case study market orientation

The Effect of Market Orientation on Marketing Performance: A Case Study on Commercial Bank of Ethiopia

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Market Orientation: Why It Matters for Leaders at all Levels

It can be tempting, very tempting. You’re focused on your job, your department,  your team, and you just have so much to do. So you leave worrying about your organization’s market orientation—understanding who your customers are, what value you create for them, why they choose your organization, what your competition’s doing—to someone else. You have enough on your plate already, so you delegate accordingly. Need to know basis only , you tell yourself. And maybe you don’t feel you need to know.

But you should.

Leaders at all levels and functions must build their business acumen . And fundamental to business acumen is identifying your organization’s market orientation.

Why market orientation matters

When you know your organization’s customers and what they value, you’re able to make smarter choices in your role. To demonstrate this, a product manager, for instance, might come up with a new product feature that delights customers. Another case could be an HR professional who proposes new benefits that help their organization out-recruit the competition and close critical skill gaps that meet an emerging market need.

When you’re fluent in the language of business – your business – you’re better equipped to persuade decision makers to rally around your plans.

As a leader, you often need to gain approval for your ideas or build coalitions in support of your strategy . When you’re fluent in the language of business – your business – you’re better equipped to persuade decision makers to rally around your plans. And when you’re looking to level up in your career, having solid business acumen can carry as much weight as your domain expertise.

Know your organization’s story

Fundamental to building your market orientation savvy is knowing your organization’s story. The elements of this story include:

• Who your customers are
• What customers value most about your offerings
• How you bring those offerings to your customers
• What differentiates you from your competitors
• How your organization makes money by doing all this

Where will you find your organization’s story? By knowing the business model. All organizations — from small businesses to scrappy startups to Fortune 500 companies — need a business model to succeed. Your organization may not have a document explicitly labeled as its business model, but the elements that comprise your business model should be there for the asking — including your organization’s story.

Key elements of your organization’s story

The first part of your organization’s story covers who your customers are and how you satisfy their needs. The story should also include:

• How your organization attracts and retains customers,
• how it grows its base,
• and how it entices customers to buy more of its products and services.

Your value proposition: Critical for market orientation

Your value proposition may be the most important part of the business model to get right. That was the thinking of Mark Johnson, Clayton Christensen, and Henning Kagermann in “ Reinventing Your Business Model ,” a timeless article that appeared in  Harvard Business Review in 2008. In defining the value proposition, they wrote:

A successful company is one that has found a way to create value for customers – that is, a way to help customers get an important job done. By “job” we mean a fundamental problem in a given situation that needs a solution.

How critical is it to get the value proposition right?

CBInsights analyzed over 100 startup postmortems and found that 35% of failed startups cited “lack of market need” as one of the reasons for their failure. In other words, they hadn’t found a way to create value for customers.

35% of failed startups cite “lack of market need” as one of the reasons for their failure. In other words, they didn’t find a way to create value for customers.

Of these failed startups, 20% also cited losing to their competition. Your organization’s business model may not directly call out how it’s different from your competitors. However, the value proposition can help you understand why customers choose you over others in your category. As you increase your market orientation, it’s important to know who your competitors are and where you win or lose against them.

A business model should also include information about the channels you use to reach and serve customers, as well as what your customers are willing to pay for your offerings.

Once you understand your organization’s business model, you’ll gain a clear view of your market orientation. This new focus will help you expand your business acumen and increase the value you provide to your organization.

And not to worry: you’ll still get things done. Now, though, you’ll understand why you do what you do — and who benefits from it.

Let’s talk

Change isn’t easy, but we can help. Together we’ll create informed and inspired leaders ready to shape the future of your business.

© 2024 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

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• Open access
• Published: 04 October 2023

Market orientation practices of Ethiopian seed producer cooperatives

• Dawit Tsegaye Sisay   ORCID: orcid.org/0000-0003-1829-4214 1 ,
• Frans J. H. M. Verhees 2 &
• Hans C. M. van Trijp 2  

Humanities and Social Sciences Communications volume  10 , Article number:  637 ( 2023 ) Cite this article

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• Business and management

The practices of market orientation are context-specific. This paper focuses on the concept and practices of market orientation in Ethiopian seed producer cooperatives (SPCs). Based on 44 semi-structured interviews with experts and practitioners (SPC leaders and member farmers), we identify key market orientation elements in the SPCs’ context. Market orientation criteria in the Ethiopian SPC context could meaningfully be grouped into five underlying dimensions: quality of produce, business organization, external orientation, value addition activities, and supplier access. The understanding of market orientation by practitioners, particularly by member farmers, is limited to quality seed production. There is considerable recognition among respondents of the importance of customer orientation in the SPC context. Information on produced seeds, market prices, and profits is considered important. Information on competitors, although recognized by experts as important, is not really gathered by SPCs. Experts believe that the SPC committees should be responsible for information dissemination, but in practice, there is also an important role for the SPC chairman personally. Market-oriented practices in SPCs contribute to increasing employment and productivity and ensuring food security. Policymakers should devise strategies to support SPCs in becoming more market-oriented and successful in their business ventures. Specific market orientation practices by SPCs are discussed in detail.

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Introduction

Market orientation lies at the heart of marketing theory (Ozkaya et al., 2015 ) and is seen as a key contributor to organizational performance in terms of profitability, sales growth, return on investment, customer perceived quality, customer satisfaction and loyalty, employee’s satisfaction, esprit de corps, and organizational commitment (Kirca et al., 2005 ; Kohli and Jaworski, 1990 ; Maydeu-Olivers and Lado, 2003 ; Narver and Slater, 1990 ; Raaij and Stoelhorst, 2008 ).

Empirically, the concept and practices of market orientation and its effect on business’ performance are well-documented for large companies in developed countries (Bhattarai et al., 2019 ; Cano et al., 2004 ; Ellis, 2006 ; Harris and Ogbonna, 2001 ; Homburg and Pflesser, 2000 ; Kirca et al., 2005 ; Langerak, 2001 ). The general finding is that, in developed countries with mature economies characterized by the prevalence of buyer’s markets, stable growth, and intense competition, market orientation positively contributes to the company’s sustainable competitive advantage (Ellis, 2005 ). Market-oriented businesses can satisfy the expressed and latent needs of their customers (Farrell, 2000 ; Harris and Ogbonna, 2001 ; Homburg and Pflesser, 2000 ; Inoguchi, 2011 ; Langerak, 2001 ).

As a positive market orientation-performance relation in large businesses exists, it is postulated that the market orientation practices also are applicable to and profitable for small businesses (Bamfo and Kraa, 2019 ; Blankson and Stokes, 2002 ; Verhees and Meulenberg, 2004 ). Although based on relatively few studies, the available evidence suggests that this is indeed the case (Blankson and Cheng, 2005 ; Chao and Spillan, 2010 ; Inoguchi, 2011 ; Pelham, 2000 ; Renko et al., 2009 ).

Studies regarding market orientation practices in the context of developing and emerging (D&E) economies are scarce (Coffie et al., 2020 ; Mahmoud, 2011 ). Several scholars have urged for exploring the tenability of marketing theory taking into consideration the specific situation of D&E economies (e.g., Burgess and Steenkamp, 2006 ; Sheth, 2011 ). Most D&E economies are highly local and suffer from inadequate infrastructure, lack of access to technologies, and chronic resource shortages (Sheth, 2011 ). Such challenges are highly determinant, particularly for small businesses. The direct transferability to the D&E economies of the market orientation theories and practices which were developed on the assumptions of the Western world might be difficult (Burgess and Steenkamp, 2006 ). The context of D&E economies differs considerably from high-income countries’ (HICs) context. The institutional context of D&E economies departs from the assumptions of theories developed in HICs (Wright et al., 2005 ).

Because of the wide technical, managerial, financial, political, socio-economical, and infrastructural differences between large businesses in developed nations and small businesses in D&E economies, market orientation thinking, and practices may need to be adjusted to the context of small businesses in D&E economies (Burgess and Steenkamp, 2006 ; Sheth, 2011 ). It should be considered the specific context in the implementation of the market orientation practices. Moreover, understanding the unique situation of D&E economies may give fertile ground to develop new perspectives and practices in the marketing discipline (Burgess and Steenkamp, 2006 ; Sheth, 2011 ). For example, competitor orientation is considered one of the key components of market orientation that significantly contributes to firm performance in HICs (Narver and Slater, 1990 ). However, studies in the D&E economies show that competitor orientation has a limited contribution to the livelihood performance of Ethiopian pastoralists (Ingenbleek et al., 2013 ). This indicates that the practices of market orientation and their influence on performance may vary in D&E economies which are characterized by specific cultural contexts. Thus, specific market orientation practices of D&E economies need to be understood for the proper implementation of the concept of market orientation. Therefore, there is a need to conduct more research in diverse cultures and contexts to boost conviction in the nature and power of market orientation (Burgess and Steenkamp, 2006 ; Narver and Slater, 1990 ).

Specific to the Ethiopian context, we have limited information about the implementation of market orientation (Oduro and Haylemariam, 2019 ). our understanding is partial regarding how market orientation is interpreted and practiced in the context of small agricultural marketing cooperatives in Ethiopia. Our case study focuses on the Ethiopian seed sector with specific consideration for seed producer cooperatives (SPCs) and how the concept of market orientation is understood and applicable in their context. We consider SPCs as a case of small agricultural marketing cooperatives in D&E economies. Therefore, the main aims of this paper are: (1) to explore the understanding and interpretation of market orientation in the context of small agricultural marketing cooperatives taking Ethiopian SPCs as a case, and (2) to make an inventory of the current practises in the domain of market orientation components proposed by Kohli and Jaworski ( 1990 ).

The structure of the paper is as follows. First, the paper briefly introduces the market orientation concept in general and the evidence of its applicability to small and medium-sized enterprises (SMEs) in D&E economies. Next, it describes the context of the study. This is followed by a description of the methodology of the study and a presentation of the results. The paper continues with the conclusion and discussion and ends with suggestions for further research.

Market orientation

Market orientation is defined as the implementation of the marketing concept, which is the cornerstone of the marketing discipline and contributes to long-term profitability (Deshpande and Farley, 2004 ). Narver and Slater ( 1990 ) and Kohli and Jaworski ( 1990 ) studied market orientation empirically in different industries. Market orientation has been approached as a company culture building on three components: orientation on the customer and on competitors, and cross-functional coordination within the company to effectively and efficiently respond to and anticipate the challenges in the external environment (Narver and Slater, 1990 ). In terms of market intelligence functions, market orientation practices involve the generation and dissemination of market intelligence and the responsiveness to such intelligence (Kohli and Jaworski, 1990 ). These two seminal works provided conceptualizations, definitions, and measures of the market orientation constructs.

Market orientation provides a business with a better understanding of its customers, competitors, and environment, which subsequently provides necessary inputs based on which superior business performance can be built (Kirca et al., 2005 ). A market-oriented business is one that successfully applies the marketing concept (create value for customers), which indicates that the key to organizational success is through the determination of the needs of target markets and satisfaction of these needs for profit and/or other objectives (Blankson and Stokes, 2002 ; Deshpande and Farley, 2004 ; Jeong, 2017 ). Market-oriented firms are known for their superior understanding of the expressed and latent needs of existing and potential customers and by their ability to offer solutions to those needs (Amirkhani and Fard, 2009 ; Ellis, 2006 ; Sampaio et al., 2020 ). Market-oriented businesses should focus on customers’ satisfaction and sustainable profits and should also develop close relationships with important customers to gain deeper insight into those customers’ desires (Slater and Narver, 1998 ; Yang, 2013 ). Moreover, they do not only focus on short-term profit, but focus on sustainable profits (e.g. Narver et al., 2004 ). Market-oriented firms are more flexible in their market exit decisions than less market-oriented organizations (Yayla et al., 2018 ). Meta-analysis assessments reveal that market orientation has predominantly positive relationships with various performance measures including profits, sales and market share, customer satisfaction, new product performance, team spirit, and job satisfaction (Cano et al., 2004 ; Kirca et al., 2005 ).

Market orientation in small businesses

The understanding of the concept of market orientation and its implementation practices vary between large companies and SMEs (Hernández-Linares et al., 2020 ). However, market orientation has also a positive impact on the performance of SMEs (Acikdilli et al., 2020 ; Bamfo and Kraa, 2019 ; Kasim et al., 2018 ; Zhang et al., 2017 ). The typical features of SMEs render the implementation of the market orientation concept more challenging than for large companies. This is because SMEs typically do not have specialized functions and departments (under one roof) and are constrained by technical and financial resources. Because of the differences in infrastructure, the availability of and access to resources (skilled labor, finance), the number and type of customers, and the firm’s technological competence, both the processes of information generation and dissemination, as well as the process of coordinated response are more fluid, less structured and possibly less articulated (Blankson and Stokes, 2002 ; Mahmoud, 2011 ; Verhees and Meulenberg, 2004 ). As a result, in SMEs market orientation practices reside much more at the individual level, rather than at the formalized departmental level as in large companies. Studies on the impact of market orientation on SMEs are limited particularly the organizational innovation (Alhakimi and Mahmoud, 2020 ; Didonet et al., 2016 ).

