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Journal of Nonprofit & Public Sector Marketing

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Operationalizing the Marketing Concept in the Nonprofit Sector

Adrian Sargeant , Susan Foreman & Mei-Na Liao
a b a a b

Henley Management College, Greenlands, Henley-On-Thames, Oxon, UK, RG9 1PD E-mail:

School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter, Devon, UK, EX4 4PU E-mail: Available online: 21 Oct 2008

To cite this article: Adrian Sargeant, Susan Foreman & Mei-Na Liao (2002): Operationalizing the Marketing Concept in the Nonprofit Sector, Journal of Nonprofit & Public Sector Marketing, 10:2, 41-65 To link to this article: http://dx.doi.org/10.1300/J054v10n02_03

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Operationalizing the Marketing Concept in the Nonprofit Sector

Adrian Sargeant Susan Foreman Mei-Na Liao
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ABSTRACT. This paper questions the validity of applying the market orientation construct, which was developed ostensibly for and in large multinational organizations, to a sector whose characteristics differ greatly. Instead, this paper argues for a new approach to the operationalization of the marketing concept in the nonprofit sector. The components of this societal orientation are delineated, as are the organizational imperatives, antecedents and the potential consequences and benefits associated therewith. [Article copies
available for a fee from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail address: <getinfo@haworthpressinc.com> Website: <http://www.HaworthPress.com> 2002 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Nonprofit marketing, marketing concept, nonprofit sector INTRODUCTION The rediscovery of market orientation (Webster, 1994) which is largely attributed to the work by Narver and Slater (1990), and Kohli and Jaworski (1990),
Adrian Sargeant is Professor of Nonprofit Marketing, Henley Management College, Greenlands, Henley-On-Thames, Oxon, UK RG9 1PD (E-mail: adrians@henleymc. ac.uk). Susan Foreman is Marketing Faculty Group Leader, Henley Management College, Greenlands, Henley-On-Thames, Oxon, UK. RG9 1PD (E-mail: susanf@henleymc.ac.uk). Mei-Na Liao is Marketing Tutor, School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter, Devon, UK EX4 4PU (E-mail: m.liao@ exeter.ac.uk). Journal of Nonprofit & Public Sector Marketing, Vol. 10(2) 2002 http://www.haworthpressinc.com/store/product.asp?sku=J054 2002 by The Haworth Press, Inc. All rights reserved.

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has provided much needed clarity for managers looking for ways of implementing what they understand to be the concept, philosophy or substance of marketing (Ames, 1970). In this paper we challenge whether the market orientation construct is appropriate for all organizations and in particular, those operating in the nonprofit sector. While researchers have begun to explore the relevance of market orientation to this context (Siu and Wilson 1998; Caruana et al 1998), many nonprofits still struggle with some of the core assumptions and concepts, such as market, competition, exchange, and performance (Bruce 1998). Since these are an integral part of a for-profit representation of the marketing concept questions are raised about the prevailing view of market orientation. Indeed is it sufficient to cope with the distinctive characteristics and complexities that exist in the nonprofit sector. The aim of this paper is therefore to posit an alternative framework to facilitate the operationalization of marketing in this context. A discovery oriented approach as used by Kohli and Jaworski (1990), Deshpande (1983) and Mahrer (1988) is adopted. The first step in this process is to explore the copious literature on market orientation and the extant work in the nonprofit sector. In order to understand the theoretical foundations we examine the key models of market orientation, the unique features of nonprofit organizations and the specific contextual conditions they encounter. Since there is only a limited amount of extant research focusing on market orientation and nonprofits the second step is to balance this with findings from in-depth interviews conducted with executives in a range of nonprofit organizations. The third step is to synthesize the prevailing views from the literature with the findings from the interviews. From this a framework that reflects the particular needs of nonprofit organizations is developed. Finally the implications for future research are considered. THE MARKETING ORIENTATION CONSTRUCT The first attempts in the literature to operationalize the marketing concept were developed largely by consultants and practitioners (See for example, Alderson 1955; Borch 1957; Felton 1959; McKay 1954; Keith 1960). While instructive, these early works were largely reports of personal experience and were highly philosophical and normative in nature (Webster 1988). Early works considered the philosophy of marketing and developed descriptive accounts of how to achieve a market orientation (Barksdale and Darden 1971; Hise 1965; Lusch et al 1976; McNamara 1972), delineated the benefits of achieving it (Viebranz 1967), defined the boundaries of the concept (Houston 1986; Levitt 1969; Tauber 1974), or focused primarily on implementation issues (Felton 1959; Lear 1963).

