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Analysis on Impact of Marketing Dynamic Capabilities Against the

Value of Stakeholders
------A Case Study Based on Huawei1
XU Hui, LI Wen
Nankai University, Tianjin, 300071
susan_xuhui@126.com

Abstract: Marketing dynamic capabilities is not only the organizational resources to obtain and
maintain competitive advantage when the enterprises faced turbulent environment, but also an
important foundation for value creation, and thus has a positive impact on the value network of
stakeholders. In this study, based on the marketing dynamic capabilities theory and value of stakeholder
theory, the paper uses single case study approach, takes Chinese company Huawei as the study object,
and the main line of the study is the relation between value creation and marketing dynamic capabilities
which embed in core business processes-product development management, supply chain management
and customer relationship management. From the perspective of the three management processes, the
paper identify the value creation characteristics, which is helpful for exploring the marketing dynamic
capabilities impact against stakeholders value.
Keywords: Marketing Dynamic Capabilities, Value Creation, Stakeholders, Value Network

1 Introduction

Nowadays, with the rapid development of Economic globalization and technology, the business
environment has become increasingly complex and dynamic, and is full of uncertainty change
(Bengtssonm, Kock, 2000), just in 2008, a large number of business losses or even bankruptcy during
the global financial crisis, which allows businesses have become increasingly concerned about the
impact of environmental change on business. However, during the period of this crisis, Chinese
company Huawei adverse economic growth: 46% growth in 2008, and its business in the United States
increased by nearly 60% in 2009. What kind of enterprises capability makes Huawei still pull through
in the face of such turbulent environment? What corporate governance objectives make Huawei bucked
the trend? The answers to these issues are not only the businesses want to know, but also attract more
and more academic attentions.
Stakeholders value maximization has become corporate governance objectives in modern enterprises
management. In the new economic age with the characteristics of highly developed information and
network technology, how to gain competitive advantage though relevant stakeholders and the network
of stakeholders value has attracted close attention of the academic community (GAO Jing, Guan Tao,
Wang Yalin 2007), and the dynamic capabilities which driving the value creation has become a hot in
the strategic research areas (Bie Xiaozhu, Hou Guangming 2005). In strategic management theories, the
core of corporate governance is to train and to establish their own competitive advantage. The network
of stakeholders value has increasingly become an effective mode of operation under dynamic
competitive environment (Niu Xiaohua 2005). Many scholars have proposed the concept of marketing
dynamic capabilities which explains how to use the dynamic capability to gain competitive advantage
for corporate from a marketing point of view. This study takes Huawei for case study, based on value
creation and value of network theory to discuss how marketing dynamic capabilities effects the

1
[Fund]: Supported by National Natural Science Foundation Project " China's international marketing dynamic
capabilities under risk environment: theoretical models, mechanism building and the impact of marketing dynamic
capabilities against the performance " (71072100)

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stakeholders value network, and attempts to identify the interlinkages and path between marketing
dynamic capability and business stakeholders, with a wish to be useful for dynamic capabilities theory,
stakeholder theory and corporate governance practices.

2 Relevant Theories and Literature Review

2.1 Marketing Dynamic Capabilities

The concept of dynamic capabilities of marketing is arising from strategic management theory.
Dynamic capabilities theory provides an new interpretation of how to gain competitive advantage for
companies in the fast-changing environment. (Teece et al, 1997; Winter, 2003). In order to further
expand the dynamic capabilities theory in practical applications, many scholars proposed concept of
marketing dynamic capabilities by combining the marketing concept into dynamic capabilities. For
example, Daniele Severi Bruni et al (2009) believes that marketing dynamic capabilities are different
from general marketing capabilities, which involves the market knowledge and marketing resources
creation, use and integration in order to match the changes of the market and technology. Teece et al.
(1997) believe that the dynamic capabilities are made up of the process, location and path. Among them,
the process is the most basic part, the Fang and Zou (2009) believes that the three types of
inter-departmental business processes - product R&D management, customer relationship management
and supply chain management, are key elements of marketing dynamic capabilities, the measurements
for marketing dynamic capabilities are also based on these three inter-departmental business processes.
Therefore, the paper agrees with the Fang and Zou (2009), believes that marketing dynamic capabilities
are embedded in the business management processes, have an impact on business value creation
through three processes: they are customer relationship management process, product R&D
management process and supply chain management process.