Small businesses have limitations in technical, managerial, and financial capabilities to run their business. Unlike large companies, they do not have marketing specialists to generate information about customers’ needs (preferences) and competition or to make good forecasts. The owner (manager) of the business is largely responsible for marketing, and hence for the survival of the business (Rizzoni, 1991 ). SMEs are constrained by scarce resources and poorly developed management systems to access information (Carpenter and Petersen, 2002 ). Their market intelligence is mostly based on external (personal) contacts with customers and suppliers (Verhees and Meulenberg, 2004 ).

The dissemination of market intelligence provides a shared basis for concerted actions by the different departments (Kohli and Jaworski, 1990 ). For small businesses owned by one individual person, coordination between internal departments is not an issue because the owner makes the major decisions (Inoguchi, 2011 ). Literature supports the omission of the intelligence dissemination component of market orientation for small businesses (Verhees and Meulenberg, 2004 ). Importantly, information dissemination increases employee motivation, which has a direct impact on external market orientation (Ian and Gordon, 2009 ).

Small businesses run by the owner can respond with alacrity and flexibly to market intelligence because decision-making is non-bureaucratic, and the decision-maker is able to oversee the whole production and marketing process (Carson et al., 1995 ; Verhees and Meulenberg, 2004 ). The coordinated response towards the information generated is the key element for successful business performance (Hult and Ketchen, 2001 ). The predominant view is that limited financial and technical resources can hinder small businesses from responding to customers’ needs, particularly in unexpected phenomena such as the covid 19 pandemic (Alekseev et al., 2023 ; Bartik et al., 2020 ). However, some researchers have reported that responding to market intelligence seems to be easier for small businesses compared to larger organizations because of their size (Inoguchi, 2011 ). Besides their limited resources and narrow range of technological competencies, the owner’s (manager’s) technical capabilities also hinder the firm’s response to customer’s needs. The owner often focuses on the efficiency of current operations (Niemimaa et al., 2019 ).

Market orientation in D&E economies

The market situation in D&E economies puts a further challenge on the implementation of market orientation, both in terms of business structures as well as regarding the socioeconomic, cultural, and political contexts (Ho et al., 2018 ). Basic marketing infrastructures such as marketing data, communication availability, electricity, roads, e-banking (e-commerce), and skilled manpower are largely absent or poorly developed in D&E economies (Sheth, 2011 ). In most cases, markets in D&E economies are local, very fragmented, and small. Underperformance of formal institutions, uneven distribution of value added in supply chains, underperformance of spot markets, weak institutional environments, and politically affiliated marketing systems are some of the key limitations in D&E economies (Guo et al., 2019 ). However, despite these bottlenecks, there is rapid economic growth in many developing countries.

The limited technical and managerial capabilities of firms in D&E economies together with poor marketing infrastructure hinder the level of implementation of market orientation. Firms may not have well-organized and structured information-gathering schemes and capabilities, and market intelligence is costly for individual firms to generate. In most cases, market information is generated through secondary data using both formal and informal approaches such as customer surveys, meetings and discussions with customers and trade partners, and analysis of sales reports. Advances in information technology are potentially helpful in generating intelligence (Ngamkroeckjoti and Speece, 2008 ) but require skills and infrastructural facilities. Particularly for small businesses in rural areas of emerging economies, accessing intelligence via advanced technologies is limited. However, the increasing coverage of mobile phones in emerging economies provides a good opportunity to facilitate the decision-making process regarding the type of goods to produce and sales prices (Arinloye, 2013 ). Besides the limited resources available to the companies, the poor infrastructural development hinders firms from responding to customers’ needs. E-banking (e-commerce) is very limited, or even absent in some countries, which makes reaching customers and expanding business troublesome (Asikhia, 2009 ).

However, with all limitations regarding infrastructure development and context-specificity, there are studies that report the positive effect of market orientation on firm performances in the D&E too (Masa’deh et al., 2018 ; Wakjira and Kant, 2022 ). Studies reported a positive relationship between market orientation, innovation, and firm performance (Prifti and Alimehmeti, 2017 ). The positive relationship was also reported from several developing countries, including Brazil (Frank et al., 2016 ), China (Zhang et al., 2021 ); Iran (Salehzadeh et al., 2017 ), and Ethiopia (Wakjira and Kant, 2022 ).

The implementation of market orientation in D&E economies particularly in small businesses is expected to involve unique market orientation practices, beyond those identified in “general” marketing theory. It has context-specific features concerning customers’ needs identification, dissemination of information within the business, and implementation of a coordinated response to the information generated and disseminated.

Obviously, the arguments of the market orientation theories and practices are assumed to be constant and equally applicable in other environmental conditions. However, the context of D&E economies differs considerably from the HICs’ context in which market orientation theory was originally developed (Ellis, 2005 ). Most countries in D&E economies suffer from inadequate infrastructure, lack of access to technologies, and resource shortages (Sheth, 2011 ). The institutional context of D&E economies departs from the assumptions of theories developed (Wright et al., 2005 ). Hence, firms in D&E economies may not be able directly to incorporate and apply the knowledge of marketing that is derived almost exclusively from high-income, industrialized countries (Burgess and Steenkamp 2006 ).

Market orientation of small agricultural producer cooperatives in D&E

The concept of market orientation can also be applied to the context of cooperatives; however, it may take on diverse forms and attributes (Sisay et al., 2017b ; Agirre et al., 2014 ). Studies show that the application of the concept of market orientation in the cooperative context should consider the issue of governance mechanisms and organizational structures of the cooperatives (Benos et al., 2016 ). These unique organizational arrangements of agricultural cooperatives are an area that should be considered while market-oriented strategies are sought (Kyriakopoulos et al., 2004 ). As intense market competition exists, cooperatives should deliver higher value to customers through the implementation of market orientation (Bijman, 2010 ). Hence, they should be market-oriented enterprises to respond to the existing highly competitive markets (Kyriakopoulos et al., 2004 ; Ketchen et al., 2007 ; Agirre et al., 2014 ).

The implementation of the market orientation concept in the cooperative context is highly determined by the economic status where they are operating (developed vs. developing economies) and the specific cultural, organizational and human resource capabilities within the cooperatives. High attention by cooperative management towards the implementation of the marketing concept is also another factor (Agirre et al., 2014 ). Most studies focus on how internal factors (e.g., organizational structure, human resource capacities, etc.) and external factors (e.g., policy framework) affect the implementation of market orientation within the cooperative. Cooperative organizational attributes positively influence the implementation of market orientation (Benos et al., 2016 ). Agirre et al. ( 2014 ) reported the influence of internal organizational factors of the cooperatives (organizational commitment, integration of cooperatives) on the degree of market orientation of the cooperatives.

Studies on the association between market orientation and performance in the agricultural cooperative context are limited. The positive influence of market orientation on the performance of agribusiness cooperatives in Greece is reported by Benos et al. ( 2016 ). They measured the performance of the agribusiness cooperatives in Greece in terms of sales volume, new market entry, and market share (Benos et al., 2016 ). Agirre et al. ( 2014 ) explained the benefits of market orientation for the business performance of the worker cooperative organization of the Mondragon group of Spain. They reported the positive influence of market orientation on cooperative performance in terms of efficiency (i.e., profitability, return on investment) and effectiveness (i.e., growth of sales, growth in the market, growth in profits).

Studies on the market orientation of agricultural cooperatives in D&E are scanty. A study in Rwanda shows that the participation of farmers in cooperatives improves market orientation, resulting in an increase in the share of farm produce sold (Verhofstadt and Maertens, 2014 ). A positive contribution of market orientation to the business unit of cattle milk cooperatives was reported in Indonesia (Al Idrus et al., 2018 ). The success of cooperatives in becoming market-oriented is based on their selected strategies regarding membership, commodities, etc. (Bijman and Wijers, 2019 ).

There are arguments for and against the contribution of market orientation to the performance of agricultural cooperatives in Ethiopia. It is evident that there is a significant difference between cooperatives in Ethiopia regarding service delivery, market orientation, composition, and socio-economic context (Chagwiza et al., 2016 ). The objective of establishing a cooperative is one main determining factor for being a market-oriented business (Subedi and Borman, 2013 ). Most of the agricultural cooperatives in Ethiopia have established the so-called ‘service delivery’ mentality while leaving the key elements of market orientation (Emana, 2009 ). This is related to the lack of market information and the absence of a marketing plan by agricultural cooperatives, as they mainly focus on production. Other studies, however, reported a positive association between market orientation and cooperative performance in Ethiopia, depending on the specific businesses they engage in, such as coffee (Ruben and Heras, 2012 ) and seed (Sisay et al., 2017a ). However, the performance of cooperatives is associated with specific market orientation components, indicating they are partly market-oriented (Sisay et al., 2017b ; Wassie et al., 2019 ). Studies show that Ethiopian seed producer cooperatives are not competitor-oriented, but customer orientation, inter-functional coordination, and supplier orientation contribute to higher business performance (Sisay et al., 2017b ). Studies in Ethiopia on the contribution of market orientation to smallholder farmers and factors affecting market orientation are available, though limited (e.g., Gebremedihin and Jaleta, 2013 ; Ingenbleek et al., 2013 ). However, research on the specific practices of market orientation for agricultural cooperatives is scarce.

Context of the study

Improving agricultural productivity is indispensable, in the aim to increase food supply for a growing population and for improving the economic status of Ethiopia (Hopfenberg and Pimentel, 2001 ). Seed is one of the basic inputs in agriculture and plays a vital role in the sustainable development of the Ethiopian agricultural sector (Alemu, 2011 ). Seed security and food security are linked together with agricultural economic development (Louwaars and de Boef, 2012 ; Thijssen et al., 2008 ). To satisfy the seed demand of farmers, public and private seed companies have been trying to provide quality seeds for farmers. However, they focus only on a few cereal crops, can supply only about 10% of the seed farmers use, and cannot satisfy the diversified seed needs of farmers (Bishaw et al., 2008 ).

In terms of customer demand, farmers’ seed demand varies between locations. Agro-ecological adaptability, sociocultural interest, irrigation facilities, local market demand, technical and financial capabilities, and government regulations are some of the factors that determine farmers’ choice of specific varieties and seeds (Thijssen et al., 2008 ). To satisfy the diversified seed demand of farmers and to contribute to seed security at the local level and beyond, the government and development partners support the establishment and strengthening of SPCs in various parts of the country (Sisay et al., 2017a ). The support aims to promote sustainable local seed businesses so that they become technically well-equipped, professional, market-oriented, and self-reliant in their seed business. SPCs are small seed enterprises and autonomous organizations established by a group of individual farmers from a given locality, organized as agricultural marketing cooperatives. They produce quality seed and become profitable using contractual seed production and direct selling to final customers (Tsegaye, 2012 ). Rural communities, but also other stakeholders, including policymakers, recognize SPCs’ contributions to the seed sector (Alemu, 2011 ). The government of Ethiopia sees a key role in a well-functioning agricultural cooperative sector, with cooperatives being self-sustaining economic enterprises, to support economic growth (ATA, 2012 ).

Seed producer cooperatives are not managed by one person, unlike typical small businesses. Most SPCs have three separate committees with clear roles and responsibilities, although the organizational setup varies. These committees are an executive committee (SPC leaders), a seed quality control committee, and a managerial and financial control committee. Committee members are selected out of the members of the cooperative. Some SPCs do also have other committees such as a marketing committee and a purchasing committee. The executive committee is responsible for managing the overall seed business activities. This committee develops annual budgets, implements bylaws approved by members, hires employees, manages all the resources of the cooperative, searches for market opportunities, accesses agricultural inputs (basic seeds for commercial seed production, fertilizers, crop protection chemicals, farm implements) for members, takes disciplinary actions against members that violate the bylaws and regularly report to the general assembly. The seed quality control committee is responsible for all seed quality-related issues. This committee monitors and controls the quality of the seed at all levels: in the field, during storage, packaging, and transportation. The control committee is responsible for managerial and financial-related issues and is accountable to the general assembly. In the general assembly, members of the SPC participate in decision-making on major issues. The general assembly is nominating, electing, and re-electing committee members.

Although market orientation is seen as an important feature to further develop the seed sector in Ethiopia and has been implemented as a strategic intent of the Ethiopian SPCs, there is a lack of understanding to what extent and in which form this strategic intent has been put into practice. To fill the gap in understanding market orientation practices and experiences within the D&E small marketing cooperative context, we employ a case study approach (Yin 2003 ).

Methodology

The purpose of using the case study method is to emphasize detailed contextual analysis of a limited number of events or conditions to examine contemporary real-life situations (Yin, 2003 ). We used a case study for intensive analysis of a specific situation in the Ethiopian SPCs context as a single case because no detailed information regarding SPCs’ current market orientation practices. The case study offers a rich method for investigating and researching a single case (Widdowson, 2011 ). For context-dependent experiences such as small businesses in D&E, the use of case studies is suggested to investigate the specific phenomenon (e.g. Flyybjerg, 2006 ). Moreover, the use of case studies could generate context-dependent knowledge which is an appropriate form of knowledge base in social sciences (Flyybjerg, 2006 ). This study of Ethiopian SPCs explores the understanding and interpretation of market orientation in the context and takes inventory of current practices in the domain of market orientation components: information generation, information dissemination, and responsiveness to this information. In this section, we describe the study area, case selection, data collection, and data analysis procedures.

