Market research

Market research Assessment Criteria    HD 80-100% Excellent    D 70-79% Very good    C 60-69% Good    P 50-59% Fair    F <49 Poor    Marks Complete Executive summary stating issues from article and from the real-business (2 marks) Critical View of the article by Peltier & Naidu (2012) (4 mark) Effective use of theoretical material from Marketing and Management and at least five academic journal articles besides Peltier & Naidu (2012) (6 mark) Identify at least one business that uses social networks for marketing. Providing some useful information such as when social network was introduced in the firm life cycle (2 mark) Researched on how the business is being managed and marketed (5 marks) Recommendation and challenges of future technologies and its use in the organization/business (2 mark) Ability to write clearly, good structure and format (2 mark) Use of credible in-text reference, completion of a full reference list following APA style (2 mark) Total: MA505 Sem 1 2015 Report Assessment Criteria: 25% _______________________________________________ Journal of Small Business and Enterprise Development Vol. 19 No. 1, 2012 pp. 56-73 q Emerald Group Publishing Limited 1462-6004 DOI 10.1108/14626001211196406 Introduction There is a growing consensus that forming, nurturing, and managing internal and external relational networks are critical to the success of innovative and small business ventures (Jones and Holt, 2008; Ngugi et al., 2010; Street and Cameron, 2007). Broadly defined, relational networks represent the aggregation of all interactions through membership in formal organizations and relational encounters entrepreneurs create and nurture with suppliers, distributors, consultants and customers, or any of a wide range of other social contacts, including friends, family, and acquaintances (Dodd and Patra, 2002). Through cooperative interactions with varied types of social network members, small businesses place themselves in a better position to develop effective strategies and tactics needed for thriving in an ever-changing global landscape (Lee and Jones, 2008; Molina-Morales and Marti´nez-Ferna´ndez, 2010). Combined, social networks are valuable components of entrepreneurial learning and can enhance the success of small businesses through the creation of organizational assets in the form of human, market, financial, and technological capital (Fuller-Love and Thomas, 2004; Jack et al., 2008) Although social networking is receiving increased attention in the small business and entrepreneurship literature, major shortcomings exist with regard to the transitional nature of entrepreneurial learning networks over time (Hampton et al., 2009; Littunen and Niittykangas, 2010; Zhang et al., 2008). Virtually silent is research that examines the evolutionary nature of social networks in terms of their importance and contact frequency across the organization lifecycle, and specifically from start-up and/or acquisition through growth (Elfring and Hulsink, 2007; Klyver, 2008; Xu et al., 2008). A greater understanding of these networking needs will extend the literature by highlighting how effective small business are at transitioning from launch to growth, and how social networks may benefit this transition (Hampton et al., 2009; Hite, 2005; Lechner and Dowling, 2003). Also of significance, research is increasingly questioning whether entrepreneurs have “social identities” (Watson, 2009) and whether these social orientations impact the frequency and effectiveness of different types of social network relationships (Shaw, 2006). Although a steady stream of research has emerged on the personality characteristics of entrepreneurs, relatively unexplored is the extent to which an entrepreneur’s social orientation moderates the degree of information sharing that exists within and across SMEs (Bowey and Easton, 2007) and the extent to which small businesses seek input from associates within and external to their organization (MacDonald et al., 2007; Molina-Morales and Marti´nez-Ferna´ndez, 2010). Given the gaps in the social networking and entrepreneurship literature, four research questions have emerged: (1) How do social networks and entrepreneurial learning mechanisms evolve as small business enterprises transition from start-up/acquisition to growth? (2) Do small business owners differ in their configurations of social identities? (3) How do the social identities of small business owners impact social networks? (4) Do social networks improve profitability and organizational performance in small firms? Research framework: social network theory The social network approach to asset creation is founded on the principle that the relationships entrepreneurs have with others is a key resource for creating and building business ventures (Aldrich et al., 1987; Carsrud and Johnson, 1989). Structural social capital helps entrepreneurs access information, knowledge, resources and financing by participating in networks rich in structural holes (Casson and Della Giusta, 2007). Although not meant to be exhaustive, social networks have been described in terms of three types of relational interactions (see Johannisson, 1995). The first are exchange networks, made up of an organization’s set of commercial relationships, most notably associated with vendors and customers. Communication networks encompass the set of organizations and individuals from which the entrepreneur could receive support in terms of business contacts and knowledge needed for making sound business and financial decisions and could include Social networks 57 JSBED 19,1 58 consulting firms, financial