Qualitative research at the marketing/entrepreneurship interface 9781845444099, 9780861769759

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Volume 7 Number 3 2004

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ISSN 1352-2752

Qualitative Market Research An International Journal Qualitative research at the marketing/entrepreneurship interface Guest Editor: David Crick

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Qualitative Market Research: An International Journal Volume 7, Number 3, 2004

ISSN 1352-2752

Qualitative research at the marketing/entrepreneurship interface Guest Editor: David Crick

Contents 166 Access this journal online 167 Abstracts & keywords 169 Guest editorial 172 Crafting a competitive advantage: tempering entrepreneurial action with positioning-based values Michael Beverland and Lawrence S. Lockshin 183 Understanding practices at the ‘‘ethnic’’ marketing/ entrepreneurship interface: a case study of Kirit Pathak Shiv Chaudhry and Dave Crick

218 Laments and serenades: relationship marketing and legitimation strategies for the cultural entrepreneur Nicholas C. Wilson and David Stokes 228 Relationships, marketing and small business: an exploration of links in theory and practice Grigorios Zontanos and Alistair R. Anderson

194 Marketing in the social enterprise context: is it entrepreneurial? Eleanor Shaw 206 The nature of networking in small firms Aodheen O’Donnell

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entrepreneurship within the broad Asian community in the UK. Asian entrepreneurs were chosen for the larger study due to their propensity to engage in entrepreneurial activities in the UK in comparison to other ethnic communities. Ten case histories were developed via personal interviews with entrepreneurs in the Asian Eye “Rich-List” of the 100 wealthiest Asians in the UK and data was supported with information from Web sites, newspapers etc. One case history is presented in this paper in order to explore the richness of the qualitative data and this serves as a learning vehicle for future ethnic businessmen and women working at the marketing/ entrepreneurship interface.

Abstracts & keywords

Marketing in the social enterprise context: is it entrepreneurial? Crafting a competitive advantage: tempering entrepreneurial action with positioning-based values

Eleanor Shaw Keywords Entrepreneurialism, Marketing, Quality, Research, Social environment

Michael Beverland and Lawrence S. Lockshin Keywords Entrepreneurialism, Niche marketing, Strategic management The essence of entrepreneurship is “effectual action”. Researchers at the entrepreneurial/marketing interface suggest that small firms adapt marketing theory to their needs, undertaking a range of emergent actions in response to day-to-day events and problems, without recourse to formal planning or research. By way of contrast, brands require guided action, in order to build a sustainable position in the marketplace, while research also reveals that small specialist firms increase their chance of failure if they undertake a range of unguided actions that lead to niche drift. Based upon an in-depth case study, identifies that SMEs do benefit from constant actions, but only if guided by a strong set of positioning values, which are diffused into an organisational culture, primarily via the actions of the leader.

Understanding practices at the “ethnic” marketing/ entrepreneurship interface: a case study of Kirit Pathak Shiv Chaudhry and Dave Crick Keywords Private ownership, Ethnic groups, Marketing management, Entrepreneurialism, Interface management This paper reports on a case history drawn from a larger investigation that profiled “successful” Asian entrepreneurs in order to encourage future

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · Abstracts & keywords q Emerald Group Publishing Limited · ISSN 1352-2752

This paper presents some of the findings to emerge from a qualitative study of social enterprise in the UK. The findings discussed in this paper refer to the marketing activities of social enterprises and consider the extent to which these can be described as “entrepreneurial”. This discussion suggests that while social enterprises do engage in entrepreneurial marketing, the local embeddedness of their activities, their not-for-profit orientation and challenges posed by social exclusion impact on their marketing activities.

The nature of networking in small firms Aodheen O’Donnell Keywords Entrepreneurialism, Marketing, Small enterprises, Socialization For some time, researchers at the marketing/ entrepreneurship interface have employed the concepts of networks and networking as a means of exploring how entrepreneurs “do business”. More recently, attempts have been made to show how the process of networking contributes to small firm marketing. The overall research study on which this paper is based aimed to show how networking contributes to marketing. This paper focuses on a specific objective of the overall research study, namely an understanding of the process of small firm networking. It reviews previous research into the concept of networking and demonstrates how the process of networking can be captured as a number of dimensions along which entrepreneurial networking may vary. The paper then explains that while previous research has allowed a conceptual framework of small firm networking to be developed, further empirical research is merited and an entirely appropriate type of research is of a qualitative nature.

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Abstracts & keywords

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Laments and serenades: relationship marketing and legitimation strategies for the cultural entrepreneur

recommended. The implications for relationship marketing models are discussed.

Nicholas C. Wilson and David Stokes Relationships, marketing and small business: an exploration of links in theory and practice

Keywords Relationship marketing, Entrepreneurialism, Socialization, Finance

Grigorios Zontanos and Alistair R. Anderson This paper investigates how the marketing/ entrepreneurship interface functions within the cultural sector. Specifically, the paper considers how cultural entrepreneurs in the music industry market not to customers, but to networks that control the resources necessary to support entrepreneurial ventures. Evidence is drawn from the qualitative research of a study on access to finance by ownermanagers of independent music companies (“cultural entrepreneurs”). The findings support the notion that “legitimation” is a key factor in accessing such resources. Cultural entrepreneurs have difficulties in establishing either “pragmatic legitimation” (derived from the self-interest of organisations across marketing networks) or “cognitive legitimation” (derived from perceptions of normality and conformity within marketing networks). Marketing strategies at both individual and industry level are put forward to overcome these barriers. For individual businesses, a “selection strategy” using creative clusters or a “manipulation strategy” that manages the cultural environment are

Keywords Marketing, Relationship marketing, Small enterprises, Entrepreneurialism, Socialization This paper explores the links between the theory and practices of marketing and small business. The review of the literature highlights the close association of the more advanced conceptualisations of marketing, especially relationship marketing, and those of small business, particularly entrepreneurial small business. Given these theoretical similarities and the ensuing symmetry of actions and behaviours described in theory, the research question is posed, how does an appreciation of these links aid our understanding of entrepreneurial practices? The question is addressed by employing a participant observation methodology to create a case study of one small rural firm and by inductive analysis techniques. The findings show that it is difficult to disentangle or even to distinguish, the practice of relationship marketing from entrepreneurial action. This leads one to suggest that it may be useful to reconsider relationship marketing as a facet of entrepreneurship.

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The marketing/entrepreneurship interface

Guest editorial

About the Guest Editor After six years working in the defence industry, David Crick taught at Leicester Polytechnic, University of Strathclyde, University of Leicester, and De Montfort University before commencing his present position at the University of Central England Business School. He has published a number of conference papers at the marketing/entrepreneurship interface and in journals such as Entrepreneurship & Regional Development, International Business Review, International Marketing Review, Journal of Business Venturing, Journal of International Marketing, Journal of Small Business Management and Small Business Economics.

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 169-171 q Emerald Group Publishing Limited · ISSN 1352-2752

The complementary themes that link the articles in this special issue are their positioning at the interface between the disciplines of marketing and entrepreneurship and their application of qualitative research design and methods. Interest in the marketing/entrepreneurship interface is not new. A symposium has been held since the early 1980s prior to the annual Summer American Marketing Association (AMA) Conference in the USA. More recently, a similar special interest group (SIG) symposium of the Academy of Marketing (AM) has been held each January in the UK. Additionally, there have been dedicated tracks at other conferences around the world. At these events, cognate researchers from a number of countries have the opportunity to discuss their research. A number of positive outputs have followed from these events including collaborative projects and publications, several special editions of journals, and edited books from conferences have been published at the marketing/ entrepreneurship interface. Additionally, a dedicated journal (Journal of Research in Marketing and Entrepreneurship) has emerged. Debate has arisen concerning how distinct the topic areas actually are. For example, Collinson (2002, p. 337) suggests: “the marketing/ entrepreneurship interface SIG emerged from the two very distinct disciplines of marketing and entrepreneurship respectively”. She proceeds to point out that “researchers working in these two fields recognised that there were many areas of commonality and convergence between the two subject areas”. This debate is important given that depending on the definitions of marketing and entrepreneurship authors choose to adopt, some would argue that the differences are rather quite small. Taking the Chartered Institute of Marketing’s (www.cim.co.uk) definition – marketing is “the management process responsible for identifying, anticipating and satisfying customer requirements, profitably”. Arguably, this overlaps with the view of Shane and Venkataraman (2000), who argue: “entrepreneurship is concerned with the discovery and exploitation of profitable opportunities”. Certain researchers believe that both disciplines are concerned with key issues that include a proactive and innovative stance, identification of customers’ needs (opportunities) and satisfying them at a profit (exploiting the identified opportunities), plus a level of risk taking. Therefore, the difference between the disciplines may not be that great in reality (Hills and LaForge, 1992). Behaviour at the marketing/entrepreneurship interface is not restricted to smaller sized firms;

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infact some larger firms feature in this special edition. Perhaps the greatest differences lie in the manner in which small firms run by an entrepreneur or limited team undertake marketing activities in comparison to their larger counterparts due to issues such as limited managerial experience and resources (Stokes, 1995; McCartan-Quinn and Carson, 2003). Interestingly, the methodological stance adopted by researchers in understanding aspects of behaviour at the interface has been debated. Hill (1999, p. 56) highlights a perceived divide between researchers adopting different methodological stances. Quoting from a conversation with a well-known advocate of positivism, he notes “qualitative research is too subjective. Why should I believe you?” Even so, positive features of qualitative research are widely acknowledged, in particular, approaches that are able to uncover the ‘how’ and ‘why’ type data at the interface (see, for example, Yin, 1989; Easterby-Smith et al., 1994; Carson and Coviello, 1996). Indeed, it has been suggested that a typical lack of published information (shareholder reports, commercial analyses, etc.), poor recording of internal data and a marked reluctance of entrepreneurs to divulge commercially sensitive information also make other forms of enquiry particularly problematic (Carson et al., 1995). A qualitative approach has the advantage that a statistically representative sample of firms does not always have to be selected. Eisenhardt (1989) suggests that the random selection (of cases) is neither necessary nor preferable, suggesting that “extreme examples” are most appropriate when seeking to extend theory. This special issue contains six articles addressing particular aspects of qualitative research. In the first article by Beverland and Lockshin attention is focused on the wine industry with a case study. Their findings indicate that firms can benefit from constant actions, but need to be guided by positioning values that are diffused into an organisational culture, primarily via the actions of the leader. In the second article, Chaudhry and Crick argue that in work at the marketing/ entrepreneurship interface, while not always possible, it is often useful to have “named” rather than anonymous case studies in order that practitioners can relate to the findings. A case study is developed of a “successful” Asian entrepreneur from a study into ten of the top 100 richest Asians in the UK and serves as a vehicle by which to demonstrate some of the “how” and “why” decisions influencing performance. Shaw provides the third article that investigates a growing area of interest, namely social

enterprises; it debates the extent to which they can be considered to be entrepreneurial. It has been widely reported in newspapers that the current (at the time of writing) Secretary of State at the Department of Trade & Industry is an advocate of creating social enterprises and therefore it is certainly an area of interest to policy makers in the UK. It is hoped that this article may provide the opportunity for international research that develops this relatively under researched topic further. The fourth article is by O’Donnell and this reports on one aspect of a larger study into how entrepreneurs do business and focuses on developing an understanding of the process of small firm networking. This topic is relevant at the interface since there is a need for policy makers to understand how to assist entrepreneurs in their networking activities, particularly at early stages of development when their business and social networks are likely to be more limited than at later stages of development. Building on the theme of networking, the fifth article is by Wilson and Stokes and they provide an investigation of entrepreneurial behaviour in the music industry. They argue that networks are important since entrepreneurs in the sector are not directly involved in marketing to customers, but rather networks that control the resources necessary to support entrepreneurial ventures. This links to the topic of relationship marketing where implications from the study are discussed. The issue of relationship marketing provides the background against which the sixth article, written by Zontanos and Anderson builds on. Specifically, by employing participant observation of a period of time, a mini case study is developed, leading to the suggestion that relationship marketing might be viewed as a facet of entrepreneurship. The underlying theme throughout the articles in this special edition is an investigation of behaviour at the marketing/entrepreneurship interface using qualitative methodological approaches irrespective of the size and number of firms under investigation. The aim is to offer areas for further investigation on which other studies can build. These areas range from the development of named rather than anonymous case studies that can be used as a teaching vehicle to encourage future entrepreneurial actions, through to uncovering specific aspects of entrepreneurial behaviour such as networks and relationship marketing. In particular, opportunities arise for collaborative, including cross-national, research. David Crick E-mail: [email protected]

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References Carson, D. and Coviello, N. (1996), “Qualitative research issues at the marketing/entrepreneurship interface”, Marketing Intelligence & Planning, Vol. 14 No. 6, pp. 51-8. Carson, D., Cromie, S., McGowan, P. and Hill, J. (1995), Marketing and Entrepreneurship in SMEs: An Innovative Approach, Prentice-Hall, Hemel Hempstead. Collinson, E. (2002), “Editorial: the marketing/entrepreneurship interface”, Journal of Marketing Management, Vol. 18 No. 4, pp. 337-40. Easterby-Smith, M., Thorpe, R. and Lowe, A. (1994), Management Research: An Introduction, Sage, London. Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-50.

Hill, J. (1999), “Editorial”, Qualitative Market Research: An International Journal, Vol. 2 No. 2, pp. 56-8. Hills, G.E. and LaForge, R.W. (1992), “Marketing and entrepreneurship: the state-of-the-art”, in Sexton, D.L. and Kasarda, J.D. (Eds), The State-of-the-Art in Entrepreneurship, Babson College, Babson Park, MA, pp. 69-80. McCartan-Quinn, D. and Carson, D. (2003), “Issues which impact upon marketing in the small firm”, Small Business Economics, Vol. 21 No. 2, pp. 201-13. Shane, S. and Venkataraman, S. (2000), “The promise of entrepreneurship as a field of research”, Academy of Management Review, Vol. 25 No. 1, pp. 217-26. Stokes, D. (1995), Small Business Management, D.P. Publications, London. Yin, R.K. (1989), Case Study Research: Design and Methods, Sage Publications, Beverly Hills, CA.

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Introduction

Crafting a competitive advantage: tempering entrepreneurial action with positioning-based values Michael Beverland and Lawrence S. Lockshin

The authors Michael Beverland is a Senior Lecturer in the Department of Marketing at Monash University, Caulfield East, Australia. Lawrence S. Lockshin is a Professor at the Wine Marketing Research Group, University of South Australia, Adelaide, Australia.

Keywords Entrepreneurialism, Niche marketing, Strategic management

Abstract The essence of entrepreneurship is “effectual action”. Researchers at the entrepreneurial/marketing interface suggest that small firms adapt marketing theory to their needs, undertaking a range of emergent actions in response to day-today events and problems, without recourse to formal planning or research. By way of contrast, brands require guided action, in order to build a sustainable position in the marketplace, while research also reveals that small specialist firms increase their chance of failure if they undertake a range of unguided actions that lead to niche drift. Based upon an in-depth case study, identifies that SMEs do benefit from constant actions, but only if guided by a strong set of positioning values, which are diffused into an organisational culture, primarily via the actions of the leader.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 172-182 q Emerald Group Publishing Limited · ISSN 1352-2752 DOI 10.1108/13522750410540182

Marketing is a critical boundary spanning activity for organisations, given that it brings the firm in constant and direct contact with its customers (Morris et al., 2002; Day, 1999; Morris et al., 1990), and in identifying sources of, and delivering, customer value (Flint et al., 2002). As such, it is an integral part of entrepreneurial behavior, given the importance of constant market action to the entrepreneurial process (Morris et al., 2002; Sarasvathy, 2001; Kirzner, 1997; Hayek, 1945; Mises, 1949). The need for constant action is consistent with the research on the entrepreneurial/marketing interface (Morris et al., 2002; Stokes, 2000; Carson, 2001; 1985; Dalgic and Leeuw, 1994) which identifies the essence of entrepreneurial marketing as responding to dayto-day opportunities, based on gut feel or intuition, consistent with an emergent approach to strategy (Mintzberg, 1994). The practice of marketing by entrepreneurs in believed to be similar to a process of crafting (Mintzberg, 1994) whereby entrepreneurs adapt marketing tools to the needs of the moment, with little regard for any overall plan, formalised strategy or customer analysis (Stokes, 2000). For example, Stokes (2000) found that entrepreneurs focused on ongoing competitive pressures rather than well researched needs among customers in their marketing activities. This ongoing action is critical for firm growth and survival (Lumpkin and Dess, 2001; Moran and Ghoshal, 1999; Grimm and Smith, 1997; Covin and Slevin, 1991; Mises, 1949). For example, Ferrier et al. (1999, p. 384) found: Success depends not only on the choice about what commodity to produce, but also on choices about the style of the commodity, the quality of its materials, the sizes, the colours, the packaging, and the selling effort.

In this view, a firm’s actions are motivated by discovering profit opportunities (Ferrier et al., 1999), and firms enter into decline when they reduce their level of market activity (D’Aveni and MacMillan, 1990). Competitively aggressive firms stand a better chance of increasing their level of market share (Lumpkin and Dess, 2001; Ferrier et al., 1999; D’Aveni, 1994). Activeness also helps ensure continued success, as it keeps entrepreneurs in touch with market changes, and diverse sources of information (Audia et al., 2000; Beal, 2000). The focus on constant market action would suggest that marketing (in some form) is an ongoing activity for small and medium-sized firms (SMEs) (Carson, 2001; Stokes, 2000). Existing research highlights that the implementation of the

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marketing concept in SMEs is a messy, emergent process, involving combinations of various marketing approaches, rather than a reliance on one overriding approach (Coviello et al., 2000; Sashittal and Jassawalla, 2001; Carson, 2001). Research identifies that marketing by SME owners involves tactics to attract new business and respond to crises, rather than being seen as an overriding philosophical and strategic approach (Stokes, 2000). This presents entrepreneurs with a paradox. While research has shown that day-to-day market activity across a broad scope of functions is critical to entrepreneurial success, and lies at the core of the entrepreneurship/marketing interface, marketing researchers have also identified the dangers for SMEs in operating in this overly opportunistic, unplanned manner. For example, Sashittal and Jassawalla (2001) stated that highly opportunistic firms might drift from crisis to crisis due to the lack of strategic standards provided by formal marketing plans. Research also suggests that there are downsides for SMEs undertaking constant unguided action due to the potential for “niche drift” whereby SMEs drift into niches in which they are unfit to compete (Swaminathan, 2001; Aldrich, 1999). Brand marketers would also argue that unguided actions result in the development of an uncertain brand image, or the erosion of brand image due to actions that conflict with the original brand position (Kapferer, 2001). We propose that entrepreneurial firms need to temper action towards achieving an ongoing competitive position (reactive and proactive) with their desired positioning, suggesting that entrepreneurs must develop creative strategies that blend the need for change with the need for stability (Collins and Porras, 1995). This suggests that firms need to temper their need for constant action with some guiding rules that focus on their business definition, brand position, value proposition and unique capabilities (Eisenhardt and Sull, 2001; Day, 1999). Research is required to examine just how SMEs achieve both stability of purpose and react to day-to-day market changes, in order to create a strong niche position (Coviello et al., 2000; Carson, 2001; Aldrich, 1999). This suggests that such research needs to be conducted longitudinally (Pettigrew et al., 2001), as the development of a competitive advantage occurs over time (Srivastava et al., 2001; Porter, 1980). As such, this paper has two broad aims. First, to understand the process by which SMEs combine various marketing actions to create the basis for a strong niche position, and second, to understand how SMEs retain flexibility in the face of dynamic market forces, while also attaining a

strong strategic focus (how they combine change and inertia). This paper will report on the case of Palliser Estate Wines of Martinborough, a New Zealand based winery (herein referred to as “Palliser”). The case is appropriate for several reasons. First, the world wine market is undergoing substantial change, with an increasingly clear partition emerging between large and niche players (Swaminathan, 2001). Second, research suggests that wineries of all sizes will need to increase their market orientation, and focus simultaneously on building market awareness and relationships, necessitating an increased strategic focus (Beverland and Lockshin, 2001). Third, this case provides one of the few longitudinal examples of strategic emergence and evolution in a field dominated by cross sectional research. Finally, this case is a successful niche marketer, and as such offers insights into how SMEs craft strategy in dynamic markets. Data for this case were gathered through a number of interviews with Palliser’s co-owner and managing director. Six interviews, lasting on average one hour each were carried out in between 1998 and 2003. The authors referred to over 50 newspaper and wine magazine articles on Palliser, gathered material from the company’s Web site and financial material provided by the company. Drafts of the interviews, a detailed historical case analysis, and a copy of this paper were sent to the company for review and clarification. Regular contact between the author and members of the company was maintained over this six-year period.

Palliser Estate Wines of Martinborough Palliser is co-owned and managed by Richard Riddiford. Palliser was started in 1982 by a group of six investors, with approximately 20 acres of vineyard, and three employees. The first vintage for the company was in 1989. The company became a publicly unlisted company in 1991. In 2002 the company employed 45 staff. Palliser is one of Australasia’s highest performing wineries, producing a net profit of $NZ 930,000 (1NZ$ ¼ US$0.55) in the year ended 2002. Their shares were trading at NZ$4.80 each, and had a market capitalisation of $NZ 19.2 million (up from $NZ4.5 million in 1997). Palliser benchmarks its financial performance against all publicly listed wine companies in Australia. The company’s 2001-2002 financial ratios placed it among the top 5 per cent of wine companies in Australasia. This growth was the result of both planned and unplanned activity.

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Start-up and growth

want to be in every restaurant in the world. I have a vision and it’s very simple: it’s (a) to be the best winery of my type in the world; and (b) to have my wines served at the best restaurant in every major capital city of the world.

The initial aims of the firm were unclear, and although a prospectus was developed, it bore little relation to future reality: I don’t believe anybody really knew what we were doing. In 1982 a prospectus was developed which would make interesting reading today, as it was totally irrelevant. . .personally if you talk about business plans and strategies and visions, I’m not a great fan. The world just moves so rapidly that you can write down what you’re going to do this year, and on review something entirely different happened. However we’re involved in a very longterm business because red grape vines take about seven years to produce with white grapes taking about four years, so you’re always trying to guess what people are going to drink in seven years time, which in itself is pretty high risk.

The need to make long term decisions, without recourse to lengthy analysis, was not due to a preference for intuitive action per se, but rather was due to the uncertainty in the marketplace. In this case, Palliser opted for a safer solution focusing on what are known as classical varieties in the wine market, and based on the actions on slightly earlier entrants into the region. This tempers the views of researchers who characterise entrepreneurial marketing as an unplanned activity (Morris et al., 2002; Stokes, 2000). In this case a plan was necessary initially to gain institutional support, but was less effective in terms of predictions due to the dynamic nature of the marketplace at the time, whereby the dominant production design (e.g., wine type) was yet to be established. As Palliser has grown, and the dominant product base was established, Palliser has increased the formality of their marketing activity in order to ensure consistency of activity, particularly in export markets. The company did nothing to establish the brand in 1989. In effect the company produced some wine and sold it to the partners. However, because they were aiming to position the brand at the ultrapremium end of the market, a focus on building export markets was needed to ensure future growth (due to New Zealand’s small population base). The company started exporting to the UK in 1991 and now serves 18 different export markets. This required a strong focus with a clearly identified positioning: With my particular brand, I appeal to about 5% of the wine drinking population of New Zealand, a potential market of 36,000 people. I currently export 60% of my production; I’ll go to 80% over the next four years. I will do that by positioning my product in the international marketplace with restaurants and retailers who share my vision. I don’t think a company like mine, which is small and niche-focused, can ever be everyman’s wine. I’ve got no desire to be everyman’s wine. I don’t

By “best winery of our type”, Palliser aimed to be an ultra premium wine producer with a world reknown brand name. The stated aims in the quote above were developed early on, although Richard notes that they were controversial, and ran contrary to the dominant culture in New Zealand: When I formulated this vision, my colleagues had no trouble with the “best winery of our type in New Zealand”, but as for being “best in the world”, when I first said that the rest of my colleagues thought I was nuts, but over three years that has changed. Now I think they genuinely share that goal. It doesn’t really matter whether it happens in our lifetime – it probably won’t, but if you don’t have that vision, you end up with a mentality like the English Rugby team who do a victory lap of honour after they’ve been beaten by 17 points. To them that was the ultimate, so how do they hope to win the World Cup with that mentality? I know through experience, if you want to do something bad enough then you can do it. You’ve just got to set out what you want to do and go for it!

The findings found that “positioning driven” emergence (see above quotes) was an effective form of strategising over the long term, and enabled Palliser to undertake long-term actions, and navigate periods of instability. Sashittal and Jassawalla (2001) found that the planning and implementation processes interacted strongly in small firms, and the interaction shaped the market behavior of the firm and outcomes rather than solely emergent or planned. This was also supported.

Marketing strategy An overview of the firm’s evolving marketing strategy and market impacts are shown in Table I. Investments and decisions taken in relation to each marketing variable has helped the company build up a range of capabilities from which it can build a competitive advantage and exploit over time. Palliser has developed a strategy by blending a number of marketing strategies over time. While each element of this strategy evolved into a selfreinforcing system, initially each approach was used in response to a number of perceived market based needs. This supports Stokes’ (2002) view that entrepreneurs undertake a range of marketing based actions focused on meeting competitive pressures, but adds that to craft out a sustainable position (and build a resource base), more guided proactive behavior is also needed. This suggests

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Table I Marketing strategy and results Marketing variable Approach and evolution

Result

Strategy

Initial aim to produce the best quality product evolves into a business aim of being best winery of type in New Zealand, and then the world

Market orientation

Moves from simple strategy focused around leader to a values-based culture and systems to link internal firm to external environment, all the time controlled by clear sense of purpose

Price

Lack of economies of scale, high distance to markets, uncertain exchange rate, and necessity of low yield, led Palliser to target markets where price was not a major motivation to purchase. However, price stability remains critical Target top end of market, including distributors, restaurants, airlines and events. This helps winery gain endorsements from high quality co-brands

Place

Product

Promotion

Continual investment in product quality. Recognition that product quality is not enough to provide a source of differentiation. Development of two quality tiers to help deal with uncertainty of weather. Increase in supply to provide supply stability to partners Limited promotion done in mainstream or specialist press due to cost. Promotion done through networking, events and wine shows

Networks

Form networks to gain economies of scale in promotion and develop market opportunities

Relationships

Sees distributors and agents as partners, and actively encourages them to own shares in company. Forms close relationships with distributors and agents as a means of improving word of mouth recommendations. At same time, continual commitment to quality means relationships are reduced with contract growers

that the view of entrepreneurial marketing as unplanned and reacting to day-today changes may best capture the reality of start-ups in highly uncertain markets, and or, under resourced firms, competing against more established players for survival. To avoid this scenario, and carve out a sustainable niche, firms must switch from marketing actions characterised by day-to-day problem solving, to one guided by a strong sense of positioning.

Winery invests in product quality, marketing activity, and relationships and networks both in New Zealand and overseas. Long-term result is that winery becomes recognised as world leader, and thereby attracts customers and publicity Allows firm to respond in a planned and consistent way to emergent market opportunities. Identifies which opportunities are appropriate and which are not. Allows firm to control its destiny and grow without crisis Targeting markets allows Palliser to increase prices when it is necessary, but price stability is an important point of differentiation at the premium end of the market, and helps build brand equity and distributor relationships Endorsements generate publicity and new opportunities. As long as it is supported by marketing activity, this strategy is selfperpetuating, with customers seeking out Palliser’s wines Investments in product quality act as an enabler for endorsement and distribution strategy. It also helps build the brand

Apart from limited promotion, most promotion is a result of other marketing activity, not an input. The firm does not need to create demand through promotion; rather, high demand for its wine, created by investments elsewhere, leads to continued media coverage in media likely to be noticed by target market Networks generate new market opportunities and help winery gain a level of exposure that it could not otherwise gain. This approach opens up new opportunities for publicity and promotion, as well as attracting like-minded businesses into network, all the time improving Palliser’s position Ownership counters power of distributors, and also leads all parties to create value together. Relationships between Richard, salespeople/ agents, and Palliser staff and salespeople/agents, results in word of mouth promotion in targeted outlets

In this case, the strategy was an emergent one that can be best captured under Mintzberg’s (1994) “crafting” metaphor, but guided by the strong sense of positioning identified earlier. Because of this guidance, Palliser could undertake a number of actions, without drifting from its original purpose. Also, each marketing approach was often undertaken simultaneously, rather than in a step-by-step manner. For example, product quality was improved while relationships were

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being built and brand awareness raised. However, certain approaches were more urgent (e.g. improving product quality before creating too much demand), and resulted in more immediate pay-offs than others (for example, relationships often had a long term pay off while quality endorsements had an immediate impact on sales). This was very much driven by problems the firm faced, or demands made on the firm by its customers. The case resulted in the development of a model of marketing action and practice. This is presented in Figure 1. In contrast to the neat and tidy conceptual schemes presented in marketing texts (e.g. Kotler, 2000), this approach sees each component as a window that provides a partial view of how marketing is practiced by SMEs as they attempt to create a niche position. Only by integrating these concepts can we gain a more accurate picture of SME marketing practice. Each component involves different types of actions, and decisions. Tying these together is a leader, who develops a set of values, which are then diffused into the firm’s culture as it develops (and subsequently reinforces the chosen values). We will now present the findings in more detail to provide textual evidence to support Figure 1.

Product/production concept The first key action component in Figure 1 relates to production and production quality, and can be broadly categorised as a product/production concept, whereby investments in production systems and product quality creates a source value (Kotler, 2000). The company has always aimed to produce a high-quality product, and this commitment to quality permeates everything the company does: I think that everything we do has to reflect the quality of our wines. Now obviously that takes a lot of hard work and to a degree a lot of planning. What we try and do is match every other part of our business with the quality of our wines, so for Figure 1 Multiple perspectives to niche marketing success

example, you have the wine being delivered on time to the right place.

