Marketing's role in capturing value from innovation: Knowledge resources, strategic emphasis, and firm value

Investing in and integrating R&D and marketing efforts are critical activities for achieving innovation and new product success. A persistent question is how firms should allocate resources in favor of one or the other. In this research, we examine how the bottom-line impact of the balance between R&D and marketing is dependent on the firm's knowledge resources. We propose that, depending on the technological novelty and potential of a firm's knowledge resources, investing more in marketing may have a positive impact on firm value. We find that this positive impact is only present when a firm's knowledge resources have low technological novelty and/or potential. In such cases, the complementary role of marketing helps a firm increase its value when it is in an inferior technological position relative to competitors in its industry. Our study answers recent calls to demonstrate marketing's contribution to the firm's bottom-line. Our findings evidence that managers should consider their current stock of knowledge resources when making decisions concerning balancing R&D and marketing priorities.