Marketing vs. R&D vs. Operations

Value LeveragingKrasnikov, A.; Jayachandran, S. · 2008Journal of Marketing
Topicsmarketing capability·r&d capability·operations capability·firm performance·meta-analysis·resource-based view·market performance

You're building next year's investment case, and R&D and operations are asking for a bigger share on the logic that they're the "real" drivers of results. Before you concede the point, look at the evidence: marketing capability tracks firm performance more closely than either one. A rival can benchmark your operation or read your R&D patents. It's much harder to copy the customer knowledge and relationships behind a strong marketing capability. That's the case for protecting it, not just funding it.

Of the three capabilities that drive firm performance, marketing's link to results is the strongest.

Pooling many studies across 30,000+ businesses, marketing capability shows a stronger link to firm performance than R&D capability or operations capability. All three matter, but the question worth asking before you cut a budget is which capability is hardest for a rival to copy.

Data chart

Marketing capability tracks firm performance most closely

Marketing0.352R&D0.275Operations0.205

Marketing capability's link to firm performance is the strongest of the three, though all three matter.

Action guide

  1. Defend marketing capability as a core performance driver, not a discretionary cost.Its link to firm performance is the strongest of the three capabilities across a broad body of evidence, and the ranking did not change across the firm-size, B2B/B2C, manufacturing/services or geography splits the study tested.
  2. Lean on marketing capability when the goal is market share and profitability.That is where marketing and R&D both show their strongest results, with operations trailing.
  3. Direct operations investment at efficiency goals: cost, lead-time, speed to market.Operations is the one of the three capabilities that tracks those results more closely than it tracks market share or profitability.
  4. Treat marketing capability as a multi-year asset, not a campaign line item.The study argues its strength is hard for rivals to copy because it rests on tacit customer knowledge built up with customers over time, so protect it through leadership transitions rather than letting turnover erode it.
  5. Ask how a capability claim was measured before you weigh it.Self-reported studies report stronger links than objective-data studies, and the study advises examining the measurement in both rather than automatically discounting the self-reported ones.

Evidence

  • Marketing capability has the strongest link to firm performance of the three capabilities compared, marketing, R&D, and operations, in both the raw comparisons and after accounting for differences between studies.
  • Marketing's lead over R&D and operations held regardless of firm size, B2B versus B2C, manufacturing versus services, or geography: none of those conditions changed the order.
  • All three capabilities link positively to firm performance; the question is which link is strongest, not whether R&D or operations matter.
  • Marketing and R&D show their strongest links on market results (share, profitability, sales), with operations the weakest of the three on those measures.
  • Operations capability reverses that pattern: it is the one capability that links more strongly to efficiency results (cost, lead-time, speed to market) than to market results.
  • Studies that ask managers to rate both their own capability and their own performance report a stronger link than studies using objective data. The study flags that gap as a measurement question and does not settle it: it could be managers marking their own homework, or objective measures failing to capture a complex capability.

Key takeaway

Of the three core capabilities, marketing's link to firm performance is the strongest.

Source

Krasnikov, A., & Jayachandran, S. (2008). The relative impact of marketing, research-and-development, and operations capabilities on firm performance. Journal of Marketing, 72(4), 1–11. https://doi.org/10.1509/jmkg.72.4.001

Read the paper ↗

Evidence strength: Strong. Based on a pooling of 786 findings from 114 published studies covering more than 30,000 businesses; describes an association, not a proven cause-and-effect relationship, and does not establish industry-specific rankings or a case for reallocating a specific dollar amount. The ranking may not hold in highly turbulent markets or specific new-product-development contexts, which the study did not directly test.