An evolutionary perspective on capabilities for fluid product-markets: the contingent effects of routinization and renewal in marketing, R&D, and operations

Hudson, Kerry, Kumar, V. and Morgan, Robert E. ORCID: https://orcid.org/0000-0001-8981-3144 2024. An evolutionary perspective on capabilities for fluid product-markets: the contingent effects of routinization and renewal in marketing, R&D, and operations. Long Range Planning 57 (6) , 102480. 10.1016/j.lrp.2024.102480

Preview

PDF - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (1MB) | Preview

Abstract

The performance benefits of functional capabilities in marketing, technology, and operations rely on their routinization in organizational processes, but these also require renewal in response to environmental change. This raises a fundamental tension: is it better to maximally develop functional capabilities that offer the highest contingent benefit in present market conditions, and/or to modify capabilities as conditions change? We propose two measures of a firm’s ability to renew its functional capabilities to align with market conditions: capability heterogeneity (variation in extant capabilities) and capability adaptability (selection among these strategic options). In a 20-year panel of 771 firms, we find environmental change increases the importance of these aspects of how capabilities are managed relative to what capabilities a firm possesses: In stable product-markets, capability heterogeneity and adaptability incur significant costs whereas functional capabilities improve profitability. In contrast, functional capabilities can be detrimental in fluid product-markets whereas heterogeneity and adaptability increase profitability. Notably, marketing capability remains beneficial across environments, acting as a profitable alternative to capability heterogeneity and adaptability when future conditions are uncertain. This evolutionary perspective contributes to ongoing theoretical debates on the conceptualization and consequences of capabilities, with practical implications for mitigating the risks of excessive inertia or change.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Additional Information:	License information from Publisher: LICENSE 1: Title: This article is under embargo with an end date yet to be finalised.
Publisher:	Elsevier
ISSN:	0024-6301
Date of First Compliant Deposit:	24 September 2024
Date of Acceptance:	20 September 2024
Last Modified:	08 Oct 2024 12:56
URI:	https://orca.cardiff.ac.uk/id/eprint/172342

Actions (repository staff only)

Edit Item