“ W h a t i s t h e i m p a c t o f t h e o n l i n e c o n t e x t o n t h e o r c h e s t r a t i o n o f m a r k e t i n g r e l a t e d r e s o u r c e s a n d c a p a b i l i t i e s ? ”
Master Thesis from Jordi Simons who will graduate at the University of Amsterdam for the degree Master of Science in Management with a specialization in Strategy.
Student: Jordi Simons
Student’s No. 10278796
Institution: University of Amsterdam
Faculty of Economics and Business
Executive Programme in Management Studies, Specialization in Strategy Supervisor: Drs. Roger Pruppers
University of Amsterdam, Amsterdam Business School
Date: 5th of February 2014
Acknowledgement
Before I show my appreciation to all people that have supported me, I would like to convey my special thanks for the help that I gained from my beloved mother, Lidia Guillamón, during my whole study career. I started studying on an intermediate vocational education (MBO) in international entrepreneurship, worked myself up to an university of applied sciences for my bachelor in business economics and marketing and later to the University of Amsterdam for my master in management studies, with a specialisation in strategy. Managing to successfully complete these studies is like a dream come true, as I have worked 10 years to get here. This shows that even if nobody thinks you are smart, you can still achieve goals. During all the setbacks and successes on my studies, my mother was there to support me. She was of great help to me with my master thesis, helping out with transcribing the interviews. This helped me a lot as time was one of my most valuable resources, during the whole process.
I would also like to thank my supervisor, drs. Roger Pruppers, who has guided me a lot with the process and always gave valuable feedback. Thanks to his assistance I was able to get my thoughts structured on paper, which was one of the biggest challenges for me. Next to him I would also like to thank my cousin from the US, Vincent Koppelmans, PhD who gave advice via Skype in how to write my thesis. At last I want to thank my colleague, Vivienne van Oosterum, MA who supported me a lot and helped me fine-tuning my master thesis. I wish you lots of reading pleasure!
Kind regards,
Abstract
Do you like music and online marketing? Try online resource orchestration. Music is the silence between the notes, but if you do everything at the same time, you only hear one big bang and then you are done. But if you manage the silence between the notes, you will hear a beautiful symphony. This research shows how managers should orchestrate its marketing related resources and capabilities to respond successfully to the dynamically changing online context. Today’s research has learned us a lot about management theory and how
organizations can create competitive advantages, next to that we also know that the Internet is growing enormously. But no research has been done in the field of online resource
management, connecting management theory with the online environment. That is why we asked ourselves the question, what the impact is of the online context on the orchestration of marketing related resources and capabilities. To answer that question, a qualitative research based on fourteen interviews - including General-, Marketing- and Brand Managers from smaller-, medium-sized and bigger companies - was chosen to give answer to the main
research question and the ensuing propositions. Combining the literature with the results from the interviews and additional data shed more light into what the influence of the Internet is on the management of marketing related resources and capabilities within the online context. We learned that business models have to be revised and that customers are becoming more central to organizations, as the Internet has a huge impact on buyers (79%). We also learned that online is only a manner to reach goals, and is not a goal itself. Stating that possessing valuable online resources does not lead directly to competitive positions. This means that the Internet can help to create competitive advantages, especially by creating a higher findability and by improving communication, but the Internet did not made it easier. Highly skilled
professionals have a positive influence on how organizations can be more innovative, which are one of the most important resources to make a difference. Learning from this study is therefore important from a scientific point of view; we strive to open the black box of the management of marketing related resource orchestration within an online context. From a practical point of view, we want to inspire managers to be successful conductors creating the best symphony with their organization within the online context.
Index
ACKNOWLEDGEMENT ... ABSTRACT ... INDEX ...
