Enhancing competitive advantage and financial performance of consumer-goods SMEs in export markets: how do social capital and marketing innovation matter?

Abstract

PurposeBuilding on the resource-based view (RBV), this study examines the differential roles of internal and external social capital (SC) in enhancing the marketing innovation (MI), competitive advantage and financial performance of Korean small and medium-sized enterprises (SME) in export markets.Design/methodology/approachIn total, 197 valid cases were obtained from Korean manufacturing SMEs in the consumer goods sector. Then, a path analysis was employed to test the proposed hypotheses.FindingsFirst, SME internal SC positively influenced MI, whereas external SC positively influenced foreign distributor's MI (or foreign distributor MI). Second, SME MI was positively associated with foreign distributor MI. Third, no statistical differences were found in the strength of the paths from foreign distributor and SME MI to competitive advantage. Meanwhile, foreign distributor MI positively affected financial performance more than SME MI. Fourth, SME competitive advantage predicted a positive financial performance. Finally, the effect of SME MI on financial performance had an inverted “U” shape.Originality/valueThis study fills a research gap in the MI literature by identifying MI in terms of its actors (SMEs and their foreign distributors) and examining the differential roles of internal and external SC in MI.