Enabling marketing and innovation capability in the digital economy.

Abstract

The present study examines the impact of marketing capabilities through a network perspective on innovative capabilities and firm performance. The market orientation and the resource-based view that underpin marketing capabilities have mainly treated marketing as internal capability of the firm. As firms are increasingly inter-connected and part of a business networks, a firm’s marketing capabilities need to be examined beyond a single firm. But, to date, no study has yet examined a firm's marketing capabilities from a network perspective in order to understand their influence on innovative capabilities. Thus, this study extends the existing research and conceptualisation of marketing capabilities from an internal perspective of a firm to external network relationships of the firm. This network perspective is based on a firm’s view of its network relationships, which accounts for inter-firm relationships, as well as through digital technology and learning orientation. With the advent of the Internet and information technology, this study conceptualises digital technology as an enabler of the relationship between marketing capability and innovative capability. Since capabilities evolve to become routines and/or deteriorate over time, a firm's learning orientation is also conceptualised for examining the extent to which capabilities impact on innovative capabilities. A survey data of 300 UK-based firms were analysed using statistical analysis to examine the influence of marketing capabilities on innovative capabilities and in turn, firm performance. In addition, interaction analyses were performed to test for mediating and moderating relationships of digital technology and learning orientation. Findings of the analysis show strong support for product development capability; marketing implementation capability; pricing capability. The results support the relative impact of marketing capabilities on innovative capabilities. While marketing capabilities may comprise interdependent capabilities, this finding suggests that firms can enhance innovative capabilities by emphasizing the salient marketing capabilities. Importantly, digital technology has a significant and positive mediating relationship for the relationship between marketing capabilities and innovative capabilities. This finding indicates that knowledge of the application of information technology would facilitate exploitation and exploration of marketing capabilities that enhance innovative capabilities. As indicated by the positive moderation of learning orientation for the relationship between marketing capabilities and innovative capability, the potential to harness marketing capabilities is better enhanced through learning orientation and digital technology. This new perspective of marketing capability analysis benefits from a firm’s network perspective that recognises a firm’s external relationships and inter-connected nature of business interactions. In this instance, digital technology extends the boundary of firm beyond a single firm, and learning orientation complements market orientation with learning and gathering of external market information. This research advances knowledge about specific types of marketing capabilities for improving innovative capability and firm performance through digital technology capability. The study also makes a significant contribution to building theoretical knowledge of the role of digital technology in enabling innovative capabilities by developing and empirically testing a new construct of digital technology. As the ability to mobilise digital technology is firm-specific, this study extends knowledge about the extent of learning orientation (moderator) to the marketing capabilities and innovative capabilities relationship through digital technology.