Broadening the scope of the resource-based view in marketing: The contingency role of institutional factors

Drawing on the resource-based view (RBV) of the firm and institutional theory, the authors propose and test an integrated model in an industrial marketing context that expands the boundaries of the RBV to incorporate institutional factors pertaining to societal and political issues. The rationale for taking such an integrated approach stems from the knowledge that firm performance can be explained better by incorporating not only the inability of managers to take particular actions but also their reluctance or unwillingness to pursue those behaviors. The authors develop an integrated model that tests (1) the direct effect of marketing institutional factors on the development of marketing RBV factors and (2) the moderating role of marketing institutional factors on the performance effect of marketing RBV factors. The empirical results indicate general support for the hypotheses, and this research provides several implications for broadening the scope of the RBV in marketing by underscoring how fit between marketing resources and the context in which those resources are deployed affects firm performance.     

The Vital Role of Problem‐Solving Competence in New Product Success*

Problem solving, a process of seeking, defining, evaluating, and implementing the solutions, is considered a converter that can translate organizational inputs into valuable product and service outputs. A key challenge for the product innovation community is to answer questions about how knowledge competence and problem‐solving competence develop and sustain competitive advantage. The objective of this study is to theoretically examine and empirically test an existing assumption that problem‐solving competence is an important variable connecting market knowledge competence with new product performance. New product projects from 396 firms in the high‐technology zones in China were used to test the study's theoretical model. The results first indicate that problem‐solving speed and creativity matter in new product innovation performance by playing mediator roles between market knowledge competence and positional advantage, which in turn sustains superior performance. This new insight suggest that mere generation of market knowledge and having a marketing–research and development (R&D) interface will not affect new product performance unless project members have the ability to use the information and to interact to identify and solve complex problems speedily and creatively. Second, these results suggest that different market knowledge competences (customers, competitors, and interactions between marketing and R&D) have distinct impacts on problem‐solving speed and creativity (positive, negative, or none), which underscore the need to embrace a more fine‐grained notion of market knowledge competence. The results also reveal that the relative importance of some of these relationships depends on the perceived level of turbulence in the environment. First, competitor knowledge competence decreases problem‐solving speed when perceived environmental turbulence is low but enhances problem‐solving speed when perceived turbulence is high. Second, competitor knowledge competence has a positive relationship with new product performance when the environmental turbulence is high but no relationship when the environmental turbulence is low. Third, the positive relationship between problem‐solving speed and product advantage is stronger when the perceived environmental turbulence is high than when it is low, which implies that problem solving is more important for creating product advantage when environmental turbulence is high and change is fast and unpredictable. Fourth, the negative relationship between problem‐solving speed and new product performance is stronger when the perceived environmental turbulence is high than when it is low, which means that problem‐solving speed is more harmful for new product performance when change is fast and unpredictable. And fifth, the positive relationship between product quality and new product performance is stronger when perceived environmental turbulence is low than when it is high, which implies that product quality may more likely lead to new product performance when the environment is stable and changes are easy to predict, analyze, and comprehend.     

Supplier evaluation as a new marketing tool

Sales people contacting potential industrial buyers are selling more than just a physical product or a service, they are selling the total benefits offered to the buying firm—the “augmented” product. (P. Kotler, Marketing Management. Prentice-Hall, Englewood Cliffs, NJ, 1976). In today's market, the product benefits that are critical in making a sale are those that a firm adds “to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value” (T. Levitt, The Marketing Mode. McGraw-Hill, New York, 1969). The salesperson, however, may often err in the presentation of the “augmented” product to the customer due to lack of information on the buyer's needs. These errors are compounded by lack of knowledge about which dimensions of the “augmented” product give the competitive advantage to the firm. This article proposes a new role for supplier performance evaluation that can contribute greatly to the effectiveness of the industrial marketer.     