advisors, trade associations, and other sources of expertise (Klyver, 2008; Palakshappa and Gordon, 2007). Lastly, personal networks may exist in the form of ongoing communications with family members, relatives, friends and acquaintances. Exchange and communication relationships can be viewed as formal/external networks, while family and personal relationships can be conceptualized as informal/internal networks (Mackinnon et al., 2004; Sequeira et al., 2007). Although in the current research we conceptualize social assets in terms of exchange, communication and personal networks, social networks often have fuzzy and overlapping boundaries with varying degrees of multi-plexity, leading to continuous rather than a finite number of relationships, all of which could run in multiple directions and encompass different qualities and values (Mitchell, 1969). Traditionally, social network theory has been applied to entrepreneurial organizations in two ways – to illustrate that an entrepreneur’s social network of contacts allows access to resources that are not possessed internally, and to demonstrate that relational networks enhance economic exchange (Anderson and Jack, 2002). When a network relationship is entrenched within a social relationship and directly impacts an entrepreneur’s decision making process, the linkage is deemed to be “relationally embedded” (Uzzi, 1996). As Staber and Aldrich (1995) state, “sociologists now take as axiomatic the proposition that economic action, including entrepreneurial behaviour, is embedded in interpersonal social networks” (p. 442). Granovetter (1985) argues that all relationships are socially embedded and that the degree of embeddedness has a direct and positive impact on economic actions and performance. Research hypotheses Social network theory and business transitions Research on the transitional and temporal nature of relational networks is scarce ( Jack et al., 2008). Transitional networking can be framed in part on the notion of “network culling” (Larson and Starr, 1993), which has been conceptualized as an iterative process involving the exploration, evaluation and selection of network partners. This culling process underscores the dynamic nature of social networks, and particularly with regard to the evolution of one’s network over time as new relationships are added, as some are dropped, and some modified (Bowey and Easton, 2007). This temporal evolution of networks and network ties has important ramifications for understanding innovative decision making involving opportunity assessment, resource utilization, and the governance of launching, growing, and maintaining small firms (Miller et al., 2007). In some instances, network relationships create organizational assets often referred to as social capital (Burt, 1992). Social capital is amassed when entities in the network establish relationships, relationships that build trust and expectations of fairness and reciprocity (Grabher, 1993; Granovetter, 1985). The empirical and theoretical treatment of business networking has paid little attention to understanding how complex sociological ties or attachments develop among small businesses or within small communities where an increasing number of businesses fail (Cope et al., 2007). The creation, modification, and elimination of social networks over time are important areas of inquiry (Bowey and Easton, 2007). Hite and Hesterly (2001) contend that emerging firms might rely more heavily on close, relationally embedded ties (personal networks) early on in their organizational lifecycle. This reliance on closely embedded relational networks might be traced in part to higher levels of trust associated with these informational exchange partners (Mackinnon et al., 2004). Family and friends might thus have their most important impact during the planning stages of a potential venture (Greve and Salaff, 2003). Later, as the business transitions into a growth mode and beyond, the entrepreneur might be more inclined to extend the range and depth of its relational linkages in the form of exchange (vendor and customer research) and communication (consultants, financial advisors, trade associations, etc.) networks (see Hite and Hesterly, 2001). As a consequence, the characteristics of network ties may change and these changes may affect opportunity discovery, resource access and mobilization (e.g. Hite, 2003; Uzzi and Gillespie, 2002). For example, Larson and Starr (1993) examined the evolution of network ties in emerging firms and suggested that even newly established work related ties may evolve to become more relationally-embedded over time as social exchanges are layered over the business relationship, thus increasing the influence of the tie on the firm (Granovetter, 1985; Uzzi, 1996; Uzzi and Gillespie, 2002). Likewise, Lechner and Dowling (2003) found that the mix of networks evolve as firms develop, with the relative importance of more personal social networks decreasing over time in favor of more external relationships. Logically, the preceding discussion suggests that a small business owner’s social identity is not necessarily static and might evolve as the organization proceeds through the organizational life-cycle. This is consistent with Hall’s (2002) identity-change process model that implies that an entrepreneur’s social identity might be altered over time as organizational goals change along with the effort needed to succeed in dynamic and competitive markets. As such, as the decision situation changes so too can an individual’s social identity in response to the changing context in which these decisions