Market orientation and capacity for change in higher education performance in Indonesia
| DOI | https://doi.org/10.1108/JABS-01-2020-0021 |
| Published date | 24 July 2021 |
| Date | 24 July 2021 |
| Pages | 80-100 |
| Subject Matter | Strategy,International business |
| Author | Badri Munir Sukoco,Zuyyinna Choirunnisa,Mohammad Fakhruddin Mudzakkir,Reza Ashari Nasution,Ely Susanto,Indrianawati Usman |
Market orientation and capacity for
change in higher education performance
in Indonesia
Badri Munir Sukoco, Zuyyinna Choirunnisa, Mohammad Fakhruddin Mudzakkir,
Reza Ashari Nasution, Ely Susanto and Indrianawati Usman
Abstract
Purpose –Changes are inevitable and organisations should develop their organisational capacity for
change (OCC) to survive. This paper aims to test the effect of market orientation on OCC (learning,
processand context), as well as the impact of OCC on organisational performance.
Design/methodology/approach –This research used a survey of 314 heads of study programmesin
Indonesia’shighest-ranked universitiesto test the proposed hypotheses.
Findings –The resultsof this research demonstrate that OCC is determinedby customer orientation and
cross-functional coordination (market orientation), while competitor orientation influences the learning
dimension of OCC. Moreover, only the context dimension of OCC positively influences organisational
performance in additionto serving as a mediator between market orientation (customerorientation and
cross-functionalcoordination) and organisationalperformance, whereas competitor orientationpositively
influencesorganisational performance.
Originality/value –This paper empirically testedthe three dimensions of OCC (learning, process and
context) that had previouslybeen discussed only conceptually. Furthermore,the organisation should be
market-orientedto possess the capacity for change. Finally, the paperproposes and demonstrates that
organisationalcontext (culture) plays a significantrole in OCC in developing organisationalperformance.
Keywords Market orientation, Organisational capacity for change, Performance, Higher education,
Indonesia
Paper type Research paper
Introduction
Christensen and Eyring (2011) argue that the business models and strategies of higher
education institutions (HEIs) have not changed significantly in the past 70years.
Interestingly, over the past twodecades, there had been increased autonomy and pressure
for accountability (Christensen, 2011). The growing influence of global rankings represents
a new global standard for “performative accountability” (Oancea, 2008) to obtain a world-
class status (Bak and Kim, 2015;Marques and Powell, 2020). Because HEIs produce
“positional goods” that provide access to social prestige and income-earning (Hirsch,
1976), highly reputable HEIs could offer high-value positional goods (Marginson, 2006).
Consequently, reputation (ranking) becomes a key performance indicator for HEI
administrators and policymakers (Brankovic, 2018). Despite ongoing debates and critiques
of “ranking regimes” (Gonzales and N
un
˜ez, 2014;Soh, 2015), this system has triggered
“reactivity” (Espeland et al., 2007) that “changed everything” (Morriss and Henderson,
2007). Prior studies have found that rankings force “profound transformations” (Hazelkorn,
2011) to make them more proactive about the challenges associated with reflexive
transformation (Pollock et al.,2018), particularly in the context of indicators adopted and
Badri Munir Sukoco is
based at the Department of
Management, Universitas
Airlangga, Surabaya,
Indonesia.
Zuyyinna Choirunnisa and
Mohammad Fakhruddin
Mudzakkir are both based
at the Department of
Management, Universitas
Airlangga, Surabaya,
Indonesia.
Reza Ashari Nasution is
based at the Department of
Management, Institut
Teknologi Bandung,
Bandung, Indonesia.
Ely Susanto is based at the
Department of Public Policy
and Management, Faculty
of Social and Political
Sciences, Universitas
Gadjah Mada, Yogyakarta,
Indonesia.
Indrianawati Usman is
based at the Department of
Management, Universitas
Airlangga, Surabaya,
Indonesia.