Whether to Integrate R&D and Marketing: The Effect of Firm Competence

Integration of research and development (R&D) with marketing remains a frequent topic in the new product development (NPD) literature, largely because it represents a critical antecedent of new product performance (NPP). Two divergent opinions about this integration exist, such that those who contend that firms should pursue high levels of integration in every case provoke criticisms from those who propose that various NPD processes require different levels of integration. This paper proposes that the two perspectives can be reconciled by taking into account the fact that R&D and marketing are integrated mainly to combine critical knowledge (technological and market) that otherwise would be separate to achieve market success. Following Danneels's approach, we investigate how the effect of R&D–marketing integration on performance change across four types of NPD processes: pure exploitation, pure exploration, technological competence exploitation, and market competence exploitation. Data derived from a deep study of 11 NPD projects by five firms, analyzed through qualitative methods, highlight the necessity to vary the level of integration according to the type of competence to be developed during the NPD process. Our analysis suggests two main conclusions. First, the effect of integration depends strictly on the type of competence that the firm uses to develop and launch a new product. Second, integration does not have a unique effect on performance, but it is necessary to distinguish between market performance (e.g., sales and market share) and process performance (e.g., meeting the planned budget and time to market). In some projects, the effect of integration on the two types of performance is diametrically opposite. In particular, we propose that (1) higher performance will be associated with lower integration in pure exploitative projects; (2) in projects that exploit existing market knowledge, higher market performance will be associated with a higher integration, although these projects tend to offer poor process performance regardless of integration level; (3) in projects that exploit technical knowledge, higher performance will be associated with higher integration; and (4) higher integration will be associated with higher market performance but poorer process performance in pure explorative projects.     

The role of horizontal and vertical new product alliances in responsive and proactive market orientations and performance of industrial manufacturing firms

This study examines different roles of new product alliance partners in enhancing responsive market orientation (RMO) and proactive market orientation (PMO) of industrial manufacturing firms in the context of learning in business-to-business (B2B) relationships. A survey of 146 firms shows that horizontal new product alliances with competitors provide access to similar industrial knowledge and know-how and thus help improve a manufacturing firm's RMO through exploitative learning. Although vertical new product alliances with suppliers may grant access to similar domains of knowledge, the findings of this study do not provide any support for their effect on a manufacturing firm's RMO. In contrast, the study shows that vertical new product alliances with research institutions provide access to a broader knowledge base and greater know-how with higher levels of non-redundancy and thus help improve a PMO through explorative learning. In addition, the results suggest that both RMO and PMO developed in different types of new product alliances enable a manufacturing firm to improve its new product performance and eventually its overall performance.     

The Role of Marketing Resources in Radical Innovation Activity: Antecedents and Payoffs

While radical product innovations represent significant engines of firm growth, questions remain over whether marketing helps or hurts (1) a firm's radical product innovation activity and (2) its rewards from radical product innovation activity. By attaching an attention‐based view of the firm to a market‐based assets view of marketing, this paper examines the role of three marketing resources—market knowledge, reputation, and relational resources—on radical innovation activity. Our conceptual framework posits differentiated effects among marketing resources as antecedents of radical innovation activity and as moderators of its impact on firms' financial performance. Using a survey of a broad set of high‐tech business‐to‐business (B2B) firms to test hypotheses, it is found that firms with strong relational resources enjoy a higher propensity for, and stronger financial rewards from, radical innovation activity. Reputational resources come with a trade‐off as they hurt the incidence of radical innovation but enhance its financial rewards. However, market knowledge resources appear to hurt both radical innovation activity and its financial rewards. Our results point to the multifaceted role of marketing in radical innovation activity, which is unlikely to come with a single benefit or liability as prior work often posits. Rather, our research heightens the alertness of managers to assess their firms' marketing strength as a bundle of stocks of several marketing resources. Managers must understand the distinct benefits and drawbacks of each resource in developing and launching radical innovations. Our research underscores the differentiated value of marketing in radical innovation activity in B2B high‐tech contrary to the entrenched idea of a limited or even stifling role of marketing in this context.     

Market representations in industrial marketing: Could representations influence strategy?

A central question in industrial marketing is whether the form in which the market of a firm is represented influences the marketing strategy. This question has been studied generally through case study research, and quantitative evidence is limited. In response to this limitation, this paper reports on a quasi-experiment investigating whether market representations have a constructive aspect in business. Empirically, this study compares two types of market representations - ostensive and performative - in order to test for influence exacted in two well-established strategies in industrial marketing - service focus and product differentiation. Results indicate that service focus is selected when market representations rely on agency in firms (i.e., performative), and product strategies are selected when structures are emphasized (i.e., ostensive). This paper contributes to methodology development by expanding the link between a case study approach and quasi-experiments explaining how quasi-experiments can replicate findings in industrial marketing.     

