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Innovation-based strategic flexibility (ISF): Role of CEO ties with marketing and R&D

S. Arunachalam, Sridhar N. Ramaswami, Pankaj C. Patel and Linlin Chai

International Journal of Research in Marketing, 2022, vol. 39, issue 3, 927-946

Abstract: In this research, using a capability perspective, we first define innovation based, strategic flexibility (ISF) as consisting of three lower-level capabilities- market sensing, resource reconfiguration, and proactiveness; then link it to new-product/innovation outcomes, and develop a new metric of ISF that is input–output based. This metric captures a firm’s realized flexibility in translating market opportunities into innovation output. We then examine the role of CEO ties with marketing and R&D in driving a firm's ISF. Combining survey data of 191 CEOs with objective performance data, we find that (a) ISF is positively influenced by the frequency and duration of the CEO's relationship with the two functional units, but negatively influenced by CEO's relationship closeness, and (b) ISF contributes to future profit growth of firms. We test the robustness of our findings to the potential violation of sequential-ignorability assumption as defined in the causal mediation literature and find the results to be robust. The results provide insights into the role of CEO characteristics in driving innovation, and upper echelon’s contributions to marketing.

Keywords: CEO ties; Strategic flexibility; Innovation; Causal mediation (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.ijresmar.2021.11.005

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