Understanding the pathway from market-based capability to performance of Korean firms on the basis of Dynamic Capability and Resource-Advantage theory

Abstract

This research identifies market-based capability dimensions based on Teece’s (2007) first two classes of dynamic capability—sensing capability and seizing capability—and investigates their impacts on firm performance. By incorporating Resource-Advantage theory as a complement to the primary framework of dynamic capability, the concept of market positional advantage (MPA) is introduced and empirically tested as an assessment signpost linking the capability dimensions and firm performance. Accordingly, this study addresses a research gap by exploring the full scope of market-based capabilities and clarifying the pathway through which they influence firm performance in a non-Western context, South Korea. Through LISREL structural equation modeling based on survey responses from 245 managers of Korean firms, the study finds that the seizing capability dimension of market-based capability—including product management capability (PMC), customer management capability (CMC), and supply chain management capability (SCMC)—positively influences firm performance via market positional advantage (MPA). As a sensing capability, market-insight capability (MIC) is proven to affect the three capability dimensions, indicating its critical leading role in building organizational capability collection. As the firms’ own idiosyncratic process of continuous feedback and resource recomposition repeats, we argue that the last class of Teece’s (2007) dynamic capability—transformational/reconfiguring capability—can be cultivated. This study advances theoretical perspectives on the marketing capability–performance relationship and offers practical guidance for managers seeking to enhance firm performance and develop strategic investment in capability building.