Managing knowledge in industrial markets: New dimensions and challenges

Managing knowledge in industrial markets has become an increasingly important task in the last 10 years. Many industrial firms paid little attention to the topic, since it was felt that knowledge was easily handled internally and was a simple process. The growth of information technology that centered on the collection, analysis and dissemination of information during the 1990's and early 2000's has necessitated that managing knowledge be taken seriously by industrial marketing managers. By doing so industrial firms can make available increased knowledge content in the development and provision of products and services to industrial marketing managers on all levels of the firm, achieve shorter new product development cycles, and facilitate and manage organizational innovation and learning. This article outlines the new dimensions in knowledge management in industrial marketing that are important for industrial managers, academic researchers, and business firms to understand for the future.     

Product innovation with vertical differentiation: Is a monopolist's incentive weaker?

This paper compares the incentives for product innovation across different market structures when the new product is vertically differentiated and of lower quality, a common case empirically. We show that innovation incentive rankings across market structures can differ substantially when the new product is of lower rather than higher quality. In particular, the incentive to add the new product can be greater for a monopolist over the old product than for a firm that would face any degree of competition from the old product. This incentive ranking cannot occur when, instead, the new product is of higher quality as has been analyzed in previous work. Moreover, in that case, the incentive ranking is the same whether the market is covered or not covered, whereas in our setting the ranking can differ. With the market covered, our setting provides another environment where the monopolist can have the greatest incentive to innovate, as previously shown when the new product is horizontally differentiated. Together, both settings show that Arrow's famous result—a secure monopolist gains less from a nondrastic process innovation than would a competitive firm—does not always extend to nondrastic product innovations. However, in all the cases analyzed here, consumer welfare (though not total welfare) is always lower under monopoly, even when only the monopolist would add the new product.     

How firms learn in NPD networks: The 4S model

This paper examines how firms learn in new product development (NPD) networks. While existing research in business and industrial marketing has significantly advanced our understanding of learning within single firms and in dyadic relationships, our knowledge of inter-firm learning across direct and indirect business relationships in NPD networks remains limited. We address this limitation by conducting multiple case study research to develop a more holistic understanding of learning in NPD networks that is captured in the proposed 4S model. Drawing on an integrated theoretical perspective and the empirical results of three case studies, we propose that firms engage in iterative cycles of syndicated, situated, selected and synergised modes of learning in NPD networks.     

Power dynamics of the international marketing within firms and how they shape international performance

The status of marketing within the firm and its cross-functional interactions continue to draw academics and practitioners' attention. Using power, rather than influence, and power asymmetry concepts in an industrial international marketing (IM) context for the first time, the study examines the interface between IM and non-IM functions and investigates whether powerful IM functions benefit international performance. Findings show that IMs are powerful and enhance performance, however to some extent. Power asymmetry between IM and non-marketing functions is related negatively with performance while power asymmetry between IM and non-international marketing function is not related to performance. However, in the presence of international market orientation (IMO) the negative effect of differences between IM and non-marketing functions powers on performance is weaker. Thus, a strategic decision to adopt an IMO, perceived as a power mechanism, potentially has a reviving effect on the IM function, and IMO and the power distribution activity should not be isolated domains of managerial decision-making. The study accounts simultaneously for IM as a distinct function and as an activity-based process and allows refined observation into the marketing functions' interaction.     

Balancing exploration and exploitation capabilities in high technology firms: A multi-source multi-context examination

Based on the dynamic capability view, this study examined the balance between exploration and exploitation capability. With this, we proposed a framework that synthesizes the impact of new product creativity and marketing program creativity on new product quality (internal product quality and external product quality), and further understanding the path to performance of new products in a select number of industrial and consumer products. The main findings revealed that the effect of new product creativity in consumer product firms through internal and external product quality was less dominant than those in industrial product firms. In contrast, the effect of marketing program creativity in industrial product firms through only external product quality was less dominant than those in consumer product firms. Additionally, this paper also discusses the research limitations, future research directions, and theoretical and practical implications.     