1. INTRODUCTION ... 1
1.1RUNNING A BUSINESS IS LIKE CONDUCTING AN ORCHESTRA ... 1
1.2MANAGING ONLINE ACTIVITIES WITH MARKETING RELATED RESOURCES ... 2
1.3WHAT THIS STUDY IS ALL ABOUT ... 3
1.4ELEMENTS THAT WILL NOT BE COVERED ... 3
1.5SCIENTIFIC CONTRIBUTION FOR STRATEGIC THEORY ... 4
1.6MARKETING RESOURCES ORCHESTRATION WITHIN AN ONLINE CONTEXT ... 4
1.7MANAGERIAL CONTRIBUTION FOR ORGANIZATIONS ... 5
1.8STRUCTURE OF THE RESEARCH ... 6
2. RESOURCES ORCHESTRATION ... 7
2.1RESOURCES AND CAPABILITIES ... 7
2.2EVOLUTIONARY PERSPECTIVE ... 8
2.3RELEVANCE FOR MANAGEMENT ... 9
2.4RESOURCE ORCHESTRATION ... 10
2.5WHEN RESOURCES ORCHESTRATION MATTERS ... 13
3. ONLINE RESOURCES ... 15
3.1BEING DIFFERENT USING THE INTERNET ... 15
3.2ONLINE TRENDS AND DEVELOPMENTS ... 16
3.3DIFFERENCES BETWEEN ONLINE AND OFFLINE ... 17
3.4REVISING THE MARKETING MIX FOR THE WEB ... 19
3.5MARKETING RELATED RESOURCES & CAPABILITIES ... 20
3.6IMPORTANCE OF ONLINE RESOURCES ORCHESTRATION ... 21
3.7CONCEPTUAL FRAMEWORK FOR ONLINE RESOURCES ORCHESTRATION ... 22
4. EXPLORING ONLINE RESOURCE ORCHESTRATION ... 26
4.1PROPOSITION DEVELOPMENT ... 26
4.1.1BREADTH OF ONLINE RESOURCE ORCHESTRATION ... 26
4.1.3LIFE CYCLE OF ONLINE RESOURCE ORCHESTRATION ... 29 5. METHODOLOGY ... 32 5.1RESEARCH SETTING ... 32 5.2DATA COLLECTION ... 33 5.3INTERVIEW QUESTIONS ... 35 5.4DATA ANALYSIS ... 36 5.5LIMITATIONS ... 37
5.6METHOD SECTION CONCLUSION ... 37
6. RESULTS OF THE RESEARCH ... 39
6.1BREADTH OF THE ORGANIZATION ... 39
6.2DEPTH OF THE ORGANIZATION ... 46
6.3LIFE CYCLE OF THE ORGANIZATION ... 51
6.4ADDITIONAL DATA ... 55
7. DISCUSSION ... 57
7.1REVIEWING THE PROPOSITIONS ... 57
7.1.1BREADTH OF ONLINE RESOURCE ORCHESTRATION ... 58
7.1.2DEPTH OF ONLINE RESOURCE ORCHESTRATION ... 63
7.1.3LIFE CYCLE OF ONLINE RESOURCE ORCHESTRATION ... 66
7.2ANSWER TO THE RESEARCH QUESTION ... 70
7.3THEORETICAL CONTRIBUTION ... 71
7.4MANAGERIAL IMPLICATIONS ... 73
8. CONCLUSION ... 79
8.1LIMITATIONS AND FURTHER RESEARCH ... 80
BIBLIOGRAPHY ... 82
1. Introduction
1.1 Running a business is like conducting an orchestra
Picture yourself in an orchestra, where you have artists playing the music and the conductor who directs them. And then, there you are. Determining the value of the whole process. From a managerial perspective you see lots of commonalities between conducting an orchestra and managing a business.
During the Management Studies courses, it became clear that there are different points of view when we are talking about doing business. A company for example can focus on its resources (the assets it has within a company) or on the market (opportunities in the external environment). The conductor decides where the focus will be, just as a manager does in a company. Both do their best to let the audience enjoy as much as possible.
