MARKET ORIENTATION AND ORGANIZATIONAL PERFORMANCE: THE IMPACT OF SERVICE QUALITY

A STUDY ON HOTEL INDUSTRY IN MALAYSIA

Chin Chee Hua

Bachelor of Business Administration with Honours (Marketing)

2012

Punt Khidmat MIIldumat Akadmik UNIVERSm MALAYSIA SARAWAK

MARKET ORIENTATION AND ORGANIZATIONAL PERFORMANCE:

THE IMPACT OF SERVICE QUALITY

A STUDY ON HOTEL INDUSTRY IN MALAYSIA P,KHIDMAT MAKLUMAT A1<ADIMIK

111111111 fllIm 111111111 1000245034

by

CHIN CHEE HUA

Thesis submitted in fulfillment of the

requirements for the degree of Bachelor of Marketing with Honours

Faculty of Economics and Business

UNIVERSITY MALAYSIA SARAWAK

2012

Statement of Originality

The work described in this Final Year Project, entitled

"Market Orientation and Organizational Performance:

The Impact of Service Quality. A Study on Hotel Industry in Malaysia"

is to the best of the author's knowledge that of the author except

where due reference is made.

(Date submitted) (Student's signature)

Chin Chee Hua

23300

ABSTRACT

MARKET ORIENTATION AND ORGANIZATIONAL PERFORMANCE:

THE IMPACT OF SERVICE QUALITY

A STUDY ON HOTEL INDUSTRY IN MALAYSIA

By

Chin Chee Hua

The general objective of this research was to examine the relationship

between market orientation and organizational performance. In addition, service

quality was included as a moderator. This study was conducted on hotel industry in

Malaysia and 187 set of samples were collected randomly from 55 3 -stars and above

hotels in Malaysia. Analyzing tools such as Statistical Package for Social Science

(SPSS) 18.0 for Windows and SmartPLS 2.0 were used to analyze the data collected.

Tests such as confirmatory factor analysis, convergent validity, discriminant validity

and reliability were carried out to assess measurement model. Besides, t -Value test

was used to assess the structural model. The outcomes from the analyses have

demonstrated partially support for the hypotheses. The results showed that market

orientation was not significantly influence organizational performance whereas

exists of service quality moderated the relationship between market orientation and

firm performance. Thus, this study may increase managers understanding toward the

importance of service quality, market orientation practices that lead to better

organizational performance. This paper enhances both scholars' and practitioners'

understanding about the influence of service quality as a moderator in moderating

the relationship between market orientation and organizational performance.

ABSTRAK

ORIENTASI PASARAN DAN PRESTASI ORGANISASI:

IMPAK KUALITI PERKHIDMATAN

KAJIAN MENGENAI INDUSTRI HOTEL DI MALAYSIA

Oleh

Chin Chee Hoa

Objective umum penyelidikan ini adalah untuk menyelidik hubungan antara

orientasi pasaran dan prestasi organisasi. Tambahan pula, kualiti perkhidmatan

digunakan sebagai moderator. Kajian ini dijalankan pada hotel industri di Malaysia

dan sebanyak 187 keping kertas soal selidik dikumpulkan secara rawak antara 55

hotel yang berbintang 3 dan ke atas. Alat-alat menganalisis seperti Statistical

Package for Social Science (SPSS) 18.0 untuk Windows dan SmartPLS digunakan

untuk menganalisis data yang dikumpulkan. U jian seperti analisis factor konfirmatori,

kesahihan konvergen, kesahihan diskriminan dan kebolehpercayaan dilakukan untuk

menilai model pengukuran. Ujian t-value digunakan untuk menilai struktur model.

Hasil keputusan ini menunjukkan sebahagiannya menyokong hipotesis. Keputusan

menunjukkan orientasi pasaran tidak mempengaruhi prestasi organisasi secara

ketaran tetapi dengan kewujudan kualiti perkhidmatan sebagai moderator telah

menjalinkan hubungan tersebut. Keseluruhannya, hasil kajian ini kemungkinannya

akan menaikkan pemahaman pengurus dan juga meningkatkan tahap perfahaman

antara penyelidik dan eksekutif syarikat tentang kepentingan kualiti perkhidmatan

sebagai moderator dalam menjalinkan hubungan antara orientasi pasaran yang akan

menaikkan prestasi organisasi seperti prestasi kewangan dan prestasi pasaran.