The company has continued to invest heavily in improving production quality. In 1999 Palliser spent a million dollars on new harvesters, sprayers, crushers and a winepress, and spent a further oneand-a-half million in 2001-2002 on extensions to its barrel room and production facilities: That’s our livelihood. If you’re going to make do with second-hand barrels and second-hand harvesters then you get a second-hand tasting product. So whilst I’m very happy to invest the money, it’s got to come out the other end. I often have arguments with Alan (the winemaker) when he says the wines are getting better. The only good place to store good wine is in a bank after it is has been converted into money.

This product focus has also driven the company to invest in technological innovations early, and exploit these for a short-term advantage while other competitors catch up. For example, the company was also among the earliest to adopt screw cap enclosures (as opposed to cork) when it became clear that they could help eliminate the “corked wine” phenomena, and promoted this under the title of “Our screw cap initiative” with other like-minded producers, gaining widespread press coverage. Palliser has seven varieties of wines and two price tiers. The top of range is labelled as “Estate,” while the next tier of wines is labelled “Pencarrow”. The wine is labelled Pencarrow only when the quality is not up to the standards of the Estate range. This also gives the winery more flexibility and a wider market, as the Pencarrow range is less expensive than the Estate range. The quality of Palliser’s wines is very high, and importantly the company has been able to achieve what many of the world’s famous wine estates have achieved – producing high quality wines in poor vintage years (such as 1993 and 1995). This is reflected in the fact that on average, 80 per cent of Palliser’s production is Estate quality wine, with 20 per cent being Pencarrow (a ratio unusual in the wine industry). Ongoing investment in product quality has also been coupled with increased knowledge about the company’s vineyards, sites, and production techniques. The company is conservative when it comes to developing new products. This is a result of the original positioning focused around restaurant sales. The majority of restaurant lists are dedicated to classical varietals of wine, and are often categorised around country-of-origin, making it difficult for firms to get unusual wines (for the country) listed. However, this positioning also drove the firm to develop a Vintage Methode Champenoise (after lengthy financial analysis). This product has a natural synergy with the

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company’s plantings, as it is made from Chardonnay and Pinot Noir, and fills out the product portfolio. It also helps increase interest in the brand: I had said in the past that we’ll never produce a sparkling wine because it’s expensive and the leadtime is huge. I changed my mind simply because there are certain occasions when I think the only thing people want to drink is Champagne or Methode Champenoise and it was such a neat fit with our range.

Richard believes that developing a new wine product is difficult because of the long delay between planting and harvesting: It is very difficult, even two years ago the white/red wine ratio was entirely different to what it is today. That change occurred over night, you could never have predicted that. You can sit down and call on expensive consultants and they couldn’t have predicted that. I operate a lot on how my stomach feels. I think the wine industry has a lot to do with style, and style is something that is very difficult to quantify or put down in a business plan. You have a feeling that a wine style will work. That feeling comes from looking at the world, travelling the world and talking to people – they are key in the whole mix and people generally love to try something new.

This focus away from innovative product development lies in contrast to the high innovation orientation (vs customer orientation) expected of SMEs (Morris et al., 2002; Stokes, 2000). SMEs are expected to invest more heavily in new value creation through the development of new products for new markets, or new products for established customers. However, organizational researchers would question this, identifying that under conditions of high market concentration, specialist firms should become more specialised and focused (Swaminathan, 2001; Aldrich, 1999). In Palliser’s case, the actions undertaken sought to expand value in the brand, through line extensions consistent with the original positioning, and these in turn helped reaffirm the value proposition of the firm. In this case, rather than constantly seeking new sources of value, Palliser’s competitive advantage was achieved through constant value reaffirmation. For example, Richard argues that ensuring stability in supply is a key component of future success. Wine production is reliant on the weather, and while Martinborough will always produce small quantities of wine, the region is often affected by weather that drastically reduces the size of the harvest (even in cases where quality remains high). Building on this view, Richard committed the company to a growth program in 1997, aiming to approximately double production to 50,000 cases per annum by 2004. The decision to grow was not made lightly, as Riddiford believes the

market has a clear structure, and that if Palliser grows too big, it will have to compete with competitors that have greater scale advantages: If you produce 100,000 cases in New Zealand you’re in no-mans-land, you have to go to half a million cases and you have to change the whole operation really. We are not in the business of competing with Montana (a large local producer) or on an international basis with BRL Hardy or Southcorp (large Australian producers).

This desire for stability led the firm to increase production, not in an attempt to gain new markets, but to reaffirm the value proposition in established ones. Richard believes the greatest challenge for Palliser will be to maintain their margins and their quality as they approximately double production from 30,000 cases to 50,000 cases. A key part of Palliser’s production strategy is to ensure price stability, as this is a key component of their brand and relationship strategy: You can’t have products that change price daily – it doesn’t work. You have a relationship with your consumer. If I went into the Hilton in London and said “our prices had gone up 30 per cent because the harvest was low”, they would say “that’s very interesting but there’s a million other brands that we can buy that, a) will supply us year round and b) will have a price that is consistent”.

Relationship orientation Entrepreneurial firms are predicted to leverage off established relationships to ensure survival (Stokes, 2000). The second action component in Figure 1 relates to the use of relationships. Palliser has utilised relationships since its inception, as a means of gaining greater awareness, insuring certainty of orders, gaining shelf space, and gaining some degree of niche power. Also, these have become a significant part of the company’s brand, and a significant source of marketing intelligence. Palliser has relationships across a number of activities, including distribution, competitors, stakeholders, government agencies, the Wine Institute, complementary firms, and other brands. Global distribution changes present challenges for SMEs because channels are getting bigger through mergers and acquisitions and there is also more wine on the market. The basis of Palliser’s approach to distribution lies in building relationships:

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From a production point of view we must be the best in the world for turning grapes into wine. But all the links in the production, distribution and selling chain have to be rock solid. I’ll freely admit that prior to my current distribution arrangement I had two other distributors and they didn’t work out

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because they didn’t share our vision. I don’t like referring to people as agents, I like to refer to them as my partners and to that extent I actively encourage agents to be shareholders, and two of them are. I consider each agent a partner because if you’re just transferring the ownership from here to a warehouse in London or New York it doesn’t do the partner much good and it[sic] ultimately it doesn’t do me very much good. It’s a short-term game because we get the money and they’ve got the wine, but if you’re not getting that pull through in the market place, then it doesn’t work.

As part of this strategy, Richard believes in working in partnership with demand chain members in order to build mutual long-term value. This involves building up trust: I think that you have to be completely transparent in your value chain. There’s no point trying to keep the cost of production a secret. If you’re going to have a relationship with one of those guys its got to be profitable for both sides, therefore you need to be totally open about margins.

Another way to gain market power is through cooperative marketing strategies with other likeminded wineries, or through aligning yourself with high profile brands that share your desired positioning. Richard is a big supporter of leveraging off established brands to gain greater profile and implied prestige, and has invested much energy into gaining listings with airlines, top restaurants and high profile events such as the Wimbledon tennis tournament: Using other brands to support my brand. That’s why we had the wine at Wimbledon. Everyone in the world knows what Wimbledon is, not many people know what Palliser is, but if you combine the two, I think we add value to Wimbledon and they certainly add value to Palliser. That’s why the airlines have always been a key part of this business. Ever since we began we’ve always had wine on Air New Zealand. I’ve got a very strong view on positioning products. If you’re going to be at the ultra premium end or the icon end it’s where you put your wines that is important. Another of my key aims is that I want Palliser’s wine in the best restaurant in every major capital of the world, because if I say the Pinot Noir is in Aureoles in New York, 99% of people will say that’s fine we’ll have it, because they need reassurance.

In 1996 Palliser gained listings with Harrods of London, Pride of Auckland luxury yachts, Raffles Hotel in Singapore, KLM business class, Emirates business class, Peak Cafe´ and Cafe´ Deco in Hong Kong, e´lite restaurant Icon in the National Museum of New Zealand, and Wharekauhau one of New Zealand’s top luxury lodges (to name a few). The company also has a relationship with Audi in New Zealand, whereby every Audi purchaser gains two bottles of wine with their purchase. For Palliser, the brand exposure rather

than sales quantity was important with the Raffles deal: It gives us an endorsement and that’s what consumers look for. It took about a year to get the wine on KLM’s list and about nine months for Raffles. Success with these companies was gained through offering a quality product and a consistent level of supply. Price was less of an issue since consumers at Raffles are not that price conscious.

The company also invests in networks as part of its export marketing strategy. Richard has long been a member of the Wine Institute of New Zealand, a body that works to advance the interests of the New Zealand wine industry. As part of this, Palliser was a founding member of the Wine Guild, which was a group of like-minded wineries that developed strategies for the UK market. In 1995, Palliser was part of a group of six winemakers who mounted a mini campaign to sell their products on the East Coast of the USA. This operation helped place the companies’ wines in 60 retail outlets and restaurants. The company also became a member of The New Zealand Way, an organisation that links complementary brands together and promotes them as part of a generic New Zealand promotion strategy. Richard also founded the Toast Martinborough Wine Festival (to raise the profile of the region), and was the Inaugural Chairman of the Pinot Noir 2001 Conference in Wellington (which gained worldwide coverage and helped raise the profile of New Zealand Pinot Noir around the world). As well as gaining market knowledge and enhancing brand associations, the common theme running through these activities is that cooperation helps raise the profile of a region, country, or grape variety among consumers in a way that individual producers like Palliser could never do, and this action ultimately benefits every network partner. Palliser was the first winery in New Zealand to have ISO9002, and in 1998 formed a group called Living Wine with four other wineries and gained ISO14001 certification for their commitment to environmental responsibility. Richard stated that Palliser had always attempted to be at the forefront of change and believed that initiating better environmental protection measures would ward off regulation from the government, differentiate them in the market and give them continued access to export markets. Following this, Palliser became part of the New Zealand Business Council for Sustainable Development, partnering with large companies such as 3M, The Warehouse, and Waste Management. This provides the company with another source of public relations activity, enabling widespread diffusion of its commitment to the environment among consumers.

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Entrepreneurial orientation

where you’ve gone wrong and you’re not improving the bottom line.

An entrepreneurial orientation consists of a high commitment to market actions that are focused on identifying and seeking out new opportunities (Morris et al., 2002). For example, the Emirates contract came about as a result of Richard reading in a magazine that the airline claimed to have the best wines in the world: I rang them and asked how they can have the best wines in the world, if they didn’t have our wines. They asked me to send some wine, and a contract was signed in June 1997 and renewed in 1998. In the export business you follow a lot of leads. Eighty per cent don’t bear fruit, but this one did. . .if you don’t ask, you don’t get.

This approach in SMEs primarily will concern the leader, although in Palliser’s case this approach has evolved from a leader centric one, to one involving a range of key staff (representing a movement towards a formal market orientation; Narver et al., 1998). Richard’s job involves creating demand, primarily off shore. To do this, you need to be prepared to travel to the key markets: I don’t think you can do it any other way than by being there in person, that’s why I’ve always travelled a lot. I know that in the UK for instance with an outlet like the Thresher Group who owns 3,000 outlets, I can’t hope to visit them all. However, I will do regional tastings and I do know that after I’ve done a tasting with 40 shop managers, the sales of Palliser wines the following month will go up 40%, it’s never changed. We do a lot of work with restaurants because they are our ultimate sales people. People forget that. They think “just give the wine to an agent and they will distribute it”, but in retail outlets or restaurants around 50% of people say “what shall I buy?” If you’ve got wine in Singapore or Hong Kong, if you have talked to those restaurant people and said “buy Palliser,” if they’ve tasted it and met you they will, it’s just human nature.

Given the short time frame available to make decisions, mistakes are sometimes made. Critically, the entrepreneurial orientation involves rectifying these mistakes quickly. In the following quote, the core values of the firm drove the decision to end a relationship with a distributor, again highlighting the emergent approach used. Richard freely admits it made mistakes with its initial distribution in large markets: In foreign markets you often have a very small window, maybe you’re there for three days and you’ve got to make a decision about people most of whom you’ve met only very briefly. Sometimes as that relationship develops you find out you’ve made a mistake so you just get on and correct it. However if you don’t take these risks, you’ll get companies that spend an enormous amount of time analysing what they’re doing and where they’re going. That’s fine, but if you’re not constantly adding to your sales or your value all you’re doing is analysing

Market orientation Market orientation involves both the development of systems and a culture to focus the firm on the needs of customers, but also involve the effectiveness of implementing the marketing mix and the development of a strong brand (Narver et al., 1998). Branding is seen as the most critical aspect of Palliser’s capabilities: Take off the label and the wine is worth nothing. To buyers the first impression is visual: the average consumer has hundreds of labels to choose from in a single outlet. I regard Palliser’s brand as its most valuable asset. We will never put out a wine that does not fit our quality parameters because you can ruin a brand with a bad vintage. If you’re selling a product at NZ$35 bottle, quality has to be a given.

A firm of Palliser’s size cannot afford to undertake mass advertising, nor does it wish to, as it does not desire to target a mass market. As such, Palliser uses other methods to build the brand’s reputation and awareness among its target audience. This strategy is based around gaining endorsements from a number of sources: independent journalists and wine shows, and the activities mentioned in the discussion on relationships. For a small winery this helps to establish the brand as it generates a level of press coverage, which a small winery could never afford to pay for. For example when Palliser’s 1997 Sauvignon Blanc won the Best Sauvignon Blanc Trophy at the International Wine Challenge in London, the result and interviews with the winemaker and owner were broadcast on the BBC, TVNZ and noted in major wine magazines throughout the world, which equates to tens of thousands of dollars of free editorial. Wine shows must be entered with care because not all are equal, and they are unlikely to provide the basis for a sustainable competitive edge, since most shows give awards based on whether the entered wines meet a certain level of quality, and the results are highly uncertain depending on the subjective views of wine judges. Nevertheless, wine consumers and buyers do see the results as an indicator of quality. Therefore, Palliser still enters its wines and sees endorsements as an important part of their marketing strategy, again representing actions that ensure consistency, while also investing in activities that will gain greater certainty in profile, consistent with a crafting approach (Mintzberg, 1994):

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Most wineries will enter shows early on in their development to establish a track record of

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performance. They will win a couple of gold medals and then cease entering shows. Now we have a relationship with our consumer and we owe it to them to have some outside measurement to show that our wines are still great. That’s why we enter shows – 1999 was a classic example. Allan Johnson our wine maker said to me “perhaps we shouldn’t enter” and I said ‘we should.’ We ended up getting four gold medals, one silver and three trophies, which is a result you dream about. To some extent they are a lottery, but over a period of time it averages out, and I think if you’re an excellent producer you will get rewarded.

While the company undertakes some limited advertising, the company’s main advertising is done via the Internet because the Internet enables Palliser to disperse a lot of information very effectively and very cheaply which is why the company was one of the first to have a Web site. The site is constantly updated and redesigned, which involves continuing investment. Market orientation also relates to organisational structure, systems and culture (Narver et al., 1998). The company has a flat management structure. The company has clear functions, but without the bureaucracy of separate functional departments. As part of having a flat structure, Palliser requires its staff to be multi-skilled: It [functional structures] doesn’t work, you get that Chinese wall mentality, people ring a place and order some wine, and someone will say that’s not my job. If that happens to me as a customer I get annoyed and after all, the customer ultimately pays our wages.

This culture has been difficult to establish, but the company has a low staff turnover and a number of employees have worked for the company for long periods of time. Although Palliser has a flat management structure, Richard argues that you need somebody to make the key decisions at the end of the day, because they can see what is happening to the whole of the business. Leadership plays a key integrating and driving role in the model developed (see Figure 1), as leaders have an inordinate impact on the actions of SMEs (Aldrich, 1999). Richard believes that you have to keep in mind what your end goal is when you are evaluating a new idea, especially when it comes from staff, as they may come up with what seems like a great idea, however it is developed in isolation from the rest of the business: I say to staff “that’s way out of left field, is that really going to help us achieve our end goal?” When they look at it that way, they say “no perhaps it won’t.” I often will say to them, look if that were your money would you do it?’ I try and get them to treat it as if they own the business. This is also helped by the fact that 95% of all staff own shares in the business. When people have a financial involvement they think differently.

The company also ensures that its key staff, managing director, winemaker and assistant winemaker and the cellar sales manager get out and visit the markets that they export to, which, consistent with market orientation, helps reinforce a culture focused on the customer, and ensure information flow: You can sit in Martinborough and it’s idyllic, but if they don’t have a global view you can’t teach them that, they’ve got to go there and experience London or New York. They have to understand that what happens in Martinborough isn’t necessarily what happens in the rest of New Zealand and it certainly isn’t what happens in the rest of the world. You have got to export; you’re on an international stage. People go on about how America is booming but they forget that there are planeloads of people arrive daily in New York or L.A with briefcases full of products to sell. It’s tough out there and that’s why you can’t afford not to do it, you have to invest in the market place.

Conclusion We began this paper by identifying the paradox facing entrepreneurs – that is, how day-to-day market activity is critical to entrepreneurial success, while marketing success requires commitment to stability and careful planning, particularly for small firms in markets dominated by larger incumbents. Through the use of a longitudinal case study, we identified how Palliser built a sustainable niche through commitment to positioning, and constant market action. The findings supported the views of researchers (Morris et al., 2002; Carson, 2001; 1985; Stokes, 2000) that SMEs practice “marketing in context” whereby they craft or blend a number of marketing approaches, to react to day-to-day market changes. In addition, we found that these approaches also allow firms to engage in proactive action – action which we believe is required if SMEs are to put themselves on a more sustainable footing. Doing so requires that SMEs temper their dayto-day actions with a strong commitment to positioning and brand values. These values were similar to a business definition and strategic thrust as identified by Day (1999, p. 22): [A business definition] describes the market arena where the business has chosen to compete, the scale and scope of activities in the value chain, and the channels to be used to gain access to the market arena. . .[while a strategic thrust] specifies how the business intends to gain and sustain a competitive advantage and the pattern of investments and cash flows that will be required to support the strategy.

The findings suggest that these could be identified in a formal plan, or held implicitly and

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communicated via the actions of the leader and senior staff (or a combination of both). This supports the view of Mintzberg (1994) who proposed that effective strategies involved an umbrella strategy that sets the broad guidelines but leaves implementation up to individuals. Strategy should manage stability, detect discontinuity, know the business (personal knowledge of market and business), manage patterns and reconcile change and continuance. This answers the first aim of the paper, and suggests that researchers at the entrepreneurship/marketing interface would benefit from greater theoretical pluralism to examine what aspects of traditional marketing approaches are required for success and which need to be adapted or indeed, discarded. In relation to our second aim, we found that SMEs did need to devise creative strategies that blended stability of purpose and day-to-day reactions/actions as a means of achieving a competitive advantage. This was done via the actions of the leader, but over time, these values were supported by a shared-culture and supportive systems (flexible work arrangements, share ownership, support for, and encouragement to undertake market visits). This was identified through the use of longitudinal research, and suggests there is a need to identify how the practice of marketing changes over time within SMEs, rather than relying solely on cross sectional surveys or in-depth interviews of current practices. The case also highlighted that value creation activity is not limited to the creation of new products or expansion of markets, but includes reaffirmation of the original values. In this case, innovation can take many forms, but is undertaken to reinforce brand positioning, and thereby provide the firm with a more sustainable edge. This commitment to both stability and change suggests that successful SMEs avoid the “tyranny of the OR” (Collins and Porras, 1995), whereby managers cannot deal with apparently paradoxical pressures. In Palliser’s case, commitment to the values identified above, allowed the firm’s members to solve paradoxes, and manage stability and change. This suggests that while SMEs may not have the trappings of a formal marketing approach, they do benefit from committing themselves to a broad marketing philosophy if they wish to create the basis for a sustainable competitive advantage. Future research should therefore compare and contrast the actions of successful SMEs and those who under perform, and more critically, those that are constantly focusing solely on day-to-day fire fighting activities. We propose that one key difference will be that the later firms are characterised by ongoing

action, and no clear guiding values in regards to positioning.

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Kotler, P. (2000), Marketing Management, 10th ed., PrenticeHall, Sydney. Lumpkin, G.T. and Dess, G.G. (2001), “Linking two dimensions of entrepreneurial orientation to firm performance: the moderating role of environment and industry life cycle”, Journal of Business Venturing, Vol. 16, pp. 429-51. Mintzberg, H. (1994), The Rise and Fall of Strategic Planning, Prentice-Hall, New York, NY. Mises, L. (1949), Human Action, Yale University Press, New York, NY. Moran, P. and Ghoshal, S. (1999), “Markets, firms, and the process of economic development”, Academy of Management Review, Vol. 24 No. 3, pp. 390-412. Morris, M.H., Avila, R. and Teeple, E. (1990), “Sales management as an entrepreneurial activity”, Journal of Personal Selling and Sales Management, Vol. 10, Spring, pp. 1-15. Morris, M.H., Schindehutte, M. and LaForge, R.W. (2002), “Entrepreneurial marketing: a construct for integrating emerging entrepreneurship and marketing perspectives”, Journal of Marketing Theory and Practice, Vol. 10 No. 4, pp. 1-19. Narver, J.C., Slater, S.F. and Tietje, B. (1998), “Creating a market orientation”, Journal of Market-Focused Management, Vol. 2, pp. 241-55.

Pettigrew, A.M., Woodman, R.W. and Cameron, K.S. (2001), “Studying organizational change and development: challenges for future research”, Academy of Management Journal, Vol. 44 No. 4, pp. 697-713. Porter, M.E. (1980), Competitive Strategy, Free Press, New York, NY. Sarasvathy, S.D. (2001), “Causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency”, Academy of Management Review, Vol. 26 No. 2, pp. 243-63. Sashittal, H.C. and Jassawalla, A.R. (2001), “Marketing implementation in smaller organizations: definition, framework, and propositional inventory”, Journal of the Academy of Marketing Science, Vol. 29 No. 1, pp. 50-69. Srivastava, R.K., Fahey, L. and Christensen, H.K. (2001), “The resource-based view and marketing: the role of marketbased assets in gaining competitive advantage”, Journal of Management, Vol. 27, pp. 777-802. Stokes, D. (2000), “Putting entrepreneurship into marketing: the process of entrepreneurial marketing”, Journal of Research in Marketing & Entrepreneurship, Vol. 2 No. 1, pp. 1-16. Swaminathan, A. (2001), “Resource partitioning and the evolution of specialist organizations: the role of location and identity in the US wine industry”, Academy of Management Journal, Vol. 44 No. 6, pp. 1169-85.

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Understanding practices at the “ethnic” marketing/ entrepreneurship interface: a case study of Kirit Pathak Shiv Chaudhry and Dave Crick

The authors Shiv Chaudhry is a Professor of Marketing and International Business and Dave Crick is a Professor of Marketing and International Entrepreneurship, both at the University of Central England, Birmingham, UK.

Keywords Private ownership, Ethnic groups, Marketing management, Entrepreneurialism, Interface management

Abstract This paper reports on a case history drawn from a larger investigation that profiled “successful” Asian entrepreneurs in order to encourage future entrepreneurship within the broad Asian community in the UK. Asian entrepreneurs were chosen for the larger study due to their propensity to engage in entrepreneurial activities in the UK in comparison to other ethnic communities. Ten case histories were developed via personal interviews with entrepreneurs in the Asian Eye “Rich-List” of the 100 wealthiest Asians in the UK and data was supported with information from Web sites, newspapers etc. One case history is presented in this paper in order to explore the richness of the qualitative data and this serves as a learning vehicle for future ethnic businessmen and women working at the marketing/ entrepreneurship interface.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 183-193 q Emerald Group Publishing Limited · ISSN 1352-2752 DOI 10.1108/13522750410540191

Introduction Debate has arisen in recent years about the relevance of academic research to practitioners (Cunningham, 1999; Ankers and Brennan, 2002). Indeed, this is particularly relevant at the marketing/entrepreneurship interface and especially, in respect of smaller-sized firms. For example, Carson et al. (1995) suggest most marketing theories and approaches appear (to the practitioner) to be more suited to large companies rather than to small and medium-sized enterprises (SMEs). Debate has therefore arisen about the most appropriate mechanisms for managerial (organisational) learning for the provision of education and training (Matlay, 2000; Ram et al., 2000a). The case study approach is widely accepted as a learning vehicle (Argyris and Schon, 1976; Simmonds, 1986). From a methodological viewpoint, Eisenhardt (1989) suggests that “extreme examples” are most appropriate when seeking to extend theory. A number of profiles exist in the form of biographies and other material on “successful” entrepreneurs in a number of countries. These serve a useful purpose in many instances in aiding future entrepreneurial activities by men and women, for example, by providing role models and examples of successful and less successful activities in searching for and exploiting opportunities i.e. key characteristics of entrepreneurship (Shane and Venkataraman, 2000). It has been found that people from ethnic and non-ethnic minority backgrounds tend to move into self-employment because of the need for “independence” and “autonomy” (Blackburn, 1993; Storey, 1994). In terms of a wider debate, the need to effectively encourage entrepreneurial activities through the most appropriate learning vehicles is also of economic and social interest to particular government policy makers (Ram and Smallbone, 2003). The topic has a high degree of currency given the recent widely reported levels of immigration; indeed, many forecasts consider that this will continue to rise for a number of years to come. Historically, certain ethnic minority populations have shown a greater propensity than others, including indigenous populations, to engage in self-employment (Aldrich et al., 1989; Bates, 1989; Ward, 1991; Bates and Dunham, 1993; Basu, 1998, 1999; Borooah and Hart, 1999; Ram et al., 2000b; Barrett et al., 2002). For example, while now quite dated, Ward (1991) offers statistics indicating the proportion of selfThe authors are grateful to comments from participants at the symposium on the marketing/ entrepreneurship interface held at Oxford where an earlier version of this paper was presented.

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employed within particular ethnic groups, that is, as a percentage of the working age in employment within the UK: Afro-Caribbean 5, Indian 19, Pakistani/Bangladeshi 23, and other ethnic minorities 13. This compares with 11 per cent for the “white” population in the U.K. and demonstrates the relative level of entrepreneurship, at least as far as selfemployment is concerned, within the respective ethnic groups. Within Asian-owned businesses, it is important to distinguish between groups from different countries, such as India, Pakistan, Bangladesh and East Africa. Further distinctions, e.g. in Indianowned businesses can be further categorised as Hindu, Muslim, Sikh and so on, as religious issues may impact on the cultural attitudes and beliefs of the key decision maker. It is also necessary to distinguish between ethnic businesses started by first generation immigrants, compared with their children or further generations. Such distinctions are potentially significant in understanding how the cultural background of Asian-owned firms may influence business practices. A generational shift has become apparent whereby second and subsequent generations within certain ethnic communities now form a major part of certain regions within particular countries. Indeed, Mr Timo Summa, the SME Envoy and Director of DG Enterprise recently stated “Leicester, with almost 30 per cent of its population belonging to ethnic minorities, is setting an example for its active integration policies” (Dholakhia, 2003). This has implications for studies such as this whereby the terms: “ethnic minority” and “indigenous population” become blurred as the growth rates and integration of particular ethnic community groups increases. The white “indigenous” population within some areas is projected to become the ethnic minority in the not too distant future. Therefore, the integration of communities over time can erode culturally specific behaviour such as that investigated in the present study; indeed, the environmental conditions present and opportunities open to first generation Asians some while back were not the same as they are now. Nevertheless, it seems peculiar that there is an absence of profiles of “successful” entrepreneurs from ethnic minority backgrounds, although recent work has attempted to consider this from a practitioner’s perspective (see, for example, Gidoomal, 1997). It could be argued that a need exists to profile leading entrepreneurs from ethnic minority backgrounds, since role models from the “white” or “indigenous” community may not be seen as representative. In terms of the contribution to managerial learning, the relevance of this is quite clear, non-ethnic specific case histories cannot be fully related to by future entrepreneurs

from certain community groups, due to perceived cultural impediments. This paper addresses this gap in the literature and provides one case history drawn from a larger project that profiled “successful” entrepreneurs from the Asian community in the UK. The term “Asian” was used in the widely agreed UK context (originating from the Indian sub-continent but from various national and religious backgrounds), as opposed to the North American context (originating from South East Asia). Asian entrepreneurs were chosen for the larger study due to their propensity to engage in entrepreneurial activities vis-a`-vis other community groups (Ward, 1991). Although ten case histories were undertaken in the larger study, this paper discusses one of these in-depth to serve as a learning vehicle at the marketing/entrepreneurship interface for future entrepreneurs from the Asian community.