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Despite the considerable interest in the topic, there has been considerable confusion over the years, both in terms of the components of the market orientation construct, and the nature of the terminology that should be employed (Shapiro 1988; Swartz 1990). To illustrate these difficulties, Trustrum (1989), for example, equates market orientation and orientation to marketing, Chang and Chen (1993) regard marketing orientation and orientation to the client as synonymous (see also Webster 1994). Deshpande et al. (1993) see the terms market orientation and customer orientation as interchangeable, but Sharp (1991) is careful to distinguish between market and marketing orientation. Indeed, in respect of this latter point there is now a consensus in the literature that the term market orientation is to be preferred to denote the implementation of the marketing concept or philosophy. In adopting this label, the construct is effectively identified as something in which the whole organization can participate. (See also Kohli and Jaworski 1990; Narver and Slater 1990; Shapiro 1988.) Given these differences, it is perhaps not surprising that a variety of meanings have been attributed to the construct (Kohli et al. 1993). These have included; involving marketing executives in strategic decisions (Felton 1959; McNamara 1972), emphasizing customer concerns over those of the production function (Konopa and Calabro 1971), integrating activities within the marketing function (Felton 1959; McNamara 1972) and the extent to which marketing might be afforded a leadership role (Viebranz 1967). Of these, the literature has particularly emphasized the necessity of organizations adopting a focus on their customers, if they are to survive into the longer term (Levitt 1960; McCarthy and Perreault 1987; Piercy 1997). A variation on this theme, emphasizing the importance of the interaction with the customer has also emerged from the service marketing literature (Cowell 1984; Gronroos 1981; Gummesson 1991). It has been argued that, particularly in service contexts, the contribution made by employees is paramount. In cases where production and consumption occur simultaneously the employee is the service and the development amongst staff of a customer consciousness is therefore essential (Gronroos 1981; Sasser and Arbeit 1976). In addition to the dimension of customer orientation, Kohli et al. (1993) note that other relatively consistent themes have emerged from the literature. These include co-ordinated marketing and a focus on profitability. Indeed, these critical dimensions have been reflected in more recent definitions of the market orientation construct. Narver and Slater (1990, p. 21), for example define it as the organization culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance for the business. Kohli and Jaworski (1990), however, prefer to emphasize the generation and dissemination of market intelligence about

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existing and future customer needs, their preferences, expectations and behavior and ultimately the organizations response to it. There are, therefore, common themes in these constructs despite the differences existing between the approaches to measurement. Kohli and Jaworski (1990) tended to concentrate on what they perceived as the activities and behaviors driving the generation and dissemination of market intelligence. On the other hand Narver and Slater (1990), considered a number of behavioral dimensions, but also chose to highlight the cultural dimensions (see also Deshpande et al 1993). They prefer the view that specific activities (such as intelligence generation) are the consequence of developing a market orientation, rather than a component of market orientation per se. NONPROFIT MARKET ORIENTATION A variety of studies have now examined the extent to which the market orientation construct might have a relevance for the nonprofit sector. The overwhelming body of evidence from such studies is that the construct does have relevance, but that some adaptation may be required. Siu and Wilson (1998), for example, argue that to apply market orientation to the setting of Further Education Colleges it is necessary to drop the concepts of profit and competition and to replace them with what the authors refer to as employee orientation and a long term survival requirement. Indeed the education sector appears to have received the most attention in the literature. Employing rather fewer modifications Stewart (1991) examines the market orientation of higher education institutions in the U.K. The author argues that in this context a market orientation allows institutions to attract and retain students (see also Berry and Allen 1977; Blackburn 1980; Kotler 1976; Wolfe 1973 and Kotler and Fox 1985). Caruana et al. (1998) apply the abridged market orientation instrument, MARKOR to the public and university sectors. In both cases they identify a positive relationship between the level of market orientation and a variety of the measures of performance they adopted. Adopting a similar methodology Bennett (1998) also identifies a link between market orientation and fundraising performance in small/medium sized UK charities. In a study of market orientation in healthcare Hayden (1993) distinguishes between customers and consumers and examines the organizations orientation toward both. George and Compton (1985) also working in the healthcare arena, emphasize the role of personnel in this type of context and embrace this dimension in their definition of the construct. It should be noted, however, that all these studies begin from the fundamental assumption that it is appropriate both to seek to measure market orientation in a

