Journal of World Business 45 (2010) 217227

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Journal of World Business

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Do marketing capabilities consistently mediate effects of rm intangible capital

on performance across institutional environments?
David A. Grifth a,*, Goksel Yalcinkaya b,1, Roger J. Calantone c,2
a
Michigan State University, Department of Marketing, N356 North Business Complex, Eli Broad College of Business, East Lansing, MI 48824-1122, United States
b
University of New Hampshire, Department of Marketing, Whittemore School of Business & Economics, Durham, NH 03824, United States
c
Michigan State University, Department of Marketing, N307 North Business Complex, Eli Broad College of Business, East Lansing, MI 48824-1122, United States

A R T I C L E I N F O A B S T R A C T

Keywords: This study examines whether marketing capabilities consistently mediate intangible capital on
Resource-advantage theory performance across institutional environments. A partial test of resource-advantage theory is conducted,
Marketing capabilities examining the relationship between four intangible capital elements on marketing capabilities and
Institutional economics
consequent rm performance. The results, based upon samples of 239 importers in Japan and the U.S.,
Importers
indicate that human capital and relational capital inuenced marketing capabilities, and that marketing
capabilities inuenced performance similarly across institutional environments. Organizational capital,
however, was found to only inuence marketing capabilities for U.S. importers. Furthermore, our results
indicate full mediation in both samples. Implications for academics and practitioners are presented.
2009 Elsevier Inc. All rights reserved.

As rms expand into international markets they continually
strive to leverage rm resources and capabilities. Nike works to
leverage its creative talent to develop new and innovative product
offerings to an increasingly demanding global marketplace.
Similarly, SAP attempts to leverage its worldwide business
relationships to establish its competitive positioning in relation
to its marketing/sales efforts to enhance performance globally.
While some companies are successful in leveraging rm resources
across markets, most rms have struggled to achieve success in
differing institutional environments. Given these challenges, it is
not surprising that a substantial amount of research has focused on
this issue. However, while rm resources and capabilities have
been a central focus of the literature (e.g., Ainuddin, Beasmish,
Hulland, & Rouse, 2007; Atuahene-Gima & Murray, 2007; Barney,
1991; Day, 1994; Vorhies & Morgan, 2005), a review of the
literature reveals several shortcomings limiting our understanding
of the development of marketing capabilities in the global context.
First, limited empirical research has focused on the ability of
rms to leverage intangible resources into marketing capabilities
(Grifth & Harvey, 2001). This is not to suggest that researchers have
not explored capabilities. Yalcinkaya, Calantone, and Grifth (2007)
specically examined the inuence of technological and marketing
resources on the development of exploitation and exploration
capabilities. Researchers to date have not focused on intangible rm
capital as leveraged as marketing capabilities (viewed in this study
as a rms ability to integrate the collective knowledge, skills, and its
resources to effectively respond changing market needs and meet
competitive pressure3) under resource-advantage theory (hereafter,
R-A theory). This is a critical limitation as researchers (cf., Hitt,
Bierman, Shimizu, & Kochhar, 2001; Hunt, 2000; Hunt & Morgan,
1995) argue that it is through the leveraging of intangible resources
into capabilities that rms are able to achieve superior performance.
By specically examining the linkage between R-A theory desig-
nated intangible resources and marketing capabilities on resulting
performance a partial test of R-A theory can be conducted. This is of
note as limited empirical testing of R-A theory has been offered in the
literature.
Second, and more importantly, as rms compete in increasingly
diverse global markets, it becomes critical to understand whether
or not the inuence of intangible rm capital can be leveraged as
marketing capabilities to enhance performance consistently across
institutional environments. Hunt (2000), when explicating R-A
theory, contends that the foundational aspects of R-A theory are
broad (within market-based economies4) and have wide-ranging
applicability. However, the global marketing research is mixed in

* Corresponding author. Tel.: +1 517 432 6429; fax: +1 517 432 1112.
E-mail addresses: grifth@bus.msu.edu (D.A. Grifth),
goksel.yalcinkaya@unh.edu (G. Yalcinkaya), rogercal@msu.edu (R.J. Calantone).
1
Tel.: +1 603 862 3376; fax: +1 603 862 3383.
2
Tel.: +1 517 353 6381; fax: +1 517 432 1112.
3
Vorhies and Morgan (2005) note that the literature has yet to categorize specic
marketing capabilities. The literature (e.g., Day, 1994) conceptualizes marketing
capabilities in the context of transforming resources into valuable outputs based on
the classic marketing mix.
4
The decomposition of institutional environment into market-based is
consistent with current institutional theory approaches to international business
research (e.g., Luk et al., 2008).

