Customer orientation and financial performance relationship: the mediating role of innovative capability

Mirela Jeffman Dos Santos,Cláudio Hoffmann Sampaio,Cláudia Simões,Marcelo Gattermann Perin

doi:10.1590/0104-530x4706-20

Abstract

Abstract: Existing research establishes customer orientation (CO) per se as insufficient to achieve higher levels of financial performance (FP). Such reasoning suggests the need for additional skills and capabilities, such as, innovative capability (IC). In addition, environmental variables (e.g., Technological Turbulence – TT) affect these relationships. This paper explores the relationships and effects of CO and IC on FP under different TT conditions. A research framework and hypotheses were developed. The framework captures the following relationships: (i) the direct influence of CO on FP; (ii) the mediating role of IC on the CO/FP relationship; (iii) the moderating role of TT over the mediation of IC on the CO/FP relationship. The fieldwork included an exploratory stage, followed by a cross-sectional survey applied to managers in medium-sized companies in Brazil. Findings revealed that IC partially mediates the relationship between CO and FP, in particular in high TT environments. Managerial implications and avenues for future research are presented.

Highlights

Transformations in the business environment, such as, the emergence of new technologies and changes in customer preferences, call for organizations to develop new market approaches and capabilities (Paladino, 2008; Wei & Morgan, 2004)
In the second model (Model 2), the innovative capability (IC) was included as a mediating variable in the relationship between customer orientation (CO) and financial performance (FP)
This study sought to analyze the effect of CO in FP and the role that IC may play in this relationship

Summary

Introduction

Transformations in the business environment, such as, the emergence of new technologies and changes in customer preferences, call for organizations to develop new market approaches and capabilities (Paladino, 2008; Wei & Morgan, 2004). The different capabilities and their combination are expected to generate competitive advantage and, impact on business survival (Watson et al, 2018). The theory of the Resource Based View (RBV) of the firm posits that the right combination of internal resources fosters the development and implementation of strategies that generate a leading position in the market (Hooley et al, 2001), competitor differentiation and competitive advantage (Barney, 1991). Organizations ought to develop suitable and relevant capabilities that leverage their competence in addressing the market and business environment

Methods

Results

Conclusion