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Understanding the patterns of market orientation among small

businesses Charles Blankson

University of North Texas, Denton, Texas, USA, and

Jaideep G. Motwani and Nancy M. Levenburg Grand Valley State University, Grand Rapids, Michigan, USA

Abstract

Purpose – To assess the patterns of market orientation within the small business sector.

Design/methodology/approach – After a pilot study involving interviews with owner-managers, and covert and overt observation of small businesses’ marketing practices, depth interviews by telephone and face-to-face were conducted in one state of the USA. Data, collected in the form of protocols and means-end maps for individual owner-managers, were analyzed by inductive reasoning.

Findings – The study confirmed the appropriateness of the market orientation framework for the small business sector. Findings included a distinctive “marketing style” (strong emphasis on customer care and employee welfare; motivation; and market intelligence) related to size of the firms surveyed, the personality of the owner-manager, the available resources and the nature of the operating environment. Despite absence of a formal approach to market research and marketing planning, this “style” was found to have a positive effect on margins and market share.

Research limitations/implications – Future studies could usefully investigate larger samples in broader geographic settings, including countries at all stages of economic development. It should also examine causal links among the “constructs” of market orientation.

Practical implications – The findings provide small business owner-managers, policy makers and researchers with a framework for the measurement and evaluation of market orientation in small businesses, which could be adapted to specific conditions or used as a source of performance benchmarks.

Originality/value – This paper offers useful and candid insights into the application of market orientation by small businesses, distilled from in-depth investigation of the motivations underlying respondents’ marketing decisions and initiatives. It thus supplements the largely quantitative studies of market orientation in the literature to date.

Keywords Market orientation, Small enterprises, Qualitative methods, United States of America

Paper type Research paper

Introduction Over 40 years ago, Levitt (1960) introduced and espoused the concept of market orientation. Subsequently, management and marketing scholars have defined what it means to be a “market-oriented” company, and the subject of market orientation has been developed, tested, and refined using scales for measuring the degree of market orientation that organizations exhibit: see, amongst others, Kohli and Jaworski (1990), Narver and Slater (1990); Hart and Diamantopoulos (1993), Caruana et al. (1999) and Harris (2001). According to Becherer et al. (2003, p. 13), market orientation refers to “a culture in which organizations strive to create superior value for their customers (and superior performance for the business) by focusing on customer needs and

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0263-4503.htm

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Received February 2005 Revised June 2006 Accepted June 2006

Marketing Intelligence & Planning Vol. 24 No. 6, 2006 pp. 572-590 q Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634500610701663

www.emeraldinsight.com/0263-4503.htm

long-term profitability.” The concept is significant since recent work demonstrates positive links to several areas of business strategy and performance, including return on assets (Narver and Slater, 1990), organizational learning and ability to rapidly respond to environmental changes (Dickson, 1992; Sinkula et al., 1997), and new product innovation and success (Pelham and Wilson, 1996; Lukas and Ferrell, 2000), to name only a few.

Despite the attention devoted to market orientation by academics, research interest in market orientation within the small business sector has been scanty (McLarty, 1998; Lee et al., 1999; Becherer et al., 2003). This is surprising in view of the fact that small firms account for the majority of businesses within the United States economy, employing more than 52 per cent of the private work force, contributing 51 per cent of gross domestic product, and accounting for two-thirds of new jobs annually (Kuratko and Hodgetts, 2001; Longenecker et al., 2003). Additionally, recent work suggests that the small business sector accounts for the majority of innovation (Kuratko and Hodgetts, 2001). According to Gudmundson et al. (2003), new and small firms play a crucial role in experimentation and innovation, which leads to technological change and productivity growth.

Given this sector’s importance to the US economy, and the world’s economic growth (Hills, 1999), as well as theoretical relationships between market orientation and a firm’s performance, it is important to ask the question: what leads small firms to adopt a market orientation? What business goals do they hope to achieve? And how do they demonstrate a purported market orientation?

Thus, the aim of this exploratory study is to assess the patterns of market orientation within the small business sector.