ACKNOWLEDGEMENTS

In preparation of this research study, I would like to express my sincere and

heartfelt thanks for the encouragement and assistance given by a number of

delightful people and institutions in the preparation of this thesis. In the absence of

their assistance, it would not have been possible to complete the thesis.

Firstly, I deeply appreciate my supervisor, Associate Professor Dr. Lo May

Chiun, who has patiently led and advised me throughout the course of the thesis.

Although I am not originally from the Management discipline, she has not ever

hesitated to put me on the correct path of investigation, and frequently redirected my

steps from unproductive by-ways. She has enriched my understanding by her

extensive experience in this study. lowe her the countless hours she spends in

educating me on my thesis. It is indeed difficult for me to quantify my gratitude

towards her and I feel honored to be under her supervision.

I would like to recognize Perbadanan Tabung Pendidikan Tinggi Nasional

Malaysia (PTPTN) for granting me the loan in August 2009 and also support from

my parent. Without this loan and support, I am not able to continue my study in this

Degree pro gramme.

I also owe gratitude to many people in the hotel sector in Malaysia who have

willingly cooperated in the difficult task of data collection. In addition, I would like

to thanks all my friends who willingness to help me in data collection.

vi

rusat Khidmat Maklumat Akademik U~]VERSm MALAYSIA SARAWAK

TABLE OF CONTENTS

LIST OF TABLES ............................................. ......................... Xl.

LIST OF FIGURES........................... .. . .................................... ... xu.

CHAPTER ONE: INTRODUCTION

1.1 Background. . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1.1 The Malaysian Scenario ................................................ 4

1.2 Problem Statement... ... .. ................... ................................. ... 5

1.3 Research Objectives... ... .. ..................................................... 8

1.4 Research Questions .. .. .. .. . .... ...... .. . .. ................................ ...... 9

1.5 Definition ofKey Tenns ........................... . ............................ 10

1.6 Significance of the Study......................... .......... .................... 12

1.7 Scope of the Study.................. .................. ................. .. ... . .... 13

1.8 Organization of Chapters.............................. ... ......... ... ........ .. 13

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction. . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15

2.2 Definition ofMarket Orientation Models.................................... 16

2.2.1 Customer Orientation ................................................. . . 18

2.2.2 Competitor Orientation................................................ 20

. 2.2.3 Inter-functional Coordination.................................... .. . .. . 22

