Marketing Capabilities in Entrepreneurial Firms

Most of the survey respondents were the entrepreneurial CEOs themselves who were involved in the marketing activities of the firm and therefore had the necessary understanding to respond to the questions.

The scales used in the research were tested using confirmatory factor analysis (CFAs). The scales were tested to check the item loadings, unidimensionality, discriminant, and convergent validity. All the constructs used in the study exceeded the loading threshold of 0.50. Discriminant validity was also tested using factor analysis. The items had higher loadings with their corresponding factors in contrast to their cross loadings. The internal consistencies (reliabilities) as given in Table 1 are within acceptable limits.

The hypothesized model was tested using a PLS based structural equation modeling program called SmartPLS. Summated scales of the various constructs were used. The empirical results are presented in Fig. 1.

Marketing capability construct consists of various capabilities i.e. capability for new product development, conducting market research, capability to price, promote and distribute the products, and the capability to manage the market management function. The factor loadings represent the strength of the interrelations between marketing capability and the sub constructs. The factor loadings are presented in Table 2. The market management indicator sub construct had a high value of 0.845, followed by promotion (0.826), market research (0.824), channels (0.730) product development (0.702) and pricing (0.514).

Table 1 Reliability estimates for the measures

Table 2 Factor Loadings for various constructs used in the model

The factor loading of the various sub constructs of the Entrepreneurial orientation construct i.e. innovation, proactiveness, and risk taking had a value higher than 0.694. Market orientation consists of intelligence generation, dissemination and response. The factor loadings of all the sub constructs of the marketing orientation construct had a loading higher than 0.91. Market and technological turbulence had a factor loading higher than 0.86.

The coefficient of reliability and the average variance extracted (AVE) was also obtained using PLS to assess the measurement models. The coefficient of reliability had a value of 0.8 to 0.9 for all of the constructs indicating the internal consistency of the constructs. The AVE value was between 0.5 to 0.81 for all constructs.