The Development of Market Orientation Based on Organizational Perspective for Creating Business Performance of Banking Industries in Indonesia

Less research in banking industries has focused on developing conceptual frame work of market orientation based on organizational perspective. Previous studies on market orientation that were conducted partially in manufacturing industries found that some of variables of organizational system have effect on market orientation and business performance. This research develops a conceptual framework for developing market orientation and its effect toward business performance in banking industries. It involves 128 branches of banks as the sample. All instruments used in the research had been tested for their validity and reliability. By using Structural Equation Modeling, it was found as follows: 1) Leadership style, specifically transformational leadership, formalization, and learning orientation have positive effect on market orientation, 2) learning orientation, rewards system (market-based), and centralization influence directly the business performance in banking industries, 3) market orientation has positive effect on business performance. It implies that it is very important for banking managers to develop market orientation by establishing organizational systems such as  transformational leadership, formalization, and learning orientation. Besides that, market-based reward system and decision making style of management should be considered for facilitating their business performance.

 

Keywords - transformational leadership, learning orientation, market orientation, business performance.