Strategic Management JournalStrat. Mgmt. J., 28: 961–964 (2007)Published online 24 April 2007 in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/smj.620Received 24 October 2006; Final revision received 13 November 2006RESEARCH NOTES AND COMMENTARIESTOWARD GREATER UNDERSTANDING OF MARKETORIENTATION AND THE RESOURCE-BASED VIEWDAVID J. KETCHEN JR1, G. TOMAS M. HULT2* and STANLEY F. SLATER31College of Business, Auburn University, Auburn, Alabama, U.S.A.2Eli Broad Graduate School of Management, Mic higan State University, East Lansing,Michigan, U.S.A.3College of Business, Colorado State University, Fort Collins, Colorado, U.S.A.Connor’s commentary offers a series of thoughtful comments on the ideas presented in Hult,Ketchen, and Slater (2005). We focus on two of his contentions in our response. First, weargue that the theory underlying our study—the resource-based view—is not tautological. Thisis because resources and performance are not directly related. Instead, realizing the potentialvalue of resources depends on those resources being exploited through a firm’s strategic actions.Second, we disagree with Connor’s contention that market-oriented and customer-led firms liealong a continuum. We propose a richer conceptualization centered on a two-by-two matrix thatcontains market-oriented firms, customer-led firms, and two additional types. Copyright 2007John Wiley & Sons, Ltd.We are pleased that Professor Connor (2007) tookthe time to comment on our recent article onmarket orientation and performance (i.e., Hult,Ketchen, and Slater, 2005). His intentions appearto be constructive, and our reply adopts the samespirit. We acknowledge that some of his critiquesare well founded. Certainly we agree that assessinglong-term performance is preferable to short-termperformance, and we are intrigued by Connor’snotion of disaggregating performance to discoverwhat is due to market orientation and what is due toKeywords: resource-based view; market orientation; per-formance*Correspondence to: G. Tomas M. Hult, Eli Broad GraduateSchool of Management, Michigan State University, East Lans-ing, MI 48824-1121, U.S.A. E-mail: [email protected] customer led. However, we respectfully sug-gest that Conner’s rhetorical arrows are off targetin at least two significant ways. First, we disagreewith his insinuation that the theory that groundedour 2005 study, the resource-based view, is tau-tological. Instead, we suggest that the theory hasoften been cast in overly simplistic terms, lead-ing to an appearance of tautology—a problem weattempt to remedy partially in this paper. Second,we disagree with his notion that market orienta-tion and being customer led lie at two ends of acontinuum. We contend that these concepts can bebetter portrayed as part of a two-by-two matrixcreated by two dimensions: the propensity to sat-isfy current customer needs and the propensity todevelop products and services for potential futureneeds.Copyright  2007 John Wiley & Sons, Ltd.962 G. T. M. Hult, D. J. Ketchen Jr and S. F. SlaterWHY THE RESOURCE-BASED VIEW ISNOT TAUTOLOGICALIn his critique, Connor refers to the ‘apparenttautological nature’ of the resource-based view(RBV). This is a key point, because if our study’sunderlying theory is in fact tautological the sup-port we found for the theory is meaningless. Wesuggest that part of the problem is that previousstudies have often simply examined the relation-ship between ‘strategically valuable resources’ andperformance. It does in fact, on the surface, appearthat such a relationship is tautological. However,asimpleresources–performance link obviouslylacks face validity. At the risk of being flippant,customers do not mail checks to a company justbecause the company possesses certain resources.In reality, the RBV’s underlying conceptual modelis more complex than its critics allow. As shown inFigure 1, the RBV, as it has evolved over the past20 years, contends that resources that are valuable,rare, inimitable, and non-substitutable allow thefirm to do a better job of taking strategic actions. Ifactions are taken that capitalize on the resources,this creates a competitive advantage, which in turnenhances performance.Recent investigations of the RBV, such as our2005 study, move beyond a direct resources–per-formance link and attempt to more fully capturethe RBV by assessing the ‘action’ componentof its underlying framework (see also Edelman,Brush, and Manolova, 2005; Frynas, Mellahi, andPigman, 2006). While some of our previous workon market orientation (MO) did not include anexplicit ‘action’ component (Hult and Ketchen,2001), action in our 2005 study was representedby a responsiveness variable, as shown in Figure 1.One limitation of our work, and MO research ingeneral, is that Figure 1’s ‘competitive advantage’component has yet to be captured. Measuring thisconcept is difficult, but it is needed in order tocompletely test the RBV.In sum, current portrayals of the RBV makeclear that strategic resources only have potentialvalue, and that realizing this potential requiresalignment with other important organizational ele-ments. The RBV at its core has evolved into acontingency theory of organizations, much likestrategic choice, agency theory, and transactioncost economics. While all of these theories havelimitations, the contingent nature of their centralpredictions precludes the prospect of tautology.MARKET-ORIENTED ANDCUSTOMER-LED FIRMSConnor is steadfast in his belief that market ori-ented and customer led are the anchor points ofa continuum. In his current commentary, Connornotes that a firm must decide ‘where on a spec-trum to locate its marketing focus.’ Connor (1999:1157) offered similar and more detailed thoughts:‘there is a danger ... of appearing to suggest thatbusinesses are faced with a choice between thetwo. Rather, we should think of a spectrum of ori-entations which is available to businesses and theselection of position on the spectrum should beseen as a central strategic decision.’ Yet, if marketorientation (MO) and customer orientation (CO)are conceptualized as existing along a continuum,as Connor has twice suggested, then by definitionafirmmust make a choice between the two. Afirm could, for example, fully commit to MO tothe exclusion of CO, fully commit to CO to theexclusion of MO, or half commit to both (i.e., byplacing itself at the mid-point of the continuum). Afirm could not, however,