ISSN 1648-0627 / eISSN 1822-4202

2024

BUSINESS: Volume 25
Issue 1
THEORY & PRACTICE Pages 164–174
https://doi.org/10.3846/btp.2024.20174

THE IMPACT OF MARKET ORIENTATION ON MARKETING PERFORMANCE:

EXPLORING THE MODERATING ROLE OF COMPETITIVE ADVANTAGE

Dahmiri DAHMIRI , Junaidi JUNAIDI, Johannes JOHANNES, Syahmardi YACOB ,

Sigit INDRAWIJAYA
Faculty of Economics and Business, Universitas Jambi, Indonesia

Article History: Abstract. This research analyses the influence of market orientation and competitive advantage on MSMEs’
■ received 15 October 2023 marketing performance, with competitive advantage as a moderating variable. The research methodology em-
■ accepted 1 December 2023 ploys path analysis using Smart PLS software version 4.0 and involves 397 MSME owners in Jambi City, Jambi
Province, Indonesia. The analysis results indicate that market orientation and competitive advantage signifi-
cantly influence MSME marketing performance. Additionally, competitive advantage moderates, strengthen-
ing the relationship between market orientation and marketing performance. These findings have practical
implications for MSME owners, suggesting that focusing on developing market orientation and competitive
advantage can enhance their marketing performance. Furthermore, this study contributes to the theoretical
understanding of factors influencing MSMEs marketing performance and encourages further research on ele-
ments that most impact competitive advantage. It also provides recommendations for policymakers to sup-
port enhancing MSME marketing performance through various supportive policies. However, this research
has limitations, such as the lack of specific elements of market orientation with significant impacts and a need
to better understand the moderation mechanism between market orientation and marketing performance
through competitive advantage, which could be subjects of future research.

Keywords: market orientation, competitive advantage, marketing performance, MSMEs.

JEL Classification: M3, M31.

Corresponding author. E-mail: dahmiri@unja.ac.id

1. Introduction but also large enterprises, banks, and universities. One

form of government support is through regulations such
Micro, Small, and Medium Enterprises (MSMEs) are central as the Government Regulation of the Republic of Indo-
to the global economy. At the international level, MSMEs nesia Number 07 of 2021, which encompasses the Ease,
in developed countries contribute up to 50% of the GDP, Protection, and Empowerment of Cooperatives and Micro,
while in developing countries, this figure reaches 35%. Fur- Small, and Medium Enterprises.
thermore, MSMEs contribute to employment generation However, MSMEs in Indonesia face significant chal-
by approximately 60% (World Trade Organization, 2023). lenges related to globalisation and free market compe-
Specifically in the ASEAN region, MSMEs hold a dominant tition. Market openness requires MSMEs to compete
position, contributing 85% to employment and 44.5% to globally in terms of technology, market access, and price
GDP (Association of Southeast Asian Nations, 2023). competition (Hayek, 1980). Therefore, improving market-
In Indonesia, MSMEs are one of the main pillars of eco- ing performance is essential for MSMEs.
nomic growth, with a significant contribution to the GDP, Numerous previous studies have shown a positive in-
accounting for 61.97% in 2020 and 60.3% in 2021 (Kata- fluence of market orientation on marketing performance
data Media Network, 2023). The number of MSME units (Frösén et al., 2016; Agarwal et al., 2003; Udriyah et al.,
also shows a positive trend, growing from 64.0 million in 2019; Rahman et al., 2021; Na et al., 2019; Chin et al., 2013;
2020 to 74.2 million in 2022 (Ministry of Cooperatives and Kumar et al., 2011; Murray et al., 2011; Merlo & Auh, 2009;
SMEs of the Republic of Indonesia, 2023). Therefore, it is Dobni & Luffman, 2003; Fernandes et al., 2020; Dabrowski
only fitting that this sector becomes the focus and serious et al., 2019; Acikdilli et al., 2022; Tjahjadi et al., 2020; Habib
attention of various stakeholders, not only the government et al., 2020; Gligor et al., 2019; Länsiluoto et al., 2020).

