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Firm capabilities and growth: the moderating role of market conditions

Author

Listed:
  • Hui Feng

    (Iowa State University)

  • Neil A. Morgan

    (Indiana University)

  • Lopo L. Rego

    (Indiana University)

Abstract

Using a contingency theory lens, this study explores the impact of multiple firm-level capabilities and their interactions on firm growth under different market conditions, using panel data from 612 U.S. public firms across 16 years in 60 industries. Specifically, this study empirically examines how three key firm capabilities (marketing, R&D, operations) interact to impact firms’ revenue growth and profit growth over time, and how external boundary conditions (market munificence and competitive dynamism) influence the interactive growth effects of these capabilities. The results indicate that firms’ R&D (operations) capabilities positively (negatively) influence the effects of marketing capabilities on firm growth and that such effects vary across different market conditions. This study provides insights to researchers and managers regarding how to manage and deploy resources across multiple capabilities simultaneously under different market conditions to drive firm growth.

Suggested Citation

  • Hui Feng & Neil A. Morgan & Lopo L. Rego, 2017. "Firm capabilities and growth: the moderating role of market conditions," Journal of the Academy of Marketing Science, Springer, vol. 45(1), pages 76-92, January.
    • Handle: RePEc:spr:joamsc:v:45:y:2017:i:1:d:10.1007_s11747-016-0472-y
    DOI: 10.1007/s11747-016-0472-y
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