Study area and case selection

To ensure adequate coverage of potential heterogeneity in the Ethiopian situation, four SPCs were selected from four regional states in Ethiopia: Amhara region, Oromia region, Southern Nations Nationalities and Peoples region (SNNPR), and Tigray region. These four SPCs vary in terms of their organizational structure, formation history, production potential, seed marketing experience, number of members, marketing strategy and market arrangement, and agroecological conditions. The first SPC is in the northern dryland area of the country. The area is characterized as one of the dryland areas in the country. The SPC is experienced in seed potato and food barley seed production and sells its products to customers (i.e. farmers) in the vicinity and beyond, but most of its seed is sold at the local market. The SPC sometimes sells its seed directly to institutional buyers such as NGOs. In the area, farmers often use a simple bartering system for seed exchange. The cooperative has 33 members and is led by a committee selected from its members. The SPC has nine years of seed production and marketing experience. The SPC is also produce other locally demanded crop varieties. The second SPC is in the northwest highland part of the country. This part of the country is known for its high production potential and its being a food secure area. The SPC produces mainly cereal crop varieties: hybrid maize, tef, and malt barley. Most of the time it sells its products based on a contractual arrangement with public seed enterprises. This cooperative is led by an executive committee along with other supporting committees such as the controlling committee and quality control committee. This SPC has more than eight years of seed production and marketing experience. The third SPC is in the central part of the country. The area has high production potential and better infrastructures (road, electricity, proximity to potential markets, etc.) than most parts of the country. The SPC has been involved in bread wheat, chickpea, tef, and lentil seed production and marketing since 2007. It sells its seeds directly to farmers and institutional buyers. It has good experience in working with researchers in a variety of promotion, demonstration, and dissemination. The SPC is led by an executive committee. Moreover, it has a quality control committee, purchasing committee, and control committee. The fourth SPC is in the southern part of the country and has the potential to produce various crops. Executive committee members are responsible for leading and supervising the cooperative’s seed business activities. It has diversified seed marketing approaches: direct marketing to customers (i.e. farmers) and contractual arrangements with unions. Tef and haricot beans are the main seeds produced and marketed by the cooperative. The cooperative has more than six years of seed production and marketing experience.

Data collection

Primary data were collected from individual interviews to get an inside perspective on opinions, ideas about, and experiences with the concept and practices of market orientation. In-depth face-to-face interviews were conducted with three groups of interviewees: SPC leaders, member farmers, and experts who have knowledge about and experience with the market orientation practices of SPCs.

Interview guides were similar between the different groups of respondents, with the exception that the interview guides for experts were framed normatively as what “should” be done, whereas for practitioners these were framed descriptively in terms of actual practices conducted. Also, the questions for experts referred to SPCs in general (“an SPC”), whereas those for SPC leaders and farmers made explicit reference to their specific SPC (“your SPC”).

Interview guides consisted of two main parts. The first part focussed on understanding and interpretation of the market orientation concept generally, guided by two open-ended questions: (1) “W hen do you consider your (/an) SPC to be market-oriented?” , and (2) “ What activities does your SPC (/should an SPC) do to be market-oriented?” The second part focussed on each of the specific components of market orientation: information generation, dissemination, and responsiveness. Again, first, an open question was asked (e.g., “what kind of information does your (/should an) SPC gather about the market?” ) to allow respondents to express their understanding and experiences in their own words. Then more specific questions were asked for further details (how, from whom, who, etc.) on each of these market orientation practices.

Prior to the interview, respondents were briefed about the purpose of the interview and research, the reason why they were selected, the importance of participation, and the anonymity and confidentiality of the interview (Saunders et al., 2000 ). Before the interview the concept of market orientation was explained to the interviewees, using the following description: “It basically refers to the organization-wide information generation, dissemination, and appropriate response to satisfy customers’ needs.” In the beginning, a few farmer respondents did not have clear opinions about the open-ended questions regarding the meaning of the concept of market orientation. To them, the meaning of the questions was explained at the level of their understanding in terms of consequences of market orientation (i.e. to explain when they consider the SPC to be successful in terms of members’ satisfaction, obtaining better income, and other objectives such as satisfying customers’ need), after which they expressed their opinions.

Pilot interviews were carried out with seven respondents (three experts, two SPC leaders, and two member farmers) to check the ease with which respondents responded and to check the appropriateness of the interview guide. For actual data collection, field assistants were recruited to facilitate effective communication between the researcher and the respondents (i.e. translation to/from local languages). Each interview question was translated in such a way that interviewees could easily understand and respond. Overall, we obtained a purposive sample in which in-depth interviews were conducted with a total of 44 respondents: 16 SPCs leaders, 12 member farmers, and 16 experts. Experts included those who have in-depth knowledge and experience on the SPCs regarding their organization, seed production, and marketing activities. Experts include those who have relevant educational backgrounds and experience in research, seed projects, NGOs, and government offices either in marketing, cooperative marketing or agribusiness, economics, or seed development and extension. During interviews, a digital voice recorder was used to gather all the information and to increase the accuracy of data presentation.

Data analysis

The data collected were analyzed using full transcripts of the individual interviews. We used Atlas.ti software to analyze the transcribed data. A total of 44 documents were uploaded into the software. Data were classified along the two main parts of the interview: market orientation understanding and market orientation practices, differentiating between the three groups of respondents. For market orientation practices we further differentiated the data among the three components of market orientation: information generation, information dissemination, and responsiveness.

Upon careful reading of all transcripts, an inductive data analysis was used for coding, categorizing, and identifying the key themes (Lincoln and Guba, 1986 ). This was a ‘bottom-up’ approach, progressing from a very detailed level to greater generality by assigning text fragments without prior assumptions. Inductive data analysis refers to approaches that primarily use detailed readings of raw data to derive concepts, themes, and/or models through interpretations made from the raw data by an evaluator or researcher (David, 2006 ). We analyzed our data as they became available to check and refine emerging understandings. Line-by-line coding was applied to interview transcripts. We identified representative primary codes (quotations of the respondents with similar meanings) from text fragments that were related to the market orientation understanding and market orientation practices. We further added codes and then finally condensed codes (family codes) to those that can capture critical aspects of the market orientation practices.

The concept of market orientation

The concept of market orientation understanding was expressed as a mix of more conceptual (“when do you consider your (/an SPC) to be market-oriented?”) and behavioral (“what activities does your (/should an SPC) do to be market-oriented?” ) quotations which are combined in the analysis.

From the primary codes that we extracted from the interview transcripts, a clear pattern emerged in terms of twelve key topics (elements) of market orientation, which could further be classified into five major themes (see Table 1 ). These major themes of market orientation are described below in detail.

Quality of produce emerged as the dominant theme from the interviews. In a sense, seed quality refers to having the necessary elements of the seeds that customers want including good germination and moisture content, free from unwanted seed and inert materials, and high market value. Buyers require quality seeds to increase yields and obtain high incomes. It was expressed in a more/narrow product quality sense as the supply of quality product and in the value/economic sense as the supply of high market value products . At the level of individual quotes, quality of the produce was referred to as ‘focus on seed quality’, ‘provision of quality seed to the market’, ‘production of market demanded seed’, ‘production of improved seed’, ‘sufficient quality seed production’, ‘supply of quality seed for customers’, ‘timely provision of quality seed’, ‘work on providing quality seed production’, etc. Respondents stated:

“If we use all the required agricultural inputs and produce quality seed, I can say our cooperative is market-oriented.” (farmer11)

“Customers do not have any complaint on the seed that we delivered. In general, we are providing quality seed for our customers.” (farmer2)

Value-adding activities emerged as a second important theme in relation to the market orientation of SPCs. It was expressed in terms of internal activities such as seed value addition , external activities of the SPC in terms of selling the seed directly to customers and developing better market strategies , as well as the outcome level in terms of profitability . Profitability was emphasized as most respondents believe that profit is the key for the consistent growth of the business. Practitioners explained:

“… a cooperative is market oriented when it produces quality seed and sells its seed with reasonable profit.” (leader2)

“… a seed producer cooperative can produce improved quality seed and become profitable. It also obtains high income….. because of this its members and other farmers in the community can benefit from producing improved seed …” (farmer1)

In addition, several respondents expressed value-adding activities in terms of quotes related to ‘provide the seed with reasonable profit’, ‘sell the seed with profit’, and ‘when using value additions profitably’. Experts particularly linked the high profitability with the value-addition capabilities of the SPCs. For example, one expert said:

“I can say a given cooperative is market-oriented when the seed (it produces) is cleaned and sold directly to its customers by its own capacity…. it can obtain higher prices and become profitable by packaging its own seed.” (expert2)

External orientation came out as a third key theme of market orientation in SPCs and basically relates to the concept of information-based competitive advantage in the market place. External orientation covers the topics of access to market information , customer focus, and competitor orientation . Results show that most SPCs are more customer-focused rather than competitor-oriented. Several respondents shared the opinion that the SPCs should try to satisfy their customers and should be customer-oriented. It was mentioned by the respondents that customers are satisfied when they get what they want, which in turn will turn them into loyal customers. For example:

“… for SPC to be market oriented first it should collect information about the benefit of seed production and marketing. Then, it should produce seed that customer farmers need…. able to process and pack accordingly. If SPC is in a position to do all these activities, I can say the cooperative is market-oriented.” (expert4)

“… Furthermore, from a marketing point of view the cooperative should know in advance who really demands its seed, when they need the seed, which quality standards, and the amount of the seed they want to buy …” (expert5)

“In addition, I can say a cooperative is market-oriented when it is able to process and pack its seed by itself and satisfy its customers. Customers can only be satisfied when we deliver quality seed …” (leader4).

Business organization came out as a relevant theme, although less frequently articulated than the previous themes. It relates to the performance of the SPC in terms of it being a well-organized and managed cooperative with committed and capable members who are professionally disciplined to supply quality seed. Most respondents emphasized that SPCs should be well organized and their members should be committed to becoming profitable and stay in the business. For example:

“Our cooperative is working hard to produce and maintain quality seed …” (leader9)

“We have our own bylaws to maintain the seed quality.” (farmer12)

At the more specific level of quotes, the business organization was expressed in such terms as ‘strong relationship with partners (i.e. supporting organizations)’, ‘when SPCs are able to obtain support from partners’, ‘when SPCs are able to develop a plan for quality seed production and marketing’. Moreover, respondents explained the commitment in terms of high member participation, and members’ integrity and hard work.

Supplier access is the final theme that emerged from the interviews, reflecting the important task of cooperatives to ensure access to inputs and services for their members to enable them to produce the required quality and quantity of seed. Cooperatives are supporting their members to access the necessary inputs and services at the right time and at the desired level, which was expressed by respondents as inputs and services access for members . The argument centers on access to basic seed. Because of the high basic seed shortage in the country, the SPCs usually approach partners (agriculture office, cooperative promotion office, research institutes, public seed enterprises, seed-related projects, etc.) to get support to access basic seed from available sources. Respondents explained:

“In general, SPCs should access quality basic seed from seed sources and distribute it to their members.” (expert10)

“We accessed basic seed from seed sources through the support of district offices of agriculture and cooperative promotion.” (leader5)

Experts’ vs. practitioners’ interpretation of market orientation

Figure 1 shows the occurrence of quotes related to the five themes of market orientation in the context of Ethiopian SPCs as obtained from three respondent categories. From the occurrence of quotes (relative number of quotes within each of the five themes), several similarities and differences stand out. First of all, the quality of produce is seen as the dominant element of market orientation for all respondent groups but is particularly prominent in the perception of farmers/members. Experts emphasize external orientation as a crucial element of the market orientation concept much stronger than the SPC leaders and member farmers. SPC’s value-adding activities are perceived by all respondent groups as an important component of market orientation, but more so by SPC leaders than by member farmers and experts. All groups see business organization as a component of market orientation without too much distinction between respondent groups. Access to seed is seen as a less central element of market orientation, although more prominent by leaders than by experts and particularly farmers.

Response pattern of experts, leaders and farmer members on market orientation themes.

Overall, when reflecting on market orientation as a general concept in the context of SPCs, experts, and practitioners do agree on five key themes, although they do emphasize specific themes to different degrees. We developed the conceptual model shown in Fig. 2 on the basis of this qualitative research. Business organization leads to better access to inputs from potential suppliers. Inputs may include seeds, fertilizers, and agrochemicals, but centrally focuses on accessing basic seed from certified suppliers such as research centers, universities, and big seed companies. Sometimes SPCs’ access to basic seed depends on the business-to-business relationship with suppliers. Well-organized SPCs have strong relationships with suppliers, which results in accessing the right input at the right time. The business organization also contributes to better-coordinating members of the cooperatives. SPCs search for and provide the necessary inputs to their members to satisfy their basic seed demand and help them to produce the best quality seed that customers need. The quality of seed can influence buyers to pay higher prices and contribute to a higher market share. The business organization also links with gathering relevant information from the environment in terms of customers’ needs and competitors´ actions. It also depends on the organizational capacity of the cooperative to disseminate the information gathered to members and respond accordingly. Business organization also leads to more customer satisfaction by adding value to the product. Value addition in the seed business may include sorting, grading, transporting, and packaging.