Background literature A body of knowledge exists on the marketing/ entrepreneurship interface (see, for example, Hills and LaForge, 1992; Coviello et al., 2000; Morris et al., 2002). Arguably, the classic perception of entrepreneurs is that they are largely seen as proactive, risk-taking individuals that attempt to identify and exploit opportunities at a profit (Hills and LaForge, 1992). However, these “lone individuals” have also been found to rely to some extent on cooperation with various stakeholders and use of networks in this pursuit of opportunity recognition and exploitation (Shaw, 1999). Entrepreneurship is widely considered to be an important economic factor, both for society as a whole, and for individuals within various ethnic communities. Positive issues include the potential for earnings advantage; upward social mobility; and, investment in family futures. Conversely, long hours, hard work and the risk of failure have been identified (Aldrich and Waldinger, 1990; Light, 1972; Min, 1987; Portes and Zhou, 1992; Sanders and Nee, 1996; Waldinger, 1986; Ward, 1991). Arguably, these entrepreneurial characteristics are not necessarily culturally specific and therefore it is important to briefly look at theories that have been proposed to account for ethnic entrepreneurship (see Yoon (1991) and Chaudhry and Crick (2003) for a more detailed review). First, the “theory of middleman minorities” suggests that ethnic enterprise arises largely from an orientation towards the country of origin and hostility from a native population. Within this, businesses will depend to a certain extent on white suppliers and serve minority customers. Moreover, production will tend towards vertical integration, with reliance on ethnic finance sources and family

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labour (Bonacich, 1973, 1987). Second, “ethnic enclave theory” views ethnic enterprise as a self generating process; here, ethnic enterprise can act as a training system for new entrepreneurs through employment in existing enterprises, generating network linkages and an evolving cadre of ethnic business institutions. The theory suggests that the ethnic enclave can support local institutions, generates a basis for informal communication of market opportunity, and provides community role models (Aldrich et al., 1989; Waldinger, 1989). Third, “reactive cultural theory” suggests that ethnic entrepreneurship is an adaptation to historic and racialised labour market discrimination. Immigrants are forced to adopt marginal niches in the economy, using mechanisms such as ethnic sources of rotating credit, providing a means of upward social mobility (Light, 1972; Nowikowski, 1984). Irrespective of the theory adopted to explain minority enterprise, contrasting views have been noted in earlier work about the working practices in Asian-owned firms (see, for example, Krcmar, 1987; Rafiq, 1988; Patel, 1989; Pardesi, 1992). It has been suggested that Asian-owned firms operate harmonious, family-oriented practices (Werbner, 1984). Alternatively, they have been viewed as “sweatshops” and businesses that exploit working practices (Mitter, 1986). Blackburn (1993) notes the importance of prohibitive factors in ethnic business development in specific trade sectors, plus their likely treatment by external organisations such as banks and insurers, policy makers, and the subsequent impact on potential for growth. Indeed, studies have recognised specific problems with racism and unequal gender relations (Ram, 1992; Ram and Sparrow, 1993). In terms of financing ethnic minority-owned business (see Jones et al., 1992; Deakins et al., 1992; Ram et al., 2002) studies have argued whether problems are business-related (Curran and Blackburn, 1993), or race-related (Deakins et al., 1995). These debates provide important considerations in explaining the strategic development of ethnic businesses (Ward, 1987), not least of which include factors at the marketing/entrepreneurship interface. In terms of the specific activities at the interface, previous studies have identified the need for entrepreneurs to mobilise resources in order to enable them to identify and exploit opportunities. This “resource based view” takes an “inside-out” firm perspective (Dicksen, 1996) and indicates that resources that are valuable, rare, inimitable and non-substitutable allow the firm to develop and maintain competitive advantages (Barney, 1991). This said however, the issue of serendipity in identifying and exploiting opportunities should not be under estimated (Merrilees et al., 1998). However, in respect of specific cultural factors,

Werbner (1990) suggests that “networks” are an important element of success for ethnic minority enterprise. Jones et al. (1993) suggest the competitiveness of entrepreneurial activities within community networks is affected by the ability to utilise internal cultural resources, such as family labour and specialist knowledge, in order to satisfy the requirements of their own ethnic community. Problems can also arise in family businesses not least of which in relation to succession (Bachkaniwala et al., 2003). Ram and Hillin (1994) argue that the unwillingness or inability of ethnic minority entrepreneurs to attract custom from outside the local ethnic community is a key constraint on business viability. They suggest that entrepreneurs need to “break-out” and tap into “majority” markets. Crick et al. (2001) extended this “break-out” argument into international markets suggesting that background factors play a role in Asian entrepreneurship, for example, due to prior business experience. An example of this was the international trading experience of East African Asians compared to certain other ethnic groups, as business experience including networks were utilised after immigration to the UK took place, that allowed them to professionalise their businesses and tap into majority markets.

Research focus and method Focus A review of earlier literature highlighted the need to profile “successful” ethnic entrepreneurs to act as role models in facilitating entrepreneurial activities in younger ethnic groups and indeed immigrant communities. It was suggested that small anonymous cases or those from the “white” community might serve little purpose in stimulating entrepreneurial activities since prospective businessmen and women could not readily relate to these cases. In contributing to the work at the marketing/entrepreneurship interface, particular issues arose from previous studies that provided a focus for this study, specifically opportunity recognition and exploitation of markets served; serendipity; role of family and other resources; network activities; “mainstreaming” business practices; and, community including perceived discrimination issues. Sampling issues The problem of locating and facilitating access to Asian firms is widely known (Pardesi, 1992) and in the course of this study interviews were undertaken with ten “leading” Asian entrepreneurs in the UK. An initial interview was undertaken with an entrepreneur who had prior

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association with the researchers. His name was used to facilitate access to others in the Asian Eye report of the top 100 wealthiest Asian business people in the UK. The number of entrepreneurs interviewed was based on time and cost considerations.

name), has come a long way since its humble beginnings in the mid 1950s. Thinking back, Kirit Pathak (Chairman and CEO) recollects, “our business has been born really out of necessity, it’s just survival. I think most businesses actually set up that way. Certainly when people have a family to feed and they can’t get a job, that’s what Asian families do. They will set up a grocery store, or they will set up something else”. Kirit’s father, L.G. Pathak, was involved in a successful family retailing business in East Africa:

Interview approach The relatively small number of firms permitted the researchers to carefully check for systematic patterns of response, as a means of validating the data, as well as searching for idiosyncrasies requiring further examination and interpretation (for example, each provided their own story about how “success” was achieved). All but one of the interviews was tape-recorded and transcribed (one entrepreneur preferred not to be taped and notes were taken instead). Additionally, both authors were present at all but one of the interviews (a postponement meant that one researcher had other commitments during the rescheduled appointment). Interviews with the entrepreneurs were transcribed and systematically checked by the authors for patterns in the data. In order to explore the underlying (subjective) reasons for entrepreneurs’ particular decisions, which in some cases were undertaken over a number of years, it was decided that a semistructured qualitative approach would be appropriate (King, 1994). This enabled key topic areas to be covered but in a way that allowed entrepreneurs to tell their own particular account of the way in which events materialised and a rationale to account for them. The merits of this approach have been widely acknowledged in research at the marketing/entrepreneurship interface (see, for example, Carson and Coviello, 1996). This approach enabled the researchers to address process-based issues concerning why events happened and how they unfolded over time (Denzin and Lincoln, 1998). Even so, it was recognised that interviews with the entrepreneurs themselves did not in the true sense of the word constitute case study research and therefore interview data were compared (where possible) with trade data, newspaper articles and the like to support the validity of the findings. The number of interviews with respondents varied, but in the case of Kirit Pathak, to which this paper refers, this involved two formal interviews and was supplemented with secondary data from Web sites and press material.

Findings: Kirit Pathak case history Patak’s, the business started by L.G. Pathak (the “h” is omitted because otherwise it could not be registered on a global basis due to it being a family

. . .we had a good business running in East Africa making Indian sweets, samosas and all that and we had another shop, which my uncles used to run as a grocery store. So we had a retailing and manufacturing background. My father looked after the bhajis and samosas, generally the cooking, while my uncles concentrated on the business side.

However, in the early 1950s the British and Asians (those supportive of the British) who lived in East Africa experienced a movement against them from a major section of the indigenous population. Due to this situation, Kirit’s father felt a sense of insecurity for himself and his family. At about this time Kirit’s uncle left East Africa and started a successful trading business in Italy. Spurred on by the sense of insecurity he was feeling and the realization that there were perhaps better opportunities elsewhere (e.g. his younger brother’s business in Italy), in 1953, L.G. Pathak came over to Britain on an exploratory trip. He selected Britain because he had a great deal of respect for the way in which the British managed things in East Africa. Despite a lack of support from his elder brother (who wanted him to stay in East Africa), in 1956, L.G. Pathak, armed with a letter of recommendation from an East African bank and an insurance policy, brought his wife and children to the UK. With nowhere to live, he approached the local bank manager in Kentish Town, London, with his two documents. The bank manager offered the family a place to rent that did not require a deposit. After a month or so, L.G. Pathak managed to find a road-sweeping job. Appalled by how things had turned out, he and his wife decided to make use of their expertise and started to make Indian sweets in their 6ft £ 6ft kitchen on a small scale. In his quest to find a customer for the produce, L.G. Pathak approached the Indian embassy and offered the possibility of supplying the embassy freshly made Indian finger foods and the like. Very quickly the orders started coming in from the embassy and others who got to know about Pathak’s foods. In order to satisfy demand and achieve a “cost-effective distribution channel”, L.G. Pathak sent his children on the London Underground to deliver the food to various

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customers because at the time children under the age of fourteen could travel free! With the money that the enterprise was generating L.G. Pathak was able to persuade his bank manager to provide financial assistance to buy “the first Indian shop in the UK” to provide fresh sweets and savoury snacks in Drummond Street, North London. Conducting his own brand of marketing research on his customers, L.G. Pathak soon expanded his range of products to the extent that over time he was selling almost everything an Indian home needed from a food point of view. Although most of the clientele were Indian, it was about this time that the British who were posted out in India were returning home. Keen to continue their “Indian lifestyle”, L.G. Pathak received a considerable number of orders for dinner parties from this particular market segment, including Viceroy Lord Mountbatten! The diversity of products which his customers demanded meant that L.G. Pathak started to import spices, lentils, rice and so on from overseas. To L.G. Pathak, quality was the cornerstone of his business, Kirit remembers:

century mill in Westbury, Northamptonshire and so, in 1962, L.G. Pathak purchased the property. A subsequent opportunity for the Pathak family materialized from the inadvertent importation by L.G. Pathak’s office manager of 200 cases of pickles from India instead of 20 cases! In an attempt to survive a potential crisis L.G. Pathak made a deal with the suppliers to pay for the pickles as and when they sold; luckily the suppliers agreed. The next predicament was how was he to get rid of all the pickles. Again, necessity was the mother of invention, L.G. Pathak noticed that jam in the UK was sold in glass jars and he thought that these jars would make ideal containers for the pickles. Consequently, he approached Jackson Glass and ordered 144 jars. Despite the very small initial order, Jackson’s understood Pathak’s predicament and agreed to supply the jars. Subsequently, the Pathak family and their few employees busily transferred all the different types of pickle into the jars with the help of teaspoons. The jars were then labeled in a very simple format indicating the contents e.g. mango, chilli etc. The pickles were ready to be sold but L.G. Pathak realized that he would not be able to sell such a huge amount, therefore, he instructed the people working in his shops to give away a jar of the pickle if the customer’s bill amounted to £2 or more. Kirit Pathak recollects:

. . .even as kids we would be sat there cleaning the rice and lentils from the sacks just like an Indian housewife would do. Then we would pack it into bags and sell it in our shop. Then over time our one shop became two and then three. By 1961, we had shops in Drummond Street, Bayswater and in Kentish Town all selling the same products, under the brand name of Patak’s. Although my father was responsible for running the shops, he did receive help from various relatives who had by this time moved to the UK. Obviously, the initial 6ft £ 6ft kitchen was no longer adequate for the amount of food which was being produced and so we moved to a typical five storey London terrace house where we converted the whole of the basement into a kitchen.

Working day and night in order to keep up with demand, it was not long before neighbours complained to the Council about the 24 hour smell of cooking and clattering of pans. Consequently, the Council approached L.G. Pathak and gave him three months to find premises in an industrial zone rather than a residential area in order to continue his manufacturing (cooking) business. In his quest to find suitable premises, L.G. Pathak needed to satisfy a number of criteria. These were: affordability, remoteness (to alleviate the problem he faced in London), within striking distance of London so that the freshly-made food could be delivered without it going off, a number of levels so that gravity led columns could be fitted which would have various sieves installed in order to clean the various lentils, seeds and rices, and finally accommodation for his family. Fortunately, the ideal building existed in the form of a sixteenth

. . .we used to ask these customers to come back and tell us what they thought of the pickles. Based on the knowledge gained from this feedback we started to add things to the pickles, resulting in pickles of all different tastes and so the famous Patak’s range of pickles was born. After a time we stopped giving them (pickles) away, got proper labels done and started selling them.

Due to various family commitments and complications, on the advice of his brother, in 1968, L.G. Pathak decided to appoint third party managers to run his shops (including his export business which involved posting food parcels abroad). This proved to be a disastrous move because within the space of one and a half years, these managers had managed to buy the lease to a shop in Golders Green which was empty with no turnover, and moreover turned an overall very profitable business into one facing bankruptcy. Consequently, L.G. Pathak terminated this business relationship. In a desperate attempt to revive his businesses, L.G. Pathak called on the help of his offspring. He persuaded his son Kirit Pathak to leave his business management course at Lanchester Polytechnic (Coventry University) and join the family business full time. Kirit Pathak’s initial assignment was to take over the Golders Green shop and set it up in a way which replicated their other shops. Despite his best efforts, Kirit Pathak realized that the location of

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the Golders Green shop was simply wrong for the type of produce (Indian sweets, curries etc) that he wanted to sell, primarily because the area was predominantly inhabited by the Jewish community. Eventually in 1970, Kirit Pathak was able to convince his father to get rid of the Golders Green shop and let him (Kirit) join his father at the production facility in Westbury. It was at this point in time that Kirit Pathak actively learnt about the tools of his trade:

Having decided to grab with both hands the autonomy that had been bestowed on him by his father, Kirit Pathak wasted no time in reorganising the production facility. Despite an initial revolt by his 13 strong workforce in reaction to the “new way of doing things”, within three weeks Kirit Pathak had managed to turn the place round: . . .while my dad was away and I was in control, I turned the place inside out and using my common sense and analytical mind I just organized what was going on. I transformed it from being a typical artisan way of doing things to something which had a proper production programme and every individual within the process knowing what they were supposed to do and how they were supposed to do it.

I observed my mother and father and picked up their production techniques. I noted everything down and started to measure the ingredients needed to make the recipes and then formalize the whole procedure so that I could understand it. It was my way of applying science to their artisan talents.

The next major milestone came in 1972 when Idi Amin expelled all Asians from Uganda. Kirit Pathak explains: . . .they came to the UK for rehabilitation. There were proper rehabilitation camps and my concern was, what were they going to feed these people. So, we (Kirit and his father) visited the camps and enquired about this. I was told that they were planning to serve typically English food. I said that I could devise an Indian menu for every day of the week. The organizers agreed and gave me the job of looking after all the food side of things. So, for the next six months, I used to make the stuff, load the van and deliver the food to the camps. It took a lot of effort but I made a decent margin reflecting the short-term nature and logistics issue; the end result was that by 1972 I had managed to pay off all of my dad’s debts.

With the business improving, Kirit Pathak recognized a major opportunity:

On his return from holiday, Kirit Pathak’s father was so pleasantly surprised by what his son had managed in such a short space of time that he decided to leave Kirit in permanent charge of the business while he returned to India to manage the steady supply of quality ingredients for the UK operation. The next big break for Kirit Pathak came on the basis of a misquote in an article written in the Daily Mail newspaper entitled “The Curry War Hots Up”. The article basically referred to the state of the Indian food retail industry in the UK at the time but instead of introducing Patak’s as one of the distributors of Indian food it hailed it as the best manufacturer. On reading the article a distributor of ethnic foods to the major supermarkets approached Kirit Pathak to enquire as to whether he would be interested in selling his products to the indigenous population. As Kirit Pathak explains:

. . .the Ugandan Asians were being rehabilitated all over the country. So I started to think to myself that there are obvious limits to how far people will come to our shops. What we should be doing is going to where they are, not have them coming to us. These people were recognizing their niches in the UK marketplace and setting up little corner grocery stores in the same way they had done in Africa. So I thought there is an opportunity here to supply these retailers by concentrating on the wholesale side of my business and distributing my products through the various cash and carry facilities spotted around the country.

Not totally convinced about his son’s aspirations and views on running the business, in 1973, L.G. Pathak decided to go off on holiday for the first time in 30 years and hand over the reins to Kirit Pathak. Although Kirit Pathak’s brothers and sisters were involved in the business in various guises, ranging from running the shops to administration duties, his main responsibility lay on the production side, or as he puts it, “dealing with the buying, deliveries and everything else other than standing in the shops”.

. . .we were just concentrating on the Indian market and so because of this offer I saw the opportunity of having my products available on other peoples’ (non-Indian) shelves. I knew from our conversation that this distributor was unhappy with his current suppliers. In addition, besides the distribution this company offered full marketing and sales support. Also, they wanted the products canned and introduced us to a contract packer, so we supplied the spices and they manufactured it to a recipe. However, I was not going to make the mistake my father did, so I told them categorically that you can have the distribution in the white market but you will not touch my Indian market or my cash and carries. They agreed and so we got off the ground and that’s how we started distributing to the indigenous population. However, problems emerged such as product inconsistencies, misjudged timescale for the launch and in my view a ludicrous label for curried foods based on the “stars and stripes”. So, it will come as no surprise that after some time I terminated that particular contract.

At this point in time, besides the issue of finding another canning contractor Kirit Pathak faced a

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number of other problems. The growth of the company had outpaced the production capacity at Westbury both in terms of physical space and the availability of sufficient labour. In a bid to eradicate these problems, Kirit Pathak approached the Metal Box company to see whether they could recommend a canning contractor. Metal Box suggested a cannery in Haydock, Lancashire. Consequently, Kirit Pathak accompanied by his father visited the cannery but were not impressed by the operation. As a result, another approach was made to Metal Box for an alternative recommendation:

charge them less with this method. Thankfully, they took my idea on board and so that is how my Indian markets abroad initially developed.” As a consequence of this success, Kirit Pathak went around the world looking to set up deals with wholesalers and supermarkets to buy his products but without much success:

Metal Box replied by telling us that there was an empty factory about 4 miles from the cannery we had visited. So we went and saw the factory. . . as I walked in I fell in love with it, something told me that this was the place. I think it was a Marks & Spencer’s food factory which used to produce canned spam. It also had a freezer facility with a 400 ton capacity and I was very keen to get into frozen produce because I could foresee the future importance of convenience foods. So, in 1978, I bought the factory and slowly shifted all my business (manufacturing) up there and started to manufacture our own cans. The only problem was that the management team I had built up in Northamptonshire was unwilling to move north, but my belief in this new facility was so strong that I considered other issues to be challenges which would need to be resolved over time.

With his new production facility getting off the ground, Kirit Pathak’s attention turned to the family-owned shops in London. The shops, in his view, carried too wide a range of goods and coupled with the increase of cheaper imports by their competitors, Kirit Pathak was of the opinion that the shops did not justify their existence. Despite internal family feuds with respect to this issue, Kirit Pathak’s brother who ran the shops reluctantly gave them up and, on Kirit’s invitation, joined the production operation in Wigan, NorthWest England. The next big step in Patak’s story came about in the mid-1980s when Kirit Pathak’s attention turned to the international dimension of his business, “I used to get letters from Indians abroad located in places like New York, Los Angeles, Germany and wherever there were Indian Embassies wanting to buy my products. It struck me that there was an opportunity here. So what I decided to do was to send out promotional leaflets with my post parcel deliveries and requested the recipients to hand the leaflets out. Over a short period of time, awareness of my products increased in these various places and I could see pockets of customers developing overseas. This gave me the impetus to suggest to my customers that instead of me trying to satisfy individual orders, why don’t they get together and import the stuff in bulk and then distribute it to their friends, obviously I could

. . .they told me that although I had good products, their market (indigenous) was not ready. By now my products were famous amongst the Indian communities internationally, so why were the respective indigenous populations not buying my products. This is when I realized that my biggest challenge was the distribution of my products to mainstream customers both in the UK and overseas.

In the UK, the dominance of supermarkets in the retailing environment had taken hold. So, while Patak’s products were selling well in the independent shops, they were struggling to establish any kind of foothold on the supermarket shelves and hence get accepted in the mainstream market. As Kirit Pathak explains: . . .it was this situation which led me to recruit a marketing manager. His first idea was to put a brief out to an advertising agency to re-design the Patak label and packaging. I didn’t agree at first because I thought that the brand and labeling had been going for 20 years and stood out a mile and so did not need changing and besides I could not afford much on this activity. Anyway, I eventually agreed to test the idea in principle and obtained the rather costeffective services of a group of Indian students from Liverpool University who could look at this issue on a group project basis. All I had to do was pay them £150 plus their out-of-pocket expenses. The results which came back basically told me that the design of the label might be OK for the Indian community but for the indigenous community it did not say anything and if we were attempting to try and educate the mainstream about our products then we needed to change it, and so I did.

Despite considerable family opposition to the idea of redesigning the label, Kirit Pathak employed the services of an advertising agency:

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. . .they (the agency) came up with a design based on a diamond because they believed that we were a company that needed to have a much more modern image. They told me that we had a strong brand in the Indian market based on good product knowledge, availability and long service but for the mainstream it just did not work. Anyway, my family were very concerned and protested that if we were to change the design then our customers would simply not recognise our products. Nevertheless, the agency came up with this design (diamond) but to me it lacked ‘Indianism’. I told them that we were famous for being Indian, we are selling authenticity. After some discussion, they adjusted the design somewhat and the colours to reflect the royal Indian image I wanted to portray. So, a mixture of absolute gut feel, belief in the concept

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specifically from the point of view that we had a wide range of products, about 80, and Sharwoods only had about 10 and perhaps the two ranges would complement each other. But the problem was that the Indian consumers were never going to buy Sharwoods products, to them Patak’s was the household name. Naturally, with their (supermarkets) objective of attracting the Indian consumer, Asda, Tesco and others were much more interested in our products and so we entered into long dialogues with them over what to stock. The Sharwoods contract cancellation meant that I needed to quickly redeem the consequent losses in sales and so I decided to aggressively compete in the English market with the supermarkets as my major distribution channels. Simultaneously, due in large part to the change in design of our packaging, orders from foreign markets also increased substantially.

and being on the ground led to the development of Patak’s packaging.

Around this time (mid 1980s) the biggest supplier of Indian pastes, chutneys etc to the major supermarkets was Sharwoods and this situation presented Kirit Pathak with a major predicament: . . .it was obvious that people had cottoned on to our inventions, for example, tandoori paste, curry paste and so on, all invented by my family, including my wife who was involved in looking after the product development side of things. The issue was that what Sharwoods sold on the supermarket shelves did not meet the same standard of product compared to the Indian restaurants we were supplying. My concern was that the majority of customers in Indian restaurants were English and these people were unable to create their favourite dishes at home simply because they could not get hold of ingredients of the right quality. This led me to the realisation that we had the products and Sharwoods had the marketing expertise and distribution network, but somehow I needed to marry the two together. So I decided to write to Sharwoods, saying that I understood they were major suppliers of Indian products to the supermarkets and we were a high quality manufacturer and would they be interested in dealing with us. If Sharwoods agreed to this arrangement then it would get my products into the mainstream market and also fully utilize the very large factory I had bought. Fortunately, Sharwoods gave us the contract and I consequently developed Sharwoods business into a more authentic line of products. It was a good job that Sharwoods did not consider us as a threat at the time principally because they thought we knew nothing about marketing. It was whilst I was supplying Sharwoods that I developed a marketing plan and decided to advertise Patak’s products with our newly prepared designs in magazines. The promotion was an instant success and within one and a half years I had doubled my sales. It was by taking this step that the awareness level of our products increased substantially and I received considerable interest from the major supermarket chains, such as Asda, who were struggling to pull Indian customers into their stores. So they (Asda), decided to, in a sense, test market our products and told us they would put Patak’s products on the shelves of their stores which were located in areas of high Indian concentration, such as Southall, Leicester and Bradford. However, I was not convinced that this was the way to go, so with difficulty, I managed to persuade them (Asda) to include my products at their other stores by telling them that it was the English consumer who was mainly eating at Indian restaurants and we were the main supplier to these restaurants and therefore there was a potential national market for my products.

With business growth on a sharp incline, Kirit Pathak experienced considerable family problems: . . .a situation was developing where there was a lot of inter-family tension because the company was growing so fast, too fast for my family (brothers, sisters etc) to cope with, this led to disagreements and jealousy. Although I did not want to hurt anybody, I was of the firm opinion that if the business was to survive and prosper the situation had to change. So, in 1989, I got together a very considerable amount of money, including borrowing from wherever I could and basically bought my family out. This was acceptable to them because they each received enough money to keep them and their children extremely comfortable. Subsequently, in 1990, me and Meena (Kirit’s wife) started recruiting our current management team. The difference was that now I had professional managers who were accountable to me and I would expect them to bring me results, this was something I could not achieve with my family members.”

From that point on, Kirit Pathak concentrated on expanding the business:

Perhaps inevitably, Sharwoods as a consequence cancelled their contract; however, to Kirit Pathak it was not such an obvious move for them (Sharwoods) to make: . . .I did not really go in there (supermarkets) to compete against Sharwoods. I was going in there

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. . .we have grown our product portfolios, we’ve become professional marketers, spent a lot of money on marketing and we recognise the brand building exercise that involves educating the market in order to develop it and ultimately to control it. But expansion does not mean compromising quality. As in our early days, although there is the secret element of our recipes, we have stringent production controls, so that all the end-products are consistent and of the same high quality. With this as our foundation, we are catering for consumers ranging from those that are cooking addicts to those who want to simply put a ready-meal in a microwave. To achieve my original objective of being the leading supplier of Indian foods worldwide we endeavour to offer Indian food to all markets whether they be retail, food service or industrial, and in whatever form, whether it be at room temperature, chilled or frozen. On the international scale, I see my job as trying to introduce and educate overseas customers with respect to the Indian cuisine, because I see the

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global market as a necessary requirement for future success. One of the reasons for this is that I have learnt from experience that a supplier should not be dependent on one or very few customers, therefore, from my point of view, it is very important to spread the risk, and besides there is still a huge potential in the UK, never mind other markets to which we are relatively new.

To stay on terms with the expansion of the business, in 1991, Kirit Pathak acquired a new head office and finished goods warehouse in close proximity to the original factory, followed in 1994, by the acquisition of a factory in Brechin, Scotland. The head office and warehouse was doubled in size soon after and, in 1997, Kirit Pathak bought a frozen food company in Dundee, Scotland. Perhaps an interesting departure from his main business was Kirit Pathak’s acquisition of a food factory that did not produce Indian food. At this factory the idea is that English food will gradually over time be mildly flavoured with Indian spices. As Kirit points out: . . .this factory had no Indian offering but they had other things, like macaroni cheese and English based ready-meals like bangers and mash and so on. The idea was that future adult customers are the children of today and if I can get them accustomed to the flavour of Patak’s at an early age then this should provide a very good market for the future. I am a firm believer in building relationships both with one’s customers and suppliers and so a long term perspective is essential.

As to the current state of play, Patak’s is reported to be growing rapidly. It exports globally, ranging from Europe and North America to Australia (its biggest foreign market), and it picked up a “Food From Britain” Award in 1999. To aid this growth a new purpose built factory was recently opened as a building block for the new millennium. The culmination of these culinary successes is that Kirit Pathak has a place on the UK’s 100 richest Asians table (Asian Eye Survey).

Discussion The focus of this contribution to work at the marketing/entrepreneurship interface involved a study into the key issues relating to the background of a “successful” Asian entrepreneur. Anonymous case studies of small Asian-owned firms or indeed profiles of non-community members (typically “white” entrepreneurs) are sometimes difficult for prospective ethnic entrepreneurs to fully relate to. Therefore, profiles of “successful” entrepreneurs from the respective communities arguably help to bridge the perceived gap between academia and managerial practice (Cunningham, 1999; Ankers and Brennan, 2002). Previous research provided a

specific focus for this work, i.e. opportunity recognition and exploitation of markets served; serendipity; role of family and other resources; network activities; ‘mainstreaming’ business practices; and, community issues. From the outset, it might be concluded that a number of issues arise from this study that could equally be drawn from an investigation into successful entrepreneurs within any community, e.g. hard work, luck, opportunity recognition, risk taking etc. (Merrilees et al., 1998; Shane and Venkataraman, 2000). Furthermore, it could be concluded that in terms of the ethnic business literature, Kirit Pathak exhibited similar characteristics (at varying stages of his life) to a number of other Asian entrepreneurs that did not realise the same degree of success as himself. For example: serving cultural niches, networking, and making use of cultural resources (Nowikowski, 1984; Aldrich et al., 1989; Bates and Dunham, 1993; Ram et al., 2000b). An important point that differentiates him from previous ethnicity research is that his success can to a large extent be attributed to him “breaking out” of serving his cultural niche and addressing the needs of the ‘mainstream’ market (Ram and Hillin, 1994). Moreover, he “professionalised” his business in a number of ways, not least of which meant buying out family members, i.e. moving away from a key resource advantage perceived to exist in Asian firms (Jones et al., 1993). Although his wife still formed an important part of the business, he subsequently employed professional managers who could be accountable on a results basis, something that was potentially difficult with family members, also after succession had taken place (Bachkaniwala et al., 2003). This is a key learning point for future entrepreneurs from the Asian community. Kirit Pathak effectively utilised resources, defined in a general sense to include financial and managerial resources (experience), and targeted growth markets, supporting the resource based view of the firm (Dicksen, 1996; Barney, 1991). However, his case history demonstrates that an element of luck and not simply management skills and resources can influence success (Merrilees et al., 1998); an issue arguably not demonstrated enough in business school teaching that is somewhat dominated by planning and strategy setting. More important is that successful entrepreneurs like Kirit Pathak do have a vision and can operationalise strategies quickly to react to changing and serendipitous events. He has in some cases faced losses, but in other cases these are offset by the gains from more successful activities. It therefore appears that experience has enabled him to be in a better position to scan and analyse market opportunities. He has concentrated on his core activities, but maintained a growing product

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portfolio that has capitalised on, and been supportive of, his core business strengths. Consequently, the issue of opportunity recognition and exploitation for future ethnic minority entrepreneurs can take a variety of forms and will be subject to different environmental forces at given points in time. With the current influx of immigrants from various countries, prospective minority entrepreneurs must be able to effectively identify and address opportunities and case histories such as Kirit Pathak provide a learning vehicle for this to take place. The case history also offers avenues for future research. Research could be undertaken into the training requirements of Asian-owned firms, since this is an under-investigated area of study (Ram et al., 2000a). Opportunities exist for crossnational research to investigate the international trading practices of Asian-owned firms located in various countries. A specific opportunity exists to establish the extent to which Asian-owned firms have taken on cultural values in various countries and whether this has affected their business activities. It would be useful as an educational vehicle to further investigate characteristics associated with entrepreneurs from various ethnic communities, e.g. the generation of ownership, previous experience, sector operating in, etc. Elements of best practice (from “successful” entrepreneurs) can therefore be shared at a national level that can be disseminated to various regions, particularly those with high immigrant populations. Recommendations would subsequently be offered about ways to more effectively serve community needs, that is, based on the particular ethnic composition of communities. In the meantime, the findings from this study form the basis on which future work can build in order to bridge the interface between academia and business practice at the marketing/entrepreneurship interface.

