Improving the performance of hospitality firms

Improving the performance of hospitality firms

Brendan J. Gray

Senior Lecturer, Department of Marketing, University of Otago, Dunedin,

New Zealand

Sheelagh M. Matear

Senior Lecturer, Department of Marketing, University of Otago, Dunedin,

New Zealand

Philip K. Matheson

Lecturer, Department of Marketing, University of Otago, Dunedin, New Zealand

Introduction

There is growing evidence of the impact of

market orientation on company

performance, with recent studies suggesting

that the concept can be applied to service

firms as well as to manufacturers (Chang and

Chen, 1998; Van Egeren and O'Connor, 1998).

However, there have been few market

orientation and performance studies which

focus on the hospitality sector.

There are several other organisational

characteristics which appear to be key

predictors of superior marketing and

business performance. These include an

appropriate corporate culture, an emphasis

on innovation, the adoption of new

information technologies like Web pages, and

the promotion of ethical guidelines and

procedures.

Research now suggests that a marketing

culture (or orientation) is insufficient on its

own to encourage appropriate market￾oriented and profit-oriented behaviours, and

that companies need a balanced portfolio of

business philosophies, including a

production (quality and efficiency)

orientation and an employee orientation, to

be successful (Fritz, 1996).

The business strategy, services marketing

and innovation literatures emphasise links

between environmental scanning,

innovation and firm performance, with some

evidence that innovation might mediate the

market orientation-performance relationship

(Han et al., 1998). There is also increasing

research into the relationship between the

use of new information technologies and new

media such as the Internet and company

performance (Lynn et al., 1999). Finally, there

is some evidence of links between corporate

social responsibility and company

performance (Balabanis et al., 1998).

This study explores the links between

company characteristics and performance

using two subsets of firms which took part in

a multi-industry study in New Zealand.

Because a limited number of hospitality

firms took part in the survey, the present

research must be considered exploratory and

the results treated with some caution.

However, comparing the characteristics of

hospitality firms with the most highly

market-oriented service firms from other

sectors has produced some important

insights into possible ways of improving

hospitality management and performance.

Market orientation and performance

Market orientation (or market-oriented

behaviour) can be viewed as the

implementation of a particular corporate

philosophy, the marketing concept

(sometimes called a marketing orientation).

The marketing concept focuses on the

customer, spreading marketing throughout

the organisation and providing mutual

benefits for the customer and the company.

Market orientation, however, goes beyond

responding to customer needs to include

countering competitor actions. Since the

initial empirical research by Kohli and

Jaworski (1990) and Narver and Slater (1990),

a growing number of studies have supported

the links between market-oriented behaviour

and company performance, including recent

studies in the services sector (Chang and

Chen, 1998; Han et al., 1998; Van Egeren and

O'Connor, 1998).

Gray et al. (1998a) have produced a

parsimonious model of market orientation

from the intersection of three North

American models (Narver and Slater, 1990;

Jaworski and Kohli, 1993; Deng and Dart,

1994). The five dimensions are:

1 customer orientation (gathering

information on customers' changing

needs);

2 competitor orientation (tracking

competitors' actions);

The current issue and full text archive of this journal is available at

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[ 149 ]

International Journal of

Contemporary Hospitality

Management

12/3 [2000] 149±155

# MCB University Press

[ISSN 0959-6119]

Keywords

Market orientation,

Company performance,

Hospitality, Marketing

Abstract

The aim of this article is to identify

company characteristics which

are linked to improved perfor￾mance in hospitality firms. It

compares the levels of market

orientation and other company

characteristics, including corpo￾rate culture, innovation proce￾dures, use of information

technology and ethical policies of

hospitality firms with the most

highly market-oriented service

firms from other sectors which

took part in a large multi-industry

study in New Zealand. Suggests

that hospitality managers should

encourage their organisations to

become more customer-focused,

to develop a corporate culture

which encourages innovation, and

to make greater use of Web-based

marketing to improve company

performance.

The authors wish to thank

Associate Professor Erik Jan

Hultink, of Delft University

of Technology, for his

comments on an earlier

draft of this article.