[emma wood] journal of communication management

ISBN 1-84544-018-8 ISSN 1352-2752

Qualitative MarketResearchAn International Journal

Papers from the Business Innovation in the KnowledgeEconomy Conference, 2003Guest Editors: Lynn M. Martin and Julie Abbott

Volume 7 Number 4 2004

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qmr_cover_(i).qxd 17/08/2004 9:49 AM

Contents

238 Access this journal online

239 Abstracts & keywords

241 Guest editorial

243 Customer and company voices in

e-commerce: a qualitative analysis

Rachel McLean and Nigel M. Blackie

250 Qualitative issues in ITand

organizational processes in

implementing marketing strategies

Ashok Ranchhod and Calin Gurau

257 Channel benefits portfolio

management in the eBusiness era

Panos Louvieris and Harmen Oppewal

265 V2C activity on a local level:

qualitative cases – Tampere and

Silicon Valley

Hannu Jungman and Marko Seppa

274 A qualitative sense-making

classification of business

incubation environments

Paul D. Hannon

284 Enhancing customer service

and organizational learning

through qualitative research

Peter R.J. Trim and Yang-Im Lee

293 Awards for Excellence

Qualitative Market Research: An InternationalJournal

Volume 7, Number 4, 2004 ISSN 1352-2752

Papers from the Business Innovation in the KnowledgeEconomy Conference, 2003Guest Editors: Lynn M. Martin and Julie Abbott

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Customer and company voices in e-commerce:a qualitative analysis


Keywords Knowledge management,

Electronic commerce, Shopping, Consumers

Consumer knowledge is a very important asset for an

organisation. Two types of consumer knowledge have

been identified, “knowledge about customers”

including customer segments, individual customer

preferences, potential customers, and “knowledge

possessed by customers” including knowledge about

product ranges, companies, and the marketplace.

Electronic commerce (e-commerce) offers an ideal

medium for the creation and exchange of both types

of knowledge. This paper presents the results of an

initial phase in a research cycle that looks at

e-commerce through the lens of knowledge

management. It examines e-commerce provision

made by organisations for customers across seven

facets ranging from transactional to relational

facilities. The results of a self-evaluation of

companies’ e-commerce propositions are contrasted

with customer expectations to determine divergence

and alignment. Implications are discussed and

conclusions proposed.

Qualitative issues in IT and organizationalprocesses in implementing marketing strategies


Keywords Marketing, Internet, Marketing strategy,

Technology led strategy

Successful marketing strategies depend very much on

an organisation’s ability to implement them. As the

role of technology grows apace in marketing, it is

important to understand how IT and organizational

processes impact on the implementation of marketing

strategies. This paper attempts to show how

technology is changing the nature of marketing and

then shows its interaction with people and processes.

It also offers organisations an opportunity to

undertake a self-evaluation exercise to determine how

well integrated are their implementation policies.

In general, the argument outlined indicates that for

successful implementation of strategies an

organisation has to integrate people, processes and IT.

Channel benefits portfolio management in theeBusiness era


Keywords Consumer behaviour,

Electronic commerce, Channel relationships

The role of channels and their management in the

eBusiness era is becoming increasingly important to

customer relationship management. Traditional use

of the application portfolio approach has been

concerned with providing an appropriate basis for

making investment decisions about ITapplications for

the firm. This paper argues that there is a gap between

the established IS portfolio application theory and the

requirements to support management investment

decisions about eBusiness applications; Therefore,

the paper proposes a channel benefits portfolio (CBP)

approach to inform managers’ channel investment

decisions concerning business-to-customer channel

interface. The suggested approach provides a

conceptual framework and means to facilitate the

alignment of the firm’s portfolio with their customers’

portfolio. The paper reports exploratory findings

regarding customer channel preference and customer

channel choice behaviour in the information search

and purchasing stages during the customer decision-

making process on the basis of the CBP.

V2C activity on a local level: qualitativecases – Tampere and Silicon Valley


Keywords Venture capital, Entrepreneurs, Finland,

United States of America

The increased capital intensity of venture capital

supply and the increased knowledge intensity of new

venture supply have created a knowledge gap and

recreated a capital gap between new venture activity

and venture capital industry. This development has

given rise to an all-new breed of players. In this

descriptive, qualitative study, V2C activity is explored

in a local context through comparison of cases

Tampere (Finland) and Silicon Valley (USA). In

Silicon Valley, the dominant group of V2C players is

business angels, whereas in Tampere, publicly funded

incubators play the most visible role in new venture

development. Nevertheless, in both areas, five

different categories of V2C players are represented,

and, in both, bridge the gaps to a significant extent.

Abstracts & keywords

Qualitative Market Research: An International Journal

Volume 7 · Number 4 · 2004 · Abstracts & keywords

q Emerald Group Publishing Limited · ISSN 1352-2752

239

A qualitative sense-making classification ofbusiness incubation environments

Paul D. Hannon

Keywords Metaphors, Start-ups,

Business development

Business incubation is a new and fast growing

industry in the UK. The environments within which

incubation can take place and their descriptors as

used across the industry are many and varied. The

language engaged in by policy-makers, professionals

and practitioners commonly applies metaphors to

convey meaning of loosely defined terms and

concepts in a diverse market seeking increased

clarity. Metaphors can offer a qualitative approach

to sense-making. By articulating ideas through

metaphors, individuals can often expand the

concepts and expressions available through

language. It is asserted that it would be valuable to

incubation communities to provide shared meaning

to the discourse of incubation such that further

confusion is minimised. This paper aims to address

this challenge by proposing a classification of

incubation environment types based upon a

qualitative approach to understand the incubation

marketplace through its language, specifically the

application of metaphor.

Enhancing customer service and organizationallearning through qualitative research


Keywords Research, Communication,

Culture (sociology), Learning, Marketing,

Partnership

In order to develop a sustainable competitive

advantage in the knowledge based economy, senior

managers need to ensure that customer relationship

management is placed within a clearly defined

organizational culture that embraces organizational

learning. Senior managers are required to exhibit a

proactive approach to leadership that results in

creative solutions being found to solve complex

problems. Open communication reinforces the

decision-making process and allows mutually based

partnership arrangements to develop. This being the

case, the network approach to business development

can be viewed, as collectivist in orientation and this

should allow partnership arrangements to be

developed through time.

Abstracts & keywords Qualitative Market Research: An International Journal

Volume 7 · Number 4 · 2004 · 239 – 240

240

Guest editorial

Guest Editors

Lynn M. Martin

Julie Abbott

About the Guest Editors

Lynn M. Martin is director of EU Asia projects at the BusinessSchool, with key development work under way with India, China,Germany and Spain. She is also director of the innovationmanagement interactive exercise (IMIE), a computer-based toolto aid understanding of the innovation process. In the past shehas worked in universities in the UK and Germany, withexperience as a senior manager in a large organisation and as anowner-manager in small firms. She has published many paperson small firm development internationally in academic journalsand contributed to several books on entrepreneurship andinnovation. In addition to supervising doctoral students workingin this area she is also course director for the action-researchbased Doctor in Business Administration Programme. A regularrapporteur and evaluator for the European Union frameworkprogrammes, she also contributes to projects and initiatives runby NATO and the Commonwealth in terms of innovation andentrepreneurship.Julie Abbott runs her own marketing consultancy, specialisingin producing strategic marketing plans for small to medium sizedbusinesses from their business plans. She lectures widely atvarious business schools on marketing topics and runs marketingplanning workshops for clients. She also does general marketingconsultancy for companies that need extra help in understandingtheir marketplace or how to position themselves for bestadvantage. Prior to this Julie worked in the IT industry for anumber of years, most recently for IBM as marketing managerfor a key product set across EMEA (Europe, Middle East, Africa).She mainly worked in technical IT roles both for IBM and othercompanies. She spent the first five years of her IBM career as anIT consultant before moving into marketing. During hermarketing career, she has worked as marketing manager for avariety of IBM’s leading products and has published papers onCRM in leading academic journals as well as contributing toseveral marketing books. She works closely with many UKbusiness schools to encourage interaction and thoughtleadership between them and the business world as well aslecturing at postgraduate level on marketing issues.

Welcome to the Business Innovation in the

Knowledge Economy (BIKE) Conference special

issue of QMRIJ. This issue contains six qualitative

papers with a range of insights and applications

into business incubation environments, channel

benefits, customer and company voices in

e-commerce, IT and organizational processes,

a two-country comparison in qualitative case

examples and the enhancement of customer

service. As such, this issue presents a different

scenario to the normal qualitative academic papers

by focussing on innovative practices.

As background, the BIKE event was one of a

series of conferences to explore how new business

processes, services and products arise from

innovation and knowledge developments and to

study and discuss realities of business operations in

new technological environments with the benefits

of qualitative insights and qualitative inputs to the

management of such areas. A particular feature

of this annual event is that it brings together

academics, practitioners, business people and

policymakers; this year it took place thanks to

the sponsorship of IBM, the West Midlands IT

Association (WMITA) and Stratford-upon-Avon

District Council. The logo for WMITA is shown in

Figure 1. It has a key significance for the way BIKE

has tried to bridge the gap between commerce

and academia since WMITA is a group of small

and large firms working together as a regional

cluster and its presence here also represents an

important new university-industry partnership.

The involvement of this cluster also indicates the

local and regional impacts of BIKE while the more

international aspects are shown by the EDECAD

involvement. The founding members of BIKE

include Julie Abbott, Lynn Martin and Len Tiu

Wright.

Last July 2003, the BIKE team held a

conference at IBM Warwick and Stratford-upon

Avon District Council. This formed the UK

launch of the EDECAD project that involves

India, China, Spain and the UK and is led by Lynn

Martin from the Business School at the University

of Central England (www.edecad.info). It was

partly funded by the EU Asia ITC programme

which aims to develop European-Asian links in

terms of information technology communications.

The logo for this programme is shown here as its

involvement indicates the truly international

nature of the BIKE event and the potential impacts

on a wider economic and social community

(www.europa.eu.int/comm/europeaid/projects/

asia-itc) (Figure 2).

Over 30 months, EDECAD took an active role

in developing new elearning and e-commerce

initiatives across the partner countries.

Underpinning issues include techno-ethics, the


Volume 7 · Number 4 · 2004 · pp. 241-242


241

societal impacts of new technology and the role

of foreign direct investment in this process with a

particular focus on SMEs. Supporting the initial

stages of this process, participants explored key

issues connected with customer relationship

marketing, industry and the public sector,

knowledge, e-business, small and medium sized

enterprises and digital inclusion.

Knowledge management and organizational

learning formed a central part of the conference and

indeed are high on the agendas of many in business

today, along with customer service, which must

form the central tenet of an organisation if it is to

win in the marketplace. Trim and Lee discuss how

customer service can be enhanced by a business

culture that embraces organizational learning. This

can result in proactive leadership and creative

solutions being put forward to ever more complex

challenges that firms face today when dealing with

day-to-day issues such as managing relationships

with their customers and suppliers.

The papers selected for this issue from the

BIKE conference are examples of the focus and

high quality of the papers presented over the two

days and we believe that they will hold your

interest and provide food for thought.

The first paper is about customer and company

voices in e-commerce. A company’s knowledge

base becomes ever more important in this

networked world and McLean and Blackie have

qualitatively investigated how companies use

knowledge management within their e-commerce

strategies. Customer expectations are matched

against organizational provisions in order to

understand knowledge gaps and customer

requirements. This underlines how important

people and processes still are in business despite

the proliferation of information technology in

markets and its ubiquitous presence everywhere

today. In the second paper, Ranchhod and Gurau

tackle the issues between IT, organizational

processes and people from the viewpoint of how

this is changing the nature of marketing today.

The need for interaction between all three aspects

is vital for marketing strategies to be successful

in an ever-increasingly competitive business

environment. As the Internet is becoming more

mature and accepted across most customer

segments, and so businesses using this channel are

beginning to flourish again, as shown in the third

paper. Louvieris et al. argue, in the third paper,

that closely aligned company and customer

channel portfolios are a strategic imperative for

sustainable success in multi-channel environments

and so propose a “Channel Benefit Portfolio”

approach for successful e-commerce strategies.

The growth of e-commerce coupled with

governmental encouragement in new business is

causing a proliferation of incubation centres and

increased use of venture capitalists once again.

This intensity of supply is causing gaps in

knowledge and capital and has led to a new set of

actors – the venture to capitalists (V2C), who

move projects from “prospective” to “investable”.

Jungman and Seppa in the fourth paper

qualitatively researched operating models in two

local areas of the US in order to understand

activity in this area and to discover if the models

developed can be used elsewhere. The wide

range of incubation centres has resulted in a whole

series of descriptors being used that has given

rise to a lot of confusion which is slowing down the

development of policy and practice in this area.

In the fifth paper, Hannon argues that the

incubation market needs a sense-making

classification of the different incubation types in

order to enhance the meaning of incubation and

allow policy development to move forward at the

required rate. He proposes a classification system

that if accepted would provide a shared meaning to

those both within the communities and outside.

This issue finishes with paper six by Trim and Lee

which consolidates and enhances customer service

elements and the context of organizational

learning with the qualitative orientation.

It can be seen from the papers in this edition of

QMRIJ that the business environment is changing

as rapidly as ever and it is enlightening to take in

research and well articulated academic and

practitioner views from within the various focus

areas to demonstrate how they are driving or

responding quickly to market forces in today’s

knowledge economy.

In developing this special edition, both Julie

Abbott and myself are indebted to the EDECAD

Research Assistant Ms Cindy Liu whose own

insights on the Chinese experience of Internet

implementation, plus hard work and careful

support have greatly informed the progress of this

edition.

Figure 2 Logo for EU Asia ITC Programme

Figure 1 Logo for WMITA

Guest editorial Qualitative Market Research: An International Journal

Volume 7 · Number 4 · 2004 · 241-242

242

Customer and companyvoices in e-commerce: aqualitative analysis

Rachel McLean and

Nigel M. Blackie

The authors

Rachel McLean is a lecturer in Management InformationSystems at the Manchester Metropolitan University BusinessSchool, Manchester, UK.Nigel M. Blackie is a lecturer in the School of Computing,Science and Engineering at the University of Salford, Salford, UK.

Keywords

Knowledge management, Electronic commerce, Shopping,Consumers

Abstract

Consumer knowledge is a very important asset for anorganisation. Two types of consumer knowledge have beenidentified, “knowledge about customers” including customersegments, individual customer preferences, potential customers,and “knowledge possessed by customers” including knowledgeabout product ranges, companies, and the marketplace.e-Commerce offers an ideal medium for the creation andexchange of both types of knowledge. This paper presents theresults of an initial phase in a research cycle that looks ate-Commerce through the lens of knowledge management.It examines e-Commerce provision made by organisations forcustomers across seven facets ranging from transactional torelational facilities. The results of a self-evaluation of companies’e-commerce propositions are contrasted with customerexpectations to determine divergence and alignment.Implications are discussed and conclusions proposed.

Electronic access

The Emerald Research Register for this journal isavailable atwww.emeraldinsight.com/researchregister

The current issue and full text archive of this journal isavailable atwww.emeraldinsight.com/1352-2752.htm

Introduction

In the initial “start up period” of e-commerce, two

clear approaches to developing an electronic

presence emerged: the Informational approach

and the Transactional approach (Holsapple and

Singh, 2000). The Informational approach

focused on building brand presence, and

informing the consumer’s buying decision, while

the transactional approach focused on facilitating

the retail process – exchange of product or service

for financial value (Kalakota and Whinston, 1997).

There was a general belief that a transactional

approach offered greater competitive advantage.

This was reflected by a surge in virtual companies

or “dot coms”. Although many of these companies

did not survive, business continues to focus on the

Internet as a sales channel. Companies utilize the

communication capabilities of the Internet for

marketing purposes, sending out “personalized”

promotional material or in pop up advertisements.

Academic literature promotes and supports this

use of the Internet in commercial activity

(Hoffman and Novak, 2000). For companies the

Internet facilitates knowledge gathering.

“Consumer knowledge” is the knowledge about

consumers collected through the Internet

including individual customer preferences,

lifestyles and key life events for marketing

purposes. They appear almost unaware of a

different type of consumer knowledge that is

increasingly made explicit and exchanged through

the Internet, “knowledge possessed by customers”

including knowledge about product ranges,

companies, and the marketplace (Rowley, 2002).

Research has shown that many consumers are

not ready to accommodate online purchasing into

current shopping practice. Instead, it is the

information and communication capabilities of the

Internet that consumers more readily make use of.

People currently use the Internet to research

products and services, and increasingly fail to

complete transactions online. Research by eStats

suggests that “over 80 per cent of people using the

Internet do so solely to send e-mail or gather news

and information. Only 17.8 per cent of people

using the Internet list shopping as being a primary

motivation” (eMarketer, 2002). Consumers are

using the Internet to gather and share knowledge

about products and companies. They are using the

Internet as a consumer knowledge exchange

forum, claiming neutral territory away from the

commercial Web as their own (Pastore, 2000;

Levine et al., 2000). There has been an increase in

the amount of sites such as epinions.com,

notacceptable.com and bitchaboutit.com where,

significantly, consumers have conversations with


Volume 7 · Number 4 · 2004 · pp. 243–249


DOI 10.1108/13522750410557049

243

each other, and share their experiences or stories of

interacting with companies and using products.

Electronic commerce is still evolving, but it is

clear that this new channel offers enormous

potential for both consumers and businesses.

Kozinets suggests that:

. . . a cultural battle is in the making. On the oneside are consumers who are just beginning to uniteonline (and through it, in person) in order to assertsocial power, to unite and to claim symbols andways of life that are meaningful to them and thecommunities they build. On the other are themarketing and other corporate industries who seekto understand these consumers, to address theirconcerns without “giving away the store” and alsoto understand how best to take advantage of themany opportunities the new information media(such as the World Wide Web) present as a vastforum for direct sales and advertising (Kozinets,1999).

Enabling these two sides to interact and align their

expectations and aspirations for e-commerce could

help to realize the enormous potential of the

Internet for customer-to-business relationships.

This paper discusses results of research carried

out in the Centre For Networking and

Telecommunications at the University of Salford.

It presents the trends identified in the initial phase

of a research cycle that looks at e-commerce

through the lens of knowledge management. The

aim of this phase of the research was to examine

e-commerce provision made by organisations for

customers across seven facets ranging from

transactional to relational facilities, and to

compare and contrast the value placed upon

aspects of the provision by customers and

companies. The results of this self-evaluation of

companies’ e-commerce propositions are

contrasted with customer expectations to

determine divergence and alignment.

Study design

Grounded in the theory that the role of the Internet

in commercially related activity is increasingly as a

knowledge exchange forum (Giga Information

Group, 2001; Holsapple and Singh, 2000; Levine

et al., 2000; Rowley, 2002) this research focuses on

e-commerce through the lens of knowledge

management. From the socially constructed

approach to knowledge management (Demerest,

1997; McAdam and McCreedy, 1999), seven

facets of e-commerce including facilities that

enable both high and low levels of interaction from

consumer to consumer, and from consumer to

company were identified. They are as follows:

(1) communication;

(2) sales;

(3) marketing;

(4) links to related sites;

(5) company information;

(6) online communities;

(7) links to consumer reviews.

Companies and consumers were asked to rate the

value of each facet via a questionnaire, and follow

up interviews with consumers explored the

emergent issues to a greater depth.

Research method

The data were collected from both companies and

customers over a period of a year. In each case the

sample was a non-probability, purposive sample.

A Positivist approach would dictate that a sample

used should be a random probability sample

taken objectively and without bias, enabling

generalisation from sample to population.

In contrast, interpretive researchers employ

theoretical or purposive sampling to uncover

emerging and transferable theories (Easterby-

Smith et al., 2002; Lincoln and Guba, 2000). For

them it is important to survey relevant groups with

“high experience levels of the phenomena under

study” (Pettigrew, 1990). For this reason

questionnaires were adopted as a preliminary data

collection method, and as a means of identifying

suitable interview participants with high levels of

relevant experience. To ensure consideration of

stable usage patterns the sample was made up of

well established high street retailers and consumers

who were experienced Internet users, having

engaged in commercial activity (transaction,

product/company research) on the Internet for at

least one year. For the companies postal

questionnaires were adopted whilst direct postings

and snowball sampling (Robson, 1993) were used

to contact consumers. A criticism traditionally

levelled at postal questionnaires is the generally

poor response rate and the reduced depth of

information likely to be gathered (Moser and

Kalton, 1971). In recent years it has been

suggested that business and management

researchers particularly are finding it increasingly

difficult to achieve an acceptable response rate to

questionnaires (Berger, 2000). The response to

this has been the increasing adoption of closed

questions or Likert scale questionnaires which are

quick to complete but may bring only superficial

data (Foddy, 1994; Hussey and Hussey, 1997).

The response rates were 36 per cent for company

questionnaires and 86 per cent for consumer

questionnaires. This allowed for the identification

of relevant cases within the sample as Likert scales

were triangulated (Todd, 1979) with more open

ended questions and semi-structured interviews

Customer and company voices in e-commerce



Volume 7 · Number 4 · 2004 · 243–249

244

which allowed the researcher to build a richer

picture of the phenomena under study. Through

the social interaction of an interview, meaning can

be constructed and negotiated between the

participant and the researcher. It is argued that the

interview is the most powerful means for attaining

in-depth understanding of another person’s

experience (Woodruffe, 1997).

Companies

The sample used in the analysis was made up of

retailers that appear in British Companies: Best of

British Shopping High Street Stores listings (British

Companies, 1999). The list comprises one

hundred and six companies. Eleven of these were

excluded as they were considered to be service

industries rather than retail companies (six banks,

two travel agencies, two bookmakers, and one mail

delivery company). A further six companies were

excluded as their primary function was not

considered to be retail (two portals to retail

companies, one record label, two charities).Two

other companies were not registered in the UK, or

their Web sites were produced and maintained

outside of the UK thereby excluding them from

the sample. The final sample comprised of eighty

eight UK based retail companies. A postal

questionnaire was used to collect data. The

questionnaire was addressed to the “E-commerce

Manager”, and asked companies to rate the

importance, from extremely important to not at all

important, of the seven facets of e-commerce.

Consumers

The sample of consumers was recruited through

mail box postings at two universities in the North

West of England. Participants were professional

staff (lecturers, researchers, professors,

information professionals) and students.

The questionnaire asked consumers to rate the

importance of the same seven features of

e-commerce, adapted to take a consumer

viewpoint (communicating with companies,

making purchases, receiving marketing messages,

links to related Web sites, access to information on

the company, access to an online community, and

links to consumer reviews).