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Dholakhia, U.K. (2003), “European minority businesses: a European Commission dimension”, Asian Enterprise, Vol. 1, pp. 11-13. Dicksen, P. (1996), “The static and dynamic mechanics of competitive theory”, Journal of Marketing, Vol. 60, pp. 102-6. Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-50. Gidoomal, R. (1997), The UK Maharajahs: Inside the South Asian Success Story, Nicholas Brealey Publishing Ltd, London. Hills, G.E. and LaForge, R.W. (1992), “Marketing and entrepreneurship: the state-of-the-art”, in Sexton, D.L. and Kasarda, J.D. (Eds), The State-of-the-Art in Entrepreneurship, Babson College, Babson Park, MA, pp. 69-80. Jones, T., McEvoy, D. and Barratt, J. (1992), “Raising capital for the ethnic minority small business”, in Hughes, A. and Storey, D. (Eds), Financing the Small Firm, Routledge, London. Jones, T., McEvoy, D. and Barratt, J. (1993), “Labour-intensive practices in the ethnic minority firm”, in Atkinson, J. and Storey, D. (Eds), Employment, the Small Firm and the Labour Market, Routledge, London. King, N. (1994), “The qualitative research interview”, in Cassell, C. and Symon, G. (Eds), Qualitative Methods in Organizational Research: A Practical Guide, Sage Publications, London. Krcmar, K.M. (1987), “Minority enterprise in the clothing industry: an analysis of Asian jeans manufacturers in Birmingham”, unpublished PhD, Aston University, Birmingham. Light, I. (1972), Ethnic Enterprise in America: Business and Welfare among Chinese, Japanese and Blacks, University of California, Berkeley, CA. Matlay, H. (2000), “Organisational learning in small learning organisations: an empirical overview”, Education + Training, Vol. 42 No. 4/5, pp. 202-10. Merrilees, B., Miller, D. and Tiessen, J. (1998), “Serendipity, leverage and the process of entrepreneurial internationalisation”, Small Enterprise Research, Vol. 6 No. 2, pp. 3-11. Min, P.G. (1987), “Factors contributing to ethnic business: a comprehensive synthesis”, International Journal of Comparative Sociology, Vol. 28, pp. 173-93. Mitter, S. (1986), “Industrial restructuring and manufacturing homework: immigrant women in the UK clothing industry”, Capital and Class, Vol. 27, pp. 37-80. Morris, M.H., Schindehutte, M. and LaForge, R.W. (2002), “Entrepreneurial marketing: a construct for integrating emerging entrepreneurship and marketing perspectives”, Journal of Marketing Theory and Practice, Vol. 10 No. 4, pp. 1-19. Nowikowski, S.E. (1984), “Snakes and ladders: Asians in Britain”, in Ward, R. and Jenkins, R. (Eds), Ethnic Communities in Britain, Cambridge University Press, Cambridge. Pardesi, U. (1992), “Marketing in indigenous and Asian small firms in the West Midlands”, unpublished PhD, Aston University, Birmingham. Patel, S. (1989), “The nature and dynamics of Asian retailing in Britain”, unpublished PhD, Open University, Milton Keynes. Portes, A. and Zhou, M. (1992), “Gaining the upper hand: economic mobility among immigrant and domestic minorities”, Ethnic and Racial Studies, Vol. 15, pp. 491-522.

Rafiq, M. (1988), “Asian businesses in Bradford, West Yorkshire”, unpublished PhD, University of Bradford, Bradford. Ram, M. (1992), “Coping with racism: Asian employers in the inner city”, Work Employment and Society, Vol. 6 No. 4, pp. 601-18. Ram, M. and Hillin, G. (1994), “Achieving ‘break-out’: developing mainstream ethnic minority businesses”, Small Business and Enterprise Development, Vol. 1 No. 2, pp. 15-21. Ram, M. and Smallbone, D. (2003), “Policies to support ethnic minority enterprise: the English experience”, Entrepreneurship & Regional Development, Vol. 15 No. 2, pp. 151-66. Ram, M. and Sparrow, J. (1993), “Minority firms, racism and economic development”, Local Economy, Vol. 8 No. 3, pp. 117-29. Ram, M., Smallbone, D. and Deakins, D. (2002), Ethnic Minority Businesses in the UK: Access to Finance and Business Support, British Bankers Association, London. Ram, M., Abbas, T., Sanghera, B. and Hillin, G. (2000b), “Currying favour with the locals: Balti owners and business enclaves”, International Journal of Entrepreneurial Behaviour & Research, Vol. 6, pp. 41-55. Ram, M., Sanghera, B., Abbas, T. and Barlow, G. (2000a), “Training and ethnic minority firms: the case of the independent restaurant sector”, Education + Training, Vol. 42 No. 4/5, pp. 334-41. Sanders, J. and Nee, V. (1996), “Immigrant self-employment: the family as social capital and the value of human capital”, American Sociological Review, Vol. 61, pp. 231-49. Shane, S. and Venkataraman, S. (2000), “The promise of entrepreneurship as a field of research”, Academy of Management Review, Vol. 25 No. 1, pp. 217-26. Shaw, E. (1999), “Networks and their relevance to the entrepreneurial/marketing interface: a review of the evidence”, Journal of Research in Marketing and Entrepreneurship, Vol. 1 No. 1, pp. 24-40. Simmonds, K. (1986), Strategy and Marketing: A Case Approach, Alden Press, Oxford. Storey, D.J. (1994), Understanding the Small Business Sector, Routledge, London. Waldinger, R. (1986), Through the Eye of a Needle: Immigrants and Enterprise in New York’s Garment Trades, New York University Press, New York, NY. Waldinger, R. (1989), “Structural opportunity or ethnic advantage? Immigrant business development in New York”, International Migration Review, Vol. 23, pp. 48-72. Ward, R. (1987), “Resistance, accommodation and advantage: strategic development in ethnic business”, in Lee, G. and Loveridge, R. (Eds), The Manufacture of Disadvantage, Open University Press, Milton Keynes, pp. 159-75. Ward, R. (1991), “Economic development and ethnic business”, in Curran, J. and Blackburn, R.A. (Eds), Paths of Enterprise, Routledge, London. Werbner, P. (1984), “Business on trust: Pakistani entrepreneurship in the Manchester garment trade”, in Ward, R. and Jenkins, R. (Eds), Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 166-88. Werbner, P. (1990), “Renewing an industrial past: BritishPakistani entrepreneurship in Manchester”, Migration, No. 8, pp. 7-41. Yoon, I.J. (1991), “The changing significance of ethnic and class resources in immigrant businesses: the case of Korean immigrant businesses in Chicago”, International Migration Review, Vol. 25, pp. 303-31.

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Introduction

Marketing in the social enterprise context: is it entrepreneurial? Eleanor Shaw

The author Eleanor Shaw is a Lecturer in Marketing at the University of Strathclyde, Glasgow, UK.

Keywords Entrepreneurialism, Marketing, Quality, Research, Social environment

Abstract This paper presents some of the findings to emerge from a qualitative study of social enterprise in the UK. The findings discussed in this paper refer to the marketing activities of social enterprises and consider the extent to which these can be described as “entrepreneurial”. This discussion suggests that while social enterprises do engage in entrepreneurial marketing, the local embeddedness of their activities, their not-for-profit orientation and challenges posed by social exclusion impact on their marketing activities.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 194-205 q Emerald Group Publishing Limited · ISSN 1352-2752 DOI 10.1108/13522750410540209

As the field of entrepreneurial marketing has evolved, much has been learnt about the management of entrepreneurial marketing and the types of marketing activities which can be described as ‘entrepreneurial’. For example, it has been found that when entrepreneurial approaches to marketing are employed, organisations are better positioned to identify and exploit market opportunities (Hills and Singh, 1998); exhibit strong entrepreneurial effort (Carson et al., 1995); manage marketing in a more informal and ad hoc fashion than recommended by mainstream marketing texts (Bjerke and Hultman, 2002; Stokes, 1995) and, consequently, develop a different range of competencies than those associated with mainstream marketing (Hill, 2000a, b; Hill and McGowan, 1997). However, “(k)nowledge about entrepreneurial marketing is just in its infancy” (Bjerke and Hultman, 2002, p. 209) and to date, aside from a small number of papers (Fillis, 2000; Stokes, 2002), contributions to current understanding of entrepreneurial marketing have been made by research which has explored profit-orientated small firms. At a time when the social or third sector is growing, it is relevant to consider entrepreneurial marketing within this developing context. This paper is presented in several parts. It opens by reviewing the entrepreneurial marketing literature and identifying key research topics before introducing social entrepreneurship and discussing the contribution which social enterprises make to the economic and social wealth of the UK. The research problem and methodology are detailed before then describing respondents and presenting the key themes relevant to understanding entrepreneurial marketing in a social enterprise context which emerged from this qualitative study. These findings are then discussed before the paper concludes with recommendations for research, practice and policy. The author would like to acknowledge the support of the Barclays Centre for Entrepreneurship which generously provided the funding for this research. She would also like to thank Jane Shaw, Morna Wilson and Meryl Dodd for their involvement and contribution to the design of the research, collection of data and dissemination of results. Finally, thanks are also due to all members of the research team who collected data, the advisory panel for their insight and advice in designing the interview guide and to all respondents who freely gave of their time.

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Entrepreneurial marketing Over the past two decades, entrepreneurial marketing has emerged as an important development in marketing theory and practice. One reason for this is that researchers have identified a number of commonalities between entrepreneurship and marketing. In particular, opportunity recognition and change have been identified as key areas of overlap between entrepreneurship and marketing. Omura et al. (1993) argue that both entrepreneurship and marketing focus on identifying opportunities in a changing environment. Similarly, Bjerke and Hultman (2002) argue that entrepeneurial marketing is about identifying market opportunitites and transforming resources of all types – knowledge, money and technology – which are acquired both internally and from the organisation’s networks and alliances, to co-create products which consumers perceived to be of value. Reviewing work in this area, Collinson and Shaw (2001) conclude that entrepreneurship and marketing share three significant areas of overlap: both are change-focused, opportunistic in nature and innovative in their approach to management. While commonalities between marketing and entrepreneurship have been identified (Hills and La Forge, 1992), there is no agreed definition of “entrepreneurial marketing”. This is not problematic however as existing research has identified a number of activities and behaviours as common to entrepreneurial marketing and has provided detailed descriptions of these which offer more practical advice than is often afforded by universal definitions. Included within these are “entrepreneurial effort”: the energy, zeal, commitment, determination, persistence, opportunity and focus exhibited by the entrepreneur or management team (Carson et al., 1995); the management of entrepreneurial marketing (Carson et al., 1995; Carson and Cromie, 1989; Stokes, 1995) and the competencies required to engage in and manage entrepreneurial marketing (Carson and Coviello, 1994; Carson et al., 1995; Hill and McGowan, 1997). Related to competencies, one area which has received significant attention is that of networks and the activity of networking (Collinson and Shaw, 2001; Gilmore et al., 2001; O’Donnell et al., 2001). This may be because entrepreneurial marketing is characterised by a responsiveness to the environment and an intuitive ability to anticipate changes in customer demands. Specifically, research shows that with fewer financial resources and greater restrictions on the time available to engage in market research,

entrepreneurial organisations make excellent use of the networks of relationships in which they are embedded to collect that market information which is pertinent to the continued achievement of organisational goals on a regular, almost daily, basis (O’Donnell et al., 2001; Shaw, 2002). Consequently, networking and building relationships with buyers, suppliers and others along the supply chain and in the immediate micro environment has been identified as a critical competency for the entrepreneurial marketing manager (Carson et al., 1995; Hill, 2000a, b). As well as exploring the nature, management, tools and competencies of entrepreneurial marketing, research in this area has sought to explore entrepreneurial marketing within a range of contexts. However, empirical studies of entrepreneurial marketing have tended to concentrate on collecting data from small, entrepreneurial organisations whose primary business objective is the generation of profit. Fewer studies have sought to understand entrepreneurial marketing within a not-for-profit or social context where the generation of profit is not the primary objective. Where such organisations have been studied, for example, Fillis’s (2000) work on creativity in arts organisations and Stokes’s (2002) exploration of entrepreneurial marketing by the head teachers, the findings generated have contributed much to an understanding of entrepreneurial marketing within diverse contexts. Building on such research, the study described in this paper seeks to contribute to our understanding of this diversity by presenting some of the findings generated by a qualitative study of UK social enterprise.

Social enterprise and social entrepreneurship While currently receiving a higher media profile, social entreprises are not new. Rather, “social entrepreneurship” is a new label, which is arguably an appropriate way of describing the work of community, voluntary and public organisations as well as private firms working for social rather than only profit objectives. In the UK, social entrepreneurship has its origins in the nineteenth century when philanthropic business owners and industrialists including Sir Titus Salt of Saltaire and Robert Owen, demonstrated a concern for the welfare of employees by improving their working, education and cultural lives. Since this time, social entrepreneurship has been associated with community enterprise and development, education, churches, charities, the not-for-profit sector and voluntary organisations.

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Collectively, these organisations are often referred to as the social economy or the ‘third sector’ which, since the 1990s, has expanded within the UK. Reasons for this growth have been attributed to emerging problems within traditional public and social services and the welfare state. Mulgan and Landry (1995) have criticised providers of public and social services as bureaucratic and resistant to change and Leadbeater (1997) has argued that the welfare state has become overstretched and hampered by severe resource restrictions. In such an environment, social enterprises have been identified as vital to the development and delivery of innovative ways of tackling social problems which cannot be resolved through traditional public, voluntary or community mechanisms. Like their traditional business counterparts, there is no accepted definition of what constitutes a “social entrepreneur”. They have been variously described as, “those people who bring to social problems the same enterprise and imagination that business entrepreneurs bring to wealth creation” (Blair, 1997); individuals who initiate social innovation and change (Drucker, 1999; Leadbeater, 1997) and as individuals who are motivated by the opportunity to adopt an innovative approach and creative use of resources and contacts to satisfy needs which the state welfare system cannot or will not meet (Thompson et al., 2000). While a universal definition may not be agreed on, researchers, commentators, development agencies and politicians have sought to identify characteristics common to social entrepreneurs (Leadbeater, 1997; Leadbeater and Goss, 1998; Prabhu, 1999; Thake and Zadek, 1997; Thompson et al., 2000). Building on the work in this area, Ashoka (www.ashoka.org), the international charity which identifies social entrepreneurs and provides them with capital to launch their initiatives, describes social entrepreneurs as possessing the characteristics shown in Table I. Research has also concentrated on trying to define the ‘social enterprise’ (Prabhu, 1999; Leadbeater, 1997; Social Enterprise London, 2001a, b). However, the diversity of activities and organisations which the social economy comprises is such that researchers have been unable to agree on a single definition. Instead, the characteristics detailed in Table II have been identified as common to social enterprises. Having introduced social entrepreneurship and clarified what is meant by a “social enterprise” it is useful to consider the size of this sector and the contribution which it makes to the UK both economically and socially. Although there are many estimates about the scale of activity in the

Table I Characterising social entrepreneurs Creative Find radical and effective solutions to social problems Entrepreneurial Present their project, negotiating their needs, commanding support for their idea and winning resources effectively Agenda-setting Demand that their ideas or proposals will make a major difference when successfully implemented Ethical Ensure that public money is well used, that ideas are not corrupted by vested interests and that their full commitment is available for the project Source: Ashoka (www.ashoka.org)

Table II Characteristics of social enterprises Enterprise As viable trading organisations, making an orientation operating surplus, they are directly involved in producing goods or providing services to a market Social aims They have explicit social aims such as job creation, training or the provision of local services. They have strong social values and mission, including a commitment to local capacity building. They are accountable to their members and the wider community for their social, environmental and economic impact Social They are autonomous organisations often ownership with loose governance and ownership structures, based on participation by clients, users, local community groups or trustees. Profits are distributed to stakeholders or for the benefit of the community Sources: Community Action Network (2000); Leadbeater (1997); Prabhu (1999); Social Enterprise London (2001a, b)

social economy, perversely its diversity and lack of an agreed definition of what constitutes a “social enterprise” combine to frustrate efforts to produce a comprehensive picture of its overall size. The most comprehensive data available relates to charities of which 188,000 are registered in England and Wales (John Stoker, Chief Charity Commissioner, May 2001). The Commissioner estimates however that while there are approximately 100,000 bodies subject to the Charity Commission’s authority, the absence of compulsory registration means that not all appear on the register (Charity Commission for England and Wales, 2001). In Scotland, the voluntary sector comprises the largest part of the social economy and accounted for 4 per cent of GDP at the end of 1998 (Scottish Council for Voluntary

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Organisations (SCVO), 1998). SCVO also estimate that in Scotland the voluntary sector employs the equivalent of 49,000 full-time jobs, is supported by 300,000 volunteers and has a turnover of £1.8 billion per annum. Where definitions are less precise, the difficulties of measurement are magnified, sometimes producing results which are apparently impossible to reconcile. As a recent Small Business Service report notes, while the Department for Environment, Transport and the Regions estimated that approximately 450 social enterprises were trading in the UK in 1998, Community Enterprise in Strathclyde estimated that in lowland Scotland alone there were 3,700 community enterprises in 1997 (Smallbone et al., 2001). Despite these difficulties, it is clear that the social economy contributes significantly to the economic and social fabric of the UK.

which offer specialist advice and support to social enterprises. After piloting the interview guide, a range of databases including the Social Entrepreneurs Scotland (SENSCOT) mailing list and the Voluntary Sector Workplace Survey, as well as introductions and contacts provided by the School for Social Entrepreneurs, The Big Issue and specialist development agencies were used to identify 80 individuals willing to participate in the study. Given these decisions, the sampling approach used could be described as “purposive”, that is, participating firms were selected because they were identified as being “rich” in data about which the study was interested (Easterby-Smith et al., 1991; Patton, 1987). As purposive sampling is appropriate when the aim of research is to generate an understanding of an under-researched topic rather than confirm or refute hypotheses, it was identified as appropriate for identifying participating social enterprises. As a result of this sampling process, while respondents were predominantly located in the North-East of England and the central belt of Scotland, several best practice examples located throughout the UK were also included. All interviews were administered face-to-face and lasted between one and two and a half hours. Once collected, the analysis of data was guided by the theory building procedures suggested by Eisenhardt (1989) and Dey (1993); the process of inductive analysis proposed by Shaw (1999) and the literature on grounded theory (Easterby-Smith et al., 1991; Glaser and Strauss, 1967; Lofland, 1971; Marshall and Rossman, 1995; Strauss and Corbin, 1990). Specifically, the inductive analysis of data involved the reading and re-reading of transcripts and field notes (Easterby-Smith et al., 1991), the search for similar emergent themes and the use of codes to bring order, structure and meaning to raw data (Strauss and Corbin, 1990). When searching for patterns and themes in the data relevant to the study, the researcher was “senitised” by the pre-understanding of entrepreneurial marketing which she had acquired from her previous research on this topic and her familiarity with the entrepreneurial marketing literature. In this way, from the process of coding and constantly comparing slices of data – in the form of sections of transcribed interviews – four themes relevant to understanding entrepreneurial marketing within a social enterprise context emerged: opportunity recognition (OR); entrepreneurial effort (EE); an entrepreneurial organisational culture (EOC); and networks and networking (N&N). Before presenting and discussing each of these themes, a description of respondents is provided.

Research problem and methodology Having identified social enterprise as a significant and growing part of the UK economy and recognising that few studies have sought to explore entrepreneurial marketing within the context of social enterprises, it was decided, as part of a wider qualitative study on UK social enterprises to explore their marketing activities. Specifically, it was decided to explore the types of marketing activities in which social enterprises engage and consider the extent to which these activities could be described as “entrepreneurial”. It is suggested that when little is known about a subject area (Bygrave, 1989) and when the aim and objectives of research are exploratory in nature (Easterby-Smith et al., 1991; Patton, 1987) a phenomenological approach is appropriate. Therefore, the study was designed within a phenomenological paradigm which allowed the research team to get close to participants, penetrate their realities and generate an understanding of the marketing practices and activities employed by social enterprises. Working within this paradigm, the in-depth interview was identified as the method most appropriate to meeting the aim and objectives of the research. To assist, a semi-structured interview guide was developed. This allowed the research team the flexibility to collect data relevant to each of the research objectives as well as to explore other relevant and interesting issues as they emerged (Kumar et al., 1997). A panel of experts was appointed to help design and pilot the interview guide. This panel was comprised of individuals working directly in social enterprises as well as personnel employed by intermediary agencies

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Description of participants

(1995) have identified as an important entrepreneurial marketing competency.

Social enterprises Participating social enterprises were typically small in scale with only 20 per cent being registered for VAT at the time of the research and the majority of the sample turning over less than £250,000. A wide range of social problems were addressed by participating social enterprises, reflecting the diversity of the UK social economy. For example, included in the sample were: a community festival; a community bus service; various projects for the homeless; catering enterprises; drug awareness and prevention initiatives; child and out of school schemes and employment and training companies.

Interviewees Interviews were held with the founders of participating social enterprises or, if they were no longer involved, the chief executive or most senior manager or volunteer. Of the 80 participants interviewed, 62 per cent were aged between 30-59 years and 88 per cent held qualifications. Analysis of these by highest qualification achieved found that: one held a PhD; 13 had a Masters degree, ten held undergraduate degrees and 10 had NVQ awards. Many participants also emphasised the “life” skills which they had acquired and identified these as relevant to their current activities. Analysis of data about the previous experiences of participants found that 32 per cent had previously established a social initiative; 33 per cent had previously worked with a social initiative; 13 per cent had been employed in the public sector and 12 per cent in the voluntary sector. Significantly fewer had experience of working within the private sector. Immediately prior to becoming involved in social initiatives only 8 per cent of those interviewed had been employed by a private firm. Additionally, it was found that more than onethird had previously been self-employed, 14 per cent had experience of employing others and more than 70 per cent of participants were involved in the work of another social initiative at the time of interview. In common with many profit-orientated small business owners, these findings suggest that a significant number within the sample might be described as “portfolio” or “serial” entrepreneurs (Carter, 2001; Westhead and Wright, 1998; Westhead and Wright, 1999), that is individuals who own and manage a range of enterprises or follow a pattern of setting up one enterprise and developing and growing it before setting up another. Additionally, the history of involvement in the social economy found to be common to many respondents suggests that many possessed the job and industry experience which Carson et al.

Presentation of themes As described above, the process of inductive analysis identified four themes within the data which contribute to an understanding of entrepreneurial marketing within a social enterprise context. Table III uses examples of data – in the form of the words which respondents used during interviews – to illustrate these themes and identify the entrepreneurial marketing literature to which they relate. This is followed by a more detailed description of each of these themes before discussing their implications, drawing conclusions and offering recommendations. Theme 1: opportunity recognition Opportunity recognition has been recognised as essential to the process of entrepreneurship (Kirzner, 1979) and has received attention within entrepreneurial marketing literature (Kuratko, 1995; Hills and Singh, 1998; Omura et al., 1993; Schwartz and Teach, 2000). The entrepreneurial marketing literature has argued that when organisations adopt an entrepreneurial approach to their marketing they are better positioned to identify and then exploit opportunities and gaps in the market (Bjerke and Hultman, 2002; Hills and Singh, 1998). Analysis of data collected from participants, especially when they were discussing reasons why they had decided to set up their social enterprise (if they were the founder) or become involved with the enterprise (if they had not founded it but held the most senior managerial or volunteer position), revealed that for most participating social enterprises, the recognition of a gap in the provision of services or an unmet social need had been the key driving force in their creation and development. For example, one participant involved with a housing project in the North East of England explained that: I look at opportunities and see how to take them forward and go on gut feeling. I just go for it. I want to see the change for myself and where I live, it can be frustrating to see what happens where you live. I really want to put something back. I would still do this as a volunteer, the wage is a bonus (Manager, Housing Project, Middlesex).

These words suggest that in common with traditional or profit-orientated entrepreneurs, identifying and exploiting an unmet social need – in the case of this respondent, the need to provide low cost, quality housing in a deprived community in the North East of England – is a key motivator for those who become involved in creating and

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Table III Summary of key themes Example of raw data in which emergent themes were grounded

Entrepreneurial marketing literature Opportunity recognition (Hills and Singh, 1998; Omura et al., 1993; Schwartz and Teach, 2000) Entrepreneurial effort (Carson et al., 1995;)

“I have an eye for opportunitites, I like to seize opportunities as they arise” (Founder, catering enterprise, Central Scotland)

Entrepreneurial organisational culture (Collinson and Shaw, 2001) Networks and networking (Gilmore et al., 2001; Hill, 2000 a, b; O’Donnell et al., 2001; Shaw, 1998, 2002)

managing social enterprise. Relatedly, it emerged that when discussing the opportunity or social need which was not being addressed either by the public sector – typically the local authority – or the established charity sector, respondents emphasised the local nature of the social need (opportunity) which their initiative had been established to address (exploit). Each of the quotations below illustrates the local nature of the opportunities identified by all participating social enterprises: A local need was identified; nobody else was willing to start the initiative (Volunteer in charge of a drugs addiction initiative, Glasgow). There was no work in the area, no facilities. I wanted to build something for the next generation (Manager who established a recycling business, Northumberland). I can see opportunities and facilitate developments for the community to take advantage of (Manager of a regeneration initiative, Newcastle).

Comments like these were common to data collected from all respondents who spoke about the reasons why their initiative had been established or why they had decided to get involved in its work. These comments and others like them revealed respondents’ desire to affect change and make a difference, to meet local needs and to tackle a particular social issue. Such reasons were repeatedly identified as key motivating factors for the establishment and growth of participating social enterprises. Considered alongside existing entrepreneurial and entrepreneurial marketing literature, these findings suggest that, in common with profit-orientated enterprises, participating social enterprises were actively involved in identifying and exploiting opportunities in the form of unmet social needs. However, particular to participating social enterprises, the local nature of these opportunities is an important finding. Unlike

“I’m very hard-headed but realistic. I provide focus but things are often not easy. I’m not afraid to say no and will always try” (Manager of a rural IT outreach centre, Northumberland) “It’s innovative, gives people space to be creative and collectively powerful.” (Volunteer, regeneration project, Newcastle) “I am constantly learning and making new contacts, finding new avenues of resource and building my own network. I enjoy the ability to be able to focus on more than one direction” (Founder, training for long-term youth unemployed, Glasgow)

small, profit-orientated organisations which may be characterised by – but not restricted to – the local and niche markets which they serve (Curran and Blackburn, 1994; Wynoczyk et al., 1993), these findings suggest that social enterprises may be restricted to identifying and meeting only local social needs.

Theme 2: entrepreneurial effort A second key theme to emerge was that of “entrepreneurial effort” which Carson et al. (1995) have identified as critical to the growth and development of entrepreneurial organisations. When comparing interview data, a range of issues relating to entrepreneurial effort emerged as relevant to the creation and continued development of participating social enterprises. As illustrated by the following interview data, the first of these relates to focus and determination: I have the ability to take responsibility, to see things through. The buck stops with me. I’m a back stage driver. . .I avoid publicity but I am the stone boiler behind the success (Founder, of gardening initiative to provide work for people with learning disabilities, Glasgow). I’m cynical but believe anything can happen. If you try hard you get there. I refuse to take no for an answer (Director of an online newsletter for social enterprises, Edinburgh). I believe in my community and the people that live here, I am committed to creating jobs for local people wherever possible (Founder of childcare facility, rural Northumberland).

The second common issue associated with the theme of “entrepreneurial effort” was that of leadership, passion and vision. This was discussed by many respondents but particularly by those founders who continued to be involved in the management of social enterprises. For example, when asked about the objectives of their initiative,

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the founder of an initiative which tackles homelessness explained that: There is the assumption that profit-maximisation is the key objective, I don’t agree. There are a range of business objectives including profit maximisation and social goals but you must have passion (Founder, initiative to tackle homelessness, Glasgow).

Similarly, when asked to comment on the difficulties which their enterprise had experienced since its establishment, the founder of a recycling initiative which sought to provide training and employment for people with learning disabilities responded: I am always enthusiastic, always reliable. I think round corners. . .there is always a solution and I am passionate and believe that the world can be improved (Founder, recycling initiative, Newcastle).

Likewise, when asking the founder of an arts-based initiative which was established to raise awareness of the creative skills of individuals with mental health issues about the tactics they had employed to develop the initiative she explained: Vision and commitment . . . A belief in empowering others, driving and capturing the vision, making sure everyone shares the vision . . . keeping it special (Founder, arts-based initiative, Glasgow).

Considered alongside the dimensions of entrepreneurial effort which have been described by Carson et al. (1995) – the energy, zeal, commitment, determination, persistence, opportunity and focus exhibited by the entrepreneur or management team – these findings suggest that the founders of social enterprises possess the characteristics required to maintain an entrepreneurial stance over the lifecycle of their existence. In addition to these dimensions, as illustrated by the data presented below, it was found that, for participating social enterprises, the interpersonal and people management skills of their founders, management teams and volunteers were also important in this respect: I am able to support others. I feel I have more confidence when dealing with other organisations. I like to see myself as a calming influence (Manager, childcare facility, Glasgow). I am a strong believer in people and hope that education is a route out of poverty (Founder, initiative which provides low cost childcare to support women learning IT skills, Newcastle). People do things for me – so others say – I get people involved, sell my ideas to other people . . . I get people involved through shame or excitement or enthusiasm. At times I have the idea with no end in sight, that comes with time (Founder, drugs rehabilitation centre, Central Scotland).