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nonprofit context and to subsequently seek to relate this measurement to various aspects of performance. A CRITIQUE As we have seen the construct of market orientation has traditionally been regarded as the embodiment of the marketing concept for all sectors. However there are a number of reasons why one might question our ability to simply transplant the construct from one sector to another. As very different definitions of marketing have been applied to the for-profit and to nonprofit sectors, it would seem rather more appropriate to operationalize the marketing concept in this latter context, by starting from an appropriately-tailored definition. One could, for example, employ the definition first posited by Kotler and Levy (1969 p. 7), namely sensitively serving and satisfying human need, and work from that to an appropriate measure of the extent to which this philosophy was embodied by a given organizationsocietal orientation. To take another approach and to simply transfer a construct from one setting to another would seem wholly inappropriate. Some of the terminology used in marketing in the for-profit sector does not transfer unequivocally to the nonprofit arena. For example the term market orientation implies an orientation towards markets. Even though one could argue that nonprofits have a market for resource acquisition and a market for resource allocation, these are often not true markets in the economic sense of the term. In fact, as Hansmann (1980), notes, nonprofits can often be a response to a very particular form of market failure. Nonprofits, it has been argued, are the most appropriate category of organization to supply goods and services under (certain) circumstances where the market mechanism fails. The economics literature tells us that profit seeking firms will supply goods and services at the quantity and price that represent maximum social efficiency when consumers can (a) compare reasonably accurately between competing products and service, (b) reach a clear agreement with the chosen firm in respect of the goods to be provided and the price to be paid and (c) determine whether the supplier ultimately complied with the terms of the agreement (Hansmann 1980). Nonprofits, however, because they are barred from distributing net earnings, have no such incentive and in such circumstances are a more appropriate organizational form. It therefore seems clear that if nonprofits are a reasonable response to the breakdown of the discipline of the market that the term market orientation is a misnomer. The second key argument for revising the terminology in this context is that the notion of market implies that some form of exchange will take place between the supplier and the recipient of goods and services. There are a plethora of

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occasions when nonprofit organizations do exchange value with the recipients of their goods or services, (or even a warm feeling in exchange for donations), however there are also many occasions when the notion of exchange has little meaning. Even when one considers the different nature of restricted, generalized and complex exchange (Bagozzi, 1975) it is clear, for example, that recipients of international aid, exchange nothing except their need with their supplying organization. In recognition of this, Foxall (1989, p14) advocates a move from exchange to matching to make the concept more embracing and certainly more appropriate to a nonprofit context. The components of market orientation are also problematic in the nonprofit context. The consensus now emerging from the literature in respect of the importance of a customer focus was highlighted earlier. In the nonprofit context, organisations are often less concerned with customer satisfaction, per se, than they are with the notion of longer term benefit to society. As Blois (1987) noted, belief-based organizations, for example, can be particularly antipathetic to customer needs. Such organizations are actively engaged in the furtherance of their mission, often to the detriment of short-term customer satisfaction. Indeed, arts organizations may also forgo customer satisfaction and elect to show particular forms of art, which they know will not appeal to the majority of their existing customers. They do so, however, because they believe that the promotion of such art forms would be good for society and worthwhile, even if a loss should result (Diggle 1998). Even though customer satisfaction is important, it is essential to note that it is not the only consideration in a nonprofit context. Competition is also different in the nonprofit arena. Nonprofits typically serve two primary customer groupsthose that supply the funding for activities and those that consume it. Demand for nonprofit goods and services is often so insatiable that to regard other organizations as direct competitors would be wholly inappropriate (Bruce 1995). Naturally, there are occasions when competition is of significance, when, for example, organizations compete for funds, as in the case of charities wishing to secure government funding to supply goods and services, but whether this dimension warrants the same emphasis as in the for-profit context is far from clear. An additional difficulty with the dimensions of market orientation is the somewhat narrow perspective taken of stakeholders. Indeed, in the for-profit context, it is not unusual to find operationalizations that focus on customers and employees as the two primary stakeholder groups. In the nonprofit context, this can be overly simplistic since organizations can potentially have a much larger group of stakeholders (Lovelock and Weinberg 1984). In conclusion we therefore posit that a nonprofit operationalization of the marketing concept should properly be termed societal rather than market orientation. We further suggest that a nonprofit operationalization of the marketing

