DISCUSSION OF RESEARCH FINDINGS
6.5 The Relationships between IMC and Firm Performance
6.5.1 The Relationship between SMC and MP
The result chapter highlights the positive relationship between static marketing capabilities and firm performance. This finding is expected and consistent with the resource-based theory (Barney 1991). The MNEs’ marketing mix capabilities are essential resources to deliver value and fulfill stakeholders’ needs.
The pricing capabilities allow the firm to generate value from stakeholders, who perceive the MNEs’
prices of services or products as fair in comparison to the competitors. Besides, these firms communicate pricing strategies and structures to suppliers and partners effectively. On the other hand, the static marketing capabilities provide abilities for the MNEs firms to develop their existing products and collaborate with suppliers, partners, and customers for successful performance. These capabilities enhance the firms’ communications performance and support the development of marketing programmes that highlight the value of the MNEs’ offerings effectively.
The association between static marketing capabilities and firm performance is consistent with the conceptualisation of Day (1994), which proposes that these capabilities are skills, accumulated knowledge, and challenging to copy routines that enable business processes to be performed (Day 2011).
The result of the thesis is consistent with several empirical studies that confirmed the positive and
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significant contributions of these specialised capabilities to firm performance. For example, Vorhies and Morgan (2005) confirmed positive relationships between these marketing capabilities and performance using a benchmarking procedure of top-performing firms in the United States of America. Besides, Morgan, Katsikeas and Vorhies (2012) found that these specialised capabilities predict firm performance by allowing the effective execution of export marketing strategies, which remain consistent with the thesis results. Contrary to the research findings, Zou, Fang and Zhao (2003) found that only pricing capabilities and communication capabilities positively affect the performance of the firm, and these effects are either partially or fully mediated by low-cost advantage and branding advantage, which was not tested in this thesis. Further, Zou, Fang and Zhao (2003) study did not explain direct relationships between distribution capabilities, product development capabilities, and firm performance. This difference in results might be related to the origin of the firms and the mode of entries deployed in their international ventures. The selected firms in the thesis are MNEs that invested direct resources and accumulated knowledge, which might explain the direct contribution to firm performance. On the other hand, Zou, Fang and Zhao (2003) used the Chinese exporters to study the relationship between capabilities and performance, which might explain the role of positional advantages on the relationship between pricing, communication capabilities, and firm performance. Additionally, the firms’ financial resources impact positively product development capabilities, which contribute to the export venture performance (Kaleka 2011). This finding might explain the non-significant relationship between product development capabilities and export performance in the Chinese context.
The findings provide evidence for the positive relationship between marketing capabilities and firm performance. The direct relationship in this thesis is consistent with the studies conducted using firms from developed countries. On the other hand, the relationship between marketing capabilities and firm
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performance is indirect and mediated by effective marketing strategy implementation or relational capabilities for firms originating in emerging markets (Pham, Monkhouse & Barnes 2017).
6.5.2 The Relationship between DMC and MP
The direct relationship between dynamic marketing capabilities and firm performance was not significant. This result did not support the hypothesised path between the two variables and implies the test of indirect association between these capabilities and performance. The result of the mediation test indicates an indirect relationship between dynamic marketing capabilities and firm performance, and static marketing capabilities mediate this relationship. These findings might be explained by the inherent inside-out perspective of dynamic capabilities theory, which implies the loss of sensitivity to weak signals and fast market changes in the digital age (Day 2011). Besides, the indirect contribution of these dynamic capabilities might be explained by their influence on other types of capabilities, which are the static marketing capabilities in the case of this thesis. This argument is consistent with the original conceptualisation of dynamic capabilities, which implies that these capabilities build, integrate, and reconfigure internal and external firm competencies (Teece, Pisano & Shuen 1997). Kachouie, Mavondo and Sands (2018) found that the impact of dynamic marketing capabilities on firm performance is mediated by operational marketing capabilities. Additionally, Morgan, Vorhies and Mason (2009) found that market orientation did not relate to subjective firm performance; however, the complementary effect with organisational capabilities contributes to firm performance. These results are consistent with the thesis finding, which demonstrates that proactive market orientation is a dynamic marketing capability, which enables the MNEs’ to build, integrate, and reconfigure their marketing mix capabilities to achieve higher performance in international markets.
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On the other hand, the thesis finding contradicts the result of other studies that found a direct and positive relationship between dynamic marketing capabilities and firm performance. For example, Fang and Zou (2009) confirmed the direct contribution of dynamic marketing capabilities on firm performance in international joint ventures of Chinese firms. Besides, Guo et al. (2018) found that the direct relationship between these capabilities and firm performance is significant as well in the Chinese business to business firms. These contradicting results imply a more critical reflection on the context, and the operationalisation of dynamic marketing capabilities construct. First, the context of this thesis differs from previous studies since the MNEs firms represent a foreign direct investment, which was not similar to the previous studies. Besides, the thesis dynamic marketing capabilities construct is operationalised as proactive market orientation, which is line with Barrales-Molina, Martínez-López and Gázquez-Abad (2013), and Kachouie, Mavondo and Sands (2018) definition of dynamic marketing capabilities.
However, Fang and Zou (2009) and Guo et al. (2018) operationalise the construct as cross-functional capabilities. The former explanation is in line with the arguments of Foley and Fahy (2009) and Fahy et al. (2000), which proposed the modelling of market orientation within a capability perspective, and emphasised that the relevance of empirical studies should be discussed critically within a specific firm or industry contexts. Besides, this argument mirrors the research of Menguc and Auh (2006, p.65), who suggest: “the need to theorise market orientation as a dynamic capability in combination with other complementary resources.”
The results and the discussion of the relationship between dynamic marketing capabilities and firm performance provide additional insights on how these capabilities contribute to firm performance. The findings of the thesis supported an indirect relationship with firm performance mediated by static marketing capabilities. This result is obtained in the context of MNEs’ foreign direct investment and the operationalisation of dynamic marketing capabilities as proactive market orientation.
180 6.5.3 The Relationship between AMC and MP
The thesis findings explain a positive and significant relationship between adaptive marketing capabilities and firm performance. This result supports the developed hypothesis and consistent with the original theoretical conceptualisation (Day 2011). The fast changes in the market highlight new challenges for MNEs in the international markets. These obstacles are emphasised by the emergence of new technologies and continuous changes in customers’ preferences and needs. The new adaptive capabilities have an outside-in orientation and support the firms in exploring the markets independently from the boundaries and constraints. According to Mu et al. (2018), outside-in marketing capabilities relate positively to firm performance and provide knowledge resources for other types of capabilities in complex and fragmented markets. The context of this thesis is the international markets, which represent higher velocity, complexity levels, and fast market shifts accompanied by knowledge sharing technologies. Accordingly, these capabilities provide a higher contribution to the firm performance as compared to other types of capabilities. The thesis result is consistent with Guo et al. (2018) empirical study, which demonstrated that adaptive marketing capabilities are essential contributors to firm performance, and their impacts outperform the inside-out marketing capabilities.
The result of this research enriches the theoretical discussion that underpins the firms’ strategic orientations and the contributions to competitive advantage and firm performance. For instance, the inside-out and the outside-in strategic postures contribute to firm performance. However, the effectiveness of these associations is contextual and impacted by industry type, country economic, and cultural conditions. Day (2014) argued that inside-out strategic thinking provides internal processes efficiencies and short-term cost reductions, which might imply firm myopia in changing environments.
Besides, the meta-analysis conducted by Saeed et al. (2015) found that the outside-in strategic orientation