Data analysis

Respondents were asked to rank their opinion

using a four point Likert scale on the importance

of each of the seven facets in the categories:

(1) communication;

(2) sales;

(3) marketing;

(4) links to related sites;

(5) company information;

(6) online communities; and

(7) links to consumer reviews.

From these responses it is possible to build a

profile of interest in a particular category for

business and customers that demonstrates interest

or importance, or indifference.

In order to contrast the degree of fit in a

category between company and customer

expectations the responses were weighted to

account for the different number of customer and

company responses and the percentage of

customer respondents within each scale point

subtracted from the corresponding company

value. Thus if the responses between customer and

company expectation were matched the resulting

outcome would approach zero. If however

customers placed more emphasis than companies

within a scale point this would result in a positive

outcome. Conversely a negative resultant would

occur if companies placed more emphasis on a

scale point relative to customers’ responses.

The outcomes of these comparisons do not

produce results for quantified relative importance.

Thus statements such as category A is twice as

important to companies than customers, or

category 3 is 50 per cent more important than

category 2 should not be derived from the

outcomes. This research is not intended to be

representative or generalisable. Specific

implications can be drawn and viewed as general

tendencies rather than generalisable statements

(Walsham, 1995). The resultants do however allow

a graphical image of congruity between customer

and company expectations (Figure 1). There are

three intuitive evaluations to be made within a

category:

(1) A flat, near zero response in all four points of

the scale indicates that customer and company

expectations are well aligned.

(2) A positive gradient slope (sloping from bottom

left to top right), indicates that companies are

over valuing the importance attached of this

facet relative to customer aspirations, and

hence potentially over providing.

(3) A negative gradient slope (sloping from top

left to bottom right), indicates that companies

are under valuing the importance of this facet

relative to customer aspirations, and hence

potentially under providing.

Figure 1 shows the relative importance of each

facet to customer versus company. It illustrates that

companies and customers were closely aligned in

the importance they placed on only one of the seven

categories; 5 – information about the company.

The remaining categories showed a misalignment




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in the importance attached to them, the greatest

divergence being in category 3 – Marketing.

However, 4 – Links to related sites, 6 – Online

communities, and 7 – Links to consumer reviews

also showed substantial differences in the levels of

importance placed on them by companies

and consumers. The remaining two categories,

1 – Communicating with customers/companies,

and 2 – Sales, showed a marginal misalignment.

The next section will consider the emergent

trend in each category in turn and use qualitative

data from follow up interviews with the consumers

to create a richer picture of that trend.

Facet one: communicating withcompanies/customers

This facet of e-commerce showed a marginal

divergence in the importance attached to it by

companies and customers. The general trend is

that companies regard the ability to communicate

with customers as more important than their

customers do. Electronic business-to-customer

communication has strong links with marketing

and this is reflected in the wider divergence found

in facet three: marketing. The fact that consumers

assigned little importance to the ability to

communicate with companies through a Web site

was qualified during interviews carried out with

consumers. Many participants noted that

companies frequently fail to respond to customer

e-mails.

At least if you’re hanging on a telephone, even if it’sfor an hour you know you’re hanging on atelephone and somebody eventually is going tohave to speak to you that day. Whereas e-mail theycan leave for a week and you’ve got no idea whenthey’re going to e-mail you back you know. I meanwith some companies you might be checking your

e-mail every hour and still not getting any responseso that can be quite frustrating (Interview 12).

Some commented that when they do reply it is

with a standard script from the theatre of retail

with the illusion of “personalization” through the

use of a personal name. This standard script

frequently fails to address the customer’s question,

and they are forced to fall back on more traditional

methods of communication. Participants

commented that a personal e-mail rather than a

standard reply which didn’t address their

particular problem would greatly improve their

perception of a company. Some participants

attached little importance to this facet of

e-commerce as they simply preferred to speak to a

company representative than use e-mail to contact

them.

I must admit I like to deal with someone that I cantalk to (Interview 1).

One participant commented that he regarded

communication with companies via the Internet as

“a one way thing” (Interview 11) where

communication is from company to customer

preventing rather than facilitating social

interacting and exchange.

Facet two: sales

The relative importance of this facet to customer

versus company was rather surprising. Although

only a marginal divergence, the customers

surveyed attached greater importance to the

ability to make purchases than the surveyed

companies did. The companies surveyed were

high street stores, and in the qualitative data,

many companies commented that online sales

made up only a small part of their total sales

figures. The importance customers attached to

Figure 1 Relative importance of each facet to customer versus company




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the ability to make purchases online is qualified

in this interview data:

Well the only time I’ve actually used it to buyanything was when I needed to buy some world cupstickers for my nephew and the only means ofaccessing them was over the internet. That’s reallythe only time I’ve done any Internet shopping(Interview 9).

The range of the products that they sell in theonline shops is almost unlimited so you can find itand they deliver it to you as well so you don’t evenhave to go outside (Interview 8).

The consumers questioned value the ability to

purchase online, particularly where there is a

product that is unavailable elsewhere. One

participant comments that “the range of the

products that they sell in the online shops is almost

unlimited” and it is this aspect of online sales that

is of value to them.

Facet three: marketing

Marketing was the facet that showed the most

dramatic divergence. Companies attached a great

deal of importance to the ability to use the Internet

for marketing activities. The ability to gather

knowledge about customer preferences, lifestyles,

routines and significant life events is a very

valuable asset to a retail business, and it is this

aspect of e-commerce that companies have

focused on.

In contrast, it is this aspect of e-commerce that

consumers are most wary about. This interview

participant expressed his concerns over the fact

that companies use the Internet to gather

information about customers:

I’ve filled in enquiry forms and that sort of thing,where they are basically gathering data on me. . .Ijust don’t like the idea anyway because all they needto do is put in your postcode and your name andthere you go! They’ve got you! And how do theylink that up with other databases? You don’t knowdo you? (Interview 4).

Customers attached little or no importance to the

ability to receive marketing messages and

promotional information via the Internet.

Similarly this area prompted the most vehement

responses from the interview participants. Little

distinction was made between unsolicited

messages and those from companies in which the

participant had expressed some interest.

Electronic marketing was experienced as a form of

organisational power over consumers. Narratives

frequently included images of closing down

communication channels. Promotions and

marketing messages were experienced as an

annoyance, adding no value to the consumer

experience, and in some cases prompting the

participant to cease dealing with the company

responsible. These extracts from the consumer

interviews illustrate how strongly the participants

felt.

I don’t like getting advertising material. I don’tread it because if I want to find out aboutsomething then I will find out about it. So it justgoes in the bin (Interview 10).

I hate it. It irritates the hell out of me. I hate beingbombarded with junk e-mail. I can’t stand it. It’sthe scourge of the Internet. I really think that itneeds controlling there’s no control, you know withthe Internet it’s unstoppable isn’t it? It’s going toput people off (Interview 6).

I don’t like having to look at advertising. If you logonto the Internet you’re becoming increasinglybombarded with stuff coming into your computer.You come off the Internet and you realise thatthere’s three or four windows up of advertising stuffand you weren’t even aware that they had comeinto your machine and I don’t like that. They do itso that the window is slightly shifted so that youcan’t get to the cross. Somebody’s thought all thisthrough and it’s just irritating and they should beshot (Interview 5).

Marketing through the Internet has not developed

into the personalized and targeted messages that

we were promised. For these consumers, mass

messaging from a corporate script addressed to a

named person does not add value to their

experience of online retail. Significantly the

consumers participating in this research assigned

very little importance to marketing as a facet of

e-commerce.

Facet four: links to related Web site

This category relates to the idea of linking

commercial Web sites to interest related sites, or

other related services, not to competitors’ sites.

For example, a DIY store may link to an interior

design site with tips on choosing colour schemes, a

toy company may provide links to a child

development Web site with an independent guide

to developing skills through play, or an airline

company may link to hotels or car hire. Again this

category showed a marked divergence in the

relative importance consumers and companies

attached, illustrated by a negative gradient slope

on Figure 1. Companies considered this facility to

be of little importance, where as consumers rated it

as very or extremely important. Qualitative data

from two interview participants illustrate why

customers regard this facet as valuable.

If there’s links to another site, say it was themanufacturer, you can go and see what else they’veproduced whereas if you’re in a shop you’ve got to




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wait until someone is available or if you’re lookingthrough magazines, that information isn’tnecessarily there (Interview 3).

I’ve booked flights through Easyjet. . . Then fromdoing that I’ve then linked to other sites, a hotel sitebooked hotels and then also booked car parking atthe airport so it was all just done sitting at acomputer, whereas before you’d have had to go outand be making phone calls so yes, it saves time(Interview 10).

Customers attach great importance to the ability to

access a range of related information and services

through one gateway. Their expectations are of a

seamless experience. This research suggests that

companies are under providing in this category.

Facet five: information about thecompany

This was the only category that showed a flat, near

zero response in all four points of the scale,

indicating that customer and company

expectations are well aligned. Company and

consumer responses illustrate that they attach

equal importance to information about the

company such as company history, staff profiles

and contact details. This is borne out both in the

literature on issues of trust and e-commerce and in

the responses from interview participants in this

research project. One participant recounted how

he had telephoned a company to check that the

details given about a company on their Web site

were correct.

When I asked them their address, I said well what’syour address you know just a little thing, questionsjust to sort of like check whether their address iswhat they say it is on the Web site, just to make sure(Interview 6).

Others commented that a short company history

telling how old the company is, how they began

trading and other such information made the

company appear more “reliable” and

“trustworthy” (Interview 1). This research

suggests that company and customer expectations

are well matched with the actual provision in this

category.

Facet six: online communities

The analysis of the data on access to online

communities showed a negative gradient slope

(sloping from top left to bottom right), indicating

that companies are under valuing the importance

of this facet relative to customer aspirations.

Consumers use online communities based around

shared interests to exchange knowledge of

products and services provided by companies. For

customers “consumer knowledge” is knowledge

possessed by consumers. On the Internet they are

building a knowledge sharing culture where stories

are told, advice given and opinions shared.

If you’ve got a complaint about a company you canput it in a very public space. Customers do actuallyknow that there are particular Web sites out thereon which they can put their opinions down(Interview 2).

. . . you can go onto like a discussion forum wherepeople are talking about it and you can ask specificquestions about something, the specifications orany specific requirements it may have before youbuy it. . . if you’ve got a lot of knowledgeableusers out there it’s handy to chat with them(Interview 8).

Consumers value the potential to communicate

with each other that the Internet offers them. This

research suggests that companies are currently

under providing in this category.

Facet seven: links to consumer reviews

This facet has much in common with the previous

one. The results here showed vast incongruity.

Consumers placed a high value on this facet whilst

the companies surveyed placed little or no value on

it. It is widely accepted that Amazon have

established a successful online retail business, and

consumers frequently mention the customer

reviews as a strong factor in Amazon’s appeal.

Interview participant’s spoke enthusiastically

about consumer reviews and stated that they

would influence a purchase decision

And then for software, buying games software,I regularly go on line just to check particularreviews and also check reader reviews and that willinfluence whether I buy that particular product(Interview 2).

I do take notice of reviews. Even if they’re justwritten by other consumers, yes I read reviews,I would take notice of those, yes (Interview 9).

Despite this, companies explicitly stated that they

regard this facet to be of little or no importance, a

major misalignment in company/customer

aspirations.

Conclusion

Significantly, in contrast with the companies,

consumers placed a high value on the facets which

facilitate interaction, communication with other

consumers and C2C knowledge exchange.

Companies placed more value on the marketing

facility. Levine et al. state that:




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The same technology that has opened up a newkind of conversation in the marketplace has donethe same within the corporation, or has thepotential to do so (Levine et al., 2000).

Corporate, scripted marketing messages are not

enough to convince the customer of the value of

online marketing. They merely enforce the

boundaries and power relations between

customers and companies. Habermas proposed

that “where power is present, communication is

systematically distorted”, and further that “power

would act as a barrier to the free and

unconstrained realization of the human interest in

achieving rational truth or enlightenment” (Clegg,

1989). The interview participants of this research

do not construct a view of the Internet as opening

up communication channels with companies

where social interaction may facilitate the

construction and exchange of knowledge.

Companies must now focus on the

communication capabilities of the Internet and use

the technology to facilitate conversations across

the corporate boundary. They must meet

consumers on neutral ground and encourage

consumer-to-consumer and consumer-to-business

interaction in order to leverage a most valuable

resource; the knowledge constructed by and

embodied in the customers. In return they must

share corporate knowledge with the consumer.

Sinkula proposes that for organisations to learn

from their customers:

Particular attention should be paid toserendipitous, unsolicited, customer information,particularly that which revolves around complaints.Marketing managers must do two things to betterlisten to customers (Sinkula, 2002).

Firstly he argues they “must process the

information better”, and secondly they should

“become more open to criticism” (Sinkula, 2002).

This research suggests that before they can do this,

companies must first learn to have conversations

with their customers.

References

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eMarketer (2002), Why do People Use the Internet?, available at:www.emarketer.com/estats/usage_reason_online.html(accessed 11 November 2002).

McAdam, R. and McCreedy, S. (1999), “A critical review ofknowledge management models”, The LearningOrganisation, Vol. 6 No. 3, pp. 91-101.

Moser, C.A. and Kalton, G. (1971), Survey Methods in SocialInvestigation, Heinemann Educational Books, London.

Pastore, M. (2000), The Value of Word of Mouth, available at:http//cyberatlas.internet.com/markets/advertising/article/0,5941_395371,00.html (accessed on 28 July 2002).

Pettigrew, T.F. (1990), How to Think Like a Social Scientist,Longman, London.

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Sinkula, J.M. (2002), “Market-based success, organizationalroutines, and unlearning”, Journal of Business andIndustrial Marketing, Vol. 17 No. 4, pp. 253-69.

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Walsham, G. (1995), “Interpretive case studies in IS research:nature and method”, European Journal of InformationSystems, Vol. 4 No. 2, pp. 74-81.

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Qualitative issues in ITand organizationalprocesses inimplementing marketingstrategies

Ashok Ranchhod and

Calin Gurau

The authors

Ashok Ranchhod is the Faculty Professor in Marketing atSouthampton Business School. He has worked in business andacademia., having founded and run a biotechnology company inthe eighties. He has published extensively on e-marketing,biotechnology marketing and advertising.Calin Gurau is Lecturer in Marketing in the School ofManagement, Heriot-Watt University, Edinburgh. He is a JuniorFellow of the World Academy of Art and Science, Minneapolis,USA.

Keywords

Marketing, Internet, Marketing strategy, Technology led strategy

Abstract

Successful marketing strategies depend very much on anorganisation’s ability to implement them. As the role oftechnology grows apace in marketing, it is important tounderstand how IT and organizational processes impact on theimplementation of marketing strategies. This paper attempts toshow how technology is changing the nature of marketing andthen shows its interaction with people and processes. It alsooffers organisations an opportunity to undertake a self-evaluation exercise to determine how well integrated are theirimplementation policies. In general, the argument outlinedindicates that for successful implementation of strategies anorganisation has to integrate people, processes and IT.

Electronic access



Introduction

Marketing strategy and formulation of this strategy

are important aspects of a company’s long-term

plans. However, marketing strategy objectives often

fail to materialise. Is this because, the strategy was

unsound in the first place, or is it because the

implementation was in effective, or both? (Sashittal

and Tankersley, 1997). Companies tend to place a

great deal of time planning strategies and

sometimes they fail to consider the full implications

of implementing the strategies. Several authors

highlight the fact that much emphasis is placed on

strategy formulation and little thought is given to

implement issues even by marketers. Strategy may

or may not drive actual marketing practice

(Crittenden and Bonoma, 1988).

With the explosion of new forms of

communications that have a global reach, it is

incumbent on marketers to consider

implementation as an important issue in marketing

and at the same time consider the relevant speed at

which implementation should take place.

Technology drivers have become increasingly

important over the last ten years as the pace of

information exchange increases rapidly. This in

many ways has destroyed the luxury of developing

strategies over a long period of time. Shorter

periods are available for strategy formulation and

development. Even shorter periods are available

for the implementation of these strategies. Noble

and Mokwa (1999), however, define marketing

strategy implementation as:

. . . the communication, interpretation, adoptionand enactment of a marketing strategy or strategicmarket initiative.

The impact of information technology

The implementation of many marketing strategies,

depend on the effective utilization of sophisticated

Internet technology (Berthon et al., 1996;

Hoffman and Novak, 1996; Kitchen, 1999;

O’Connor and Galvin, 1997, 1998). The rapid

growth of the Internet and Internet marketing

suggests that information technology (IT) has an

important role to play in the process implementing

online marketing communications (Kassaye,

1999). Internet based technology can also

facilitate information dissemination, file

transformation, information gathering, and

searching and browsing activities etc. (Keeler,

1995; O’Connor and Galvin, 1997). Thus, a better

utilization of the state-of-the-art IT for business

and marketing becomes a fundamental task, which

is too important to leave to IT professionals

(O’Connor and Galvin, 1998).


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DOI 10.1108/13522750410557058

250

Technological deployment corresponds to the

way in which companies plan and manage IT to

benefit from its potential and effectiveness in

marketing implementation (Croteau and

Bergeron, 1991, 1998, and 2001). There are six

components of technology deployment.

(1) The strategic use of IT refers to the IT

applications used to help the organization gain

a competitive advantage, reduce competitive

disadvantage, or meet other strategic

enterprise objectives (Bergeron and

Raymond, 1995; Bergeron et al., 1991).

(2) The management of IT examines IT related

activities such as the usage of current and new

technologies, the development of specific IT

applications and the degree of IT usage

practised by the employees (Bergeron and

Raymond, 1995; Das et al., 1991).

(3) The role of the information systems (IS)/IT

concerns the organizational importance of IT

planning, the quality of the IT alignment with

organizational structure, the effectiveness of

software development, and the management

of communication networks (Bergeron and

Raymond, 1995).

(4) The technological infrastructure addresses the

ITarchitecture and the formalized procedures

used to guide and control the firm’s IT

resources (Das et al., 1991).

(5) The organizational infrastructure refers to the

internal functioning of the IT/IS development

such as structure, processes, reporting

relationships, support groups, and skills

(Das et al., 1991; Henderson and

Venkatraman, 1999).

(6) The administrative infrastructure deals with

the managerial policies and actions that

influence and guide the work of employees

involved with the IT/IS development

(Das et al., 1991).

Marketing is and will continue to be heavily

influenced by IT and marketers who do not adapt

to the new technological era will not survive (Bruce

et al., 1996, Komenar, 1997). It can benefit

organisations in many ways, but it has to be

successfully managed. The sensible use of IT

allows creative and innovative strategies to cope

with the new varied and dynamic marketplace

(Schlegelmilch and Sinkovic, 1998). Marketing

helps with automation, information and

transformation (Remenyi et al., 1995; Zuboff,

1988) (Figure 1).

Automation

This argument is used to explain the fact that IT

has been primarily used for automating manual

systems of recording. It is useful for routine and

tactical activities to improve efficiency (Peattie and

Peters, 1998).

Information

This is the next stage of development and

translates data into useful information that can be

utilised for developing marketing strategies.

Information is also the stage where the data

obtained through automation are scrutinised and

converted into information.

Transformation

This stage is reached when organisations embrace

IT and start to “think out of the box”

(Schlegelmilch and Sinkovic, 1998). This is when

companies start to focus on new ideas and

concentrate on adaptation and using knowledge to

transform themselves into effective market

oriented organisations (Brady et al., 1999).

IT is now the key driver in most businesses and

many companies are conducting business through

cyberspace. At the same time, with the growth of

the Internet, companies also need to be able to

work with and undertake transactions on a global

basis. Many companies that implement good

systems to deal with value chains on a global basis

show good returns on investment.

Information and knowledge creation

In addition to this, specific areas of application are

also growing. One area is based on systems

providing market intelligence on a global basis.

As companies become confident of their IT

infrastructures on a global basis, they will be

increasingly looking to have access to systems that

can provide them with business intelligence.

Business intelligence gathering is becoming a

complex issue for most companies as technology

develops further. Increasingly access to

information is possible through hard-wired

systems as well as wireless protocols.

The technology drivers, also create the

following possibilities.

(1) Salesmen, on the road, can be updated on

customer requirements as necessary. This

information can be used for enhancing CRM

and logistics.

(2) As mobile devices become more sophisticated,

customers will be able to access inventories of

their suppliers. This means that they can place

orders and specify delivery times. This can be

done via links to an Intranet or the Internet.

Qualitative issues in IT and organizational processes



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(3) Individuals, apart from talking to others, will

also be able to communicate with machines.

This is already a reality with consumers being

able to buy soft drinks, chocolates and car

washes via mobile devices.

(4) Consumers will be able to pay for restaurants

meals via secure transactions through a mobile

device.

(5) The “blue-tooth” devices, can enable retailers

to market special offers to customers on their

mobile devices if they are within a 20 m radius.

This will also allow customers to undertake

transactions with shops and restaurants.

(6) Radio will become an integral part of the

mobile device, allowing an individual access to

a myriad of radio stations. This also has

implications for advertising and branding.

(7) The incorporation of ground positioning

systems (GPS) into mobile devices

(GPS, via satellite), means that individuals

will be able to easily locate their positions

and also the nearest outlets or services that

they need.

Current IT systems (Figure 2) are not fluid and

dynamic enough to cope with customers who are

ubiquitous and can contact companies through

mails, mobiles and the Internet.

As customers become fluid in the way they

contact and interact with companies, companies in

turn need to be fluid enough in their approach.

Often the IT/marketing link is not good. The

marketing function, often does not understand

what happens in IT with regards to service

provision and prices. There is often a cultural

gap between marketing and ITand therefore there

is a need to integrate data and for computer

experts to work side by side with marketers.

There is a need to share experiences. It is

important that for good customer relationship

management, IT and marketing work together,

with IT being able to understand the internal

customer needs. A change of philosophy is

required, where IT shifts from “building

solutions” to defining requirements from the front-

end with business and customers in building the

best solutions. The one-to-one relationship means

that a customer is known to the enterprise and

interacts with the enterprise, with the enterprise

flexing and changing to meet his/her needs.

Figure 1 IT strategies

Figure 2 Current systems architecture




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The enterprise can then have a unified view of a

single customer across the entire enterprise,

linking other functional and geographical units

together.

As the relationship develops across boundaries,

it is clear that the organisation truly becomes a

learning organisation with the customer finding

that he/she is investing in a continuing relationship

with it. At every given opportunity the organisation

can “tailor” and refit its behaviour to suit the

customer. In the end the way the relationship is

maintained, grown and nurtured means that a

customer is less likely to spend time in building

such a relationship with a competitor. This

relationship building needs to be regarded as a

business process rather than a technology suite.

The technology needs to be able to support and

enable this process (Figure 3).