1090-9516/$ see front matter 2009 Elsevier Inc. All rights reserved.
doi:10.1016/j.jwb.2009.09.008
218 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227
relation to generality of business models. For example, some
research has demonstrated the importance of institutional
environment aspects (Davis & North, 1970; Jackson & Deeg,
2008; Lenartowicz & Balasubramanian, 2009; Pil & MacDufe,
1999), such as national culture, as a key inuencing factor in
different behavioral situations (e.g., Bstieler & Hemmert, 2008;
Grifth, Myers, & Harvey, 2006; Limon, Kahle, & Orth, 2009; Song,
Nason, & Di Benedetto, 2008; Steers, Meyer, & Sanchez-Runde,
2008), while others have found similarities across institutional
contexts (e.g., Grifth et al., 2006; Hult, Cavusgil, Deligonul, Kiyak,
& Lagerstrom, 2007). Building on this research, we empirically
investigate whether or not institutional environment inuences
the relationship between intangible rm capital and marketing
capabilities and its resultant performance, or whether these
resources are consistent in their inuence on marketing capability
development, thereby working to identify boundaries of R-A
theory.
These shortcomings within the international marketing litera-
ture create not only a theoretical and empirical gap, but leave
international marketing academics and practitioners without a
clear understanding of the manner in which a rm can leverage its
intangible rm capital as marketing capabilities. Further, as global
operations intensify greater understanding of the effect of
intangible rm capital utilization across different institutional
environments could provide international marketing academics
and practitioners with strategic insights for resource investment to
enhance rm performance. We begin by presenting the theoretical
foundation of R-A theory, followed by development of the
hypotheses. Next, we present the method and analysis followed
by a discussion of the results and their implications for
international marketing academics and practitioners.
1. Theoretical development
1.1. Resource-advantage theory
R-A theory is a theory of competition advanced within the
marketing strategy literature (cf., Hunt & Morgan, 1995; Seggie &
Grifth, 2008). It is based on several different research traditions,
e.g., Austrian economics, transaction cost economics and resource-
based views of the rm. Hunt and Morgan (1995), when
explicating R-A theory, contend that the foundational aspects of
R-A theory have wide-ranging applicability, employing illustra-
tions of R-A theory across multiple market contexts to demon-
strate its power in explaining rm behavior, market development
and competition. The general business model of R-A theory is that
rm resources are leveraged to provide for competitive advantage
resulting in better rm performance (Hughes & Morgan, 2007;
Hunt, 2000; Hunt & Morgan, 1995).5 R-A theory incorporates the
resource-based view of the rm (cf., Barney, 1991; Peteraf, 1993;
Wernerfelt, 1984) into its explication of competition.
R-A theory indicates that resources are the tangible and
intangible entities available to the rm that enable it to produce
efciently and/or effectively a market offering that has value for
market segment(s) (Hunt, 2000, p. 11). Hunt and Morgan (1995)
categorize and specically identify resources as tangible (i.e.,
nancial, physical and legal) or intangible (i.e., human, organiza-
tional, informational and relational). Researchers examining the
competitive advantage of rms note that competitive advantage is
founded on heterogeneous intangible resources (Barney, 1991;
Grifth, 2006; Harvey & Buckley, 1997; Hitt et al., 2001). Following
work in R-A theory (Grifth & Lusch, 2007; Hunt, 2000; Hunt &
5
This approach is consistent with Day (1994) who argues that business assets
provide the foundation for capabilities of the business which ultimately inuence
performance outcomes.
Morgan, 1995, 1996), we contend that competitive advantage is
founded on intangible resources, and specically, as identied by
R-A theory, human, relational, organizational and information
capital. R-A theory however contends that it is not simply the
possession of intangible rm capital that allows rms to achieve
enhanced performance but rather the leveraging of these resources
as capabilities.
R-A theory views the rm as leveraging heterogeneous and
imperfectly mobile resources to achieve competitive advantage
(Hunt, 2000; Hunt & Morgan, 1995). Hunt and Morgan (1995, p. 7)
noted that a comparative advantage in resources exists when a
rms resource assortment (e.g., its competencies) enables it to
produce a market offering that, relative to extant offerings by
competitors, (1) is perceived by some market segments to have
superior value and/or (2) can be produced at lower costs. Through
the development and leveraging of heterogeneous and imperfectly
mobile resources, rms are theorized to be able to achieve
competitive advantage through greater effectiveness and ef-
ciency. The value of a resource is seen not in its possession, but
rather in terms of its potential to yield competitive differentiation
and/or customer value delivery. Value is maximized when
resources are deployed in a means to provide a distinctive
competency and relative sustained advantage (Day, 1994; Hunt,
2000; Hughes & Morgan, 2007). As such, rm resources are viewed
as employable capital. It is through the combining of these
resources (i.e., capabilities) that rms are able to achieve positional
advantages (here, consistent with R-A theory, positional advan-
tages are observable in the marketplace by a rms superior ability
in relation to other rms in relation to a specic rm aspect). Hunt
and Morgan (1995, p. 7) further argues that a comparative
advantage in resources, then, can translate into a competitive
advantage in the marketplace and superior nancial
performance. . . Thus, through the development and leveraging
of rm resources the rm establishes a set of capabilities (e.g.,
marketing capabilities) that allow the rm to achieve superior rm
performance (i.e., a level of performance that exceeds that of its
referents, often its closest competitors) (Hunt & Morgan, 1995).
1.2. Institutional environment and R-A theory
Institutional economics has been employed within interna-
tional business research to understand business differences across
countries (Jackson & Deeg, 2008). Institutional economics argues
that the environment is composed of a set of social, legal and
political institutions that govern economic activity (Davis & North,
1970; North, 1990), thereby inuencing rm operations. Research
based on country level factors (reective of institutional environ-
ments) such as technological innovation, capital investment,
national culture, etc., continue to demonstrate country-based
performance differences (e.g., Franke, Hofstede, & Bond, 1991; Luo,
2000; Song et al., 2008). For example, Goerzen and Beamish (2003)
note that the more dissimilar the country proles, i.e., institutional
environments, the more difcult it is to understand the require-
ments of the collection of operations and responses appropriate to
local demands. Similarly, Franke et al. (1991) nd that differences
in country level economic performance result from differences in
national culture.
R-A theory is argued to be widely applicable (Hunt, 2000; Hunt
