5
CHAPTER II: REVIEW OF LITERATURE
This chapter mainly discuss about market power and its determinants. Hence, entrepreneurial orientation and social capital are considered to be main determinants for the
proposed model.
2.1. Market Power dan Competitive Advantage
The theory of competitive advantage tries to understand the position of firms or industry with aim to set strategy. The third component of competitive advantage refers to
capacity of firms to develop statements of the current strategy of each competitor Porter, 1980. Various degrees of relative bargaining power brings about efficiency, while
Informational asymmetries generate inefficiency Cabrales et al., 2011. Firms set pricing strategy through keeping prices of imitated national brands higher than the category profit
maximizing price Meza Sudhir, 2010. This strategic pricing seems to be temporary, especially during unfaltering market, when the firms has no longer capability to distort prices
away from the profit maximizing price.
Companies or firms need to dynamically set a price for their products at each stage in order to maximize its revenue Yao, Wang, Mukhopadhyay, Cong, 2012. Liozu
Hinterhuber 2012 indicates price-setting processes carry out nexus of scientific and intuitive decision-making processes. In the context of small business, managers tend to refer cost to set
price, though they take prime consideration on satisfactory profit instead of profit maximization Dunn, Kogut, Short, 2012. Hence, competitor-based pricing becomes
second alternative, while value-based pricing tends to be abandon due to poor understanding of value-based price Liozu, Hinterhuber, Boland, Perelli, 2012. Value-based pricing
requires capability to conduct formal market research over the value that customers attach to a product or a service Codini, Saccani, Sisco, 2012.
Marketing capability has been considered as a mediator variable in previous studies. The marketing capability plays a moderate role between entrepreneurial orientation and firm
performance as well as strategic orientation and firm performance Qureshi Mian, 2010: Qureshi Kratzer, 2012. Shu-Hua Wu 2006 consider that marketing capacity is
moderator variable between social capital and firm performance. Murray et al. 2011 also provide evident the mediating effect of marketing capabilities of market orientation on firm
Kategori