These particular findings are also supported by the “agenda-setting” characteristic which Ashoka (www.ashoka.org) has identified as common to social enterprises. Theme 3: entrepreneurial organisational culture A third theme to emerge from data analysis was entrepreneurial organisational culture. The entrepreneurship literature has recognised that an entrepreneurial culture is necessary if enterprises are to identify and exploit opportunities, remain flexible within a dynamic environment and compete, successfully against larger organisations (Covin and Slevin, 1991). Particular to entrepreneurial marketing, it has been suggested that if organisations are to adopt an entrepreneurial approach towards their marketing activities, they must embrace an entrepreneurial, organisational culture (Bjerke and Hultman, 2002; Collinson and Shaw, 2001). For this reason, when developing the interview guide, the culture of social enterprises was identified as a topic around which to collect data. In particular, participants were asked for those words which best described the culture of their enterprise. When analysing responses to this question it emerged that almost three-quarters of participants specifically used the words “open” and “creative” to describe the culture of their enterprises. When asked to expand on the reasons why they had chosen these particular words, comments included the following: Very creative, it is a very positive environment, where people listen to your ideas. I don’t think I’ve ever heard the word “no” being used (Volunteer, arts-based initiative, London). Liberating. Creative in our way, we think differently (Manager, recycling initiative, Central Scotland). Caring, friendly, all round support, simply the best. We have to be creative/innovative to get the clients through the door – break down cultural and gender stereotypes (Founder, women’s education initiative, Northumberland).

Considered alongside research which argues that entrepreneurial marketing is likely to occur within organisations which display an entrepreneurial culture (Bjerke and Hultman, 2002; Carson et al., 1995), this data suggests that the prevailing culture within most participating social enterprises was conducive to approaching marketing from an entrepreneurial perspective. However, when respondents were asked if they would describe themselves as “an entrepreneur” very few agreed that this was a description which they would attribute to themselves. Instead, many respondents spoke of the “community” and

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“collective” nature of both the social needs which their enterprises addressed and the structure of their management boards and committees, both of which it emerged often included members of the community of interest which they had been established to assist. This finding is supported by the “social aims” and “social ownership” characteristics which Table II shows have been identified as comon to social enterprises (Community Action Network (2000); Leadbeater, 1997; Prabhu, 1999; Social Enterprise London (2001a, b)).

the personal contact networks of the founders, managers and volunteers of social enterprises were important in developing relationships for social enterprises. Related to this, a second important issue regarding networks which emerged from the analysis of data referred to the credibility which the involvement of founders, key staff and volunteers in local networks generated for participating social enterprises. Analysis of interview data relating to this issue found that many respondents identified their involvement in the local community as necessary for building credibility for their social enterprise. The following words extracted from an interview with the manager of a housing project in Newcastle are illustrative of the importance which respondents attached to the credibility which local networking had generated for their initiatives:

Theme 4: networks and networking Within the entrepreneurial marketing literature, networks have been identified as an important entrepreneurial marketing tool (O’Donnell et al., 2001; Gilmore and Carson, 1999; Shaw, 1998, 2002) and networking has been described as a critical entrepreneurial marketing competency (Carson et al., 1995; Hill, 2000a, b; Hill and McGowan, 1997). Particular to this study, the fourth theme to emerge related to social enterprises’ use of networks and networking. Analysis of interview data found that, for participating social enterprises, networks and networking were important for many of the same reasons which have been established within the entrepreneurial marketing literature: acquiring market and customer information; identifying opportunities and providing introductions to possible funding sources etc. In particular, it emerged that for each founder interviewed, the networks in which they were embedded had been instrumental in making them aware of local conditions and helping them identify local social needs which were not being met. An example of the type of data from which this theme emerged is provided by the following words: I have knowledge of the area, an understanding of the area and needs of local people. I’m a recognised community leader and spokesperson. I am committed to the regeneration process for the West End (Founder, regeneration project, West Newcastle).

Building on discussion about the local focus of the opportunities (unmet social needs) identified by participating social enterprises, this theme suggests that networks were critical to participating social enterprises in providing their founders with information and knowledge required to identify opportunities locally. Considered alongside the finding that, relative to the location of the social needs which their enterprise sought to address, 84 per cent of respondents lived in the same area, these findings highlight the local embeddedness of social enterprises. Specifically, these findings suggest that

As a local person living in the area, I bring credibility, experience of dealing with people, links with partners and knowledge of founders. I’m an experienced management committee member with community development skills and experience, this provides good management and external support (Manager, housing project, Newcastle).

The issue of networking and credibility has been touched on in the entrepreneurship marketing literature. For example, McGowan and Durkin (2002) have argued that entrepreneurial small firms build trust and credibility by interacting with members of their network. Given the difficult social needs often addressed by social enterprises, this finding suggests that the networking undertaken by social enterprises was important in developing the trust and credibility required, especially locally, to encourage the community to support their activities.

Discussion The key themes presented above suggest that social enterprises do adopt an entrepreneurial approach towards their marketing. However, considered alongside existing entrepreneurial marketing research which has concentrated on exploring entrepreneurial marketing within the for-profit sector, these findings suggest that there may be some differences when entrepreneurial marketing occurs within the not-for-profit context. Table IV compares and contrasts each of the themes to emerge from this research with existing entrepreneurial marketing literature. Comparisons made in Table IV suggest that while not-for-profit enterprises which engage in entrepreneurial marketing share many similarities with profit-orientated entrepreneurial firms, some differences can be found. For example, while opportunity recognition is common to both, for

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Table IV Summary of findings Entrepreneurial marketing theme Opportunity recognition

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For-profit context

Social enterprise context

Occurs when an unmet consumer need/market demand is identified as profitable

Occurs when an unmet, social need such as homelessness or lack of provision of child-care services is identified, whether profitable or not Restricted to satisfying social needs which emerge locally

Entrepreneurial effort

Can be characterised by but is not restricted to local and niche markets. Provide and encourage a common vision, determination and leadership to drive the enterprise towards meeting an unmet consumer need/market demand, despite scarcity of resources

Entrepreneurial organisational culture

Create initiatives which are “open” to suggestions and “creative” in the way they meet organisational and profit objectives

Networks and networking

Use local networks to identify unmet consumer needs/market demands and use contacts to provide direct and indirect access to the resources required to profitably meet these needs

profit-orientated firms, opportunities must exhibit the potential to be exploited at a profit whereas, for social enterprises profit is not the main motivating factor. Similarly, while social enterprises have been found to network with members of their community to engage others in their vision and harness the necessary scarce resources required to satisfy unmet social needs in innovative and creative ways, networks are not used for profitorientated purposes. Furthermore, while the findings suggest that entrepreneurial effort was a theme common to participating social enterprises, the exclusion encountered by social enterprises – perhaps because of where they are located (for example, deprived housing estates situated on the periphery but not connected to large cities) or the issue which they are tackling (for example, drug addiction; under-age pregnancies) – poses a particular challenge. It may be that as a consequence of this exclusion, social enterprises require significant entrepreneurial effort as, combined with the scarcity of resources common to many firms which adopt an entrepreneurial approach to their marketing, they must also address the problems and prejudices caused by such social exclusion. Related to the entrepreneurial culture of organisations, this research suggests that most participating social enterprise are perceived to have an “open” and “creative” culture. However, unlike profitorientated enterprises, the collective structure and approach of social enterprises suggests that few founders, managers or volunteers are comfortable at being identified as the “social entrepreneur” who drives the enterprise towards its objectives. This is not to imply that the owners, volunteers and managers of social initiatives are not entrepreneurial. Rather, this suggests that given

Provide and encourage a common vision, determination and leadership to drive the social initiative towards meeting social needs, despite scarcity of resources and extent of exclusion encountered Create initiatives which are “open” to suggestions and “creative” in the way they address unmet social needs, whether profitable or not Use local networks to identify unmet social needs and to use contacts to provide direct and indirect access to the resources required to meet these needs and to build credibility locally

the collective nature of many social enterprises, those involved are not comfortable at attributing organisational achievements at an individual level. A final difference suggested by the findings presented relates to the local embeddedness of social enterprise. While the local embeddedness of small, profit-orientated enterprises has been identified by previous research (Granovetter, 1985; 1992; Jack and Anderson, 2002) the findings presented in this paper suggest that unlike profit-orientated small firms which may be characterised by servicing the needs of local and niche markets, the needs addressed by social enterprises and the activities in which they engage are restricted to local areas, often at a community level. In particular, the opportunities recognised by social enterprises and the networks which they engage are situated at local, often community levels. As mentioned above, one reason for the local embeddedness of social enterprises and the networks within which they participate is that many founders live in the area within which they have identified an unmet social need. A second suggested reason relates to perceptions about the types of social needs addressed by social enterprises. Given the challenging nature of many of these – for example, initiatives to improve the sexual health of children under the age of 16 – it is vital to use local networks to build credibility and attract local and community support and involvement for and in the work of social enterprises.

Conclusions and recommendations This paper has argued that current understanding about entrepreneurial marketing has largely been

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informed by studies which have explored the marketing practices of entrepreneurial, small, profit-orientated firms. Considered alongside the growing contribution which organisations operating in the social economy make to the economic and social wealth of the UK, a qualitative study of such enterprises was undertaken. Inductive analysis of data collected from interviews with the founders, managers and volunteers of 80 UK social enterprises generated four common themes relevant to understanding entrepreneurial marketing within a social enterprise context: (1) Opportunity recognition. (2) Entrepreneurial effort. (3) Entrepreneurial organisational culture. (4) Networks and networking.

Before offering recommendations it is worthwhile identifying the limitations of the findings presented in this paper. First, given the qualitative design of the methodology, while is has been assumed that respondents spoke openly and honestly, there is the possibility that they were not always truthful in their responses – not necessarily deliberately so but it is possible that they may have been unable to recall specific details or rationalised events after they had occurred. A second limitation is that it is possible the interviewer bias may have occurred. Countering this, however, as a team of researchers were used to collect the data, it is unlikely that if interview bias did occur that the same bias would be reflected across all interviews. A final methodological limitation relates to the sample size; while 80 interviews is a respectable number for a qualitative study, given the large scale and diversity of the social economy in the UK, the findings presented and discussed in this paper may not be representative of the whole sector. Remembering however that one objective of the research was to explore the marketing practices of social enterprises and generate qualitative data which would generate insights into the extent to which these could be described as “entrepreneurial”, the issue of representativeness is less important than if the research had been seeking to test hypotheses. Related to these limitations the first recommendation for research is that given the understanding about entrepreneurial marketing within a social enterprise context which has been acquired by this research, future entrepreneurial marketing research should seek to understand the marketing practices of diverse types of organisations, not only profit-orientated enterprises. A further recommendation is that future research seeks to compare and contrast the effects of entrepreneurial effort in both profit and not-for-profit enterprises. For practitioners, discussion of the findings presented has stressed the local embeddedness of social enterprise and the critical role played by networks in identifying opportunities, acquiring resources and importantly, in building credibility. In view of this, it is recommended that before initiating a social enterprise, practitioners should consider the local context and seek to develop relationships within the local community which will be necessary for gaining support at a grass-roots level. This further suggests that given current policy interests in promoting and encouraging social enterprise and social entrepreneurship, the benefits of any topdown approaches may not be effective unless they are supported by local communities at a grass roots level.

Discussion of each of these themes suggests a number of implications. First, while social enterprises were found to engage in entrepreneurial marketing, the findings presented suggest that within a social enterprise context, sector-specific factors including local embeddedness, a not-for-profit orientation and the challenges posed by social exclusion may influence the entrepreneurial marketing activities of social enterprises. Second, given the restricted resource base from which social enterprises operate and the challenges posed by social exclusion, it can be suggested that in common with entrepreneurial, small firms, social enterprises have to adopt entrepreneurial and creative approaches to their marketing if they are to resolve the social problems which they are established to address. Third, as few participants spoke specifically of marketing, it can be further suggested that within social enterprise, the management and position of marketing is similar to that of organisations which embrace entrepreneurial marketing (Bjerke and Hultman, 2002; Carson et al., 1995). That is to say, the findings presented suggest that in common with organisations which adopt an entrepreneurial approach to their marketing, for social enterprises marketing was second nature even though they did not speak of marketing or use the language of marketing. This suggestion is supported by the entrepreneurial marketing literature which has routinely argued that within small, entrepreneurial organisations, marketing occurs naturally, in an ad hoc and unplanned fashion (Bjerke and Hultman, 2002; Carson et al., 1995; Carson and Cromie, 1989; Stokes, 1995). Within the context of social enterprise, it can be further suggested that the flexibility afforded by such an informal approach is appropriate given the fluctuating and challenging environment within which many social enterprises exist and is of benefit to the entrepreneurial marketing in which they engage.

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Bjerke, B. and Hultman, C.E. (2002), Entrepreneurial Marketing: The Growth of Small Firms in the New Economic Era, Edward Elgar, Aldershot. Blair, A. (1997), “Welfare to work”, First Policy Speech as Prime Minister, London, June. Bygrave, W. (1989), “The entrepreneurship paradigm (I): a philosophical look at its research methodologies”, Entrepreneurship Theory and Practice, Vol. 14 No. I, pp. 7-26. Carson, D. and Coviello, N. (1994), “The marketing/ entrepreneurship interface: a distinct paradigm for research and education”, in Hills, G.E., Giglierano, J.J. and Hultman, C.M. (Eds), Research at the Marketing/ Entrepreneurship Interface, University of Illinois at Chicago, Chicago, pp. 59-67. Carson, D. and Cromie, S. (1989), “Marketing planning in small enterprises: a model and some empirical evidence”, Journal of Marketing Management, Vol. 5 No. 1, pp. 33-49. Carson, D., Cromie, S., McGowan, P. and Hill, J. (1995), Marketing and Entrepreneurship in SMEs: An Innovative Approach, Prentice-Hall International, Englewood Cliffs, NJ. Carter, S. (2001), “Multiple business ownership in the farm sector: differentiating mono-active, diversified and portfolio enterprises”, International Journal of Entrepreneurship Behaviour and Research, Vol. 7 No. 2, pp. 43-59. Charity Commission for England and Wales (2001), Annual Report 2000, available at: www.charitycommission.gov.uk/ Collinson, E. and Shaw, E. (2001), “Entrepreneurial marketing: a historical perspective on development and practice”, Management Decision, Vol. 39 No. 9, pp. 761-6. Community Action Network (2000), information leaflet, London. Covin, J. and Slevin, D. (1991), “A conceptual model of entrepreneurship as firm behavior”, Entrepreneurship, Theory and Practice, Fall, pp. 7-25. Curran, J. and Blackburn, R.A. (1994), Small Firms and Local Economic Networks: The Death of the Local Economy?, Paul Chapman Publishing Ltd, London. Dey, I. (1993), Qualitative Data Analysis: A User-friendly Guide for Social Scientists, Routledge, London. Drucker, P. (1999), Innovation and Entrepreneurship, Butterworth-Heinemann, Oxford. Easterby-Smith, M., Thorpe, P. and Lowe, A. (1991), Management Research: An Introduction, Sage Publications, Newbury Park, CA. Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14, pp. 532-50. Fillis, I. (2000), “Being creative at the marketing/ entrepreneurship interface: lessons from the art industry”, Journal of Research in Marketing and Entrepreneurship, Vol. 2 No. 2, pp. 125-37. Gilmore, A. and Carson, D. (1999), “Entrepreneurial marketing by networking”, New England Journal of Entrepreneurship, Vol. 12 No. 2, pp. 31-8. Gilmore, A., Carson, D. and Grant, K. (2001), “SME marketing in practice”, Marketing Intelligence & Planning, Vol. 19 No. 1, pp. 6-11. Glaser, B. and Strauss, A. (1967), The Discovery of Grounded Theory, Aldine, Chicago, IL. Granovetter, M.S. (1985), “Economic action and social structure: the problem of embeddedness”, American Journal of Sociology, November, pp. 55-81.

Granovetter, M.S. (1992), “Networks and organisations: problems of explanation in economic sociology”, in Nohria, N. and Eccles, R.G. (Eds), Networks and Organisations: Structure, Form and Action, Harvard Business School Press, Boston, MA. Hill, J. (2000a), “A multidimensional study of the key determinants of effective SME marketing activity: Part 1”, International Journal of Entrepreneurial Behaviour & Research, Vol. 7 No. 5, pp. 171-204. Hill, J. (2000b), “A multidimensional study of the key determinants of effective SME marketing activity: Part 2”, International Journal of Entrepreneurial Behaviour & Research, Vol. 7 No. 6, pp. 211-35. Hill, J. and McGowan, P. (1997), “Marketing development through networking: a competency-based approach for small firm entrepreneurs”, in Hills, G.E., Giglierano, J.J. and Hultman, C.M. (Eds), Research at the Marketing/ Entrepreneurship Interface, University of Illinois at Chicago, Chicago, IL, pp. 543-60. Hills, G.E. and La Forge, R.W. (1992), “Marketing and entrepreneurship: the state-of-the-art”, in Sexton, D.L. and Kasarda, J.D. (Eds), The State-of-the-Art of Entrepreneurship, Babson College, Babson Park, MA, pp. 69-80. Hills, G.E. and Singh, R.P. (1998), “Opportunity recognition: a survey of high performing and representative entrepreneurs”, in Hills, G.E., Giglierano, J.J. and Hultman, C.M. (Eds), Research at the Marketing/Entrepreneurship Interface, University of Illinois at Chicago, Chicago, IL, pp. 249-68. Jack, S.L. and Anderson, A.R. (2002), “The effects of embeddedness on the entrepreneurial process”, Journal of Business Venturing, Vol. 17, pp. 467-87. Kirzner, I.M. (1979), Perception, Opportunity, and Profit: Studies in the Theory of Entrepreneurship, University of Chicago Press, Chicago, IL. Kumar, V., Aaker, A.D. and Day, G.S. (1997), Essentials of Marketing Research, John Wiley & Sons, New York, NY. Kuratko, D. (1995), “Entrepreneurship”, International Encyclopedia of Business and Management, International Thomson Press, London. Leadbeater, C. (1997), The Rise of the Social Entrepreneur, Demos, London. Leadbeater, C. and Goss, S. (1998), Civic Entrepreneurship, Demos, London. Lofland, J. (1971), Analysing Social Settings: A Guide to Qualitative Observation and Analysis, Wordsworth, Belmont, CA. McGowan, P. and Durkin, M. (2002), “Toward an understanding of Internet adoption at the marketing-entrepreneurship interface”, Journal of Marketing Management, Vol. 18, pp. 361-77. Marshall, C. and Rossman, G.B. (1995), Designing Qualitative Research, 2nd ed., Sage, Thousand Oaks, CA. Mulgan, G. and Landry, L. (1995), The Other Invisible Hand: Remaking Charity for the 21st Century, Demos/Comedia, London. O’Donnell, A., Gilmore, A., Cummins, D. and Carson, D. (2001), “The network construct in entrepreneurship research: a review and critique”, Management Decision, Vol. 39 No. 9, pp. 749-60. Omura, G.S., Calantone, R.J. and Schmidt, J.B. (1993), “Entrepreneurialism as a market-satisfying mechanism in a free market system”, in Hills, G.E. and Mohan-Neill, S.T. (Eds), Research at the Marketing/Entrepreneurship Interface, University of Illinois at Chicago, Chicago, IL, pp. 161-71.

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Patton, M.Q. (1987), How to Use Qualitative Methods in Evaluation, Sage, London. Prabhu, G.N. (1999), “Social entrepreneurship leadership”, Career Development International, Vol. 4 No. 3, pp. 140-5. Schwartz, R.G. and Teach, R.D. (2000), “A model of opportunity recognition and exploitation: an empirical study of incubator firms”, Journal of Research in Marketing and Entrepreneurship, Vol. 2 No. 2, pp. 93-107. Scottish Council for Voluntary Organisations (SCVO) (1998), Scotland’s Social Economy, Edinburgh. Shaw, E. (1998), “Social networks: their impact on the innovative behaviour of small service firms”, International Journal of Innovation Management, Special Issue, pp. 201-22. Shaw, E. (1999), “A guide to the qualitative research process: evidence from a small firm study”, Qualitative Market Research: An International Journal, Vol. 2 No. 2, pp. 71-81. Shaw, E. (2002), “Networking”, in Warner, M. (Ed.), International Encyclopedia of Business and Management, 2nd ed., Thomson Learning, Boston, MA, pp. 4667-73. Smallbone, D., Evans, M., Ekanem, I. and Butters, S. (2001), Researching Social Enterprise: Final Report to the Small Business Service, Centre for Enterprise and Economic Development Research, London. Social Enterprise London (SEL) (2001a), Introducing Social Enterprises, London.

Social Enterprise London (SEL) (2001b), Understanding Social Enterprise, London. Stokes, D. (1995), Small Business Management: An Active Learning Approach, D.P. Publications Ltd, London. Stokes, D. (2002), “Entrepreneurial marketing in the public sector: the lessons of head teachers as entrepreneurs”, Journal of Marketing Management, Vol. 18 No. 3-4, pp. 397-414. Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research: Grounded Theory Procedures and Techniques, Sage, Newbury Park, CA. Thake, S. and Zadek, S. (1997), Practical People, Noble Causes, New Economics Foundation, London. Thompson, J., Alvy, G. and Lees, A. (2000), “Social entrepreneurship: a new look at the people and the potential”, Management Decision, Vol. 38 No. 5, pp. 328-38. Westhead, P. and Wright, M. (1998), “Novice, portfolio and serial founders in rural and urban areas”, Entrepreneurship, Theory & Practice, Vol. 22 No. 4, pp. 63-100. Westhead, P. and Wright, M. (1999), “Contributions of novice, portfolio and serial founders located in rural and urban areas”, Regional Studies, Vol. 33 No. 2, pp. 157-73. Wynoczyk, P., Watson, R., Storey, D.J., Short, H. and Keasey, K. (1993), The Managerial Labour Market in Small and Medium-Sized Enterprises, Routledge, London.

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Introduction

The nature of networking in small firms Aodheen O’Donnell

The author Aodheen O’Donnell is a Lecturer in Communication and Advertising at the School of Communication, University of Ulster, Newtownabbey, UK.

Keywords Entrepreneurialism, Marketing, Small enterprises, Socialization

Abstract For some time, researchers at the marketing/entrepreneurship interface have employed the concepts of networks and networking as a means of exploring how entrepreneurs “do business”. More recently, attempts have been made to show how the process of networking contributes to small firm marketing. The overall research study on which this paper is based aimed to show how networking contributes to marketing. This paper focuses on a specific objective of the overall research study, namely an understanding of the process of small firm networking. It reviews previous research into the concept of networking and demonstrates how the process of networking can be captured as a number of dimensions along which entrepreneurial networking may vary. The paper then explains that while previous research has allowed a conceptual framework of small firm networking to be developed, further empirical research is merited and an entirely appropriate type of research is of a qualitative nature.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

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It is becoming increasingly accepted that many traditional marketing theories are not wholly applicable to small businesses, due to the unique characteristics exhibited by these firms (Cohn and Lindberg, 1972; McNamara, 1972; Carson, 1985, 1990; Hills, 1987; Peterson, 1989; Carson and Cromie, 1990; Brooksbank et al., 1992; Liu, 1995; Hogarth-Scott et al., 1996; Hill and Wright, 2001). However, it is recognised that small firm owner-managers do engage in marketing, but that the form this marketing takes is not fully understood (Dunn et al., 1987; Hill and Wright, 2001; Blankson and Stokes, 2002). For some time, researchers at the marketing/entrepreneurship interface have employed the concepts of networks and networking as a means of exploring how entrepreneurs “do business”. More recently, attempts have been made to show how the process of networking contributes to small firm marketing, The overall research study on which this paper is based aimed to gain an understanding of entrepreneurial networking and how networking contributes to marketing. This overall aim was broken down into individual objectives. First, the research sought to identify the actors in an entrepreneur’s marketing network. Then, the research investigated the nature of small firm/ entrepreneurial networking. Finally, the research sought to show how, and to what extent, the process of networking contributes to small firm marketing. It is the second of these research objectives, namely an understanding of the nature of small firm networking, that this paper will focus on, since the fulfilment of this objective demonstrates why and how a qualitative approach is particularly suitable. The paper reviews previous research into the concept of networking and demonstrates how the process of networking can be captured as a number of dimensions along which owner-managers may vary. The paper then explains that, while previous research has allowed a conceptual framework of small firm networking to be developed, further empirical research allows this framework to be developed and that an entirely appropriate type of research is of a qualitative nature.

Networks and networking at the marketing/entrepreneurship interface It is thought that one of the main reasons for the incompatibility between traditional marketing theories and small businesses is that traditional marketing models have been derived from research conducted in large organisations (Wyer and

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Carberry, 1998). Small, entrepreneurial firms are thought to exhibit many characteristics that distinguish them from large firms, and researchers are alerted to the dangers of generalising results from large organisation settings to small firms (Dandridge, 1979; Pearce et al., 1982; Gibb and Scott, 1985; Jennings and Beaver, 1997). Researchers at the marketing/entrepreneurship interface have sought to investigate the nature of entrepreneurial marketing, while taking account of the distinguishing characteristics of entrepreneurs and small firms. A popular approach that has been adopted by Interface researchers as a means of understanding how entrepreneurs market their goods and services, is to examine the network in which the entrepreneur is embedded (Shaw, 1999). Although it is thought that network analysis should consider not just the structural dimensions of networks, but also the process of interaction between the owner-managers and the individuals who comprise his network (Granovetter, 1973, 1985; Burt, 1982; Powell, 1990; Spekman, 1996; Olkkonen et al., 2000; Rocks, 2000), it has been noted that there is a strong structural imperative to network research (DiMaggio, 1992; Araujo and Easton, 1996). As such, less attention has been paid to the process of networking by small firm owner-managers. Indeed the small firm literature has failed to recognise that networks and networking are in fact different constructs (Shaw, 1997). Furthermore, it is agreed that it is not the existence of a network per se, but rather the use of that network through the process of networking, from which benefits accrue (Ostgaard and Birley, 1994; Shaw, 1997). As noted in the introduction, the specific area on which this paper is based, is the nature of this process of small firm/entrepreneurial networking. The process of networking, like the concept of a network, has enjoyed various definitions in the literature. Iacobucci (1996) for example, has stated that:

networking. This research was found to be disparate, inconsistent in terms of terminology and concepts adopted, and inconclusive in its findings. Despite this, a synthesis of research which investigated the nature of networking in small firms was achieved. It was revealed that, generally speaking, networking is an activity that varies according to the individual owner-manager and furthermore, according to the person with whom the interaction takes places. Previous research has indicated that small firm networking can vary along certain dimensions and it is the central supposition of this paper that these encapsulate the nature of the networking process engaged in by entrepreneurs. An analysis of these factors reveals that these dimensions can be referred to as: level of networking; networking proactivity and strength of network ties. These factors are such that they will vary from entrepreneur to entrepreneur and that they will vary according to which network actor is involved. Each of these factors is now discussed.

Colloquially networking is a verb used to describe the initiation and sustenance of interpersonal connections for the rather Machiavellian purpose of tapping those relationships later for commercial gain (Iacobucci, 1996, p. xiii).

Carson et al. (1995) describe networking in a small firm context as: . . .an activity in which the entrepreneurially oriented SME owners build and manage personal relationships with particular individuals in their surroundings (Carson et al., 1995, p. 201).

Although, as noted before, there has been relatively more research effort directed at the concept of networks, a review of previous research did provide some insights into the process of

Level of networking Opinions differ as to the level of networking in which small firm owner-managers engage. Birley et al. (1991) claim that business owners are likely to have a more extensive range of networks than their employed counterparts and will spend more time engaging in networking. However, this has been refuted by Curran et al. (1993), who believe that the considerable time constraints to which owners are subject, make inclusion in extensive networks impossible. According to Curran et al. (1993), there is abundant research suggesting that owner-manager self-definitions stress independence very strongly. This produces a “fortress enterprise” mentality in dealing with the wider environment and a low likelihood of participation in networking activities of all kinds. MacMillan et al. (1989) similarly, have suggested that participation in networking is “antithetical” to owner-manager cultures. Devine (1989) and Burns and Dewhurst (1996) also subscribe to this logic, believing that the psychological characteristics of people who set up their own business, often cause them not to participate in networking. However, others have challenged this “fortress mentality” description. Dollinger (1985), for example, believes that the popular image of the entrepreneur as an isolated figure, who overcomes obstacles and fends off dangers alone, is at best, incomplete. While this previous research, concerning level of networking, has examined owner-manager networking in a general sense, it is further contended that the level of networking in which an

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owner-manager engages, will vary according to the particular network actor. Previous research has shown that owner-managers network more extensively with some actors than others (Birley, 1985; Curran et al., 1993; Curran and Blackburn, 1994; Joyce et al., 1995; Hill et al., 1999; McGowan, 2000). Therefore, the level of networking in which an owner-manager engages with a particular network actor, can be positioned along a continuum from “limited” to “extensive”, as shown in Figure 1.

network actor, with whom the owner-manager networks. While it can be assumed that the degree of networking proactivity is indeed related to the owner-manager, other research shows that this factor also varies according to individual network actor involved. Aldrich and Zimmer (1986) for example, believe that networking can be both deliberate and subconscious. They are of the opinion that, social relations are to varying extents purposive, in that some arise because of accidental or unplanned encounters with individuals, while others are created via planned interactions to obtain access to specific information. In line with this, Shaw (1997) found that the small business owners in her study were aware of the benefits that particular network relationships had for their firms and consequently, the owner-managers’ involvement with these actors was not ad hoc, but very often deliberate. Therefore, the level of networking proactivity that an owner-manager adopts in networking with a particular network actor, can be positioned along a continuum from “reactive” to “proactive”, as shown in Figure 1.