& Morgan, 1995, 1996) across countries. Similar effects in business
models are not new to the literature. Research efforts have found
that certain business aspects are not inuenced by elements of
institutional environments. For example, Grifth et al. (2006)
found that national differences did not inuence the association
between knowledge resources and relational resources within
channel relationships, while House, Javidan, Hanges, and Dorfman
(2002) found consistent leadership aspects across 61 nations.
 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227
Fig. 1. Conceptual model.
Similarly, Hult et al. (2007) found structural and process drivers of
rm performance to be consistent cross-nationally and Capelleras,
Mole, Greene, and Storey (2008) found that when adjusted for
registration, new venture growth was similar across different
regularity environments. These results are supportive of the
perspective that there are a common set of factors driving business
performance across institutional environments. More importantly,
these ndings are consistent with elements of R-A theory therefore
suggesting that the fundamental relationships of R-A theory (i.e.,
resources leaded to capabilities which inuence performance) may
be applicable across institutional environments.
2. Hypotheses
The purpose of this study is to examine the cross-institutional
applicability of R-A theory. R-A theory argues that resources can be
leveraged into capabilities (e.g., marketing capabilities) to provide
enhanced rm performance. As such, this study works to examine
intangible resources within R-A theory, as expressed in Fig. 1.
2.1. Intangible capital elements effects on marketing capabilities
Human capital is dened as the business skills and knowledge
of a rms employees (Hunt, 2000, p. 187). Human capital includes
general business skills, education, expertise, etc. In the marketing
literature, researchers have incorporated human capital, such as
top management skills, as an antecedent of general marketing
management expertise (Capron & Hulland, 1999) and market
orientation (Jaworski & Kohli, 1993; Kohli & Jaworski, 1990; Narver
& Slater, 1990) when exploring rm competitiveness. Human
capital can yield: (1) increased efciency due to the integration of
tacit and codied knowledge (Capron & Hulland, 1999; Grant,
1996) and (2) increased effectiveness resulting from leveraging of
the learning curve (Capron & Hulland, 1999; Grant, 1996; Stroh &
Caligiuri, 1998).
Relational capital is dened as the rms relationships with
customers, suppliers, competitors, government agencies, and
unions (Hunt, 2000, p. 188). In the marketing literature, relational
capital has been studied in a broad number of areas including
buyerseller dyads (Dwyer, Schurr, & Oh, 1987; Morgan & Hunt,
1994; Piercy, Katsikeas, & Cravens, 1997), business networks
(Achrol, 1997; Achrol & Kotler, 1999), and rmcustomer
interactions (Bhattacharya & Sen, 2003). Relational capital can
provide benets in the form of: (1) reduced transaction uncer-
tainty, i.e., consumer avoidance of unfavorable interactions
relative to trust, commitment, and condence (Bendapudi &
Berry, 1997) and (2) meaningful afliation (Berry & Parasuraman,
1991).
Organizational capital is dened as the rms policies, norms,
etc. (Hunt, 2000, p. 189). Organizational capital resides in
competences such as entrepreneurial proclivity (Matsuno, Ment-
219
zer, & O zsomer, 2002) and organizational learning (Baker &
Sinkula, 1999; Sinkula, Baker, & Noordewier, 1997). Organizational
capital can provide benets in the form of (1) increased efciencies
(Sinkula et al., 1997) and (2) competitiveness (Matsuno et al.,
2002).
Informational capital is the rms knowledge relating to its (and
its competitors) products, processes, customers, and resources
(Hunt, 2000, p. 187). Firm informational capital derives from
investments in technical research, marketing research, and
competitive intelligence (Hunt, 2000). Research on market
orientation specically addresses the importance of informational
capital accumulation (e.g., the rms increased ability to be more
responsive to customer needs).
Building on R-A theory, we argue that the rm can leverage the
four elements of intangible capital into marketing capabilities that
allow the rm to establish a competitive position within the
marketplace. Hunt and Morgan (1995) argue that through the
development and leveraging of heterogeneous and imperfectly
mobile resources, rms are able to achieve competitive advantage.
It is through leveraging intangible resources that rms are able to
achieve positional advantages (here, consistent with R-A theory,
positional advantages are observable in the marketplace by a rms
superior ability in relation to other rms in relation to a specic
rm aspect (e.g., marketing activities)). For example, rms, such as
Nestle or Nabisco, are able to leverage their informational capital
by combining elements of said capital to be more responsive to
customer needs (Jaworski & Kohli, 1993; Matsuno et al., 2002;
Narver & Slater, 1990). Through combining the rms informa-
tional capital related to their rm and their competitors, the rm is
able to develop new products, offered through the appropriate
distribution channel, that provide superior value to the rms
market segments. Similarly, the rm is able to leverage relational
capital with customers, suppliers, etc. to engage in appropriate
marketing and sales campaigns, employ best channel of distribu-
tion, to effectively and efciently present the rms market offering
to its market segments, thereby exceeding the value delivered by
competitors. As Hunt (2000) argues for R-A theorys consistent
effects in market-based economies (i.e., across institutional
environments) we theorize:
H1: Human capital positively inuences marketing capabilities
consistently across institutional environments.
H2: Relational capital positively inuences marketing capabil-
ities consistently across institutional environments.
H3: Organizational capital positively inuences marketing
capabilities consistently across institutional environments.
H4: Informational capital positively inuences marketing
capabilities consistently across institutional environments.
2.2. Marketing capabilities effects on rm performance
A growing number of studies have emphasized the role of
marketing capabilities in achieving and sustaining competitive
advantage (e.g., Day, 1994; Hunt & Morgan, 1995; Song et al., 2008;
Vorhies & Morgan, 2005). We dened marketing capabilities in this
study as a rms ability to integrate the collective knowledge, skills,
and its resources to effectively respond changing market needs and
meet competitive pressure. In this respect, marketing capabilities
can be seen as a joint process of bringing intangible (i.e.,
knowledge-based) and tangible resources together to create
valuable outcomes. These capabilities are considered unique as
individuals (i.e., employees) collectively combine their knowledge
and skills through their past experiences such as selling, new
product development, and distribution. As a result, marketing
capabilities cannot be easily imitated by competitors and are able
to provide sustainable competitive advantage (Grant, 1996).
220 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227

