The effects of perceived industry competitive intensity and marketing-related capabilities: Drivers of superior brand performance

Since the early 1990s the theoretical and practical issues associated with organizational capabilities have been a major research focus in marketing. However, there has been little focus simultaneously on industry environment and internal competitive capability development. A manager's perception of his/her industry environment has the potential to impact the firm's marketing-related capability development through their strategic responses to their perception of the environment. This paper advocates that managers (i.e., firms) perceiving their industry environment as turbulent will develop superior market learning and marketing capabilities. Market learning will assist in the process of building superior marketing capabilities. Both capabilities lead to higher brand performance. To explore these issues a study was designed to measure perceived industry competitive intensity, market learning and marketing capabilities. Data were gathered from senior managers of commercial firms and the results largely support the hypothesized theoretical relationship that industry competitive intensity influences market learning activity and marketing capability development. Interestingly, the study findings suggest that market learning impacts brand performance through marketing capability. The findings significantly contribute to the debate on the influence of the competitive environment on a firm's internal capability development which suggests the need for further research to examine the industry competitive intensity-internal capabilities-firm performance relationship.     

Exploring the characteristics of the market-driven firms and antecedents to sustained competitive advantage

During the last few decades, identifying and examining the characteristics of market-driven firms have been a dominant theme in strategic marketing research. It has been argued that market-driven firms are superior in their market sensing and customer linking capabilities, enabling market-driven firms to outperform their competitors. This paper reports the findings of a study that examines the role market-focused learning capability and marketing capability in innovation-based competitive strategy on sustainable competitive advantage. The findings indicate that entrepreneurship is an important factor in sustained competitive advantage (SCA) and while market-focused learning capability leads to higher degrees of innovation, marketing capability enables SCA.     

Insecure Advantage? Markets for Technology and the Value of Resources for Entrepreneurial Ventures

We study how the impact of capabilities for performance is contingent upon the environment. Using a novel dataset of information security start‐ups, we study how markets for technology change the relative impact of technology and marketing capabilities on performance. Since internal technical effort enables firms to generate technology inputs instead of acquiring them from the market (substitute), a greater supply of technology diminishes the importance of technical ability as a source of competitive advantage. Moreover, since marketing capability complements technology inputs, a greater supply of technology enhances the impact of marketing capability on performance. Copyright © 2011 John Wiley & Sons, Ltd.     

The Roles of Sustainability Orientation and Market Knowledge Competence in New Product Development Success

Firms’ sustainability orientation (SO) is widely understood as a strategic resource, which can lead to competitive advantage and superior (financial) performance. While recent empirical evidence suggests a moderate and positive relationship between SO and financial performance on a corporate level, little is understood about the influence of SO on new product development (NPD) success. Building on the natural‐resource‐based view (NRBV) of the firm, we hypothesize that firms’ SO positively influences NPD success, because of efficiency gains and differentiation advantages. However, scholars have also argued that the win–win paradigm postulated by NRBV might not always hold because NPD managers might find it difficult to balance sustainability objectives with the needs of their customer and the competitive dynamics in their markets. It is, therefore, proposed that market knowledge competence (MKC) is an important capability, which helps firms to balance social and ecological objectives with economic goals such as profitability and market share. Using data from 343 international firms from 24 countries that was collected by the Product Development and Management Association, structural equation modeling results suggest that (1) SO positively influences NPD and that (2) this relationship is partially mediated by firms’ market knowledge capabilities. The findings suggest that strategic‐level SO and MKC are complementary in that they help in balancing trade‐offs between sustainaility objectives and profitability goals. In this way, the study contributes to a better understanding of how critical NPD practices can help managers to translate firms’ SO into NPD success. The article concludes by highlighting implications for product innovation managers.     

Strategic marketing and business performance: A study in three European ‘engineering countries’

In spite of its relevance, the effects of strategic marketing on business performance are sparingly studied, especially in particular business contexts. We address this gap in two ways. First, we examine the influence of four key strategic marketing concepts—market orientation, innovation orientation, and two marketing capability categories (outside-in and inside-out capabilities)—on company performance. Second, these relationships are studied in three European “engineering countries:” Austria, Finland and Germany. Their relative homogeneity enables testing the generality versus context-specificity of strategic marketing's performance impact. Using SEM analysis, surprisingly weak relationships between market orientation and outside-in capabilities, and business performance are identified, as opposed to the strong role of inside-out capabilities and innovation orientation. These results can be understood through the “engineering country” characteristics. Moreover, clear differences in results are identified among these relatively homogenous countries. This is a major finding as it challenges the widely assumed generality of the strategic marketing–performance relationship. Country-specific results have also considerable managerial relevance.     