When I worked at T-Mobile, I had the assignment to optimize the work processes of the E-Commerce department. In this department lots of online marketeers, developers, content editors, sales managers and so on were working at the same place. The idea was to connect these people to work more efficiently and effectively together. But I did not know how to orchestrate the firm’s resources within this online context, for example by using the Resource Orchestration framework (Sirmon, Hitt, Ireland, & Gilbert, 2011). This is a model that
enables managers to orchestrate resources by focusing on the breadth, depth and life stages of an organization. There was and still is no answer into how to manage marketing related resources using the Resource Orchestration framework, within this so-called “online context”. From an online perspective, the existing marketing mix model had to be revised to be
applicable for online marketing activities. This happened with the introduction of the web-based marketing mix framework (Constantinides, 2002). In this framework the existing 4 P’s: product, price, place and promotion were transformed into the 4 S’s: scope, site, synergy and system. This enabled organizations to address the issue of building the organization, human and knowledge infrastructure needed to efficiently operate online.
Now that there is a web-based marketing mix, we know what aspects are important when online marketing resources are deployed. Like knowing the scope of your company, who we are, what our purposes and customer expectations are on the Internet and how we can
motivate the customer to do what we wish them to do. But you also need to take the processes that have to be managed within an organization into account. Also think of the integration of the front, back and third party office. Partnerships are important to outperform competition, if a company chooses to focus on its core.
But we still do not know which resources are needed and how to manage (orchestrate) these. So the question now is: how does a company orchestrate its marketing related resources and capabilities to deliver the highest customer value within an online context?
At this moment there is no specific answer to that question. What is known is which
marketing resources (such as knowledge, financial, physical, human, organizational etc.) and capabilities (such as dynamic, cross functional, specialized and architectural) can be used to gain marketing and business performance (Morgan, 2012). To get a better understanding of marketing resource orchestration within an online context, it is inevitable to do research in this field.
1.2 Managing online activities with marketing related resources
Linking the web-based marketing mix framework (Constantinides, 2002) and the marketing resources and capabilities framework (Morgan, 2012) with the resource orchestration framework (Sirmon et al., 2011), gives insight into what a company needs to successfully orchestrate its marketing related resources within an online context.
In the following chapters you will be guided through a journey of finding the answer to successful resource orchestration within an online context. During this journey there will be a focus on the creation of a durable competitive advantage, bearing in mind the rapidly
changing dynamics of the online environment. This means that not only the achievement of a good working organization is enough. There must be a clear answer that really enables companies to know how to be different; by structuring, bundling and leveraging marketing related resources within an online context.
A lot of research has been done in the field of management theory, this is important because organizations strive to be different and therefore competitive as a company. Next to that we nowadays see that the Internet is growing enormously and that the Internet usage is relatively high in Europe. Unfortunately no research has been done in the field of online resource management, connecting management theory with the online environment. That is why there is a gap and why this research will be meaningful to managers, who are responsible for the strategic management of online marketing resources.
Managers want to know how to deliver the highest value to their customers and receive valuable response back using their online resources. An example of a valuable response can be a completed form on the website or a placed order in the webshop. The exchange of so-called “value” is also known as a “conversion” and is the most important factor in this research, as it reflects the achievement of the goals of an organization or department.
1.3 What this study is all about
Existing literature provides insights into how value can be created and captured from a strategic point of view, placing the customer central in the organization and answering how a company can be different. The online context is also becoming more important and resource orchestration within an online context might help. At last we also know what is needed to gain firm performance using marketing resources and capabilities and that process
management within an organization is highly important. But what we do not know yet is an answer to the following research question:
“What is the impact of the online context on the orchestration of
marketing related resources and capabilities?”
1.4 Elements that will not be covered
There are lots of activities that are related to resources within the online context that can be investigated. Choosing only a few that are highly important, will provide the most valuable information. This because doing profound research in a new area, starts by focusing on the foundations of a certain topic. In this case the foundations of online resources orchestration. This means that we want to get more insight into being successful by effectively managing
marketing related online resources. So the focus will be on the breadth, depth and life cycle effects of an organization according to the “resource orchestration framework” of Sirmon et al. (2011), knowing how to structure, bundle and leverage marketing resources and
capabilities so companies will be able to implement its web based marketing mix.