In addition, as noted previously, Hunt and Morgan (1995, p. 7) Table 1

Data collection, sampling frame, and response rates.
argue that a comparative advantage in resources, then, can
translate into a competitive advantage in the marketplace and Japan United States
superior nancial performance. . .. Their argument suggests that Sample size 128 111
through the development and leveraging of rm resources the rm Response rate 27.64% 24.78%
establishes a set of capabilities (e.g., marketing capabilities) that Firm size (measured by number 46 58
allow the rm to accomplish higher level of rm performance. of employees)
Experience of respondents in 23.6 23.3
Hunt and Morgan (1995) conceptualize superior rm performance
international operations (years)
as implying that rms seek a level of rm performance that Average age of respondents 57.7 50.8
exceeds that of its referents. Under R-A theorys similar effect Respondents years of experience in 27.6 24.5
argumentation, we theorize: chosen profession
Respondents being the owner or 86.1% 96.4%
CEO of the Firm
H5: Marketing capabilities positively inuence rm perfor-
mance consistently across institutional environments. Gender of respondents
Male 97% 80%
Female 3% 20%
2.3. Mediation effect
Industry of respondents
Marketing capabilities are a derived from the intangible capital a Consumer non-durable 83% 44%
Consumer durable 9.6% 23.4%
rm possesses and are a central driver of rm performance. We Capital good 4% 10.8%
argue that marketing capabilities fully mediate the effect of Producer 3.4% 21.8%
intangible capital on rm performance. Following R-A theory, we
argue that rm resources are viewed as employable capital and that
it is through the combining of these resources that rms are able to constructs and construct relationships. Next, an English version of
achieve positional advantages (Hunt, 2000; Hunt & Morgan, 1995, a survey instrument and cover letter was developed and examined
1996). Positional advantages are observable in the marketplace by a by Japanese and United States business professionals, and
rms superior ability in relation to other rms in relation to specic translators. Iterative pre-testing with these groups indicated
rm capabilities, such as marketing activities. As a result, through minor modications to minimize translation concerns. The survey
the development and leveraging of rm resources the rm instrument was then translated into Japanese and back-translated
establishes a set of capabilities (e.g., marketing capabilities) that by two independent translators. The instrument was then checked
allow the rm to achieve a higher level of rm performance. for form and meaning equivalencies.
Consequently, we theorize that marketing capabilities serve as a
mediator between intangible capital and rm performance and that 3.1.2. Data collection
intangible capital will not directly inuence rm performance. Thus: Individuals identied in the directories were contacted by mail
and asked to have the individual responsible for the administration
H6: Marketing capabilities fully mediate the inuence of capital of their relationship with their primary Japanese or U.S. business
on rm performance across institutional environments. partner complete the survey. A follow-up survey packet was sent
after four weeks. Respondents were offered a copy of the nal results
3. Method for completing the survey. Of the 1000 surveys mailed, 239 surveys
were returned completed (Japan = 128, U.S. = 111). Response rate
3.1. Sample and procedure varied slightly by sample (Japan = 27.64%, U.S. = 24.78%). The study
yielded a 26.26% response rate and a 25.32% usable response rate.
The hypotheses were examined using data sets from two Sample characteristics are presented in Table 1.
market-based economies. As this study employs institutional Non-response bias testing was completed by comparing early
economics as a central foundation for comparison of institutional and late respondents across the variables under study (cf.,
environments, we worked to identify two market-based institu- Armstrong & Overton, 1977). Specically, rst and last quartiles
tional environments which would represent two distinct institu- of both Japanese and U.S. samples were tested for signicant
tional environments (in relation to the issues of social, legal and differences across means for each of the constructs. Results of the t-
political).6 After consideration of a number of markets, it was tests indicated no signicant differences (p < .05) between early
deemed that the U.S. and Japan would serve as appropriate and late respondents for either group, minimizing non-response
institutional environments for evaluation. Respondents from Japan bias concerns.
were asked to report on the relationship with the primary United To assess whether our results are likely to be signicantly
States supplier and respondents from the United States were asked affected by common method bias, we used a CFA version of
to report on the relationship with their primary Japanese supplier. Harmans single-factor test for common methods variance.
A systematic random selection method was used to identify 500 Comparison of a single-factor conrmatory model (CFI = .43,
Japanese importers from the Japan External Trade Organization RMSEA = .11) with a 6-factor conrmatory model (CFI = .97,
(JETRO) database. A national sample of 500 United States importers RMSEA = .07) yields a x2 difference equal to 110.65, 12 d.f.,
was similarly drawn from the Directory of United States Importers. p < .001. The t is considerably worse for the unidimensional
model than for the measurement model, suggesting that common
3.1.1. Pre-test method bias is not a serious threat in the study. Further, results of
Interviews were conducted with business professionals in both the model testing demonstrate full mediation, thus precluding
Japan and the United States to explore the validity of the proposed common method bias.
6
In relation to the social environment, Japan and the U.S. vary widely employing 3.1.3. Measures
Hofstedes cultural dimensions. Similarly, whereas the U.S. functions based upon
common law, Japan functions based upon civil law. Political distinctions are
All constructs were operationalized as multi-item measures
evidenced by differences in the involvement of government in business, political and captured on seven-point Likert scales, ranging from strongly
structure, etc. disagree (1) to strongly agree (7). Table 2 reports items and
 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227 221

Table 2
Measurement items, standard loadings, t-values, and reliabilities.

Measure Japan United States

Std. loading t-Value a Std. loading t-Value a

Human capital .85 .91
The employees of our rm have many business abilities. .87 10.39 .89 11.04
The employees of our rm have a great deal of business education and training. .78 9.00 .81 9.42
The employees of our rm have a great deal of business expertise. .76 8.61 .92 11.63

Relational capital .82 .94

The employees of our rm have a large network of business contacts. .69 7.52 .91 11.33
The employees of our rm have many business connections. .87 10.42 .96 12.62
The employees of our rm have developed many business acquaintances. .85 10.18 .91 11.45

Organizational capital .88 .89

The employees of our rm know a great deal about the way the rm does things. .80 9.18 .87 10.45
The employees of our rm have a great understanding of our rms policies. .79 8.94 .82 9.55
The employees of our rm know a great deal about the practices and procedures of our rm. .90 10.84 .90 10.97

Informational capital .84 .83

The employees of our rm have a great understanding of our rms competitors. .78 8.85 .78 8.68
The employees of our rm know a great deal about our rms customers. 76 8.54 .81 9.23
The employees of our rm have a great knowledge of the industry. .83 9.74 .82 9.45

Marketing capabilities .72 .71

Our rm is extremely good at marketing/selling. .82 8.59 .68 6.82
Our rm has substantial abilities in product development/research. .67 6.80 .56 4.49
Our rm has considerable abilities in the area of distribution. .56 5.50 .53 5.20

Firm performance .85 .87

Overall, we outperformed our major competitors last year. .74 8.64 .83 8.42
Our overall performance last year was greater than expected. .93 13.55 .92 9.37

Table 3
Descriptive statistics and correlations for Japan.

