Innovation Capability and Market Share: The Moderating Effect of Marketing Capability

Abstract

The performance of manufacturers of baby-care products in Nigeria experienced 1% improvement between 2017 and 2018 and this is in spite of the 36.9% birth rate within this period. Empirical submissions have linked the cause of this performance in the baby-care industry to primarily the macroeconomic conditions in Nigeria. Literatures advocate that to flourish in a changing environment, organizations need to employ competencies (innovation and marketing) that can adjust well with such turbulent environment. Hence, this study examined the effect of innovation capability on market performance. In addition it evaluated the moderating effect of marketing capability on the interaction between innovation capability and market performance. To achieve these objectives, the study employed a cross-sectional survey design and a sample of 232 employees of four manufacturers of baby-diapers in Lagos State, Nigeria. Through a validated questionnaire, a moderated regression analysis to test two-way interaction hypotheses was conducted, and the results show that innovation capability has a significant positive effect on market share (R2 = 0.221, F(1,233) = 66.279, β=0.460, t=8.141, p =0.000). Further analysis shows that innovation capability explained the increase experienced in market share with the introduction marketing capability as a moderator (ΔR2 = 0.02, ΔF(1,232)= 6.205,p=0.013). This finding suggests that managers of manufacturing companies in diaper production in Nigeria should invest more in developing an innovative high-level capability that would help their firms to improve their market performance. Moreover, pay attention to developing more dynamic marketing capability from an outside-in perspective to enhance the overall organizational performance.