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Marketing innovation and sustainable competitive advantage of
manufacturing SMEs in Ghana
Article  in  Management Decision · October 2018
DOI: 10.1108/MD-08-2017-0784
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Management Decision
Marketing innovation and sustainable competitive advantage of manufacturing
SMEs in Ghana
Daniel Quaye, Isaac Mensah,
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Marketing innovation and Marketinginnovation
sustainable competitive advantage and SCA
of manufacturing SMEs in Ghana
Daniel Quaye and Isaac Mensah
Department of Marketing and Entrepreneurship,
University of Ghana Business School, Accra, Ghana Received 24 August 2017Revised 31 May 2018
Accepted 24 September 2018
Abstract
Purpose – The purpose of this paper is to establish how small- and medium-sized enterprises (SMEs) in
water, beverage, soap, detergent, metal fabrication, wood and furniture manufacturing industries can sustain
or improve their competitive advantage by integrating specific resources and capabilities. The paper seeks to
offer an alternative framework “resource capability-based view (RCBV)” that provides a strategic marketing
direction for SMEs regarding how innovative marketing practices and dynamic marketing capabilities
integrate to create sustainable market advantage.
Design/methodology/approach – This current paper employed a quantitative survey design with a
positivist methodological research paradigm. The paper used a multi-stage stratified and simple random
sampling technique to collect data from 591 manufacturing SMEs in Ghana. SMEs in water, beverage, soap,
detergent, metal fabrication, wood and furniture manufacturing industries were sampled for the study.
A structural equation model was employed to test the study hypotheses to arrive at the findings.
Findings – The study found that product design and packaging innovations, promotion innovations, retail
innovations and pricing innovations provide sustainable market advantage for water, beverage, detergent
and metal fabrication SMEs. The paper also found that new product designs and packages are the major
drivers of sustainable market advantage followed by innovative retail outlets. The paper further originated
that integrating marketing competence (marketing resources and marketing capabilities) and innovative
marketing activities provides a marginal improvement in competitive advantage. Physical resources may
result in market advantage but integrating physical resources with dynamic marketing capabilities provides
sufficient competitive sustainability in a competitive market.
Practical implications – SMEs in water, beverage, soap, detergent, metal fabrication, wood and furniture
manufacturing industries should prioritise their key marketing resources and capabilities in product designs,
promotion, pricing and retailing innovations in order to sustain market advantage. Old products should not
be faded from the market but rather SME managers should employ innovative retail strategies, such as
eco-friendly advertising, product re-branding and digital platforms (social network sites and websites), which
are important to sustaining market performance. Government must develop targeted policies to bridge the
information gap between SMEs and research institutions such as universities through regular subsidised
entrepreneurial training and creation of semi-annual industry-academic fairs. The main theoretical
contribution of this current paper is the development of “RCBV” as a framework which shows how SMEs can
integrate specific resources and capabilities to achieve sustainable market advantage. This framework offers
an integrative view of conventional resource-based view and dynamic capability theory (DCT) which are
independently examined in the literature.
Originality/value – This current study has proposed an integrated and elaborative approach to the
conventional resource-based view and DCT which does not provide a composite understanding in the
literature. SMEs may lack the needed resources and capabilities to introduce new products or extant product
lines but this paper has demonstrated that how SME can sustain market advantage of existing product(s) by
synchronously using specific marketing resources and capabilities. The proposed framework offers a guide
for SMEs to integrate their physical resources and capabilities to sustain their market advantage.
Keywords Marketing, Innovation, Sustainability, Manufacturing, Competitive advantage,
Marketing capabilities
Paper type Research paper
1. Introduction
The intensity of global market competition has created dynamic and fast-changing business Management Decision
environment which has affected all enterprises including small- and medium-sized © Emerald Publishing Limited
0025-1747
enterprises (SMEs). SMEs have, therefore, realised the need to explore, exploit and deploy DOI 10.1108/MD-08-2017-0784
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MD innovative strategies in order to stay competitive in the changing business environment
(Carvalho and Costa, 2014). In both developed and developing countries across the world,
SMEs form an important fragment of the local economic system (Ismail, 2015). In Ghana for
instance, SMEs constitute about 90 per cent of businesses (Abor and Quartey, 2010), provide
over 80 per cent of employment (Abor and Quartey, 2010) and contribute over 50 per cent to
GDP (Buame, 2004). In developed and developing nations, the contributions of SMEs have
been faced with multiplicity of challenges such as lack of access to improved and affordable
technology (Quaye, 2014), and finance (Abor and Quartey, 2010; Fraser et al., 2015).
Quaye and Mensah (2017) identified these challenges as either from the internal or external
environment. These challenges, coupled with socio-cultural, legal and political
characteristics of the domestic economy, present opportunities for SMEs to develop
innovative strategies to survive, grow and expand. As a result of the challenging business
environment, SME owner–managers create opportunities when they are compelled to “think
outside the box” to develop new and/or different marketing strategies to meet the changing
strategies of vicious competitors, consumer and regulatory demands.
