Facilitating dynamic marketing capabilities development for domestic and foreign firms in an emerging economy

While the strategy literature has long advocated the impact of strong firm dynamic capabilities on new product development, scant research has discussed how to build dynamic marketing capabilities (DMCs), a key component of dynamic capabilities, to improve innovation performance. Focusing on emerging economies, this study develops a framework for exploring the mechanisms of building strong DMCs from the perspective of both external (inter-organizational relationships) and internal (entrepreneurial orientation) factors. Using survey data from firms in China, the authors find that both vertical and horizontal relationship can facilitate the development of DMCs. Moreover, the impact of vertical relationship is stronger than that of horizontal relationships for domestic firms but weaker for foreign firms, because foreign and domestic firms have different levels of resource dependence on their partners. Furthermore, entrepreneurial orientation influences firms' willingness and ability to leverage the benefits from relationships, thus strengthening the impact of vertical relationships but weakening that of horizontal relationships. The study extends DMCs research into the area of international business by suggesting different approaches for firms to develop DMCs in domestic versus overseas markets.