In a review of the state of knowledge at the marketing/entrepreneurship interface, Muzyka and Hills (1993) posed the following question: “Just how well do existing marketing models and the traditional marketing paradigm fit the environment, behavior, and processes found in entrepreneurial organizations?” This is a particularly important issue to consider given that small firm practices have historically been assessed in the context of existing marketing models: models based on large firm practices. Perhaps not surprisingly, small firm marketing practices have generally been criticized as non-traditional, informal, short-term, and non-strategic. However, given that the marketing discipline is undergoing a transformation with new paradigms of thought emerging (for example, relationship marketing), is it now appropriate to assess small firm practices in the context of a broader, more contemporary perspective. This research examines the relevance of the traditional marketing paradigm to smaller firms, in terms of market planning, the type of marketing practiced, and the use of performance measures. Smaller firm practices are compared with those of larger firms in the context of a framework that integrates both the transactional and relational schools of marketing thought. Thus, both traditional and emerging paradigms are considered. Three hypotheses are examined using a self-administered survey designed to collect quantitative and qualitative data pertaining to the firm's various marketing practices and processes. The sample consists of 302 firms reflecting two similar sub-samples of managers attending part-time executive programs in New Zealand n = 192 , and Canada n = 110 . These managers represent firms of varying size, age, growth rate, use of technology, and industry sector. Analysis was controlled for each of these variables, with firm size being the primary unit of analysis. The results show that in certain areas, marketing practices differ between smaller and larger firms. For example, size-related differences are reflected in the approach to market planning, where smaller firms are found to be more informal than larger firms. Smaller firms also use fewer ways to measure market performance than larger firms. At the same time, the findings also indicate that small firm marketing practices are similar to those of larger firms in many ways, with both transactional and relational marketing relevant across firm size. For example, similarities can be identified in the intent of marketing decisions, the expected duration of customer relationships, the nature of customer contact, and where firms invest marketing resources. The results show that both types of firms practice aspects of the traditional transaction view of marketing, and also emphasize the development and management of personal relationships with individual customers, and efforts to position the firm in a net of various market relationships. These latter practices reflect the more contemporary relational marketing paradigm. Overall, this study enriches our understanding of marketing practices by viewing them in the context of a contemporary framework. By taking a more modern and integrated view of marketing, the study also provides greater realism to our appreciation of issues at the marketing/entrepreneurship interface. On one hand, it confirms that the traditional models related to market planning and performance measurement are not fully evidenced in the practices of smaller firms. These results clearly support the mainstream entrepreneurship literature. On the other hand, the study also shows aspects of the traditional paradigm do fit the environment, behaviors, and processes found in entrepreneurial organizations. More importantly however, the findings show that to understand and assess small firm practices, we must move beyond the traditional marketing paradigm to appreciate a broader, more modern perspective. In doing so, we find evidence that the types of marketing practiced by smaller and larger firms are not, in fact, fundamentally different. In terms of practical implications for managers of smaller firms, investment (time, personal effort, and financial resources) should be placed in both individual relationships and the development of the firm's position in a network of firms. As the firm grows, this understanding of relational marketing will serve the firm well, given managers in larger firms report a perceived need to improve their skills in this area. The traditional view of marketing is also relevant to smaller firms. By learning how to competently manage the areas of product, price, promotion, and distribution in a manner appropriate to the smaller firm, the organization can develop a base on which to develop customer relationships, and also the capacity to compete as a larger organization. With regards to planning and performance measurement, a number of implications can also be drawn. For example, smaller firms are more informal than larger firms in terms of their market planning. As managers in these firms seem to want to improve their planning processes, it might be suggested that this in fact be done. However, since this study does not link planning to market performance, it is inappropriate to suggest that smaller firms should become more formal, as their informality may well be an inherent characteristic of an entrepreneurial organization (and not necessarily a weakness). In terms of performance measurement, the results of the study show that smaller firms tend to rely primarily on financial indicators. Thus, managers should be aware of the risk of being myopic and seek to capitalize on their close market contact by better use of customer feedback. They might also learn from the more holistic approach taken by larger firms. Managers should, however, question the relevance of market performance measures in the context of their specific firm and it's environment and not simply adopt formal large firm tools without due consideration.
Journal of Business Venturing – Elsevier
Published: Sep 1, 2000
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