Abstract:
Marketing managers are challenged to explain how a firm’s focus on customers drives profit to stimulate significant organizational change. The authors draw on configuration theory to argue that a customer-centric strategy, when aligned with a customer-centric structure, allows a firm to increase profit through the dynamic capability of new product portfolio innovativeness. They further contend that the influence of a customer-centric strategy-structure alignment on the dynamic capability of new product portfolio innovativeness can be magnified by increasing the firm’s strategic resource emphasis toward R&D relative to advertising. The model is tested using a 9-year panel dataset (2011-2019) involving 695 firm-year observations comprising 8,899 product launches across 91 firms. The findings indicate that the dynamic capability of new product portfolio innovativeness mediates the positive effect of customer-centric strategy-structure alignment on firm profit and that the increase in strategic resource emphasis toward R&D magnifies the effect of customer-centric strategy-structure alignment on new product portfolio innovativeness.