This is an opportune time to do so in that, while researchers have found congruence between market orientation and the performance of the business (Narver and Slater, 1990; Jaworski and Kohli, 1993; Deshpandé et al., 1993), the fact that traditional marketing is conceived of as a planned and organized process will demand a sizeable allocation of resources that may extend beyond the capabilities of many small companies. As observed by numerous researchers, such firms are impoverished compared with their larger counterparts in terms of human and financial resources, typically possessing negligible buying power, limited access to resources and information, and a short-range perspective (Davies and Garcia-Sierra, 1999; Burpitt and Rondinelli, 2000; Lee et al., 1999; Stokes, 2002; McCartan-Quinn and Carson, 2003). Further, recent reports indicate that small firms are failing at a rapid rate (Miller et al., 2001; McCartan-Quinn and Carson, 2003). Consequently, for them, adopting market orientation may well hold the key to improving competitiveness and viability in the marketplace (Pelham, 2000; Verhees and Meulenberg, 2004).

Moreover, given that market orientation concept was developed and principally based on studies of large organizations and that traditional marketing theories may not be applicable to small firms (McCartan-Quinn and Carson, 2003), it is timely to examine the appropriateness of the concept for the small business sector. As McLarty (1998) and Sashittal and Jassawalla (2001) contend, despite the impact of the small enterprise on nations’ economies, the venture of setting up a small firm still remains risky in the face of competition. The research study reported here applies an adaptation of an extant market orientation framework (Kohli and Jaworski, 1990) to the small business sector in the State of Michigan in the north central region of the USA.

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Research framework Harris (2001) contends that a growing number of scholars are asserting the significance of market orientation in a range of organizational disciplines, including strategic management (Piercy et al., 1997), marketing management (Doyle and Wong, 1998), strategic human resource management (Harris and Ogbonna, 2001), innovation management (Atuahene-Gima, 1996), and organizational cultural change (Harris and Ogbonna, 1999). Furthermore, there is general agreement in the literature concerning the congruence between market orientation and the performance of the business: see, among others, Narver and Slater (1990); Jaworski and Kohli (1993); Deshpandé et al. (1993); Caruana et al. (1995). Notwithstanding this, there appears to be a lack of clarity as to whether the market orientation concept is actually appreciated (Stokes, 2000), let alone practised, by the small business owner-manager (McLarty, 1998). The latter assertion is not surprising, in that, as Stokes and Blackburn (1999) contend, while traditional marketing is conceived of as a deliberate planned process which proceeds from a careful identification of market needs by formal research, and through purposeful development of new offerings to the market place, the small business deliberation involves informal, unplanned activity that relies on intuition and energy of an individual, normally the owner-manager, to make things happen. According to Stokes and Blackburn (1999), it comes as little surprise to find that small business owners have a problem with marketing and appear to give marketing a low priority compared to the other functions of their business, often regarding marketing as “something that larger firms do”. This may be due to the owner/manager’s education level or decision-making style. Becherer et al. (2003) found significantly less market orientation in organizations in which the leader had less formal education, as well as those in which the leaders make all the day-to-day and long-term decisions, as is likely to be the case in smaller firms (McCartan-Quinn and Carson, 2003).

In support, Harris (1998) contends that the dimensions of market orientation may not in reality be applicable in the small business sector, and Lee etal. (1999) suggest that only one of the three generic strategies proposed by Porter (1980) may even be relevant to small businesses – the “focus” strategy. According to Harris (1998), several key factors impinge on the ability of small hotels to focus on market trends and needs, in other words to practise market orientation. These include an unclear view of the customer, contentment with the status quo, ignorance of market orientation, lack of competitive differentiation, limited resources, perceived inappropriateness and a short-term mentality.

Since the late 1970s, several advanced economies have adopted and supported policies highlighting the central role that small businesses play in furthering economic prosperity (Day, 2000). Additionally, numerous authors have issued calls for further research to identify the appreciation of market orientation within the small business sector (Becherer and Maurer, 1997; Becherer et al., 2003; McCartan-Quinn and Carson, 2003) and to reveal pertinent issues about marketing practice that should be of interest to policy makers, entrepreneurs and researchers interested in the small business sector. As was noted by Hills (1999), marketing and entrepreneurship largely determine the fate of entrepreneurs and small and medium-sized enterprises (SMEs) around the world. He asserts that the creation of employment by such firms is the engine driving the global quality of life.

McCartan-Quinn and Carson (2003) observe that there is no single official definition for a small business. In fact, a wide range of definitions is used by researchers. For the purpose of this study, the Wiltshire Committee’s widely used definition is adopted:

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. . . a business in which one or two persons are required to make all the critical management decisions such as finance, accounting, personnel, purchasing, processing or servicing, marketing, selling, without the aid of internal specialists and with specific knowledge in only one or two functional areas (Berryman, 1983).

