Market Orientation Scale (MKTOR)

Abstract

The Market Orientation Scale (MKTOR), developed by John C. Narver and Stanley F. Slater in 1990, stands as one of the foundational and most widely cited psychometric instruments in strategic management and marketing strategy research. Designed to operationalize market orientation as an overarching organizational culture, MKTOR measures the extent to which a business unit systematically and consistently generates superior value for customers while maintaining sustainable competitive advantages. The scale conceptualizes market orientation through three primary behavioral components: Customer Orientation (understanding target buyers to continuously create superior value), Competitor Orientation (identifying and responding to the current and prospective strengths, weaknesses, and strategies of key rivals), and Interfunctional Coordination (the coordinated deployment of firm-wide resources across departmental boundaries to facilitate customer value creation). In its standard operationalized form, the scale comprises 15 behavioral items evaluated on an authentic 7-point Likert response format ranging from 1 (“Not at all”) to 7 (“To an extreme extent”). Extensive empirical validation across manufacturing, service, business-to-business (B2B), business-to-consumer (B2C), and non-profit sectors globally demonstrates high internal consistency (Cronbach’s alpha typically ranging from .70 to .88 for the individual subscales and above .85 for the aggregated construct), robust convergent and discriminant validity, and strong predictive validity regarding business profitability, return on assets (ROA), sales growth, and customer retention. This comprehensive psychometric treatise details the structural foundations, theoretical architecture, measurement models, cross-cultural generalizability, factor analytic validity, and standardized administrative protocols of the MKTOR scale.

Keywords

Market Orientation Scale, MKTOR, Narver and Slater, Customer Orientation, Competitor Orientation, Interfunctional Coordination, Organizational Culture, Firm Performance, Psychometrics, Strategic Management

Authors

The Market Orientation Scale (MKTOR) was conceived and operationalized by:

• John C. Narver, Ph.D. — Professor Emeritus of Marketing at the Michael G. Foster School of Business, University of Washington, Seattle, Washington, United States. Dr. Narver was a pioneering scholar in strategic marketing, market-driven organizational strategy, and competitive positioning.
• Stanley F. Slater, Ph.D. — Professor of Marketing at the College of Business, Colorado State University, Fort Collins, Colorado, United States (and previously affiliated with the University of Washington and University of Colorado). Dr. Slater has published extensively on market orientation, strategic capabilities, organizational learning, and business performance.

Correspondence regarding the foundational validation studies of MKTOR is anchored in the seminal work published in the Journal of Marketing (Narver & Slater, 1990) under the auspices of the American Marketing Association.

Purpose

The primary purpose of the Market Orientation Scale (MKTOR) is to quantify, assess, and evaluate the degree to which an enterprise or strategic business unit (SBU) embodies a market-oriented organizational culture. For decades prior to the instrument’s publication in 1990, the foundational marketing concept—which posited that organizational goal attainment depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors—remained predominantly a philosophical ideal rather than a measurable behavioral phenomenon. Academic researchers and corporate practitioners lacked a rigorous, psychometrically validated measurement system to assess the implementation of this philosophy across operational workflows.

Narver and Slater bridged this fundamental divide by conceptualizing market orientation not merely as a marketing departmental function, but as an pervasive organizational culture that dictates employee behaviors, resource allocations, and strategic priorities. MKTOR was engineered to fulfill several interconnected research and managerial objectives:

• Empirical Operationalization: Transforming the theoretical paradigm of the marketing concept into concrete, observable behavioral indicators that can be captured via structured survey research across managerial tiers.
• Performance Diagnostics: Providing strategic managers and management consultants with an actionable diagnostic audit to evaluate structural misalignments between customer focus, competitive vigilance, and internal departmental synergy.
• Hypothesis Testing in Strategy: Enabling academic researchers in marketing, organizational behavior, and industrial organization to examine complex structural equation models linking cultural antecedents (e.g., top management leadership styles, organizational reward systems, centralization, formalization) to key organizational outcomes (e.g., market share, return on assets, customer equity, new product success).
• Benchmarking and Longitudinal Tracking: Offering a standardized baseline metric to track cultural transformations before, during, and after major strategic restructuring, mergers and acquisitions, or corporate digital transformation initiatives.

In applied organizational development settings, MKTOR serves as a catalyst for identifying cross-functional friction. By pinpointing whether an organization suffers from an insular customer bias (excessive customer focus that neglects competitive disruptions), competitor hyperopia (obsessing over rival maneuvers while ignoring evolving customer pain points), or functional siloing (failure of non-marketing departments to align with market intelligence), the scale offers clear prescriptive guidance for organizational change.