Received 22 January 2020
Revised 5 September 2020
26 December 2020
5 March 2021
24 March 2021
Accepted 26 March 2021
PAGE 80 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 16 NO. 1 2022, pp. 80-100, ©Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-01-2020-0021
used by global ranking institutions (Brankovic,2018). In short, rankings cause universities to
implement changes ranging from internal practices to organisational structures (Dahler-
Larsen, 2011;Marques andPowell, 2020).
Many studies have offered a prescription to obtain world-class status. For example, Uslu
(2020) studied four major rankings (ARWU, QS WUR, THE WUR and URAP)and suggested
that research quality accounted for approximately 73.71% of HEIs’ ranking scores.
Therefore, changing the capabilities of HEIs’ researchers to publish in reputable journals
may lead to higher rankings. Furthermore, Bak and Kim (2015) report that emphasising
research could reduce the quality of teaching in Korea; therefore, the incentive structure for
teaching and research should offer the same marginal return on their efforts. Similar
findings were also reported by Sandy and Shen (2019), who found that the capability for
HEIs in Indonesia needs to be supported by research capability, although the research
facilities and academic cultures are not yet ready yet. Other studies have emphasised
internationalisation capabilities as the main issue in increasing the global ranking such as,
while others have emphasised HEIs’ ability to translate and execute abundant support and
resources from the government such as was the case of China (Huang, 2015;Dong et al.,
2020), Taiwan (Lo and Hou, 2019;Tang, 2019), Hong Kong (Li, 2016) and Singapore (Soh,
2015).
Amongst these studies, a comprehensive framework that might be used by the HEIs’
administrators to implement changes to obtain world-class status appears to be unlikely.
Building on the dynamic capability view, another form of dynamic capability that has been
empirically tested is organisational capacity for change (OCC) (Judge et al.,2009).
Organisations must develop their capacity to change to survive and succeed in creating
change (Oxtoby et al., 2002;Kerber and Buono, 2005). An organisation that enhances its
capacity to change can achieve successful changes more quickly and efficiently
(Pagliarella, 2001;Lawler and Worley, 2006), thereby improving its performance
(Heckmann et al.,2016). OCC itself is considered as a “meta-capability” that allows an
organisation to remain competitive in a highly dynamic environment (Judge and Douglas,
2009;Kok and Driessen, 2012). This studyempirically tests OCC on AHEIs’ performance.
By possessing OCC, an organisation will proactively take market opportunities to adapt,
learn and innovate (Judge and Elenkov, 2005). Previous studies on OCC have discussed
the components of OCC such as Klarner et al. (2008) andSoparnot (2011), which consisted
of capacity to learn, capacity to process and context that facilitates the change, whereas
Judge (2011) and Judge and Douglas (2009) emphasised the combination of managerial
and organisational capabilitiesas OCC’s components. In terms of the determinants of OCC,
few have been discussed. For example, Klarner et al. (2007) argue that organisations need
to have the ability to adapt to external changes, particularly on the market. Specifically, at
the beginning of the process of change, organisations should adopt a market orientation
(Hult and Ketchen, 2001), with which it will respond more quickly to changes and
understand and respond to marketneeds effectively (Day, 1994;Hwang and Chung, 2017).
In other words, organisations needto adopt market orientation to initiate (Narver et al.,1998;
Lafferty and Hult, 2001) and build the capacity for change (Klarner et al.,2007). This study
empirically tests market orientationas a determinant of OCC in HEIs.
To answer the research question, this paperreviews the organisational capacity for change
and organisational performance in the context of HEIs. Further, the paper develops
hypotheses based on relevant concepts from existing studies and contextualises them into
HEIs. Secondly, this paper discusses its research design by distributing questionnaires
amongst heads of study programmes from 11 highly-ranked Indonesian universities
mandated by the government to obtain world-class status. Thirdly,a number of procedures
were followed to deal with common method bias (Podsakoff and Organ, 1986;Podsakoff
et al., 2003) and analyse the collected data. Further, this paper provides a discussion that
relates to existing studies, theoretical contributions, managerial implications and limitations
VOL. 16 NO. 1 2022 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 81
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