Contextual Strategic Entrepreneurship: Perspectives on Regional Contexts, Social Elements, and Entrepreneurial Competitiveness (Contributions to Management Science) 3030860272, 9783030860271

Table of contents :
Foreword
Acknowledgements
Contents
Part I: Strategic Entrepreneurship in Geographical Contexts
An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional Contexts, Social Elements, and Entrepreneurial Competitiveness
References
Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship Phenomenon: A Bibliometric Map Approach
1 Introduction
2 Theoretical Background
3 Research Method
4 Research Results
4.1 The First Cluster: Organizational Restructuring
4.2 The Second Cluster: Organizational Capabilities Development
4.3 The Third Cluster: Business Turnaround Strategies
4.4 The Fourth Cluster: Internal Corporate Venturing
4.5 The Fifth Cluster: Entrepreneurial Leadership Development
4.6 The Sixth Cluster: Business Processes Development
4.7 The Seventh Cluster: Business Rebranding
5 Discussion
6 Conclusion
References
Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian Context
1 Introduction
2 Literature Review
2.1 Drivers of the Strategic Entrepreneurship
2.1.1 Balanced Exploration and Exploitation
2.1.2 Exhibiting Organisational Innovations
2.1.3 Ample Knowledge of the Market
2.1.4 Support from Top Leadership
2.1.5 Choice of Industrial Sectors
2.1.6 Adequate Financial and Human Capital
3 Research Methodology
3.1 Interpretive Structural Modelling (ISM)
3.2 Fuzzy MICMAC
4 Data Analysis and the Results
4.1 Identification of Barriers Related to the Adoption of Strategic Entrepreneurship
4.2 Interpretive Structural Modelling
4.2.1 Structural Self-Interaction Matrix (SSIM)
4.2.2 Initial Reachability Matrix (IRM)
4.2.3 Final Reachability Matrix (FRM)
4.2.4 Partitioning of Levels
4.2.5 The Structural Model
4.3 MICMAC Analysis
5 Discussion
6 Policy Implications and Recommendations
7 Research Limitation
8 Scope for Future Research
9 Conclusion
References
A New and Innovative GEM Composite Index Based upon the National Expert Survey: A Survey of Selected African Countries
1 Introduction
2 Literature Review
3 Common Methodological Limitations
4 The GEM Conceptual Model
5 Methodology
6 An Applied Example: The NECI Results for a Sample of African Countries
7 An Applied Example: The NECI Results for a Sample of African Countries
8 Conclusion, Future Developments and Lines of Research
References
Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos Norte, Philippines: The Role of Resource-Based View
1 Introduction
2 Resource-Based View (RBV)
3 Barangay Micro Business Enterprises (BMBEs)
3.1 The R.A. 9178, Also Known as Barangay Micro Business Enterprises (BMBEs) Act of 2002
3.2 The Barangay Micro Business Enterprises in Laoag City
3.2.1 Profile of BMBEs: Hotel Accommodation and Food Service Activities Group in Laoag City
3.2.2 SWOT Analysis of BMBE: Hotel Accommodation and Food Service Activities Group in Laoag City
Strengths
Weaknesses
Opportunities
Threats
3.2.3 Valuable, Rare, Inimitable, Organized Resources of BMBE: Hotel Accommodation and Food Service Activities Group in Laoag City
Valuable Resources
Rare
Inimitable
Organized
4 Strategies for Sustained Competitive Advantage of BMBEs in Laoag City
4.1 Financial Strategies
4.2 Marketing Strategies
4.3 Production Strategies
4.4 Human Resources Strategies
5 Conclusions
References
Part II: Strategic Entrepreneurship in Social Contexts
The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed Embeddedness Theory
1 Introduction
2 Conceptual Considerations: Intersectionality as the Missing Link?
3 Methodology
4 Results and Discussion
4.1 Migrant Entrepreneurship in Vienna
4.1.1 Integration and Marginalization as Socio-Spatial Processes
4.1.2 Locating the Shopping Streets: Simmeringer Hauptstraße and Neubaugasse
4.2 Doing Entrepreneurship: Situational and Contextual Construction of the Entrepreneurial Selves in Simmeringer Hauptstraße and Neubaugasse
4.2.1 “A Barber Shop Every Ten Meters” and the Migrant “Benefit King”
4.2.2 “Unmarking of the Gendered Entrepreneurial Self Through Social Mobility and Class Formation”
4.3 Summary of the Interviews on which the Chapter Is Based. Carried out by the Authors from May 2017 to February 2018 in HN (Neubaugasse) and HS (Simmeringer Hauptstraße)
5 Conclusion
References
Investigating the Impact of Social Network Marketing on the Bank Customers’ Profitability
1 Introduction
1.1 Objectives
2 Litrature Review
2.1 Social Network (SN)
2.2 Social Network Marketing (SNM)
2.2.1 Electronic Word-of-Mouth Marketing
2.2.2 Online Brand Communities
2.2.3 Online Advertising
2.3 Brand Loyalty
2.4 Customer Profitability (CP)
2.5 Conceptual Framework
3 Research Methods
4 Analysis of Data and Research Findings
4.1 Determine the Appropriateness of the Model
4.2 Testing Hypotheses
5 Findings
6 Discussion and Conclusion
References
Part III: Strategic Entrepreneurship in Competitive Contexts
Product Development Under Information Technological Turbulence: The Role of Marketing Communication for Competitive Advantage in Small Businesses Enterprises
1 Introduction
2 Literature Review
3 Hypothesis Development
3.1 Hypothesis 1:Marketing Communication Capability Has a Positive Impact on Sustainable Competitive Advantage
3.2 Hypothesis 2: Marketing Communication Capability Has a Positive Impact on Product Development
3.3 Hypothesis 3: Marketing Communication Capability Has a Positive Impact on Selling Capability
3.4 Hypothesis 4: Product Development Has a Positive Impact on Sustainable Competitive Advantage
3.5 Hypothesis 5: Product Development Has a Positive Impact on Selling Capability
3.6 Hypothesis 6: Selling Capability Has a Positive Impact on Sustainable Competitive Advantage
3.7 Hypothesis 7: Information Technological Turbulence Has a Moderating Impact on the Relationship Between Marketing Communication Capability and Sustainable Competitive Advantage
4 Research Method
5 Results
6 Discussion
7 Limitation
8 Conclusion
References
How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic Learning Perspective
1 Introduction
2 Literature Review
2.1 Competition and Entrepreneurial Firms
3 The Concept of Strategic Learning
4 Research Methodology
5 Empirical Findings
6 Learning Through Competitor Analysis (CA)
7 Learning Through Benchmarking
8 Learning Through Imitation
9 Learning Through Social Media
10 Discussion
11 Conclusion
12 Implications and Limitations
References
Benefits of New University-Business-Government Arrangements for the Performance of Organizations: A Triple Helix Approach
1 Introduction
2 Literature Review
2.1 Knowledge Management
2.2 University-Business-Government Collaboration
3 Institutional Changes and Strategic View to Entrepreneurship
4 Benefits and Barriers of University-Business-Government Collaboration
5 Benefits of the Relationship Between Knowledge Management and University-Business-Government Collaboration
6 Discussions
7 Conclusion
References
Index

Citation preview

Contributions to Management Science

Nezameddin Faghih Amir Forouharfar   Editors

Contextual Strategic Entrepreneurship Perspectives on Regional Contexts, Social Elements, and Entrepreneurial Competitiveness

Contributions to Management Science

More information about this series at http://www.springer.com/series/1505

Nezameddin Faghih  •  Amir Forouharfar Editors

Contextual Strategic Entrepreneurship Perspectives on Regional Contexts, Social Elements, and Entrepreneurial Competitiveness

Editors Nezameddin Faghih Cambridge, MA, USA

Amir Forouharfar Shiraz, Iran

ISSN 1431-1941     ISSN 2197-716X (electronic) Contributions to Management Science ISBN 978-3-030-86027-1    ISBN 978-3-030-86028-8 (eBook) https://doi.org/10.1007/978-3-030-86028-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

This book is dedicated to Banu Homayoun Soltan Enayat (1931), a cherished philanthropist, devoted mother, and great advocate of the traditional family business of saffron production in Estahban (Fars, Iran), the land of figs and saffron.

Foreword

The dramatic expansion of research on business creation over the past three decades reflects the recognition of its critical role in economic growth and adaptation. This has been accompanied by greater attention from policy makers seeking to facilitate business creation. They often try to improve the preparation of potential entrepreneurs and the context in which they implement new firms. Entrepreneurial success involves assessments of opportunities and developing appropriate strategies. Established businesses are more effective when they identify and plan for changes in their political, economic, and competitive contexts—the focus of strategic planning. Both emerging and established businesses are more successful when they focus on and systematically evaluate future opportunities. The major differences are in the resources and assets available for implementing a new venture. While relatively recent, research on the interface and overlap of entrepreneurial strategies and corporate future planning has drawn considerable attention from different scholarly communities. Published output continues to grow and the scope has expanded. An overview of the current status of strategic entrepreneurship research will be of service to those emphasizing this important feature of the entrepreneurial process. This overview makes an important contribution in this regard. EntrepreneurshipPaul Davidson Reynolds Steamboat Springs, CO, USA January 2021

vii

Acknowledgements

The editors would like to express their sincere gratitude to Lorraine Klimowich for her great efforts in the publication process of this book, and to all chapter authors as without their generous contributions completing this volume would not have been possible. They would also like to wholeheartedly thank those who have devoted their time, efforts, support, and generosity throughout the chapter review process: Şuay Nilhan Açıkalın, Adeleke Oladapo Banwo, Osman Bayraktar, Vincent Blok, Ebrahim Bonyadi, Alireza Bostani, Rossella Canestrino, Milenka Linneth Argote Cusi, Léo-Paul Dana, Mozhgan Danesh, Petra Dannecker, Ege Erkoçak, Veit Etzold, Elizabeth Gatewood, Diala Kabbara, Jonas Löher, Thomas S.  Lyons, Belinda Mandigma, Valentinas Navickas, Maliheh Omidvar, Maria Orero-Blat, Zahoor Ahmad Paray, Shahamak Rezaei, Domingo Ribeiro-Soriano, Leyla Sarfaraz, Lida Sarreshtehdari, Mahshid Sazegar, Jonathan M.  Scott, Masoumeh Hosseinzadeh Shahri, Serge Francis Simen, Dalia Streimikiene, Jackson J.  Tan, Mansoureh Vahab Zadeh.

ix

Contents

Part I Strategic Entrepreneurship in Geographical Contexts  Introduction to Contextual Strategic Entrepreneurship: An Perspectives on the Regional Contexts, Social Elements, and Entrepreneurial Competitiveness������������������������������������������������������������    3 Nezameddin Faghih and Amir Forouharfar  Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship Phenomenon: A Bibliometric Map Approach����������������   15 Alireza Bostani, Mohammad Reza Zali, Asadollah Kordnaeij, and Nezameddin Faghih  Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian Context����������������������������������������������������������   35 Shahbaz Khan, Nosheen Fatma, Mohd Imran Khan, and Abid Haleem  New and Innovative GEM Composite Index Based upon the National A Expert Survey: A Survey of Selected African Countries������������������������������   57 Mike Herrington and Alicia Coduras  Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos Norte, Philippines: The Role of Resource-­Based View ������������   71 Bibeth L. Macatumbas-Corpuz and Nelson C. Bool Part II Strategic Entrepreneurship in Social Contexts  The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed Embeddedness Theory��������������������������������������������������   95 Alexandra Heis and Petra Dannecker  Investigating the Impact of Social Network Marketing on the Bank Customers’ Profitability������������������������������������������������������������  119 Fataneh Yarahmadi, Farzaneh Yarahmadi, and Behzad Sanjari Nader

xi

xii

Contents

Part III Strategic Entrepreneurship in Competitive Contexts  Product Development Under Information Technological Turbulence: The Role of Marketing Communication for Competitive Advantage in Small Businesses Enterprises����������������������������������������������������������������������  137 Aluisius Hery Pratono, Wyna Herdiana, and Teoh Chai Wen  How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic Learning Perspective��������������������������������������  155 Masoumeh Hosseinzadeh Shahri  Benefits of New University-Business-­Government Arrangements for the Performance of Organizations: A Triple Helix Approach����������������������������  173 Suzana Xavier Ribeiro and Marcelo Seido Nagano Index������������������������������������������������������������������������������������������������������������������  191

Part I

Strategic Entrepreneurship in Geographical Contexts

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional Contexts, Social Elements, and Entrepreneurial Competitiveness Nezameddin Faghih and Amir Forouharfar

Abstract  This edited volume embraces counties as diverse as India to Austria. The chapters in this book depict and reveal contextual features of strategic entrepreneurship (SE) in re-conceptualizing organizational rejuvenation, barriers to SE, entrepreneurial resourced-based view, mixed embeddedness, social network marketing, competitiveness in small enterprises, strategic learning, and a triple helix approach to the business strategic cooperation with the government and university. Through these chapters, the concept of context in SE is unfolded, and it is demonstrated how the entrepreneurial strategies differ within the specific contexts in various countries, societies, and entrepreneurial ecosystems. The volume introduces the usually and widely neglected issues that the strategic decisions, planning, and formulations are greatly context-related endeavors, and hence, any true understanding of the strategy in this realm starts with a deep and appropriate understanding of the key relevant context(s). Keywords  Entrepreneurship strategy · Contextual strategy · Strategic entrepreneurship (SE) · SE barriers · Entrepreneurial resourced-based view · Mixed embeddedness · Social network marketing · Small enterprises competitiveness · Strategic learning · Triple helix cooperation · GEM composite index Social phenomena usually show different behaviors, impacts, and effects within various settings, arenas, and contexts. Strategy is not an exception. There is no one-­ size-­fits-all strategy in strategic management domain. Sometimes, a well-­formulated strategy falls short of reaching satisfactory results within an incompatible context.

N. Faghih (*) Cambridge, MA, USA A. Forouharfar Shiraz, Iran © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_1

3

4

N. Faghih and A. Forouharfar

Metaphorically, even the best seed/strategy sowed in an unfit soil and climate will not yield full potential outcomes. Nonetheless, what is context? Simply, context could be defined as “the interrelated conditions in which something exists or occurs” (Merriam-Webster’s Collegiate Dictionary, 2002, p.  250). Hence, interrelation, reciprocity, and exchange play pivotal roles in the emergence of what we define as context. In any context, contextual entities are observed; in other words, particular features that make the context what it is. However, each scientific discipline usually pays more attention to some specific features of the context which affects its main subject matter the discipline dealt with. For instance, historical studies pay more attention to the epochal features of the age they are studying. A philosopher of history, on the other hand, would define the concept of zeitgeist or the spirit of the age to distinguish, define, and correlate the historical events to the crucial and salient features of an age. Generally, “CONTEXT”—as an entrepreneurial concept—bears the following features: 1. Correlation: two or more entities show reciprocal relation; thus, they make a network within the context. 2. Opportunity: each context could be assumed as an entrepreneurial chance. 3. Nearness: the constituting features of a context are in proximity to each other; thus, they make and define the wholeness of the context by juxtaposition. 4. Temporariness: the entrepreneurial contexts are usually elusive, fading, and short-lived. 5. Emergence: each moment new contexts could be formed, emerged, and defined. 6. Cross-sectionality: the entrepreneurial contexts are ecosystemic; i.e., they usually exceed and related to some other issues out of the domain of the context; e.g., politics, society, economy, state laws, government regulations. 7. Time-boundedness: contexts are entrapped within time spans and thus could be and should be defined within time domains such as years, decades, centuries, and so forth. In strategic entrepreneurship, context is one of the ill-defined and understudied issues. One of the reasons for such a condition could be the prevalent atmosphere of neglecting strategic contexts in strategic studies. This has dramatically overshadowed the other domains in strategic studies, and entrepreneurship is no exception. Social science should not neglect contextualization; i.e., “considering something together with the situation, events, or information that relate to it, rather than alone” (Longman Advanced American Dictionary, 2007, p. 343). Although the concepts in physics, biology, geology, and other disciplines of empirical science are usually axiomatic/formulistic and could not be usually changed by the change in the contexts, social science issues are greatly context-related; i.e., social phenomena are the offshoots of their contexts, and these contexts are inherently inseparable entities in the constant flux, changing and emerging. Subject matters are contextualized with the intention to understand the dynamics of particular context. This contextual dynamism is the determining factor of the social and hence entrepreneurial events,

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional…

5

ideas, efficiency, and effectiveness. Furthermore, entrepreneurial ecosystem could be considered as a principal, in many cases, influential context of any entrepreneurship. Entrepreneurial ecosystems mainly embrace the “who,” “where,” and “when” of entrepreneurship. As Baker and Welter (2018) have broadly—not specifically for the entrepreneurial ecosystem—put it, context dimensions include who (individual/ team, community, business), where (business: sector, market; social: networks, households, families; spatial: communities, neighborhoods, industrial districts, clusters, country; institutional: culture, regulatory, normative institutions), and when (time and history). Nevertheless, entrepreneurship is usually contextualized within only a few arenas; that is to say “concerning entrepreneurship studies, contextualization has usually been done in spatial (e.g. Korsgaard et al., 2015; Müller & Korsgaard, 2018), structural (Baker et al., 2005; Baker & Powell, 2016), temporal (e.g. Lippmann & Aldrich, 2016a, 2016b) and historical (e.g. Wadhwani, 2010, 2016) dimensions of entrepreneurship” (Forouharfar, 2020, pp. 46–47). On the other hand, according to Zahra and Wright (2011, p. 75), we can assume four general dimensions for studying any entrepreneurship in context: (1) time, (2) space, (3) practice, and (4) change. It is believed that these dimensions could also be attributed to and studied in strategic entrepreneurship; e.g., the strategic timing, strategic region/ground, strategic advantages/pragmatism, and the emerging strategic phenomena within the above-mentioned entrepreneurial contexts: 1. Entrepreneurial time: entrepreneurship takes place within specific time frames. For example, the temporal context of entrepreneurship in the 1980s is different from the 1990s and that of 2000s. 2. Entrepreneurial space: every kind of entrepreneurship has its own specific region and place. Hence, there is regional entrepreneurship (RE) and perspectives within entrepreneurship literature and research. In other words, “It reflects Maryann Feldman’s frequently quoted notion that ‘entrepreneurship is primarily a regional event’” (Sternberg, 2021). 3. Entrepreneurial practice: entrepreneurship is usually done and practiced within specific fields; e.g., Women’s Entrepreneurship focusing on the contexts and outcomes of female-led businesses (Hughes & Jennings, 2021), Social Entrepreneurship as “a socially mission-oriented innovation which seeks beneficial transformative social change by creativity and recognition of social opportunities in any sectors” (Forouharfar et al., 2018, p. 33), Eco-Entrepreneurship—or Ecopreneurship—with environmental and sustainable missions, Corporate Entrepreneurship as “the process by which teams within an established company conceive, foster, launch and manage a new business that is distinct from the parent company but leverages the parent’s assets, market position, capabilities or other resources” (Wolcott & Lippitz, 2007, p. 75), Intrapreneurship or the entrepreneurship fostered within an organization by one of its employees, Infopreneurship or the entrepreneurship in the domain of information products, Political Entrepreneurship as a practice by “a politician, bureaucrat or officer within the publicly funded sector who encourages entrepreneurship for growth and employment using innovative approaches” (Karlsson et al., 2016, p. 1).

6

N. Faghih and A. Forouharfar

4. Entrepreneurial change: opportunities, demands, ideas, and conditions are in constant flux; thus, entrepreneurial endeavors change correspondently to be on the one hand updated, efficient, and effective and on the other hand to develop and even to monopolize their own market. The chapters in this volume embrace different aspects of the above contextual dimensions. For example, regional entrepreneurship case studies, specific entrepreneurial domains, and the emerging entrepreneurial issues are addressed. Additionally, definition of the entrepreneurial context greatly depends on the intuition, insight, and experience of strategist. In other words, each defined context should at least have two determining features: 1. Comprehensive inclusion: or including as much as possible all the potential and constituting elements and entities of the context. 2. Miss-matched exclusion: or excluding the unfit and inappropriate features which are impertinent to the context under study. Such simultaneous inclusion of pivotal features and exclusion of the irrelevant ones rest deeply on the strategist’s tacit insight, which is deeply indescribable and could not be put into words in any textbook. The definition of strategic context affects the effectiveness of defined strategies, since logically we see, define, and assume specific particularities for each context. This definition also defines the domain of the context. In the next step, each contextual strategist potentially gives superiority to some of the strategic features of the context. Hence, this strategic prioritization is also an intangible intuitive practice. The strategic priorities are always reflected in the formulation of strategy. Thus, strategist’s cognitive faculty and aptitude could not be neglected in and hence detached from the strategic formulation process and even its future amendments and modifications through strategic setting. Nevertheless, there is not a hard and fast answer to the unchanging contextual features of strategic entrepreneurship and hence the need to delve into the regional contexts, social elements, and entrepreneurial competitiveness within each region, time, space, and condition and study their determining vicissitudes and competitive advantages to understand this phenomenon better. Thus, it echoes the old saying that “one man’s meat is another man’s poison”; in other words, considering the contextual approaches in strategic management, there is no guarantee for the effectiveness and fruitfulness of a perfect strategy practiced in another context within different time, regions, and circumstances. The context determines the sharpness, timeliness, and competitiveness of our formulated strategies not only in entrepreneurship but also in larger perspectives and arenas. Therefore, any strategy formulated is based upon some specifically presumed grounds which is the context that rests deep down under the strategy. Strategies are the leaves and the contexts are the roots. In every well-formulated strategy, there is a reason and justification that could be traced in its context. Moreover, since entrepreneurship happens within specific ecosystems, in a sense all strategic entrepreneurships are based on specific

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional…

7

ecosystems and hence they are contextual. That is, strategic thinking in the entrepreneurial domain could not escape from contextualized strategic entrepreneurship. The objectives of this edited volume are to depict and reveal the contextual features of strategic entrepreneurship (SE) in re-conceptualizing organizational rejuvenation, barriers to SE, entrepreneurial resourced-based view, mixed embeddedness, social network marketing, competitiveness in small enterprises, strategic learning, and a triple helix approach to the business strategic cooperation with the government and university. Through these chapters, the concept of context in SE is unfolded, and it is demonstrated how the entrepreneurial strategies differ within the contexts in various countries, societies, and entrepreneurial ecosystems. The volume introduces the usually and widely neglected issues that the strategic decisions, planning, and formulations are greatly context-related endeavors and hence any true understanding of the strategy in this realm starts from the deep and appropriate understanding of the relevant context(s). The book is divided into three parts and contains ten chapters (including this introductory chapter). Part I consists of four chapters pertinent to strategic entrepreneurship in geographical contexts. It begins by presenting a bibliometric-mapping approach to re-­ conceptualizing organizational rejuvenation as a strategic entrepreneurship phenomenon. In fact, all organizations go through different stages during their life cycle. In the decline stage, businesses face several problems, such as a sharp decline in sales, income, profit, performance, and competition ability. To exit from the decline stage, companies must rejuvenate themselves, which is often a costly and time-consuming process accompanied by pain. However, the concept of organizational rejuvenation as a strategic entrepreneurial phenomenon is an old but almost unknown concept. In this chapter, a systematic literature review based on the bibliometric method has been used. Out of 400698 articles, 7257 articles are selected using the Web of Science (WoS) database. It uses VOSviewer software to analyze the articles in the field of organizational rejuvenation and the relevant scientific domains. According to the results of co-occurrence technique, seven clusters were identified as the seven dimensions of “organizational rejuvenation”: organizational restructuring, organizational capabilities development, organizational processes improvement, implantation of business turnaround strategies, internal corporate venturing, entrepreneurial leadership development, and business rebranding. The last four components are the theoretical contribution of this study, and some research gaps are proposed for future research. The second chapter of this part of the book aims to identify and model the significant barriers towards adoption of strategic entrepreneurship. While the last three decades have seen focused research on strategic entrepreneurship, and organizations try to achieve global competitiveness by adopting strategic entrepreneurship, it is observed that strategic entrepreneurship in developing countries is academically understudied. Further, due to several barriers, its adoption in practice is limited. This chapter primarily aims to identify the significant barriers towards adopting strategic entrepreneurship for the strategic management of entrepreneurial organizations. Thus, through expert inputs, twelve barriers are modeled through Interpretive

8

N. Faghih and A. Forouharfar

Structural Modeling (ISM). ISM models the interrelationship among the identified barriers so that the organization can mitigate these barriers effectively. The most significant barriers revealed by the study were “strategic entrepreneurship awareness,” “lack of entrepreneurship culture,” and “limited financial support to knowledge-­based firms.” Further, in the next step, MICMAC analysis (Matrice d’Impacts Croises Multiplication Appliques a un Classement, or Impact Matrix Cross-Reference Multiplication Applied to a Classification) is used to assess the identified barrier’s driving and dependence power. These barriers are clustered into four categories, based on the driving/dependence power, namely autonomous, dependent, linkage, and driver clusters. The finding of this study suggests that “strategic entrepreneurship awareness,” “lack of entrepreneurship culture,” and “limited financial support to knowledge-based firms” are the most significant barriers towards the successful adoption of strategic entrepreneurship. Therefore, management needs to provide greater attention to the mentioned barriers to adopt a strategic perspective towards entrepreneurship. There are three potential implications of this study. The first implication is that it is beneficial for the managers and policy makers to develop mitigation strategies to address these barriers. Second, this study is conducted in Indian organizations, and it will help Indian and many other developing countries to understand the significant barriers to strategic entrepreneurship. Third, the academic researchers in entrepreneurship will also get deeper insights into facilitating strategic entrepreneurship. The third chapter in this part of the book presents a new and innovative GEM (Global Entrepreneurship Monitor) composite index based upon the national expert survey of selected African countries. The study involves collecting and analyzing data obtained by interviewing key experts covering nine framework conditions influencing the entrepreneurial ecosystem in selected African countries using the National Expert Survey (NES) questionnaire developed by the Global Entrepreneurship Monitor (GEM) and then using the information gathered to develop a new and innovative composite index. The purpose of a composite index is to consolidate a number of inputs that describe or are related to a phenomenon into a single summary number that is easy to interpret and to use by professional developers and policy makers. This chapter discusses the development of a national entrepreneurial context composite index (NECI) which makes use of the data collected by GEM national teams for the National Expert Survey (NES). The results for six African countries, Angola, Egypt, Morocco, Sudan, Madagascar, and Mozambique, are given and conclusions drawn as to what interactions are required in each country to improve the entrepreneurial ecosystem. Moreover, it is known that micro, small, and medium enterprises (MSMEs) are essential engines for growth and development. They represent over 50% of all enterprises worldwide, and they contribute to more than 70% employment and 50% of GDP growth in developing countries (ICSB, 2020). The fourth chapter of this part of the book looks into the sustainability factors of Barangay (the smallest administrative division in the Philippines) Micro Business Enterprises (BMBEs) from the Resource-Based View (RBV). The primary data are gathered through a survey questionnaire and interview. The secondary data are also collected from the Department

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional…

9

of Trade and Industry-Ilocos Norte Provincial Office and Laoag City Licensing Office in the Philippines. The findings show that the BMBEs in the City of Laoag (capital of the province of Ilocos Norte, Philippines), particularly the hotel accommodation and food service activities group, have valuable, rare, inimitable, and organized resources that sustain their operations. Having excellent local market knowledge, customer loyalty, established relationships with suppliers, owner’s motivation, daily recording of financial transactions, separating business money from personal money, and high social media presence with positive reviews are the resources that give them a sustainable competitive advantage. By maximizing these resources, they overcome the problems encountered in business operations, especially amid the COVID-19 pandemic. Valuable resources that are not rare and can easily be imitated, such as offering affordable meals, financial resources, employees, sales on a cash basis, and a simple organizational structure, provide competitive parity. The BMBEs should strategize to make all valuable but not rare and easily imitated resources into valuable, rare, inimitable, and organized resources to become sustainable competitive advantages. Part II includes two chapters devoted to strategic entrepreneurship in social contexts. The first chapter of this part of the book studies the meaning of being a migrant entrepreneur through an intersectional approach to mixed embeddedness theory. By highlighting institutional constraints and market opportunities in various environments, the mixed embeddedness approach has considerably enriched the migrant entrepreneurship debate. However, despite socio-theoretical advancements on ethnicity, gender, class, and migration background, and the social construction and intersectionality of these categories, the “social embeddedness” of the population groups in question remains unchallenged by this approach. Engaging intersectional and constructivist perspectives on identity and difference, this chapter argues for a revision of the mixed embeddedness approach, in order to more strongly address the constitution of the migrant category in entrepreneurship, instead of taking it for granted. Then comparing two main shopping streets in two different Viennese districts, the chapter examines the relationship between embeddedness and agency, and how both the market and the actors are entangled in a multiplicity of interdependent social relations. Simmering is a blue-collar district at the city’s fringes, while Neubau, the unofficial city-center, is home to the most important shopping street in Vienna and contains an aspiring creative milieu. Both reveal a very different mix of gendered and ethnicized businesses. This chapter addresses how the category of migrant becomes relevant in the local economies of these two distinct sites. The chapter asks the question: how are these categories articulated and how do they intersect with everyday encounters in business life and the opportunity structures there? Additionally, for decades, measuring the relationship between customer loyalty and profitability has been an important issue in marketing research. It is argued that loyal customers have higher customer retention rates and are more inclined to recommend the company to others by word of mouth and that a 5% increase in customer retention produces more than 25% increase in the profit. Alternatively, a 5% reduction in the number of loyal customers causes the company to lose 50% of its

10

N. Faghih and A. Forouharfar

profits (Reichheld & Sasser, 1990; Zeithaml, 2000). Thus, customer loyalty is important for profitability of any business including banking industry. Hence, the next chapter investigates the impact of social network marketing on the bank customers’ profitability. This chapter aims to investigate the effect of social network marketing on customer profitability in banks and to design a customer profitability model in the field of marketing. A deductive approach is used to develop the hypotheses based on the existing theory. Moreover, this study is a descriptive research and uses the survey method. The sample is collected from 200 potential customers from Melli banks in Hamadan Province, Iran. Simple random sampling technique is selected for this study. The data have been analyzed by the Structural Equation Modeling (SEM). The conclusion is that electronic word-of-mouth marketing, online brand community, online advertising, and customer brand loyalty are influencing factors on the bank customers’ profitability. Part III contains three chapters focusing on strategic entrepreneurship in competitive contexts. This part of the book begins by considering product development under information technological turbulence and the role of marketing communication for competitive advantage in small business enterprises. This chapter investigates the impact of marketing communication capability on sustainable competitive advantage by examining the mediating effect of product development and selling capabilities. It also explores the effect of information technological turbulence on the relationship between marketing communication capability and firm competitive advantage. The chapter proposes a structural equation model to empirically test the relationships between marketing communication, selling capability, product development, and sustainable competitive advantage. Drawing from the SME database provided by the Ministry of Cooperative and SMEs in Indonesia, random sampling was adopted via a self-administered mail survey for data collection. The results indicate that marketing communication capability has a positive impact on product development capability, which in turn strengthens the sales capability to achieve sustainable competitive advantage. However, high information technological turbulence reduces the effectiveness of marketing communication capability on supporting the competitive advantage. This chapter extends the dynamic capability theory by adopting information technological turbulence at various levels to explain the role of marketing communication and product development. Nevertheless, the increasing intensity of competition and the many changes and challenges of today’s world requires that organizations adapt to these developments using their learning power and updating and always looking for ways to gain a competitive advantage and win the competition. These dynamics have shaped the managerial assumptions and decision-making processes of many entrepreneurial firms, including deciding how to seize entrepreneurial opportunities and how to create and deliver customer value (Webb et al., 2010). Hence, entrepreneurs must constantly learn from the environment. Entrepreneurs, no matter how experienced, need to learn and use information from the outside world. They need to closely monitor events, trends, and changes in the environment to anticipate and take advantage of opportunities not seen by competitors. They need to have an insight into the factors that affect customer demand, such as the economic, political, and technological

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional…

11

trends in the environment. Entrepreneurs who can make the necessary changes to adapt the firm to the environment are likely to have long-term success (McEwen, 2008). Thus, the second chapter of this part of the book highlights the importance of how, learning from competitors, improves strategic decision making, and also ameliorates the performance of entrepreneurial firms. Strategic learning is a process at the strategic level that refers to an organization’s ability to process strategic knowledge so that it can recreate its strategies. Knowledge acquisition from competitors as a creative strategic knowledge plays a major role in strategic learning in entrepreneurial firms. Using a qualitative research approach and examining eight entrepreneurial firms as case studies, this chapter outlines learning from competitors’ processes in these firms. The findings of this study show that these firms learn from their competitors by four means: through competitive analysis, benchmarking, imitation, and social media. Furthermore, with the advancement of technology and globalization, contemporary organizations need to constantly seek new knowledge and turn it into innovation in order to acquire strategic wellspring of innovativeness and to gain sustainable competitive advantage. In this context, the implementation of collaborative processes becomes fundamental for the acquisition of organizational objectives and a competitive differential. These processes of institutional change are the new inter-­ organizational arrangements formed by the collaboration among the members of different institutions such as companies, Scientific, Technological and Innovation Institutions (STIs)—including universities—and from different governmental spheres. This type of collaboration, aiming at collective solutions, has received increasing attention in organizational theories and practices (Carayol, 2003; Nohria & Eccles, 1992) and is recognized as a crucial element in stimulating innovation, organizational performance, and the formulation of policies (Bishop et al., 2011; D’Este et al., 2013; Estrada et al., 2016; Malmström & Johansson, 2016; Rybnicek & Königsgruber, 2019). This is because, in addition to the relevance of the benefits it can provide for each of the institutions involved in the pursuit of its organizational objectives, this cooperation can contribute to the technological, economic, and social development of a country, specifically within emerging market economies. Despite advances in the researches aimed at discovering the determinants of the success of such inter-organizational arrangement, there is still a scarcity of knowledge about university–business–government collaboration (Rybnicek & Königsgruber, 2019). Considering this type of collaboration, the growing importance of science and technology in the development of a country is increasingly recognized, with the role of university as a source of collaborative knowledge. Moreover, companies need to apply knowledge to improve production processes or change into new knowledge-based companies. Thus, government programs play an important role in this scenario, not only at the national (top-down) but also at the local (bottom-up) levels, often occurring in cooperation with other civil society organizations. When bottom-up initiatives are reinforced by top-down policies and programs, more fruitful results were achieved (Etzkowitz, 2003). Due to the relevance of this topic, the third chapter of this part of the book presents a theoretical synthesis on knowledge management and university–business–government

12

N. Faghih and A. Forouharfar

collaboration, highlighting key benefits and barriers, as well as how these topics are relating to—and can generate—organizational improvements as well as contributing to a society as a whole. The purpose of this chapter is to investigate how knowledge management and university–business–government collaboration—including the three helices—relate to the performance of organizations, based on the theories of Knowledge Management and the Triple Helix, the most referenced model to deepen this kind of cooperation. In the contemporary competitive environment and context, the ability of organizations to create and use knowledge is becoming increasingly fundamental to the pursuit of sustainable competitive advantage, leading even to the search for new forms of inter-organizational arrangements. The choice of topic is justified by the scarcity of empirical researches that relate the topics of knowledge management and university–business–government collaboration in an integrated manner. This relationship can lead to tremendous improvements for the organizations involved and for the development of society as a whole. It is hoped that this book, presenting Perspectives on the Regional Contexts, Social Elements, and Entrepreneurial Competitiveness is appealing to a wide spectrum of global audience and academics and can provide a useful reference work in contextual strategic entrepreneurship education and research. Academics, researchers, and scholars, who teach and conduct research in strategic entrepreneurship, have contributed chapters and addressed the most recent issues in this field. Thus, it is also hoped that the book can provide creative discussions and align well with scholarly and intellectual interests in the contextual dimensions of strategic entrepreneurship. It should also be noted that facts, information, opinions, views, findings, conclusions, comments, positions, and strategies expressed by the contributors and chapter authors are theirs alone and do not necessarily reflect the views, opinions, positions, or strategies of the editors of this contributed volume and do not constitute endorsement or approval by the editors. Authors and contributors are responsible for their citing of sources and the accuracy of their references and bibliographies. The editors of this book cannot be held responsible for any errors or for any consequences arising from the use of the information contained in the chapters or any lacks or possible violations of third parties’ rights. Although every effort is made by the editors to see that no inaccurate or misleading data, opinion, or statements appear in this contributed volume, the data, their use and interpretations, and opinions appearing in the chapters are the sole responsibility of the authors and contributors concerned. The editors accept no liability whatsoever for the consequences of any such inaccurate or misleading data, information, opinion, or statements.

References Baker, T., Gedajlovic, E., & Lubatkin, M. (2005). A framework for comparing entrepreneurship processes across nations. Journal of International Business Studies, 36(5), 492–504. Baker, T., & Powell, E. (2016). Let them eat bricolage? Toward a contextualized notion of inequality of entrepreneurial opportunity. In F. Welter & W. B. Gartner (Eds.), A research agenda for entrepreneurship and context (pp. 41–53). Edward Elgar Publishing.

An Introduction to Contextual Strategic Entrepreneurship: Perspectives on the Regional…

13

Baker, T., & Welter, F. (2018). Contextual entrepreneurship: An interdisciplinary perspective. Foundations and Trends® in Entrepreneurship, 14(4), 357–426. Bishop, K., D’Este, P., & Neely, A. (2011). Gaining from interactions with universities: Multiple methods for nurturing absorptive capacity. Research Policy, 40, 30–40. Carayol, N. (2003). Objectives, agreements and matching in science industry collaborations: Reassembling the pieces of the puzzle. Research Policy, 32(6), 887–908. D’Este, P., Iammarino, S., & Guy, F. (2013). Shaping the formation of university–industry research collaborations: What type of proximity does really matter? Journal of Economic Geography, 13(4), 537–558. Estrada, I., Faems, D., Cruz, N. M., & Santana, P. P. (2016). The role of interpartner dissimilarities in industry-university aliances: Insights from a comparative case study. Researh Policy, 45(10), 2008–2022. Etzkowitz, H. (2003). Innovation in innovation: The triple helix of university-industry-government relations. Social Science Information, 42(3), 293–337. Forouharfar, A. (2020). A contextualized study of entrepreneurship in the Arab states prior to the Arab spring: Reviewing the impact of entrepreneurship on political stability. In P. Sinha, J. Gibb, M. Akoorie, & J. M. Scott (Eds.), Research handbook on entrepreneurship in emerging economies: A contextualized approach (pp. 44–63). Edward Elgar Publishing. https://doi. org/10.4337/9781788973717.00009 Forouharfar, A., Rowshan, S.  A., & Salarzehi, H. (2018). An epistemological critique of social entrepreneurship definitions. Journal of Global Entrepreneurship Research, 8(1), 1–40. https:// doi.org/10.1186/s40497-­018-­0098-­2 Hughes K.  D. and Jennings J.  E. (2021). ‘Women’s entrepreneurship’. Oxford bibliographies. Retrieved from https://www.oxfordbibliographies.com/view/document/obo-­9780199846740/ obo-­97801998467400042.Xml?Rskey=4tTvTE&result=1&q=women+entrepreneurship#first Match doi: https://doi.org/10.1093/OBO/9780199846740-­0042. ICSB (2020), Annual global micro-, small and medium-sized enterprises report, International Council for Small Business. Retrieved from https://icsb.org/wp-­content/uploads/2020/04/2020 ICSBGlobalMSMEsReport.pdf Karlsson, C., Silander, C., & Silander, D. (2016). Political entrepreneurship: Regional growth and entrepreneurial diversity in Sweden. Edward Elgar Publishing. Korsgaard, S., Müller, S., & Tanvig, H.  W. (2015). Rural entrepreneurship or entrepreneurship in the rural – Between place and space. International Journal of Entrepreneurial Behavior & Research, 21(1), 5–26. Lippmann, S., & Aldrich, H. E. (2016a). A rolling stone gathers momentum: Generational units, collective memory, and entrepreneurship. Academy of Management Review, 41(4), 658–675. Lippmann, S., & Aldrich, H.  E. (2016b). The temporal dimension of context. In F.  Welter & W. B. Gartner (Eds.), A research agenda for entrepreneurship and context (pp. 54–64). Edward Elgar Publishing. Longman Advanced American Dictionary. (2007). Contextualization (2nd ed.). Malmström, M. M., & Johansson, J. (2016). Social exchange in collaborative innovation: Maker or breaker. Journal of Innovation and Entrepreneurship, 5(4), 1–20. McEwen, T. (2008). Environmental scanning and organizational learning in entrepreneurial venture. The Entrepreneurial Executive, 13(3), 1–17. Merriam-Webster’s Collegiate Dictionary. (2002). Context (10th ed.). Müller, S., & Korsgaard, S. (2018). Resources and bridging: The role of spatial context in rural entrepreneurship. Entrepreneurship & Regional Development, 30(1–2), 224–255. Nohria, N., & Eccles, R.  G. (1992). Networks and organizations: Structure, form, and action. Harvard University Press. Reichheld, F., & Sasser, J. R. (1990). Zero defections, quality comes to services. Harvard Business Review, 65(5), 105–111. Rybnicek, R., & Königsgruber, R. (2019). What makes industry–university collaboration succeed? A systematic review of the literature. Journal of Business Economics, 89(2), 221–250.

14

N. Faghih and A. Forouharfar

Sternberg, R. (2021). Regional entrepreneurship. Oxford Bibliographies. Retrieved from https://www.oxfordbibliographies.com/view/document/obo-­9780199846740/ obo-­9780199846740-­0066.xml doi: https://doi.org/10.1093/OBO/9780199846740-­0066. Wadhwani, R. D. (2010). Historical reasoning and the development of entrepreneurship theory. In H.  Landström & F.  T. Lohrke (Eds.), Historical foundations of entrepreneurial research (pp. 343–362). Edward Elgar Publishing. Wadhwani, R. D. (2016). Entrepreneurship in historical context: Using history to develop theory and understand process. In F. Welter & W. B. Gartner (Eds.), A research agenda for entrepreneurship and context (pp. 65–78). Edward Elgar Publishing. Webb, J. W., Ireland, R. D., Hitt, M. A., Kistruck, G. M., & Tihanyi, L. (2010). Where is the opportunity without the customer? An integration of marketing activities, the entrepreneurship process, and institutional theory. Journal of the Academy of Marketing Science, 39(4), 537–554. https://doi.org/10.1007/s11747-­010-­0237-­y Wolcott, R.  C., & Lippitz, M.  J. (2007). The four models of corporate entrepreneurship. MIT Sloan Management Review, 49(1), 75. Retrieved from https://sloanreview.mit.edu/article/ the-­four-­models-­of-­corporate-­entrepreneurship/ Zahra, S.  A., & Wright, M. (2011). Entrepreneurship’s next act. Academy of Management Perspectives, 25(4), 67–83. Zeithaml, V.  A. (2000). Service quality, profitability, and the economic worth of customers: What we know and what we need to learn. Journal of the Academy of Marketing Science, 28(1), 67–85.

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship Phenomenon: A Bibliometric Map Approach Alireza Bostani, Mohammad Reza Zali, Asadollah Kordnaeij, and Nezameddin Faghih

Abstract  All organizations, during their life cycle, go through different stages. In the decline stage, businesses face several problems, such as a sharp decline in sales, income, profit, performance, and competition ability. To exit from the decline stage, companies must rejuvenate themselves, which is often a costly and time-consuming process accompanied by pain. However, the concept of organizational rejuvenation as a strategic entrepreneurial phenomenon is an old but almost unknown concept. In this chapter, a systematic literature review based on the bibliometric method has been used. Out of 400,698 articles, 7257 articles were selected using the Web of Science (WoS) database. In this research, VOSviewer software (Visualizing Scientific Landscapes) was used to analyze the articles in the field of organizational rejuvenation and the other relevant scientific domains. According to the results of cooccurrence technique, seven clusters were identified as the seven dimensions of “organizational rejuvenation”: organizational restructuring, organizational capabilities development, organizational processes improvement, implantation of business turnaround strategies, internal corporate venturing, entrepreneurial leadership development, and business rebranding. The last four components are the theoretical contribution of this chapter. Finally, some research gaps were proposed for future research.

A. Bostani University of Tehran, Tehran, Iran M. R. Zali (*) Faculty of Entrepreneurship, University of Tehran, Tehran, Iran e-mail: [email protected] A. Kordnaeij Tarbiat Modares University, Tehran, Iran N. Faghih Cambridge, MA, USA © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_2

15

16

A. Bostani et al.

Keywords  Organizational rejuvenation · Business turnaround · Organizational restructuring · Organizational processes improvement · Organizational capabilities · Entrepreneurial leadership · Business rebranding · Internal corporate venturing

1  Introduction All companies and organizations, during their life cycle, go through different stages. However, scholars have different approaches toward business cycle. For example, Adizes (1979) believes the life cycle of businesses follows a normal curve. In his opinion, this life cycle has 10 steps: (1) courtship, (2) infancy, (3) go-go, (4) adolescence, (5) prime, (6) stability, (7) aristocracy, (8) recrimination, (9) bureaucracy, and (10) death. Entering the decline phase means death of businesses. In this stage, companies have several problems, such as low differentiation, low profitability, closure, sell-off, or even bankruptcy. Research suggests some options such as flexible automation, using computer-aided design/computer-aided manufacturing, and robotics to better manage the process of organizational maturity and prevent organizations decline (Ayres & Steger, 1985). Other researchers have proposed business turnaround theory. According to this view, when companies enter the decline stage, they must completely change their route. Business turnaround means a significant and stable positive change in a business’s performance (Bibeault, 1981). Furthermore, there is a paucity of research in the fields such as revitalization, innovation, entrepreneurial leadership, and organizational culture pertaining to organizational rejuvenation. Meanwhile, unlike Kuratko et  al. (2011), in terms of Leung (2006), organizational rejuvenation means changing the strategy. Others have suggested organization’s rejuvenation to exit from the decline (Baden-Fuller & Volberda, 1997). But in Covin and Miles (1999) and Kuratko et  al. (2011), organizational rejuvenation is required either to maintain or to improve organizational competitive position by the change in three areas: (1) internal processes, (2) structures, and (3) company capabilities. Rejuvenation includes changing and the communication among five elements of strategy, structure, processes, organization employees, and reward (Leung, 2006). However, in the mainstream literature, there is no complete picture of organizational rejuvenation, and organizational rejuvenation has not entirely been studied by researchers (Kuratko et  al., 2011) or the existing research is partly scattered (Adenfelt & Lagerström, 2006). Therefore, the question is, what the conceptual dimensions of “organizational rejuvenation” are? In this chapter, we have used the systematic literature review in the strategic entrepreneurship field to answer the above research question using the bibliometric cooccurrence technique and VOSviewer software. But before that, the process of organizational rejuvenation is considered through the early theoretical background.

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

17

2  Theoretical Background More than 30 years ago, Stopford and Baden-Fuller (1990), for the first time, defined the concept of organizational rejuvenation as creating comprehensive organizational structure, processes, and strategies that affect the entire organization. They considered the process of organizational rejuvenation as a three-stage procedure: (1) reducing organizational scope (simplification and control), (2) investment on supply capabilities, skills, and teamwork (to become learning organization), and (3) redesigning and development of business (re-complication). Later in 1994, Baden-Fuller and Stopford modified their theory and described organizational rejuvenation as a four-step process (Fig. 1). At the first stage of this process, an organization needs a strong leadership team in order to lead its changes. In fact, at this stage, top management is motivated to create fundamental organizational changes. The second stage, “simplification of business,” helps changing managers’ perception of what is wrong and what new organizational actions are needed. Business simplification is a decision to halt activities that have led to a failure or a decline in the company. The company’s top management team in the business simplification phase focuses on scarce resources via a smaller program and increases the chances of achieving positive results in the short and medium term. They also give hope to external stakeholders that the organization is working on a positive goal. At the third stage, “creating new capabilities of business,” the organization must work for future development. The organization should invest in deepening skills and/or acquiring new skills, developing new systems, and new knowledge. In the fourth phase, “leveraging organizational capabilities,” as business competitiveness increases, the company can expand its activities to enter new markets and new parts of the value chain. The leveraging effect is defined as better results with available resources without more resources (Robbins, 2010). To create a competitive advantage, organizations must build and leverage their new capabilities. At this stage, organizational learning, as the ability to create new knowledge and transfer it to different organization levels, is the critical factor to become a learning organization (Muthusamy & Palanisamy, 2004).

Fig. 1 Organizational rejuvenation process (Authors’ work; Source: Baden-Fuller & Stopford, 1994)

18

A. Bostani et al.

In 1999, Covin and Miles defined organizational rejuvenation as one of the forms of strategic entrepreneurship that are required to maintain or improve its competitive position. An organization can rejuvenate by changing its three basic areas, namely internal processes, structure, and company capabilities (Kuratko et al., 2011). A more recent study by Gotteiner et al. (2019) refers to the new term “organizational anti-aging.” They provide a framework for organizational rejuvenation by using business turnaround strategies such as changing management, restructuring financial resources, improving working capital, cost reduction, strategic focus, improving key processes, changing organizational culture, and business growth strategies. In addition “organizational anti-aging” requires identifying and evaluating organizational risks. In general, review of theoretical background showed there are two paradoxical approaches in relation to organizational rejuvenation. The first approach is that organizational rejuvenation includes altering the business strategy (Leung, 2006; Stopford & Baden-Fuller, 1990). The second approach is the organizational rejuvenation, which does not include business strategy change (Covin & Miles, 1999; Kuratko et al., 2011). Despite the huge number of researches in the area related to organizational rejuvenation, there are still other research gaps. For example, the older theories by Stopford and Baden-Fuller (1990), Baden-Fuller and Stopford (1994), Baden-Fuller and Volberda’s (1997) have not considered new theories and concepts such as entrepreneurial leadership and entrepreneurial organizational culture in their models. In addition, the relationship between some concepts such as business turnaround, organizational modernization, or organizational improvement, and the concept of organizational rejuvenation is not clear. Although since 1990s, there has been relatively different models on the process of the organizational rejuvenation, no comprehensive model has been seen in this area recently. Therefore, unknown theoretical areas still exist. In this chapter, a bibliometric method has been used to identify unknown or less known concepts of “organizational rejuvenation“that was neglected by researchers in previous researches (Lampe et al., 2019). In the rest of the chapter, after a brief description of Bibliometric Research method, the main clusters (dimensions) of “organizational rejuvenation” are demonstrated. Finally, new research gaps are going to be presented in this area for future research.

3  Research Method The purpose of this chapter is to reconceptualize the phenomenon of “organizational rejuvenation“through bibliometric. A systematic literature review based on bibliometric method indicates a comprehensive literature review of existing research articles, writings, and documents on a specific scientific topic. In this chapter, to systematically review organizational rejuvenation, papers published in the WoS scientific database have been analyzed.

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

19

In recent years, the bibliometric method has become a very popular method for the new concept or reconceptualization (Castriotta et al., 2018; Hermann & Bossle, 2018; Lampe et al., 2019; Serrano et al., 2019). It is a research method to analyze the scientific products in order to identify the structure and growth in a specific research area (Danvila-del-Vallea et al., 2019; Van Oorschot et al., 2018). In this chapter, the cooccurrence technique was used to implement the bibliometric method. Cooccurrence analysis includes statistical analysis of papers based on keywords (Danvila-del-Vallea et al., 2019). Figure 2 illustrates the searching protocol which is applied within the framework of the bibliometric method in this chapter. According to Fig. 2, in the first stage, variables and keywords related to the direct field of “organizational rejuvenation” and related scientific fields (such as “revitalization, rebranding, turnaround, restructuring, organizational capabilities, business process reengineering, entrepreneurial leadership, organizational transformation, decline”) were selected. In the second phase, a comprehensive search was conducted based on the keywords in the articles’ topic (title, abstract, and author keywords) on the WoS scientific database. The next stages of the search were performed by the following inclusion/exclusion criteria: (a) No time limitation was specified for searching. (b) The subject areas (i.e., WoS categories) were restricted to business, economics, and management. (c) The searched document type was only limited to articles. Therefore, sources such as the proceedings paper, book review, book chapter, data paper, and other document types in the scientific database were filtered and excluded from the reviewing cycle. (d) To be more comprehensive, papers were limited to the papers in English. (e) The journals (source titles) were merely limited to management, business and organization-related journals.

