Dual routes of marketing capabilities through marketing innovations to firm performance

Purpose This study examines how SMEs can succeed in dynamic environments by investigating (1) how outside-in marketing capabilities affect firm performance through different innovation pathways and (2) how environmental and organizational factors moderate these relationships. Design/methodology/approach Data from 500 Korean SMEs, spanning both manufacturing and service sectors across B2B and B2C markets, were analyzed using structural equation modeling to examine path relationships and mediating effects, while hierarchical regression analysis was used to assess moderating effects. Findings Marketing capabilities operate through distinct innovation pathways: exploitative capabilities foster market-driven innovation, whereas exploratory capabilities promote market-driving innovation, both enhancing firm performance. Market turbulence negatively moderates the link between exploitative capability and market-driven innovation, whereas ambidexterity management strengthens the link between exploratory capabilities and market-driving innovation. Research limitations/implications We advance the understanding of marketing capabilities by examining how exploitative and exploratory capabilities distinctly influence market-driven and market-driving innovations. We also extend the environment-organization fit theory to marketing and innovation domains by empirically validating the moderating effects of environmental turbulence and ambidextrous management. Next, we expand the “Capability-Activity-Performance” framework within the marketing context, demonstrating the sequential relationships among capabilities, innovation activities, and firm performance. Further, our integrated analysis of mediating and moderating effects provides a more nuanced theoretical model. Practical implications We recommend developing dual marketing capabilities, as both exploitative and exploratory capabilities are shown to facilitate distinct types of innovation, thereby enhancing both current market competitiveness and future opportunities. We also emphasize the critical importance of strategic adaptability in response to environmental dynamics, which is particularly true when market turbulence moderates the effectiveness of exploitative capabilities. Furthermore, we highlight the crucial role of ambidextrous management systems, which can enhance the relationship between exploratory capabilities and market-driving innovation. Social implications We propose that resource-constrained SMEs can achieve sustainable competitive advantages by strategically implementing these marketing capability development initiatives. Originality/value This study highlights the strategic importance of outside-in marketing capabilities by elucidating the complex relationships between marketing capabilities, innovation activities, and performance outcomes. By identifying the moderating effects of environmental and organizational factors, this study provides implications for strategic marketing decisions. The originality of this study lies in conceptualizing exploratory marketing capability and market-driving innovation and empirically examining their relationship. Although Day (2011) proposed adaptive marketing capability, this study is among the first to provide evidence within a specific dual-path framework.