Women’s driving decree, market orientation, and company performance in Saudi Arabia

This paper investigated whether the royal decree of September 2017 allowing women to drive affects the relationship between market orientation and firm performance of official car dealerships in Saudi Arabia. In the empirical investigation, a quantitative method was used, focusing on car dealership managers and executives. The hypotheses were tested using structural equation modelling with data collected from 94 questioned. Market orientation dimensions that were investigated included customer orientation, competitor orientation, and inter-functional coordination. The results indicate a positive effect of market orientation on company performance in Saudi Arabia over two periods, before and after the application of the decree. Before the royal decree, only two of the three dimensions of market orientation affected company performance, customer orientation, and inter-functional coordination. After the decree, all three dimensions of market orientation affected company performance. This proves that political decision has intensified competition in this market. Our results underlined the non-necessity of equality and the strength of the three components belonging to the market orientation on performance. Yet, our investigation is unprecedented having sought to resolve this classic relationship in a specific context.


Introduction
*The great changes in the Saudi Arabian economy following the Kingdom's Vision 2020-2030 encouraged many stakeholders to adopt planning changes and development programs. In fact, one year after the September 2017 decree was announced, the Saudi government reported that 120,000 women applied for a driving license, and the government expected that three million women would hold a license in 2020, as foreseen by Vision 2020-2030. As a move to diversify the Saudi economy, this decision was made to reduce the Kingdom's need for crude oil revenues and to develop other industrial and service sectors (Aloulou, 2019). Based on reports by the National Institute of Statistics, the Saudi automotive market has 22 official car dealerships. With the new decree, those dealerships are undoubtedly motivated to use the best marketing means to breakthrough in this transitional period for competitive market success.
In this paper, our aim is to determine the effect of applying the September 2017 decree on the link between market orientation and company performance. Indeed, according to the Ministry of Commerce and Industry, Saudi Arabia is the most important car dealership market in the Middle East, with 40% of sales in the automotive sector. Following Vision 2020-2030, car dealerships were expected to increase in 2018 by up to 50%, to absorb the impact of stronger demand from women.
Hence, this research tried to answer the following question: Will the correlation between market orientation and car dealership performance change with the women's driving decree?
The contributions of this study are threefold. First, market orientation and its components (customer orientation, competitor orientation, and inter-functional coordination) help car dealerships to effectively differentiate their product offerings from those of their competitors. Second, our study could attract future researchers to important and finer topics. Third, it is essential to know whether or not market orientation affects car dealership performance, but also to estimate the magnitude of the market orientation effect on performance before and after the application of the women's driving decree.
These results may be different if they are suitable for industrial Saudi companies. Indeed, the problem of our research was to study the relation between the market orientation and service performance of Saudi companies following the launch of the royal decree concerning women's right to drive.

Decree allowing women to drive (vision 2020-2030)
For economic and development purposes, Saudi Arabia's Vision 2020-2030 was adopted as a procedure and roadmap to achieve greater diversification, requiring structural dimensions in top-of-the-line manufacturing and service areas and focusing on increasing a maintainable economy based on knowledge (Khorsheed, 2015;Nurunnabi, 2017). Accordingly, in September 2017, the Saudi government announced the end of a long ban on women driving. They have been allowed to drive in the Kingdom since 24 June 2018.
For decades, women in Saudi Arabia were not allowed to travel alone. Even to go to work, they needed a male companion. With the new decision, they can have more mobility to enter the labor market. Therefore, this decree has created more employment opportunities for women, which reflects positively on their social life. In fact, Ilo (2009) confirmed that women's participation in economic and regional development is a source of development and innovation around the world. Thus, this decree is good, allowing the car market to grow even more. This will surely reduce women's dependence on drivers and lead to their becoming potential customers in the automotive sector.