Fig. 2  The search protocol (Source: Authors’ own work)

20

A. Bostani et al.

As a result, the total number of relevant articles reached 7257. A detailed descriptions of the stages of the “bibliometric method” performed up to this point are shown in Table  1. Then in order to conduct bibliometric method on the research problem, we used the cooccurrence technique. The trend of papers published on the WoS database pertinent to rejuvenation have been increased from 1956 onward. As shown in Fig. 3, since 1992, research in the related scientific fields of “organizational rejuvenation” has been increasing. The top 10 journals that have the most articles in the search field are listed in Table 2. Moreover, the most articles related to the searched keywords, by country (top 10 countries), belonged to the United States (2860 articles), the United Kingdom (943), Germany (471), China (459), Canada (401), Australia (397), France (280), Italy (258), Spain (217), and the Netherlands (212). In the next step, for carrying out the bibliometric method, 7257 articles (output of WoS database) were analyzed by VOSviewer software and 1750 variables1 were extracted (VOSviewer extracted 1750 cooccurrence words with minimum 15 occurrences in the 7257 articles). After removing the less relevant variables, the number of final related variables reached 152 selected variables.2 Finally, the result of VOSviewer software analysis of the organizational rejuvenation process, based on those variables (152 selected variables), was obtained. The results are described below. Table 1  Details of the bibliometric method (data were collected in December 2020)- (Source: Authors’ own work)

Steps Description of steps 1 Selecting keywords from literature review and WoS search (keywords related to the direct field of organizational rejuvenation and related scientific fields) 2

Keyword search location

3 4 5 6 7

Period Categories (subject areas) Document type Languages Source title (the key academic journals)

Inclusion and exclusion criteria Keywords included: Rejuvenation, organizational revitalization, rebranding, business turnaround, restructuring, organizational capabilities, business process reengineering, entrepreneurial leadership, organizational transformation, decline Only articles’ topic (title, abstract and author keywords) From 1965 onward Economics, management, business Articles English Journal of strategic management, business process journal, European management journal, etc.

Number of obtained articles –

400,698 400,698 10,227 8009 7495 7257

1  Keywords identified (1750 keywords) in the 7257 articles through VOSviewer automatic algorithm with threshold frequency = 15. 2  Keywords selected (152 keywords) for the cluster analysis.

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

21

Fig. 3  Frequency of articles in the research field (1956–2020 years) (Authors’ work; Source: WoS database) Table 2  Top ten journals with the most articles related to research (Authors’ work) Source titles Applied economics Harvard business review Energy economics Strategic management journal American economic review Economic modelling Applied economics letters Journal of business research Journal of public economics Organization science

Records 185 122 120 120 108 95 93 92 88 81

Rank 2 3 3 4 4 2 1 3 3 4

Journals classify into four categories (1–4) plus a Journal of Distinction category, which recognizes the quality of those journals ranked as a “top” class journal in at least three out of five international listings consulted (Wood & Peel, 2015)

4  Research Results Based on the results of the cooccurrence analysis technique for 7257 selected articles, seven clusters (conceptual focus) on organizational rejuvenation were identified (Fig. 4).

22

A. Bostani et al.

Fig. 4 Seven clusters of “organizational rejuvenation” concept (Authors’ work; Source: VOSviewer output)

Fig. 5  “Organizational restructuring” cluster (Authors’ work; Source: VOSviewer output)

4.1  The First Cluster: Organizational Restructuring Most organizations move toward bureaucratic structures as they grow up. Bureaucratic structure cannot meet the needs of today’s dynamic environment. In this respect, the significant relationship between the “restructuring” variable and the “firm performance and dynamic capability” can be seen in software analysis results (Fig. 5). As Stopford and Baden-Fuller (1990) say, in the first stage of rejuvenation when the company reconsiders and limits its activities, the structure of the organization becomes simpler. In the analysis of VOSviewer results, the cooccurrence of the variable “organizational restructuring” with the variables of “entrepreneurial leadership, education, training, technological change, information technology, learning, organizational learning, firm performance, productivity growth, dynamic capability” is observed (Fig. 5).

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

23

4.2  T  he Second Cluster: Organizational Capabilities Development In the stage of organizational decline, business capabilities and competencies are intensively reduced, and as a result, the company’s performance and profitability are reduced (Trahms et al., 2013). Therefore, to rejuvenate the organization, it is necessary to develop its organizational capabilities. Organizational capabilities are the set of basic organizational skills and competencies that appear in the company’s products and services (Prahalad & Hamel, 1990). Baden-Fuller and Stopford (1994) state that the rejuvenation process’s ultimate goal is to leverage business capabilities to increase the organization’s competitive advantage. In this way, the rejuvenated business can expand its activity to new markets, new products, and new parts of the value chain. According to the research background, in the results of VOS software analysis (Fig. 6), there is a strong relationship between “organizational capability” variable and the variables of “dynamic capability (Tondolo & Bitencourt, 2014), business processes (Kuratko et al., 2011; Stopford & Baden-Fuller, 1990), innovation (Covin & Miles, 1999; Kreiser & Davis, 2009) and culture (Baden-Fuller & Stopford, 1994)”.

Fig. 6 “Organizational VOSviewer output)

capabilities

development”

cluster

(Authors’

work;

Source:

24

A. Bostani et al.

The results of VOS software analysis also confirm the strong relationship between the variable “organizational learning” and the variables of “organizational capabilities (Argyris, 1993; Baden-Fuller & Stopford, 1994) and dynamic capabilities (Tondolo & Bitencourt, 2014)”. Hence, it can be inferred that organizational learning is strongly associated with rejuvenation (Stopford & Baden-Fuller, 1990).

4.3  The Third Cluster: Business Turnaround Strategies The organizational decline occurs when the company’s performance or the foundation of its resources are depleted during a sustainable period (Trahms et al., 2013). Under these circumstances, some companies turn around their businesses. The rejuvenation and business turnaround are both involved in managing changes and have a lot of common features (Stopford & Baden-Fuller, 1990). Business turnaround activities include selling company assets, shutting down some production lines, manpower adjustment, new pricing, improving operations, refinancing, and eventually reclaiming its competitive position (Trahms et al., 2013). Of course, the leaders and administrators are responsible for developing and implementing turnaround strategies. Therefore, strong leadership is the most important factor in the successful business turnaround in an enterprise (Abebe & Tangpong, 2018). Business turnaround strategies include financial restructuring to reduce the assets and costs, revenue generation, strategic focus, improve core processes, changing the organizational culture and growth strategies (Gotteiner et al., 2019). It is observed that according to the literature of research, the variables “acquisition, merger, divestiture, debt restructuring, retrenchment, acquirer, financial restructuring, asset restructuring” are in this cluster that, according to Gotteiner et  al. (2019), all of these variables are the components of “business turnaround strategies,” so concerning the prominence of the variable “business turnaround strategies“in the third cluster, this cluster was labeled as “business turnaround strategies.” In this cluster, the variable “business turnaround strategies“(Fig. 7) is associated with a significant weight with variables of “business processes” (Kuratko et  al., 2011), organizational decline (McKinley et  al., 2014; O’Kane & Cunningham, 2014; Seah & Hsieh, 2015; Trahms et  al., 2013) and innovation” (Stopford & Baden-Fuller, 1990). Moreover, the variable “business turnaround“is related3 to the variables “top management“ (Abebe & Tangpong, 2018; Bibeault, 1981; Mihail et al., 2013), culture (Gotteiner et al., 2019), capabilities (Kuratko et al., 2011), and learning “(Tondolo & Bitencourt, 2014).

3  Focusing on the processes of co-word analysis, the co-occurrence of two words in the same article is an indicator of how these two concepts are related to each other. A high frequency of these cooccurrences is a measure of similarity within papers that belong to a specific research theme (Castriotta et al., 2018).

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

25

Fig. 7  “Business turnaround strategies” cluster (Authors’ work; Source: VOSviewer output)

4.4  The Fourth Cluster: Internal Corporate Venturing According to Kuratko et al. (2011), organizational entrepreneurship is divided into two general categories: corporate venturing and strategic entrepreneurship. According to this category, rejuvenation is one of the forms of strategic entrepreneurship, and corporate venturing is classified into three modes: (1) internal corporate venturing, (2) cooperative corporate venturing, (3) external corporate venturing. Corporate venturing includes several ways to start a new business, add to an existing business, or invest in a new business. With internal corporate venturing, new business is created and acquired by the company. These businesses are typically within the company structure but may sometimes be located outside the company and operate as semi-independent entities. The list of variables in the “internal corporate venturing” cluster is: entrepreneurship, entrepreneur, financial performance, new product, downsizing, novelty, technological innovation, new venture, rejuvenation, mindset, strategic alliance, corporate entrepreneurship, new product development, product development, new market, corporate strategy, firm growth, innovation strategy, new knowledge, company performance, new business, and new firm. The variables “new venture, strategic alliance, new business, and new firm” (all examples of “internal corporate venturing”) fall within this cluster. Their grouping is very meaningful and significant, and hence, this cluster was labeled as “internal corporate venturing.”

26

A. Bostani et al.

Fig. 8  “Internal corporate venturing” cluster (Authors’ work; Source: VOSviewer output)

Moreover, in this cluster, the variable “new venture” has a significant relationship with the variables: organizational processes (as one of the components of rejuvenation according to Kuratko’s definition), organizational capabilities (as one of the components of rejuvenation once again according to Kuratko’s definition), entrepreneurial leadership, innovation (Kreiser & Davis, 2009), and brand (Fig. 8).

4.5  T  he Fifth Cluster: Entrepreneurial Leadership Development The research flow of entrepreneurship leadership, which has been introduced after the concept of transformative leadership, is made up of the two relatively new and old scientific fields, namely “leadership” and “entrepreneurship.” Thornberry (2006) defines entrepreneurial leadership as the process of penetration in the organization to identify and take advantage of the organization’s opportunities and competitive advantages. According to Baden-Fuller and Stopford (1994), at the beginning of the organizational rejuvenation, the organization needs strong leadership to create organizational changes. However, they do not specify the type and nature of the leadership in this process of organizational rejuvenation. Meanwhile it seems that organizational rejuvenation needs entrepreneurial leadership strategies. According to

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

Fig. 9 “Entrepreneurial VOSviewer output)

leadership

development”

cluster

(Authors’

work;

27

Source:

Thornberry (2006), the entrepreneurial spirit can thrive and alive in large businesses through entrepreneurial leaders. Thornberry has coined types of entrepreneurial leaders as explorers, miners, accelerators, and integrators. Market-focused exploring leaders concentrate on developing new markets, services, and products. Mining leaders are more concerned with their business’s operational issues and develop their business more efficiently and more customer satisfaction. Accelerating leaders are also business-focused but from a human resources view; they encourage their employees to think and act in more innovative ways. Finally, integrating leaders combine managers, employees, and teams’ capabilities and focus on the strategy of the business as a whole (Thornberry, 2006) (Fig. 9).

4.6  The Sixth Cluster: Business Processes Development With the increasing competition in Business environment, organizations are looking for ways to stay ahead in their markets. Companies are constantly involved in updating their procedures to shorten the work process times, so that the best quality of the product or service will be delivered to the customer as soon as possible, and this will lead the organization toward business process reengineering (BPR). Reengineering of the business process means the complete change of traditional methods of doing work and restarting everything from the beginning, with completely new thinking and new ideas, to be updated in the market (Hooda, 2014). Organizational rejuvenation is associated with developing and improving existing processes or creating new processes to identify and exploit valuable market opportunities (Covin & Miles, 1999). Business process development is via creating a detailed business process model in question, acquiring an IT-system to support it, and then implementing it in the organizational practice (Bider & Jalali, 2014) (Fig. 10).

28

A. Bostani et al.

Fig. 10  “Business process development” cluster (Authors’ work; Source: VOSviewer output)

4.7  The Seventh Cluster: Business Rebranding Organizational rejuvenation is accompanied by changes in all organizational aspects. In most cases, the organizational change and transformation programs’ success requires that even appearance aspects such as logos, names, and brand of company products synchronized with changes. Therefore, business rebranding is one of the types of organizational rejuvenation. According to Lehu (2006), brand rejuvenation includes activities that lead to modernization and a newer brand without losing its identity during the process. The rejuvenation process is not only to increase sales but also to promote the brand’s value and enhance the brand’s perception quality and improve the customer’s view of the brand (Smit, 2011). When an organizational brand reaches the rejuvenation stage, all company sectors need to change their culture and think according to the new brand (Fig. 11). The most important factor of successfully rebranding of a brand is that the entire organization change its culture and mindset (Smit, 2011).

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

29

Fig. 11  “Business rebranding” cluster (Authors’ work; Source: VOSviewer output)

5  Discussion The presence of a cluster of “business turnaround strategies” in the results of the cooccurrence analysis confirms the view of Leung (2006) as well as Stopford and Baden-Fuller (1990) that the organizational rejuvenation program includes a change in business strategy (Fig. 12). Furthermore, as Chandler (1962) explained and the results of future research, such as Kim and Mauborgne (2009) and Kavale (2012) showed “ organizational structure “ follows organizational strategy. Therefore, in addition to applying and implementing “business turnaround strategies” in the company, organizational rejuvenation also requires redesigning the organizational structure. On the other hand, organizational rejuvenation requires refinement and improvement of business processes to make organization more agile (Covin & Miles, 1999; Kuratko et al., 2011).

30

A. Bostani et al.

Fig. 12  Conceptual focuses of “organizational rejuvenation” (Source: Authors’ own)

The colorful presence of the variable “corporate restructuring” in the cluster of “business turnaround strategies“also confirms this (Fig. 4). Contrary to the early theorists’ views (e.g., Stopford & Baden-Fuller, 1990), organizational rejuvenation could not be feasible without effective entrepreneurial leadership. Evidence of this claim was the experience of Louis Gerstner (Gerstner Jr., 2009) in leading the fundamental transformation and restructuring of the IBM’s declining company in the 1980s. IBM in 1993 was exposed to extinction, losing $16 billion. Gerstner Jr. (2009), as CEO, led IBM and saved it from the crash. The reemergence of Steve Jobs as an entrepreneurial leader also saved Apple Inc. in fact, entrepreneurial leaders identify new opportunities, competitive advantages, and new horizons and present them to company managers and employees (Zali, 2011). On the other hand, contrary to the views of Baden-Fuller and Volberda (1997), Covin and Miles (1999), and Kuratko et al. (2011), the phenomenon of organizational rejuvenation requires rebranding. Because when the quality of corporate products and services is greatly reduced compared to its competitors, from the view of customers, the brand of such a company will undoubtedly be of little value to customers (Caniago et  al., 2014). In fact, during the process of rejuvenation,

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

31

corporate entrepreneurs not only offer new products and services to customers and to the market by innovation or upgrading the quality of available products and services, but also they need to present a new picture of the company’s brand or services to complete the process. Logo correction, logo and business-appearance symbols (preserving the brand’s original identity) can also create a sense of organizational rejuvenation and newness in the company (lehu, 2006; Smit, 2011). Finally, Kuratko et  al. (2011) and Covin and Miles (1999) are not considered internal corporate venturing as a part of organizational rejuvenation process. But in fact this process creates a strategic change in the organizational capabilities and improves structure of the organization. Therefore, such a change will definitely affect an internal corporate venturing within the company. That is why, in this research, internal corporate venture is part of the process of organizational rejuvenation. Because internal corporate venture needs to allocate financial resources and can be done through leveraging organizational resources, reorganizing or re-­ allocating, eliminating, or selling company’s assets.

6  Conclusion The business decline stage can potentially lead to the death of a business. Therefore, entrepreneurs and business owners apply the organizational rejuvenation to avoid entering this stage. For the first time, Stopford and Baden-Fuller (1990) defined the concept of organizational rejuvenation as creating comprehensive changes in organizational structure, organizational systems, and processes, and strategy that affect the whole organization. While according to Covin and Miles (1999), organizational rejuvenation as a form of strategic entrepreneurship refers to the entrepreneurial phenomenon by which a business seeks to maintain or continuously improve its competitive position by making changes just in three fields: (1) internal processes, (2) structures, and (3) company capabilities (Kuratko et al., 2011). Further, according to Leung (2006) and Baden-Fuller and Stopford (1994), Baden-Fuller and Volberda (1997), organizational rejuvenation also includes to change business strategy. It is important that scientific concepts evolve during time based on further research. Therefore, in this research, bibliometric results showed that organizational rejuvenation, as a strategic entrepreneurial phenomenon, is a complex and multidimensional concept. In fact, contrary to the early theorists, this phenomenon cannot be only limited to three previously-mentioned dimensions: “organizational restructuring, development of organizational capabilities and development of organizational processes” (Covin & Miles, 1999; Kuratko et al., 2011). Therefore, in this chapter, according to the results of the cooccurrence technique, seven dimensions (clusters) were identified for the concept of “organizational rejuvenation“: (1) organizational restructuring, (2) development of organizational capabilities, (3) improvement of organizational processes, (4) business turnaround strategies, (5) internal corporate venturing, (6) developing entrepreneurial leadership, and (7) business

32

A. Bostani et al.

rebranding. The first three components are the exact three dimensions of organizational rejuvenation concept has already been identified by Covin and Miles (1999). The next four components are the theoretical contribution of this chapter. In fact, Covin and Miles (1999) and Kuratko et al. (2011) assumed that organizational rejuvenation did not require a change in strategy. But the fact is that the organizational rejuvenation is a fundamental and strategic change in organization, and it cannot be overlooked in the organizational rejuvenation (Leung, 2006; Stopford & Baden-Fuller, 1990). Organizational entrepreneurs and company managers can stop the decline of the company and improve its performance by selecting and implementing a business turnaround strategy and carrying out turnaround actions such as selling assets, downsizing manpower, closing some production lines, and the like (Gotteiner et al., 2019). Therefore, in real world, organizational rejuvenation requires the design and implementation of business turnaround strategies and alignment (Leung, 2006), besides the other key components of organizational rejuvenation (such as organizational restructuring, entrepreneurial leadership development, business process improvement, organizational capabilities development, rebranding, internal corporate venturing). But how to do this alignment among the seven components raises new issues for future research. Moreover, according to the strategic alignment perspective (Srivastava and Sushil, 2017), how can a link and alignment be made between business turnaround strategy and organizational culture? What is the relationship between entrepreneurial leadership strategies and business turnaround strategies? How can organizational restructuring be done with startup and internal corporate venturing approaches? It is hoped that these research questions will be addressed in future research.

References Abebe, M. A., & Tangpong, C. (2018). Founder-CEOs and corporate turnaround among declining firms. Corporate Governance-An International Review, 26(1), 45–57. https://doi.org/10.1111/ corg.12216 Adenfelt, M., & Lagerström, K. (2006). Organizational rejuvenation for knowledge exploitation: Exploring corporate entrepreneurship in an MNE. Journal of International Entrepreneurship, 4(2), 83–98. https://doi.org/10.1007/s10843-­006-­0002-­y Adizes, I. (1979). Organizational passages: Diagnosing and treating life cycle problems in organizations. Organizational Dynamics, 8(1), 3–24. Argyris, C. (1993). Knowledge for action: A guide to overcoming barriers to organizational change. Jossey-Bass. https://doi.org/10.1002/hrdq.3920060210 Ayres, R. U., & Steger, W. A. (1985). Rejuvenating the life cycle concept. Journal of Business Strategy, 6(1), 66–76. Baden-Fuller, C., & Stopford, J. M. (1994). Rejuvenating the mature business: The competitive challenge. Harvard Business School Press.

Reconceptualizing Organizational Rejuvenation as a Strategic Entrepreneurship…

33

Baden-Fuller, C., & Volberda, H. (1997). Strategic renewal: How large complex organizations prepare for the future. International Studies of Management and Organization, 27(2), 95–120. https://doi.org/10.1080/00208825.1997.11656709 Bibeault, D.  B. (1981). Corporate turnaround: How managers turn losers into winners. McGraw-Hill. Retrieved from https://www.amazon.com/Corporate-­Turnaround-­Managers-­ Losers-­inners/dp/1893122026#:~:text=Based%20on%20the%20experience%20offor%20 regaining%20growth%20and%20profits Bider, I., & Jalali, A. (2014). Agile business process development: Why, how and when  – Applying Nonaka’s theory of knowledge transformation to business process development. Information Systems and e-Business Management, 14(4), 693–731. https://doi.org/10.1007/ s10257-­014-­0256-­1 Caniago, A., Suharyono, T., Arifin, Z., & Kumadji, S. (2014). The effects of service quality and corporate rebranding on brand image, customer satisfaction, brand equity and customer loyalty (study in advertising company at tvOne). European Journal of Business and Management, 6(19), 118–126. Castriotta, M., Loi, M., Marku, E., & Naitana, L. (2018). What’s in a name? Exploring the conceptual structure of emerging organizations, Scientometrics, 118, 407–437. https://doi. org/10.1007/s11192-­018-­2977-­2 Chandler, A. D. (1962). Strategy and structure: Chapters in the history of American Enterprise. MIT Press. Covin, J., & Miles, M. (1999). Corporate entrepreneurship and the pursuit of competitive advantage. Entrepreneurship Theory and Practice, 23(3), 47–63. Danvila-del-Vallea, I., Estévez-Mendozaa, C., & Larac, F. J. (2019). Human resources training: A bibliometric analysis. Journal of Business Research, 101, 627–636. https://doi.org/10.1016/j. jbusres.2019.02.026 Gerstner, L. V., Jr. (2009). Who says elephants Can't dance? : Leading a great Enterprise through dramatic change. Harper Collins e-books. Gotteiner, S., Mas-Machuca, M., & Marimon, F. (2019). Turnaround types, stages, strategies, and tactics: Putting things in order. European Accounting and Management Review, 5(2), 12–37. Hermann, R. R. & Bossle, M. B. (2018). Conceptualizing Entrepreneurial-Oriented Sustainability Education through Bibliometric Methods. ECSB Entrepreneurship Education Conference 2018, Enschede, May 16–181. Retrieved from https://www.researchgate.net/profile/ Roberto_Rivas_Hermann/publication Hooda, A. (2014). Emergence of business process reengineering: A literature review. The IUP Journal of Information Technology, 10(3), 61–75. Retrieved from https://search.proquest.com/ docview/1628369893?accountid=43860 Kavale, S. (2012). The connection between strategy and structure. International Journal of Business and Commerce, 1(6), 59–70. Kim, W. C., & Mauborgne, R. (2009). How strategy shapes structure. Harvard Business Review. Retrieved from https://hbr.org/2009/09/how-­strategy-­shapes-­structure Kreiser, P., & Davis, J. (2009). A revised conceptual model of the firm-level entrepreneurial process. Journal of Small Business Strategy, 20(1), 1–18. Kuratko, D. F., Morris, M. H., and Covin, J. G. (2011). Corporate innovation and entrepreneurship: Entrepreneurial development within organizations. Retrieved from https://books.google.com/ books/about/Corporate_Innovation_and_Entrepreneurshi.html?id=hKscQAACAAJ Lampe, J., Kraft, P. S., & Bausch, A. (2019). Mapping the field of research on entrepreneurial organizations (1937–2016): A bibliometric analysis and research agenda. Entrepreneurship Theory and Practice, 44(4), 784–816. https://doi.org/10.1177/1042258719851217 Lehu, J.-M. (2006). Brand rejuvenation: How to protect, strengthen and add value to your brand to prevent it from aging. Journal of Brand Management, 15, 223–224. https://doi.org/10.1057/ palgrave.bm.2550128

34

A. Bostani et al.

Leung, W.C. (2006). The development of a learning organisation in Hong Kong: From design to implementation  - the case of McDonald's restaurants (DProf thesis). Middlesex University, Retrieved from http://eprints.mdx.ac.uk/8003/ McKinley, W., Latham, S., & Braun, M. (2014). Organizational decline and innovation: Turnarounds and downward spirals. Academy of Management Review, 39(1), 88–110. https:// doi.org/10.5465/amr.2011.0356 Mihail, D. M., Links, M. M., & Sarvanidis, S. (2013). High performance work systems in corporate turnaround: A German case study. Journal of Organizational Change Management, 26(1), 190–216. https://doi.org/10.1108/09534811311307978 Muthusamy, S. K., & Palanisamy, R. (2004). Leveraging cognition for competitive advantage: A knowledge-based strategy process. Journal of Information and Knowledge Management, 3(3), 259–272. O’Kane, C., & Cunningham, J. (2014). Turnaround leadership core tensions during the company turnaround process. European Management Journal, 32(6), 963–980. Prahalad, C. K., & Hamel, G. (1990). The core competence of the organization. Harvard Business Review, 68(3), 79–91. https://doi.org/10.1007/3-­540-­30763-­X_14 Robbins, S. (2010). Get-it-done Guy's 9 steps to work less and do more. Griffin. Seah, M., & Hsieh, M. H. (2015). Impact of leader adaptability on organizational change and adaptation: The case of Savecom communication. Journal of Asia Business Studies, 9(3), 213–231. https://doi.org/10.1108/JABS-­05-­2012-­0023 Serrano, L., Sianes, A., & Ariza-Montes, A. (2019). Using bibliometric methods to shed light on the concept of sustainable tourism. Sustainability, 11(24), 6964–6989. Smit, Y. (2011). Corporate brand rejuvenation. University of Stellenbosch. Srivastava, A.  K., & Sushil. (2017). Alignment: The foundation of effective strategy execution. International Journal of Productivity and Performance Management, 66(8), 1043–1063. https://doi.org/10.1108/IJPPM-­11-­2015-­0172 Stopford, J.  M., & Baden-Fuller, C. (1990). Corporate rejuvenation. Journal of Management Studies, 27(4), 399–415. https://doi.org/10.1111/j.1467-­6486.1990.tb00254.x Thornberry, N. (2006). Lead like an entrepreneur: Keeping the entrepreneurial Spirit alive within the corporation. McGraw Hill, ISBN: 9780071631693 0072262354. Tondolo, V., Bitencourt, C. (2014). Understanding dynamic capabilities from its antecedents, processes and outcomes. Brazilian Business Review, 5(11), 122–144. https://doi.org/10.15728/ bbr.2014.11.5.6 Trahms, C., Ndofor, A., & Sirmon, D. (2013). Organizational decline and turnaround: A review and agenda for future research. Journal of Management, 39, 1277–1307. https://doi. org/10.1177/0149206312471390 Van Oorschot, J. A. W. H., Hofman, E., & Halman, J. I. M. (2018). A bibliometric review of the innovation adoption literature. Technological Forecasting and Social Change, 134(C), 1–21. https://doi.org/10.1016/j.techfore.2018.04.032 Wood, G., & Peel, D. (Eds.). (2015). Association of Business Schools Academic Journal Guide 2015. Association of Business Schools. Zali, M.  R. (2011). Towards the theory of entrepreneurial situational leadership. Journal of Entrepreneurship Development., 4(2), 45–66.

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian Context Shahbaz Khan, Nosheen Fatma, Mohd Imran Khan, and Abid Haleem

Abstract  The last three decades have seen focussed research on entrepreneurship and related strategic entrepreneurship. Organisations try to achieve global competitiveness by adopting strategic entrepreneurship. Despite having extensive benefits, we find that strategic entrepreneurship in developing countries is academically understudied. Further, due to several barriers, its adoption in practice is limited. This chapter primarily aims to identify the significant barriers towards adopting strategic entrepreneurship for the strategic management of entrepreneurial organisations. Thus, through expert inputs, twelve barriers were modelled through Interpretive Structural Modelling (ISM). ISM models the interrelationship among the identified barriers so that the organisation can mitigate these barriers effectively. The most significant barriers revealed by the study were ‘strategic entrepreneurship awareness’, ‘lack of entrepreneurship culture’ and ‘limited financial support to knowledge-based firms’. Further, in the next step, MICMAC analysis is applied to assess the identified barrier‘s driving and dependence power. These barriers are clustered into four categories, based on the driving/dependence power, namely autonomous, dependent, linkage and driver clusters. The finding of this study suggests that ‘strategic entrepreneurship awareness’, ‘lack of entrepreneurship culture’ and ‘limited financial support to knowledge-based firms’ are the most significant barriers towards the successful adoption of strategic entrepreneurship. Therefore, management needs to provide greater attention to the mentioned barriers to adopt a strategic perspective towards entrepreneurship. S. Khan (*) GLA University, Mathura, India N. Fatma · A. Haleem Department of Mechanical Engineering, Jamia Millia Islamia, New Delhi, India e-mail: [email protected] M. I. Khan Mittal School of Business, Lovely Professional University, Phagwara, Punjab, India e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_3

35

36

S. Khan et al.

There are three potential implications of this study. The first implication is that it is beneficial for the managers and policy planners to develop mitigation strategies to address these barriers. Secondly, this study is conducted in Indian organisations, and it will help Indian and other developing countries to understand the significant barriers to strategic entrepreneurship. Thirdly, the academic researchers in entrepreneurship will also get deeper insights into facilitating strategic entrepreneurship. Keywords  Barriers · Entrepreneurship · Interpretive Structural Modelling (ISM) · MICMAC Analysis · Strategic entrepreneurship

1  Introduction Entrepreneurship persists to be one of the fastest-growing areas in the global knowledge economy. In this domain, several researchers have studied the area of strategic entrepreneurship, and it is now developing as a popular research field (Ketchen et al., 2007; Rezaian & Naeiji, 2011; Siadat & Naeiji, 2019). There is a growing interest in this field because it is considered a means for firms to improve their ability to innovate and enhance business success by establishing new corporate ventures (Ferreira, 2002). In the domain of entrepreneurship, strategic entrepreneurship has significant importance. Strategic entrepreneurship is concerned with opportunity-seeking and advantage-seeking behaviours, resulting in value for society, organisations and even individuals. It further infers that strategic entrepreneurship includes activities chosen to exploit the current advantages while simultaneously opening new opportunities that endure an entity’s ability to create value across time. Kuratko and Morris (2018) explore the term ‘strategic entrepreneurship‘as it is an extensive collection of substantial innovations or entrepreneurial activities implemented in an organisation’s pursuit of competitive advantage. It is a technique to pursue superior performance through incremental and discontinuous innovation and a combination of strategic and entrepreneurial activities (Hitt et al., 2001; Ketchen, 2007; Mazzei, 2018). Furthermore, strategic entrepreneurship has been recognised as ‘a unique form of strategy in which a firm realises sustainable competitive advantage does not rest upon any single source of competency; rather, sustainable competitive advantage depends upon a firm’s ability to develop a stream of continuous innovation to stay ahead of competitors’ (Webb et al., 2010). Such efforts entail a significant arrangement of resources to explore new opportunities and exploit the current global markets cooperatively. To adopt strategic entrepreneurship, the organisations face several significant barriers that need to be mitigated. Therefore, this chapter aims to identify these barriers and model them. Precisely the objectives of this chapter are as follows:

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

37

• To identify the significant barriers towards the adoption of strategic entrepreneurship. • Develop the structural relationship among the identified barriers. To fulfil the stated objective, we initially conduct the literature review to identify the significant barriers and validate them with the expert’s input. A well-known modelling tool named Interpretive Structural Modelling (ISM) is used to model these barriers. After that, we have evaluated the strength of each relationship by using fuzzy MICMAC analysis.

2  Literature Review The term ‘entrepreneurship‘is defined comprehensively in contemporary literature. According to Garcia-Morales et al. (2006), entrepreneurship involves ‘creating new resources or combining existing resources in new ways to develop and commercialise new products, move into new markets, and service new customers’. The integration of strategic management and entrepreneurship is known as strategic entrepreneurship, and it is less explored in the literature. Some significant studies related to strategic entrepreneurship are mentioned here. Siadat and Naeiji (2019) identified the major dimensions and factors of strategic entrepreneurship and examined these dimensions using factor analysis. They identified five dimensions as ‘opportunity-based mindset’, ‘continuous innovation’, ‘risk-taking’, ‘value creation’ and ‘proactive behaviour’. The finding of Siadat and Naeiji (2019) demonstrated that these five dimensions had positive effects on knowledge-based firms’ competitiveness. Siddiqui and Jan (2019) developed a framework to evaluate female entrepreneurship‘s strategic entrepreneurship in the Indian context. They found that innovativeness, entrepreneurial leadership, entrepreneurial culture, strategic management of resources, entrepreneurial mindset, and networking are the most significant factors in supporting strategic entrepreneurship. Gelard and Ghazi (2014a, 2014b) explored several dimensions of strategic entrepreneurship in the context of Iran. The identified factors of strategic entrepreneurship such as ‘entrepreneurial mindset’, ‘entrepreneurial’, ‘innovation’, ‘growth and profitability‘, ‘capital mobilisation’ and ‘management and leadership’ were the key dimensions of strategic entrepreneurship.

2.1  Drivers of the Strategic Entrepreneurship Significant drivers of strategic entrepreneurship are identified by reviewing available literature, and we need to focus on these drivers. Six significant drivers are as follows:

38

S. Khan et al.

2.1.1  Balanced Exploration and Exploitation Exploring is an opportunity to seek attributes like where to place the firm, looking for new products, processes, or organisational forms. Moreover, exploitation is advantage-seeking attribute. It is looking for current competitive advantages to meet market demands. SE is concerned with exploring new innovation-based opportunities and devising ways to exploit them (Duane Ireland & Webb, 2007). Hence those firms that can successfully strike a balance between the two will lead successful SE. 2.1.2  Exhibiting Organisational Innovations Creativity is not enough; the organisation’s innovation and creativity initiatives should be aligned with the organisation’s long-term objectives, vision and mission for sustained competitive advantage. The growth of intrapreneurs is essential, as it helps organisations in improving internal processes to remain competitive (Kuratko & Audretsch, 2009). 2.1.3  Ample Knowledge of the Market Companies engaged in extensive market research are well aware of any business’s uncertainties, risks and profits. Such enterprises make market-oriented and targeted strategies that maximise their business performance (Garri & Konstantopoulos, 2013). 2.1.4  Support from Top Leadership The leaders who focus on opportunity-driven decision-making are most likely to seek new ventures. Hence effective leadership can provide the proper support system in an organisation so that some part of it can be committed to exploiting new opportunities (Hitt et al., 2011). 2.1.5  Choice of Industrial Sectors The choice of industrial sectors, which is considered trivial, is quite crucial for SE. Different industrial sectors have varied effects on entrepreneurs’ performance (Boudreaux, 2019). The service industries are found to be more profitable than retail and manufacturing. Hence industries having a lower threat to entry and less rivalry are more inclined towards SE.

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

39

2.1.6  Adequate Financial and Human Capital Both financial and human capital are essential for engaging in SE (Ireland et al., 2003a, 2003b). Financial capital is necessary for obtaining resources and ensures better chances of survival. Moreover, human capital ensures an indispensable part that, through correct knowledge, creates successful ventures.

3  Research Methodology This study applied a mixed literature review approach and ISM-fuzzy-MICMAC analysis to fulfil the previously mentioned research objectives. The adopted research methodology is described in Fig. 1. Initially, the twelve barriers of strategic entrepreneurship are identified through the comprehensive literature review and confirmed with the expert group. After finalising the barriers, the ISM method has been applied to develop the structural model of the barriers. Further, fuzzy MICMAC analysis is conducted to classify the barriers into four clusters based on their driving and dependence power. The steps of the ISM and the fuzzy MICMAC were presented in the next section.

3.1  Interpretive Structural Modelling (ISM) Warfield developed the ISM technique in 1973, an effective technique to deal with complex issues (Warfield, 1974). This technique was used to develop a structural model of complex relationships among the numerous elements in a complicated situation (Ansari et al., 2013; Khan et al., 2018; Khan et al., 2019; Khan et al., 2020; Sushil, 2016). ISM has been widely used in the academic literature and encompasses three modelling languages, namely words, diagraphs and discrete mathematics, in order to develop a framework for solving a complex problem (Shruti et al., 2018). The steps of the ISM used in this chapter are as follows (Farris & Sage, 1975; Janes, 1988; Shruti et al., 2018): Step 1: Identify the significant barriers to strategic entrepreneurship  Strategic entrepreneurship‘s barriers are identified through a literature review, idea engineering workshop, expert input and other data collection techniques. Step 2: Describing the contextual relationship  Formulate a contextual relationship between the identified barriers and develop an auxiliary self-interaction matrix (SSIM) using the pair-wise investigation of identified barriers. This matrix specifies the pair-wise relationship between the barriers. The symbols (V, A, X, O) have been applied to represent the direction of the relationship between two barriers (i and j):

40

S. Khan et al.

Aim: Identification and Modelling of barriers towards Strategic Entrepreneurship development

Conduct the Literature review

Development of binary direct relationship matrix

Input Expert’s opinion

Identification of barriers towards strategic entrepreneurship

Develop the structural selfinteraction matrix

Development of linguistic direct reachability matrix

Development of fuzzy direct relationship matrix

Develop the initial reachability matrix Obtain the fuzzy stabilised matrix Develop the final reachability matrix

Level determination by the partition of reachability matrix

Development of the Diagraph

Obtain the driving and dependence power

Classify the barriers into four clusters

Remove the transitivity Develop the cluster map Replace the variable node with a relationship statement

Fuzzy MICMAC

Is there any conceptual inconstancy?

Represent relationship statement into the model ISM Method

Fig. 1  A proposed research framework for this study (Source: Author)

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

41

V: Barrier i will lead to barrier j. A: Barrier j will lead to barrier i. X: Barrier i and j will lead to each other. O: No relation between the two barriers. Step 3: Constructing an initial reachability matrix  Construct the initial reachability matrix from the SSIM by replacing the element in every cell of the SSIM obtained in the previous step into binary digits (0 and 1). Further, the transitivity is checked, which means if barrier X is linked to barrier Y, and barrier Y is linked to barrier Z, barrier X is connected virtually to barriers Z. Step 4: Partitioning of levels  The final reachability matrix is determined from an initial reachability matrix by incorporating the transitivity. After that, reachability and antecedents’ sets are identified and based on this level; partitioning is done. Step 5: Developing the ISM Model  Based on the level partitioning, a directed graph or digraph is drawn. Eliminate the insignificant transitive links from the digraph according to the relationships provided in the final reachability matrix. Subsequently, substitute the resulting digraph with the ISM model by replacing the variables nodes with barriers.

3.2  Fuzzy MICMAC Duperrin and Godet (1973) developed MICMAC (Matrice d’Impacts Croises— Multiplication Applique and Classement—cross-impact matrix multiplication applied to classification) for making a systematic analysis of complex issues. In MICMAC analysis, the driving and dependence power of the barriers are determined. This method classifies the barriers into four clusters based on their driving and dependence power. Despite these benefits, the conventional MICMAC analysis has some limitations, such as containing the barriers‘binary relationships. Thus, to overcome such limitations, a fuzzy number is combined with MICMAC analysis, which improves the reliability and sensitivity of MICMAC analysis (Bhosale & Kant, 2016). Therefore, this chapter adopted a fuzzy MICMAC analysis for classifying the barriers. The following steps of fuzzy MICMAC are used in this chapter: Step 1: Developing the Binary Direct Relationship Matrix (BDRM)  BDRM is obtained by exploring the direct connection between the barriers used in the ISM method. The final reachability matrix is transformed into BDRM by replacing the diagonal elements with zero.

42

S. Khan et al.

Table 1  Linguistic scale and their associated TFNs (Source: Author) Linguistic variable No influence (N) Very low influence (VL) Low influence (L) Medium influence (M) High influence (H) Very high influence (VH) Complete influence (C)

TFNs (0, 0, 0) (0, 0.1, 0.3) (0.1, 0.3, 0.5) (0.3, 0.5, 0.7) (0.5, 0.7, 0.9) (0.7, 0.9, 1) (1, 1, 1)

Step 2: Developing the Linguistic Assessment Direct Reachability Matrix (DRM)  The strength of the relationship is assessed by the experts using the linguistic scale. These linguistic scales are converted into a Triangular Fuzzy Number (TFNs) using Table 1. The TFNs are expressed through triplet (l, m, r), and the l represents a lower limit, ‘u’ represents the upper limit, and m is the middle value which lies between “l” and “u.” The membership function of μA ~ (x) of the TFN is expressed through the following function:



0x u    

We require transforming the TFNs in crisp values for further operations because the matrix operations are not appropriate for the fuzzy numbers. Therefore, these TFNs are transformed into a crisp number using the following expression:



( u − l ) + ( m − l )  Best Non Fuzzy Performance ( BNPij ) = l +  3 (1)

After defuzzification of each element of the LADRM matrix, we obtain the resultant matrix known as Fuzzy Direct Reachability Matrix (FDRM). Step 3: Fuzzy MICMAC-stabilised matrix  The obtained FDRM matrix is repeatedly multiplied until the hierarchies of the driver power and dependence stabilise. This multiplication follows the fuzzy matrix principles and performing the multiplication through the given rule:

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

C = A.B = max k ( min aik ,bkj )  where A = [ aik ] , B = bkj  .



43



Step 4: Classifications of the barriers  After determining the driving and dependence power of each barrier from BDRM, it is plotted on the graph. The obtained graph is further clustered into autonomous barriers, driving barriers, linkage barriers, and dependence barriers.

4  Data Analysis and the Results 4.1  I dentification of Barriers Related to the Adoption of Strategic Entrepreneurship The significant barriers related to strategic entrepreneurship are recognised through the comprehensive literature review. These identified barriers are put in front of the expert’s group, and their comments are taken. After discussion with the expert’s group, twelve barriers related to adopting strategic entrepreneurship are finalised and shown in Table 2. In this chapter, we have applied the ISM with fuzzy MICMAC to develop the structural model of barriers to adopt strategic entrepreneurship and categorise these barriers as per their nature. The applied method is provided in the upcoming section:

Table 2  Barriers related to the adoption of strategic entrepreneurship (Source: Author) S.No 1 2 3 4 5 6 7 8 9 10 11 12

Barriers Lack of strategic entrepreneurship awareness Lack of entrepreneurial culture Unavailability of measurement tools Inefficient strategic resource management Scarcity of entrepreneurial mindset Limited financial support to knowledgebased firms Lack of continuous innovation Low exploring and exploiting opportunities Low risk-taking capacity Insufficient networking Organisational rejuvenation Existing business models

Code BSE1 BSE2 BSE3 BSE4 BSE5 BSE6

References Sriboonlue (2019) Ireland et al. (2003a, 2003b) Siadat and Naeiji (2019) Kyrgidou and Petridou (2011) Kyrgidou and Petridou (2011) Grant (1996)

BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

Luke and Verreynne (2006) Ireland and Webb (2007); Siadat and Naeiji (2019) Siddiqui and Jan (2019) Covin and Slevin (1988) Gelard and Ghazi (2014a, 2014b)

44

S. Khan et al.

4.2  Interpretive Structural Modelling This chapter’s primary objective is to identify the contextual relationships among the barriers to adopt strategic entrepreneurship, as explained in the methodology section. The identified barriers are analysed through the ISM with the help of the expert’s input. 4.2.1  Structural Self-Interaction Matrix (SSIM) An expert group is formed to gain inputs for the analysis. This expert group contains five members from both academia and industry. Initially, four industrial experts are contacted, working on the management level, and working on sustainable development and innovation. Further, three academia were contacted who are working in the area of entrepreneurship. After discussions, three industry experts and two academic experts agreed to participate in this research. These five members experts’ group have validated the barriers to adopting strategic entrepreneurship. After finalising the barriers, we have formed the SSIM matrix by using the experts’ inputs as described in the methodology section. Like previous studies (e.g., Khan & Haleem, 2012; Khan et al., 2021; Sushil, 2017), four symbols (V, A, X, O) are used to denote the direction of the relationship between the barriers i and j. Table  3 shows the inputs of experts along with symbols in making the SSIM. 4.2.2  Initial Reachability Matrix (IRM) After developing the SSIM matrix, the next step is to convert this matrix into an initial reachability matrix using the following rule: Using the rules provided in Table  4, the SSIM is transformed into IRM and shown in Table 5. Table 3  Structural self-interaction matrix (SSIM) of the barriers (Source: Author) Barriers BSE12 BSE11 BSE10 BSE9 BSE8 BSE7 BSE6 BSE5 BSE4 BSE3 BSE2 BSE1 BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

O V X V V V A A V X V

V O A X X O A O X A

O V X V V V A A V

V V A X X V A A

V V V O V O X

V V V O V V

X X A A A

V V O X

O O A

O V

X

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

45

Table 4  Rules for transforming SSIM into the initial reachability matrix (Source: Author) SSIM Element (i,j) V A X O

Initial reachability matrix (IRM) Element (i,j) 1 0 1 0

Element (j,i) 0 1 1 0

Table 5  Initial reachability matrix (IRM) of barriers (Source: Author) Barriers BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12 BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

1 1 0 0 0 1 0 0 0 0 0 0

1 1 0 0 0 1 0 0 0 0 0 0

0 1 1 1 0 1 0 0 1 1 1 1

0 0 0 1 1 1 0 0 1 0 1 0

1 1 0 1 1 1 0 0 1 0 1 0

1 1 0 0 0 1 0 0 0 0 0 0

1 1 1 0 1 1 1 1 1 1 1 1

1 1 1 0 1 0 1 1 1 1 0 1

1 1 0 1 1 1 0 0 1 0 1 0

0 1 1 1 1 1 0 0 1 1 1 1

1 0 0 1 1 0 0 0 1 0 1 0

0 1 1 1 1 1 0 0 1 1 1 1

4.2.3  Final Reachability Matrix (FRM) The final reachability matrix (FRM) is obtained by converting the IRM by checking the barriers‘transitivity. Transitivity is an assumption in ISM, expressing that if a barrier X is related to Y, and Y is related to Z, X is necessarily related to Z (Sushil, 2012). Thus by incorporating the transitivity, the final reachability matrices for the barriers is developed, and the same is shown in Table 6. 4.2.4  Partitioning of Levels Reachability set and antecedent set are formed by level partitioning. The reachability set is formed by grouping the barriers that influenced the barrier. In the antecedent set, we have put the barrier‘s cluster that influence that barrier. Further, the intersection set is formed by identifying the intersection of these sets, and the same procedure is repeated for all barriers. After that, assign level 1 to those barriers for whom the reachability and intersection set are identical. This process is known as iteration. It is repeated to assign barriers to levels until each one gets allocated to a level. Table 7 shows the level partitions of the reachability matrix.

46

S. Khan et al.

Table 6  Final reachability matrix (FRM) of barriers (Source: Author) Barriers BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12 BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

1 1 0 0 0 1 0 0 0 0 0 0

1 1 0 0 0 1 0 0 0 0 0 0

1* 1 1 1 1* 1 0 0 1 1 1 1

1* 1* 0 1 1 1 0 0 1 0 1 0

1 1 0 1 1 1 0 0 1 0 1 0

1 1 0 0 0 1 0 0 0 0 0 0

1 1 1 1* 1 1 1 1 1 1 1 1

1 1 1 1* 1 1* 1 1 1 1 1* 1

1 1 0 1 1 1 0 0 1 0 1 0

1* 1 1 1 1 1 0 0 1 1 1 1

1 1* 0 1 1 1* 0 0 1 0 1 0

1* 1 1 1 1 1 0 0 1 1 1 1

1* = Transitivity

4.2.5  The Structural Model After finalising each barrier‘s levels, the ISM model is constructed by placing the barriers of level 1 on top and level 2 below it and so on. After that, the links among the barriers are connected based on the final reachability matrix. The final ISM model for the barriers to adopting strategic entrepreneurship is shown in Fig. 2.

4.3  MICMAC Analysis The fuzzy MICMAC analysis is conducted to obtain in-depth insights into the dependencies existing among the barriers. The FRM matrix uses the binary digits, i.e., 0 or 1. The strength of the relationships among the barriers is measured using the linguistic scale provided in Table 2. Based on the linguistic scale, experts have provided the relationship’s strength, and the resulted matrix is known as Linguistic Assessment Direct Reachability Matrix (DRM). Table 8 shows the LADRM for the barriers. This matrix uses a linguistic scale, which is converted into TFN numbers as given in Table 2. Further, the TFNs are not suitable for the matrix operations, so that these TFNs are converted into a crisp number by using eq. 1. The obtained matrix is known as the fuzzy direct relationship matrix, and the same is shown in Table 9. The FDRM matrix is repetitively multiplied until the driving and dependence power hierarchies are stabilised (Gorane & Kant, 2013; Haleem et al., 2018; Khan & Haleem, 2012). We have applied this process and obtained the stabilised matrix in the iteration. The driving power of each barrier is obtained by summing up all entries of the rows, and the dependence power of each barrier is obtained by

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

47

Table 7  Level partitions of the reachability matrix: Iteration 1 (Source: Author) Barrier Reachability set BSE1 1,2,3,4,5,6,7,8,9,10,11,12 BSE2 1,2,3,4,5,6,7,8,9,10,11,12 BSE3 3,7,8,10,12 BSE4 3,4,5,7,8,9,10,11,12 BSE5 3,4,5,7,8,9,10,11,12 BSE6 1,2,3,4,5,6,7,8,9,10,11,12 BSE7 7,8 BSE8 7,8 BSE9 3,4,5,7,8,9,10,11,12 BSE10 3,7,8,10,12 BSE11 3,4,5,7,8,9,10,11,12 BSE12 3,7,8,10,12 Iteration 2 BSE1 1,2,3,4,5,6,9,10,11,12 BSE2 1,2,3,4,5,6,9,10,11,12 BSE3 3,10,12 BSE4 3,4,5,9,10,11,12 BSE5 3,4,5,9,10,11,12 BSE6 1,2,3,4,5,6,9,10,11,12 BSE9 3,4,5,9,10,11,12 BSE10 3,10,12 BSE11 3,4,5,9,10,11,12 BSE12 3,10,12 Iteration 3 BSE1 1,2,4,5,6,9,11, BSE2 1,2,4,5,6,9,11, BSE4 4,5,9,11, BSE5 4,5,9,11, BSE6 1,2,4,5,6,9,11, BSE9 4,5,9,11, BSE11 4,5,9,11, Iteration 4 BSE1 1,2,6 BSE2 1,2,6 BSE6 1,2,6

Antecedent set 1,2,6 1,2,6 1,2,3,4,5,6,9,10,11,12 1,2,4,5,6,9,11 1,2,4,5,6,9,11 1,2,6 1,2,3,4,5,6,7,8,9,10,11,12 1,2,3,4,5,6,7,8,9,10,11,12 1,2,4,5,6,9,11 1,2,3,4,5,6,9,10,11,12 1,2,4,5,6,9,11 1,2,3,4,5,6,9,10,11,12

Intersection 1,2,6 1,2,6 3,10,12 4,5,9,11 4,5,9,11 1,2,6 7,8 7,8 4,5,9,11 3,10,12 4,5,9,11 3,10,12

Level

1,2,6 1,2,6 1,2,3,4,5,6,9,10,11,12 1,2,4,5,6,9,11 1,2,4,5,6,9,11 1,2,6 1,2,4,5,6,9,11 1,2,3,4,5,6,9,10,11,12 1,2,4,5,6,9,11 1,2,3,4,5,6,9,10,11,12

1,2,6 1,2,6 3,10,12 4,5,9,11 4,5,9,11 1,2,6 4,5,9,11 3,10,12 4,5,9,11 3,10,12

1,2,6 1,2,6 1,2,4,5,6,9,11 1,2,4,5,6,9,11 1,2,6 1,2,4,5,6,9,11 1,2,4,5,6,9,11

1,2,6 1,2,6 4,5,9,11 4,5,9,11 1,2,6 4,5,9,11 4,5,9,11

III III

1,2,6 1,2,6 1,2,6

1,2,6 1,2,6 1,2,6

IV IV IV

I I

II

II II

III III

summation of the entries in the columns. Table  10 shows the resulted fuzzy MICMAC stabilised matrix for barriers. Based on the driving and dependence power, these barriers are categorised into four clusters: autonomous, dependent, linkage and driving. They identified twelve barriers that were classified into four categories and are shown in Fig. 3.