Copyright © 2024 The Author(s). Published by Vilnius Gediminas Technical University

This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/),
which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
 Business: Theory and Practice, 2024, 25(1), 164–174 165

Other studies also show the influence of competitive ad- profit or net income. Factors such as marketing mix and
vantage on marketing performance (Davcik & Sharma, market orientation significantly influence marketing per-
2016; Hooley et al., 2005; Zhou et al., 2009; Kaleka & Mor- formance (Julian & O’Cass, 2002). Marketing performance
gan, 2017; Ma, 2020; Al-Murad, 2022; Hang et al., 2022; is intricately tied to the competitive advantage in market-
Chong & Ali, 2022; Yasa et al., 2020; Nuryakin & Maryati, ing (Limakrisna & Yoserizal, 2016).
2022; Abdullah & Rosliyati, 2020). Various factors influence the improvement in market-
Some studies use competitive advantage as a moder- ing performance, but market orientation and competitive
ating variable for business performance (Martinette et al., advantage have been identified as two key elements (Fato-
2012, 2014; Zaini et al., 2014; Kaleka & Morgan, 2017; Pa- nah & Haryanto, 2022; Lestari et al., 2022; Puspaningrum,
trisia et al., 2022; Samad, 2018; Haseeb et al., 2019; Qi 2020; Mohammadian et al., 2013; Efrata et al., 2019).
et al., 2021; Harjadi et al., 2020; Fatikha et al., 2021; Syah- The initial concept of market orientation was intro-
rial & Nofriza, 2022; Na et al., 2019; Correia et al., 2020; duced by Kotler et al. (2021), emphasising the importance
Elgarhy & Abou-Shouk, 2023; Keskin et al., 2021; Kiyabo & of understanding the market, creating value for customers,
Isaga, 2020; Mazaira et al., 2003). However, these studies and adapting to changes in the business environment. It
are still general and not specific to the marketing perfor- later evolved to emphasise understanding the market and
mance of MSMEs. So far, no study has shown how the adapting to changes in the business environment (Day,
moderating role of competitive advantage affects the mar- 1994; Slater & Narver, 2000; Porter et al., 2014; Drucker,
keting performance of MSMEs. 1954) and emphasised customer focus and the value cre-
Therefore, this study aims to analyze the direct impact ated for them. Smith (1956) argued that companies should
of market orientation on the marketing performance of focus on understanding different market segments and
MSMEs examine the indirect influence of market orienta- adjusting products and marketing strategies for each seg-
tion on SME marketing performance moderated by com- ment (Levitt, 1984). Moreover, McKenna (1991) argued
petitive advantage. This research introduces a novel aspect that companies should focus more on customer needs and
by incorporating competitive advantage as a moderating desires than just the products they produce.
variable. The success of marketing performance is heavily deter-
mined by the extent to which a company adopts a market
orientation. Market orientation is a business perspective
2. Literature review
that focuses on the company’s overall activities (Raju et al.,
Marketing performance is the outcome of a company’s ac- 2011). Market orientation has been proven to enhance
