Examining the link between marketing controls and firm performance: The mediating effect of market-focused learning capability

Abstract

This study builds on parallel structural equation modeling (SEM) and fuzzy set Qualitative Comparative Analysis (fsQCA) to explore how formal and informal marketing controls affect firm performance by enhancing a firm's market-focused learning capability. The SEM results reveal that formal controls have a direct impact on market-focused learning capability and, thereby, firm performance, while informal controls strengthen this positive impact. Furthermore, results from fsQCA suggest that all configurations associated with high market-focused learning and/or high firm performance reflect high informal controls. Taken together, these results imply that informal controls serve as “hygiene factors” that are necessary but not sufficient to generate market-focused learning capability or firm performance. Finally, a firm's business strategy (i.e., cost leadership, differentiation or a dual strategy) is found to moderate the effectiveness of marketing controls: firms with a dual strategy benefit more from informal controls, while those with a clear strategy reap more benefits from formal controls.