Interaction Orientation and Product Development Performance for Taiwanese Electronics Firms: The Mediating Role of Market‐Relating Capabilities

While academics and practitioners are increasingly aware of the value of including the customer in new product development (NPD), processes for doing so effectively remain unclear. Therefore, this study explores the process through which a firm's interaction orientation (the ability to effectively interact with customers) influences product development performance. Drawing on the resource‐based view, this study develops a research model in which two market‐relating capabilities—market‐linking and marketing capabilities—mediate the effect of interaction orientation on product development performance. The validity of this model is examined by analyzing primary data gathered from 167 Taiwanese electronics companies. The model results provide support for a process link between interaction orientation, market‐relating capabilities, and product development performance, such that a firm's capabilities enable the conversion of customer‐based resources into productive new product outcomes. More specifically, the interaction orientation–product development speed relationship is mediated by both marketing and market‐linking capabilities, while the interaction orientation–product innovativeness relationship is partially mediated by marketing capability. That is, interaction orientation has indirect effects on product innovativeness and product development speed by strengthening both marketing and market‐linking capabilities that in turn improve product development performance. In addition, the results suggest that a firm's interactive rationality moderates the relationship between interaction orientation and marketing capability. Overall, this study enhances our understanding of how firms achieve superior product development performance by developing effective customer interaction. The findings of this study provide important strategic insights into NPD.     

The effect of export marketing capabilities on export performance: Moderating role of dysfunctional competition

This study utilizes multiple-informant and time-lagged primary data from 162 industrial exporting firms in Sub-Saharan Africa to contribute to an understanding of when export marketing capabilities can be deployed to drive export performance. The study finds that market responsiveness capability drives export performance when it is deployed together with a product innovation capability. The joint effect of both capabilities on export performance is weakened at high levels of dysfunctional competition in export market environment. The findings suggest that a stronger capability to respond to export market needs and a greater competence in introducing new products in export markets are not always beneficial in Sub-Saharan African markets as the resulting export performance outcome is dependent upon degrees of dysfunctional competition.     

Winning through innovation and marketing: Lessons from Australia and Vietnam

We examine the role of innovation and marketing, two functional capabilities that have the capacity to play a major role in creating superior marketplace performance in firms. Our study of the two capabilities and firms' marketplace performance also takes into account the contribution of entrepreneurial orientation (EO) and market orientation (MO) to our focal functional capabilities and marketplace performance. The results of a study of firms in Australia and Vietnam show innovation capability, marketing capability mediate the effects of the firm's MO on its marketplace performance. The results also show that the interaction of innovation and marketing capabilities significantly influences firms' marketplace performance more than they do individually. Finally, our results show that MO partially mediates the relationship between EO and innovation and marketing capabilities.     

In Search of Innovation and Customer‐related Performance Superiority: The Role of Market Orientation,Marketing Capability,and Innovation Capability Interactions

Understanding the mechanisms through which firms realize the value of their market‐based knowledge resources such as market orientation is a central interest of innovation scholars and practitioners. The current study contends that realizing the performance impact of market orientation depends on know‐how deployment processes and their complementarities in functional areas such as marketing and innovation that co‐align with market orientation. More specifically, this study addresses two research questions: (1) to what extent can market orientation be transformed into customer‐ and innovation‐related performance outcomes via marketing and innovation capabilities; and (2) does the complementarity between marketing capability and innovation capability enhance customer‐ and innovation‐related performance outcomes? Drawing upon the resource‐based view and capability theory of the firm, a model is developed that integrates market orientation, marketing capability, innovation capability, and customer‐ and innovation‐related performance. The validity of the model is tested based on a sample of 163 manufacturing and services firms. In answer to the first research question, the findings show that market orientation significantly contributes to customer‐ and innovation‐related performance outcomes via marketing and innovation capabilities. This finding is important in that market‐based knowledge resources should be configured with the deployment of marketing and innovation capabilities to ensure better performance. In answer to the second research question, the findings indicate that market orientation works through the complementarity between marketing and innovation capabilities to influence customer‐related performance but not innovation‐related performance. Managers are advised to have a balanced approach to managing the deployment of capabilities. If they seek to achieve superiority in customer‐related performance, marketing capability, innovation capability, and their complementarity are essential for attracting, satisfying, building relationships with, and retaining customers. On the other hand, this complementarity would be considerably less important if firms placed greater emphasis on achieving superiority in innovation‐related performance. In contrast to many existing studies, this study is the first to model the roles of both innovation capability and marketing capability in mediating the relationship between market orientation and specific performance outcomes (i.e., innovation‐ and customer‐related outcomes).     

