1.MA. Business Management,Department of management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran

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1 International Research Journal of Applied and Basic Sciences 2013 Available online at ISSN X / Vol, 5 (5): Science Explorer Publications The impact of entrepreneurial orientation and market orientation on the of industrial firms listed in Tehran Stock Exchange (food, chemical, pharmaceutical, automobile) Khadije Jalilian 1, Babak Jamshidinavid 2, Mehrdad Ghanbary 3 1.MA. Business Management,Department of management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran Corresponding Author kh.jalilian@yahoo.com ABSTRACT:Some factors such as rapid advances in science and technology and more competitiveness in business environment and also increasingly changing environmentshas caused companies managers to consider the improvement of and entrepreneurial orientation and market orientation as an important goal. Therefore, present paper attempts to study the effect ofentrepreneurial orientation and market orientation on the of the companies listed in Tehran Stock Exchange. The study method is applied in terms of objective and is descriptive and of a correlative type in terms of data analysis. The statistical community of the firms listed in Tehran Stock Exchange is composed of industries (food, chemicals, pharmaceutical, automobile).in order to determine the sample size, census method was used which 110 companies were selected as the sample. In order to study information and study data, standard questionnaire with Likert spectrum was used which its reliability coefficient has obtained through Cronbach's alpha The hypotheses are investigated through statistical tests of Pearson correlation coefficient and structural equations using software SPSS and Lisrel.In studying the study hypotheses, the relationship between competitive aggression and, responsibility and, autonomy and information, proactiveness and responsibility, and autonomy and responsibility were not confirmed. Other hypotheses that investigated the effect of other study variables were directly and indirectly confirmed. Keywords:customer, entrepreneurship, improved, industrial firms, innovation, marketing, product, risk taking, Stock Exchange Market INTRODUCTION In today's competitive world, the survival of organizations depends on innovation, creativity and entrepreneurship (Saeeidikia, 2006) and those firms with a stronger entrepreneurial orientation have better than their counterparts in the same industry (Moghimi et al., 2007). Changes in products and market mechanism is often in a way that organizations utilize the opportunities that other organizations do not follow and sometimes even are unaware of them (Collins and Ram, 2003). Many firms with a shift in strategy have realized the need to develop an entrepreneurial spirit within the organization. In fact, this shift in response to the three parameters that have been imposed on the firms: the rapid rise of new competitors, creating a sense of dishonesty to traditional management methods in firms, withdrawing the best work forces of firms and their attempt to establish an independent entrepreneurship (Fry, 1993).Thus, entrepreneurial orientation is regarded as an important organizational process which leads to survival and improved function of firms (Tajeddini, 2010). On the other hand, the firms that are able to better utilize their available tools and features, particularly tools embedded in marketing areas, would provide a good platform for dealing with turbulent environment, and the emphasis on market orientation strategies by such firms propels them towards an optimal (Naidoo, 2010).Market orientation is same as entrepreneurship, i.e. a) the members of the organization are able and willing to engage in learning activities in the market b) recognizing the needs to reduce uncertainty unjustified and c) acceptance of calculated risks, as an aspect of entrepreneurial orientation of an organizationleads to increase in the incidence and tendency to market orientation (HaidarZadeh, 2002).The success of companies listed on the Stock Exchange same as other sectors of the economy requires attention to influential and determining factors that extensive studies must be performed to further investigate

2 such factors; therefore, present study, using previous studies, attempts to find an answer to this question that whether using the entrepreneurial orientation and market orientation strategies in companies listed on the stock exchange can increase their in a competitive and economic environment or not? significance of problem In the early 1980s, researchers have realized the significance of entrepreneurship and its role in organizational renewal, innovation and create new businesses, which this issue has a profound impact on the and modernization of organizations (Kuratko, 1990).The Schumpeter believes that entrepreneurial economic activity leads to a high level of income. He regards entrepreneurship as the basis for long term firm success (Kreiser, et al., 2002). The firms to create a competitive advantage in a fast-paced changes and fierce market competition must turn to entrepreneurship. Increasing competition and rapidly changing customer needs and shortening product life, have producedvarious opportunities and risks for firms. Firms at each time and place attempt to keep present customers and attract new ones and those firms are more successful that satisfy the changing market and customer needs more efficient and quicker than competitors.entrepreneurship and market orientation are factors which makes