M SD 1 2 3 4 5 6

1. Human capital 4.77 1.01 1.000

2. Relational capital 4.67 1.08 .92 1.000
3. Organizational capital 5.26 .95 .78 .69 1.000
4. Informational capital 5.08 .98 .96 .94 .75 1.000
5. Marketing capabilities 4.25 1.10 .66 .70 .45 .57 1.000
6. Firm performance 4.64 1.53 .35 .45 .41 .36 .52 1.000

Descriptive statistics and correlations for United States

M SD 1 2 3 4 5 6

1. Human capital 4.49 1.11 1.000

2. Relational capital 4.70 1.33 .85 1.000
3. Organizational capital 5.22 1.09 .80 .59 1.000
4. Informational capital 5.16 1.00 .82 .64 .90 1.000
5. Marketing capabilities 4.44 1.10 .90 .78 .95 .82 1.000
6. Firm performance 4.22 1.58 .44 .26 .49 .46 .61 1.000

Note: Mean values and standard deviations are based on average factor scores; correlations are from the CFA output.

internal reliability statistics for the measures. Mean values,
standard deviations, and correlations are presented in Table 3.
Table 3 indicates high correlations for some of the constructs
due to the nature of intangible capital elements. To examine
whether the four intangible capital elements are distinct from one
another and discriminant validity holds, we drew support from
literature. First, we performed Anderson and Gerbings (1988) chi-
square difference tests between a model in which a factor
(construct) correlation is xed at 1.0 and the original (unrestricted)
model. Second, to further validate that the dimensions of rm
capital, namely human, relational, organizational, and informa-
tional capital are distinct from one another, we tested several
sequential measurement models to explain the underlying
covariance structure of the items (see Fornell & Larker, 1981)
(please see Section 4 for details of these tests).
Capital measures were adapted from Grifth and Lusch (2007).
Human capital was operationalized via a three-item Likert scale
(aJapan = .85; aU.S. = .91). Relational capital was measured by a
three-item Likert scale (aJapan = .82; aU.S. = .94). Organizational
capital was operationalized via three-item, Likert scale (aJa-
pan = .88; aU.S. = .89). Informational capital was measured via a
three-item Likert scale (aJapan = .84; aU.S. = .83).
Marketing capabilities were conceptualized as encompassing
the skills of rms related to the marketing operations, such as
abilities related to marketing/sales, product development, and
distribution. Marketing capabilities were captured via a three-
item, seven-point Likert scale (aJapan = .72; aU.S. = .71), with items
derived from Snow and Hrebiniak (1980).
Firm performance was conceptualized as consisting of both
internal and competitive dimensions. Following Kohli and Jaworski
(1990), performance was measured via a two-item scale assessing
whether (1) the rms overall performance last year was greater
than expected and (2) the rm outperformed its major competitors
in the last year (aJapan = .85; aU.S. = .87).
222 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227

Table 4 Table 5
Goodness of t indices for CFAs. Sequential model testing of rm capital constructs.

Japan United States Japan United States

2
df 104 104 Model 1one-factor model x = 280.883 x2 = 377.960
Chi-square 172.83 194.48 df = 54 df = 54
NFI .94 .94 NFI = .858 NFI = .833
NNFI .97 .96 NNFI = .858 NNFI = .820
CFI .97 .97 CFI = .884 CFI = .852
IFI .97 .97
RMSEA .07 .08 Model 2four-factor x2 = 157.134 x2 = 330.117
model (independent) df = 54 df = 54
NFI = .922 NFI = .854
NNFI = .935 NNFI = .846
CFI = .947 CFI = .874
4. Analysis and results
Model 3four-factor x2 = 59.221 x2 = 78.507
model (interdependent)a df = 48 df = 48
4.1. Measurement validation NFI = .971 NFI = .965
NNFI = .992 NNFI = .981
Prior to model assessment, we examined measurement CFI = .994 CFI = .986
invariance. We employed two-group conrmatory factor analysis a
All inter-construct correlations for each of the four-factor models (inter-
(CFA) to test the equivalence of measurements models across U.S. dependent) lie between 0 and 1.
and Japanese samples (Bollen, 1989). The basic tenet of this
procedure is that factor patterns and factor loadings should be
equal if the measurement properties are the same for both In Model 3 (four-factor model-interdependent), each of the
samples. Thus, the factor loadings for the two countries were set to hypothesized constructs is allowed to freely intercorrelate. That
be equal (invariant) for all questionnaire items under investiga- is to say that the four elements of intangible capital are separate
tion; operationally we set the factor loadings to be equal for yet are related in some manner. At each stage, we compare the
specied items. We examined overall model t to determine nested models with each other in terms of improvements in
whether it was substantially improved by releasing one or more goodness of t indices and chi-square statistics as constrains are
constraints. The Lagrange Multiplier (LM) test was employed. The relaxed. On the basis of these results, we concluded that the four
results indicated no differences across groups (p < .05). In addition, intangible capital elements are related, yet separate and distinct
the factor loadings were signicant for all items (p < .01). The t from one another.
indices such as NNFI, CFI, and IFI for multi-group CFA model were Once the validity of the measures was established, the
.97 or above. Consequently, we found that measurement models structural model was tested using EQS 6.1 causal modeling
were invariant across Japanese and U.S. samples. procedures (Bentler, 1995). The two-step procedure followed
Following the work of Anderson and Gerbing (1988), we rst reduced the number of interpretational confounds and provides a
tested the validity of the measures using conrmatory factor greater ability to identify model misspecication. The results
analysis. We followed the procedure recommended by Bagozzi and indicate that the x2 is 414.72 with 220 degrees of freedom, which is
Yi (1988) to evaluate the t of the measurement model in Fig. 1. signicant at the .05 level. Because the chi-square should not be
The elliptical reweighted least squares (ERLS) procedure of the EQS used alone to evaluate model t (Bollen, 1989), we also examined
6.1 program was used to t the measurement model (Bentler, other t indices, parameter estimates, and the internal structure of
1995). The advantage of this method over maximum likelihood the model (Bagozzi & Yi, 1988). The Bollen t index (IFI) was .97,
(ML) is that it is less constrained by the normality assumptions of the non-normed t index (NNFI) was .93, and the comparative t
the data, and its use is recommended for nonnormal data (Sharma, index (CFI) was .97 (Bagozzi & Yi, 1988). Furthermore, we obtained
Durvasula, & Dillon, 1989). The results of the measurement model small standardized residuals and all parameter estimates are in the
for both Japan and U.S. samples suggested a good t of the data. expected direction. The high t indices and the theoretically
Table 4 summarizes the goodness of t indices for the measure- consistent parameter estimates suggest that the structural path
ment model. As shown in Table 2, the item loadings were all model ts the data very well.
signicantly greater than zero, all positive and high in magnitude.
These ndings indicate that the model converged well. 4.1.1. Hypotheses testing
Discriminant validity of the measures was tested by perform- Multi-group EQS analysis for two groups was used to test H1
ing, one at a time, chi-square difference tests between a model in through H5. We examined each hypothesized path and worked to
which a factor (construct) correlation is xed at 1.0 and the original identify any signicant differences between groups. Differences in
(unrestricted) model (Anderson & Gerbing, 1988). Because every chi-square were computed between a model where equality
restricted model exhibited a signicantly worse t than the constraints were imposed and a model where equality constraints
unrestricted model, we concluded that there is a sufcient degree were not imposed. If the difference was determined to be
of discriminant validity between the factors. signicant, parameter estimates for those structural paths were
Further, given the nature of the intangible capital elements, we considered to be statistically different for two groups.
also tested a range of sequential measurement models to validate Hypothesis 1 predicted that human capital would inuence
that the intangible capitals elements are distinctly measured (see marketing capabilities positively across institutional environ-
Fornell & Larker, 1981) (see Table 5). In Model 1 (one-factor ments. The path coefcients in Table 6 also indicate that human
model), all twelve items from rm capital are constrained to load capital was inuenced positively and signicantly by the market-
on a single factor. That is to say that the four elements of intangible ing capabilities in both Japan and U.S. samples (b = .30, t = 2.08,
capital are simply hypothesized to be a single construct of capital. p  .01 and b = .29, t = 2.03, p  .01 respectively). Further, as the
In Model 2 (four-factor model-independent), each item is allowed difference in chi-square (2.001) did not exceed the critical value for
to load on each of its hypothesized constructs, but is constrained .05 probability level (3.841), we accept the null hypothesis that
not to intercorrelate. That is to say that the four elements of direction and strength of effect are consistent across samples.
intangible capital are truly separate and distinct from one another. Therefore, H1 was supported.
 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227 223