The digital marketing capabilities gap

Over the past two decades, digitalization has revolutionized not only consumer marketing but also industrial marketing. Both industrial marketing scholars and industrial marketers seek insights to understand how our knowledge and practice of digital marketing has been structured and configured. To address this gap, we adopt the resource-based perspective as an organizing framework and systematically review 129 articles spanning two decades of research to identify different digital marketing capabilities in industrial firms. From this analysis, we identify four themes: channels, social media, digital relationships, and digital technologies. We then stress-test this knowledge with managerial practices by conducting an online survey of 169 managers, designed to establish the repertoire of current and future marketing capability needs of industrial firms. Herein, we identify two marketing capabilities gaps: the practice gap—which identifies the deficit between managers' ‘current’ practices and their ‘ideal’ digital marketing capabilities; and, the knowledge gap—which demonstrates a significant divide between the digital marketing transformations in industrial firms and the extant scholarly knowledge that underpins this. Based on these results, we build an agenda for future research on digital marketing capabilities.     

The trade-off between institutionally proximal and distal markets: The impact of home market pressures on firms’ export market selection

This study uses an organizational change perspective to analyze firms' export market selection (EMS) to adapt to home country market pressures. We argue that firms' strategic objectives influence whether they will enter institutionally proximal or distal markets. A model with two curvilinear (U-shaped and inverted U-shaped) relationships is found by testing 1940 Taiwanese export firms based on two official datasets. The model shows that firms are more likely to increase their exports to institutionally proximal markets and to decrease their exports to institutionally distal markets if they have an increasing but still controllable degree of competitive and marketing pressures in the home country. This response represents an incremental change by exporting firms. However, firms increase their exports to institutionally distal markets while decreasing their exports to institutionally proximal markets if they have an excessively increasing degree of competitive and marketing pressures in the home country. This response represents a radical change by exporting firms. We find that export firms' strategic objectives in choosing different organizational change styles (incremental or radical) are highly related to this trade-off in their EMS decision making.     

Marketing capabilities: Antecedents and implications for B2B SME performance

The study provides a new perspective on SME marketing strategies in the B2B context. Using a resource-based view of the firm, the study develops a structural model linking marketing capabilities and marketing performance. A study of 367 SME Australian firms reveals that two key marketing capabilities, namely branding and innovation, have major performance outcomes in the SME B2B context. This is the first SME study to evaluate concurrently the contribution of innovation and branding marketing capabilities, with innovation capability the strongest determinant of SME performance. The study also finds market orientation and management capability act as enabling mechanisms for building marketing capabilities. Disaggregation tests indicate that the same findings apply to three size categories denoting micro firms (less than 20 staff), small firms (20-99 staff) and medium-sized firms (100-499 staff).     

Competing internationally through multiple innovative efforts

Increasingly, small firms will be required to compete on international markets in order to grow and survive. This paper reports on a study of 86 small manufacturing firms operating in the metal sector. All firms had adopted one or more advanced manufacturing technology and were considered by the Canadian Association of Manufacturers as process innovative. The basic premise of this research was that in order to compete internationally, a small firm had to develop certain innovative capabilities. These capabilities were not only associated to traditional innovative efforts in R&D and process innovation, but also in supportive organizational capabilities in the form of strategic orientation, technological policy, and technological scanning. Results show that, for these small firms, process innovativeness remains an important competitive factor for international competition and that it is often linked to an aggressive strategic orientation coupled to a short term emphasis on efficiency.     