firms equipped and ready for such conditions as well as a host of other objectives (Yadollahi, 2009).Market competition requires new management approaches. Competition has caused many organizations to not just think about how supply and offer products. Stagnation in such an environment leads to a gradual loss of market share or immediate failure in such an environment(lumpkin&dess, 2011). Entrepreneurial orientation does not include market analysis,so market orientation along with entrepreneurial orientation is necessary (Hurley&Hult, 1988).Many researchers have assumed entrepreneurship to be a stimulus for adopting a market-orientated approach, because entrepreneurial firms in order to offer products that are salable in the market should focus on customer needs and thereby they will be market-oriented. Market orientation is proximity to markets and understanding overt and covert customer's needs, which it could be regarded as a valuable source for the new ideas on product. Overall, innovative products in a market-oriented firm face more success, because they have been manufactured in accordance with the wants and needs of the customers. In addition, due to market-oriented firms'additional information of the customer and environment, usually the rate of innovation, product and product success in market in such firms is much higher (Lado&Oliveres, 2001). The study was performed based on the following necessities: continuous learning about customer and client's overt and covert needs and also understanding hidden capabilities and strategies of competitors; customers' ability to select customers and increase the role of innovation in new products to attract new customers coordination between departments and organizational units to create learning and taking advantage of them; Increased competitive environment and the importance of market orientation and avoidingproduct orientation to achieve a greater share of the market by manufacturing firms Literature Background Entrepreneurial orientationisconsidered as an important organizational process that leads to the survival and improvement of firms' (Tajeddini, 2010). Therefore, many scientists have sought to "search components" that could help them measure the potential approach of an organization to entrepreneurship and on this basis evaluate the impact of this phenomenon on its (Sharma & Chrisman, 1999.Barret& Weinstein, 1998) Yong-Hui Li et al (2008) examined the impact of entrepreneurial orientation on of listed firms on the Stock Exchange and realized that entrepreneurial orientation has a direct effect on the of firms. In addition, Shihping KevinHuanga and et al (2011) in their study stated that high entrepreneurial orientation is closely related to creating innovations that ultimately has a positive impact on.many approaches have been proposed regarding entrepreneurship, including Parsons, Max Weber, Miles and Snow, Dess and Lumpkin, which entrepreneurship trend from the view of Dess and Lumpkin are investigated in this study. According to Dess and Lumpkin, entrepreneurial indicators include innovation as the tendency to introduce a new thing; proactiveness as the ability of a more active firm to discover a new market segment and offer new products and services ahead of competitors; competitive aggression as an serious endeavor to outdo competitors; autonomy as the independent activity of competitors to create a profitable business; risk taking as decision making and taking actions without dependency upon a definite and complete knowledge on possible consequences (Lumpkin and Dess 2001). Market orientation is an important issue that has attracted the attention of many researchers and marketing managers in the few past decades and especially since the beginning of the nineties(day, 1999). Such organization has an external approach, i.e. it shows more attention to customers and competitors (Slater and Narver, 1994; Ellis, 2005). As market oriented organizations emphasize more on customers' understanding 645

3 and satisfaction of their needs, they achieve a more sustainable competitive advantage (Jaworski and Kohli, 1993; Matsuno and Mentzer,; 2000, Pelham and Wilson,1996). Maria Smirnova et al (2011) examined the impact of market orientation on with emphasis on communicative capabilities and results indicated that market orientation directly or indirectly affects through communicative capabilities. Also, Coline Chenget al (2010) indicated that market orientation and adopting innovation could lead to the high of firms. Researchers have operationalized the concept of market orientation in different ways, including views by Shapiro and Glazer, Kohli and Jaworski, Nerver and Slater, Ruekert, Deshpande and Farley. In the present study market orientation is investigated from the perspective of Kohli and Jaworski. They believe that market orientation includes information which is achieved through formal and informal mechanisms. The information which is regarded as a method to distribute information about customers and competitors among allsectors.responsibility which requires that all sectors be accountable to customer and market needs and they must be able to select an appropriate target market, and also design, distribute and promote a product (Kohli and Jaworski, 1996). Hurley and his colleagues in their study argue that market orientation, entrepreneurial orientation and innovation have a positive and significant impact on business. In addition, based on the studies conducted, there is a significant positive relationship between entrepreneurial orientation and market orientation, which in turn this affects the business (Lin