Developing measures for successfulimplementation

In order to develop a basis for understanding a

company’s stance with regards to strategy

implementation, the following questionnaire was

developed. It is generally felt (McKean, 2002),

that most companies have poor records when it

comes to implementing IT strategies. As the

arguments above indicate, IT is now an essential

component of marketing. It is therefore important

to consider both IT and people issues when

considering how marketing strategies should be

implemented. This questionnaire allows

organisations to be self-critical in their approach

and see the quadrant that they fall into (Figure 4).

Once the scores to all the questions have been

totalled according to the IT or the organisation

context, they can be plotted on the horizontal and

the vertical axes. This enables the respondent to

position his/her company within the

implementation matrix (Figure 5). The

implications of the positions within each quadrant

are discussed below.

Integrated marketing implementation

Companies in this quadrant will have a well-

balanced marketing implementation, based on

good IT systems and a dynamic flexible

organisation. The people processes and the

technology work in unison. The company is likely

to have a global IS. Integrated systems tend to offer

increased customer service, by increasing

convenience, collecting service performance

information for management use, and extra

services (Furey, 1991). An integrated system can

also create barriers to entry in service industries,

productivity enhancement and revenue generation

(Fitzsimmons and Fitzsimmons, 1997). Effective

IT management requires a set of coordinated

efforts associated with planning, organizing,

Figure 3 Creating a relationship Web




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controlling, and directing the introduction and use

of IT resources within a firm (Boynton et al., 1987;

McNurlin and Sprague, 1997).

Fragmented marketing implementation

Companies in this quadrant will have excellent

organisation capabilities. However, their

technology resources will be poor and not very well

integrated. Companies in this quadrant will

require extra investment in IT infrastructure. In

some firms the lack of clear organizational

processes for effective IT management prevent

them from using IT strategically (Boynton et al.,

1992, 1994). It could be that the firm would

benefit from good IT management processes.

Figure 4 Questions to determine organizational and IT factors




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Technologically driven marketingimplementation

In this quadrant, companies tend to rely on

technology to a greater extent. The people

processes tend to be poor and often,

mechanistic solutions may be provided leaving

individuals within organisations alienated

and poorly informed. According to the research

carried out (Wilson and McDonald, 2001) it is

important that managers can understand and

control the IT system rather than accepting

technological objectives influenced by the

management science of prescribing an optimal

solution. Systems are useful in enhancing

mutual understanding in a cross-functional

planning team and hence in building commitment

to marketing plans.

Poor marketing implementation

Companies in this quadrant tend to have

outdated organizational practices and possess

poor technology systems. These companies

need organizational change and technology

investment. The implementation matrix

therefore, provides a useful measure of a

company’s ability to implement marketing

strategies within an environment, which is

increasingly driven by technology. As the role

of technology grows and evolves, many companies

do not have to be confined to operating within

national boundaries. Indeed, many companies

are now “Born Global”.

Summary

In this paper, a wide range of issues surrounding

the effective implementation of marketing have

been considered. Implementing marketing

strategies successfully lies at the heart of successful

company management. However, the process is

fraught with challenges as the market place is

generally turbulent and ever changing. This places

emphasis on developing flexible and responsive

organisations. Research also indicates that many

organisations do not “follow-through” strategies

according to the traditional format and may

implement them in an ad hoc manner. Better

technology helps to speed up processes. It also

helps companies to become global within a short

space of time and some companies can be said to

be “born-global” from inception. However, it is

important for marketing managers to realise that

the information provided has to make sense and

that the IS actually provide the necessary

“nuggets” for implementation purposes.

According to Ivan Menezes, Vice President,

Group Marketing, Whirlpool Europe (Ronkainen

and Menezes, 1996):

You have to be flexible, the not-invented-heresyndrome is not acceptable, you have to be pickingup ideas and best practices from different marketsand different parts of the business and transferringthem rapidly. It does require an entrepreneurial, asopposed to a managerial, structured anddisciplined approach. One of the more interestingparts of being in a global or a European marketingrole is that there is always so much going on. Thereis not enough time to go after all the opportunitiesthat are on your plate and you are juggling lots ofballs at the same time. It requires constantly

Figure 5 Implementation matrix




Volume 7 · Number 4 · 2004 · 250–256

255

picking and prioritising the big opportunities andgoing at them and making decisions fast.

When fast decisions need to be made, the role of

information becomes highly relevant and

important and systems have to be able to offer this

facility. As technology becomes more sophisticated

and can deliver data and video links at increasing

speeds within a mobile environment, marketers

need to understand its capability in effective

marketing implementation. At the same time the

need to understand the impact of globalisation in

the marketplace need to be understood and

embraced. It appears that it is necessary to

integrate the organizational factors with

technological factors in order to develop integrated

marketing implementation strategies that can be

successful in today’s marketplace.

References

Bergeron, F. and Raymond, L. (1995), “The contribution ofinformation technology to the bottom line: a contingencyperspective of strategic dimensions”, Proceedings of theInternational Conference on Information Systems,Amsterdam, pp. 167-81.

Bergeron, F., Buteau, C. and Raymond, L. (1991), “Identificationof strategic information systems opportunities: applyingand comparing two methodologies”, MIS Quarterly,Vol. 15 No. 1, pp. 89-103.

Berthon, P., Pitt, L. and Watson, R. (1996), “The World Wide Webas an advertising medium”, Journal of AdvertisingResearch, Vol. 36 No. 1, pp. 43-54.

Boynton, A.C., Jacobs, G.C. and Zmud, R.W. (1992), “Whoseresponsibility is IT management?”, Sloan ManagementReview, pp. 32-8.

Boynton, A.C., Zmud, R.W. and Jacobs, G.C. (1994), “Theinfluence of IT management practice on IT use in largeorganisations”, MIS Quarterly, Vol. 18 No. 3,pp. 299-318.

Brady, M., Saren, M. and Tzokas, N. (1999), “The impact of IT onmarketing: an evaluation”, Management Decision, Vol. 37No. 10, p. 758.

Bruce, M., Leverick, F., Little, D. and Wilson, D. (1996), “Thechanging scope and substance of marketing: the impact ofIT”, in Beracs, J., Bauer, A. and Simon, S. (Eds),Proceedings of the European Academy of MarketingConference: Marketing for an Expanding Europe, Vol. 1,Budapest University of Economic Science, Budapest,pp. 185-204.

Crittenden, V.L. and Bonoma, T.V. (1988), “Managingmarketing implementation”, Sloan ManagementReview.

Croteau, A. and Bergeron, F. (1991/1998/2001), “Aninformation technology trilogy: business strategy,technological deployment and organisationalperformance”, Journal of Strategic Information Systems,Vol. 10, pp. 77-99.

Das, S.R., Warkentin, M.E. and Zahra, S.A. (1991), “Integratingthe content and process of strategic MIS planning with

competitive strategy”, Decision Sciences, Vol. 22,pp. 953-84.

Fitzsimmons, J.A. and Fitzsimmons, M.J. (1997), ServiceManagement, Strategy, and Information Technology,2nd ed., Irwin/McGraw-Hill, New York, NY.

Furey, T.R. (1991), “How information power can improveservice quality”, Planning Review, Vol. 19 No. 3,pp. 24-6.

Henderson, J.C. and Venkatraman, N. (1999), “Strategicalignment: leveraging information technology fortransforming organizations”, IBM Systems Journal,Vol. 38 Nos 2/3, pp. 472-84.

Kassaye, N. (1999), “Sorting out the practical concerns in WorldWide Web advertising”, International Journal ofAdvertising, Vol. 18, pp. 339-61.

Keeler, L. (1995), Cybermarketing, Amacall, New York, NY.Kitchen, P.J. (1999), Marketing Communications: Principles and

Practice, Thomas Business Press, London.Komenar, M. (1997), Electronic Marketing, Wiley Computer

Publishing, New York, NY.McKean, J. (2002), Information Masters: Secrets of Customer

Race, Wiley, New York, NY.McNurlin, B.C. and Sprague, R.H. (1997), Information Systems

Management in Practice, 4th ed., Prentice-Hall,Englewood Cliffs, NJ.

Noble, C.H. and Mokwa, M.P. (1999), “Implementingmarketing strategies: developing and testing amanagerial theory”, Journal of Marketing, Vol. 63 No. 4,pp. 57-73.

O’Connor, J. and Galvin, E. (1997), Marketing and InformationTechnology, Pitman, London.

O’Connor, J. and Galvin, E. (1998), Creating Value ThroughE-Commerce, Financial Times Publication, London.

Peattie, K. and Peters, L. (1998), “The marketing mix in the 3rdage of computing”, Marketing Intelligence and Planning,Vol. 15 Nos 2/3, p. 142.

Ranchhod, A. (2004), Marketing Strategies: A 21st CenturyApproach, Prentice-Hall, Englewood Cliffs, NJ.

Remenyi, D., Money, A. and Twite, A. (1995), EffectiveMeasurement and Management of IT Costs and Benefits,Butterworth Heinemann, London.

Ronkainen, I.A. and Menezes, I. (1996), “Implementing globalmarketing strategy: an interview with WhirlpoolCorporation”, International Marketing Review, Vol. 13No. 3, pp. 56-65.

Sashittal, H.C. and Tankersley, C. (1997), “The strategic marketplanning – implementation interface in small and midsizedindustrial firms: an exploratory study”, Journal ofMarketing, Vol. 5, pp. 77-92.

Schlegelmilch, B.B. and Sinkovic, R.R. (1998), “Marketing intothe information age: CAN incoming goods plan for atunpredictable future?”, International Marketing Review,Vol. 15 No. 3, pp. 162-70.

Wilson, N.W. and McDonald, M.H.B. (2001), An Evaluation ofStyles of IT Support for Marketing Planning.

Zuboff, S. (1988), In the Age of the Smart Machine, HeinemannPublishing, London.

Further reading

Boynton, A. and Zmud, R.W. (1997), “Information planning inthe 1990s”, MIS Quarterly, Vol. 11 No. 1, pp. 59-71.




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256

Channel benefitsportfolio managementin the eBusiness era

Panos Louvieris and

Harmen Oppewal

The authors

Panos Louvieris is based at the School of Management,University of Surrey, Surrey, UK. E-mail: [email protected] Oppewal is based at Department of Marketing, Facultyof Business and Economics, Monash University, Monash,Australia. E-mail: [email protected]

Keywords

Consumer behaviour, Electronic commerce,Channel relationships

Abstract

The role of channels and their management in the eBusiness erais becoming increasingly important to customer relationshipmanagement. Traditional use of the application portfolioapproach has been concerned with providing an appropriatebasis for making investment decisions about IT applications forthe firm. This paper argues that there is a gap between theestablished IS portfolio application theory and the requirementsto support management investment decisions about eBusinessapplications; Therefore, the paper proposes a channel benefitsportfolio (CBP) approach to inform managers’ channelinvestment decisions concerning business-to-customer channelinterface. The suggested approach provides a conceptualframework and means to facilitate the alignment of the firm’sportfolio with their customers’ portfolio. The paper reportsexploratory findings regarding customer channel preference andcustomer channel choice behaviour in the information searchand purchasing stages during the customer decision-makingprocess on the basis of the CBP.

Electronic access



Introduction

Realising channel benefits of Internet based

eBusiness in the tourism and hospitality industry is

widely accepted as an important subject by both

academics and industry practitioners. However,

a current and major issue in channel benefits

management is that there is little research that

explicitly addresses the specific methods necessary

for measuring success in terms of customer

benefits realisation in the new computer mediated

eBusiness environments. Moreover, the lack of a

portfolio approach to the analysis and

management of channel benefits that embraces the

customer perspective appears to be an important

gap in the existing body of knowledge. This

research, therefore, takes a portfolio management

approach and proposes a channel benefit portfolio

(CBP) as an analytical framework and taxonomy

by which channel management investment

decisions may be guided.

The study aims to explore channel preference;

particularly, how channel benefits are evaluated

and realised in the information search and

purchasing stages of the customer decision-making

process. In addition, the study aims to identify the

most appropriate channel mix that maximises

benefits for the customer. This paper presents

findings from exploratory interviews and a

small survey into customers’ perceived channel

benefits and perceived channel importance in

terms of existing and future benefit contribution

to channel usage during information search and

purchasing. The objectives of the study are

as follows.

(1) Determine customer preferences for different

channels in the information search stage and

purchasing stage of the customer decision-

making process.

(2) Determine how customers’ current channel

benefits differ from their expected future

channel benefits within the context of the CBP.

(3) Determine how customers’ perceived channel

benefits differ between the information search

stage and the purchasing stage within the

context of the CBP.

Theoretical background

This research takes an application portfolio

approach to evaluate and realise the channel


Volume 7 · Number 4 · 2004 · pp. 257–264


DOI 10.1108/13522750410557067

Panos Louvieris and Harmen Oppewal are the

Principal Investigators, and thanks are expressed to

Hyung-Soo Jung who assisted in the initial phase of

this tourism industry funded research project about

(electronic) channel benefits management based at

the University of Surrey, UK.

257

benefits from the customers’ point of view.

The concept of the application portfolio was

described by McFarlan and McKenney (1983)

and they proposed the strategic grid framework for

understanding and appropriately positioning a

firm’s IT investment. McFarlan and McKenney

(1983) described two aspects of strategic relevance

and impact of IT such as the strategic impact of the

existing system (current portfolio) and strategic

impact of applications development portfolio

(future portfolio). McFarlan et al. (1983) also

proposed a useful matrix for considering the

portfolios as a whole to position the company’s

information systems and the matrix shows four

alternative sectors for describing the portfolio

according to the strategic importance of the

existing and future systems. These are strategic,

factory, support and turnaround. McFarlan

(1984) also developed a matrix concept which

considered the contribution of IS/IT to the

business now and in the future, based on its

industry impact.

With reference to Ward (1990), the limitations

of the original strategic grid were found by the

research of Hirschheim et al. (1988) who found

that IS managers thought it unhelpful to aggregate

an entire firm’s IT applications into one category.

Hence, the derivative portfolio model which

classifies IS applications into four groups such as

key operational, strategic, high potential and

support has been demonstrated to be much

more meaningful for management purposes

(Ward, 1996).

However, there is a gap between the IS portfolio

application theory and the current eBusiness

application especially in terms of channel benefits.

As we move into the eBusiness era, strategic

channel design and channel management are

important issues in today’s competitive markets

where tourism/hospitality organisations are

increasingly using eChannels, alongside more

traditional channels, for the distribution of

their products and services. Clearly, customers

have greater channel options (telephone,

WAP/mobile, PC, IDTV, brochure, travel store,

etc.) for information search and booking.

Therefore, a successful eBusiness strategy

requires that the role of channels be carefully

evaluated when developing an optimum channel

mix that is compatible with the preferences

and variety of channel choice available to their

customers.

In order to accomplish the appropriate

assessment of the channel benefits, a new

framework to evaluate and realise the channel

benefits is required. Therefore, this paper proposes

the CBP model from the customers’ point of

view based on the existing IS application portfolio.

In this model, all channel options are classified

into four groups namely key operational,

strategic, high potential, and support.

Key operational refers to channels that customers

currently depend on for successful choice.

Strategic refers to channels which are critical

to future (and current) customer choice.

High potential means the channels which may

be important in achieving successful future

customer choice. Finally, support refers to those

channels which are valuable, but not critical to

successful customer choice (Figure 1).

The benefits of this CBP management approach

are that a company can identify and prioritise the

customers’ current/future channel preference and

perceived benefits from each channel and create a

proper multiple channel strategy aligned to the

customers’ channel portfolio. On the basis of the

CBP, customer channel preference and customer

channel choice behaviour in the information

search stage and purchasing stage can be

examined.

Channel strategy

Marketing channel theory is focused to a relative

degree on channels with physical product flows

(Bagozzi, 1975; Barabba and Zaltman, 1991;

Dwyer et al., 1987; Etgar, 1979; Heide and John,

1988). Traditional channel options evolved

primarily around the choice of involving either a

wholesaler or dealer, a distributor or an in-house

sales force to market and distribute products and

services. The advent of information technology, in

particular the world wide Web, in the mid 1990s

made it possible to move from traditional channel

configurations to composite channel

arrangements. In traditional channels, all channel

Figure 1 Customer CBP model

Portfolio management in the eBusiness era



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258

functions (from demand generation to after-sales

service) are usually performed by the chosen

configuration. However, in composite electronic

channels, these functions can be distributed over

several channels (Christiaanse and Zimmerman,

1999).

In the new eBusiness environments, the

eChannel concept is a plural concept because

customers use multiple channels for information

search and purchasing (Louvieris and Driver,

2004; Louvieris et al., 2001). The result is a CBP

approach which considers a mix of traditional

channels and eChannels. This CBP can be used to

guide management investment decisions about

customer decision support services across

customer owned multiple/plural channels to

maximise channel benefits. The idea of exploiting

the value-adding synergies between channels

has been articulated often in the literature

concerned with channel investment decisions

(Anghern and Meyer, 1997; Venkatraman and

Christiaanse, 1996).

Methodology

As a first exploration into channel choice

behaviour, in-depth qualitative interviews were

conducted on with ten university students. The

purpose of this preliminary exercise was to obtain

an initial identification of channel preferences for

the information search and booking stages. In the

second stage of the research, a questionnaire

regarding the perceived importance of channels

was distributed among a class of undergraduate

management students. A total of 41 students

volunteered to participate and completed the

questionnaire, which consisted of questions that

asked respondents to rate the current and future

importance of each series of channels on a ten-

point scale (1 ¼ not at all important, 10 ¼ very

important). For the information search stage 27

channels were presented including relatively new

channels such as WAP mobile phone, Interactive

digital TV, e-mail, consult with people in the

virtual community and so on. For the purchasing

stage, the same channel options were presented

except those such as consult with people in the

virtual community and news/magazine that are not

currently offering booking facilities.

Though the sample obviously represents a

convenience sample, it should be noted that in the

context of this study, students are a highly relevant

group of respondents. Students represent

customers of the future for many eBusiness-based

companies and it is relevant to know how this

segment evaluates their current and future channel

portfolios.

Findings

The pilot interviews suggested several differences

in the channel preference of respondents between

the information search and purchasing stages.

Most respondents regarded the Internet as their

favourite initial choice of channel. They also

regarded the travel shop as their most favoured

choice of channel in the purchasing stage because

they trusted that a store provides a safer method of

payment. Furthermore, it was found that most

respondents were not aware or alert of all the

channel options available to them. WAP mobile,

iDTV, and PDA were not readily perceived as

channel alternatives unless prompted by the

interviewer. Also, the qualitative interviews

highlighted that channel switching behaviour was

most intense during the pre-purchase, information

search phase of the customer journey. This

suggests that a single channel cannot satisfy the

range and variety of customers’ channel needs.

Therefore, the provision of flexible channel

options, online and off-line, that meet customers’

diverse information and purchasing needs appears

to be crucial in stopping customers switching to a

competitors’ channels.

Building on these initial results of the

questionnaire, the second research phase included

more options for the channel choice of

respondents in order to investigate more detailed

and complex channel preference. There were

marked differences in the importance for specific

channels between the information search and

purchasing stage. Figures 2 and 3 show the

respondents’ mean importance ratings for each

channel in the information search and purchasing

stages.

In the information search stage, respondents

regarded talk to friends as the most important

channel when searching for a holiday product,

closely followed by the Internet and travel shop.

However, WAP mobile phone was perceived as the

least important channel in the information search

stage by respondents. In addition, consult with

people in the virtual community was regarded as a

less important source of information by the

respondents (Figure 2).

Figure 3 shows the results of the perceived

importance of the current booking channel.

Telephone call-overall was regarded as the most

important channel for the booking and talk to

travel agent, e-mail-overall, PC Internet were also

regarded as important channels for booking.

However, Teletext and WAP mobile phone were

not perceived as the key channel option for

booking.

A paired sample t-test revealed a number of

distinct differences between the importance scores




Volume 7 · Number 4 · 2004 · 257–264

259

of several channels in the current and future. The

more detailed channel options are presented in

Table AI which shows the respondents’ perceived

current and future importance for each channel

with mean value in the information search stage.

Also, Table AI presents the results of paired sample

t-test and it reveals that there were substantial

differences in the preference for the specific

channel between the current and future timescale.

From Table AI, we see that the mean score for

importance was significantly different (at the

5 per cent confidence level) in the case of several

channels.

There was a statistically significant decrease in

travel shop channel scores from current to future,

p , 0:05 ð p ¼ 0:000). Also there was a significant

decrease in other channels such as travel brochure,

talk to travel agent, call-overall, call to travel agent

(Call-TA), call to brochure, fax to brochure, postal

mail and news and magazine from current scores

to future scores.

However, with reference to eight relatively new

Internet based eChannels, including PC Internet,

WAP mobile phone, IDTV, VC, e-mail-overall,

e-mail to travel agent, e-mail to brochure, and

e-mail to PC Internet, there was a statistically

significant increase from current scores to future

scores. This result demonstrates that customers’

perceived benefits from the traditional channel in

the information search is expected to become less

important in the future; however, the customers’

perceived eChannels benefits in the information

search stage is expected to become more important

in the future.

In order to find out whether there is a difference

between the current and future in the purchasing

stage on the perceived importance of the channels,

a paired sample t-test was conducted to compare

the perceived importance scores of each channel

between the current and future. Table AII shows

the respondent’s perceived current and future

importance for each channel with mean value

in the purchasing stage and the results of the

paired sample t-test revealed that there were

substantial differences in the preference for the

specific channel between the current and future

timescale.

There was a statistically significant increase in

the PC Internet channel scores from current to

future, p , 0:05 ð p ¼ 0:000Þ. For other

Figure 2 Channel preference – information search stage

Figure 3 Channel preference – purchasing stage




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260

channels, such as WAP mobile phone, e-mail-

overall, e-mail to travel agent, e-mail to brochure,

e-mail to PC Internet and e-mail to teletext, there

was also a statistically significant increase from

current scores to future scores. On the contrary,

there was a distinctive decrease from the current

scores to future scores in the traditional channels

including travel brochure, talk to travel agent,

Call-TA, call to brochure, call to teletext,

fax-overall, fax to travel agent and fax to brochure

in the purchasing stage.

To find out whether there is a difference on the

perceived channel preference between the

information search and purchasing stages, a paired

sample t-test was conducted to compare the

perceived importance scores of each channel

between the information search and purchasing

stages. Table AIII shows the respondents’

preferences for each channel with the mean values

for the information search and purchasing stages.