Understanding the links between technological opportunism, marketing emphasis and firm performance: Implications for B2B

The capability of firms to sense and respond to changes in technologies, called technological opportunism, is of growing importance to managers as a source of competitive advantage. However, exactly how technological opportunism impacts firm performance is still not clearly understood. Furthermore, the role of marketing in this relationship, if any, has yet to be examined. Understanding this relationship is critical for marketing managers not only for determining strategic investments of resources but also for demonstrating marketing return on activities. This paper explores the links between technological opportunism and firm performance. The results show that technological opportunism has a strong positive impact on key measures of performance such as firm sales, profits and market value. Importantly, marketing emphasis is the mechanism through which the technological opportunism-performance relationship is achieved. Finally, the impact of marketing emphasis on B2B firms is different than that for B2C firms, highlighting the importance of these activities for B2B marketing managers.     

Strategic factor markets,scale free resources,and economic performance: The impact of product market rivalry

This paper analyzes how scale free resources, which can be acquired by multiple firms simultaneously and deployed against one another in product market competition, will be priced in strategic factor markets, and what the consequences are for the acquiring firms' performance. Based on a game‐theoretic model, it shows how the impact of strategic factor markets on economic profits is influenced by product market rivalry, preexisting competitive (dis)advantages, and the interaction of acquired resources with those preexisting asymmetries. New insights include the result that resource suppliers will aim at (and largely succeed in) setting resource prices so that the acquiring firms earn negative strategic factor market profits—sacrificing some of their preexisting market power rents—by acquiring resources that they know to be overpriced. Copyright © 2014 John Wiley & Sons, Ltd.     

Strategy,human capital investments,business‐domain capabilities,and performance: a study in the global software services industry

Research summary : In knowledge‐based industries, continuous human capital investments are essential for firms to enhance capabilities and sustain competitive advantage. However, such investments present a dilemma for firms, because human resources are mobile. Using detailed project‐level operational, financial, and human capital data from a leading multinational firm in the global IT services industry, this study finds that deliberate investments in improving general human capital can help firms develop superior capabilities and maintain high profits. This paper identifies two types of capabilities essential for success in this industry—technological and business‐domain capabilities—and provides empirical evidence justifying such investments. Theoretical and practical implications of capability‐seeking general human capital investments are discussed. Managerial summary : The primary managerial implication of this research is that capability‐seeking investments in developing general human capital through strategic learning (training and internal certifications) can enhance firm performance. Although investing in general human capital is risky, the firm considered this a strategic necessity in order to thrive in the fast paced IT services industry. By leveraging general technological skills in combination with business‐domain knowledge to address customer's business problems firms can earn and sustain higher profits. Our study also demonstrates how a developing‐country firm responded to strong competitive challenge from global rivals possessing superior capabilities by upgrading the capabilities of its employees through internal development. In doing so the firm was able to narrow the capability gap vis‐à‐vis its foreign peers and expand its business globally. Copyright © 2016 John Wiley & Sons, Ltd.     

Internationalization and the Dynamics of Product Adaptation—An Empirical Investigation

Firms competing in foreign markets can choose to make no changes to the physical product and packaging, called a product standardization policy, which keeps costs low. The main drawback of such a policy is that the product might not satisfy customers. Conversely, firms may choose to modify, or to adapt, the physical characteristics or attributes of a product and its packaging to fit the needs and desires of consumers in different countries better, but this increases development, manufacturing, marketing, packaging, and distribution costs. Though product adaptation is a core aspect of customizing an export market offering, little research has investigated modifying the physical product and packaging. To be successful, an adapted product must add sufficient incremental revenue (through increased sales due to better satisfying customer needs and wants relative to competitive product offerings) such that the additional manufacturing and marketing costs that result from adapting the product are recovered. In this article, a model of the product adaptation process is developed. Using mail surveys, information is gathered from managers in 239 U.S. organizations and 302 South Korean organizations, all of which export products. The goal was to understand better the motivation of firms to adapt their products for export markets as well as the performance implications of adapting products. Furthermore, the model was tested in these two countries to determine if the model is robust and to uncover differences between the United States and South Korea. Using structural equation modeling to analyze the data, a positive association was found between the level of product adaptation and profitability at the project level. Second, U.S. firms appear to be more reactive when adapting products for export markets, doing so when laws and regulations in the export market mandate changes relative to the U.S. market. Conversely, South Korean firms appear to be more proactive and to adapt products even when not required by the governments of export markets. Third, greater international product adaptation is linked to a more responsive marketing organization with customer‐focused practices. Fourth, while a positive link was expected between business unit experience and the extent of international product adaptation, inconsistent results were found between the two country samples. For U.S. firms, it was found that greater experience in international business and product design capability is linked to a higher level of international product adaptation. For South Korean firms, however, a negative relationship was found. Greater international product adaptation occurred with less international business and product design experience. These findings are discussed, and areas for future research are noted.     

