Abu Shams Mohammad Mahmudul Hoque1 and Zainudin Awang2
1
Primeasia University
2
Universiti Sultan Zainal Abidin
Abstract
Virtually thirty years ago, Entrepreneurial Marketing (EM) was developed as a concept at the edge between two sciences – marketing and entrepreneurship. For SME business success, Entrepreneurial marketing (EM) is seen as a dominant element. However, EM construct is still under-developed and lacks a unifying theory, leading to piecemeal research efforts. Hence, this study intends to explore and determine the dimensionality of items measuring the EM constructs. The issue has been debated for many years now and there is still no common agreement among researchers as the number of dimensions and as well as items should be employed to measure EM. This study has explored the items measuring EM developed by previous researchers and customized these items to suit the environments in Bangladesh. The study has collected data using these items and conducted the Exploratory Factor Analysis (EFA) procedure. The EFA revealed seven dimensions of EM with 75.611% of total variance explained in this study.
Keywords: Entrepreneurial marketing, Exploratory factor analysis.
Introduction
Over the past 30 years, the concept of entrepreneurial marketing (EM) was addressed by many emerging research streams through spanning between two sciences – marketing and entrepreneurship. Morris, Schindehutte, and LaForge (2002) proposed dimensions of EM that have been used by numerous scholars to study firms small and large. Ionita (2012) described the EM construct is still under-developed and lacks a unifying theory, leading to piecemeal research efforts e.g. Bjerke and Hultman (2002) mentioned four dimensions of EM, Morris et al. (2002) mentioned seven dimensions, Jones and Rowley (2011) mentioned fifteen dimensions, Schmid (2012) mentioned seven dimensions and Mort et al. (2012) mentioned four dimensions of EM.Not only that, there is no generally accepted definition and quantitatively measured dimension for EM (Uslay& Teach, 2008). Hence, there are still gaps for further studies of EM. A need for clarity and understanding of EM in the literature is also proposed by Kraus, Harms, and Fink (2010).Consequently, the study expresses validation of the EM construct and for that itidentifies the dimensions of EM in the context of SMEs. As an incipient impact topic, we focus on the first steps of construct validity through exploratory factor analyses of EM construct.
Background of the study
Small Medium Enterprises (SMEs) upkeepexpressively to economic development (Islam et al., 2011; Singh, 2009; Tsukahara, 2006; Storey, 1994), to production, competitiveness, employment, industrial growth, organizational decentralization and social coherence (Barry & Milner, 2002), In today‘s dynamic global economy. Across the flora and fauna, there is a
23 broad consensus that a vibrant SME sector is one of the principles driving forces in the development of a market economy (Tambunan, 2011; Kurokawa et al., 2010; Audretsch, 2009; Tsukahara, 2006). Small business can enable rapid industrialization and accelerated economic growth. Recent literature from all parts of the world suggests importance of SMEs in the overall performance of economy, including USA (Audretsch, 1998), Japan (Urata and Kawai, 1998), East Asia (Berry and Mazumder, 1991), and Africa (Ogechukwu, 2013). Therefore, most Government of the world have realized the important contribution made by SMEs towards achievement of sustainable growth, employment and poverty reduction (Swerczek& Ha, 2003). So, SMEs are one of the indispensable ways to economic self-sufficiency around the world (Montoo, 2006). Bangladesh is not the exception. So the government of Bangladesh has identified the SMEs as a priority sector.
However, according to Ahmed M.U. (2001), Bangladesh has failed to maximize the benefits derived from the SME sector because Bangladeshi SMEs have been facing multifarious problems related to raw materials, power, land, marketing, distribution channel, transportation, environment, technical know-how and finance (Chowudhury& Rashid,1996). Bangladeshi SMEs are facing more challenges in the globalized business arena due to lack of proper marketing, and proper entrepreneurial behavior(Alauddin, 2015)and SMEs contribution growth to the GDP of Bangladesh is very inconsistent (Chowdhury et al., 2013).Anecdotal observation by the researchers of the present study indicate that most of the customer goods manufacturing enterprises in Bangladesh generally do not care about customer but they are too much concern about maximizing profit and as a result in most case neither customer satisfaction nor better business performance is achieved. As a result, they are on tremendous pressure to sustain in domestic as well as global markets owing to global competition, technological advances and changing needs of customers.In order to be able to clutch the opportunities that globalize dynamic environment opens up, Bangladeshi SMEs have to refigure their existing marketing strategies and need dynamic entrepreneurial capabilities that enable them to intellect and seize new opportunities and renew the existing market base. As a consequence, it is proposed that, EM will be a potential strategy of competitive advantage and key to success factors of SMEs in Bangladesh.