are made (Tajfel and Turner, 1986). There is some expectation that although relative importance might deviate over time, entrepreneurs with a greater family- and/or personally-based orientation will utilize personal and family-oriented networks more across all stages of the organizational life-cycle and those with a more external orientation will always form relationships with exchange and communication social networks (Greve and Salaff, 2003). Based on this review, we posit the following: H1. Advice from personal networks (family and friends) will be the most used social network during the start-up stage of the organizational lifecycle. H2. Advice from personal networks (family and friends) will have the highest perceived value during the start-up stage of the organizational cycle. H3. The frequency advantage of advice received from personal networks (family and friends) over other types of social networks will decrease from the start-up to the on-going stage of the organizational life-cycle. H4. The value advantage of advice received from personal networks (family and friends) over other types of social networks will decrease from the start-up to the on-going stage of the organizational life-cycle. H5. The frequency of advice and value of advice received from exchange networks (customers and suppliers) will increase from the start-up to the on-going stage of the organizational life-cycle. Social networks 59 JSBED 19,1 60 H6. The frequency of advice and value of advice received from communication networks (consultants, financial advisors, competitors) will increase from the start-up to the on-going stage of the organizational life-cycle. H7. The frequency and value of advice received from personal networks (family/friends) will decrease from the start-up to the on-going stage of the organizational life-cycle. Social network theory and social identities Consistent with emerging research by Down (2006), and Peltier et al. (2009, 2012), entrepreneurs’ “self-identity” is expected to play a role in the internal and external orientation that they take in making business decisions. Hite (2003) contends that the nature, scope and importance of relationally embedded linkages for solving business problems may differ based on the interpersonal characteristics of an entrepreneur and the social setting in which the interactions take place. In this way, the type of “social identity” employed by an entrepreneur may play a major role in impacting opportunity discovery and resource mobilization (Hite, 2005; Larson and Starr, 1993). Moreover, the interdependence of individuals and groups in the social network and that these social members share common goals are expected to be key aspects of external social identities (Ellemers and Bos, 1998). Watson (2009) contends that an entrepreneur’s social identity will impact the degree and value of information seeking and sharing (MacDonald et al., 2007). Pertinent to social networks, information access comes from multiple sources, including past experience, customers and competitors, and other players in the social environment. Information accessibility and fit thus determine which social groups (if any) become salient and thus influence the frequency and value of that information and the extent to which one’s social identity is impacted (Ullrich et al., 2007). As such, a key ingredient for capturing social identities is the ability to categorize small business owners with regard to their preferences for varied network relationships, and specifically, exchange networks, communication networks, and personal networks (Sequeira et al., 2007). Importantly, the information access process undertaken is thus a function of whether small business owners define themselves in terms of a more personal or social identity, and when an external social identity is prevalent, which type of social network serves to guide behaviour (Haslam et al., 2003). H8. A family/personal-oriented social identity will result in greater use and perceived value of personal networks at all stages of the life-cycle; and an external-focused social identity will result in greater use and perceived value of exchange and communication networks at all stages of the life-cycle. Social identities, entrepreneurial learning and economic performance Despite the increasing consensus that entrepreneurs and small businesses must form networks to survive, relatively few empirical studies have investigated the link between an entrepreneur’s social identity and firm performance (Watson, 2009). Granovetter (1992) argues that socially embedded relations are also closely linked to productivity and economic performance vis-a`-vis the ability to make better decisions through information sharing and tactic knowledge exchange, and particularly in decision environments containing high levels of task complexity and uncertainty. We argue that regardless of the social identity type in which entrepreneurs fall, “social” entrepreneurs will outperform “non-social” entrepreneurs. Linking back to the notion of “social capital”, Casson and Della Giusta (2007) contend that the “capitalized value” of social networks contribute to future economic performance, a view supported by Molina-Morales and Marti´nez-Ferna´ndez (2010) and Zhang and Fung (2006). (1) H9. Firms operated by small business owners characterized as having a stronger internal or external social identity will outperform firms operated by individuals with a weaker social identity. Methods Sample Respondents were selected from the local directory of businesses and chosen to participate by a systematic random sample of firms