2.3 Service Quality..... ........................................................ ...... 23

vii

2.3.1 Technical Quality............ ............................................ 25

2.3.2 Functional Quality....................................................... 26

2.4 Organizational Performance...................... ...... ...... ...... ...... ...... 27

2.4.1 Financial Performance.... ... ....... .... ............ ...... ... ............ 29

2.4.2 Market Performance............................... . ..................... 30

2.5 Underlying Theory............................................................... 31

2.6 Theoretical Framework.............................................. ........... 34

2.6.1 Gap in the Literature............ ....................................... 34

2.6.2 Justification of the Theoretical Framework......................... 35

2.6.3 Description of Variables ................ ................ .. ............. 36

2.7 Development of Hypotheses ..................................... ... ........... 37

2.8 Summary ............................. ... ................... . .. '" ... .. . . .......... 44

CHAPTER THREE: METHODOLOGY

3.1 Introduction..... .................................................................. 45

3.2 Research Site............................. . ............................ ............ 45

3.3 Research Design, Sample, and Procedure.......................... .... ....... 46

3.3.1 Data Collection Procedure.............................................. 50

3.4 Research Questionnaire ...................... :.......................... .... ..... 51

3.5 Measures............................................................... . .. .... ..... 52

3.6 Pilot Study.. .. ............................. .. ...................................... 56

3.7 Statistical Analyses........................................................... ... 57

3.7.1 Descriptive Statistic .... ................ ................................. 57

3.7.2 Factor Analysis.. ............ ........................................ ..... 58

viii

3.7.3 Reliability Analysis........................ .............................. 59

3.7.4 Correlation Analysis........................ ............................. 60

3.7.5 Partial Least Square........... .................... .................... ... 60

3.7.5.1 Average Variance Extracted (AVE) ........................ 63

3.7.5.2 Composite Reliability (CR) .............................. .... 64

3.7.5.3 Cronbach's alpha ........................................... ... 65

3.7.5.4 Convergent Validity.......................................... 66

3.7.5.5 Discriminant Validity........................................ 66

3.7.6 Summary........ ...................................................... .... 67

CHAPTER FOUR: RESULTS

4.1 Introduction.................. ..................... ... ........................ ... 68

4.2 Profile ofRespondents ..... .... .............................................. .. 68

4.3 Goodness ofMeasures .................. ....................................... 71

4.3.1 Assessment of the Measurement Model.............................. 73

4.3.1.1 Loading and Cross Loading................................. 73

4.3.1.2 Convergent Validity.......................................... 75

4.3.1.3 t-Value........................ ........................ .......... 77

4.3.1.4 Discriminant Validity ...:...... ............................ ... 79

4.3.1.5 Reliability Test................................................ 80

4.3.1.6 Community and Redundancy.. ..... ...................... ... 81

4.3.1.7 Global Fit (GoF) ............ ... ................................ 82

4.4 Restatement ofResearch Hypotheses ......................................... 83

4.5 Intercorrelations among Study Variables... ......... ......... ................ 84

ix

4.6 Assessment of the Structural Model.. ................ . ........................ 84

4.6.1 Hypotheses Testing.................................................. .... 85

4.6.2 Finding ofHypotheses Testing........................................ 85

4.7 Summary................ ............................................. ... .. ... . .... 88

CHAPTER FIVE: DISCUSSION AND CONCLUSION

5.1 Introduction ....................................................................... 90

5.2 The Backdrop ........................ .................. ... ... ... ... ... ......... ... 90

5.3 Discussion.......................... ... ............. ...... . .. . .. ....... . .......... 91

5.3.1 Market Orientation and Firm Performance (HI) ................ . ........ 92

5.3.2 Market Orientation and Market Performance (H2) ............... ....... 95

5.3.3 Service Quality Moderate Market Orientation and Financial

Performance (H3) ......................... . .. . .. ... ................... .. . . .. ... 98

5.3.4 Service Quality Moderate Market Orientation and Market

Performance (H4) ......... ............ .. ................................ .. ..... 101

5.4 Implications.... ................................... .. .............................. 103

5.4.1 Theoretical Perspective................... .. ............................ 104

5.4.2 Practical Perspective..................... .. ............................. 105

5.5 Strengths and Potential Limitations ........ .:................................. 106

5.6 Direction for Future Research....................... .. ......................... 108

5.7 Conclusion......... ... ............................................................ III

REFERENCES ....................................................................... 112

APPENDICES

x

LIST OF TABLES

Table 3.1: Research Sample Hotels List............................................ 49

Table 3.2: ,Market orientation items and sources.................................. 53

Table 3.3: Service quality items and sources....................................... 55

Table 3.4: Organizational performance items and sources ....................... 56

Table 3.5: Assessing Measurement Models........................................ 62

Table 3.6: Assessing Structural Models............................................. 63

Table 4.1: Demographic Profile ofRespondents ................................... 70

Table 4.2: Loading and Cross Loading............... .............................. 75

Table 4.3: Results ofMeasurement Model.... ..................................... 77

Table 4.4: Summary Results of the Model Constructs ........................... 78

Table 4.5: Discriminant validity ofconstructs........... ........................... 79

Table 4.6: Result ofReliability test.................................................. 80

Table 4.7: Result of Communality and Redundancy....... ......... ............. 82

Table 4.8: Correlation Test........................... .............................. .... 89

Table 4.9: Path coefficients and hypothesis testing............................... 86

xi

LIST OF FIGURES

Figure 2.1: The Research Model. . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Figure 2.2: Conceptual Framework............................................... ... 36

Figure 4.1: Research Model......................... ............... .................. 72

Figure 4.2: Research Model with Beta Values ..................................... 83

Figure 4.3: Research Model with t-Value .......... ................................. 87

xii

CHAPTER ONE

INTRODUCTION

1.1 Background of Research

In 20th century, a tremendous changes of economy development based on

the increased of number of organizations, technology and others related factors. This

effected to the increased of the organizational competition in the market. James and

Robert (1997) mentioned that the major competition can be concluded as

competitive imitation which one good performance will encourage others to emulate

and practices in their organizations. In a competitive market, the degree of an

organization's orientation becomes crucial for an organization to stay compete in the

uncertain and competitive business environment (Ellis, 2005). Among the various

type of sectors, service sector has become one of the major contributor to Malaysia

economy. As seen, service sector contribute approximately 50 percent ofthe nation's

real GDP over the past few years and in addition to that, the hotel industry said to be

one of the major contributor to Malaysia economic (Khairil, Isyak, Radzi, & Taha,

2008).