The marketing focus of SME owner–managers is to create new and/or modify product
packages and designs, promotion tactics, pricing strategies as well as explore effective and
efficient distribution networks. These marketing strategies and practices have been generally
described as marketing innovations (Stošić, 2007) because they are unconventional,
haphazard, reactive (Hills et al., 2008), opportunistic, creative and unusual solutions to market
needs. In operational lenses, the concept of marketing innovation has been variously defined
as the implementation of new marketing methods which involve significant changes in
product designs and package, product placement, promotion and pricing (Onwumere and
Ozioma-Eleodinmuo, 2015; Talegeta, 2014). Generally, the concept of innovation is regarded as
an essential ability of SMEs to compete domestically and also improve their performance
(Ren et al., 2015). These basic strands of marketing innovation: new improved packages and
designs, promotion strategies, pricing and distribution networks create competitive
advantage (Chuwiruch et al., 2015) through product differentiation, visibility and easy
identification (Ilić et al., 2014). In essence, all these strands of marketing innovations provide
support for SMEs to overcome basic challenges, hence improve their advantage in the
competitive market (Onwumere and Ozioma-Eleodinmuo, 2015).
Despite the relevance of marketing innovation in achieving sustainable competitive
advantage (SCA), studies appear to be mixed on the subject (Heimonen, 2012). For instance,
while some studies have found a positive and significant effect of marketing innovation on
SCA (Awan and Hashmi 2014; Camisón and Villar-López, 2011; Dzisi and Selvarajah, 2012;
Geldes and Felzensztein, 2013; Mbizi et al., 2013), other studies have found that some SMEs
(especially those in Ghana) are not innovative, hence SMEs are unable to achieve and
sustain their market performance (Quaye and Acheampong, 2013; Dzisi and Ofosu, 2014).
The findings of Quaye and Acheampong (2013) and Dzisi and Ofosu (2014) reveal that
innovation was examined from general perspectives such as product innovation and
process innovations using all sectors of the Ghanaian economy including service,
agriculture and industry. The current paper argues that SMEs may not be innovative in
terms of new products (product innovation) but can develop innovative strategies such as
new package and design, pricing and distribution strategies to sell their existing products.
In this regard, the conclusion “SMEs in Ghana are not innovative” may differ or change
when SME innovation is examined from the marketing perspective.
In a saturated and highly competitive market, this current paper seeks to offer an
alternative framework (resource capability-based view (RCBV)) that provides a strategic
marketing direction for SMEs regarding how innovative marketing practices and dynamic
marketing capabilities integrate to create sustainable market advantage for SMEs. This
current study seeks to propose an integrated and elaborative approach to the conventional
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resource-based view and dynamic capability theory (DCT) which does not provide a Marketing
composite understanding in literature. It seeks to establish how SMEs in water, beverage, innovation
soap, detergent, metal fabrication, wood and furniture manufacturing industries can sustain and SCA
or improve their competitive advantage by employing and integrating specific resources
and capabilities. At the national level, this paper makes a proposal for a strategic
collaboration between government, research institutions and manufacturing SMEs to foster
capability development that boosts the marketing performance of manufacturing SMEs in
both domestic and international markets.
2. Literature review, conceptual framework and hypotheses development
2.1 Concept of SME innovation
The definition of “innovation” has acquired various meanings and understanding from
different domains and perspectives in academics and practice (Hunt and Morgan, 1995).
An early pioneer of innovation, Schumpeter (1934) defined innovation as “a new way of
doing things, or a unique combination of factors of production”. Observing carefully, the
exposition by Schumpeter suggests a broader view of innovation such as product
innovation, process innovation, management innovation, organisational innovation and
marketing innovation (Talegeta, 2014). With regard to the forms of innovations espoused by
Schumpeter (1934), Terziovski (2010) noted that SMEs prefer some forms of innovation over
others. However, Medrano and Olarte-Pascual (2016) disagreed with this assertion, arguing
that it is currently difficult in any academic discourse to limit studies on innovation to any
form of innovation. Further studies have shown that SMEs that conduct process, product or
organisational innovations are likely to undertake marketing innovation too (Medrano
and Olarte-Pascual, 2016; Soltani et al., 2015). A study by Forés and Camisón (2016) reported
that SME managers should rather concentrate on the distinguishing feature, which is the
“novelty” of the innovation outcome. Consequently, SMEs achieve high performance
when their strategic objectives and goals are based on their level of innovation
(Rosenbusch et al., 2011).
Thus, Schaltegger and Wagner (2011 as cited in Klewitz and Hansen, 2014) note that
small enterprises are well positioned to innovate more radically and compete favourably
than large firms, especially in a niche market. Innovation does not come from large firms
alone but from dynamic SMEs (Schilirò, 2015). Another study by Yeh-Yun Lin and Yi-Ching
Chen (2007) revealed that about 80 per cent of 877 SMEs surveyed in Taiwan are engaged in
some marketing innovation such as new sales approach, new market and new brand styles.
Ayyagari et al. (2011) confirmed the finding of Yeh-Yun Lin and Yi-Ching Chen (2007) in the
Ghanaian context that many innovations come from SMEs.
2.2 Marketing innovation
The definition of marketing innovation has taken a new paradigm because global business
trends have shifted the flow of innovative ideas partially from the producer to the consumer.
Alternatively, marketing innovation is defined as the significant changes in aesthetic
designs, improved product packaging, new mass media, new pricing and sales strategies
(Moreira et al., 2012). Yeh-Yun Lin and Yi-Ching Chen (2007) in their study revealed that
manufacturing SMEs adopt marketing innovation as one of the major types of innovations
to transform their products into profit (Soltani et al., 2015) and also determine the innovation
focus of the firm (Woschke et al., 2017). Stošić (2007), therefore, identified four strands of
marketing innovation which includes product design and packaging innovation; new
pricing strategies; new retail concept and new promotion concepts.