48

S. Khan et al. Low exploring and exploiting opportunities

Lack of continuous innovation

Inefficient strategic resource management

Scarcity of entrepreneurial mindset

Lack of strategic entrepreneurship awareness

Inefficient networking

Existing business models

Unavailability of measurement tools

Organisational rejuvenation

Limited financial support to knowledgebased firms

Low risk-taking capacity

Lack of entrepreneurship culture

Fig. 2  Structural model of the barriers for adoption of strategic entrepreneurship (Source: Author) Table 8  Linguistic Assessment Direct Reachability Matrix for barriers (Source: Author) Barrier BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11

BSE12

BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

L M M L M H 0 0 L M L 0

0 H 0 0 0 M 0 0 0 0 0 0

H 0 0 0 0 M 0 0 0 0 0 0

L M 0 H L H 0 0 H L H M

VL L 0 0 VH M 0 0 M 0 M 0

M H 0 VH 0 L 0 0 M 0 M 0

M M 0 0 0 0 0 0 0 0 0 0

M VH M L H VH 0 M H M H H

H VH H VL VH M H 0 H M L VH

M H 0 M M H 0 0 0 0 M 0

L M M H H M 0 0 L 0 L M

H L 0 M M L 0 0 M 0 0 0

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

49

Table 9  Fuzzy direct relationship matrix for barriers (Source: Author) Barrier

BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12

BSE01 BSE02 BSE03 BSE04 BSE05 BSE06 BSE07 BSE08 BSE09 BSE10 BSE11 BSE12

0 0.7 0 0 0 0.5 0 0 0 0 0 0

0.7 0 0 0 0 0.5 0 0 0 0 0 0

0.3 0.5 0 0.7 0.3 0.7 0 0 0.7 0.3 0.7 0.5

0.1 0.3 0 0 0.9 0.5 0 0 0.5 0 0.5 0

0.5 0.7 0 0.9 0 0.3 0 0 0.5 0 0.5 0

0.5 0.5 0 0 0 0 0 0 0 0 0 0

0.5 0.9 0.5 0.3 0.7 0.9 0 0.5 0.7 0.5 0.7 0.7

0.7 0.9 0.7 0.1 0.9 0.5 0.7 0 0.7 0.5 0.3 0.9

0.5 0.7 0 0.5 0.5 0.7 0 0 0 0 0.5 0

0.3 0.5 0.5 0.7 0.7 0.5 0 0 0.3 0 0.3 0.5

0.7 0.3 0 0.5 0.5 0.3 0 0 0.5 0 0 0

0.3 0.5 0.5 0.3 0.5 0.7 0 0 0.3 0.5 0.3 0

5  Discussion Figure 2 depicts the structural relationships among the barriers to the adoption of strategic entrepreneurship. It shows that the ISM model has four levels. The top-­level (first level) encompasses two barriers, ‘lack of continuous innovation’ and ‘low exploring and exploiting opportunities’. These barriers a relatively higher dependence to other barriers. These barriers can be mitigated by focusing on remaining barriers. The second level of the ISM model comprises three barriers, ‘inefficient networking’, ‘unavailability of measurement tools’ and ‘existing business models’. These barriers can be mitigated by creating the organisation’s innovation culture and developing a collaborative network with other organisations. The third level has four barriers: ‘scarcity of entrepreneurial mindset’, ‘inefficient strategic resource management’, ‘low risk-taking capacity’ and ‘organisational rejuvenation’. These barriers are related to the human resource and work culture of the organisation. These could be mitigated by training the working personnel and creating a long-term vision related to innovation. At the bottom of the model, i.e., the fourth level, three barriers are identified, and these are: ‘strategic entrepreneurship awareness’, ‘lack of entrepreneurship culture’ and ‘limited financial support to knowledge-based firms’. These barriers are the most critical barriers which influence the remaining barriers. Therefore, to mitigate these barriers, awareness about strategic entrepreneurship among the working personnel is required. This awareness may lead to the development of the organisation’s entrepreneurship culture, which results in the mitigation of the barriers. Finally, the financial constraint is another significant barrier in adopting strategic entrepreneurship, which could be mitigated through the government’s economic policies towards sustainable entrepreneurship development.

Barrier BSE1 BSE2 BSE3 BSE4 BSE5 BSE6 BSE7 BSE8 BSE9 BSE10 BSE11 BSE12 Dependence power

BSE1 0.7 0.5 0 0 0 0.5 0 0 0 0 0 0 1.7

BSE2 0.5 0.7 0 0 0 0.5 0 0 0 0 0 0 1.7

BSE3 0.7 0.7 0.5 0.5 0.7 0.5 0 0 0.5 0.5 0.5 0.5 5.6

BSE4 0.5 0.7 0 0.9 0.5 0.5 0 0 0.5 0 0.5 0 4.1

BSE5 0.7 0.5 0 0.5 0.9 0.5 0 0 0.5 0 0.5 0 4.1

BSE6 0.5 0.5 0 0 0 0.5 0 0 0 0 0 0 1.5

Table 10  Fuzzy MICMAC stabilised matrix for barriers (Source: Authors) BSE7 0.7 0.7 0.5 0.7 0.5 0.5 0.5 0 0.5 0.5 0.5 0.5 6.1

BSE8 0.7 0.7 0.5 0.9 0.7 0.5 0 0.5 0.5 0.5 0.5 0.5 6.5

BSE9 0.7 0.5 0 0.5 0.5 0.5 0 0 0.5 0 0.5 0 3.7

BSE10 0.7 0.7 0.5 0.7 0.7 0.5 0 0 0.5 0.5 0.5 0.5 5.8

BSE11 0.5 0.7 0 0.5 0.5 0.5 0 0 0.5 0 0.5 0 3.7

BSE12 0.5 0.5 0.5 0.5 0.5 0.5 0 0 0.5 0.5 0.5 0.5 5

Driving power 7.4 7.4 2.5 5.7 5.5 6 0.5 0.5 4.5 2.5 4.5 2.5 49.5

50 S. Khan et al.

51

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

Fuzzy MICMAC Chart 8

IV: Linkage Barriers

BSE1 7

BSE11

BSE2

Driving Power

6

BSE6

5

BSE4 BSE5

IV: Driving Barriers

BSE9

4

II.Dependent Barriers

3

BSE3

2

BSE12

I: Autonomous Barriers

1

BSE10 BSE8

BSE7

0 0

1

2

3

4

5

6

7

Dependence Power

Fig. 3  Fuzzy MICMAC analysis for barriers (Source: Author)

The fuzzy MICMAC analysis provides further insights into adopting strategic entrepreneurship based on driving and dependence power. They identified twelve barriers, which are classified into four clusters and described as follows: 1. Autonomous: Barriers associated with this cluster show insignificant driving and dependence power. In this analysis, no barriers related to this cluster are identified. It infers that all identified barriers have a significant influence on the adoption of strategic entrepreneurship and are worth considering. 2. Dependent: Barriers associated with this cluster have insignificant driving and show strong dependence power and are placed at the top of the ISM model. Five barriers have fallen in this cluster: ‘lack of continuous innovation’, ‘low exploring and exploiting opportunities’, ‘inefficient networking’, ‘unavailability of measurement tools’ and ‘existing business models’. Furthermore, these barriers are considered as the output of the adoption of strategic entrepreneurship. 3. Linkage: Barriers related to this cluster show intense driving and strong dependence power and are commonly placed in the middle of the developed model. Four barriers are associated with this cluster: ‘scarcity of entrepreneurial mindset’, ‘inefficient strategic resource management’, ‘low risk-taking capacity’ and ‘organisational rejuvenation’. These barriers are unstable; hence, careful analysis should be done, and practitioners should continuously examine these barriers at each stage of adopting strategic entrepreneurship. 4. Drivers: CSFs related to this cluster show strong driving and insignificant dependence power. These are usually positioned at the bottom of the ISM model. Three

52

S. Khan et al.

barriers are associated with this cluster: ‘strategic entrepreneurship awareness’, ‘lack of entrepreneurship culture’ and ‘limited financial support to knowledge-­ based firms’. These driving barriers acted on the system as a critical force of inertia; thus, it requires more attention to adopting strategic entrepreneurship.

6  Policy Implications and Recommendations This chapter signifies that ‘lack of strategic entrepreneurship awareness’, ‘lack of entrepreneurship culture’ and ‘limited financial support to knowledge-based firms’ are the most significant barriers. This also infers that if an organisation focuses on mitigating these barriers, then strategic entrepreneurship can be implemented better. Hence there is a need to develop awareness about strategic entrepreneurship among the working personnel and management by conducting awareness programs and seminars. Secondly, an organisation needs to develop an entrepreneurship culture among the stakeholders. This could be achieved through the top management’s consistent support to promote strategic entrepreneurship and gain support from working personnel. Development of the entrepreneurship culture takes a large amount of time and effort, and the management should appreciate this. Financial support should be provided to implement the strategic entrepreneurship, and it could be managed by allocating a fair amount of fund for strategic entrepreneurship. The government support in a different form is also essential to promote strategic entrepreneurship.

7  Research Limitation Like other studies, this study also has some limitations, such as identifying the barriers through available literature, which seems limited. Therefore, there is a chance of overlooking some significant barriers related to strategic entrepreneurship. Another limitation could be that the ISM model is developed with the expert’s opinion, which may have some bias. These limitations can be overcome by using an extensive literature review and taking the inputs from a higher number of experts. Further, the fuzzy integration with the adopted method is also beneficial to reduce the subjectivity and bias present in the expert’s input.

8  Scope for Future Research This study could be extended in several ways. The identified barriers are modelled using other modelling techniques such as Total Interpretive Structural Modelling (TISM) and Structural Equation Modelling (SEM). In future studies, these barriers

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

53

can be ranked using Multi-Criteria Decision-Making Methods (MCDM) such as AHP, ANP, PIV and BWM. The interrelationship among the barriers is quantified using the DEMATEL method. Similar to this chapter, we can also model the drivers of the SE using the ISM and MICMAC method.

9  Conclusion This research focusses on the adoption of strategic entrepreneurship and investigates the barriers related to this. Thus, to fulfil these objectives, a literature review is conducted to identify the significant barriers to adopt strategic entrepreneurship. Further, twelve barriers are identified through the expert’s input and modelled by using ISM. The developed structural model has four levels. The most significant barriers are ‘strategic entrepreneurship awareness, “lack of entrepreneurship culture’ and ‘limited financial support to knowledge-based firms’. These barriers require greater attention for the organisation that wants to adopt strategic entrepreneurship. The fuzzy-MICMAC analysis is employed to classify the barriers into four clusters based on their driving and dependence power. The research findings of this chapter can facilitate organisations to adopt strategic entrepreneurship.

References Ansari, M., Kharb, R., Luthra, S., Shimmi, S., & Chatterji, S. (2013). Analysis of barriers to implement solar power installations in India using interpretive structural modeling technique. Renewable and Sustainable Energy Reviews, 27, 163–174. https://doi.org/10.1016/j. rser.2013.07.002 Bhosale, V. A., & Kant, R. (2016). An integrated ISM fuzzy MICMAC approach for modelling the supply chain knowledge flow enablers. International Journal of Production Research, 54(24), 7374–7399. https://doi.org/10.1080/00207543.2016.1189102 Boudreaux, C. (2019). The importance of industry to strategic entrepreneurship: Evidence from the Kauffman firm survey. Journal of Industry, Competition and Trade, 20(1), 93–114. Covin, J. G., & Slevin, D. P. (1988). The influence of organisation structure on the utility of an entrepreneurial top management style. Journal of Management Studies, 25(3), 217–234. Duane Ireland, R., & Webb, J. (2007). Strategic entrepreneurship: Creating competitive advantage through streams of innovation. Business Horizons, 50(1), 49–59. Duperrin, J., & Godet, M. (1973). Methode de hierarchisation des elements d'un systeme. Rapport Economique Du CEA, 1(2), 49–51. Farris, D., & Sage, A.  P. (1975). On the use of interpretive structural modeling for worth assessment. Computers & Electrical Engineering, 2(2–3), 149–174. https://doi. org/10.1016/0045-­7906(75)90004-­X Ferreira, J. (2002). Corporate entrepreneurship: A strategic and structural perspective. International Council for Small Business, 47th world conference San Juan, Puerto Rico. Garcia-Morales, V., Moreno, A., & Llorens-Montes, F. (2006). Strategic capabilities and their effects on performance: Entrepreneurial, learning, innovator and problematic SMEs. International Journal of Management and Enterprise Development, 3(3), 191. https://doi. org/10.1504/ijmed.2006.008820

54

S. Khan et al.

Garri, M., & Konstantopoulos, N. (2013). Market information acquisition: A prerequisite for successful strategic entrepreneurship. Procedia - Social and Behavioral Sciences, 73, 643–651. Gelard, P., & Ghazi, E. (2014a). Strategic entrepreneurship element from theory to practice. International Journal of Business and Technopreneurship, 4(2), 205–219. Gelard, P., & Ghazi, E. (2014b). Strategic entrepreneurship element from theory to practice. International Journal of Business and Technopreneurship, 4(2), 205–219. Gorane, S., & Kant, R. (2013). Supply chain management: Modelling the enablers using ISM and fuzzy MICMAC approach. International Journal of Logistics Systems and Management, 16(2), 147. https://doi.org/10.1504/ijlsm.2013.056158 Grant, R. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. https://doi.org/10.1002/smj.4250171110 Haleem, A., Imran Khan, M., Khan, S., & Hafaz Ngah, A. (2018). Assessing barriers to adopting and implementing halal practices in logistics operations. IOP Conference Series: Materials Science and Engineering, 404, 012012. https://doi.org/10.1088/1757-­899x/404/1/012012 Hitt, M.  A., Ireland, R.  D., Camp, S.  M., & Sexton, D.  L. (2001). Strategic entrepreneurship: Entrepreneurial strategies for wealth creation. Strategic Management Journal, 22(6–7), 479–491. Hitt, M., Ireland, R., Sirmon, D., & Trahms, C. (2011). Strategic entrepreneurship: Creating value for individuals, Organisations, and society. Academy of Management Perspectives, 25(2), 57–75. Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003a). Strategic entrepreneurship: The construct and its dimensions. Journal of Management, 29(6), 963–989. Ireland, R., & Webb, J. (2007). Strategic entrepreneurship: Creating competitive advantage through streams of innovation. Business Horizons, 50(1), 49–59. https://doi.org/10.1016/j. bushor.2006.06.002 Ireland, R., Hitt, M., & Sirmon, D. (2003b). A model of strategic entrepreneurship: The construct and its dimensions. Journal of Management, 29(6), 963–989. https://doi.org/10.1016/ s0149-­2063_03_00086-­2 Janes, F. (1988). Interpretive structural modelling: A methodology for structuring complex issues. Transactions of the Institute of Measurement and Control, 10(3), 145–154. https://doi. org/10.1177/014233128801000306 Ketchen, D. J. (2007). Change. Strategic Entrepreneurship Journal, 1(3–4), 291–293. Ketchen, D. J., Ireland, R. D., & Snow, C. (2007). Strategic entrepreneurship, collaborative innovation, and wealth creation. Strategic Entrepreneurship Journal, 1(1), 371–385. Khan, S., Haleem, A., Khan, M., Abidi, M., & Al-Ahmari, A. (2018). Implementing traceability Systems in Specific Supply Chain Management (SCM) through critical success factors (CSFs). Sustainability, 10(2), 204. https://doi.org/10.3390/su10010204 Khan, M., Khan, S., & Haleem, A. (2019). Using integrated weighted IRP-fuzzy TISM approach towards evaluation of initiatives to harmonise halal standards. Benchmarking: An International Journal, 26(2), 434–451. Khan, W., Akhtar, A., Ansari, S., & Dhamija, A. (2020). Enablers of halal food purchase among Muslim consumers in an emerging economy: An interpretive structural modeling approach. British Food Journal, 122(7), 2273–2287. https://doi.org/10.1108/bfj-­08-­2018-­0528 Khan, M., Khan, S., Khan, U., & Haleem, A. (2021). Modeling the Big Data challenges in context of smart cities – an integrated fuzzy ISMDEMATEL approach. International Journal Of Building Pathology And Adaptation, ahead-of-print(ahead-of-print). https://doi.org/10.1108/ ijbpa-­02-­2021-­0027 Khan, U., & Haleem, A. (2012). Smart organisations: Modelling of enablers using an integrated ISM and fuzzy-MICMAC approach. International Journal of Intelligent Enterprise, 1(3/4), 248. https://doi.org/10.1504/ijie.2012.052556 Kuratko, D., & Audretsch, D. (2009). Strategic entrepreneurship: Exploring different perspectives of an emerging concept. Entrepreneurship Theory and Practice, 33(1), 1–17.

Modelling of Barriers Towards the Adoption of Strategic Entrepreneurship: An Indian…

55

Kuratko, D. F., & Morris, M. H. (2018). Corporate entrepreneurship: A critical challenge for educators and researchers. Entrepreneurship Education and Pedagogy, 1(1), 42–60. Kyrgidou, L., & Petridou, E. (2011). The effect of competence exploration and competence exploitation on strategic entrepreneurship. Technology Analysis & Strategic Management, 23(6), 697–713. https://doi.org/10.1080/09537325.2011.585040 Luke, B., & Verreynne, M. (2006). Exploring strategic entrepreneurship in the public sector. Qualitative Research in Accounting & Management, 3(1), 4–26. https://doi. org/10.1108/11766090610659724 Mazzei, M. (2018). Strategic entrepreneurship: Content, process, context, and outcomes. International Entrepreneurship and Management Journal, 14(3), 657–670. https://doi. org/10.1007/s11365-­018-­0512-­9 Rezaian, A., & Naeiji, M. J. (2011). Intellectual capital and strategic entrepreneurship as determinants of organisational performance: Empirical evidence from Iran steel industry. Journal of Global Entrepreneurship Research, 1(2), 3–19. Shruti, J. R., Kant, R., & Shankar, R. (2018). Lean six sigma implementation: Modelling the interaction among the enablers. Production Planning & Control, 29(12), 1010–1029. https://doi. org/10.1080/09537287.2018.1495773 Siadat, S., & Naeiji, M. (2019). Developing a measurement for strategic entrepreneurship by linking its dimensions to competitiveness in knowledge-based firms. International Journal of Business Innovation And Research, 18(1), 1. https://doi.org/10.1504/ijbir.2019.10017790 Siddiqui, S., & Jan, S. (2019). Developing and validating a scale to assess strategic entrepreneurship among women: A case of Jammu and Kashmir in India. Global Business Review, 20(2), 387–404. https://doi.org/10.1177/0972150918825400 Sriboonlue, P. (2019). Strategic entrepreneurial awareness and business performance: Empirical evidence from small and medium-sized Enterprises in Thailand. Procedia Computer Science, 158, 653–661. https://doi.org/10.1016/j.procs.2019.09.100 Sushil. (2012). Interpreting the interpretive structural model. Global Journal of Flexible Systems Management, 13(2), 87–106. https://doi.org/10.1007/s40171-­012-­0008-­3 Sushil. (2016). How to check correctness of total interpretive structural models? Annals of Operations Research, 270(1–2), 473–487. https://doi.org/10.1007/s10479-­016-­2312-­3 Sushil. (2017). Multi-criteria valuation of flexibility initiatives using integrated TISM – IRP with a big data framework. Production Planning & Control, 28(11–12), 999–1010. https://doi.org/1 0.1080/09537287.2017.1336794 Warfield, J. (1974). Developing interconnection matrices in structural modeling. IEEE Transactions on Systems, Man, and Cybernetics, SMC-4(1), 81–87. https://doi.org/10.1109/ tsmc.1974.5408524 Webb, J. W., Ketchen, D. J., & Ireland, R. D. (2010). Strategic entrepreneurship within family-­ controlled firms: Opportunities and challenges. Journal of Family Business Strategy, 1(1), 67–77.

A New and Innovative GEM Composite Index Based upon the National Expert Survey: A Survey of Selected African Countries Mike Herrington and Alicia Coduras

Abstract  This chapter involves collecting and analysing data obtained by interviewing key experts covering nine framework conditions influencing the entrepreneurial ecosystem in selected African countries using the National Expert Survey (NES) questionnaire developed by the Global Entrepreneurship Monitor (GEM) and then to use the information gathered to develop a new and innovative composite index. The purpose of a composite index is to consolidate a number of inputs that describe or are related to a phenomenon into a single summary number that is easy to interpret and to use by professional developers and policy makers. This chapter discusses the development of a national entrepreneurial context composite index (NECI) which makes use of the data collected by GEM national teams for the National Expert Survey (NES). The results for six African countries, Angola, Egypt, Morocco, Sudan, Madagascar and Mozambique are given, and conclusions are drawn as to what interactions are required in each country to improve the entrepreneurial ecosystem. Keywords  Entrepreneurship · National experts · Composite index · National framework conditions · Entrepreneurial ecosystem · African countries

M. Herrington (*) University of Stellenbosch Business School, Cape Town, South Africa e-mail: [email protected] A. Coduras Global Entrepreneurship Research Association (GERA) & Institute Optimetric (Barcelona), Barcelona, Spain e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_4

57

58

M. Herrington and A. Coduras

1  Introduction The fundamental purpose of a composite index is to distil a number of different inputs that describe or are related to a phenomenon into a single summary number (Szerb & Acs, 2010). It often attempts to provide a qualitative measure to non-­ measurable phenomena resulting in a score or rank for the unit in question, thereby providing information for data-driven policy discussions (Saisana & Satelli, 2008). As early as 2002, the World Bank developed and launched the now acclaimed Doing Business indicators (World Bank, 2012). Although the technical merits of these indicators have been debated for well over a decade (Kaufman & Kraay, 2008; Michaels, 2009), the index has proven to be an immense success in helping to improve and modernize the business ecosystems in both developed and developing economies. However, when it is combined with other indices such as the Heritage Foundation’s Index of Economic Freedom, the Global Competitive Index and others, professionals and policy makers have concrete goalposts to develop tools aimed at improving the state of entrepreneurship and the overall business ecosystem in countries around the world. It should be noted that these indicators are focused more on lightening burdens for businesses and to improve economic incentives to foster economic growth rather than trying to explain what is necessary to be done. In more recent times, composite indicators have gained popularity in a wide variety of research areas and with government organizations (Greco et al., 2018). Their adoption has captured the attention of the media and policy makers, and the number of applications has surged in recent years. The concept really came to the fore when the World Entrepreneurship Forum tried to develop a composite index to measure well-being (Schwarb, 2016). In principle, it is a very difficult concept that is extremely hard to capture in one single indicator (Decancq & Lugo, 2013; Decancq & Schokkaert, 2016) that would encompass a multitude of different indicators.

2  Literature Review Support for composite indices has been found in many areas (Nardo et al., 2005; Saisana & Tarantola, 2002) in that they are efficient, reducing potentially a large number of indicators and data into a single number. However, there are detractors because, if the index is flawed or badly constructed, policy makers might draw poor conclusions and make incorrect decisions from the results. In many cases, judgment calls are required in order to create a composite index, thereby introducing uncertainty. In many cases when comparing composite indices to single indicator, the potential for disagreement among stakeholders increases possibly due to self-­ interest. The big problem is that, in the case of composite indices, considerably more data is required than with a single indicator, thereby markedly increasing costs.

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

59

Although defining a composite indicator should be straightforward, it appears that there is no single, overall accepted definition. According to the European Commission’s State of the Art report (Saisana & Tarantola, 2002), composite indicators are “based upon sub-indicators that have no common meaningful unit of measurement and there is no obvious way of weighting these sub-indicators”. Another potential definition provided by the OECD is that a composite index is “formed when individual indicators are compiled into a single index on the basis of an underlying model of the multi-dimensional concept that is being measured” (Nardo et al., 2005). According to the definition provided by the Institute National de la Statistique et des Etudes economique (2016), “a composite index number is a weighted mean of the elementary index number in which the weighting represents the ‘mass’ of the elementary number”. In other words, it provides the required information to build ranks on a concrete concept and the basis for useful benchmarking among economies or other types of entities. While literature contains many reviews of different composite indices, the vast majority focus on applications for specific disciplines such as the environment (Juwana et al., 2012), innovation (Grupp & Mogee, 2004), sustainability (Bohringer & Jochem, 2007) and tourism (Mendola & Volo, 2017). In spite of the many vague definitions, there has been an exponential increase in the amount of research and in the number of academic publications which show no signs of decline. The widespread adoption by global institutions such as the OECD, the World Bank and the EU has captured the attention of policy makers and the media around the world (Saltelli, 2007), again increasing awareness and interest. In terms of the best practices associated with building a composite index, the OECD Handbook (, 2008) identifies ten steps that are recommended to be followed in any attempt of constructing a composite index: “1. Theoretical/conceptual framework construction – a model of the phenomenon in question that clearly defines it is created, identifying components and sub-components. 2. Data selection – individual indicators should be selected based on a number of criteria, including coverage, measurability, relation to one another, and connection to the index phenomenon. 3. Data treatment  – includes dealing with missing data and testing for and treating outliers. 4. Multivariate analysis – this analysis examines the structure of the dataset, including weights and aggregation, evaluating its suitability to capture the phenomenon in question (principal components analysis, or PCA, Factor analysis, and Cronbach Alpha are common techniques). 5. Normalization – transforming varied data with no common unit of measurement into a comparable form; also includes scaling if necessary. 6. Weighting and aggregation – applied index weights and aggregation should match the theoretical framework. 7. Uncertainty and sensitivity analysis  – uncertainty analysis, or robustness testing, evaluates how individual sources of uncertainty (imputed data, weighting method, weights, normalization, aggregation rule) move through the computation of the index score, affecting rankings, and sensitivity analysis examines the extent to which any one unique uncertainty source impacts the variance of scores and ranks. 8. Relation to other indicators – attempt to link the composite index to other indicators, aiding in the progression of data-driven discussions.

60

M. Herrington and A. Coduras 9. Decomposition into the underlying indicators – the composite index should be transparent so that scores are fully understandable, and one can understand why and how a score was achieved. 10. Visualization of the results – the composite index results should be presented and explained in the most clear and accurate fashion”.

3  Common Methodological Limitations It should be noted that a number of potential problems can occur at different stages when compiling a composite index as discussed by Nardo, Saisana, Saltelli, Tarantola, Hoffman and Giovannini (cited in Saisana & Satelli, 2008) regarding the issues related with uncertainty when modelling a composite index. Taking together what these authors discovered, Saisana and Saltelli summarize the findings and warn on nine different ways in which some degree of uncertainty can be introduced in the estimation of a composite index. These are: “1. Measurement error in the data. 2. Elected approach for selecting indicators. 3. Selected truncation or trimming technique of data. 4. Amount of missing data and, if done, imputing methodology. 5. Chosen normalization technique. 6. Weighting method (for example, equal weights or those based on expert opinion). 7. Selection of weights attached to each individual indicator. 8. Level of aggregation, if more than one is used. 9. Aggregation technique (additive, multiplicative, or non-compensatory).”

As previously discussed, composite indices can lead policy makers or individuals to make simplistic or flawed decisions. A report by two worldwide universities ranking composite indices suggest that the indices reflect more the perceptions of the indices creators than those using the indicators (Saisana & Satelli, 2008). They frequently violate Step 10 of the OECDs composite index formation guide, by overstating results and not clearly stating how they should be interpreted. In 2017, Kevin Walker (a doctoral student at the J.J. Strossmayer University in Osijek, Croatia) was commissioned to review a number of indicators used by different organizations (unpublished report done for the Global Entrepreneurship Research Association). The indexes reviewed are presented in Table 1: His conclusions were that various organizations had specific indices for a particular function and that there was not a composite index that measured entrepreneurship effectively with justifiable results.

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

61

Table 1  The reviewed indexes in this chapter Organizations OECD Eurostat Entrepreneurship Indicators Program (EIP) EY G20 Entrepreneur Barometer

Global Entrepreneurship and Development Index (GEDI) Gallup Well-Being Index GINI Index Human Development Index (HDI) World Economic Forum’s Global Competitiveness Index (GCI) Global Innovation Index (GII) Heritage Foundation’s Economic Freedom Index Transparency International’s Corruption Perceptions Index (CPI) World Bank’s Doing Business (DB) Gender Inequality Index World Economic Forum’s Global Gender Gap Index Economist Intelligence Units (EIU) Women’s Venture Scope Hofstede Culture Indexes

Websites http://epp.eurostat.ec.europa.eu/portal/page/portal/ european-­business/special_sbs_topics/ entrepreurship-­indicators http://www.eyom/GL/en/Services/Strategic-­Growth-­ Markets/ The-­EY-­G20-­Entrepreneurship-­Barometer-­2013 http://www.thegedi.org http://gallup.com/poll/123215/gallup-­healthways-­ index.aspx http://data.worldbank.org/indicator/SI.POV.GINI http://hdr.undp.org/en http://www.weforum.org/issues/ global-­competitiveness http://globalinnovationindex.org/content. aspx?page=GII-­Home http://www.heritage.org/index/ http://www.transparency.org/research/cpi/overview http://www.doingbusiness.org/ http://hdr.undp.org/en/statistics/gii http://weforum.org/issues/global-­gender-­gap http://weventurescope.com/ http://www.geerhofstede.com/indx and http:// geert-­hofstede.com/countries.html http://www.worldvaliessurvey.org/ http://www.cfr.org/thinktsnk/iigg/reportcard/index. html

World Values Survey (WVS) Council on Foreign Relations’ International Institutions and Global Governance Report International Monetary Fund’s Financial http://fas.imf.org/ Access Survey Access to Entrepreneurship Education http://ec.europa.eu/education/more-­information/ Indicators doc/2011/entrepreneurship_en.pdf (Source: Authors’ own work)

4  The GEM Conceptual Model The Global Entrepreneurship Monitor (GEM) research program was first conceptualized in 1997 by two academics, Michael Hay and Bill Bygrave, one from London Business School and the other from Babson College in the United States, respectively. The project now spans over 100 countries covering all geographic regions and all levels of economic development (GEM Global Report 2017/18). Surveys are

62

M. Herrington and A. Coduras

Entrepreneurial framework conditions

National framework conditions

Social, cultural, political, economic context

Basic requirements Efficiency enhancers Innovation and business sophistication

Outcome: socio-economic development

Entrepreneurial output: new jobs, new value added

Social values towards entrepreneurship Individual attributes (psychological, demographic, motivation)

Entrepreneurial activity By phases of organizational life cycle: nascent, new, established, discontinuation Types of activity: high growth, innovative, internationalisation Sectors of activity: TEA, SEA, EEA

Fig. 1  The GEM Conceptual Framework. (Source: GEM Global Report, 2017/2018)

conducted annually by teams in different countries collecting primary data through two structured surveys. The first survey, the Adult Population Survey (APS) asks a minimum of 2000 randomly selected respondents between the ages of 18 and 64  years that are representative of the demographics of the country. The second survey, the National Expert Survey (NES) is conducted by interviewing a minimum of 36 key informant experts in the country gathering insights into factors that impact the country’s entrepreneurial ecosystem (Xavier et al., 2013). Over the years, GEM has developed a conceptual framework (Fig.  1) which depicts the multifaceted nature of entrepreneurship recognizing the proactive, innovative and risk-responsive behaviour of individuals who are in continual interaction with the environment (GEM Global Report 2017/18). The figure depicts the main components and relationships into which GEM divides the entrepreneurial process and how it classifies entrepreneurs according to the level of organizational development.

5  Methodology In this chapter, the focus will be on the social, cultural and economic context represented through the National Framework Conditions (NFCs) and the Entrepreneurial Framework Conditions (EFCs) via the NES which relate specifically to the quality of the national entrepreneurial context/environment and include:

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

• • • • • • • • • • • •

63

Entrepreneurial financing. Government policies: support and relevance. Government policies: taxes and bureaucracy. Government entrepreneurship programs. Entrepreneurship education at the school level. Entrepreneurship education at post school level and entrepreneurship training. Research and development (R & D) transfer. Commercial and legal infrastructure. Internal market dynamics. Internal market burdens or entry regulations. Physical infrastructure. Cultural and social norms.

The NES questionnaire is standard structured and semi-structured for all countries and consists of blocks of 5–8 items or statements relating to each framework condition. At least four experts from each EFC are interviewed, making a minimum of 36 experts per country. So as to ensure a balanced and representative sample, the experts are drawn from the community of entrepreneurs, government, academics and practitioners in each country. A minimum of 25% must be entrepreneurs or business people and 50% must be professionals. Additional aspects such as geographical distribution, gender, involvement in the public versus private sector and level of experience should be taken into account when balancing the sample. The results of the data collected can be presented in various formats, tables, bar charts or spider graphs which show the averages obtained year after year for the principal components that represent the latent entrepreneurial framework conditions. Taking into account that 5 is the average of the measurement scale, the results will show what conditions prevail and which conditions remain over the average and which conditions remain under. This is shown in Table 2 which represents the results for

Table 2  The average state of the 12 EFCs for selected African countries_2018 Country A Angola 2,59 Egypt 4,39 Madagascar 2,79 Morocco 3,60 Mozambique 1,71 Sudan 3,89

B1 3,65 4,26 3,30 3,42 1,83 2,49

B2 3,65 3,50 3,21 3,97 2,48 2,69

C 3,13 3,98 3,03 3,39 2,25 2,66

D1 3,22 2,33 2,33 1,87 1,77 2,47

D2 3,85 3,72 5,51 4,02 2,26 3,92

E 2,72 3,46 3,27 2,59 1,91 2,94

F 4,55 4,48 4,35 4,96 3,61 4,83

G1 4,98 5,13 5,15 4,50 4,82 7,46

G2 3,57 4,38 3,35 3,08 3,11 3,17

H 3,97 6,52 4,26 6,61 4,99 4,92

I 4,68 4,56 3,77 3,79 3,14 4,34

Where: A = Financial environment and support; B1 = Concrete government policies, entrepreneurship priority and support; B2  =  Government policies: taxes and bureaucracy; C  =  Government entrepreneurship programmes; D1 = Entrepreneurship education: primary and secondary level; D2 = Entrepreneurship education, vocational, professional and tertiary level; E  =  R & D transfer; F  =  Access to professional and commercial infrastructure; G1  =  Internal market dynamics; G2  =  Internal market burdens; H  =  Access to physical infrastructure/services; I =  Cultural and social norms. Source: authors’ own work

64

M. Herrington and A. Coduras

six African countries (Angola, Egypt, Morocco, Sudan, Madagascar and Mozambique) who participated in the 2018 GEM cycle. The values for the individual components are difficult to use in order to evaluate the quality of the total environment, and for this reason, GEM moved towards the development of a composite index which is called the National Entrepreneurial Context Composite Index (NECI). The development of a similar type of composite index was put forward by Acs et al. (2014) when they presented their Global Entrepreneurship Development Index (GEDI) which was based upon using primary data compiled by GEM. The use and validity of this was refuted by the Global Entrepreneurship Research Association (GERA)1 for a number of reasons. It used GEM indicators and assume these indicators could also be applied for neighbouring countries and that data collected in different years could be used as representing the current year.

6  A  n Applied Example: The NECI Results for a Sample of African Countries The first step in the consideration formulating an NES composite index was to review the recent literature on composite indices exploring the different aspects and selecting the ones most relevant for this purpose. It was important to solve two critical questions. The first was to give a set of weights and to ascribe the influence of each variable on the output and the second was how the weights can be assigned to reflect the desired importance? GEM teams, from the statements received from the 36 key informants about the 12 framework conditions, indicate the extent to which they agree on a 9-point Likert scale. The experts also evaluate the importance scores for each statement representing the extent this aspect plays a key role in stimulating and supporting entrepreneurship in their country in a particular year. The name chosen for this index is NECI or the National Entrepreneurial Context Composite Index and is calculated based upon a typical weighted average model. NECI  W1 ·S1  W2 ·S 2  W3 ·S3  W4 ·S 4  W5 · S 5  W6 · S6  W7 ·S 7  W8 ·S8  W9 ·S 9  W10 ·S10  W11 ·S11  W12 ·S12 W1  W2  W3  W4  W5  W6  W7  W8  W9  W10  W11  W12





S1 to S12 are the summaries applied to each block in the NES from finance for entrepreneurs (S1) to social and cultural norms (S12). W1 to W12 represent the weights of these variables in terms of the importance that expert key informant expert applies to the 12 framework conditions. Each expert’s ratings for the statements (re-scaled to ten points) are multiplied by their importance values. The results for all

 www.gemconsortium.org/about/news/37)

1

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

65

statements on each framework condition are then summed and divided by the sum of the importance values to generate and individual weighted NECI score. These scores are then averaged over all experts to arrive at an NECI value for each framework condition. This index was first written about in the GEM 2018/2019 Global Report (Bosma & Kelley, 2019). NECI intends to fill the gap in the entrepreneurship literature by providing a single composite number that is able to express the average state and quality of the entrepreneurial ecosystem in any one country and compare it to other countries. However, before normalization, the maximum attainable value of NECI is 9 points and the minimum 1 but the value can be normalized on a scale of 10 by:



NECI normalized 

NECI value 10 9

where if NECI has a value of: 0–3 = the state of the entrepreneurial framework condition is of very low quality and needs serious review. 3–5  =  the state of the entrepreneurial framework condition is low and where the main conditions need to be reviewed. 5–7 = the state of the entrepreneurial framework condition is reasonable and policy makers need to look at those parts which are low and need intervention. 7–10  =  the state of the entrepreneurial framework conditions are good and even excellent if the score is 8 points or higher. The advantage of this ranking is that participating countries have comparative benchmarks, and they now have information, which provides answers to critical questions such as: • What is the condition(s) which need to be considered to be improved? This is particularly important in developing countries. • What is the gap between the main conditions? • How does a country compare to another and what lessons can be learnt from that country?

7  A  n Applied Example: The NECI Results for a Sample of African Countries In 2018, 54 economies participated in the GEM cycle including six African economies: Angola, Egypt, Madagascar, Morocco, Mozambique and Sudan. The results of the NECI index for this sample of countries is provided in Fig. 2. Based upon a 10-point scale, the six countries show NECI scores under 5 points (Mozambique, 3.28; Angola, 4.17; Madagascar, 4.22; Sudan, 4.45; Morocco, 4.56 and Egypt, 4.92), indicating that their entrepreneurial framework conditions are

66

M. Herrington and A. Coduras

NECI 2018 10 9 8 7 6 5 4 3 2 1

4.17

4.22

4.45

4.56

Angola

Madagascar

Sudan

Morocco

4.92

3.28

Mozambique

Egypt

Fig. 2  Results of the NECI for six African countries, 2018 (Source: GEM NES, 2018)

below average and not very healthy when compared to the GEM average for all countries of 5.24. Although the results do not indicate a healthy environment on a collective basis, there are some differences: North African economies like Egypt and Morocco are closer to the GEM average, suggesting that their conditions are more conducive towards economic development However, Mozambique, Madagascar, Angola and Sudan need more attention to improve the entrepreneurial context. As previously explained, in order to calculate a value for NECI, GEM requires experts to evaluate the main conditions that make up the entrepreneurial context and then to assign a value or degree of influence and importance to each of these conditions. Figure  3 shows a comparison between the average scores of importance/ weight for each of the framework conditions as ascribed by the national key informant experts and the average state for each condition as perceived by the Key Informants. In all the countries, with the exception of Madagascar, the weights assigned to all the framework conditions by the experts are high being between 7 and 9. However, for Madagascar, the weights are all less than eight points although the experts believe that government policies and support and cultural and social norms are the most important determinant conditions. Nonetheless, all the conditions perceived by the experts are less than the mean value of 5 with the exception of entrepreneurship education in post school. In Angola, the average state of the framework conditions are very low especially in the case of financing for entrepreneurs, R&D transfer, government programs and school entrepreneurial education. The slightly stronger conditions are commercial infrastructure, cultural and social norms and market dynamics. However, the experts in this country believe that a lot of work is needed to close the gap between what they perceive to be important and what is actually happening in order to improve the entrepreneurial ecosystem for economic development. In Egypt, the experts’ evaluation of what is necessary and what is happening is much closer especially with two conditions; internal market burdens and physical infrastructure resulted in a good equalization between the state and the importance of internal market burdens and physical infrastructure, two conditions that obtained

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

67

Angola 10 9 8 7 6 5 4 3 2 1

Average importance

Average state

Egypt 10 9 8 7 6 5 4 3 2 1

Average importance

Average state

Madagascar 10 9 8 7 6 5 4 3 2 1

Average importance

Average state

Fig. 3  Average importance assigned by experts to main entrepreneurial framework conditions compared to the average state assigned by experts to each of them. Source: authors’ own work

68

M. Herrington and A. Coduras

Mozambique 10 9 8 7 6 5 4 3 2 1

Average importance

Average state

Sudan 10 9 8 7 6 5 4 3 2 1

Average importance

Average state

Morocco 10 9 8 7 6 5 4 3 2 1

Average importance

Fig. 3 (continued)

Average state

A New and Innovative GEM Composite Index Based upon the National Expert Survey…

69

average scores above 7 points. This means that these conditions are adequate and that attention must be directed towards others as, for example, R&D transfer, government policies and support and entrepreneurial education at school, the latter being the weakest elements of the framework but considered as important to make up the ecosystem. In Mozambique, internal market dynamics and burdens and physical infrastructure tend to be aligned with the importance/weight assigned by experts to these conditions. Mozambique has a favourable market, but the other framework conditions need improvement. In Sudan, the internal market dynamic is the strongest condition and perfectly reflects the level of influence assigned by experts to it. Internal market burdens, physical infrastructure and cultural and social norms tend to be close but not sufficient. The rest of the framework conditions need urgent attention and are really distant from the important role they have under the light of experts’ opinions.

8  Conclusion, Future Developments and Lines of Research In conclusion, the construction of the NECI has been challenging because finding an adequate methodology to calculate the weights of the composite index in the equation constituted a serious problem. The solution adopted in 2018 is a feasible method, but it is not exempt of critics. The information used to build the indicator is completely provided by experts, and it is subjective. In defence of the methodology, it can be said that the NES has always been treated as an expert’s survey and that in 20 years it remained stable and gave no signals of incoherence regarding the results provided. The experts’ evaluations are usually recognized as good descriptions and diagnostics of the average state of national entrepreneurial contexts, and the indicators provided by GEM in this area are used by prestigious organizations such as the European Commission or the OECD. However, GEM scholars within its research commission have planned and are executing a second version of the NECI based on a different methodological approach. Suggested by Dr. Abdul Ali,2 the second approach to be tested in the 2019 GEM cycle consisted of adding a new item to the current NES survey so experts could provide a global score on the average state of the national context for entrepreneurship. Once collected the data, this variable will be used as dependent in a multiple regression model where the explanatory variables are going to be the twelve principal components that GEM uses to evaluate the average state of the main framework conditions. The beta regression coefficients are intended to be used as weights for a second version of the NECI.

2  Dr. Abdul Ali a member of the GEM Research and Innovation Committee until 2018. Based in Babson College and member of the GEM USA team, he unexpectedly passed away in December 2018.

70

M. Herrington and A. Coduras

References Acs, Z., Autio, E., & Szerb, L. (2014). National systems of entrepreneurship : Measurement issues and policy implications. Research Policy, 43(3), 476–494. Bohringer, C., & Jochem, P. E. (2007). Measuring the immeasurable – A survey of sustainability indices. Ecological Economics, 63(1), 1–8. Bosma, N. and Kelley, D. (2019). Global Entrepreneurship Research Association 2018/19 Global Report, pp. 58–61. Decancq, K., & Lugo, M. A. (2013). Weights in multidimensional indices of wellbeing: An overview. Econometric Reviews, 32(1), 7–34. Decancq, K., & Schokkaert, E. (2016). Beyond GDP: Using equivalent incomes to measure well-­ being in Europe. Social Indicators Research, 126(1), 21–55. GEM Global Report. (2017/2018). London Busibess School. Greco, S., Ishizaka, A., Tasiou, M., & Torrisi, G. (2018). On the methological framework of composite indices : A review of the issues of weighting, aggregation and robustness. Social Indicators Research, 141(1), 61–94. Grupp, H., & Mogee, M. E. (2004). Indicators for natoinal science and technology policy: How robust are composite indicators? Research Policy, 33(9), 1373–1384. Institute National de la Statistique et des Etudes Economique. (2016). Retrieved from https://www. insee.fr/en/metadonnees/definitions Juwana, I., Muttil, N., & Perera, B. J. C. (2012). Indicator-based water sustainability assessment – A review. Science of the Total Environment, 438(1), 357–371. Kaufman, D., & Kraay, A. (2008). Governance indicators; Where are we, where should we be going. World Bank Observer, 23(1), 1–30. Mendola, D., & Volo, S. (2017). Buliding composite inicators in tourism studies. Measurements and applications in tourism destination competitiveness. Tourism Management, 59, 541–553. Michaels, R. (2009). Traditional comparative Law. Journal American Journal of Comparative Law, Vol. 57, Issue 4/Fall 2009, pp. 765–795. https://doi.org/10.5131/ajcl.2008.0022. Nardo, M., Saisana, M., Saltelli, A., Tarantola, S., Hoffman, A., & Giovannini, E. (2005). Handbook o constructing composite indicators. OECD Publishing. OECD. (2008). Handbook on Constructing Composite Indicators. Methodology and User Guide. OECD. Saisana, M., & Satelli, A. (2008). Expert panel opinion and global sensitivity analysis for composite indicators (pp. 251–275). Springer. Saisana, M. and Tarantola, S. (2002). State-of-the-art report on current methodologies and practices for composite indicator development. European Commission. Joint Research Centre. Institute for the protection and security of the citizen, Technology and Risk Management Unit, Ispra, Italy. Saltelli, A. (2007). Compositr indicators between analysis and advocacy. Social Indicators Research, 81(1), 65–77. Schwarb, C. (2016) The growing disconnect between GDP and well being. World Economic Forum. Retrieved from https://www.weforum.org/agenda/2014/05/growing-­disconnect-­gdp-­wellbeing. Szerb, L. & Acs, Z.  J. (2010). The global entrepreneurship and development index. Strategy, organisation and technology, London. World Bank. (2012). About the Doing Business Project. Retrieved February 12, 2012, from http:// donigbusiness.org/about-­usdownloaded Xavier, S.  R., Kelley, D., Kew, J., Herrington, M. and Vorderwulbecke, A. (2013). The Global Entrepreneurship Research Association Re.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos Norte, Philippines: The Role of Resource-­Based View Bibeth L. Macatumbas-Corpuz and Nelson C. Bool

Abstract  This chapter looks into the sustainability factors of Barangay Micro Business Enterprises (BMBEs) in Laoag City from the Resource-Based View (RBV). Primary data were gathered through a survey questionnaire and interview. Secondary data were collected from the Department of Trade and Industry-Ilocos Norte Provincial Office and Laoag City Licensing Office. The findings show that the BMBEs in Laoag City, particularly the hotel accommodation and food service activities group, have valuable, rare, inimitable, and organized resources that sustain their operations. Having excellent local market knowledge, customer loyalty, established relationships with suppliers, owner’s motivation, daily recording of financial transactions, separating business money from personal money, and high social media presence with positive reviews are the resources that give them a sustainable competitive advantage. By maximizing these resources, they overcome the problems encountered in business operations, especially amid the COVID-19 pandemic. Valuable and rare but can be easily imitated resource such as differentiated product provides a temporary competitive advantage. Valuable resources that are not rare and can easily be imitated, such as offering affordable meals, financial resources, employees, sales on a cash basis, and a simple organizational structure, provide competitive parity. The BMBEs should strategize to make all valuable but not rare and easily imitated resources into valuable, rare, inimitable, and organized to become a sustainable competitive advantage. Keywords  Sustainability · BMBEs · Resource-based view · Strategies

B. L. Macatumbas-Corpuz (*) Graduate School, University of Santo Tomas, Manila, Philippines School of Business and Accountancy, Divine Word College of Laoag, Laoag City, Philippines N. C. Bool Graduate School, University of Santo Tomas, Manila, Philippines © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_5

71

72

B. L. Macatumbas-Corpuz and N. C. Bool

1  Introduction Micro, small, and medium enterprises (MSMEs) are essential engines for growth and development. They represent over 50% of all enterprises worldwide, and they contribute to more than 70% employment and 50% of GDP growth in developing countries (International Council for Small Business, 2020). In the Philippines, MSMEs are operationally defined based on employment and asset size. The Philippines Statistics Authority classifies an enterprise based on employment, while the Small and Medium Enterprise Development Council (SMEDC) uses asset size as its basis for classification. The classification of enterprises based on employment is as follows: microenterprises have 1–9 employees, small enterprises have 10–99 employees, medium enterprises have 100–199 employees, and large enterprises have 200 employees and above. Meanwhile, the classification based on asset size is as follows: microenterprises have assets up to P3,000,000; small enterprises have assets of P3,000,001-P15,000,000; medium enterprises have assets of P15,000,001–P100,000,000; and large enterprises have assets of P100,000,001 and above (2019 Philippine MSME Statistics in Brief). There are 1,000,506 registered business enterprises in the country, of which 995,745 (99.5%) are micro, small, and medium enterprises (MSMEs) while 4761 (0.5%) are large enterprises. Of the MSMEs, 891,044 (89%) are microenterprises, 99,936 (10%) are small enterprises, and 4765 (0.50%) are medium enterprises (2019 List of Establishments of the Philippine Statistics Authority, as quoted by the Department of Trade and Industry) (Fig. 1) and (Table 1).