et al. 2008). The objective of study The current study aims to study the impact of entrepreneurial orientation and market orientation on the evaluation of the of listed firms in Stock Exchange. Research Hypotheses Entrepreneurial orientation has a positive and direct influence on the of the firms listed in Tehran Stock Exchange. Market orientation has a positive and direct influence on the of the firms listed in Tehran Stock Exchange. Entrepreneurial orientation has a positive and direct influence on the market orientation of the firms listed in Tehran Stock Exchange. METHODOLOGY The present paper attempts to investigate the impact of entrepreneurial orientation and market orientation on firms'. The study is applied in terms of objective and the method is of a measurecorrelative type. The statistical community is composed of four industries (food, pharmaceutical, chemical and automobile) among the industries listed in Tehran Exchange Market. The sample size includes 110 firms which are active in such industries. Due to the selection of four industries among the industries accepted, "census method" was used to determine the sample volume. Validity and reliability In order to determine the validity and reliability of the questionnaire applied to the present study, Cronbach's Alpha method was used which the amount of Cronbach'sAlpha must be higher than 0.6. Total Cronbach's Alpha has been determined by 0.92, which indicates high reliability of the questionnaire. As a standard questionnaire has been used in the study, experts confirm the study and its content validity. Data analysis To analyze the descriptive statistics and to express features of statistical community, SPSS software was used. In addition, in order to analyze data, Lizrel Software and structural equations method based on path analysis were used. Path analysis is a procedure to test overall models and requires modeling adjustmentas a causal diagram (Hsieh 2006). This method enables analyzer to use explicit causal assumptions. Path analysis is regarded as an analytic technique which investigates theoretical models using standardized multi-variable regression equations. The researchers mainly attempt to discover the relationships between independent and variable factors (Lattin, 2003). In fact, path analysis is a method to evaluate the degree of suitability and concordance between a series of data and model. Goodness-of- Fit Test Following determining the model, there are different ways to evaluate goodness-of-fit of the model with observed data.there are several methods to evaluate the fit of the model used, which generally three or five indicators are sufficient (Ghazi Tabatabai 2002). Based on a rule of thumb, the pre-supposed model (a model 646

4 that is being fitted) is good when the calculated coefficients remain in anallowable limit otherwise the indicator has not been poorly fitted. The following table shows the model fit indicators. Table 1.the results of the model fit test Fit indicator Suitability Criterion Acceptance Criterion 1 χ 2 (Chi SquareK square( 0 χ 2 2df χ2 3df The Study Final Model Statistics χ2=6.03df=4 2 df )the ratio of K square to freedom degree ( The Root Mean Square Error of RMSEA Approximation df 2 3 df RMSEA 0.05 RMSEA NFI)normed fit indicator)( 0.95 NFI NFI 0.99 NNFI 1)non-normed fit indicator( 0.95 NNFI NNFI 0.96 CFI 1)comparative fit indicator)( 0.95 CFI CFI 1.00 GFI 1)goodness-of- fit indicator )( 0.90 GFI GFI 0.99 AGFI 1(amended goodness of- fit indicator 0.90 AGFI 1.00 Close to GFI 0.86 Based on the Table 1 and the values obtained, the model has been adequately fitted Table 2. the results of hypotheses test Study Hypotheses Significance Test Result Number entrepreneurial orientation Hypothesis 1: innovation has a positive impact on 3.28 Acceptance Hypothesis 2: risk taking has a positive impact on 4.48 Acceptance Hypothesis 3:proactiveness has a positive impact on 6.43 Acceptance Hypothesis 4: competitive aggression has a positive impact on Rejection Hypothesis 5:autonomy has a positive impact on 4.04 Acceptance market orientation Significance Number Test Results Hypothesis 6: information has a positive impact on 5.03 Rejection Hypothesis7: information has a positive impact on 5.58 Acceptance Hypothesis 8: responsibility has a positive impact on Rejection entrepreneurial orientation market orientation Significance Number Test Results Hypothesis9: innovation has a positive impact on information 7.52 Acceptance Hypothesis 10: risk taking has a positive impact on information 3.18 Acceptance Hypothesis 11: proactiveness has a positive impact on information 2.40 Acceptance Hypothesis 12: competitive aggression has a positive impact on Acceptance information. Hypothesis 13: autonomy has a positive impact on information 3.98 Acceptance Hypothesis 14: innovation has a positive impact on information Acceptance Hypothesis 15: risk taking has a positive impact on information 5.34 Acceptance Hypothesis 16: proactivenesshas a positive impact on information 3.49 Acceptance Hypothesis 17: competitive aggression has a positive impact on 1.96 Acceptance information Hypothesis 18 autonomy has a positive impact on information Rejection Hypothesis 19: innovation has a positive impact on responsibility 2.23 Acceptance Hypothesis 20: risk taking has a positive impact on responsibility 4.49 Acceptance Hypothesis 21: proactiveness has a positive impact on responsibility 0.88 Rejection Hypothesis 22: competitive aggression has a positive impact on 2.26 Acceptance responsibility Hypothesis 23: autonomy has a positive impact on responsibility 0.19 Rejection 647

