The Impact of Business Sophistication on Marketing Knowledge

The Impact of Business Sophistication on Marketing Knowledge

Francisco Xavier Pedro, Ricardo Gouveia Rodrigues
DOI: 10.4018/978-1-7998-9194-9.ch007
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This study aims to analyze the impact of business sophistication on marketing knowledge. The research combines bibliometric literature review, preferred reporting items for systematic and meta-analyses (PRISMA), and empirical approach to collect extensive sample data GII (Global Innovation Index) of 50 countries' business sophistication technologic input-output framework. Furthermore, the research uses multiple linear regression analysis to test the proposed hypotheses. Business sophistication impacts positively on marketing knowledge. However, each technological input pillar behaves differently. This study derives managerial strategies and policies from marketing knowledge.
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This research aims to analyze and describe the impact of business sophistication on marketing knowledge. Several revolutions have happened in the past. As a result, the Information Technology (IT) Industry is multiplying and transforming the business standards of tomorrow. First industrial revolution (1.0, 1700) drove steam engines' discovery to optimize the industry's production process. The second industrial revolution (2.0, 1800) was the precursor of electricity for mass production. Third industrial revolution (3.0, 1900) was the hallmark of the use of Information and Communication Technology (ICT), the internet, and electronic elements that automated production processes; Fourth industrial revolution - better known as 4.0 (intelligence – digital transformation) - is the junction of technologies, speed and intelligence.

IT industry has already gained much traction at the global level shifting towards the fourth industrial revolution (4.0) by adhering to cutting-edge technologies through digital enterprise transformation. The fourth industrial revolution (4.0) on digitizing all its processes allows the interaction between physical and digital systems, thereby achieving real-time information for making timely decisions (Riola, J.M. et al. 2020). The Fourth industrial revolution involves several changes in the workforce's key features. The fourth revolution catalyzes welfare, socio-economic changes, cross-sector boundaries (e.g., water service, health, business), and new business models that will influence job marketing knowledge. With the fourth industrial revolution, the marketing strategies of companies are disruptive when the world manages the pandemic crisis of COVID-19. Digital technologies have dramatically changed the business sophistication and, as a consequence, there is an urgent need to redefine the impact of business sophistication on marketing knowledge for Disruptive Innovation and Emerging Technologies for Business Excellence in the Service Sector. In addition, companies experience significant managerial transformations. The digital enterprise transformation needs to plan and produce disruptive innovations for traditional business management tools and challenge integrating the marketing knowledge of companies' management processes and strategies.

Kirikkaleli and Ozun (2019) explore the linkages between business sophistication and macroeconomic stability within OECD countries. If policymakers intend to accelerate business sophistication, then their attention should be directed towards maximizing the economic indicators in the long run. Zhou and Li (2012) examine how the existing knowledge base interacts with external and internal market knowledge to affect radical innovation. Business sophistication and knowledge marketing are a matter of concern for business excellence in the service sector because business sophistication support competitiveness in order for it to reach the advanced level requirements needed for global competitiveness. Business sophistication and innovation have bilateral impacts as they are seen as central pillars of competitiveness, especially if an economy is innovation-driven (Kirikkaleli & Ozuna, 2019, p. 352). However, there is no relationship between business sophistication and marketing knowledge in the service sector in these studies. Therefore, what is the impact of business sophistication on marketing knowledge in the service sector? According to Global Innovation Index (GII) framework, we assume that the proxy for business sophistication is knowledge, innovation linkages and knowledge absorption, and these variables in a broad pillar that we designate as input - Digital Enterprise Transformation - in the institutional environment, human resources and research, infrastructures to support the business environment. Business sophistication refers to the market through access to credit, investment, competition and market scale. Furthermore, we assume as a proxy for knowledge marketing the outputs of the GII framework, namely welfare - measured by the number of goods and services produced. Thus, when referring to marketing knowledge, within the framework of the GII, we assume as a proxy knowledge and technology outputs - therefore knowledge creation, knowledge impact and knowledge diffusion; when referring to the dimension of creative outputs, that is, goods and services such as in health, we assume intangible assets, creative goods and services and online creativity (see figure 12; table 7 and 8).

Key Terms in this Chapter

Global Innovation Index: The Global Innovation Index (GII) is a set of innovation determinants (inputs) and outputs , collects annual datasets and proposes a global ranking for countries based on their capacity to innovate (Hamidi, S, & Berrado, A., 2018 AU107: The in-text citation "Berrado, A., 2018" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. ). Connell University, INSEAD and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations) co-publish the GII (Dutta and Lanvin 2013 AU108: The in-text citation "Dutta and Lanvin 2013" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. ; Sohn, SY et al., 2016 AU109: The citation "Sohn, SY et al., 2016" matches multiple references. Please add letters (e.g. "Smith 2000a"), or additional authors to the citation, to uniquely match references and citations. ).

Business Sophistication: Is an innovation and greater sophistication production processes. Empirical analysis of macroeconomic performance stated that OECD countries with a higher capacity for innovation and greater sophistication production processes tend to be less inefficient. Furthermore, non-parametric methods for evaluating the impact of process and contextual variables on efficiency also confirmed that business sophistication and innovation contribute to efficiency improvements across OECD countries ( Salas-Velasco, 2018 , p.60).

World Intellectual Property Organization: WIPO is a specialized agency of the United Nations that co-publish the GII.

Digitization: Is transforming analog data into digital data. For example, taxpayers can enter their data online and from anywhere, and after the input confirmation, the online form automatically forwarded to the responsible tax office.

Educational Institution: Is where school ages attend education, providing a wide variety of teaching and learning process.

Fourth Industrial Revolution (4.0): Digitizing all enterprise processes allows interaction between physical and digital systems, thereby achieving real-time information for making timely decisions.

Knowledge Creation: Is the pillar that reflects the degree to which a country can develop and apply knowledge to increase the components of added value in products and services and, in general, to an economy driven by innovation.

Marketing Knowledge: The importance of marketing knowledge management is integrating internal and external knowledge into the product/service innovation process. Therefore, they analyze marketing departments' role in accessing internal and external knowledge resources (i.e., marketing-specific relational capital [RC]) to reach improved product and service innovation performance. Their study makes a valuable contribution to marketing and management literature by revealing the types of social interactions in the marketing function that enable access to knowledge sources that promote successful product/service innovation (Peòalba-Aguirrezabalaga et al., 2021 AU110: The in-text citation "Peòalba-Aguirrezabalaga et al., 2021" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. , p.1).

Digitalization: Derives from the Latin word digitus , which means categorized, integer, countable and discrete in value and time.

Digital Transformation: Is the adoption of new digital technologies to capture change in the performance of an organization with a focus on disruptive technologies.

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