tivities over a specific period, typically measured by several marketing performance (Protcko & Dornberger, 2014). The
indicators (Venkatraman & Prescott, 1990; Slater & Narver, market orientation undertaken by a company can lead to
2000), including sales growth, ROI, and profit. Addition- success in marketing efforts (Lings & Greenley, 2009).
ally, Lee and Yoo (2019) have developed indicators such Market orientation is an organizational strategy that is
as sales growth rate, profit growth, capital growth, and highly effective and efficient in cultivating the behaviours
earnings. Kotler et al. (2021) popularised ideas related to necessary for creating superior value and sustaining buyer
marketing performance measurement and analysis. performance (Nerver & Slater, 1990). Companies with a
Marketing performance is the result of entrepreneur- market orientation gather information about buyer needs
ial activities and refers to the output originating from the and competitor activities then coordinate them to create
execution of all business operations, with indicators being superior customer value (Chabowski & Mena, 2017).
progress in sales and productivity (Wheelen et al., 2017). Armstrong and Kotler (2018) define competitive advan-
Marketing performance is related to customer growth, tage as an advantage achieved by a company in competi-
which can be seen in increased customer repurchases tion by offering more excellent value or more significant
(Pardi et al., 2014; Nursal et al., 2022; Elgarhy & Abou- benefits than competitors. A company is said to have a
Shouk, 2023). Marketing performance measures the extent competitive advantage if its position has a competitive
to which sales volume and growth increase in a company advantage in resources that can generate superior value
(Karnowati & Handayani, 2022; Rua & Santos, 2022; Suta- at a lower cost.
guna et al., 2023). Understanding competitive advantage requires a com-
Marketing performance is crucial in the development prehensive understanding of business advantages and
of a company, as high marketing performance enhanc- competitors (Clark & Montgomery, 1999) because compet-
es the overall sustainability of the business. The level of itive advantage arises from various activities, such as prod-
marketing performance is also heavily influenced by the uct-related factors (Leonidou et al., 2015), service quality
innovation implemented (Zhang et al., 2018). Marketing (Johnson & Sirikit, 2002), market characteristics (Carbone
performance serves as a construct that can be utilised to et al., 2020), distribution (Hoffman & Novak, 1996), and
gauge the impact of a company’s strategies, acting as a marketing ecosystems (Zhang & Watson IV, 2020).
benchmark for the company’s achievements in promoting Competitive advantage can be measured in various
its products (Handayani & Handoyo, 2020). ways, such as price, product quality, production capabil-
Marketing performance measurement can be based ity, marketing ability, innovation, and leadership (Katsikeas,
on the success of new products, sales growth, and annual 1994). The competitive advantage of SMEs can be observed
 166 D. Dahmiri et al. The impact of market orientation on marketing performance: exploring the moderating role of competitive advantage