Based on the reports from the World Tourism Organization (2003) stated

that growth in the number of tourists arrivals in Asian countries is forecasted to

increase through the year 2020 and Asian region estimated to account approximately

25 per cent of the total inbound tourism by the year 2020. Hence, government of

1

Malaysia take the lead and opportunity to focusing on the tourism industry, thus,

there will be a necessary for hotel industry to improve their services in order to

attract tourists, and increase the returning rate of tourists to Malaysia.

Hotel industry'S defmed as a fragmented industry which means no ftrm can

strongly influence the overall market share (Porter, 1980). On a macro view, hotel

performance can be influenced by either internal environment or external

environment. Internal factor will be controllable by the organization; meanwhile,

external factor will be uncontrollable by the organization which included global

competition, and economic downturn. Apart from that, in order for hotel to create

competitive advantage, hotel player should never forget to focus on turning their

weaknesses into strength (internal factor) since this can be control by the

organization itself. In order for a hotel to stay in the industry, there will be a need to

increase their hotel performance.

A number of theoretical models have addressed the linkage between market

orientation and organizational performance (Narver & Slater, 1990; Slater & Narver,

1994; Sullivan & Butler, 2009; Rodrigues & Pinho, 2010). Hence, market orientation

(MO) practice is known to be an important ~ey success for organizations in the

present turbulence and competitive market. Thus, the marketing concept or best

known as market orientation has been an important key that lead to greater customer

satisfaction and organizational commitment of employees (Kohli & Jaworski, 1990;

Narver & Slater, 1990). Market orientation will mainly focus on customers,

competitor, and employee satisfaction. In the past, many researchers had proved

2

through their studied, market orientation practices leads to better organizational

performance (Kohli & Jaworski, 1992; Narver & Slater, 1990; Slater & Narver, 1994;

Wood, Bhuian, & Kiecker, 2000; Chao & Spillan, 2010).

Besides market orientation, service quality (SQ) appeared to be as another

critical measure of organizational performance (OP) in service organizations as well

(Lasser, Manolis, & Winsor, 2002). Service quality able to creates competitive

advantage for organizations (Kandampully, 1998) and generally bring effect on

customer satisfaction (Zeithaml & Bitner, 2003; Arasli, Katircioglu, & Mehtap, 2005)

and further resulted better business performance (Kersten & Koch, 2010). Hotel

industry more to service sector, hence, service quality is one of the main concerns

among most of the hotels. The higher the service quality provided by organizations

resulting in better customer satisfaction as well as maintains the loyalty, hence,

increased customer retention rates (Levesque & McDougall, 1996).

Overall, more market-oriented and higher service quality organizations

seem to enjoy a higher level of organizational performance. The present study

conducted to examine the relationship between market orientation, service quality,

and organizational performance. This paper. is organized along the lines of a

discussion consisting of the past literatures, hypotheses, methodology and analysis of

results.

3

"

I

1.1.1 The Malaysian Scenario

In Malaysia, most organizations have take into concern and consideration

about the important of market orientation toward organizational performance. Some

studies even highlight the linkage between market orientations, service quality, and

organizational performance. In addition, few related researches have been done by

Malaysia researchers regarding the relationship between market orientation, service

quality, and organizational performance. Based on the study of Boo (2006),

empirically developed a service-driven market orientation (SERVMO) construct and

tested its relationships with service quality. The results show that there is a positive

relationship between SERVMO and service quality.

Apart from that, another studied by Malaysia researchers were highlighted

about the understanding of the impact of market orientation toward business

performance in the fruit industry and results shown that market orientation positively

associated with firm performance (Aziz, Yassin, & Ahmad, 2010). Besides, a studied

by Shekarchizadeh, Rasli, and Tat (2011) used SERVQUAL (service quality) model

to analyzed international postgraduate students perception toward service quality

provided in their studying universities in Malaysia. The results show all their

perceptions were significantly negative as compared to expectations. Service quality

provided will affect the organizational performance. In addition, TQM practices in

an organization also will affect the service quality and market orientation practices in

an organization (Samat, Ramayah, & Saad, 2006).