It also presents the results of the paired sample

t-tests. It appears that there are substantial

differences in the preference for the specific

channel between the two stages. There is a

statistically significant increase in the talk to travel

agent channel scores from information search to

purchasing, p , 0:05 ðp ¼ 0:034Þ. Likewise, there

are statistically significant increases in the call-TA ,

call to contact number in a brochure (Call-B), call

to contact number from the Internet (Call-I) and

call to contact number in teletext (Call-TXT)

channel scores from information search stage

(Call-TA; Call-B; Call-I; Call-TXT) to purchasing

stage (Call-TA; Call-B; Call-I; Call-TXT),

p , 0:05 ð p ¼ 0:010; p ¼ 0:004; p ¼ 0:021;p ¼ 0:033Þ:. This result indicates that respondents

regarded these channels as much more important

for purchasing than for seeking holiday product

information.

Figure 4 shows the current and future

customer CBP according to their importance

in the information search and purchasing stage.

The value of the X and Y axes represent the

current and future importance of each channel,

respectively, and all the channels are located within

the CBP framework i.e. is key operational,

strategic, high potential and support. Each

channel in the CBP framework is plotted as a

diamond symbol for the information search

stage and as a circle for the booking stage.

From Figure 4, it can be seen that in general,

most channels tend to be located in the strategic

or support sectors of the CBP model.

According to the CBP, e-mail channels based on

the Internet such as PC Internet, e-mail-overall,

e-mail to a contact number from the Internet,

e-mail to travel agent, e-mail to a contact number

in a brochure, call to a contact number from the

Internet were regarded as strategic channels

and interestingly talk to friends are very

influential in the customer decision-making

process in the information search stage.

Respondents perceived that these channels

are highly important both in the current and future

when they find holiday product information.

However, another group of eChannels, IDTV,

WAP, VC and e-mail to teletext were regarded

as high potential and respondents consider that

these channels are currently less important, but

they may be important in achieving successful

future choice.

Another group of channels including traditional

channels such as call-overall, Call-TA, talk to a

travel agent, TV, travel shop, travel brochure and

newspaper and magazine were also regarded as

strategic, but they were relatively less important

in the future importance compared to the

group of eChannels. Traditional channels

including Fax-overall, Fax to a contact number

from Internet, Fax to a contact number in a

brochure, Fax to a contact number in the teletext,

Teletext-overall, call to a contact number in the

teletext and Postal mail were regarded as support

channels. These channels are currently valuable

and used by the respondents, but they are not

critical to successful customer choice. Only one

channel, call to a contact number in a brochure,

was regarded as key operational in the information

search stage.

Figure 4 CBP [information search and purchasing]




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261

In general, the customer channel portfolio

in the information search and purchasing stage

shows a similar picture of channel distribution.

However, a detailed comparison of the channel

portfolio between the information search and

purchasing stages demonstrates that customers

have a different perception about the channels.

In other words, there is a gap between the

customers’ information search and purchasing

portfolios. For example, call to a contact number

in a brochure was key operational in the

information stage, but in the purchasing stage

it was regarded as strategic. Also fax to travel

agent and call to a contact number in teletext

were considered as support in the information

search stage, but they were regarded as

key operational in the purchasing stage. Even

though customers are currently using or likely

to use these aforementioned channels in the

information search stage, customers do not

intend to use or are not ready to use certain

channels in the purchasing stage.

Conclusions

The research revealed that customers have a

different preference for the channel choice in

the information search and purchasing stages.

In the information search stage, talk to friends

or relatives was regarded as more important

than PC Internet and travel shop for the

preparation of holiday. This result indicates that

private or informal channels have a key role in the

customer decision-making process and the

customer value for the C2C (customer to

customer) or P2P (peer to peer) conversation is

becoming increasingly important during the

customer buying process. The quantitative

findings generally confirm the in-depth qualitative

interviews conducted during the preliminary

investigation. The implication of this result is

that the importance of socio-technical model of

channel management may be a key aspect for

the success of the Internet-based eBusiness

company in the computer mediated eBusiness

environment. Therefore, it is necessary for tourism

firms to evaluate the customer value for these

informal channels such as friends/relatives, online

conversational interfaces in order to make an

appropriate and successful channel investment

decisions that realise or maximise customer

channel benefits.

However, in the purchasing stage, call

related channels, talk to travel agent, e-mail and

Internet were regarded as key channels for the

booking. These results indicate that customers’

channel benefits are changing according to the

information search and purchasing stages

and therefore, from the firm’s point of view,

it is critical to identify the customers’ current

and future channel preference/benefits during

their search and booking stages and provide

an optimal channel combination (mix)

according to the customer channel preference/

benefits in order to acquire and retain the

customers within the company’s channel

configuration/portfolio.

It is worth noting that the future importance of

the customers’ perceived benefits on the Internet

based eChannels is expected to increase both in

the information search and purchasing stage.

Though most of the traditional channels were

regarded as less important in the future, however,

when traditional channels were linked to the

eChannels (e.g. e-mail to travel agent), the future

importance of these channel combinations or

mixed channels increased. The implication of

this result is that it is important for a company to

identify the customer benefits and risks of these

relatively new eChannels in order to make an

appropriate channel investment decisions.

Furthermore, there is an opportunity for Internet

based eBusiness company to maximise the

realisation of the customers’ expected or

unrealised channel benefits by providing an

optimal channel mix of traditional channels and

eChannels to the customers i.e. Business Channel

Re-engineering.

The distribution of channels within the CBP

model shows that most of the channels are located

in either the strategic or support quadrant. This

result suggests that there are only a few key

operational channels as far as customers are

concerned, which tends to suggest that customers

do not value channels unless they are critical to

their decision-making needs and is a subject for

further investigation.

The management implications of this CBP

approach is that Internet based eBusiness in

tourism/hospitality companies need to identify

the current and future CBP portfolio of their

existing and prospective customers to be

successful in the multichannel eBusiness

environment. It is critical to assess the

company’s current channels and identify

alternative ones according to the customer’s

CBP in order to make appropriate and successful

channel investment decisions that maximises

channel benefits; thus, making the company

much more effective in the management of its

customer decision support services across

multiple customer channels. This is because

in the eBusiness environment, more power

accrues to the customer in the company/consumer

relationship and customers will be a major




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262

enabler and driving force and not the firm in

terms of channel strategy (Hagel, 1997).

Therefore, channel management strategy

which consider customers’ CBP as a key

aspect of future success for the Internet based

eBusiness company in the tourism/hospitality

industry.

This research also demonstrated how CBP can

be used to reveal the channel gap between the

information search and purchasing stages

when considering critical usage. The fact that

customers have a different perception on the

critical usage of these channels implies that for

the booking stage most eChannels are not

sufficiently developed for customer to place their

trust in online transactions. The issue of customer

trust in eBusiness seems to be a key aspect for the

future success of the eCommerece environment.

The trust issue was often quoted by respondents

during the qualitative interviews as the main factor

and reason for the reluctance to conduct

transactions online.

Furthermore, while the qualitative results of

the initial investigation indicated differences in

channel usage, the quantitative results were

established where these differences significant

within the CBP.

Hence, a combined quantitative and qualitative

approach to channel management should ensure

greater reliability in decision-making about

channels.

In the eBusiness environment which is

characterised by multiplicity of eChannels,

one can no longer remain focused solely on

applications, but must address the key

channel investment decisions that underpins

eBusiness performance in the eBusiness

environments.

Future research in the channel benefit

evaluation and realisation from the company’s

point of view is required in order to establish

legitimate and adequate criteria for decision-

making about strategic channel deployment and

investment. Moreover, research into the

appreciation of the channel attributes and role in

determining customers’ channel choice is required

to understand what makes an effective channel

benefits management strategy, and will provide

further insights for a much more effective CBP

analysis. Moreover, CBP analysis will be an

important input to segmentation strategy decisions

that must take into account the customers’

communication channel portfolios (Louvieris et al.,

2003).

Finally, the onslaught of new miniaturised

communication technologies with greater

bandwidth capability (e.g. 3G networks, emerging

nanocommunications technologies, etc.) will

mean that channels will become more pervasive.

Therefore, the CBP needs to be managed

dynamically and updated at regular intervals

to ensure continuing alignment of the firm’s

portfolio with their customers’ channel

portfolios in order to maximise customer

relationship capital.

References

Anghern, A.A. and Meyer, J.F. (1997), “Developing matureInternet strategies: insights from the banking sector”,Information Systems Management, pp. 37-43.

Bagozzi, R. (1975), “Marketing as exchange”, Journal ofMarketing, Vol. 39, pp. 32-9.

Barabba, V. and Zaltman, G. (1991), Hearing the Voice of theMarket: Competitive Advantage Through Creative Use ofMarket Information, Harvard Business School Press,Boston, MA.

Christiaanse, E. and Zimmerman, R. (1999),“Managing electronic channels: the KLM cargocyberpets case”, Journal of Information Technology,Vol. 14, pp. 123-35.

Dwyer, F., Schurr, P. and Oh, S. (1987), “Developing buyer-sellerrelationships”, Journal of Marketing, pp. 11-27.

Etgar, M. (1978), “The effects of forward vertical integration onservice performance of a distributive industry”, Journal ofIndustrial Economics, Vol. 26, pp. 249-55, March.

Hagel, J. (1997), Net Gain: Expanding Markets through VirtualCommunities, Harvard Business School Press, Boston, MA,p. 17.

Heide, J. and John, G. (1988), “The role of dependencebalancing in safeguarding transaction-specific assets inconventional channels”, Journal of Marketing, Vol. 52,pp. 20-35.

Hirschheim, R., Earl, M., Feeny, D. and Lockett, M. (1988), “Anexploitation into the management of the IS function: keyissues and an evolving model”, Proceedings of the JointInternational Symposium on IS, March.

Louvieris, P. and Driver, J. (2004), “Avoiding buyer behaviormyopia in hotel eCommerce”, Journal of Hospitality &Leisure Marketing, Vol. 11 No. 1, pp. 65-84.

Louvieris, P., Driver, J. and Powell-Perry, J. (2003), “Managingcustomer behaviour dynamics in the multi-channelenvironment: enhancing customer relationship capital inthe global hotel industry”, Journal of Vacation Marketing,Vol. 9 No. 2, pp. 164-73.

Louvieris, P., Jung, H.S. and Pandazis, G. (2001), “Investigatingthe Web presence of London hotels”, in Sheldon, J.,Wober, K.W and Fesenmeier, D.R (Eds), Information andCommunications Technologies in Tourism, SpringerComputer Science, New York, NY, pp. 327-34.

McFarlan, F. (1984), “Information technology changes the wayyou compete”, Harvard Business Review.

McFarlan, F. and McKenney, J. (1983), Corporate InformationSystems Management: The Issues Facing SeniorExecutives, Dow Jones & Irwin, New York, NY.

McFarlan, F., McKenney, J. and Pyburn, P. (1983), “Theinformation archipelago-plotting a course”, HarvardBusiness Review.

Venkatraman, N. and Christiaanse, E. (1996), “Expertiseexploitation of electronic channels, in best paper”,Proceedings of the Academy of Management Conference,Cincinnati, August.




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263

Ward, J. (1990), “A portfolio approach to evaluating informationsystems investments and setting priorities”, Journal ofInformation Technology, Vol. 5, pp. 222-31.

Ward, J. (1996), “Strategic planning for information systems”,in Ward, J. and Griffiths, P. (Eds), 2nd ed., Wiley,Chichester.

Further reading

Ward, J. (1987), “Integrating information systems intobusiness strategies”, Long Range Planning, Vol. 20 No. 3,pp. 19-29.

Appendix

Table AI Paired sample t-tests comparing mean scores for the current and futureimportance of channels in the information search stage

Current Future

Channel Mean SD Mean SD t df

Sig.

(2-tailed)

PC Internet 7.56 1.41 9.17 0.89 29.855 40 0.000*

TS 7.34 2.11 6.02 2.44 3.801 40 0.000*

TB 6.95 2.26 6.07 2.46 3.163 40 0.003*

WAP 2.93 1.94 5.17 2.83 26.465 40 0.000*

TV 6.25 2.26 6.15 2.43 0.539 39 0.593

Teletext 4.29 2.44 4.36 2.51 22.70 40 0.789

IDTV 4.42 2.35 6.77 2.57 27.653 39 0.000*

Talk-F 8.00 1.89 8.07 1.75 20.723 40 0.474

Talk-TA 6.87 2.28 5.70 2.24 5.060 40 0.000*

VC 3.34 2.38 5.04 2.68 26.299 40 0.000*

Call-OA 6.76 2.27 5.97 2.15 2.583 38 0.014*

Call-TA 6.78 2.01 5.41 2.14 4.787 40 0.000*

Call-B 5.70 2.33 4.73 2.20 3.717 40 0.001*

Call-I 6.63 2.15 6.29 2.31 1.236 40 0.224

Call-TXT 4.63 2.53 4.09 2.11 1.89 40 0.066

Fax-OA 4.38 2.41 4.0 2.52 1.793 30 0.083

Fax-TA 4.65 2.60 4.12 2.60 1.934 40 0.060

Fax-B 4.21 2.29 3.82 2.20 2.389 40 0.022*

Fax-I 4.82 2.54 4.68 2.70 0.628 40 0.534

Fax-TXT 3.39 2.07 3.26 1.91 0.625 40 0.535

E-mail-OA 7.19 2.10 8.58 1.97 25.079 30 0.000*

E-mail-TA 6.85 2.21 7.80 2.32 23.854 40 0.000

E-mail-B 6.21 2.28 6.85 2.60 22.549 40 0.015*

E-mail-I 6.97 2.43 7.90 2.36 23.702 40 0.001*

E-mail-TXT 4.70 2.45 5.07 2.78 21.263 40 0.214

Postal mail 4.68 3.11 3.80 2.89 5.009 40 0.000*

News/Mag 6.39 2.07 5.56 2.32 3.148 40 0.003*

Notes: TS: travel shop, TB: travel brochure, Talk-F: talk to friends, Talk-TA: talk totravel agent, VC: consult with people in the virtual community, Call- OA: call overall,Call-TA: call to travel agent, Call-B: call to a contact number in a brochure, Call-I: callto a contact number from the Internet, Call-TXT: call to a contact number in theteletext, Fax-OA: fax overall, Fax-TA: fax to travel agent, Fax-B: fax to a contactnumber in a brochure, Fax-I: fax to a contact number from the Internet, Fax-TXT: faxto a contact number in the teletext, e-mail-OA: e-mail overall, e-mail-TA: e-mail totravel agent, e-mail-B: e-mail to a contact address in a brochure, e-mail-I: e-mail to acontact address from the Internet, e-mail-TXT: e-mail to a contact address in theteletext, News/Mag: newspaper or magazine. *significance at p , 0.05

Table AII Paired sample t-test comparing mean scores for the current and futureimportance of channels in the purchasing stage

Current

importance

Future

importance


Sig.

(2-tailed)

PC Internet 6.92 1.88 8.85 1.79 210.178 40 0.000*

TB 6.78 2.04 5.92 2.27 3.438 40 0.001*

WAP 3.17 2.16 5.04 3.02 26.077 40 0.000*

Teletext 3.94 2.42 4.05 2.46 20.755 38 0.455

Talk-TA 7.53 1.88 6.07 2.04 5.981 40 0.000*

Call-OA 7.71 1.70 6.56 2.28 3.614 38 0.001*

Call-TA 7.70 1.95 6.65 2.30 3.446 40 0.001*

Call-B 6.58 1.98 5.39 2.37 4.113 40 0.000*

Call-I 7.39 1.65 6.95 2.22 1.371 40 0.178

Call-TXT 5.32 2.64 4.65 2.62 1.2954 39 0.034*

Fax-OA 4.89 2.45 4.21 2.25 2.865 36 0.007*

Fax-TA 5.12 2.80 4.43 2.57 2.765 38 0.009*

Fax-B 4.63 2.61 3.95 2.30 3.332 40 0.002*

Fax-I 4.53 2.37 4.34 2.41 0.805 40 0.426

Fax-TXT 3.67 2.26 3.37 2.09 1.433 39 0.160

E-mail-OA 7.23 2.46 8.58 1.81 24.009 33 0.000*

E-mail-TA 6.82 2.27 8.00 2.22 23.892 39 0.000*

E-mail-B 6.30 2.25 7.46 2.18 24.188 39 0.000*

E-mail-I 7.10 2.09 8.43 2.02 24.462 39 0.000*

E-mail-TXT 4.77 2.46 5.48 2.81 22.351 39 0.024*

Note: *significance at p , 0.05

Table AIII Paired sample t-test comparing mean score for the importance of channelsin the information search and purchasing stage

Information

search stage

Purchasing

stage


Sig.

(2-tailed)

PC Internet 7.56 1.41 6.92 1.88 1.818 40 0.077

TS 7.34 2.11 – – – – –

TB 6.95 2.26 6.78 2.04 0.505 40 0.617

WAP 2.93 1.94 3.17 2.16 21.056 40 0.298

TV 6.25 2.26 – – – – –

Teletext 4.29 2.44 3.94 2.42 1.634 38 0.111

IDTV 4.42 2.35 – – – – –

Talk-F 8.00 1.89 – – – – –

Talk-TA 6.87 2.28 7.53 1.88 22.198 40 0.034*

VC 3.34 2.38 – – – – –

Call-TA 6.78 2.01 7.70 1.95 22.703 40 0.010*

Call-B 5.70 2.33 6.58 1.98 23.067 40 0.004*

Call-I 6.63 2.15 7.39 1.65 22.394 40 0.021*

Call-TXT 4.63 2.53 5.32 2.64 22.211 39 0.033*

Fax-TA 4.65 2.60 5.12 2.77 21.667 39 0.104

Fax-B 4.21 2.29 4.63 2.61 21.187 40 0.242

Fax-I 4.82 2.54 4.53 2.37 1.182 40 0.244

Fax-TXT 3.39 2.07 3.67 2.26 20.980 39 0.333

E-mail-TA 6.85 2.21 6.82 2.27 0.110 39 0.913

E-mail-B 6.21 2.28 6.30 2.25 20.404 39 0.688

E-mail-I 6.97 2.43 7.10 2.09 20.551 39 0.585

E-mail-TXT 4.70 2.45 4.77 2.46 20.405 39 0.687

Postal mail 4.68 3.11 – – – – –

News/Mag 6.39 2.07 – – – – –

Note: *significance at p , 0.05




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264

V2C activity on a locallevel: qualitativecases – Tampere andSilicon Valley

Hannu Jungman and

Marko Seppa

The authors

Hannu Jungman is based at eBRC, Tampere University ofTechnology, Finland. He is a project manager at eBRC andresearcher at Tampere University of Technology (TUT). He ispreparing a doctoral dissertation on new V2C operating models.Marko Seppa is based at eBRC, Tampere University ofTechnology, Finland. He is director of eBRC, a virtual researchcentre and joint venture between TUT and University of Tampere(UTA) and one of the six sub-programs of eTampere, a local pilotof eEurope.

Keywords

Venture capital, Entrepreneurs, Finland, United States of America

Abstract

The increased capital intensity of venture capital supply and theincreased knowledge intensity of new venture supply havecreated a knowledge gap and recreated a capital gap betweennew venture activity and venture capital industry. Thisdevelopment has given rise to an all-new breed of players. In thisdescriptive, qualitative study, V2C activity is explored in a localcontext through comparison of cases Tampere (Finland) andSilicon Valley (USA). In Silicon Valley, the dominant group of V2Cplayers is business angels, whereas in Tampere, publicly fundedincubators play the most visible role in new venturedevelopment. Nevertheless, in both areas, five differentcategories of V2C players are represented, and, in both, bridgethe gaps to a significant extent.

Electronic access



Introduction

Since 1995, supply of venture capital financing,

the sizes of venture capital funds and, hence, also

the minimum investment amounts of a given

venture capitalist, have grown substantially,

transforming the venture capital process into the

venture capital spiral (Seppa, 2000).

Consequently, after the boom and bust of the

Internet hype, since 2000, the interest of venture

capital firms has shifted from seed and start-up

situations to more mature investment stages,

because such investments are considered safer,

easier to manage, and markedly more capital than

knowledge (hands-on) intensive. At the same time,

new ventures have become more knowledge than

capital intensive – requiring even more hands-on

involvement (Mason and Harrison, 2000; for

observations of an earlier such shift refer Bygrave

and Timmons, 1992).

Thanks to the two phenomena, a knowledge gap

has emerged and a capital gap has re-emerged

between new venture activity and the venture

capital industry. Figure 1 shows an illustration of

the dual gap (Rasila et al., 2002, p. 6).

To bridge the gaps between venture and capital,

an all-new breed of venture to capital or V2C

players has emerged based on a number of distinct

operating models. The mission of these players is

to push “prospective” ventures towards the radar

scan of the venture capital industry by turning

(refining) them “investable” in the eyes of the

venture capitalist, i.e. by building business from

venture to capital (Seppa and Nasi, 2001).

V2C activity, aimed at overcoming the capital gap

and the knowledge gap, is a concern on the both

the local, national, as well as the international

level. The benefits of successful V2C activity have

been acknowledged, for example, on the European

Union level (Aernoudt, 2002). The benefits

include an increase in the number of “investable”

ventures and jobs, as well as new export income.

The services provided by different types of V2C

players differ by nature and content. However, in

general, V2C players provide, besides financing

and other capital contribution, significant

managerial support and/or guidance. Such

support may or may not include businessman

wisdom, growth management insight, technical

management skills and/or introductions to contact

networks (Rasila et al., 2002).

The emerging V2C industry appears to have

assumed a part of the classic role of the venture

capital industry. Lending the classic discussion on

the role of the venture capital financier from

Brophy (1986), the role of V2C – for a country or

area today – can be put in perspective.

To put the role of [V2C] in context, it is useful tothink of it as a key part of the economic growth


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DOI 10.1108/13522750410557076

265

process now facing the United States and othercountries as well. The [V2C] process is importantin marshalling resources for the attainment ofbenefits for government, business, and the public atlarge . . . It is . . . to the point to think of the [V2C]financier as the overseer of the market exchangesystem, in a sense deciding through financingdecisions, on behalf of society at large, which newprojects should go forward and which should not.This is an important function in the economictransition now facing many economies. It isunlikely that a country or area can be competitivein commercial exploitation of innovative process,products, and services without a strong local [V2C]community.

Economically, V2C activity clearly plays a

significant role in the value chain of the venture

capital industry as a pre-screener of new ventures

and as provider of knowledge and capital for the

most “prospective” ones – the ones with most

potential as future investment targets of the

venture capital industry. Furthermore, this activity

will speed up the growth of new companies and

therefore, increase the pace of job creation.

Today, in the words lent from Brophy (1986),

the V2C players decide, “as the overseers of the

market exchange system, on behalf of society at

large, which new projects (businesses) should go

forward and which should not”.

