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Innovation pathway to profitability: the role of entrepreneurial orientation and marketing capabilities

Author

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  • S. Arunachalam

    (Indian School of Business)

  • Sridhar N. Ramaswami

    (Ivy College of Business, Iowa State University
    Indian School of Business)

  • Pol Herrmann

    (Ivy College of Business, Iowa State University
    EGADE Business School)

  • Doug Walker

    (Kansas State University)

Abstract

Drawing from the marketing capabilities and innovation literatures, we identify aprocess by which a firm’s entrepreneurial orientation impacts profits and show that it is dependent on marketing capabilities. Using a half-longitudinal design we integrate survey data with performance metrics over two time periods, from a sample of 190 firms. While the effect of entrepreneurial orientation (EO) on innovation is enhanced by architectural marketing capabilities, the effect of innovation outcomes on profits is enhanced by specialized marketing capabilities. Ultimately, the pathway from EO to performance, mediated by innovation, is positively significant at higher levels of both marketing capabilities. The results uncovered using Bayesian conditional process modeling, are robust to alternate model specifications, endogeneity tests, and provide insights into the capabilities-based understanding of entrepreneurism-marketing interface. We discuss resource allocation implications for managers as they attempt to maximize profits through innovation.

Suggested Citation

  • S. Arunachalam & Sridhar N. Ramaswami & Pol Herrmann & Doug Walker, 2018. "Innovation pathway to profitability: the role of entrepreneurial orientation and marketing capabilities," Journal of the Academy of Marketing Science, Springer, vol. 46(4), pages 744-766, July.
  • Handle: RePEc:spr:joamsc:v:46:y:2018:i:4:d:10.1007_s11747-017-0574-1
    DOI: 10.1007/s11747-017-0574-1
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