DEVELOPING SME’S MARKETING COMPETENCE BY INTERVENTION
PROGRAMS
Riitta Ristiluoma
MTT Agrifood Research Finland, Economic Research
Introduction
Many small firms lack the resources, especially financial resources and also sources of labour and information are limited (Malecki 1997). There are views that stand for direct governmental financial support for SMEs’ or state for promoting learning about best-practises (Malecki & Tödtling 1995) or regional development models found fertile in some region. Simply throwing money at the problem of capital shortages for small firms, even if based on successful models elsewhere, is unlikely to be productive (Malecki 1994). It has been found that the greatest barriers to small firms are not necessarily linked to capital. Capital is secondary to information, business knowledge, and management expertise. More important is knowledge that can only be gained from experience (Chinitz 1961 ref. Malecki). Knowledge is vitally important to the upgrading, transformation and redeployment of core competencies which, arguably, form the basis of an enduring competitive advantage (e.g. Porter 1990).
Enhancing human capital by providing people with knowledge in work-related competencies may have a more widespread impact than any other policy measure (Brusco 1989). The policy framework which promotes learning about best-practises and creation of network in regions where networks have failed to emerge could also be fertile (Malecki & Tödtling 1995). But the problem in learning about best-practises is its’ imitative aspect. When the knowledge is practically available for every SME’s, the gained utility will disappear due to competition. According to Brusco (1989) the most effective political way to promote SMEs competence might be to provide training programs and services. The ultimate long term challenge for government policy is to generate competitiveness and increasing globalisation among its small firms.
The role of the government policy is crucial in many ways in enhancing SME’s competencies and skills. SMEs often lack the resources needed to develop their business operations and intervention
certain degree, but intervention programs have been seen as means of the general regional, industrial and employment policies rather than essential aspects of the learning networks for enterprises. According to Mugler, (2000, 170), SMEs need access to consultancy services and other support targeted at the supply of information. This is found in many countries, for instance in Finland. In many researches, marketing is found the most difficult area for SMEs (e.g. Tapionlinna 2002).
Development of interventions is needed because the prime concern of political interventions differs from the business level objectives in small enterprises. This follows that the evaluation of the performance of intervention programs is often difficult, because the goals of political interventions and firm policy are general and not targeted at the firm level, where small business need a wide range of skills and abilities in areas such as organisation, management, production, marketing, selling, investment and finance or law.
The question is how to develop entrepreneurs’ marketing competence by intervention programs. These interventions refer to temporary organisations and activities which intervene in the marketing capabilities in small business enterprises (Kupiainen & Kuorikoski 2002). Intervention projects are temporary organisations which differ in some respects from permanent organisations (Lundin & Söderholm 1994). Distinctive factors are by Lundin & Söderholm time, task, team and transition. Interventions can be arranged as conventional school lessons, but it is questionable whether traditional approaches to education, with their reliance on teacher-led passivity, are what are required to promote the spread of enterprise (Bridge et al. 1999). Minimum level in marketing training programs is to get entrepreneurs to internalize the meaning of different sectors of marketing in their businesses. According to Carson et al. (1995) SMEs’ marketing style differs from those of bigger ones e.g. in product development and strategy formulation (Covin & Miles 1998). Stokes found (2002) that the most SME owners have very limited picture of marketing.
To be able to utilize resources most effectively and most productive way demands the kind of competence, which is often attached to learning by doing or learning by experience (Spender 1995). The source of capital is thus not to own resources but to be able to continuously learn to coordinate resources better. Thus, managing knowledge and competence is one of the most critical competitiveness factors in SMEs (Scardamalia et al. 1992). To promote learning in intervention projects, also the learning environment in projects should be taken account. Learning environment
is a place, space, community or practice which aim is to promote learning. In other words, learning always takes place in some kind of context, which at the same time guides learning (Keso 1999). Evidence from various industry studies and from studies of firms in multiple industries, shows that knowledge of how to enhance performance is not readily or easily transformed across firms (Pfeffer & Sutton 1999). Although we live in an era of distance learning, many things, about organizations, operations, and people, can only be learned by firsthand experience. According to Pfeffer & Sutton the gap between knowing and doing is important for firm performance. This follows, although knowledge creation, benchmarking, and knowledge management may be important, transforming knowledge into organizational action is at least as important to organizational success (Pfeffer & Sutton 1999). Pfeffer & Sutton found, that most firms’ efforts consist of investing in knowledge repositories such as intranets and data warehouses, building networks so that people can find each other, and implementing technologies to facilitate collaboration. These are all activities that treat knowledge pretty much like resource whatsoever, to be gathered, shared, and distributed. Knowledge management systems rarely reflect the fact that essential knowledge, is often transferred between people by stories, gossip, and by watching one another work. This is a process in which social interaction is often crucial.
Recently learning has been considered, from a strategic perspective, as a source of heterogeneity among organizations, as well as a basis for possible competitive advantage (Jerez-Gómez et al. 2003). From this approach arises the concept of learning organization, which implies a change in the traditional way of dealing with business management (Jerez-Gómez 2003). Organizational learning is seen as a dynamic process based on knowledge, which implies moving among the different levels of action, going from the individual to the group level, and then to the organizational level and back again (Huber 1991). Jerez-Gómez et al. conceptualize organizational learning as the capability of an organization to process knowledge – in other words, to create, acquire, transfer, and integrate knowledge, and to modify its behaviour to reflect the new cognitive situation, with a view to improving its performance.
