LAUSR

Abstract In today's fast-changing digital world, it is more important than ever before to understand the drivers of a firm's continuous change and renewal. Although concepts such as dynamic capabilities help to address this challenge, managerial instructions for achieving a sustainable competitiveness do not often reach beyond the surface. Therefore some researchers suggest investigating the sensing capability, or the capability to recognize market opportunities and threats, which is one dimension of the dynamic capabilities. In this paper, we derive the key market knowledge sourcing determinants of the sensing capability of industrial firms in general, and under high, medium, and low levels of market dynamism and link them to revenue growth. Our results provide industrial (marketing) managers new insights on how to effectively use various sources of market knowledge to sense market opportunities and threats. We use second respondent-validated survey data from top managers at 483 internationally operating industrial firms to test hypotheses and complement it with objective revenue growth data. Surprisingly, while competitor sourcing negatively affects sensing capabilities under low and medium dynamic markets, research institution sourcing positively affects it, particularly under high dynamic markets.