Antecedents of Market Orientation in the Microfinance Industry of Pakistan

This research paper attempts to identify factors that determine the level of market orientation of microfinance providers (MFPs) in Pakistan. Studies have found that one of the main reasons for the non-sustainability of Pakistani MFPs is their lack of market orientation. Market orientation as an organizational culture is comprised of customer orientation, competitor orientation and inter-functional coordination.

The paper notes that market orientation significantly influences firms performance in the general business field. It examines data from 19 MFPs that represent 95 percent of the total active outreach of the microfinance sector in Pakistan. Results indicate that:

• Top management emphasis on market orientation has significant effects on the level of MFIs market orientation;
• Top management should motivate employees to be sensitive and responsive to borrowers changing needs and preferences;
• Policies, rules and regulations should be in accordance with market situations.

The paper cites the small number of microfinance providers studied as a limitation of the study. It concludes that other factors such as the education background and training of management might influence their understanding of the impact of market orientation and that these factors should be included in future studies.