Number of Establishments in the Philippines Medium 0.50%

Large 0.50%

Small 10%

Micro 89%

Micro

Small

Medium

Large

Fig. 1  Number of establishments in the Philippines. Source: Authors’ Own Figure based on the 2019 List of Establishments, Philippine Statistics Authority

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

73

Table 1  Number of establishments in the Philippines

Micro Small Medium Large Total

Number of establishments 891,044 99,936 4765 4761 1,000,506

Source: Authors’ Own Table Based on the 2019 List of Establishments, Philippine Statistics Authority

MSMEs generated a total of 5,510,760 jobs or 62.4% of the country’s total employment as of 2019. Microenterprises produced the most significant share (29.8%), closely followed by small enterprises (25.2%), while medium enterprises were far behind at 7.4%. On the other hand, large enterprises generated 3,315,575 jobs or 37.6% of the nation’s overall employment. In terms of value-added, the MSME sector contributed 35.7%, where small enterprises had the largest share (20.5%), followed by medium enterprises (10.3%) then microenterprises (4.9%). Moreover, MSMEs contributed 25% of the country’s total export revenue, and it was projected that 60% of all exporters in the country belong to this sector. They contribute to exports through subcontracting arrangements with large firms or as suppliers to exporting companies (2019 List of Establishments of the Philippine Statistics Authority, as quoted by the Department of Trade and Industry). In Ilocos Norte, as of 2019, there were 6695 registered business establishments; 99.87% were MSMEs, and 0.13% were large enterprises (2019 List of Establishments of the Philippine Statistics Authority, as quoted by the Department of Trade and Industry) (Fig. 2) and (Table 2). Based on the 2019 List of Establishments of the Philippine Statistics Authority, as quoted by the Department of Trade and Industry, Laoag City, the capital of the province of Ilocos Norte, had the most number of registered MSMEs, accounting for 32.19%, followed by San Nicolas (11.76%) and Batac City (11.32%) (Fig. 3). The top 3 industry sectors in the province are Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles accounting for 41.12%, followed by the manufacturing industry, which accounts for 18.82% and Accommodation and Food Service Activities with 16.18% (2019 List of Establishments of the Philippine Statistics Authority, as quoted by the Department of Trade and Industry) (Fig. 4). Considering the impact of MSMEs on the economy, it is necessary to ensure the sustainability of their business operations. Capitalizing on their available resources could help them gain a sustained competitive advantage that can bring many benefits to the business, such as increasing sales, market share, and eventually growing profits. The Resource-Based View (RBV) is a popular theory that explains the resources of the business. The RBV theory can help firms choose essential resources and craft strategies to gain a competitive advantage. This chapter applies the concept of RBV to the registered Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos Norte, Philippines. The

74

B. L. Macatumbas-Corpuz and N. C. Bool

Number of Establishments in Ilocos Norte Medium 0.21%

Large 0.13%

Small 7.23%

Micro Small Medium Large Micro 92.43%

Fig. 2  Number of establishments in Ilocos Norte. Source: Authors’ own figure based on the 2019 List of Establishments, Philippine Statistics Authority

Table 2  Number of establishments in Ilocos Norte

Micro Small Medium Large Total

Number of establishments 6188 484 14 9 6695

Source: Authors’ own table based on the 2019 List of Establishments, Philippine Statistics Authority

different resources of the BMBEs are identified to create strategies to help them attain their business sustainability. The following section presents literature on Resource-­Based View. This is followed by the discussion of Barangay Micro Business Enterprises that includes: (1) the R.A. 9178, known as Barangay Micro Business Enterprises (BMBE) Act of 2002; (2) the profile of the BMBEs in Laoag City; (3) the BMBEs‘SWOT Analysis and their VRIO resources, and (4) strategies for the sustainability of BMBEs.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

2,500

75

2,152

2,000 1,500 1,000 500 -

786

757

20

249 230 156 125

62

6

83

401

280

94 33

6

210 192 132 168

161 216 167

MSMEs in Ilocos Norte by City/Municipality

Fig. 3  MSMEs in Ilocos Norte by city/municipality. Source: Authors’ own figure based on the 2019 List of Establishments, Philippine Statistics Authority

MSMEs in Ilocos Norte by Industry Sector MSMEs in Ilocos Norte Wholesale and Retail Trade; Repair of Motor Vehicles…

2,749

Manufacturing

1,258

Accommodation and Food Service Activities

1,082

Other Service Activities

340

Financial and Insurance Activities

273

Human Health and Social Work Activities

196

Information and Communication

184

Agriculture, Forestry, and Fishing

104

Education

83

Real Estate Activities

82

Administrative and Support Service Activities

77

Professional, Scientific and Technical Activities

77

Arts, Entertainment, and Recreation

70

Transport and Storage Construction Electricity, Gas, Steam, and Air Conditioning Supply Mining and Quarrying Water Supply; Sewerage, Waste Management and…

62 21 14 8 6

Fig. 4  MSMEs in Ilocos Norte by industrial sector. Source: Authors’ own figure based on the 2019 List of Establishments, Philippine Statistics Authority

76

B. L. Macatumbas-Corpuz and N. C. Bool

2  Resource-Based View (RBV) The firm’s Resource-Based View (RBV) is one of the most popularly used theoretical frameworks in the management literature (Beard and Sumner, 2004; Runyan et al., 2006). The RBV focuses on the firm’s competitive advantages from its unique set of resources (Wernerfelt,1984; Barney,1991; Peteraf,1993). The RBV claims that a business progresses based on valuable resources. It proposes that a firm can differentiate itself from its opponents and craft sustainable competitive advantage only if it keeps valuable resources (Barney, 1991). According to Barney (1991), the RBV rests on two fundamental assumptions: (1) resource heterogeneity—assumes that different firms own different bundles of productive resources; and (2) resource immobility—assumes that these resources may not be entirely mobile across firms as some of these resources are either very costly to copy or inelastic in supply. RBV defines a firm in terms of the resources that the firm integrates. Often, “resource” is narrowed to those attributes that increase its efficiency and effectiveness (Wernerfelt, 1984). Miller and Shamsie (1996) denoted that resources should have some capability to generate profits or to avoid losses. According to Daft (1983), as quoted by Barney (1991), firm resources comprise all assets, capabilities, organizational processes, firm attributes, knowledge, and information controlled by a firm that allows them to think of and implement strategies that develop its efficiency and effectiveness. As cited by Barney (1991), firm resources can be categorized into three: physical capital resources (Williamson, 1975), human capital resources (Becker, 1964), and organizational resources (Tomer, 1987). Physical capital resources include the physical technology used in business, its access to raw materials, its plant and equipment, and its geographic location. Human capital resources encompass the experience, training, intelligence, judgment, relationships, and insight of individual managers and workers in a firm. Organizational capital resources involve a firm’s formal reporting structure, formal and informal planning, controlling and coordinating systems, and informal relations among groups within a firm and between a company and its environment (Barney, 1991). Resources can also be classified as tangible or intangible. Tangible resources include capital, access to capital, and location, among others. Intangible resources consist of skills and reputation, knowledge, entrepreneurial orientation, among others (Runyan et al., 2006). According to Barney (1991), for firm resources to have the potential of sustained competitive advantages, it must have four characteristics: (a) it must be valuable, that it exploits opportunities and/or neutralizes threats in a company’s environment; (b) it must be rare among a company’s current and potential competition; (c) it must be imperfectly imitable or difficult to imitate; and (d) there cannot be strategically corresponding substitutes for this resource that are valuable but neither rare nor imperfectly imitable.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

77

3  Barangay Micro Business Enterprises (BMBEs) 3.1  T  he R.A. 9178, Also Known as Barangay Micro Business Enterprises (BMBEs) Act of 2002 The Barangay Micro Business Enterprises (BMBEs) Act of 2002 (R.A. No. 9178) promotes the establishment of Barangay Micro Business Enterprises (BMBEs). This Act encourages the formation and progress of BMBEs by providing them incentives and other benefits such as income tax exemption from income arising from the enterprise’s operations. They are also exempted from the Minimum Wage Law; however, their employees will still avail the social security and healthcare benefits. In addition, a particular credit window has been set up specifically for the financing of BMBEs. They are assisted through production and management training, technology transfer, and marketing programs. Moreover, the local government units may reduce or exempt them from local taxes, fees, and other charges (BMBE Act of 2002). A BMBE is defined under the BMBE Act of 2002 as any business enterprise involved in the production, processing, or manufacturing of products. It includes agro-processing, trading, and services, with total assets of not more than P3 million. These assets shall include those arising from loans but not the land on which the plant and equipment are located.

3.2  The Barangay Micro Business Enterprises in Laoag City There are 446 registered BMBEs in Ilocos Norte as of 2019 based on the list provided by the Department of Trade and Industry—Ilocos Norte Provincial Office. Based on the record, 39 are from Laoag City, the capital of Ilocos Norte. However, only 23 BMBEs have pertinent data in the Laoag City Licensing Office. Data include form of ownership, capitalization, business age, and the number of employees. It was noted that there are 16 BMBEs from the Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles industry; four from the Accommodation and Food Service Activities; two from Other Service Activities and one from the Manufacturing industry (Fig. 5). 3.2.1  P  rofile of BMBEs: Hotel Accommodation and Food Service Activities Group in Laoag City Table 3 presents the profile of the BMBEs, particularly the hotel accommodation and food service activities group. All the BMBEs in this group belong to food service activities. The groupings were based on the Department of Trade and Industry.

78

B. L. Macatumbas-Corpuz and N. C. Bool

Barangay Micro Business Enterprises in Laoag City Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles

16

Accommodation and Food Service Activities

4

Other Service Activities

2

Manufacturing

1 0

2

4

6

8

10

12

14

16

18

Barangay Micro Business Enterprises in Laoag City

Fig. 5  Barangay Micro Business Enterprises in Laoag City, Ilocos Norte. Source: Authors’ own figure based on the records of Laoag City Licensing Office (2020)

Table 3  Profile of BMBEs: Hotel Accommodation and Food Service Activities Group Business profile BMBE 1 Form of ownership Sole proprietorship Capitalization P20,000.00 Business age 6 Number of 1 employees

BMBE 2 Sole proprietorship P10,000.00 2 1

BMBE 3 Sole proprietorship P439,190.00 2 4

BMBE 4 Sole proprietorship P50,000.00 3 5

Source: Authors’ own table based on the records of Laoag City Licensing Office (2020)

All four BMBEs‘form of ownership are single proprietorships. Their capitalization ranges from P10,000.00 to P439,190.00. BMBE 1 has been operating for 6 years, BMBE 2 and 3 have been in operation for 2 years, and BMBE 4 has been operating for 3 years. BMBE 1 and 2 have 1 employee each, BMBE 3 has 4 employees, and BMBE 4 has 5 employees. As of 2020, the BMBEs in Hotel Accommodation and Food Service Activities group have an average annual sales ranging from P 200,750 to P900,000. All BMBEs pay a 3% percentage tax for business tax and opt for a graduated income tax rate rather than the 8% income tax rate. According to the National Internal Revenue Code (1997), every business has to pay income tax, business tax, and excise tax, if applicable. The implementation of R.A. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN) Law, gives the self-employed individuals and professionals the option to avail either one of the following tax regimes: the 8% tax on gross sales or gross receipts and other non-operating income above P250,000 or the graduated income tax rate. The 8% tax rate is only applicable if gross sales or gross receipts do not exceed P3,000,000. If the taxpayer opts for the 8% tax rate, he does not have to pay the percentage tax. However, if he selects the graduated income tax rate, he has to pay the percentage tax.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

79

Table 4  Average annual sales and tax rates availed by BMBEs: Hotel Accommodation and Food Service Activities Group Business profile Average annual sales Business tax (12% VAT or 3% percentage tax) Income tax (8% or graduated income tax rate)

BMBE 1 P237,250

BMBE 2 P 200,750

BMBE 3 P 810,000

BMBE 4 P 900,000

3% percentage tax

3% percentage tax

3% percentage tax

3% percentage tax

Graduated income tax rate

Graduated income tax rate

Graduated income tax rate

Graduated income tax rate

Source: Authors’ own Table (2021)

It could be gleaned in Table 4 that none of the BMBEs availed the 8% tax on gross sales or receipts. They did not avail since one of the benefits and incentives provided in the BMBE Act of 2002 is income tax exemption from income arising from the enterprise’s operations. Hence, even before the implementation of the TRAIN Law, their income from operations was already exempted from income tax but not from business tax. Moreover, a business is subject to VAT if its aggregate actual gross sales or receipts exceed Php 3,000,000.00. Meanwhile, businesses whose annual gross sales and/or receipts do not exceed Php 3,000,000.00 and are exempt from value-added tax (VAT) under Sec. 109 (B.B.) of the National Internal Revenue Code, as amended by R.A. No. 10963 shall be subjected to percentage tax. All BMBEs are subjected to the 3% percentage tax since their annual gross sales are below P3,000,000.00. 3.2.2  S  WOT Analysis of BMBE: Hotel Accommodation and Food Service Activities Group in Laoag City This sub-section analyzes the strengths, weaknesses, opportunities of and threats to BMBE—hotel accommodation and food service activities group in Laoag City. The SWOT analysis was based on the survey questionnaire and interview conducted with the owners of the four BMBEs (Table 5). Strengths BMBEs Offer Affordable Meals  Ilocanos, including Laoageños, are known to be thrifty and budget-conscious people. Offering meals at reasonable prices attract them. According to all the BMBEs, customers are coming back because of their inexpensive yet delicious meals. BMBE 1 and BMBE 2 are serving snacks as low as P10 and P20, respectively. BMBE 3 serves its specialty snack as low as P30. BMBE 4 offers a budget meal (with rice, vegetable, and meat) at P50.

80

B. L. Macatumbas-Corpuz and N. C. Bool

Table 5  SWOT Analysis of BMBE: Hotel Accommodation and Food Service Activities Group in Laoag City Strengths  • BMBEs offer affordable meals  • Good local market knowledge  • Capitalization  • Customer loyalty  • Established relationship with suppliers  • Employees  • All sales are on a cash basis  • High social media presence with positive reviews  • BMBEs have simple organizational structures  • BMBE owners have great motivation  • Daily recording of financial transactions  • Separating business money from personal money Opportunities  • Policies and programs initiated by the government  • Technological advances  • Demand for home delivery services

Weakness  • Limited access to finance  • High cost of doing business  • Limited sales area coverage  • High production costs

Threats  • Competition  • Impact of climate change  • Pandemic

Source: Authors’ own Table (2021)

Good Local Market Knowledge  The BMBE owners are knowledgeable about their local market. Hence they have learned the buying preferences of their target market. According to BMBE 1, its customers are mostly neighbors who have a limited budget for their snacks. BMBE 2 customers are mainly neighbors and construction workers near their place who prefer meals with soup. BMBE 3 customers are mostly from the city proper and health conscious. BMBE 4 customers are primarily tricycle drivers and workers in their nearby grocery stores who prefer to buy their lunch at a minimal amount. Capitalization  As shown in Table 3, the BMBEs‘capital investment ranges from P10,000.00 to P439,190.00. The BMBEs’ capital investment was used to start the business and sustain its operations. According to BMBE 3, a part of its net income had been set aside to improve its restaurant area and future expansion. Customer Loyalty  The BMBEs have loyal customers who continue patronizing their products and services. According to BMBE 1, BMBE 2, and BMBE 4, customers keep coming back because of their cheap but delicious meals. BMBE 3 claimed that their loyal customers frequently dine in their restaurant because of their healthy and affordable snacks. Hence, customers still visit their place even they are far from the business district. Established Relationships with Suppliers  BMBE owners directly transact with their suppliers and build a good rapport with them. This good relationship helps them to secure a high quality of products at lower prices. Moreover, purchases are given discounts which lower their costs. All the BMBEs have dependable suppliers whom they buy their raw materials. In addition, all of them stated that their suppliers give them special discounts. BMBE 4 further claimed that since trust had been built between them, they were able to avail credit lines with their suppliers.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

81

Employees  Employees are considered the best assets of a business. With their skills, ideas, insights, and efforts, they help in a business’ success. All the BMBEs have employees that help them to work in their business. According to BMBE 2, their employee helps them in decision-making with regard to the business operations. All Sales Are on a Cash Basis  Cash is king. All BMBE sales are on a cash basis; hence, they avoid the possibility of bad debts. Have a High Social Media Presence with Positive Reviews  Having an increased social media presence with positive thoughts promotes the business and raises awareness. BMBE 3 has social media accounts and a member of a group on Facebook consisting of local restaurants in Ilocos Norte. According to BMBE 3, their social media accounts increased the awareness and familiarity of existing and potential customers. The owner also claimed that their sales had risen since they created the account and became a member of the group. BMBEs Have Simple Organizational Structures  Being personally managed by single proprietors, they are updated with the BMBEs‘operations, facilitating cost control and addressing general operational issues. All of them (BMBEs) expressed that they manage and oversee the business operations. BMBE Owners Have Great Motivation  The owners of BMBEs work harder and longer and are more concerned with profits and losses. Having a passionate, almost compulsive desire to succeed makes them work harder and better. All the BMBEs are motivated to run the business out of necessity because it is their source of income for their daily living. In addition, BMBE 1 and BMBE 3 also stated that they could finance their children’s education out of their business income. BMBE 1 further claimed that the business income could pay their personal debts. The finding is in contrast with the study of Velasco et al. (2017) that Filipinos were mainly motivated to be an entrepreneur by the opportunity to earn more (41.55%) rather than necessity (25.64%). These opportunities can provide them greater financial independence and higher financial income. It can be noted that the chapter only discusses four BMBEs, and the interview revealed only information that might be exclusive to such. Daily Recording of Financial Transactions  All the BMBE owners record their daily financial transactions, such as sales and expenses. Hence, they have a daily tracking of the operation and financial position of their business. According to BMBE 3, they also need to update their books of accounts on a daily basis to avoid penalties with the Bureau of Internal Revenue if ever they conduct tax mapping. They Are Separating Business Money from Personal Money  The BMBE owners practice the business entity concept: the separation of business money from personal money. All of the BMBEs believed that they could have a proper accounting of the business’ money through this practice.

82

B. L. Macatumbas-Corpuz and N. C. Bool

Weaknesses BMBEs Have Limited Access to finance  BMBEs can start a business with minimal funds. As they expand their operations, they need to raise their capital. However, they have limited access to it. According to BMBE 1, it is discouraging to avail loans from banks and microfinance due to the many requirements, including collateral and guarantor availability. This is similar to Aldaba’s (2011) findings that the top reasons for turning down MSMEs’ financial requests were the firm’s poor credit history, insufficient collateral, inadequate sales, income or cash flow, unstable business type, and flawed business plan. In general, banks tend to prefer larger corporate borrowers because of higher gains, perception of lower credit risk, higher r­ epayment rates, and collateral availability. The lack of credit information limits access to financing from traditional financial institutions (MSME Development Plan 2017–2022). R.A. No. 9501, Section 15 prescribed that for a period of 10 years from June 17, 2008, to June 16, 2018, banks must set aside 8% of their loanable funds for micro and small enterprises while 2% should be allotted for medium-sized firms to provide them the credit needed for their operations and expansion. Ramos (2020) brought to light that banks only allocated 2.8% of their loan portfolio to MSMEs in 2019. Although R.A. 9501 is implemented, its enforcement is difficult due to the high risks that MSMEs bear. Lenders prefer to evade this provision and pay penalties rather than lend to MSMEs. They Are Experiencing a High Cost of Doing Business  All the BMBEs expressed that they are experiencing continuous increases in expenses incurred, such as salary costs, raw materials, taxes, and licenses, making the profit thinner. All of them also cited the numerous requirements and time-consuming processes in securing business permits. The country’s ease of doing business improved over the past year, climbing 29 notches in World Bank’s “Doing Business 2020” Report. Among 190 economies, the Philippines ranked 95th from 124th place in 2019. The country’s score improved to 62.8 from 60.9 previously. However, comparing it to countries in East Asia and Pacific, the Philippines ranked below Singapore (2nd), Hong Kong (3rd), Malaysia (12th), Taiwan (15th), Thailand (21st), China (31st), Brunei (66th), Vietnam (70th), Indonesia (73rd), and Mongolia (81st) (World Bank, 2020). The issuance of DTI/DILG/DICT Joint Memorandum Circular No. 1 Series of 2010 and 2016 and securing FDA licenses to operate through the Market Authorization Portal streamlines the process of business licensing/issuance of mayor’s permit. However, several government procedures and requirements are still numerous, repetitive, and time-consuming due to the non-uniformity of rules, weak support for MSME, and poor coordination among national government agencies (NGAs) and local government units (LGUs). Thus, it is more costly for MSMEs to comply (MSME Development Plan 2017–2022) (World Bank, 2020).

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

83

They Have Limited Sales Area Coverage  BMBE1 and BMBE 2 operate within the barangays; hence, they have limited sales area coverage. High Production Costs  All BMBEs are experiencing high production costs as raw materials continue to increase. BMBE 3 also expressed the inability to maximize economies of scale and scope. Opportunities BMBEs Can Avail of the Policies and Programs Initiated by the Government  All the BMBEs signified their interest to take advantage of the government’s different policies and programs to aid them with their needs. Aside from the benefits and incentives provided in the BMBE Law, they can benefit from the following policies and programs provided in the MSME Development Plan 2017-2022 and the TRAIN Law: The Magna Carta for Micro, Small and Medium Enterprises (R.A.  No. 9501) encourages, supports, stimulates entrepreneurship by giving program assistance and strengthening a balanced and sustainable development to MSMEs. The Go Negosyo Act (R.A. 10644) promotes job generation and inclusive growth through the growth of micro, small, and medium enterprises, requiring the establishment of Negosyo Centers in all municipalities, cities, and provinces, which shall be accountable for promoting ease of doing business and enabling access to services for MSMEs. The Anti-Red-Tape Act (R.A. 9485) aims to improve efficiency in delivering government service to the public by reducing bureaucratic red tape, preventing graft and corruption, and providing penalties therefor. Moreover, different circulars were issued to implement guidelines in processing business permits and licenses. Furthermore, the Enhanced Business Name Registration System was created to ease business name registration through online registration and payment. There are also microfinance programs such as “Pondo sa Pagbabago at Pag-­ asenso” or P3 Program, which intends to provide inexpensive loan program. The Access of Small Entrepreneurs to Sound Lending Opportunities (ASENSO) Program aims to decrease the effective cost of borrowing and liberalize credit requirements. The Surety Fund Program aims to help MSME who are experiencing trouble securing loans due to the absence of collateral, credit knowledge, and track record to build their creditworthiness. The installation of a National ID System by the government will overcome some of the information asymmetries. The Shared Service Facilities (SSFs) and Small Enterprise Technology Upgrading Program (SET-UP) help MSMEs access better technology and sophisticated equipment. With these, MSMEs can improve the quality of their products and services, simplify and improve overall operations, and increase production and sales, which could become globally competitive. Learning programs such as the SME Roving Academy (SMERA) helps develop MSMEs to become globally competitive. The KAPATID Mentor ME Program

84

B. L. Macatumbas-Corpuz and N. C. Bool

teaches MSMEs on various aspects of business operation through coaching and mentoring. The R.A. 10963, also known as the Tax Reform Acceleration and Inclusion Law, aims to make the Philippine Tax System simpler, fairer, and more efficient to promote investments, create jobs, and reduce poverty. The TRAIN Law minimizes the number of tax brackets from 7 to 6 and exempts the first P250,000 annual taxable income, which is beneficial to microenterprises. It also gives individual taxpayers an option to pay a fixed rate of 8% on gross sales or receipts instead of the graduated income tax rate and percentage tax. Technological Advances  With the presence of the internet, the BMBEs can reach more customers through online marketing or selling. BMBE 1, 2, and 4 expressed their interest in creating social media accounts for their business. BMBE 3 would continue to maximize its social media accounts to reach more potential customers. Demand for Home Delivery Services  With the pandemic, home delivery services have become in-demand as more people prefer to stay at home. BMBE 2 considers to offer home delivery services since many of their customers are requesting it. Threats Competition  All of the BMBEs considered competition as a threat. Interestingly, BMBE 1 revealed that direct competitors are threats to their market share, while BMBE 4 expounded that the presence of indirect competitors such as fast-food chains significantly affects their sales. Impact of Climate Change  It can be noted that the Philippines ranked 17th on the Climate Risk Index (CRI) 2019 as it scored 26.67, and it was ranked fourth in the long-term climate risk index for a period of 19  years from 2000–2019 having a score of 18.17 (Eckstein et al., 2021). It was also at ninth place in the World Risk Index in 2019, with the country’s index at 20.69 (St. John Day, Independent WASH Consultant et al., 2019). These rankings are due to the fact that the country recurrently faces catastrophic events because of its geographical location. As explained by BMBE 1, the natural calamities hamper their operations and likewise threatens their survival. In one instance, when Typhoon Haiyan struck the country in 2013, a total of 13,312 MSMEs were affected in the Eastern Visayas Region, as reported by the National Economic and Development Authority. For this reason, MSMEs experienced another downfall in their struggling situation (Badoc-­ Gonzales et  al., 2020). The lack of disaster risk management strategies reduced MSMEs’ competitiveness in the post-disaster economy (Mendoza et al. 2018). Pandemic  COVID-19 has occurred as a profound business disruptor. The pandemic has caused a devastating socio-economic impact around the world. In the Philippines, the nationwide lockdown implemented in March 2020 almost paralyzed the economy. Not only was the movement of the people became limited but

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

85

also the delivery of non-essential goods. Many businesses were closed; most of these were microenterprises. MSMEs were at significant risks because of the economic lockdown due to the COVID-19 outbreak. According to a survey conducted by the United Nations Development Program (UNDP) Philippine office (2020), MSMEs were much affected by liquidity and supply problems during the lockdown. This survey confirmed the sector’s vulnerability. Most MSMEs reported income reduction during the lockdown and financial strain from continuing expenses such as rent, taxes, salaries, and unpaid loans. Moreover, most of them closed their businesses due to the lockdown. Meanwhile, the businesses allowed to operate during the lockdown encountered inadequate supplies and logistics, and transportation issues. Most business closures and transportation problems were reported in the manufacturing sector. Moreover, those engaged in farming encountered problems such as poor market access, reduced workforce, and finance (UNDP Philippines, 2020). The BMBEs in Laoag City are also affected by the pandemic. All of them experienced minimal sales. BMBE 2 even claimed that they had no sales for months due to the lockdown. 3.2.3  V  aluable, Rare, Inimitable, Organized Resources of BMBE: Hotel Accommodation and Food Service Activities Group in Laoag City This sub-section presents the Valuable, Rare, Inimitable, and Organized Resources of the four (4) BMBE—hotel accommodation and food service activities group in Laoag City (Table 6). The VRIO analyses were based on the survey questionnaire and interview conducted with the owners of the four BMBEs. Valuable Resources All four BMBEs offer affordable meals. The owners believed that their capability to provide affordable meals is valuable since it applies to their target market, the thrifty and budget-conscious Laoageños. According to BMBE 1, their customers return and patronize their services due to affordable yet delicious meals. Good local market knowledge creates value as all the BMBE owners considered their target market’s buying preferences. BMBE 2 claimed that since Ilocanos are known to be frugal people, they prefer to buy affordable products or services. Hence, they are offering affordable meals that fit their budget. All the BMBEs claimed that the invested capital is valuable for it is necessary to defray the business’ essential expenditures, such as payment of raw materials, salaries, utilities, and taxes. In addition, BMBE 3 said that having enough capital facilitates the business’ smooth operations since there are enough funds to cover the expenses. Moreover, BMBE 4 indicated that having extra funds pave the way to other investment and expansion opportunity.

86

B. L. Macatumbas-Corpuz and N. C. Bool

Table 6 Valuable, Rare, Inimitable, Organized (VRIO) Resources of BMBEs: Hotel Accommodation and Foodservice Activities in Laoag City Resources Offers affordable meals

BMBE 1 BMBE 2 BMBE 3 BMBE 4 V R I O V R I O V R I O V R I O Y N N N Y N N N Y N N N Y N N N

Good local market knowledge

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Financial resources (capitalization)

Y N N N Y N N N Y N N N Y N N N

Customer loyalty

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Established relationship with suppliers

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Employees

Y N N N Y N N N Y N N N Y N N N

Sales are on a cash Y N N N Y N N N Y N N N Y N N N basis Simple Y N N N Y N N N Y N N N Y N N N organizational structure Owner's motivation

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Records financial transactions

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Separates business money from personal money

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Differentiated product High social media presence with positive reviews Source: Authors’ Own Table (2021)

Y Y N N Y Y Y Y

Competitive Advantage Competitive parity Sustainable competitive advantage Competitive parity Sustainable competitive advantage Sustainable competitive advantage Competitive parity Competitive parity Competitive parity Sustainable competitive advantage Sustainable competitive advantage Sustainable competitive advantage Temporary competitive advantage Sustainable competitive advantage

Legend: Y – Yes N – No Sustainable competitive advantage Temporary competitive advantage Competitive parity

All BMBEs believed that customer loyalty is a valuable resource because sales are ensured when loyal customers patronize their products and services. According to BMBE 1, loyal customers guarantee continuous sales or income. BMBE 2 also stated that even there are new food establishments in their area, their loyal customers still prefer to dine in their restaurant. All the BMBEs considered the established relationship with suppliers as a valuable resource because it helps them secure a high quality of raw materials with lower prices. According to them, since trust has been built between them, the BMBEs can depend on the quality of raw materials and timely delivery of products. They also stated that their suppliers give them special discounts, but only BMBE 4 has a credit line with its suppliers.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

87

Employees’ skills, ideas, insights, and efforts contributed to the business and are valuable resources. All the BMBEs have employees that help them to work in their business. According to BMBE 2, their employee helps them in decision-making regarding their business operations. The capability of the BMBEs to have all their sales on a cash basis is valuable. According to BMBE 3, since all of their sales are cash, they avoid bad debts and maximize their cash flow by investing the excess money to other businesses. The high social media presence with positive reviews is valuable. BMBE 3 claimed that their social media accounts increased the awareness and familiarity of existing and potential customers and increased their sales. The BMBEs‘simple organizational structure is valuable because it facilitates ease of cost control and addresses general operational issues. All of the BMBEs mentioned that they manage and oversee the business’ operations. Hence, they could address issues and concerns immediately. The BMBE owners’ motivation is valuable because it keeps them to work harder and better. All the BMBEs are motivated to manage the business because it is their source of income for their daily living. BMBE 1 and BMBE 3 also claimed that they could finance their children’s education out of their business income. BMBE 1 added that the business income could pay their personal liabilities. Thus, they are encouraged to do well with their business. The capability of the BMBEs to record their daily financial transactions such as sales and expenses is valuable. According to BMBE 4, by recording their daily transactions, they are able to monitor their day-to-day operations, which helps them in decision-making. Moreover, BMBE 3 expressed that by updating their books of accounts every day, they are compliant with the Bureau of Internal Revenue regulations. The BMBE owners’ practice of always separating the business money from personal money is valuable because it leads to proper accounting. All of them believed that this practice is necessary to determine the actual cash position of the business. BMBE 1 further expressed that the cash position aids in making economic decisions. The differentiated product of BMBE 3 is a valuable resource. According to BMBE 3, it makes the customers’ perceived value high. Also, since BMBE 3 is the first to introduce such a product, it has a first-mover advantage. Rare Good local market knowledge is rare because it took time to determine the target market’s buying preferences. Customer loyalty and established relationships with suppliers are rare because they resulted from years of building a good rapport. The BMBE owners’ motivation is rare as this is inherent to the owner. Their ability to record their daily financial transactions such as sales and expenses and their practice of separating the business money from personal money is rare since it takes discipline and commitment to do them. The differentiated product of BMBE 3 is rare because they are the first to introduce malunggay miki, a native snack in the

88

B. L. Macatumbas-Corpuz and N. C. Bool

province. Having a high social media presence with positive reviews is rare as it takes time to have a high social media presence and obtain positive reviews. Offering affordable meals is not rare because many food establishments in Laoag City offer affordable meals. The invested capital is not rare because all the BMBEs have a capital investment. The employees are not rare since they can resign and look for another job anytime. Sale on a cash basis is not rare since it is a common practice. The BMBEs‘simple organizational structure is not rare since all are single proprietorships. Inimitable Good local market knowledge is difficult and costly to imitate because it takes time and money to be familiarized with the target market’s buying behavior, including their preferences. Customer loyalty is difficult to replicate as customer loyalty results from months or even years of marketing, providing affordable and delicious meals, and building a good relationship with them. Likewise, the established relationship with suppliers is difficult to imitate because a good relationship with suppliers results from months or years of building rapport. The BMBE owners’ motivation is difficult to imitate, as this is inherent to the owner. Their capability to record their daily financial transactions such as sales and expenses is challenging to imitate since it takes discipline and patience to do this every day, especially that the owner is the over-all in-charge of the business operations. Moreover, the BMBE owners’ practice of always separating the business money from personal money is difficult to imitate because the discipline is inherent to the owner. A high social media presence with positive reviews is difficult to imitate as it takes time to have a high social media presence and obtain positive reviews. However, BMBE 3 considered their differentiated product as imitable. Although they are the first to create the malunggay miki, the recipe is easy to copy since it did not have a patent. Organized Good local market knowledge is organized to capture value. This resource is used to continuously consider the target market’s buying preferences, making sure to offer products or services that fit them. Customer loyalty is also organized as the BMBEs exploit such resources. As can be gleaned in Table 3, BMBE 1 has been operating for 6 years, BMBE 2 and 3 have been in operation for 2 years, and BMBE 4 has been existing for 3 years, proof that their loyal customers continue to patronize their products. The established relationship with suppliers is organized because the BMBEs depend on the on-time delivery of high quality but discounted raw materials. The owners’ motivation is organized because they used such inspiration to improve the business further. The recording of financial transactions is organized as this is being done daily and systematically. The high social media presence with positive reviews is organized because of increased awareness of potential customers.

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

89

4  S  trategies for Sustained Competitive Advantage of BMBEs in Laoag City 4.1  Financial Strategies BMBE 4 cited that BMBEs should sustain the recording of financial transactions to keep abreast of their profitability and financial position. They should also maintain the separation of business money from personal money to have proper accounting on the business money. Moreover, BMBE 4 recommended that they request the proper credit term deals such as higher credit lines and more extended credit periods from the suppliers. Getting a higher credit limit increases their buying capacity as they can purchase more products without shelling out cash at the moment of delivery. In connection with this, it is also suggested that a more extended credit period will enable them to maximize their cash flow. BMBE 1 suggested that BMBEs should maintain sales on a cash basis to avoid bad debts and maximize cash flow. When all sales are on a cash basis, and purchases of raw materials are on account, they can still use the money by investing in short-­ term investments. According to BMBE 2, they should avail of the reduced local taxes as indicated in the BMBE Law to minimize their cost of doing business. BMBE 2 also suggested that BMBEs should avail of the 8% income tax rate because both income tax and percentage tax will be exempted. In case there is a need to raise capital, BMBE 3 suggested that they should avail the government’s programs, especially those related to finance, such as the P3 program, as this offers lower borrowing costs than informal lending.

4.2  Marketing Strategies BMBEs should maintain customer loyalty. According to BMBE 1, long-lasting customers and repeat sales are ensured when long-lasting relationships are created. Valuing and appreciating customers encourage them to refer other potential customers to the business. BMBE 4 suggested to stay focused on target market preferences. He explained that by doing so, they would continue to patronize their products and services. He further added that they could innovate their existing products, but they should make sure that it still fits their needs and wants. BMBE 3 recommends that BMBEs should engage in online marketing. According to him, their sales had increased since they created their social media accounts. This is similar to the findings of Sha et al. 2019 that social media influences SMEs. It serves as a marketing platform that helps increase sales with lower costs and expenditures, resulting in profitability. Further, Ainin et  al. (2015) showed that using Facebook positively affects SMEs’ financial performance and non-financial

90

B. L. Macatumbas-Corpuz and N. C. Bool

performance, lowering the cost of marketing and customer service, enhanced customer relations, and better information accessibility. BMBE 3 also suggested that BMBEs should engage in online selling. With the pandemic, where face-to-face communication is discouraged, online selling has emerged; hence, they can take their business to the next level by engaging in online selling. Moreover, the BMBEs should consider offering home delivery services as suggested by BMBE 2. Since most people are still afraid to dine out because of the pandemic, this opportunity for home delivery service should be taken advantage of.

4.3  Production Strategies According to BMBE 3, BMBEs should seek assistance from the Department of Trade and Industry or Department of Science and Technology to register their products, recipes, and other innovations at the Intellectual Property Office to protect them and their products from being copied. Further, he added that they should avail of the technology transfer, production, and management training provided by different government agencies to maximize output and reach economies of scale and scope.

4.4  Human Resources Strategies One of the benefits of BMBE registered entities is their exemption to the minimum wage law coverage. Since they can offer a lower amount than the minimum wage, they can lower production costs. BMBE 2 stated that although some prospective applicants may be discouraged in applying to BMBE entities because they can get lower salaries, giving them other non-taxable benefits such as rice allowance and free meals can entice them. The Department of Trade and Industry continuously conducts training and seminars that help MSMEs. Recently, a series of free webinars were conducted to help microenterprises re-start their business amidst the pandemic. According to BMBE 1, BMBEs should participate in these seminars to gain additional knowledge in managing their business. They will be mentored on different practices such as cash and inventory management and marketing practices necessary for their operations.

5  Conclusions The BMBEs‘resources are essential in the firm’s sustainability because it gives them sustained competitive advantage. In line with the RBV perspective, competitive advantage is generated from within the firm. The firm’s resources are its

Sustainability of Barangay Micro Business Enterprises (BMBEs) in Laoag City, Ilocos…

91

primary source of advantage. To achieve a competitive advantage, firms have to vigilantly analyze their internal strengths and weaknesses and exploit their resources. Resources that are simultaneously valuable, rare, inimitable, and organized give the firms sustained competitive advantage (Barney, 1991). The BMBEs‘resources that are simultaneously valuable, rare, inimitable, and organized are having excellent local market knowledge, customer loyalty, established relationship with suppliers, owner’s motivation, daily recording of financial transactions, separate business money from personal money, and high social media presence with positive reviews. Since these resources give them sustained competitive advantage, they should maintain and strengthen them because these differentiate their firms from their competitors. For instance, customer loyalty can be sustained by maintaining their affordable prices. This conforms with Han and Ryu (2009) findings that price perception proved to be a significant predictor of satisfaction, directly/indirectly influencing customer loyalty. When customers are satisfied, they can leave positive reviews in the BMBEs‘social media accounts, which will help build a better company image. For valuable and rare resources but can be easily copied, BMBEs should register and apply for its patent. This will give them protection against imitators. They can transform such resources from providing a temporary competitive advantage to a sustainable competitive advantage. For valuable but not rare and easily copied resources, BMBEs should find ways to make them rare and inimitable. For example, BMBEs can keep their talented and dedicated employees by providing them adequate compensation packages, training and seminars, and a healthy working environment. This chapter has been subject to some limitations. First, this chapter focused only on the VRIO of BMBEs in Laoag City, particularly the hotel accommodation and food service activities group. Future research studies can consider other BMBE groups. Moreover, the study’s findings may apply only to other cities with the same situation as Laoag City.

References Ainin, S., et  al. (2015). Influencing the use of social media by SMEs and its performance outcomes. Industrial Management & Data Systems, 115(3), 570–588. https://doi.org/10.1108/ IMDS-­07-­2014-­0205 Aldaba, R. M. (2011). SMEs access to finance: Philippines. In C. Harvie, S. Oum, & D. Narjoko (Eds.), Small and medium enterprises (SMEs) access to finance in selected east Asian economies. ERIA research project report 2010-14 (pp.  291–350). ERIA. https://www.eria.org/ uploads/media/Research-­Project-­Report/RPR_FY2010_14_Chapter_10.pdf Badoc-Gonzales, B., et al. (2020). Merging Sustainable Pillars into the Tourism Plan Format for Micro, Small, and Medium Enterprises in Post-Typhoon Haiyan Areas. The International Journal of Interdisciplinary Environmental Studies 14(2), 1–31. https://doi.org/10.18848/2329-1621/ CGP/v14i02/1-31 Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

92

B. L. Macatumbas-Corpuz and N. C. Bool

Beard, J., & Sumner, M. (2004). Seeking strategic advantage in the post-net era: Viewing ERP systems from the resources-based perspective. Journal of Strategic Information Systems, 13, 129–150. Becker, G. S. (1964). Human Capital. Film Movement, Film Movement Llc. BMBE ACT OF 2002. http://www.bsp.gov.ph/downloads/laws/RA9178.pdf. Eckstein, D., et  al. (2021). Global climate risk index 2021. Germanwatch e.V. Retrieved from https://germanwatch.org/sites/default/files/Global%20Climate%20Risk%20Index%20 2021_1.pdf Han, H., & Ryu, K. (2009). The Roles of the Physical Environment, Price Perception, and Customer Satisfaction in Determining Customer Loyalty in the Restaurant Industry. Journal of Hospitality & Tourism Research, 33(4), 487–510. https://doi.org/10.1177/1096348009344212 ICSB. (2020). Annual global micro-, small and medium-sized enterprises report 2020 Mendoza, R., et al. (2018). Can SMEs survive natural disasters? Eva Marie arts and crafts versus typhoon Yolanda. International Journal of Disaster Risk Reduction, 31, 938–952. https://doi. org/10.1016/j.ijdrr.2018.08.004 Miller, D., & Shamsie, J. (1996). The resources-based view of the firm in two environments: The Hollywood film studios from 1936 to 1965. Academy of Management Journal, 39(3), 519–543. MSME Development Plan. (2017–2022). https://drive.google.com/file/d/1jSzo5uuiH_WjvH9Ib C8UWWZ3yfQdmTO0/view National Internal Revenue Code. (1997). Peteraf, M. (1993). The cornerstone of competitive advantage: A resource-based view. Strategic Management Journal, 14, 179–191. R.A. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN) Law. Ramos, M. M. M. (2020). Banking on MSMEs: making business loans easy. Business World, 24, 2020. https://www.bworldonline.com/banking-­on-­msmes-­making-­business-­loans-­easy/ Runyan, R., Huddleston, P., & Swinney, J. (2006). Entrepreneurial orientation and social capital as small firm strategies: A study of gender differences from a resource-based view. Entrepreneurship Management, 2, 455–477. Sha, W., Basri, M., & Mohammed, R.  A. (2019). Social media and corporate communication antecedents of SME sustainability performance a conceptual framework for SMEs of Arab world. Siam Journal of Economic and Administrative Sciences, 35(3), 172–182. https://doi. org/10.1108/JEAS-­01-­2018-­0011 St John Day, Independent WASH Consultant, et al. (2019). World Risk Report 2019. Berlin: Bündnis Entwicklung Hilft and Ruhr University Bochum – Institute for International Law of Peace and Armed Conflict (IFHV). Retrieved from https://reliefweb.int/sites/reliefweb.int/files/ resources/WorldRiskReport-2019_Online_english.pdf List of Establishments of the Philippine Statistics Authority (PSA) (2019). https://www.dti.gov.ph/ resources/msme-­statistics/ Tomer, J.  F. (1987). Organizational capital: The path to higher productivity and Well-being. Praeger. United Nations Development Programme, Philippines (2020). https://www.ph.undp.org/content/ philippines/en/home/library/msme-­value-­chain-­rapid-­response-­survey.html Velasco, A.  L., Castillo, P.  J., Conchada, M.  I., Gozun, B.  C., Largoza, G.  L., Perez, J.  A., & Sarreal, E. D. (2017). Philippine entrepreneurship report 2015–2016. De La Salle University Publishing House. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5, 171–180. Williamson. (1975). Markets and hierarchies: Analysis and antitrust implications. Free Press. 2019 Philippine MSME Statistics in Brief. https://dtiwebfiles.s3-­ap-­southeast-­1.amazonaws.com/ BSMED/MSME+2019+Statistics/2019+Philippine+MSME+Statistics+in+Brief.pdf World Bank (2020). Doing Business 2020. Washington, DC: World Bank. https://doi. org/10.1596/978-1-4648-1440-2. License: Creative Commons Attribution CC BY 3.0 IGO.

Part II

Strategic Entrepreneurship in Social Contexts

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed Embeddedness Theory Alexandra Heis and Petra Dannecker Abstract  By highlighting institutional constraints and market opportunities in various environments, the mixed embeddedness approach has considerably enriched the migrant entrepreneurship debate. However, despite socio-theoretical advancements on ethnicity, gender, class and migration background, and the social construction and intersectionality of these categories, the “social embeddedness” of the population groups in question remains unchallenged by this approach. Engaging intersectional and constructivist perspectives on identity and difference, this chapter argues for a revision of the mixed embeddedness approach, in order to more strongly address the constitution of the migrant category in entrepreneurship, instead of taking it for granted. Comparing two main shopping streets in two different Viennese districts, the chapter examines the relationship between embeddedness and agency and how both the market and the actors are entangled in a multiplicity of interdependent social relations. Simmering is a blue-collar district at the city’s fringes, while Neubau, the unofficial city center, is home to the most important shopping street in Vienna and contains an aspiring creative milieu. Both reveal a very different mix of gendered and ethnicized businesses. In this chapter, we address how the category of migrant becomes relevant in the local economies of these two distinct sites. The chapter asks the question: how are these categories articulated and how do they intersect with everyday encounters in business life and the opportunity structures there? Keywords  Mixed embeddedness · Intersectionality · Vienna · Sectoral study of barber and hairdressers · Locality study

A. Heis () · P. Dannecker University of Vienna, Department of Development Studies, Wien, Austria e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_6

95

96

A. Heis and P. Dannecker

1  Introduction The mixed embeddedness approach has been a conceptual milestone in the field of migrant entrepreneur studies. For decades, research on migrant entrepreneurship was caught up in the concept of “ethnic entrepreneurship,” focusing on ethnic minorities and their segmented assimilation via business ownership. This concept not only reflected the prevailing understanding of ethnicity and nationality in the post-war era, it has also made ethnicity a priority category in research on migration and societal cohesion. While admitting the constructed nature and relationality of ethnicity as a principle of social organization, this iteration of ethnicity leads to perception of ethnic communities as fixed social entities with culturally determined features (e.g., Light & Gold, 2000; Portes & Jensen, 1987; Waldinger et al., 1985). While early contributions in ethnic entrepreneurship studies looked at how socio-­ cultural traits were beneficial or detrimental to self-employment and entrepreneurship, the mixed embeddedness framework, first introduced by Kloosterman et al. (1999), allowed us to consider multiple levels on which entrepreneurship becomes an option for migrants. These include economic and political environments, policies and social institutions, but also individual preconditions such as social and human capital. Institutional and market opportunities, and the ability to grasp them, define the chances of migrants to become self-employed (Kloosterman & Rath, 2001). Since its introduction, the mixed embeddedness approach has become an important perspective and field of study. However, in spite of the intended focus of analysis on the relation between structures and actors, and hence an attempt to combine structural and “culturalist” approaches, many mixed embeddedness studies still focus on particular ethnic or national groups of migrants, thus reproducing the ethno-centric constitution of much of the integration/assimilation debates. There is no doubt that economic and political opportunity structures shape migrants’ economic activities and social relations. The juxtaposition of a socially embedded actor on the one hand and an opportunity structure on the other prevents a conceptualization of the constitution of social actors through gendered and racialized socio-economical processes. Nor can it grasp the different meanings that this mutual constitution has, as feminist constructivists have shown (West & Fenstermaker, 1995). Instead, quite often mixed embeddedness continues to conceptualize ethnic groups as a priori units of analysis, thus reconstructing ethnicized and ethno-religious identities as central for migrant entrepreneurs (Glick-Schiller & Çağlar, 2013, p. 495). Whereas ethnicity as social category is a primary focus in most studies on migrant entrepreneurship and studies using the mixed embeddedness approach, gender relations, as well as socio-economic positionalities as co-constitutive of opportunity structures were and are still ignored. Gender is also neglected as an unmarked aspect of entrepreneurship in mainstream organizational and business literature, and this has affected migrant entrepreneurship scholarship. This despite the fact that from the 1980s onward feminist scholars have argued that women are often used as a cheap and flexible source of labor also in “ethnic enterprises” (Phizacklea, 1988; Anthias, 1992). However, this fact was often subsumed under the euphemistic term of “family labor” or

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

97

deemed a necessary strategy for small enterprises to resolve problems (Borjas, 1986). In recent years, critical studies by feminist researchers have focused on differences and relations of power within so-called ethnic communities and differences between migrant women and non-migrant women with regard to citizenship, economic position, and diversities that have influenced studies on female migrant entrepreneurs. This has led to an emerging literature on female migrant entrepreneurs focusing on different aspects and dimensions, arguing from different theoretical backgrounds and using different methodological approaches.1 However, the literature dealing with female migrant entrepreneurship is still thin and derivative (Halkias & Caracatsanis 2011, p. 4). Female entrepreneurs are still perceived as a deviation from normative, masculine gendered entrepreneurship (Ahl, 2002; Hancock et al., 2014; Verduijn & Essers, 2013). Understanding the complexities of the migrant entrepreneurship phenomenon requires a closer reading of the historical and spatial context in which the migrant identity of an entrepreneur becomes meaningful. Or, to put differently, we have to ask why and how are gendered, racialized, and class-specific differences created—and by whom (c.f. West & Fenstermaker, 1995). It is here that we suggest an intersectional and interactional perspective on the negotiations of identities as socially, economically, and institutionally embedded processes, which affect the phenomenon of migrant entrepreneurship, and what meaning it has in the society. The aim of this chapter is to challenge the fixity of mostly unquestioned social categories in studies on migrant entrepreneurship and to analyze the situated processes of gendered, ethnicized, and class-structured identities, which are central to this field of research. Looking at the sector of hairdressers and barbers in two Viennese shopping streets, the academic interest of this chapter is to bring the mixed embeddedness framework and intersectionality approaches into conversation. Our empirical data shows how the meaning of social categories and identities, particularly the migrant, varies in different places and with regard to different lifeworlds2 and professional experiences of male and female foreign-born hairdressers. The main argument put forward is that the social category of “migrant,” let alone the social category “ethnicity,” does little to explain the everyday experiences of business owners, or their motivations and aspirations. The category migrant proves in 1  See Azmat 2013; Baycan-Levent 2010; Pio 2007; Verduijn & Essers 2013, Dannecker & Cakir 2016; Villares-Varela & Essers 2019 for example. 2  Lifeworld (Lebenswelt), like every day, or the quotidian have been conceptual frameworks of phenomenological philosophy and sociology (Lefebvre, 1991; Schutz, 1962) from the 1920s onward. They refer to experience of the world as it is, not reflected and unquestioned by scientific method. The concepts of the quotidian are an entry point for analysis of a number of different schools—the sociology of knowledge, the situationists and Marxist analysis, the critical theory, as well as ethnomethodology. The basic assumption in life-world approaches, and their contribution to social science, is the focus on meanings and symbolical values of objects. Edmund Husserl, for example, argued for a transcendental nature of objects, denying the possibility of observing the object world directly. For social scientists, this means that the nature and meaning of social phenomena are not simply given, or unambiguously existing outside, or prior to their social, interactive constitution (see (Berger & Luckmann, 1991; Schütz & Luckmann, 1973)).

98

A. Heis and P. Dannecker

the same way to be overgeneralizing because it homogenizes extremely varied experiences, which are dynamic and situational. Instead, the category migrant, as we will show, has become a tool of constructing racialized, social hierarchies in epistemology, and political discourse.

2  C  onceptual Considerations: Intersectionality as the Missing Link? The mixed embeddedness approach helps to explain how economic and political opportunity structures influence the observable and specific social, economic, and cultural forms of migrant entrepreneurship in these two locations. However, it cannot conceptualize how distinction and differentiation along the lines of race, class, and gender shape the representations and experiences of migrant entrepreneurs. As mentioned already, the mixed embeddedness framework draws attention to the range of informal and formal institutional contexts in which opportunities occur for entrepreneurs, independently of their origins, social membership, or cultural backgrounds (Kloosterman, 2010; Kloosterman & Rath, 2001). Acknowledging the relationship between resources on the individual/group level, the level of market opportunities and the broader political-economic level, the conceptual framework can grasp different pathways of entrepreneurship (Kloosterman & Rath, 2003). While the theory admits that migrant entrepreneurs potentially can generate opportunities too, and not only respond to them, but the model also ignores the possibility of migrant identities being constructed in specific opportunity structures. Gendered, racialized otherings of migrants, such as the Turkish barber, do not depict priory constituted identities reacting to opportunity structures, but refer to specific performances of gender and ethnic identities in interaction with societal, cultural and economic processes. Regarding the so-called supply side of the model of migrant entrepreneurship, it proves rather static. Since it is argued that time-place-specific market opportunity structures occur independently of the actors, the model cannot address how a given market opportunity structure is produced by gendered, class-specific, and racialized agency itself. Undoubtedly, as emphasized by Kloosterman and Rath (2003, p. 9) and accentuated more recently for example in a special issue of Sociologica edited by Barberis and Solano (2018), the concept requires further elaboration and operationalization. This has been done through quite a number of studies by including gender as social category and showing that female entrepreneurial activity is influenced by women’s embeddedness in multiple and shifting institutional contexts, which may have contradictory effects (Welter & Smallbone, 2010). While certainly important, given that female migrant entrepreneurs have been dealt with neither in political or academic debates in the field nor in the development of the mixed embeddedness approach, these studies tend to represent female entrepreneurship as embedded in existing

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

99

gender structures, without problematizing the situated constructedness3 of gendered identities, in the first place (West & Zimmerman, 1987). Often, studies on women migrant entrepreneurs primarily want to make female entrepreneurs visible, rather than to study constitutive gender relations. However, reflections on constructions of gender, gender relations, or concepts of femininity and masculinity through entrepreneurship are missing, as is a discussion of how gender intersects with other social categories, processes of differentiation, and processes of discrimination. Such a “single axis” (Collins, 2015) perspective on discrimination—either gender, or class or race, or all in a hierarchical order—follows from an analytical bias toward structure, rather than agency. This bias leads to generalizations and homogenization of the “others” ignoring the fact that entrepreneurship is marked as a gendered and ethnicized phenomenon (c.f. Weber, 2016), as in the case of the hairdressers and barbers discussed here, and that this social positionality4 also proves oppressive or beneficial regarding the opportunity structures. These intertwined processes of differentiation and inequality are the prime focus of intersectional theorizing and analysis. Intersectionality,5 understood as a “matrix of oppression” at the level of the individual or a social collective has proved to be a worthwhile perspective on the multiplicity and situatedness of sometimes conflicting experiences of exclusions, but also freedoms and choices (Cho et  al., 2013; Collins, 1990; Hancock, 2005). Despite the fact that the phenomenon of migrant entrepreneurship allows for several different and potentially contradictory forms of identification and opportunities and draws boundaries along multiple axes of distinction, migrant entrepreneurship remains all too often just another category of the “other,” a deviant to the dominant, silent norm. This is the case when converting inequality, for example, discrimination in the labor market, into difference as in diversity politics, and thus a category which can be administrated and governed (Bannerji, 2000; de Jong, 2016). Thus, it is not only of crucial interest how migrants experience privilege or exclusion in society, politics, and economy but also how this category itself is the product of intersectional processes of differentiation and distinction at the same time. An understanding of intersectionality as a process

3  We refer here to the scholarly tradition, in which social categories, as well as identities and subjectivities, are regarded as constructed, i.e., the result of action, interaction, and reproduction of interpretation systems, of patterns of agency and socialisation. This is not to deny the material and physical aspects of individuals, but to say that how we as a society interpret the materiality of being, is a question of social negotiation (Berger & Luckmann, 1991; West & Fenstermaker, 1995). 4  Positionality, together with standpoint and situation, are concepts aimed at defining identity in relation to others (Franks, 2002, p. 38). 5  Intersectionality as an analytical angle on how different experiences of inequality and difference intersect, to create specific form of marginalisation and discrimination. Framed by Crenshaw to depict the situated and interdependent nature of discrimination experiences for black women, intersectionality stands for an emancipative, anti-oppressive, and post-colonial (Hall, 1996) scientific program. In addition, it speaks to the epistemological problems addressed by positionality, standpoint, and situation theories. In migration research, intersectionality as heuristic device was used by Floya Anthias and Nora Yuval-Davis (1996) to address the relations between gender, class, and ethnicity in the context of the global hierarchy of power and international migration.

