Employee Involvement and Market Orientation in a Transition Economy: Importance, Problems and a Solution

The former state controlled economies in Central and Eastern Europe continue the transition from state control of business enterprises to private ownership of those enterprises through privatization programs and a regulatory environment that facilitates business development. Unfortunately, privatization and a supportive regulatory environment are not enough to ensure the transition to a free market economy. Continued progress in transition economies depends on a number of factors at the individual firm level, such as the business' ability to adapt to changing market conditions, the ability to successfully implement innovation, the ability to develop highly skilled management teams, the ability to involve employees in the business venture, and the ability to develop a market oriented culture that focuses on customer and competitor related activities. Although these factors have all been identified as critical factors for the success of businesses and continued growth of transition economies, a number of barriers exist that are slowing the business development process (e.g., Aoki and Kim, 1995; Crockford, 1994; Ennew et al., 1993; McDonald, 1993; Miller, 1994; Shipley and Fonfara, 1993). One of the most critical elements appears to be the lack of involvement of managers and employees throughout the organization in market oriented activities of the firm. This article explores the importance of employee involvement and employee empowerment for becoming market oriented in a transition economy by (1) identifying the importance of employee involvement in the implementation of a market orientation, (2) examining the difficulty of developing employee involvement and empowerment in businesses in Eastern European countries, (3) presenting the results from a series of interviews with CEOs from companies in Eastern Europe with respect to employee involvement and market orientation, and (4) describing the use of goal setting theory as a management tool for incorporating employee involvement and empowerment into the market oriented activities of firms in an Eastern European country. The Importance of Employee Involvement to a Firm's Market Orientation The development of a strong market orientation in firms in the U.S. and similar cultures has been identified as an important factor to the success of a business because a strong market orientation in a company will increase its ability to adapt to changing market conditions, will increase its ability to be innovative and will generally increase the performance of the company (e.g., Atuahene-Gima, 1996; Day, 1994; Jaworski and Kohli, 1993; Kohli and Jaworski, 1990; Narver and Slater, 1990; Ruekert, 1992; Slater and Narver, 1994). The above cited market orientation literature suggests a strong market orientation consists of five main components. * The systematic and continuous generation of market intelligence, including detailed information about customers, competitors, and the general market environment. * The dissemination of market intelligence throughout the organization. * Cross-functional coordination and the inclusion of all employees in focusing their activities toward satisfying customer needs at all levels of the organization. * A rapid response to changing customer needs or market conditions. * A dynamic strategic planning process incorporating a long-term perspective. These components, when implemented together, produce market oriented companies with increased sales, increased profits and higher growth rates when compared to their less market oriented counterparts (e.g., Atuahene-Gima, 1996; Narver and Slater, 1990; Slater and Narver, 1994). Employee involvement in marketing activities is pervasive in the market orientation concept and is critical to the successful implementation of a market oriented organizational culture. To effectively engage in market oriented activities requires the involvement and participation of employees at all levels in all functional areas. …