2.2.1 Design and packaging innovation. One central element in SME marketing activities
is design and packaging innovations (O’Dwyer et al., 2009). For decades, product design and
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MD packaging innovation has become one of the innovation strands adopted by SMEs
(Madrid-Guijarro et al., 2009 as cited in Asiedu, 2016). Product design and packaging
innovation includes significant changes in product design and packaging form and/or style
without any effect on the core functioning and user characteristics of the product (Stošić,
2007; Wang, 2015). In recent years, literature has emphasised on the eco-design of products
as a broader strategic approach for sustainability (Klewitz and Hansen, 2014).
Literature affirms that manufacturing SMEs that often introduce new product designs
and packages create product varieties, improve products’ life and enhance customer
satisfaction and possess superior strength over competitors (Henderson and Clark, 1990;
Wang, 2015). Consequently, the ability to sustain and improve competitive advantage
requires SMEs to possess some amount of resources and capabilities as a catalyst to
transform and modify existing strategies. Studies such as Youtie (2006), Moreira and Silva
(2010), Moreira et al. (2012), Woschke et al. (2017) have noted that internal resources such as
machinery, equipment and software are key to the development of innovation strategies.
Other studies have argued that information from stakeholders (Resnick et al., 2016) such as
customers, employees, competitors, advertisers, retailers and wholesalers are important
because these supply chains actually possess relevant information for product design and
packaging innovation (Mbizi et al., 2013). Manufacturing SMEs that are able to change and
or modify their existing products into unique product designs and package achieve superior
competitive advantage (SCA) (Awan and Hashmi, 2014; Haq et al., 2008; Sudarmiatin and
Suharto, 2016). Therefore, the study hypothesises that:
H1a. There is a significant positive relationship between product design and packaging
innovation and SCA.
H2a. Marketing resources and capabilities sustain the relationship between SME
product design and packaging innovation and SCA.
2.2.2 Pricing innovation. The second strand of marketing innovation is pricing innovation.
Wang (2015) and Ilić et al. (2014) viewed SME pricing innovation as a process where a firm
uses new and alternative methods to vary prices. Wang (2015) and Ilić et al. (2014) noted
that SME pricing is characterised by conditions such as demand fluctuations and an
introduction of a new interactive online pricing system such as website and social network
sites. SMEs also operate price differential pricing system by charging different customers
with different prices for the same products (Carson et al., 1998). The price differential
approach is based on factors such as the nature of business relationship, awareness of the
market conditions, conditions of the product and the SME. Other SMEs also improve
product designs and package by using new bottle shapes, taste, size and flavour as a
means to differentiate their product prices. These strategies are normally influenced by
market knowledge, managers’ culture, intuition and experience over time (Carson et al.,
1998). Developing innovative pricing tools require key strategic marketing resources and
capabilities such as employees with right knowledge, quality information and experience.
In innovative pricing, employee capabilities and all relevant primary and secondary
factors are important to consider in order to fix prices that are fair and acceptable to the
firm, customers, market and industry. SME innovative pricing system aims to establish
and maintain customer loyalty for business performance. The study, therefore,
hypothesises that:
H1b. There is a significant positive relationship between SME pricing innovation
and SCA.
H2b. Marketing resources and capabilities sustain the relationship between SME pricing
innovation and SCA.
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2.2.3 Promotion innovation. Innovative promotion involves significant changes in media Marketing
techniques and symbols that are different from what the firm has used or existed before innovation
(Ilić et al., 2014). Salehi (2012) established that SME managers have used the conventional and SCA
marketing tools to be working well and attracted consumers to purchase firms’ offerings.
Nevertheless, Sledzik found evidence to disagree that traditional promotion tools appear too
glossy, aggressive and insincere to the specific needs of customers. These problems are
evident because the power of the digital age has altered the way consumers purchase and
consume products (Ilić et al., 2014), and thus consumers are now immune to all marketing tools
and strategies (Lendel and Varmus, 2013). Furthermore, in an era where physical “word of
mouth” is giving way to “word of mouse” and social media (Resnick et al., 2016), SMEs
managers have also resorted to social network sites and platforms such as WhatsApp,
Facebook, Google+ and YouTube to promote their products and build relationships. These
social network platforms allow SMEs to create internet platforms to promote their products
and also allow customers to make purchase orders online. SMEs that do not have enough
financial resources to adopt digital innovations to promote their products have resorted to use
personality, personal contact, calls and text messages to customers, and good personal
relationship as branding tools, which is essential for sustainable business performance
(Resnick et al., 2016). Sudarmiatin and Suharto (2016) noted that these innovative promotion
activities such as branding, networking and internet adoption are critical to sustaining market
advantage. In effect, innovative promotion tools improve brand trust, customer fulfilment,
marketing image (Chuwiruch et al., 2015) and also achieve good market performance
(Schaupp and Bélanger, 2013). Therefore, we hypothesise that:
H1c. There is a significant positive relationship between SME promotion innovation
and SCA.
H2c. Marketing resources and capabilities sustain the relationship between SME
promotion innovation and SCA.
