Internal market orientation, interdepartmental relationships and market performance: the pivotal role of employee satisfaction

Purpose This study aims to signal the relevance of internal market orientation (IMO) as an organizational process for improving interdepartmental relationships and employee satisfaction, which, in turn, serves to leverage performance. The study has three main objectives: to consider the adaptation of IMO at the departmental level, whereby internal departments are identified as internal customers; gauging the impact of IMO on interdepartmental relationships, employee satisfaction and organizational performance; and testing the mediating role of employee satisfaction in linking interdepartmental relationships, i.e. connectedness and conflict with organizational performance. Design/methodology/approach The study observes the proposed relationships by drawing on a sample of 816 managers from 272 companies. Through accessing three respondents in each organization and asking them to focus on different constructs, the study’s methodology avoids common methods bias. Partial least square was used to test the hypotheses posited in the concept. Findings The findings confirm that IMO at the departmental level is critical for facilitating interdepartmental relationships within the organization. In particular, high levels of IMO can enhance interdepartmental connectedness, reduce interdepartmental conflict and improve employee satisfaction. Employee satisfaction not only influences firm performance directly but also plays a mediating role in linking interdepartmental relationships, i.e. connectedness and conflict with performance. Research limitations/implications While this study is conducted in the Chinese context, future research may consider testing the framework in different sectors and geographical areas. In addition, more objective measures of firm performance could be used in future studies, and other mediating and moderating variables may be added to further advance the understanding of the subject at large. Practical implications The identification of IMO at the departmental level can help firms collect ideas from staff across different departments, facilitate open and constructive communication and react promptly to other departments. Through a social information processing lens, this leads to the creation of a positive organizational atmosphere, contributing significantly to enhancing employee satisfaction and firm performance. Originality/value The findings of the study contribute to the area by supporting the legitimacy of IMO at the departmental level and its positive impact on internal relationships and employee satisfaction, which, in turn, leverages performance advantages for the firm.