100

A. Heis and P. Dannecker

embraces a relational and spatial inspection of social categories, with special attention given to context (Choo & Ferree, 2010, p. 134). In migration studies, but also in studies on migrant entrepreneurship, the category of primary focus is often country of origin and/or an ethno-nationally defined collectivity. Women are usually a subgroup of such a category and have been taken as the starting point in research on migrant entrepreneurship as well as of inequality, discrimination, opportunities, or privilege; thereby for example concluding that membership in ethnicized groups can be a privilege or an opportunity for entrepreneurship, without reflecting the privileges and opportunities of the unmarked majority group. Therefore, Collins (1990, 2015) and others call for an approach which could define all groups as both privileged and oppressed within that overarching power structure, depending on their positionality in the social “matrix of oppression” (Hancock, 2007). In the context of a debate on opportunity structures for migrants in an urban context, we could also speak of a “matrix of resources” (Harding & Blokland, 2014). In the following section, we will try to show how the meaning of categories differs among social groups across time and space using the example of gendered and ethnicized class-­ formation processes of migrant entrepreneurs in the two Viennese shopping streets.

3  Methodology The motivation of the research was to avoid the ethnic lens (Glick-Schiller et al., 2006), because ethnic identity might not be the only, or the primary axis, along which societal differentiation and boundary drawing in the local economy is articulated. Put differently, we do not assume that any recent or prior experience of migration becomes a relevant factor in entrepreneurial activity. Rather, we assume that migrant has become a racialized category of othering, with fundamental effects on identity constructions and social relations attached to it. Following the critical claims to de-ethnicize migration research, we claim to de-migranticize6 it too (Dahinden, 2016). Considering the conceptual changes in this field of study (e.g., from ethnic businesses to migrant entrepreneurship), we wanted to question not only the ethnic boundaries as relevant but also those imposed by a migrant identity. We assumed that whether the category of migrant becomes relevant in business ownership and, in general, will vary considerably with regard to the social, gendered, racialized/ethnicized social locations, defined by space and time, of a given individual. Socio-economic backgrounds, education, and socialization will also define the hopes, aspirations, and concrete possibilities as well as constraints of the business owner, as identified by mixed embeddedness. However, whether any given actual or passive migration biography is relevant, or how, will be partly decided by

6  Dahinden (2016) criticizes the tendency of migration research and migration scholars to reproduce the categories of the migration apparatus, based on nation-state centric perspectives on societies, history, and space.

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

101

the specific intersection of those social categories and the experience of marginalization they create. The problematic nature of ethnic categories, which remained unquestioned, and the missing gender dimension were thereby the starting points of the research project of which this chapter is a part.7 Similarly, the approach is inspired by an ­understanding of space as relational, and hence closely related to identities and subsequent social relations. Inspired by both, intersectionality and literature on social space, we cannot think of identities as a-spatial, context-less, or discrete. Localities and places are made up of multiple spaces and hence allow us an entry point to study these spaces and how they are interrelated with identities, differences, and power relations. We understand localities as endowed with a multiplicity of meanings and relationships as well as potentially productive loci for analysis of the dynamics of power, and processes of othering, differentiation, or social cohesion (Massey, 1991) in post-migrant societies.8 Drawing on an intersectional understanding of social locations of migrants (Anthias, 2013) and the theory of locality (Glick Schiller & Caglar, 2013; Massey, 1991), we are using locality as a methodological entry point to study the construction of the category migrant. The empirical data consists of participant observation and qualitative interviews with shop owners, business associations, and local politicians in two shopping streets in Vienna. Interviews were anonymized with a specific abbreviation for each street (HN for Neubaugasse or HS for Simmeringer Hauptstraße), as well as for the expert interviews (XV Expert Interviews without a specific local focus/XS Experts with focus on Simmering), and numbered consecutively, also indicating the month and year of the interview. The districts and streets will be introduced in further detail below. Since in both projects, the primary interest is not in basic data about the businesses or demographic facts about the entrepreneurs, we did not follow a rigorous sampling framework, but instead found respondents by surveying the streets and calling their shops (c.f. Rusinovic, 2008). Alexandra Heis visited the streets regularly from May 2017 to February 2018, undertaking participant observation and conducting 30 interviews of 1–2 h each. With the approval of the interviewees, each interview was recorded, or notes were taken during the interview, and these were anonymized. For this chapter, interviews with barbers and hairdressers were considered more closely, but of course all empirical data support the argument and focus put forward in this chapter. Some shop owners were reluctant to give an interview, were too busy, or both, whereas others were very open and invested quite a bit of their time. The position of the researcher, especially her gender identity and (invisible) migration experience, influenced not only the conceptualization of the research but also its analysis, as well as the empirical phase, especially since the ways that interview partners 7  The research project focuses explicitly on female migrant entrepreneurs in Vienna and was funded by the Anniversary Fund of the Oesterreichische Nationalbank (OeNB). This project is part of the research platform “Mobile Cultures and Societies” at the University of Vienna (2016–2019). 8  Post-migrant societies are acknowledging the constitution of national societies as based in ethno-­ cultural plurality and heterogeneity (Foroutan, 2019; Yildiz & Berner, 2021).

102

A. Heis and P. Dannecker

perceived the female interviewer speaking with foreign accent influenced what they said and how they said it. Reflexivity was thus an important part of the research process. Presenting the empirical data, we will start by discussing the phenomenon of migrant entrepreneur in Vienna and introducing the two shopping streets as the localities in question. In a second step, the divergent experiences of business owners in two local shopping streets are analyzed as intersectional and situated identities which are specifically embedded not only in institutional constraints and market opportunities, but, most importantly, the result of societal interactions.

4  Results and Discussion 4.1  Migrant Entrepreneurship in Vienna Entrepreneurship increasingly figures as one of the main possibilities for social and economic incorporation of immigrants in Austria and elsewhere. While structural changes in the economy have led to growing rates of self-employment in general, a number of surveys and newspaper articles have attributed an above-average share of entrepreneurship in Vienna to migrants, especially to those from East and Southeast Europe, as well as from Turkey (Kierbein et al., 2012; Miejski, 2015; Schmatz & Wetzel, 2014). Indeed, the promotion of entrepreneurship for immigrants is pursued by a number of local and national agencies and institutions like the Federal Economic Chamber (WKO, 2017), the Economic Agency of the City of Vienna (Wirtschaftsagentur Wien, n.d.), or the Integration Secretary of Austria (ÖIF, n.d.). The latter has published a number of reports presenting migrant entrepreneurs as “success stories for Austria” and as “success stories for integration” (ibid, n.d.; Zusammen:Österreich, 2014). This selective framing of successful migrants as entrepreneurs, as proof of well-made social membership in their “new homelands,” gives the phenomenon a veneer of desirable integration. The thinly veiled subtext is that migrants are welcome, if they are contributing to the national economy without intrusion into national labor markets. The manipulation of the concept’s normativity ignores important aspects of the lived reality of those who consider themselves migrants or those who are considered such, but were born in Vienna—the so-called second or third generation. This image of the successful migrant is further supported by liberal newspapers and magazines featuring successful migrants’ businesses in the belief that this fosters acceptance of immigrants (derStandard.at., 2014; diePresse.com, 2014; ORF, 2013). This has had material effects on the lived realities of migrants and is further extended to Austrian-born individuals through the concept of “migration background” (Migrationshintergrund), projecting the migration experience of parents onto their children and grandchildren (Perchinig & Troger, 1990; Supik, 2017). As a more or less deliberate category of external, often unsubstantiated ascription from a supposedly majority position, migrant often

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

103

designates racialized, gendered, and socio-economically disadvantaged social locations, making immigration status a substitute for racial stereotyping (c.f. Balibar & Wallerstein, 1991). 4.1.1  Integration and Marginalization as Socio-Spatial Processes Contrary to other cities in the Western world, and for historical reasons, racially or ethnically segregated areas are not a pressing issue in Vienna (Novy 2011). Overall, the rate of foreign-born residents in Vienna is about 40%. This corresponds to the average in most districts, including the two discussed here—Simmering and Neubau. The differences in population mix are defined more in terms of income, family situation, and education background. In general, it is assumed that Vienna has a good social mix in most residential areas of the city. Just how much the different groups actually mix and interact is yet another question.9 However, there are historically given trends of residence patterns, which are more closely linked to issues of income and the economic position of residents. Vienna’s housing situation is often described in terms of vertical segregation—the upper floors are high value, while the lower floors are less attractive due to the light, pollution, and noise conditions and often remain architecturally in bad condition. In most places, there is co-­ existence of different strata of society, but of course social and ethnic biases are imprinted onto the urban social space (Franz, 2015). Migrants have historically been working in unskilled jobs, and their children, particularly from non-academic backgrounds, are discriminated against in education and schooling (Erkurt, 2020). Refugees and less affluent migrants have access only to substandard apartments in run down, old buildings in the outer-belt areas, which are still the arrival-areas, particularly for refugees (Kohlbacher & Reeger, 2006). While neither of the two districts in this research could be said to be a typical migrant district, or even quarter, both do benefit from migration and, as previously stated, have comparable overall rates of foreign-born population. Simmering is a district that still has space to grow, and urban development projects from community housing to smart living areas are mushrooming there. In fact, as one of the large-area districts in Vienna, it has been growing constantly since it has become part of the municipality, with the exception of the inter-war era. Simmeringer Hauptstraße, the main shopping street and thoroughfare of the district, has undergone significant changes due to its connection to the metro system in the 1990s, the replacement of the still very rural structure of buildings in certain areas through reconstruction and urban development projects, and public investments in housing 9  Regarding co-existence, social mix, integration, or other imaginaries of urban sociality vary. Richard Sennett (2018) suggests that we need more interaction in order to increase the social fabric in urban areas, which are endangered by increasing individualisation and isolation. On the contrary, Iris Young (1990) argues for the possibility of an “unassimilated otherness,” where interaction is not seen as a necessary precondition of peaceful and tolerant cohabitation based on acceptance, not weighting of difference (Massey, 2005).

104

A. Heis and P. Dannecker

and schools, with increased focus on diversity, integration, and families. These changes have further spurred population growth. However, as a main road, and a highway, it is still heavily used by cars, as well as trams. Two lanes for parking, driving, and tramway rails each lie between the two sides of the street. Overall, the locality has undergone rapid change and transformation, which has not been considered beneficial by all. On the contrary, Neubau has been shrinking since 1918, but the real estate value is rising. It is certainly among the most sought-after locations, for living and business making. A shop in this location was part of the business plan of many interviewed entrepreneurs.10 The one-lane, traffic-calmed road has undergone several construction and rejuvenation treatments and is in parts of a pedestrian area. The district is a national and regional commercial center, appealing not only business owners but also customers who seek specialty goods. The local street business association branded the street as early as 1984 “the specialists’ street,” signaling an inclusive, open, and professional business environment. The mix of goods and services in the Neubaugasse is based on the principle of distinction as a class-making component (Bourdieu, 1996). 4.1.2  L  ocating the Shopping Streets: Simmeringer Hauptstraße and Neubaugasse The two streets have been selected because we expected that migrant as a category, and phenomenon, will have a quite distinct meaning in each location. The two streets thus represent different drivers and dynamics of integration and marginalization, as well as different place-specific symbolics. Integration and marginalization, understood as socio-spatial processes, are reflected in the micro-level negotiations of difference and belonging in the sphere of small businesses in these locations. From the statistics, the two districts seem not so different in some respects, for example, both are mid-table in terms of yearly net per capita income, share of foreign-­born population, and the rate of women in entrepreneurship. At the same time, statistically, the population’s age and education, the economy, and political climate—all differ considerably between these two districts. In addition, Neubau is relatively homogenous, in contrast to the highly fragmented socio-economic and cultural structure in Simmering (Stadt Wien, 2015; Stadtentwicklung und Stadtplanung, 2014). The districts also differ in terms of their inhabitants’ educational backgrounds; while most Neubau residents have completed academic education and many are working in the tertiary sector, Simmering residents are on average high-school graduates (Stadt Wien, 2015, pp. 48, 49). More young people under 15 years and more seniors above the age of 60 years live in Simmering, sometimes in category D11 flats, while Neubau has a large share of double-income/no-kids households, which offer, on average, 10 m2 more living space per capita. Net income per capita from employment  Interviewed business owners HN 11, November 2017; HN 7, September 2017.  Category D classifies flats without water supply and toilets inside. In this case, shared toilets and water pipes were in the hallways.

10 11

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

105

is in the mid-table range in both districts; however, almost 10% of Neubau residents are self-employed, unsurprisingly at a relatively high wage level, as opposed to 2% of Simmering residents (ibid). While Simmering used to be a petit bourgeois district, and it has the historical structures of a small town, we are now considering a largely blue-collar district and one that is more home to creative industries and entrepreneurial activity. Simmering’s economy is characterized by heavy industry, agriculture, supply infrastructure, and municipal disposal facilities; in short, the economy is predominantly based in the primary sector. There are some cultural locations, and attempts at revaluation and urban renewal, but the district remains a residential area, with few entertainment, shopping, and cultural possibilities. Simmering is considerably bigger and separated from the urban structure by a highway bridge and an industrial area. Some of the respondents, particularly at the local political level, felt that the district is traditionally discriminated against by the Viennese city government and the Chamber of Commerce and that their activities were not supported in the same way as in other, more central districts.12 Simmeringer Hauptstraße is the only shopping street of Simmering and its main shopping area stretches over just 1 km between the metro stations Zippererstraße and Simmeringer Hauptstraße. The street thus caters mostly to its one hundred thousand locals, as well as consumers from the neighboring districts and adjacent villages of lower Austria, just across the municipal border.13 Neubau, in contrast, is the unofficial city center and has access to indirect investments through tourism and start-up venues, as well as culture and art subsidies, and benefits from spill-over effects. Neubau is known for its shops, bars, and restaurants, but also as the location of some of the most fashionable brands. It attracts customers from all over Austria, and many shops sell their goods online to meet the demands. At present, the localities differ in their respective regional relevance, the sectoral mix and specific price-segment and assortment of goods, and altogether different entrepreneurship conditions, but also in buying power and preferences of customers. Described as the opportunity structures of individual migrant entrepreneur, these could well be grasped with the mixed embeddedness framework; however, they would lose out on the specific meaning of the social phenomenon of migrant as constituted through multiple, but locally situated relations and interactions, specific but not essential to any given locality.

4.2  D  oing Entrepreneurship: Situational and Contextual Construction of the Entrepreneurial Selves in Simmeringer Hauptstraße and Neubaugasse During our research, the burgeoning sector of hairdressers and barbers turned out to be an apt example to discuss the mutual constitution of social embeddedness and opportunity structures. The sector is stratified in terms of class-specific tastes,  Interviewed business owner HS 6, April 2017; Interviewed Expert XS 3, June 2017; Interviewed Expert XS 2 August 2017. 13  Interviewed business owner, HS 13, May 2017. 12

106

A. Heis and P. Dannecker

educational requirements, and gendered products and is specifically racialized in different locations, particularly in the two streets presented here. Originally an exclusively male business, hairdressing has gradually opened up to women—both as customers and as its main labor power. With technological innovations, hairdressing, originally reserved for men, became more attractive for women, but also capital- and technology-intensive. The focus shifted from barber services and wig production to costly hairdressing, and the barber sector became a side concern. As early as the 1940s, most hairdressers focused on women as customers. The educational priority moved accordingly, with hairdressing techniques for women becoming more important (Höggerl, 1951). In Austria, until recently, being a hairdresser was labeled a girls’ job (Cremer, 1982) and is still mainly popular among young women, who also represent the majority of the workforce in this sector. It is a licensed trade,14 which means that access is regulated and subject to authorization. That said, the stars of the profession, those with lots of fame and high incomes, are mostly male. In recent years, barber shops experienced a revival. Migrants from Turkey, North African countries, and the Middle East15 started to open shops and change the appearance of shopping streets across the city, particularly in non-central areas, such as neighborhoods with low-income populations. They increasingly gained a reputation for clean cuts, elaborate grooming techniques and cheap prices, but also as places of flexible employment. They attracted particularly low-budget customers, but also a broader spectrum of society, thus generating and responding to the growing demand for beauty services. Especially clients, who missed such specialized services in the mainstream businesses, were attracted by this niche. However, the shop equipment, style, and assortment of products are often basic. Recently, barber shops have experienced an upscaling, and the business model has been gentrified to cater to upper-middle-class customers, particularly in inner-belt areas, such as Neubau. The more expensive shops sell more of an experience than just a haircut, with drinks and luxury spa products. In these shops, barbers and clients share  Licenced trades require the completion of the professional qualification (in German the “Meister”) for hairdressers and wigmakers (hairstylists) to enter self-employment, and open a business, or alternatively a year of experience in a trade-specific business, and some other exceptions. For immigrants the main way to trade license is to undergo the vocational training and obtain the formal qualification, to work as shop manager for several years under a license holder, or to apply for the so-called individual qualification certificate, whereby qualification is granted by the guild. Going through vocational training, which takes 3  years and requires proficient language skills, is very demanding for migrants in general. In particular, it is a burden for barbers/hairdressers from the Middle East, who often learn hairdressing from a very young age onwards, but without formal education, but with a lot of practice (Acar, 2010). The access to a barber license is therefore easier to obtain, and an institutional and market opportunity for migrant barbers to enter self-employment. Obviously, this was not planned when allowing the individual qualification certificate to ease the access to licenses, and some guilt representatives claim that the quality control is not sufficient (Stylisten Agentur, 2018). 15  We define Middle East here as the region stretching from Northern Africa, over the Balkans to central Asia. We are aware of the Eurocentric perspective reflected there but running short of more suitable terminology. 14

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

107

similar positions within the matrix of privilege (c.f. Collins, 1990). The respective localities and shop structures are co-constituted by the ethnicized and class-specific social spaces of which they are a part. Barbershops and hairdressers on Simmeringer Hauptstraße are mainly run by young men and offer affordable prices. Due to the chair rental system (see below), and because the shops are also meeting places for the local young adults, they are often crowded. Crowds of young men from the Middle East are an imaginary which is used and framed by the right to stir up racial stereotypes and xenophobic sentiments (Shooman, 2014). There, the category migrant became synonymous with Turkish residents, collectivized as Muslim, and hence essentially other, and personalized in the figure of the Turkish barber, who are not only a source of animus of the declining local business dynasty, but also for representatives of the hairdresser guild, and the local extreme right-wing Freedom Party representatives.16 4.2.1  “ A Barber Shop Every Ten Meters” and the Migrant “Benefit King”17 Ümit18 moved from Turkey to Austria 30 years ago and has lived in Simmering ever since. He has been a barber in Simmering for 20 years, most of the time as his own boss. He has a barbershop, because this is easier to handle than a hairdresser shop and requires less capital input. The mixed embeddedness approach would explain the increasing numbers of Turkish barbers in terms of the specific “ethnic capital”— i.e., getting access to the trade through social networks, further capitalizing on the demand for cheap haircuts, and pursuing the strategy of chair rental. From this viewpoint, Ümit might be seen as particularly innovative, because he certainly was one of the first barbers in Simmering (Kloostermann, 2006, p. 9). However, we suggest a different reading by understanding the street not only as a locality, but also as intersectional social space. The interviews reveal three quite distinct social spaces: first, the remnant Austrian business owners and the old district dynasties,19 who hold dominant social and economic positions and very often draw an ethnic boundary along religious and cultural identities20 in defining migrants as a racialized other.21 Migrants (implicitly Turkish migrants) are met with suspicion and hostility, and despite the physical proximity, the social distance between these groups is huge.22 Second, Turkish migrants and guest worker children, who  Interviewed Expert, XS 4, May 2017, Interviewed barber, HS 3, June 2017.  The term “welfare queen” was  coined by Ronald Reagan in  referring to  an  Afro-American woman accused of receiving welfare benefits for multiple identities. Ange-Marie Hancock (2004) has picked it up in her study of the neoliberal welfare reform in the US. 18  The names of the exemplary interviewed partners are fictional. 19  Interviewed business owner, HS 6, April 2017. 20  Interviewed business owner HS 6, April 2017; Interviewed Expert XS 3, June 2017. 21  Interviewed business owners HS 6, April 2017, Interviewed business owner HS 9, May 2017. 22  Ibid. 16 17

108

A. Heis and P. Dannecker

have been living in the area long before most of them ventured into self-­ employment.23 The Turkish migrants are a heterogeneous group, with conflicts among generations, business strategies, length of stay, as well as religion. Third, children of guest workers who grew up in Simmering refer to themselves as from the Balkans and include all guest worker offspring in that category. Their social location is distinct from the young adults who have just immigrated from Turkey, or other Muslim societies. There are conflicts arising from different forms of socialization and from different forms of belonging which unload in economic competition. Ümit and other hairdressers, as well as some owners of kebab takeaways, regret the increasing number of barbershops or kebab takeaways, respectively, as they ruin the sectoral mix. The newcomers, so the argument goes, apply unfair business practices, informal employment and exploitation, as well as tax and other forms of misdemeanor. Among the different forms of migrant businesses, Turkish business owners are represented as entrepreneurial others by trade representatives, members of the trade, and some businesses in the street because of their specific form and style of business organization, a different handling of the trade, and different forms of socializing in general. While some blame the business owners for being unfair and lacking business ethics,24 others—like Ümit—blame the Austrian state with its lax controls for being too generous to newly arrived foreigners, especially to migrants from Turkey and asylum seekers. Ümit’s language skills are still very basic, but his shop and his business practice—self-employed business owner—signal his acceptance of the way to do business at the time when he started. His efforts to emphasize that he and his children are Austrian citizens signal a strong readiness to become part of the national society. Ümit constructs his Austrian identity through distinction from the younger Turkish migrants and their business practices. Starting his interview with the statement that he loves Austria, and Vienna, and he is Kurdish shows his attempt to distance himself from the other Turkish barbers in the locality. Set against other interviews from the street, in which hostility and racialization toward these barbers, and other Turkish-born, or Turkish-speaking business-owners were prominent, is understandable. Thus, he feels estranged from other barbers not only by the perceived advantage of his political citizenship but also and maybe more strongly through downward social mobility and age. New shops are popping up in the street, and his street neighbor is being refurbished. A widespread business practice in Simmeringer barbershops is chair renting. In this system, the shop owner and former employer figures as real estate agent, renting out chairs and shop infrastructure to self-employed barbers. This system has been cheered as a chance for hairdressers by important professional media (Kirschnick, n.d.), the forerunner being one of the most prominent hairstylists of Vienna, incidentally located in Neubau. Ironically, this business style has been criticized by representatives of the district

23 24

 Interviewed business owner HS 10, June 2017; HS 8, June 2017.  Interviewed Expert XS 3, June 2017.

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

109

administration as ruining the Austrian hairdressers’ businesses. Contrary to his neighbors, who are geared for chair rental, Ümit’s shop will not attract many selfemployed chair tenants, making it difficult for him to benefit from this form of business innovation. While he started as a pioneering entrepreneur, seizing and creating an opportunity structure for barbers to start businesses, the changed opportunity structures have affected his identity position and his social embeddedness. He articulates his belonging to Austrian society in many respects: he prefers to work with Austrian business partners, his customers are 90% Austrian, and he presents himself as a law-­abiding Austrian citizen.25 Also, in other interviews with entrepreneurs born in Turkey and other Southern European countries, Austrians were preferred as customers and business partners.26 The social relations within the ethno-national group of migrants from Turkey, and their offspring, have been repeatedly presented as highly fragmented and competitive, fractured along the lines of social mobility, social citizenship, belonging, and age. While the younger generation of entrepreneurs expressed optimistic views about their situation and business aspirations, the older entrepreneurs were more pessimistic regarding their futures and expressed hostile attitudes toward newer immigrants.27 Among the younger generation, amicable relationships based on friendship or neighborhood are more important than their ethnic identity. Although identifying themselves as Turkish, Kurdish, or Alevi, and well aware of the potential tensions there,28 this is not their primary collective identity. Second-generation business owners also reported conflicts with co-ethnic business owners, who ruin the business by selling too cheap.29 Ümit’s statements indicate a changing positionality due to the dynamic in the opportunity structure. He feels threatened by the growth in his sector in his neighborhood, by the social mobility of the other Turkish entrepreneurs,30 who are younger than he is, and he shows fear of losing out. As Austrian citizen, he worries that because of increasing immigration, and, as he says, policies welcoming immigration, this status will not benefit his children any longer. He worries how his kids will cope with a situation, where, as he says, refugees and migrants have more access to benefits than Austrian citizens. While his othered masculinity—being a Turkish/Kurdish male barber—allowed him to occupy a privileged position at the beginning of his career in relation to other migrants because of the new possibility of self-employment, and particularly non-migrant hairdressers and barbers because of his competetive prices, it became increasingly marginalized, intersecting with a disadvantaged socio-economic position, in spite of his Austrian citizenship. The possibility for migrants to open businesses in licensed trades (see footnote above)

 Interviewed barber, HS 3, June 2017.  Interviewed business owner HS 2, June 2017; HS 10 June 2017. 27  Interviewed business owner HS 5, May 2017; HS 6 April 2017; HS 7, May 2017. 28  Interviewed business owner HS 8, June 2017. 29  Interviewed business owner HS 10, June 2017, Interviewed business owner, HS 8, June 2017. 30  Interview with barber, HS 3, June 2017. 25 26

110

A. Heis and P. Dannecker

has opened the way to self-employment for many, for whom it was difficult to be employed anywhere, not to mention in the profession of hairdresser. Being among the first immigrants, Ümit was able to capitalize on his ability to cut hair and to do it for reasonable prices and benefitted from the legal change of the trade regulation in 1994. However, the access to self-employment in a regulated trade via an individual qualifying certificate has increased the pressures and competition in a hard-­ fought sector with limited growth potential. While Ümit has furnished his shop similarly to average “traditional” Austrian hairdresser shops, which signals his needs for belonging and acceptance,31 he also performs Austrianness by displaying notions of xenophobia and sympathy for Austrian society and denying his own experience of xenophobia in Austria (which certainly exists). Ethnic solidarity, which is often assumed in literature (Min, 2008) to be reaction to discrimination experiences, needs to be questioned in this locality. Rather, solidarity relations are based on friendship or kinship relations, as well as on a shared migrant experience. If expected social mobility fails to materialize, and thus assimilation into the socio-economic and cultural norm of the majority population does not occur, the migrant experience is passed on to the children of migrants. In this case, the status of migrant and accompanying feelings of inferiority, strangeness, and otherness become part of the socialization and hence collective identity of part of the native population that is nevertheless not accepted as native. 4.2.2  “ Unmarking of the Gendered Entrepreneurial Self Through Social Mobility and Class Formation” Yara, who owns a hairdresser shop on Neubaugasse, came to Austria with her parents at the age of 11. Like the other female hairdressers there, she received vocational training in Vienna. She stresses that she started her own business early in her career, and always wanted to become an entrepreneur. Her parents were entrepreneurs too, but when they arrived in Austria, they had to start from scratch, working in exhausting and low-paid jobs. Like the other women, Emilia represents upward social mobility. She even became a member of the business association, and she actively supports the marketing activities of Neubaugasse. Yara hat diversified her investments to strengthen her busines activities, she has successively integrated more services and products to increase the attractivity of her shop. Emilia has also invested in business venues in proximity to her working places and has diversified in terms of business sectors32 as well as the services offered by the shops. She has bought a café next to her hairdresser shop, and she signals that she has still more plans to grow.33 She has been working hard and had been waiting for several years to find a location in the Neubaugasse. Mali, yet another migrant hairdresser

 Interviewed barber, HS 3, June 2017.  Interviewed hairdresser, HN 14, November 2017. 33  Interviewed hairdresser HN 11, November 2017. 31 32

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

111

in Neubaugasse, managed to get her hairdresser qualification in spite of language challenges, as she says. It was very hard, but she saw no other chance. While running a business in an outer-belt district, she too waited 5 years to find a shop in Neubaugasse. Mali, similarly, to other shop owners, stresses that she feels less racialized here. She thinks that as an Asian person, it would be more difficult in other districts.34 However, she works hard, and her customers expect good service and cheap prices. She has also invested in another beauty shop and a restaurant close by.35 Emilia too underlines how she worked hard to achieve what she has. She thinks that specific personal traits are necessary to become a businesswoman, in particular courage and diligence.36 In terms of business, they all perform the inherently male protestant entrepreneurship model37 (Brouwer, 2002). While there is no ethnicized or racialized “other,” onto whom self-experienced discriminations could be projected, all three women were conscious of how their gender has an adverse impact on their entrepreneurial prospects, rather than their ethnicized, national, or religious identities. Separating their entrepreneurial identity from their gendered social positions as spouses and mothers, they have remarked on how the compatibility of family and work is an extra burden to them. At the same time, self-employment gives them the freedom to work and to realize their dreams and aspirations. They agreed that starting and running a business is tough for women because they always have two responsibilities—the career and the household—as opposed to men.38 Their agency39 is constrained by the normatively gendered business model, making their gendered, but not migrant identities the norm. In contrast to Ümit, none of the women address any connectivity to their respective ethno-national social groups, and there is no mention of any resources they could draw from. There is no social or business connectivity to other entrepreneurs in their sector in the streets. They know each other by sight and see themselves as colleagues, but due to their busy days, and other professional obligations, they hardly ever talk to each other.40 Beyond business, there is little emotional linkage to Neubaugasse, only Yara has moved in nearby recently. They have consciously chosen a lucrative location for their businesses, in spite of the fact that, as they say, it is much harder to survive there. They argue that the customers are more demanding than elsewhere and have high expectations. At the same time, growth chances are higher and they like the challenge.41

 Interviewed hairdresser HN 7, September 2017; HN 2, August 2017; HN 15 February 2018  Own observation, September 2017. 36  Interviewed hairdresser HN 14 November 2017; HN 11 November 2017, HN 7, September 2017. 37  A lot of the still hegemonic definitions of what an entrepreneur is go back to Max Weber’s The Protestant Ethics and the Spirit of Capitalism, where entrepreneurship is a lifestyle of diligence, self-discipline, honesty, and modesty (Brouwer, 2002). 38  Interviewed hairdresser HN 14 November 2017; HN 11 November 2017, HN 7, September 2017. 39  Agency is concept of social theory, dating back to post-structuralist theory, accentuates individuals and collectives as making, and being able to make active choices. Although agency accepts the power of social norms and institutions, and the constrained nature of individual/collective choices, it marks a departure of the deterministic perspective on social life by structuralist (Davies, 2006). 40  Interviewed hairdresser, HN 7, September 2017. 41  Interviewed hairdresser, HN 7, September 2017; HN 11, November 2017, HN 14, November 2017. 34 35

112

A. Heis and P. Dannecker

The collective identities of the women presented here—as women, as hairdressers, and as entrepreneurs—are negotiated through their business success, which is the socially dominant form of defining success in the middle classes. Although they see that their gendered positions make them potentially disadvantaged, they are proud to say that they were successful in separating their personal and professional worlds. Although they as women “do business” differently, this is not seen as something they would stress as a specific benefit. Masculine gendered identities are often assumed to occupy a privileged position due to the global and historical hegemony of patriarchy. The comparison of how actors position themselves with regard to entrepreneurship shows how the intersection of a masculine and ethnicized identity can suffer situational oppression and discrimination, where the patriarchy bonus does not apply (Huxel, 2008; Tunç, 2006). Because Ümit is no longer able to correspond to the normative image of the entrepreneur (Ahl, 2002), his feelings of optimism and his confidence have diminished. Conversely, Emilia, Mali, and Yara have performed the normative hairdresser business they have learned and been socialized into Austria. The have assimilated into the adequate roles of women hairdressers, running successful businesses but not standing out too much as to raise attention. As Emilia, who is also involved in the guild’s activities, said, it is important to adapt. Adaptation then, made their migrant identities irrelevant and indeed invisible.

4.3  S  ummary of the Interviews on which the Chapter Is Based. Carried out by the Authors from May 2017 to February 2018 in HN (Neubaugasse) and HS (Simmeringer Hauptstraße)42 HS

HN HN 7 HN 11 HN14 HN11 HN 1

Identity formation and othering “Entrepreneurial” personalities

Gender relations make the business harder— Motherhood, partnership HN 14 Nationality or ethnic HN 11 background is not important in business HN 7 Have experienced racial HN 2 discrimination in HN 15 employment or daily life but not in the business

Location and place attachment Place/locality—Part of business plan. Street as national marketplace: Access to a wider market (regional, national, international)

Institutional structures Formal qualification acquired Formal financing, Bank loans, savings Active compensation for lack of networks

Lively, artsy, open-­ minded, and tolerant

 Table shows early coding and axial coding results. Unfortunately, the table does not have the flexibility to point out the multiple interrelations and intersectionalities contained in the data.

42

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

HS HN HS 3 HS 8 HS 10 HS 3 HS 8 HS 10 HS 7 HS 6 HS 6 HS 9 HS7 HS 3 HS 2 HS 4 HS 13

113

Identity formation and othering Experience racial discrimination in daily life, second generation: “from the Balkans” Conflicts and boundaries between young/older business owners intersects with gender and ethnic, national backgrounds Racialized migration imaginary, social distance— Marginalization/othering

Location and place attachment Attachment to place depends on age and length of stay Belonging as attachment to place, beyond ethnicity/ citizenship, aim to improve it

Institutional structures Financing: Family savings, formal education, social network

Decline, neglected district, rapid changes, and negative effects

Financing: Heritage, property ownership

Ethnic identities more important, more recent migration experience Social mobility through business making

Cheap rents and accessibility, lucrative location

Access to business through ethnic networks, and migrant—Not ethnic networks

Source: Author(s)’ own work

5  Conclusion This chapter has shown that Simmeringer Hauptstraße and Neubaugasse present different entrepreneurial spaces due to their locations in the urban social space. Both localities present different socially constituted and historically grown business spaces, which evoke different processes of gendered and ethnicized opportunities within the same city. The often-described localities of migrant entrepreneurship in literature often do not take into considerations, how the relevance of being a migrant varies across different urban spaces. In the center and on the city margins, different tendencies of societal cohesion, marginalization, with different dynamics and processes of belonging, inclusion and solidarity are taking place. We have tried to examine the two localities closely, and the processes of boundary drawing there, and analyzed the intersectional identities and axes of difference and inequality. We have also looked closer into the hairdressing sector and the different gendered, ethnicized, and class-structured businesses there. While in Simmering, the barber and hairdresser sector is markedly masculine, owners are framed as the entrepreneurial others, not only because of their national, religious, or ethnic backgrounds, which are generalized as Turkish, but also because of their business strategies. These include chair rental, the undermining of regulations set by the national hairdresser and barber guild, a new barber culture and corresponding male beauty styles, and the institutionalization of the shop as a friendly meeting place. The hairdresser sector in Neubaugasse reproduces the normative, corporate business relations of

114

A. Heis and P. Dannecker

hairdressing in Austria. In this case traditional employment relations are beneficial for the shop owners because of greater control over quality and marketing strategies. Although chair rental is advancing in Austria because it offers more flexibility and income for both, leaser and tenant, it undermines the authority of the employer. In Neubau, gendered relations of the sector, in which women supply the labor and men gain publicity and prominence, are reproduced, as are the class-specific tastes and fashions in consumption patterns, service performance, and equipment features. In both locations, the identities of the business owners are located at different, intersecting social positions. However, in Simmering the gendered, racialized, and marginalized identities of the barbers are labeled as migrant. To be a migrant, and to feel like a migrant, i.e., someone who does not belong, or is different, is a matter of specific ethno-cultural and a socio-economic location, rather than an actual, recent immigration. However, recent actual migration experience and ethnic background were not of importance in Neubau. Migrants, who have businesses there, do not hide their national or ethnic identities, there is Ayurveda shop, a Croatian deli, a Vietnamese shop, and many others, and the diversity is widely appreciated by customers and other business owners too. However, they all subscribe to the normative form of western business strategies and have the same target group—the sophisticated, middle-class, conspicuous consumers. Thus, we argue that migrant identity, constructed in the public, political, and academic debates in Austria, obtains meaning through the intersection of ethnicized and racialised othering, spatial location, class, and gender in historically specific ways. Whereas female entrepreneurs in Neubaugasse see their gender as a disadvantage but are determined to downplay these drawbacks through social upward mobility and accumulation of symbolic capital—such as language skills, qualifications, habitus, and tastes—the racialized masculinity of the entrepreneurs in Simmeringer Hauptstraße is hindered by their specific class position and their different symbolic capital. As has been shown, social positionalities can be exclusionary, oppressive, or beneficial depending very much on one’s location within the matrix of domination (Collins, 1990). Because all difference is intersectional, social categories like migrant or “ethnicity” cannot be understood as a single axis but are always accentuated in relation to others. While the mixed embeddedness approach claims to look at the “…relation of the opportunity structure and the social embeddedness of the actor” (Kloostermann, 2006, p. 3), this relation is not understood as a dialectic but rather in terms of matching, although the authors do recognize this problematic (Kloosterman & Rath, 2001, p. 190). Migrant identity may obtain a different meaning depending on the specific locality of agency, but of course, this meaning also changes over time. In addition, and depending on where the migrants come from, their gender might be an important empowering or discriminating category, amplified through their class position. When and why the social positionality of an individual proves exclusionary, oppressive or beneficial depends very much on location within the matrix of domination (Collins, 1990). While axes of oppression along gender relations, economic exploitation, and processes of racialized othering play out at the same level; they can also have different impacts and be differently constructed on the level of the individual, the group level, and the systemic level.

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

115

References Acar, H. (2010). Children working in the streets and in the service sector in Turkey “A Comparative Study”. Journal of Human Sciences, 7(1), 1009–1019. Ahl, H. J. (2002). The making of the female entrepreneur: A discourse analysis of research texts on women’s entrepreneurship. Jönköping International Business School. Anthias, F. (1992). Connecting “race” and ethnic phenomena. Sociology, 26(3), 421–439. Anthias, F. (2013). Hierarchies of social location, class and intersectionality: Towards a translocational frame. International Sociology, 28(1), 121–138. https://doi.org/10.1177/ 0268580912463155 Anthias, F., & Yuval-Davis, N. (1996). Racialized boundaries: Race, nation, gender, colour and class and the anti-racist struggle. Routledge. Azmat, F. (2013). Opportunities or obstacles?: Understanding the challenges faced by migrant women entrepreneurs. International Journal of Gender and Entrepreneurship, 5(2), 198–215. https://doi.org/10.1108/17566261311328855 Balibar, E., & Wallerstein, I. M. (1991). Race, nation, class: Ambiguous identities. Verso. Bannerji, H. (2000). The dark side of the nation: Essays on multiculturalism, nationalism and gender. Canadian Scholars’ Press. Barberis, E., & Solano, G. (2018). Mixed embeddedness and migrant entrepreneurship: Hints on past and future directions. An introduction. Sociologica, 12, 1–22. https://doi.org/10.6092/ ISSN.1971-­8853/8617 Baycan-Levent, T. (2010). Migrant women entrepreneurhip in OECD countries. In OECD (ed.) Open for Business: Migrant Entrepreneurship in OECD Countries, (pp. 227–254) Paris. OECD Publishing. Berger, P. L., & Luckmann, T. (1991). The social construction of reality: A treatise in the sociology of knowledge. Penguin. Borjas, G. J. (1986). The self-employment experience of immigrants. National Bureau of Economic Research Cambridge, Mass., USA. https://www.nber.org/papers/w1942 Bourdieu, P. (1996). Distinction: A social critique of the judgement of taste. Harvard University Press. Brouwer, M. T. (2002). Weber, Schumpeter and knight on entrepreneurship and economic development. Journal of Evolutionary Economics, 12(1–2), 83–105. Cho, S., Crenshaw, K. W., & McCall, L. (2013). Toward a field of intersectionality studies: Theory, applications, and praxis. Signs: Journal of Women in Culture and Society, 38(4), 785–810. Choo, H. Y., & Ferree, M. M. (2010). Practicing intersectionality in sociological research: A critical analysis of inclusions, interactions, and institutions in the study of inequalities. Sociological Theory, 28(2), 129–149. Collins, P.  H. (1990). Black feminist thought: Knowledge, consciousness and the politics of empowerment. Harper Collins Press. Collins, P. H. (2015). Intersectionality’s definitional dilemmas. Annual Review of Sociology, 41(1), 1–20. https://doi.org/10.1146/annurev-­soc-­073014-­112142 Cremer, C. (1982). Der Friseurberuf. Ein typischer Mädchen- und Frauenberuf? Hochschultage Berufliche Bildung, Universität Hannover, 29(9), 2. Dahinden, J. (2016). A plea for the ‘de-migranticization’ of research on migration and integration. Ethnic and Racial Studies, 39(13), 2207–2225. https://doi.org/10.1080/01419870.2015.112412 9 Dannecker, P., & Çakır, A. (2016). Female Migrant Entrepreneurs in Vienna: Mobility and its Embeddedness. Österreichische Zeitschrift Für Soziologie, 41(1), 97–113. https://doi. org/10.1007/s11614-016-0193-y Davies, B. (2006). Subjectification: The relevance of Butler’s analysis for education. British Journal of Sociology of Education, 27(4), 425–438. https://doi.org/10.1080/01425690600802907 de Jong, S. (2016). Converging logics? Managing migration and managing diversity. Journal of Ethnic and Migration Studies, 42(3), 341–358. https://doi.org/10.1080/1369183X. 2015.1074857

116

A. Heis and P. Dannecker

der Standard.at. (2014). Migrantische Unternehmer in Wien: Gut qualifiziert, wenig Einkommen. DerStandard.At. http://derstandard.at/2000002533237/Migrantische-­Unternehmer-­in-­Wien-­ Gut-­qualifiziert-­wenig-­Einkommen die Presse.com. (2014). Jeder dritte Selbstständige ist Migrant. DiePresse.Com. http://diepresse. com/home/wirtschaft/economist/3831050/Jeder-­dritte-­Selbststaendige-­ist-­Migrant Erel, U. (2003). Soziales Kapital und Migration: Die Kraft der Schwachen? In M. do M. Castro Varela & D. Clayton (Eds.), Migration, Gender, Arbeitsmarkt: Neue Beiträge zu Frauen und Globalisierung (pp. 154–185). Königstein/Taunus. Ulrike Helmer Verlag. Erkurt, M. (2020). Generation Haram. Warum Schule lernen muss, allen eine Stimme zu geben. Paul-Zsolnay-Verlag. Foroutan, N. (2019). Die postmigrantische Gesellschaft: Ein Versprechen der pluralen Demokratie. Transcript. Franks, M. (2002). Feminisms and cross-ideological feminist social research: Standpoint. Situatedness and Positionality – Developing Cross-ideological Feminist Research, 3(2), 14. Franz, Y. (2015). Gentrification in Neighbourhood development: Case Studies from new York City, Berlin and Vienna. V&R Unipress GmbH. Glick-Schiller, N., & Çağlar, A. (2013). Locating migrant pathways of economic emplacement: Thinking beyond the ethnic lens. Ethnicities, 13(4), 494–514. https://doi. org/10.1177/1468796813483733 Glick-Schiller, N., Çağlar, A., & Guldbrandsen, T. C. (2006). Beyond the ethnic lens: Locality, globality, and born-again incorporation. American Anthropologist, 33(4), 612–633. Hall, S. (1996). When was “the post-colonial”? Thinking at the limit. In I. Chambers & L. Curti (Eds.), The post-colonial question: Common skies, divided horizons (pp. 242–260). Routledge. Hancock, A.-M. (2004). The politics of disgust: The public identity of the welfare queen. New York University Press. Hancock, A.-M. (2005). W.E.B.  Du Bois: Intellectual Forefather of Intersectionality? Souls, 7(3–4), 74–84. https://doi.org/10.1080/10999940500265508 Hancock, A.-M. (2007). Intersectionality as a normative and empirical paradigm. Politics & Gender, 3(02). https://doi.org/10.1017/S1743923X07000062 Hancock, C., Pérez-Quintana, A., & Hormiga, E. (2014). Stereotypical Notions of the Entrepreneur: An Analysis from a Perspective of Gender. Journal of Promotion Management, 20(1), 82–94. https://doi.org/10.1080/10496491.2014.869100 Harding, A., & Blokland, T. (2014). Urban theory: A critical introduction to power, cities and urbanism in the 21st century. SAGE. Höggerl, A. (1951). Der Friseur im Wandel der Jahrtausende: Von d. Antike bis in d. Neueste Zeit ; Entwicklung d. Gewerbe, Zunftwesen, Schönheit durch Frisur u. Kleid. Wiener Neustadt: Selbstverlag. Huxel, K. (2008). Männlichkeit kontextualisieren—Eine intersektionelle Analyse. In L. Potts & J.  Kühnemund (Eds.), Mann wird man: Geschlechtliche Identitäten im Spannungsfeld von Migration und Islam (pp. 65–78). Transcript. Kierbein, S., Aigner, J., & Watson, S. (2012). Straßenmärkte in Wien und Budapest als Schauplätze des Wirtschaftens in Migrationskontexten. In M. Dabringer & A. Trupp (Eds.), Wirtschaften mit Migrationshintergrund. Zur soziokulturellen Bedeutung “ethnischer” Ökonomien in urbanen Räumen. (Entrepreneurs; pp. 93–106). Studien-Verlag. Kirschnick, R. (n.d.). 10 dinge, rund ums top Thema Stuhlmiete—Imsalon.at—Hair & Beauty Austria [online Fachmagazin]. Imsalon.At. https://imsalon.at/Business/ Personal-­Geschaeftsfuehrung/10-­Dinge-­rund-­ums-­Top-­Thema-­Stuhlmiete Kloosterman, R., van der Leun, J., & Rath, J. (1999). Mixed embeddedness. (in)formal economic activities and immigrant business in the Netherlands. International Journal of Urban and Regional Research, 23(2), 253–267. Kloosterman, R. (2010). Matching opportunities with resources: A framework for analysing (migrant) entrepreneurship from a mixed embeddedness perspective. Entrepreneurship & Regional Development, 22(1), 25–45. https://doi.org/10.1080/08985620903220488

The Meaning of Being a Migrant Entrepreneur: An Intersectional Approach to Mixed…

117

Kloosterman, R., & Rath, J. (2001). Immigrant entrepreneurs in advanced economies: Mixed embeddedness further explored. Journal of Ethnic and Migration Studies, 27(2), 189–201. https://doi.org/10.1080/13691830020041561 Kloosterman, R. & Rath, J. (2003). Introduction. In Robert Kloosterman & J.  Rath (Eds.), Immigrant entrepreneurs: Venturing abroad in the age of globalization (Entrepreneurs II; pp. 1–16). Berg. Kloostermann, R. (2006). Mixed embeddedness as a conceptual framework for exploring immigrant entrepreneurship [Eurex Lecutre 8]. Kohlbacher, J., & Reeger, U. (2006). Die Dynamik ethnischer Wohnviertel in Wien Eine sozialräumliche Longitudinalanalyse 1981—2005. ÖAW Österreichische Akademie der Wissenschaften; AH online. http://www.oeaw.ac.at/isr/fileadmin/mediapool/dokumente/projekte/fb33.pdf Lefebvre, H. (1991). Critique of everyday life. Verso. Light, I. H., & Gold, S. J. (2000). Ethnic economies. Academic Press. Massey, D. (1991). The political place of locality studies. Environment and Planning A, 23(2), 267–281. https://doi.org/10.1068/a230267 Massey, D. (2005). For space. SAGE. Miejski, S. P. (2015). Migrawire: Die Messe für ethnische Unternehmen. Meinbezirk.At. https://www1. meinbezirk.at/linz/c-­wirtschaft/migrawire-­die-­messe-­fuer-­ethnische-­unternehmen_a1279424 Min, P. G. (2008). Ethnic solidarity for economic survival: Korean greengrocers in new York City. Russell Sage Foundation. Novy, A. (2011). Unequal diversity–on the political economy of social cohesion in Vienna. European Urban and Regional Studies, 18(3), 239–253. ÖIF. (n.d.). Zusammen Österreich. Zusammen Österreich. https://www.zusammen-­oesterreich.at/ startseite/ ORF. (2013). Migranten-Unternehmer verdienen oft wenig. Wien.ORF.At. http://wien.orf.at/news/ stories/2598907 Perchinig, B., & Troger, T. (1990). Migrationshintergrund als Differenzkategorie: Vom notwendigen Konflikt zwischen Theorie und Empirie in der Migrationsforschung. Zukunft. Werte. Europa. Die Europäische Wertestudie, 2010, 283–319. Phizacklea, A. (1988). Entrepreneurs, Ethnicity and Gender. In S. Westwood & P. Bhachu (Eds.), Enterprising Women: Ethnicity, Economy and Gender Relations (pp. 20–33). London. Routledge. Pio, E. (2007). Ethnic minority migrant women entrepreneurs and the imperial imprimatur. Women in Management Review, 22(8), 631–649. https://doi.org/10.1108/09649420710836317 Portes, A., & Jensen, L. (1987). What is an ethnic enclave—The case for conceptual clarity— Comment. American Sociological Review, 768–771. Rusinovic, K. (2008). Transnational embeddedness: Transnational activities and networks among first- and second-generation immigrant entrepreneurs in the Netherlands. Journal of Ethnic and Migration Studies, 34(3), 431–451. https://doi.org/10.1080/13691830701880285 Schmatz, S., & Wetzel, P. (2014). Migrantische Ökonomien in Wien. Kammer für Arbeiter und Angestellte für Wien. Schutz, A. (1962). Phenomenology and the social sciences. In Collected Papers I (pp. 118–139). Springer. https://doi.org/10.1007/978-­94-­010-­2851-­6_5 Schütz, A., & Luckmann, T. (1973). The structures of the life-world. Northwestern University Press. Sennett, R. (2018). The Open City. In T. Haas & H. Westlund (Eds.), In the post-urban world: Emergent transformation of cities and regions in the innovative global economy (pp. 97–106). Routledge. Shooman, Y. (2014). »... weil ihre Kultur so ist«: Narrative des antimuslimischen Rassismus. Transcript. Stadt Wien. (2015). Wien im Querschnitt der Zeit. Ergebnisse aus der Registerzählung 2011. Teil 1: Gebäude—Und Wohnzählung [Statistik Journal]. MA 23 Wirtschaft Arbeit Statistik, Stadt Wien. https://www.wien.gv.at/statistik/pdf/wien-­quer-­sj-­2-­15.pdf

118

A. Heis and P. Dannecker

Stadtentwicklung und Stadtplanung (MA 18). (2014). Im Ausland geborene Personen. Stadt Wien. https://www.wien.gv.at/stadtentwicklung/grundlagen/stadtforschung/gis/karten/images/im-­ ausland-­geborene-­personen-­2013-­g.jpg Stylisten Agentur. (2018). Stylisten Talk zum Thema Billigfriseure. https://www.youtube.com/ watch?v=B4cjVp2xjSM Supik, L. (2017). Diskriminierung von Menschen mit Migrationshintergrund. In A.  Scherr, A.  El-Mafaalani, & G.  Yüksel (Eds.), Handbuch Diskriminierung (pp.  191–207). Springer Fachmedien Wiesbaden. https://doi.org/10.1007/978-­3-­658-­10976-­9_26 Tunç, M. (2006). Migrationsfolgegenarationen und Männlichkeiten in intersektioneller Perspektive. Forschung, Praxis und Politik. In H.  B. Stiftung (Ed.), Migration udn Männlichkeiten. Dokumentation einer Fachtagung des Forum Männer in Theorie und Praxis der Geschlechterverhältnisse und der Heinrich Böll Stiftung am 9./10. Dezember 2005  in Berlin (pp. 17–31). Heinrich Böll Stiftung. Verduijn, K., & Essers, C. (2013). Questioning dominant entrepreneurship assumptions: The case of female ethnic minority entrepreneurs. Entrepreneurship & Regional Development, 25(7–8), 612–630. https://doi.org/10.1080/08985626.2013.814718 Villares-Varela, M., & Essers, C. (2019). Women in the migrant economy. A positional approach to contextualize gendered transnational trajectories. Entrepreneurship & Regional Development, 31(3–4), 213–225. https://doi.org/10.1080/08985626.2018.1551789 Waldinger, R., Ward, R., & Aldrich, H. (1985). Ethnic business and occupational mobility in advanced societies. Sociology, 19(4), 586–597. Weber, M. (2016). Die protestantische Ethik und der „Geist“ des Kapitalismus. Lichtblau K. & Weiß J. (eds.) Reprint of the first edition 1904-05, including the most important changes from the second edition 1920. Wiesbaden. Springer VS. Welter, F., & Smallbone, D. (2010). The embeddedness of women’s entrepreneurship in a transition context. In C.  G. Bruch (Ed.), Women entrepreneurs and the global environment for growth: A research perspective (pp. 96–117). West, C., & Fenstermaker, S. (1995). Doing difference. Gender & Society, 9(1), 8–37. West, C., & Zimmerman, D. H. (1987). Doing Gender. Gender & Society, Vol. 1(No. 2), 125–515. Wirtschaftsagentur Wien. (n.d.). Wirtschaftsagentur.at: Ein Fonds der Stadt Wien › Übersicht › Migrant Enterprises. https://wirtschaftsagentur.at/beratungen/migrant-­enterprises-­6/ WKO (2017). Diversity—WKO.at. WKO. https://www.wko.at/service/w/netzwerke/diversity.html Yildiz, E., & Berner, H. (2021). Postmigrantische Stadt: Eine neue Topographie des Möglichen. Zeitschrift für Migrationsforschung, 1(1), 243–264. https://doi.org/10.48439/zmf.v1i1.107 Young, I. M. (1990). City life and difference. Princeton University Press. Zusammen:Österreich. (2014). 50 Unternehmerisch Erfolgreiche Zuwander/innen und ihre Erfolgstipps. Österreichischer Integrationsfond.