2.2 Stakeholder Theory & Value Network Theory

Stakeholder theory is arising from a group's research in Stanford University in 1963, the research team
first defined the concept of stakeholders: stakeholders are such a number of groups, without their
support, the organization can not survive; they have impact on business and are also influenced by the
corporate. the. In addition, economists Ansoff believes that "to develop the desired business goals,
enterprises must consider the overall balance amang the many stakeholders with conflicting claims,
they may include managers, workers, shareholders, suppliers and customers." (Ansoff, 1965).
After entering the 1980s, with the development of economic globalization and increasingly fierce
competition among enterprises, stakeholder theory was gradually accepted by Western companies, and
is increasingly becoming one of the goals of corporate governance. Companies are in a variety of
stakeholder relations intertwined networks (Ludong Bin, Li Wenbin 2005), a network of stakeholders,
the company's survival and development no longer depends solely on the company's own corporate
governance, more importantly, depends on the composition of stakeholders by the company's value
network relationships (Li Yuan, Liu Yi, 2001). Value of the network by including companies, suppliers,
customers, who complement each other, competitors and other stakeholders to generate the value of the
composition, distribution, transfer and use of relationships and structures. (Brandenburger, Nalebuff,
1996), the value network is a core customer value creation system (Jiang plot Sea, 2009). For the
enterprises, the ability to create value-driven network of stakeholders has a crucial role in the marketing
dynamic capabilities of to achieve the objectives of the corporate governance.
In addition, the value activities are the linkages of the value network (Fangrun Sheng, Li Yuan 2002),
stakeholders get the value from the value network through different value activities. The enterprise
creates value involves value activities through business process. The most important issue for
enterprises to build competitive advantage is clearly identifying their value activities, and continues to
enhance the capabilities of value creation through value activities (Zhou Xuan 2005). Dynamic
capabilities can help companies break the shackles of the value chain, and build up value network to

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create more value (Li Yuan, Liu Yi, 2001). Marketing dynamic capabilities quickly respond to changes
in customer demand through a series of business processes, providing customized value chain and value
combinations, the implementation of value creation across the value network, which have a positive
impact on the value network.

3 Framework for the Case Study

Based on the above theoretical analysis, we found that the researches on the stakeholder and value
network theory have been quite full, but it is still rare for the research which combined the dynamic
capabilities with value creation mechanisms of stakeholders value network from a marketing point of
view. Based on the concept of marketing dynamic capabilities, the paper uses case study method to
discuss how marketing dynamic capabilities which embedded in the three main business processes to
value creation, and marketing dynamic capabilities impacts on stakeholder value networks. Based on
this, the research design framework is as followed (Figure 1):

Marketing Dynamic
Capabilities
Stakeholders Value
Customer Relationship
Management Value Costumer Value

Supply Chain Creation Shareholder Value

Management
Supplier Value
Product R&D
Staff Value
Management

Figure 1 The Analysis Framework of This Study

4 Case Selection and Data Coding

4.1 Case Background

Huawei Technologies Co., Ltd. was established in 1988, is headquartered in Shenzhen,
employee-owned private technology companies, and mainly engaged in development, production,
marketing and services of communication network technology and product. It is one of the major
supplier for Chinese telecom industry, has successfully entered the global telecommunications market,
providing products and business solutions for the world's professional telecom operators in the field of
optical telecommunications network, fixed network, mobile network and value-added network.
Huawei's products and solutions are successfully used in over 100 countries, and it services for 45
telecom operators around the world and 1/3 of the worlds population, has become the top 20th
enterprise in the worlds telecom industry. During the severe global financial crisis in 2008, there is a
considerable part of the decline in business orders, a lot of companies lose. But Huawei still achieved
rapid growth, the contract sales reach $ 23.3 billion, which was up 46% over the previous year, and
75% of sales revenue from overseas markets. In 2009, Huaweis business in the U.S. increased by 60%.

4.2 Data Sources and Coding

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In this paper, we collected both first hand data and second-hand data for analysis. First-hand
information mainly comes from interviews, we have interviewed 10 employees working in Huawei, and
sorted out the interview materials from the perspective of understanding of Huawei's internal
management process and how the process affects corporate value creation and stakeholder value
network. Second-hand data are 5 publications, 150 journal articles and more than 400 news reports
related Huawei. Based on this data, we indirectly observe Huawei's and sort out process of management
and process to build marketing dynamic capabilities.
In the data processing, this paper uses data coding and classification methods for the analysis and
collation the relevant information, the aim is to extract subjects from a large number of qualitative data,
in order to explain the research questions. We classified and coded data in accordance with the main
concepts of the framework (see Table 1).