Conceptual model of market orientation in SPCs.

Specific market orientation practices

Information generation, information dissemination, and coordinated responsiveness to that information are core behaviors within market orientation theory. In the second part of the interviews, these behaviors were assessed and made explicit by respondents as they apply to their specific context, again in terms of “what is being done” (practitioners) and “what should be done” (experts). In this section, we discuss these specific market orientation behaviors in terms of information generation, information dissemination, and responsiveness.

Information generation

Information generation about the seed that the SPC is producing and/or wants to produce came out as a major theme, together with information on market prices, customers’ needs, and to a lesser degree information about competitors. Experts consider information on seeds that have high market value important, which is also dominant in the current practices of SPCs. Two experts stated that:

“In the first place they (SPCs) should gather information about the varieties demanded by the market, and the place where these varieties can be sold.” (expert4)

“When we say collecting market information, it includes information about whether the crop/seed aligns with market demand. Before they start seed production, they have to know which crops/varieties are really demanded by the market.” (expert13)

Information that SPCs are gathering about products (seed) includes the seed demand (quality and variety) by customers, the adaptability of the seed to the locality, the seed productivity (production potential), availability of alternative varieties, and the place to market the seed. They gather market price information from local markets and markets outside their vicinity.

“We access market information from partners about which crops/varieties we need to produce to profit, and how to sell our product (seed) for a reasonable price.” (leader2)

Experts also emphasized the importance of collecting information about customers as a basis for SPCs to design appropriate strategies and to find all possible ways to satisfy their customers and obtain a better income.

“… They should also collect information about customers’ needs and how they can satisfy their needs …” (expert16)

Collecting market information about customers is, however, not very much considered in the current practices of SPCs. The emphasis in information gathering is on prices. The market price information is useful to set the seed price while considering customers’ willingness to pay. SPCs also access information about their competitors through external contacts. Some respondents consider big government seed enterprises as their competitors, but most consider them as partners. In some cases, respondents consider other SPCs as their competitors. For example:

“We also gather information about other seed producer cooperatives, and we understand where we stand as compared to other cooperatives …” (leader5)

Both experts and SPC leaders/farmers emphasize partners in the network as important sources through which information can be obtained. Experts suggest that SPCs should collect and access information through external contacts such as district offices, research institutes, seed-related projects, Universities, NGOs, and cooperative Unions. Experts’ suggestions take into account that most of the existing SPCs have limited technical and financial capabilities to gather market information by themselves, and do not have their own employees responsible for gathering market information. One expert said:

“There are stakeholders supporting the seed producer cooperatives. For example, … in connection with marketing and market linkage SPCs should gather information from district office of marketing and cooperative promotion. In addition, SPCs should access information from other organizations including NGOs …” (expert5)

This is also reflected in current SPC practices, where respondents stated that SPCs are gathering information from partners and intermediaries (e.g., big seed enterprises). Particularly local-level government offices, which are closely working with SPCs, are supporting the cooperatives in information gathering. One SPC leader explained:

“Our cooperative is gathering information from the district office of cooperative promotion, district office of agriculture, the ISSD project and seed enterprises.” (leader1)

Experts suggested that SPCs should not only rely on information from partners and intermediaries but also collect such information themselves. However, this is not a well-developed practice in SPCs yet.

In line with market orientation theory, experts indicated that customers, particularly farmers in the direct vicinity can be an important source of information to SPCs, but this practice is implemented only to a limited degree in SPCs. An expert from the district office of cooperative promotion and marketing suggested:

“Information should be gathered from experts, the market place (traders), and customers. I said from customers, that is, from customer farmers. They should ask customer farmers to give feedback about their seed … they should gather information about customers’ preference from farmers themselves.” (expert6)

In agreement with market orientation theory, competitor intelligence came up as a theme among experts (“should be done”), but also this theme seems weakly developed in current SPC practices. Competitors in a sense may include other SPCs within and outside their locality, as well as private and government seed companies. Experts explained:

“I think SPCs should also collect information from other seed producer cooperatives…” (expert5)

“…furthermore, SPCs should know their competitors’ price and competitors’ product. They should know where their competitors are found … are they near to their place or far away? Do competitors have transportation facilities and road access?” (expert12)

In terms of how SPCs should collect market information, experts suggested that SPCs should gather market information through both formal and informal mechanisms. Formal information-gathering mechanisms include collecting market information by asking and interviewing partners, reviewing documents, and through structured information-gathering techniques. Experts also acknowledged the importance of various informal ways of collecting market information through personal contacts and communication. Experts suggested SPCs should use the various social gatherings to collect market information from customers and other supporting organizations.

“SPCs should also gather market information from the community … when people gather for various activities-for instance in Church …” (expert1)

In fact, SPCs are gathering information (e.g., on market prices) when collecting/purchasing the seeds from their members and when they are selling to customers. Members also gather price information from the market place when they go there for their own purposes, as well as from neighbors, friends, and relatives. Accordingly, members inform cooperative leaders about the price information they come across. SPCs also exchange market information with each other.

“We collect information from farmers in neighboring villages …” (leader14)

“We also ask market information from office of marketing and cooperative promotion.” (leader8)

“There are other SPCs in other areas of the region… we ask them through telephone about the market price of the seed in their respective areas.” (leader9)

Experts see an important role for SPC committees in gathering market information and a role for the SPC chairman. Depending on the existing situation of a given SPC, the committee responsible for gathering market information would be either a marketing committee, selling committee, or executive committee. Experts suggested that the executive committee members should be responsible for collecting the market information because in most cases they have a better education, more experience, and more social status than other SPC members. A few suggested that the chairman of the cooperative should be responsible. Some others also suggested that SPCs should have employees responsible for both gathering market information and supporting the SPCs in other technical activities. Experts explained:

“In my opinion, the capacity of the cooperative determines who should be responsible to gather market information. If the cooperative has financial capacity, it can hire a professional/expert … if it is not able to hire an expert, the leaders of the cooperative should be responsible to gather market information.” (expert2)

“From my experience, the chairman of the cooperative should be responsible for gathering market information.” (expert16)

SPCs have various committees with specific responsibilities. Several interviewees stated that these committees are gathering market information. Some respondents said that information is gathered by the chairman of the cooperative, indicating the chairman is fully responsible for information generation. Although different committees are involved in gathering market information depending on the organizational structure of the SPCs, most interviewees believed that it should be the responsibility of the executive committee.

“Market information is gathered by various committees of the cooperative.” (leader5)

“We made the chairman responsible. Thus, he has to gather information about the market.” (farmer3)

Information dissemination

Information dissemination is a common practice within the SPC, as indicated by SPC leaders/farmers. They share and discuss market information within the business, particularly about market prices, market places, expected profit, quality of product, and customers’ preferences as suggested by experts. However, different from what experts envisioned, this sharing focuses on customer needs and not on competitor information. Both the committees and the chairman take a leading role in this information dissemination. One farmer said:

“We, members, usually discuss where, how and for how much to sell our seed to buyers.” (farmer2)

Market information should be shared and discussed within the SPC, according to experts. They suggested that information about market prices, market places, expected profit, quality of products, customers’ preferences, and competitors should be shared and discussed within the SPC. In the SPCs’ context, members of the cooperatives are owners of the business and therefore information should be shared among members.

Both experts and SPC leaders/farmers acknowledge the importance of formal and informal ways of information dissemination. According to experts, information should be disseminated during the general assembly facilitated by the executive committee and assemblies of other sub-committees. Sharing information at local and religious festivals and through contacts within their neighborhood are recommended channels for information dissemination. In most cases, SPCs use informal events, for example, social gatherings, religious places, and community-based organizations. The internal hierarchical structure of the cooperative also helps to disseminate information from committees to members, and between committees. The chairperson of the SPC and other committees disseminate the information to all members through internal mechanisms which may vary among SPCs depending on specific social, cultural, and religious practices.

“One of the mechanisms of information dissemination within SPC is through the general assembly….” (expert3)

“Executive committee members discuss the market information…. and then this information is further disseminated to and discussed with members. We know that there will be a problem, if we do not discuss the market information with members.” (leader8)

“We also share information during informal meetings in the Church. We use local community-based organizations to share market information.” (farmer3)

Concerning the responsibility for information dissemination, leaders and members believed that cooperative leaders should take responsibility. However, a few of them preferred the chairperson to be responsible mainly because of individual commitment and capabilities. Some respondents described that all members are equally responsible for disseminating information. One farmer explained:

“… we shouldn’t keep silent by saying it is only the responsibility of the executive committee. We should support the executive committee …” (farmer7)

Responsiveness

Responsiveness to market information about customers’ preferences by setting seed prices, providing the right quality seed in sufficient quantities, and adding value to the seed is suggested by experts. Experts particularly advised SPCs to respond based on seed pricing mechanisms considering production costs, a profit margin, and whether the seed quality meets the needs of customers and competitors’ seed prices.

“In relation to their competitors, SPCs should understand what their competitors are doing at present. Accordingly, they should respond to the market information by considering the pricing mechanism of the competitors.” (expert1)

Experts agreed that SPCs should be responsive to market knowledge by providing quality seed and by considering the specific needs of their customers. SPCs should not produce seeds with low market demand and seeds that can be easily produced by other farmers. They should adapt themselves to produce more than one crop (and variety) and satisfy their customers’ preferences by widening their product portfolios i.e. product diversification. They also stated that SPCs should focus on providing seed that receives limited attention and interest from public and private seed companies. Locally demanded crops and varieties are often ignored by large seed companies because the demand and profit margin are too small for these companies to justify their investment. This provides a good opportunity for SPCs to satisfy specific target customers’ demands and eventually obtain better profit. Moreover, experts suggested more value additions to the product in relation to market responsiveness. Almost all experts stressed that SPCs should be responsive to customers’ preferences. To achieve that, the SPCs should know what their target customers really want to have and understand the places where their buyers want to obtain their seeds.

“I think the key thing that is expected from the SPCs is to provide the product in accordance with the interest of customers.” (expert11)

“It would be better if the SPCs had its own branches and shops to distribute their seed to buyers.” (expert2)

SPC leaders/farmers said that the SPCs are making efforts to respond to the market by supplying quality seed and fixing the price by considering their production cost and profit. However, current SPC practices to add value to the seed are limited. When SPCs sell their seed without further processing and packaging, it limits their profit and their future competitive capabilities. Particularly the SPCs producing seed in contractual agreements with big seed enterprises sell their seed with limited value addition.

“Currently, we are providing quality seed to our customers based on an agreement. Because of limited capabilities, we are not able to reach a position to provide quality seed using post-harvest technologies such as treating, processing and packaging.” (leader1)

On the other hand, those SPCs selling their seed directly to farmer customers have more experience in value additions including through seed processing and packaging. Farmers said:

“We are distributing our seed with different packaging size. For instance, we distribute with 15 kg and 100 kg bags.” (leader6)

“We usually process and pack our seed before selling.” (farmer5)

SPCs also respond to the market by providing alternative crops/varieties. When SPCs understand that a given crop/variety is not profitable, they change the variety based on market interest, which is indicative for their adaptation strategy. Moreover, SPCs encourage their members to provide large quantities of quality seed to the cooperative. It is observed that some SPCs award prizes for members who provide the largest quantities of quality seed. Farmers that provide higher quantities of seed receive higher dividends and thus have a better income than other members.

In the Ethiopian SPCs context, we have compiled a number of context-specific market orientation practices. The five market orientation themes (quality of produce, value addition activities, business organization, external orientation, and supplier access) can be related to the “prototypical” market orientation model. The themes of external orientation and supplier access capture the orientation on developments and constraints in the environment. Through their external networks, SPCs gather market information from the external environment including mainly from customers (buyers), trade agents, partners, intermediaries, and in very rare cases from competitors. As a unique case for SPCs, they work with the external environment to access the required inputs and services, and more specifically to get access to basic seed. SPCs usually approach research centers, universities, seed companies, and other partners to access the basic seed. Business organization relates to what is recognized as antecedents of market orientation such as top management characteristics, organizational structures, and interdepartmental dynamics (Jaworski and Kohli, 1993 ). Like other businesses, better organizational capabilities of SPCs matter a lot in successful business venture. Value-adding activities of the SPC , represent a consequence of market orientation which relates directly to the performance of the business in terms of customer satisfaction, profit (financial performance), and employees’ satisfaction. In the case of SPCs, members’ satisfaction can be also considered (Opoku et al., 2014 ). Higher quality of members’ produce plays a mediating role between market orientation and consequences. The effect of quality of produce reflects itself in higher price and higher market share. Our study is in alignment with literature that captures a broader concept of market orientation related to the capabilities of market-driven organizations, which makes less distinctions between the concept of market orientation, its antecedents, and consequences (Li et al., 2018 ). Our results suggest that indeed the concept of market orientation has equal recognition in the D&E context.

