PRODUCT MANAGEMENT AS FIRM CAPABILITY

Abstract

Product management as an organizational system has a long history of practice, which predates most modern academic management research. Its activities span the external environment of the firm, while simultaneously spanning across internal functional specialties of the organization. Thus product management obtains, codifies, simplifies and stores external information making it available to a responsive organization, which uses it to establish competitive advantage and ultimately superior performance.

Building on the resource based view of the firm and boundary theory, these spanning activities, which are heterogeneously dispersed across firms, are considered organizational capabilities. Drawing upon the extant product management literature, this research uses product management as a proxy for boundary spanning capabilities of the firm. These capabilities are then empirically measured against two well established firm capabilities; market orientation and firm-level innovativeness.

This research addresses a gap in the literature by establishing product management as a set of firm-level capabilities, distinct from the well established constructs of market orientation and innovativeness. Results indicate that external product management capability, defined as channel bonding activities, fully mediates the market orientation – firm performance relationship, while firm level innovativeness continues to have a small mediating effect on performance. Internal product management capabilities, defined as market and technical integration are shown to negatively moderate the external product management capability - firm performance relationship.

Theoretical implications include establishing a link between boundary theory and the resource based view of the firm. Practical implications include the strong relationship between external spanning capabilities and firm performance and the dampening effect of cross-functional integration on firm performance. This empirical link between product management boundary spanning practices and how firms ultimately perform could assist practitioners in allocating resources and managing the relationship between the marketing and technological factions of the organization. Most importantly this research establishes the hereto untested link between product management capability and firm performance.