Table 1 Qualitative Data Classification Code Table

Product R&D management process supply chain management process customer relationship management
P S processes C
Needs identified P1 Supplier selection activities S1 Customer identification C1
New Product Design P2 Logistics Management S2 Learning knowledge and
Functional / sectoral relationship Volume manufacturing S3 application of products use C2
management P3 Order management S4 Development / implementation of
Contact with external organizations Channel management S5 marketing plans C3
P4 Customer service management S6 Customer contact C4
Coordination of product design P5 Enhance customer trust and
loyalty C5

Source: Rajendra K.Srivastava, Tasadduq A.Shervani, Liam Fahey. Marketing, Business Processes and Shareholder
Value: An Organizationally Embedded View of Marketing Activities and the Discipline of Marketing. Journal of
Marketing.1999 (63):168-179

5 Case Studies and Findings

As mentioned earlier, on one hand, marketing dynamic capabilities is important for enterprises to
develop competitive advantages under volatile environment; on the other hand, marketing dynamic
capabilities have impacts on value creation and thus affect the entire value network through the main
business processes. Based on this, this paper explains how the marketing dynamic capabilities influence
the stakeholders value network by analyzing the characteristics of the three management processes
(customer relationship management process, supply chain management process, product R&D
management process).

5.1 The Impact of Customer Relationship Management Processes against Stakeholders Value
Network
Customer relationship management aims to create and deliver greater customer value. Therefore,
customer relationship management has an important impact on customer value. Take Huawei for
example, through encoding the information of Huawei, we found that Huawei's customer relationship
management processes mainly have the following characteristics:

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Table 2 The Main Characteristics of Customer Relationship Management Processi

Number
customer relationship
management processes
of
entries

impact against value network Example quotations from data
Customer identification C1 20 " Huawei lives for considering customer needs."
Learning knowledge and
"A qualified staff in Huawei must have knowledge of product
application of products use 9
expertise, marketing, communication and sales skills."
C2
" create a differential advantage by building rapid response and
Development /implementation
10 service system for global customers demand, combined with
of marketing plans C3
marketing advice and free equipment upgrades "
"Huawei has established the communication system for each product
Customer contact C4 18
manager to maintain customer contact at least five times a week."

"Huawei must be customer value oriented, regards customer

Improving customer trust and
15 satisfaction as the standard, all of the evaluations of acts are on the
loyalty C5
basis of customer satisfaction."

Through the above data analysis, we found that numberC1\C4\C5 are the top 3 characteristics of
Huawei's customer relationship management processes, which have impacts on value creation and
stakeholders value network as follows:

Table 3 The Impact of Customer Relationship Management Processes against Value Network
Number
customer relationship of
Value creation impact against value network
management processes entries

Customer identification C1 20 Expanding the market Increase shareholder value

Enhance customer
Customer contact C4 18 Increase customer value
satisfaction

Improving customer trust and Maintain long-term Increase shareholder value, employee
15
loyalty C5 customer relationships value

Based on Huaweis data analysis, we found that the impact of customer relationship management
processes against stakeholders value network mainly in: (1) Customer identification allows Huawei to
further explore the potential customers, expanding the market, better market share and improved
performance, thereby increasing the shareholder value. (2) Through contacting with customers, Huawei
can better understand and better meet customer needs, which enhance customer satisfaction, thereby
increasing the customer value. (3) Improving customer trust and loyalty allows customers to purchase
and maintain long-term customer relationships, which bringing in long-term performance, thus ensuring
the value of both shareholders and employees. In short, Huawei's customer relationship management
had a positive impact on customer value, shareholder value, employee value through customer
identification, customer contact, improving customer trust and loyalty.