Investigating the Impact of Social Network Marketing on the Bank Customers’ Profitability Fataneh Yarahmadi, Farzaneh Yarahmadi, and Behzad Sanjari Nader

Abstract  Customer loyalty is important for profitability of any business including banking industry. This study aims to investigate the effect of social network marketing on customer profitability in banks and to design a customer profitability model in the field of marketing. A deductive approach is used to develop the hypotheses based on existing theory. This study is a descriptive research and uses the survey method. The sample is collected from 200 potential customers from Melli banks in Hamadan Province, Iran. The simple random sampling technique is selected for this study. The data have been analyzed, using the structural equation modeling. The conclusion is that electronic word-of-mouth marketing, online brand community, online advertising, and customer brand loyalty are influencing factors on the bank customers’ profitability. Keywords  Social network · Social networking · Social network marketing · Brand loyalty · Customer profitability

1  Introduction For decades, measuring the relationship between customer loyalty and profitability has been an essential topic for the marketing research of organizations. It is stated in the research that loyal customers have higher customer retention rates, and are more inclined to recommend the other customers of the company (Reichheld and Earl Sasser, 1990; Zeithaml 2000). According to research done by Frederick Reichheld of Bain & Company, a 5% increase in customer retention produces more F. Yarahmadi (*) · B. S. Nader University of Malayer, Malayer, Iran e-mail: [email protected] F. Yarahmadi Oman Tourism College, Muscat, Oman © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_7

119

120

F. Yarahmadi et al.

than 25% increase in the profit. Alternatively, a 5% reduction in the number of loyal customers causes the company to lose 50% of its profits (Reichheld & Sasser, 1990). In the banking industry, a customer loyalty plays a crucial role in their profitability. Despite the importance of customer profitability, this concept was mainly considered from the perspective of financial and accounting management, and only revenue and expenses were defined as influential variables on the bank customers’ profitability. For the last few decades, the increasing competition in the market of business has changed the approach from traditional mass marketing to online marketing and word-of-mouth marketing. The increasing focus on customers profitability reflects the weakening of the mass market attitude in marketing principles (Osanlou & Khoddami, 2016). Furthermore, for the last few decades, people are mainly engaged in and attracted to social media platforms. Organizations started to consider such innovations as powerful mechanisms to communicate with their customer more frequently. Marketers began to recognize the use of social media as a part of marketing strategies to reach out to their customers. The viral quality of social media makes it an attractive tool for companies to market products and services (Xiang & Gretzel 2010). Nielsen (2011) stated that 70% of social media users are engaged in online shopping. Nowadays, each customer is analyzed individually and not as a part of the market but as a group of customers. Based on the principles of interpersonal marketing, banks cannot establish and maintain the same relationships with all their customers because customers are different in terms of the type of profit for the bank (Niraj et al., 2008). Therefore, due to customer profitability, banks try to maintain their relationship with loyal and profitable customers, and they try to end their connection with customers who do not have much loyalty to the bank brand. Besides, the cost of continuing with them is more costly than their profitability. Achieving such goals has made it essential to identify ways to build brand loyalty among customers (Fensen and Hansen 2006). In most developed countries, product and service providers have been able to make the best use of this tool based on the information they receive from the networks and to enhance brand loyalty among customers (Brodie et al., 2013). The fact that social media provide consumers with an opportunity to become a fan of a specific brand, using the information they receive from these networks indicates the important role of social media in the success of banks’ profitability. This research is an encouragement to study the relationship between social network marketing and customers’ profitability through the loyal customers. The purpose of this chapter is to investigate the effect of social network marketing on customers’ profitability of the banks by emphasizing the mediating role of customer loyalty.

1.1  Objectives The main objective of this chapter is to investigate the impact of social network marketing on the bank customers’ profitability. The other objectives are to investigate:

Investigating the Impact of Social Network Marketing on the Bank Customers…

121

1. The relationship between electronic word-of-mouth marketing on brand repurchase intention and brand recommendation to other customers. 2. The relationship between online brand communities on brand repurchase intention and brand recommendation to other customers. 3. The relationship between online advertising on brand repurchase intention and brand recommendation to other customers.

2  Litrature Review 2.1  Social Network (SN) Social network is the social structure of groups that are connected to a cluster of specific social relationships, e.g., friendship, transfer of funds, specific membership. For the last few decades, significant changes have taken place with expansion of the internet, social networks, and the number of people who use them. Social network includes websites and applications that allow users to share content, ideas, opinions, beliefs, feelings, personal, social and educational experiences (Azizi et al. 2019). Social network can be defined as a group of “Internet-based Applications,” allowing individuals to create a public or semi-public profile within a limited system, communicate with other users, and view the pages and details that other users have created within the system. In another words, social network is defined as technologies and procedures by which people share their knowledge and opinions. According to Cadima et al. (2012), social networks play a vital role in learning environments as a primary communication medium and a source of social support. There are several instructive benefits for social networks as they provide comprehensive access to knowledge and informative services, and to eliminate barriers to community interactions and telecommunications (Madaiah et  al. 2017). The new 2018 Global Digital Suits reports from We Are Social and Hootsuite reveal that the world’s number of internet users is around 4021 billion. In addition, 3196 billion people regularly use social networks worldwide. In Iran, the use of the internet and social networks has risen dramatically. According to the Iranian Center for Statistics, over the past 3 years, the use of social media has tripled and more than 47 million Iranians use social networks (Jafari 2017). There are a number of popular online social networks with millions of users who interact on a daily basis. Facebook, Twitter, and Kurkut are among the most widely used. According to Barkhuus and Tashiro (2010), online social networks allow people to communicate and share their interests with others over long distances. Companies recognize that social networks represent a new way to communicate with consumers allowing a company to extend its communications, develop a reputation, and promote the firm image (Becker et al. 2013). Direct contact with consumers through social networks generates greater involvement resulting in a direct impact on brand loyalty intentions. The customers can share their product experiences through social networking. Social networking is defined as the relationship between a network of people who share common interests (Wang et al. 2011).

122

F. Yarahmadi et al.

2.2  Social Network Marketing (SNM) Any marketing that occurs on social media platforms is referred to as social network marketing. Nowadays, social networking is used as one of the new marketing tools to maintain customer loyalty. Since retention of existing customers is less expensive and more effective than attracting new customers, so mastering the customers’ involvement is vital in social networks (Hollebeek, 2011). According to the above-mentioned description of social network marketing, the first hypothesis and its sub-hypotheses are as follows: H1:  social network marketing has a positive and significant effect on customer loyalty to thebanks’ brand. H1.1:  electronic word-of-mouth marketing has a positive significant effect on brand repurchase intention and brand recommendation to other customers. H1.2:  online brand communities have a positive significant effect on brand repurchase intention and brand recommendation to other customers. H1.3:  online advertising has a positive significant effect on brand repurchase intention and brand recommendation to other customers. Balakrishnan et al. (2014) have identified three dimensions for social network marketing variable as follows: 2.2.1  Electronic Word-of-Mouth Marketing Word-of-mouth marketing (WOMM) is becoming an effective strategy and a central platform for interactive marketing communication. WOMM is about harnessing people’s power to generate awareness of the brand (Word of Mouth Marketing Association, 2017). With the emergence of the digital marketplace, the internet as a crucial facilitator is an amorphous network link between producers and consumers (Berman et  al., 2007). Electronic WOMM, also called electronic word-of-mouth marketing, is defined as consumers’ informal communications through Internet-­ based technology concerning the use or characteristics of certain goods or services or their vendors (Stephen and Ronald 2008). This type of communication is one of the most reliable methods of advertising. In the age of information, people are faced with a mass of information and advertising, and they do not have enough time to check all of them. Also, they prefer to have their desired information in the form of screening and receive a review of their friends and relatives (Silverman, 2001). Individuals are more likely to trust word-of-mouth information than through the radio, television, and other publications (Cakim, 2010). Therefore, word-of-mouth marketing is an authoritative source of product information and effective marketing strategy and communication (Yeh and Choi 2011). Extensive studies have been conducted on the impact of electronic word-of-­ mouth marketing on brand loyalty. Researchers in this field have come to the consensus that electronic word-of-mouth advertising has potential to influence brand

Investigating the Impact of Social Network Marketing on the Bank Customers…

123

loyalty. Studies by some researchers have shown that marketing of electronic word-­ of-­mouth marketing is an extraordinary power that positively increases brand loyalty and influences customer behavior. In such a way, customers with a high level of loyalty are more likely to create positive word-of-mouth communication and act as a brand supporter. In other words, word-of-mouth advertising is often done by loyal customers, and the role of loyal customers in marketing and creating a positive attitude towards the brand is vital. As a matter of fact, with the help of technology, consumers can create a positive or negative image in other consumers’ minds for a particular brand (Duhan et al., 1997). 2.2.2  Online Brand Communities Online brand communities are specialized societies with no geographical boundaries that are based on social relationship among the admirers of a brand in cyberspace (Zhang et al., 2011). In today’s world, many companies tend to develop their brand communities because membership in such communities provides an opportunity for companies to connect with dedicated customers, and it helps to communicate effectively with other customers, gain valuable information from them, and create shared values from close interactions with other customers. Perhaps, the essential advantage in supporting brand communities for companies is brand loyalty, called the Holy Grail (McAlexander et al., 2002). These communities have been identified as the ultimate goal of brand loyalty. They are considered a powerful tool for marketers to strengthen the relationship between consumers and their products and increase brand equity. A brand’s experience enhances consumers’ brand recognition. Similarly, consumers can share well-­ known brands through the brand community and enhance the brand’s connectivity. Generally, a brand’s community leads to the increase of the brand’s affiliation, loyalty to the community, lack of loyalty to rival brands, word-of-mouth marketing, and brand image (Relling et al., 2015). 2.2.3  Online Advertising With the commencement of commercial activity on the internet, online advertising has also emerged. Online advertising can be defined as “The use of the internet and its subset technologies, such as social networks, websites, and e-mails, to carry out promotional activities by business organizations” (Esmaeilpour et al., 2013). Online social networking offers the benefits of interacting with two-way communication with customers. In other words, online advertising can provide more and better information about products and services and create a two-way communication with customers (Kircova and Cinar 2015). Thus, a bank can easily have access to the information about customer opinions and views about its brand and service features (Khraim and Alkrableih 2015).

124

F. Yarahmadi et al.

On the other hand, banks can combine traditional advertising methods with online advertising techniques and use this hybrid approach to influence consumer purchasing behavior, and to increase sales and returns on their capital (Huang et al., 2015). It can also be stated that the advertisement is linked to client loyalty and reinforces customer relationship and perceptions towards the brand. Social networking services have also become an essential part of many businesses (Weeden et al., 2013).

2.3  Brand Loyalty Today, brand loyalty has become an essential issue in consumer marketing and research. Besides, its importance as a consumer behavior phenomenon has a significant impact on financial performance of business. Many studies over the past three decades have examined consumer loyalty from two perspectives: behavioral loyalty and attitude loyalty. In the meantime, some researchers defined loyalty based on a behavioral point of view. Others believe that a better attitude perspective can describe the concept of customer loyalty. Finally, some experts have introduced a behavioral-attitude combination approach to explain customer loyalty. Behavioral loyalty refers to the abundance of purchases (Nam et al., 2011). Besides having certain marketing benefits such as lower marketing costs, attracting more new customers, creating more significant business leverage, and developing brand loyalty are also a prerequisite for the bank’s competitiveness and profitability. Therefore, to retain the right customers is more beneficial than constantly looking for a new customer (Mitussis et al., 2006). Based on the theoretical and experimental principles reviewed in this research, two dimensions of “brand repurchase” and “brand recommendation to other customers” have been identified for the customer loyalty variable.

2.4  Customer Profitability (CP) Over the last decades, the concept of customer profitability has attracted both management accounting and marketing professionals’ attention. According to Cooper & Kaplanc (1991), customer profitability can be defined as the difference between individual customers’ revenues and their expenses. Customer profitability is of great concern for all commercial companies in the service industries, including banking industry. Customer profitability is related to the value that a bank obtains from a particular customer (Mulhern, 2010). Previous studies show that the process of ordering services, providing services, supporting before and after the use of services, and payment procedures for profitable customers are different from non-­ profitable bank customers. One factor that distinguishes profitable customers from non-profitable customers is the customer’s purchasing patterns.

Investigating the Impact of Social Network Marketing on the Bank Customers…

125

Based on the theoretical and empirical theories reviewed in this study for the concept of customer profitability, the bank has identified four dimensions as follows: • Purchase patterns: Purchase procedures of the bank include the use of services, the use of discounts, and after sales service. • Procedures for providing services: Factors, relating to the provision of services to customers, include the cost of providing services, the frequency and specific requests for customer service, and the request for fast service delivery. • Financial procedures: Payment and its processing methods for customers with banks include applying for a loan and the use of their discounts. • Service inventory management: These are the factors related to the maintenance of an inventory of services and management of requirements, such as requests for orders. Many research types have investigated the relationship between customer loyalty and customer profitability concepts. Mulhern (2010) indicated that advice for others and word-of-mouth advertising by customers are variables that influence organizations’ profitability. Garland (2002) also showed that customer satisfaction positively affects customer loyalty and its profitability. The results of the study conducted by Osanlou and Khoddami (2016) showed that the brand image, the quality of service, the customer perceived value, and the customer loyalty in the field of marketing management had been introduced as influential variables on the customer profitability for the organization. According to the above-mentioned descriptions of customer profitability and brand loyalty, the second hypothesis and its sub-hypotheses are as follows: H2: brand loyalty has a positive and significant effect on banks’ customer profitability. H2.1: brand repurchase intention and brand recommendation to other customers significantly affect shopping patterns. H2.2: brand repurchase intention and brand recommendation to other customers significantly affect service delivery procedures. H2.3: brand repurchase intention and brand recommendation to other customers significantly affect financial procedures. H2.4: brand repurchase intention and brand recommendation to other customers significantly impact service inventory management.

2.5  Conceptual Framework This chapter aims to investigate the effect of social network marketing on banks’ customer profitability, with an emphasis on the mediating role of customer loyalty. The conceptual model in this research is based on Osanlou and Khoddami in 2016 that has been conducted with a non-formal marketing approach to identifying customer profitability incentives. A conceptual model of customer

126

F. Yarahmadi et al.

Social Network Marketing

Electronic Word of Mouth Marketing Online Brand Communities Online Advertising

Banks Customer Profitability Brand Loyalty Brand Repurchas Intentione Brand Recommendation

Shopping Patterns Service Delivery Procedures Financial Procedures Service Inventory Management

Fig. 1  Conceptual model of research derived from Osanlou & Khoddami Research (2016)

profitability is designed and presented below based on the first and second hypotheses and their sub-hypotheses that are presented in the theoretical foundation section. Fig. 1 shows the conceptual model of the research:

3  Research Methods In this chapter, a deductive method was used to develop the hypotheses based on existing theory. This study determined causal relationship between social network marketing variables and customer profitability for banks and brand loyalty. Therefore, the research was applied in terms of purpose and in terms of data collection method. Also, it was descriptive and correlational, specifically based on structural equation modeling. The research instrument was a questionnaire that includes two sections of general and specific questions based on the five Likert scales. The banking industry was considered to reflect a statistical population of this study, since it is one of the country’s service industries that are facing severe competition. As social network marketing techniques have a significant impact on banks’ success; therefore, the conceptual model of the research seeks to identify the factors of social network marketing affecting banks’ customer profitability, which can be tested in the best way in a competitive environment. The statistical population of this study consists of all branches of Melli banks operating in the city of Hamadan (over 420 banks). The sample is collected from 200 potential customers from Melli banks in Hamadan Province, Iran. This study used simple random sampling from banks’ loyal customers. The list of customers was

Investigating the Impact of Social Network Marketing on the Bank Customers…

127

provided by the banks. Morgan table was used to estimate the sample size. Two hundred twenty questionnaires were distributed, of which 205 questionnaires were collected, but 200 questionnaires with complete informational accuracy were used for analysis. As indicated in the conceptual model of the research, the research model includes three main variables: social network marketing, customer loyalty, and customer profitability. Therefore, this research questionnaire consists of two separate sections collected in the banking industry. The first part of the questionnaire consists of 17 questions related to social network marketing and brand loyalty. The second part contains 11 questions related to the variable customer profitability for organizations that the managers of the banks execute. The validity of this questionnaire’s content has been approved by the academia and industry experts. Cronbach’s alpha method was also used to determine this test reliability. Cronbach’s alpha for all questions was 91%. Table 1 shows Cronbach’s alpha and the source of the questions for each of the research variables.

Table 1  Cronbach’s alpha and source of questions for the variables of the research model (Authors’ own table)

Questionnaire The first part of the questionnaire

Variable Social networks marketing

Brand loyalty

The second part Customer profitability of the for the bank questionnaire

Dimensions Electronic word-of-mouth marketing Online brand communities Online advertising

The number of items 3

4 3

Brand repurchase 3 intention 4 Brand recommendation to other customers Shopping patterns 3 Service presentation procedures Financial procedures Service inventory management

2

3 3

Sources Balakrishnan et al., 2014 Balakrishnan et al., 2014 Balakrishnan et al., 2014 Chen et al., 2012 Pan et al., 2012 Ritter & Walter, 2012 Smith and Dikolli 1995 Heitger and Heitger 2008 Smith and Dikolli 1995

Cronbach’s coefficient alpha 0/76

0/83 0/76 0/76 0/73

0/76 0/78

0/83 0/79

128

F. Yarahmadi et al.

4  Analysis of Data and Research Findings In this research, structural equations model, factor analysis, and LISREL tools have been used to assess the conceptual model’s validity extracted from theoretical foundations and hypotheses.

4.1  Determine the Appropriateness of the Model Before testing the hypotheses, it is necessary to consider the research’s conceptual model. Exploratory factor analysis has been used in the study. Accordingly, Fig. 2 shows the LISREL model output in the standard coefficient display mode. Table 2 shows the fitting indexes of the model:

Fig. 2  Model of social network marketing measurement on customer profitability for the organization (Authors’ own figure) Table 2  Correlation indices of the structural model of research (Authors’ own table)

Structural model Acceptable rate Research model index

RMSEA 0/08> 0/056

IFI 0/9< 0/98

NFI 0/9< 0/94

GFI 0/9< 0/93

AGFI 0/9< 0/94

CFI 0/9< 0/93

2 df 3> 2/5

Investigating the Impact of Social Network Marketing on the Bank Customers…

129

As shown in the table above, the RMSEA value, obtained from the model estimation, is smaller than 0.08, and the IFI, NFI, GFI, AGFI, and CFI values, obtained from the model estimate, are more significant than 0.9. Also, the ratio of the dividing of X2 by df is less than 3, which indicates the suitability of the model. In general, according to the numbers obtained from estimating the model, it can be concluded that the conceptual model of the research is excellent in terms of the fit index. Therefore, in this conceptual model, the defined relationship can be evaluated.

4.2  Testing Hypotheses A meaningful model of the individual coefficients is presented for each model portion using confirmatory factor analysis. For a significant coefficient or parameter, its significant number must be greater than 2 and smaller than −2. Figure 3 shows the LISREL output in the case of significant numbers.

5  Findings According to the results shown in Fig. 2 and 3, the results of the first hypothesis (H1) are as follows:

Fig. 3  Model of social network marketing measurement on customer profitability in significant numbers (Authors’ own figure)

130

F. Yarahmadi et al.

1. In testing the first sub hypothesis, the path coefficient value for the effect of word-of-mouth marketing on a brand repurchase intention is 0.70, and the coefficient value is 7.20, and the path coefficient value for the effect of word-of-­ mouth marketing on a brand recommendation is 0.81, and the coefficient value is 4.41. Therefore, the structural equation model shows that the electronic word-of-­ mouth marketing significantly affects brand repurchase intention and brand recommendation more than other customers. 2. In testing the second sub-hypothesis, the path coefficient value for online brand communities effect on brand repurchase intention is 0.83, and the coefficient value is 5.53. The path coefficient value for online brand communities effect on a brand recommendation is 0.66, and the coefficient value is 10.36. Therefore, the structural equation model shows that online brand communities significantly and positively affect brand repurchase intention and brand recommendation to other customers. 3. In testing the third sub-hypothesis, the path coefficient value for the effect of online advertising on brand repurchase intention is 0.68, and the coefficient value is 10.38. The path coefficient value for the effect of online advertising on a brand recommendation is 0.75, and the coefficient value is 10.25. Therefore, the structural equation model shows that online advertising has a significantly positive effect on brand repurchase intention and brand recommendation to other customers. According to the results shown in Fig. 2 and 3, the results of the second hypothesis (H2) are as follows: 1. In testing the first sub-hypothesis, the path coefficient value for the effect of brand repurchases intention on shopping pattern is 0.88, and the coefficient value is 10.28, and the path coefficient value for the effect of brand recommendation on shopping pattern is 0.73, and the coefficient value is 10.43. Therefore, the structural equation model shows that brand repurchase intention and brand recommendation to other customers significantly affect shopping patterns. 2. In testing the second sub-hypothesis, the path coefficient value for the effect of brand repurchases intention on service delivery procedures is 0.85, and the coefficient value is 10.25. The path coefficient value for the effect of brand recommendation on service delivery procedures is 0.79, and the coefficient value is 10.29. Therefore, the structural equation model shows that brand repurchases intention and brand recommendation have a significant effect on service delivery procedures. 3. In testing the third sub-hypothesis, the path coefficient value for the effect of brand repurchases intention on financial procedures is 0.85, and the coefficient value is 10.25. The path coefficient value for a brand recommendation effect on financial procedures is 0.88, and the coefficient value is 10.58. Therefore, the structural equation model shows that brand repurchase intention and brand recommendation significantly affect financial procedures.

Investigating the Impact of Social Network Marketing on the Bank Customers…

131

4. In testing the fourth sub-hypothesis, the path coefficient value for the effect of brand repurchases intention on service inventory management is 0.76, and the coefficient value is 8.46. The path coefficient value for the effect of brand recommendation on service inventory management is 0.75, and the coefficient value is 10.55. Therefore, the structural equation model shows that brand repurchase intention and brand recommendation to other customers have a significant impact on service inventory management.

6  Discussion and Conclusion In today’s competitive business world, the discussion of developing and maintaining the profitability of service providers by increasing customer brand loyalty is one of the strategic issues for managers and marketers. Customers who have a strong connection with the service providers are known to be the primary source of profitability; therefore, the banks should seek to use new strategies to increase and maintain their customers loyalty that could lead to customer profitability. In this study, we sought to answer whether or not social network marketing would affect on the bank customers’ profitability. The confirmation of the first hypothesis shows the positive effect of social network marketing on customer loyalty. In other words, the results indicate that there is a positive and significant effect of social network marketing, namely, electronic word-of-mouth marketing, online communities, and online advertising with customer loyalty. The results highlight that social networking is a popular marketing strategic tool that can help organizations communicate with their customers more effectively. Banks can also increase customer loyalty and create more loyal customers through social network marketing, i.e., word-of-mouth marketing, online communities, and online advertising. The confirmation of the second hypothesis of the research shows that brand loyalty affects customer profitability for the bank. This result is consistent with Holm et al. (2012) research and indicates that customers with high loyalty increase the bank customers’ profitability. The confirmation of the first hypothesis aligns with the results of studies by Jacobs et al. The year 2001 showed that customer loyalty is associated with customer retention. This issue increases revenues and reduces expenses, affecting customer profitability for the organization. According to the confirmation of this hypothesis, brand repurchase intention and brand recommendation positively and significantly affect customer profitability for the bank, which includes four dimensions of purchasing patterns, product delivery procedures, financial procedures, and product inventory management. These results reflect that customer loyalty affects customer profitability in two ways: (1) Increased revenue due to the customers’ desire to repurchase the brand (2) Reduced cost due to the reduction of customer’s attraction, expenses, and higher efficiency of experienced customer service.

132

F. Yarahmadi et al.

In this regard, it is recommended that managers and marketers of banks develop customer loyalty by utilizing new marketing methods in social networks, such as creating word-of-mouth electronic marketing, online brand communities, and online advertising for the purpose of encouraging customers. These marketing tools have an immense impact on the decision to buy the brand and recommend it to others by customers. This will change the shopping patterns of these customers, their product delivery procedures, financial procedures, and inventory management of their products in a way that increases the bank’s profitability. It is also suggested that, for an effective and efficient use of social networks, the banks need to consider their customers’ opinions regarding their services, and their brand of their competitors to collect the required information about their customers’ needs and expectations. After collecting the required information, banks need to use the results of their study to improve the marketing dimensions of social networks and improve their customers’ mentality towards the bank’s brand in order to increase the number of loyal customers and attract them more.

References Azizi, S.  M., Soroush, A., & Khatony, A. (2019). The relationship between social networking addiction and academic performance in Iranian students of medical sciences: A cross-sectional study. BMC Psychology, 7, 1–8. Article number: 28. https://bmcpsychology.biomedcentral. com/articles/10.1186/s40359-­019-­0305-­0 Balakrishnan, B.  K., Dahnil, M.  I., & Yi, W.  J. (2014). The impact of social media marketing medium toward purchase intention and brand loyalty among generation Y. Procedia-Social and Behavioral Sciences, 148, 177–185. Barkhuus, L., & Tashiro, J. (2010). Student socialization in the age of Facebook. In Proceedings of the 28th International Conference on Human Factors in Computing Systems (pp. 133–142). Becker, K., Nobre, H., & Vijay, K. (2013). Monitoring and protecting company and brand reputation on social networks: When sites are not enough. Global Business and Economics Review, 15(2/3), 293–230. Berman, S. J., Abraham, S., Battino, B., Shipnuck, L., & Neus, A. (2007). Navigating the media divide: Innovating and enabling new business models (No. G510-6579-03). IBM Global Business Services - IBM Institute for Business Value. Brodie, R. J., Ilic, A., Juric, B., & Hollebeek, L. (2013). Consumer engagement in a virtual brand community: An exploratory analysis. Journal of Business Research, 66(8), 105–114. Cadima, R., Ojeda, J., & Monguet, J. M. (2012). Social networks and performance in distributed learning communities. Educational Technology and Society, 15(4), 296–304. Cakim, I. M. (2010). Implementing word of mouth marketing. Wiley. Chen, F. Y., Chang, Y. H., & Lin, Y. H. (2012). Customer perceptions of airline social responsibility and its effect on loyalty. Journal of Air Transport Management, 20, 49–51. Cooper, R., & Kaplanc, R.  S. (1991). Profit priorities from activity-based costing. Harvard Business Review, 69, 130–135. Duhan, D. F., Johnson, S. D., Wilcox, J. B., & Harrell, G. D. (1997). Influence on consumer use of word-of-mouth recommendation sources. Journal of the Academy of Marketing Science, 25(4), 283–295. Esmaeilpour, M., Bahraini, M., & Gharihi, M. (2013). Provide a hierarchical model to examine the role of online advertising in the shopping process of customers. In Second National Conference of Modern Management Sciences, Golestan Province, Gorgan.

Investigating the Impact of Social Network Marketing on the Bank Customers…

133

Fensen, F. M., & Hansen, T. (2006). An empirical examination of brand loyalty. Journal of Product & Brand Management, 15(7), 442–449. Garland, R. (2002). What influences customer profitability? Service–Profit Chain. Non-financial drivers of customer profitability in personal retail Banking. Journal of Targeting, Measurement and Analysis for Marketing, 10, 233–248. Heitger, L.  E., & Heitger, D. (2008). Jamestown electric supply company: Assessing customer profitability. Issues in Accounting Education, 23, 261–280. Hollebeek, L. (2011). Exploring customer brand engagement: Definition and themes. Journal of Strategic Marketing, 19(7), 555–573. Huang, C.-Y., Chiou, C.-C., Wu, T.-H., & Yang, S.-C. (2015). An integrated DEA-MODM methodology for portfolio optimization. Operational Research, 15(1), 115–136. [5]. Jafari, H. (2017). Social media usage in iran has tripled. https://techrasa.com/2017/05/23/ social-­media-­usage-­iran-­tripled/.2018 Khraim, H. S., & Alkrableih, A. A. (2015). The effect of using pay per click advertisement on online advertisement effectiveness and attracting customers in E-marketing companies in Jordan. International Journal of Marketing Studies, 7(1), 180–199. Kircova, I., & Cinar, D. (2015). Digital advertising practices and its impacts on students: An application in the public. In Handbook of Research on Effective Advertising Strategies in the Social Media Age (pp. 388–407). Madaiah, M., Seshaiyengar, C. T., Suresh, P., Munipapanna, S., & Sonnappa, S. D. (2017). Study to assess the effects of social networking sites on medical college students. International Journal Of Community Medicine and Public Health, 3(5), 1204–1208. McAlexander, J. H., Schouten, W. J., & Koening, F. H. (2002). Building brand community. Journal of Marketing, 66(1), 38–54. Mitussis, D., O'Malley, L., & Patterson, M. (2006). Mapping the reengagement of CRM with relationship marketing. European Journal of Marketing, 40, 572–589. Mulhern, F. J. (2010). Customer profitability analysis: Measurement. Concentration, and Research Directions, Journal of Interactive Marketing, 13, 25–40. Nam, J., Ekinci, Y., & Whyatt, G. (2011). Brand equity, brand loyalty and consumer satisfaction. Annals of Tourism Research, 38(3), 1009–1030. Nielsen. (2011). State of the media: the social media report. Nielsen Company. http://blog.nielsen. com/nielsenwire/social/ Niraj, R., Foster, G., Gupta, M. R., & Narasimhan, C. (2008). Understanding customer level profitability: implications of satisfaction programs. Journal of Business & Industrial Marketing, 23/7, 454–463. Osanlou, B., & Khoddami, S. (2016). The survey of the effect of brand image on customer profitability for organization based on service quality and perceived value of customer. Journal of Executive Management, 14(7), 14–32. Pan, Y., Sheng, S., & Xie, F. T. (2012). Antecedents of customer loyalty: An empirical synthesis and reexamination. Journal of Retailing and Consumer Services, 19, 150–158. Relling, M., Schnittka, O., Sattler, H., & Johnen, M. (2015). Each can help or hurt: negative and positive word of mouth in social network brand communities. International Journal of Research in Marketing, 33(1), 42–58. Reichheld, F., & Sasser, J. R. (1990). Zero defections, quality comes to services. Harvard Business Review, 65(5), 105–111. Ritter, T., & Walter, A. (2012). More is not always better: The impact of relationship functions on customer-perceived relationship value. Industrial Marketing Management, 41, 136–144. Silverman, G. (2001). The secrets of word-of-mouth marketing. AMACOM. Smith, M., & Dikolli, S. (1995). Customer profitability analysis: An activity-based costing approach. Managerial Auditing Journal, 10, 3–7. Stephen, W. L., & Ronald, E. G. B. (2008). Electronic word-of-mouth in hospitality and tourism management. Journal of Tourism Management, 29, 458–468. Wang, Q., Chen, W., & Liang, Y. (2011). The effects of social media on college students. MBA Student Scholarship, 5(13), 1548–1379.

134

F. Yarahmadi et al.

Weeden, S., Cooke, B., & McVey, M. (2013). Underage children and social networking. Journal of Research on Technology in Education, 45(3), 249262. Word of Mouth Marketing Association. (2017). Wommapedia – everything to know about word of mouth marketing, http://www.wommapedia.org Xiang, Z., & Gretzel, U. (2010). Role of social media in online travel information search. Tourism Management, 31, 179–188. Yeh, Y. H., & Choi, S. M. (2011). MINI-lovers, maxi-mouths: An investigation of antecedents to eWOM intention among brand community members. Journal of Marketing Communications, 17(3), 145–162. Zhang, Q., Zhou, Z., Chenting, S., & Zhou, N. (2011). How do brand communities generate brand relationships? Intermediate mechanisms. Journal of Business Research, 19(7), 117–131. Zeithaml, V.  A. (2000). Service quality, profitability, and the economic worth of customers: What we know and what we need to learn. Journal of the Academy of Marketing Science, 28(1), 67–85.

Part III

Strategic Entrepreneurship in Competitive Contexts

Product Development Under Information Technological Turbulence: The Role of Marketing Communication for Competitive Advantage in Small Businesses Enterprises Aluisius Hery Pratono, Wyna Herdiana, and Teoh Chai Wen

Abstract  This chapterinvestigates the impact of marketing communication capability on sustainable competitive advantage by examining the mediating effect of product development and selling capabilities. It also explores the effect of information technological turbulence on the relationship between marketing communication capability and firm competitive advantage. This chapter proposes a structural equation model to empirically test the relationships between marketing communication, selling capability, product development, and sustainable competitive advantage. Drawing from the SMEs database provided by the Ministry of Cooperative and SMEs in Indonesia, the random sample adopts a self-administered mail survey for data collection. The results indicate that marketing communication capability has a positive impact on product development capability, which in turn strengthens the sales capability to achieve sustainable competitive advantage. However, high information technological turbulence reduces the effectiveness of marketing communication capability on supporting the competitive advantage. This chapter extends the dynamic capability theory by adopting information technological turbulence at various levels to explain the role of marketing communication and product development. Keywords  Product development · Marketing communication · Information technological turbulence · Competitive advantage

A. H. Pratono (*) Faculty of Business and Economics, Universitas Surabaya, Surabaya, Indonesia e-mail: [email protected] W. Herdiana Faculty of Creative Industry, Universitas Surabaya, Surabaya, Indonesia T. C. Wen Department of Marketing, Sunway University, Petaling Jaya, Malaysia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_8

137

138

A. H. Pratono et al.

1  Introduction The framework of strategic entrepreneurship highlights that entry timing decisions and entrant performance spring from various forces, which allow firms to gain sustainable competitive advantage (Zhao et al., 2020). Hence, the strategic entrepreneurship research attempts to understand how firm behaviour deal with dynamic institution forces, where dynamic capability enables firms to become creative destructive (Gölgeci et al., 2017). Vibrant entrepreneurial culture is key element for a strong innovation ecosystem, which calls for extensive literatures to examine the ambition to identify opportunities and favouring innovation (Pradhan et al., 2020; Kantis et al., 2020). The capability of small and medium enterprises (SMEs) to enhance their product development relies on social capital, which demonstrates a robust informal relationship with their stakeholders, which demonstrates their responsiveness to the needs of the customers (Perez & Bulte, 2014). Extensive business networking is essential for SMEs to acquire local knowledge for innovation development by increasing their managerial capability ties with their buyers and suppliers (Wang & Chung, 2020). However, the marketing communication capability to enhance the interaction between producers and consumers is challenging in the past to generate co-­ production. Recently, the evolution of technology allows the marketing communication strategy to create co-innovation and co-production but not all firms have capability to seize the opportunity (Bacile et al., 2014). Selling new products requires great effort intensity, which may imply resistance, especially when customers become curious about new products (Steenburgh & Ahearne, 2018). The marketing communication capability demonstrates how firms generate innovation to deal with the unique challenges that spring from social media fragmentation and consumer personalisation (Vernuccio & Ceccotti, 2015). Hence, the contributions of marketing communication capability to organisational competitiveness need clarify since the major studies on marketing communication still concern on traditional information distribution (Zerfass & Volk, 2018). The behavioural consequences in corporate communication come from the interaction with customers, especially when their interests become divergent (Tura et  al., 2018). Whether by force or by design, firms are encouraged to establish their relationship with their customers in anticipation of this transformation by using social media as a co-­ creative platform for product improvement and innovation (Zhu et al., 2018). This study attempts to investigate the entrepreneurial strategy of SMEs by addressing the relationship between marketing communication capability and sustainable competitive advantage. Hence the research question involves whether the product development and selling capability mediate the relationship between marketing communication and competitive advantage. This study also explores the dynamic business environment by responding the research question whether information technological turbulence determines the relationship between marketing communication and competitive advantage.

Product Development Under Information Technological Turbulence: The Role…

139

This chapter divides into four sections. The first section begins with the research gap and purposes. The second section provides the literature review for entrepreneurial strategies, which underpins the competitive advantage theory, resource-­ based theory, and dynamic capability theory. The next section involves research method that explains the empirical model and data collection. The last section reveals the findings, followed by the discussion and conclusion.

2  Literature Review The concept of strategic entrepreneurship has been emerging since early 2000, where strategic management integrated with entrepreneurship research by exploring the opportunity and advantage-seeking behaviour to achieve sustainable competitive advantage under dynamic business environment (Zhao et al., 2020). The roadmap of strategic entrepreneurship springs from several phenomena, including institutional works, entrepreneurial orientation, and business model, which intertwine at dynamic capability approach (Gölgeci et al., 2017). Strategic entrepreneurship is an approach that serves business organisations to achieve competitive advantage both today and the near future (Ireland & Webb, 2007). The strategic entrepreneurship demonstrates the dynamic capability of the firms to become creative destructive, which offer valuable resources to achieve competitive advantage (Gölgeci et al., 2017). Marketing communication capability refers to a process of building brand awareness and image (Vorhies et al., 2011), which demonstrates the intangible asset resulting in competitive advantage, as per resource-­ based theory (Barney, 1991). The modern marketing communication strategy has extended over brand awareness to market signals through building intensive communication with other departments (e.g., operation, sales, direct marketing). At the same time, the traditional approach remains to focus on advertising activities (Day, 2011). Marketing communication capability is an essential element of marketing capabilities that firms need to be able to deploy available resources that match the market condition to drive firm competitive advantage (Morgan et al., 2009; Pratono & Radjamin, 2012). As the capability is hard to imitate, this capability allows for the effectiveness of organisational resources, such as coordination, technical skills, or mental ability (Lvina, Johns, & Vandenberghe, 2018). Firms have a sustainable competitive advantage if they enjoy more superior performance than their competitors (Schilke, 2014). Another literature argues that sustainable advantage demonstrates the capability to anticipate environmental turbulence faster than the competitor (Kumar et al., 2011). The capability of small and medium enterprises (SMEs) to enhance their product development relies on a robust informal relationship with their stakeholders, which demonstrates their responsiveness to the needs of the customers (Perez & Bulte, 2014). Such capability includes collaboration for horizontal communication, stretch assignments, a risk-­ tolerant environment, and reduced centralised control (Maurer & London, 2018),

140

A. H. Pratono et al.

which allows organisations to generate value-focused sales management in the industrial context (Töytäri & Rajala, 2015; Pratono et al., 2019). Contingency theory attempts to formulate the role of technology on organisational attributes by criticising the classical managerial style (Woodward, 1958). The communication within information technological turbulence in a new level promises an integral part of future customer relationship management (Nguyen & Mutum, 2012). The firms, which attempt to seize opportunities by taking a high risk, could find difficulty under uncertainty contingency (Pratono, 2019). The theory argues that organisations should manage the internal balance needs and adapt to environmental circumstance by taking into account the uncertainty contingencies (Hwang et al., 2019).

3  Hypothesis Development 3.1  H  ypothesis 1:Marketing Communication Capability Has a Positive Impact on Sustainable Competitive Advantage Marketing communication capability creates synergy among the different marketing elements (Kitchen & Burgmann, 2010). The astute marketing communication responds to the needs of colleagues by appearing genuine interactions, which lead to group cohesiveness (Lvina et al., 2018). This capability promotes the development of quality social relationships by caring for others and building a reliable work environment (Babalola et  al., 2018), which positively affects sales performance (Porcu et al., 2019). Firms may increase the performance by organising their information resources to align content topic and exploiting the risk-taking behaviour to enable simultaneous determination of sustainable competitive advantage (Kanuri et al., 2018). Marketing communication capability allows the consumers to get involved in processing to stimulated a required extensive information integration (Landwehr et  al., 2013), which lends further credibility to the competitive advantage (Schilke, 2014).

3.2  H  ypothesis 2: Marketing Communication Capability Has a Positive Impact on Product Development Managing creativity requires not only the identification of employees with creative potential but also an understanding of how the team context influences the creativity of individuals who have different types of motivation. Marketing communication capability fosters extrinsic motivation, which directly relates to creativity (Zhu et al., 2018). Marketing communication strategy enhances employees’ sense of efficacy that promotes caring, respect for co-workers, open discussions, and concern

Product Development Under Information Technological Turbulence: The Role…

141

for activating specific knowledge, which is essential for innovation (Babalola et al., 2018). The real-time interactional data becomes a fertile source of research and development to feed innovation and create value in the frontlines (Singh, Brady, & Arnold, 2017). The attempts to promote organisational innovation entail the decision and information process in the organisation closer to the innovators (Maurer & London, 2018). A network contact provides a new piece of information by considering the content and sources of informational resources when examining their effects on creativity from different cultural backgrounds (Chua, 2018).

3.3  H  ypothesis 3: Marketing Communication Capability Has a Positive Impact on Selling Capability Selling capability demonstrates the organisational capabilities that contribute to increased customer-perceived values in sales management practice (Töytäri & Rajala, 2015). Consumers may need considerable exposure before accepting and purchasing products with a new design (Landwehr et al., 2013). Awareness that a specific number of consumers have adopted the product in the past leads to a general buzz type of social influence (Risselada et al., 2014). Once the marketing communication was able to distract the consumers, they may spend more time to find the information and to shelf information more, which ultimately increases the amount they purchase (Grewal et al., 2018). Promotion-focused consumers using social media can obtain more information and buy items more often with higher spending levels than those using other channels. On the other hand, prevention-focused consumers can routinise their shopping and spend more on traditional channels than on other channels (Kushwaha & Shankar, 2013). Marketing communication capability improves content effectiveness by enhancing consumers’ propensity to engage with social media content (Kanuri et al., 2018). The marketing capability demonstrates how firms can effectively tailor their communications to audiences with conservative ideology (Kim et al., 2018).

3.4  H  ypothesis 4: Product Development Has a Positive Impact on Sustainable Competitive Advantage New product development is an essential element of marketing capability. Nadeau and Casselman (2008) demonstrates how firms achieve their competitive advantage by employing new product development strategies. Business model innovation for sustainability leads to a higher complexity on how to assess the impact of innovation on the whole business networks by involving the value network with a new purpose, design, and governance (Evan et al., 2017).

142

A. H. Pratono et al.

New product development also provides opportunities for the competitive landscape (Nadeau & Casselman, 2008). The reliable networks help the firm to conduct new product development (Pratono, 2018). At the same time, the effect of informational resources on creativity and innovation relies on how the firms confer the information on the innovators (Chua, 2018).

3.5  H  ypothesis 5: Product Development Has a Positive Impact on Selling Capability Selling capability depends on the newness of the product. Firms launch a new product by adapting the individualistic culture and subsequently moving to more collectivistic societies (Ma et  al., 2014). The product development project typically entails intensive communication and coordination between collaborators (Mindruta et al., 2016). Sales of a new product will increase in the beginning, reach a natural ceiling and then decline until the product is removed from the market (Landwehr et al., 2013). Marketing communication capability plays a pivotal role in promoting new products by making consumers enthusiastic and shares their opinion with their social network (Risselada et al., 2014). Murray (2013) indicates that there is a parallel path to new product success, which occurs from new product development to commercialisation that continues to influence the market success significantly. Organisational buying often involves buying centres and multiple stakeholders that evaluate the value proposition. There are situations in which the supplier is more innovative to promote value creation than the buyers (Töytäri & Rajala, 2015).

3.6  H  ypothesis 6: Selling Capability Has a Positive Impact on Sustainable Competitive Advantage Selling capability demonstrates the organisational capabilities that contribute to increased customer-perceived values in sales management practice (Töytäri & Rajala, 2015). Selling capability involves various steps of the selling process, and that these steps occur over time and not necessarily in any given sequence (Jaakkola et al., 2015). Salespeople are at their best if they are optimistic about their abilities to adapt to customer situations and to use their selling skills to make customer interactions more successful (Singh et al., 2017). Selling capability of the firms with a strong social network structure will lead them to achieve competitive advantage (Pratono, 2018). A value selling approach allows firms to tailor offerings that maximise buyer and seller return, maximising the lifetime value of the relationship (Kienzler et al., 2019).

Product Development Under Information Technological Turbulence: The Role…

143

3.7  H  ypothesis 7: Information Technological Turbulence Has a Moderating Impact on the Relationship Between Marketing Communication Capability and Sustainable Competitive Advantage Marketing communication appears to respond to changes in the market due to information technological turbulence. Marketing communication practices include the systematic documentation of customer cases as reference stories, indexing the case stories, stakeholders, and making the stories available for sales and marketing communications through information technology solution (Töytäri & Rajala, 2015). Information technology allows the firms to build not only a longterm relationship but also organisational integration by sharing the information each other which is far beyond departmental and organisational boundaries (Porcu et al., 2019). On the other hand, firms will be able to manage multiple pieces of information simultaneously to some extent until the information processing slows down due to the restricted bottleneck (Grewal et  al., 2018). Lack of ability to respond to the dynamic information technological turbulence diminishes the relationship with the buyer, who may get the information asymmetry (Kozlenkova et al., 2017). Drawing on social learning theory, spillover effects can explain why a firm fails to promote communication capability (Diehl et al., 2018). They may prefer to use simple rules of thumb to address the complexity in marketing communication strategy, which indicates the scepticism about the profit-maximising ability of their heuristics (Kanuri et al., 2018).

4  Research Method The path model was developed based on the previous literature, which argues that product development and sales capabilities serve as a mediation variable in support of the relationship between the marketing communication capabilities and sustainable competitive advantage. The mediating effects explain how product development and selling capabilities translate the marketing communication capabilities as exogenous construct into the competitive advantage. Primary data for testing the hypotheses involve the mail survey of the small and medium enterprises in Indonesia, which taken from SME directory. After eliminating surveys from out-layer data, we retained 390 useable data. Testing for the difference between respondent and non-­respondents on the dependent variable of sustainable competitive advantage found no differences, suggests that non-response bias is present in the dataset (Fig. 1). The specific indicator variables for each survey measure are available in Table 1. There were seven items of sustainable competitive advantage, which was measured

144

A. H. Pratono et al.

Moderating effect

IT01 IT02

Information technological turbulence

0.802 0.811

IT03

0.881 0.785

IT04

-0.110

0.848

IT05

CA02 0.768

CA03

0.835 0.777

0.476

0.790

MC02

Sustainable competitive advantage

Marketing communication capability

MC01

CA01

0.199

CA04

0.772

0.093

0.830

CA05

0.882 0.829 0.803 0.847

CA06

MC03 0.476

0.228

0.264

CA07

0.509

PD01 PD02

0.776

PD04

0.789

0.777

Selling capability

0.310

0.789

PD03

PD05

0.472

0.839

0.259

0.692

0.885

0.894

0.875

Product development

SC01

SC02

SC03

SC04

Fig. 1  Product development. (Source: authors’ own figure)

using subjective assessment and adapted from Schilke (2011). We asked respondents for their subjective assessment of their performance based on their comparison to their direct competitors in the industry. The first measure points out that ‘[firm has] gained strategic advantages over our competitors’. The second measure concerns the market share. Another measure indicates that ‘ROI (return on investment) is continuously above the industry average’. Three items of marketing communication capability were measured using existing scales (Morgan et al., 2009). The measures involve ‘… develops and executes the advertising programme’, ‘… enhances advertising management and creative skills’, and ‘promotes public relations skills’. Other capabilities, product development, and selling capabilities were also measured using existing scales adapting from Morgan et  al. (2009). Product development: ‘manages new products well’, ‘exploits R&D investment to develop new products’, ‘speedily develops and launches new products’, ‘carries out test marketing of new products’, ‘product development is responsive to customers need’. The measures of selling capability consist of ‘provides salesperson training they need to be effective’, ‘sales management planning and control system’, ‘skilful salesperson’, and ‘develops sales management skills’.

Product Development Under Information Technological Turbulence: The Role…

145

Table 1  Construct measures Code Variables Competitive advantage CA01 We have gained strategic advantages over our competitors CA02 We have a large market share CA04 Our EBIT (earnings before interest and taxes) is above industry average CA05 Our ROA (return on asset) is continuously above industry average CA06 Our ROI (return on investment) is continuously above industry average CA07 Our ROS (return on sales) is continuously above industry average CA08 Overall, we are more successful than our major competitors Marketing communication MC01 Our firm develops the advertising programme MC02 Our firm enhances advertising management and creative skills MC03 Our firm promotes public relations skills Information technological turbulence IT01 The information technology in our industry is changing rapidly IT02 The IT changes provide opportunities in our business IT03 Many new products ideas become possible by information technology IT04 IT changes in our industry generate new ideas for product supply IT05 IT changes generate new ideas for our service support Product development PD01 Our firm manages new products well PD02 Our firm exploits R&D investment to develop new products PD03 Our firm speedily develops and launches new products PD04 Our firm carries out test marketing of new products PD05 Our product development is responsive to customers need Selling capability SC01 Our firm provides salesperson training they need to be effective SC02 Our firm sets sales management planning and control system SC03 Our firm has skilful salesperson SC04 Our firm develops sales management skills

VIF

Outer loadings

2.527 0.768 2.827 0.835 2.213 0.777 2.262 0.772 2.763 0.830 2.609 0.829 2.716 0.847 1.516 0.790 1.631 0.882 1.602 0.803 2.226 0.802 2.219 0.811 2.903 0.881 2.173 0.785 2.406 0.848 2.203 1.738 1.884 1.892 1.998

0.839 0.789 0.776 0.777 0.789

2.921 2.760 2.946 2.612

0.892 0.885 0.894 0.875

Source: authors’ own table

This study used the Smart PLS 3.0 to execute the structural equation model with algorithm approaches to estimate the path coefficients that maximise the explained variance of the dependent construct. The Smart PLS provides three main results: the outer loadings for the measurement models, the path coefficients for the structural model, and the goodness of fit. Assessment of the measurement models also involves composite reliability to examine the internal consistency, individual indicator reliability, and average variance extracted to examine the

146

A. H. Pratono et al.

convergent validity. Both outer loadings and path coefficients of the structural model were estimated, which results in R2 values of the endogenous latent variables.

5  Results Table 2 shows the descriptive statistics of the observed respondents, which indicates that 67% of respondents belong to the group of small-sized enterprises with annual sales varied from IDR300 million to IDR2.5 billions. According to marketing capability level, 64% of respondents indicate that their degree is above the moderate level as 125 respondents state that their firms have capability slightly higher than the reasonable level of 4. The analysis of the structural equation model examines the structural relationships among the constructs. Table  3 shows that the Cronbach’s alpha (CA) have values higher than 0.7, which gives high confidence in its reliability based on intercorelated indicator variables. The values of composite reliability (CR) are also higher than 0.8, which indicates high reliability. The results show the constructs meet the validity and reliability standard.