1.5 Scientific contribution for strategic theory
The resource orchestration framework was chosen as a basis for this research because of its practical relevance, authors and its novelty. The authors have done a lot of work in the past few decades collecting empirical data to develop the resource orchestration framework using a meta-analysis. Author David G. Sirmon has a MBA and a PhD degree and is currently Associate Professor at Texas A&M University. He is known as one of the best professors in the world in Strategic Management and Entrepreneurship.
Using this strong basis gives the opportunity to add something new that will be of real value, other than building upon a less valuable theory and framework. Targeting at marketing related resources shapes focus that is needed to deliver valuable information. Information that is relevant by looking at the online developments. Narrowing down to the online context also makes the results even more relevant for managers, who are concerned with online marketing activities. The decision to focus on narrowing down is also made to deliver results that are meaningful, relevant and even more reliable than aiming to a more general topic.
During the research lots of other - perhaps new - questions will arise. For example: How to execute the strategy in a more operational manner? How can a company be ambidextrous? Or even how creative management creates competitive advantage? These questions might
slightly be answered during the research as these questions are closely related to the research question, but the research question will always stand central. It is possible that some of these questions might be answered in the practical implications part in the end of the research, where ideas for further research will be given.
1.6 Marketing resources orchestration within an online context
The added value of this research is that more insight will be given into today’s literature on the evolutionary theory. This is the theory behind the question how a firm can sustain superior performance in rapidly changing industries, also known as the theory that is concerned with
the creation of dynamic capabilities (Teece, 2007). Dynamic capabilities are used to continuously create, extend, upgrade and protect the company’s unique asset base. This means that the capabilities of an organization enable to sense and shape opportunities and threats, to seize opportunities and to maintain competitiveness.
Next to that, this research will build upon earlier research by Sirmon et al. (2011), applying the resource orchestration framework to create competitive advantage in an online context. As this topic is highly related to marketing literature, the conceptual framework of Morgan (2012) - which is about the foundations of marketing resources and capabilities - will be utilized while building upon the literature of Sirmon et al. (2011). The Web-Marketing Mix model of Constantinides (2002) - which is about Web-based marketing mix - will be analysed during the whole journey, finding the answer to the research question.
Let me explain this a bit more in detail, in order to create customer equity - which is one of the greatest goals and is the total of discounted lifetime values of all the firm’s customers (Vogel, Evanschitzky & Ramaseshan, 2008) - through the Internet, marketing related online resources are important. Due to the fact that: Online marketeers are concerned with strategic and operational issues of Internet marketing (Constantinides, 2002). So again this shows how important marketing related resources are during the execution of a strategy within the online context. You cannot ignore marketing while you sell products or services online
(e-commerce) or deliver customer service without an online marketeer. Integration and synchronization between and within marketing related activities within the firm’s infrastructure is important (Constantinides, 2002).
1.7 Managerial contribution for organizations
From a more practical point of view, managers will finally get clear guidelines to manage their organization by strategically implementing online marketing resources. This means that a manager will not only know how companies can be different, but also know how his organization can or cannot manage their online activities to influence online business performance. In which online business performance is the successful exchange of an online delivered value from the company with an action back in return from a (potential) customer.
1.8 Structure of the research
In the upcoming chapter you will be guided to a journey where you will meet the resource orchestration framework, so that you will know exactly what we are talking about. After reading the theory about resources and capabilities, the briefly introduced evolutionary perspective will be discussed, as this is one of the most important topics of today’s
management literature. Also the relevance for the management will be discussed. So that you know why resource orchestration really matters.
2. Resources orchestration
This chapter will give insight in today’s strategic management literature, which is about creating and capturing value by successfully deploying resources and capabilities. What this exactly means and why managerial actions are becoming more important will be discussed.