2.2.4 Retail innovation. Wang (2015) defined innovative retail concepts as the introduction of
new sales channels used to sell goods and services to customers. Innovative retail concepts
may involve first-time franchising system, direct mode of selling, exclusive retailing and
product licensing mechanisms to other sellers. SME managers normally have the desire to
take full control of their product delivery chain but due to time and other resource constraints,
they sometimes resort to indirect channels. Regarding the innovative direct product
distribution tools, some SMEs launch their own delivery vans and “showrooms” at various
locations to distribute products to customers within specified geographical areas. Firms also
adopt innovative discounts and other promotion tools to encourage customers to purchase
directly from their factory, warehouse and distribution centres. Indirectly, manufacturing
SMEs also organise intermittent mass sale promotions where consumers buy from the
wholesaler at vantage places. In the age of technology, manufacturers have also developed
websites and other social network sites such as Instagram to provide product information and
pictures and also allow customers to make orders online. Such a delivery system means that
different customers receive special and preferential retail service from a firm. The nature of
the innovative SME delivery systems, which have shaped and moulded a closer relationship
with customers, often creates a loyalty which cannot be replaced by large firms (Harrigan
et al., 2011). Hence, it is hypothesised that:
H1d. There is a significant positive relationship between SME retail innovation
and SCA.
H2d. Marketing resources and capabilities sustain the relationship between SME retail
innovation and SCA.
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MD 3. Sustainable competitive advantage
SCA has become one of the important goals of SMEs across the globe (Papula and Volná,
2013). The concept of SCA received wide significance when Porter and Advantage (1985)
attempted a definition of SCA as strategies (cost leadership, differentiation and focus) relevant
to achieving the long-term market advantage. In furtherance to the inroads of Porter, Barney
(1991) attempted a definition of SCA as a long-term benefit resulting from unique value
creation processes asynchronously with potential competitors that cannot be easily copied.
Noci and Verganti (1999 as cited in Klewitz and Hansen, 2014) noted that it is important to
consider SMEs strategic sustainability behaviour from three behavioural patterns: reactive
pattern, which defines how firms react to elements or stimuli from the external environment;
anticipatory pattern which describes the activities of firms in achieving competitive
advantage; and finally the innovation-based behavioural pattern which shows how the firm
can adjust to innovations to achieve market advantage. The reactive and anticipatory
sustainability strategies of an SME prove to be the highest strategies that are likely to result in
innovation because they are responses to the external environmental stimuli.
Marketing-based strategies are well defined within a relationship context where the
customer represents an important strategic part of the innovation process. Studies have
found evidence that marketing innovation remains one of the important strategies to
achieving SCA (Ren et al., 2015; Camisón and Villar-López, 2011). Other studies have noted
that “a company can only achieve SCA when they provide unique and valuable marketing
strategies that potential and dynamic rivals cannot imitate” (Amini et al., 2012, p. 193).
Studies have emphasised that a firm must accumulate both resources and capabilities in
order to achieve SCA (Abdelrahman, 2012; Ren et al., 2009). To some authors, the capacity of
SMEs to develop marketing innovation for SCA remains fundamental in the RBV
(Rosenbusch et al., 2011). Marketing capability, according to Prahalad and Ramaswamy (2000
as cited in Ren et al., 2015), is the “integrative process in which a firm uses it tangible and
intangible resources to understand market needs, enables products differentiation, enhances
customer cooperation”. Fundamentally, resources such as brand name, trade contacts,
efficient processes (Barney, 2011), technical skills, knowledge, technology, relationships
(Remeikiene and Startiene, 2009), finance and materials (Saunila et al., 2014) are required to
develop innovative marketing strategies for SCA (Barney, 2012). However, Barney (1991) and
Genç et al. (2013) re-echoed the fact that not all firms’ resources can create SCA. In order to
develop marketing innovation for SCA, internal and external resources must be rare,
inimitable, valuable and non-substitutable (Barney, 1991; Ren, Au and Birtch, 2009; Ren, Xie
and Krabbendam, 2009; Teece et al., 1997; Genç et al., 2013). The shift in focus from just
competitive advantage to SCA re-enforces the works of Weerawardena (2003) and
Weerawardena and O’Cass (2004) who noted that SCA must involve providing superior
customer value and achieving relative lower cost for a long period of time and creating
superior performance. To Ren et al. (2015), marketing capability not only provides support for
innovation strategies but also helps in benefitting from the effect on internationalisation on
innovation performance. The study of Ren et al. (2015, p. 649) recommended that SMEs
“should increase their marketing capability to attain sustainable advantages by innovation
and gaining deeper insights into consumer needs, wants, and trends, thus, exploiting new
business opportunities”.
4. Theoretical framework
The theoretical foundation of this study is based on the influential theory of resource-based
theory (RBT) and its extended DCT. The RBT and DCT have being predominantly used to
deepen the understanding regarding how resources are identified, selected, deployed and
coordinated to develop innovative marketing methods. Firms’ resources may also include all
assets, organisational processes, attributes, information and the knowledge to conceive
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and implement strategies to develop, manufacture and deliver products to customers Marketing
(Barney, 1991). In order to create a market advantage, resources must be valuable (exploit innovation
opportunities and/or neutralise threats in a firm’s environment), rare among a firm’s current and SCA
and potential competitors, inimitable and non-substitutable “VRIN” (Barney, 1991).
