Dynamic Capability under Industry Competitiveness:
The Interaction of Innovation and Marketing Capabilities
Don Jyh-Fu Jeng*, Artur Pak
Institute of International Management, National Cheng Kung University, Taiwan
Email: jeng@mail.ncku.edu.tw
Abstract
The aim of this study is to examine how the integration of marketing and innovation capabilities enables firms to compete in dynamic markets and enhance performance. In addition, we seek to understand how small, medium, and large enterprises build their dynamic capabilities, and provide suggestions on the development of organizational capabilities under conditions of high industry competitiveness. This study fills a gap the current literature by examining the complementarity of innovation and marketing capabilities, which has been investigated very few studies. The proposed conceptual model was tested on a selected sample of 692 companies, which was divided into sub-samples of small, medium, and large enterprises. Our findings demonstrate that the development of organizational capabilities is not necessarily beneficial to performance, while competition is not necessarily detrimental to it; the impacts vary depending on a firm’s resource base and the level of competition. In small enterprises, dynamic capability proved to be crucial in order to withstand competition. Therefore, despite the limited resources of such firms, managerial efforts should be focused on the integration of marketing and innovation capabilities, because each capability alone does not have a significant positive impact on performance. In medium-sized enterprises, the support of marketing capability is required to raise profitability under conditions of high industry competitiveness; otherwise, innovation would not lead to actual profits. For large enterprises, industry competitiveness was found to be a less serious threat to performance, and instead is a catalyst to the development of capabilities, suggesting that managers of such firms should focus on building long-term strategic advantages.
Keywords: Dynamic capability, Innovation capability, Marketing capability, Resource-advantage theory, Industry Competitiveness.