2.1 Resources and capabilities
Every company has people, machines (such as printers), places to work at like an office, systems and so on. It can also be stated that the internal factors that strengthen the company are coming from company’s resources. A capability on the other hand is the ability to deploy available resources of a firm into product or service characteristics that are valuable in the eyes of product selectors (Bhansing, Leenders & Wijnberg, 2012). Or in other words, resources are the inputs used by firms to create products and services and capabilities are a firm’s skill at using its resources to create goods and services (Pinkse & Pruppers, 2010). An example of a resource is a manager. You can define resources into tangible resources like a plant or finance and intangible resources like information, knowledge and reputation (Sirmon, Hitt & Ireland, 2007). A strong brand name is an intangible asset too, which helps a company to outperform rivals (Collis & Montgomery, 2008). An example of a capability is management’s strategic decision-making. You can define capabilities into activities like the use of technology, innovation and training and procedures like routines, tricks of the trade and knowledge management (Teece, 2007). So a firm's resources and capabilities include all the financial, human, physical and organizational assets used by an organization to develop, manufacture and deliver products or services to its customers (Barney, 1995). A company thus needs to have resources and capabilities in place to be able to deliver products and services, whereby in an orchestra the conductor wants to let the audience enjoy as much as possible.
But how can we let the targeted audience enjoy? From a strategic point of view, it is about being different (Porter, 1996). Especially when we are talking about innovative organizations with an entrepreneurial mind-set (Foss, Klein, Kor, & Mahoney, 2008).
Being different, that is what distinguishes a successful company from another. But how a company can achieve this is still unknown. Management literature has been investigating this question for years. Even if we know what the differences between companies are, we still need to know how to achieve these. Knowing how to manage this in the long-term is vital to stay different in order to create a sustainable competitive advantage.
According to Barney, sustained competitive advantage (SCA) can be achieved when a company acquires and controls valuable, rare, inimitable and non-substitutable (VRIN) resources and capabilities (Barney, 1991), plus the organization being able to absorb and apply them (Kraaijenbrink, Spender, & Groen, 2010). The VRIN framework has been
transformed into the VRIO framework, stating that the organization must be well organized in order to capture value from the resources it has created (Barney & Hesterly, 2011). Some authors state that attaining a competitive position or series of competitive positions lead to superior and sustainable financial performance, clarifying that the company has a cross-sectional (short term) and longitudinal (long-term) problem, in which the “five forces model” can help to be competitive within an industry (Porter, 1991). Implicitly saying that companies should adjust to the environment, managing the value chain and its systems in order to react to opportunities.
So when a manager is compared to an orchestra conductor and he or she wants people to value the delivered goods or services as high as possible, we should manage resources in a different way in order to create a sustainable competitive advantage. Makes sense right?
2.2 Evolutionary perspective
The resource-based view does not look enough into the market, neoclassical perspectives have learned us how markets shape the game, but the resource-based view does not focus on this but more on internal factors: restructuring resources and capabilities (Kraaijenbrink, et al., 2010). From a more evolutionary perspective core capabilities become more important (Nelson, 1991), acting on market opportunities using the core competencies a firm has. This is evolutionary because of the fact that there is attention on managers’ resource-focused actions (Sirmon et al., 2011). Also the fact that sustainable competitive advantage can be achieved is questionable in my perception, as monopolies will not survive when barriers disappear. Nowadays building dynamic capabilities becomes more important, monitoring trends and
developments in the market and reacting to them through innovation (Christensen, 2001). Having the right resources does not have to lead to competitive advantage and again sustainable competitive advantage is therefore not really achievable. Believing that
competitive advantage leads to performance differentials is ok as long as it helps to achieve high performance (Powell, 2001). What I really believe is that firms must have a more entrepreneurial mind-set (Foss et al., 2008). I believe this because entrepreneurs are known for their innovative mind-sets and their managerial actions in rapidly changing dynamic environments. As a manager being creative, alert and judging when using its resources is most important. This because only then you can create dynamic capabilities that are real unique as there is no one who is the same. Just think of Steve Jobs, former CEO of Apple. As in fact every manager or CEO is different and sees the world from another perspective (interpretive asymmetry). According to Foss et al. (2008) the evolutionary theory embraces
entrepreneurship as it stands for the production of a collective output that is creatively superior to individual output. Which means that the mental models of managers are heterogeneous in which synthesis brings together the interaction between heterogeneous resources and managerial actions to produce services from resources to gain entrepreneurial rents. This shows that subjectivism of managers gave influence in the production process of an organization and therefore have to be taken into account while developing and executing a strategy.