Psychological Construct

The psychological and behavioral construct captured by MKTOR is Market Orientation, conceptualized by Narver and Slater (1990) as “the organizational culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance for the business.” This overarching construct is underpinned by organizational cognitive theory, social learning dynamics, and shared belief systems. Within the MKTOR paradigm, the construct manifests through three interrelated behavioral dimensions and two decision criteria (a long-term focus and a profitability objective), with the behavioral core operationalized across 15 items:

1. Customer Orientation

Customer Orientation refers to the organizational culture and behaviors dedicated to comprehensively understanding target buyers throughout their life cycle, deciphering both expressed and latent customer needs, and consistently mobilizing corporate capabilities to deliver superior perceived value. Rather than viewing customers merely as sales targets, a customer-oriented culture views them through the lens of long-term economic partnership.

In practical terms, this construct encompasses continuous assessment of customer satisfaction, direct engagement between senior executives and clients, systematic post-sales support, and the alignment of core business goals with customer problem-solving. For instance, an organization exhibiting high customer orientation does not simply resolve warranty claims; it analyzes service feedback systematically to re-engineer product architectures, ensuring that customer experiences continuously inform future engineering and operational decisions.

2. Competitor Orientation

Competitor Orientation denotes the systematic capability of an organization to identify, analyze, and anticipate the actions, capabilities, cost structures, and strategic intents of existing and potential rivals. This dimension recognizes that customer value creation occurs within a competitive matrix where alternative choices are constantly presented to buyers.

A competitor-oriented organization institutionalizes processes wherein competitive intelligence gathered by boundary-spanning personnel (e.g., frontline sales forces, procurement managers) is rapidly synthesized and shared with executive leadership. Such organizations do not react to rival initiatives haphazardly; rather, they engage in rapid counter-strategies, identify unmet niche segments left exposed by competitors, and actively benchmark their cost and quality metrics against global rivals to protect and expand their competitive advantage.

3. Interfunctional Coordination

Interfunctional Coordination reflects the synchronized deployment of firm-wide resources across organizational departments—such as research and development, manufacturing, human resources, finance, accounting, and marketing—in the service of creating customer value. It addresses the psychological and sociological phenomenon of departmental parochialism, commonly known as organizational silos.

Under this dimension, every functional area recognizes its fundamental interdependence with other units in realizing the firm’s market objectives. Information is not hoarded as departmental power currency; instead, success and failure data are disseminated transparently throughout the enterprise. Cross-functional communication is institutionalized, enabling R&D personnel to interact directly with clients alongside marketing teams, and ensuring that financial controllers understand how resource allocation directly influences external customer satisfaction.

Theoretical Framework

The architectural foundation of MKTOR is grounded in three major theoretical frameworks within organizational behavior and strategic management:

1. Organizational Culture and Cognitive Schemata

Drawing upon the sociological and anthropological perspectives of Edgar Schein (1985), Narver and Slater framed market orientation as a deeply ingrained cultural system consisting of basic assumptions, shared values, and visible behavioral norms. Unlike conceptualizations that view market orientation strictly as a procedural processing of information (e.g., the behavioral information-processing model advanced by Kohli and Jaworski in 1990), Narver and Slater posited that information acquisition and dissemination cannot be sustained without an overarching organizational culture that prioritizes buyer value creation. In Schein’s hierarchy, MKTOR captures the visible behavioral norms and shared artifacts that reflect the deeper underlying cultural values of the collective enterprise.

2. The Resource-Based View (RBV) of the Firm

The MKTOR framework is intrinsically anchored in the Resource-Based View, pioneered by Jay Barney (1991) and Birger Wernerfelt (1984). According to RBV, a firm can attain a sustainable competitive advantage (SCA) only if it possesses resources and capabilities that are Valuable, Rare, Inimitable, and Non-substitutable (VRIN criteria). A market-oriented culture functions as a complex, socially complex, path-dependent intangible resource. Because an integrated culture of customer focus, competitive vigilance, and interfunctional coordination cannot be easily replicated or purchased in factor markets by rivals, MKTOR serves as an organizational capability that generates enduring superior economic rents (profitability, ROA, economic value added).

3. Dynamic Capabilities Theory

Later expansions by Slater and Narver (1995, 2000) synthesized MKTOR with Dynamic Capabilities theory (Teece, Pisano, & Shuen, 1997). Market orientation provides the foundational sensing, seizing, and transforming routines necessary for an enterprise to navigate volatile, fast-moving market environments. By continuously scanning customer needs (sensing), evaluating competitor trajectories, and dynamically reallocating cross-functional assets (seizing and transforming), market-oriented organizations avoid the competency traps and core rigidities that frequently plague incumbent firms.

Validity

The psychometric validity of the MKTOR scale has been rigorously tested, documented, and debated across hundreds of independent empirical investigations spanning diverse industrial, national, and temporal contexts.