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concept will comprise behavioral components at variance with those previously ascribed in the for-profit context. In the primary study that follows we delineate these components, together with the antecedents and consequences of achieving a societal orientation. METHOD Since the goal was to understand the meaning that leading organisations might ascribe to a nonprofit operationalization of the marketing concept a qualitative methodology was adopted (Braybrooke 1965). Authors such as Dexter (1970), Fielding and Fielding (1986) and Miles and Huberman (1994) suggest that a field-based interview approach is well suited to circumstances where the research objective is to understand complex interactions, beliefs and processes. (See also Drumwright 1996.) The technique of elite interviewing was employed. Dexter (1970) employs the term elite interviewing to refer to interviews of decision makers and distinguishes it from highly structured approaches to empirical enquiry. While highly structured approaches are helpful in predicting behaviors, elite interviewing allows the researchers to focus instead on the decision makers understanding of key issues. As Drumwright (1996 p. 74) notes, the technique stresses the informants definition of the situation and allows the informant to reveal his or her notions of what is relevant. (See also Dexter 1970; King 1994.) The interview protocol was developed in consultation with five senior nonprofit practitioners and five marketing academics with experience of qualitative methodology. Questions were deliberately broad and allowed each of the informants the scope to define the components, consequences and antecedents of a market orientation construct in the nonprofits sector. Participants were encouraged to engage in guided introspection (Wallendorf and Brucks 1993, p. 341) considering each of the facets of their perception in turn. The interview protocol is presented below. It should be noted that this protocol was pre-tested with three nonprofit executives prior to the commencement of the field study. The results of these initial interviews were not included in the subsequent analysis. 1. What do you understand by the philosophy of marketing? How does this relate to the nonprofit context? How might a nonprofit organization operationalize this philosophy? What attitudes/behaviors do you think a nonprofit operationalizing this philosophy might exhibit? 2. What are the necessary organizational antecedents that facilitate the operationalization of the marketing concept? What kind of factors foster or discourage this from happening?

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3. What are the practical implications of achieving this operationalization? What are the positive consequences? What are the negative consequences? 4. What are appropriate measures of performance for a nonprofit? What would be the likely impact on these measures of successfully operationalizing the marketing concept? A purposive or theoretical sampling plan was developed (Glaser and Strauss 1967). Forty informants were interviewed for at least one hour; fifteen from the US and twenty five from Europe. Of these five were senior personnel from marketing agencies currently serving the sector, five were nonprofit marketing consultants, and five senior executives were selected from each of the following categories of nonprofit cause; education, health, social welfare, culture/heritage, international aid and religion. This latter category of respondent (i.e., senior executive) was further stratified to reflect a balance of individuals from marketing, fundraising and operational functions. All those solicited to take part in the research agreed to participate and the interviews were conducted over a period of four months. The resultant data were subjected to a content analysis employing the software programme AQUAD (Analysis of Qualitative Data). Standard procedures for the analysis of such data were utilized (Spiggle 1994; Strauss 1990). An analysis of the resultant dataset suggested the framework depicted in Figure 1. We present the figure here as a framework to guide our discussion. The rationale for each of the components we posit and the relationships between them are developed in detail below.

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DELINEATING THE SOCIETAL ORIENTATION CONSTRUCT Stakeholder Focus The presence of multiple constituencies is seen to be a defining characteristic of the nonprofit sector (Shapiro, 1973; Lovelock and Weinberg, 1974; Capon and Cooper-Martin, 1988). Marketing, they argue, should address the needs of a wide variety of different stakeholders, with the needs of one group significantly less likely to dominate than would be the case in the for-profit sector. This was also a consistent theme to emerge from our primary research. One respondent explained that Whatever strategy we develop we need to be sensitive to the needs of our donors, volunteers, beneficiaries, trustees and the wider society we serve. I find my hands tied more than I ever did working in the business world. I

Sargeant, Foreman, and Liao FIGURE 1. Societal Orientation Construct

Societal Orientation Societal Antecedents Organisation Mission Values beliefs Orientation Stakeholder Focus

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Benefits

Consequences

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Competitor Focus

Performance in efficiency effectiveness

Stakeholder goal congruence

Collaboration

Reciprocity

Societal Benefits

Inter-functional Coordination Systems and Structures

Mutuality

Responsiveness

now have to serve a variety of different masters, often with very conflicting needs. Indeed, to properly assess the extent to which marketing has been operationalized within a nonprofit context, the interviews suggested it would be necessary to examine the organizations orientation towards such groups as individual donors, corporates, trusts/foundations, trustees, employees, volunteers, recipients, government, umbrella bodies and society in general. We therefore posit: H1: The greater the degree of stakeholder orientation, the greater will be the degree of societal orientation obtained. Competitor Focus The competitor focus proposed in the original work of Narver and Slater (1990 p. XX) states that, to create value for buyers that is greater than that created by its competitors, a seller must understand the short term strengths and weaknesses and the long term capabilities and strategies of both the key current competitors and the key potential competitors. Informants suggested that this notion was more applicable to the market for resource acquisition. Competition for funds with other organizations was becoming a key issue for our interviewees.