2.3 Relevance for management
A lot of so-called “schools of thought” have been discussed in the past few years. Schools that are concerned how managers look to management theory. Think for example of the design-, planning- and positioning school. The first one, the “design school” is about strategy as a conceptual process, which separates formalization and implementation as it used a top down hierarchy whereby the CEO has all the control (1960's). The second one, the “planning school” is about strategy as a formal process, which aims at lots of steps to analyse and develop strategies (1970’s). The last one of the examples, the “process school” is about strategy as a collective learning (1980’s), which is concerned with the implementation of a strategy whereby theory and practice not always are the same. In particular the process school might be interesting, as it claims that the process comes before the content. It states that the role of leaders will focus more on the management of the process of strategic learning
(Stoelhorst, 2008). This means that the question on how strategies can effectively be developed is more important than how strategies can contribute to competitive advantage. Strategic choice under conditions of bounded rationality shows the importance to know how managers can be biased in making decisions (Hambrick & Mason, 1984). Every situation has a different impact on managers because of differences in values and cognition that shape the managerial perceptions in order to make strategic choices.
Model: Strategic Choice Under Conditions of Bounded Rationality (Hambrick & Mason, 1984).
Identifying organizational performance is both an objective and subjective phenomenon. Information can of course be interpreted differently and that also accounts for the end goal, using different selection system orientations (Bhansing et al., 2012). For example one
manager can focus on delivering the best deals for the customers, giving almost al the margin away and gains market share, while another manager chooses to focus on profit margin, focusing less on market share. The financial end-result can be the same, but you see that the approach is a whole different story.
From an evolutionary perspective, organizations need an entrepreneurial mind-set, culture and leadership, that manage resources strategically using creativity and innovative development to create wealth, which is the competitive advantage of firms (Ireland, Hitt, Sirmon, 2003). How managers create the creation of wealth will be discussed in the next paragraph.
2.4 Resource orchestration
In the previous paragraph resources and capabilities, the evolutionary perspective and the managerial relevance have been discussed. It can be stated that when we read and link these paragraphs, we can say the following: strategically managing resources and capabilities needs managers with an entrepreneurial mind-set in order to create core capabilities that create
wealth, which is the firms’ competitive advantage. So that means that organizations need to give attention on managers’ resource-focused actions (Sirmon et al., 2007).
Resource orchestration combines resource management and asset orchestration into a theory that aims at the role of managers’ actions to effectively structure, bundle, and leverage firm resources (Sirmon et al., 2011). That means that this theory is not about “having” the right resources, but about “picking” the right resources. From a more evolutionary and dynamic perspective a company should structure its resource portfolio, bundle its resources to build capabilities and leverage these capabilities to exploit market opportunities (Sirmon et al., 2007).
The asset orchestration consists of two primary dimensions: the searching and selection process and the configuration and deployment of (co-specialized) assets. These are concerned with the acquisition of valuable resources (creation of value) and focus on to leverage these resources (capture of value). It is argued that the breadth (scope of the firm’s departments), depth (levels of hierarchy) and life cycle effects (stage of maturity) affect how managers manage their firm’s resources to maximize the likelihood of achieving a competitive
advantage (Sirmon et al., 2011). This because of the fact that a young company, which is still in the start-up stage, reacts very differently on market changes than a company that is in the decline-stage. Logical as the focus is on variability instead of conserving resources to survive. But when and how do you have to acquire and manage resources in a way that you can deploy them, in order to create relevant value for your customers? According to the Research
Orchestration framework (Sirmon et al., 2011) the answer is to be found by comparing two theories of resource management and asset orchestration. This model shows that not only searching, selecting, configuring and deploying resources is important, you also have to structure, bundle and leverage them while you are in the same process.
