Strategic orientations, market-based capabilities and business performance : the moderating effect of business context

Abstract

Prior research has demonstrated that strategic orientations (e.g., market orientation, learning orientation and innovation orientation) and market-based capabilities (e.g., innovation capability and customer-linking capability) positively affect business performance. However, how these lead to superior firm performance has been insufficiently addressed. Moreover, the level of robustness of the performance implications has yet to be clarified. To these ends, the main research problem for this dissertation is: “How do different strategic orientations and market-based capabilities contribute to companies’ business performances in different business contexts?” To address this problem, direct, mediated, and complementary performance effects of strategic orientations and market-based capabilities are examined. Furthermore, different external and internal contexts that could strengthen or weaken performance implications are considered. These issues are analyzed empirically in four complementary essays included in this dissertation.

The first essay examines whether different strategic orientations and marketing capabilities affect firm performance in an ‘engineering country’ context and determine whether these performance implications are different between countries. The second essay focuses on the roles of three core business process capabilities in translating the potential value of market orientation into superior business performance. In the third essay, I investigate whether a combination of market orientation and innovation capability leads to synergistic performance outcomes for firms in different business contexts. The fourth essay, by adopting a configurational approach, examines the roles of customer-linking capabilities and innovation capabilities in contributing to financial performance under different organizational and environmental contexts. In each essay, data sets ranging from 249 to well over 1,000 respondents are analyzed.

This dissertation contributes to both theory and practice. It adds to the understanding of the interplay between strategic orientations and market-based capabilities, as well as offers insight in to the how these factors contribute to business performance. Secondly, it identifies that performance implications are strongly context-dependent. According to the results, strategic orientations do not suffice as themselves; rather their value lies in building and leveraging market-based capabilities that account for differentials in firm performance. The analyses also identify combinations of orientations and capabilities that lead to superior performance. Importantly, firms should acknowledge that differences in and between country context, market type, and environmental turbulence may significantly affect the performance outcomes of their strategic orientations and market-based capabilities. I conclude that contextuality and the role of resource-capability combinations should be increasingly considered; failure to do so might lead to misleading results and potentially harmful recommendations for companies.