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I believe the fundraising environment is becoming a lot more hostile. We have to spend about 10% more to raise a donation than we would have had to even five years ago. Too many charities competing for a slice of an ever-declining cake. A competitive orientation was also felt to be desirable in circumstances where a nonprofit might have to compete for the right to provide welfare services on behalf of the government (see Bryce, 1992). However, informants felt that the notion of competition in respect of service provision was generally inappropriate. We wouldnt be in this game if someone else was providing the (service). That was the whole point of establishing a nonprofit! We saw an unmet need and decided to do what we could to meet it. We therefore conclude that the need to focus on competitors does appear to have relevance to the nonprofit sector, its influence may not be as pervasive as has proven to be the case in other sectors. Nevertheless, it seems appropriate to posit: H2: The greater the degree of competitor focus, the greater will be the degree of societal orientation obtained. Collaboration Competition is a key strategic issue for many nonprofits, but collaboration is an equally important facet of their relationship with other organizations. Many third world agencies for example, will share transportation channels to maximize the distribution and impact of aid. Indeed, in addition to other similar organizations, nonprofits may be able to identify suitable opportunities for collaboration with both public and private sector bodies (Kotler and Andreasen 1991). It is also commonplace for nonprofits to share lists of lower value donors with other organizations, in the hope that every participant in the exchange will benefit from the sharing of these resources (Sargeant and Mackenzie 1998). From the field research, we can see that collaboration is as much a feature of a societal orientation as competition. The nature of the collaboration is delineated by one of our respondents in the following quotation. This sector seems to me to be unique. Where else would you find an industry group that met regularly once a month to share sensitive data about customer behavior? We meet regularly with representatives of 20 other charities to discuss trends in the market, how various communications have

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fared and what seems to be working well, or not so well. You just wouldnt get that happening anywhere else. We, therefore, define collaborative orientation as the extent to which an organization is focused on exploiting the potential for collaboration with other organizations, either for the joint acquisition of resources, or for the mutual provision of nonprofit goods and services. We posit:
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H3: The greater the propensity to collaborate, the greater will be the degree of societal orientation obtained. Interfunctional Co-Ordination In the market orientation literature this component of the construct directs organizations to marshal all resources, to call on its entire human and other capital resources to create superior value for buyers. Narver and Slaters (1990, p. 22) interfunctional co-ordination would appear to be of relevance to the nonprofit sector, although, again, some modification is required. The voluntary nature of the sector (Hatch 1980) makes it imperative that nonprofits adopt an inclusive democratic approach, where each person can express their personal view (Knapp et al. 1987). In effect, this adds value, not for buyers, but for all the stakeholders associated with the organization, as they begin to develop a greater degree of affinity with and ownership of, the activities undertaken (Schervish 1997). Our respondents highlighted the need to share information on a regular basis as outlined below We try to set up regular meetings between staff in all departments of our organization. They can meet, exchange ideas, concerns and learn about the work which is taking place in other parts of the organization. In our field, this can be a real motivator, since people often passionately believe in the work were doingso its important to keep them informed. Pay isnt a real motivator for most of the staff working here, its the feeling of doing something worthwhile. As noted above, nonprofits face additional challenges, their services are provided from within the boundaries of the organization, from employees and volunteers; supported by donors and other groups who are technically beyond These Boundaries But Whose Efforts Must Be Coordinated Nevertheless (SchindlerRainman and Lippitt 1997; Drucker, 1989). With such a variety in stakeholders it is difficult to ensure that everyone is familiar with and conscious of customers