Table 2  Respondent profile based on the marketing capability level Marketing communication Firm assets Less than IDR50 million Between IDR50 and IDR500 million Between IDR500 million and IDR10 billion Total respondents Firm annual sales Less than IDR300 million Between IDR300 million and IDR2.5 billion Between IDR2.5 and IDR50 billion Total respondents

1

2

3

4

5

6

7

Total

1 2 0 3

2 10 0 12

4 5 0 9

7 18 3 28

7 39 9 55

11 27 11 49

7 15 4 26

76 262 52 390

1 7 0 8

5 23 0 28

4 13 1 18

16 55 13 84

19 93 13 125

24 56 21 101

7 15 4 26

76 262 52 390

Source: authors’ own table Table 3  Validity and reliability test Constructs Marketing communication capability (MC) Sustainable competitive advantage (CA) Information technological turbulence (IT) Product development (PD) Selling capability (SC) Source: authors’ own table

CA 0.771 0.912 0.883 0.854 0.909

CR 0.865 0.93 0.915 0.895 0.936

AVE 0.682 0.654 0.683 0.631 0.786

Product Development Under Information Technological Turbulence: The Role…

147

Table 4  HTMT discriminant validity Constructs Information technological turbulence Moderating effect Product development Selling capability Sustainable competitive advantage Marketing communication capability

IT 0.826 −0.235 0.487 0.634 0.558 0.575

ME

PD

1 −0.155 −0.308 −0.294 −0.129

0.794 0.552 0.536 0.509

SC

0.887 0.611 0.633

CA

0.809 0.505

MC

0.826

Source: authors’ own table

The convergent validity involves both average variances extracted and the outer loadings. Table 1 shows that standardised outer loadings of all items are higher than 0.75, while Table 3 shows that the AVE value of each construct is higher than 0.5. The values indicate that the constructs explain more than half of the variance of the indicators. Table  2 also provides evidence that multicollinearity is not the main issue for the model as the VIF values of the constructs are below the threshold of 5. Overall, the results indicate that the communality level of the five constructs is acceptable. Turning to the discriminant validity assessment, the Fornell–Larcker criterion, which entails the values of the square root of average variance extracted (AVE) for the reflective construct, is listed on the diagonal of Table 4. The MC has a value of the square root of AVE is 0.826, which is higher than the correlation of MC with other constructs. Other constructs also have squared root values of AVE (IT: 0.826, ME: 1, PD: 0.794, SC: 0.887, CA: 0.809), which are higher than the correlation with other constructs (Table 4). Figure 2 shows that the R2 value of the competitive advantage is 0.476, which demonstrates the combined effects of all exogenous latent variables on the competitive advantage. The combined impact of MC and PD on selling capability is 0.472, which indicates a moderate level of predictive accuracy. Table  5 shows that the standardised root-mean-square residual (SRMR) is less than the threshold of 0.08, which suggests that the model misspecification is avoidable (Hair et  al., 2014). Henseler et al. (2014) introduced the SRMR for assessing the goodness of fit by evaluating the difference between the observed correlation, and the model implied correlation matrix. However, the normed fit index (NFI) is 0.781, which does not meet the threshold of 0.9. Table 6 shows the bootstrap results. The impact of marketing communication capability (MC) on sustainable competitive advantage (CA) has a standard deviation of 0.054 and t-value of 1.731 with P-value of 0.084, which indicate that the effect of MC on CA is significant at a 10% level. This result confirms the hypothesis I, which argues that MC has a positive impact on CA. The findings support the previous study, which claims that marketing communication positively affects their performance (Porcu et al., 2019).

148

A. H. Pratono et al.

Fig. 2  Moderating effect of information technological turbulence. (Source: authors’ own figure) Table 5  Goodness of fit

SRMR d_ULS d_G1 d_G2 Chi-Square NFI

Saturated model 0.07 1.482 0.935 0.683 1464.03 0.781

Estimated model 0.099 2.917 0.981 0.737 1509.13 0.774

Source: authors’ own table

The effect of marketing communication capability on product development has a standard t-statistics value of 11.78, which indicates a significant impact at an alpha of 1%. This result suggests that hypothesis II is acceptable, which confirms that marketing communication capability positively affects creativity (Zhu et al., 2018) and plays a pivotal role to promote innovation (Babalola et al., 2018). The hypothesis III is acceptable with t-value of 8.981, which indicates that marketing communication capability has a significant impact on selling capability at the alpha of 1%. The results support the previous study, which argues that marketing communication capability improves the content effectiveness in enhancing consumers’ propensity to purchase (Kanuri et al., 2018). The impact of product development on competitive advantage is significant at an alpha of 1% with t-statistics of 4.791. This result confirms the previous study, which argues that new product

Product Development Under Information Technological Turbulence: The Role…

149

Table 6  Path analysis Path H1: MC → CAa H2: MC → PDb H3: MC → SCb H4: PD → CAb H5: PD → SCb H6: SC → CAb H7: IT → CAb ME → CAb

Original sample (O) Std. dev. (STDEV) T statistics (|O/STDEV|) P values 0.093 0.054 1.731 0.084 0.509

0.043

11.789

0.000

0.476

0.053

8.981

0.000

0.228 0.310 0.264 0.199 −0.110

0.047 0.049 0.051 0.046 0.040

4.791 6.386 5.126 4.362 2.782

0.000 0.000 0.000 0.000 0.006

Source: authors’ own table ME mediating effect a Significant at alpha 10% b Significant at alpha 1%

development plays a pivotal role to promote the firm performance (Pratono, 2018) and competitive advantages rely on how firms convert the creativity and innovation on the innovators (Chua, 2018). Table 6 also shows that hypothesis V is acceptable with the t-statistics value of 6.386, which indicates that the product development significantly affects selling capability with an alpha value of 1%. The results support the previous study, which argues that selling lead firms to achieve competitive advantage (Pratono, 2019) by offerings the return and lifetime value of the relationship (Kienzler et al., 2019). Both information technological turbulence and interaction term have a significant impact on competitive advantage. The effect of information technological turbulence has a t-statistic value of 4.362, while the interaction term of moderating effect (ITxMC) generates value of 2.782. Both values generate p-value of 1%, which confirms that the moderating effect is statistically significant. Figure 2 shows that firms with marketing communication capability gain benefit from moderate information technological turbulence by achieving high sustainable competitive advantage. Information technology allows the firms to share the information beyond the organisational boundaries to promote organisational integration (Porcu et al., 2019) and resource interaction (Saranga et al., 2018). On the other hand, firms that attempt to allocate resources for marketing communication capability under high information technological turbulence will suffer from a low sustainable competitive advantage (Fig. 2). Lack of ability to respond to the information from technological turbulence diminishes the ability to promote sustainable competitive advantage (Kozlenkova et  al., 2017). When information technological turbulence poses delayed decision making process following the slow information process due to a lack of capability to deal with the restricted bottlenect (Grewal et al., 2018).

150

A. H. Pratono et al.

6  Discussion Overall, this chapter supports the resource-based theory linking with the contingency approach. Consistent with the resource-based theory that argues that organisation capability explains performance, our results reveal a significant indirect relationship among the capabilities, which in turn lead to sustainable competitive advantage. This study confirms that marketing communication does not only play a pivotal role in advertising campaigns but also delivering tangible value to the business organisation. It indicates that the respondents perceive that marketing communication capability leads the firms to high product development and sales capability, which bring about sustainable competitive advantage. Marketing communication capability is a valuable resource for innovative organisations. It can bring a positive impact on product development, which leads the organisation to enhance their selling capability, which in turn foster a sustainable competitive advantage. The substantial changes in skills and focus for marketing communication strategy may occur while the business environment is dynamic (Lvina et al., 2018). Such efforts of marketing communication capability may include crossfunctional collaboration and integrative structures for horizontal communication, stretch assignments, a risk-­tolerant environment, and reduced centralised control (Maurer & London, 2018). The result extends the contingency theory by examining the role of technology on organisational attributes. This article indicates that firms struggle to convert their resources of marketing communication capability into a competitive advantage when they face information technological turbulence. The communication within information technological turbulence provides a new level promises for an integral part of future customer relationship management (Nguyen & Mutum, 2012) but also has a potential risk, especially when firms face uncertainty contingency (Pratono, 2018). The results support the contingency theory, which argues that organisations should manage the organisational balance by adapting the environmental circumstance (Hwang et al., 2019). The SMEs face a glimpse of the information technology shifts, which provides potential to impact a particular industry, especially the individuals and small teams. Most organisations spend more time and resources scouting the emerging technologies by running a pilot test, which requires a strong relationship with support groups like IT, product innovators, and marketers. They can provide some integrated communication to fill the gaps in a product line. They can make commitments necessary to pilot new products. This approach requires master data analytics, customer experience, and product design. Marketing communication capability needs to understand not only the customers but also the product designer, and salespersons to understand their sources of satisfaction for their new product. Firms need to manage their marketing communication capabilities, which allow their employees to feel more capable of generating product development by enabling them to access the information, knowledge, and talent

Product Development Under Information Technological Turbulence: The Role…

151

outside of their capabilities, which in turn can stimulate their creative thinking (Maurer & London, 2018). The marketing communication strategy should promote collaboration, instead of competition, between the divisions in the organisational structure, which attempts to provide organisational context with enjoyment, fun, and engagement, which positively related to creativity (Zhu et al., 2018). In the fragmented social media landscape, firms are encouraged to manage their marketing communication capabilities to become the new channel of the organisation by inspiring creativity in other departments. Firms should adapt their communication strategies over time as the product development changes by treating everyone as an extension of the marketing team. Effective marketing communication should allow all departments to adjust their strategies in real time to generate the value of the business in an innovative approach. The organisations need to set their strategic purposes in advance and then working within their limited resources to achieve the expected performance.

7  Limitation It is essential to consider the context of this study, which examines the small and medium enterprises. It needs studies in different context prior to generate the results. Besides, this chapter has not examined the types of communication. In contrast, the communication literature shows kinds of informal communication, such as entertainment-­oriented, nonintentional, and less evaluative ones in the public sphere (Wu et al., 2018). Future studies are encouraged to explore various types of information in engaging the marketing communication strategies, which can bring a different impact on sustainable competitive advantage.

8  Conclusion This study’s intention was to understand the relationship between marketing communication capability and sustainable competitive advantage by examining the mediating effect of product development and selling capability as well as the moderating effect of information technological turbulence. The results show that marketing communication capability required goal orientation, which was crucial for new product development and selling it. The results extend the discussion on the intersection between resource-based theory and contingency theory, which is essential to the concept of strategic entrepreneurship. Acknowledgement  This research work gains financial support from the Indonesian Ministry of Research and Technology. The chapter also benefitted greatly from the feedback of two anonymous reviewers.

152

A. H. Pratono et al.

References Babalola, M. T., Stouten, J., Euwema, M. C., & Ovadje, F. (2018). The relationship between ethical leadership and workplace conflicts: The mediating role of employee resolution efficacy. Journal of Management, 44(5), 2037–2063. Chua, R. Y. (2018). Innovating at cultural crossroads: How multicultural social networks promote idea flow and creativity. Journal of Management, 44(3), 119–1146. Day, G. (2011). Closing the marketing capability gap. Journal of Marketing, 75(7), 183–195. Diehl, M.-R., Richter, A., & Sarnecki, A. (2018). Variations in employee performance in response to organizational justice: The sensitizing effect of socioeconomic conditions. Journal of Management, 44(6), 2375–2404. Evan, S., Vladimirova, D., Holgado, M., Van Fossen, K., Yang, M., Silva, E.  A., & Barlow, C.  Y. (2017). Business model innovation for sustainability: Towards a unified perspective for creation of sustainable business models. Business Strategy and the Environment, 26(5), 587–608. Gölgeci, I., Larimo, J., & Arslan, A. (2017). Institutions and dynamic capabilities: Theoretical insights and research agenda for strategic entrepreneurship. Scandinavian Journal of Management, 33, 243–252. Grewal, D., Ahlbom, C.-P., Beitelspacher, L., Noble, S. M., & Nordfält, J. (2018). In-store mobile phone use and customer shopping behavior: Evidence from the field. Journal of Marketing, 82, 102–126. Hair, J. F., Hult, G. T., Ringle, C. M., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). SAGE. Hwang, S., Kim, H., Hur, D., & Schoenherr, T. (2019). Interorganizational information processing and the contingency effects of buyer-incurred uncertainty in a supplier’s component development project. International Journal of Production Economics, 210, 169–183. Ireland, R. D., & Webb, J. W. (2007). Strategic entrepreneurship: Creating competitive advantage through streams of innovation. Business Horizons, 50, 49–59. Jaakkola, M., Frösén, J., & Tikkanen, H. (2015). Various forms of value-based selling capability— Commentary on “value-based selling: An organizational capability perspective”. Industrial Marketing Management, 45, 113–114. Kantis, H. D., Federico, J. S., & García, S. I. (2020). Entrepreneurship policy and systemic conditions: Evidence-based implications and recommendations for emerging countries. Socio-­ Economic Planning Sciences. https://doi.org/10.1016/j.seps.2020.100872 Kanuri, V. K., Chen, Y., & Sridhar, S. (2018). Scheduling content on social media: Theory, evidence, and application. Journal of Marketing, 82(6), 89–108. Kienzler, M., Kindström, D., & Brashear-Alejandro, T. (2019). Value-based selling: A multi-­ component exploration. Journal of Business & Industrial Marketing. https://doi.org/10.1108/ JBIM-­02-­2017-­0037 Kim, J.  C., Park, B., & Dubois, D. (2018). How consumers’ political ideology and status-­ maintenance goals interact to shape their desire for luxury goods. Journal of Marketing, 82(6), 132–149. Kitchen, P. J., & Burgmann, I. (2010). Integrated marketing communication. In Wiley International encyclopedia of marketing (pp. 21–38). Kozlenkova, I. V., Palmatier, R. W., Fang, E., Xiao, B., & Huang, M. (2017). Online relationship formation. Journal of Marketing, 81, 21–40. Kumar, V., Jones, E., Venkatesan, R., & Leone, R.  P. (2011). Is market orientation a source of sustainable competitive advantage or simply the cost of competing. Journal of Marketing, 75, 16–30. Kushwaha, T., & Shankar, V. (2013). Are multichannel customers really more valuable? The moderating role of product category characteristics. Journal of Marketing, 77, 67–85. Landwehr, J. R., Wentzel, D., & Herrmann, A. (2013). Product design for the long run: Consumer responses to typical and atypical designs at different stages of exposure. Journal of Marketing, 77, 92–107.

Product Development Under Information Technological Turbulence: The Role…

153

Lvina, E., Johns, G., & Vandenberghe, C. (2018). Team political skill composition as a determinant of team cohesiveness and performance. Journal of Management, 44(3), 1001–1028. Ma, Z., Yang, Z., & Mourali, M. (2014). Consumer adoption of new products: Independent versus interdependent self-perspectives. Journal of Marketing, 78, 101–117. Maurer, T. J., & London, M. (2018). From individual contributor to leader: A role identify shift framework for leader development within innovative organizations. Journal of Management, 44(4), 1426–1452. Mindruta, D., Moeen, M., & Agarwal, R. (2016). A two-sided matching approach for partner selection and assessing complementarities in partners’ attributes in inter-firm alliances. Strategic Management Journal, 37, 206–231. Morgan, N. A., Vorhies, D. W., & Mason, C. H. (2009). Market orientation, marketing capabilities, and firm performance. Strategic Management Journal, 30, 909–920. Nadeau, J., & Casselman, R. M. (2008). Competitive advantage with new product development: Implication for life cycle theory. Journal of Strategic Marketing, 16(5), 401–411. Nguyen, B., & Mutum, D. S. (2012). A review of customer relationship management: Successes, advances, pitfalls and futures. Business Process Management Journal, 18(3), 400–419. Perez, R., & Bulte, C. (2014). When to take or forgo new product exclusivity: Balancing protection from competition against world-of-mouth spillover. Journal of Marketing, 78(3), 83–100. Porcu, L., del Barrio-Garcia, S., Alcántara-Pilar, J. M., & Crespo-Almendros, E. (2019). Analyzing the influence of firm-wide integrated marketing communication T on market performance in the hospitality industry. International Journal of Hospitality Management, 80, 13–24. Pradhan, R. P., Arvin, M. B., Nair, M., & Bennett, S. E. (2020). The dynamics among entrepreneurship, innovation, and economic growth in the Eurozone countries. Journal of Policy Modeling. https://doi.org/10.1016/j.jpolmod.2020.01.004 Pratono, A. H. (2018). Network structure and open innovation: The role of trust in product development. International Journal of Business Innovation and Research, 15(1), 44–61. Pratono, A. H. (2019). Cross-cultural collaboration for inclusive global value chain: A case study of rattan industry. International Journal of Emerging Markets, 15(1), 149–170. Pratono, A. H., Darmasetiawan, N. K., Yudiarso, A., & Jeong, B. G. (2019). Achieving sustainable competitive advantage through green entrepreneurial orientation and market orientation: The role of inter-organisational learning. The Bottom Line, 32(1), 2–15. Pratono, A. H., & Radjamin, I. P. (2012). Kopy Luwak: A conservation strategy for global market. Emerald Emerging Markets Case Studies, 2(8), 1–12. Risselada, H., Verhoef, P.  C., & Bijmolt, T.  H. (2014). Dynamic effects of social influence and direct marketing on the adoption of high-technology products. Journal of Marketing, 78, 52–68. Saranga, H., George, R., Beine, J., & Arnold, U. (2018). Resource configurations, product development capability, and competitive advantage: An empirical analysis of their evolution. Journal of Business Research, 85, 32–50. Schilke, O. (2014). On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic Management Journal, 35, 179–203. Singh, J., Brady, M., & Arnold, T. (2017). The emergent field of organizational frontlines. Journal of Service Research, 20(1), 3–11. Singh, R., Kumar, N., & Puri, S. (2017). Thought self-leadership strategies and sales performance: Integrating selling skills and adaptive selling behavior as missing links. Journal of Business & Industrial Marketing, 32(5), 652–663. Steenburgh, T., & Ahearne, M. (2018). How to sell new products focus on learning, not performance. Harvard Business Review, 96(6), 92–101. Töytäri, P., & Rajala, R. (2015). Value-based selling: An organizational capability perspective. Industrial Marketing Management, 45, 101–112.

154

A. H. Pratono et al.

Vorhies, D. W., Orr, L. M., & Bush, V. D. (2011). Improving customer-focused marketing capabilities and firm financial performance via marketing exploration and exploitation. Journal of the Academic Marketing Science, 39, 736–756. Wang, C. L., & Chung, H. F. (2020). Business networking and innovation of Asian enterprises in Western countries: The moderation of institutional distance. Industrial Marketing Management, 88, 152–162. Woodward, J. (1958). Management and technology. Her Majesty’s Stationery Office. Wu, L.-Z., Birtch, T. A., Chiang, F. F., & Zhang, H. (2018). Perception of negative workplace gossip: A self-consistency theory framework. Journal of Management, 44(5), 1873–1898. Zhao, E. Y., Ishihara, M., & Jennings, P. D. (2020). Strategic entrepreneurship’s dynamic tensions: Converging (diverging) effects of experience and networks on market entry timing and entrant performance. Journal of Business Venturing, 35(2), 1–23. Zhu, Y.-Q., Gardner, D. G., & Chen, H.-G. (2018). Relationship between work team climate, individual motivation, and creativity. Journal of Management, 44(5), 2094–2115.

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic Learning Perspective Masoumeh Hosseinzadeh Shahri Abstract  This chapter highlights the importance of how learning from competitors improves strategic decision making and also ameliorates the performance of entrepreneurial firms. Strategic learning is a process at the strategic level that refers to an organization’s ability to process strategic knowledge so that it can recreate its strategies. Knowledge acquisition from competitors as a creative strategic knowledge plays a major role in strategic learning in entrepreneurial firms. Using a qualitative research approach and examining eight entrepreneurial firms as case studies, this chapter outlines learning from competitors’ processes in these firms. The findings show that these firms learn from competitors in four matters: through competitive analysis, benchmarking, imitation, and social media. Keywords  Strategic learning · Competitive analysis · Imitation · Benchmarking · Social media · Entrepreneurial firms

1  Introduction The increasing intensity of competition and the many changes and challenges of today’s world requires that organizations adapt to these developments using their learning power and updating and always looking for ways to gain a competitive advantage and win the competition. These dynamics have shaped the managerial assumptions and decision-making processes of many entrepreneurial firms, including deciding how to seize entrepreneurial opportunities and how to create and deliver customer value (Webb et al., 2011). One way to respond to environmental changes and gain a competitive advantage is to learn faster than competitors, that is, to get information and knowledge faster than competitors, and to provide the right M. H. Shahri (*) Department of Management, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_9

155

156

M. H. Shahri

environment and conditions for knowledge sharing and distribution. Organizations that can adapt and evolve through learning survive (De Geus, 1988). Although the effectiveness of knowledge acquisition has been confirmed in research, researchers have gradually found that traditional knowledge acquisition may not be enough to help entrepreneurial firms with some strategic activities, because knowledge acquisition may be related to gaining external knowledge, which puts a lot of pressure on the entrepreneurs who face limited resources (Kuwada, 1998). Entrepreneurs must constantly learn from the environment. Entrepreneurs, no matter how experienced, need to learn and use information from the outside world. They need to closely monitor events, trends, and changes in the environment to anticipate and take advantage of opportunities not seen by competitors. They need to have an insight into the factors that affect customer demand, such as the economic, political, and technological trends in the environment. Entrepreneurs who can make the necessary changes to adapt the firm to the environment are likely to have long-term success (McEwen, 2008). To solve the problem of knowledge acquisition, entrepreneurial firms must use a high knowledge acquisition process to institutionalize scattered knowledge in strategic knowledge (Sirén et al., 2017). In this process, rich heterogeneous knowledge will create knowledge interaction among individuals, promote deeper mutual learning, and institutionalize individual knowledge in organizational strategic knowledge, thus improving the firm’s ability to build and modify strategies. According to Moorman and Miner (1997), this capability not only facilitates the combination of more knowledge but can also enable the effective implementation of new strategic opportunities. The ability to continuously institutionalize scattered knowledge in the organization is essential for the sustainable development of entrepreneurial firms (Anderson et al., 2009; Garrett et al., 2009; Hitt et al., 2001; Sirén et al., 2012, 2017) because strategic learning not only facilitates the process of integrating valuable knowledge for strategic purposes but also helps entrepreneurial firms solve the problem of acquiring expensive external knowledge (Anderson et al., 2009). Strategic learning is a real source of sustainable competitive advantage for such firms (De Mueller et al., 2012). In fact, strategic learning can be more effective in small- and medium-sized companies than in large ones. Because of their flexibility, small businesses can quickly take advantage of new learning opportunities to create, disseminate, interpret, and implement strategic knowledge (Kuwada, 1998; Real et al., 2012; Thomas et al., 2001). Despite the interest in small business strategic learning programs, empirical evidence on this subject is limited (Battistia et al., 2019; Keith et al., 2016; Kelliher et al., 2020). The researchers found that learning traditional knowledge may not be enough to help entrepreneurial firms to perform strategic activities, as knowledge learning may be associated with the acquisition of external knowledge. On the other hand, these firms usually have limited amounts of resources which applies great deal of pressure on entrepreneurship. Sirén et al. (2012) asserted that to solve the problems of knowledge learning, these firms ought to employ an advanced learning process to organize separated knowledge into a unit at a strategic level.

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

157

Organizations learn from their environment. Although the ability to learn faster than competitors is a kind of sustainable competitive advantage for organizations, learning from competitors and colleagues is also essential for organizations in this situation (Dixon, 1991). Competitors’ knowledge is an external resource for firms, and learning occurs when an organization acquires the necessary knowledge. This study aims to explain the process of learning from competitors in entrepreneurial firms and to show how entrepreneurial firms learn from competitors. The research contributes to several matters. First, it discusses the effects and the importance of learning from competitors and strategic learning in the strategic entrepreneurship literature. This is an empirical study that shows the process by which knowledge gained from competitors in various ways acts as strategic learning. Second, in the literature, learning faster than competitors has always been a competitive advantage, but this research indicates that even the competitors themselves can be a source of learning for companies. Competitors’ behaviors and actions are an appropriate repository of knowledge which are available to entrepreneurial companies at a lower cost. Third, although learning from competitors in all corporate activities is a common procedure, it may not always be clearly defined, and this is crucial to institutionalizing disparate knowledge. This chapter is organized as follows. First, before presenting the research method, the definition of entrepreneurial firms and competition, and the literature related to strategic learning is presented. Then, experimental findings, and discussion and conclusion will follow.

2  Literature Review 2.1  Competition and Entrepreneurial Firms Competition is a situation in which the outcomes or goals of actors are at odds with each other, that is, as a state of negative interdependence, the benefit of one is the loss of the other (Scherer & Ross, 1990). Thus, competing companies are companies that are currently competing for the same resources and results (Chen, 1996). Competition is a key element of the strategy because it affects the economic performance of the organization. Competition is a dynamic and inherently uncertain process in which some innovative strategies succeed and others fail (Mukasa, 2016). According to Nelson (1994), competition means the struggle between two or more organizations to achieve what is considered rare. Researchers of competitive dynamics consider competitive behavior as a means to entrepreneurial discovery and competition including the organizations’ actions and reactions aimed to maintain position and obtain a competitive advantage (Wechtler & Rousselet, 2012). Research shows that entrepreneurial firms are better equipped to adapt to dynamic competitive environments than firms with lower entrepreneurship (Lumpkin & Dess, 1996; Zahra & Chaples, 1993). Entrepreneurial firms are generally defined as young,

158

M. H. Shahri

small, and very innovative companies in industries that have fast-growing technologies (Das & He, 2006). Small entrepreneurial firms are often portrayed as active and agile (Katila et al., 2012). They have limited internal resources and external relations, and are not well aware of the new roles and norms created within them. They challenge established companies by innovating, attracting new customers, or acquiring customers from them. As companies grow, they become increasingly vulnerable to competition from new entrances to the market (Das & He, 2006). The dynamic environment in which small- and medium-sized companies compete has created the need for them to adopt an innovation orientation, which is evident in the introduction of new products and production processes to take advantage of market opportunities (Golovko & Valentini, 2011). Researches illustrate that although the market orientation relationship with customer emphasis is positive in small companies (Alpkan et al., 2007), over-reliance on the customer ignores the relationship between competitor orientation and small companies’ performance. Therefore, paying attention to competitors is an important component of market orientation in small companies. O’Dwyer and Gilmore (2017) mentioned that among the elements of market orientation, only the competitors’ orientation has a significant relationship with organizational performance in the field of small companies’ sustainability. Usually, a large, mature firm spends significant resources examining their competitors, so these companies develop their strategies on the assumption that competitors will quickly observe and respond to them. In a competitive environment where the life cycle of products and services is shortening and future benefits are uncertain, entrepreneurial firms need to take risks, and innovation and market domination are critical. To maintain a competitive advantage, they must acquire knowledge from environment. There are many sources for acquiring knowledge and learning. These firms can learn competitor’s actions and behaviors, so that they can take advantage of such opportunities to improve their competitive position.

3  The Concept of Strategic Learning The concept of strategic learning was introduced by Mintzberg and Waters (1985) and later developed by Kuwada (1998) and Thomas et  al. (2001). According to Mintzberg, learning occurs with the development of strategy over time until it becomes a formal plan. He developed the concept of organizational learning in strategy formation. Strategic learning is a process at the strategic level that refers to an organization’s ability to process strategic knowledge so that it can recreate its strategies. The goal of organizational learning in the traditional approach is to help companies implement and realize their deliberated strategies, while in the new approach, the goal of strategic learning is to develop the firm’s strategies to outperform competitors. Therefore, strategic learning involves double-loop learning in which the organization analyzes and modifies existing norms, procedures, strategies, and goals. Strategic learning, compared to the single-loop learning process that

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

159

brings small but effective adjustments to similar processes, procedures, and issues, enables organizations to achieve a high level of adaptation. Finally, strategic learning is a learning process at higher levels of the firm through which companies internalize knowledge and can change their strategy (Sirén et al., 2012). The main role of strategic learning is to maintain the most vital strategic initiatives formed through active learning from entrepreneurial activities, so strategic learning is broader than just learning from mistakes (Burgelman, 1991; Mueller et  al., 2012). Through strategic learning, organizations can create unpredictable preparation capacity for future uncertainties (de Geus, 1988). The strategic learning process model proposed by Kuwada can be used to explain the role of knowledge in the long-term development and strategic orientation of organizations. Strategic learning is a combination of knowledge creation, knowledge dissemination, knowledge interpretation, and knowledge implementation (Kuwada, 1998; Thomas et  al., 2001). Strategic learning consists of intra-­ organizational processes used by a firm to ensure the creation, dissemination, interpretation, and implementation of strategic knowledge, that allows for adopting a new strategy and effectively implementing a planned strategy (Sirén & Kohtamäki, 2016). Strategic knowledge creation is defined as the process of acquiring knowledge in which individuals actively gather strategic information from the environment to expand their current knowledge (Atuahene-Gima & Murray, 2007). This process is done by individuals and groups, and the firm creates new knowledge and strengthens its existing knowledge (Crossan & Berdrow, 2003; Jones et al., 2005). Knowledge creation is especially important for small companies that have limited knowledge base because without having a large repository of previous knowledge, they create or approve solutions to deal with new situations that may not be foreseen in strategic plans (Zahra et al., 2006; Sirén & Kohtamäki, 2016). Strategic knowledge dissemination is a process of social exchange that means sharing strategic knowledge through interaction between and within organizational units. Entrepreneurial enterprises need to be guided by various functional areas with a cross-functional knowledge dissemination process (Sirén & Kohtamäki, 2016). Strategic knowledge interpretation allows firm employees to process relevant knowledge and use it in collective action that affects the firm’s strategy and performance (Daft & Weick, 1984; Tippins & Sohi, 2003). When strategic learning occurs, some of a firm’s basic assumptions change and it acquires a new reference framework; so, a different way of interpreting knowledge is created and disseminated. Strategic learning is the acquisition of knowledge at the corporate level that changes the basic assumptions of the firm and then its strategic behavior (Kuwada, 1998). Strategic knowledge implementation is a formal process in which new strategic knowledge is institutionalized in organizational aspects, such as organizational systems, structures, procedures, and routines (Huber, 1991). These four dimensions reflect the capabilities that support a firm’s ability to acquire knowledge from strategic action and use that knowledge to formulate its own strategies (Anderson et al., 2009; Kuwada, 1998). Managers can enhance their proactive posture and acquire knowledge from beyond the firm’s boundaries. In this study, competitors’ activities

160

M. H. Shahri

have been considered as a source for strategic learning in entrepreneurial companies and learning from them has changed the company’s strategic plans.

4  Research Methodology This chapter uses qualitative research methods to discover how to learn from competitors in entrepreneurial firms. This approach provides theory building and helps to facilitate a deeper understanding of phenomena in their natural context and environment (Amaratunga et  al., 2002). A qualitative and interpretive methodology allows for exploring the internal logic of entrepreneurial firms and facilitates the researcher’s empathy with the research field and subject. This chapter uses targeted sampling. Entrepreneurial firms in this research are small firms that have creative and innovative products. The inclusion criteria were a) more than 5 years old, (b) evidence of successful market performance and having a market-oriented culture, and (c) access to key decision-makers and other stakeholders to formulate a firm strategy. Data were collected through interview. Competition intensity is a situation where there is a lot of competition between companies due to a large number of competitors in the market and the lack of potential opportunities for further growth. The higher the intensity of competition, the more the organization’s behavioral outcomes will be affected by competitors’ actions (Martin & Javalgi, 2016). Table 1 shows the characteristics of examined firms and their competitive status.

5  Empirical Findings Empirical findings were first presented based on the Kuwada model framework to guide the study. Strategic knowledge creation: gathering information about competitors, the type of information and the mechanism of gathering information; strategic knowledge dissemination: how to use knowledge in the firm, how to distribute knowledge about competitors to units, knowledge sharing mechanism; strategic knowledge interpretation: how to interpret knowledge in departments and between Table 1  Cases activity and competitive status Cases A B C D E F G

Entrepreneurial firm activity E-business platform Manufacturer Electronic health E-business platform Optical microscope manufacturer E-business platform Electronic components manufacturer

Industry competition status Relatively competitive Very competitive Relatively competitive Low competition Relatively competitive Very competitive Very competitive

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

161

Competitor analysis

Strategic knowledge creation

Social Media

Strategic knowledge implementation

Strategic learning

Strategic knowledge dissemination

Benchmarking

Strategic knowledge interpretation

Imitation

Fig. 1  The process of strategic learning in an entrepreneurial setting (Author’s own work)

departments, among managers and employees and the methods of performing this process; strategic knowledge implementation: Decisions made based on competitors’ knowledge, actions that improve performance in the firm based on competitors’ activities, areas in which that knowledge has been applied (Fig. 1; Table 2). As Table 2 shows, all of the cases in question have the four-step process of learning from competitors in their organization. These learning activities are based on interviews, and occur in four ways in entrepreneurial firms: competitor analysis, benchmarking, imitation, social media. The purpose of this study was to show how entrepreneurial firms can learn from competitors and apply this learning in their strategies and actions. Examination of the studied cases shows that strategic learning is carried out in strategic knowledge creation, dissemination, interpretation, and implementation. This knowledge is acquired through four manners: Competitor Analysis, Benchmarking, Imitation, and Social Media.

6  Learning Through Competitor Analysis (CA) All companies in the sample were constantly assessing competitors’ activity, had a formal and highly structured CA system, and devoted significant resources to CA activities. They processed information about competitors and used it to support strategic decisions.

162

M. H. Shahri

Table 2  Cases actions Strategic knowledge interpretation Discuss this information in managers’ meetings Hold multiple Send the meetings to information understand obtained to the competitors’ departments actions Send information Compare Collect information to engineering and competitors’ about competitors’ information with production technologies and new the firm’s current departments product status Constantly review Send the Collect information and analyze information about markets, customer customers, new product, obtained to the feedback about departments and brand strategy competitors Compare Send the Collect information competitors’ information about pricing, information with obtained to the customers, and the firm’s current departments technologies status Send information Compare Collect competitor’s information as a routine from competitors competitors’ to production and information with activity the firm’s current marketing status managers Hold monthly Send the Collect information meetings to about marketing, public information analyze obtained to the relations, and product competitors’ development strategies, relevant actions competitors’ employees departments and the type of virtual activity

Strategic knowledge Cases creation A Collect competitors’ information continually about their current and new products B Collect competitor’s sales information and marketing activities

C

D

E

F

G

Strategic knowledge dissemination Send information from competitors to managers

Strategic knowledge implementation Improve our products and processes

Change market segments once

Improve our products and using new technology

Change procedures and processes

Determine pricing strategy

Improve marketing activities

Product development and participation in marketing activities on social networks

Case A: As business is like a war, you have to have a strategy. For this strategy, you need to know the competitors. If we do not know what goals our competitors have in the future and do not plan for it, we will fail like many other businesses. There is always a competitor at work. Our work is the same. Our business has a strong competitor. But with the value proposition we offered, we have been able to surpass our competitors. We owe our growth to our competitors. Case B: In the analysis of competitors, we examine their strengths and weaknesses, and in the meetings that managers have, competitors’ actions are analyzed and sent to senior managers as reports. We are always trying to do better than our competitors, so examining

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

163

their actions will help us. Last year, we took several steps in the firm because of our competitors’ activities, and their performance affects our decisions. Case C: We also review potential customers’ opinions about competitors in our shared market. The correct evaluation of competitors depends on our sufficient knowledge of their activities and the market. With this knowledge, we can easily monitor them through the mentioned ways and we can even obtain their technical details, advertisements, etc. By analyzing competition, learning occurs when an entrepreneurial firm modifies its strategies, actions, and assumptions by identifying its competitors’ strengths and weaknesses. Case E: We review the news published by the competitors themselves. Also, we get news about them via mediators. We do not directly look for news unless we are studying a particular product or fundraising for a product at the market study stage. According to the news they publish and the news that comes to us via mediators. In the analysis of competitors, we pay attention to the points related to the customer and the price of their products, how to import and buy the required parts, etc. Case F: From the beginning of the startup, we started examining local and foreign competitors, and we review it every month and keep abreast of competitors’ strategies and markets. Because it leads to a competitive advantage; allows us to gain more market share; makes the customers experience a better purchase; builds customer loyalty and returns; and increases the likelihood of fundraising. We examine competitors almost every month.

These entrepreneurial firms use publications, industry reports, databases, websites, and social networks to obtain competitor’s data. Generally, competitors’ information collected by companies comes from “open sources” such as annual reports, newspapers, business magazines, online database services, and so on. Significantly, all studied entrepreneurial firms used “open” sources to obtain information about their competitors. Case A, Case C, and Case F expected their employees to formally monitor competitors’ activities. Case D and Case G considered talking with competitor’s staff an important source of information. The current business status of competitors, products, customers, marketing strategies, product development, and virtual activities are among the information that all companies are looking for. They collect information via categorizing competitors, finding their strengths and weaknesses, and monitoring their communication channels, such as websites, social networks, etc. Case A and Case D identify the operation that needs to be improved and also identify strengths and weaknesses. Determining strengths and weaknesses paves the way for new business strategies. The most learning that happens from competitor analysis in these firms is product development, problem-solving, strategic planning, and decision making.

7  Learning Through Benchmarking Benchmarking is the process of organizational adaptation in which the focus is on learning how to improve organizational performance. Therefore, this concept is a changing factor in behavior modification and creating new ways to manage a

164

M. H. Shahri

business. Almost all of the companies studied are constantly comparing themselves to higher competitors and even successful companies in other industries in terms of some indicators, and they are taking advantage of their key activities that have made them successful in their organization. Case D is mainly in the sales phase and when we follow the market critically. For instance, in product pricing, we must evaluate the price of similar products, or when looking for an investor for one of our products. This is due to many reasons such as pricing, existence or inexistence of the customer, fundraising, etc. We mainly benchmark the competitors in the sales phase and when we follow the market critically. For instance, in product pricing, we must evaluate the price of similar products.

Using comparisons with competitors, these companies find strategic opportunities in the market, which allows them to increase the quality of their products and better meet customer needs and wants. Since competitors are constantly changing their strategies, tactics, and conditions, they are constantly benchmarking. Case G: In pricing strategies, we always try to lower the price in case of a similar product and, if possible, provide the product with more options for a higher price. Competitors benchmarking has always improved our business. Sometimes we had to not produce the same product, or not to go to common customers.

Many organizations compare themselves with competitors (strong and parallel competitors) to identify and eliminate gaps and problems in services and products or to gain, create, and increase their competitive advantage. The data collected from five competing brands provides the organization with a clear view and insights into the competitors’ processes and ways of thinking, and in many cases has led to a change in the firm. Cases B, E, and G: Defined more ambitious goals due to learning from the best companies and following them, in order to improve the company’s existing performance and processes, gaining greater customer satisfaction, and having lower costs. Achieving these goals is based on having better information than competitors. Case C continuously compares benchmark results with its past performance and that of competitors, and seeks to identify activities and processes that need to be improved. The positive top management leadership and their attitude have made benchmarking successful in the research cases. The comparative evaluation has been one of the most effective ways to improve these companies. By benchmarking successful organizations, they have found and implemented top methods to continuously improve the efficiency of their organization. Recognizing successful organizations’ performance levels, understanding how to achieve them, and how others can motivate changes in the organization and minimize their mistakes were the goal of benchmarking in these cases. They seek to identify the gaps between the performance of successful competitors and reduce the distance with them. They usually use benchmarking when they need a solution to change and use the best business methods. They have used benchmarking more in developing pricing and sales strategies and marketing measures.

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

165

8  Learning Through Imitation Strategic literature has paid considerable attention to imitation, not only because imitation is important for competitive advantage, but also because imitation is a recurring approach to learning and “a common way for business growth and profitability” (Gupta & Misangyi, 2018). According to Case C, it is better to behave similar to competitors in some situations or act similar to industry trends to achieve superior performance. Developing a strategy means thinking about the future of the business, which involves thinking and planning ahead. Since uncertainty is inevitable, it is one of the most difficult and complex tasks for us to develop strategic plans and strategies. In this context, to reduce complexity, imitating the strategies of other managers is a possible solution, especially when the adopted strategy has a successful history. Although Case B says it is not necessary to imitate the right actions of others, they can be a source of inspiration. Case D: One of the biggest values of competitors’ assessment is to save a lot of human and financial resources, because if we close our eyes and only follow our experiences, we may encounter many mistakes and errors, all of which consume a lot of our resources, while we can easily save a lot of resources by examining the competitors and imitating them. Case G: In analyzing competitors, we pay attention to current business situations; product status; customers; marketing and public relations strategies and product development; competitors’ employee, and the type of virtual activity. We participated in trade fairs by imitating competitors, and we have also taken steps to create a competitive advantage by developing products through imitating them. Case F: We have improved our performance so far due to the activities of competitors. Especially in the appearance changes and new features that can be used as a competitive advantage. We have usually improved our platform by imitating competitors’ promotional activities and campaigns.

9  Learning Through Social Media Social media is a set of tools that allow people to communicate and cooperate. Social media provide the most successful mechanisms for the distribution of free information and allow individuals to share, discuss, and collaborate in the production of knowledge and learning from each other. That is why today they are an important source of knowledge creation. All research cases used social media as a source of both gaining information and learning from competitors. Case A: We categorize our competitors and we visit their webpage once a week, looking for and writing down their strengths and weaknesses, using the weaknesses of their pages, and learning from their strengths. We gain information about competitors through people’s comments and a quick review of their posts and websites. We pay more attention to the customers’ comments and we use them. So far, we have improved our performance due to competitors’ activities; these were the things they had not paid attention to, and were obtained from their webpages; we produced content accordingly, thus increasing our

166

M. H. Shahri

­ ebpage’s visits. Some activities are done because of competitors’ actions, which usually w leads to improved performance. Case B: We continuously evaluate our competitors at each stage of business development. We examine competitors for their level of activity and customer satisfaction. We get information about our competitors from our common customers and the cyberspace. Case C: We access competitors’ information through startup information websites, and competitors and their employees’ websites. In analyzing competitors, anything that can be understood from competitors can help with development and a better view of the business. Service improvement was due to competitors’ performance and based on user feedback. Competitors’ performance analysis helps us to have a better view and make better decisions about marketing and introducing ourselves. Case D: In the first steps to evaluate the market and get to know more about the customers and the activities in the field of ideas, we evaluate all the competing websites and the activities that they do. Because perhaps the competitors have seen the issue from another angle that we might have missed. This will help us grow our attitude and vision for advancing the business. The key to the success of any business is to examine and evaluate its competitors and customers. We also monitor the activities of our customers and competitors daily and, if necessary, make changes to our activity based on these experiences once a month. We monitor competitors’ communication channels, such as websites, social networks, etc. Case E: We review the news published by the competitors themselves. Also, we get news about them via mediators. We do not directly look for news unless we are studying a particular product or fundraising for a product at the market study stage. According to the news they publish and the news that comes to us via mediators. We also access information about competitors through their websites. In the analysis of competitors, we pay attention to the points related to the customer and the price of their products, how to import and buy the required parts, etc. Case F: By subscribing to a competing business email newsletter and checking regularly every month, we examine competitors in terms of technics and programming. Usually by checking the new keywords that they work on and the technical and programming changes they have made to their platform; checking their Google Ad which can greatly suggest their marketing budget; using the archive site to check their appearance changes; using SEO tools such as similarweb to find the monetary keywords that our competitors have ads on; and we can also find their network and display ads; and with other tools, we can find their technical and programming issues. In analyzing our competitors, we pay attention to their target keywords, advertising budget, ui/ux changes, technical and programming changes, team changes (professionals who can be found via LinkedIn profiles), etc. When we found out that our competitor was working on a new keyword, we immediately checked that keyword and found that they did so due to the upcoming occasion in the next few days; we did the same by learning them. Case G: We examine our competitors by following and reviewing their websites; Instagram, LinkedIn, and Telegram pages; and checking founders’ and commoncustomers’ pages. We get information about competitors from their websites, social networks, and exhibitions and events that they participate in. We share the information we have obtained and used it in our decisions and improve our performance.

The best and most convenient way to get information about competitors’ activities and learn from them is to enter their website and social networks as one of their customers to find out how their support and service work.

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

167

10  Discussion Entrepreneurial firms learn through interaction with their environment. They gain strategic knowledge via analysis of competitors. This knowledge is interpreted by people in the organization; it is shared; and then implemented to take measures such as product development, problem-solving, strategic planning, and decision making. So, these companies learn through competitor analysis and craft new strategies. The findings suggest that these firms learn from competitors in four ways: through analysis of competitors, benchmarking, imitation, and social media. Competition analysis enables companies to learn from competitors (Zahra & Chaples, 1993), and “environmental scanning of entrepreneurs can enhance entrepreneurs’ knowledge and lead to improved problem-solving” (McEwen, 2008). Competitive analysis is the collection, processing, storage, and dissemination of information to individuals at all levels of the organization in order to help shape the future of the organization and protect it against the current competitive threat (Rouach & Santi, 2001). Examination of research cases revealed that by analyzing competition, learning occurs when an entrepreneurial firm modifies its strategies, actions, and assumptions by identifying its competitors’ strengths and weaknesses. Inspiration and learning have been among the goals of competitors’ analysis in past research (Hatzijordanou et al., 2019). Double-loop learning leads to fundamental changes in behavior, for example, correcting an error requires changing business norms for performance, which in turn requires changing strategies and hypotheses related to these norms. Entrepreneurial firms use publications, industry reports, databases, websites, and social networks to obtain competitor’s data. Research cases obtain resources mostly from social media. Benchmarking means comparing behavior performance, strengths, and weaknesses against external criteria and competitors. It is a continuous learning process. Benchmarking is the process of comparing the firm with its competitors, and besides, benchmarking is the search for the best ideas, methods, and approaches that can be measured for the firm and can play a role in increasing its efficiency (Jetmarová, 2011). Benchmarking helps companies improve their performance by making changes to their policies and procedures, and by following the footsteps of industry leaders who have excelled in performance. Imitation strategies are a set of “decision rules” that guide action in unpredictable environments in a competitive process (Lieberman & Asaba, 2006). Competitors imitate rival movements to defend their status quo. Protecting a superior position, lowering the risk, with competitive imitation, effective in dealing with environmental uncertainty, corporate strategies (Giachetti et  al., 2017; Zhu & Chen, 2014). When a firm imitates a competitor’s practices, the imitator and the target become more similar, reducing performance heterogeneity. In order to reduce the difficulty of action and uncertainty, managers consider imitating the strategies of others as a solution, especially when the strategies have been successful. Repeating these successful strategies and eventually institutionalizing them will turn them into industry

168

M. H. Shahri

guidelines or patterns of attitude and behavior. In other words, organizations are constantly monitoring the behavior of competitors and adjusting their future competitive behavior accordingly. Social media are both a source of information about a competitor and a source of learning from competitors for entrepreneurial firms. Social media are made up of user-centered platforms that make it possible to publish interesting content, engage in conversations, and connect with a wide audience. It is basically a digital space created by people for people and provides a suitable environment for interaction and communication with others at different levels (e.g., personal, professional, commercial, marketing, political, and social). Entrepreneurs use social media, which play a significant role in their business activities, for a variety of reasons and goals. Social media easily remove the problems in identifying and achieving business offers and expert advice for entrepreneurs.

11  Conclusion In today’s turbulent environment, competition does not only mean trying to increase market share, but also trying to learn from each other in order to improve performance. This chapter highlighted the importance of knowledge about competitors in the strategic learning process of entrepreneurial firms. This knowledge exists as a routine action in all companies, although it is not transparent as a source of strategic learning. Competitor analysis, benchmarking, imitation, and social media are the sources of knowledge for competitors that entrepreneurship companies can learn at a lower cost. Focusing on learning from competitors not only improves the level of competition, but also prepares competitors against each other and also causes effective behaviors.

12  Implications and Limitations In the current situation, there are more successful firms that learn faster and better than competitors and learn from competitors too. Entrepreneurial firms need to learn from competitors and create or acquire new knowledge and turn it into practical ways to improve their activities. They must clearly and explicitly announce their enthusiasm for learning, especially learning from competitors, by adopting informed policies. This learning is strategic learning that is reflected in the organization’s vision and strategies. Entrepreneurial firms need to respond to events much faster than a formal strategic planning cycle. In this environment, a strategic learning approach can enable them to quickly identify market changes and focus on emerging opportunities. They greatly need to examine competitors to better understand them, use their ideas, and

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

169

learn from them, to meet the customers’ needs, offer the best services to them and as a result the company’s performance will improve. Qualitative approach is a limitation for this study because the results cannot be generalized. Future researches can compare the effectiveness of these learning methods from competitors for entrepreneurial firms.

