Research on the Relationship between Customer-Orientation of NPOs and Performance - Intermediary Role of Service Innovation

Abundant researches focus on the relationship between the customer-orientation of enterprises and the performance. However, only a few discuss the effects of the customer-orientation of non-profit organizations (NPOs) on the performance. As for the intervening variables between the customer-orientation of NPOs and performance, scarcely any literature is available around the world. By reviewing and concluding the previous studies, this essay reveals that the customer-orientation of NPOs has positive effects on the performance, and that the service innovation is an important variable between customer-orientation and performance. Moreover, this essay utilizes the survey statistics of the NPOs in Zhejiang Province in structural equation modeling (SEM), and verifies the positive effects that the customer-orientation of NPOs have on the organizational performance and the intermediary role of service innovation between customer-orientation and performance. Keywords-NPOs; customer-orientation; service innovation; performance I. INTRODUCTION As NPOs grow stronger worldwide and the operation of NPOs matures, NPOs adopt more and more marketing concepts and methods. Kotler thinks that the marketing notions of NPOs have developed to maturity and marketing appeals to the NPOs in many developed countries. In recent years, the concept of customer-orientation draws the attention of Chinese scholars. The literature review shows that the customer- orientation of enterprises has been well studied. In the analysis framework of the customer-orientation of enterprises and performance, innovation is included as an intervening variable in some researches and is verified in empirical studies. However, the customer-orientation of NPOs is seldom discussed and the intervening variable is hardly referred to in the literature. In no public literature is the service innovation included in the analysis framework of the customer-orientation of NPOs. At present, the product supplies are abundant, the customer needs diverse a lot, and the customer has more choices and authority due to the development of information technologies. Hence, the producer-oriented society is transforming to the customer-oriented society. The transformation is not only demonstrated in the operation of enterprises, but also the operation of NPOs. Like enterprises, to adapt to the changing social environment and satisfy the diverse public demands, NPOs have the urgent needs to bridge the gap between the surging demands of the society and the limited supply capabilities of NPOs. Therefore, it is very meaningful to discuss how to build customer-oriented NPOs that provide quality service to the customer and establish good relationship with the customer. If customer-oriented NPOs are built, the performance can be improved. This essay starts with the features of NPOs, focuses on the effects of that the customer- orientation of NPOs has on the performance, reveals the intermediary role of service innovation between the customer- orientation of NPOs and the performance, builds the intact model of the relationship between customer-orientation and performance, and verify the positive effects that the customer- orientation of NPOs has on the performance and the intermediary role of service innovation with empirical studies. This essay will encourage the customer-orientation studies on the NPOs of developing countries, provides reference to cross- cultural and cross-regional studies on the customer-orientation of NPOs, integrates the new notions such as customer- orientation and service innovation, and guides the marketing and service management practices of Chinese NPOs.