The Drivers, Benefits, and Drawbacks to a Customer Value-Oriented Dominant Logic: A Dynamic Managerial Capability Perspective, An Abstract

Abstract

It has been widely accepted that market-oriented behaviors are positive drivers of business performance (Narver and Slater 1990; Jaworski and Kohli 1993; Morgan et al. 2009). Rather than examining such behaviors, this study bases its assertions on Kor and Mesko’s (2013) investigation outlining the role of the drivers and consequences to the firm’s dominant logic. This doctoral study infers that the firm’s dominant logic (defined below) has similarities with a market-oriented dominant logic (Cadogan 2003) and is driven by dynamic managerial capabilities (Kor and Mesko 2013). The firm’s dominant logic is “the way in which managers conceptualize the business and make critical resource allocation decisions - be it in technologies, product development, distribution, advertising, or in human resource management” (Kor and Mesko 2013, p. 235). Dynamic managerial capabilities (managerial human capital, managerial cognition, and managerial social capital) are “the capabilities with which managers create, extend, and modify the ways in which firms make a living — to help explain the relationship between managerial decisions and actions, strategic change, and corporate performance under conditions of change” (Helfat and Martin 2015, p. 1282). No studies have examined the drivers and consequences of a market-oriented dominant logic which needs to be done so that managers can appreciate how firms can manage their market-oriented activities and shape their performance accordingly through the correct level of investments across its various departmental functions. This is critical to measure so that scholars and managers can appreciate the situations in which marketing may not always be a positive activity as an overinvestment in marketing may cause negative consequences (e.g., effects on tensions and performance) (Buono and Bowditch 2003). The study conceptualizes the dark side of a market-oriented dominant logic through causal relationships (where the primary contribution is made), whereby a market-oriented dominant logic indirectly leads to negative consequences (such as tensions between departments through overinvestments in marketing) as well as through environmental contingencies. The paper argues that while the “marketing department” is an integral component of a firm’s operations (Verhoef and Leeflang 2009; Morgan 2012), other departments are likely to require a level of investment in tandem with marketing (Homburg et al. 2015). Tensions may encapsulate a broad range of outcomes associated with such relative investments across an organization’s departments such as trust and relationship quality (Menon et al. 1997). This study intends to make recommendations on how managers can avoid such outcomes based upon the proposed negative link between an overinvestment in marketing (due to a market-oriented dominant logic) and financial performance. As such, the above conceptualizations yield the research objective of examining (under the dynamic managerial capabilities perspective) the antecedents and consequences to a market-oriented dominant logic with a specific focus on the dark side to such market-oriented dominant logic. The presentation ends by discussing further stages of this doctoral study’s life cycle specific to the empirical testing of the conceptual findings.