. The school boards are the ones who are responsible for the policy of their primary

(22)

Page | 17

educational institutions, and therefore, also for the strategy and market orientation of their primary educational institutions (PO-Raad, n.d.). There are 880 school boards of primary educational institutions in the Netherlands (Dienst Uitvoering Onderwijs, 2019). There was a database of Dienst Uitvoering Onderwijs (2019) with only the names and websites of the school boards. This database was used to select the corresponding email addresses of each school board. If possible, the email address of the person responsible for the policy of the primary educational institutions has been noted as the primary contact. Of the 880 school boards, 857 email addresses were found. In order to get as much response as possible, all these school boards are approached by email. In case the email was not sent to the right person, there was asked to forward the email to the right person.

As discussed in chapter two, the survey is derived based on the studies of Greenley, Hoolay and Rudd (2004), Oplatka & Hemsley-Brown (2007) and Padanyi & Gainer (2004). The survey consisted of 56 questions. The survey can be found in Appendix A. Five questions were general questions about the school boards. The other ones were about market orientation and performance and were measured through a seven-point Likert scale. The reason to choose a seven-point Likert scale is that a seven-point Likert scale has the highest reliability (Nunnally & Berstein, 1967). The answer categories differ between 1 ‘strongly disagree’ and ‘7’ strongly agree. The questions about market orientation and performance will be discussed in paragraph 3.3.

3.3 Operationalization of the variables

For this study, the variables are operationalized. The independent variable is market orientation, and the dependent variable is performance. Both variables will be operationalized in this paragraph.

3.3.1 Market orientation

In order to measure market orientation, this study used a combination of the measurement of Oplatka and Hemsley-Brown (2007) and the measurement of Greenley, Hoolay and Rudd (2004). As discussed in paragraph 2.1, market orientation is conceptualized in customer orientation, competitor orientation, interfunctional coordination, and employee orientation in this study. The original scale of the three components of Narver and Slater (1990), customer orientation, competitor orientation, and interfunctional coordination, was adjusted by Oplatka and Hemsley-Brown (2007). Oplatka and Hemsley-Brown (2007) adjusted the measurement so it would fit the education sector. Because this study focuses on the primary education sector, the adjusted measurement of Narver and Slater (1990) made by Oplatka and Hemsley-Brown

(23)

Page | 18

(2007) is used in this study. Oplatka and Hemsley-Brown (2007) did not make a measurement for the component employee orientation. Because of that, the employee orientation measurement of Greenley, Hooley and Rudd (2004) is used. The conceptualizations of Oplatka and Hemsley-Brown (2007) and Greenley, Hooley and Rudd (2004) have been partially adjusted to fit better in the primary education sector. Therefore, several statements have been removed, and several statements have been adjusted somewhat in wording.

The first component, customer orientation, consists of seventeen items. These items aimed to measure the extent to which primary educational institutions focus on customers’ needs, desires, and concerns. Because the customers of a primary educational institution consist of both students and parents (van Noort, 2019), there are more items for this component compared to the other components of market orientation. The second component, competitor orientation, consists of six items. These items aimed to measure the extent to which school boards are aware of the strengths and weaknesses of competitors and to what extent they believe that this information could contribute to the marketing of the primary educational institution. The third component of market orientation, interfunctional coordination, consists of seven items. These items aimed to measure the behavioral expressions of inter-departmental coordination of marketing activities, as well as the school boards’ beliefs about their responsibility for school marketing and customer orientation (Oplatka & Hemsley-Brown, 2007). The final component, employee orientation, consists of four items. These items aimed to measure the degree of the employee-centered organizational climate in the school.

All items are measured with a seven-point scale where 1 = strongly disagree, 2 = disagree, 3 = somewhat disagree, 4 = neutral, 5 = somewhat agree, 6 = agree and 7 = strongly agree. Narver and Slater (1990) also used a seven-point scale. However, Oplatka and Hemsley-Brown (2007) used a six-point scale. Because the items of Oplatka and Hemsley-Hemsley-Brown (2006) were used, all items were measured with a six-point scale in the pre-test. However, after testing the survey, respondents said that they missed the option to choose a neutral answer if necessary. Besides, it is also recommended to use an odd number of alternatives, allowing for a neutral response (Cox, 1980). A seven-point scale also has the highest reliability (Nunnally & Berstein, 1967). Because of that, a seven-point scale instead of a six-point scale is used in the final survey. In appendix B, a further elaboration of the items of market orientation is shown.