The present study focuses on V2C activity on a

local level. More specifically, the study explores

V2C activity in Tampere, Finland, and Silicon

Valley, USA. First of all, the study aims to identify

the key players in two regions and the key

differences between them. Second, the study

attempts to build early propositions on how to

develop V2C activity with a focus on Tampere

case. The primary data of the study comprised

of public information on the V2C market and

interviews of selected individuals, both in Tampere

and Silicon Valley. The interviews conducted in

Tampere comprised CEOs of all major V2C

institutions and were semi-structured by nature.

The Tampere study is reported in more detail in

Jungman and Seppa (2002). The present study

also derives on unstructured interviews conducted

in Silicon Valley (Appendix 1). The interviews

were conducted on convenience basis and focused

on the nature of the capital and the knowledge

gaps, as well as the status of the venture capital

industry, in Silicon Valley. A similar study is

underway to understand the nature of V2C activity

and the status of the venture capital industry in

St Petersburg, Russia. However, the present study

is limited to cases Tampere and Silicon Valley only.

Categorisation of V2C players

By definition, V2C players operate to push

ventures to capital, help to cross the dual gap.

Many V2C players conceptualise entrepreneurs as

their main clients. Furthermore, it appears that

V2C players are seldom financially interested in

what happens to the ventures after they have

received venture capital financing, i.e. once

transferred from the V2C portfolio to the venture

capital industry portfolio. After such transfer it is

considered to be the venture capitalist’s task to

push the venture from “investable” to “listable”.

V2C players can be divided into four categories:

(1) business angels;

(2) incubators;

(3) advisors; and

(4) corporate ventures.

In addition to these basic categories, venture

capitalists themselves may seek to be active in

the V2C space, by setting up funds specialised

in early stage financing. However, almost

without exception, further funds of such

players tend to eventually slide towards later

stage focus if not premature dissolutions, due

to inability to make small enough investments

(Seppa and Nasi, 2001). As in any other new

industry, new and emerging operating models

have been developed continuously to

overcome the shortcomings of the existing

ones contributing to a fifth category;

(5) Emerging V2C models (Rasila and Okkonen,

2003).

In the following sections, a basic overview of each

of the five categories of V2C players is provided.

Business angels

Business angels are, by definition, wealthy

individuals putting some of their hard-earned

capital, business-experience, and contact-

networks back to the entrepreneurial process.

Business angels are profit-driven, market-educated

players vested with an extensive value-adding

potential. However, they are, by definition, also

hobbyists. This is neither their profession nor full

Figure 1 The capital and knowledge gaps

V2C activity on a local level: qualitative cases – Tampere and Silicon Valley



Volume 7 · Number 4 · 2004 · 265–273

266

time job. Even if this is their main job,

post-retirement, it does not necessarily fill the

hours of their days. Importantly, they are not

dependent on any market forces to maintain a

long-term in what they are doing; they do not need

to serve any particular stakeholder group such as

outside investors or even the entrepreneurs.

They do not seek organised growth of their

business, as do, for example, the players of the

formal venture capital industry. In other words,

their business reality lacks certain dynamism, for

example, the absence of classic stakeholder

pressures from financiers and customers.

Common to most business angels is that

they like to remain anonymous; hence, it

may be difficult for entrepreneurs to find such

players – let alone the Right One. Anyhow, the

number of business angels has grown in the recent

years due to the increased number of millionaires

produced by the entrepreneurial revolution of the

1990s. On relative terms, business angels serve

more as a solution for the V2C space in the USA

than in Europe. In the USA, it is estimated that

business angels invest about twice as much as the

formal venture capital industry in monetary terms

(Mason and Harrison, 2000).

Incubators

Also business incubators often lack certain

dynamism, but from a different angle than

business angels. Most incubators are based on

a formal process and professional management;

this is someone’s main job – not a mere hobby.

However, whereas business angels personally

participate as owners in underlying ventures,

incubator staff seldom has such personal incentive.

Many incubators are public sector financed or

semi-public players under the public eye with little

or no space for making mistakes. In other words,

their activity lacks different aspects of dynamism

than business angels. According to Aernoudt

(2002) a business incubator’s task is to “nurture

young firms, help them survive and grow during

the start-up period when they are most

vulnerable.” In addition to premises, business

incubators may also provide services such as

hands-on management, access to finance, legal

advice, operational know-how and access to new

markets. Furthermore, according to Aernoudt

(2002), “a business incubator’s main goal is to

produce successful firms that will leave the

incubator financially viable and free-standing

within reasonable delay.”

Advisors

Compared with business angels and incubators,

business advisors are typically the most focused on

their own short-term gains and profitability.

By definition, they are also involved for the

shortest time with a given venture. On the negative

side, a standard image of an advisor relates to

quick-and-dirty, get-the-money-and-run type of

operation. Advisors are sometimes faced with

accusations according to which they do not care

what happens in the client firms once they have

finished. On the more positive tone, advisors are

highly skilled and motivated professionals, who

have seen many cases and can derive, advise from

experience. Most advisors also work under full

market pressure, the requirement of sustainable

direct financial profitability. This is neither a

hobby for them nor are they around to fulfil (soft)

economic-policy-related missions.

Corporate venturing

Corporate venturing brings about new business by

building on internal entrepreneurship, sometimes

referred to as intrapreneurship. In environments

and societies that lack entrepreneurial incentive,

large corporations are natural platforms for new

venture activity. Conversely, in environments

boasting with entrepreneurial incentive,

corporations have tougher time in keeping new

venture activity indoors. Compared with the USA,

Europe relies much more on corporate venturing.

As a form of “institutionalised parenthood”,

corporations have a significantly better track

record as a platform for new venture activity than

state or government related entities, but there are

exceptions also to this rule.

It is worthwhile, herein, to make difference

between corporate venturing and corporate venture

capital: The latter refers to investments made from

corporate funds directly in external start-up

companies, i.e. it excludes investments made

through a fund managed by a third party and the

funding of new internal ventures. The former, on

the other hand, refers especially to investments

in-house (Chesbrough, 2002). Regardless of the

fact that there are several significant corporate V2C

players both in Tampere and Silicon Valley, as a

limitation of the present study, corporate venturing

is not discussed, herein, in any further detail.

Emerging V2C models

The shortcomings – such as the lack of long-term

commitment, due to lack of financial interest – of

many of the existing V2C models have opened

space for new and innovative V2C business

models, which seek to integrate the best practises

of the existing players. It seems that ownership

issues and investment of knowledge (intellectual

capital) are the key building elements of the

emergent V2C models. It can be argued that

the emergent V2C models link the field to the

roots of the classic venture capital industry.




Volume 7 · Number 4 · 2004 · 265–273

267

(For a more comprehensive overview on emerging

V2C models refer Rasila and Okkonen, 2003.)

All the categories of V2C players are

represented in both Tampere and Silicon Valley.

In the following chapters, an initial overview of

V2C activity in the two regions is provided.

The classification follows the one introduced

above (excluding corporate venturing).

Case Silicon Valley

Silicon Valley is known throughout the world as

the number one new technology venturing market

on the planet. It is also a home for some of the

best-known venture capital companies in the USA,

and draws people from all over the country to seek

and negotiate for venture capital financing.

In addition, also the universities in the area are well

known for their research and education related to

entrepreneurship and venture capital financing.

However, based on the interviews conducted for

the present study, it is also noticed in Silicon Valley

that the needs of entrepreneurs and the services

provided by venture capitalists do not always meet.

The issue, as presumed, is two-folded: the capital

injections available for investment are too large

and venture capitalists are unable to provide

sufficient hands-on involvement. Because venture

capitalists have, consequently, been sometimes

forced to return some of their funds back to the

investors, due to inability to make small enough,

hands-on investments, there is market pressure on

the venture capital industry to move towards

smaller investments.

Business angels

Business angels in the USA invest about twice as

much in monetary terms and 20 times more in

terms of the number of ventures financed as

the formal venture capital industry. According to

the Center for Venture Research[1], located at the

University of New Hampshire, in total there are

ca. 250,000 business angels in the USA who invest

annually a total of $20 billion in ca. 30,000

ventures. A typical investment of a business angel

is less than $200,000, but can also be as much as

$1,000,000. It is typical that business angels

co-invest with other business angels (Mason and

Harrison, 2000). It is evident that, in the USA,

business angels play the most significant role in

building business from venture to capital.

According to the Capital Connection[2] there

are six business angel networks that operate in

Silicon Valley (Appendix 2). They all provide

capital investments to start-up and/or early stage

companies. In addition to mere financial capital,

they also invest mental capital; their time as

advisors and board members.

Incubators

In Silicon Valley, there are nine business

incubators (Appendix 3), which are members of

the National Business Incubation Association[3].

Most of the incubators are supported by public

funds. On an average, each incubator has

16 tenants and the average incubation period is

three years. Of the incubators only one appears to

be making capital investments (one sponsored by a

major corporation). The basic services include

office space, furnishing and support services.

A majority of the incubators have specialised to

serve certain customer groups like international

companies expanding to the USA, environmental

businesses, art businesses or entrepreneurs from

low-income communities. Common to these

groups is that they may find it hard to get financing

and other resources from other sources.

Advisors

The entrepreneurial environment and venture

capital industry together have created numerous

opportunities for various kinds of consultative

advisors in Silicon Valley. One special group of

these – namely technology analysts – is selected

for introduction herein. This special advisor group

provides entrepreneurs with technology and

market analysis and suggestions for suitable

venture capitalists. Such a service will most likely

bring entrepreneurs and venture capitalists closer

to each other, and make it easier for entrepreneurs

to justify their need to raise capital. However,

technology analysts do not fully solve the problems

related to the knowledge and capital gaps, as they

do not provide any managerial advice.

Emerging V2C models

There is no shortage of emerging V2C operating

models in Silicon Valley. Three models have been

selected for presentation, herein. The first relates

closely to business angel networks and the second

to individual business angels. The two models can

also be defined as hybrids of the category of

advisors. The third model is closer to the category

of incubators.

CEO Circle consists of chief executive officers

with entrepreneurial background. They are hired

to companies in order to solve especially the

problems caused by the knowledge gap, by sharing

their businessman wisdom with the

entrepreneurial teams of the start-up companies.

Payment is received either in cash or equity.

The concept of Virtual CEO is presented by

Randy Komisar in his autobiography “Monk and

the Riddle” (Komisar, 2001). The book describes




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his personal work as “a business angel without

money” possessing skills and networks vital to

entrepreneurial ventures. For the time and money

he contributes to young ventures he receives a

stake in the company.

Garage Technology Ventures[4] helps young

companies developing new technologies in three

ways:

(1) they provide small venture capital investments

($100,000-750,000);

(2) they help ventures raise bigger investments

from venture capitalists, corporate and

individual investors; and

(3) they work as advisors in mergers and

acquisitions.

Of these functions the second is pure V2C activity,

while the two others are similar to the functions of

venture capitalists.

Case Tampere

While the city of Tampere has a good 200,000

inhabitants, over 300,000 people live within

a 20 min drive from the city centre, and half a

million live within a radius of 100 km. Empowered

by two universities (Tampere University of

Technology and University of Tampere), other

institutions of higher education and research, and

a number of knowledge centres and science parks,

the Tampere region is rapidly emerging among the

most recognised local knowledge areas in Europe.

One of the drivers of this development, the

eTampere knowledge society development

program, is largely geared at putting eEurope –

the vision of Europe – into action on a local level.

The goal of the eTampere program is no less

ambitious than to make Tampere the world’s

leading local knowledge society. One mean to

achieve this target is creation of new businesses,

and acceleration of their growth and development.

According to the business development strategy of

the city of Tampere, this activity is supported by

providing help in set-up activities and in evaluation

of business ideas, creating culture that encourages

entrepreneurship, securing appropriate finance,

helping get required working premises, and

promoting networks (Tampereen

elinkeinostrategia, 2002).

The city of Tampere has been active (as key

financier and part owner) in developing several

specialised incubators. The mission of these V2C

players is to turn “prospective” ventures

“investable” in the eyes of venture capitalists,

i.e. to help ventures to cross the dual gap. The city

of Tampere has also invested in venture capital

funds especially targeted to finance early stage

companies.

Business angels

In Europe, and this holds also for Finland, the role

of business angels is, unfortunately, far less

significant than in the USA. The Internet hype of

the late 1990s, particularly the successful initial

public offerings (IPOs) it enabled, produced

several new players in the business angel arena also

in Finland. Within Finland, the Tampere region

was not among the top scorers of individual IPO

related wealth creation of the hype era, however.

Hence, in Tampere this category of V2C players is

not particularly strong, but of average strength.

Nonetheless, notable measures – on the Finnish

national scale – to activate business angel activity

have been taken precisely in Tampere. In 1997,

Finnish Business Angel Association[5] was

registered in Tampere. This was the first registered

business angel association, and still to date the only

one, in Finland. One of the functions of the

association is to arrange elevator pitch sessions

where entrepreneurs are pre-screened for

presentation to participating members. It is to be

noted that the association has not been successful,

so far, in attracting the attention of Finland’s

leading business angels. Even within Tampere,

there are unofficial round-table-clubs of business

angels that do not actively participate in the

operations of the association. In Finland, and this

holds also for the Tampere region, business angels

typically make investments between e10,000 and

150,000 and their preferred investment time

ranges from two to four years.

Incubators

In Finland, the number of business incubators has

grown rapidly since 1995. For example, in the

Helsinki region there was only one incubator in

1995 compared to 16 in 2000. Most of the

incubators in Finland are located in one of the

16 science parks, and are strongly affiliated with

university research (Aernoudt, 2002).

There are four players in Tampere that can be

labelled as the city’s strategic V2C portfolio.All four

have their own sector specific development

responsibilities. While they differ in target venture

segments, one of their common denominators is the

V2C process. They all provide help in developing

business plans and in acquiring additional

financing, contact networks and office space.

All four incubators are briefly introduced below.

Finn-Medi Research Ltd[6] is a business

development organisation that concentrates on

health technologies. In addition to basic incubator

services they also provide loans that typically range

from e11,000 to 50,000.

Tampere Technology Centre Ltd[7] and

Tampere University of Technology together

constitute an internationally significant




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concentration of ICT based business, research and

development activity. Much of the company’s

business development services, including Hermia

Incubator, have been outsourced for over ten years

to entrepreneurial (management-controlled)

firms, mainly Hermia Business Development Ltd

(of which Tampere Technology Centre Ltd owns

10 per cent). The incubator is specialised in

technology based product and business

innovations. The V2C player is an exception

among the incubators in the Tampere Region,

and Finland in general, because it is

management-controlled, and public sector based

players are only minority owners. Nonetheless, this

is a close private-public-relationship.

Oy Media Tampere Ltd[8] is minority-held by

the City of Tampere, whereas private sector

(mainly large) enterprises own the majority.

Media Tampere can also make investments in early

stage companies and has creatively outsourced

incubator services. The incubator Media Club was

recently established as an incubator specialised in

content production and media business.

The incubator is not (yet) a legal entity, but a

project fully owned by Tampere Polytechnic.

The project was set-up for two years, in 2001.

Professia Ltd[9] is the latest entrant to the city

of Tampere’s strategic sector-specific V2C

portfolio. Professia is owned, in four equal shares,

by the city of Tampere, the University of Tampere,

Finnvera Ltd (a public funding agency), and

Sentio Invest Ltd (a local management-owned

venture capital company). Professia manages

a business incubator that develops

knowledge-intensive advisory and business service

companies.

Advisors

There are several advisory firms, in the Tampere

Region, that are active in the V2C space. Many of

these firms are actually incorporated form of the

activity of a given business angel. One advisory

firm has been selected as a case example of this

category, namely Ledi Oy.

Ledi[10] has been one of the most active

entrepreneurial companies in the Tampere V2C

space. Ledi was established in 1997 and today has

a presence at science parks in both Tampere and

Helsinki. Ledi is a corporate finance boutique that

arranges financing for mainly early-stage

enterprises. Ledi has also been offered, and

accepted, shares as partial payment for its services.

Ledi and/or its individual partners played

instrumental roles in establishing the business

angel association (introduced above) and in

creating a private-public seed-investment

partnership involving corporate and

government institutions – referred to as Seed

consortium – which resembles the round-table

sessions of business angels. In the set-up, Ledi has

served as the coordinator that pre-screens target

ventures, helps put their presentations together,

and is engaged in post-investment activities.

The seed consortium provides profit sharing based

subordinated loans, ranging from e50,000 to

200,000, to seed, start-up, and growth stage

companies. The maturity ranges from two to four

(or even to seven), years. The loans are intended to

cover the seeking of financing options and,

ultimately, the expenses of the due diligence

process related to a potential venture capital

investment. The consortium (the investing

institutions) does not provide any operational help

(Laine, 2002).

Emerging V2C models

eAccelerator[11] is one of the six subprograms of

eTampere. It was launched, in 2001, as a sort of an

ambitious virtual incubator funded by the city of

Tampere. The entity legally responsible for the

eAccelerator project is Tampere Technology

Centre Ltd. In practise, based on an outsourcing

arrangement, the project is managed by Hermia

Business Development Ltd, the partner driven

company introduced above, making eAccelerator

another PPP experiment. In addition to various

incubation services the deliverables may include

small investments. eAccelerator leans on a network

of 15 core experts and an advisory board of 54

persons. The advisory board is designated to help

the core personnel in customer service and, at

present, they are the primary source of knowledge

on legal, managerial and technological matters.

The advisory board also plays a central role in

evaluating new customer ventures and in making

contacts with investors. Contracts with accepted

ventures are made case by case. For compensation

the management company of eAccelerator takes

cash, but more lately has also accepted equity and

success fees.

Tamseed Ky is seed and start-up venture capital

fund managed by Innofinance Ltd[12] in

cooperation with Sentio Invest Ltd. The fund was

opened in October 2002 and in the first stage it

managed to raise 5.6 Me. The fund works in close

cooperation with business development entities

that are part of the city of Tampere’s V2C

portfolio. The aim is to effectively utilise the skills

and knowledge of these organisations in

developing seed companies. The fund has already

made its first investments.

Venture Stables[13] is a support model for

testing innovations and facilitating for

entrepreneurship within the faculty and students

of the Tampere University of Technology.

Also this V2C operation is managed by




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Hermia Business Development Ltd constituting

for yet another PPP experiment in Tampere.

The ventures accepted to the stables gain an access

to office space, computers and office equipments

for one year and an option to one additional year.

The contract also covers expert services, patenting

costs, etc. up to e7,000. The stable staff can also

provide contacts to customers and financiers.

If a company succeeds, it is obliged to pay back the

money the university has invested in it.

Summary and discussion

Key features and differences of the two V2C

arenas

A number of similarities and differences mark the

players of the regional V2C arenas of Tampere and

Silicon Valley. In both regions there are players in

all of the five V2C categories. In principle, the

markets are dynamic and offer a balanced mix of

V2C related services to entrepreneurs facing the

dual gap. Overall, the players seem to provide

monetary investments in small enough doses, and

offer specialised business development services to

several different business areas and sectors of

economy.

It is also evident that the city of Tampere’s

portfolio of V2C players, and the incubators they

manage, play the most visible role in this V2C

arena. Domination of the V2C space by public

sector or public sector funded entities is quite a

common feature in Europe vs the USA, where

business angels play the dominant role. It is worth

mentioning that even though the population in

Silicon Valley is some eight times larger than that

of the Tampere Region, the number of business

incubators is only double. In Tampere, business

incubators work in close contact with the two

universities in the area, whereas in Silicon Valley

incubators are established to serve certain special

groups of the population, which may find it

difficult to start and expand their businesses in

other ways.

As mentioned above, in Silicon Valley as in the

USA in general, business angels play the dominant

role in turning entrepreneurial ventures

“investable” in the eyes of venture capitalists.

In Silicon Valley, an average angel investment is

bigger – and obviously also the number of active

business angels is larger in both absolute and

relative terms – than in Tampere.

In Europe, the mechanisms by which V2C

resources are provided and distributed differ

between countries and regions. In Tampere,

several creative PPP schemes are underway as well

as all some emerging V2C models. In contrast, the

emerging V2C models developed in Silicon Valley

lean heavily on private entities and active

ownership.

However, the picture is in complete neither in

Tampere nor in Silicon Valley. Notably, each of the

key players interviewed for this study agrees that

further development is still needed in the V2C

space, at both ends. These conclusions also reflect

upon the differences in entrepreneurial culture

between Finland and the USA. In the USA, the

general attitude towards entrepreneurship, growth

and wealth creation, is by far more encouraging

than in Finland. This is manifested by both annual

birth-rate of new businesses per capita and the

amount of both business angels and angel money

put back to the entrepreneurial process.

Ideas for further development of V2C services

in Tampere region

In the words of a Tampere based incubator

representative interviewed for this study:

“The biggest challenge in the field is to clarify and

communicate to each other the needs and

objectives of V2C players and venture capitalists

and, in the course of the dialogue, develop an

operating model that fulfils these needs and,

ultimately, makes the growth resource allocation of

young ventures more efficient”. Also the other

interviewees underscored the importance of

dialogue and two-way cooperation between the

V2C players and both entrepreneurs and venture

capitalists.

More efficient and appropriate distribution and

use of target venture ownership could be a key

to more successful V2C activity. In fact,

ownership – not financing – is key to both venture

capital and V2C activity (Rasila et al., 2002;

Seppa, 2000; Seppa and Nasi, 2001). In return for

the time, money and services, and businessman

wisdom if any, that they contribute to target

ventures, V2C players could receive a minority

share in the target company. In Silicon Valley, two

emerging V2C models have been identified

(CEO Circle and Virtual CEO) that utilise the idea

of using equity to buy committed knowledge.

By definition, a V2C player’s financial gains

should be maximised at the point where a

venture capitalist enters the “investable” venture,

or – better yet – at the later point where the

venture capitalist completes a successful exit

(Rasila et al., 2002). In Figure 2, the ideal

development of the market valuation of a given

venture is shown as a function of time. The picture

does not reflect reality in the Tampere region at the

present moment, since most of the local V2C

players prefer cash to equity and do not exercise

active and responsible ownership.

At the moment, most of the Tampere based

V2C actors have no ownership incentives to pay




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attention to the time after receipt of venture capital

investment. Likewise, the venture capitalists do

not have an incentive to pay attention to the time

before their own investment. The ownership

structure depicted above could help different

parties to better understand each other’s motives

and operating logic and enable fruitful long-term

relationships. Such an operating model would

require much closer cooperation between V2C

players and venture capitalists which also brings

about new challenges: V2C players may become

servants to a given venture capitalist leading to

neglect of other stakeholders. Also, misplaced

ownership distribution, for example, in favour of

faceless institutions rather than entrepreneurial

teams responsible for delivering the results, can

cause more harm than good to the entrepreneur.