Market orientation The description “market orientation” is different from “marketing orientation”, and preferable to it, because the former highlights an entire organization-wide application whereas the latter tends to describe a philosophy and activities that are specific to the marketing department (Kohli and Jaworski, 1990; Narver and Slater, 1990). A market-oriented firm is one which successfully applies the marketing concept (Kohli and Jaworski, 1990; Pitt et al., 1996; Caruana et al., 1999). The marketing concept, in turn, holds that the key to organizational success is through the determination and satisfaction of the needs, wants and aspirations of target markets. These must be pursued more effectively and efficiently than by competitors. In other words, the marketing concept states that, if a business is to achieve profitability, the entire organization must be oriented towards satisfying customers’ needs, wants, and aspirations. In recent years, the increased interest in market orientation and what it involves has led several writers to describe its operational definition as a “construct”, and the majority of researchers have derived their definitions from the two most familiar conceptualizations, formulated more than a decade ago by Kohli and Jaworski (1990) and Narver and Slater (1990).

Comparing the three core elements of market orientation as a philosophy (customer focus, coordinated marketing, and profitability/objectives) to the perceptions of marketing practitioners, Kohli and Jaworski (1990) concluded that its implementation consists of three components: the organization-wide generation of market intelligence pertaining to current and future customer needs; dissemination of the intelligence across departments; and organization-wide responsiveness to this market intelligence. They saw market intelligence as based on customers’ opinions and “a much broader concept” that includes consideration of exogenous market factors, such as competitors or regulation, that affect customer needs and performance, and of the current and future needs of customers.

Grönroos (1991) suggests a strong information system especially in the case of those “in relationship marketing situations”. The work of Jaworski and Kohli (1993) work, which followed suggestions by Churchill (1979), utilized the market intelligence-related activities of their definition to develop an information-instrument system for measuring market orientation. At least three other scales for measuring market orientation based on different emphasis in authors’ definitions of market orientation as a construct have also been put forward (Deshpandé et al. (1993); Narver and Slater (1990); Ruekert (1992) cited in Caruana et al. (1999)).

Similarly, Narver and Slater (1990) propose that market orientation comprises three components: customer orientation – a sufficient understanding of target buyers, so that continuous superior value can be created for them; competitor orientation – understanding short-term strengths and weaknesses and long-term capabilities of both current and potential competitors; and interfunctional coordination – the coordinated deployment of company-wide resources for the creation of superior value for customers.

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However, as has already been noted, what is not clear is whether the extant market orientation concept developed within large organization environment is actually appreciated and practised in the small business sector. The latter assertion is made in view of the few research studies (Pelham and Wilson, 1996; Sashittal and Jassawalla, 2001; Becherer et al., 2003) at the interface of small business deliberations and the market orientation concept in the USA.

The need for continued research activities in the small business sector is especially critical in view of the growing interest from governmental policy makers and the increasing number of small business start-ups:

Never before have more people been realizing that Great American Dream of owning and operating their own businesses. Every 11 seconds a new business is born in the US, and there’s no sign of a slowdown in our nation’s interest in entrepreneurship (Zimmerer and Scarborough, 2002, p. 2).

This is especially true in the State of Michigan, with a long and rich history of small business ownership, a blending of small manufacturing and service firms, and an environment that is conducive to and supportive of minority-owned start-ups. A recent article in the Grand Rapids Business Journal (2001-2002) stated that “African-American and Hispanic entrepreneurs in the Grand Rapids metropolitan area outpaced the rest of the nation in the creation of new businesses.” That sector of the population is considered by the US Census Bureau to be one of the fastest growing loci of entrepreneurial activity. Thus, that particular area within Michigan affords an ideal environment in which to examine marketing deliberations in the small business sector.

Research objectives The purpose of this research is to assess the patterns of market orientation within the small business sector. More specifically, following Blankson and Omar (2002), its objectives are to:

. identify the general marketing practices that emanate from the application of the market orientation framework; and

. assess the appropriateness of the latter framework in the small business sector.