in the uniqueness of their products, product quality, and a better competitive advantage. Emphasising the needs
competitive pricing (Song & Parry, 1997). and desires of customers not only supports the creation of
On the other hand, competitive advantage refers to the more suitable products or services but also allows compa-
unique position held by a company that allows it to create nies to maintain customer loyalty, increase market share,
more value for customers (Barney & Hesterly, 2010; Porter and ultimately achieve sustainable growth.
et al., 2014; Kotler et al., 2021). Competitive advantage is Therefore, market orientation is a relevant strategy for
the key to success in market competition and is a deter- small businesses and a key factor in achieving the neces-
minant of achieving optimal performance (Wongsansuk- sary competitive advantage in an increasingly competitive
charoen & Thaweepaiboonwong, 2023; Mian & Ghabban, market. Furthermore, this emphasises the importance of
2022; Achmad, 2023). customer focus in business strategy development. Based
Companies have a competitive advantage when ac- on the research above, the following hypotheses can be
tions in an industry or market create economic value and presented:
when several competing companies engage in similar ac-
H2: Market orientation has a positive and significant
tions (Akpan et al., 2022; El Chaarani et al., 2022; Pusung
impact on competitive advantage.
et al., 2023; Aljumah et al., 2022). If a company chooses the
right strategy to analyse the market, it can easily create a Market orientation significantly impacts marketing per-
competitive advantage. Furthermore, to create a competi- formance, both directly and indirectly, through the mecha-
tive advantage in entering the global market, companies nism of competitive advantage. This concept has been found
must enhance their capabilities, which refer to maintain- in several recent studies. Fatonah and and Haryanto (2022)
ing their market share and even winning from competi- emphasise the importance of market orientation in shaping
tors. Companies must possess a competitive advantage superior marketing performance. They found that when com-
to achieve product performance and success (Fatonah & panies direct their attention to customer needs and desires, it
Haryanto, 2022). positively influences their marketing performance.
Puspaningrum (2020) further strengthens this finding
by demonstrating that market orientation directly contrib-
3. Hypothesis development
utes to marketing performance. Companies that identify
Market orientation significantly impacts marketing per- customer needs and respond appropriately often achieve
formance and has been consistently found to positively better marketing outcomes.
enhance a company’s performance (Tjahjadi et al., 2020; Salim et al. (2021) stress that competitive advantage
Habib et al., 2020; Gligor et al., 2019). However, it is im- can mediate between market orientation and marketing
portant to note that research results have varied. Research performance. By focusing on creating value for customers
conducted by Rahman et al. (2021) and Na et al. (2019) and meeting their needs, companies can obtain a com-
showed positive results, in line with previous findings, petitive advantage that, in turn, enhances their marketing
confirming that market orientation remains relevant in performance.
enhancing a company’s performance. Suwandana (2023) reinforces these findings by under-
To comprehensively understand the influence of mar- scoring the importance of sustained efforts in maintaining
ket orientation on marketing performance, it is essential a strong market orientation and linking it to sustainable
to consider the various studies conducted in this field. competitive advantage. This will help companies maintain
This will aid in developing a deeper understanding of the excellent marketing performance.
complexity of the relationship between market orienta- In other words, the research findings confirm that mar-
tion and a company’s marketing performance, as well as ket orientation plays a crucial role in enhancing a com-
strengthening the knowledge base. Based on the empirical pany’s marketing performance, both directly and through
studies above, the following research hypotheses can be creating sustainable competitive advantages. A deep un-
proposed: derstanding of customer needs is the key to success in a
H1: Market orientation has a positive and significant competitive business world. Based on the research above,
impact on marketing performance. the following hypotheses can be proposed:

Market orientation in small businesses is an ongoing H3: Competitive advantage positively and significantly
response to the desires and needs of customers, which, mediates the influence of market orientation on marketing
in turn, facilitates the development of strategies focused performance.
on creating value for customers. This is a critical factor in
achieving a competitive advantage, as noted by Pardi et al. 4. Research methodology
(2014), Nursal et al. (2022). Various researchers’ findings
also support this, showing market orientation’s positive The stages in the research design can be explained where
and significant impact on competitive advantage. this study employs a survey. Primary data collection is
Puspaningrum (2020), Mohammadian et al. (2013) are conducted by administering a closed questionnaire to
among the researchers who consistently found that com- respondents, a survey with answer alternatives, allowing
panies with a strong market orientation tend to achieve respondents to choose answers that align with their expe-
 Business: Theory and Practice, 2024, 25(1), 164–174 167

riences, opinions, and feelings on a Likert scale of 1–5. The Table 1. Demographic characteristics (source: researcher’s
research was conducted in Jambi, Jambi Province, Indone- calculation)
sia. The population of focus includes all owners of SMEs
Percentage
operating in the city of Jambi, with a total population of Characteristics Attribute Frequency
(%)
50,747 business units. The criteria based on the Slovin For-
Male 234 58.94
mula with a 5% margin of error are used to determine the
Gender Female 163 41.05
sample size. Therefore, the determined sample size is 397
business owner respondents. Total 397 100.00
The criteria for business owners eligible to be respon- 16–25 Years 56 14.11
dents are their willingness to participate in the research, 26–35 Years 139 35.01
engagement in business activities in the city of Jambi, a Age 36–45 Years 163 41.06
minimum age of 17 years, at least a Junior High School >45 Years 40 10.08
education, a minimum of 3 years of business operation, Total 397 100.00
and classification as an SME. Primary School 52 13.10
The sampling technique used to ensure sample repre- Junior High School 79 19.90
sentativeness is the stratified random sampling method. High School 139 35.01
With this method, samples are proportionally taken from Education Diploma 52 13.10
each district in Jambi. Sample selection from each district Bachelor’s Degree 56 14.11
is done randomly, referring to the list of SME owners in
Master’s Degree 20 5.04
each district. Sample selection is conducted through ran-
Total 397 100.00
dom drawing or using statistical software.
Food 131 33.00
The variables focused on in this study are market ori-
Clothing Store 60 15.11
entation, competitive advantage, and marketing perfor-
mance. The dependent variable in this research is market- Print Shop 40 10.08
ing performance, while market orientation and competitive Pharmacy 36 9.07
advantage serve as independent variables. Additionally, Field of Furniture 44 11.08
Business
competitive advantage also functions as a moderating vari- Repair 36 9.07
able. Data collection is carried out through a questionnaire Crafts 32 8.06
divided into four parts: respondent demographic character- Transportation
20 5.04
istics (Part A), questions about market orientation (Part B), Services
questions about competitive advantage (Part C), and ques- Total 397 100.00
tions about SME marketing performance (Part D). The data 1–3 Years 79 19.90
measurement scale uses a Likert scale with a score ranging 4–6 Years 151 38.04
from strongly disagree (1) to strongly agree (5). Years in
7–10 Years 127 31.99
Business
Instrument testing includes validity tests, reliability >10 Years 40 10.08
tests, and normality tests. Quantitative data analysis is Total 397 100.00
conducted using path analysis using Smart PLS software
version 4.0. In this analysis, SME marketing performance and the most significant business sector was food, with
is considered the dependent variable (Y), while market a percentage of 33.00%. Furthermore, many respondents
orientation (X) and the moderating variable competitive had been in business for 4–6 years (38.04%).
advantage (M) are independent variables. The validity and reliability of research instruments play
Many prior studies have employed the same variables, a crucial role in measuring the effectiveness of the mea-
namely market orientation, competitive advantage, and surement tools used. Instrument validity ensures that the
marketing performance, using the same quantitative anal- generated data is meaningful, while reliability indicates
ysis method with the SmartPLS application. Examples of score coherence, which, in turn, affects validity. According
such studies include those conducted by (Martin & Javalgi, to Creswell and Creswell (2017), reliability and validity are
2016; Najafi-Tavani et al., 2016; Zaini et al., 2014; Mazaira interrelated; inconsistent data will not produce meaningful
et al., 2003). conclusions, and vice versa.
Table 2 presents the results of instrument reliability and
5. Results and discussion validity analysis. The Cronbach’s alpha values exceeded
0.70, indicating adequate reliability. Composite reliability
This section analyses demographic characteristics related also met the criteria with values above 0.70. The Average
to gender, age, education level, field of business, and years Variance Extracted (AVE) results also met the requirements
in business. with values above 0.50, indicating good construct valid-
Table 1 shows that most respondents were male ity. Market orientation had a construct reliability of 0.944,
(58.94%), and 41.06% were in the age group of 36–45 while competitive advantage had a reliability of 0.802,
years. 35.01% of respondents had a high school education, showing high internal consistency.
 168 D. Dahmiri et al. The impact of market orientation on marketing performance: exploring the moderating role of competitive advantage

Table 2. Cronbach’s Alpha, composite reliability, and AVE (source: researcher’s calculation)

Construct variables Cronbach’s alpha Rho_A Composite Reliability (AVE)

Market Orientation 0.944 0.901 0.881 0.883
Competitive Advantage 0.802 0.788 0.911 0.915
Moderating effect 1 1.000 1.000 1.000 1.000
Marketing Performance 0.965 0.779 0.906 0.907

