The Effect of Marketing Capabilities on Small and Medium Enterprises’ Performance: A Dynamic Capabilities Approach to Rwanda Manufacturing Sector

Abstract

The issue of what contributes to performance heterogeneity among firms has, since, been  within  the  business  strategic  management  literature.  Some  scholars  have  focused  on external factors while others, recently, focused on internal factors (resources) to explain inter- firm performance differences. Falling into the second wave focusing on internal factors, this study, therefore, investigated the contribution of marketing capability on small and medium enterprises’ performance in the Rwanda manufacturing sector. Grounded on the dynamic capabilities theory, the study specifically thought to determine the effect of innovation-marketing capability and brand-marketing capability on firm performance. By the mean of a survey questionnaire, data were collected from 210 selected manufacturing companies and the qualified respondents were marketing managers. Using a structural equation modelling approach, it was empirically proved that marketing capability has a positive significant impact on firm performance, especially, it was found that a firm’s innovation-marketing capability and brand- marketing capability both positively and significantly influence firm performance. It is suggested that manufacturing companies lay more emphasis on improving their branding capability since it is the most critical in boosting firm performance. The findings implied that firms with strong marketing capability innovate and implement new processes to meet customer needs.