Examining the antecedents and consequences of pricing capability: evidence from SMEs

Abstract

Purpose The purpose of this study is to highlight the need for developing pricing capability (PC) for business-to-business firms to effectively manage and execute the pricing activities in the organization and succeed in a competitive market. Using the firms’ resource-based view, organizational learning theory and organizational capabilities literature, this study develops a conceptual framework in which market-focused learning and firm innovativeness are potential antecedents of PC and pricing value and business performance (BP) are consequences. Design/methodology/approach The authors conducted an online e-mail-based survey to collect primary cross-sectional data from the 127 Indian small and medium-sized enterprises (SMEs). The partial least squares structural equation modeling technique was used to empirically validate a conceptual framework as well as the research hypotheses. Findings The findings indicate that market-focused learning and firm innovativeness have a substantial influence on PC, which in turn positively affects both pricing value and BP. Moreover, pricing value demonstrates a partial mediating effect on the link between PC and BP. Research limitations/implications This research has certain limitations, namely, using cross-sectional data and limited sample size. More empirical research on the antecedents of PC is required. Practical implications The empirical findings enlighten the SMEs on the significance of developing specialized PC in delivering superior pricing value to customers and achieving greater BP. Originality/value The existing literature lacks empirical data on the development and antecedents of PC, particularly in the SME context. The current study empirically examines the impact of market-focused learning and firm innovativeness on PC.