Our results deviate from the predominant view about the importance of competitor orientation. SPCs largely emphasize customer satisfaction with less focus on competitor orientation. Experts emphasize external orientation more strongly than SPCs currently do. Farmers emphasize the consequence of market orientation for their performance (quality of produce) and SPC leaders seem to put relatively more emphasis on the value-adding activities and supplier access. This is reflective of the different roles that experts, SPC leaders, and farmer members hold in the complex supply chains that characterize D&E markets. However, the different components of the market orientation model in marketing theory seem to be well captured. Importantly, as cooperatives, SPCs serve two customer groups both buyers (farmers, unions, traders, and big seed companies) and member farmers.

The present study identified supplier access as an important factor in the conceptualization of market orientation, next to customer and competitor orientation and inter-functional coordination. This finding reflects that in complex and fragmented value chains in D&E countries and particularly in the context of seed production, free access to high-quality inputs cannot be taken for granted. Rather it needs to be carefully managed through sensing and responding activities. Supplier orientation can be recognized as a key component of market orientation within a value chain context. Our results suggest that in D&E context supplier orientation may be an important part of the market orientation concept.

The specific market orientation behaviors of information generation, dissemination, and responsiveness are well recognized also in a D&E context. Both experts and SPC members emphasize the importance of generating information about the quality of inputs (basic seed as input to produce commercial seed). Moreover, SPC members emphasize a focus on information about the market value of the produce (in terms of price and profit), more so than experts think they should. On the other hand, whereas experts emphasize the importance of collecting competitor information, this is not practiced by most SPCs. The latter finding relates well to other research on market orientation in D&E countries and Ethiopia in particular (e.g., Ingenbleek et al., 2013 ). The concept of competitor orientation does not resonate well in cultures with high levels of embeddedness and a focus on social capital, which is typical for D&E economies (Steenkamp, 2005 ). Together these findings suggest that in a D&E context competitor orientation may not be a central component of the market orientation concept.

Profitability considerations came out as a very prominent element of market orientation, particularly among SPC members, next to a focus on the high quality of the basic seed needed as a production input, and the seed produced. Given the context of D&E economies with many farmers operating at the bottom of the pyramid, a focus on short-term profit is understandable as it is an important factor in ensuring the livelihood of farmers. However, much of the market orientation literature has emphasized that reactive market orientation should be combined with a pro-active approach to the market (Bodlaj, 2010 ; Narver et al., 2004 ; Voola and O’Cass, 2010 ). This delicate balance between reactive and proactive market orientation approaches is reflected both at the level of the SPC business organization and its business strategies. At the business organization level, the long-term strategic orientation on quality, marketing, value addition, and strengthening partnerships is the main responsibility of SPC committees under the final responsibility of the executive committee chaired by the SPC chairperson. These committees and the chairperson, are assigned important responsibilities in ensuring the long-term prospects of the SPC in terms of sensing, sharing, and responding to information on important developments in the external environment. In terms of their market-approach strategies, SPCs differ in where they aim to compete. Some SPCs choose to operate in niche markets that are not served by large seed companies. Other SPCs also produce seed in contractual arrangements with buyers to secure mainstream markets. This again illustrates the importance of market orientation as such decisions should best be made based on solid evidence, both in terms of market opportunities and access to resources such as basic seed.

In terms of conceptualization and specific practices, our study provides a detailed insight into market orientation at the level of Ethiopian SPCs context. It identified various key issues that are (proto) typical characteristics of D&E economies. However, the specifics of the study (cooperative seed businesses in a specific value chain) may not necessarily allow full generalization to other D&E contexts. Further research may explore the extent to which the current insights in market orientation practices generalize to other forms of cooperatives and other D&E business contexts. Also, in D&E economies marketing research represents various challenges (Ingenbleek et al., 2013 ) and our study is no exception. Ethiopia is characterized by a high cultural diversity. Hence, for the data collection, we administered a number of interviewees with different languages. Field assistants were recruited to facilitate the translation to/from local languages. Despite extensive training and instruction, it can formally not completely be ruled out that some information may have gone lost during this complex process.

The issue of supplier access came out as one determinant factor for the success of the SPCs’ business in Ethiopia. The concept of marketing regarding delivering better services and values for customers is related to the supply-oriented behavior of the firm in both developed (Gligor et al., 2019 ) and developing (Alhakimi and Mahmoud, 2020 ) economies. In this regard, leaders of the SPCs should have a fundamental understanding of the function, role, and techniques of marketing in relation to supply. This would help SPCs assess their comparative advantage and increase their competitiveness in the existing dynamic seed market.

The present study reveals that the concept and practices of market orientation in the Ethiopian SPCs context center around five major themes: quality of produce, value-adding activities, external orientation, business organization, and supplier access. These key themes by and large cover important elements of the market orientation concept in “general” marketing theory. However, an important observation is that normative (experts) and descriptive (practitioners) views on market orientation do not fully overlap in terms of the core concept of market orientation. Experts put greater emphasis on external orientation as a component of market orientation, more so than what is currently being practiced in SPCs. Across all groups’ expressed associations, the quality of produce came out as the most prominent theme, particularly so among farmers where it dominated the conceptualization. Access to suppliers came out as a unique theme in this context, which is not explicitly covered by the market orientation concept as it is typically operationalized in “general” marketing theory.

When focussing on market orientation’s specific behaviors regarding information generation, information dissemination, and coordinated response, there is shared recognition of the importance of customer orientation. However, in the studied context information on produced seeds, market prices, and profits came out as an equally important consideration. Interestingly, information on competitors, although recognized by experts as important, does not really resonate in current SPCs practices. In general, there is a strong emphasis on obtaining market-relevant information from secondary sources. Although experts emphasize that SPCs should also generate market intelligence themselves, this is hardly practiced by SPCs. This is reflected in the fact that intelligence generation is seen as a key responsibility at the level of the SPC’s executive committee and even more specifically at the level of the SPC’s chairperson. Information is generated, as well as disseminated within the cooperative, through a combination of formal and informal approaches, including at festivities and religious gatherings. Although experts believe that the SPC committees should be responsible for information dissemination, in practice there is also an important role for the SPC chairman personally. In terms of responsiveness, SPC’s reactions to the market seem to be driven primarily by seed quality issues and prices.

The findings of this study have implications for the government and various development organizations (partners) that are supporting SPCs to become more market-oriented and successful in their business ventures. The government should favor SPCs in accessing credit by guaranteeing the financial institutions without collateral that helps SPCs supply large quantities of seed and improve their negotiation power in the market. Policymakers should also devise strategies to support SPCs in getting technical support and the required seed from public research institutes and seed enterprises to address the input shortage and improve their crop and variety portfolios. Our findings also suggest that policymakers should consider the role of SPCs beyond local contributions. They would have a great contribution to make in reducing import substitution impacting foreign exchange, minimizing external dependency on ensuring food security, and increasing employment and productivity. Strategies should also consider the long-term competitiveness of the SPCs, keeping in mind the basic marketing principles for sustainable business development and their contribution to the economic development of Ethiopia.

Data availability

The datasets generated during and/or analyzed during the study are available from the Wageningen School of Social Sciences (WASS). Data can be accessed from WASS on reasonable request.

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Acknowledgements

The authors would like to thank the seed producer cooperative members, leaders, and experts for their participation in the interviews. They want to thank the staff of the program on Integrated Seed Sector Development (ISSD) in Ethiopia for collaboration, discussions, and reflections on the work. They also would like to thank Dr. Marja Thijssen for her careful reading and valuable comments and suggestions.

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DTS, FJHMV, and HCMVT contributed to conceptualization and methodology. DTS investigated the study, conducted data collection and analysis, and developed the first draft. FJHMV and HCMVT revised and edited the previous versions of the manuscript. All authors approved the final manuscript.

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Sisay, D.T., Verhees, F.J.H.M. & van Trijp, H.C.M. Market orientation practices of Ethiopian seed producer cooperatives. Humanit Soc Sci Commun 10 , 637 (2023). https://doi.org/10.1057/s41599-023-02156-1

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South Asian Journal of Business Studies

ISSN : 2398-628X

Article publication date: 14 December 2021

Issue publication date: 30 August 2023

This study explores the relationship between market orientation (MO), marketing capabilities, competitive advantage and firm performance with a focus on productivity and growth. This study answers on how MO and capabilities can enhance the performance of a firm. The following research points have been looked into: (1) business development in uncertain times, (2) strategies that complement both business development and competitive advantage at the same time and (3) how proactive MO helps the business organization to improve performance and attain category leadership in the desired therapeutic segment.

Design/methodology/approach

This article is based on an intensive case study that provides a thorough description, interpretation and understanding of the case. To accomplish the given goals, a public sector firm was carefully chosen and data were gathered through interviews with managers from different levels of the case company.

Results of this study explain that the MO concept is highly effective in building the marketing capabilities and sustaining the performance. The study offers business development strategies for the businesses where product differentiation is low and price ceiling is practiced on a certain category of products. MO when combined with marketing capabilities gives the organization a competitive advantage which ultimately enhances the firm performance.

Originality/value

The manuscript is based on a case study representing niche and mid-sized Indian pharmaceutical company, “Indian Immunologicals Limited” (IIL, a public sector firm), that adopted MO along with competitive business strategies in highly competitive, regulated and price control therapeutic category, anti-rabies vaccine. The company with a judicious mix of business strategies, operational excellence and MO not only enhanced productivity but also market share and created new business units for future.

• Business development
• Customer orientation
• Firm performance

Acknowledgements

This paper forms part of a special section “Role of technology in E-commerce: Bright and the Dark Side”, guest edited by Abhishek Behl and Justin Zuopeng Zhang.

Narula, S. , Rana, S. , Srivastava, S. and Kharub, M. (2023), "Improving firm performance using market orientation and capabilities: a case study approach", South Asian Journal of Business Studies , Vol. 12 No. 3, pp. 374-394. https://doi.org/10.1108/SAJBS-10-2021-0375

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The key role of market orientation in innovation ambidexterity in agribusiness firms

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• Published: 05 February 2024

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• Beatriz Corchuelo Martínez-Azúa   ORCID: orcid.org/0000-0002-6590-7944 1 ,
• Álvaro Dias   ORCID: orcid.org/0000-0003-4074-1586 2 &
• Celia Sama-Berrocal   ORCID: orcid.org/0000-0001-9355-6419 3  

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The objective of this study is to examine the relationships between market orientation , organizational culture , proactive management , organizational climate , and organizational structure on the innovative orientation (exploitative and exploratory innovation). Little research has been conducted to examine the relationship between these organizational dimensions and innovation orientation. This study offers this and provides a particular type of companies (agribusiness) and context (Extremadura, Spain). Quantitative approach, by using structural modelling equations, to analyze data from 151 innovative agri-food firms was used in this study. Then, using a fuzzy set qualitative comparative analysis (fsQCA), was carried out to obtain additional insights. The main result find that market orientation plays a key role both in exploitative and exploratory innovation in agribusiness firms. Innovation exploitation is influenced by the firm’s organic structure. Results from fsQCA provide valuable findings showing that innovation exploitation and exploration result from distinct organizational configurations, thus providing valuable insights for decision and policy-making.

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1 Introduction

In the agri-food industry (food, beverages, and tobacco), and according to the latest available data (National Institute of Statistics-NIS: Survey on Innovation in Companies), in 2020 the number of companies in Spain with expenditure on innovative activities was 1490, representing 23% of all companies with 10 or more employees in this industry and 71% of all innovative companies in the agri-food sector. The amount spent on technological innovation in the agri-food industry was only exceeded by the pharmaceutical and motor vehicle industries (MAPA 2022 ).

Innovation in the agri-food industry is a subject little studied in the academic world and yet of great relevance given the changes that are taking place in this sector, especially after the COVID-19 pandemic. In particular, the pandemic caused changes in food consumption patterns and consumer perceptions, and modified the channels of marketing, communication, and promotion of products. This led to various actions and activities in agribusiness, mainly related to the search for new forms of product promotion, the creation of marketing platforms, the use of technologies in communication activities, and the development of new products (Corchuelo et al. 2021 ). Innovation is one of the main determinants of productivity and competitiveness in the agri-food sector and is essential for economic growth (Trott and Simms 2017 ; Corchuelo and Sama-Berrocal 2022 ). There are several aspects that influence the innovative orientation in companies (Smith et al. 2008 ; Castillo-Valero and García-Cortijo 2021 ). The study by Smith et al. ( 2008 ) identified nine factors that impact the ability to manage innovation in an organization and especially focused on companies in the agricultural field: management and leadership style, resources, organizational structure, corporate strategy, technology, knowledge management, employees, and innovation process.

In this study, we analyze the role of various business variables ( organizational culture , market orientation , proactive management , organizational climate , and organizational structure ) in guiding innovation in agri-food companies, distinguishing between exploratory and exploitative innovation . This study is focused on companies in the agricultural field because of the importance and weight of these organizations in the economic development of different economies. However, it is mainly these organizations that present the greatest difficulties when it comes to innovating. The study by Corchuelo and Sama-Berrocal ( 2022 ) concluded that especially uncertainty regarding demand and lack of knowledge are barriers that negatively influence the willingness to innovate. Other barriers detected by agri-food firms to innovate were high costs, high economic risk, markets dominated by established companies, and lack of internal financing. For that reason, the results obtained in the present study can help explain how to promote innovation in agro-industrial companies.

