Investigating the Dynamic Relationship between Marketing Capabilities and Firm Performance

This study examined the dynamic relationship between marketing capabilities and firm performance (the relationship between the change in marketing capabilities over time and the change in firm performance over time) and the moderating effect of industry type on the dynamic relationship. A three-step approach was proposed to facilitate analysis. In the first step, DEA was used to measure marketing capabilities. In the second step, growth modeling with the case-by-case approach was used to obtain the estimates of the slope of the linear growth trajectory. In the third step, the moderated regression analysis was conducted to test for the research hypotheses regarding dynamic relationship. The results, based on a sample of 392 firms from S&P500, indicated that there existed a positive dynamic relationship between marketing capabilities and firm performance and the relationship was moderated by industry type. The positive dynamic relationship existed for manufacturing firms but not for service firms. Some practical implications were discussed. This work contributes to the literature on marketing capabilities.