3.3.2 Performance

In this study, as discussed in paragraph 2.2., performance is operationalized in two ways: (1) as the overall performance, and (2) divided into three components proposed by Herman (1990):

(24)

Page | 19

client satisfaction, resource acquisition and reputation among sector peers. Both ways will be explained.

As mentioned, performance is measured with the variable overall performance. To be able to measure the overall performance, school boards were asked to agree or disagree on one item: ‘Our overall performance has increased over the past five years’. It is the perception of the school boards about their overall performance. This item is measured with a seven-point scale where 1 = strongly disagree, 2 = disagree, 3 = somewhat disagree, 4 = neutral, 5 = somewhat agree, 6 = agree and 7 = strongly agree.

The perception of the school boards of their overall performance may differ. To be able to say more about specific components of performance, three components of performance are also investigated. There is focused on three components: client satisfaction, resource acquisition, and peer reputation. In order to measure performance with the three components, this study uses the multi-item measure of Padanyi and Gainer (2004). However, the measurement has been slightly adapted to this study, making it focused on the primary education sector. Padanyi and Gainer (2004) have taken the argument of Herman and Renz (1999) into account. Herman and Renz (1999) believe that "non-profit organizational effectiveness is always a matter of comparison" to the past or others. Because of that, Padanyi and Gainer (2004) have asked their respondents how the organizations performed over the past five years. Market orientation is a form of investment effort that has a long-term effect (Greenley, 1995). Because of that, in this study, the respondents are also asked to take the past five years into account.

The first component, client satisfaction, consists of five items. These items aimed to measure to what extent the primary educational institutions have performed in terms of their client satisfaction over the past five years. The second component, resource acquisition, consists of seven items. These items aimed to measure to what extent the primary educational institutions have performed in terms of resources over the past five years. The final component, reputation amongst peers, consists of four items. These items aimed to measure to what extent the primary educational institutions have performed in terms of their peer reputation over the past five years.

In this study, the performance items are measured in a slightly different way than how Padanyi and Gainer (2004) did this. The respondents of Padanyi and Gainer had to say how their organization has performed over the past five years in terms of the items. Their items were measured with a five-point scale where 1 = declined significantly, 2 = declined somewhat, 3 = been stable, 4 = increased somewhat, and 5 = increased significantly. In this study, it was

(25)

Page | 20

decided to measure the items in the same way as market orientation. In this way, the respondents did not have to get used to a different way of answering. For that reason, the items have been slightly adjusted. Therefore, it is mentioned that the respondent had to take into account the past five years for every item. So, all items of the performance are measured with a seven-point scale where 1 = strongly disagree, 2 = disagree, 3 = somewhat disagree, 4 = neutral, 5 = somewhat agree, 6 = agree and 7 = strongly agree. The reason for choosing a seven-point scale is because it has the highest reliability (Nunnally & Berstein, 1967). In appendix B, a further elaboration of the items of performance is shown.

3.4 Data analysis

For the data analysis, SPSS Statistics 25 is used. All results obtained of the survey are imported in SPSS. Multiple regression analysis is used to test the significance of the individual relationships (hypotheses) in the model. Because of the four dependent variables, multiple regression analysis was the best way to test the hypotheses.

3.5 Quality of the research

To guarantee the methodologically quality of the study, the criteria reliability and validity have to be taken into account (Baarda, 2009; Kooijker, Broekhoff & Stumpel, 2011). Reliability is concerned with whether the same results will be found when the research will be repeated under the same conditions (Baarda, 2009). To increase the reliability of the study, the same survey was used for all respondents. The survey also had a closed structure. Furthermore, almost the entire target group is approached. This was done to try to increase the reliability (Kooiker, Broekhoff & Stumpel, 2011). Furthermore, reliability analysis has been executed in order to control whether all variables have been measured appropriately. From the reliability analysis, it became clear that the variables have been measured appropriately. In paragraph 4.2.2, this reliability analysis will be further discussed.

The second thing that is taken into account is the validity. Validity is about measuring what you want to measure (Kooijker, Broekhoff & Stumpel, 2011). To increase the validity of the research, the survey is translated from English into Dutch. The reason for this is that Dutch is the most common language in the Netherlands, where this study has taken place. This is done in an attempt to avoid possible errors due to language interpretations. So, this must also ensure that there will be no possible errors in measurement (Su & Parham, 2002). In addition, to measure what you want to measure, it is important that the questions in the survey are clear and not guiding. Because of that, the online survey is pre-tested among five respondents in order to

(26)

Page | 21

filter out unclear and guiding questions. The five respondents have provided a lot of useful feedback. As stated in section 3.3, the items of market orientation and performance are sometimes slightly adjusted somewhat in wording. This is done because of the feedback that was received. So, by testing the survey, the survey is improved, and some adjustments could be made before the survey was sent to the rest of the respondents.