Table 3. R-Square values (source: researcher’s calculation) this context, a strong market orientation positively impacts
the marketing performance of MSMEs. This positive im-
R Square R Square Adjusted
pact has significant implications for MSMEs. MSMEs can
Marketing Performance 0.833 0.817 enhance their competitiveness in the market by focusing
on a deep understanding of customer needs and pref-
Table 3 displays the results of the structural model erences and adjusting marketing strategies accordingly.
analysis. The R-squared values obtained exceeded 0.3, This will help increase market share and ultimately boost
indicating consistency in the model. The high R-Square profitability.
values indicate a positive and significant impact of market Market orientation is a business’s ability to respond
orientation and competitive advantage on the marketing to market demand better than its competitors. It also in-
performance of MSMEs. Hypothesis testing results show cludes the ability to forecast market changes effectively,
that t-statistic values >1.96 are significant, confirming the ultimately creating sustainable competition and achieving
importance of research variables. Thus, this research dem- high profits. Some market orientation indicators include
onstrates that market orientation and competitive advan- intensive market research, product development based
tage play a vital role in improving the marketing perfor- on customer needs, customer value appreciation, market
mance of MSMEs in Jambi City. segmentation and targeting, responsive customer service,
customer performance measurement, product and mar-
keting innovation, customer relationship development,
6. Discussion
technology and data utilisation, and responsiveness to
This research delves into the influence of market orienta- market changes (Kotler et al., 2021). Businesses with a high
tion on the marketing performance of micro, small, and market orientation are expected to seize opportunities ob-
medium enterprises (MSMEs) in Jambi City, Jambi Province, tained from the market and enhance service development
Indonesia, as well as the moderation effect performed by to meet market demands (Na et al., 2019).
competitive advantage. This research confirms existing marketing theories that
Table 4 presents the analysis results. In this analysis, the emphasise the importance of market orientation in achiev-
market orientation variable shows a positive and signifi- ing marketing success. The implication is that theoretical
cant impact on marketing performance, with a t-statistic concepts in marketing, such as customer understanding,
value of 2.836, exceeding the threshold of 1.96. Therefore, market segmentation, and relevant marketing strategies,
it can be concluded that market orientation positively im- have a significant positive impact on MSMEs. This impli-
pacts the marketing performance of MSMEs in Jambi City, cation also contributes to developing theories related to
as indicated by a path coefficient value of 0.377. Conse- MSMEs, demonstrating that market orientation applies to
quently, an increase in market orientation can lead to im- large companies and crucial for MSMEs. It can help acade-
proved marketing performance. micians and researchers develop a more specific theoreti-
Market orientation significantly impacts the market- cal framework to understand the factors influencing MSME
ing performance of MSMEs. This finding is supported by performance.
various studies, such as those conducted by (Frösén et al., Practical implications from this theoretical perspective
2016; Udriyah et al., 2019; Rahman et al., 2021; Na et al., also provide valuable insights for MSME owners and busi-
2019; Chin et al., 2013; Fernandes et al., 2020; Dabrowski ness practitioners. Investing in market orientation can help
et al., 2019; Acikdilli et al., 2022; Tjahjadi et al., 2020; Habib achieve better marketing results. Therefore, consideration
et al., 2020; Gligor et al., 2019; Länsiluoto et al., 2020). In should be given to adopting a more customer-focused

Table 4. Research findings (source: researcher’s calculation)

Original Sample Mean T Statistics P

Path (STDEV)
Sample (O) (M) (|O/STDEV|) Values
Market Orientation -> Marketing Performance 0.377 0.256 0.121 2.836 0.002
Competitive advantage -> Marketing Performance 0.865 0.572 0.025 4.652 0.000
Moderating Effect 1 -> Marketing Performance 0.710 0.754 0.109 5.770 0.000
 Business: Theory and Practice, 2024, 25(1), 164–174 169