4

1

Posat Kbidmat MakJumat Akad mik VNlVERSm MALAYSIA SAKAWA)(

Furthermore, a studied by Ramayah, Samat, and Lo (2011) looked at the

relationship between market orientation, service quality, and their impact towards

organizational performance among several service organizations which included

banks, finance companies, insurance companies, private and public utility service

organizations, higher learning institutions, consulting service companies, and other

related service organizations. The result shown that there was a significant effect on

organizational performance and service quality and also service quality has a

significant effect on organizational performance. Besides, this studied also found that

service quality partially mediates the relationship between market orientation and

organizational performance.

Overall, few of Malaysian studied shown that there is a need for

organizations to concern about their market orientation and service quality practices

in order to create better organizational performance. Hence, market orientation

practices and service quality adopted by organization obviously will increase

organizational performance. Thus, the issue highlight in present study is will market

orientation practice and service quality concentration by hotel industry lead to better

hotel performance in term of financial performance and market performance?

1.2 Problem Statement

In an advance and fast developed technology globalization market,

traditional way of business management is no longer consider an appropriate strategy.

Nowadays, for an organization to stay competitive, variety of impro~ements need to

5

be put into concern to generate self competitive advantage. In 90's, many

organizations have realized the important of organizational performance, hence,

pursued to enhance their performance and effectiveness to obtain differentiation in

the market (Miguel, Silva, Chiosini, & Schutzer, 2009). Current organizations are

forced to change from profit maximization to maximizing profits through the

increased of customer satisfaction. Challenges faced by today organizations included

rapid development in technology dimension, diverse workforce, rapid changes and

globalization as well. In addition, the popularity of using IT -based and networked

way ofdoing business, this had further increased the competencies in doing business

(Kulmala, 2003; Kulmala, Paranko, & Uusi-Rauva, 2002).

On the other hand, organizations need to deal with multiple stakeholders

such as customers, suppliers, investors, competitors and lenders as well. Rapid

changes occurring in the organization cause by changing in internal and external

environment. The most important influence indicator was globalization which causes

success and failure of an organization. Based on Fiol (2001), organizational

competencies included the particular set of skills and resources possess to produce

outcomes. As seen, many changes in the market had cause a problem to

organizational performance.

Hence, measuring organizational performance plays an important role in

turning organizational goals to reality. In the past, the dimensions used by

researchers to measures organizational performance were financial performance and

marketing performance such as return on investment (ROI), return on assets, return

6

on sales and new product success (Deshpande, Farley, & Webster, 1997; Pelham &

Wilson, 1996). Addition to that, elements of an organizational effectiveness was also

another important indicator to measure organizational performance (Mott, 1972).

Thus, a continuous improvement of organizational performance needs to be done. In

fact, market orientation found to be an important key determinant to explain

organizational performance (Jaworski & Kohli, 1993; Kohli & Jaworski, 1990;

Narver & Slater, 1990; Rodrigues & Pinho, 2010). The information derived from the

market enables companies to create opportunity and later deliver superior values to

its customers by satisfying their wants and needs on a continuous basis (Slater &

Narver, 1994).

In addition, other than market orientation, service quality often said to have

impact on organizational performance (Lasser, Manolis, & Winsor, 2002). Service

quality often found to be the influential of strategic business unit's performance

(Zeithaml, Berry, & Parasuraman, 1996); generate revenue and yield greater

profitability in term of financial performance (Rust, Zahorik, & Keiningham, 1995).

In addition, Zeithaml and Bitner (2003) proposed that service quality will generally

affects the relationship between customers and organizations. In other words, if

organizations manage to provide good service quality, customers will be willing to

stick to the organizations. For instance, a studied by Shekarchizadeh et al. (2011) on

the perspectives of international students toward few selected Malaysia universities

service quality provided. The results stated that their perception toward the service

quality provided is much lower than expected. Hence, service quality will directly or

indirectly effect organizational performance as well.

7

Thus, the effectiveness and efficiency of organizational perfonnance

clearly seen to be challenging and organizations should highly concern about the

highlighted problem in order for them to remain competitive in. the market.

Therefore, the present study outline to what extent market orientation and service

quality will effect organizational perfonnance among hotel industry in Malaysia.