Model: Resource Orchestration framework (Sirmon D. , Hitt, Ireland, & Gilbert, 2011)
Earning returns while successfully orchestrating assets and configuring capabilities, involves the breadth, depth and life cycle effects of an organization. Therefore it is important for corporate- and business-level strategies to know how to do this to achieve competitive advantage. Next to that it is important to know that a company has to earn series of
competitive advantages, as competitive advantage itself is only temporary and can quickly fade away when competition strikes (Sirmon, Hitt, Arregle, & Campbell, 2010). Also the orchestration on each stage of a firm’s life cycle is important, as it is dependent on the managerial actions with one or between multiple resources. Understanding the requirements of success helps to increase growth and prevent decline of the business. Synchronization between all levels of an organization is highly important to ensure that the type of strategy is well employed (Sirmon et al., 2011).
This research was done based on decades of empirical work and by recent meta-analysis and focused on managerial actions during successful integration of the firm’s resources to
maximize the likelihood of achieving a competitive advantage. The only problem is, that it is hard to tell when a competitive advantage is achieved, stating that there is no clear “end result”. Although this seems like a problem, this theory still is important because of the fact that it gives structure into how to manage resources, and for this research especially
marketing related resources within the online context. Those seem to be important in the online field and will be discussed more in detail in the following chapter.
So this means that this research will investigate what to search for and or select to gain valuable marketing related resources and capabilities and also how to deploy these within the online context. Then we also want to know how we can structure (i.e. acquiring best people) these resources so that we know how we can bundle (i.e. enriching people) them in order to leverage (i.e. coordinating people) these. This all with the knowledge that the authors argue that breadth, depth and life cycle affect how managers manage their firm’s resources and capabilities in order to achieve competitive advantage.
The following overview will give more insights into what the framework is about. This will give more overview what resource orchestration exactly means:
- Breath (resource orchestration across the scope of the firm)
o Corporate strategy, business strategy and competitive dynamics. - Depth (resource orchestration across levels of the firm)
o Bottom up and -down and bidirectional strategy.
- Life cycle (resource orchestration at various stage of the firm maturity) o Start-up-, growth-, mature- and decline-stage.
2.5 When resources orchestration matters
Not having a clear end result does not mean that literature is not important. In this case it shows that there is a difference between actions of managers within resource-based logic (Sirmon et al., 2007). It can also be stated that when we know how to structure, bundle and leverage the firm’s resources with the purpose of creating value for customers and
competitive advantage for the firm, a company can be seen as successful if for example the predefined targets are achieved. Such as more traffic to the website, a higher sales amount, increasing amount of form enquiries, more e-mail subscribers or likes on Facebook.
Structuring resources means that a manager acquires, accumulates and divests resources from the firms’ resources portfolio. For example: hiring interim managers to manage a market introduction of a new iPhone. Bundling resources focuses on the integration of resources to form capabilities and concerns on the stabilization, enrichment and the creation of new
capabilities. For example: organizing team meetings, improving communication infrastructure and working together with other departments or organizations to strengthen the output. And at last leveraging involves sequences of processes to exploit the firms capabilities and profit
from market opportunities, including mobilizing, coordinating and deploying to exploit the capability. For example by outsourcing the logistics, so that customers can get their ordered products faster and against lower costs. This all with the goal to create value and develop competitive advantages by establishing synchronized processes (Sirmon et al., 2007). Resource orchestration thus enables a manager to use a resource advantage, market opportunity or entrepreneurial strategy.