Objective
The main purpose of the study is to highlight how entrepreneurs’ insight of marketing changes (if it does change) during marketing intervention program. The research object is small rural food processing firms which participate in marketing development projects. Attention will be paid how the possible occurring change can be seen in entrepreneurs’ way of thinking and enterprises’ economic indicators. The project’s function as a learning environment will be examined and how the learning environment created in projects enhance entrepreneurs marketing competence. In literature review the competence building and organizational learning will be discussed from marketing competence point of view.
The ultimate goal of the study is to enhance practical understanding how marketing training should be arranged in intervention project environment. Research also produces information needed in planning marketing training programs for SMEs. The results can be applied to education of small rural enterprises. Projects are understood as temporary organizations where entrepreneurs have the ability to be in interaction with other group members; other entrepreneurs. Projects provide SMEs also the learning environment in which entrepreneurs are able to reflect and increase their knowledge.
The theoretical frame of this study is based on activity theory. Research based on activity theory has long traditions and theory has been applied e.g. to education and lately in planning ADP based learning environments (Engeström et al. 1999). In activity theory, an organisation or network is investigated as an object-oriented, artefact-mediated activity system with its internal relations and contradictions. The model of activity system provides a context to reflect the praxis (picture 1). Marketing development project is seen here as an activity system. An activity system consists of the interdependent elements of subject, object, instruments, rules, community and division of labour (Engeström 1987). Object of the activity is a driving force. The motivating capacity of an object (the assumed results of the project) gives direction to an activity (marketing development project). Training, education or guidance given in projects can bee seen as tools which carry the process forward towards the goal. In this study, the process of marketing training will be examined in the frame of activity theory. The process will be followed from entrepreneurs’ point of view and by entrepreneurs’ experiences.
Picture 1. The model of activity system applied to marketing project context (Engeström 1987).
Methodology
Method of the research is qualitative. The qualitative method was chosen because the aim of the study is to understand and uncover what lies behind the phenomenon in focus. Also when the object of the research is a process, it is difficult or even possible to convey the phenomenon with quantitative methods.
In the empirical analysis one or two marketing development projects will be chosen for analysis. The amount depends on how keen the project managers are to let researcher follow their projects. If I am able to get two projects, comparative study is possible. Chosen projects can e.g. differ from their implementation methods. Research is a follow-up study and the data will be collected by focused interviews from entrepreneurs participating to the project. In both projects (if I get two of them), 6 - 10 entrepreneurs are chosen to the analysis. Because the focus of the analysis is on learning process, the interviews are made several times in different phases of the project. This kind of follow-up method has been found productive in similar situations where the object of the study is process (Kangasoja 1999). The last interviews will be done after half a year the project(s) has finished. That enables better possibilities to evaluate the possible changes in entrepreneurs’ way of thinking.
Because I haven’t even started to collect my data, it’s a bit difficult to decide what kind of analysis or approache(s) I will use. The chosen analysis should be compatible with collected data and with existing research problem. At the moment, I find narrative analysis interesting. Narrative analysis might be suitable way to analyse a follow-up study because the object of the study is a process.
Tools & Instruments
Provided by marketing project (e.g. education, advice)
Object – enhance entrepreneurs marketing competence
Division of labour
Work contribution between project’s personnel and entrepreneurs Community Region’s infrastructure, enterprises’ operational environment Rules Profitable trading Subject
Marketing project and entrepreneurs
Narrative analysis is analysis of a chronologically told story, with a focus on how elements are sequenced, why some elements are evaluated differently from others, how the past shapes perceptions of the present, how the present shapes perceptions of the past, and how both shape perceptions of the future. As a social phenomenon, narratives vary by social context e.g. home and work (Labov & Waletzky 1967). So the evaluative data extracted form narratives will vary by the social context within which they are collected. That’s why gathering narratives on the same objects from the same respondents at different points in some development process, will yield differences in evaluative components and consequent insight into the process. In this case the development process is marketing training project, and the objects (entrepreneurs) will be interviewed in different phases of the project to evaluate the learning process.
The question of validity will be taken account by recording all the interviews and by using Atlas.ti-program. With Atlas.ti I hope to avoid temptation to jump to a conclusion by some “interesting”, single cases. Atlas.ti will be used in coding and categorizing the data. One way to strengthen research’s validity is respondent validation (Silverman 2000). That means going back to the subjects with the tentative results and asking their approval to the results (Reason & Rowan 1981). Silverman represents five interrelated ways to aim at more valid findings: the refutability principle, the constant comparative method, comprehensive data treatment, deviant-case analysis and using appropriate tabulations. Refutability principle means that researcher seeks to refute assumed relations between phenomena (Popper 1959; ref. Silverman 2000). Only if the existence of a certain relationship cannot be refuted, we can speak about “objective” knowledge. Using quantitative measures like simple counting techniques; frequencies and so on is also seen as one of the validating method. E.g. Atlas.ti –program enables to count frequencies etc. from the data. According to Silverman, reliability refers to the degree of consistency with which instances are assigned to the same category by different observers or by the same observer on different occasions. To be able to evaluate reliability, all procedures done in data must be documented and the analyzing process must be transparent.
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