Market orientation (MO)
Since 1990, two approaches have emerged to define the concept of market orientation. These two positions find their origins in the studies of Kohli and Jaworski (1990), who stressed the behavioral dimension, and Narver and Slater (1990), who highlighted the cultural dimension. However, the theoretical proposals of Homburg and Pflesser (2000) and the empirical study evidence of Gotteland et al. (2007) then followed. Homburg and Pflesser (2000) analyzed market orientation in the industrial sector in Germany. Gotteland et al. (2007) showed the clarity of the concept of market orientation, which differs according to the actors in the business environment, as well as the clarity of the mechanisms, allowing improvement in the relation between market orientation and organizational performance. These two approaches emerge as historically competing ideas, yet they meet on the nature of the market orientation concept. This concept ushered in an important stream of research currently being followed in the area of strategic marketing management, as market orientation is dominant in contemporary marketing decision-making (Mahmoud et al., 2019;Hinson et al., 2017). Jaworski and Kohli (1993) and Cheng and Krumwiede (2012) referred to market orientation as a philosophy by which a company discovers and satisfies the needs of its customers through its products and services. Narver and Slater (1990) defined market orientation as the basis of marketing and strategic planning, orienting the company toward creating and delivering superior value for its customers. They agree that market orientation is multidimensional, consisting of three behavioral facets (Vahdati et al., 2016). First is customer orientation, which denotes the activities undertaken to gather information about competitors in the target market and disseminate it throughout the company. Second is competitor orientation, which refers to actions planned for acquiring and disseminating data relative to customer targets. The third is interfunctional coordination, which includes the company's coordinated efforts, related to more than the marketing department to make greater importance for consumers (Vahdati et al., 2016). Neely et al. (1995) defined performance as the efficiency and effectiveness of action. Moullin (2003) defined an organization's performance in terms of how well the organization is managed. This amounts to using a measurement method that determines whether the business is well managed. The measurement of company performance has been studied by several researchers using various components. The components associated with company performance are measured by objective or subjective methods and are usually used in studies of the relationship between market orientation and business performance. For Tangen (2003), the measurement scale of company performance is composed of an objective or subjective perception or both. He points out that multiple sets of measures will certainly give a more correct and balanced view of a company's performance.

Company performance
Few studies have examined the relationship between objective and subjective indicators. Dawes (2000) concluded that there is a strong correlation between them. According to Wesson and Figueiredo (2001), the objective perspective is more appropriate than the subjective one. However, when financial data are unavailable, Dess and Robinson (1984) suggested using the subjective perspective. For example, most managers in Saudi Arabia refuse to disclose information about their financial performance. Then it is more appropriate to use a self-reporting (subjective assessment) method. In addition, a meta-analysis by Kirca et al. (2005) confirmed that the relationship between market orientation and performance is stronger when using subjective rather than objective measures, which supports our choice of measuring financial performance with three items: return on sales (ROS), return on assets (ROA), and return on investments (ROI).

Market orientation and car dealership performance
Studies that investigated the relationship between market orientation and firm performance still did not provide clear-cut answers. Most researchers of market orientation and performance found quite mixed results. This suggests that the relationship between the two constructs can be more complicated and the impact cannot be considered in a simple way (Baba, 2012).
On the one hand, the majority of studies found a positive relationship (Mahmoud et al., 2019;Hinson et al., 2017;Slater and Narver, 1994;Green et al., 2008;Raju et al., 2011;Bamfo and Kraa, 2019). For example, Bamfo and Kraa (2019) proved that the customer orientation component of market orientation (MO) positively and significantly affected company performance, while competitor orientation had the same effect, but not significant, whereas inter-functional orientation had contrary and nonsignificant effects on the performance of small and medium enterprises (SMEs) in Ghana. In fact, Dawes (2000) highlighted that each market orientation component is not necessarily equally and strongly linked with performance.
On the other hand, some researchers did not identify a significant relationship between MO and performance, such as Hart and Diamantopoulos (1993). This was reinforced by the results of Liao et al. (2011) in a survey showing that 36 out of 38 articles examined noted a relationship between market orientation and performance.
In this context, most of these studies prove that a significant link is evident in a developed context. Based on these findings, Kirca et al. (2005) recommended that researchers study this relationship in different contexts and with different perspectives. Most of the proposals about a significant relationship refer to developed economies. Recently, several studies, such as those by Osuagwu (2006) in Nigeria, Attia (2013) in Egypt, and Bamfo and Kraa (2019) in Ghana, found a positive association between market orientation and performance in emerging countries. Thus, studying this relationship in the car sector in Saudi Arabia seems relevant. Therefore, the following research hypothesis was formulated: H1. There was a significant link between market orientation and car dealership performance before the application of the women's driving decree.
For women in Saudi Arabia, 2017 was a significant year. Permission for women to drive should create a new group of consumers. This is expected to promote the economy through the creation of new jobs with increased female participation in the workforce and more active participation in society. Car rental companies are likely to employ more female staff in their offices and customer service centers, resulting in more support for women driving. Indeed, women have become more autonomous by having the possibility of traveling without any obligation to be accompanied by a man. This has forced marketers to adapt their orientation to the new market, given the increased competition between car companies. So, car dealerships have become strongly committed to developing their market orientation in order to increase their performance. Specifically, different readings show a need for research to identify the possible mediating or moderating factors likely to affect the link between market orientation and firm performance. As shown in this paper, the royal decree allowing women to drive in Saudi Arabia likely influences the performance of car dealerships when considering the market orientation of their marketing efforts. Then, the secondary hypothesis that this study test is: H2. There is a significant link between market orientation and car dealership performance after the application of the women's driving decree.