Besides ownership, another important issue is

the delivery of crucial knowledge to target

ventures. We believe that it is not a matter of lack of

knowledge – or businessman wisdom – but rather

a lack of sufficient vehicle to acquire and deliver

that wisdom or competence. As committed

competence cannot be bought on the market in the

classic meaning of the word, expansion of owner

base may be a working solution. The limited-life

limited-partnership based fund vehicle of the

venture capital industry could serve as a basis in

developing a vehicle to do the exchange between

knowledge and stake in a company – such as the

concept of the Knowledge Fund (Seppa, 2002).

Whereas a venture capital fund is managed by a

venture capitalist, a knowledge fund is managed by

a venture knowledgist. Investors of knowledge

could be found, besides entrepreneur and adviser

communities, for example, inside universities,

major corporations, and other institutions.

The above discussion is meant to stimulate

discussion and lead to further research and

development activity in the V2C space.

In conclusion, probably the highest yield would

come from further work on the development of an

operating model that understands and appreciates

the needs of entrepreneurs, V2C players and

venture capitalists, but is set to serve the stock

market investor (or acquiring corporation) as the

ultimate customer. At least as crucial is the

valuation of businessman wisdom. Since the city of

Tampere and many other key players of the region

recognise the importance of a strong local V2C

community, Tampere continues to facilitate one of

the most potential “testing environments for new

V2C laboratories” in Europe and the world.

Silicon Valley, for its part, remains as a trendsetter

in growth venturing and venture capital financing.

Notes

1 www.unh.edu/cvr/2 www.capital-connection.com/networksangels.html3 www.nbia.org4 www.garage.com5 www.ledi.fi/bisnesenkelit/index.html6 www.finnmedi.fi7 www.hermiayrityskehitys.fi8 www.mediaclubi.com9 www.professia.fi

10 www.ledi.fi11 www.hermia.fi/eAccelerator12 www.innofinance.fi13 www.yritystallit.tut.fi/yritystallit

References

Aernoudt, R. (2002), “Incubators: tool for entrepreneurship?”,paper presented at Euram 2002, Stockholm.

Brophy, D.J. (1986), “Venture capital research”, in Sexton andSmilor (Eds), The Art and Science of Entrepreneurship,Ballinger Publishing Company, Cambridge, MA.

Bygrave, W.D. and Timmons, J.A. (1992), Venture Capital atThe Cross-Roads, Harvard Business School Press,Boston, MA.

Chesbrough, H.W. (2002), “Making sense of corporateventure capital”, Harvard Business Review, pp. 90-9,March 2002.

Figure 2 Development of ownership and market valuation through ventures life




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Jungman, H. and Seppa, M. (2002), “Local approach to V2Cactivity”, in Hannula, M., Jarvelin, A-M. and Seppa, M.(Eds), paper presented at FeBR 2002, TampereUniversity of Technology and University of Tampere,Tampere.

Komisar, R. (2001), The Monk and The Riddle, Harvard BusinessSchool Press, Boston, MA.

Laine, P. (2002), Seed Consortium Tampere, Linking money andknowledge Seminar 28.11.2002, Tampere.

Mason, C. and Harrison, R. (2000), “Business angels are theanswer to entrepreneur’s prayer”, in Birley and Muzyka(Eds), Mastering Entrepreneurship, Prentice-Hall,Englewood Cliffs, NJ, pp. 110-4.

Rasila, T. and Okkonen, J. (2003), “Traditional and emergingV2C business models”, in Hannula, M., Jarvelin, A-M.and Seppa, M. (Eds), FeBR 2002, TampereUniversity of Technology and University of Tampere,Tampere.

Rasila, T., Seppa, M. and Hannula, M. (2002), “V2C or venture-to-capital – new model for crossing the chasm between start-up ventures and venture capital”, paper presented atEuram 2002, Stockholm.

Seppa, M. (2000), “Strategy logic of the venture capitalist”,Doctoral Dissertation, University of Jyvaskyla, Jyvaskyla.

Seppa, M. (2002), “The concept of the knowledge fund”,Poster presentation at eBRF 2002. eBRF 2002 Book ofAbstracts.

Seppa, M. and Nasi, J. (2001), “Playing with the goose – pushingentrepreneurs across the capital gap – who, why, andhow?”, Research Paper presented at the IntEnt 2001Conference, South Africa. Published in ConferenceProceedings.

, Tampereen elinkeinostrategia (The business developmentstrategy of the city of Tampere) 19.8.2002.

Appendix 1. Interviewed professionals

In Tampere. Business angel (anonymous);. Eskola M., FinnMedi Research Ltd;. Jussila, P. and Huhtamella, H., Hermia

Business Development Oy;. Jussila, A., Ledi Oy;

. Sulonen, T., Oy Media Tampere Ltd,

Media Club;. Vakkari, L. Ledi Oy.

In Silicon Valley:. Dossani, R. and Toyoda, M. Asia/Pacific

Research Center, Stanford University;. Guerra, P. Center for Innovation and

Entrepreneurship (CIE), Santa Clara

University;. Tyebjee, T. Leavey School of Business, Santa

Clara University.

Appendix 2. List of Silicon Valley businessangel networks

. Angel Investors;

. The Angels’ Forum;

. The Band of Angels;

. Angel Breakfast Club;

. Investors Circle;

. Net Angels.

Appendix 3. List of Silicon Valley businessincubators

. Business United in Investing, Lending and

Development;. Daly City Business Center;. Environmental Business Cluster;. International Business Incubator;. Panasonic Incubator;. Renaissance Business Incubator;. San Jose Arts Incubator;. Software Business Cluster;. US-Japan Business Incubation Center.




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A qualitativesense-makingclassification ofbusiness incubationenvironments

Paul D. Hannon

The author

Paul D. Hannon is a Professor of Incubation and Enterprise atthe University of Central England Business School, Brimingham,the UK’s, and probably Europe’s, first professional post inincubation. Here he applies his 30 years of experience in the fieldof enterprise as an entrepreneur, practitioner, professional andacademic working across many aspects of public and privatesector environments. [email protected]

Keywords

Metaphors, Start-ups, Business development

Abstract

Business incubation is a new and fast growing industry in the UK.The environments within which incubation can take place andtheir descriptors as used across the industry are many and varied.The language engaged in by policy-makers, professionals andpractitioners commonly applies metaphors to convey meaning ofloosely defined terms and concepts in a diverse market seekingincreased clarity. Metaphors can offer a qualitative approach tosense-making. By articulating ideas through metaphors,individuals can often expand the concepts and expressionsavailable through language. It is asserted that it would bevaluable to incubation communities to provide shared meaning tothe discourse of incubation such that further confusion isminimised. This paper aims to address this challenge by proposinga classification of incubation environment types based upon aqualitative approach to understand the incubation marketplacethrough its language, specifically the application of metaphor.

Electronic access



Introduction

It is in the last 10-20 years that phenomenal

growth of the incubation sector has been witnessed

to the extent that most countries around the globe

now boast a growing and thriving incubation

industry. NBIA, the US membership association

for business incubation, identifies the origins of

incubators in New York (www.nbia.org). In the

UK it has been suggested that the foundations of

incubators emerged out of the growth of managed

workspace and enterprise centres in the 1970s and

1980s (Hannon 2004, forthcoming, for a further

exploration of the evolution of business

incubation).

In exploring the definitions of incubators and

incubation projects and through examining public

and private sector reports and studies it is clear

that a common language is emerging. However,

this has not necessarily led to a shared meaning of

the purpose, nature or process of incubation.

Incubators and incubation programmes appear

mixed in description of form, function, purpose

and outcomes. In reflecting on the diverse range of

defining characteristics of incubators and

incubation programmes this paper first

investigates the origins of the language in common

parlance.

The use of the terminology applied to such

programmes is purposefully chosen. The noun

used to describe the phenomenon is borrowed

from the natural and life sciences as the range of

adjectives used to describe the incubation

processes and environments: nurturing;

accelerating; safe; protected. These terms have

gained a shared meaning temporally and spatially,

and have strongly influenced the approaches to

incubation policy formation and management

application. Indeed, some of the issues raised have

been endemic within the enterprise support

environment for many decades and are not

specifically unique to the world of incubators and

incubation.

For some readers the origins of the term

“incubator” will have meaning and purpose in the

context of the challenges of difficult child births

where the newly born infant is unlikely to survive

without the application of a protective and

artificial environment, within which the essential

ingredients for life can be monitored and provided

through expert care. An incubator may also have

meaning and purpose in an horticultural sense

where there are attempts to enhance the natural

processes of plant reproduction through providing

seeds or new cuttings with a controlled

environment within which the appropriate

nutrients and atmosphere can be provided to

simulate idealised conditions for effective and


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DOI 10.1108/13522750410557085

274

speedy growth. In intensive farming methods, such

approaches are used to force cropping plants to

produce their crops earlier than the processes of a

natural environment. Indeed, incubators can have

meaning in a farming context in the way that some

animals are battery farmed to control and speed up

rates of growth and egg production. It may also be

that some have experienced the use of incubators

in biological research establishments for the use of

generating artificial life, developing genetic

cultures and other purposes.

Whatever the exposure it would be reasonable

to expect that a common shared understanding of

the term incubator would include notions of

protection; nurturing the fragile and weak;

accelerating growth; and enhanced survival.

Indeed, such understandings are applied equally to

those engaged in business incubation. One initial

point to emphasise is the way that meanings from

such diverse applications with specific purposes

have formed a conglomerate meaning of mixed

purposes in the context of business incubation.

Why the use of metaphor matters inqualitative research

The Collins New English Dictionary defines a

metaphor as “a figure of speech that makes an

implied comparison between things which are

not literally alike” and defines an analogy as

“a resemblance in certain essential respects”.

These tools are important in qualitative research

because their common use in communicating

meaning provide illustrative insights into others’

worlds. For instance, the use of metaphor is well

established in the organisation theory and change

literature both through increased published

research and management articles and books from

the 1980s, popularised in the late 1980s by

Morgan (1986). The metaphor has been widely

applied in organizational analysis and has drawn

upon diverse images from machines and organisms

to jazz bands and even soap bubbles (Palmer and

Dunford, 1996 for a review). One use of metaphor

is as a tool for making sense of complex and

dynamic organizational environments to provide

insights into key features and characteristics.

From a positive aspect metaphors can be

important tools for the “advancement of

knowledge and understanding” as in practice, they

“entail using a combination of both language and

thought to construct a non-literal meaning and

apply it to reality in order to shape and enhance

our appreciation of that reality” (Grant and

Oswick, 1996).

Marshak (1993) cited in Dunford and Palmer

(1996) states:

. . . underlying, usually unarticulatedunderstandings about a situation are often shapedand revealed metaphorically. Furthermore,because these understandings are critical to howpeople assess the need for change – and indeedtheir conception of change itself – paying attentionto managing the metaphors of change becomes acritical competency for leaders and change agents.

This supports the underlying purpose of this

paper, which is to offer a sense-making framework

to support incubation leadership and

management.

Chia (1996) proposes that the process of

“metaphorization” should “force us to re-evaluate,

re-conceptualize and reinterpret what is going

around us” and hence will be better equipped to

deal with the increasingly unpredictable and

volatile business world in which they and their

organizations must operate. Chia suggests that

using metaphors is about “shifting styles of

thinking from being (i.e. thinking in terms of

‘states’, ‘entities’, ‘events’, ‘attributes’) to become

(i.e. thinking in terms of the primacy of

‘movement’, ‘unfolding’, ‘emergence’, ‘flux’ and

‘transformation’) . . . it is this organismic form of

thinking which is more in keeping with a

processual reality”. This is a reality in alignment

with the fundamental act of incubation.

Marshak (1996) describes the use of

metaphoric fields that “structure perception and

behaviour”. Each field defines reality and Marshak

suggests that where there is consistency “with the

operative themes of the metaphoric field” (where

metaphoric field refers to a system of symbolic

meaning) then change “will be readily engaged

because they will be coherent and easily

understood”. Using different fields would evoke

“very different actions and responses . . .

depending on which metaphor was shaping

perception”. This notion of “fields”, or in the

context of this paper “environments” is an

underpinning thread throughout.

Inns and Jones (1996) reviewing the work of

Miles and Huberman (1994) identify how

Miles and Huberman explored metaphors as

“a qualitative methodological tool, offering the

researcher access to participants” interpretations

of situations as they are revealed through

participants’ use of metaphors’. Furthermore,

Inns and Jones also explore metaphor as a means of

access to, and expression of, intuitive, embryonic

perceptions and understanding. These may be

easier to grasp as people attempt to describe their

experiences in novel and unconventional ways.

The indicative sense-making classification

presented in this paper attempts to demonstrate

this point.

Inns and Jones (op.cit.) suggest that “the world

is constituted by our shared language and that we

Business incubation environments

Paul D. Hannon


Volume 7 · Number 4 · 2004 · 274–283

275

can ‘know the world’ through the particular forms

of discourse our language creates”. In applying

Morgan (1986) work, Inns and Jones continue

“metaphors link thought and action and can

provoke insights that often allow us to act in ways

that we may not have thought possible before”.

Although metaphors are used freely in

incubation environments there is no critical

and qualitative analysis of their application or

their meaning. Addressing this gap enables a

market classification of incubation environment-

types that illuminate differences across

metaphorical profiles, thus unearthing a more

sophisticated qualitative description of incubation

landscapes in relation to specified business

incubation goals.

Bolman and Deal (1991) note that “metaphors

are liberating because they offer a sense of choice

and new alternatives and ideas” (Palmer and

Dunford, 1996). Furthermore, Srivastva and

Barrett (1988) argued that “metaphorical

language is superior to literal language because it

captures expressions . . . and because it can

communicate meaning in complex ambiguous

situations . . .” (Palmer and Dunford, 1996).

Analogies, similes and metaphors are applied in

the stories told to communicate thoughts, values

and beliefs, and to transfer knowledge and

experiences. Entrepreneurs are noted for their use

of these tools as part of valuable informal peer

learning processes. In business and enterprise

support, gardening analogies abound. References

to growing strong firms (or plants) from new

opportunities (hybrid seeds or seedlings) or new

ventures (germinated seeds) are frequently made

to explain the processes and policies of incubation.

The application of this analogy is so strong that

other words from the same context are now applied

freely to describe various models in use in the

world of business incubation. For example,

germinators, hothouses, cold frames, and

accelerators can be identified. Table I provides a

selected terminology of incubation landscapes in

the UK. In attempting to differentiate between the

terms it may be useful to identify what are the

essential differentiating characteristics between

these analogical concepts.

This paper continues by exploring specific selected

concepts in common use as the basis for

constructing a sense-making framework to inform

a more sophisticated characterisation and

understanding of the complexity of incubation

environments and contexts. These concepts

are referred to throughout the paper as

environment-types.

An exploration of incubationenvironment-types

First, Table II presents the indicative key

characteristics of three commonly used

environment-types as applied within their

originating horticultural context.

The use of this terminology in a different context

such as business incubation implies certain

meanings and underpinning assumptions about the

phenomenon in question. For instance, in a general

sense, the term incubator may imply for those in the

incubator that they need to be cared for. Experts

who make decisions about what needs to be

provided by whom, when and for what purpose,

carefully monitor the incubatees. If the desired

outcome is not being achieved then another course

of action is required to bring the incubatee to the

desired condition. Additionally, incubatees in the

incubator are protected from harmful external

influences and the role of the expert monitor is to

ensure that there are appropriate filters and controls

in place to avoid any unwanted contamination.

The incubatee is supported to offer safety and

protection whilst in this environment.

However, there are some obvious contradictions.

Human incubators are generally used for protecting

the survival of very weak human life. On the

contrary, business incubators highly select their

entrants such that only the stronger applicants are

invited to become incubatees. The application of

such a policy seems at odds with the common

shared meaning. In this context incubators would

be selecting those firms less likely to survive and

need significant support to convert the venture into

a healthy business with a strong future. However,

the purpose of business incubators seems to provide

the opportunity for accelerating the growth and

development of the incubatee more so than could

be achieved in the external “natural” environment.

Such a purpose would appear to have closer fit with

that of an “accelerator”, which provides a

controlled environment with specific and intensive

inputs for growth but not necessarily a protective

environment, i.e. some ventures in an accelerator

will not survive.

The importance of careful application of

terminology for the incubation sector is to consider

the overall implications for policy and practice of

Table I Selected descriptors of UK incubation landscapes

UK incubation landscapes

Cold frames Hot-desks Spokes

Germinators Hubs Ideas labs

Hatcheries Graduators Managed workspaces

Hives Grow-on space Venture labs

Innovation centres Incubators Business centres

Enterprise centres Accelerators Fertilizators

Source: Adapted from UKBI, 2003


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adopting an incubator “environment-type” that has

a distinct purpose and specific set of inputs

appropriate for achieving the desired outcomes.

Policies and their implementation in practice

should be “fit for purpose”. Furthermore, the

matching of incubatees with incubation

environment-type is likely to ensure a

more appropriate fit between needs, demand

and supply.

Characterising management capabilityacross incubation environment-types

The above text implies that each incubation

environment-type is likely to require specific and

different management capabilities with respect to

role, style, process tasks and outcomes. Table III

provides an outline characterisation across the

three incubation environment-types already

presented in Table II, but within a business

incubation context.

These components provide a framework for

defining and understanding overall incubation

management capabilities. Clarity of role and

intervention style match with the overarching

policy for each environment-type. For instance,

a “hands-in” style is unlikely to be the most

appropriate for an “Incubator” environment-type,

but will be highly relevant for an “Accelerator” and

possibly a “Germinator” environment-type.

Undertaking the main process tasks relevant to

each environment-type ensures a focus of resource

usage and activity in achieving target outputs and

outcomes. Mixing process tasks across

environment-types is likely to dilute or confuse

intended outcomes.

It is possible to identify differentiating

characteristics for the three incubation

environment-types. In reviewing the overall

framework presented in Table III certain

observations can be posited.

. There is clarity in the fit across the outcome of

each environment-type with the role, style and

tasks of management.. There is clarity in the differentiation of

management capabilities between the three

environment-types.. There is an indication of incubation

intensity variations across environment-types

with possibly the “Accelerator” being

highest and the “Incubator” being lowest in

intensity.. There is an indication of scope variation across

environment-types in that the “Germinator” is

likely to be less selective and engage with a

higher volume of entrants.. There is an implied identification of degrees of

risk across types as “Germinators” are likely to

operate further from the market than other

types and hence are likely to be engaged in

higher-risk activity.

Developing and applying the above framework to

the context of business incubation enables both

differentiation of management capabilities across

environment-types and identification of linkages

between environment-types where it is appropriate

and beneficial to create a seamless flow from type

to type.

The paper now considers the usefulness of

such a framework to the role of incubation

environment-types in supporting

generic incubation goals, from three different

perspectives.

Mapping environment types againstincubation goals

Incubation programmes promote a variety of

goals. Incubation programmes often have

priorities and focus on specific target groups. From

Tables II and III, it is now possible to explore the

Table II Generic indicative characteristics of three environment-types

Incubation environment-types

Generic characteristics Germinator Incubator Accelerator

Purpose To provide a protective

environment for the germination

of new plant life

To provide a protective

environment for the early

growth of new plant life

To provide a controlled

environment for rapid growth

of plant life to crop maturity

Key Inputs Seeds and new cuttings Young seedlings and

“taken” cuttings

Seeds and new cuttings

Nutrients and water Nutrients and water Nutrients and water

Germination compost Growing compost Enriched compost

Climate control Climate control Disease protection

Full climate control

Main process Germination Growing on Intensive production

Early growth

Primary outcome New seedlings Young plants Early cropping


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potential effects of different environment-types in

specific, but common, incubation programme

goals, such as:

(1) creating new ventures;

(2) creating ventures with high-growth

potential; and

(3) supporting new venture growth.

In the context of this paper, creating new

ventures refers to those new firms that are

established as the result of an incubation

programme. Ventures with high-growth potential

will be those firms with identified opportunities for

achieving growth outputs significantly higher than

the mean for the population of all new and small

firms. Finally, the “support” category considers

the practices applied to new and small ventures to

enable those firms to achieve growth outputs that

would not have been identified or achieved without

support or could be achieved more readily with

support. Each category is now discussed and

illustrative key points are highlighted and

summarised in Table IV.

Creating new ventures

How do different environment-types affect

programme characteristics if the overall purpose is

creating new ventures?

Germinators aim to maximise opportunities

for creating new ventures through market

intelligence and developing strategic awareness.

Their skills in attracting people with venture

ideas and in motivating them towards

venture creation would lead to new venture

proposals for viable opportunities being

created. Providing a supportive learning

environment with easy flexible access is

essential. This environment-type is likely to

demand high volume usage.

The role of the incubator environment-type

would be to build the foundations and

market opportunities of new ventures through

providing local support to selected proposals

and helping to validate these in the market

thereby developing growth capability in these

new ventures. A hands-on approach to build

confidence and capability is likely to be

necessary. Developing a clear exit strategy will

be important.

There is unlikely to be a general role for an

accelerator environment-type. Their approach is

highly selective and probably too intensive for

general new venture creation activity as they are

only interested in high/fast growth venture

opportunities.

Table III Characterising management capabilities against the three incubation environment-types within a business incubation context

Incubation environment-typesManagement

capabilities Germinator Incubator Accelerator

Overall role Overall management of facility

or programme to ensure regular

flow of business ideas, latent

entrepreneurs and proposals for

new ventures

Overall management of facility

or programme to ensure seedling

growth into healthy young plants

Overall management of facility

or programme to ensure

accelerated rates of growth in excess

of natural processes and resource

inputs

Intervention style Hands-in and hands-on Hands-on Hands-in

Main process tasks Finding sources of supply of quality

ideas and people

Databases of ideas and people

Inducting into the germinator

Assessing needs and providing

required inputs

Monitoring and adjusting of inputs

to achieve desired outcome, i.e.

a viable opportunity and

realistic plan

Finding sources of supply of

strong new or young firms, viable

business plans or emerging

spin-outs

Positioning the business or

venture in a relevant incubator

Assessing growth needs and

providing input requirements

Monitoring and adjusting of

inputs to achieve desired

outcome i.e. survival and

growth rates beyond those

in general environment

Finding sources of supply of strong

quality proposals with significant

potential in targeted growth sectors

Locating in specific environments

Detailed assessment of competitive

global environments and resource

needs

Dedicated supply of resource inputs

Monitoring and adjusting of

inputs to achieve desired

outcome i.e. superior high-growth

rates and IPO

Management

outcomes

Understanding and knowledge of

the needs of individuals in bringing

venture ideas to fruition and testing

for viable business opportunities


the needs of individuals and

teams successfully bringing viable

business opportunities to market


the needs of high growth potential

opportunities and their requirements

in successfully bringing them to a

global market and achieving IPO

Outputs Viable business opportunities and

venture proposals

Sustainable new ventures Exceptional growth rate of

new ventures achieving significant

returns on investment


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Creating ventures with high-growth potential

Another common goal of incubation programmes

is the creation of ventures with high-growth

potential.