Creating superior customer value for B2B firms through supplier firm capabilities

In a dynamic global business-to-business (B2B) environment, innovation and marketing appear crucial to providing supplier firms' positional advantage through the ability to create value for customers. Our examination is grounded in seeking to address the research question: To what extent is the creation of superior performance, relationship, and co-creation value driven by market orientation, product innovation and marketing capabilities in B2B firms? The results of a survey of 155 large B2B firms show product innovation capability and marketing capability partially mediates the relationship between a firms' market orientation and its ability to create value (performance and co-creation), except for the role of marketing capability which we found acted as a full mediator of the relationship between market orientation and relationship value.     

The impact of marketing capability, operations capability and diversification strategy on performance: A resource-based view

Using resource-based view (RBV) of the firm as a theoretical backdrop; we aim to find out the relative impact of a firm's functional capabilities (namely, marketing and operations) and diversification strategies (product/service and international diversification) on financial performance. We hypothesize that this linkage depends on the firm's relative efficiency to integrate its resource-capabilities-performance triad. Using archival data of 102 UK based logistics companies, we find marketing capability is the key determinant for superior financial performance. This study highlights that a market-driven firm is likely to have better business performance than a firm focusing solely on operational capabilities. Also, firms are better off when they focus on a narrow portfolio of products/services for the clients and concentrate on a diverse geographical market. Our findings provide a new perspective to model a firm's functional capabilities and diversification strategy on its financial performance and offer a benchmarking tool to improve resource allocation decisions.     

Market Orientation and R&D Effectiveness in High‐Technology Firms: An Empirical Investigation in the Biotechnology Industry*

There seems to be lack of consensus among informed scholars about the importance a of market orientation for high‐technology firms. This paper gives a comprehensive review of existing empirical studies on the relationship between market orientation and innovation performance and pinpoints two limitations in this research stream that might be at the origin of such controversy. First, extant research often overlooked key innovation outcomes for high‐technology firms, such as those related to research and development (R&D) performance. Second, organizational conditions that can ensure an optimal integration of market knowledge in the innovation process have been less analyzed in the case of these firms. Against this background, the present study contributes to the literature by providing a test of the effect of market orientation on R&D effectiveness and the moderating role of knowledge integration in this relationship, using a sample of Italian biotechnology firms. The study's objectives are addressed in two steps. The first one consists of an in‐depth qualitative study based on semistructured interviews in five biotechnology firms. The second step consists of a follow‐up survey of 50 biotechnology firms. Results from hierarchical multiple regression analysis show that the different dimensions of a market orientation have diverse effects on R&D effectiveness of high‐technology firms: whereas interfunctional coordination has a positive main effect, the effect of customer orientation is moderated by knowledge integration, and competitor orientation has no effect on R&D effectiveness. Post hoc analyses also show two additional results involving a broader set of dependent variables. First, R&D effectiveness mediates the effects of customer orientation and interfunctional coordination on organizational performance. Second, market orientation does not appear to significantly affect R&D efficiency. The present study contributes to current literature in two main respects. First, it adds to previous work on market orientation and innovation by proposing a new dependent variable—R&D effectiveness—which offers a better perspective to understand the impact of market orientation on innovation performance in high‐technology contexts. Second, while part of the current debate on the role of market orientation in high‐tech markets seems to be polarized by positions that sustain its potential drawbacks or, on the contrary, its advantages, this study's findings on the moderating role of knowledge integration shed light on important contingency factors, such as organizational capabilities. The authors discuss the study's limitations and provide directions for future research.