approach to business strategies. Theoretically, these find- Table 5. Path coefficients of indirect influence (source:
ings suggest that market orientation plays a vital role in researcher’s calculation)
the context of MSMEs and can be used to develop better
Path
theories and practices in MSME marketing. T Statistics P Values
Coefficient
MSME owners in Jambi City, Jambi Province, Indone-
sia, should enhance and coordinate collaboration between Market Orientation →
Competitive Advantage 0.312 1.544 0.021
functions or divisions within their businesses, especially in → Business Performance
the marketing division. It is also essential to pay atten-
tion to customer and competitor orientation indicators.
These research findings align with studies conducted
A greater focus on meeting customer needs and offering
by Puspaningrum (2020), Salim et al. (2021), Suwandana
more attractive marketing programs than competitors can
(2023). These studies indicate that competitive advantage
help build a strong market orientation, which, in turn, can
plays a role in moderating the relationship between mar-
lead to improved marketing performance (Nursal et al.,
keting strategies and market performance. In this context,
2022).
MSMEs with a strong market orientation positively con-
The positive influence of competitive advantage on
tribute to competitive advantage by creating unique prod-
marketing performance is also evident from the figures in
ucts, maintaining product quality, and competitive pricing.
the Path Coefficients table, with a t-statistic value of 4.652,
This ultimately affects MSMEs’ market performance.
exceeding the threshold of 1.96, indicating that competi-
To enhance MSMES performance, efforts need to in-
tive advantage has a significant positive impact on the
clude the development of marketing strategies while con-
marketing performance of MSMEs in Jambi City. The path
sidering market orientation, customer orientation, compet-
coefficient value of 0.865 further confirms this positive
itor orientation, and inter-divisional coordination. Product
impact. Therefore, it can be concluded that an increase
development or innovation also becomes a critical key to
in competitive advantage will positively affect marketing
achieving competitive advantage, besides moderating the
performance. Competitive advantage is one of the stages
influence of market orientation and product innovation on
in achieving good marketing performance for MSMEs.
marketing performance. Thus, this research significantly
This research supports and aligns with previous stud-
contributes to the development of theory regarding the
ies, such as those conducted by (Udriyah et al., 2019),
moderating role of competitive advantage between mar-
which concluded that competitive advantage partially has
ket orientation and product innovation in marketing per-
a positive and significant impact on business performance.
formance. This research also helps discover strategies that
In their research, Lee and Yoo (2019) also stated that
can enhance MSMEs’ marketing performance.
competitive advantage significantly influences marketing
The empirical results of this research prove that mar-
performance. Market-oriented MSMEs can contribute to
ket orientation has a positive and significant impact on
competitive advantage by creating unique products, main-
marketing performance, with competitive advantage serv-
taining product quality, and competitive pricing, ultimately
ing as a mediator that moderates the relationship between
affecting marketing performance (Puspaningrum, 2020).
market orientation and marketing performance. It dem-
Competitive advantage has a significant and positive im-
onstrates the importance of competitive advantage as a
pact on marketing performance. Based on these findings,
link in the relationship between market orientation and
MSMEs can enhance their marketing performance by be-
the marketing performance of MSMEs. In other words, a
ing more innovative in producing their products or ser-
solid customer-oriented market orientation can enhance
vices (Sukaatmadja et al., 2021).
competitive advantage, which, in turn, positively impacts
Competitive solid advantage significantly and posi-
MSME’s marketing performance.
tively impacts the marketing performance of MSMEs.
The practical implications of this research are that
Practical implications of this result include that MSMEs
MSMEs can use these findings to guide their business
can enhance their marketing performance by focusing on
strategies. Besides focusing on customer understanding
developing and strengthening competitive advantages in
(market orientation), MSME practitioners should strive
their products, services, or pricing strategies. Academically,
to create and maintain a competitive advantage in their
this finding contributes to the theoretical understanding
products, services, or other aspects of their business. Train-
of the factors influencing MSMEs in achieving marketing
ing employees to improve their understanding of market
success and may stimulate further research into the most
orientation and how to integrate it with efforts to create
influential elements of competitive advantage.
competitive advantages can help improve marketing per-
To test the indirect influence on the model, we found
formance.
the analysis results provided in Table 5.
From Table 5, it can be seen that market orientation
has a positive indirect influence on marketing performance 7. Conclusions
through a competitive advantage of 31.2%. This means
This research affirms that a robust market orientation sig-
that when MSMEs increase market orientation, enhancing
nificantly contributes to positive marketing performance.
competitive advantage, it will positively impact marketing
The findings indicate that MSMEs actively emphasising a
performance.
 170 D. Dahmiri et al. The impact of market orientation on marketing performance: exploring the moderating role of competitive advantage

