On Explaining Performance Differentials: Marketing and the Managerial Theory of the Firm

Abstract

Efforts to develop a managerially meaningful alternative to the neoclassical theory of the firm have always been an important part of theory development in marketing. This paper argues that the main explanandum of a managerial theory of the firm is performance differentials between firms. Marketing shares an interest in explaining performance differentials with strategic management and organizational economics. We show that a generic understanding of the sources of performance differentials is emerging across these three disciplines, and we incorporate this understanding in a unifying conceptual framework that is both managerially relevant and embedded in economic theory. We discuss market orientation literature in light of this framework, and present the prospects for developing it into an actionable view of how marketing can contribute to the success of the firm.

Keywords: Competitive advantage, theory of the firm, marketing strategy, market orientation

JEL Classification: B52, D20, D21, L10, L13, L20, L21, L25, M10