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needs (Kohli and Jaworski, 1990) The interviews undertaken in this research support the need for interfunctional co-ordination as can be seen below: The fundraising department has to liase very closely with (operations). Many funders will only look to fund projects that are of a certain type or nature. Some trusts will fund running costs, whilst others wont. There are some activities that the general public finds attractive and some it doesnt. We have to very carefully talk through with (operations) what services we would like to provide and get a sense of their priorities. Only then can we match these services with prospective funders. If we just ran off and did our thing, it would be absolute chaos. We therefore define interfunctional co-ordination as the extent to which the organization shares a common goal and works together synergistically, for the attainment thereof. We posit: H4: The greater the degree of interfunctional co-ordination, the greater will be the degree of societal orientation obtained. Responsiveness The interviews and nonprofit literature suggested that a fourth dimension to the societal orientation construct should be considered, namely responsiveness. Historically one of the key reasons for the development of a strong voluntary sector has been the ability of nonprofit organizations to respond rapidly to changing patterns of need, producing innovative solutions. This is accomplished without a requirement to consider either the political consequences of action, or the financial returns that might accrue to shareholders (Bryce 1992, Henderson and Thomas 1982, Wann 1992). Nonprofits have the necessary freedom, flexibility and moral imperative, to respond rapidly to the dictates of social need and must ensure that they do so if the maximum benefit to society is to accrue (Jordan 1964; Dahrendorf 1997). This view was reflected by one of the interviewees: We will often engage in projects many other agencies would prefer to sweep under the carpet, either because they perceive the need as transitory and it would take time to marshal the resources, or because the fear the publicity that association with the project would bring. By contrast, if theres a need and it fits with our mission we just act. We define responsiveness as the extent to which the organization is capable of developing a rapid response to changing patterns of societal need and posit:

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H5: The greater the degree of responsiveness, the greater will be the degree of societal orientation obtained. THE ANTECEDENTS OF A SOCIETAL ORIENTATION During the course of the interviews and discussions in the literature it was possible to identify the prerequisites or antecedents essential to developing a societal orientation. Kohli and Jaworski (1990) noted that there were three core antecedents, which could help or hinder the development of a market orientation; (i) the commitment of senior management, (ii) interdepartmental dynamics, and (iii) organizational systems. In a similar vein, this research identifies some prerequisites or antecedents needed in nonprofits in order to develop an organizational culture of values and beliefs with a societal rather than market orientation. Even though these issues are important for any organization, in the nonprofit organization there is a particular need to (i) emphasize the mission, values and beliefs that underpin the whole, (ii) build stakeholder goal congruence and to (iii) develop systems and structures to meet the needs of the multiple stakeholders. Mission, Values and Beliefs The organizational mission and surrounding values and beliefs are of particular significance to nonprofit organizations since they are bound to conduct only those activities permitted thereby. Both British and American law recognizes the unique status awarded to nonprofits, and in particular the subsetcharities, only so long as they fulfill their published objects. Indeed, tax exempt status and other key benefits may only be realized when such organizations address certain categories of need originally delineated in the Elizabethan Charitable Uses Act of 1601 (Williams 1989). Charities therefore need to ensure that they focus solely on those needs deemed by society as befitting their unique status. In addition, it is the mission, values and beliefs of a nonprofit that define how the organization will operate. However this is also true for for-profit organizations, the profit imperative will usually dictate that the wishes of the customer predominate. In the nonprofit sector it is often the case that immediate customer needs will be subordinated to the dictates of the organizations mission (Sheehan, 1996). It is thus appropriate to regard the mission, values and beliefs of a nonprofit as an antecedent to a societal orientation, since it is these dimensions that will define the societal needs that will be met, how they will be met and under what circumstances. Lenkowsky (1999) argues that nonprofits differ from for-profits because they offer both functional and expressive utility to the parties involved. He therefore

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suggests that a nonprofit mission should express the values and beliefs of the organization alongside the functional goal so often present in for-profit missions. Only then can relevant stakeholders be attracted and a response engendered to appropriate categories of cause. We therefore posit that: H6a: The successful communication of the goals of the organization to all stakeholder groups is an antecedent of societal orientation.
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H6b: The successful communication of the beliefs and values of the organization to all stakeholder groups is an antecedent of societal orientation. Stakeholder Goal Congruence The motives and goals of stakeholders in the business world can be incompatible and thus may become a source of internal disharmony (Williamson 1975). Employees, for example, may act opportunistically and put their own interests before the welfare of the organization. The enhanced number of stakeholders in the nonprofit context emphasizes the role of this factor. For a nonprofit organization to function adequately, all stakeholders should share congruent and therefore not mutually exclusive goals (Rose-Ackerman 1986). Goal congruence plays a key role in focusing efforts and attention on the cause. This helps to bring cohesion and facilitate the interfunctional co-ordination needed in the societal orientation. In the nonprofit sector, goal congruence is often taken for granted as personal motivation is a strong driver for those contributing albeit in a paid or non-paid capacity. Yet its contribution to a societal orientation should be acknowledged, as deficiency in this area would detract significantly from the degree of societal orientation obtained. As one executive noted, The ideal situation is one where the trustees and donors of an organization have a perfect understanding of the needs of beneficiary groups and can identify very clearly therewith. Sadly this isnt always the case and the most pressing needs are not always the ones deemed most worthy of support. We therefore define stakeholder goal congruence as the degree to which the goals of an organisations stakeholders are compatible and synergistic. We posit: H7: Stakeholder goal congruence is an antecedent of societal orientation.

