A Framework of Measuring the impact of Market Orientation on the outcome of Higher Education Institutions mediated by innovation

IntroductionGlobalization, commoditization and competition are contemporary issues that are facing modern non-profit organization (Maringe & Gibbs, 2009). Higher Education Institutions (HEIs) and other public and non- business sector organizations applied business strategies to deal with those emerging challenges. Market orientation (MO) is one of these strategies that are considered as operationalization of marketing concept. Locally, Saudi Arabia as emerging economy strives to build an international standard HE system. Therefore, Ministry of Economic and Planning's Annual Report (2012) stated that the governmen t allocated 25 percent of its budget to education and 17 percent of this allocation were directed to HE, which is huge amount when compared to other developing countries. With the high allocation, the number of students, universities and faculty members increased dramatically in the past two decades. For instance, the number of students in HE increased from just 7,000 in 1970 to 1,021,288 in 2010, more than 1,400 percent increase. Saudi Arabia focuses on quality as well as quantity in the HE sector as a part of its transformation strategy to be a knowledge-based and diverse economy (Al-mubaraki, 2011). Ministry of Higher Education (MOHE) in Saudi Arabia encourages and supports private sector to invest in establishing private universities and colleges (Onsman, 2011). Although, the HE is free for citizen, public universities were permitted to design and lunch private programs (i.e. not free) to encounter the new patterns of demand of some types of HE such as distance learning and professionals further learning.In spite of this ambitious vision, HE sector encounters challenges such as high rate of unemployment among degree holders, unbalanced distribution of students among different disciplines (e.g. majority are from social sciences) (Alamri, 2011) and gap between researches carried out by the scholars and the community needs, with lack of fund, encouragement and facilities for researchers (Alzahrani, 2011). One of the serious challenges for HE in Saudi Arabia is unemployment among their graduates (Al-mubaraki, 2011) which is because of mismatch between qualification and training level and labor market requirement. According to The Eighth Development Plan of Saudi Arabia (2005 -2009) this problem emphasized the need to raise the internal efficiency of HE and warned that the recent expansion of absorptive capacity should not be at the expense of competence and performance. The Plan also called for improvement of teaching competency and continuing monitoring national and international bodies of accreditation.Therefore, the problem statement of this study is the lack of effectiveness of Saudi Arabian HEIs efforts to meet their market demand of qualified graduates, researches and other products and services, which, would optimized in bringing internal as well as external market orientation innovatively to enhance their outcomes in various performance indicators such as teaching, employability, research and their image among local and international counterparts. Consequently, this study aims to address the noticeable gap between HEIs products (outputs of graduates and researches) and their market demand because, they are still product oriented and this is a common challenge in developing country (Nicolescu, 2009)Minimal research attention has been directed to measure the degree of MO among HEIs by adopting the existing instruments that developed originally in business context (Albert Caruana, Ramaseshan, & Ewing, 1998; Flavian, Longas, & Lozano, 2011; Flavian & Lozano, 2008; Kuster & Aviles-Valenzuela, 2010; Webster, Hammond, & Rothwell, 2010). Previous studies confirm the appropriateness of MO in HE setting. Service-Driven Market Orientation (SERVMO) by Voon (2008) and University Market Orientation (UMO) by Camino and Ayala (2010) are the only two studies- to the best ability of researcher - that attempted to present a distinguished model to measure MO in HE context. …