Development of Novel Products Through Intraorganizational and Interorganizational Networks

The pendulum appears to be swinging away from the merger mania of the 1980s, with many leaner-and meaner organizations refocusing on their core competencies. However, these more focused organizations often lack the breadth of skills and expertise necessary for developing products and services which cut across traditional technological and marketing boundaries. Complex product systems such as those under development in the home automation industry include elements from such disparate sectors as consumer electronics, telecommunications, construction, and energy. A narrow focus may prevent the novel forms of innovation necessary for successful development of such products. Using the home automation industry as an example, Joe Tidd examines the challenges involved in the development of complex product systems. When products and services cut across traditional marketing and technological boundaries, radical innovation is difficult because different firms and industries are typically responsible for developing the various subsystems and components. Successful development efforts may require novel forms of innovation–for example, architectural innovation and technology fusion. Architectural innovation involves changes in the way the components of a product are linked together, but leaves the core design concepts untouched. Technology fusion creates new products and market opportunities through the blending of diverse technologies from various fields. Two organizational factors affect a firm's ability to develop and commercialize new products based on novel forms of innovation: the internal organization of the firm, and the firm's links with other organizations, including suppliers, customers, and networks of collaborating organizations. Within a firm, the development of complex product systems is likely to require managing across traditional product-division boundaries. The breadth of competencies required may necessitate strong interfirm linkages. Comparing organizational approaches and the networks of alliances for home automation in the United States, Europe, and Japan, it appears that European firms tend to be more narrowly focused then American and Japanese firms. A rigid focus on core competencies may cause these European firms to overlook the potential for new products. Because various technologies and industries are involved, open networks are more effective than closed networks or alliances. European and American firms tend to favor closed strategic alliances, while Japanese firms typically participate in open networks and overlapping consortia. This approach gives Japanese firms an edge in the home automation industry.     

Building and leveraging competence exploitation and exploration for firm new product success

We theorize that industry conditions of collaboration intensity and innovation intensity drive the development of competence exploitation and exploration in manufacturer-manufacturer collaborations, and that such competencies can be leveraged to increase firm-level new product sales and market share, contingent on the firm's establishment of non-proprietary knowledge transfer capability. We test our model using a survey of 224 manufacturer-manufacturer collaborations. Our findings indicate that collaboration intensity drives firms to build both competence exploration and exploitation while innovation intensity drives neither. We also find that while non-proprietary knowledge capability enhances the influence of competence exploration on a firm's new product sales and market share, it dampens the firm's ability to leverage competence exploitation for firm-level new product success.     

New Product Activities and Performance: The Moderating Role of Environmental Hostility

In the race to bring new products to market, a company may be tempted to cut corners in the new product development (NPD) process. And a hostile environment—that is, one marked by intense competition and rapid technological change—only heightens the pressure to reduce NPD cycle time. However, hasty completion of the NPD process may actually jeopardize a product's chances for success. In a study of Fortune 500 manufacturers of industrial products, Roger J. Calantone, Jeffrey B. Schmidt, and C. Anthony Di Benedetto explore the relationships among new product success rates, proficiency in the execution of NPD activities, and the perceived level of hostility in the competitve environment. Their study examines how proficiency in NPD activities affects the odds of success for industrial new products. Adding environmental hostility to the mix, they also investigate whether the perceived level of hostility in the competitive environment affects the relationship between NPD proficiency and success. In this way, they provide insight into the factors managers must consider when attempting to accelerate cycle time in a hostile competitive environment. The respondents to their survey—142 senior managers involved in NPD or product innovation rated environmental hostility in terms of the extent to which the firm perceives its industry as safe, rich in investment opportunity, and controllable. To assess NPD proficiency, respondents were asked about their firms' performance in predevelopment marketing and technical activities, development marketing and technical activities, and financial analysis. Respondents assessed new product performance in terms of product profitability. As expected, the responses indicate that proficiency in the performance of NPD activities increases the likelihood of new product success. Proficiency in development marketing activities produced the largest increase in likelihood of success—nearly 25 percent over that of projects in which respondents rated performance of these activities at any level below “most proficient.” More importantly, the responses indicate that a hostile competitive environment increases the impact of NPD proficiency. In other words, by improving performance of key NPD activities under hostile environmental conditions, a firm can greatly increase the likelihood of success for a new industrial product. Rather than simply cut corners in the NPD process, a firm faced with a hostile environment must strike a balance between speed and quality of execution.     

