Marketing

Statistics

Microeconomics

Marketing mix

Accounting

Marketing effectiveness

Return on marketing investment

Economics

Market value

Enterprise value

Computer science

Business

Market share analysis

Market microstructure

Marketing research

Market analysis

Marketing management

Mathematics

Value (mathematics)

Industrial organization

Finance

Factor market

Marketing strategy

Nonmarket forces

Market orientation

Order (exchange)

Machine learning

Journal of Business Research

In recent years, significant managerial attention has been paid to marketing innovation; however, the academic literature has remained silent on the value of marketing innovation and often assumes that it is too trivial and tactical to create a substantial impact on firm value. This study attempts to address the research gaps by answering two research questions: (1) Does marketing innovation increase firm value? and (2) if yes, how does marketing innovation add value to firms? Building upon market orientation theory and the marketing-finance interface literature, we classify two types of marketing innovation—market-driven and market-driving—and assess their impact on firm value through the mediating effects of cash flow drivers and investigate how such an impact is influenced by the three market forces—demand uncertainty, technological turbulence, and competitive intensity. With a large panel dataset consisting of 4772 new products in the consumer-packaged-goods (CPG) industries from 1985 to 2010, our study reveals that market-driving marketing innovation, which is associated with the effectiveness of firm value creation, contributes six-fold more to firm value than market-driven marketing innovation, which is associated with the efficiency of firm value creation. This study also reveals the differential moderating effects of the three market forces: when an industry faces high demand uncertainty, both types of marketing innovation strengthen their positive impact on firm value; in an industry marked by technological turbulence, only market-driving marketing innovation increases firm value; but, in an intensely competitive industry, only market-driven marketing innovation increases firm value.

The value of marketing innovation: Market-driven versus market-driving