In our knowledge, little research has been done to examine the relationships between these variables ( organizational culture , market orientation , proactive management , organizational climate , and organizational structure ) and innovation orientation, so this is the main novelty of this study. The influence of these variables simultaneously is only studied from a qualitative methodology in agri-food industry in the study by Corchuelo et al. ( 2020 ). The present study offers this and provides a particular context: innovative Extremaduran agri-food companies.

The analysis of each of these variables with the innovative orientation of firms has been also not sufficiently studied, especially in the agrifood industry. Regarding the variable organizational culture , there are studies that analyze this aspect in terms of definitions, theoretical scopes, conceptualizations, characteristics, and types (e.g., Lavine 2014 ). Also, arguing that organizational culture contributes to innovation (Kim and Chang 2019 ; Naranjo-Valencia et al. 2019 ), but not referring to agribusiness. The influence of organizational climate (Lafta et al. 2016 ; Tan et al. 2021 ) and management (Ureña-Espaillat et al. 2022 ) in agribusiness have been studied, but we do not find references to the relationship of these variables with the innovative orientation . Market orientation has been mentioned in qualitative studies (i.e., van Duren et al. 2003 ) in the agribusiness field, but are less the studies that have directly tested hypothesized relationships in a quantitative manner (Johnson et al. 2009 ; Mirzaei et al. 2016 ; Ho et al. 2018 ; Kamarulzaman et al. 2023 ). There are also few studies that analyze the organizational mechanisms that influence innovation , especially focused on the agri-food industry (Ogidi 2014 ; Camanzi et al. 2018 ). In this sense, this study contributes to the literature on the factors influencing innovative orientation and the type of innovation developed by agribusiness firms, filling a research gap. To fill this research gap, this study poses the following research questions: (i) Do organizational variables ( organizational culture , market orientation , proactive management , organizational climate and organizational structure ) influence the innovation orientation of innovative agribusiness firms? (ii) What types agribusiness firms can be identified based on their innovation orientation? In this sense, we consider that our results will contribute to addressing the lack of empirical studies related to the influence of these business variables in the innovative orientation of innovative agribusiness companies. As such, this study aims: (i) to explore the influence of organizational dimensions such as market orientation, organizational culture, proactive management, organizational climate, and organizational structure on the innovative orientation (exploitative and exploratory innovation); (ii) to explore the different configurations of the organizational dimensions that contribute to innovation ambidexterity.

This study adopts a quantitative approach, by using structural modelling equations to analyze data from 151 innovative agri-food firms. Then, we use a fuzzy set qualitative comparative analysis (fsQCA) to obtain additional insights. The main result find that market orientation plays a key role both in exploitative and exploratory innovation in agribusiness firms. Innovation exploitation is influenced by the firm’s organic structure. Results from fsQCA provide valuable findings showing that innovation exploitation and exploration result from distinct organizational configurations, thus providing valuable insights for decision and policy-making. These results provide understandings on how managers and policy makers should focus on innovation policies and strategies to exploit competitive advantage.

2 Theoretical framework

This study draws on the Resource-Based View (RBV) and organizational innovation theories to elaborate on the conceptual model and hypotheses development. The RBV theory is a management theory that posits that a firm's unique resources and capabilities are the primary source of its competitive advantage, regardless of its industry or external environment (Pinheiro et al. 2022 ). The RBV theory is important in studying innovation because it provides a framework for understanding how firms can develop and sustain their innovative capabilities (Zhang and Jedin 2022 ). According to the RBV theory, firms can innovate by developing new resources and capabilities, or by recombining existing resources and capabilities in new ways (Valaei et al. 2022 ). Organizational innovation theory is a field of study that examines how organizations develop and implement new ideas, products, processes, or practices. It aims to understand the factors that influence innovation, such as organizational culture, structure, strategy, leadership, learning, and change management. It also explores the outcomes and impacts of innovation on organizational performance, competitiveness, and survival (Damanpour 2018 ). RBV and organizational innovation theory consider that each company has different resource configurations that make it important to relate their study methodologically through configurational theory. Configurational theory allows transcending the qualitative-quantitative divide through the formulation of formal statements that explain how causally relevant conditions combine in configurations associated with the outcome of interest (Iannacci and Kraus 2022 ). Specifically, RBV and organizational innovation theory suggest that companies should be studied in terms of their unique resource configurations, which can be achieved through the use of configurational theory. Configurational theory provides a way to understand how different causal conditions combine to produce a given outcome, which is particularly useful when studying complex phenomena such as organizational innovation. By using configurational theory, researchers can move beyond the traditional qualitative-quantitative divide and develop a more nuanced understanding of the relationship between resource configurations and organizational innovation.

2.1 Innovation ambidexterity in agribusiness firms

Innovation is generally characterized by changes in a complex and interrelated system between product/service, market, knowledge, and society. Nowadays, the concept of innovation is beginning to be seen as a system that is an accumulation of several interrelated innovations. In this system, the fundamental role of the firm as a driver of innovation is emphasized and attention is also given to informal activities as sources of knowledge and generators of new innovative processes (Corchuelo and Sama-Berrocal 2022 ).

Innovation can be conceptualized as the development of new products or services (Cumming 1998 ), as new knowledge embedded in products, processes and services (Quintane et al. 2011 ), or the ability to understand and identify future customer needs, expectations and potential customers through the organization's internal and external knowledge (Rajapathirana and Hui 2018 ). Innovation is considered a key factor in the creation of new firms and industries, economic development, firm performance and competitiveness, as well as effective firm management (Corchuelo et al. 2020 ).

Innovation is a complex activity in an organization, involving multiple internal and external variables (Castillo-Valero and García-Cortijo 2021 ; Corchuelo and Sama-Berrocal 2022 ). Complexity is the result of a blend of learning, knowledge, creativity, and management. This combination encourages the use of both the company's own and external resources, thus seeking to enhance the process of differentiation, with the aim of gaining a competitive advantage. In this sense, innovation is a dynamic in which internal and external aspects interact at the beginning and at the end of the process. Furthermore, it seeks to satisfy internal needs to achieve better levels of efficiency and quality that result in increased competitiveness through better satisfaction of market needs (Corchuelo et al. 2020 ). Innovative capabilities are important for companies to maintain their competitive advantage. In this sense, the study by Sun and Ju ( 2022 ) found that congruence between exploitative and exploratory innovation positively influences firm performance. In the case of incongruence, the combination of high exploitative innovation and low explorative innovation outperforms the opposite.

Applied to the agri-food industry, the study by Corchuelo et al. ( 2020 ) used a multiple case study to measure the level of importance that managers attached to six business variables ( Management , Strategy , Structure , Culture , Climate and Market Orientation ). The study validated the proposed model in which all the variables tested had a high weight for the achievement of innovative performance. These assumptions were also validated in the study by Sama-Berrocal and Corchuelo ( 2023 ) in a multi-case study in which agri-food cooperative enterprises were analyzed. Based on these studies, this research quantitatively analyzes whether the variables proactive management, organizational culture, organizational climate, organic structure, and market orientation influence the innovative orientation of agri-food companies.

Innovation orientation is an innovation-driven strategy launched by an organization to respond to ongoing market challenges and is a form of control that affects the innovative behavior of employees (Siguaw et al. 2010 ). Some studies have shown a positive correlation between innovation orientation and the introduction of innovations (Wei et al. 2020 ). In practice, one aspect to consider is how to measure innovation and how to classify it. One classification system that determine the innovation orientation of a firm and which is used in this research, is based on the radical factor of innovation in terms of innovation strategies (exploitative innovation and exploratory innovation) (Jansen et al. 2006 ; Bernal et al. 2019 ). Exploitative innovation refers to incremental innovations that meet emerging customer and market demand. In this innovation, new knowledge is generated and created by the development of new products, services, markets, and distribution channels based on existing knowledge (Duan et al. 2022 ). Exploratory innovations, on the other hand, are radical innovations designed to meet emerging customer needs or target new markets. These innovations offer new designs, create new markets, and develop new distribution, thus requiring new knowledge and modifying existing knowledge in the organization (Kollmann and Stöckmann 2014 ). Ambidexterity of innovation refers to the development of both exploratory and exploitative innovation (Duan et al. 2022 ; Saleh et al. 2023 ; Weigel et al. 2023 ). Firms that develop innovation ambidexterity can constantly adapt to changes in the environment and achieve high short-term performance and long-term competitive advantage, although it can also create problems due to competition for firm resources and the problem of resource scarcity (Duan et al. 2022 ).

2.2 Hypotheses development and conceptual model

2.2.1 organizational culture of agribusiness firms and innovation orientation.

According to Miron et al. ( 2004 ) organizational culture is defined as the values, beliefs and hidden assumptions that members of an organization hold in common. Lee and Kim ( 2017 ) refer to organizational culture as the shared set of values and behaviors within an organization. Hofstede ( 2015 ) characterize the organizational culture as a shared cognitive system that acts as a guide for people's perceptions, thoughts, and language. These aspects form the basis for communication and mutual understanding and affect employee behavior through its two main functions: internal integration and coordination (Martins and Terblanche 2003 ). Since organizational culture is a characteristic of the organization as a set of hierarchical, functional or departmental sub-groups, the organization will harbor several, possibly conflicting, cultures within it. If the different subcultures collaborate, one can speak of a strong organizational culture. Otherwise, the organizational culture will be weak (Sousa et al. 2022 ). Thus, culture can stimulate an organization's innovative orientation as it can lead its members to accept innovation as an organizational philosophy (Hartmann 2006 ).

In this study, and, following the study by Lam et al. ( 2021 ) organizational culture is considered as the “internal characteristics of a company that plays a determining role in its long-term development. It represents the way in which the members of the organization interact with each other and the way in which the organization associates with its stakeholders. In this sense, company culture is conceived as a guide that directs the functioning, workflow, and customer management within an organization” (Lam et al. 2021 , p. 3). In this context, organizational culture can affect innovative orientation in two ways. On the one hand, socialization teaches individuals how to behave and act towards each other. On the other hand, organizational structure and management orientation can be affected by core "values, beliefs and assumptions" (Martins and Terblanche 2003 ).

The literature shows a significant relationship between organizational culture and innovation (Miron et al. 2004 ; Büschgens et al. 2013 ; Chen et al. 2018 ; Aboramadan et al. 2020 ). Shayah and Zeliou's ( 2019 ) literature review study concludes, based on the studies reviewed, that organizational culture is one of the factors that can most stimulate the innovative behavior of organizational members playing an integral role in all organizations. Referring to the agri-food industry, the study by Castillo-Valero and García-Cortijo ( 2021 ) concludes that the internal factors or characteristics of a company are those that most influence its propensity to innovate. In particular, innovative culture has the potential to exert a multiplier effect through mechanisms such as knowledge spillovers or learning by doing. Given this discussion, the following hypotheses are put forward:

H1a: Organizational culture of the agribusiness firms is positively related to their innovation exploitation.

H1b: Organizational culture of the agribusiness firms is positively related to their innovation exploration.

2.2.2 The influence of market orientation of agribusiness firms on innovation orientation

Approaches to the concept of market orientation are basically from two perspectives: cultural and behavioral or operational. Under the first approach, market orientation is seen as a form of organizational culture in which the market, customers and competitors are at the core of the firm's operations. Market orientation represents a set of values and attitudes shared throughout the organization, from which it seeks to stimulate the creation of greater value for customers (Narver and Slater 1990 ; Slater and Narver 1995 ).

Under the second approach, market orientation is the degree to which an organization applies the marketing concept in its strategic and tactical decisions. Several studies argue that market orientation is a complementary contribution to strategy and is important for strategic orientation (Kohli et al. 1993 ; Jaworski and Kohli 1993 , 1996 ; Hunt and Lambe 2000 ; Varadarajan 2020 ).

Market orientation establishes the environment-organization relationship as a source of ideas, recommendations, adjustments, and benchmarks. A matter of debate is whether market orientation encourages exploration or exploitation business innovation. On the one hand, some studies conclude that market orientation limits innovation to incremental developments that derive from changes in customer preferences. It tends to avoid the risks that radical innovations might produce by not knowing how the target audience will react (Prifti and Alimehmeti 2017 ). On the other hand, other studies point out, in a different line, that the vision of the present and future environment and market orientation allow the development of new products with a higher degree of novelty incorporated (Jaworski and Kohli 1996 ). Firms that are more market-oriented, in addition to being more willing to innovate, market a greater number of innovations than their competitors and, moreover, incorporate a greater degree of novelty in these innovations (Akman and Yilmaz 2008 ).

In relation to the previous hypotheses ( H1a and H1b ), Hurley and Hult ( 1998 ) argued that market orientation is an antecedent of the firm's predisposition towards the development of new ideas and this predisposition is an aspect of the organizational culture that positively influences the ability to innovate. According to these authors, market-oriented companies are better positioned to anticipate customer needs and are therefore in a better position to respond to them with innovative products and services.