1. Construct and Convergent Validity

In the original validation study by Narver and Slater (1990), conducted across 140 strategic business units within a diversified Western forest products corporation, construct validity was established through thorough item selection from an initial pool of literature-derived indicators, pre-tested by panels of academic experts and senior corporate executives. Convergent validity was substantiated by significant item-to-total correlations (all exceeding .40) and statistically significant standardized factor loadings (typically ranging from .55 to .82) on their respective latent constructs. When modeled using confirmatory factor analysis (CFA), the latent behavioral dimensions exhibit high average variance extracted (AVE), regularly exceeding the recommended .50 threshold in well-specified structural models (e.g., Greenley, 1995; Pelham & Wilson, 1996).

2. Discriminant Validity

Discriminant validity between Customer Orientation, Competitor Orientation, and Interfunctional Coordination has been confirmed using both the Fornell-Larcker criterion and the Heterotrait-Monotrait (HTMT) ratio of correlations. Although the three subscales share common conceptual ground as facets of market orientation—often yielding inter-factor correlations between .45 and .70—multitrait-multimethod (MTMM) analyses and nested chi-square difference tests consistently demonstrate that a three-factor model provides a significantly superior statistical fit compared to a single unidimensional construct model. Furthermore, MKTOR demonstrates discriminant validity against related organizational constructs, including entrepreneurial orientation (EO), total quality management (TQM), and technological orientation.

3. Criterion and Predictive Validity

MKTOR’s predictive validity regarding business performance represents its most celebrated psychometric asset. In Narver and Slater’s (1990) baseline study, market orientation demonstrated a statistically significant positive relationship with business unit return on assets (ROA), controlling for relative business size, market growth, relative cost structures, and buyer power. Subsequent meta-analyses (e.g., Cano, Carrillat, & Jaramillo, 2004; Kirca, Jayachandran, & Bearden, 2005) consolidating data across hundreds of independent samples verified that the market orientation-performance link is robust and positive worldwide, with mean corrected correlation coefficients (r) ranging between .32 and .45 for subjective performance measures and .20 to .35 for objective financial outcomes.

Reliability

The reliability of MKTOR has been established across a wide spectrum of psychometric evaluations, confirming exceptional internal consistency across varied operational environments.

In the original investigation by Narver and Slater (1990), internal consistency was estimated using Cronbach’s alpha coefficients:

• Customer Orientation: α = .85 to .87
• Competitor Orientation: α = .72 to .73
• Interfunctional Coordination: α = .71 to .76
• Overall Market Orientation Composite: α = .88 to .91

Subsequent independent validation replications across varied sectors have reinforced these baseline parameters. For example, in an extensive cross-industry study involving European manufacturing and service firms, Greenley (1995) reported Cronbach’s alphas of .82 for Customer Orientation, .74 for Competitor Orientation, and .75 for Interfunctional Coordination. In studies of small and medium-sized enterprises (SMEs), Pelham and Wilson (1996) reported composite reliability coefficients consistently surpassing the established .70 benchmark recommended by Nunnally and Bernstein (1994).

Test-retest reliability assessments conducted in longitudinal strategy studies over 6- to 12-month intervals have yielded stability coefficients between .68 and .79, indicating that while market orientation is sufficiently stable as an organizational culture, it remains sensitive to deliberate executive interventions, strategic shifts, and targeted organizational change programs.

Factor Analysis

The internal dimensionality of the MKTOR scale has been extensively scrutinized using both Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) within covariance-based structural equation modeling (SEM) frameworks.

1. Exploratory Factor Analysis (EFA)

Initial principal components analyses using orthogonal (Varimax) and oblique (Promax) rotations identified three distinct eigenvalues exceeding 1.0, accounting for approximately 54% to 62% of the total cumulative variance across the 15 behavioral indicators. Items 1 through 6 loaded heavily onto the primary factor (Customer Orientation, factor loadings ranging from .61 to .81). Items 7 through 10 loaded distinctly onto the second factor (Competitor Orientation, loadings ranging from .58 to .79). Items 11 through 15 converged onto the third factor (Interfunctional Coordination, loadings ranging from .52 to .77). Cross-loadings across alternative factors were generally low, rarely exceeding .30.

2. Confirmatory Factor Analysis (CFA) and Model Fit

Subsequent confirmatory structural evaluations, such as those conducted by Matsuno, Mentzer, and Özsomer (2002) and Farrell (2005), assessed the goodness-of-fit indices for first-order and second-order factor models. The classic specification models market orientation as a second-order factor with three reflective first-order dimensions:

• Chi-Square / Degrees of Freedom (χ²/df): Typically observed between 1.45 and 2.10, indicating good model parsimony.
• Comparative Fit Index (CFI): Ranges routinely between .92 and .97.
• Tucker-Lewis Index (TLI): Consistently reported between .91 and .96.
• Root Mean Square Error of Approximation (RMSEA): Estimates typically fall between .042 and .068 (90% CI [.035, .074]), within acceptable thresholds of model fit.
• Standardized Root Mean Square Residual (SRMR): Generally below .055.