Apart from the RBT which focusses on both internal tangible and intangible assets
(Barney, 1991), this study also adopts the DCT which focusses on the processes used in
exploiting firms’ resources (Vassolo and Anand, 2008). These processes represent the
capabilities that managers possess to integrate, develop and reconfigure their competences
to match and address rapidly changing environments (Genç et al., 2013; Jiao et al., 2010;
Teece et al., 1997). In view of this, the integration of resources and capabilities creates
competences relevant to sustaining firms’ market advantage (Genç et al., 2013).
The relevance of RBT and DCT to this study is that SMEs possess unique marketing
resources and capabilities such as knowledge (quality information and activities), expertise,
appropriate technology and adequate finances relevant to anticipating and responding to
changing customer needs with innovative marketing tools.
5. Conceptual framework
Drawing on the theoretical and empirical perspectives of marketing innovation, the study
presents a conceptual framework depicting marketing resources and capabilities, marketing
innovation and SCA described in this paper as “RCBV”. The conceptual framework (Figure 1)
explains that SMEs possess unique marketing resources such as finances, materials,
employees (Saunila et al., 2014) technical skills, competencies, knowledge, education, patents,
properties, proprietary technologies, relationships (Remeikiene and Startiene, 2009) relevant to
supporting marketing innovation effort (Abdelrahman, 2012). Firms’ capabilities also include
daily processes, routines and operations (Miller et al., 2002). Walobwa et al. (2013) on SMEs in
Kenya revealed that in Sub-Sahara Africa, the ability of SMEs to innovate depend largely
on capabilities, information and skills available. In this study, the researchers follow the
recommendation that efficient integration of marketing resources and capabilities create
blocks of core marketing competence to develop innovative marketing strategies (Barney,
1991; Genç et al., 2013; Jiao et al., 2010; Miller et al., 2002). Hence, it is hypothesised that:
H1. There is a positive significant relationship between marketing innovation and SCA.
H2. Marketing competence improves the significance between marketing innovation
and SCA.
Marketing
innovation:
Resource capability Product design
integration Sustainableinnovation competitive
Marketing competence: advantage
Pricing innovation
resources and
Capabilities Retail innovation
Figure 1.
Promotion Conceptual framework
innovation for marketing
competence,
marketing innovation
and sustainable
competitive advantage
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MD 6. Study methods
The research adopts a positivist methodological paradigm, which involves formulating
research questions and hypotheses, and testing them empirically under carefully controlled
circumstances (Boateng, 2014). In this quantitative study, the researchers adopt a survey
research design which is suitable to ascertain relationships and strength of the relationships
of variables using a questionnaire instrument. The survey design was used because similar
studies on marketing and innovation (Mbizi et al., 2013; Talegeta, 2014; Walobwa et al., 2013)
used it. The study sampled 591 manufacturing SMEs from a population of 7,832
manufacturing SMEs in Ghana (Ghana Statistical Service, 2016a, b). In this study, beverage
and water, soap, detergent, metal fabrication, wood and furniture manufacturing SMEs
were sampled. The sample size was informed by Hair et al. (2013) who posited that for a
sample to be representative, it must be more than 100. To ensure reliability of the study, two
main criteria were adopted. These are the Cronbach’s α (CA) and composite reliability (CR),
which are mostly used in structural equation modelling (Hair et al., 2014, 2015). Validity was
also measured using convergent validity and discriminant validity (Rezaei, 2015; Rezaei and
Ghodsi, 2014). Discriminant validity used construct correlations and cross-loading criterion
while convergent validity employed average variance extracted (AVE) and factor loadings
(Kim et al., 2016; Rezaei, 2015).
7. Result and discussions
7.1 Descriptive statistics of respondents
Table I shows the descriptive statistics of manufacturing SMEs in Ghana. The study’s results
show that 70.8 per cent of manufacturing SME owners in Ghana are males while 29.2 per cent
are females. The results further show that 49.4 per cent of manufacturing SME owners in Ghana
are within the ages of 35 and 44 years, indicating a strong evidence of a more vibrant age
populations for the sub-sector. On the level of education, the study found that the highest
percentage of 32.1 of manufacturing SME owners were junior high school graduates. However,
there was a fair representation of respondents at various levels of education: secondary
(16.1 per cent), non-formal (22.9 per cent), no education (26.2 per cent) and university (2.7 per cent).
The study’s results further showed that 45.5 per cent of manufacturing SMEs in Ghana have
existed between 11 and 15 years and are mainly managed by individuals who are owners.
7.2 Mean and standard deviation of construct
From Table II, all the six constructs recorded average mean and standard deviation scores.
Specifically, product design innovation recorded the highest average mean of 4.45, which
was driven by changes in product shape, size, colour and taste. On the other hand,
innovative retail outlets strategy recorded the least mean of 3.49, which was driven by the
lack of internet platforms for online ordering. The highest mean implies that manufacturing
SMEs in Ghana are innovative, driven by product design innovation. The least mean
recorded shows that manufacturing SMEs in Ghana are not much innovative in terms of
exploring innovative retail outlets such as internet systems to advertise and distribute their
products. In a cumulative sense, the overall average mean for the six constructs was
3.76 within the average mean score.
