Linking Market Orientation to Strategic Performance: Operational and Digital Mediation in Manufacturing Firms

Abstract

This study examines how market orientation influences strategic performance through the
mediating effects of process improvement, operational speed, and digital transformation within
manufacturing environments. Although prior research has linked market orientation and
performance, the operational and digital mechanisms that enable this relationship to remain
underexplored in production research. Survey data were collected from 314 manufacturing firms
listed on the Tehran Stock Exchange. Using Structural Equation Modeling (SEM) with AMOS 26,
the study assessed both direct and indirect effects of the proposed relationships. Bootstrapped
confidence intervals (95 %) were used to verify mediation significance. Results indicate that
market orientation enhances process improvement and operational speed, which in turn drive
strategic performance. Digital transformation further strengthens these mediating effects by
improving automation, agility, and information flow. The direct effect of market orientation on
performance was non-significant, confirming full mediation through operational and digital
pathways. Manufacturing managers should integrate market driven strategies with process
improvement and digital initiatives to increase competitiveness, responsiveness, and resilience
under Industry 4.0. This paper advances the Resource-Based View (RBV) and Dynamic
Capabilities Theory (DCT) by positioning digital transformation as a dynamic operational
capability that connects market orientation to performance.