Methodology Pilot study In order to appreciate the study setting and test the questions for open-ended interviews, a pilot study involving face-to-face interviews with five small business owners was undertaken. This was complemented by covert observation of 30 small businesses in the greater Grand Rapids, Kalamazoo, Holland and Muskegon areas of West Michigan, using a number of selected marketing-practices measures underpinning the basic principles of marketing: customer care/service, pricing tactics, promotional activities and product/service quality (Appiah-Adu, 1998). The businesses were operating in both service and manufacturing sectors. This was supplemented by overt and covert observation of mostly small retail outlets in the Lansing, East Lansing, and Detroit areas of East Michigan.

Main study For the main study, face-to-face and telephone depth interviews were conducted. Following Blankson and Omar (2002), the questions employed in the interviews were

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open-ended and derived from Kohli and Jaworski’s (1990) market orientation framework.

Sample and data collection The sampling universe of small business owner-managers was located across Michigan. A database of small businesses held by the Michigan Small Business and Technology Development Center (SBTDC), an affiliate of the US Small Business Administration, provided the sampling frame from which the sample of manufacturing and service businesses was drawn.

A convenience sample of ten owner-managers (out of 21 initially approached) plus two expert consultants was interviewed (Table I). This sample size is consistent with related and similar studies. Omar (1997) also reported on a sample of 12; Hooley et al. (1998) interviewed 11 in Hungary, 12 in Poland and 11 in Slovenia; Doherty (2000):7; Ankers and Brennan (2002) analyzed data collected from ten respondents, and Doherty (2000) from 7.

Appointments for the interviews were arranged in person by the authors. The face-to-face depth interviews were conducted at the respondents’ premises between March and June 2001, and were supplemented with telephone interviews conducted intermittently between April 2001 and January 2002. During the interviews, discussion was allowed to develop naturally within a non-contrived setting, while the interviewer ensured that the areas under discussion were thoroughly addressed (McCracken, 1998). Notes were taken, supported by audio tape recording. The interviews lasted between 45 minutes and an hour.

Construct The questions, shown in the Appendix, were based on Kohli and Jaworski’s (1990) construct, and were consistent with Blankson and Omar (2002). In line with suggestions by Wright and Kearns (1998) for replications of existing marketing frameworks/constructs, Kohli and Jaworski’s work was adapted for its popularity and

Type of business

Years in business

(orconsultancy)

Number of

employees

Gender of

owner-manager

Depth interview method

Manufacturer of machine tools 5 30 Male Telephone Business to business wholesale firm 15 1 Male Telephone Insurance firm 10 3 Female Telephone Advertising agency 2 3 Female Telephone Barber and beauty salon 5 4 Male & female Face-to-face Photographic shop 16 13 Male Face-to-face Dentist practice 8 5 Male Face-to-face Retail shop 5 4 Male Face-to-face Retail shop 7 11 Male Face-to-face Book Shop 5 4 Female Face-to-face Michigan Small Business and Technology Development Center 10 5 Female Face-to-face Michigan Small Business and Technology Development Center 10 5 Male Face-to-face

Table I. Face-to-face and

telephone respondent data

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replications in extant literature: for instance, among others, Hart and Diamantopoulos (1993) and Pitt et al. (1996). It is important to note that adaptation of existing market orientation constructs in different environments is not without precedent. For example, Hooley et al. (1998) adapted the Narver and Slater scales for their research in Central Europe, while Rexha et al. (1998) adapted the MARKOR scale for a study of small firms in Western Australia. For the study reported here, it was decided to assess the existence of the market orientation construct in the small business sector, rather than to examine causal links between the antecedents and consequences (Jaworski and Kohli, 1993).

Validity checks In view of the subjective nature of the study, and following Goodwin et al. (1997) and Blankson and Omar (2002), validity was assessed first by sending a summary of the findings to two owner-managers and two Michigan-based SBTDC business consultants, for their comments and suggestions. Second, two academics with expertise in small business management and qualitative research were given copies of the draft version of the paper for their comments. Both inputs were incorporated in the structure of the research.

It is noteworthy that, with few exceptions (Blankson and Omar, 2002), all known studies of market orientation to date have used quantitative research techniques. Although there are numerous advantages associated with that methodological choice, and these studies have contributed to our understanding of market orientation, it is not always possible – or even desirable – to use formal quantitative methods to obtain information from respondents:

People may be unwilling or unable to answer certain questions. People are unwilling to give truthful answers to questions that truthful answers to questions that invade their privacy, embarrass them, or have a negative impact on their ego or status (Malhotra, 2004, p. 138).