7.3 Exploratory factor analysis
7.3.1 Test for adequacy. The study tested for adequacy based on four main criteria:
Kaiser–Meyer–Olkin (KMO) measure of sampling adequacy, Bartlett’s test of sphericity,
goodness-of-fit test and total variance explained (AVE). KMO measure of sampling
adequacy recorded a value of 0.897W0.70 which indicates that the factors are suitable for
the study. Bartlett’s test of sphericity recorded a χ2 of 5,168.772 with df of 325 at a
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Marketing
Characteristic Item Frequency Per cent innovation
Gender Male 419 70.8 and SCA
Female 172 29.2
Total 591 100.0
Age (years) 18–24 46 7.7
25–34 167 28.3
35–44 292 49.4
55–65 84 14.3
65 and above 2 0.3
Total 591 100.0
Level of education No education 155 26.2
Non-formal 135 22.9
Junior high 190 32.1
Secondary 95 16.1
University 16 2.7
Total 591 100.0
Years of operation Less than 5 49 8.3
6–10 169 28.6
11–15 269 45.5
16 and above 104 17.6
Total 591 100.0
Job position Owner–manager 169 28.6
General manager 276 46.7
Non-managerial 146 24.7
Total 591 100.0
Nature of business Water and beverage 157 26.5
Soap and detergent 153 25.9 Table I.
Metal fabrication 181 30.7 Demographic
Wood and furniture 100 17.0 characteristics
Total 591 100.0 of respondents
significant value of 0.000, depicting a suitable factor analysis. Goodness-of-fit test recorded
a χ2 of 466.082 at non-significant value of 0.000, which is considered perfect for the study.
Thirdly, the reproduced correlation recorded an acceptable value of 0.05, equal to the
threshold of 0.05. The study also found the average variance explained (see Table III) to be
76.10, per cent indicating a strong explanation of the study variables (Tables IV and V).
7.3.2 Robustness test result. 7.3.2.1 Test for validity and reliability. Validity test was also
conducted based on two main criteria: discriminant validity (correlation and cross loadings)
and convergent validity (AVE and factor loadings) (Rezaei and Ghodsi, 2014; Rezaei, 2015;
Kim et al., 2016; Hair et al., 2013). The rotated factor loaded strongly on their respective factors,
ranging from 0.52 to 0.91. AVE recorded a range from 0.507 to 0.717, which shows that the
AVE of each latent construct is higher than the highest squared correlation with other
construct, thus showing a strong variance as captured by the construct. The reliability test
involved two main criteria comprising CA (Cronbach, 1951) and the CR (Hair et al., 2014, 2015).
The reliability values recorded were within the range of 0.95 and 0.68 above the satisfactory
levels of 0.70 as recommended by CA (Cronbach, 1951; Hair et al., 2013). Again, CR was also
found to be within the range of 0.964 and 0.753, indicating a strong reliability measure.
7.4 Confirmatory factor analysis
7.4.1 Model fit indices. Before the structural model was developed and analysed to test the
study hypothesis, the paper assessed the general fitness of the six confirmed variables:
product design innovation, retail innovation, pricing innovation, promotion innovation,
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MD
Constructs Mean SD Average mean
Product design innovation
PDI_1 4.39 1.03 4.450
PDI_2 4.47 0.918
PDI_3 4.55 0.892
PDI_4 4.4 1.009
Promotion innovation
ProIn_1 3.81 0.974 3.510
ProIn_2 3.76 0.985
ProIn_3 3.26 1.092
ProIn_4 3 1.173
ProIn_5 3.76 1.046
Pricing innovation
PxIn_1 3.71 1.053 3.580
PxIn_2 3.51 1.043
PxIn_3 3.54 1.064
Retail innovation
Retl_1 3.78 1.535 3.49
Retl_2 3.54 1.395
Retl_3 3.25 1.454
Retl_4 3.39 1.443
Market competence
Mktcmp1 3.76 1.136
Mktcmp2 3.74 1.139
Mktcmp3 3.32 1.051
Sustainable competitive advantage
SCA_1 3.8 1.143 3.89
SCA_2 4.18 1.12
SCA_3 4.32 1.069
SCA_4 4.29 1.089
Table II. SCA_5 3.77 1.069
Construct mean and SCA_6 3.47 1.06
standard deviation SCA_7 3.45 1.18
Extraction sums of squared Rotation sums of squared
Initial eigenvalues loadings loadings
% of Cumulative % of Cumulative % of Cumulative
Component Total variance % Total variance % Total variance %
1 9.949 38.265 38.265 9.949 38.265 38.265 5.386 20.716 20.716
2 3.658 14.070 52.336 3.658 14.070 52.336 3.692 14.199 34.914
3 2.191 8.427 60.763 2.191 8.427 60.763 3.273 12.590 47.504
4 1.475 5.672 66.435 1.475 5.672 66.435 3.048 11.723 59.227
Table III. 5 1.295 4.981 71.415 1.295 4.981 71.415 2.415 9.290 68.516
Total variance 6 1.218 4.684 76.099 1.218 4.684 76.099 1.972 7.583 76.099
explained Note: Extraction method: principal component analysis
marketing competencies and SCA. The results of the general model assessment revealed the
comparative fit index (CFI) as 0.902o0.95 (Bentler, 1990), the incremental fit index as
0.913o0.95 (Bollen, 1989) and Tucker–Lewis coefficient as 0.90W0.95 (Bentler and Bonett,
1980). The RMSEA was 0.038o0.06; SRMR¼ 0.070o0.08; CMIN/DF¼ 2.745W1o3;
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Marketing
Construct Factor loadings Composite reliability AVE Cronbach’s α innovation
Product design innovation 0.909 0.714 0.89 and SCA
PDI_1 0.741
PDI_2 0.828
PDI_3 0.788
PDI_4 0.693
Promotion innovation 0.910 0.672 0.729
ProIn_1 0.838
ProIn_2 0.894
ProIn_3 0.897
ProIn_4 0.756
Pricing innovation 0.753 0.507 0.679
PxIn_1 0.861
PxIn_2 0.720
Retail innovation 0.860 0.607 0.866
Retl_1 0.730
Retl_2 0.820
Retl_3 0.811
Market competence 0.841 0.641 0.85
Mktcmp1 0.775
Mktcmp2 0.787
Mktcmp3 0.798
Sustainable competitive advantage 0.964 0.717 0.95
SCA_1 0.824
SCA_2 0.814
SCA_3 0.853
SCA_4 0.822 Table IV.
