Market orientation in production agriculture: measurement, relationships, and implications

Over the past several decades, the agricultural marketplace has transitioned from a completely price driven, homogeneous, commodity market towards a more differentiated and fragmented product market characterized by heterogeneous consumers, firms and value offerings. Examples of this change are seen in product differentiation strategies such as grass-fed beef, free-range chicken and organic soybeans. While the strategic landscape may have changed, many beef producers still focus their scarce managerial and capital resources solely on the improvement of production efficiency, often leading to mediocre performance. Within these new complex agricultural markets, such as the beef value chain, market oriented producers may be able to better utilize non-price signals to observe value opportunities, and thus achieve superior performance. Utilizing a sample of Illinois beef producers, this study uses existing measurement scales and a postal survey to empirically assess the level of market orientation, innovation, entrepreneurship and organizational learning among Illinois beef producers, and measures the relationship these unobservable resources have on firm performance. This research contributes to the existing literature by assessing the market orientation of single decision-maker firms managed by the owner as opposed to management teams of large organizations. Findings show that even within the context of production agriculture, a market orientation is a significant driver of firm performance. Secondly, this research shows that market oriented firms are able to clearly define how they provide value, and what impact value discipline clarity has on firm performance.