Performance Effects of Internal Market Orientation and Pricing Capability: The Moderating Role of Firm Innovativeness

Abstract

This research intends to develop a conceptual framework for examining the distinct effects of internal market orientation and pricing capability on three categories of performance outcomes: customer performance, market performance, and financial performance. This study also explores the moderating influence of firm innovativeness on the relationship between internal market orientation and pricing capability. The partial least square structural equation modeling technique was applied to a cross-industry sample of 194 small and medium-sized enterprises in India. The findings indicate that internal market orientation contributes significantly to the development of pricing capability, which has positive effects on customer performance, market performance, and financial performance. Similarly, firm innovativeness positively moderates the relationship between internal market orientation and pricing capability. More interestingly, internal market orientation and pricing capability have substantial and differential effects on customer performance, market performance, and financial performance. Overall, these findings have substantial implications for theory and practice.