SCA_5 0.755 Robustness test result
Path relationship Hypothesis Result Standardized estimate Significance
Product design innovation→SCA H1a Supported 0.554 ***
Promotion innovation→SCA H1b Supported 0.135 0.029
Retail innovation→SCA H1c Supported 0.499 ***
Pricing innovation→SCA H1d Supported 0.446 ***
Marketing innovation→SCA H1 Supported 0.690 ***
Marketing innovation and SCA with marketing competence as second-order construct
Product design innovation→SCA H2a Supported 0.554 ***
Promotion innovation→SCA H2b Supported 0.135 0.029
Retail innovation→SCA H2c Supported 0.499 *** Table V.
Pricing innovation→SCA H2d Supported 0.446 *** Structural path
Marketing innovation→SCA H2 Supported 0.729 *** estimations and
Note: ***pW0.001 hypothesis test results
CMIN¼ 776.755 and DF¼ 283, indicating an excellent fit for our data based on the
recommended cut-off criteria (Hu and Bentler, 1999; Browne and Cudeck, 1993). Principally,
this paper seeks to test the relationship between marketing innovation and SCA (H1–H1d),
and the role of marketing resources and marketing capabilities on the level of significance
between marketing innovation and SCA (H2–H2d). Two structural models (Models I and II)
were developed to test the individual phenomenon.
7.4.2 Structural model I. The first model revealed strong model fit indices including: CFI
0.971W0.95 (Bentler, 1990), P-close: 0.05¼ 0.50; RMSEA: 0.043o0.06; SRMR: 0.039o0.08;
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MD CMIN: 7.407; DF: 5; CMIN/DF: 1.481, indicating an excellent fit between our model and the
data (Hu and Bentler, 1999).
Figure 2 shows the structural equation model used to test the relationship between
marketing innovation and SCA. Previous studies (Awan and Hashmi, 2014; Haq et al., 2008;
Osei et al., 2016; Porter and Advantage, 1985; Chuwiruch et al., 2015) have found a significant
relationship between marketing innovation and SCA, the results of our study (H1: β¼ 0.690,
p o0.05) confirm these findings. On individual marketing innovation strands, the results
found a significant relationship between product design innovation, promotion innovation,
retail innovation, pricing innovation and competitive advantage (H1a: β¼ 0.781, p¼ 0.001;
H1b: β¼ 0.135, pW0.05; H1c: β¼ 0.499, pW0.001; H1d: β¼ 0.446, pW0.001).
7.4.3 Structural model II. Figure 3 shows that all indicators generally reveal a good model
fit based on established criteria for model fit such as CFI: 0.975W0.95; Bentler (1990), SRMR:
0.043o0.008; RMSEA: 0.071W0.06; CMIN: 20.440; DF: 9, CMIN/DF: 2.271o3W1; P-close:
0.176W0.05), indicating an excellent fit (Hu and Bentler, 1999; Browne and Cudeck, 1993).
0.61
PrdtInnovation u2
0.01 0.78
PromInnovation u3 0.00 0.48
0.10
0.69
0.56 MKTINNOV SCA
0.75
Figure 2. RetInnovation u4
Marketing innovation 0.70
and sustainable 0.49 u1 u6
competitive advantage PxInnovation u5
0.60 0.01 0.51 0.45
PrdtInnovation PromInnovation RetInnovation PxInnovation
u1 u2 u3 u4
0.77 0.12 0.72 0.67
0.47
0.69 MARKTINNOVTN 0.73
MarketCompt SusCompAdva
Figure 3.
Marketing innovation
and sustainable
competitive advantage
with marketing
competence as a u5 u6
second-order construct
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Principally, the structural model in Figure 3 sought to test the role of marketing resources Marketing
and marketing capabilities on the relationship between marketing innovation and SCA. innovation
Previous studies (Yeh-Yun Lin and Yi-Ching Chen, 2007; Ren, Au and Birtch, 2009; Ren, Xie and SCA
and Krabbendam, 2009; Camisón and Villar-López, 2011; Walobwa et al., 2013; Sudarmiatin
and Suharto, 2016; Woschke et al., 2017) have found that key marketing resources and
marketing capabilities are relevant in developing marketing innovations to sustain market
advantage; the results of our study (H2: β¼ 0, 0.729, pW0.05) confirm these findings.
