Abstract:
This research study aims to investigate the impact of responsive market orientation on
organizational performance through innovation and market driving. An empirical research
was conducted to test the hypothesized relationships based on a conceptual framework
developed through a comprehensive literature review. Through a literature support our
model consisted of responsive market orientation as a uni-dimensional construct and
innovation has two dimensions namely radical and incremental innovation and market
driving with two dimensions namely shaping market structure and shaping market behavior
and organizational performance as a uni-dimensional construct. Research context for the
study is financial services sector of Sri Lanka and the population for the study is branch
managers and executives of all banking, leasing, insurance, and other financial service
establishments’ registered in Sri Lanka through various parliamentary Acts. Personally
administered questionnaire and a web based questionnaire was used to collect primary
data and 155 valid responses were received. Measurement model was modified after
deleting thirteen items form 51 item original model and showed acceptable reliability,
convergent validity, and discriminant validity. All Structural model path coefficients
were positive and statistically significant except radical innovation and shaping market
structure relationship which is positive but $ statistically not significant. Results suggest that
responsive market orientation has a positive direct impact on organizational performance
and mediated impact through innovation and market driving as well. This research has
provided an academic insight in to a new research model with two mediating variable
innovation and market driving between responsive market orientation and organizational
performance. Future research with entrepreneurial orientation and market driving as
mediators is emphasized. Managerial implication of promoting mhrket driving and
innovation in organizations and measuring impact of these strategies were emphasized.
