Managers face increasing pressure to boost marketing capability, especially during economic downturns. Although prior research has examined the impact of marketing capability on firm performance, there appears no published study that has investigated the importance of firm-idiosyncratic marketing capability for financial analysts.
The analyses with a large scale longitudinal dataset support that higher marketing capability is related to stronger stock recommendations (higher levels and fewer downgrades) for the firm. Yet, this impact is nonlinear: too high marketing capability is sub-optimal and associated with weaker recommendations. In addition, marketing capability has a relatively larger impact in magnitude than financing capability.
The result also indicates that the effects of marketing capability are more pronounced in the condition of high market competition. These findings innovatively reveal the dark side of both too low and too high marketing capability. The side-by-side comparison of marketing vs. financing capability also provides a new perspective for future research to examine issues related to marketing accountability.