On individual marketing innovation strands, previous studies have found that product
design innovation (Henderson and Clark, 1990; Ren, Au and Birtch, 2009; Ren, Xie and
Krabbendam, 2009; Wang, 2015), promotion innovation (Sudarmiatin and Suharto, 2016;
Ren, Au and Birtch, 2009; Ren, Xie and Krabbendam, 2009; Schaupp and Bélanger, 2013),
retail innovation (Ren, Au and Birtch, 2009; Ren, Xie and Krabbendam, 2009; Harrigan et al.,
2011) and pricing innovation developed from key marketing resources and capabilities
sustain market competitive advantage (Abdelrahman, 2012), our study’s result (H2a:
β¼ 0.619, pW0.001; H2b: β¼ 0.188, pW0.05; H2c: β¼ 0.579, pW0.001; H2d: β¼ 0.531,
pW0.001) confirms these findings.
Although all the ten study hypotheses (H1, H1a, H1b, H1c, H1d, H2, H2a, H2b, H2c,
H2d) were confirmed, a careful look at the standard estimate result (H1a and H2a; H1b and
H2b; H1c and H2c; H1d and H2d) shows that there was sustainability in the level of
significance in each of the four pairs of marketing innovation strands. Consequently, there
was an increase in standard estimate result in H1 and H2 indicating that marketing
resources and capabilities improve the significance of marketing advantage. The result
means that employing key relevant resources that are valuable, rare, inimitable and
non-substitutable “VRIN” (Barney, 1991) are important to sustaining market advantage and
even improve on it (O’Cass and Ngo, 2011).
8. Summary of study hypotheses testing
This research investigated ten hypotheses, detailing the relationship between marketing
competence, marketing innovation and sustainability. Based on the analysis of the result,
all the hypotheses were confirmed. Findings from this research indicate that product
design and packaging innovations (H1a and H2a), promotion innovations (H1c and H2c),
retail innovations (H1d and H2d) and pricing innovations (H1b and H2b) provide
sustainable market advantage for water, beverage, detergent and metal fabrication SMEs.
The paper further originates that deploying marketing competence (marketing resources
and marketing capabilities) in marketing innovations provides a marginal improvement in
competitive advantage. Therefore, the result means that depending primarily on physical
resources may result in market advantage, but an incorporation of dynamic marketing
capabilities provides a sufficient improvement in market sustainability. Again, these
finding means that exploring, exploiting and deploying both resources and capabilities is
important for manufacturing SMEs to keep pace with the changes in the environment
resulting in SCA.
9. Conclusion
In this paper, we conducted analysis on the interplay of resource and capabilities in
marketing innovation development as a strategy to sustain market advantage. The paper
concludes that innovative marketing practices such as new and modified product designs
and packages, new retail and promotion strategies and pricing schemes are key to achieving
SCA. Again, the study concludes that new product designs and packages are the major
drivers of SME sustainable market advantage followed by innovative retail outlets.
The paper further concludes that marketing resources and capabilities are key to sustaining
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MD and improving the market advantage of SMEs. Even though firms may not possess the
resources to change or extend their product line, SME manager–owners can integrate
resources and capabilities such as information and finance, technical skills, organisational
processes and operations to develop marketing innovations that will help sustain the
market advantage.
10. Recommendation and practical implication
The paper recommends that SMEs in water, beverage, soap, detergent, metal fabrication,
wood and furniture manufacturing industries should prioritise their key marketing
resources and capabilities in product designs, promotion, pricing and retailing innovations
in order to sustain market advantage. More importantly, innovative retail strategies such as
eco-friendly advertising, product re-branding and digital platforms (social network sites and
websites) are important to sustaining market performance. To achieve sustainability, SME
managers and owners must improve their technical skills, processes and operations in order
to convert resources into innovations. SMEs must not discard “old” products brands with
low customer interest but rather redesign and engineer innovation in existing product
designs, promotion, pricing and retailing strategies to regain and sustain market advantage.
Government must develop targeted policies to bridge the information gap between SMEs
and research institutions such as universities in order to improve the capabilities of SME
managers and owners. This can be done through regular subsidised entrepreneurial
training and creation of semi-annual industry-academic fairs. Government must also
provide support to skill and capability development institutions such as National Board for
Small Scale Industries and Association of Ghana Industries to effectively and efficiently
offer support services to SMEs in an effective and cost-value efficient manner.
11. Theoretical contribution
The main theoretical contribution is the development of “RCBV” as a framework which
shows that SMEs can integrate specific resources and capabilities to achieve sustainable
market advantage. This framework is an advancement to resource-based view which does
not consider the integration of resource and capabilities. This paper has espoused that
SMEs who manufacture beverage, water, soap, detergent, metal fabrication, wood and
furniture can integrate and synchronise physical resources and capabilities such as
technical skills and organisational processes to sustain competitive advantage.
SMEs may not have the needed resources and capability to introduce entirely new
products or extent product line, but this paper has proved that the market base of an
existing product can be sustained by synchronously using marketing resources and
capabilities. By this, our paper adds to knowledge on the basis that water, beverage,
detergent and metal fabrication SMEs can sustain market advantage of old products if they
integrate their capabilities with their resources to develop new innovations. Future research
may consider testing the proposed RCBV framework to SMEs, especially in other industries
to confirm or otherwise.
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Further reading
Amankwah-Amoah, J. and Sarpong, D. (2016), “Historical pathways to a green economy: the evolution
and scaling-up of solar PV in Ghana, 1980–2010”, Technological Forecasting and Social Change,
Vol. 102 No. 2016, pp. 90-101.
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Management, Vol. 5 No. 3, pp. 90-95.
Corresponding author
Isaac Mensah can be contacted at: ikebus2008@yahoo.com
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