Regarding to the agri-food industry, the study by Mirzaei et al. ( 2016 ) showed that market-oriented agribusinesses in Ontario were more likely to adopt new products and services. Ho et al. ( 2018 ) also found a positive relationship between market orientation and innovation, as well as between innovation and financial performance in agricultural value chains in emerging economies (Vietnam). Kamarulzaman et al. ( 2023 ) conclude that all dimensions of market orientation had significant relationships with innovative marketing strategies. Innovative marketing strategies, in particular promotion, had the strongest influence on the performance of Malaysian agri-food manufacturers. In a different view, Johnson et al. ( 2009 ) revealed that the most successful agri-food companies focus more on the internal (cross-functional coordination and innovation) than on the external (competitive and market orientation). Based on these considerations, the following hypotheses are established.

H2a: Market orientation of the agribusiness firms is positively related to their innovation exploitation.

H2b: Market orientation of the agribusiness firms is positively related to their innovation exploration.

2.2.3 Proactive management of agribusiness firms and innovation orientation

According to Tidd and Bessant ( 2014 ), the innovation process in organizations needs to be managed in a systematic or integrated way, which would require strategic leadership and management, the creation of an innovative organization, and the creation of networks for innovation. Thus, management is not an isolated task, as it is related to parallel concepts such as the organizational structure, the organizational culture and climate that enables people to innovate, and the market orientation.

Proactive management is about anticipating problems and taking action to prevent them from occurring. A proactive management style is based on prevention and thinking in the long term, looking for ways to improve the business. Proactive management encourages innovation and adaptation (Crant 2016 ). The study by Talke et al. ( 2011 ) showed that the diversity of the management team and a proactive focus on customer needs has a strong positive effect on the innovative orientation of the firm through new products with higher market novelty which increase the firm's performance. In this vein, Chen et al. ( 2012 ) found that proactive management is determinant for innovation, and the main driver of proactiveness are internal resources (e.g., organizational culture of firm’s capabilities) rather external forces (e.g. regulations or stakeholder influence). The study by Safari and Raza ( 2015 ) concluded that knowledge-oriented leadership influences knowledge creation and application and innovation performance. In the agro-industrial sector, Ureña-Espaillat et al. ( 2022 ) found that knowledge and innovation management can play a key role in fostering and managing creativity in the agro-industrial sector. We establish the following hypotheses.

H3a: The existence of a proactive management in agribusiness firms is positively related to their innovation exploitation.

H3b: The existence of a proactive management in agribusiness firms is positively related to their innovation exploration.

2.2.4 The organic organizational structure of agribusiness firms and innovation orientation

The structure of an organization can be defined as the permanent distribution of job functions and administrative mechanisms that enable an organization to direct, coordinate and control its business activities and the flow of resources (Miller 1987 ). Organizational structure affects the management choices and market opportunities of the firm.

In this research, we consider the organic organizational structure. In contrast to a formal structure, characterized by the existence of a hierarchy, specialization of work and centralized decision-making, in the organic structure there is a combination of formal and informal variables (Burns and Stalkers 1961 ). Informal variables consist of a set of decisions that have not been consciously defined in advance and that respond to the relationships between the individuals who meet each other at work. Both types of relationships develop together and are not always clearly distinguishable. Inside an organic organizational structure, there is a "more flexible" structure: the hierarchy consists of fewer levels, barriers between departments disappear and decision-making is usually more decentralized (Burns and Stalker 1961 ; Aiken and Hage 1971 ; Martínez-León and Martínez-García 2011 ; Gimenes et al. 2017 ).

The structure of an organization is an essential factor in the role of innovation that serves to benefit or impede it (Savvides 1979 ). An organizational structure in which people feel motivated and valued and with which work is organized in a way that enhances human capital has a positive effect on innovative performance through the recognition and support employees receive from management (Aiken and Hage 1971 ; Kalay and Lynn 2016 ). Most studies conclude that decentralized and not strictly formalized organizational structures are more conducive to innovative performance (Jansen et al. 2006 ; Menguc and Auh 2010 ; Cabello-Medina et al. 2011 ; Kalay and Lynn 2016 ). Cabello-Medina et al. ( 2011 ) stated the idea that organizations with organic structures are more innovative than those with mechanistic ones. Menguc and Auh ( 2010 ) found that the effect of radical product innovativeness on new product performance is positive under an informal structure. Kalay and Lynn ( 2016 ) concluded that centralization has a significant negative impact on management innovation. Based on these considerations, the following research hypotheses have been put forward.

H4a: The existence of an organic organizational structure in agribusiness firms is positively related to their innovation exploitation.

H4b: The existence of an organic organizational structure in agribusiness firms is positively related to their innovation exploration.

2.2.5 The organizational climate of agribusiness firms and innovation orientation

According to Ekvall ( 1996 ) organizational climate is conceived as an attribute of the organization, consisting of behaviors, attitudes, and feelings, which are characteristics of life in the organization. Organizational climate expresses the workplace and its environment, as well as the factors surrounding it. It can be defined as the set of distinctive features of the internal work environment in which employees perform their functions and jobs (Lafta et al. 2016 ).

Organizational climate can be seen as a situation in which there is cooperation between employees which contributes to knowledge sharing and contributes to the generation of ideas (Xu et al. 2022 ). The fact that employees feel supported by the organization in a way that is actively promoted, actively participate in the creation of ideas and stimulates innovation (Johannenssen and Olsen 2011 ). A climate conducive to innovation fosters innovation at the organization level (Jung et al. 2008 ). Climate affects the results of an organization's operations, as it "influences organizational processes such as problem solving, decision making, communications, coordination, control, and the psychological processes of learning, creativity, motivation and commitment" (Ekvall 1996 , p. 10). Successfully developing a new product, service or production process involves complex and dynamic changes and therefore requires an organizational climate that fosters innovation. The study by Acosta-Prado ( 2020 ) found a positive relationship between organizational climate and innovativeness (organizational ambidexterity, exploration and exploitation) in Colombian new-technology based firms. Related to proactive management, Malabari and Bajaba's ( 2022 ) study found that entrepreneurial leadership significantly influences employees' innovative behavior through their innovation climate and intellectual agility. The following hypotheses are set out.

H5a: A positive organizational climate in agribusiness firms is positively related to their innovation exploitation.

H5b: A positive organizational climate in agribusiness firms is positively related to their innovation exploration.

Based on these hypotheses, Fig.  1 shows the proposed conceptual model.

The conceptual model

In this research we posit that achieving innovation ambidexterity is challenging because it requires balancing the trade-offs and synergies between different types of innovation that may have conflicting demands and goals. Therefore, it is important to understand the factors that enable or constrain innovation ambidexterity in different organizational contexts (Duan et al. 2022 ). According to RBV and organizational innovation theory, there is no single best way to achieve innovation ambidexterity. Rather, multiple paths exist that depend on the interaction of various organizational dimensions, such as market orientation, organizational structure, organizational culture, organizational climate, and proactive management. To better understand these complex relationships, we draw on configurational theory, which provides a more contextual understanding of how causal conditions can combine to produce a given effect. Unlike traditional methods that focus on the net effects of causal variables, configurational theory allows researchers to analyze the multiple possible ways in which causal conditions can interact to produce a given outcome (Iannacci and Kraus 2022 ). Based on these assumptions, we can formulate the following hypothesis:

H6 : Different configurations of organizational dimensions may lead to innovation ambidexterity.

3 Methodology

The study uses data collected from agribusiness firms in Spain to test the proposed research hypotheses. The population was self-elaborated and obtained through by crossing and analyzing different databases (National Institute of Statistics, Extremaduran Agri-food Cooperatives, and Iberian Balance Analysis System) using the Extremaduran companies of the National Classification of Economic Activities (CNAE-2009), codes 10 (agri-food industry), 11 (beverages), and 12 (tobacco), as a search base. This total population was the one we sent the questionnaire to, and they answered both by the Google Docs form and by telephone. The data was collected through an ad hoc questionnaire sent to agrifood innovative companies in the region. Data collection occurred between September and October 2021. The participation of the companies was voluntary. Of the 283 innovative agribusinesses in Extremadura that were contacted, a final sample of 151 completed questionnaires from innovative agri-food companies was obtained. It is assumed that the sample is adequate (confidence level 95% and margin of error 5.5%) calculated following Krejcie and Morgan ( 1970 ) formula for the objectives of this study. We also tested the Harman’s single factor to detect common method bias. We followed the recommendations of Podsakoff and Organ (1986) and estimated the variance of a single factor which was 39.32%, below the limit of 50%, revealing no common method bias in our dataset.

The sample characterization is as follows. Firstly, in relation to the informant, the majority was company managers/owners, followed by department heads (Finance, Quality, R&D, Operations, Sales) and administrators. The educational level of the informants is mostly secondary education, followed by higher education. The predominant age of the informants is in the range of 31 to 55 years. Secondly, regarding the characteristics of the companies, in terms of size, they are mainly micro enterprises (less than 10 employees that represent 47.3% of the total), followed by small (10–49 employees, 34.7%), medium-sized enterprises (50–199 employees, 15.3%) and large enterprises (more than 200 employees, 2.7%). In terms of legal form, they are mostly limited companies (60.7% of the total), followed by cooperatives (24%), public limited companies (13.3%) and other legal forms (2%).

The questionnaire was developed following a three-step approach. First, based on the literature review an initial version of the questionnaire was developed by adapting existing scales as described below. Second, the measures of each construct discussed within a panel of academic experts with knowledge innovation and management. Third, a revised version of the questionnaire was subject to a pilot tested with five business owners to validate the wording and eliminate ambiguities and errors (Corchuelo et al. 2020 ).

The measures were adapted from existing research. As such, the measure for innovation exploitation and exploration was taken from Jansen et al. (1996) and Bernal et al. ( 2019 ), consisting of three items each one. The market orientation (11 items) was adapted from Narver and Slater ( 1990 ). The measurement of organizational climate (nine items), organic structure (four items), organizational culture (eight items), and proactive management (eight items) was adapted from Hage and Aiken (1967), Martins and Terblanche ( 2003 ), Ekvall ( 1996 ) and Safari and Raza ( 2015 ), respectively. The respondents were asked to identify their degree of agreement in a Likert-type scale, ranging from 1 (equals to totally disagree) to 7 (equals totally agree) (“Appendix 1 ”). To ensure normality of our data, we verified that the skewness and kurtosis values were within ± 1 and ± 2 respectively; all the measures met this criterion, indicating a normal distribution.

First, partial least squares structural equation modelling (PLS-SEM) was applied to evaluate the conceptual model (Ringle et al. 2015 ). Based on the hypotheses set out in the previous section, Fig.  2 shows the proposed structural model. The items used to measure the constructs are listed in “Appendix 1 ”.

The structural model

Second, to obtain additional information on the influence of independent variables on innovation exploration and exploitation, we conducted a configurational analysis using fuzzy set qualitative comparative analysis (fsQCA). This technique is based on a statistically-informed configurational approach to draw predictive conclusions (Kraus et al. 2018 ; Kumar et al. 2022 ). It is grounded on set theory and allows for a detailed investigation of causal complexity (Misangyi et al. 2017 ). The basic assumptions of this procedure are: (i) conjunctural causation: the effect of a single condition unfolds in combination with other conditions; (ii) equifinality, which means that different configurations of conditions may lead to the same outcome; (ii) casual asymmetry, which means that the condition leading to a positive outcome, are not necessarily the opposite of its negation (Iannacci and Kraus 2022 ).

Using the SmartPLS 3 software (Ragin and Davey 2016 ), partial least squares structural equation modelling (PLS-SEM) was applied to evaluate the conceptual model (Ringle and Sarstedt 2017 ; Ringle et al. 2015 ). Multiple experiments were run to gauge the measurement model's validity and reliability. More particularly, we examined the reliability, convergent validity, internal consistency reliability, and discriminant validity in accordance with Hair et al. ( 2017 ). The results demonstrate that all items' standardized factor loadings were significant (p 0.001) and more than 0.6 (varying from 0.701 to 0.905), supporting the reliability of each individual indicator, according to Table  1 . Internal consistency reliability was supported by Cronbach alphas and composite reliability (CR) values that were higher than 0.7 (Hair et al. 2017 ).

Additionally, we investigated for convergent validity, which was shown to be true given that all constructions' components loaded significantly and positively. Convergent validity was further supported by the constructs' CR values exceeding 0.70 and the average extracted variance (AVE) exceeding the 0.50 threshold (Bagozzi and Yi 1988 ). The Fornell and Larcker ( 1981 ) criteria, which is illustrated in the diagonal of Table  1 and states that each construct's square root of AVE should be greater than its largest correlation with any other construct, was used to assess the discriminant validity. Additionally, we determined the heterotrait-monotrait ratio (HTMT) need (Henseler et al. 2015 ). Table 1 's findings demonstrate the discriminant validity of the HTMT ratios as being below 0.85 (Hair et al. 2017 ; Henseler et al. 2015 ).

