Assessing the Impact of Internal Market Orientation (IMO) on the Firm's Performance

  • Mujahid Mohiuddin Babu

Student thesis: Phd


The primary aim of this thesis is to explore the conceptualisation and implementation of internal market orientation (IMO) from the practitioners' point of view and to investigate its impact on the firm's overall performance. The basic premise of this thesis is to develop an integrated model to measure the impact of IMO on a firm's overall performance. Most of the earlier attempts suggested a direct relationship between IMO and financial performance, which is rather difficult to demonstrate since the outcome is reflected in a firm's customer-based performance through enhancing employees' behavioural outcomes. Moreover, despite the theoretical development of IMO, practitioners are reluctant to adopt IMO. With this in mind, in this thesis, a mixed-method approach was employed to gain an in-depth understanding of practitioners' perceptions of IMO and to assess its impact. This thesis is drafted in an alternative format comprising three related papers. For the first paper, data were collected through in-depth interviews with key decision-makers and analysed applying content analysis. For the second and third papers, data were collected from middle to top managers from service industries in the UK through an online survey and analysed using partial least squares structural equation modelling (PLS-SEM). The first paper explores the practitioners' understanding of the concept and the underlying reasons behind their reluctance to be IMO-focused. The outcomes of the study point out limitations of IMO's conceptualisation, implementation procedure, and unclear consequences that have thwarted its adoption. The main contribution of this study stems from the fact that it explores the concept from the practitioners' point of view and suggests potential measures that can be taken to increase IMO's applicability among them. The second paper investigates the impact of IMO on firms' employee-related outcomes, such as job performance and subversive service behaviour, through an integrated model. Findings indicate that the direct effect of IMO on firms' employee performance is not significant; however, there exists an indirect relationship between them through employee commitment and customer orientation. Moreover, the findings indicate that implementation of IMO reduces the employees' tendency to engage in subversive service behaviour. The third paper presents an integrated model, which is developed and tested to understand the impact of IMO on a firm's customer-based outcomes as well as financial performance. Results provide statistically significant support for the argument that IMO impacts firms' customer-based performance through both employee commitment and customer orientation. The study also supports a strong relationship between a firm's customer-based performance and financial performance. As predicted, the study has identified the mediating role of several constructs, such as customer orientation, employee commitment and employee performance, in the integrated model. IMO underscores employees' role in a firm's overall performance. It becomes crucial that firms focus on employees and develop suitable internal marketing programmes complementing the existing external marketing programmes.
Date of Award31 Dec 2016
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorJikyeong Kang (Supervisor) & Alex Gunz (Supervisor)


  • Firm performance
  • Customer-based performance
  • Partial least squares structural equation modelling (PLS-SEM)
  • Subversive service behaviour
  • Employee performance
  • Internal market orientation
  • Internal marketing

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