Marketing first? The role of marketing capability in SME growth

Abstract

Purpose This paper aims to examine the growth rates of small- and medium-sized enterprises (SMEs) over a three-year period, the relationship between firm size and firm growth in the context of SMEs, and the effect of marketing capability (MC) on firm growth and how it relates to firm size. The theoretical framework is based on the resource-based view and dynamic capabilities. Design/methodology/approach Data were gathered from Finnish SMEs (n = 214) and analyzed with Latent growth curve modeling (structural equation modeling). Respondents were chief executive officers or company owners. Findings Results show that firm size is unrelated to the rate of change, and MC has a significant effect on both the intercept and slope parameters. Smaller SMEs have less MC than larger SMEs. Practical implications While the overall human resources level of the SME is not linked to the rate of growth, MC is. This is an important point for small business growth studies, for it shows what type of personnel is called for during rapid growth. SMEs could advance significantly and rapidly if they invest in versatile human capital, especially in the marketing area. Originality/value Majority of the MC research involves larger corporations. This study brings new insights from SME perspective. In addition, this study suggests that it is imperative to consider different types of growth separately. This study contributes to this need by demonstrating the connection between employee growth rate and MC in SMEs.