Route-to-Market Capability, Marketing Execution, and Organizational Performance in FMCG Distribution: The Moderating Role of Competitive Intensity

INKUBIS: Jurnal Ekonomi dan Bisnis Volume 8, Issue 1, 473-485 e_ISSN: 2775-3913 https://inkubis.polteksci.ac.id/index.php/ink/index DOI: doi.org/10.59261/inkubis.v8i1.214 Route-to-Market Capability, Marketing Execution, and Organizational Performance in FMCG Distribution: The Moderating Role of Competitive Intensity *Hartono Tjong1 Murpin Josua Sembiring2 David Sukardi Kodrat3 Universitas Ciputra Surabaya, Indonesia Universitas Ciputra Surabaya, Indonesia Universitas Ciputra Surabaya, Indonesia *Corresponding author: Hartono Tjong, Universitas Ciputra Surabaya, Indonesia 🖂 Article Info: Article history: Received: April 02, 2026 Revised: May 06, 2026 Accepted: May 07, 2026 Abstract Background: FMCG distributors in emerging markets must adapt their route-to-market (RTM) strategies to market changes; however, this adaptation often compromises operational consistency, which is crucial for maintaining sales performance and outlet loyalty. This creates a dilemma between flexibility and stability that has not yet been fully addressed within the distribution capability framework. Objective: This study investigates RTM capability as a higher-order organizational construct comprising five integrated first-order Keywords: dimensions and examines how this capability drives organizational route-to-market capability; performance through marketing execution quality, conditioned by marketing execution; competitive intensity. organizational performance; Methods: This study employed PLS-SEM using data collected from 300 competitive intensity; FMCG employees of Indonesian FMCG distribution companies. distribution; dynamic capabilities Results: The findings reveal that RTM capability significantly and positively influences marketing execution, which, in turn, significantly enhances organizational performance (p < 0.001). Marketing execution partially mediates the RTM–performance relationship (VAF = 42.2%), while competitive intensity moderates the RTM–execution relationship, amplifying execution returns under conditions of highly competitive rivalry. Conclusion: This study advances the Resource-Based View (RBV) and Dynamic Capabilities Theory by specifying the execution mechanism through which distributor-level capability generates organizational performance and by identifying competitive intensity as a boundary condition governing this mechanism. To cite this article: Hartono, T., Sembiring, M. J., & Kodrat, D. S. (2026). Route-to-market capability, marketing execution, and organizational performance in FMCG distribution: The moderating role of competitive intensity. INKUBIS: Jurnal Ekonomi dan Bisnis, 8(1), 473–485. https://doi.org/10.59261/inkubis.v8i1.214 INTRODUCTION Organizations operating in rapidly changing markets must continually adapt to survive. However, overly frequent changes can lead to operational instability and inconsistent customer service (Eisenhardt & Martin, 2017; Teece, 2016). This situation is particularly relevant to FMCG distributors. On the one hand, they must quickly adapt to market changes; on the other hand, they must maintain operational routine and stability. All of this is crucial for maintaining outlet trust and stable sales. Therefore, a crucial question arises: how do distributors maintain stability in the face of change. Existing research has attempted to explain how organizations cope with change, but the results remain incomplete. Dynamic Capabilities Theory emphasizes that organizations must be flexible and respond quickly to change (Teece et al., 1997). However, this theory primarily focuses 473 | INKUBIS: Jurnal Ekonomi dan Bisnis Hartono Tjong, Murpin Josua Sembiring, David Sukardi Kodrat Route-to-Market ... on conceptual explanations and does not clearly describe how such flexibility is implemented in daily operational activities. Indonesia’s FMCG distribution sector is particularly interesting because it has unique characteristics that have not been widely discussed in theory. First, the role of FMCG distributors in Indonesia is highly complex. They must serve thousands of outlets with varying conditions, communicate with multiple principals simultaneously, and operate across large and geographically diverse areas. Approximately 3.7 million Indonesian small businesses depend on wholesalers for their goods (Sheth, 2011). Consequently, distributors must be capable of managing multiple tasks simultaneously, including field team supervision, warehouse inventory management, delivery route management, and timely delivery. All of these activities require precise coordination and specialized capabilities. Second, the performance of distributors can vary significantly despite similarities in the business environment. Some distributors achieve high sales, broad outlet coverage, and superior execution, while others perform only moderately (Cavusgil et al., 2014). Yet, they may operate with the same principals, products, and territories. This suggests that these differences are not merely the result of centralized strategy, but rather reflect each distributor’s ability to execute its operations effectively. Unfortunately, this issue has rarely been discussed in prior research, as most studies focus on large manufacturers or producers. Third, market conditions in Indonesia also present unique challenges. The country’s vast geography, uneven infrastructure, prevalence of informal outlets, and highly price-sensitive consumers create a highly competitive environment. As a result, competition occurs not only at the macro level, but also at the grassroots level, where distributors compete to secure small outlets across different regions (Sheth, 2011). Therefore, competition is perceived as more immediate and intense. This makes the relationship between field execution and organizational performance even more critical; however, it has not been widely examined in depth. In short, FMCG distribution in Indonesia demonstrates that business success depends not only on grand strategies, but also on how those strategies are implemented in the field under complex conditions. There are three important issues that remain underexplored in previous research, which motivated this study. First, although considerable research has examined marketing capabilities in manufacturing companies Day (1994) and Vorhies (2005) few studies have comprehensively addressed route-to-market (RTM) capability at the distributor level as a holistic organizational capability. To date, RTM research has primarily focused on the manufacturer’s perspective Anderson (2002) and Frazier (1999), resulting in distributors often being viewed merely as “intermediaries” rather than as entities possessing strategic capabilities of their own. Second, there is still limited clarity regarding how organizational capabilities are translated into market performance within the distribution context. Marketing execution is often viewed as the link between strategy and outcomes Noble (1999) and Morgan (2 (...truncated)