Table 6
Path coefcients for the structural model.

Path Japan United States

Estimate Std error t-Value Estimate Std error t-Value

Human capital ! marketing capabilities (H1) .30 .14 2.08** .29 .14 2.03**
Relational capital ! marketing capabilities (H2) .43 .12 3.48** .20 .10 1.95*
Organizational capital ! marketing capabilities (H3) .04 .13 .33 .50 .14 3.55**
Informational capital ! marketing capabilities (H4) .03 .16 .16 .24 .16 -1.55
Marketing capabilities ! rm performance (H5) .62 .11 5.48** .53 .13 4.12**
*
Statistically signicant at a = .05.
**
Statistically signicant at a = .01.

Table 7
Analysis of mediation effect.

Model 1mediator absent Estimate Standard error t-Value

Path
Human capital ! rm performance .269 .138 2.737**
Relational resources ! rm performance .589 .127 3.123**
Organizational resources ! rm performance .291 .131 1.838*
Informational resources ! rm performance .236 .136 1.952*

Model 2mediator added Estimate Std error t-Value

Path
Human capital ! rm performance .221 .207 1.217
Relational resources ! rm performance .237 .177 1.519
Organizational resources ! rm performance .232 .164 .548
Informational resources ! rm performance .016 .238 .045
Human capital ! marketing capability .390 .142 2.214**
Relational resources ! marketing capability .423 .129 2.624**
Organizational resources ! marketing capability .087 .236 .249
Informational resources ! marketing capability .015 .271 .074
Marketing capability ! rm performance .382 .145 3.114**
*
Statistically signicant at a = .05.
**
Statistically signicant at a = .01.