5.2 TheImpact of Supply Chain Management Process against Stakeholders Value Network

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Just like the same ways of analyzing the impact of customer relationship management processes against
stakeholders value network, we found that numberS3\S4\S6 are the top 3 characteristics of Huawei's
supply chain management processes, which have impacts on value creation and stakeholders value
network as follows:

Table 4 The Impact of Supply Chain Management Process against Value Network
Number
supply chain management of
Value creation impact against value network
processes entries

Increase customer value, supplier

Order management S4 20 Improve efficiency
value
Customer service management Enhance customer
19 Increase customer value
S6 satisfaction
Reduce production Increase shareholder value and
Bulk manufacturing S3 15
cost employee value

Based on Huaweis data analysis, we found that the impact of supply chain management processes
against stakeholders value network mainly in: (1) order management makes supply chain management
efficiency, enhance supplier value, at the same time, the customer order processing acceleration also
reduces customers waiting time, thus enhance customer value; (2) Customer service management,
making the further maintenance of customer relationships including suppliers relationships, thus
enhance customer value; (3) Bulk manufacturing further reduced production costs, improved profit
margins, thus ensures the shareholder value and employee value. In short, Huawei's supply chain
management had a positive impact on suppliers value, customer value, shareholder value and employee
value through order management, customer service management, high-volume manufacturing.

5.3 The Impact of Product R&D Management Process against Stakeholders Value Network
Based on the data analysis, we found that numberP1\P2\P5 are the top 3 characteristics of Huawei's
product R&D management process, which have impacts on value creation and stakeholders value
network as follows:

Table 5 The Impact of Product R&D Management Process against Value Network
Number
product R&D management of
Value creation impact against value network
processes entries

Needs identified P1
Design new product P2
Coordinating product design
activities P5
Faster respond to
21 Increase shareholder value
market
19 Meet customers needs Increase customer value
Improve coordinate
15 Increase employee value
capabilities

Based on Huaweis data analysis, we found that the impact of product R&D management processes
against stakeholders value network mainly in: (1) needs identification makes Huawei respond to
market changes faster, and can better identify new markets so as to enhance shareholder value; (2) the
characteristics of new product design factors makes Huawei better meet customer needs, enhance
customer satisfaction, thereby increasing customer value; (3) Coordination on product design activities
develop the capabilities of R & D personnel, promoting the cooperation between marketing personnel

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and R & D personnel, thus enhance the employee value. In short, Huawei's product R&D management
had a positive impact on customer value, shareholder value and employee value through identifying
needs, new product design and coordinating product design activities.

6 Conclusions and Limitations

6.1 Conclusion
In this paper, we analysis the impact of marketing dynamic capabilities against stakeholders value and
their value network based on marketing dynamic capabilities and stakeholders value network theory.
Through Huaweis case study, we found that marketing dynamic capabilities are not only helpful for
developing competitive advantage in the turbulent business environment, but also have a positive
impact on value creation and thus enhance the value network of enterprises stakeholders through
business management processes. By analyzing Huaweis marketing dynamic capabilities which
embedded in the main business management processes, we identified factors related to value areation:
product R&D management process contributed to corporate value creation primarily through demand
identification, new product design and coordination on product design activities; supply chain
management process has a positive impact on value network mainly through order management, batch
manufacturing and customer service management; customer relationship management process enhance
the value of stakeholders primarily through customer recognition, customer contacts and improving
customer trust and loyalty (see Figure 2).
This study combined dynamic capabilities theory and corporate governance issues, identify dynamic
capabilities embedded in business processes trait factors based on the concept of marketing dynamic
capabilities, analyzes and describes the mechanism of how the marketing dynamic capabilities influence
the value network of stakeholders by characteristics of business management processes. On one hand,
the study make the dynamic capabilities theoretical study more specific and operable, on the other hand,
we develop a new perspective on conjunction of corporate governance research and strategic
management research, which has a certain theoretical and practical significance.

Figure 2 The Impact of Marketing Dynamic Capabilities against Stakeholders Value Model Based on
Characteristics of Management Processes

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6.2 Limitations and Future Study

There are some limitations in this paper as follows: (1) Despite Huaweis success has some industry
representation in Chinese multinational enterprises, the inherent limitations of single case studies in the
research can not be avoided, further cross-case analysis is needed to dig the validity of the conclusions
(Eisenhardt, 1989); (2) there may be other characteristics of business management processes which
make Marketing dynamic capabilities effects the stakeholders value network, future studies need to
be done; (3) the validities of the research on the impact of marketing dynamic capabilities against value
network of stakeholders need to be tested by quantifying methods. In this regard, the relevant empirical
research should be the directions of the future researches.

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i
The resource of Table 2-Table 5 are all based on the data collected in this study.

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