Additionally, problems associated with small firms’ reluctance to participate in cross-sectional studies and the consequent low response rates have been noted by Poon (2000) and Brockhaus (2004). The explanation offered by Poon is that small businesses may not perceive the time spent completing the survey as a value-added activity compared to other tasks.

On the other hand, an advantage of using depth interviews, a qualitative research technique, is that opportunities exist for researchers to probe respondents to uncover underlying motivations, beliefs, attitudes, and feelings (Malhotra, 2004). This technique is particularly useful as follow-up to quantitative studies, to assist researchers in understanding and interpreting the data collected (Brooksbank et al., 2003; Burns and Bush, 2003).

The authors are aware of the criticisms levelled against qualitative data (Arnold et al., 1995; Oppenheim, 1981; Cooper and Schindler, 2001). However, it is important to take note of the growing alarm in the marketing literature concerning the relegation of qualitative research to the “bottom of the pile”. As Gummesson (2001) wrote, “the academic praise of the supremacy of quantitative measurement shuts out most of marketing reality”. His assertion echoes the pungent statement by Van Maanen (2000) that “qualitative research is back, and back with a vengeance, as many of the promises of quantitative research have come up empty”. More recently, “pluralistic”

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(Brooksbank et al., 2003), “quasi-qualitative” (Brady and Cronin, 2001) and fully qualitative (Goodwin et al., 1997) studies have been published in premier business journals.

We, therefore, infer that, within the context of replication of frameworks/models (Wright and Kearns, 1998), the qualitative research methodology will offer unique insight to the subject matter (Gummesson, 2001), especially to provide insight into the sparsely researched area of market orientation in the small business sector. More importantly, in recognizing the limitations associated with prior cross-sectional quantitative studies, this study responds to calls by academic researchers for additional qualitative research into market orientation (Becherer and Maurer, 1997).

Data analysis and results The data were in the form of protocols and means-end maps for individual respondents. Patterns of responses and observed similarities across individuals form the results of this section of the study (Goodwin et al., 1997). Respondents’ answers were analyzed using inductive reasoning, following good practice in the literature (Durgee, 1986; Kirk and Miller, 1986; Wolcott, 1990; Feldman, 1995; Shaw, 1999). In the rest of this section, the results of the qualitative research in the form of the constructs employed in the study are presented in turn, following the lead of Blankson and Omar (2002).

Top management This construct deals with issues concerning owner-managers’ involvement in marketing strategy/policy and customer care/service, and their propensity to take business risks. The results of the face-to-face interviews revealed that all owner-managers were indeed involved in the day-to-day running of the business, and it was evident that, intuitively, they had long-term strategies to grow their businesses. All respondents emphasised that they considered customer service important for success in the face of competition. Five out of the 12 (42 per cent) believed that they exceeded customer service all the time. As an owner-manager of a dental practice put it, “our customers confirm our high level of customer service . . . we inform customers as to what they are to do with regard to taking good care of their teeth . . . we make it very comfortable as possible.” An owner-manager of a wholesaling firm claimed that “the level of customer service is excellent . . . although it is a ‘one-man show’, I do everything.”

Although there was an overwhelming acknowledgement of the importance of customer service, other owner-managers were quite candid about their ongoing endeavours to improve customer service. This is evident in comments by an owner-manager of an insurance firm: “as for customer service, we fully work at it . . . we are careful with customers in terms of the right information”. She further claimed that “business is unstable and, in the insurance business, premium rates are very high so our customers seek alternatives . . . it is very competitive business”. Yet an owner-manager of an advertising agency simply said that “the level of customer service is relatively low”.

Further probes into the responses raised certain pertinent concerns worthy of comment. While good customer service appears to be an acknowledged central tenet in small business marketing deliberations, it may be opportune to appreciate the relevance of factors such as the type of business and the individual owner-manager’s

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motivation and abilities. One consultant with the SBTDC suggested that in order to foster good customer service, small businesses needed to form close relationships with customers and continually focus on understanding customers’ expectations.

He also observed that “rather [than focus on customers], small businesses appear to focus on the competition and their own perspectives” and that: it is possible that high customer care emanates from past experiences, the owner-manager’s motivation, the business history, the current market situation, the business vision for the future and the overall budget at the disposal of the owner-manager.

Another SBTDC consultant claimed that “the level of customer service depends on the number of employees . . . the micro businesses can barely afford marketing and they pursue basic marketing.” This comment seems to support Carson’s (1993) assertion that small businesses embark upon marketing in a general and inappropriate way.

