The Capabilities and Performance Advantages of Market-Driven Firms: An Empirical Investigation

Although progress has been made in understanding the development of businesses competencies from a theoretical perspective, relatively few empirical studies have addressed the capabilities needed to become market-driven and the performance advantages accruing to firms possessing these capabilities. One of the barriers faced has been in defining what is meant by the term ‘market-driven’. This study develops a multi-dimensional measure useful for assessing the degree to which a firm is market-driven. Evidence is presented in this study that strategically focused market-driven business units developed higher levels of capabilities than their less market-driven rivals and significantly outperformed these rival business units on four measures of organisational performance.