Market-based organizational learning, pricing capability and business performance: the moderating effects of coordination mechanism and environmental dynamism

Abstract

Purpose This study aims to present a conceptual framework for understanding the dual orientations of market-based organizational learning (MBOL), namely, market orientation (MO) and learning orientation (LO), in the development of pricing capability (PC) with the goal of improving business performance (BP). This framework further explores the moderating effects of coordination mechanism (CM) and environmental dynamism (ED) on the PC–BP link and the mediating role of PC on the relationship between MBOL and BP. Design/methodology/approach This study applied the partial least squares structural equation modeling on survey data from 298 Indian small- and medium-sized enterprises (SMEs) operating in manufacturing and service sectors. Findings The findings indicate that MBOL significantly contributes to PC development, which in turn improves BP. Interestingly, PC acts as a partial mediator in the MO–BP link, as well as LO–BP link. Moreover, CM and ED strengthen the effect of PC on BP. Finally, MO and LO have substantial and distinct effects on PC and BP. Research limitations/implications This study examines only one market-related capability, i.e. PC, considers multi-industry SMEs rather than specific large industries and uses cross-sectional instead of longitudinal data. Practical implications These findings are crucial from managerial standpoints because SMEs need to understand the MBOL dimensions, including MO and LO, and their significance in improving PC and BP. Originality/value Understanding how MBOL adoption contributes to superior performance is critical, but research in the SMEs context is still lacking. This study addresses a research gap by examining the impact of MBOL on BP, both directly and indirectly, through PC in the context of SMEs.