Capabilities and Financial Performance: The Moderating Effect of Strategic Type

Journal of the Academy of Marketing Science, Vol. 35, No. 1, pp. 18-34, March 2007

Posted: 28 Feb 2012

See all articles by Michael Song

Michael Song

Barclays Investment Bank

Robert Nason

Michigan State University - Department of Marketing and Supply Chain Management

Anthony Di Benedetto

Temple University

Date Written: 2007

Abstract

The Miles-Snow (M-S) strategic typology has continued to receive attention in the academic business press, even though it has been criticized for not making explicit the relationships between strategic type and ultimate profit performance. Using the market orientation and Resource-Based View literature, we develop hypotheses regarding relationships between M-S strategic type and four firm capabilities (technology, information technology, market-linking, and marketing capabilities), relationship between the four capabilities and performance, and the moderating role of M-S strategic type. An empirical test involves multiple data collections from 216 firms. The study results suggest that there are significant relationships between capabilities and performance if one does not account for the moderating role of strategic type. When strategic type is used as a moderating variable, we find that only certain capabilities had significant effects on profitability. For example, technology and information technology capabilities increase financial performance for prospector organizations, while a different set of capabilities (market linking and marketing) are positively related to financial performance for defender organizations.We discuss how our findings are consistent with the expectations of the Resource-Based View of the firm.

Suggested Citation

Song, Michael and Nason, Robert and Di Benedetto, Anthony, Capabilities and Financial Performance: The Moderating Effect of Strategic Type (2007). Journal of the Academy of Marketing Science, Vol. 35, No. 1, pp. 18-34, March 2007. Available at SSRN: https://ssrn.com/abstract=2012623

Michael Song

Barclays Investment Bank ( email )

5 The North Colonnade
London, Canary Wharf E14 4BB
United Kingdom

Robert Nason

Michigan State University - Department of Marketing and Supply Chain Management ( email )

East Lansing, MI
United States

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