Networking proactivity Debate also continues as to whether small business owners are proactive or reactive in their networking. Curran et al. (1993) purport that small business networking is much more limited and less proactive than generally believed. This is very much in keeping with the findings of McGowan and Rocks (1995), who found that small firm owners usually operationalised their networks in a subconscious manner and were unpractised in planned networking activity. Although the business owners they studied, considered themselves to be proactively using their networks, their evidence suggested that their networking was largely unstructured and coincidental in nature. By contrast, other studies have found evidence of planned and deliberate network building (MacMillan, 1983; Shaw, 1997). These findings could indicate that the extent of reactive or proactive networking in which an owner-manager engages, could be considered a factor that relates to the owner-manager, as opposed to a factor that relates to the specific

Strength of network tie Granovetter (1973) defines the strength of an interpersonal tie as a combination of the amount of time, the emotional intensity, the intimacy and the reciprocal services which characterise the tie. Johannisson (1986) adds to this definition, the regularity of use of the relationship, its level of maturity and the degree of trust and the nature of past experiences between the two actors. Dubini and Aldrich (1991) describe strong ties as relations

Figure 1 Small firm owner-manager networking dimensions

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that the small firm owner can “count on” and weak ties as superficial or casual relations, in which people typically have little emotional investment. Therefore, the strength of tie between an ownermanager and a particular network actor can be positioned along a continuum from “weak” to “strong”. All these factors just discussed can be viewed as a set of continua along which owner-manager networking can vary. This concept is depicted in Figure 1. While Figure 1 provides a conceptual illustration of how small firm networking might vary from individual to individual and from actor to actor, the previous research from which it was developed has not provided conclusive evidence as to the nature of small firm networking. The next section describes a methodology that has allowed the nature of owner-manager networking to be assessed using the model and furthermore, has allowed the conceptual model to be developed.

Support for a qualitative methodology is provided by showing that, in attempting to understand the nature of networking in small firms, the researcher is in fact investigating the social as opposed to the natural world. The social world involves real-life experiences and so to treat respondents as independent objects, “ignores their ability to reflect on problem situations and act upon them” (Robson, 1993, p. 60). This research sought to investigate small firm owner-managers’ networking activities, and inherent in this, was a need to investigate their behaviour. As such, the researcher wished to gain access to socially constructed knowledge. According to Riley (1996), this presents a unique challenge to the researcher. He states that:

Methodology Justification for a qualitative methodology The objective of this research was to gain an understanding of the nature of the networking process in which small firm owner-managers engage. It has been noted that, while much research has been undertaken to discover the structure of small firm networks, less is known about the interactional or process dimensions (DiMaggio, 1992; Araujo and Easton, 1996). Such a situation has been explained by the fact that structural dimensions of a network are amenable to quantitative methods, and accordingly, these have tended to dominate small firm research to date (Harland, 1996). However, it has been stated that the understanding of networks proffered by such quantitative methods is limited and in some cases, confusing. As Blackburn et al. (1990) point out: . . .[d]iagrams of the links between the member of a network specifying the number of links between members, the ways in which they cluster etc. are at best symbolic representations of actual relations (Blackburn et al., 1990).

In light of the drawbacks and limitations of a quantitative methodology for research of this kind, this research adopted a qualitative methodology. Qualitative methods focus on dynamic processes with the aim of explaining, rather than predicting, phenomena (Leavy, 1994). This kind of research is, according to Gordon and Langmaid (1988), “. . .centrally concerned with the understanding of things rather than measuring them”.

. . .[i]t is difficult to ask subjects to reflect upon knowledge that subconsciously guides their world because they rarely acknowledge or reflect upon it themselves Riley (1996, p. 22).

In such situations, Riley (1996) believes that the knowledge must be revealed by observing the subjects while they live their lives, or through the subjects “telling” their life stories, through recollections of particular situations (Strauss and Corbin, 1990). An appropriate methodology for gathering and analysing such stories is that of a qualitative nature (Denzin and Lincoln, 1994). Furthermore, it has been recommended that research into networks should concentrate more on theory building than theory verification (Bonoma, 1985; Tsoukas, 1989; Borch and Arthur, 1995). Carson et al. (2001) have shown that qualitative research allows for theory building as a result of empirical insights. Data collection tool Having established that a qualitative methodology was most suitable for this study, the in-depth interview was deemed a particularly suitable research tool. According to Jones (1985), the depth interview enables the researcher to understand other persons’ “constructions of reality”, by allowing interviewees to respond in their own language. Patton (1987) concurs by stating that the in-depth interview “provides a framework within which respondents can express their own understandings in their own terms”. It is a method which assists in understanding the meaning and significance which people give about their experiences (Merriam, 1988). In addition, according to Tull and Hawkins (1990), the indepth interview is the most appropriate method to probe in detail an individual’s behaviour or attitudes. The interview type, which was chosen for this research, can be referred to as semi- or quasistructured. Completely unstructured interviews

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were considered inappropriate due to the risk that the interviewer would fail to glean the desired information (Easterby-Smith et al., 1991). On the other hand, the imposition of too rigid a structure on the interview might have inhibited the flow of information and might have prevented the emergence of useful and revealing insights (Jones, 1985). In semi-structured interviews, the researcher has a framework of themes which may lend itself to the development of a number of broad questions. In this type of research, the framework guides the interview, the purpose of which is to gain understanding and meaning, rather than generalising findings to a specific population (Riley, 1996). Johannessen and Dolva (1995) state that semi-structured interviews enable the informant to “discourse freely on topics capturing his interest”. With such a method, both flexibility and structure are achieved (Johannessen and Dolva, 1995).

determined only after the researcher’s entry into the field (Hill and Wright, 2001) and so, having completed a preliminary study of thirty small firms, the researcher was in a position to choose a smaller number (in this case seven) of small firm owner-managers who were considered to offer rich and insightful data and who would offer the opportunity of building a trusting relationship with the researcher. A time period of at least nine months elapsed between the interviews with each of the ownermanagers, to ensure a longitudinal dimension. According to Borch and Arthur (1995), an overly static analysis is a common pitfall within strategic network studies and it was considered imperative that the phenomenon be studied over time, otherwise all that would be achieved is a “snap shot” (Aldrich and Zimmer, 1986). In in-depth interviews for research of this type, it is recommended that the interviewer avoids the use of marketing terminology (Muzyka and Hills, 1993; Stokes, 2000; Carson et al., 2001) and ensures that the interviewee does not feel that certain responses are “expected” (Patton, 1987; Riley, 1996; Carson et al., 2001). With this in mind, the researcher used the key themes which emerged from the literature review to guide the interview process. These themes were incorporated into various conceptual models which related to the various individual research objectives. The conceptual model shown in Figure 1 relates to the nature of small firm networking; the focus of this paper. However, in addition to ensuring that no marketing terminology was used as noted above, no reference was made to the fact that the purpose of the study was to gain an understanding of the ownermanagers’ networking activities. The terms “network” or “networking” were never introduced by the researcher, and only arose in the course of the interviews if the owner-managers themselves employed the terms. The researcher adopted Strauss and Corbin’s (1990) suggestion that socially constructed knowledge can be obtained by subjects telling their life stories, through recollections of particular situations. Furthermore, the sequential nature of the interviews allowed the researcher to gain further clarification, understanding and expansion, of points made in earlier interviews. So the researcher would have said:

The execution of the fieldwork As noted at the outset, the overall aim of this study was to gain an understanding of the small firm owner-manager networking and how networking contributes to marketing. This overall aim was broken down into individual objectives which included the identification of the marketing network, the nature of owner-manager networking and an assessment of how networking contributes to the owner-managers’ marketing activities. This paper focuses on the second of these objectives: the nature of small firm networking. The researcher conducted three in-depth interviews with owner-managers of seven small firms. The seven owner-managers had been participants in a larger study of small firm marketing for which the researcher had conducted 30 in-depth interviews. Problems with small firm definition abound, and the researcher chose firms for the original study which had been in operation for at least five years and which employed between ten and 200 employees. The firms came from a wide array of sectors including engineering, construction, distribution and services. Table I provides summary details of the participating firms. In choosing a smaller number of firms for the purposes of investigating the nature of small firm networking, the researcher used purposeful or purposive sampling, where cases are used which are rich in information (Marshall and Rossman, 1989). Purposive sampling is a feature of qualitative research of this kind and it allows the researcher to choose cases where there is an opportunity for building trusting relationships with the participants. When using purposive sampling, the composition of the sample is

Last time you talked about “quote from ownermanager”, can you say something more about this OR can you clarify what you meant by this?

Riley (1996) supports this approach, by recommending that formally structured questions should be minimised and any subsequent interventions should be made in the form of

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Table I Summary of details of participating firms No. years No. Firm established employees Industry 1 2

24 16

42 46

3

21

80

4 5 6 7

7 16 25 14

58 78 12 10

Precision engineering Plumbing and heating merchants/fireplace distribution/electrical goods distribution/bathroom and cooker showroom PVC window and conservatory manufacturer and installation/trade frame manufacturer/private development Kitchen and bedroom door designer Civil and structural engineering Screen printing Lighting design

B2B/B2C

Turn-over (£mn)

Rate of growth of T/O in last three years (%)

B2B

1.8

80

Y

B2B

6.7

30

Y

B2B & B2C B2B B2B B2B B2B

5.1 5.5 1.8 0.75 1.2

75 35 17 0 2 20

N Y Y Y Y

Notes: B2B: business-to-business; B2C: business-to-consumer; T/O: turnover

prompts and probes, based on the informant’s words. As well as revisiting issues that were raised in previous encounters, the researcher, where necessary, guided the interviewee to discuss the issues contained in the conceptual models. As well as issues emerging from the original conceptualisation, pertinent issues that were raised by other informants were also introduced by the researcher, if the interviewees themselves did not discuss such issues “voluntarily”. In this way, a degree of deduction or confirmation and/or disconfirmation was introduced, as recommended by Carson et al. (2001). When the interviews were completed, the tapes were taken and transcribed verbatim (Carson et al., 2001). This yielded a large volume of extremely rich data. Once again the conceptual framework developed earlier helped the researcher to organise the data into manageable frameworks to aid analysis, as discussed below. Data analysis The key characteristic of the data analysis of this research is that it was essentially “grounded”. That is not to say that the research programme fulfilled the conditions of grounded theory research (Glaser and Strauss, 1967), but rather that the analysis produced findings which were faithful to the participants’ understanding of the data. In other words, the “ . . .research findings constitute a theoretical formulation of the reality under investigation” (Strauss and Corbin, 1990). Grounded approaches to data analysis encompass several variants but they all stem from the grounded theory approach to qualitative research (Glaser and Strauss, 1967; Glaser, 1978, 1992). Grounded theory analysis provides a systematic structure that allows the richness of socially constructed knowledge to emerge (Riley, 1996). The key to grounded theory is that the

analysis and collection are concurrent activities. Indeed, there is widespread acknowledgement that for a study of this kind, data collection and data analysis should be a simultaneous process (Glaser and Strauss, 1967; Spradley, 1979; Kirk and Miller, 1986; Fetterman, 1989; Marshall and Rossman, 1989; Creswell, 1994; Hammersley and Atkinson, 1995; O’Donnell and Cummins, 1999). To aid analysis and to ensure that the specific objectives of this research were met, the dimensions of the conceptual framework provided the “codes” or “labels” under which the data were considered. Specifically, what are known as “criteria for analysis” (Carson et al., 2001), were developed such that the application of the criteria to the data effectively allowed the nature of networking in each of the seven firms to be analysed as well as allowing the firms to be compared to one another. The criteria for analysis were developed originally from previous literature but because of the simultaneous nature of the data collection and analysis, they were amended in light of emerging empirical understanding. So in this way, the data were used to refine the analysis frameworks which were simultaneously used to analyse the data themselves. Butler and Hansen (1991) comment that this interplay between theory, data collection and theory modification is consistent with established views on how data should be used to modify theory. Eisenhardt (1989) refers to this as a “highly iterative process” and believes that by constantly comparing the collected data with the emergent framework, the researcher can hope to generate theory which closely fits the data. Similarly, Jones (1985) explains that, such an approach to data analysis generates theory which “fits” and “works” because it has been derived from the social actors themselves and their interpretation of their social worlds.

211

Foundermanaged?

The nature of networking in small firms

Qualitative Market Research: An International Journal

Aodheen O’Donnell

Volume 7 · Number 3 · 2004 · 206-217

The criteria for analysis for the objective on which this paper is based (the nature of networking in small firms) have been developed from the conceptual model of Figure 1. As can be seen from Figure 1, it is the supposition of this research that entrepreneurial networking can be captured in three key dimensions and that entrepreneurs vary along these dimensions and further, that the network actor with whom the entrepreneur is networking, will affect the networking dimension. In order to fulfil the objective for this part of the research, namely an understanding of the nature of networking, for each dimension continuum, three distinct stages were identified, which, depending on the dimension being considered, represents “low”, “medium” and “high”. Application of these criteria for analysis enabled the researcher to position each owner-manager along the three dimensions’ respective continua.

Criteria for analysis: level of networking It was discussed how previous research has failed to reach a consensus regarding the level of ownermanager networking. An owner-manager’s level of networking is measured along a continuum from “limited” to “extensive”. In accordance with this: . an owner-manager who engages in “limited” networking with a particular network actor interacts infrequently and irregularly with the network actor and any interactions that the two actors share, are of a short duration; . an owner-manager who engages in a “medium” level of networking with a particular network actor interacts relatively frequently and/or relatively regularly with the network actor and any interactions that the two actors share, are of a relatively short duration; and . an owner-manager who engages in an “extensive” level of networking with a particular network actor interacts frequently and/or regularly with the network actor and at least some interactions will be of significant duration. Criteria for analysis: networking proactivity It was discussed how small business ownermanagers can adopt an essentially reactive or proactive approach to their networking activities and that this can vary according to the particular network actor in question. This criterion therefore spans a continuum from “reactive” to “proactive”. In accordance with this: . an owner-manager will be “reactive” in networking with a particular network actor if he engages in networking in an unplanned and ad hoc way, is unsure of what the outcomes of networking may be and does not readily create

.

.

opportunities to network with the network actor; An owner-manager who adopts a “medium” degree of proactivity in networking with a particular network actor will create opportunities to network with the actor or will approach the networking activity in a planned way or will have expectations of the outcomes of the networking activity; and an owner-manager will be “proactive” in networking with a particular network actor if he networks with the actor in a planned and deliberate way, has keen expectations of the benefits of networking and regularly creates opportunities to network with the actor.

Criteria for analysis: strength of network tie It was discussed how previous research has offered varying descriptions for the strength of a network tie. One measurement of strength is the amount of time spent interacting with network players (Granovetter, 1973), but it is noted that this may not be an entirely accurate reflection (Granovetter, 1973; Mitchell, 1973) and accordingly, other defining criteria have been added. Strength of network tie spans a continuum between “weak” and “strong.” In accordance with this: . a “weak” tie is a tie that is rarely used and represents an actor with whom the ownermanager spends little time interacting and an actor for whom the owner-manager indicates a low level of intensity, intimacy or trust; . a tie of “medium” strength will be in evidence when the tie is used with relative regularity or a reasonable amount of time is spent interacting with the actor, or if the owner-manager indicates a medium level of intensity, intimacy and trust; and . a “strong” network tie is said to occur when the tie is used regularly, or a significant amount of time is spent interacting with the actor, or if the owner-manager indicates a high level of intensity, intimacy and trust. Using these criteria for analysis, findings pertaining of the dimensions emerged and these are discussed next.

Discussion of findings As previously noted, the application of the analysis criteria allowed the nature of each ownermanager’s networking activities with members of the marketing network (in terms of level of networking, level of networking proactivity and strength of network ties) to be assessed. Then, by comparing each owner-manager with all the others, the analysis sought to explain key

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The nature of networking in small firms

Qualitative Market Research: An International Journal

Aodheen O’Donnell

Volume 7 · Number 3 · 2004 · 206-217

differences and similarities between the ownermanagers’ networking profiles. As noted, the analysis allowed for an understanding of the networking activities with members of the entrepreneurs’ marketing networks. The identification of a “marketing network”, that is the network actors with whom owner-managers interact to accrue marketing benefits, was in fact an earlier objective of this research. At that stage, a generic marketing network emerged from the data and it was found to comprise: . potential customers and existing customers; . potential suppliers and existing suppliers; . competitors in the firm’s home market and competitors outside the home market; . business friends and colleagues; . The Small Business Agency and other Government agencies; and . employee of the firm (the internal network).

network demonstrates that the owner-managers generally engaged in extensive and proactive networking and generally maintained strong ties with the actors (however, analysis of the ownermanagers’ networking profiles reveals that there are roughly equal numbers of strong ties as there are medium strength ties and weak ties). The first set of actors to be analysed were customers, which were categorised as potential customers and existing customers. The ownermanagers typically engaged in extensive and proactive networking with potential customers and typically built ties of medium strength with these actors. Less extensive and proactive networking was attributable to being almost entirely reliant on repeat business with the addition of a small level of unsolicited new business. Strong, as opposed to medium strength ties, are attributable to being extremely selective about potential customers. On the other hand, the findings indicated that weak ties were formed only in cases where the potential customer represents one-off business for the small firm. The owner-managers typically engaged in extensive, proactive networking with existing customers and built strong links with them. The main motivation for such networking activities is to generate repeat business from these customers, with a secondary or indirect motivation being that these customers may generate positive word-ofmouth recommendations to potential customers. Firms for whom repeat business is inappropriate or

The key insights afforded in respect of the nature of networking are outlined below. These are summarised in Table II, which specifically highlights if there is a dominant level of each networking dimension with respect to each of the network actors and furthermore, highlights the key factors that emerged which explain the differences between different types of networking between the owner-managers. The data revealed great variation, both among the owner-managers and between the various network actors. However, a holistic examination of the nature of networking with the marketing Table II Summary of key findings General level of Network actor networking

General level of networking proactivity

General strength of network tie

Potential customers

Extensive

Proactive

Medium

Customers

Extensive

Proactive

Strong

Potential suppliers

No dominant level

No dominant level

No dominant level

Suppliers

Extensive

Proactive

Strong ties

Competitors in the home market

No dominant level

No dominant level

No dominant level

Competitors outside the home market SBA and government agencies Business colleagues and friends

Medium

Proactive

Medium

Medium

No dominant level

No dominant level

No dominant level

No dominant level

No dominant level

Employees

Extensive

Proactive

Strong

213

Key differentiating factors Reliance on repeat business or one-off purchases Degree of selectiveness in choosing new customers Reliance on repeat business Reliance on word-of-mouth communication Friendship The degree of visibility of supplied goods in final offering; How frequently new suppliers are acquired Reliance on suppliers’ market knowledge, expertise and brand name Membership of a trade/professional association Proximity of small firm to location where trade/professional association meetings take place Friendship Number of trade association events attended Eligibility for assistance Personality compatibility Existence of appropriate person/s to turn to for advice Friendship Personality compatibility The degree to which owner-manager is a “fire-fighter” Personality compatibility

The nature of networking in small firms

Qualitative Market Research: An International Journal

Aodheen O’Donnell

Volume 7 · Number 3 · 2004 · 206-217

unattainable, will engage in less extensive networking with existing customers. The data revealed a myriad networking activities between owner-managers and existing customers but two issues emerged as common to all the firms. First, the owner-managers endeavoured to ensure that someone perceived as sufficiently senior and/or informed was always available to speak to a customer and second, the owner-managers, through a variety of means endeavoured to “look after” their customers. The next set of actors to be considered were suppliers who were categorised as potential and existing. With regard to potential suppliers, it was found that generally speaking, the level of networking, the level of networking proactivity and the strength of ties are all related to how visible the supplies are in the final offering, combined with the frequency with which new suppliers are taken on by the small firm. Therefore, the most extensive and proactive networkers are those ownermanagers whose final offerings closely resemble the product which they purchase from suppliers and who frequently deal with new suppliers, the most extreme case being firms who act as distributors (two of the seven firms were distributors). Furthermore, these owner-managers build strong ties with potential suppliers. On the other hand, where the supplied goods are highly visible in the firm’s offering but the firm does not change supplier frequently, the owner-manager’s networking will typically be less extensive and less proactive and the ties will be weaker. Ownermanagers who modify raw materials quite substantially in order to produce the final offering, are also likely to engage in less extensive and proactive networking and are more likely to build only weak links. The owner-managers typically engaged in an extensive level of networking with their existing suppliers. Extensive networkers tended to be dependent on their suppliers, not just for the supplied goods, but for the supplier’s market knowledge, technical expertise and brand name. Two of the seven owner-managers engaged in a medium level of networking and they demonstrated less dependence on their suppliers in these areas. The owner-managers were also typically proactive in their networking with existing suppliers, with a common manifestation of proactive networking being price negotiation. Similarly, the owner-managers maintained mainly strong ties with their existing suppliers. Only one owner-manager, who was experiencing problems with his main supplier, maintained a tie of medium strength. Regarding competitors, the data indicated that owner-managers are more likely to engage in

extensive and proactive networking with competitors in the home market if they belong to a trade or professional association, and this propensity increases further if the association meets at locations within the owner-manager’s home market. Two of the seven firms operated in an industry where there was no corresponding trade or professional association and these two owner-managers engaged in limited and reactive networking with their competitors. In the other cases, the owner-managers built and maintained ties of medium strength with their competitors. Only one owner-manager, who is planning to collaborate with a few competitors, has built strong ties. Again, the two owner-managers who do not belong to a trade association have the weakest ties with their competitors. The typical assessment of networking activities with competitors outside the home market is proactive networking at a medium level, resulting in medium strength ties. Such networking usually takes place at trade shows and exhibitions. In fact, the principal reason for attendance at trade shows and exhibitions is to network with competitors. Not all of the owner-managers are eligible for assistance from the SBA or other government agencies and those owner-managers who network with the SBA and other government agencies (four out of seven), generally do so at a medium level. Two of the owner-managers adopted a proactive networking approach, while the other two adopted only a medium level of proactivity. Those ownermanagers who were proactive in networking with the SBA, had built stronger links with individuals in the agency. With regard to the owner-managers’ networking activities with business colleagues and friends, there is variation between the owner-managers in all the dimensions. In terms of level of networking, only one owner-manager was found to exhibit a limited level of networking with business friends, this being attributed to there being no appropriate person to whom he could turn for advice. Some of the owner-managers adopted a proactive approach to networking with this sub-network, and indicated that they would proactively solicit advice from certain individuals. Others appeared to only network with their business colleagues through chance encounters, indicating a more reactive approach. With regard to strength of tie, again there was variation, but more owner-managers maintained strong links than maintained weak links. The last sub-network is the internal network and the findings revealed that most of the ownermanagers network extensively with their employees for marketing purposes. These ownermanagers indicated that they would consult with

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The nature of networking in small firms

Qualitative Market Research: An International Journal

Aodheen O’Donnell

Volume 7 · Number 3 · 2004 · 206-217

their internal network if appropriate, before turning to someone in their external network. Typically the owner-managers are proactive in their networking, although one owner-manager exhibited only a medium level of proactivity and another who describes his daily activities as ‘firefighting’, adopted a mainly reactive approach to networking with staff. Most of the ownermanagers, especially those who are extensive and proactive networkers, maintain strong ties with their employees. As well as allowing for a greater understanding of the dimensions comprising the original conceptual model, the nature of the research method adopted was such that it allowed other dimensions pertaining to the nature of networking to be revealed, if appropriate. Indeed, two additional factors which influence the nature of networking were revealed. However, an analysis of these factors and their effects revealed that they should more appropriately be regarded as influences on the already established dimension of “strength of network tie”. These additional influencing factors are the level of friendship contained within the network link and the level of compatibility of the personalities of the two network actors. With regard to friendship, it was found that a friendship content only occurred in, and had an effect on, the owner-managers’ networking activities with their existing customers, domestic market competitors and business friends and colleagues. Regarding the personality compatibility dimensions, the findings indicated that ownermanagers are drawn to network actors who are on their “wavelength”. This influence was found to be most apparent in the owner-managers’ networking activities with government agencies, business friends and colleagues and their internal network. A final insight into the nature of entrepreneurial networking afforded by this research is that with all else being equal, more extensive and more proactive networking with an individual network actor usually generates stronger network ties with that actor than limited and reactive networking.

From previous research, three dimensions emerged which captured the nature of small firm networking and these dimensions are presented in Figure 1. Empirical research validated this conceptual model and provided further insight into these dimensions. The empirical research revealed that owner-managers vary in their networking activities but that there are some common trends. In particular, it was shown that owner-managers generally engage in networking that can be described as extensive and proactive. Furthermore, such networking leads to the development of strong links between the ownermanager and his/her network ties. With regards to the variation among the owners in the study, a variety of explanatory factors arose and these were summarised in Table II. What this study demonstrates is that networking is an activity in which owner-managers in all kinds of industry engage. Furthermore, it is an activity that owner-managers shape to suit their circumstances and the needs of their firm. So, it was found that on occasions, extensive networking was neither necessary nor desirable. For example, owner-managers whose firms rely almost exclusively on one-off business will not expend considerable effort in networking with existing customers. On the other hand, when appropriate, owner-managers will consciously and proactively network with actors within their networks. For example, owners who hope to negotiate lower prices with their suppliers will be proactive in their approach to networking with the suppliers in question. It was further shown that networking with a view to developing strong ties generally requires extensive and proactive networking. Again, it is not always preferable to develop strong ties with all network actors. With regard to competitors, for example, strong ties are only deemed necessary if the owner-manager hopes to engage in some form of collaboration with the competing firm. This understanding of the nature of small firm owner-manager networking has been used as a foundation in the investigation of how networking contributes to small firm marketing; the overall aim of this research. This paper and the study on which it is based have demonstrated that qualitative research is entirely appropriate for the investigation of a phenomenon of interest at the marketing/ entrepreneurship interface. For areas about which some understanding has been achieved, but a deeper investigation is required, qualitative research can provide a richer and fuller understanding and allow for new, unanticipated empirical insights.

Conclusion This paper was based on a research study which sought to understand how networking contributes to small firm marketing. This overall aim was broken down into several objectives and the objective on which this paper focused, was to gain an understanding of the nature of small firm networking by examining the dimensions along which small firm networking can vary.

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Introduction

Laments and serenades: relationship marketing and legitimation strategies for the cultural entrepreneur

This paper investigates marketing and entrepreneurship in a very distinct context: marketing to financial markets by cultural entrepreneurs in the music industry. For a number of reasons, this context is particularly appropriate for examining the marketing/entrepreneurship interface. At a practical level, the ability to access financial capital is a core task of entrepreneurial behaviour and provides a very strict test of marketing capabilities. At a conceptual level, this perspective contributes to two contrasting but related trends at the marketing/entrepreneurship interface. The first is an increasing specialisation within each of the two disciplines. Researchers in marketing and entrepreneurship have focused their respective lenses on particular business environments with ever increasing magnifications in an attempt to make theoretical concepts more relevant to specific contexts. This has given impetus to the second trend: a theoretical convergence that reinforces the interface between the two disciplines.

Nicholas C. Wilson and David Stokes The authors Nicholas C. Wilson is Senior Lecturer in Small Business and Entrepreneurship and David Stokes is Assistant Director, both at the Small Business Research Centre, Kingston Business School, Kingston University, Kingston-upon-Thames, UK.

Keywords Relationship marketing, Entrepreneurialism, Socialization, Finance

Abstract This paper investigates how the marketing/entrepreneurship interface functions within the cultural sector. Specifically, the paper considers how cultural entrepreneurs in the music industry market not to customers, but to networks that control the resources necessary to support entrepreneurial ventures. Evidence is drawn from the qualitative research of a study on access to finance by owner-managers of independent music companies (“cultural entrepreneurs”). The findings support the notion that “legitimation” is a key factor in accessing such resources. Cultural entrepreneurs have difficulties in establishing either “pragmatic legitimation” (derived from the self-interest of organisations across marketing networks) or “cognitive legitimation” (derived from perceptions of normality and conformity within marketing networks). Marketing strategies at both individual and industry level are put forward to overcome these barriers. For individual businesses, a “selection strategy” using creative clusters or a “manipulation strategy” that manages the cultural environment are recommended. The implications for relationship marketing models are discussed.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 218-227 q Emerald Group Publishing Limited · ISSN 1352-2752 DOI 10.1108/13522750410540227

Marketing theory Within marketing theory there has been a shift away from the classical transactional approach to take into account the theoretical developments of market orientation, sectoral approaches, relationship marketing and networks (Christopher et al., 1991; Gro¨nroos, 1994; Deshpande´, 1999). Analysis of the marketing process has become increasingly specialised and sophisticated, as evidenced by the growth in special interest groups of the Academy of Marketing (2002). A particular aspect of this is the comparative discussion of marketing within large and small firms (Hulbert et al., 1998). While some commentators (e.g. Nevin, 1995; Chaston, 2000a) describe a simple dichotomy between corporate and entrepreneurial marketing, Coviello et al. (1997) argue that SME marketing practice can be further distinguished into four types: (1) Transaction. (2) Database. (3) Interaction. (4) Network marketing. In particular, interaction and network marketing rely on informality in developing markets and marketing communications (Stokes, 2000), thereby providing a direct bridge to the entrepreneurship literature. Marketing is “an evolving philosophy” (Chaston, 2000a) and a key aspect of this evolution is the study of its relationship to management paradigms, including entrepreneurship.

