Marketing first? The role of marketing capability in SME growth

Abstract

Purpose This paper aims to examine the growth rates of small- and medium-sized enterprises (SMEs) over a three-year period, the relationship between firm size and firm growth in the context of SMEs, and the effect of marketing capability (MC) on firm growth and how it relates to firm size. The theoretical framework is based on the resource-based view and dynamic capabilities. Design/methodology/approach Data were gathered from Finnish SMEs (n = 214) and analyzed with Latent growth curve modeling (structural equation modeling). Respondents were chief executive officers or company owners. Findings Results show that firm size is unrelated to the rate of change, and MC has a significant effect on both the intercept and slope parameters. Smaller SMEs have less MC than larger SMEs. Practical implications While the overall human resources level of the SME is not linked to the rate of growth, MC is. This is an important point for small business growth studies, for it shows what type of personnel is called for during rapid growth. SMEs could advance significantly and rapidly if they invest in versatile human capital, especially in the marketing area. Originality/value Majority of the MC research involves larger corporations. This study brings new insights from SME perspective. In addition, this study suggests that it is imperative to consider different types of growth separately. This study contributes to this need by demonstrating the connection between employee growth rate and MC in SMEs.

How to flourish under constraints: imitation or innovation? The mediation role of innovation and absorptive capacity on firm performance

“…The RBV gives strength to the concept of strategic orientation as a means to get synergistic benefits from unique resources to achieve competitive advantage (Lee and Tang, 2017; Lee and Zhou, 2012). The RBV supports to explicate that firms’ heterogeneity in resources (managerial and organizational skills, processes and routines, information and knowledge) is the ingredient key that contributes substantially to the maintenance and enlargement of competitive advantages through innovation (McCartan, 2023; Bello et al , 2016; Ahuja and Katila, 2004), and develops corporations into capabilities must be valuable, rare, inimitable and nonsubstitutable so that a firm can have the potential to create sustainable competitive advantage (Barney, 1991; Lin and Wu, 2014; Joensuu-Salo et al , 2023). Furthermore, following the views of EMs and strategic management to sense and seize opportunities (e.g.…”

“…Because the subject of the study is associated with the relationship between innovation and imitation strategies, ACAP and firm performance, the underpinning theory for this study is derived from the RBV and dynamic capability theory (DCT)− an extension of RBV of the firm. The focal point of both RBV and DCT is on resources and capabilities, which enable firms to differentiate from the other competitors, develop performance and play a crucial part in the organization’s ability to attain competitive advantage (Joensuu-Salo et al , 2023; Talari and Khoshroo, 2022; Helfat and Peteraf, 2009). In alignment with strategic management literature, setting the appropriate strategic orientation, due to the firms’ positioning in markets, is not only a principle for optimizing and making the best use of their resources but also allows firms to organize their resources to grow and sustain competitive advantage and eventually performance, particularly in a changing environment (Teece, 2014).…”

“…Furthermore, following the views of EMs and strategic management to sense and seize opportunities (e.g. technological) and renovate value chain, DCT is a robust theoretical framework in strategic management to advance a strategic fit between changing market opportunities and its capabilities (Joensuu-Salo et al, 2023;Helfat and Peteraf, 2003;Lin and Wu, 2014). The DCT supports the notion of strategic orientation as a means to potentially Source: Authors' own work curb a number of the weaknesses by renewing and reconfiguring assets (tangible and/or intangible) and capabilities of the firm to ensure that they endure to acquire benefits and competitive advantage during changing environment (Helfat and Peteraf, 2009;Teece, 2014).…”

Positioning in SMEs: entrepreneurs’ perceptions and strategies

“…In summary, the lack of competitor orientation in SMEs as part of their market orientation might be a fundamental difference between the positioning approaches of SMEs and large companies, which could be because of the lack of financial resources and marketing personnel in SMEs (Abimbola, 2001; Kotler and Keller, 2016; Joensuu-Salo et al , 2022) to conduct market research as well as the lack of marketing knowledge and skills of many SME entrepreneurs (Gruber, 2004; Van Scheers, 2011).…”

“…Positioning approaches in small-and medium-sized enterprises Research on growing SMEs shows that they tend to adopt a more explicit market and brand orientation than their stable or declining counterparts (Reijonen et al, 2012). They invest more in their marketing capabilities (Joensuu-Salo et al, 2022) and target markets more precisely than slow-growing SMEs which are "trying to be 'everything to everyone'" (Tan Swee Lin and Smyrnios, 2007, p. 69). SMEs with a stronger competitive orientation are more innovative in the marketplace (Lefebvre and Lefebvre, 1993) and develop greater competitive advantages (Renton et al, 2015).…”