Hypothesis 2 predicted that relational capital would positively
inuence marketing capabilities across institutional environ-
ments. The results indicated that relational capital positively
and signicantly inuenced the marketing capabilities in both
countries (b = .43, t = 3.48, p  .01 for Japan; b = .20, t = 1.95,
p  .05 for U.S.). Statistical testing across paths indicated no
signicant differences since difference in chi-square (3.618) did
not exceed the critical value for .05 probability level (3.841), thus
H2 was supported.
Hypothesis 3 predicted the effect of organizational capital on
marketing capabilities would be positive across institutional
environments. The results demonstrated that although organiza-
tional capital positively and signicantly inuenced marketing
capabilities in the U.S. sample (b = .50, t = 3.55, p  .01), it did not
signicantly inuence the marketing capabilities in the Japanese
sample (b = .04, t = .33, p > .10). This result was further supported
by chi-square difference (4.311), which exceeded the critical value
for .05 probability level (3.841), thus H3 was not supported.
Hypothesis 4 predicted that informational capital would
positively inuence marketing capabilities in both Japan and the
U.S. The results indicate that informational capital did not
signicantly inuence the rms market capabilities in either
sample (b = .03, t = .16, p > .10 for Japan; b = .24, t = 1.55, p > .10
for U.S.). Chi-square difference (2.092) further supports this
conclusion since it did not exceed the critical value for .05
probability level (3.841). Thus, H4 was not supported.
Hypothesis 5 predicted that marketing capabilities would
positively inuence the rms performance across institutional
environments. The results indicated that rm performance was
inuenced positively and signicantly by marketing capabilities in
both samples (b = .62, t = 5.48, p  .01 for Japan; b = .53, t = 4.12,
p  .01 for U.S.). Statistical testing across paths indicated no
signicant differences, since the difference in chi-square (3.290)
did not exceed the critical value for .05 probability level (3.841),
thus H5 was supported.
To test Hypothesis 6, the mediating effect of marketing
capabilities on the relationships between intangible capital and
rm performance, we estimated two alternative models using
structural equation modeling (Baron & Kenny, 1986; Venkatraman,
1989). In the rst model (Model 1), the construct of marketing
capabilities was removed and only the direct effects of intangible
capital on rm performance were estimated. The direct effects of
intangible capital on rm performance were signicant at the .05
level. In Model 2, the direct effects of intangible capital elements on
rm performance were added to the original model, including the
indirect effects, as mediated by marketing capabilities. In this
specication, none of the direct effects of intangible capital on rm
performance were signicant at the .05 level (see Table 7). Hence,
we conclude that the effects of intangible capital on rm
performance are fully mediated by marketing capabilities,
supportive of H6.
5. Discussion
This study investigated the inuence of four elements of rm
intangible capital (human, relational, organizational, and informa-
tional) on a rms development of marketing capabilities and
resultant rm performance across institutional environments.
Specic hypotheses were derived from the tenets of the R-A theory
of competition (Hunt, 2000; Hunt & Morgan, 1995, 1996) and were
examined across the institutional environments of the U.S. and
Japan. The results engender signicant contributions to the
international marketing literature. Specically, the primary issue
of study was to examine R-A theorys transferability across
224 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227
institutional environments. Recent research efforts have found
important drivers of rm performance to be consistent across
institutional environments (e.g., Grifth et al., 2006; Hult et al.,
2007), thus supporting the argument that business performance
drivers are common across cultures. In this study, three key aspects
of the model were found to be consistent across institutional
environments.
First, human capitals positive inuence on marketing cap-
ability was found to be equally strong across samples. The rationale
for the generalizability aspect of this nding can be attributed to
the transferable nature of human capital. Grifth and Lusch (2007)
argue that human capital is more easily transferred from one
business setting to another than other capital elements. The fact
that human capital is easily shifted from one context to another
suggests that this aspect of a rms capital should be consistent in
similar institutional environments. That is to say, human capital,
such as experience, business skills, etc. should provide a similar
benet in similar business contexts (i.e., transferability), where the
fundamental aspects of conducting business are similar (e.g.,
across market-based economies). This is consistent with institu-
tional economic provocations pertaining to the inuence of
institutional environments on international business.
Second, contrary to much of the international marketing
literature which has argued for bounded relationship differences
(e.g., Cullen, Johnson, & Sakano, 2000; Franke et al., 1991; Song
et al., 2008), the ndings of this study indicate no meaningful
difference in the inuence of relationship capital on marketing
capabilities. The ndings of this study are consistent with the
results of Grifth et al. (2006) who, after nding that the
relationship between knowledge resources and relational
resources were not cultural bound, theorized that channel
relationships develop their own unique norms that operate free
from national cultural inuences. From a theoretical perspective, it
could be argued that as relational capital is more easily
transferable, its transference from one context to another has
consistent effects. This nding, coupled with the nding related to
human capital, provides support for R-A theorys widespread
applicability (cf., Hunt, 2000; Hunt & Morgan, 1995, 1996) in
relation to the inuence of resources on marketing capabilities in
different institutional environments.
Third, the positive inuence of marketing capabilities on rm
performance was found to be consistently strong across institu-
tional environments. This nding supports the argumentation
made in the literature (e.g., Capelleras et al., 2008; Hult et al., 2007)
that business structures and processes are not bound by unique
institutional contexts. There has been some discussion within the
literature pertaining to the role of globalization in creating a
common business culture where fundamental business aspects
operate consistently in relatively unique market structures. As
Japan and the U.S. are both market-based economies, one could
argue that the institutional framing of the business marketplace is
similar thereby allowing for standardized business processes. R-A
theory provides for institutional factors, such as societal resources
and institutions, etc. as potentially boundary parameters on R-A
theory and suggests common drivers of productivity across
market-based economies. Our ndings help to further explicate
the theoretical parameters of R-A theory (cf., Hunt, 2000; Hunt &
Morgan, 1996).
More of note in support of the general applicability of R-A theory
was the demonstration of the full mediation effect of marketing
capabilities. The fact that the model demonstrated full mediation in
both Japan and the U.S. provides compelling evidence for the
applicability of R-A theory as a common business model. Hunt and
Morgan (1995) contend that R-A theory provides a new model to
understand competition, in contrast to the neoclassical theory of
perfect competition. They contend that this model helps to explain
key micro- and macro-phenomena more effectively than extant
models. Further, they contend that R-A theory helps to provide
greater insights into rm diversity. This study is important as it
provides one of the rst empirical tests of R-A theory, albeit a partial
test, as well as an assessment across institutional environments.
While some support was found for the applicability of R-A
theory across institutional environments, it is important to note
that of the four intangible capital elements investigated, one
element was found to differ in its inuence across samples.
Specically, the ndings indicate that while organizational capital
positively inuenced marketing capability development in the U.S.
sample, no effect was found within the Japanese sample. This
nding is contrary to what one would expect from an institutional
environment perspective. Capelleras et al. (2008) found that
differences in regulatory environments did not inuence rm new
venture growth. It can be argued that the conceptualization of
organizational capital could give way to the interpretation that
management orientations are more prominent in the U.S. market
than in Japan, therefore allowing for greater leveraging of
organizational capital resources into marketing capabilities in
the U.S. market (Hunt, 2000). This contention underlies R-A
theorys premise of heterogeneous distribution of resources within
and across markets. Further, informational capital did not present a
signicant effect in either the Japanese or U.S. samples. Although
this nding is also contrary to many peoples expectations at rst,
it actually lends a support to Raju and Roy (2000) study. Their
research ndings suggest that although industry size does not
affect the value of information, information is more valuable for
larger rms. As a result, larger rms give greater emphasis than
small rms on understanding of their competitors, customers, and
industries. In this study, we worked with small importers both in