Germinators would continue their activity as

for goal (1) but now provide additional inputs

and processes that facilitate the identification

of those ideas or ventures with enhanced

growth orientation and characteristics, probably

ensuring that close links are initiated with specialist

provision at an early stage through either an

incubator or accelerator environment-type,

but probably the latter, where feasible. Exploiting

strong networks and a diverse contacts base is

important.

The incubator would seek to enhance the

venture’s potential for high growth through

provision of higher added value services than

generally available and possibly in collaboration

with an accelerator environment-type. A strong

exit policy would be in operation with these

ventures. The approach is likely to be resource

intensive and require access to a wider base of

expertise and knowledge.

Goal (2) fulfils the overriding purpose of

accelerator environment-types. They aim to take a

strong “hands-in” management intervention style

with highly selective venture proposals and provide

intensive resource inputs to achieve a fast IPO

launch with commercially significant potential

gains for taking very high risks. Accelerator types

may support and collaborate with germinator

types in facilitating the identification of embryonic

ideas and may work closely alongside Incubator

types in providing the expertise and resources to

maximise the potential of high-growth ventures.

However, fast-growth ventures may be less suited

to incubator types.

Supporting new ventures to grow

Supporting new ventures to grow, goal (3) is

another common goal of business incubation

programmes.

In supporting new ventures to grow the role of

germinator types would be to create “investment-

ready” venture proposals, such that they would be

appropriate for accessing mainstream support

provision. Investments in this context could refer

to advice and information, knowledge and

learning and support tools as well as access to

financial and human resources. Ventures would

be directed towards an incubator

environment-type.

Goal (3) is a key purpose for incubator types.

Their local support services and networks would

provide clear routes to building growth

opportunities and developing ventures able to

sustain operations at full market rates. Strong

selection and exit policies would ensure

appropriate matches between entrants’ capabilities

and potential and the resource and experience base

and management capability of the

incubator environment. Some applications may be

referred to germinator or accelerator types as

appropriate.

Accelerator environment-types can support

new ventures to grow where access to commercial

and professional expertise and networks are

Table IV Examples of indicative defining characteristics of three environment-types against three incubation programme goals

Specific programme Incubation environment-types

goals Germinator Incubator Accelerator

Creating new

ventures

Creative, learning environment

Scanning for people with ideas

Identifying lots of opportunities

Open policy, flexible?

High use, high turnover

Short-term participation

Easy access

Selective

Hands-on approach

Validating/testing opportunities

Building team capability

Strengthening venture foundations

and market access

Exit strategy

Probably not the key purpose – could be

fatal for many new firms unable to manage

fast growth and change

Creating ventures

with high-growth

potential

Fast responses to emerging

opportunities

Tools for quick assessments

Strong networks and contacts

Direct access to accelerator

Hands-on approach, individually focused

Resource intensive

Strong selection and exit policies

Global expertise

Direct access to accelerator

Hands-in approach

Low volume, very selective

Focus on money, markets and management

Direct access to capital markets

IPO goal

Highly commercial

Supporting new

ventures to grow

Investment-preparedness focus

Low-cost inputs

Wide use of networks, peers

Easy access to incubator

Local support

Building to market commercialisation

Strong networks

Exit policy

Extensive professional networks

Commercial environment

Access to global information

and opportunities

Direct access to wide ranging resources

and expertise


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appropriate. It is likely that only those ventures at

the growth-ready state with strong capability and

clear market opportunities will be supported

through accelerators.

Table IV presents indicative illustrations of

the three incubation environment-types against

the three specific incubation programme goals

explored above. These which define

characteristics help to paint a series of pictures,

like landscape shots, that inform our

understanding of what a particular landscape

may look like in the beginning so that we can

recognise, describe it, and differentiate one

landscape shot from another. Collectively they

provide a rich and varied landscape, although we

may only be seeing or experiencing any one part

of it at a particular time, depending where we

are positioned and through which lens we are

looking.

Overall the framework presented as Table IV

proposes nine differentiated incubation

programme opportunities. Through selecting

different environment-types and/or

different incubation programme goals

alternative incubation opportunities can be

defined.

Therefore, in general terms the framework does

not suggest that these should be nine isolated and

disconnected initiatives. On the contrary, the

framework demonstrates the clear potential for

synergistic and beneficial linkages across

environment-types and between incubation

programme goals. It is likely that numerous

combinations may co-exist feeding into and off

each other.

Rather, the framework provides a route map

across an incubation landscape for both

management and incubatees, and offers greater

sophistication and understanding of the potential

relationships between incubation programmes and

venture ideas. Each opportunity has its challenges

and requires that the appropriate management

capabilities (Table III) are in place for effective

incubation.

In summary, the insights presented in this

paper aim to provide a rationale for understanding

the meaning attached to business incubation

and its origins in specific metaphors. In doing

so the paper has highlighted the need for a

deeper and more sophisticated categorisation

of environment-types. In Table III, a typology

of business incubation has enabled a

characterisation of management capabilities.

Further these are considered in the context of

three common incubation goals for supporting

and enabling growing new ventures and mapped

against the three incubation environment-types

(Table IV ).

Implications of environment-typeclassifications for incubation policyand practice

This section discusses the implications of the

environment-type classifications for incubation

policy and practice. The incubation industry

and individual incubators and incubation

programmes are continually challenged in

striving for effectiveness and success within a

highly entrepreneurial and dynamic market

environment. Concerns of long-term programme

sustainability, the building of management

capacity and capability, the development of

sophisticated modes of evaluation, and the

overall integration and coherence of regional

incubation systems are current threads within

the professional and practitioner incubation

communities. But can a qualitative sense-making

framework, such as the classification proposed in

this paper offer any further illumination and

insight to those engaged in setting policy and

support practical action?

The final section of this paper considers

such challenges through the application of the

sense-making framework of environment-types

as an example of how the application of such

tools may provide value. First the germinator

environment-type is considered.

The germinator environment-type

Long-term incubation programme sustainability is

a complex phenomenon that is likely to be highly

contingent upon both incubation environment-

type and venture characterisation. Some areas of

incubation activity can be argued to be higher risk

than others. For instance, germinator types are

operating at the high-risk end of venture

development with low predictability of actual

future outcome. Additionally, embryonic ventures

are also at risk as access to capital and other

resources influence progress and growth potential,

and they may not be able to pay commercial rates

for expertise and support.

Clarifying incubation goal orientation and

characterising the incubation environment-type

will provide the basis for a more specific choice of

impact assessment indicators that are appropriate

for the particular context within which the

incubation programme is operating. Expectations

of impact may then be more appropriately mapped

against actual intentions of individual incubation

programmes, rather than seeking to apply

generalised indicators to all incubation programme

initiatives.

Such an approach may help to develop a deeper

understanding of how orientations and

environment-types impact on new and young


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ventures and the localities in which themselves,

and the incubation programme co-exist.

It may be necessary for regional long-term

achievement of wealth creation opportunities

that policy makers take a broader and more

holistic approach to their funding of incubation

programmes. The unpredictability of a

“picking winners” approach can mean that

investments in incubation could fail to address the

fundamental need for attracting and encouraging

future “winners”, i.e. the critical role of

germinators and (early-stage) incubators. This

may also affect sustainability as discussed above.

Regional coherence of an integrated incubation

system is essential for improving long-term

performance and sustainability.

Next the incubator environment-type is

considered.

The incubator environment-type

As the number of incubation programmes

increases each year across the UK the demand for

incubation management and leadership increases.

As the pressures from government and other

stakeholders increase, and as new entrants demand

improved services, then the need for effective,

high-quality management and leadership is also

high. Additionally, as the UK moves towards the

introduction of national benchmarking standards

in incubation then the performance of incubation

and management will attract closer attention.

The management intervention in incubator

environment-types is more intensive than

germinators and likely to be hands-on in style.

Building management capability is crucial.

The frameworks presented in this paper are

likely to be helpful for incubation governance,

management and leadership as they offer increased

clarity of role and purpose and enable a focus of

effort and resources. Mapping functions against

programme goals will also ensure that appropriate

performance indicators are applied.

It can be suggested that a key factor in achieving

incubation success is its embeddedness within

regional strategies for encouraging and/or

supporting the growth of new ventures with

growth potential. Most regions of the UK in

alignment with other similar regions across the

developed world aim to improve wealth creation in

their area. Regional policy makers often see

incubation programmes as a mechanism for

supporting such aims. A deeper understanding

of incubation programme opportunities may aid

holistic policy making through the identification of

synergies and the co-existence of opportunities

within broad based programmes. The three

environment-types do not have to be located in

separate physical or virtual locations, indeed

there are strong arguments for ensuring close

integration.

Finally, the accelerator environment-type is

considered.

The accelerator environment-type

Accelerator types may be more likely to achieve

high growth outcomes and potential, and may be

operating with ventures more able to pay for

services. This would suggest that sustainability is

more critical for some incubation programmes

than others and may therefore be a critical factor in

forming policy for funding future incubation

programmes. Figure 1 shows this main point.

Accelerators, in adopting strong entry and exit

policies, are continually reducing the degree of risk

to the programme funder. They are less likely to

require, or indeed be seeking, public funding,

using their access to private venture and angel

funds to support client growth opportunities.

These incubation programmes of low risk

environment-type working with growing ventures

may be more able to achieve sustainability than

those of a high-risk environment-type working

with embryonic stage ventures.

Therefore, in deciding how to support

incubation across a region it may be useful to

consider the way that incubation environment-

types may contribute to regional wealth creation.

It is likely that regional policies will strive to focus

on supporting those programmes with the greatest

potential for achieving significant outcomes, for

example, accelerator types.

A final comment

Attaining greater clarity of the complex

phenomenon of incubation may ensure that the

application of the metaphors and analogies we use

in common parlance may gain a shared meaning

amongst the growing incubation community of

practice. Such shared meanings may lead towards

the construction and implementation of focused

policies and strategies targeted at specific purposes

and ventures. The environment-type and the stage

and orientation of the venture are two possible key

factors influencing the need for public funding,

affecting the degree of sustainability, and

contributing towards the general overall success

of incubation programmes.

A Darwinian viewpoint in common

interpretation suggests that the fittest or strongest

of the species survives. We should then place many

firms in artificial environments where they can

grow strong and fit. However, Darwin’s work

suggests that it is not the strongest of the species

that survives but those best able to respond and


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adapt to their environment as quick as the

environmental changes. Slower adapters are less

likely to survive than quicker adapters. This could

imply that being in an artificial environment would

not expose the species to the same subtle nuances

of change that could be experienced by existing in

the unprotected and unsupported environment.

Those artificial environments able to recreate the

changing external environment may be able to

develop fast-adapting ventures to survive

externally as the environment continues to change.

No firm is exactly the same as another. It may be

that the creation of environment-types will be

appropriate for selected firms only. It will be the

matching of the firm and founder with the

environment-type that is likely to be critical.

The “payback” from incubation programmes

should be in increased outputs of better quality in

reduced time to market, or healthier, stronger

outputs less susceptible to debilitating processes.

If either is achieved then the investment has been

fruitful. Accelerators and incubators working with

high-growth/growth potential ventures are

probably the most relevant environment-types for

such investments, with accelerators favouring

commercial investors. Germinators on the other

hand are not ideally placed for achieving the types

of investment outcomes described above, and

therefore less likely to attract market investments.

Germinators and (early-stage) incubators

supporting the creation of new ventures and

helping new ventures to grow are arguably

operating in areas of market failure and are

generating ventures to investment-ready state for

the market. These approaches are more likely to

require subsidy to support their activity.

In summary when the incubation environment is

highly diverse, different solutions will be required

for different purposes. The selection of the nine

opportunities for creating and supporting growing

ventures will enable effective choices to be made

for matching incubation goals against

environment-types and management capabilities.

Adopting incubation opportunities within an

integrated incubation system may help in

maximising incubation impact through developing

synergies between environment-types.

A final word on the discourse of incubation.

Despite its meaning in the context of healthcare,

incubators in a business context are the contrary to

facilities for supporting the weak and the sick.

Similarly, incubators should not be survival

schools supporting those that would otherwise not

survive. The horticultural analogy enables us to

portray a rich and sophisticated landscape of

incubation opportunities. We can change the

“labels” of the environment-types to better reflect

the context in which they are being applied. Other

environment-types can be developed and added to

the framework as our understanding of incubation

grows.

A note on further research

There is a continuing need for robust empirical

work that explores the use of metaphors within

incubation policy rhetoric and practical discourse.

Particularly the language of policy-makers,

incubator managers and incubatees could be

usefully compared and contrasted to determine

how “shared” is its use and meaning and to what

Figure 1 Mapping likely sustainability success against environment type and venture orientation


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degree this creates barriers or provides

opportunities for effective interaction between

stakeholder groups. Furthermore, it would be

useful to identify the creation and source of the

discourse and specifically the apparent dominance

of metaphors to understand if this is grown out

from an emerging community that is constructing

sense-making frameworks in the absence of any

other alternative or whether this reflects a sense-

giving approach derived from imposed rhetoric.

Further, development of the classification of

environment-types and their compatibility with a

wider range of incubation programme goals would

provide deeper insights and understanding as the

application of the generic framework across

different incubation contexts.

The application of the framework as a means for

developing more meaningful assessment and

evaluation criteria would also be usefully

undertaken.

The continuing development of the frameworks

in this paper, and others, and their analysis in use

would contribute to a more sophisticated

understanding of the diversity of incubation

environments and contexts.

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Dunford, R. and Palmer, I. (1996), “Metaphors in popularmanagement discourse: the case of corporaterestructuring”, in Grant, D. and Oswick, C. (Eds),Metaphor and Organizations, Sage Publications Ltd,Beverley Hills, CA.

Grant, D. and Oswick, C. (Eds) (1996), Metaphor andOrganizations, Sage Publications Ltd, Beverley Hills, CA.

Hannon, P.D. (2004), “Incubation policy and practice: buildingpractitioner and professional capability: the case of

the east midlands region”, Journal of Small Business andEnterprise Development (forthcoming).

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Marshak, R.J. (1996), “Metaphors in organizational settings:impact and outcomes”, in Grant, D. and Oswick, C. (Eds),Metaphor and Organizations, Sage Publications Ltd,Beverley Hills, CA.

Miles, M.A. and Huberman, A.M. (1994), Qualitative DataAnalysis: An Expanded Sourcebook, 2nd ed., cited inGrant, D. and Oswick, C. (Eds) (1996) Metaphor andOrganizations, Sage Publications Ltd, Sage Publications,Thousand Oaks, CA.

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Further reading

Barrett, F.J. and Cooperrider, D.L. (1990), “Generative metaphorintervention: a new behavioural approach for workingwith systems divided by conflict and caught in defensiveperception”, Journal of Applied Behavioral Science,Vol. 26 No. 2.

Lakoff, G. and Johnson, M. (1980), “Metaphors we live by”,University of Chicago Press, Chicago, IL. cited in Grant, D.and Oswick, C. (Eds) (1996) Metaphor and OrganizationsSage Publications Ltd, Beverley Hills, CA.

Tsoukas, H. (1991), “The missing link: a transformational view ofmetaphors in organizational science”, Academy ofManagement Review, Vol. 16 No. 3.


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Enhancing customerservice andorganizational learningthrough qualitativeresearch

Peter R.J. Trim and

Yang-Im Lee

The authors

Peter R.J. Trim is a Lecturer in Management at Birkbeck College,University of London, London, UK. He teaches a number ofmarketing courses at undergraduate and postgraduate level, andis currently undertaking research into corporate intelligence andnational security.Yang-Im Lee is a Lecturer in the School of Business andManagement at Brunel University, Uxbridge, UK. She is amarketing specialist and is at present researching variousaspects of marketing strategy and international management.

Keywords

Research, Communication, Culture (sociology), Learning,Marketing, Partnership

Abstract

In order to develop a sustainable competitive advantage in theknowledge based economy, senior managers need to ensure thatcustomer relationship management is placed within a clearlydefined organizational culture that embraces organizationallearning. Senior managers are required to exhibit a proactiveapproach to leadership that results in creative solutions beingfound to solve complex problems. Open communicationreinforces the decision-making process and allows mutuallybased partnership arrangements to develop. This being the case,the network approach to business development can be viewed,as collectivist in orientation and this should allow partnershiparrangements to be developed through time.

Electronic access



Introduction

The body of marketing knowledge has over the

past two decades been extended and refined, and

as a consequence there does appear an occasion

to merge the body of marketing knowledge and

strategic management knowledge. It is also evident

that as companies enter new markets abroad and

form strategic alliances with previous competitors,

that new bodies of marketing related knowledge

will emerge. However, what is of interest is that the

subject of marketing is being transformed and is to

some degree being linked closely with human

resource management for example. This is to be

understood in the sense that the service economy

is important and as a consequence a distinct body

of knowledge has originated relating to services

marketing. Also to emerge is the concept of

relationship marketing and this is to be placed

within a cultural context. For example,

relationships are developed though time and issues

such as trust and loyalty emerge that are rooted in

organizational culture. Organizational culture

contains the cultural traits and values to be found

in national culture, and is shaped and reshaped by

a set of factors including history, religion and

technology for example.

Qualitative research

In order to understand the complexities of the

issues confronting management academics and

business practitioners, it is necessary to undertake

qualitative research that allows insights to be

drawn from various, but related bodies of

management knowledge. This further underpins

the fact that the strategic marketing concept has

validity, and also suggests that marketing

academics and practitioners, and human resource

management academics and practitioners, have a

number of interests in common. For example, a

service oriented company relies extensively upon

its employees to market the products and services

available, and consumers and potential consumers

pay attention to the value for money concept and

the quality of the after sales service provided.

Therefore, the quality of marketing staff and their

support staff are key factors in determining the

type and amount of business that will be secured.

It is not surprising to learn, therefore, that to

achieve a specific marketing objective(s), staff need

to be adequately trained and motivated, and the

necessary leadership and reward systems need to

be in place. Owing to the fact that organizations

undergo rapid forms of transformation from time

to time (expansion followed by contraction), it is

relevant to suggest that research that provides


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DOI 10.1108/13522750410557094

284

insights into how staff feel (“the feel good factor”);

how they view their own performance and the

performance of their peers; and how they view

their superior from the stance of leadership and

motivation, are all worthy of study. Data can be

collected from attitudinal surveys, however, a

crucial point to note is that if a manager accepts

that organizations undergo periods of

transformation, it would be more relevant to

suggest that the employees themselves are involved

in the research process, as it is the staff who are

going to be responsible for making the necessary

sacrifices and changes vis-a-vis working practices

for example. If senior management is determined

to reward and retain staff, it is vital that in-house

qualitative research is undertaken, that is viewed as

ongoing and relevant. Research that is viewed as

inclusive will sit comfortably within the

organization’s culture, because it will produce

factual evidence, and any anomalies can be

thought through and turned into research

objectives and questions, which then form the next

phase of the research. In-house research is useful

with respect to making matters public (feelings,

emotions, programmes and policies, for example),

and it also has the advantage of immersing the

employees in the research process, and making

them more aware of the need for change.

This paper will make clear how action research,

which is a valid and increasingly deployed form of

qualitative research, can be used by staff employed

by an organization to study and influence the

process of change that is taking place, within

the organization (Easterby-Smith et al., 2003,

pp. 10-11 and 43-44). Action research can be used

to reform an organization’s structure, as it provides

a platform for senior managers to devise and

implement new programmes and policies. Action

research has one key advantage. The research/

evaluation is “controlled by the people in the

program or community. It is something they

undertake as a formal, reflective process for

their own development and empowerment”

(Patton, 1990, p. 129).

Collectivist organizational culture

Oakland (1993) has indicated that the concept

of improvement is to be thought as a continuous

process. This suggests that the drive towards

quality needs to be placed within a specific

organizational context, and a collectivist cultural

setting appears to be the main integrating factor as

it considers how everybody can benefit and share

in the rewards gained. One is not suggesting that

individualism is to be perceived as unacceptable or

harmful, but that senior management need to have

a specific view of how goals and objectives are to be

established and realized. For example, Bae and

Chung (1997) have made some useful

observations regarding the motivation level of

workers in South Korea, and it is clear that South

Korean workers are loyal to the organization they

work for. The advantage of staff being committed

to the organization has been recognized by

Fincham and Rhodes (1999, pp. 417-418), and it

also provides further advantages in the sense that

the necessary style of leadership can be

forthcoming that produces a relationship

marketing focus. In other words, a shared

organizational culture has the benefit of allowing

staff within the organization to learn from each

other and this occurs through collaboration

(Porter et al., 2000). Collaboration may be

planned or indeed forced upon an organization.

However, once when partnership arrangements

are entered into they need to be directed and

managed so that a win-win outcome results.

Hofstede (1997) and Schein (1992) have

adopted a holistic view to culture and this allows

marketers to think more deeply about the cultural

setting in which goods are traded and partnership

arrangements are managed. One of the powerful

aspects to emerge relating to a culture is of course

the influence of religion. If one compares Japan

and South Korea, it is clear that over the centuries,

Buddhism and Confucianism have been adopted,

but adopted at different points in time and as a

consequence, the mindsets of the people from

Japan and South Korea are different. There are a

number of other factors to consider when studying

how a national cultural value system has emerged

and given rise to cultural traits that influence the

decision-making process. An important point to

note however, is that countries such as

South Korea are now undergoing a process of

transformation and this will result in new hybrid

management models being produced. One can

therefore suggest, that countries such as

South Korea will have more than one type of

organizational model in being (Lee, 2001, p. 271).

As a consequence, South Korean companies will

adapt in various ways to the challenges they face.

There are various ways in which action research

can be used to provide insights into the past,

present and future aspects of organizational

culture. Therefore, it is essential that senior

managers find ways to utilize the knowledge and

experience of existing staff, and to harness this

knowledge and experience in a meaningful way.

This assumes a degree of urgency when one

understands that organizations compete in what

can be classified as a knowledge management era,

where the speed at which information is exchanged

represents a key success factor. Politis (2003, p. 56)

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has put this perspective: “Transferring knowledge

from one person to another requires that tacit

knowledge be converted into explicit knowledge

through sharing experience, dialogue discussions,

know how ‘exteriorization’ and teaching”.