Methodology
From the review of the literature, the concept of market orientation is used to measure the degree to which a car dealership adopts it in its marketing strategies. This study reexamines market orientation through the traditional measures of Narver and Slater (1990), the scale of which is widely appraised.

Data and sample
To examine the hypotheses, a quantitative study was conducted. The choice of the automotive sector as the field of study came after noting its reactions following the decree allowing women in Saudi Arabia to drive, including a wave of advertising by car manufacturers, the opening of fairs specializing in women's cars, bank credit incentives, and car rental offers. Data were collected using an electronic survey questionnaire completed by managers of official car dealerships. Companies were randomly selected from a sample of registered dealerships. The population in this study consisted of executives, mainly managers, of official car dealerships in Saudi Arabia. Among the 22 official car dealerships listed in the sampling database of the National Institute of Statistics, 110 questionnaires as an illustrative sample were sent out; only 94 questionnaires were returned and used in the analysis. Based on the random sampling method, specifically, the conventional method, managers from this population were chosen. This procedure was adopted because it offered an equal chance for each manager to be carefully chosen.

Profiles of respondents and firms
The percentage of acceptable answers was 78.33%. This is an acceptable percentage to test our research hypotheses. Most of the managers were men (81%) and only 19% were women. Furthermore, most were financial managers (31%) or marketing managers (26%) or had another function (24%), and 19% were CEOs. The questionnaire was administered to several managers at each company. The questionnaire was written in English and translated into Arabic, the official language of Saudi Arabia.

Measures
Following the recommendations of Douglas and Craig (2007), before the main study, a pre-test phase was conducted with managers and executives from 5 automotive dealers in Saudi Arabia, to check that they adequately understood all questionnaire items. For methodological purposes, some items were modified. The final version was developed using a 5point Likert scale and administered over two periods, before and after the decree was put into effect.
Market orientation (MO) is measured by different scales, and the MARKOR (Jaworski and Kohli, 1993) and MKTOR (Narver and Slater, 1990) scales are the best known. The universal measure of Narver and Slater has been highly assessed and hence accepted (Mavondo and Farrell, 2000). This market orientation scale consists of 3 subdivisions: customer orientation, competitor orientation, and inter-functional coordination. For each subdivision, there are different items operationalizing each variable. The importance here is to assess how official car dealerships include market orientation in their marketing strategies. The integrated questionnaire uses 10 items to measure the market orientation of firms, covering the 3 dimensions developed by Narver and Slater (1990): Customer orientation (4 items), competitor orientation (3 items), and inter-functional coordination (3 items). Subjective indicators were used to assess firm performance (Escandón-Barbosa et al., 2016;Nouri et al., 2016). The indicators retained to measure the perceived level of financial performance were return on sales (ROS), return on assets (ROA), and return on investments (ROI). Specifically, managers were asked to indicate their firm's performance on the 3 criteria. The items constituting each measure are presented in Table 1.

Results
In this section, we present the details of the exploratory and confirmatory analysis of the two periods, before and after the royal decree allowing women to own and drive a car, followed by the obtained results and a discussion. We regularly share information concerning competitors' strategies We emphasize the fast response to competitive actions that threaten us

Interfunctional coordination
We regularly communicate information on customer needs across all business functions We frequently discuss market trends across all business functions All of our business functions are integrated in serving the needs of our target markets Firm performance

Return on investments (ROI)
Return on sale (ROS) Return on assets (ROA)

Exploratory analysis
The survey data were assessed to check the reliability of different scales. Principal component analysis (PCA) and Cronbach's alpha were run for the constructs market orientation and firm performance. Table 2 summarizes the results of this analysis over the two periods under study (before and after).

Confirmatory analysis
In this phase, structural equation modeling was used, which is based on the functionalities of regression analysis and factorial analysis. For the measurement model, the Mardia coefficient was above 3, so multiformity was not verified. To solve this problem, previous research suggests applying the bootstrap method (Roussel et al., 2002). Taking into account the results presented in Table 3 and Fig.  1, the adjustment indicators for the measurement model had satisfactory values according to the standards indicated in the literature.
In this context, Joreskog's rho for all measures of variables was high at 0.6. Thus, the reliability of the measurement scales was confirmed. All items had a critical ratio (CR) greater than 1.96 and the average variance extracted (AVE) of the measures was high at 0.5. So, validity was confirmed.  The correlation link between all variables must be lower than to AVE of all constructs, hence discriminant validity is checked.
According to the results presented in Table 4 and Fig. 2, the adjustment indicators for the structural model have satisfactory values according to the standards indicated in the literature.
For example, the root mean squared error of approximation (RMSEA) has a value less than 0.08. This indicates a solid model fit and a better explanation of relationships among variables.
In this stage, we move on to testing the research hypothesis. When the CR value exceeds 1.96, the regression link is significantly different from zero at risk of error of 5% (Akrout, 2018). Table 5 summarizes the results.