However, the seven dimensions of EM proposed by Morris et al. (2002), that to date have not been validated or empirically tested in the SME context of Bangladesh. Bjerke et al. (2002) cite a need for theory-based EM research that sheds light on entrepreneurial actions and processes, particularly those processes that connect entrepreneurship with marketing strategy formation and execution. Kraus, Harms, and Fink (2010) further suggest a need for clarity and understanding of EM in the literature, as well as conceptualization of what actually comprises EM activities and entrepreneurial aspects of marketing. The present study as a consequence fills a gap in the literature as it addresses scale development and validation for the EM construct in the context of Bangladeshi SMEs and an under- researched business segment.
Literature Review
Entrepreneurial Marketing (EM)
In a historical perspective, the foundations of Entrepreneurial Marketing were settled during the marketing and entrepreneurship research conference promoted by Hills &LaForge in 1992, which wrote the first empirical study of the marketing and
24 entrepreneurship interface, starting this way the marketing and entrepreneurship movement within marketing. Three years later, Gerald Hills produced the empirical research regarding the marketing and entrepreneurship interface (Hills, Hultman, & Miles, 2008). In 1989, the American Marketing Academy (AMA) settled a task force and a special interest group for the marketing and entrepreneurship interface. The first Entrepreneurial Marketing guidelines were created in the American Marketing Academy summer 1990 and winter 1991 conferences (Hills et al., 2008).
Until the 1990s, it was widely assumed that small and medium-sized enterprises (SMEs) or new ventures required a simplified and informal version of the more ‗sophisticated‘ marketing practices that were developed for larger firms (Sullivan Mort, Weerawardena, &Liesch, 2012). In 1995, two very important papers were produced: the first, entitled ―marketing and entrepreneurship in SMEs: An Innovative Approach‖, that helps establish to the content and structure of EM course of activity, was written by Carson et al. (1995) and the second, entitled ―Market orientation and the learning organization‖, was written by Slater and Narver (1995). Their major contributions were that they made some scholars to look at the similarities between marketing and entrepreneurship.
In 1999 the Journal of Research in Marketing and Entrepreneurship, which deals with this interception between this two fields of research were founded and become the first academic journal dedicated to EM, which increased the acceptance of Entrepreneurial Marketing in the scholar environment.
In the last decades, there was a considerable growth in the Entrepreneurial Marketing knowledge. (Morris et al., 2002), argued that the EM concept ―has been used in various ways, and often somewhat loosely‖, reason why it seems important to understand the evolution of the definitions of Entrepreneurial Marketing (see Table 1).
Table 1: Definitions of Entrepreneurial Marketing
Authors Definition
Duus (1997)
―The distinguishing feature of this new interpretation, which is essentially a market oriented inside-out perspective, could be the development of the specific competencies of the firm by entrepreneurial action with a view to serving future customers' latent demand for products that do not yet exist. […] this can be called the Entrepreneurial Marketing concept.‖
Stokes (2000a) ―marketing carried out by entrepreneurs or owner-managers of entrepreneurial ventures‖
Stokes (2000a)
―The Entrepreneurial Marketing concept is focused on innovations and the development of ideas in line with an intuitive understanding of market needs […].‖
Hill & Wright (2000)
―A new stream of research describes the Marketing Orientation of small firms as ‗Entrepreneurial Marketing‘. This means a style of marketing behavior that is driven and shaped by the owner manager‘s personality.‖
Morris, Schindehutte, &LaForge (2001)
―a proactive, innovative, risk-taking approach to the identification and exploitation of opportunities for attracting and retaining profitable customers‖
25 Morris et al. (2002)
―the proactive identification and exploitation of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation.‖ ―EM synthesizes critical aspects of marketing and entrepreneurship into a comprehensive conceptualization where marketing becomes a process that firms use to act entrepreneurially.‖
―the unplanned, non-linear, visionary marketing actions of the entrepreneur.‖
Bjerke and Hultman (2002) ―EM is the marketing of small firms growing through entrepreneurship.‖
Hills and Hultman (2006)
―[....] [the authors] describe EM characteristics which reflect such activities as ―a flexible, customization approach to market‖ and ―innovation in products, services and strategies‖.