1.3 Research Objectives

A number of prior studies have investigated the impact of implementing

market orientation toward organizational perfonnance in few different sectors. The

result had shown the important of market orientation lead to better organizational

perfonnance. However, no known studies in the past have been found to investigate

the relationship between market orientation, organizational perfonnance and the

impact of service quality toward hotel industry.

Research objectives will be divided into two categories which are general objective

and specific objective.

~ General objective

The overall objective of the present study is to examine the relationship

between market orientation, organizational perfonnance and the impact of

service quality toward hotel industry in Malaysia.

>­ Specific objective

I. To determine whether market orientation such as customer orientation

may affect organizational perfonnance like fmancial perfonnance and

market perfonnance on hotel industry in Malaysia.

8

II. To investigate whether market orientation such as competitor

orientation may affect organizational performance like fmancial

performance and market performance on hotel industry in Malaysia.

HI. To examine whether market orientation such as inter-functional

coordination will affect organizational performance like financial

performance and market performance on hotel industry in Malaysia.

IV. To found out whether service quality exist in moderating market

orientation and organizational performance.

1.4 Research Questions

There are several questions for present research in order to find out to what

extend market orientation and service quality effect organizational performance. The

research questions exist to answering and achieve research objectives. The questions

as follow:

I. Will market orientation such as customer orientation effect organizational

performance (e.g. financial performance and market performance) among

hotel industry in Malaysia?

II. Will market orientation such as competitor orientation effect organizational

performance (e.g. financial performance and market performance) among

hotel industry in Malaysia?

III. Will market orientation such as inter-functional coordination effect

organizational performance (e.g. fmancial performance and market

performance) among hotel industry in Malaysia?

9

IV. Will service quality exist to be moderating market orientation and

organizational performance?

1.5 Definition of Key Terms

I. Market Orientation

» Express a marketing perception which put the customer's needs in the center

of aU fum's activities (Dalgic, 1998).

II. Customer Orientation

» Understanding the potential customer needs in order to create an added value

for customers on a continuance basis (Narver & Slater, 1990).

III. Competitor Orientation

» Knowing the strength and weaknesses as well as capabilities and strategies of

key competitors (Narver & Slater, 1990).

IV. Inter-functional Orientation

~ Efficiency in coordinating use of the firm resources for creating high added

value to target customers (Narver & Slater, 1990).

10

V.

)

Service Quality

Defmed as understanding the customers' desire or expectations and use to

evaluate a supplier's perfonnance based on the service provided (Chia, Chin,

& Chin, 2002).

VI.

)

Technical Quality

Entails what type of service quality is provided (Gronroos, 1983).

VII.

)

Functional Quality

Take into account how the service quality is delivered (Gronroos, 1983).

VID.

)

Organizational Performance

The ability of an organization to use resources in an efficient and effective

manner to achieve its goal by meeting customers' needs and owns' needs

(Griffin, 2003).

IX.

)

Financial Performance

Refer to the extent to which the organization perfonns in relative profitability,

return on investment and total sales gro~th (Griffin, 2003).

X.

)

Market Performance

The organization perfonns

satisfaction (Griffm, 2003).

m market share, profit ratio, and customer

11

1.6 Significance of the Study

The present study is significance and beneficial to organizations especially

service organizations as well as hotel industry, fmancial and investment industry,

and others service organizations. This study tries to examine the impact of market

orientation practice and service quality toward organizational performance among

hotel industry in Malaysia. Hence, the present study will help in investigating

effective way to increase hotel performance.

In current competitive-market, it is important for organizations to create

self competitive advantage in order for them to compete in the turbulence market.

Market orientation consists of customer, competitor, employee, and even inter­

functional orientation. It is important for an organization to build good relationship

with customer through emphasizing on customer orientation. Beside, through

competitor orientation enable organization to create competitive advantage by

knowing their competitor current strategy and plan. Furthermore, service quality is

another important indicator in determining organizational performance. Employees

play an important role in building ofservice excellence in organization.

Ultimately, if organization especially hotel industry emphasize more on

service quality provide by its employees, customers will satisfy with the service

given. Hence, this will help in develop good service quality and react a pdsitive

effect toward organization performance among hotel industry. Apart from that, the

present study tries to examine the relationship between market orientation, service

12