5 Hypothesis test In order to investigate the study hypotheses, structural equations based on path analysis are used. In the model depicted, the impact of entrepreneurial orientation on market orientation is examined. In one section, the impact of independent variables (entrepreneurial orientation and market orientation) on dependent variable (the of firms) is investigated. Table 2 shows the significance of coefficients and parameters obtained in the study overall measurement model. If significance test of each item is higher than 1.96 and lower than -1.96, the coefficients obtained are significant. The significance of such numbers indicates the significance of the model, i.e. placement of each component in the form of each factor is significant. According to Table 2, all hypotheses except for hypotheses 4, 8, 18, 21 and 23have been confirmed. Figure 1. Resulte of path analysis DISCUSSION AND CONCLUSION The present paper attempts to investigate the impact of entrepreneurial orientation and market orientation on the of firms. The study findings indicate that innovation, risk taking, proactiveness and independence have a positive impact on the of the companies listed in Tehran Stock Exchange. Firms with establishing research, development and innovation units in products and also accepting high-risk projects became able tooutdo competitors in introducing new products as a way to enhance the, and managers by giving freedom and independence to employees discovered new opportunitiesand improved their. In addition, competitive aggression has no effect on the companies listed in Tehran Stock Exchange, perhaps due to companies' dissatisfaction with making competitors inactive. Yong-Hui Li et al (2008) concluded that entrepreneurial orientation has a positive impact on the of firms which the results of the present study confirms this issue. Also, among market orientationcomponents, information and information influence, i.e. whatever the rate of and distribution of information on companies listed in Tehran Stock Exchange greater, more increase in the of companies will be observed. Firms with conducting marketing research were able to identify customers'current and future needs.additionally, managers by spending time with the various units But there was not any significant relationship between responsibility and firms'. Kohli and Jaworski (1997) concluded that market orientation influences the of firms which the results of the present study confirms this issue.another aspect of the study is that there is a significant positive relationship between the dimensions of entrepreneurial orientation and market orientation except independence information and proactiveness on responsibility and independence on responsibility.based on the study results, among entrepreneurial orientation components, proactivness, risk taking, independence and innovation have the maximum impact on the of the companies listed in Tehran Stock Exchange, and among market orientation components, information and information have the maximum impact. In general, the positive and significant impacts of market orientation and entrepreneurial orientation are related to the significance that firms attach to such concepts. Therefore, paying attention to them is one of the most significant factors in achieving competitive advantage, success and enhanced of the firms. Therefore, companies must more quickly and before the development of newer technological advances, globalization of business and cross-border markets, and also formation of a more difficult competitive environment, achieve a higher competitive position using some factors such as investment, encouraging entrepreneurship and innovation, high risk taking, market orientation, more flexible organizational structures, and consequently development of entrepreneurial orientation and market orientation. Suggestions 648

6 Managers are proposed to enhance company through incentive and motivating systems, and recruit employees with new ideas to boost creativity and innovation. Company can supply products and provide services, different from competitors in order to attract new customers. Company can identify threats and opportunities in the industry, including the risks and rewards in the competitive environment and utilizing market opportunities. Company can introduce new products, services and technology and act as a pioneer and initiator of activities and ideas in order to be able to create a competitive advantage for the company. Considering the negative impact of competitive aggression on the in the present study, it is essential to note that disregarding the activities of competitors make company lag behind changes in the market. Conducting research on marketing, external factors, life styles, consumption patterns, companies can identify customers' current and future needs and take action to meet them. Managers canspend time with marketing department and other units for discussion about the needs of customers and the market, to meet the needs, thereby enhance the. The managers are suggested to include entrepreneurial orientation in company strategy in order to boost entrepreneurship morale in employees and make them committed to the ideals of the organization, and utilize every opportunity to improve company, that is, to make benefit and income, maintain and increase market share and higher rate of sales for the companies. REFERENCES Barret H, Weinstein A "the effect of market orientation and organizational Flexibility on corporate entrepreneurship ". Entrepreneurship: theory and practice. Fall, pp Collins L, Ram M "Managing the entrepreneurial firm. 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