―[...] tactics often two ways for customers, and marketing decisions based on daily contacts and networks.‖
Hills et al. (2008)
―[...] financially successful, entrepreneurial SMEs may use marketing as a path to create competitive advantage, based on differentiating their marketing program by leveraging their superior knowledge of customers, markets and technologies.‖
Kraus, Harms, & Fink (2010)
―a particular type of marketing that is innovative, risky, proactive, focuses on opportunities and can be performed without resources currently controlled‖
Maritz (2010)
―Entrepreneurial Marketing is the proactive identification and exploitation of opportunities for acquiring and retaining appropriate stakeholders through innovative approaches to risk management, resource leveraging and value creation‖
Hills et al. (2010)
―EM is a spirit, an orientation as well as a process of pursuing opportunities and launching and growing ventures that create perceived customer value through relationships, especially by employing innovativeness, creativity, selling, market immersion, networking or flexibility‖
Carson (2010)
―[...] interface researchers have been ―blinded‖ by the ―widening‖ of entrepreneurial dominance that the true interface between marketing and entrepreneurship has been lost. Thus, I hope, indeed propose that future interface research is defined by the parameter SB [small businesses] marketing and entrepreneurship‖
Jones and Rowley (2011)
―[...] any concept of EM [...] must embrace aspects of behaviors that have traditionally been researched in the entrepreneurship, innovation, and customer engagement and relationship fields.‖
Webb et al., (2011)
―Marketing activities represent a set of means that facilitate firms‘ ability to exploit opportunities and satisfy customer needs. [...] (F)irms can recognize and exploit opportunities to
26 more efficiently or effectively serve customer needs through the innovation of marketing activities.‖
Therefore, Entrepreneurial Marketing can be understood as the marketing and entrepreneurial strategies and process that the entrepreneur uses to proactively identify opportunities in the environmental complexity and to implement non-linear, innovative and disruptive solutions that create value and that could have some degree of risk. Morris et al. (2002) characterizes EM as an organizational orientation with seven dimensions: proactiveness, opportunity-focused, risk taking, innovation-oriented, customer intensity, resource leveraging, and value creation. Each of these dimensions can be employed to a greater or lesser extent by a firm.
Why Entrepreneurial Marketing?
EM has emerged as a new marketing paradigm that helps firms rethink their ways of doing marketing. According to Webster (1992); Gronroos(1994); Day and Montgomery (1999); Vargo and Lusch(2004); in the past two decades, marketing scholars have questioned the adequacy of traditional marketing and suggested that a new marketing paradigm is needed.Several empirical studies show that the traditional marketing concepts do not cover all marketing practices. For example, Hultman and Shaw (2003) find that service firms engage in several activities that are not covered by the marketing mix concept. Those activities are a creation of reputation through word of mouth, referral marketing, good will, and long term personal relations. According to Constantinides (2006) the marketing mix concept lacks customer orientation and customer interactivity. As a result, Morris (2002), proposes Entrepreneurial Marketing which complements thetraditional marketing and covers several concepts that are the essence of marketing paradigm.
Dimensions of Entrepreneurial Marketing
According to Collinson and Shaw (2001), Entrepreneurial marketing is characterized also by responsiveness to the marketplace and intuitive ability to react to changes in customer demands.Entrepreneurial marketing is also characterized having seven underlying assumptions that are pro-activeness, opportunity focus, calculated risk taking, innovativeness, resource leveraging, customer intensity and value creation. These assumptions distinguish entrepreneurial marketing from traditional marketing. The first five aspects are entrepreneurial orientation dimensions and the last two are marketing orientation dimensions. Entrepreneurial marketing is matter of degree and different combinations of the underlying dimensions will result in marketing which might be less or more entrepreneurial (Morris et al., 2001). The seven dimensions of EM developed by Morris et al. (2002) are:
27 Figure 1: Entrepreneurial Marketing Dimension
Method
Data Sources and Data Collection Techniques
In order to ensure adequate and relevant data to facilitate for effective research work, data related to this research work was primarily sourced. The primary data was sourced by personally distributing and retrieving completed questionnaires from the respondents. Primary data refers to information that is developed or gathered by the researcher specifically for the research project at hand (Burns and Bush, 2013).Self-administered questionnaires were used.The researcher personally distributed and retrieved the completed questionnaires. Alongside the researcher himself, 3 research assistants from colleagues were properly briefed and trained on the distribution and retrieval of questionnaires in order to ensure the effectiveness of the data collection process. They therefore took parts in the data collection in order to fast track the process.