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Systems and Structures To achieve a societal orientation, it is essential that adequate systems and structures exist to support the work of the organization (Kushner and Poole, 1996). Nonprofits need to be sensitive to changes in their operating environment and have adequate systems in place for gathering data in respect thereof. Without adequate information it will clearly be impossible for an organization to develop a stakeholder, competitor or collaborative focus (Nutt 1984). We would also argue that organizational structure should be regarded as an antecedent of societal orientation since this should reflect the relative importance of various stakeholders, facilitate communication between these groups and permit the organization sufficient flexibility to rapidly respond to changing patterns of need (Wortman 1983). H8: Achieving appropriate organizational systems and structure is an antecedent of societal orientation.

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THE BENEFITS Drawing on data gathered from both the literature and the interviews it was possible to posit two primary benefits likely to accrue to nonprofit organizations successfully operationalizing the marketing concept. These may be categorized as enhanced performance, and mutuality/reciprocity. Performance The link between the extent to which the marketing concept has been operationalized within an organization and its reported performance has fascinated researchers since the 1950s. The performance measures, typically the subject of analysis, have tended to be readily-attainable financial criteria such as profitability, turnover, market share and ROE. The assessment of nonprofit performance is somewhat more problematic and for a variety of reasons. Firstly, nonprofits do not define themselves around financial returns, but rather around their mission. Indeed, nonprofits have a distinct legal and fiscal status that bars them from distributing their net earnings to stakeholders such as governors, members, directors, etc. (Hansman 1980). Secondly, the nonprofit can have amorphous goals (Newman and Wallender 1978). What Dahrendorf (1997) refers to as creative chaos of the voluntary sector, may

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well be a strength, but this feature complicates the delineation of appropriate measures of performance. Indeed, authors such as Weick (1977) have cautioned against the use of performance measures, since if efficiency and production measures predominate, then the random deviant behaviors that enhance an organizations ability to be responsive may be lost. This is particularly critical in the voluntary sector where creativity must be encouraged if the essential essence of the sector is to be maintained. So how might performance in this sector be assessed? The interviews suggested that both efficiency and effectiveness should be considered. One manager interviewed stated that; There are two key issues in the (nonprofit) context. Firstly, to what extent are we fulfilling our mission and secondly, are we making a reasonably efficient use of our resources in conducting this work. An assessment of effectiveness might therefore begin with an analysis of mission directedness, or the extent to which an organization might be said to be fulfilling its mission (Sheehan 1996). Effectiveness could also be assessed by the extent to which specific objectives have been met. (See, for example, Hall 1978.) Although there has historically been much support for this view in the literature (Kanter and Summers 1987) a number of criticisms have recently been forthcoming. Perrow (1981), for example, notes that in many cases an organizations goals can be multiple, conflicting and inconsistent, making it difficult to identify appropriate assessment measures. Those writers that prefer to regard effectiveness as a function of the fit an organization might have with its environment, advocate a measurement system which takes into account the needs of supporters, clients, regulators and, indeed, all the multiple constituencies with whom the organization may have links (Connolly et al 1980). Indeed, writers such as Gartner and Reissman (1974), have specifically advocated employing measures of customer satisfaction as a measure of effectiveness (see also Cummings and Molloy 1977; Connolly et al 1980). While inherently appealing, we take the view that customer satisfaction may be a less than ideal measure of organizational effectiveness in the nonprofit sector, since such organizations often have missions which require them to change customer behaviors. Given the preceding difficulties it seems clear that to assess nonprofit effectiveness appropriately a composite measure of effectiveness should be developed, thereby mitigating the weaknesses of any one single approach.