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Entrepreneurship theory Although entrepreneurs are often typified as lone individuals thriving on independence, they also depend on co-operation and various forms of networks (Shaw, 1999). Early developments in entrepreneurship theory focused on the personality traits of individuals (Chell et al., 1991), but it is now widely accepted that entrepreneurial behaviour cannot be fully understood in isolation from the social and market networks within which entrepreneurs operate (Curran and Blackburn, 1994; Carson et al., 1995). At the same time as the development of generalised notions of entrepreneurship, the literature has expanded to include differentiated and specialised accounts using variables such as gender, family and ethnicity (Carter and Jones-Evans, 2000), market sector – such as technology-based firms (Oakey, 1994) and cultural entrepreneurship (Leadbeater and Oakley, 1999; Fillis and McAuley, 2000; Brindley, 2000; Ellmeier, 2003). In this paper, we follow Ellmeier’s definition of “cultural entrepreneurialism” – encompassing all-round artistic and commercial/business qualifications, long working-hours and fierce competition from bigger companies. It is in the disappearance of any separation between the artist/creator and noncreators/artists that this concept has begun to be used relatively widely. As such, the particular ability of the cultural entrepreneur to coordinate artistic and managerial resources (see Casson, 2003), can be seen as a defining characteristic of the use of the term “entrepreneur”.

marketing models, such as relationship and network marketing. Aspects of relationship marketing do overlap with entrepreneurial concepts. A critical survival factor for a new venture is the development of a network of supportive relationships across the local business environment (Mumby-Croft, 1998; Aldrich, 1999). This strategy is supported by the literature on relationship marketing that has focused on an extended market (Hunt and Morgan, 1994; Christopher, 1995). In the years since the first “six markets” model (Christopher et al., 1991) brought more than the “customer” market to the attention of researchers, relationship marketing has become increasingly sophisticated following general recognition that marketing encompasses networking to suppliers and other stakeholders (Peck et al., 1999; Chaston, 2000b). However, relationship marketing concepts tend to focus on established networks within the six markets and the need to develop long term relationships between them. Existing literature is less explicit on how to establish these networks and broker the relationships in the first place – the key task for an entrepreneur setting up a new venture. This is where the entrepreneurship literature can help.

Theoretical convergence – to a point This special issues bears testimony to the convergence taking place between the marketing and entrepreneurship literatures. Research at the marketing/entrepreneurship interface has gone further than a simple “bolting together” of two distinct literatures. Indeed, some commentators now argue that marketing should be seen as a major domain within the entrepreneurship field, or vice versa, as they share a range of key concepts such as creativity, innovation, idea generation and opportunity identification within their respective areas (Hills and LaForge, 1992; Carson et al., 1995). However, an obvious danger in merging aspects of two rapidly developing theoretical disciplines is that researchers at the cutting edge of one compare their findings against a dated background of the other. As Coviello et al. (2000, p. i) suggest, it is now appropriate to assess entrepreneurial marketing practices in the context of a “broader more contemporary perspective” that takes into account the new paradigms of thought that have developed within existing

Legitimation at the marketing/ entrepreneurship interface Entrepreneurial network researchers have tended to focus on the role social resources play in founding new organisations. In particular, Hannan (1986) argues that a pattern of low rates of new firm foundation and high rates of closure exist where small firms in new business populations initially lack external “legitimacy” – a social judgement of acceptance, appropriateness, and desirability. A key strategic issue affecting entrepreneurs attempting to establish and grow new ventures is their ability to attract such legitimacy – which in turn influences how that business can access new resources.

Defining legitimation Suchman (1995, p. 574) describes legitimation as: . . .a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions.

Elsewhere, Ashforth and Gibbs (1990) consider legitimacy as congruency between the values, norms and expectations of society and the activities and outcomes of the organisation. Zimmerman and Zeitz (2002, p. 416) regard

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legitimacy as a relationship [original emphasis] between the practices and utterances of the organization and those that are contained within, approved of, and enforced by the social system in which the organisation exists. They go on to define ‘social system’ here as an interacting collectivity that has ongoing patterns of scripts, rules, norms, values and models. Barron (1998), following Suchman (1995), distinguishes between three forms of legitimacy: (1) Pragmatic legitimacy “rests on the selfinterested calculations of an organization’s most immediate audiences” (Suchman, 1995, p. 578). To that extent, potential customers and suppliers (or finance providers in the case of this paper) must believe that involvement will be in their interests. Such self-interested calculation, or “framing” is a key dimension of any “market” (Callon, 1998). (2) Moral legitimacy “reflects a positive normative evaluation of the organization and its activities” (Suchman, 1995, p. 579). This is probably the definition closest to its meaning in common usage. (3) Cognitive legitimacy, describes where the organization is “taken for granted” as being the natural way of achieving something. Aldrich (1999) goes on to describe cognitive legitimacy from a producer’s point of view as meaning that new entrants to an industry are likely to copy an existing organizational form, rather than experiment with a new one. In addition to cognitive legitimacy, Zimmerman and Zeitz (2002) suggest that new ventures can derive legitimacy from their industry, adding to the legitimacy they have from other sources. In this paper we restrict our focus to pragmatic and cognitive legitimacy. Industry legitimacy is difficult to discern from either pragmatic or cognitive legitimacy in practice, so this is not identified separately. We exclude moral (or sociopolitical) legitimacy on the grounds that moral and regulatory acceptance are generalised constraints of new venture activity. Figure 1 outlines the conceptual logic that underpins this paper’s contribution to the marketing/entrepreneurship interface. In line with the first trend at the marketing/ entrepreneurship interface (increasing specialisation), the context for researching legitimation is specific both in terms of marketing (to finance markets) and entrepreneurship (by “cultural entrepreneurs” in the music industry).

Supply and demand in financial markets for the music industry The music industry is one of Britain’s biggest and most culturally significant industries. For over four decades, Britain’s music companies have been world leaders. The industry’s growth has been rapid, generating over 130,000 jobs and contributing £3.2 billion to the value of the UK economy (National Music Council, 1999). Over 90 per cent of music businesses in the UK are small or medium-sized enterprises (SMEs) and these are widely seen to be the source of much of the creative potential for the industry as a whole. However, anecdotal evidence has suggested that these businesses face particular difficulties in accessing finance. A number of specific supply-side and demandside difficulties have been identified that create barriers to successful marketing to obtain finance. These include complex chains of royalties and fees, which lengthy contracts make more difficult for potential funders to understand (Passman, 1995); the intangible nature of the assets held by many music businesses (copyrights and royalties) which can be difficult to value; and perceptions of the high risk nature of the industry – increased by dependence on the vagaries of fashion and individual artists. Some have argued that underlying these marketing difficulties for creative industries are the specific characteristics of creative products and services themselves. For example, creative products display “quality uncertainty” (Caves, 2000; Kretschmer et al., 1999) whereby it is difficult to assess how “good” a product is before, during and even after delivery. Anecdotal evidence points to relationships for the provision of finance emerging between the many smaller music businesses and their larger counterparts (either the few medium-sized producers and distributors, or the “majors” – Sony; BMG: EMI; Polygram; Warner Music). Even where differences exist between the smaller ‘independents” and the majors, it could be that their bond (through cognitive legitimation) is in fact stronger than that between music businesses and formal finance providers. Legitimacy may motivate such investors by signalling the organisation’s commitment to the proper scripts, rules, norms, values and models (Zimmerman and Zeitz, 2002). At a general level, recalling Hannan (1986), there is every reason to think that legitimacy will play a key role in determining the success rates of new ventures, and their ability to access finance. However, this is unlikely to be confined to an issue of new venture creation alone. More established cultural firms

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Figure 1 Network legitimation and the interface: conceptual overview

also encounter issues of legitimation, as outlined below.

Legitimation, network governance and the cultural entrepreneur O’Connor’s research for the ICISS Project at the Manchester Institute for Popular Culture has pointed to the importance of increasing the visibility and recognition of the many small companies and enterprises in the cultural sector, which is essentially dominated by big media companies (O’Connor, 2000). This research has also pointed to the potential dilemma faced by established small enterprises in the cultural sector whereby they are categorised as commercial by government cultural support but regarded by business as being “non-professional” (Ellmeier, 2003). A deficit of legitimacy appears to play a part in propagating the widely held perception that creative and cultural sector firms are intrinsically high risk. Such a blanket approach to risk may unnecessarily count against some cultural entrepreneurs. Taking into account the complex nature of exchanges in conditions of demand uncertainty (Peterson and Berger, 1971), some commentators have suggested that relationships between parties in the creative industries are subject to a particular type of interfirm coordination, or “network governance” (Jones et al., 1997). Such coordination relies on strongly embedded network ties (Granovetter, 1992) and emphasises shared norms, values and beliefs. On this basis, cognitive legitimation also plays a vital role in influencing how things get done. We propose a basic model (Figure 2) that illustrates the different legitimation types to be expected within and across the networks involved in attempts by cultural

entrepreneurs in the music industry to market themselves to finance providers. Two further propositions put forward by Zimmerman and Zeitz (2002) are also central to this paper’s enquiry. First, legitimacy improves the chances of acquiring all the various resources needed to survive and grow, including financial, social and human capital (Aldrich and Fiol, 1994; Harman and Freeman, 1989). Thus, the likelihood of an entrepreneur marketing successfully to key suppliers depends on the level of their venture’s legitimacy. This is considered in relation to the ability of the cultural entrepreneur to access finance. Second, an entrepreneur can take specific marketing actions to improve their legitimacy rating in a deliberate, goal-oriented strategy. Four specific legitimation strategies have been put forward: conforming to, selecting, manipulating, and/or creating the environment in which it exists (Zimmerman and Zeitz, 2002). The application of such strategies in the context of the cultural entrepreneurs’ marketing to the finance sector will be considered in light of the research findings.

Methodology The empirical results of this paper are from a study commissioned by the Department for Culture, Media and Sport which had the overall aims of examining how SMEs in the music industry access finance to fund their growth, and the key reasons for any problems encountered. Parts of the study required measurement of specific variables (e.g. the range of finance options actually being used), and hence indicated a quantitative research method. Other aims required investigation of attitudes and perceptions (e.g. the problems in accessing finance and key reasons for this) that

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Figure 2 Legitimacy within and across cultural market networks

indicated a qualitative research process. A multimethod research design was therefore used to meet the research aims: in-depth interviews with cultural entrepreneurs (ten), industry representatives (ten), professional advisors (four), finance providers (four); a telephone survey of 310 music businesses; a postal questionnaire to 410 banks, and seven illustrative case studies of music companies. Mixed method designs are particularly useful for researching contextual issues with multiple aims, as can be the case in research at the marketing/entrepreneurship interface (Gilmore and Coviello, 1999). However, the focus of this paper is on the perceptions and roles of both cultural entrepreneurs and potential financial providers operating within complex networks. Such an evaluation requires the richness and depth of data available through qualitative research techniques, as recommended by previous researchers into the marketing networks of entrepreneurs (e.g. Hill et al., 1999). Most of the data drawn on for this paper is therefore from the interviews and case studies. The sampling groups for interviews included representatives of the main trade associations (e.g. the British Phonographic Institute and the Association of Independent Musicians), as well as individual owner-managers from each of the six music sectors under review: record companies, music publishers, artist managers, promoters, recording services and online music companies. Representatives of high street banks, specialist

banks, venture capitalists, and other professional service providers (music industry accountants and lawyers) were also included. Semi-structured interview plans were prepared prior to the interviews themselves, allowing for a degree of informality within a consistent framework. The researchers attempted to minimise response bias through seeking the trust of the respondents in an informal atmosphere. The qualitative data, on which most of this paper is based, was analysed using general analytical procedures (Miles and Huberman, 1994), involving the systematic disaggregation and re-aggregation of written records into themes or categories of data through coding (Curran and Blackburn, 2001). The results are presented according to these key themes, with clear labeling of all quotes indicating which respondent’s views are being expressed (see Scase and Goffee, 1982).

Results Pragmatic legitimation between market networks Barriers to market entry Difficulties between the music and finance networks manifested themselves most deeply during the start up phase. The structural and risk norms of financiers were most at variance with the needs of cultural entrepreneurs when they were

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setting up a new venture that had little to legitimise a claim for financial support. The need for a track record, for some means of reassuring potential investors or lenders appears paramount:

concern that the industry provides few examples of businesses that have provided large returns for investors: Partly it is the image or character of the industry. There is no great history of investment. There are not many rags to riches stories of start-ups becoming big public companies and making lots of money for investors (cultual entrepreneur (record company 1)).

It is a “chicken and egg” situation – you can’t get the catalogue without developing careers, but you can’t finance unknown bands. . . cultural entrepreneur (record company 1).

There is agreement from both the music industry and finance-providers that marketing and financial skills of music entrepreneurs overall have historically not been of a high standard:

The “culture gap” between networks One of the most widely referred to difficulties experienced by representatives of both networks was the problem of being “understood”:

It is very much viewed as a “cottage industry”, with esoteric rights being marketed by people who have no clearly demonstrable financial skills (finance provider 1).

It is a dialogue problem - the music industry and banks don’t speak the same language (Industry representative 1). It’s a cultural problem. . .there is no obvious link between people creating business and financiers (cultural entrepreneur (record company 2)).

While it is generally acknowledged that there is not always a “harmony of interests” between ownermanagers/investors/or sponsors (DCMS, 2000, p. 13), the situation for music businesses appears to be exacerbated by the focus on the differences between the two groups, as opposed to the areas of mutual agreement. In fact, the reported lack of understanding was less of a two-way phenomenon but principally expressed as the finance providers not “understanding” the music industry. Over and above generalised perceptions, there was an important distinction made between the views of finance-providers in general, and those of individuals working in that field. One online music business owner observed: Venture capitalists are “herd-like” – there aren’t too many contraries. However, our “champions” in the finance industry are the younger members of the VC team – people who actually appreciate the connections and importance of music (cultural entrepreneur (online music 1)).

This highlights the potential importance of individual dyadic relationships in influencing or developing legitimation across the music and finance providing market networks (see Halinen et al., 1999). Image of the music industry Many music businesses are regarded by finance providers as “lifestyle” businesses. One of the record companies commented, “being in the music industry is not perceived as being ‘serious’ until you are successful at it”. To this extent, legitimacy is dependent on evidence of success rather than the “potential” for success. Another example of such “evidence” is the return on investment delivered by music business entrepreneurs in the past. The research raised the

There have been few attempts by music industry associations to promote a better image of how music entrepreneurs manage their businesses, despite the fact that this would appear to be a suitable strategy for developing pragmatic legitimation across networks. The importance between striking the right marketing balance between enthusiastic promotion and over-eager selling was an issue raised by a number of respondents: There is also a perception of people in the music industry that because they are always seen to be selling / promoting, pushing their bands, they are automatically selling, pushing and promoting their business. . .and that all the information you get in terms of prospects is going to be inflated. . .because everyone’s got the next “great artist”! (professional advisor 1).

Market position of the music industry as “high risk” The level of uncertainty within the music business is compounded by short termism (the powerful influence of changing fashions and tastes in music), the threat of piracy (as digital distribution becomes more prevalent), and the difficulty of monitoring and patrolling territory agreements in the new Internet age. All of these perceptions about the music industry lead to a strongly endorsed view of it being a “high risk” industry. As one respondent observed: The music industry automatically generates a high score. . .security (tangible security rather than intangible) has to be that much better for the overall proposition to fit underneath the generic High St bank’s criteria. . . (professional advisor 2).

Given the core values of banks and venture capitalists that insist on sophisticated assessment of “risk”, it is understandable that broad-brush perceptions about the high risk nature of the industry will deprive music businesses of pragmatic legitimacy.

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Cognitive legitimation within market networks Music industry network – the comfort factor and selfimage Within the music industry a number of factors legitimate the marketing approach adopted by cultural entrepreneurs in their attempts to access financial markets. These lead to both negative and positive attitudes to raising finance within the industry. The cultural entrepreneur’s decision as to what kind of financial market to target for their particular music business appears to be strongly dependent on what might be termed the “comfort factor”. Such comfort is closely related to the “taken for granted” nature of cognitive legitimation. Several interviewees used the word “comfort” in the context of being “at ease” with a particular finance source, as opposed to reaching a decision on the basis of a more rigorous analysis of the suitability of the various types of financial products on offer. Interestingly, despite an “us and them” culture between smaller businesses and the “majors”, there remains a strong bond (emotionally and financially) between smaller and larger music businesses. One record company cultural entrepreneur, who was offered bank finance, explained why she turned this down in favour of a larger record company (see note to Figure 2): I went to a larger record company because I knew they would be more understanding of the dilemmas of my business and the uncertainty of the business plan. I also knew they could give me access to foreign markets, because they had established foreign territories (cultural entrepreneur (record company 3)).

This is indicative of a strong flow of investment that circulates within the music industry. Rather than looking to external markets such as banking and venture capital, many music businesses seek funding from internal markets within the industry. This income flow manifests itself at a variety of levels, including offering studio space in exchange for a share of profits from an album, through to a major record company or distributor taking an equity stake in a smaller label (corporate venturing). The self-image widely held within the music industry is that of being ‘different’ from other industries. This stems largely from the vocational aspect of an industry that deals with an intangible and difficult to value product. It is likely, however, that in an industry where “difference” is “taken for granted”, the role of cognitive legitimation will be particularly strong. A music publisher put it this way: I always think it a great mistake to think of music as being just like any other product. There’s a

difference of kind not degree. To think that you can look at the record industry in the same way as you can a baker or a service industry - it really misses the point! (cultural entrepreneur (publisher 1)).

The finance provision network While the views reported above are focused on cognitive legitimation within the music industry, the norms, values and beliefs of the finance providing network are also central to how market relationships are built up over time. A strong example of where a music business has benefited from its closer association with these norms, values and beliefs was an online music business, whose management team was assembled from city and management consultancy backgrounds. The director explained how easy it had been for his management team to access the venture capital required, precisely because they did speak the same language as the venture capitalists: Raising finance was extremely easy for us because we caught a wave, it is an exciting sector, and more than anything, the management team spoke the language of the investors. Very often in the music industry the management team doesn’t have the language at all! (cultural entrepreneur (online music 1)).

Of course, whether or not cultural entrepreneurs could (or should) learn to conform to the expectations of finance providers concerning creative industries remains a debatable question. This is taken up further in the discussion below.

Discussion The qualitative findings of this research are strongly supportive of the importance of legitimation as a factor in determining whether cultural entrepreneurs can successfully market their business to access necessary resources such as finance. To that extent Zimmerman and Zeitz’s (2002) proposition that the greater the level of a new venture’s legitimacy, the more resources it can access, appears well founded. In terms of pragmatic legitimation across networks, it was clear that this could only be achieved through the social construction of norms, values, beliefs and definitions within a common “language”. Without this, unhelpful perceptions of the music industry by finance providers will be difficult to overcome. In the particular context of cultural entrepreneurship, cognitive legitimation within networks also appeared to have an important role to play. While small music businesses continue to feel more “comfortable” by developing relationships (either formal or informal) with

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larger music businesses rather than with banks or venture capitalists, the take-up of external financial resources will be limited. The potential for cultural entrepreneurs in the music industry to develop legitimacy and, in turn, marketing relationships with finance providers is highlighted in this study. The quantitative research undertaken in parallel with the findings reported in this article found that about three-quarters of small music businesses (77.6 per cent) considered the issue of access to finance acting as a barrier to growth for the industry to be either “significant” or “very significant”. There is certainly room for improvement in existing marketing relationships, therefore. This raises the issue of what can be done to align the levels of pragmatic legitimation across networks and cognitive legitimation within networks and so reduce the finance barrier for cultural entrepreneurs in the music industry. A key proposition put forward in the literature review was that a new venture can take marketing actions to increase visible consistency with the environment by applying one or a number of “legitimation strategies” (Zimmerman and Zeitz, 2002, p. 423). Specifically, these included the four strategies of conformance, selection, manipulation, and creation. For the majority of new ventures in the music industry, conformance or “following the rules” represents the path of least resistance. However, overall this approach appeared to raise barriers to successful marketing (i.e. difficulties with finance provision). This might result from particularly clear industry norms and beliefs (cognitive legitimacy) reducing the ability of the cultural entrepreneur to “play the game” by the finance providers “rules” (pragmatic legitimacy). There is clearly a case for suggesting that a more “knowing” strategy of conformance would be beneficial to cultural entrepreneurs. There was no evidence of any music business adopting the most innovative approach (the “creation” strategy), presumably because the creation of the social context is only appropriate for completely new industries. The remaining two strategies, selection and manipulation represent differing degrees of deliberate goal-oriented behaviour. A selection strategy involves locating in a favourable environment (Suchman, 1995). From the qualitative interviews carried out in this research there was little evidence of explicit selection strategies being undertaken by cultural entrepreneurs in the music industry. However, music businesses are known to locate within “creative clusters” (geographic concentrations of interconnected companies), in London, the South East, Manchester, Sheffield, and Merseyside, for

example. The Clusters Group at the UK’s Department of Trade and Industry notes that “dividends from creative clusters can be enormous in terms of civic image, training and engagement in the economy as well as purely economic terms” (Creative Clusters, 2002). We would argue that such dividends would appear to result, at least in part, from the related increased cognitive and pragmatic legitimation such geographic closeness brings. Perhaps the most appropriate legitimation strategy available to cultural entrepreneurs is the manipulation strategy, which involves a more innovative approach. The innovator “must often intervene pre-emptively in the cultural environment in order to develop bases of support specifically tailored to the distinctive needs” of the organisation (Suchman, 1995, p. 591). The notion of pre-emptive intervention suggests a deliberate approach to strategy that sits uncomfortably alongside the opportunistic behaviour of entrepreneurial individuals. On the other hand, to the extent that the entrepreneur is an innovator in the Schumpeterian sense, this manipulation strategy would seem appropriate for cultural entrepreneurs to adopt. The findings reported in this article suggest that a rather limited set of cultural entrepreneurs have benefited from such a strategy. The example of the online music business that had no difficulties in accessing venture capital serves to demonstrate this. Strategic intervention at the industry level then is also required to overcome legitimation problems. This might include developing and promoting training seminars at targeted banks at a regional level; forming industry-specific Business Angel Networks; or identifying role models that can be publicised as examples of best practice.

Implications for entrepreneurial relationship marketing models This research at the marketing/entrepreneurship interface has clear implications for the development of relationship marketing theory, including the six markets model. First, existing relationship marketing models tend to assume that market building has already taken place. Issues of legitimation have themselves been “taken for granted” to some extent. While this is of particular concern in the context of new venture creation, it has also been shown to be important in creative industries, where short-term or fashion driven products and services are innovated regularly. Second, relationship marketing models do not easily account for stakeholders being members of

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more than one market domain. In this study there was evidence of some music businesses effectively occupying at least five of the six market “domains” put forward in the six market model. While it is convenient to label enterprises according to such criteria as record producer or music publisher, the reality of the creative production chain in this industry involves often complex interactions and market relationships. Such relationships are subject to change in the level of legitimacy over time. Third, relationship marketing models are based at the organisational level, and do not readily account for the nature of change across networks and industries (or the role of entrepreneurial individuals within that change process). Where cultural entrepreneurs adopt a manipulation legitimation strategy there will be the potential for changes to be affected across both dyadic relationships (with individual finance providers) and the network as a whole (see Halinen et al., 1999). Broadly speaking, unless legitimation is taken into account there will be a danger that relationship marketing models provide only a partial picture of where the marketing focus for cultural entrepreneurs is most required.

Chell, E., Haworth, J. and Brealey, S. (1991), The Entrepreneurial Personality: Concepts, Cases and Categories, Routledge, London. Christopher, M. (1995), “Networks and logistics: managing supply chain relationships”, paper presented to the 3rd International Colloquium in Relationship Marketing, Monash University, Melbourne. Christopher, M., Payne, A. and Ballantyne, D. (1991), Relationship Marketing, Butterworth-Heinemann, Oxford. Coviello, N.E., Brodie, R.J. and Munro, H.J. (1997), “Understanding contemporary marketing: development of a classification scheme”, Journal of Marketing Management, Vol. 13 No. 6, pp. 501-22. Coviello, N.E., Brodie, R.J. and Munro, H.J. (2000), “An investigation of marketing practice by firm size”, Journal of Business Venturing, Vol. 15, pp. 523-45. Creative Clusters (2002), Summit Conference, Sheffield, 20-23 November, available at: www.creativeclusters.co.uk Curran, J. and Blackburn, R. (1994), Small Firms and Local Economic Networks, Paul Chapman Publishing, London. Curran, J. and Blackburn, R. (2001), Researching the Small Enterprise, Sage, London. DCMS (2000), Connecting Creativity with Capital: Finance Conference, Creative Industries Taskforce, DCMS, London. Deshpande´, R. (1999), Developing a Market Orientation, Sage, London. Ellmeier, A. (2003), “Cultural entrepreneurialism: on the changing relationship between the arts, culture and employment”, International Journal of Cultural Policy, Vol. 9 No. 1, pp. 3-16. Fillis, I. and McAuley, A. (2000), “Modelling and measuring creativity at the interface”, Journal of Marketing Theory and Practice, Vol. 8 No. 2, pp. 8-17. Gilmore, A. and Coviello, N. (1999), “Methodologies for research at the marketing/entrepreneurship interface”, Journal of Research in Marketing and Entrepreneurship, Vol. 1 No. 1, Fall, pp. 41-53. Granovetter, M. (1992), “Problems of explanation in economic sociology”, in Nitin, N. and Eccles, R. (Eds), Networks and Organizations: Structure, Form and Action, Harvard Business School Press, Boston, MA, pp. 25-56. Gro¨nroos, C. (1994), “From marketing mix to relationship marketing: towards a paradigm shift in marketing”, AsiaAustralia Marketing Journal, Vol. 2 No. 1, pp. 9-29. Halinen, A., Salmi, A. and Havila, V. (1999), “From dyadic change to changing business networks: an analytical framework”, Journal of Management Studies, Vol. 36 No. 6, pp. 779-94. Hannan, M.T. (1986), “Competitive and institutional processes in organizational ecology”, Technical Report, 86-13, Department of Sociology, Cornell University, Ithaca, NY. Harman, M.T. and Freeman, J. (1989), Organizational Ecology, Harvard University Press, Boston, MA. Hill, J., McGowan, P. and Drummond, P. (1999), “The development and application of a qualitative approach to researching the marketing networks of small firm entrepreneurs”, Qualitative Market Research: An International Journal, Vol. 2 No. 2, pp. 71-8. Hills, G.E. and LaForge, R.W. (1992), “Marketing and entrepreneurship: the state-of-the-art”, in Sexton, D.L. and Kasarda, J.D. (Eds), The State-of-the-Art of Entrepreneurship, Babson College, Babson Park, MA. Hulbert, B., Day, J. and Shaw, E. (1998), Proceedings of the Academy of Marketing and UIC/MEIG-AMA Symposia on the Marketing and Entrepreneurship Interface, Nene University College, Northampton.

References Academy of Marketing (2002), Proceedings of the Academy of Marketing Conference, Nottingham, July. Aldrich, H.E. (1999), Organizations Evolving, Sage, London. Aldrich, H.E. and Fiol, C.M. (1994), “Fools rush in? The institutional context of industry creation”, Academy of Management Review, Vol. 19, pp. 645-70. Ashforth, B.E. and Gibbs, B.W. (1990), “The double-edge of organizational legitimization”, Organization Science, Vol. 1, pp. 177-94. Barron, D.N. (1998), “Pathways to legitimacy among consumer loan providers in New York City, 1914-1934”, Organization Studies, Vol. 19 No. 2, pp. 207-33. Brindley, P. (2000), New Musical Entrepreneurs, IPPR, London. Callon, M. (1998), “The laws of the markets”, The Sociological Review, Blackwell Publishers, Oxford. Carson, D., Cromie, S., McGowan, P. and Hill, J. (1995), Marketing and Entrepreneurship in SMEs: An Innovative Approach, Prentice-Hall, London. Carter, S. and Jones-Evans, D. (2000), Enterprise and Small Business: Principles, Practice and Policy, FT Prentice-Hall, London. Casson, M. (2003), The Entrepreneur: An Economic Theory, Edward Elgar, Cheltenham. Caves, R. (2000), Creative Industries: Contracts between Art and Commerce, Harvard University Press, Cambridge, MA. Chaston, I. (2000a), Entrepreneurial Marketing, Macmillan Press, Basingstoke. Chaston, I. (2000b), “Organisational competence: does networking confer advantage for high growth entrepreneurial firms?”, Journal of Research in Marketing and Entrepreneurship, Vol. 2 No. 1, pp. 36-56.

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Nicholas C. Wilson and David Stokes

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Hunt, S.D. and Morgan, R.M. (1994), “Relationship marketing in the era of network competition”, Marketing Management, Vol. 3 No. 1, pp. 18-28. Jones, C., Hesterly, W.S. and Borgatti, S. (1997), “A general theory of network governance: exchange conditions and social mechanisms”, Academy of Management Review, Vol. 22, pp. 911-45. Kretschmer, M., Klimis, M. and Choi, C.J. (1999), “Increasing returns and social contagion in cultural industries”, British Journal of Management, Vol. 10, pp. S61-S72. Leadbeater, C. and Oakley, K. (1999), The Independents: Britain’s New Cultural Entrepreneurs, Demos, London. Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis, Sage, London. Mumby-Croft, R. (1998), “Strategic marketing for SMEs: its role in sustaining small company viability”, in Hulbert, B., Day, J. and Shaw, E. (Eds), Proceedings of the Academy of Marketing and UIC/MEIG-AMA Symposia on the Marketing and Entrepreneurship Interface, Nene University College, Northampton, pp. 131-6. National Music Council (1999), A Sound Performance: The Economic Value of Music to the United Kingdom, NMC, London. Nevin, J.R. (1995), “Relationship marketing and distribution channels: exploring fundamental issues”, Journal of the Academy of Marketing Science, Vol. 23 No. 4, pp. 327-34. Oakey, R. (1994), New Technology-Based Firms in the 1990s, Paul Chapman, London. O’Connor, J. (2000), Music as a Cultural Industry: The ICISS Project (Manchester), available at: www.mmu.ac.uk/h-ss/ mipc/iciss/music/htm Passman, D.S. (1995), All You Need to Know about the Music Business, Penguin Books, London. Peck, H., Payne, A., Christopher, M. and Clark, M. (1999), Relationship Marketing Strategy and Implementation, Butterworth-Heinemann, Oxford. Peterson, R.A. and Berger, D.G. (1971), “Entrepreneurship in organizations: evidence from the popular music industry”, Administrative Science Quarterly, Vol. 16 No. 1, pp. 97-108. Scase, R. and Goffee, R. (1982), The Entrepreneurial Middle Class, Croom Helm, London.

