Necessary capabilities for firm performance: an NCA approach

Abstract

Realizing the important role of necessary conditions in business, this study employs an NCA (necessary condition analysis) to investigate the level of necessity of two conditions, marketing capability (comprising four components responsiveness to customers, to competitors, to the macro-environment, and business relationship quality), and innovativeness capability for firm performance. Regression results with a data set collected from 311 firms in Ho Chi Minh City reveal that except for responsiveness to the macro-environment, other components of marketing capability and innovativeness capability have positive effects on firm performance. NCA results indicate that these conditions exhibit different levels of necessity for the occurrence of firm performance. These findings suggest that firms should pay attention not only to the net effects (beta weights) but also the levels of necessity of firm capabilities for their target outcome.