Firms' customer responsiveness and performance: the moderating roles of dyadic competition and firm's age

Abstract

Purpose – The literature reports mixed findings on the performance impact of market orientation and a lack of attention to the moderating roles of dyadic competition and firm's age. The purpose of this paper is to explore the relationship between customer responsiveness and performance of industrial firms and to consider the moderators. Design/methodology/approach – Drawing on competitive dynamics literature, a contingency model is developed. Hypotheses were tested on 350 Swedish industrial firms that market clean technology to business customers. Findings – First, the main competitor's cost leadership weakens the positive performance impact of the industrial firm's customer responsiveness. An interpretation would be that it is difficult for product firms to overcome competition based on low costs. Second, the industrial firm's age weakens the positive performance impact of the industrial firm's customer responsiveness. This indicates that the firm's responsiveness advantage diminishes as strategies of competing firms converge. Research limitations/implications – By adding literature on competitive dynamics the study contributes to theory. The article shows that dyadic competition and firm's age matter for the relationship between customer responsiveness and performance. Practical implications – The industrial firm may keep an efficient customer responsiveness strategy by reducing its vulnerability to low costs of the main competitor. Also, an ability of developing the content of the firm's responsiveness strategy would favor the strategy uniqueness and efficiency. Originality/value – The article presents a new model that shows the performance impact of the industrial firm's customer responsiveness, including the moderating roles of the main competitor's competitive strategy and the firm's age. By including the contingencies, the model explains mixed findings in the literature regarding relationships between customer responsiveness and performance.

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