Contented and well-trained staff were also mentioned as a starting point for effective customer service. An owner-manager of a photographic shop, for instance, asserted that “the level of customer service and marketing in general depends on the actual market and how employees are maintained”. The owner-manger of a dental practice already quoted explained that “we are required to encourage staff members to pursue continuing education to ensure good practice . . . we exceed our customer service all the time”.

Interdepartmental dynamics Two key themes related to this construct emanated from the interviews: communications and relationships. According to an SBTDC consultant, small businesses tend to enjoy cordial working relationships, because they consider people, not necessarily money, as important; they tend to create an environment that they enjoy and where money is not a factor. This view was supported by the comment of an owner-manager of a hairdressing and beauty salon: “overall, [the] staff relationship is pretty good . . . we look after each other and treat ourselves as brothers”.

Furthermore, every owner-manager claimed to solve staff problems through open communication. Helping one another was considered important; in the words of an owner-manager of an insurance firm, “we help one another a lot . . . we make an effort to help staff and create enough good will around”. Highlighting the existence of open communication, an owner-manager of a manufacturing firm explained that “we reason things out among ourselves”. In addition, the owner-manager of a photographic shop emphasised that, whenever there was a problem among staff members, he tried to intervene to save the situation, and went on to say “we are relatively [re]lax[ed], and decisions are more cordial”. An interesting issue about staff relationships is the collaborative atmosphere and lack of bureaucracy within which it happens in some of the businesses. As an owner-manager of a bookshop put it, “staff members have amicable relationship . . . they are left to work for themselves”. Comments such as these provide illustrations of the informal atmosphere that often characterizes small firms (McCartan-Quinn and Carson, 2003).

Organizational systems Organizational systems such as meetings do exist formally in the respondents’ firms, but are undertaken in an informal setting. For instance, the owner-manager of the hairdressing and beauty salon hinted that there were no hard and fast rules about meetings but that Saturday was designated for managers “to sort out what to do over the

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week”. He explained that “in our profession, people work for themselves . . . it is up to them as to how motivated they want to be”. With the exception of two owner-managers (17 per cent), the preference was for one-on-one meetings with staff members. It is interesting to find that, despite the informal nature of the meetings, it was apparent during the interviews that pertinent issues about running the business were dealt with. One can glean from the interviews and the observation that there is justification for the informal meetings, explained by the small size of the businesses: “things are very informal here because we are small . . . meetings are held on an ad hoc basis”, according to the owner-manager of a manufacturing firm. At one end of the scale, an owner-manager of a wholesale firm stated that “once every year, I see my accountant for tax filing and I make all financial and marketing decisions, and that is about it”.

Only one owner-manager indicated some semblance of formality about staff and management meetings in his firm. Nonetheless, an owner-manager of a photographic shop remarked that, although meetings were informal and infrequent, more formal occasions took place three or four times per year. According to him, these were venues for examining sales and assessing how the business was faring.

With regard to reward for staff members, bonuses related to sales achievement, messages of praise posted on walls and conveyed orally, Christmas presents, overtime work and other verbal encouragement were frequently mentioned during the interviews.

Market intelligence As observed by other researchers, such as Brooksbank et al. (2003), and as expected of small businesses, formal market research is not pursued by any of the owner-managers interviewed. Comments from the respondents, however, reveal some semblance of data collection in the form of ad hoc data gathering. More specifically, only one of the 12 respondents, an owner-manager of an advertising agency regularly researched their service product: “although we do not really do any market research, from time to time, we ask a market research firm to research our market potential”. The owner-manager’s statement appears to give a hint of some prudence about finances, presumably due to lack of resources and the size of the business. Nevertheless, the results of the interviews revealed that owner-managers were aware of the importance of market research, even though some seemed overwhelmed by the resources required for formal research. The latter assertion is also evident in comments made by an SBTDC consultant that “small businesses do not formally engage in data collection . . . they know its importance but it’s not actually done”. However, he also commented that small businesses are typically experts in their industries and well informed about the environment within which they operate.