Population and Unit of Analysis of the Study
The population of the study is the owners or managers of the consumer goods manufacturing enterprises of Bangladesh. According to Alauddin (2015) about 6.0 million SMEs are actively performing in Bangladesh. Population refers to the entire group of people events or things of interest that the researcher wishes to investigate (Uma and Roger, 2013). Hence,the population of this research consists of owners or managers of all Six (6) millionsmall and medium enterprises of Bangladesh.
Research Instrument
For developing the EM scale,the study followed established procedures (i.e., Churchill, 1979; Gerbing& Anderson, 1988) which included creation of conceptual definitions for Innovativeness, Pro-activeness, Risk Taking, Opportunity Focus, Customer Intensity, Resource Leverage and Value Creation. Subsequently, a structured questionnaire was developed for data collection to measure EM constructin this study which, consists ofthirty-five (35) items measured using a ten-point interval scale. The ten-point interval scale was used to give respondents a wider response options that suit their utmost judgment (Zainudin, 2014). The interval scale is also designed to examine how strongly subjects agree or disagree with statements on the scale with anchors thus: 1 (Strongly Disagree) to 10 (Strongly Agree). Table 2 provides the operational definitions along with the items developed for each of seven dimensions of EM.
28 Table 2: Operational Definitions and Items of the seven dimensions of EM
Operational Definition of EM dimensions
Items of the seven dimensions of EM
Customer Intensity Customer intensity includes creative approaches to customer acquisition, retention and development.
A11 Our business enterprise frequently measures our customer satisfaction.
A12 All employees in our enterprise recognize the importance of satisfying our customers.
A13 Our business enterprise objectives are driven by customer satisfaction.
A14 Our business enterprise pays close attention to after-sales service.
A15 Our business enterprise closely monitors our level of commitment in serving customers‘ needs. A16 Our business enterprise closely evaluates our level of commitment in serving customers‘ needs.
Value Creation Creation of unique combinations of resources to produce value.
A21 Our enterprise creates value for consumers with excellent customer service.
A22 Our enterprise‘s pricing structure is designed to reflect value created for customers.
A23 Our enterprise‘s pricing structure is appropriate to create value to customers.
A24 We integrate enterprise functions in our business enterprise to better serve the target market needs.
A25 Providing value for our customers is the most important thing of our enterprise.
A26 Our enterprise‘s value is the driving force behind its operation.
Pro-activeness Proactiveness means that entrepreneurial marketer does not take external environment as a given to which the company can only react or adjust.
A31 We are constantly on the lookout for new ways to improve business enterprise.
A32 We are always looking for better ways to do things in our business enterprise.
A33 In our business enterprise, we enjoy overcoming obstacles to our ideas.
A34 We are good at turning problems at our business enterprise into opportunities.
A35 We are good at identifying opportunities for our business enterprise.
A36 We are more action oriented than reaction oriented.
A37
In our business enterprise it is more exciting to see our ideas turn into reality.
Opportunity Firm has to serve unsatisfied needs and capture new
opportunities before
A41 Management approach looks beyond current customers for more opportunities for our business.
A42 Management approach looks beyond current markets for more opportunities for our business.
29 their competitors.
Opportunities represent
undiscovered market positions that are sources of sustainable profit potential.
driven.
A44 Our business enterprise is always looking for new opportunities.
A45 Our business enterprise will do whatever it takes to pursue a new opportunity
Resource Leveraging Resource leverage explains the recognition of
resources that are not utilized optimally, nonconventional way of using the resources and control over the resource.
A51 Our Business enterprise able to leverage our resources by switching.
A52 Our Business enterprise has always found a way to get the resources need to get the job done.
A53 Our Business enterprise able to leverage our resources by sharing.
A54 Our Business enterprise prides itself on doing more with less. A55 Our Business enterprise has used networking to get advantage
in favor of my enterprise. Innovation Innovation involves ability at an organizational level to maintain a flow of internally and
externally driven new ideas that are possible to translate into new products, services, processes, technology applications or
markets.
A61 Our business enterprise tries to use innovative approaches for getting the job done more efficiently.
A62 Our business enterprise tends to be more innovative that most of my competitors.
A63 Our business enterprise creates an atmosphere that encourages innovativeness.
Risk-Taking
Calculated risk-taking involves a willingness to pursue opportunities that have a reasonable chance of producing losses or significant performance
inconsistency.
A71 Our business enterprise would rather accept a risk to pursue an opportunity than miss it altogether.
A72 Our business enterprise is willing to take risks for benefits of the company.
A73 Our business enterprise would not be considered gamblers, but we do take risks.
Translation of the Survey Instrument
In order for the respondents to clearly understand the research instrument and furnish the researchers with the required responses based on their understanding and utmost opinion,