Sarah Hummel, European Institute of Management, Valletta VLT 1427 Malta
DOI:10.2440/018-0002
How Tariff Changes Moderate the Impact of Dynamic Capabilities on Market Performance
The purpose of this quantitative study is to examine the influence of two dynamic ca-pabilities—global mindset (Torkelli et al., 2018) and market orientation (Butkouskaya et al., 2024) — on market performance (Torkelli et al., 2018) of multinational enterpri-ses, with the perceived impact of tariff changes serving as a moderating variable.
Underpinned by the Dynamic Capability Theory (Teece et al., 1997), which conceptu-alises how decision-makers sense, seize, and transform organisational resources to ad-apt to changing environments (Baishya et al., 2025), studies have shown that market orientation influences the market performance of SMEs (Butkouskaya et al., 2024). The study of Torkelli et al. (2018) finds that a global mindset predicts international performance.
Tariff modifications hold substantial importance due to their direct influence on inter-national trade dynamics and economic interrelations (Handley & Limão, 2017). By adjusting tariffs, governments can affect the pricing of imported and exported commo-dities, thereby inducing changes in consumer behavior and production pat-
terns (Amiti et al., 2019). Academic literature robustly supports the view
that tariff modifications are of substantial importance due to their direct and
indirect effects on international trade, economic relationships, and the stra-
tegic operations of global companies, particularly through their influence
on multinational supply chains (Handley et al., 2024).
This study addresses a knowledge gap by formulating the hypothesis that
the market performance of multinational enterprises is influenced by their
global mindset and market orientation capabilities, with the effectiveness
of these capabilities moderated by environmental conditions, including ta-
riff-related pressures (Fajgelbaum et al., 2020). This study employs a quan-
titative research approach to examine the relationship between the influ-
ence of market orientation and global mindset as independent variables and international performance as the dependent variable, with the perceived impact of ta-riff changes as a moderating construct. A survey-based design is employed to collect standardized responses, enabling statistical analysis based on prior work by Wilden et al. (2013). By applying Structural Equation Modeling (SEM) and the bootstrapping method, this study aims to analyse complex and partially unknown elements. Data will be collected through an electronic survey that incorporates validated scales from exis-ting questionnaires. Each item reflects the perceived impact of the early-2025 U.S. ta-riff increases announced by the Trump administration, accompanied by supporting peer-reviewed sources. This analytical method is chosen for its ability to identify sta-tistical relationships between variables, providing insights into the perceived impact that tariff changes have on the two dynamic capabilities —global mindset and market orientation —on influencing international performance. By adopting correlational ana-lysis, this study provides meaningful findings that can inform both academic research and industry practices in multinational enterprises.
This research makes an original contribution by providing an enhanced understanding of dynamic capabilities and offering novel empirical evidence that supports the theo-retical frameworks proposed by Butkouskaya et al. (2024) and Torkelli et al. (2018). Theoretical insights into novel regulatory changes and their impact on MNEs will be provided. The study’s practical implications are particularly relevant for decision-makers operating in multinational enterprises, providing novel insights that support the importance of fostering a global mindset and market orientation to navigate tariff changes and enhance market perfor-mance. The results may provide mana-gerial guidance on adaptability to fluctu-ating tariffs, which includes reconfigu-ring supply chains, adjusting pricing strategies, and renegotiating supplier contracts to mitigate potential impacts, enhance strategic flexibility and risk ma-nagement, improve contingency plan-ning, and maintain competitive positio-ning in the market.