References Alpkan, L., Yilmaz, C., & Kaya, N. (2007). Market orientation and planning flexibility in SMEs. International Small Business Journal: Researching Entrepreneurship, 25(2), 152–172. https:// doi.org/10.1177/0266242607074518 Amaratunga, D., Baldry, D., Sarshar, M., & Newton, R. (2002). Quantitative and qualitative research in the built environment: Application of “mixed” research approach. Work Study, 51(1), 17–31. https://doi.org/10.1108/00438020210415488 Anderson, B.  S., Covin, J.  G., & Slevin, D.  P. (2009). Understanding the relationship between entrepreneurial orientation and strategic learning capability: An empirical investigation. Strategic Entrepreneurship Journal, 3(3), 218–240. https://doi.org/10.1002/sej.72 Atuahene-Gima, K., & Murray, J. Y. (2007). Exploratory and exploitative learning in new product development: A social capital perspective on new technology ventures in China. Journal of International Marketing, 15(2), 1–29. https://doi.org/10.1509/jimk.15.2.1 Battistia, M., Beynon, M., Pickernella, D., & Deakins, D. (2019). Surviving or thriving: The role of learning for the resilient performance of small firms. Journal of Business Research, 100, 38–50. Burgelman, R. A. (1991). Intraorganizational ecology of strategy making and organizational adaptation: Theory and field research. Organization Science, 2(3), 239–262. https://doi.org/10.1287/ orsc.2.3.239 Chen, M.-J. (1996). Competitor analysis and interfirm rivalry: Toward a theoretical integration. Academy of Management Review, 21(1), 100–134. https://doi.org/10.5465/ amr.1996.9602161567 Crossan, M. M., & Berdrow, I. (2003). Organizational learning and strategic renewal. Strategic Management Journal, 24(11), 1087–1105. https://doi.org/10.1002/smj.342 Daft, R.  L., & Weick, K.  E. (1984). Organizations as interpretation system. The Academy of Management Review, 9(2), 284–295. Das, T.  K., & He, I.  Y. (2006). Entrepreneurial firms in search of established partners: Review and recommendations. International Journal of Entrepreneurial Behavior & Research, 12(3), 114–143. https://doi.org/10.1108/13552550610667422 De Geus, A. (1988). Planning as learning. Harvard Business Review, 66(2), 70–74. Dixon, N. M. (1991). Organizational learning. In Organizational issues and humanresource development. A guide for researchers in human resource development (pp. 23–31). Garrett, R. P., Covin, J. G., & Slevin, D. P. (2009). Market responsiveness, top management risk taking, and the role of strategic learning as determinants of market pioneering. Journal of Business Research, 62(8), 782–788. https://doi.org/10.1016/j.jbusres.2008.06.006 Giachetti, C., Lampel, J., & Pira, S. L. (2017). Red queen competitive imitation in the U.K. mobile phone industry. Academy of Management Journal, 60(5), 1882–1914. https://doi.org/10.5465/ amj.2015.0295 Golovko, E., & Valentini, G. (2011). Exploring the complementarity between innovation and export for SMEs’ growth. Journal of International Business Studies, 42(3), 362–380. https:// doi.org/10.1057/jibs.2011.2 Gupta, A., & Misangyi, V. F. (2018). Follow the leader (or not): The influence of peer CEOs’ characteristics on interorganizational imitation. Strategic Management Journal, 39(5), 1437–1472. https://doi.org/10.1002/smj.2765

170

M. H. Shahri

Hatzijordanou, N., Bohn, N., & Terzidis, O. (2019). A systematic literature review on competitor analysis: Status quo and start-up specifics. Manag Rev Q, 69(4), 415–458. https://doi. org/10.1007/s11301-­019-­00158-­5 Hitt, M.  A., Ireland, R.  D., Camp, S.  M., & Sexton, D.  L. (2001). Strategic entrepreneurship: Entrepreneurial strategies for wealth creation. Strategic Management Journal, 22(6–7), 479–491. https://doi.org/10.1002/smj.196 Huber, G.  P. (1991). Organizational learning: The contributing processes and the literatures. Organization Science, 2(1), 88–115. https://doi.org/10.1287/orsc.2.1.88 Jetmarová, B. (2011). Benchmarking-methods of raising company efficiency by learning from the best. E+M Ekonomie a Management, 1, 83–95. Jones, R.  A., Jimmieson, N.  L., & Griffiths, A. (2005). The impact of organizational culture and reshaping capabilities on change implementation success: The mediating role of readiness for change. Journal of Management Studies, 42(2), 361–386. https://doi. org/10.1111/j.1467-­6486.2005.00500.x Katila, R., Chen, E. L., & Piezunka, H. (2012). All the right moves: How entrepreneurial firms compete effectively. Strategic Entrepreneurship Journal, 6(2), 116–132. https://doi.org/10.1002/ sej.1130 Keith, N., Unger, J.  M., Rauch, A., & Frese, M. (2016). Informal learning and entrepreneurial success: A longitudinal study of deliberate practice among small business owners. Applied Psychology: An International Review, 65(3), 515–540. Kelliher, F., Murphy, M., & Harrington, D. (2020). Exploring the role of goal setting and external accountability mechanisms in embedding strategic learning plans in small firms. Journal of Small Business and Enterprise Development, 27(3), 449–469. Kuwada, K. (1998). Strategic learning: The continuous side of discontinuous strategic change. Organization Science, 9(6), 719–736. Lieberman, M. B., & Asaba, S. (2006). Why do firms imitate each other? Academy of Management Review, 31(2), 366–385. https://doi.org/10.5465/amr.2006.20208686 Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135–172. https://doi. org/10.5465/amr.1996.9602161568 Martin, S.  L., & Javalgi, R.  G. (2016). Entrepreneurial orientation, marketing capabilities and performance: The moderating role of competitive intensity on Latin American international new ventures. Journal of Business Research, 69(6), 2040–2051. https://doi.org/10.1016/j. jbusres.2015.10.149 McEwen, T. (2008). Environmental scanning and organizational learning in entrepreneurial venture. The Entrepreneurial Executive, 13(3), 1–17. Mintzberg, H., & Waters, J.  A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257–272. https://doi.org/10.1002/smj.4250060306 Moorman, C., & Miner, A.  S. (1997). The impact of organizational memory on new product performance and creativity. Journal of Marketing Research, 34(1), 91. https://doi. org/10.2307/3152067 Mueller, B. A., Titus, V. K., Covin, J. G., & Slevin, D. P. (2012). Pioneering orientation and firm growth: Knowing when and to what degree pioneering makes sense. Journal of Management, 38(5), 1517–1549. Mukasa, H. (2016). Perceptions of the rules of business behavior in the competitive banking environment in Uganda (Doctoral dissertation, Nelson Mandela Metropolitan University). Nelson, J. E. (1994). Four models of competition and their implications for marketing strategy. Vikalpa, 19(1), 3–14. O’Dwyer, M., & Gilmore, A. (2017). Competitor orientation in successful SMEs: An exploration of the impact on innovation. Journal of Strategic Marketing, 27(1), 21–37. https://doi.org/1 0.1080/0965254x.2017.1384040 Real, J. C., Roldán, J. L., & Leal, A. (2012). From entrepreneurial orientation and learning orientation to business performance: Analyzing the mediating role of organizational learning and the

How Entrepreneurial Firms Learn from Competitors: An Examination in Strategic…

171

moderating effects of organizational size. British Journal of Management, 25(2), 186–208. https://doi.org/10.1111/j.1467-­8551.2012.00848.x Rouach, D., & Santi, P. (2001). Competitive intelligence adds value: Five intelligence attitudes. European Management Journal, 19(5), 552–559. https://doi.org/10.1016/ s0263-­2373(01)00069-­x Scherer, F. M., & Ross D. (1990). Industrial market structure and economic performance. Houghton Mifflin, Boston, MA. Sirén, C., Hakala, H., Wincent, J., & Grichnik, D. (2017). Breaking the routines: Entrepreneurial orientation, strategic learning, firm size, and age. Long Range Planning, 50(2), 145–167. https://doi.org/10.1016/j.lrp.2016.09.005 Sirén, C., & Kohtamäki, M. (2016). Stretching strategic learning to the limit: The interaction between strategic planning and learning. Journal of Business Research, 69(2), 653–663. https:// doi.org/10.1016/j.jbusres.2015.08.035 Sirén, C.  A., Kohtamäki, M., & Kuckertz, A. (2012). Exploration and exploitation strategies, profit performance, and the mediating role of strategic learning: Escaping the exploitation trap. Strategic Entrepreneurship Journal, 6(1), 18–41. https://doi.org/10.1002/sej.1126 Thomas, J. B., Sussman, S. W., & Henderson, J. C. (2001). Understanding “strategic learning”: Linking organizational learning, knowledge management, and sensemaking. Organization Science, 12(3), 253–392. Tippins, M.  J., & Sohi, R.  S. (2003). IT competency and firm performance: Is organizational learning a missing link? Strategic Management Journal, 24(8), 745–761. https://doi. org/10.1002/smj.337 Webb, J.  W., Ireland, R.  D., Hitt, M.  A., Kistruck, G.  M., & Tihanyi, L. (2011). Where is the opportunity without the customer? An integration of marketing activities, the entrepreneurship process, and institutional theory. Journal of the Academy of Marketing Science, 39, 537–554. Zahra, S. A., & Chaples, S. S. (1993). Blind spots in competitive analysis. Academy of Management Perspectives, 7(2), 7–28. https://doi.org/10.5465/ame.1993.9411302318 Zahra, S. A., Sapienza, H. J., & Davidsson, P. (2006). Entrepreneurship and dynamic capabilities: Areview, model and research agenda. Journal of Management Studies, 43(4), 917–955. https:// doi.org/10.1111/j.1467-6486.2006.00616.x Zhu, D.  H., & Chen, G. (2014). CEO narcissism and the impact of prior board experience on corporate strategy. Administrative Science Quarterly, 60(1), 31–65. https://doi. org/10.1177/0001839214554989

Benefits of New University-Business-­ Government Arrangements for the Performance of Organizations: A Triple Helix Approach Suzana Xavier Ribeiro and Marcelo Seido Nagano

Abstract  The purpose of this chapter is to investigate how knowledge management and university-business-government collaboration—including the three helices— relate to the performance of organizations, based on the theories of Knowledge Management and the Triple Helix, the most referenced model to deepen this kind of cooperation. In the contemporary competitive environment, the ability of organizations to create and use knowledge is becoming increasingly fundamental to the pursuit of sustainable competitive advantage, leading even to the search for new forms of interorganizational arrangements. The choice of topic is justified by the scarcity of empirical researches that relate the topics of knowledge management and university-­business-government collaboration in an integrated manner. This relationship can lead to tremendous improvements for the organizations involved and for the development of society as a whole. Keywords  Knowledge management · University-business-government collaboration · Triple helix

1  Introduction With the advancement of technology and globalization, contemporary organizations need to constantly seek new knowledge and turn it into innovation in order to acquire strategic wellspring of innovativeness and to gain sustainable competitive advantage. S. X. Ribeiro · M. S. Nagano (*) Department of Production Engineering, São Carlos School of Engineering, University of São Paulo, São Carlos, Brazil e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8_10

173

174

S. X. Ribeiro and M. S. Nagano

In this context, the implementation of collaborative processes becomes fundamental for the acquisition of organizational objectives and a competitive differential. These processes of institutional change are the new interorganizational arrangements formed by the collaboration among the members of different institutions such as companies, Scientific, Technological and Innovation Institutions (STIs)—including universities—and from different governmental spheres. This type of collaboration, aiming at collective solutions, has received increasing attention in organizational theories and practices (Carayol, 2003; Nohria & Eccles, 1992), and is recognized as a crucial element in stimulating innovation, organizational performance, and the formulation of policies (Rybnicek & Königsgruber, 2019; Bishop et al., 2011; D’Este et al., 2013; Estrada et al., 2016; Malmström & Johansson, 2016). This is because, in addition to the relevance of the benefits it can provide for each of the institutions involved in the pursuit of its organizational objectives, this cooperation can contribute to the technological, economic, and social development of a country, specifically within emerging market economies. Despite advances in the researches aimed at discovering the determinants of the success of such interorganizational arrangement, there is still a scarcity of knowledge about university-business-government collaboration (Rybnicek & Königsgruber, 2019). Considering this type of collaboration, the growing importance of science and technology in the development of a country is increasingly recognized, as the role of university as a source of collaborative knowledge. Moreover, companies need to apply knowledge to improve production processes or change into new knowledge-­ based companies. Thus, government programs play an important role in this scenario, not only at the national (top-down) but also at the local (bottom-up) levels, often occurring in cooperation with other civil society organizations. When bottom­up initiatives are reinforced by top-down policies and programs, more fruitful results were achieved (Etzkowitz, 2003). Due to the relevance of this topic, this chapter presents a theoretical synthesis on knowledge management and university-business-government collaboration, highlighting key benefits and barriers, as well as how these topics are relating to—and can generate—organizational improvements as well as contributing to a society as a whole.

2  Literature Review 2.1  Knowledge Management Analyzing the theory of organization, Nonaka (1994) defended that organizational theory was dominated by a paradigm that had a passive and static view of the organization, considered as a system that “processes” information or “solves” problems. The focus of this paradigm is the assumption that the fundamental task of an

Benefits of New University-Business-Government Arrangements for the Performance…

175

organization is how it efficiently handles information and decision-making in uncertain environments. Information processing is viewed as a problem-solving activity, based on the input-process-output sequence, which is concerned with what is given to organizations, regardless of what is created. Thus, one of the areas’ main theories, defended by Nonaka and Takeuchi (1995), include both knowledge creation and management. Based on two types of knowledge defined by Polanyi (1966), explicit (easier to be formalized and communicated) and tacit (more inherent to individual skills and experience) knowledge, the Nonaka and Takeuchi’s theory focuses on knowledge creation and management, and accentuates organizational strategic resource and stimulating innovation (Alavi & Leidner, 2001). These types of knowledge are often assessed by the dichotomies (Jensen et  al., 2007): tacit and explicit knowledge (Nonaka & Takeuchi, 1995; Polanyi, 1966), individual or social (organizational) knowledge (Kogut & Zander, 1992), public and private knowledge (Hermans & Castiaux, 2016; Maskus & Reichman, 2004). Nonaka and Takeuchi (1995) defended that the process of knowledge management and creation should occur from the transformation of tacit knowledge into explicit knowledge through a process of dynamic interaction between them that generates the creation of organizational knowledge. Knowledge conversion (SECI model) takes place in four ways or transformations: from tacit to tacit knowledge— socialization; from tacit to explicit knowledge—externalization; from explicit to explicit knowledge—combination; and from explicit to tacit knowledge—internalization. The SECI model can be understood as the ability of an organization to create knowledge, disseminate it in all areas and incorporate it into goods, services and systems (Johannessen et al., 1999). It represents a dynamic process in which the organization creates, maintains, and exploits knowledge (Nonaka et al., 2000). On the other hand, the creation of new knowledge through information sharing among organizations was evidenced by Nonaka (1991) when addressing the ontological dimension of knowledge creation by which it is observed that knowledge is only created by individuals. Given this dimension, knowledge arises on an individual level and through interaction (socialization); it shifts to an organizational level and then consequently to an interorganizational level, as shown in Fig. 1. Knowledge generation arises when the interaction of tacit knowledge and explicit knowledge— epistemological level—shifts dynamically and progressively among the levels of the ontological dimension. The SECI model is considered as a procedural model, which begins with the socialization of individuals, advances to externalization within groups, blends into organizations, and then returns to internalization within individuals. It is noteworthy that individuals, groups, and organizations themselves change during the process of knowledge creation, since they themselves are a collection of processes (Nonaka et al., 2008). Ideally, knowledge will grow in quantity and quality in an upward spiral as it is transferred from the individual to the group and from the group to the organization. However, the quality and quantity of knowledge may also decline in a downward

176

S. X. Ribeiro and M. S. Nagano Epistemological dimension

Explicit knowledge

Externalization Combination

Tacit knowledge

Socialization Internalization Individual

Group

Organization

Interorganization

Ontological dimension

Knowledge level

Fig. 1  Spiral of organizational knowledge creation and epistemological and ontological dimensions. (Source: Nonaka (1994))

spiral if for some reason one of the four steps of the SECI process is prevented (Nonaka et al., 2008). In the organizational environment, it is relevant to transform individual learning into collective learning and continually create new knowledge (Nonaka, 1994; Nonaka et  al., 2000). Nevertheless it requires knowledge-based management derived from a comprehensive theory that explains the complex process through which knowledge is created and used in the organization, in its interaction with the environment (Nonaka et al., 2008). Furthermore, in order for the process of knowledge creation and conversion to take place efficiently, it is necessary to have an appropriate context. Ba is the name given to the context in which knowledge is shared, created, and used, acquiring new meanings, and can emerge in both individuals and teams, as it can be both individual and group interpretation. It exists situation-based in relation to the type of knowledge created, individual characteristics of participants, and structural factors of an organization (Hautala, 2011). Nonaka and Konno (1998), Nonaka and Toyama (2003) and Nonaka et  al. (2000) characterize ba as a way of representing the dynamic organizational context in the processes of knowledge creation, dissemination, and utilization. This space can be physical, virtual, or mental—encompassing the sharing of ideas and experiences—or a combination of them. That is, knowledge is dynamic, relational and based on human action; it depends on the situation and the people involved rather than on absolute truths or artifacts (Popadiuk & Choo, 2006). According to Nonaka et  al. (2008), there are a number of characteristics that must be present for ba to be an efficient place for knowledge creation: it must be

Benefits of New University-Business-Government Arrangements for the Performance…

177

self-organized and has its own goals, intentions, direction, and mission. Additionally, its participants must establish a shared common sense of purpose (i.e., participants create a timeless space of shared meaning that transcends individual subjectivity). Thus, it needs participants with different kinds of knowledge. Although it requires boundaries, these must be open to allow connection with other bas; and a ba inherently requires the commitment of the participants. Commitment is the basis of human activity in knowledge creation and the source of energy that drives interactions within the ba (Nonaka et al., 2008; Polanyi, 1966). The process of knowledge creation leads to diversity as a consequence of the multiple levels of involvement among individuals, teams, and different organizations. To foster innovation, it is important for organizations to be able to synthesize what is needed to integrate various pieces of knowledge while increasing their quality (Nonaka et al., 2014). Once it is strategically viewed, knowledge is fundamental to innovation and entrepreneurship. Today’s competitive propensities among organizations require organizations to constantly pursue innovation, which consists in the transformation or implementation of ideas such as products, processes or services, or even generating new values for ideas. Ideas are generally transformed through deep interaction among the people in the environments that have the necessary requisites for enabling the knowledge creation. This continuous innovation requires a well-planned knowledge management system that makes the organization stand out in the creation of knowledge (Popadiuk & Choo, 2006). Thus, it is relevant to understand how knowledge creation, sharing, and management happen with the intention to improve knowledge transfer processes among universities, businesses, and governments, which could contribute to the acquisition of not only sustainable competitive advantage but also the development of a society.

2.2  University-Business-Government Collaboration The key to the innovation process is the interaction among companies as well as among companies, universities, research and development institutes (R&D), and the government. These interactions are fundamental to collaboration and could generate joint work in pursuit of common goals (Inzelt, 2004). The development of a country’s innovative and sustainable economy depends not only on the presence of a strong government, university, and industry, but also on how they collaboratively interact in pursuit of predefined strategic objectives (Kimatu, 2016). Since the 1980s, university, business, and government strategic collaboration has intensified and received more attention from researchers, policy makers, and practitioners (Etzkowitz, 1998), and is considered relevant for creating reciprocal benefits for all parties involved and for society at large (Franco & Haase, 2015). Considering the historical evolution, until the 1960s, the organizational analysis focused on internal aspects and it later also incorporated external aspects, generating

178

S. X. Ribeiro and M. S. Nagano

institutional changes and highlighting new structures of relationships among economic actors. Triple Helix, one of the most referenced models in this area, addresses this specific type of cooperation that results from new interorganizational arrangements among university-business-government (public and private), thus representing a mechanism for institutional change, which could lead to strategically benefited entrepreneurship through such a triple collaboration. These institutions are considered fundamental for creating an enabling environment conducive to innovation, generation, and diffusion of knowledge necessary for the development of society. This model defends the effective interaction among these three spheres through the creation of communication and knowledge diffusion networks, as well as an environment that stimulates innovation and, thus, economic and social development (Etzkowitz, 2003; Leydesdorff & Meyer, 2006; Etzkowitz & Leydesdorff, 2000). Etzkowitz and Leydesdorff (2000) have presented three models of university-­ business-­government collaboration (Fig. 2). The first is the statist with the government controlling the activities of universities and businesses. The second, called laissez-faire, university, business, and government act separately and apart, interacting only modestly across solid boundaries. The third, the Triple Helix, presents an overlap among the helices, increasing the interaction among university, business, and government as relatively equal partners and enabling new collaborative strategies and practices of innovation. This recent model presents the pivotal characteristic of the open and democratic societies. There are questions as to whether the public can be considered a fourth helix, but this classification restricts the public to a private sphere rather than viewing it as a civil society and the basis for innovation development. The ability of individuals and groups to organize freely for debate and initiative without the need for state permission is considered a necessary condition for the dynamics of the Triple Helix of the university-business-government relationships, which includes both bottom-­ up and top-down initiatives (Etzkowitz, 2003; Leydesdorff & Etzkowitz, 2003).

Tri-lateral Networks and Hybrid Organizations

Government

Government University

Business

University

Business

University

Government

Business

Fig. 2  University-business-government collaboration models. (Source: Etzkowitz (2003))

Benefits of New University-Business-Government Arrangements for the Performance…

179

3  I nstitutional Changes and Strategic View to Entrepreneurship Such alterations in the collaborative process among university-industry-government represent relevant institutional changes from the so-called First Academic Revolution, in the late nineteenth century, in which university, in addition to its primary function of educating and teaching, now focuses on research and development. After the Cold War, with the Second Academic Revolution, a third mission presumed for the academia to promote strong links with knowledge users and facilitate the transfer of technology and knowledge which are relevant to economic development and social transformation (Etzkowitz, 2003; Etzkowitz & Leydesdorff, 2000; Perkmann et al., 2013). Furthermore, with the advent of the knowledge society, university has seen as a source of new knowledge and technologies and inducing relationships with companies and the government, being involved even in the formation of companies (such as spin-offs and startups) and the technology transfer, that is, it has become increasingly entrepreneurial (Etzkowitz, 2003; Etzkowitz & Viale, 2010; Wood, 2009). In this context, the entrepreneurial university is not a “commercialized university,” but one that incorporates the creation and transfer of knowledge, integrating teaching and research, as well as supporting innovation. This is because experiments involving researchers contribute to the development of innovations (Belkhodja & Landry, 2007; Etzkowitz, 2003). Such interactions can improve business productivity and foster innovation as they enable joint research and development (R&D) projects, facilitate technology transfer from the university to the productive environment, as well as skilled personnel (Arza, 2010; Cohen et al., 2002; Fuentes and Dutrénit, 2012). The type and level of interaction and involvement in collaborative projects are strongly influenced by the innovative character of economic actors and the nature of innovation. Innovation is believed to happen if companies are thirsty for innovation (Inzelt, 2004). Besides, a search for strategic entrepreneurship is fundamental for companies to remain constantly competitive and dynamic in our current ever-changing environment (Cristo-Andrade & Ferreira, 2020). Mazzei (2018) defined strategic entrepreneurship as organizational innovations that involve a combination and integration of tools in search of opportunities and advantages. Focused on the transformation of organizations through innovation, the topic has drawn professional and academic interests in recent decades, and studies on the way it manifests itself in organizations—incorporating internal and external information and opportunities—have proven relevant. The importance of strategic entrepreneurship also lies in the fact that the individuals and institutions with a spirit of entrepreneurship in the society must realize themselves, to be able to promote regional or nationwide development both economically and socially. Incentives and supporting measures for entrepreneurship and innovation in this context should therefore be encouraged (Dogan, 2015), which could also promote the dissemination of such institutionally supported behavior in emerging economies.

180

S. X. Ribeiro and M. S. Nagano

There are even authors who consider that innovation derives primarily from interaction among firms (Nooteboom, 2000). Rather than focusing solely on the product development potential for individual technologies, there is a widespread concern about building an infrastructure for innovation within innovation through a Triple Helix enhancement. The focus of this model of economic and social development is the increased interaction among university, business, and the government, which are considered central to innovation as relatively equal partners, as well as the promoters of new developments not only in innovation strategies but also in the practices that emerge from this cooperation (Etzkowitz, 2003; Etzkowitz & Leydesdorff, 1996; Leydesdorff & Meyer, 2006). In this model, the government has the role of stimulating this interaction by facilitating an enabling environment for this cooperation to occur, as well as providing tax incentives, funding, and other supports for research and technological applications. This role is crucial and happens through public funding directed to R&D activities or incentives to reduce the cost of these activities in universities, research labs or companies, as well as implementing policies to increase rewards for innovators by creating or defining markets (Fuentes and Dutrénit, 2012; Doblinger et al., 2019). For Etzkowitz (2003), the government becomes a partner in the policy making process as well as policies become results of the Triple Helix interactions; and these initiatives are important at both local and national levels. The institutional changes addressed by the Triple Helix model transform the relationship among university, industry and the government, and even within each of these spheres, since these days they are increasingly “play the role of the other,” although we should accentuate that each institution keeps its primary function and distinct identity. For example, university continues to play a fundamental role in the continuous dissemination of knowledge, even if it takes on some business and government roles/functions; or the industry continues to produce goods and services as well as doing research, providing high level training and now providing expertise in the relevant fields; or in respect to the government, it remains the ultimate guarantor of social functions, as well as makes possible the creation of new ventures (Etzkowitz, 2003). By the Triple Helix model, partnerships evolve until the emergence of networks established among businesses, universities, and government, characterized as independent organizations that cooperate with each other to become more competitive, that is, these organizations live in a simultaneously competitive and cooperative environment. These interactions can still be supported by procedures and organizations created to support this interface (Etzkowitz, 2003; Etzkowitz & Leydesdorff, 1996), such as technology parks, incubators, and technology transfer offices (TTOs), the latter minimizing cognitive distance among members of the collaboration (Maietta, 2015; Perkmann et al., 2013; Siegel et al., 2003). Therefore, understanding the nature of university-business-government collaboration, its efficiency, and potential barriers to ensuring the efficiency of knowledge transfer, competitiveness, and the development of knowledge-based economies is critical (Schofield, 2013) and could yield beneficial strategic outcomes. This type of collaboration is relevant to various strategic actors involved in the innovation process, including public authorities in their political responsibility and the academic

Benefits of New University-Business-Government Arrangements for the Performance…

181

and industrial partners involved in the projects (Hermans & Castiaux, 2016). It is also important to understand how the collaboration among the university, business, and the government evolves, which needs to understand why and how different actors in different spheres of human activity with different roles and reward systems have fruitful results from this kind of cooperation. This is also a necessary condition for creating and implementing policies dedicated to supporting and guiding these interaction initiatives (Carayol, 2003).

4  Benefits and Barriers of University-­Business-Government Collaboration Researches show (Hermans & Castiaux, 2016; Belkhodja & Landry, 2007; Bishop et  al., 2011; D’Este et  al., 2013; Estrada et  al., 2016; Malmström & Johansson, 2016) that there are various motivations and benefits of university-government cooperation for both the institutions that are part of the network formed by these interactions and the wider society that benefits from the knowledge and innovation generated. Moreover, the perception of the benefits provided by interaction is also different for companies, universities, and government (Bishop et al., 2011; Fuentes and Dutrénit, 2012). A range of stakeholders benefit from a greater understanding of the dynamics of university, business and the government collaboration. While university management and its technology transfer office may be able to effectively facilitate long-­ term interactions, knowledge of the evolution of these relationships allows the government to align its policies more closely with the specific objectives, such as developing long-term strategic interorganizational partnerships. Finally, companies gain insight into how to build lasting interactions with universities in order to optimize their innovation strategy (Plewa et al., 2013). These types of organizational arrangements can reduce transactional inefficiencies in the collaboration market and transaction costs, and allow collaborating parties to better exploit their strengths and capture the benefits of their field of expertise (Belkhodja & Landry, 2007). Moreover, the motivations for collaborative behavior by researchers depend on both economic and personal factors, measured in terms of, for example, visibility strategy and university position in a specific decision-making context. The culture of collaboration is not part of the traditional role of the researcher in the academic context, which is the production and communication of research and teaching results. Therefore, collaboration with industry and the government is often the result of a choice, and among the main motivations are: access to the equipment and resources they do not have; search for business opportunities; stimulate synergy across disciplines; gain prestige and visibility; learn tacit knowledge about a technique and insights of an area; fulfill the objectives and function of university; and create opportunities for internships and future work (Belkhodja & Landry, 2007; Lee, 2000).

182

S. X. Ribeiro and M. S. Nagano

Furthermore, strategic collaboration appears not only as a means to pursue business opportunities or to generate additional research funds, but also as a way to promote efficiency and add value to produce or transfer knowledge. Strategically, the interorganizational arrangement is a way of creating a relationship that values the complementarities between the researcher and the Triple Helix partners. More than just an idea of formal and informal networks, the individual researcher uses strategic reasons to build his network of relationships. There are authors who argue that the strategic network and the choice of partners are critical and determining factors for researchers’ collaboration with industry and government (Belkhodja & Landry, 2007). Regarding aspects that affect collaboration by universities, Belkhodja and Landry (2007) highlight those related to budget, university location, research radicalism and risk-taking culture. Relationships with industry will be closer in application-oriented fields and practical results. Arza (2010) proposes a model that relates motivations, channels, interactions and their benefits through the association of stimuli from public research organizations (universities and research centers), classified in intellectual and economic strategies, with the behavior of companies, which can be proactive or reactive, resulting in short- or long-term benefits. Some of the key benefits for companies include problem-solving, product performance or innovation process, the use of highly skilled personnel, increased productivity and competitive advantage, exchanges of ideas and resources with universities, enabling the application of research results in practice, access to new technologies, reduced R&D costs, and positive impact on organizational image. In turn, researchers can rely on ideas for future research and publication, ease of access to public channels (such as events and informal interactions), test theory application, exchange knowledge, develop and disseminate their innovations, have contact companies, secure funding for laboratories or supplements for university and employment for researchers (Cohen et  al., 2002; Fuentes and Dutrénit, 2012; Seppo & Roolaht, 2012). Among the factors that are often perceived by researchers as reducing success and productivity of university business cooperation are: misalignment of incentives between researchers and organizations (conflicts with companies); lack of academic or intermediary procedures to facilitate business interaction (academic networking issues); misalignment between academic goals and technology transfer activities (conflicts with academic goals); and the distance between academic research and business needs (nature of research) (CalcagninI et al., 2016). Considering the benefits generated by the university-business-government cooperation, it is relevant to try to minimize the possible barriers that may arise and maximize the advantages of these interactions. According to Fuentes and Dutrénit (2012), the ideal is to seek policies that increase interactions and, at the same time, protect the autonomy and freedom of researchers. In addition, aspects such as informal relationships and personnel mobility may be more important than formal technology transfer (Wright et  al., 2008), making it relevant to use appropriate communication channels that facilitate better integration.

Benefits of New University-Business-Government Arrangements for the Performance…

183

As one sphere assumes functions of another, in addition to contributing to the traditional institutional mission and participation in the capitalization of knowledge, it guides the development of new academic research and educational programs. It can be said that each institutional sphere is becoming a creative source of innovation and a support for the emergence of creativity in other spirals (Etzkowitz, 2003; Leydesdorff & Meyer, 2006).

5  B  enefits of the Relationship Between Knowledge Management and University-­Business-Government Collaboration Knowledge management is a process in which the team continually transforms personal knowledge into organizational knowledge, and then increases individual knowledge through the base of organizational knowledge. Moreover, it aims to have a positive impact on operational efficiency, teamwork performance, new knowledge generation and innovation (Patil & Kant, 2014; Pawlowsky & Schmid, 2006). Moreover, knowledge creation and exploitation, considered socially dynamic, represent the real source of innovation (Nonaka et al., 2014; Nonaka, 1994). The organization is in a position to generate knowledge-based results, that is, innovation, defined for example as the creation or updating of products, processes or services, patents, marketing techniques, new management and administrative tools, among others (Soo et  al., 2002). To achieve and maintain strategic competitiveness and sustainable growth, organizations must constantly create new knowledge and seek practical applications that result in innovation. At the same time, the results of continuous innovation activities need to include new values based on the reality of society as a whole (Nonaka et al., 2014; Nonaka 1994). Organizations need to focus on managing their knowledge as it involves important topics related to the creation and transformation of organizational knowledge, valuation of intangible assets and monitoring of competitors and prospecting for the environment. Knowledge management is concerned with creating new knowledge, disseminating it through the organization and applying it through incorporation into products, services, and systems, that is, innovating (Nonaka 1994; Alavi & Leidner, 2001). Knowledge creation theory establishes the premise that the process of knowledge creation and use forms a continuum and occurs simultaneously. It also drives diversity as a consequence of multiple levels of participation by individuals, teams, and organizations. In order to foster innovation, it is important for organizations to have “abilities to synthesize” what is needed to integrate various dimensions of knowledge and increase its quality (Nonaka & Toyama, 2003; Nonaka et al., 2014). The creation of organizational knowledge can be seen as an upward spiral process, starting at the individual level moving to the collective level (group) and then to the organizational level reaching the interorganizational level. Socialization usually

184

S. X. Ribeiro and M. S. Nagano

begins with building a “team” or “field” of interaction. This field facilitates the sharing of experiences and perspectives among team members (Nonaka, 1994; Patil & Kant, 2014). On the other hand, as the social capital of people is aggregated with that of organizations and the relationships within and among organizations generate social capital, it can be stated that interorganizational arrangements are mechanisms for the generation and transmission of this type of capital (Ahuja et  al., 2012; Burt, 1992; Nooteboom, 2000). Social capital is defined as the set of intangible or virtual resources, such as norms, trust, and networks, that are accumulated by an organization through its social structure, facilitating coordination and cooperation to achieve mutual goals and benefits. It also represents the dynamic ability to create and modify these resources and the social relationships in which the knowledge process occurs (Kianto & Waajakoski, 2010; Nooteboom, 2000; Putman, 1993). Besides, Brass et al. (2004) defend that interorganizational cooperation is composed of at least three levels: individuals that are part of groups, groups that integrate organizations, and organizations that form a collaborative arrangement. Thus, effective interaction among people, groups, and organizations broadens the knowledge initially created by individuals as people’s practices, values, culture, processes, and diversity are shared collectively towards common goals. In such a context, knowledge is understood as a socially constructed and shared resource whose focus is on the social relationships that connect the various actors and the social capital embedded in them (Kianto & Waajakoski, 2010). An important element of social capital is the competence and knowledge that is exchanged, shared, and created among organizations with different absorption abilities (Cohen & Levinthal, 1990; Nooteboom, 2000). Since knowledge arises from interactions among people, the assets that generate knowledge are the relationships in which it is shared in the ecosystem of workers, customers, suppliers, and universities, and this is the social capital that drives the organization (Nonaka et al., 2008). In the process of knowledge creation and transfer, university collaboration with industry and government can be a strategic way of acting that provides the researcher with valuable insights compared to peers not involved in such collaborative projects, as well as the possibility to test practical applications (Belkhodja & Landry, 2007). Generally, in a knowledge-based economy, the overall performance of innovation does not depend on the performance of specific formal institutions, but on how they interact with each other as elements of a collective system of knowledge creation and use and their interaction with social institutions as values, norms, and legal frameworks (Beesley, 2003).

Benefits of New University-Business-Government Arrangements for the Performance…

185

6  Discussions Establishing links between industry and science is considered paramount to the realization of an economy that emphasizes the role of knowledge and technology in driving productivity and economic growth. The Triple Helix concept has recently driven an attempt to better recognize the dynamics of the knowledge-based economy and presents itself as a new knowledge infrastructure generated in terms of overlapping institutional spheres with hybrid organizations emerging from these interfaces (Beesley, 2003). The Triple Helix, a model that captures multiple reciprocal relationships in a process of knowledge capitalization (Etzkowitz, 2002), postulates that the (interorganizational) university-business-government interaction is the key to improving the conditions for innovation in the knowledge society as collaboration generates knowledge (Ankrah & Al-Tabbaa, 2015). By the model, the company represents the locus of production, the government is responsible for contractual relationships that ensure stable interactions and exchanges; and the university is the source of new knowledge and technologies, which are the principles of the knowledge-based economy (Etzkowitz, 2003). In addition, a high level of research and teaching in universities is considered essential in the development of national and regional innovation policies (Hautala, 2011). The three helices were designed to complement each other to solve problems, promote growth, and stimulate ideas and innovation (Rosenlund et  al., 2015). “The organization combines external knowledge with its own to produce new knowledge” (Nonaka et al., 2008, p. 72). One of the first applications of the Triple Helix model is to investigate differences in the culture of knowledge in industry, and it has primarily been applied to political and national issues. These results suggest a promising application to the model: as a source of hypotheses that are useful in systems research and knowledge management in organizations and industries (Cockrell & Stone, 2010). This university-industry-government interaction, simultaneously of competition and institutional cooperation, is fundamental as it contributes to innovation as it allows companies to apply knowledge to improve production processes or to drive the emergence of new knowledge-based companies such as companies called spin-­ offs and startups, contributing to economic and social development (Etzkowitz, 2003). Companies are for-profit institutions aiming to develop successful products in the competitive market; research organizations are non-profit institutions focused on the generation and dissemination of scientific knowledge. Given these institutional differences in missions and foci, companies and research organizations develop different resources, which may result in complementarities. For example, alliances allow companies to be able to optimize and gain privileged access to the scientific knowledge of research organizations, increasing their ability for innovation. In turn, research organizations can gain a better understanding of how their scientific knowledge can be applied to business innovation activities, generating input for new scientific discoveries (Estrada et al., 2016). Collaboration is a key conduit for knowledge-flow innovation for both companies with R&D activities (either internally developed or acquired externally) and

186

S. X. Ribeiro and M. S. Nagano

non-R&D activities. Cooperation with higher education or public research institutions is an important source of technology transfer for large companies. In most countries, including Brazil, such companies are two or three times more engaged in this type of interaction than SMEs (OECD, 2015). Most countries and regions try to achieve some form of triple helix to drive productivity and economic growth (Etzkowitz & Leydesdorff, 2000). Their common goal is to achieve an innovative environment consistent with trilateral knowledge-­based economic development initiatives and strategic alliances among industry, government, and academic research groups. Such cooperative agreements are often encouraged, but not necessarily controlled by the government through new policies or support, directly or indirectly. This is done with the expectation that research will produce knowledge for immediate use by industry, promoting savings (Beesley, 2003). University-industry-government collaboration can be fundamental in improving industrial productivity, adding value to academic research, fostering innovation through joint R&D projects, facilitating technology transfer from the university to the productive sector as well as skilled personnel, and can also stimulate the formation of spin-offs and startups. Collaboration among different organizations involves people with different skills, knowledge, experience, and viewpoints, which is important for innovation (Wallin et al., 2014). Based on the theoretical foundation and considering the two main theories that underlie this research, it is observed that both the SECI model of knowledge management and the hybrid organizations formed by Triple Helix have as inputs—called by Nonaka et  al. (2008) knowledge resources—people and ideas. Through university-­industry-government collaboration, members of the three helices can interact and exchange tacit and explicit knowledge within and between each other. The main outputs of the relationship between knowledge management and university-­industry-government collaboration, also called the social product, are knowledge and technology transfer, innovation, and regional and national development, as shown in Fig. 3. Therefore, knowledge management can contribute to the exchange of knowledge among the Triple Helix spheres (university, industry, and government), which

Fig. 3  Relationships between knowledge management and university-industry-government collaboration. (Source: Authors’ own figure)

Benefits of New University-Business-Government Arrangements for the Performance…

187

involve specific objectives and natures, offering benefits for both interaction and integration of such spheres and facilitating the transfer of knowledge and technology. In this interaction, the university excels as a generator of knowledge, new ideas and training of necessary human resources, industries absorb such knowledge developing innovative products and services according to the demands of the market and society, or even enabling the creation of new companies (e.g., startups and spin-offs), and the government can more efficiently propose and implement public policies focusing on strategic and vital areas for economic, social, political, human and sustainable development, towards benefiting society as a whole and reducing social inequalities.

7  Conclusion Based on the presented theoretical foundation, it is relevant to address the process of knowledge creation and sharing, based on the theory proposed by Nonaka and Takeuchi and their knowledge conversion process (SECI model) to map innovation in university-business-government strategic collaboration. The relationships between the theories Knowledge Management and Triple Helix are fundamental to improve the organizational results of each of the institutions involved, as well as contributing to the development of society as a whole. Based on the discussion, each sphere of the Triple Helix—i.e., university-­ industry-­government—must recognize its collaborative role which is primarily beneficial for themselves and their individual goals, but also for the society as a whole, since it provides access to innovative products, services, and even processes of higher quality and stimulates a virtuous circle of innovation, in a way taxes paid return as improvements to the own society’s population. Social projects and programs can also be triggered by such collaboration. Therefore, university-industry-­ government interaction and collaborative work must be stimulated towards an increased exchange of scientific and technological knowledge with a focus not only on researchers’ interests and strategic entrepreneurship of the productive sector, but also on social demands, which can actively collaborate with emerging economies. Thus, it is essential to stimulate university-university-government interaction and collaborative works by expanding the exchange of scientific and technological knowledge focusing not only on the interests of researchers and the productive sector, but also that are directed to strategic social demands.

References Ahuja, G., Soda, G., & Zaheer, A. (2012). The genesis and dynamics of organizational networks. Organization Science, 23(2), 434–448. Alavi, M., & Leidner, D. (2001). Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues. MIS Quartely, 25(1), 107–136.

188

S. X. Ribeiro and M. S. Nagano

Ankrah, S., & Al-Tabbaa, O. (2015). University-industry collaboration: A systematic review. Scandinavian Journal of Management, 31(3), 387–408. Arza, V. (2010). Channels, benefits and risks of public-private interactions for knowledge transfer: A conceptual framework inspired by Latin America. Science and Public Policy, 37(7), 473–484. Beesley, L. G. A. (2003). Science policy in changing times: Are governments poised to take full advantage of an institution in transition? Research Policy, 32(8), 1519–1531. Belkhodja, O., & Landry, R. (2007). The Triple-Helix collaboration: Why do researches collaborate with industry and the government? What the factors that influence the perceived barriers? Scientometrics, 70(2), 301–332. Bishop, K., D’Este, P., & Neely, A. (2011). Gaining from interactions with universities: Multiple methods for nurturing absorptive capacity. Research Policy, 40, 30–40. Brass, D., Galaskiewicz, J., Greve, H., & Tsai, W. (2004). Taking stock of network and organizations: A multilevel perspective. Academy of Management Journal, 47(6), 795–817. Burt, R. (1992). Structural holes. Harvard University Press. Calcagnini, G., Giombini, G., Liberati, P., & Travaglini, G. (2016). A matching model of university-­ industry collaborations. Small Business Economics, 46(1), 31–43. Carayol, N. (2003). Objectives, agreements and matching in science industry collaborations: Reassembling the pieces of the puzzle. Research Policy, 32(6), 887–908. Cockrell, R. C., & Stone, D. N. (2010). Industry culture influences pseudo-knowledge sharing: A multiple mediation analysis. Journal of Knowledge Management, 14(6), 841–857. Cohen, W. M. & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quartely, 35, 128–152. Cohen, W., Nelson, R., & Walsh, J. (2002). Links and impacts: The influence of public research on industrial R&D. Management Science, 48(1), 1–23. Cristo-Andrade, S., & Ferreira, J. J. (2020). Knowledge spillovers and strategic entrepreneurship: What researches and approaches? International Entrepreneurship and Management Journal, 16(1), 263–286. D’Este, P., Iammarino, S., & Guy, F. (2013). Shaping the formation of university–industry research collaborations: What type of proximity does really matter? Journal of Economic Geography., 13(4), 537–558. Doblinger, C., Surana, K., & Anadon, L. D. (2019). Governments as partners: The role of alliances in U.S. cleantech startup innovation. Research Police, 48(6), 1458–1475. Dogan, N. (2015). The intersection of entrepreneurship and strategic management: Strategic entrepreneurship. Procedia - Social and Behavioral Sciences, 195, 1288–1294. Estrada, I., Faems, D., Cruz, N. M., & Santana, P. P. (2016). The role of interpartner dissimilarities in industry-university alliances: Insights from a comparative case study. Research Policy, 45(10), 2008–2022. Etzkowitz, H. (1998). The norms of entrepreneurial science: cognitive effects of the new university-­ industry linkages. Research Policy, 27(8), 823–833. Etzkowitz, H. (2002). Incubation of Incubators: Innovation as a Triple Helix of University-­ Industry-­Government Networks. Science and Public Policy, 28(2), 115–128. Etzkowitz, H. (2003). Innovation in innovation: The Triple Helix of university-industry-­government relations. Social Science Information, 42(3), 293–337. Etzkowitz, H., & Leydesdorff, L. (1996). A Triple Helix of University-industry-government relations. University of New York. Etzkowitz, H., & Leydesdorff, L. (2000). The dynamics of innovation: From national systems and “mode 2” to a triple helix of university-industry-government relations. Research Policy, 29, 109–123. Etzkowitz, H., & Viale, R. (2010). Polyvalent knowledge and the entrepreneurial university: A third academic revolution? Critical Sociology, 36, 595–609. Franco, M., & Haase, H. (2015). University-industry cooperation: Researchers’ motivations and interactions channels. Journal of Engineering and Technology Management, 36, 41–51.

Benefits of New University-Business-Government Arrangements for the Performance…

189

Fuentes, C., & Dutrénit. (2012). G. Best channels of academia–industry interaction for long-term benefit. Research Policy, 4, 1666–1682. Hautala, J. (2011). International academic knowledge creation and ba. A case study from Finland. Knowledge Management Research & Practice, 9(4), 4–16. Hermans, J., & Castiaux, A. (2016). Contingent knowledge transfers in university-industry R&D projects. Knowledge Management Research & Practice, 15(1), 68–77. Inzelt, A. (2004). The evolution of university-industry-government relationships during transition. Research Policy, 33, 975–995. Jensen, M. B., Johnson, B., Lorenz, E., & Lundvall, B. A. (2007). Forms of knowledge and modes of innovation. Research Policy, 36, 680–693. Johannessen, J., Olsen, B., & Olaisen, J. (1999). Aspects of innovation theory based on knowledge-­ management. International Journal of Information Management, 19, 121–139. Kianto, A., & Waajakoski, J. (2010). Linking social capital to organizational growth. Knowledge Management Research & Practice, 8(1), 4–14. Kimatu, J. N. (2016). Evolution of strategic interactions from the triple to quad helix innovation models for sustainable development in the era of globalization. Journal of Innovation and Entrepreneurship, 5(16), 1–7. Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383–397. Lee, Y. S. (2000). The sustainability of university–industry research collaboration: An empirical assessment. The Journal of Technology Transfer, 25, 111–133. Leydesdorff, L., & Etzkowitz, H. (2003). Can ‘the public’ be considered as a fourth helix in university-­industry-government relations? Science and Public Policy, 30(1), 55–61. Leydesdorff, L., & Meyer, M. (2006). Triple Helix indicators of knowledge-based innovation systems. Introduction to the special issue. Research Policy, 35(1), 1441–1449. Maietta, O. W. (2015). Determinants of university-firm R&D collaboration and its impact on innovation: A perspective from a low-tech industry. Research Policy, 44, 1341–1359. Malmström, M. M., & Johansson, J. (2016). Social exchange in collaborative innovation: Maker or breaker. Journal of Innovation and Entrepreneurship, 5(4), 1–20. Maskus, K. E., & Reichman, J. H. (2004). The globalization of private knowledge goods and the privatization of global public goods. Journal of International Economic Law, 7(2), 279–320. Mazzei, M.  J. (2018). Strategic entrepreneurship: Content, process, context, and outcomes. International Entrepreneurship and Management Journal, 14, 657–670. Nohria, N., & Eccles, R.  G. (1992). Networks and organizations: Structure, form, and action. Harvard University Press. Nonaka, I. (1991). The knowledge-creation company. Harvard Business Review, 69(6), 96–104. Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5(1), 14–37. Nonaka, I., Kodama, M., Hirose, A., & Kohlbacher, F. (2014). Dynamic fractal organizations for promoting knowledge-based transformation – A new paradigm for organizational theory. European Management Journal, 32(1), 137–146. Nonaka, I., & Konno, N. (1998). The concept of “Ba”: Building a foundation for knowledge creation. California Management Review, 40(3), 40–55. Nonaka, I., & Takeuchi, H. (1995). The knowledge creating company: How Japanese companies create the dynamics of innovation. Oxford University Press. Nonaka, I., & Toyama, R. (2003). The knowledge-creating theory revisited: Knowledge creation as a synthesizing process. Knowledge Management Research & Practice, 1(1), 2–10. Nonaka, I., Toyama, R., & Hirata, T. (2008). Managing flow: A process theory of the knowledge-­ based firm. Palgrave Macmillan. Nonaka, I., Toyama, R., & Konno, N. (2000). SECI, Ba and leadership: A unified model of dynamic knowledge creation. Long Range Planning, 33(1), 5–34. Nooteboom, B. (2000). Institutions and forms of co-ordination in innovation systems. Organization Studies, 21(5), 915–939.

190

S. X. Ribeiro and M. S. Nagano

OECD. (2015). OECD education at a glance 2015 Disponível em. http://www.oecd.org/edu/ education-­at-­a-­glance-­2015.htm Patil, S.  K., & Kant, R. (2014). Methodological literature review of knowledge management research. Tékhne – Review of Applied Management Studies, 12(3–14). Pawlowsky, P., & Schmid, S. (2006). Interrelations between strategic orientation, knowledge management, innovation and performance. Empirical findings from a national survey in Germany. International Journal of Knowledge Management Studies, 5(1/2), 185–209. Perkmann, M., Tartari, V., Mckelsey, M., Autio, E., Broström, A., D’Este, P., et  al. (2013). Academic engagement and commercialisation: A review of the literature on university-industry relations. Research Policy, 42(2), 423–442. Plewa, C., Korff, N., Baaken, T., & Macpherson, C. (2013). University-industry linkage evolution: An empirical investigation of relational success factors. R&D Management, 42, 365–380. Polanyi, M. (1966). The tacit dimension. Doubleday and. Popadiuk, S., & Choo, C. W. (2006). Innovation and knowledge creation: How are these concepts related? International Journal of Information Management, 26, 302–312. Putman, R. (1993). The prosperous community: Social capital and public life. The American Prospect, 4(3), 35–42. Rosenlund, J., Hogland, W., Johansson, A. W., & Seddon, J. (2015). A cross-national environmental cluster collaboration: Shifting between an analytical and management level of the triple helix. Science and Public Policy, 42, 583–593. Rybnicek, R., & Königsgruber, R. (2019). What makes industry–university collaboration succeed? A systematic review of the literature. Journal of Business Economics., 89(2), 221–250. Schofield, T. (2013). Critical success factors for knowledge transfer collaborations between university and industry. Journal of Research Administration, 44(2), 38–56. Seppo, M., & Roolaht, T. (2012). The policy suggestions concerning motivations and barriers of university-industry cooperation. Discuss on Estonian Policy: Theory and Practice of Economic Policy, 20(1), 226–246. Siegel, D.  S., Waldman, D.  A., Atwater, L.  E., & Link, A.  N. (2003). Commercial knowledge transfers from universities to firms: Improving the effectiveness of university-industry collaboration. Journal High Technology Management Research, 14(1), 111–133. Soo, C., Devinney, T., Midgley, D., & Deering, A. (2002). Knowledge management: Philosophy, process, and pitfalls. California Management Review, 44(4), 129–150. Wallin, J., Isaksson, O., Larsson, A., & Elfström, B. (2014). Bridging the gap between university and industry: Three mechanisms form innovation efficiency. International Journal of Innovation and Technology Management, 11(1), 1–18. Wood, M. S. (2009). Does one size fit all? The multiple organizational forms leading to successful academic entrepreneurship. Entrepreneurship Theory and Practice, 929–947. Wright, M., Clarysse, B., Lockett, A., & Knockaert, M. (2008). Mid-range universities’ linkages with industry: Knowledge types and the role of intermediaries. Research Policy, 37(8), 1205–1223.

Index

A African countries, 8, 58–69, 106 B Banking industry, 10, 120, 124, 126, 127 Barangay Micro Business Enterprises (BMBEs), 8, 9, 71–91 Barriers, 7, 8, 12, 36–53, 121, 174, 180–183 Benchmarking, 11, 59, 161, 163–164, 167, 168 Brand loyalty, 10, 120–127, 131 Business rebranding, 7, 28, 29, 31–32 Business turnaround, 7, 16, 18, 20, 24–25, 29–32 C Competitive advantages, 6, 9–12, 17, 23, 26, 30, 36, 38, 73, 76, 89–91, 137–151, 155–158, 163–165, 173, 177, 182 Competitive analysis, 11, 167 Competitive strategic entrepreneurship, 6, 7, 10, 18, 36, 139, 157, 179 Composite indices, 8, 58–69 Contextual strategy, 3–12 Customer loyalty, 9, 10, 80, 86–89, 91, 119, 120, 122, 124, 125, 127, 131, 132, 163 Customer profitability, 10, 120, 124–129, 131

E Economies, 4, 9, 11, 36, 58, 59, 65, 66, 73, 82–84, 90, 99, 100, 102, 104, 105, 174, 177, 179, 180, 184, 185, 187 Entrepreneurial ecosystems, 5, 7, 8, 62, 65, 66 Entrepreneurial firms, 10, 11, 155–169 Entrepreneurial leadership, 7, 16, 18–20, 22, 26–27, 30–32, 37 Entrepreneurial resourced-based view, 7 Entrepreneurships, 4–6, 8, 9, 25, 26, 36, 37, 44, 49, 52, 53, 58, 60–66, 69, 83, 96–100, 102–113, 139, 156, 157, 168, 177–181 Entrepreneurship strategy, 3–12, 16–32, 36–53, 138, 139, 157, 179, 187 G GEM composite index, 8, 58–69 Global Entrepreneurship Monitor (GEM), 8, 58–69 H Hairdressers, 97, 99, 101, 105–113 Human resources, 27, 49, 90, 187 I Imitation, 11, 161, 165, 167, 168 Information technological turbulence, 10, 137–151

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 N. Faghih, A. Forouharfar (eds.), Contextual Strategic Entrepreneurship, Contributions to Management Science, https://doi.org/10.1007/978-3-030-86028-8

191

Index

192 Internal corporate venturing, 7, 25–26, 31, 32 Internationalization, 62 Interpretive Structural Modelling (ISM), 8, 37, 39–41, 43–47, 49, 51–53 Intersectionalities, 9, 97–101, 112 K Knowledge management, 11, 12, 174–177, 183–187 L Locality study, 101 M Marketing communications, 10, 122, 137–151 MICMAC analysis, 8, 37, 39, 41, 46–49, 51 Mixed embeddedness, 7, 9, 95–114 N National experts, 8, 58–69 National framework conditions (NFCs), 62 O Organizational capabilities, 7, 17, 19, 20, 23–24, 26, 31, 32 Organizational processes improvement, 7 Organizational rejuvenation, 7, 16–32 Organizational restructuring, 7, 22, 31, 32 P Product development, 10, 25, 138–151, 162, 163, 165, 167, 180 Profitability, 9, 10, 16, 23, 37, 89, 119–132, 165

R Resource-based view (RBV), 8, 71–91 S SE barriers, 7, 8, 36–53 Sectoral study of barber, 108 Small enterprises competitiveness, 7 Social entrepreneurship, 5 Social media, 9, 11, 80, 81, 84, 87–89, 91, 120–122, 138, 141, 151, 161, 165–168 Social networking, 121–124, 131 Social network marketing, 7, 10, 119–132 Social networks, 7, 10, 107, 113, 120–129, 131, 132, 142, 162, 163, 166, 167 Strategic entrepreneurship (SE), 3–12, 16–32, 36–53, 138, 139, 151, 157, 179, 187 Strategic learning, 7, 11, 155–169 Strategies, 3, 4, 6–8, 11, 12, 16–18, 24–27, 29–32, 36, 38, 73, 74, 76, 84, 89–90, 97, 107, 108, 113, 114, 120, 122, 131, 138–141, 143, 150, 151, 156–165, 167, 168, 178, 180–182 Structural equation modeling (SEM), 10, 52, 126 Sustainability, 8, 59, 73, 74, 90, 141, 158 T Triple helix, 7, 12, 173–187 Triple helix cooperation, 178 U University-business-government collaboration, 174, 177–178, 180–184 V Vienna, 9, 101–105, 108, 110