Action research can be used to explain how

communities (staff in various departments and

partner organizations for example), relate to their

community (or tribe) and the wider community

(the industry within which the organization

competes). Therefore, research undertaken to

study and highlight the impact of cultural traits,

and which at the same time is aimed at influencing

change, should be viewed as relevant and

necessary. The fact that Schensul and Schensul

(1992), p. 166 have indicated that this type of

research can be conducted over a period of time,

suggests that a whole range of issues can be studied

and explored to provide deep insights into how

organizational culture evolves; who is instrumental

in developing or changing an organization’s

culture; and how organizational culture can

complement or hinder marketing strategy

implementation for example.

Organizational learning

De Weerd-Nederhof et al. (2002, pp. 320-321)

have indicated that the word learning encompasses

individual, group and organizational learning. It is

important to place learning in a multidimensional

context because marketing managers do need to

identify which management training and

development programmes are appropriate for their

staff. A customer oriented culture will provide a

platform for relevant training programmes (Rubin,

1995) that are viewed as relevant and necessary,

which result in organizational learning objectives

being set and achieved. Becoming a learning

organization should prove beneficial in the sense

that Hitt (1996, p. 16) has indicated that there are

two interrelated reasons why organizations

become learning organizations: survival and

excellence. In a customer driven era it would seem

logical that an organization is driven by the

concept of excellence owing to the fact that senior

managers are being continually asked to search for

new ways to improve the performance of the

organization to meet specific objectives (increasing

market share and providing higher returns to

shareholders, for example).

It is becoming increasingly important to realize

that this is a day and age characterized by ideas and

knowledge, and staffs are known to work more

independently than earlier (Appelbaum and

Gallagher, 2000, pp. 43-44). By harnessing and

using the knowledge within an organization, it is

possible to turn the knowledge into a competitive

advantage and this will as a consequence allow

those in the organization to learn (Appelbaum and

Gallagher, 2000, p. 46). This means human

resource management specialists need to identify

the skill gaps of the employees and devise training

and management development programmes to

eradicate the skill gaps. Alternatively, a thorough

audit can be undertaken and if necessary, expert

labour can be hired. Appelbaum and Gallagher

(2000), p. 49) have indicated that training “must

be designed to help close the gaps between an

organization’s current reality and its future

transformation”. Therefore, it is not surprising to

note that staff in the human resource management

function need a high profile within the

organization because human resource

management specialists are required to ensure that

the organization has the required skill base. This is

a powerful argument for suggesting that human

resource management specialists should be

involved in work which is of a competitive

intelligence nature and also, human resource

management specialists should be seconded to

various departments/functions/strategic business

units in order to monitor and appraise staff on a

continual basis.

It is clear from the research undertaken that

managers considered it necessary to create an

environment of development and learning

(McKenna, 1999, p. 776). This being the case,

it should be relatively straightforward for training

and development to be viewed as an investment as

opposed to a cost. Whatever be the view, it is clear

that there are a number of advantages associated

with a learning organization. For example,

Appelbaum and Reichart (1997, p. 234) have

stated: “Learning organizations are skilled at

systematic problem solving, and each is

accompanied by a distinctive mind-set, tool kit,

and pattern of behaviour”. This suggests that a

learning organization can embrace new challenges

and is better able to confront the various threats

that materialize in the environment. Staff in a

learning organization appear to be proactive and

managers appear to be concerned about the

welfare of the employees. This being the case,

managers and their subordinates should be viewed

favourably by the shareholders owing to the fact

that as well as yielding a return on the investment

made, and enhancing the value of the company,

there is also a commitment to incremental growth

and survival in the long term.

The findings from action research can assist

senior management to develop a holistic approach

to organizational learning. It can also trigger

further research into areas that were previously

thought to be outside the scope of the research




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objective, and this may result in the original

research questions being rephrased or redefined.

This should not be viewed as a weakness, but

should be viewed as useful and appropriate.

Biott (1996, p. 171) has even indicated that:

“As projects unfold, questions are often

reformulated and new ones emerge. Interests are

reshaped, foci shift, and observations or findings

are frequently combined with self-revelation

including practitioners’ sense of the emerging force

of their own newly established identities as

researchers”. This suggests that action research

has a fundamental role to play in areas of staff

development and training, as it can be used to

integrate separate staff development courses into

an overall staff development programme. It can

also be used to highlight the skill deficiencies of

marketing staff who are employed by partner

organizations in the marketing channel. This is a

crucial point owing to the fact that external

marketing staff may have the responsibility for after

sales service provision, which includes providing

training to staff employed by the end-user.

Open communication

Communication is an important, but under

recognized aspect of management. One would

think that the better-educated workers are, the

more they will see the need to co-operate and share

information. This is not necessarily the case in

an organizational culture driven by individual

self-esteem and underpinned by the concept of

individualism. Open communication can and does

result in teamwork and the achievement of goals,

however, too much transparency can result in

jealousies and embitterment, and inevitably lead to

conflict. Conflict may be the result of individuals

competing, but it may transpire as a result of

groups competing (within a department/function/

strategic business unit or between staff at different

locations or between staff in a joint venture/

strategic alliance) for specific rewards.

Appelbaum and Gallagher (2000, p. 50) are

correct in suggesting that communication is a

critical factor with respect to the successful

implementation of change within an organization.

Appelbaum and Gallagher (2000, p. 51) have also

referred to a key point made by Senge, who is

attributed with the saying that a learning

organization encourages and embraces dialogue.

What is evident is that it is essential for managers

to invest sufficient time in developing and

cultivating relationships with staff within the

organization that they work for and with staff in

actual and potential partner organizations.

Research undertaken by McKenna (1999, p. 775)

has highlighted the fact that managers face

significant problems while dealing with cross-

cultural management issues and relationships, and

that the time put into both building and developing

cross-cultural and global relationships can be

described as enormous.

According to Geissler (2001, p. 489), integrated

marketing communications can assist marketers in

managing relationships. The objective is to view

the communications effort from the eyes of the

consumer, and this will ensure that there is “a clear

and consistent message, and maximum

communications impact” (Geissler, 2001, p. 489).

Owing to the importance associated with the

process of communication, it is necessary to place

communication within a specific context.

Communication can be thought as internal

(in-house conferences and newsletters, for

example), and as external (a custom designed

promotion strategy). Action research can and does

provide an opportunity for evaluation and is useful

with respect to appraising promotional messages

and strategies. It can also be used to study the link

between an organization’s identity and how the

leader’s/senior management team’s vision is

operationalized. Action research can be

undertaken to establish if there is a match between

the views put forward by senior management and

the views put forward by junior management, for

example. The research findings can identify the

gaps that exist, and action can be taken to close the

gaps and ensure that everybody that occupies a

management position is on the same wavelength.

Action research can also be used to establish if the

formal communication channels that are in being

are appropriate and work in the way that they

should.

Proactive leadership

Schein (1992) has made various links between

organizational culture and leadership. One of

the key points to emerge from the literature is

that the value system of top management can be

transferred to those lower down the hierarchy and

as a consequence staff throughout the organization

can improve the image of the organization by

transforming their energies into certain outputs.

Bearing this in mind, organizational performance

can be improved through ensuring that the guiding

beliefs of senior managers override the daily beliefs

of subordinate staff (Davis, 1984). This being the

case, it should be possible for new leadership styles

to emerge that lead to change being appropriately

managed. It also means that current thinking

relating to leadership style as explained by

Kakabadse (2000) needs to be viewed positively by

all the employees of the organization as




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transformational leadership is a necessary form of

empowerment that leads to new initiatives being

put forward which ensure that existing challenges

are dealt with in a positive and speedy manner.

Indeed, one of the advantages of transformational

leadership, for example, is that about changing the

status quo (Hughes et al., 1999, p. 291) and does

to a certain degree require that managers and their

subordinates are on the same wavelength. Hence,

an organization’s value system can be defined and

can manifest in a specific corporate

communication process, that underscores the

value of a specific leadership style.

According to Patton (1990, p. 157), action

research can be used to focus on a specific problem

within a programme/organization/community.

Owing to the fact that research can be undertaken

of a confidential nature, it is true to say that the

research findings are not always made available to a

wider public. Aspects of the research outcome can

and do appear in the form of summaries and

recommendations, which are then circulated to

appropriate people for further discussion and

debate (Patton, 1990, p. 158). In the case of an

organization appointing a new leader, it can be

argued that there are reasons for appointing an

internal candidate (to maintain continuity) or an

external candidate (to improve the image of the

organization and raise the level of confidence of the

shareholders). Action research can be used to

establish if it is appropriate to appoint an external

leader, and if so, who should be appointed.

The network approach to businessdevelopment

Krapfel et al. (1991) have indicated that when

appraising suppliers, it is necessary to think in

terms of substitutability, indispensability and

common interests. A key factor in determining

whether a supplier organization will be given

renewed/increased business is whether their staff

can meet quality objectives, price objectives and

delivery objectives. This means that the level of

customer service provided by the supplier

organization needs to conform to the level of

customer service provided by the manufacturer

(Geyskens et al., 1999).

Achrol and Kotler (1999, p. 151) have indicated

that marketing can be viewed from the stance of a

network integrator and this in turn suggests that

marketing managers will be involved in strategic

decision-making, for example. It also suggests that

marketers will become more involved in the

formulation and implementation of partnership

arrangements, and will participate more fully in

strategic alliances.

Marketing covers a broad range of issues.

Bearing this in mind it can be suggested that action

research can be used to study whether the product

development process needs to be changed; how

pricing policies (and especially Internet pricing, for

example) can be devised and implemented; and

how distribution channels can be reconfigured.

The issue of market entry may surface and need

attention. Regarding restructuring distribution,

it is possible to suggest that research may need to

be undertaken that involves and incorporates the

view of staff at several partner organizations. Thus,

collaborative research may be the most appropriate

way in which to obtain relevant data and

information, and may witness the global marketing

group or global brand group establishing the

parameters of the research.

Strategic marketing focus

The strategic marketing concept as outlined by

Aaker (1992) is becoming increasingly relevant

and marketing managers have to think much more

carefully about market entry decisions. In the years

ahead, marketing managers will need to spend

time devising new forms of market intelligence,

both systems and processes, to consider the actions

of organizations involved in strategic alliances, as

these forms of organizational configuration have

changed the dynamics of the market place.

A strategic marketing approach will provide a basis

for relationship marketing and this should facilitate

the customer relationship management process.

The strategic marketing approach can also be used

by marketing managers to identify synergistic

business activities (Doyle, 1994) that result in

fitness (Porter, 1996) being achieved.

Pulendran et al. (2003, p. 492) have indicated

that “the impact of marketing planning quality on

business performance is indirect rather than

direct”. This raises all sorts of questions ranging

from who within the organization is involved in the

marketing planning process to issues such as the

degree of formalization that exists in the planning

process. In some organizations it is possible that

in-house economists provide data and conceptual

inputs and in specific industries that are

susceptible to fluctuating market conditions and/or

huge investments in technology, for example, it is

possible that marketing planning is based on or

incorporates some form of scenario analysis.

Should scenario analysis or some other forward

planning device(s) be used, it is possible that

marketers work alongside economists and

mathematicians, and that the organization

sponsors some aspect of a particular university

business school’s programme offering or a line

of research or recruits a specific type of student.




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What one has to remember is that what is deemed

formal in one cultural setting may be perceived as

informal in another, or the degree of formality may

be different. With respect to the latter, it is clear

that Japan and South Korea represent collectivist

cultures, however, Japanese people consider that

disagreement should not result in open conflict

even if change is necessary whereas people in

South Korea believe that a disagreement can result

in conflict if change is necessary. This may be an

over simplification, but the key point to note is that

cultural traits found in a nation’s value system are

evident within organizations (they manifest in the

decision-making process). Hence, it is possible to

predict what might happen in a situation where the

values of one cultural group collide with the

cultural values of another cultural group. This is an

important fact to remember when studying

international partnership arrangements. To fully

understand what is happening requires that

marketing staff have a reasonably detailed

knowledge of the country from where the other

cultural group originate, and furthermore, have a

sound appreciation of how flexible the cultural

value system is of the people that the organization

is doing business with.

Action research is appropriate for studying

complex issues. It can also be said that action

research can be used to bring about reflection

within an organization. In other words, although

senior managers are keen to solve marketing

problems and move on to the next set of problems,

it is essential that there is a period of reflection that

allows those that have been involved in the

decision-making process (and their subordinates),

to think through more deeply the consequences of

their actions.

Patton (1990, p. 158) is right to point out

however, that “Research can be a highly political

activity that generates opposing opinions and

strong emotions”. Often people in positions of

power are reluctant to authorize change as it can be

viewed as an erosion of their own power base

within the organization. A commitment to action

research can change this misconception and

bring about what Biott (1996, pp. 171-2) calls

an “emergence of a new researcher identity”.

If people at the apex of the organization are

committed to ensure that more transparency

results in more effective decision-making, then

action research can be used to implement a

research culture within the organization that has

the additional benefit of encouraging the

employees to think more critically about how

decisions are made and implemented. This would

place the strategic marketing concept within its

rightful context, as the concept itself does

incorporate reflection.

It is useful, however, to pause and consider what

a researcher involved in qualitative research is

trying to achieve. For example, Gummesson

(2000, p. 116) has indicated that action research is

both demanding and far-reaching. This would

suggest that those embarking upon action research

should anticipate future problems well before they

materialize and think of ways to deal with the

problems before they become insurmountable.

One can cite many potential problems, however,

the key point to note is that the researcher may

need to formulate a contingency plan in advance of

the research being undertaken and also may need

to lobby a number of senior managers in advance

that the necessary political support is forthcoming.

Action research in organizations does expose a

number of issues and problems, and it is inevitable

that some members of staff will feel that they are at

risk. Staff who are exposed may behave in a

manner that cannot be anticipated, and that is why

it is crucial that those involved in the research

project think through carefully the possible

consequences in advance of the research

commencing.

Customer service policy

Cook (1992) has provided some useful insights

into the concept of customer service and Rowley

(2000) has indicated that satisfied customers

experience an increasing level of expectation

once their immediate satisfaction level has been

satisfied. Christopher et al. (1991) and Payne

and Frow (1999, p. 799) have indicated that it is

cheaper for an organization to retain the customers

that it has than for marketers to gain new

customers. Rubin (1995, p. 25) has indicated

that there is a link to customer retention and

profitability, and Parasuraman (1997) has made

the link between an organization providing a high

level of customer service and being able to achieve

a sustainable competitive advantage. It is

important to keep in mind that customers are

inherently different (Weitz et al., 1995) and their

differences can be gauged and monitored by

facilitating technology such as the Internet.

The Internet is considered valuable with respect

to gaining feedback from customers (Rich, 2000),

however, Trim and Tanudjaja (2001, p. 91) are

correct to point out that marketers need to study

how the Internet can be used to develop marketing

relationships. The concepts of trust and loyalty

also come to attention and Nooteboom et al.

(1997, pp. 311-15) have made a useful

contribution to the body of knowledge by stating

that the dimensions of trust need to be known in

order that the role which trust plays is fully




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understood. Therefore, it is clear that marketers

need to think in terms of mutuality if brand loyalty

is to be achieved; and this can be achieved through

accurate market segmentation (Trim and Lee,

1999, p. 65).

There is no doubt that in the years ahead,

marketers will need to undertake research that

provides a better understanding of how customers

think and what motivates them. Various qualitative

research methods can be used including focus

groups, in-depth personal interviews and small

group interviews, for example. Action research

can be used to devise customer focused support

programmes, which result in customer

expectations being met. Case studies highlighting

the best practice of customer service can be used as

in-house training vehicles, and current and future

areas of research activity can be identified.

Relationship marketing

In order to have a customer service policy in place,

it is necessary to have a customer-oriented culture

that underpins the concept of relationship

marketing (Lewis and Gabrielsen, 1998, p. 66).

This being the case, it should be possible for

marketing managers to formulate and implement a

customer driven marketing oriented strategy

(Doyle, 1994; Porter, 1996). When auditing the

marketing strategy process, it is realistic to suggest

that marketers need to have a firm understanding

of how their colleagues view the customer

development and retention process. For example,

Gummesson (1999, p. 9) has suggested that

relationship building, and in particular the

development of long term relationships, need to be

viewed from a win-win perspective. This suggests

that the relationship marketing concept represents

a paradigm shift in marketing as indeed Gronroos

(1996) has suggested. As a result of this paradigm

shift, both marketing practitioners and marketing

academics need to think in terms of new ways to

develop and test new marketing theories and

approaches.

A number of issues emerge which need

attention. For example, it can be suggested that we

are living in an image-oriented era, and because of

this, both individuals and organizations are

concerned about the way in which they are viewed

and perceived. Wei (2002) has highlighted why it is

necessary to differentiate between image and

identity, and has linked psychology to image

enhancement and perception. Market-driven

companies are implementing customer-focused

strategies and this is to provide higher levels of

customer satisfaction (Achrol and Kotler, 1999,

p. 147). In order to be effective, a long term

relationship needs to be based on mutual trust.

However, trust-based relationships need to be

based on an accurate form of market segmentation

(Christopher et al., 1994, pp. 6 and 30-1;

Gronroos, 1994, pp. 10-13). It also means that

internal relationships (between managers and

subordinate staff) also need to be managed

appropriately (Piercy, 1995, pp. 26-7).

One way in which paradigm shifts can be fully

understood and appreciated is through a research

culture. A research culture can and does get staff to

question events, outcomes and broadens the

decision-making capability of the organization.

Marketing strategists, and marketing planning and

intelligence personnel, can be made responsible for

implementing a culture change within the

marketing function. This will bring to the surface

what is referred to as self and social identities

(Biott, 1996, pp. 173-5), and will result in a

commitment to practitioner-oriented research.

Biott (1996, p. 177) has made a useful

contribution to the body of knowledge by

suggesting that: “Insider practitioner research,

like many other aspects of social interaction in

workplaces, is often shaped by caution, strategic

common sense, compromise, reciprocity and

unspoken truces. This is as much about

establishing and maintaining favourable

relationships, as it is about reducing risk and

protecting self-interest”. One logical lesson to be

deduced from this quotation would appear to be

that those involved in the action research process

need to think carefully about continued access as it

would seem that if access is denied at any point, the

research outcome may be less effective than

anticipated. Should this be the case, it might be

that the organization is less inclined to favour a

research culture and as a consequence the status

quo is maintained. What the researcher has to

understand is that the term access covers a number

of factors and the consequences associated with

power and authority need to be understood

(Hammersley and Atkinson, 1996, p. 64). When

canvassing support for an action research project,

a researcher needs to demonstrate that they know

what benefits will be derived from the research and

what assistance they will need from personnel

within the organization.

Security management

The link between security management and

marketing has not been fully explored in the

literature. Trim (2002, pp. 262-3) has indicated

that security will hold the attention of staff at the

apex of the organization for years to come. As well

as issues of fraud and industrial espionage, the

work of computer hackers will need attention.

Indeed, senior management will need to ensure




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that there is a formal security policy operating

within the company and that key staff have links

with staff employed by relevant trade associations

(Trim, 2002, p. 264). In order that the necessary

security barriers are in place, senior management

will be required to put in place a framework that

guarantees that the corporate intelligence activity

within an organization is underpinned by a

commitment to security and intelligence work

(Trim, 2001).

Security is an area of activity that can be more

thoroughly researched. At present, too few

individuals within an organization are charged with

determining security policy and implementing

security systems. There is an opportunity in most

types of organization to undertake security-

oriented research that involves staff within the

organization working with staff from computer

security technology companies. Various action

research projects can be devised and implemented

in the area of security, and this is expected to

become a common practice. For example, security

action research projects would meet the criteria

laid down by Easterby-Smith et al. (2003, p. 10)

because they would have “a direct and immediate

impact”. It would also ensure that those involved

in action research projects learn from the research

process (Easterby-Smith et al., 2003, p. 10).

Ultimately, security-oriented action research

should result in security being viewed as a core

activity and given representation at board level.

Conclusion

The strategic marketing concept is both relevant

and useful as it integrates a number of related and

semi-related bodies of knowledge into a logical way

of analysing and interpreting the actions of

companies, customers and governments. The

strategic marketing concept also allows marketing

mangers to establish how the business

environment is changing and allows various

mechanisms to be put in place to monitor

developments as and when they occur. In order to

remain competitive, a company will be required to

develop a sustainable competitive advantage that it

can maintain through time. This means that senior

management will need to ensure that the company

invests in the latest technology and furthermore,

various marketing managers are required to

identify how their subordinates can develop their

skill base through time. Marketing managers will

increasingly need to work more closely with

specialists in the human resource management

function to put in place staff development

programmes. This should ensure that staff have

the relevant skills that they need to undertake a

growing range of complex assignments.

In order to meet the objectives set, the various

marketing managers will need to be effective

communicators, exhibit a proactive leadership

style and be committed to achieving excellence.

Should this be the case, it is possible that a learning

organization culture will be developed and this will

ensure that long lasting partnership arrangements

are formulated. In order to be successful, long

term partnership arrangements need to be based

on trust, and need to be continually reinforced

through constant communication. There is no

doubt however, that the years ahead will be

reasonably unpredictable, and marketing

intelligence and planning will assume a higher

profile within companies. This means that issues

such as security and intelligence work will need to

be viewed differently than they are at present, and

that security management will become a core

activity.

Qualitative research and in particular, action

research, is expected to provide business

practitioners, with a means for establishing a

research culture within an organization. A number

of action research projects can be devised that are

aimed at improving the performance of individuals

and the organization itself. By ensuring that a

research culture materializes, it should be easier for

senior management to transform the organization

into a learning organization. Once a learning

organization culture has been established, various

initiatives can be introduced to ensure that

managers adopt a proactive approach to problem

solving. This in turn should result in greater

transparency and a highly motivated workforce.

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Literati Club

Awards for Excellence

Annelies Verdurme

and

Jacques ViaeneGhent University, Ghent, Belgium

are the recipients of the Journal’s Outstanding Paper Award for Excellence for their paper

‘‘Exploring and modelling consumer attitudes towards geneticallymodified food’’

which appeared in Qualitative Market Research: An International Journal, Vol. 6 No. 2,2003

Jacques Viaene is Professor of Agricultural Economics at the Department‘‘Agricultural Marketing’’ at the Faculty of Agricultural and Applied Biological Sciences,University of Ghent. Teaching and conducting research on Agricultural Marketing, PriceAnalysis, Agricultural Economics and Agricultural Extension. He has been project leaderof many research projects and studies about agro-marketing in Belgium, EU and East andCentral European Countries.

Annelies Verdurme in 1999 graduated as Bio-engineer (masters) in cell and genebiotechnology at Ghent University. During the next four years she was involved in herdoctoral research at the department of agricultural economics about, Consumer attitudestowards genetically modified food and the development of a segmented communication.All together seven papers were published on this topic and she obtained her doctorate inFebruary 2003. Since then she is marketing manager at Nielsen company.

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