Furthermore, there is a chance of common method variance in this study. If this is the case, it can harm the quality of the research, and it can be a threat to the validity of the data. The common method variance is a variance that is attributable to the measurement method rather than to the construct represented by the measures (Campbell & Fiske, 1959; Podsakoff et al., 2003). It is the systematic error variance that is shared among variables that are measured with the same source or method (Richardson, Simmering & Sturman, 2009; Tehseen, Ramayah & Sajilan, 2017). It can also arise when the same respondent is used to get data for both the independent as the dependent variable (Podsakoff et al., 2003). When there is common method variance, this can bias the relationships among the variables (Tehseen, Ramayah & Sajilan, 2017). Therefore, common method variance can be a threat to the validity of the data (Burton-Jones, 2009; Reio, 2010).

In this study, the same method is used to measure the variables. Furthermore, the same respondents are used to get data for both the independent as the dependent variable. Because of this, there is a chance of common method variance in this study. However, various measures have been taken in this survey, which are recommended by Nunnaly and Bernstein (1994) and Podsakoff, et al. (2003) to reduce the chance of common method variance. First, the anonymity and confidentiality of the participants are ensured. Second, participants are informed that there is no preferred or correct answer and that an honest appraisal of all statements is desired. Lastly, the scale items are written clearly. Therefore, vague concepts were avoided, questions were made specific, simple, and concise, and no double-barreled and complicated statements were used (Tehseen, Ramayah & Sajilan, 2017). To make sure the scale items were written clearly, the survey was tested by five school boards before the survey was sent to all respondents. Due to this, the scale items were less subject to bias.

To control the impact of common method variance, statistical remedies can be used. The most commonly used method to perform a statistical check on common method variance is the Harman's single factor test (Podsakoff et al., 2003). The Harman’s single factor test is performed in this study and revealed that the common method variance was not a threat for this study (as shown in Appendix C).

(27)

Page | 22

3.6 Research ethics

In this section, it is discussed how this study addressed its potential ethical issues. During this study, continuous consideration has been given to how this research can affect others. The collected data from the survey are treated with care. In the introduction of the survey, the purpose and the duration of the survey were told. By doing this, all respondents knew in what kind of research they participated. Furthermore, the respondents could choose for themselves whether they wanted to participate in the study or not. So, participants were aware of the fact that participation was voluntary. Besides, if a respondent had any questions, the respondent had the opportunity to contact the researcher.

It was very important to ensure the privacy of all participants in the study. Because of that, no personal information, like names or telephone numbers, were asked. Respondents could fill in their email addresses at the end of the survey. Respondents were not required to enter their email address. This was voluntary. However, it was guaranteed that the email addresses would only be used for sending a summary of the main finding. So, all the respondents remained completely anonymous. This is also told in the email in which the survey link was distributed and in the introduction of the survey as well. Thus, the gathered data is handled confidentially.

(28)

Page | 23

4. Results

This chapter contains the results of the data analyses. First, the sample statistics are discussed. Secondly, the data preparation is explained. Thirdly, the univariate and bivariate are discussed. After that, the assumptions of the regression analysis will be described. Then, the twenty earlier stated hypotheses are examined through the use of multiple regression analysis. Finally, the additional findings will be described.

4.1 Sample statistics

To properly examine the data, the dataset is cleaned with respect to missing values. Of the 857 possible respondents, 209 opened the survey. However, 53 of them have only read the introduction and have not started on the questions. Because of that, these respondents have been removed from the database. So, 156 respondents did fill in the survey, of which 124 (79.49%) entirely and 32 (20.51%) partly. Examining the 32 respondents who did fill in the survey partly, it became clear that they did stop with the survey somewhere in the middle of the questions about market orientation or after all questions about market orientation. The purpose of this study is to analyze the relationship between market orientation and performance. Because these 32 respondents did not fill in any questions about performance, they have been removed from the database. The other 124 responses were appropriate to use for analysis. This is enough for conducting multiple regression analyses. A sample size of at least 100 is preferred for regression analysis (Field, 2013; Hair et al., 2014). From these respondents, 42 are board director, 18 are director, 23 are both board director and director, 22 are chairman of the executive board, 15 are policy officer and 4 are head of the primary educational institution.