An empirical study of manufacturing flexibility of exporting firms in China: How do strategic and organizational contexts matter?

Using evidence from exporting firms in China, this research aims to determine the conditions that foster manufacturing flexibility and the way in which firms support it. The contingency perspective and the competence and capability theory are utilized to develop a framework to enhance the knowledge of internal competence, external flexibility, and manufacturing performance, and the understanding of the moderating roles of strategic and organizational choice on the competence-flexibility and flexibility-performance relationships. Empirical evidence from a sample of 222 export product/market ventures confirmed the main effect that manufacturing, assembly outsourcing, and marketing competencies support a firm's manufacturing flexibility and in turn enhance manufacturing performance. Several notable moderating effects were also identified. Although a strategic emphasis on low-cost manufacturing and long-term contracting weakens a firm's transformation of core competencies into flexible capabilities, specific organizational choices regarding private ownership and direct exporting strengthen the conversion of manufacturing flexibility to superior manufacturing performance.     

Pricing policies of multinational enterprises : Host country regulation and welfare

This paper examines host country price-regulation policies towards a foreign subsidiary. The analysis considers two prices, namely the transfer prices charged to the subsidiary, and the market price of the subsidiary's products. It is shown that host countries should regulate both of these prices. Regulation of the transfer price alone may induce an increase in the subsidiary's market price and cause a loss of host country welfare. Regulation of both prices is more efficient for it enables the host country to attain a higher level of welfare and allows the foreign firm to earn the same level of profits as would regulation of only one of those prices.     

Learning and product entry: How diversification patterns differ over firm age and knowledge domains in U.S. generic drug industry

This study uses learning theory to show how knowledge domains affect product extension decisions and how these product decisions change as firms age. Faced with the choice of new product‐markets, a firm might decide to introduce a similar product, by leveraging existing firm knowledge, or to experiment with a less familiar product, which requires new knowledge. Using data on new drug introductions in the US generic pharmaceutical industry, the analyses showed clear support for heterogeneous product‐market entry patterns across knowledge domains as the firm ages. Across time, the form of learning shifts from exploration to exploitation. Copyright © 2013 John Wiley & Sons, Ltd.     

Bricoleurs and boundary riders: managing basic research and innovation knowledge networks

A major focus of national and institutional research policies during the 1990s has been on improving linkages between publicly funded research activities and industry for the purpose of advancing economic and other national objectives. The transfer of scientific knowledge, however, within and between public research institutions, universities and other innovative organizations is taking place within rapidly changing organizational environments. The emergence of new organizational structures that transcend institutional boundaries, scientific disciplines and the boundaries between basic and applied research are all contributing to as well as responding to changes in the ways science intersects with industrial innovation.
Recent international evidence suggests that innovative organizations during the next decade will depend more on their ability to maintain quite complex organizational research linkages than on their internal organizational research capabilities. Case studies of the organizational approach adopted by companies and commercial-research agency consortia in China and Australia lead to a discussion of a typology of academic-industry alliances. The typology provides insights into different collaborative R&D management strategies associated with different forms of science-industry alliance.     

Explaining post‐IPO venture performance through a knowledge‐based view typology

We extend the knowledge‐based view with a new typology and its application to post‐IPO firm performance. The typology categorizes knowledge development activity along the dimensions of familiarity (whether the firm has experience with the knowledge or it is new) and source (whether the firm creates it independently or with partners). We use this typology to determine direct and interaction effects of knowledge development activity on survival, RoA, and Tobin's q of newly public firms. Using a sample of 1,056 high‐technology manufacturing IPOs in 1990–2005, we find that focused, internal knowledge development correlates with higher performance. We also find a positive interaction effect in combining focused, internal and diversifying, alliance‐based knowledge development, and a negative interaction effect in combining diversifying, internal and alliance‐based knowledge development. Copyright © 2013 John Wiley & Sons, Ltd.