The Effect of Marketing Strategy on Firm Financial Performance

Brett William Josephson

This dissertation explores the effect of marketing strategy to influence firm financial performance. Specifically, I demonstrate through three related essays that different strategic marketing actions taken by a firm produce unique and novel financial performance implications. These findings contribute to marketing theory, by extending the fields understanding on how marketing influences firm financial performance, and marketing practice, by providing managers with useful decision tools to guide their own strategic decisions. Essay One explores the antecedents and financial consequences of strategic marketing ambidexterity. I was particularly interested in studying the shifting emphasis a firm places on either exploiting existing resources or exploring future market opportunities through the marketing function. Using longitudinal data from 2000 -2011 on 1261 publically traded firms, I show that firm maturity and resource slack are critical determinants of strategic marketing ambidexterity, and that these effects are moderated by market turbulence and industry competitiveness. In terms of performance, I find that different orientations in strategic marketing ambidexterity, either more exploitative-focused or more exploratory-focused, have a significant influence on firm financial risk as well as return. Essay Two explores the combinative effect of a firm's political management capability with its traditional market-facing capabilities, R&D, sales, and resource flexibility, on performance. Using longitudinal data from 2006 - 2011 on 83 firms in the pharmaceutical industry, I demonstrate that political management capability should only be used as when a firm has weak traditional market-facing capabilities. Political management capability can act as a substitute in these instances and improve the financial performance of the firm, decreasing firm risk and increasing return. Essay Three investigates the effect of the government as a customer on supplier firm financial performance. Specifically, I explored the financial effect when the government becomes a more central component of a firm's customer basket. I find that the government has a negative effect on firm financial performance in both the short- and the long-term. However, this negative effect can be buffered by the presence and magnitude of critical firm contextual factors, R&D intensity and resource slack.

The Effect of Marketing Strategy on Firm Financial Performance

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