deep understanding of customer needs and preferences, remains a risk. Other variables that could affect MSME’s
coupled with sharp analyses of market dynamics, tend to marketing performance were not included in this study,
achieve superior and sustainable marketing outcomes. This such as external factors and business environments that
underscores that a strong market orientation not only en- could provide additional context. Despite employing path
hances the competitiveness of MSMEs in a competitive analysis with Smart PLS, there are limitations to specific
market but also establishes a solid foundation for long- analytical methods that may impact the interpretation of
term marketing success. findings. Although there is a hypothesis that competitive
As revealed in this study, competitive advantage plays advantage plays a role as a moderating variable, other fac-
a crucial role in moderating the relationship between mar- tors influencing the relationship between variables have
ket orientation and marketing performance in MSMEs. In not been fully elucidated.
other words, the research results suggest that MSMEs
successfully cultivating a robust competitive advantage Recommendations
will experience a more substantial impact from market
orientation on enhancing their marketing performance. MSMEs should enhance their market orientation by col-
This highlights the importance of possessing a signifi- lecting more customer data, conducting regular market
cant competitive edge in maximising the benefits derived research, and better understanding customer needs and
from customer focus and market understanding. With a preferences. This will help improve marketing performance.
solid competitive advantage, market orientation becomes MSMEs should conduct an in-depth analysis of their
a strategic foundation and a primary driver for achieving competitive advantage. This may involve evaluating prod-
optimal marketing performance for MSMEs. ucts, operations, branding, and marketing strategies. Af-
Through an intensive focus on developing a competi- ter identifying competitive advantages, companies should
tive advantage in the context of innovation, efficiency, and strive to maintain and strengthen them.
strategic differentiation, MSMEs can reinforce the positive MSMEs should develop marketing strategies that align
impact of market orientation on their marketing perfor- with their market orientation and competitive advantage.
mance. In other words, these measures help establish a It may involve adjusting communication, pricing, and
robust foundation for MSMEs to more effectively meet product distribution according to market characteristics
customer needs, adapt to market changes, and ultimately and competitive positions.
achieve long-term success in terms of marketing perfor- Business owners of MSMEs can identify and map con-
mance. sumers effectively by applying the concepts of market ori-
The theoretical implications of these findings align entation and competitive advantage to enhance marketing
with existing marketing theories, emphasising that market performance further. Academicians and practitioners can
orientation, which includes a profound understanding of use the research findings to improve MSME marketing
customer needs and responsiveness to market changes, management.
has a significantly positive impact on the performance of Policymakers or the government play a crucial role in
Small and Medium-sized Enterprises. Furthermore, com- improving MSME’s marketing performance by creating
petitive advantage has proven to play a crucial role as a supportive policies for this sector to achieve maximum
mediator moderating the relationship between market marketing performance. Relevant policies may include
orientation and marketing performance. MSMEs with a marketing training and consultation programs, local prod-
solid competitive advantage tend to experience a more uct certification, funding for research and innovation, af-
pronounced impact of market orientation on enhancing fordable financing policies, infrastructure and technology
their marketing performance. These implications provide development, increased access to international markets,
additional insights into the importance of developing a and performance measurement and evaluation of support
competitive advantage in the context of innovation, ef- programs.
ficiency, and strategic differentiation to reinforce the posi-
tive impact of market orientation. Research limitations
The limitations of this research include a focus on
SMEs in the city of Jambi, so the results may not be di- This research has limitations related to the absence of spe-
rectly applicable to other geographical contexts. The study cific elements of market orientation that significantly im-
utilised a sample of 397 MSME respondents. Despite con- pact MSME’s marketing performance and the understand-
sidering a 5% margin of error, this sample size still has ing of the moderation mechanism between market ori-
limitations in generalising findings comprehensively. The entation and marketing performance through competitive
sample represented various MSMEs, but the research did advantage. Therefore, further research is recommended to
not account for differences in characteristics that could in- examine specific elements of market orientation that have
fluence the results. The study was conducted within a spe- the most significant impact. For example, whether prod-
cific time frame, limiting the applicability of the results to uct adjustments, pricing strategies, or customer-oriented
the business conditions and contexts of that period. While services have a more significant impact.
a questionnaire was used as a data collection tool, the These limitations also encourage further research to
possibility of response bias and respondent subjectivity understand the moderation mechanism between market
 Business: Theory and Practice, 2024, 25(1), 164–174 171

orientation and marketing performance through competi- Carbone, F., Moroni, S., Mattioli, W., Mazzocchi, F., Romagnoli, M.,
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ments of competitive advantage that have the most sig- vantages of chestnut timber laminated products. Annals of For-
est Science, 77(2), Article 51.
nificant impact. These findings have academic relevance in
https://doi.org/10.1007/s13595-020-00950-4
developing a more comprehensive and complete theory of
Chabowski, B. R., & Mena, J. A. (2017). A review of global competi-
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vice quality. Sage Open, 3(4).
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Disclosure statement
https://doi.org/10.31933/dijdbm.v3i2
The authors declare no potential conflicts of interest. Clark, B. H., & Montgomery, D. B. (1999). Managerial identification
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