Many other responses support this view. For instance: “There is no formal market research although we belong to a professional association who keep us informed about our market . . . ” (owner-manager of a manufacturing firm); “From time to time, we ask our customers what they think about our products . . . the results are disseminated through meetings and in reports . . . ” (owner-manager of a bookshop); “Although market research is not done, I understand what customers are looking for . . . every year, I participate in a business conference in Las Vegas, where people talk about the changing customer attitudes . . . ” (owner-manager of a wholesale firm); “Frequently, I ask students at a local university to do research for us . . . their reports are discussed with my staff . . . ” (owner-manager of a photographic shop); “We don’t pursue market

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research but we follow up on feedback from customers, especially when they tell us how we fared in our service to them . . . ” (owner-manager of a dental practice).

Paradoxically, the lack of formal market research reported by all owner-managers is buttressed by claims of awareness of the business environment and keeping abreast of changes in the operating environment. As stated by an owner-manager of a wholesale firm, “competition is lukewarm in West Michigan and, over the years, I have maintained my market”. An owner-manager of a manufacturing firm simply said, “We are very much aware of the local business environment.”

Employees From the interviews, it became apparent that motivated and committed staff was an important factor in small businesses’ marketing deliberation. Almost all owner-managers interviewed claimed that their own commitment and that of their staff were both excellent and that, to an extent, commitment and motivation depended on one’s responsibility in the firm. An owner-manager of an advertising agency emphasized the enthusiasm of her staff: “commitment from staff is one hundred percent and they are all committed to our motto: no customer too small”. Similarly, an owner-manager of a manufacturing firm asserted that “there is strong commitment from staff . . . my staff is excited about their jobs although some are not fully committed, especially the new ones”.

Environment This construct deals with issues concerning the use of technology and awareness about the competitive environment. Except for the owner-manager of a hairdressing and beauty salon, who claimed not to use any technology, all respondents claimed to use every technology commensurate with their businesses in communicating with customers and suppliers. The owner-manager of a dental practice noted that “we are technologically equipped with all the necessary modern machines”. On the other hand, an owner-manager of a wholesale firm stated, “I use computers and fax machines, however I don’t use online communication such as e-mail . . . I prefer to communicate with customers via telephone or fax”. Every respondent described the competition as either turbulent or somewhat depressed.

Business performance Two main themes emerged from the interviews under this heading: profitability and market share. Almost all owner-managers were quite content with their margins and market share, noting that their profits have improved compared to previous years. As the owner-manager of a dental practice commented, “Our margins are better than that of competitors . . . we are profitable without overworking ourselves . . . our market share is quite high and we are happy that we are doing well and our objectives have been achieved”. In the same vein an owner-manager of a manufacturing firm simply said that “profit is good and our market share is going up”.

Conclusions and managerial implications This qualitative research study has assessed the patterns of market orientation in the small business sector, presenting descriptions of the general marketing practices that emanate from the application of market orientation framework proposed by Kohli and Jaworski (1990) via the verbatim comments of the owner-managers interviewed. Not

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only does the study provide support for the appropriateness of the market orientation framework in the small business sector and the application of the adapted market orientation framework, it does so in a way that furnishes illumination and keen insight into actual small business practices as well as the rationale behind those practices – an approach which has hitherto been overlooked by researchers interested in market orientation studies (Laurent, 2000; Van Maanen, 2000; Gummesson, 2001).

Market orientation emphasises competitiveness and profits based on identifying customer needs, wants and aspirations, and delivering compatible offerings that are competitively better than those offered by rival firms. Taking this into account, it was found that, to a large degree, small businesses in Michigan are duly applying the market orientation concept, although it is acknowledged that further ongoing studies are needed to support the latter assertion. More importantly, this study has a particular relevance to marketing intelligence, in that it contributes to the limited research assessing the interface of market orientation and small business operations. The findings presented here can make a positive contribution to the debate about market orientation in the small business sector on both sides of the Atlantic (Harris, 1998; McLarty, 1998; Pelham, 2000; Sashittal and Jassawalla, 2001; Man et al., 2002; Stokes, 2002).

It can safely be asserted that our sample of small businesses exhibits a “distinct marketing style”, not practising marketing by the textbook but by strong emphasis on customer care, concern for employees’ welfare, reliance on intuition and awareness of the environment. That modus operandi befits their size, the personality of the owner-manager, available resources and the nature of the operating environment, compared to large firms (Blankson and Omar, 2002; Blankson and Stokes, 2002; Stokes, 2002; Verhees and Meulenberg, 2004). According to Sashittal and Jassawalla (2001), this is a central defining feature of the implementation process, and of planning which ultimately determines the small firm’s market orientation. Moreover, this “distinct marketing style” positively affects business performance as exemplified in the fact that virtually all the owner-managers interviewed claimed that they were content with their margins and market share. This is consistent with the study of the small business sector in The Netherlands by Verhees and Meulenberg (2004), which found evidence of the impact of market orientation on firm performance, and concluded that small businesses’ market intelligence and homogeneous offerings were positively related to performance and the selection of attractive product assortment, respectively. As we have noted earlier, this leaves one in a paradoxical mind frame about small businesses’ application of market orientation and the impact on overall business performance, in the absence of formal marketing planning and market research (Carson, 1990; Stokes, 2002).

