The marketing-entrepreneurship paradox: A frequency-domain analysis

Abstract

© 2017, Technical University of Liberec. All rights reserved. The areas of overlap between the disciplines of marketing and entrepreneurship are substantial and they provide a wide variety of opportunities for multidisciplinary research. This paper lays out multidisciplinary foundations for the formal theoretical and practical treatment of the interaction between marketing, entrepreneurship and profitability in an organization. The focus of this research is on a company’s success as a function of organizational changes and the level of acceptable risk, measured by its profitability. The contribution to the literature on the relationship between entrepreneurship and marketing is reflected in a new approach that relies on the multi-scale (i.e., frequency-dependent) approach or the so-called “spiral of success”. In addition, this paper highlights the necessity for dynamic abilities and innovative character in an organization. More broadly, it explains an important theoretical paradox that organizations always face high risk, but, in order to survive in business, they need to enter new cycles of entrepreneurial activities (innovation and diversification) that involve even more risk. The novelty of this study lies in its application of the causality tests in the frequency domain for the bivariate system in order to demonstrate the marketing-entrepreneurship paradox. This is, to the authors’ best knowledge, the first paper that uses such a methodology in marketing and entrepreneurship. The paper’s principal hypothesis is tested on a well-diversified company (Amazon.com) where it is shown that marketing drives changes in net income at both medium and long horizons, but not vice-versa. The findings and related discussions can be useful to academics and practitioners, as well as to public policy-makers.