Shaw, E. (1999), “Networks and their relevance to the entrepreneurial/marketing interface: a review of the evidence”, Journal of Research in Marketing and Entrepreneurship, Vol. 1 No. 1, pp. 24-40. Stokes, D. (2000), “Marketing and the small firm”, in Carter, S. and Jones-Evans, D. (Eds), Enterprise and Small Business, Pearson Education, Harlow. Suchman, M.C. (1995), “Managing legitimacy: strategic and institutional approaches”, Academy of Management Review, Vol. 20 No. 3, pp. 571-610. Zimmerman, M.A. and Zeitz, G.J. (2002), “Beyond survival: achieving new venture growth by building legitimacy”, Academy of Management Review, Vol. 27 No. 3, pp. 414-31.

Further reading Doyle, P. (1995), “Marketing in the new millennium”, European Journal of Marketing, Vol. 29 No. 13, pp. 23-41. Gill, J. and Johnson, P. (1997), Research Methods for Managers, 2nd ed., Paul Chapman, London. Gro¨nroos, C. (1990), “Relationship approach to marketing in services contexts: the marketing and organisational behaviour interface”, Journal of Business Research, Vol. 20, pp. 3-11. Gummesson, E. (1996), “Towards a theoretical framework of relationship marketing”, Proceedings of the International Conference on Relationship Marketing, Berlin, pp. 5-18. Hammersley, M. (1990), Reading Ethnographic Research: A Critical Guide, Longman, London. Hansen, E.L. (1995), “Entrepreneurial networks and new organization growth”, Entrepreneurship Theory and Practice, Summer, pp. 7-19. Hayek, F. (1945), “The use of knowledge in society”, American Economic Review, Vol. 35, pp. 519-30. Porter, M.E. (1990), The Competitive Advantage of Nations, Free Press, New York, NY.

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Introduction

Relationships, marketing and small business: an exploration of links in theory and practice Grigorios Zontanos and Alistair R. Anderson

The authors Grigorios Zontanos and Alistair R. Anderson are both based at the Charles P. Skene Centre for Entrepreneurship, Aberdeen Business School, Robert Gordon University, Garthdee, Aberdeen, UK.

Keywords Marketing, Relationship marketing, Small enterprises, Entrepreneurialism, Socialization

Abstract This paper explores the links between the theory and practices of marketing and small business. The review of the literature highlights the close association of the more advanced conceptualisations of marketing, especially relationship marketing, and those of small business, particularly entrepreneurial small business. Given these theoretical similarities and the ensuing symmetry of actions and behaviours described in theory, the research question is posed, how does an appreciation of these links aid our understanding of entrepreneurial practices? The question is addressed by employing a participant observation methodology to create a case study of one small rural firm and by inductive analysis techniques. The findings show that it is difficult to disentangle or even to distinguish, the practice of relationship marketing from entrepreneurial action. This leads one to suggest that it may be useful to reconsider relationship marketing as a facet of entrepreneurship.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htm

Qualitative Market Research: An International Journal Volume 7 · Number 3 · 2004 · pp. 228-236 q Emerald Group Publishing Limited · ISSN 1352-2752 DOI 10.1108/13522750410540236

The starting point for this paper was a conversation about marketing in small firms where the authors found they agreed with Hisrich and Peters’ (1992) comment that entrepreneurs often have a limited understanding of marketing. Yet, as Coviello et al. (2000) had noted, this may be because such criticisms are based on the practices of large firms. Furthermore, there may be an issue about the imposition of academic norms of marketing which ignore many of the specific elements of the context of small firm marketing. Small firms may not practice “marketing” but many, nonetheless, survive and grow. In any case, we agreed that most small firms we knew seemed to use a relationship approach to marketing. Yet, we wondered, isn’t this relationship more about entrepreneurial “networking”, tapping into external sources to augment the limited resources of the firm? The similarities between entrepreneurial theory and relationship marketing were striking, so we had to ask, how similar were they in reality? Could we learn more about entrepreneurship, or small firm marketing, by comparing theories and practice? The structure of this paper follows this line of thought. We begin by reviewing what the literature has to say about relationship marketing, and then consider small firms as a special case. We compare and contrast the theories to show how they appear to converge. This review provides what Glasser (1978) calls pre-understanding, the theoretical orientation which enables us to informally approach our data. The data consists of one case study, generated mainly by participant observation. While we recognise that this case may be unique, and not broadly generalisable, it is so rich in detail and in context, it allows us to explore the relationships in great depth. For an exploratory study, such a methodology of data collection and analysis seems very appropriate. As Johannisson (1992) claims about such inductive research, subjectivism involves the researcher and its aim is to make the world more intelligible. Accordingly, our research questions, put formally, is first, do theories of relationship marketing inform us about entrepreneurial practices. Second, can we learn anything new by comparing theory and practice?

The literature Muzyka et al. (1998) posed the following question: “Just how well do existing marketing models and the traditional marketing paradigm fit the environment, behaviour, and processes found in entrepreneurial organizations?” In this review we address this issue and argue that the specific styles and circumstances of entrepreneurship may require reconceptualisation. We argue that there

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are 4Ps, but a very different 4Ps, “person”, “process”, “purpose” and “practices” and that these dimensions provide a better framework for understanding entrepreneurial relationship marketing. Gro¨nroos (1999) argues that perceptions of marketing, as a discipline, have undergone a paradigmatic shift. From the foundation of the marketing mix (Borden, 1964), and the embedded 4Ps, the sea change has turned to, among others, relationship marketing. Gro¨nroos’s (1997) point of paradigmatic shift is well supported, Gummesson (1990), Christopher et al. (1991) concur, while others such as Peppers and Rodgers (cited in Day et al. 1988) and Day and Crask (2000) show the benefits of customer retention. Gro¨nroos (1997) notes how, around 1960, the marketing mix model became established as the unchallenged basic model, and in so doing, jettisoned a variety of previous approaches. Kent (1986, p. 146) even refers to the “holy quadruple”, as evidence of the entrenchment of the 4Ps. Gro¨nroos (1997) also notes however, how the application of the 4Ps best fitted the huge mass markets of consumer packaged goods. Citing McKenna’s (1991, p. 13) comments on the decline of advertising , “it simply misses the fundamental point of marketingadaptability, flexibility and responsiveness”. McAuley and Anderson (1999) make a strong case that, for rural entrepreneurship, the 4Ps of marketing are almost irrelevant. But it is McKenna’s points that present the starting point for our argument, that relationship marketing, with its focus on adaptability and responsiveness is also the quintessential aspect of entrepreneurship. To argue that entrepreneurship and relationship marketing are related ideas is not new. Day et al. (1998) made this point. However, we wish to argue that entrepreneurship and relationship marketing are more closely related, that each can be viewed as a sub set of aspects of the other. We shall present a case where we show first, a theoretical congruence and follow this by demonstrating the similarities in practice. We are not saying that they are exactly the same thing, they obviously are not. But we are making a case for understanding each in the terms of the other. While entrepreneurship is notoriously difficult to define, few would argue against the broad conception of “the creation and extraction of value, usually from an existing use value to a new higher market value” (Anderson, 1998). Similarly, few would quarrel with Narver and Slater (1990) who stated that marketing orientation creates the necessary behaviours to create value. Thus the generation of perceptions of value seems to be a common purpose. Central to our argument is that both entrepreneurship and relationship marketing are systems, albeit open ended and subject to change, but nonetheless best understood by considering them each as a process. There now seems to be near universal agreement that entrepreneurship is

best conceptualised as a process (Anderson, 2000). For both theories, we see the centrality of the individual, but also the idea of the extension of that individual into a web of relationships. Just as the study of the individual characteristics of the entrepreneurial individual is no longer seen as providing an explanation of entrepreneurship (Gartner, 1988; Chell, 1985), the entrepreneurial process is recognised as the best unit for analysis to provide understanding. For marketing, we also see that the focus for marketing is no longer the single, isolated transaction and that the unit for analysis is the relationship (Sheth et al., 1991). Walter and Gemu¨nden (2000), note how marketing relationships emerge from a complex set of relationships and Jack and Anderson (2002) make the same point about entrepreneurship. Following through this line of argument it becomes clear that both disciplines are in practice boundary spanning activities, Walter and Gemu¨nden (2000). So to engage in a little theoretical boundary spanning we want to argue that the conception of networking provides a crucial link between entrepreneurial theory and relationship marketing theory. Hisrich and Peters (1992) noted how each discipline has a strong customer focus. Moreover, he points out how both share a behavioural orientation that involves completing the deal. Coviello et al. (2000) build on this, by commenting how market turbulence, risk taking and change are a common element (Cravens et al. 1993). We may also note how this customer focus is manifest as a set of behaviours; for entrepreneurship we have a huge literature emanating from McClelland’s nachieve and for marketing, Kohli and Jaworski (1990) make the same point. Building on these points we can easily make a case for seeing both disciplines as action orientated. In particular, relationship marketing is about getting closer to the customer, whilst action is the essence of enterprise.

Small firms and entrepreneurship practice and theory Small firm marketing practices have been historically assessed in the context of existing models based on large firm practices (Coviello et al., 2000). Probably this is the reason why small firm marketing practices have generally been criticised as non-traditional, informal, short-term, and non-strategic. However, given that the marketing discipline is undergoing a transformation with new paradigms emerging as relationship marketing, it is now appropriate to assess small firm practices in a broader and more contemporary perspective (Day et al., 1998). There are good reasons why small firm marketing is different from larger firms. Small firms have much leaner resource bases than large firms,

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so that an important aspect that distinguishes small from large firms is the much higher closure rates of small firms (Storey, 1994). Businesses are at their most vulnerable when they are very young and very small. Only a small percentage stay in business in the long term; over two-thirds close in the decade in which they opened. Their lack of market power and dependency on a small customer base results in an environment which is much less controllable and more uncertain than those of larger organisations (Wynarczyk et al., 1993). Marketing is certainly important in the early years as it creates a vital interface between the organization and its external environment. Research, involving case studies of surviving and non-surviving small manufacturing firms, by Smallbone et al. (1993) indicated that adjustment is a key factor. The most important adjustment for the survival and growth of small firms was active market development, a continuous search for new market opportunities and an expansion of the customer base. Firms which are most enthusiastic in making adjustments in what they do, and how they do it, particularly in relation to the market place, appear to have a greater chance of survival than those who carry on as before. As the function that supplies the necessary information and direction to guide such adjustments, marketing provides the key interface between a small business and its external environment. It is generally accepted that the characteristics of the small firm influence marketing practise. Certain characteristics which differentiate small from large organisations create specific marketing issues, which are especially challenging for smallbusiness owner-managers. A number of studies (Carter and Jones-Evans, 2000) have shown a relationship between the size of a firm and the number of customers, with a high percentage of small businesses dependent on less than ten customers and some on only one buyer. One consequence is that small businesses tend to trade only in a limited geographical area (Curran and Blackburn, 1990), so this ties their fortunes closely to the cycles of the local economy, with limited opportunities to compensate for any downturn (Storey, 1982; Hall, 1995). Another important marketing problem is that of the limited financial and human resources in small firms. A small firm has less to spend on marketing both in absolute terms and even as a percentage of income. This is because of the impact of fixed costs which take up a higher proportion of revenues; financial limitations also restrict their ability to employ marketing specialists (Weinrauch et al., 1991). Finally research has shown that planning is a problem for small firm management. A body of research concludes that small firm planning activities are informal (Kinsey, 1987; Brush, 1992; Pearson and Ellram, 1995). Weinrauch et al. (1991) also argue that small firms lack a strategic

orientation. These patterns have been found across a spectrum of small firms’ activities including supplier selection and human resources management practices as well as marketing.

The inappropriateness of the 4Ps and traditional marketing for smaller firms As discussed above, the typical small firm has a limited customer base and limited marketing ability. In conjunction with the lack of formalised planning, it is very difficult to use transaction marketing techniques such as the 4Ps or market segmentation. These draw heavily on resources, both financial and human (Weinrauch et al., 1991) which are rarely rich attributes of the small firm. Even owner-managers of small firms seem to give marketing a low priority compared to the other functions of their business, often regarding marketing as something that larger firms do (Stokes et al., 1997). However, just as the firm must evolve to survive, so marketing evolves to reflect the owner-manager experience and the needs of the firm (Carson, 1985). Ownersmanagers do not define their own marketing mix in terms of product, pricing, place and promotion, entrepreneurs appear to prefer interactive marketing. They specialise in interactions with their target markets because they have strong preferences for personal contact with customers, rather than the impersonal marketing of mass promotion (Day et al., 1998). So as well as the choice of marketing approach, this may also reflect the limited resources of the smaller firm. Entrepreneurs choose “conversational” relationships in which they can have contact with the customers, can listen and respond to them, rather than undertaking formal market research to understand the marketplace (Carter and JonesEvans, 2000). In contrast to this informality, at every stage of the traditional marketing process, whether strategic or tactical, formal market research plays an important role. Transactional market orientation relies on formalised, rigorous research to try to determine customers’ demands and needs. Successful entrepreneurs do not apply these formal research methods; they prefer more informal methods of gathering market information, usually through networks of contacts involved in the industry (Carson et al., 1995). Entrepreneurial marketing also relies heavily on word-of-mouth marketing to develop the customer base through recommendations. Word-of-mouth involves face-to face direct contact between a communicator and a receiver; where the receiver is perceived to be independent of the product or service under discussion (Arndt, 1967). In these ways we begin to understand the important personal role that entrepreneurs play in the marketing and general management of small firms.

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The entrepreneurial influence on small firms’ marketing

Relationship marketing

Scholhammer and Kuriloff (1997) recognised a personal management style as a distinguishing feature of small enterprises. This is typified as personal knowledge of all employees, involvement in all aspects of management and lack of sharing of key decisions. The dominant influence of the owner-manager has led to a large literature which seeks to establish relationships between the psychology, type and background of owners and their performance of their firms (Chell et al., 1991). It is fair to assert that since many small firms are owner-managed, their marketing activities must be shaped and influenced by the lead entrepreneur. One aspect of this influence is risk-taking; in the entrepreneurial context generally refers to someone who specialises in taking risks. In relation to marketing, the entrepreneur’s conception of the type and degree of risk will substantially influence the kind of marketing undertaken (Carson et al., 1995). It seems likely that relationship marketing would be perceived as relatively low risk. First capital investment is much lower, markets are targeted and contact is direct. Moreover, relationship marketing is highly flexible and can easily adapt to changing demands. All of these points are in stark contrast to the high investments and the commitment to a given course of action required for more formal marketing methods. The other entrepreneurial influence on small firm marketing is the entrepreneur’s personal motivation. It has been suggested that entrepreneurs tend to be highly motivated individuals (Storey, 1994). For marketing, such motivation can assist marketing activity, particularly in developing new products or markets and acquiring new customers. Finally, in relation to the external dimensions of power, the entrepreneur may seek to influence circumstances for the benefit of the enterprise. Thus entrepreneurs could use personal contact networks to develop marketing activity. They may try, for example, to influence key people or to use relationships with key players in the marketplace in an effort to secure business contracts, or to gain vital market information (Carson et al., 1995). It appears that marketing and entrepreneurship are closely related ideas, good entrepreneurs practise marketing and some marketing behaviour is entrepreneurial. However what seems to distinguish “formal” marketing from “entrepreneurial” marketing is the active role of the entrepreneur and networks appear to be the link between the phenomena.

Relationship marketing is often proposed as a solution to the critique that most marketing theories and approaches appear to be more suited to large companies rather than smaller enterprises (Coviello et al., 2000). It is remarkable that although numerous authors now use the term relational marketing (RM), few provide a definition of the term. Indeed, Gummesson (1994) has commented that the perception of RM varies between authors. In addition, other writers use terms such as “relational marketing” and “relationship exchange” in ways which often seem similar, if not synonymous. McKenna (1991) provides a useful overview, which presents a more strategic view of relationship marketing. He emphasises putting the customer first and shifting the role of marketing from manipulating the customer, to genuine customer involvement. Berry (1983) in somewhat broader terms, also has a strategic viewpoint on relationship marketing. He stresses that attracting new customers should be viewed only as an intermediate step in the marketing process. Developing closer relations with the customers and making them loyal are equally important aspects of marketing. Berry (1983) was among the first to introduce the term “relationship marketing” as a modern concept in marketing. He suggested that this “new” approach should be defined as; attracting, maintaining and enhancing customer relationships. Some authors such as Cardwell (1994) argue that a company’s very survival will depend on their moving closer to the customer, fully understanding customer needs and wants, building a relationship and thus developing an attitude of consistent customer dedication. A small firm’s marketing advantage, in contrast to a large firm, is precisely these close relationships between the entrepreneur and customers. We noted earlier that small firms often have a narrow customer base and that customers are usually concentrated in a local market (Weinrauch et al., 1991). This is often translated into shorter lines of communication between the enterprise and its customers. Entrepreneurs consequently often know their customers personally and the result of such close relationship interaction leads to benefits including customer loyalty and higher levels of customer satisfaction (Carson, 1985). Another aspect that helps cement the relationship between the entrepreneur and the customer is the flexibility of the small firm, as small firms are usually more flexible in responding to customer inquiries (Carson et al., 1995) Finally, one of the biggest advantages for the small firm is easy access to market information. Entrepreneurs are close to their customers and markets, close to their staff (Brooksbank et al., 1992; Liu, 1995). The entrepreneur usually gathers information in an informal manner and

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prefers face-to-face communication in doing so (Hisrich and Peters, 1992). As a result, entrepreneurs can access vital, timely and inexpensive market information. Furthermore, such close relationships allow them to use this information to make better informed marketing decisions. Experience of working with small firms shows that although many small firm entrepreneurs do this, they do it unconsciously. Nonetheless, the ability to gather and use information in this manner is a critical advantage over a large firm (Stokes et al., 1997).

However, the actual process of networking is less well documented. Economists have begun to recognise that interpersonal relationships have a crucial role to play in the success of individuals (Coleman, 1990; Putnam, 1993). In particular those economic exchanges are influenced by the level of trust and familiarity between economic agents (Dibben, 2000; Fukuyama, 1995; Gambetta, 1988). The evidence from Fafchamps and Minten’s (1999) study is that good entrepreneurs do invest in social interaction. One way of recognising the articulation of networks is by the idea of embeddedness. Uzzi (1997) argued that research into embeddedness can help to advance understanding of how social structure affects economic life. Embeddedness is “a puzzle that, once understood, can furnish tools for explicating not only organisational puzzles but market processes” (Uzzi, 1997, p. 22). Yet embeddedness mirrors the multiple dimensions of relationship marketing. These, according to Yau et al. (2000) consist of bonding; empathy; reciprocity and trust. So clearly a case exists for conceptually linking the process we know as entrepreneurial networking with the particular form of networking we consider as relationship marketing. Both are about extending outwards, both are about building relationships founded on trust. Both create outcomes about value gathering and harvesting, so that at an abstract level, both process and content are very similar. Table I highlights the common boundaries of relationship marketing and entrepreneurship theory. As we argue in the paper, relationship marketing and entrepreneurship are two very similar theories with common linkages. In the first column we demonstrate the linking elements of the theories. The second and third columns represent the sources of these elements. To summarise, we argue that the conceptual foundations of both relationship marketing and entrepreneurship share a similar theoretical underpinning. This grounding base appears most manifest in the practices of networking. Seen this way we could envisage a model of entrepreneurial marketing practices which centres on networking as action to develop markets entrepreneurially. In this model it would be difficult to distinguish between practices which are purely about marketing or entrepreneurship, both activities employ the same means. In fact it may be no more than an academic distinction to try to differentiate the ends as either marketing or entrepreneurship!

Networking The application of the network concept by social science researchers has intensified in recent years in recognition of the importance of informal relationships (Easton and Araujo, 1991; Harland, 1995; Nohria and Eccles, 1992). As Granovetter observed “economic action is embedded in ongoing networks of personal relationships rather than carried out by autonomous actors”, (Gatley et al., 1996, p. 78; Granovetter, 1973). Knowledge about networks has expanded so greatly that it is no longer contentious to maintain that these “hybrid organizational forms” offer an alternative structure for the allocation of resources to compete with the dominant economic models of markets and formal organisation (see, for example, Powell, 1987, 1990). The network concept is not new, dating back to the 1930’s in organisational research and at least the 1950s in anthropology and sociology (Nohria, 1992). However, it is only during the last 15 years that entrepreneurship scholars have applied networking theory. Since entrepreneurship, like marketing, focuses on change, consideration of networks provides a framework for understanding how resources, knowledge and information are collected and managed. Numerous studies have shown how entrepreneurial networks enhance entrepreneurship (Aldrich and Zimmer, 1986; Birley, 1985; Carsrud and Johnson, 1989; Johannisson and Peterson, 1984; Johannisson et al., 1994). In particular, networks enhance survivability (Bru¨derl and Preisendo¨rfer, 1998; Huggins, 2000; Szarka, 1990). By supplementing the entrepreneur’s own business resources, the network improves the likelihood of success (Bru¨derl and Preisendo¨rfer, 1998; Foss, 1994; Hansen and Allen, 1992; Churchill et al., 1995; Jack and Anderson, 2002; Johannisson, 1986, 1987; Johannisson and Nilsson, 1989; Johannisson and Peterson, 1984; Ostgaard and Birley, 1994). In essence, the classic networking literature shows that networking extends the reach of the entrepreneur and the business.

Methodology Since our objective was to try to understand the links between relationship marketing and enterprise we adopted a qualitative methodology. This involved using participant observation of one

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Table I Entrepreneurship and relationship marketing theory links Links Relationship marketing

Entrepreneurship

Value Centrality of individual Complex relationships Strong customer focus Behavioural orientation Personal contact Communication Flexibility

Anderson (1998) Gartner (1988); Chell (1985) Jack and Anderson (2002) Hisrich and Peters (1992) Cravens et al. (1993) Day et al. (1998) Carson (1985) Carson et al. (1995)

Narver and Slater (1990) Sheth et al. (1991) Walter and Gemu¨nden (2000) Hisrich and Peters (1992) Kohli and Jaworski (1990) Berry (1983) Carson (1985) Carson et al. (1995)

company to develop a case study about this firm, its owner and how the company operated. The company is located in southern Greece and processes olive oil. It is a small company with nine employees and some 500 customers. Our sample was purposefully selected, in part, because it would provide an interesting case for the study, and also for convenience, because one of the authors had worked for one month each year for five years within this company. There are a number of advantages and disadvantages to this approach to collecting data. It might be criticised as a unique case or a highly subjective interpretation of “facts”. These points we accept, but also emphasise the epistemological underpinning for our approach. Rosen (1991, p. 5) makes our case “the interpretative social constructionist approach presupposes that any member of any social system enact their world through social interaction”. Similarly Cook’s (1983, p. 25) comment on such methodology, “It offers the best methodology. . . to ground theory in material content and to synthesise conjectural processes with deeper structures than those immediately accessible to empirical observation”. As Rosen (1991) puts it, understanding social process involves getting inside the world of those generating it. Strauss (1987, p. 11) puts it well, mine your experiences! Participant observation allows a depth of access unreached by other methodologies, but it also requires a clear appreciation of the role of the researcher. In Gold’s (1958) typology of master roles, the role adopted was that of participant as observer, hence an emphasis on participation. As the primary research instrument (Hammersley and Atkinson, 1983), steps had to be taken to reduce the risk of “going native” (Gill and Johnston, 2002). This was achieved by the field observer reporting “observations” to the other author, who took the role of rapporteur. Distancing from the field in this way, we feel improved the validity and reliability of the study by forcing a reflexive stance. A balance was achieved between the roles of outsider and insider; detachment and inclusion. The resulting case study (Yin, 1994) presented a pool of descriptive data for primary categorisation and analysis. Analysis of the data was conducted by techniques of constant comparison and analytic

induction. In practice, we found that we were very strongly influenced by the existing literature. Although this was intended to provide a guiding framework for the collection of data as presensitivity (Glasser, 1978), we found that it also shaped our inductive process of analysis. Bryman (1988) cautions against this problem, arguing that premature closure of alternatives may occur. In reality, we actually found that we sought patterns to reinforce our thinking, so were forced to seek refuting examples to try to modify and refine the emerging theory. In this way our observer bias was compounded by this analytical bias and presents some threat to the reliability of the findings. Accordingly we accept that there must be a tradeoff between the depth and validity of our findings (especially the strength of ecological validity) and any pretensions of generalisability. Nonetheless, we consider this trade-off as acceptable given the exploratory nature of the research.

Summary of the case study This small rural firm is situated in Glifada, a village of some 300 people and some 280kms from the capital, Athens. The surrounding catchment of 10kms supports about 2,000 people who are mainly olive farmers. The area is justly famous for the quality of these olives and olive production and processing is the main industry. Harvesting is seasonal, November to January, and processing can only take place during that period. The firm, owned and managed by the entrepreneur, Panagiotis Pandazopoulos, has nine employees and its business is to process olives to make 400 tons of high quality olive oil. Modern equipment was recently purchased to improve speed and quality. Although a very traditional industry, olives have been grown in the area for over 3,000 years, the firm faces some modern marketing and management constraints. For management, it is essential that the throughput is organised in the most effective and efficient manner. Quality is paramount but the production process must also been efficient due to the limitations of seasonality. Importantly, there are few innovations which can be incorporated into the very traditional production process. Moreover, the

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firm deals with some 500 individual customers who all have individual requirements. Transport has to be organised, production schedules negotiated and cash flow maintained. Olive oil price fluctuates unpredictably, with weather, demand and timing. For marketing the situation is even more complex. The firm operates as both manufacturer and trader. Farming customers usually “pay” for processing through the retention of a percentage of the production, so this oil has to be marketed. In effect, this means that there are two sets of customers; spatially, the number of farming customers is geographically constrained by the dictates of transport costs. A further problem is that there are eight other processors in the catchment area, thus creating a highly competitive marketplace for a very traditional commodity. In short, there is little scope for differentiating the product, so marketing needs to be focused on convincing customers about the reliability and quality of the commodity service. This is exactly what the entrepreneur does by means of relationships, both in his marketing and the operation of the business.

arise many of the locals turn to Pantazopoulos for advice. Over the years he has built up and established strong trusting relationships both with customers, and with the local bureaucracy and establishments. Some examples of the application of this trust include, introductions to friendly bank managers and assistance with loan guarantees. We also found that Pantazopoulos was very close to many of his customers and was prepared to advance cash in hard times; sell oil on credit or to offer free storage and help out with transporting oil or olives. While all of these activities appear to add considerable value to the oil production process, the marketing process, in particular customer loyalty, is enhanced by facilitating the combination of extended service. This extended service “fits” precisely the needs of the customers. On the personal front, Pantazopoulos spends a lot of time in the quintessential Greek meeting place, the coffee shop. He meets customers and friends, finds out what is happening and who is doing what. We found that he had built a wonderful local reputation by small community services, he gives lifts into town for older people needing to visit doctors and he collects medicines. In fact, he was recently elected vice-mayor of the local community. So we see that he is deeply embedded in the local community, he is well known and well established with all the local key players. He does not abuse this influence, but turns it, not to his own direct advantage, but shares it. What we see echoes the anthropological idea of “the little big man”, where influence is generated by helping others, in turn this sharing creates more influence. What seems important from a theoretical perspective is how the relationship building focus is on involvement, both direct and indirect. Each transaction takes place within an incredibly rich social context. These relationships are based on trust, trust in competence and personal trust arising from a lifetime’s work of entrepreneuring. We note how this relationship building and maintenance is about two things, creating value for the business and creating loyal customers. The two are inseparable, each reinforces the other. So we conclude, that for this case at least, relationship marketing and entrepreneurship are very similar. Similarly the 4Ps should not be directives, but should be seen as analytical tools focusing on understanding people and process, to create purpose and effective practices. One implication arising for future work is the issue of ends and means. We have argued from a theoretical perspective about the convergence of entrepreneurship and marketing; we have demonstrated from our case that the practices seem to combine. So if this case is not unique, it presents a research opportunity to establish whether this blending of networking is an explicit strategy towards furthering entrepreneurship, or if entrepreneurs are more concerned with marketing

Discussion It is clear that the owner has to be entrepreneurial to stay in business. He has little competitive advantage, few ways of developing process innovation and operates in a very competitive environment. What we found was that he used his relationships innovatively to add value to the customers’ perception of the operation. This was done exclusively through the practices we described earlier as both entrepreneurial and relationship marketing. Although the terminology of relationship marketing was alien to Pantazopoulos, he practiced it without realising. He said, “my only concern is that I make a good relationships with farmers, so that they choose my firm and not my competitors”. Significantly, this intuitive form of RM works very well. An important factor in the relationship building was the eight months off season period, this time was used to build and maintain relationships. We found that relationships were developed in two main areas, personal and commercial. For the commercial side, we noted how the entrepreneur capitalised on his expertise and his own status within the community. For example, the production of olive oil is heavily subsidised by the EU. However, claiming this cash involves complex and difficult form filling. Pantazopoulos has developed some expertise in these forms and now shares his skills by aiding small producers to correctly complete their applications. But the sharing of expertise was not limited to bureaucracy, Pantazopoulos is also an expert in the cultivation of olives. So if any technical problems

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ends. Moreover the issue of apparent altruism is an interesting one. Could we establish whether this altruism is a business or a social practice? Again the question of ends and means seems an appropriate framework.

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Further reading Carson, D. (1993), “A radical approach to marketing education on small firms”, in Hills, G.E., LaForge, R.W. and Muzyka, D.F. (Eds), Research at the Marketing/Entrepreneurship Interface, University of Chicago at Illinois, Chicago, IL, pp. 407-20. Glasser, B.G. and Strauss, A.L. (1967), The Discovery of Grounded Theory, Aldine Publishing Co., New York, NY.

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