Marketing Capability, Analyst Recommendations, And Firm Value
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This dissertation consists of two essays to investigate the potential performance impact of marketing capability. The first essay focuses on the impact of marketing capability on analyst recommendations. It examines the direct and relative effect of marketing capability on analyst recommendation metrics. The moderating effect of market competition on this capability-recommendation link is also tested. The result supports that marketing capability not only has a positive direct impact but also a stronger effect, relative to financing capability, on analyst recommendations for the firm. Furthermore, the direct effect of marketing capability on analyst recommendations is nonlinear. Pursuing an extremely high level of marketing capability may incur trade-off effects and result in unwanted outcomes. The effects of marketing capability are more pronounced in the condition of high market competition. The second essay is interested in the potential mechanisms involved in translation process of the value of marketing capability gap to product and stock markets. The marketing capability gap between a firm and its rivals represents the firm's competitive advantage. Two mechanisms, analyst coverage and market competition, are proposed to test their roles in channeling the value of marketing capability to the markets. In addition, this study examines the impact of marketing capability gap on a firm's marketing-, accounting-, and finance-oriented performance measures simultaneously. The analysis shows heterogeneity in the associations between marketing capability and performance measures. The product-market reaction to marketing capability gap differs from finance-market response. The result indicates that analyst coverage serves as an information intermediary and helps stock market recognize the value of marketing capability. Market competition facilitates the value recognition process to product market instead of financial market. In addition, market competition and analyst coverage work complementarily to unveil the value of marketing capability gap. For firms with low marketing capability gap competing in competitive market, analyst coverage enhances the visibility of marketing capability in the eyes of product market. This research makes several contributions to literature. First, it introduces the under-researched analyst recommendation metrics into marketing capability literature. Second, these two essays propose and investigate potential mechanisms involved in influencing the business performance impacts of marketing capability level and gap. Third, this dissertation utilizes a dataset collected from multiple archival databases with a nonparametric statistical tool, data envelopment analysis, to assess marketing capability also provides a novel perspective in marketing capability literature.