The impact of marketing capabilities on SME’s export performance through the mediating effect of competitive advantage

Introduction: Small and medium enterprises (SMEs) play an important role for both economic growth and employment opportunities. Considering that SMEs can expand their market coverage through exporting, governments encourage SMEs to explore the international market for potential business growth. However, this has never been an easy task. SMEs need to achieve competitive advantage in order to compete with other industrial players around the world. Competitive advantage is one of the most important factors affecting the success of any firm in international markets. Previous studies have long discussed the role of the competitive advantage of firms as a determinant of export performance, but there are few studies on the determinants of firm competitive advantage and its potential mediating role in the relationship between marketing capabilities and export performance. The purpose of this study is to investigate the impacts of four essential export capabilities including product innovation, market intelligence, pricing and marketing communication on a firm’s export performance with the mediating role of competitive advantage. In this paper, we aim to shed light on the research gaps by investigating the essential capabilities associated with competitive advantage that may lead to SMEs' international performance and whether competitive advantage is a mediator to link these capabilities to SMEs' international performance. Understanding the essential capabilities which contribute to competitive advantage will guide SMEs that intend to explore international markets to assess their readiness. Policy makers and entrepreneurs can focus their capability development programs on capabilities strongly associated with competitive advantage for exporting SMEs.
Methodology: The population selected for the study consisted of the exporting firms in the food industry based in Tehran Province. The sample of the study was calculated using the Cochran formula with 95 firms randomly drawn from the respective population. Regarding the purpose, the study is an applied work carried out with a descriptive-survey research method, and the data were collected through a questionnaire. The Hypotheses of the study were tested using Structural Equation Modeling (SEM). More specifically, we applied complete bootstrapping setting with 5000 subsamples, mean replacement for missing values and two-tailed test for hypothesis testing. SEM is particularly useful for testing complex models and when researchers need to incorporate latent variables. More specifically, we opted to apply the Partial Least Squares (PLS) SME approach, using the SmartPLS 3.2.8 software. The unidimensionality and reliability of the dataset were assessed through different procedures. The construct reliability was assessed by the degree to which the items were free from random errors and, therefore, they would yield consistent results. The reliability of the measures was also calculated using the composite reliability (CR) index and the average variance extracted (AVE) index. For all the measures, both indices were higher than the evaluation criteria, namely, 0.7 for the CR index and 0.5 for the AVE index.
Results and Discussion: Theoretically, this study provides empirical evidence on the determinants of competitive advantage and the mediating role of competitive advantage. The RBV theory suggests that only capabilities which are valuable, rare, inimitable, non-substitutable can be source of competitive advantage. In line with this argument, we examined whether all the four essential capabilities are ‘valuable’ to competitive advantage. In this sense, this study extends the findings of previous research on the relationships among organizational capabilities, competitive advantage and international performance. The results revealed that two of the mentioned capabilities (market intelligence and pricing) impact competitive advantage. In addition, the data analysis confirmed the relationship between competitive advantage and export performance. Moreover, the results indicated that competitive advantage only serves as a mediator between market intelligence capability and export performance as well as pricing capability and export performance.
Conclusion: According to the results of the study, market intelligence and pricing are two important capabilities which create competitive advantage for the exporting firms in the food industry. In other words, the competitive advantage of these firms depends upon their capability to respond to market intelligence and offer reasonable and fair prices in export markets. The present study is an effort to contribute to the literature on explaining the determinants of competitive advantage affecting the export performance of firms. Moreover, the results showed that only market intelligence and pricing capabilities have mediating effects on export performance through the competitive advantage. This proves the critical roles of these two capabilities for international success. Therefore, even though a firm can achieve competitive advantage through other capabilities, the extent to which it knows international markets, customers, rivals, and reasonable prices may be essential to capitalize the capabilities and take the most advantage of opportunities to achieve a favorable export performance. The findings of this investigation can be valuable to SMEs and startups that intend to explore or exploit opportunities in foreign markets.