These fit indices consistently demonstrate that conceptualizing market orientation as a unified, higher-order construct composed of the three distinct, correlated behavioral facets is psychometrically justified and structurally robust.

Instrument / Measurement Tool

The standard technical specifications of the Market Orientation Scale (MKTOR) are outlined below:

• Construct Measured: Market Orientation (Organizational Culture of Customer Value Creation)
• Theoretical Architecture: Second-order latent construct comprising three first-order behavioral dimensions: Customer Orientation, Competitor Orientation, and Interfunctional Coordination.
• Total Item Count: 15 behavioral items
• Subscale Allocation:
  • Customer Orientation: 6 items (Items 1 to 6)
  • Competitor Orientation: 4 items (Items 7 to 10)
  • Interfunctional Coordination: 5 items (Items 11 to 15)
• Response Scale: Authentic 7-point Likert response scale:
  • 1 = Not at all
  • 2 = To a very small extent
  • 3 = To a small extent
  • 4 = To a moderate extent
  • 5 = To a fairly great extent
  • 6 = To a great extent
  • 7 = To an extreme extent
• Target Respondent Group: Key informants comprising senior executive leadership, business unit heads, marketing directors, operational division managers, and boundary-spanning professionals within an SBU. Multiple informant aggregation is standard methodological practice to mitigate common method variance (CMV).
• Scoring Protocol: All 15 items are positively phrased; no reverse scoring is applied. Subscale scores are derived by calculating the arithmetic mean of their corresponding items. The overall Market Orientation composite score is calculated as the simple average of the three subscale means (or the mean of all 15 items), yielding an overall organizational index ranging from 1.00 to 7.00.

Permissions & Fee and Test Year

The Market Orientation Scale (MKTOR) was originally published in 1990 in the Journal of Marketing by the American Marketing Association (AMA). As an established academic measurement scale published in scholarly literature, MKTOR is widely accessible for non-commercial academic research, pedagogical investigations, and doctoral dissertations without licensing fees, provided proper attribution and scholarly citation are rendered to Narver and Slater (1990).

Commercial deployment, proprietary organizational diagnostic consulting, integration into commercial SaaS benchmarking software, or reproduction within published commercial assessment batteries requires formal copyright permission or licensing from the publisher, the American Marketing Association, or via the Copyright Clearance Center (CCC). Researchers are encouraged to review current publisher licensing guidelines prior to enterprise-wide application.

References

• Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
• Cano, C. R., Carrillat, F. A., & Jaramillo, F. (2004). A meta-analysis of the relationship between market orientation and business performance: Evidence from five continents. International Journal of Research in Marketing, 21(2), 179–200. https://doi.org/10.1016/j.ijresmar.2003.07.001
• Farrell, M. A. (2005). The effect of a market orientation on business performance: A dynamic capabilities perspective. Journal of Strategic Marketing, 13(4), 295–311. https://doi.org/10.1080/09652540500337998
• Greenley, G. E. (1995). Market orientation and company performance: Empirical evidence from UK companies. British Journal of Management, 6(1), 1–13. https://doi.org/10.1111/j.1467-8551.1995.tb00082.x
• Kirca, A. H., Jayachandran, S., & Bearden, W. O. (2005). Market orientation: A meta-analytic review and assessment of its antecedents and impact on performance. Journal of Marketing, 69(2), 24–41. https://doi.org/10.1509/jmkg.69.2.24.60761
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• Matsuno, K., Mentzer, J. T., & Özsomer, A. (2002). The effects of entrepreneurial proclivity and market orientation on business performance. Journal of Marketing, 66(3), 18–32. https://doi.org/10.1509/jmkg.66.3.18.18507
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• Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). McGraw-Hill.
• Pelham, A. M., & Wilson, D. T. (1996). A longitudinal study of the impact of market structure, firm structure, strategy, and market orientation culture on dimensions of small-firm performance. Journal of the Academy of Marketing Science, 24(1), 27–43. https://doi.org/10.1007/BF02893935
• Schein, E. H. (1985). Organizational culture and leadership. Jossey-Bass.
• Slater, S. F., & Narver, J. C. (1995). Market orientation and the learning organization. Journal of Marketing, 59(3), 63–74. https://doi.org/10.1177/002224299505900306
• Slater, S. F., & Narver, J. C. (2000). The positive effect of a market orientation on business profitability: A balanced replication. Journal of Business Research, 48(1), 69–73. https://doi.org/10.1016/S0148-2963(98)00077-0
• Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/smj.4250050207

Items of the Scale