To balance that shortcoming of practice, our respondents invested effort in customer care, employee welfare and motivation. They use their intuition to understand the marketplace and were in tune with the implications of their marketing practices on profits and market share. Thus, on the basis of our study, although the market orientation concept was developed in the context of larger organisations, it is safe to reiterate that, to a large degree, market orientation is appreciated in the small business sector (Verhees and Meulenberg, 2004; Blankson and Cheng, 2005). Consequently, our study supports and complements the validity and the philosophical basis of market orientation put forward in the literature (Laurent, 2000) and in extant quantitative studies (Kohli and Jaworski, 1990; Jaworski and Kohli, 1993).

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With regard to theoretical implications, the findings from this study appear to be somewhat contrary to UK-based studies, including the contention by Harris (1998) that the dimensions of market orientation may not be applicable in the small business context, and the conclusions of Blankson and Omar (2002) and Stokes (2002) that the small business owner-manager has limited conceptualization of marketing and, therefore, thinks of marketing only in terms of promotions. Rather, in line with Blankson and Cheng (2005), it is suggested that specific aspects may be environment specific. This assertion is widely documented in the literature: see, among others, Hart and Diamantopoulos (1993), Appiah-Adu (1998) and Harris (2001).

This study answers the calls from Carson (1990), Becherer and Maurer (1997), Becherer et al. (2003) and McCartan-Quinn and Carson (2003) for further research into the application of market orientation within the small business sector. Overall, its findings are congruent with the views expressed by Moorman and Rust (1999), who suggest that the deliberation of marketing should play a leading role in connecting the customer with the offering delivery and financial accountability.

Apart from adding to the body of work on small business market orientation, the findings of this study will be useful as an insight for policy makers, practitioners and researchers interested in the small business sector. Owner-managers may reappraise the factors/strategies within the context of their aims and objectives by employing and/or benchmarking the strategies in their marketing practices. They may also adapt the strategies in their current and future marketing activities. In addition (although we have no empirical justification for this assertion), it is to be expected that not all small businesses operate alike; undoubtedly, it is possible that some rely more on formalized research and marketing planning because of their particular experiences and sizes.

More specifically, the findings reported here suggest that owner-managers may develop different marketing deliberations based on their skills, experiences and motivations (Harris and Ogbonna, 2001), while taking into account the size of the business and resources available. The latter caveat is taken up by Stokes (2000), who suggests that a “bottom-up” rather than “top-down” targeting approach may be appropriate for small businesses, because it requires fewer resources and is more flexible and adaptable to implement. To apply it, the owner-manager engages in a process of constant elimination, rather than the deliberate segmentation, targeting and positioning strategies commonly employed by large firms.

Limitations and future research directions Although our study sample is consistent with others reported in the literature, we acknowledge the limitation of the sample size and representativeness. However, this research was intended to be exploratory. Future studies should expand the sample size, to enhance validity. In our suit of more robust results, further research could extend this study to one that combines qualitative and quantitative methods. It may be worthwhile extending this exploratory research by examining the causal links between the constructs, with the aim of assessing the antecedents and the consequences of the market orientation constructs within the small business domain. In view of the bias towards the State of Michigan, further research could be carried out in across the entire USA, in which there is large variety of types of SME.

The impact of small business on economic growth and wealth creation around the world is now well recognized (Hills, 1999). It is thus appropriate for future research to

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explore the application of market orientation in the small business sector in environments beyond the USA, UK and Western Europe. It would be fruitful to investigate small business market orientation in a mixture of industrialized economies, newly industrialized countries (such as Hong Kong, Taiwan, Singapore or Malaysia) and liberalized developing countries (such as Ghana, Kenya, Nigeria or Uganda). Finally, futures studies should compare and contrast comments by respondents in service and manufacturing businesses, and in the consumer and business-to-business sectors.

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