How Does Selling Capability Impact Firm Value? The Moderating Roles of Relative Strategic Emphasis, Market Volatility, and Technological Volatility

Abstract

Firms develop and deploy selling capability to create and sustain a competitive advantage. Previous studies have focused predominantly on static, input-based selling capability, paying little attention to dynamic, efficiency-focused selling capability. This treatise reconceptualizes selling capability from a dynamic and efficiency (input-output) perspective and investigates the effect of selling capability on firm value with the contingent role of internal [i.e. relative strategic emphasis (SE)] and external (i.e. market volatility and technological volatility) factors. Using data from 341 US-based manufacturing and service firms over the period 2014-2020 and an endogeneity-robust dynamic estimation technique, the authors find that selling capability positively affects firm value, and firms with a relative SE on value appropriation (i.e. advertising) as opposed to value creation (i.e. R&D) reap more rewards from selling capability. That is, relative SE positively moderates the nexus between selling capability and firm value. Furthermore, the results demonstrate that the interactive effect of selling capability and relative SE is weaker when an industry experiences higher market volatility but stronger when technological volatility is higher. Overall, this study demonstrates that a firm's selling capability should be managed dynamically in light of its (internal) relative SE and (external) environmental conditions. The results are robust to several additional sensitivity analyses.

Determinants of Firm Value as Measured by the Tobin’s Q: A Case of Malaysian Plantation Sector

“…The results of the second alternative hypothesis test demonstrate that firm sales significantly increase firm value. A firm can contribute to revenue advantage and cost advantage through the effective use of its sales resources, which will enhance the firm's value (Chen et al, 2015;Guenzi et al, 2016;Rahman et al, 2020). While Chandra and Ro (2008) held the view that the importance of revenue or sales is greater than the importance of earnings in valuing a firm, this was also supported by the findings from this study.…”

“…Sales and Firm Value Rahman et al (2022) discovered that sales ability not only increases firm value directly but also indirectly through the contingent participation of internal and external factors in USbased manufacturing and service enterprises from 2014 to 2020. Considering the preceding descriptions, the following hypothesis is suggested:…”

Sustainable Marketing Model: Market Research, Marketing Capability and Entrepreneurial Orientation in Indonesia

“…Product innovation, brand management, and effective communication are examples of marketing capabilities (Ali & Kadhum, 2022). Businesses can successfully integrate sustainable practices into their marketing strategy and gain a competitive edge in the market by building strong marketing capabilities (Rahman et al, 2023).…”

أثر التوجه الريادي على القدرات التسويقية: بحث استطلاعي في بعض شركات السفر والسياحة العراقية

“…According to (Day, 1994), it is defined as "the integrative processes through which skills and knowledge are combined with tangible resources to transform marketing inputs into outputs". It has also been defined as "complex operations that involve combining market knowledge and organizational resources to generate added value" (Santos-Vijande et al, 2012). Organizations spend a lot of money on building, maintaining and benefiting from marketing capabilities, as it is one of the factors of marketing success .…”

“…The selling capability is affected by the organizational situation of the organization in terms of the size of the sales staff and the rate of replacement of the sales force (Yi et al, 2021). The capability to sell enables the organization to sense demand and contribute to achieving the advantage of raising revenues and the advantage of reducing costs (Rahman et al, 2022). • Market information management: It means the set of activities and processes from which organizations acquire market knowledge (Vorhies & Morgan, 2005).…”