Before assessing the quality of the research model, we first confirmed the collinearity as suggested by Hair et al. ( 2017 ). As such, we estimated the variance inflation factor (VIF) values that ranged from 2.111 and 2.693, values pointing to no collinearity since are below the limit of 5 (Hair et al. 2017 ). We also tested for the coefficient of the determination (R 2 ) and Q 2 for additional confirmation of the model quality. Accordingly, the results for the two endogenous variables reported a R 2 surpassing the threshold of 10% (Falk and Miller 1992 ), and positive Q 2 values, as shown in Table  2 .

We used 5000 subsamples in a bootstrapping approach to assess the significance of the parameter estimations to test the hypothesis (Hair et al. 2017 ). The results presented in Table  3 show that organizational culture and organizational climate do not influence both types of innovation (for organizational culture β  = 0.129, n.s.; 0.165, n.s.; and for organizational climate 0.108, n.s.; 0.050, n.s. respectively for exploitation and exploration). As such, H1a,b and H5a,b are not supported. Market orientation positively influences innovation exploitation and exploration ( β  = 0.225, p  < 0.05; and β  = 0.402, p  < 0.001, respectively), thus H2a,b are supported. This result provide support for H1a and H1b , respectively. Regarding, the influence of a proactive management on both types of innovation was not significant ( β  = 0.005, n.s. ; and β  = 0.030, n.s. ), providing no support for H3a and H3b . The existence of an organizational organic structure was also found to has a significantly and positive relationship with innovation exploitation, however such relationship with exploration was not supported ( β  = 0.304, p  < 0.01; and β  = 0.126, n.s.) which supports H4a but not H4b respectively.

To gain additional insights about the influence of the independent variables on innovation exploration and exploitation, we performed a configurational analysis by means of fuzzy set qualitative comparative analysis (fsQCA). As such, in this study, we assumed that proactive management, culture, organic structure, organizational climate and market orientation could be combined in multiple ways to achieve an innovation exploration and exploitation.

The first procedure consisted of analyzing the necessary conditions, meaning that the consistency of each construct must be equal to or greater than 0.9 (Ragin 2014 ). The consistency values ranged from to 0.73 to 0.79, meaning that none of the five conditions nor their negation were a necessary condition for innovation exploration and innovation exploitation nor for their negation.

The second procedure focused on the analysis of sufficiency of the causal conditions. We followed the recommendations of Rihoux and Ragin ( 2009 ) and Fiss ( 2011 ) to verify this parameter for all the independent constructs. This analysis was performed suing three steps. First, the truth table was elaborated considering all logical combinations of the five conditions. Second, the reduction of the truth table was conducted considering a minimum frequency of three cases, and a lowest acceptable frequency of 0.8 (Ragin 2014 ). Third, the proportional reduction in inconsistency (PRI) was also taken into consideration by eliminating the configurations that had this indicator inferior to 0.7.

After testing the quality of the results, the simplified configurations were extracted using Boolean minimization and Quine–McCluskey algorithm (Ragin 2014 ). The results of the intermediate solution are shown in Table  4 for innovation exploration and in Table  5 for innovation exploitation. The consistency values for all combinations and for the overall solution were superior to 0.8 (Ragin 2014 ). As such, all configurations could be considered sufficient for innovation exploration and for innovation exploitation.

Considering the results of Table  4 , hypothesis 6 is supported. In fact, three configurations competed to high innovation exploration and three to low innovation exploration. Market orientation was not only considered a core condition, but it was also present in the three configurations related to high innovation exploration. The first configuration (C1 expl ) considered that firms with high market orientation but with low proactive management, low organic structure (formal structure) and low organizational climate are capable of high innovation exploration.

As mentioned, fsQCA considers an asymmetric approach. As such, we also analyzed the configurations leading to low innovation exploration. The first combination (C4 expl ) considered low market orientation combined with low organic structure and low organizational climate. The fifth combination (C5 expl ) incorporates high proactive management and culture and low organizational climate and market orientation. Finally, C6 expl combines low proactive management, culture, and market orientation.

Similar number of combinations can be found in Table  5 in relation to innovation exploitation. Similarly, market orientation is core condition and common to two of the configurations leading to high innovation exploitation.

The first configuration C1 expt considers that high innovation exploitation is the result of the combination of high organizational climate with low culture and market orientation. C2 expt combines high market orientation and low organic structure and organizational climate. The third configuration (C3 expt ) integrates high market orientation, proactive management, and culture. For low innovation exploitation three configurations were identified. The fourth and sixth configurations are equal to the one identified in innovation exploration. The fifth configuration (C5 expt ) corresponds to low proactive management, culture, and market orientation.

5 Discussion and implications

5.1 the importance of market orientation for the agribusiness.

Both the results obtained in the structural model and through fsQCA highlight the role of market orientation in both exploratory and exploitative innovation. The market orientation proves to be a predictor of both innovation orientations, and the structural model revealed that it constituted the single factor for exploitation and, in combination with a more organic structure, fostered innovation. The fsQCA results also show the importance of market orientation, with almost all combinations incorporating high innovation in both orientations. A low level of market orientation is an integral part of all combinations associated with low innovation of agri-food firms, in both orientations. This result supports the findings of previous studies that showed the influence of market orientation on both exploitative (Akman and Yilmaz 2008 ; Prifti and Alimehmeti 2017 ) and explorative innovation (Jaworski and Kohli 1996 ). Moreover, this result is also in line with other studies applied to the agri-food industry (Mirzaei et al. 2016 ; Ho et al. 2018 ; Kamarulzaman et al. 2023 ) that also showed the existence of a positive relationship between market orientation and innovation. In addition, and in line with the study by Hurley and Hult ( 1998 ) who considered that market orientation is an antecedent of the firm's predisposition towards the development of new ideas, this predisposition constitutes an aspect of the organizational culture that positively influences the capacity to innovate.

In the first combination of exploration and in the second of exploitation, market orientation emerges as the only factor. This fact reveals that, for a given group of agri-food companies, it is sufficient to develop market orientation capabilities to generate ambidextrous innovation, and the type of company structure and management is irrelevant. This finding is an important contribution of this study, given that previous studies had not detected this unique effect of market orientation.

5.2 Do organizational factors really influence innovation in agri-food firms?

With respect to the remaining organizational and management factors, the fsQCA results allow for a more refined analysis when compared to the structural model. While the structural model only indicates the organic structure as a predictor of innovation exploration, the configurational analysis reveals that there are combinations that integrate some of those factors. Thus, the second innovation exploration configuration encompasses proactive management, organizational culture and organic structure, excluding only organizational climate. The third combination integrates this last factor but excludes proactive management. Concerning to the agri-food industry, these findings extend existing knowledge by specifying which factors are effectively contributing to both types of innovation orientation. Previous research in this industry revealed that the internal factors or characteristics of a company are those that most influence its propensity to innovate (Lam et al. 2021 ; Castillo-Valero and García-Cortijo 2021 ). In particular, they found that innovative culture is particularly important for innovation. The study by Chen et al. ( 2018 ) concluded that the fit of organizations with exploratory and exploitative innovation strategy and organizational culture, improve and accelerate innovation quality. Our study confirms these results and specifies that culture should be associated with an organic structure to promote innovation exploration and with proactive management to generate innovation exploitation.

In the structural model, the organic organizational structure only influences innovation exploitation, but not innovation exploration. The fsQCA results provides different findings since organic structures are part of two configurations leading to high innovation exploration and does not integrate in any of the configurations for high exploitation. Previous research revealed this inconsistency regarding the role of the organizational structure in innovation generation (c.f. Savvides 1979 ). Studies by Jansen et al. ( 2006 ), Menguc and Auh ( 2010 ), Cabello-Medina et al. ( 2011 ) and Kalay and Lynn ( 2016 ) conclude that an organic structure in organizations favors innovation and innovative performance. However, Kalay and Lynn ( 2016 ) showed otherwise by concluding the negative effect of organic structure in radical innovation. As such, our study clarifies that an organic structure is not sufficient for both types of innovation orientation and needs to be combined with other organizational elements to generate innovation.

6 Conclusion

6.1 theoretical contributions.

This study makes several theoretical contributions. First, this study examines the separate effect of various organizational factors on innovation exploration and innovation exploitation. By doing so, it is possible to see that organizational antecedents do not influence both types of innovation equally, contributing to the organizational innovation theory. Second, this study highlights the unique effect of market orientation, not to say ubiquitous, as the main determinant in the generation of both types of innovation in agribusiness firms. Third, that some factors are less relevant such as organizational climate or proactive management. Fourth, this study shows that different combinations of organizational resources contribute to the same outcome, in this case innovation exploration and exploitation. The last two contributions are significant additions to the RBV theory. Fifth, the methodological use of the configurational theory explains how causally relevant conditions combine into configurations associated with the outcome of interest. Figure  3 provides a diagram that illustrates and details these contributions.

Groups of innovation exploration-oriented agribusiness firms

This study also shows that the business environment in this sector is far from homogeneous with respect to the innovation generated. That is, different groups have different combinations of factors leading to innovation. As such, Fig.  3 depicts the three groups of firms oriented to innovation exploration. On the left bottom are the firms fully committed to market orientation as a source of innovation. Above are the firms focused on organizational factors such as culture, structure and climate, showing less concern about managerial proactiveness. The bottom right group is composed of firms combining market orientation with proactive management. Finally, on the upper left, a group that combines of all the elements, but no innovation is expected.

In the same perspective, Fig.  4 presents the groups of firms associated with innovation exploitation. Similar to the previous one, a group just market oriented can be identified, as well as the group focused on management proactiveness. The main difference is related to the organizational focused group, which, in this case, is just based on organizational climate development. As in innovation exploration figure, the group combining all the factors is associated with no innovation.

Groups of innovation exploitation-oriented agri-business firms

6.2 Practical implications

The knowledge about the various configurations leading to exploration and exploitation innovation allows a more accurate definition of the competencies to be developed by agribusiness companies, helping to identify areas of improvement for firm management and for policymaking. The importance of market orientation was clearly seen in this study, pointing the way to managers in the close monitoring of competitors and customers, as well as alerting to the need to improve organizational processes towards a better ability to respond to changes in the environment. Policy makers are responsible for the development of market orientation competencies, which can be accomplished through training, identification and dissemination of best practices, and the implementation of consulting programs that support the transition of companies to an effective market orientation. For agribusiness firms’ management some important processes can be implemented, such as (i) closely monitor competitors and customers through market research, surveys, and customer feedback; (ii) improve organizational processes to better respond to changes in the environment by becoming more agile and adaptable, and investing in new technologies; (iii) develop market orientation capabilities through training, identifying and disseminating best practices, and providing consulting support.

On the organizational side, it was found that some factors such as organizational structure or culture may also play an important role, being essential areas to focus on by the companies' management. These are complex and long-term processes, and it is therefore important that policy makers can support companies in defining lighter structures, as these companies are often traditional and with long years of activity. Thus, the provision of skills that allow companies to lighten their structure can be achieved through incentive programs for operational efficiency. Agribusiness firms’ managers must (i) define lighter structures by simplifying hierarchies, reducing bureaucracy, and empowering employees; (ii) provide skills that allow companies to lighten their structure, specially by developing incentive programs for operational efficiency.

Here are some additional recommendations; (iii) foster a culture of innovation by encouraging employees to come up with new ideas, and by providing them with the resources and support they need to implement those ideas; (iv) collaborate with other organizations such as universities, research institutes, and other businesses to access new knowledge and resources, and to develop new products and processes.

Our study has social implications because innovation is essential for achieving sustainability goals and ambitions of international agreements (e.g., the European Green Deal), and developing lighter structures and fostering a culture of innovation creates a framework for understanding innovation holistically and systemically, and for engaging different stakeholders in the innovation process. This can help ensure that innovation serves a collective social purpose, rather than generating private returns and externalizing social and environmental costs. Additionally, since most agribusiness firms are located in less populated and developed areas, local communities can benefit from more innovative and competitive firms.

6.3 Limitations and future research

This study has some limitations. First, although the sample is considerable, a larger sample would allow for an even more detailed analysis. For example, it would be interesting to analyze the data according to the size of the firms or their position in the agri-business value chain.

Second, in this study we focus on studying some organizational and managerial dimensions of firms, following an organizational theory perspective. However, realizing that there are several configurations leading to innovation, alluding to organizational idiosyncrasy, this study suggests that this phenomenon can be studied in the light of resource-based theory, exploring the resources and capabilities that best explain both forms of innovation orientation.

Finally, this study is limited to the agri-food industry and to a specific region. Although the agri-food industry shares similarities with other natural resource industries, it is clearly different from other manufacturing industries. Therefore, the results presented here are considered industry-specific. In this sense, we identify the need for further and broader research. Future lines of research are proposed to replicate this study to generalize the results to Spanish agri-food companies, extending them also to other manufacturing industries and service sector companies.

Data availability

Data will be made available on request.

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Appendix 1: Measures

Innovation exploration, innovation exploitation.

• Organizational culture

Market orientation

• Organic structure
• Proactive management
• Organizational climate

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Corchuelo Martínez-Azúa, B., Dias, Á. & Sama-Berrocal, C. The key role of market orientation in innovation ambidexterity in agribusiness firms. Rev Manag Sci (2024). https://doi.org/10.1007/s11846-024-00732-6

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DOI : https://doi.org/10.1007/s11846-024-00732-6

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