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Nonprofit efficiency is also very much an issue. As Drucker (1990, p. 81) notes, the nonprofit organization has a duty (towards its stakeholders) to allocate its scarce resources to results rather than to squander them on being righteous. Fundraising and administrative efficiency have generated the most interest of late, certainly in the popular press (Sargeant and Kaehler 1998). Donors are reported as increasingly demanding that ever larger percentages of their gift are applied directly to the charity cause and not, as they see it squandered on fundraising and administration. Increasing amounts of press attention and the particularly bad publicity attracting recently to a small number of organizations, have all helped to focus the minds of potential supporters on suitable bases for comparison between nonprofit organizations. Inevitably by virtue of their ease of calculation it is simple financial ratios that can often be used for this purpose. The proportion of funds allocated to fundraising and administration appear to be the most common ratios investigated. Thus we would argue that in assessing the impact of a societal orientation on performance it is desirable to consider both efficiency and effectiveness. Since the extant for-profit literature suggests the existence of a link between market orientation and performance (See for example, Jaworski and Kohli 1993; Narver et al. 1992; Narver and Slater 1990; Deshpande 1993; Reukert 1992; Liu 1994), we posit: H9a: Organizational effectiveness is positively correlated with the degree of societal orientation attained. H9b: Organizational efficiency is positively correlated with the degree of societal orientation attained. Reciprocity and Mutuality Interview data suggested, however, that operational efficiency and effectiveness should not be regarded as the only outcomes from the successful attainment of a societal orientation. An additional dimension derives from the division between resource acquisition and resource allocation; a defining characteristic for many nonprofit organizations (Shapiro 1973). Those individuals that supply an organizations funding are not necessarily those that will derive the primary benefit therefrom. We argue here that one of the primary outcomes from the attainment of a societal orientation will be the bringing together of these two groups, resulting in a mutual exchange of values, ideas and a sense of identity. Many nonprofit managers expressed the desirability of achieving this goal.

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For us, one of the primary outputs has to be a feeling of community. If the things that we do, dont achieve that goal, it would be difficult to justify our existence. Were about bringing people together. If we cant do that, why bother? We like to feel that we can do something worthwhile for all our stakeholders. We want to make donors feel as though they are part of our community here. Not in a tacky kind of virtual reality waybut simply by ensuring that they have a strong association with (our residents). We want them to know the names of the people here, to understand the history of the place and the nature of our needs. We also want them to share in our philosophy and that benefits everyone. We therefore hypothesize that: H10: The degree of reciprocity/mutuality exhibited will be positively correlated with the degree of societal orientation attained. This research has, like other qualitative research, a number of limitations, most notably the subjective nature of the analysis. Whilst every effort was made to remove inconsistencies in interpretation, as Dexter (1970) notes, an element of judgement will inevitably be required on the part of the researcher. In the discussion, we mitigate this potential weakness by demonstrating clearly why each conclusion was drawn with respect to each of the dimensions of the societal orientation construct (Drumwright 1996; Golden-Biddle and Locke 1993). In keeping with a discovery-oriented approach we have also provided additional support from the extant nonprofit literature (Deshpande 1983 and Mahrer 1988). Finally, we have been careful to select only those quotations that are representative of the opinions of the majority of informants. CONCLUSIONS In this paper, the concept of market orientation has been reviewed and its relevance to and validity in the nonprofit or voluntary sector has been assessed and challenged. The market orientation construct may be viewed as the operationalization of the marketing concept within for-profit organizations. The construct has been specifically developed to reflect the content of traditional definitions of marketing and hence contains elements such as a customer focus, competitor focus, employee focus and an orientation towards profit. Even though the specific content of the construct would appear to vary from study to study, the

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consensus emerging from the for-profit literature is clearly that these elements should be considered. Given the history of the construct it would seem inappropriate to merely transfer it from one sector to another. Nonprofit definitions of marketing are often quite different from those developed for use elsewhere. It has therefore been argued that a new construct for use specifically within the nonprofit sector is required. Indeed, a societal orientation construct would have considerably more meaning for the nonprofit sector and provide a more comprehensive operationalization of the marketing concept in this setting. Such a construct would still need to consider an orientation towards customers, competitors and employees, but would also include a number of additional elements, specific to the nonprofit context. A societal orientation construct should thus consider the extent to which a nonprofit focuses on the needs of its key stakeholder groups and in addition, on the needs of the wider society of which it forms part. Indeed it is this latter dimension that perhaps provides the greatest degree of distinction between societal and market orientation. We have also suggested that a societal orientation construct should consider issues such as the potential for collaboration with other nonprofits, public sector, and private sector bodies. In this article we have thus delineated what may be regarded as the components of a new marketing construct. There is now a need for further research to establish an appropriate measurement instrument and to ascertain the nature of the relationship between the degree of societal orientation obtained and outcomes such as performance and reciprocity/mutuality. The former outcome is particularly problematic and it seems clear that any subsequent studies should be sensitive to the complexities of measuring performance in this context. In the light of the literature, previous approaches to assessing nonprofit performance appear overly simplistic. Future studies should examine the link between societal orientation and both organizational effectiveness and efficiency. Only then will a rounded picture of an organizations performance be obtained. In the nonprofit context it is inappropriate to assess performance by simple financial measures alone and composite measures of both efficiency and effectiveness should be preferred. REFERENCES
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