Discussion
The results of this research confirm the positive effects of market orientation on car dealership performance in Saudi Arabia over two periods, before and after the application of the decree. The three classical components of market orientation (consumer orientation, competitor orientation, and inter-functional coordination) have unique effects to explain variances in company performance.
In the first period (before the decree), the structural link between two variables (market orientation and firm performance) is significant, so H1 is confirmed. According to this finding, only two dimensions of market orientation are selected, customer orientation and inter-functional coordination. In fact, 28% of total variance of firm performance is explained by the level of customer orientation (CR=2.88; p=0.00) and 88% by interfunctional coordination (CR=7.10; p=0.00). This result can be clarified by noting that before women entered the automobile market, dealers did not really care about competition. Given the disparity in gender roles, the defensive method has been used by car dealerships. In light of this, companies have focused on coordinating personnel and other resources of the different functional units.

Fig. 2:
Results of the structural model test  After the decree was put into effect, market orientation had a significant effect on firm performance, so H2 is confirmed. However, during this period, customer orientation (CR=3.14; p=0.00) and competitor orientation (CR=2.40; p=0.01) positively influenced firm performance, but interfunctional coordination (CR=-1.30; p=0.19) did not have such an effect. It seems that women's right to drive clarifies the significant effect of customer orientation in company performance (β=0.50), leading car dealerships to change their marketing strategies. Meanwhile, competitor orientation contributed the least (β=0.23). This may be because firms are still working on understanding the nature of their competition in the Saudi car market to better develop their short-and long-term goals.
Overall, customer orientation had a positive effect during the two periods, with a significant increase after women's entry into the market. This finding is consistent with that of Boohene and Agyapong (2011), who showed that trade expansion is influenced by a company's understanding and customer satisfaction. Finally, market orientation has been argued to effectively and efficiently create actions necessary for the enhancement of firm performance (Iyer et al., 2019;Hinson et al., 2017).

Conclusion
This paper investigates whether market orientation affects the performance of official car dealerships taking into account the political change in Saudi Arabia following the landmark royal decree of September 2017 allowing women the right to obtain a driving license. The results confirm that market orientation may be at the root of obtaining interesting differentiation among competitors and maybe a significant antecedent of improved business performance in Saudi Arabia before and after the decree was put into effect. Moreover, this finding proves that the royal decree changed the relationship between these two variables.
These results agree with those of previous research finding that social and environmental responsibility (legal, ethical, etc.) are directly involved in firm activities. Indeed, legal changes in society, for example, have an effect on the behavior of consumers and competitors. Therefore, a marketoriented company must take into account all existing environmental players. Thus, those studies proposed considering social and environmental responsibility as part of the dimensions of market orientation (Matsuno and Mentzer, 2000;Maignan and Swaen, 2004). This invites reflection on new perspectives gained from the limits of the behavioral theory of the MARKOR study. This study has both theoretical and practical contributions. On a theoretical level, it confirms the strength of the market orientation construct and the importance of its factors (customer orientation, competitor orientation, and inter-functional coordination) in Saudi Arabia and the MENA region, similar to previous research by Attia (2013). This study should encourage managers working in the automotive sector in Saudi Arabia to give more importance to marketing since it is the path to improved company performance. Azzam (1995) confirmed that firms are obligated to update their marketing mix (production services, prices, distribution modes, and promotion) to meet the fluctuating demands of a new generation of Saudi customers.
However, the study has several limitations. First, generally, Saudi companies refuse to disclose information. We had to insist that our respondents get the right information. Second, performance was measured by subjective indicators, which represent judgments and perceptions by car dealership managers. Therefore, for future research, it will be necessary to use a measurement scale of firm performance containing objective items to enhance the validity of the results (Kirca et al., 2005;Almansour et al., 2016).
Thus, we recommend conducting longitudinal research in order to make these results more generalizable. According to Venkatraman (1989), a longitudinal design is necessary for configuration studies. In fact, Lumpkin and Dess (1996) claimed that most market orientation and performance studies use a cross-sectional design. However, it may take a longer time for the effects of market orientation to materialize than the two years of our study. Finally, researchers should consider including moderating and mediating variables that may affect this relationship in Saudi Arabia.