employing less than 500 employees (most were much smaller than 500). Some completed the survey while the interviewer awaited but the majority of the respondents asked the surveyor to come and pick it up one or two days later. The interviewers were female faculty from local educational institutions, which had a great impact on the willingness to participate in the study. A total of 312 questionnaires were returned. Given this face-to-face data collection approach and that the sponsoring universities were identified, nearly all of the surveys had complete data. Of the 312 returns, 15 were removed because of missing data pertaining to the performance measures, for a final response rate of 85.6 percent. The profile of respondents is provided in Table I. Measurements To generate insight into social network usage, we asked the small business owners to indicate their level of Contact Frequency (five-point scale: never, once in a while, sometimes, frequently, very frequently) and Value of Information Received from these contacts (five-point scale: no value, slightly valuable, some value, valuable, very valuable) for the three types of Social Networks (personal network – family/friends; exchange network – current/potential customers, suppliers; and communication network – business/financial consultants, non-competing businesses, competing businesses) at two points in time along the organizational life-cycle (start-up/planning stage and current/ongoing strategic planning stage). To assess social identity, respondents indicated their level of agreement (five-point scale: strongly disagree to strongly agree) with 28 statements, which were then used to cluster respondents to serve as independent variables for H8 and H9 (see Table II). Using a five-point comparative scale (inferior to competition, below average, average, above average, superior to competition), four Comparative Firm Performance Measures were also collected (sales growth, market share growth, profit growth, and overall success of business). Cluster analysis We were also interested in determining whether the social identity of the respondents impacted the frequency and value of the advice they receive from personal, exchange, and communication networks (H8). To test H8 we first conducted a K-means cluster analysis utilizing the 28 question instrument measuring respondents’ perceptions of different types of social networks and how they apply to their business/themselves. Social networks 61 JSBED 19,1 62 Table I. Profile of respondents Characteristic Profile (%) How business started Start-up Acquired from family Acquired externally 72.3 22.7 5.0 When business was started Within ten years 11-15 years 15 þ years 51.6 25.8 22.6 Family involvement in business Spouse Parent Children 22.6 25.6 15.8 Age , 34 35 45-54 55 þ 20.2 35.4 30.6 12.8 Education High school or less Some college/tech Graduated college Post graduate 4.1 11.5 47.2 37.2 Company sales (Euros) , 73,000 73,000-217,999 218,000-364,999 365,000-730,000 . 730,000 26.3 27.0 11.5 18.4 16.8 Two, three, and four cluster models were conducted, with the three-cluster segmentation model providing the cleanest separation in the segments. Table II shows our three-segment solution and the mean scores for each of the social identity statements (all significant at p , 0:01). The three clusters that emerged were named Family/Personal Social Identity, External Social Identity and Weak Social Identity. What is first evident from Table II is that entrepreneurs with an External Social Identity (n ¼ 146) make up the majority of the respondents, followed by Family/Personal Social Identity (n ¼ 85); and Weak Social Identity was the smallest group of entrepreneurs (n ¼ 66). In this regard, 78 percent of the respondents seem to seek some type of relational networking partners, either family/personal networks or external networks. Findings and discussion Prior to conducting tests of our hypotheses, and to determine whether the various firmographics could confound our tests, for H1, H2, H3, H4, H5, H6 and H7 we compared the frequency/value of advice received from social networks based on Social identity statements I seek business advice from many different people My family/friends play a large role in my business decisions My family/friends are important support groups My family agrees with my business decisions My family really cares about the success of my business My parents have been a major influence in my business life I am often in conflict with my family regarding my business I don’t trust the advice that I receive from non-family members I am very secretive so competitors won’t know my strategies My friends have often given me bad advice I have a strong network of business acquaintances I have a strong network of suppliers who help me make decisions I have a strong network of experts who help me make decisions I spend a lot of time developing a strong relationship network Advice from non-family members is better than from family I share my business advice with others Business organizations are important for sharing ideas I have a high tolerance for risk Others would describe me as a team player I have open communications with external business members I am often in conflict with members of my relationship network I don’t like to work in teams I am a competitive person Others like to work with me Many people seek my advice I don’t look to other businesses to see how I can improve mine My family is an important part of the success of my business I trust the advice that my family gives me Family/personal identity

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