Although progress has been made in understanding market-driven businesses from a theoretical perspective, relatively few empirical studies have addressed the capabilities needed to become market-driven and the performance advantages accruing to firms possessing these capabilities. One of the barriers faced has been in defining what is meant by the term “market-driven”. A study develops a multi-dimensional measure useful for assessing the degree to which a firm is market-driven. It presents evidence that marketdriven business units developed higher levels of six vital marketing capabilities (in the areas of market research, pricing, product development, channels, promotion, and market management) than their less market-driven rivals and significantly outperformed these rival business units on four measures of organizational performance.

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