“I propose that organizations can become more market oriented by identifying and building the special capabilities that set market-driven organizations apart.” (Day, 1994)

Day suggests that firms require Market Orientation in order to develop the Comparative Advantage. Market Orientation, according to Day, is defined as the ability to meet the needs of the customer, essentially become the voice of the customer. Likewise, Comparative Advantage is defined as the ability of the firm to produce at lower costs than anyone else, thus maximizing profits. Day’s suggestion that a firm must look inward to develop a unique capability set one that cannot easily be copied in order to become market orientated. Day defines the capabilities as various tangible aspects of a firm including personal, equipment, knowledge, skills, etc. If a firm supports an organizational structure that can improve its process of developing capabilities said firm will be able to achieve a comparative advantage.

On the other end, Teece et al suggests that firms need to develop greater agility through capabilities to not only weather a changing landscape but to adequately respond. Here the authors look at capabilities in a more outward sense in that it relates to the “slack” (Teece, Peteraf, & Leih, 2016) organizations can build up through various means including finical, technology, or skill sets. By developing up these capabilities’ firms can be more dynamic and have better market opportunities especially based on changes.

Both Day and Teece seem to be looking at the notions of process and outcomes particularly around innovation. Both are essentially describing how originations can be centered around capabilities which can be developed and used to essentially become dominate within a market. Where they differ is how the define what is more internal facing and what is more external facing; for Day it seems the process is more internal in that a firm needs to develop unique capabilities that cannot be easily copied while the outcome is more external in that a firm will become more market oriented and better represent the customer. Teece et al on the other hand sees the process as an external factor where organizations need to develop more agility, “slack”, and the outcome as more internal in that the firm will be better able to respond to a changing environment. Extending this concept, one could argue that Teece et a supports a more reactive business model; it’s unclear if Day seeks a purely proactive business model rather Day seems to promote the notion that a firm should firmly position themselves in the market based on the unique capabilities that the firm has developed and are hard to copy.

Teece would support Day in his statement “I propose that organizations can become more market oriented by identifying and building the special capabilities” (Day, 1994); however would reject the assertion that such capabilities would set a organization apart. For Teece et al the market is untamable and an organization can only develop capabilities to become agile enough to withstand the shifting dynamics; by doing this the organization becomes more market oriented. Teece et al would suggest that the market advances based on societal changes and it should not be the responsibility of the firm to predict or head off the change but rather develop enough capabilities within the organization and its resources to build up enough slack to respond to the change as it occurs.

Looking at the micro level of a firm; under the Teece et al argument a firm would probably seek more incremental innovations where they could adjust based on the external market factors. Under Day the same firm would probably seek more radical innovation after the firm has secured enough capabilities to ensure it difficult for any other firms to follow.

Day, G. S. (1994). The Capabilities of Market-Driven Organizations. Joumal of Marketing, 37–52.

Teece, D., Peteraf, M., & Leih, S. (2016). Dynamic Capabilities and Organizational Agility: RISK, UNCERTAINTY, AND STRATEGY IN THE INNOVATION ECONOMY. CALIFORNIA MANAGEMENT REVIEW, 13–35.