Japan and U.S. Thus, the rm size may be the inuencing factor for
not nding a signicant relationship between informational
capital and marketing capabilities.
Taken together, the ndings of this study provide insights into
the complexity of intangible capital in the rm and the rms
marketing capabilities on resultant performance. The results of this
study also provide some support of the argument that consistent
effects may exist across institutional environments. The fact that
transferable aspects of intangible capitals inuence on marketing
capability development and resultant performance were found to
be consistent across institutional environments lends support to R-
A theorys perspective on the importance of resource conversion on
marketing capability development and resultant performance.
However, the nuances of the conversion of organizational capital
suggest, at least to some extent, the continued inuence of
institutional environmental aspects, such as national culture, in
cross-national business operations. It is important to note that
although this study focused on smaller importers, the general
framework of R-A theory is applicable to all rms. As such, while
some of the ndings may be attributable to the sample selected, it
is important to note that there is nothing theoretical within R-A
theory that would suggest rm size boundary constraints.
5.1. Managerial relevance
Practitioners are continually challenged in relation to (1)
appropriately investing in resources to maximize return, (2)
developing business models balancing efciency and effectiveness,
and (3) resources within the structure of the rm. The results of
this research provide new insights into these areas.
First, in terms of return on investment in resource development,
the results suggest that managers can maximize the return on
investment by focusing their efforts on developing human and
relational capital. Both of these resources signicantly inuence a
rms ability to develop marketing capabilities that ultimately
 D.A. Grifth et al. / Journal of World Business 45 (2010) 217227
enhance rm performance. Given the importance of human
capital, many rms have invested substantial sums in the
development of the human capital of employees, everything from
reimbursement programs for higher education, to investing in
basic skill development. In early 2009, McDonalds of Ireland
invested 500,000 euros in a new employee training center in
Dublin to prepare its workforce of the future. While many rms
invest in the development of human and relational capital, some
managers have become more hesitant to support employee
investment in these resources due to their transferability. While
we recognize the difculty in capturing the value from invest-
ments in employee human capital development, the ndings of
this study demonstrate that it is these resources which are most
effectively converted to competitive advantage.
Second, the lack of institutional environmental inuence on the
relationships between human capital and relational capital on
marketing capabilities or marketing capabilities and rm perfor-
mance suggest opportunities for strategic process standardization
in the administration of business operations (cf., Grifth, Hu, &
Ryans, 2000; Shoham, Brencic, Virant, & Ruvio, 2008). Through
strategic process standardization a rm is able to capitalize on best
practices throughout the organization on a global basis achieving
advances in efciencies and effectiveness. This is not to suggest
that managers blindly apply standardized processes as the
differences in the magnitude of effects of organizational capital
speak directly to the culturally founded managerial expectations of
ones partner and the continued role of certain institutional
environmental inuences in business operations. From a process
adaptation standpoint, the result of this study would suggest that
U.S. managers operating in Japan place increased emphasis on the
development of market and entrepreneurial orientations within
their partners. Through the development of such orientations their
relationships with Japanese suppliers may be more effective.
Third, as Tapscott, Lowi, and Ticoll (2000) has argued, reducing
transaction costs have challenged the vertically integrated rms.
Firms, such as Cisco, Deloitte Consulting, and Microsoft, are
disaggregating and becoming more loosely coupled. As a result,
they are building stronger corporate network around the world. It
becomes increasingly important for rms to employ relational
assets within this network to facilitate the transference of knowl-
edge across rm elements (Lee, Chen, Kim, & Johnson, 2008; Roth,
Jayachandran, Dakhli, & Colton, 2009). In addition, todays business
practices are moving towards to a more project-based world in
which teams form around project rather than traditional permanent
tasks (Harvey & Grifth, 2007). In such settings, when the project is
completed, the project team disperses and new project teams are
created (thus knowledge resources developed in one area are
redeployed to new suited tasks). Through continual reformation of
project teams, new relational resources are built within the rm,
thus enhancing the ow of organizational and information
resources. Many global rms today, such as HP, Accenture, and
McKinsey, depend more on people who can drift from one project
team to another, developing and redeploying their intangible
capital, for competitive advantage.
6. Conclusion
While this study contributes to increased understanding of the
applicability of R-A theory across institutional environments,
greater research efforts are needed given the limitations of this
study. First, it is important to note that rm performance is a multi-
dimensional variable and may be conceptualized in a number of
ways (Hult et al., 2008). While the measure employed in this study
captures an aspect of rm performance, it does not capture the
multi-dimensional nature of the constructs nor is it objective. It
would be useful for future research to explore the complexities of
225
the relationship between rm capital elements and marketing
capabilities and various rm performance indicators (e.g., opera-
tional efciencies, sales growth). It would also seem appropriate
that differences in such areas as customer markets, industry, or
competitive environment may moderate the relationships inves-
tigated here.
Second, the focus of this manuscript was on the application of R-A
theory. However, in the application a number of concerns arose as to
the conceptual distinctions among intangible capital elements.
Although discriminant testing of the four intangible capital elements
indicates these constructs to be interdependent but unique, we
contend that further renement of the capital constructs would aid
researchers in more effectively studying R-A theory. Also, one could
argue that the conceptualization of capital elements under R-A
theory may be too abstract, and therefore ner-grained insights
could be gained through the investigation of sub-capital elements.
For instance, organizational capital covers a broad spectrum of
elements, inclusive of issues of identication. Wieseke, Ahearne,
Lam, and van Dick (2009) examine how organizational identication
of leaders within the organization has the ability to stimulate
organizational identication within others within the rm, thus
resulting in stronger rm performance. As such, one could argue that
while the abstract organizational resources provided under R-A
theory allow for aggregate understanding, research at a sub-capital
element level could help provide R-A theory more actionable
managerial insights (e.g., will organizational identication enhance
organizational capital within the rm?).
Third, this study was limited to two institutional environments.
While efforts were made within the study to provide distinctive
market-based institutional environments in relation to social (e.g.,
diverse national cultural values (cf., Sivakumar & Nakata, 2001)),
legal and political environments, a more expansive investigation
across a broader range of institutional environments could provide
greater insight into the robustness of R-A theory. As such, one
extension of this research should be to explore the applicability of
the model in markets of institutional diversity therefore extending
the theoretical basis for new insights.
Fourth, although R-A theory enumerates seven capital ele-
ments, the study only examined the inuence of the four intangible
capital elements, not addressing the three tangible capital
elements (i.e., nancial, legal and physical). While the rationale
for restricting this study to the intangible resource elements was
based upon the extant literatures argument that competitive
advantage derives from intangible elements, it can be argued that
differences in the level of tangible resources provides a platform
for success, thus suggesting some base level necessary for
intangible resources to serve as a competitive asset. Further
investigations which capture more fully the resources of rms may
provide additional insights into not only the value of R-A theory.
In conclusion, although this study provides new insights for
rm competitiveness across markets and the drivers of rm
competitive advantage, it would also appear that there are more
questions arising from the study than the study answers. Until
international marketing academics and managers can identify and
empirically assess rm resources and capabilities, we will be
limited in our ability to help advance international marketing
knowledge and practice. We believe that the conceptualization and
operationalization for the study of rm capital presented here
provides a starting point for advancing understanding of the
importance of intangible rm resources.
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