Besides the question about the function of the respondent, a few questions were added to the survey related to the characteristics of the primary educational institutions of the school boards. The results of these questions are shown below in Table 1. In this table, it is shown that the number of the primary educational institutions of each school board varies enormously. However, almost all school boards use the same policy in all their primary educational institutions (95.2%). This confirms that the school boards of the primary educational institutions were the right target group for asking questions about the market orientation and performance of the primary educational institutions (instead of the primary educational institutions themselves). In addition, most primary educational institutions have less than 200 (44.4%) or 200 to 400 (41.4%) students. Furthermore, most primary educational institutions have more than 15 teachers (55.6%). There are a few primary educational institutions that have less than nine teachers (8%).

(29)

Page | 24

Table 1. Characteristics of the primary educational institutions of the school boards

Number of primary educational institutions N % of total

1 27 21.8

2 to 5 19 15.3

6 to 10 26 21.0

11 to 20 31 25.0

> 20 21 16.9

Is the same policy used in all institutions? N % of total

Yes 118 95.2

No 6 4.8

Number of students N % of total

<200 55 44.4

200 to 400 51 41,4

>400 18 14.5

Number of teachers N % of total

<9 10 8.0 9 to 11 20 16.1 12 to 15 25 20.2 16 to 20 31 25.0 >20 38 30.6

4.2 Data preparation

In this study, multiple regression analysis is used to analyze the relationship between the variables. In order to conduct multiple regressions, the data is prepared by creating dummy variables and by transforming variables. A reliability analysis is done to check the internal consistency of all items of all variables.

4.2.1 Dummy variables

To conduct a multiple regression analysis, all the used variables need to be on a metric scale. All independent and dependent variables in this study were already on a metric scale. However, the control variables (number of primary educational institutions, number of students, and number of teachers) are measured on a nominal scale. Because of that, dummy variables are created. For every control variable, the first item is chosen for the reference category, this was for the control variable number of potential educational institutions ‘1’, for the control variable number of students ‘<200’, and for the control variable the number of teachers ‘<9’.

4.2.2 Reliability analysis

Market orientation was tested by using four components. The performance was tested by using the variable overall performance and by using three components. The components of market orientation (client orientation, competitor orientation, employee orientation, and interfunctional coordination) were tested by using multiple items. To judge the market orientation, all the items

(30)

Page | 25

of the components of market orientation could also be combined. The components of performance (client satisfaction, resource acquisition, and peer reputation) were also tested by using multiple items. Because of that, all these items need to be combined to test the hypothesis. Therefore, the internal consistency of these variables was calculated by conducting a reliability analysis to check whether the items of each corresponding variable may be combined into one variable. The Cronbach’s alpha of the different items are shown in Table 2. According to Field (2013), a value higher than 0.7 is an acceptable value. Thus, the reliability analyses indicate reliable scales for each of the constructs, and the internal consistency of all scales can be considered as highly consistent. In addition, it has been checked if the internal consistencies would improve by removing items. In Appendix D, it is showed that only small improvements of the Cronbach’s alpha can be made by removing any items. So, no items have been removed.

To ensure that the adjusted conceptualization of Narver and Slater (1990) in this study (employee orientation is added as a component of market orientation) will not be a problem, it is checked if the Cronbach’s alpha will be better when the items of employee orientation are excluded in the converted market orientation variable. As seen in Table 2, this is not the case. With the items of employee orientation, there is a higher internal consistency.

Because of the high internal consistencies, the items are converted into market orientation, market orientation (minus the items of employee orientation), client orientation, competitor orientation, employee orientation, interfunctional coordination, client satisfaction, resource acquisition, and peer reputation. This is accomplished by summing all values of the items and dividing it by the total amount of the items.

Table 2. Cronbach's alpha

Variable Cronbach’s alpha Number of items

Market orientation .918 34

Market orientation (minus items employee orientation) .890 30

Client orientation .823 17 Competitor orientation .711 6 Interfunctional coordination .831 7 Employee orientation .750 4 Client satisfaction .833 5 Resource acquisition .755 7 Peer reputation .892 4

4.3 Univariate and bivariate analysis

Table 3 provides an overview of the means and standard deviations of the relevant variables used in this study. The Pearson correlation coefficients of the variables are also given.