In the following chapters we will go deeper into the resource orchestration framework by giving more insights into the online context. Which is the aim of this research and will be linked to marketing related resources and capabilities. In that case you will know more about the relevant theory that is linked to marketing resource orchestration within an online context.
3. Online resources
This chapter will give insight in the trends and developments in the online environment, which is the context of this research. Furthermore we will talk about the most important marketing related resources and capabilities, so that we can link these to the resource orchestration framework.
3.1 Being different using the Internet
In the previous chapter we discussed that being different is an important factor to achieve a competitive advantage. This can be done by acquiring and controlling valuable, rare, inimitable and non-substitutable (VRIN) resources and capabilities (Barney, 1991). But in what resources does a company have to invest? That depends on the strategy of a firm, which can be influenced by its environment. In this case we are going to talk about a growing environment existing of an increasing number of people who use the Internet.
The online context is an environment where the Internet plays a big role. It can be seen as the contrary of the offline (real) world. Internet enables people to quickly find information and interact with other people. This because the distance between individuals and organizations disappears.
The Internet can also be very interesting for promotional activities, as an organization can reach lots of people in a short amount of time and that only with one message. Using the Internet for online advertising has just begun, only a decade ago. The first online
advertisement appeared in 1993, thirteen years after the creation of the Internet (O'Reilly Media, 2008). O’Reilly exploited its marketing resources by introducing the web’s first ad-supported site called: “Global Network Navigator”.
Besides promoting online, selling online is becoming more and more important. Over the past few time online retail grew with $177 billion in 2010, last year with $226 and will be
expected to be $327 in 2016. Showing a growth of 158% (Forrester Research Online Retail Forecast, 2012). This shows that selling online (also called online retail), allowing consumers to directly buy products and services through the Internet, is an interesting distribution
channel. Acquiring the resources needed to use the online sales channel might therefore be an important topic for the agenda of the online resource conductor.
3.2 Online trends and developments
In this section the importance of the Internet will be emphasized, by showing recent trends and developments where companies can benefit from and make a real difference.
One way to be different is to make effective use of the fact that the Internet usage in general is growing enormously. In Europe 75% of the people between 16 and 75 years use Internet; The Netherlands and Sweden are pioneers with 94%. On average 35% of the people in Europe also use the Internet on a mobile device (Eurostat in CBS, 2013). Comparing the 94% of the Dutch and Swedish people, on average 41% of the worldwide population have Internet access with a household penetration of 28% (International Telecommunication Union, 2013). So the Internet is booming and offers real potential to offer value to customers. To enjoy from this potential, companies must know what potential the Internet exactly offers. Recent research by PricewaterhouseCoopers shed more light at the online opportunities for businesses, which will be addressed hereafter.
Receiving feedback has become easier since the introduction of social media. Organizations nowadays have to change to manage the information within the firm, as the customer is able to give information via social media. Social Media will soon also become an indispensable retail channel, most importantly for attractive deals, promotions and sales. Stores will become mainly showrooms in the future, lots of shoppers say they do research online, but a majority still prefers to buy products at a physical store. The tablet will soon overtake the PC as the preferred online shopping device. There will be an increasing interest into buying at international shops; this due to the smaller getting world, where Beijing and Shanghai is growing enormously. Showing that the orientation process and the actual shopping behaviour shift from offline to online.
Funny about this research is the reason why people shop online, in Brazil the reason is of the lower prices and better deals, in the Netherlands it is because of the higher level of
convenience (fast checkout and 24/7 access). China will be the future model of online retail, its multichannel and online model is unique as 80% shop monthly online with only 61% in
comparison on global level. There will always be a preference for domestic retailers, pure players like Amazon will always scale advantage over domestic online pure players. Retailers are better positioned than brands, as they are closer to the customer, but it seems that
consumers shop more often directly from manufacturers and no longer distinguish between retailers and their favourite brands: 35% of shoppers buy directly from brand sites. This means that online retail is cannibalizing sales in other channels, what is interesting is that online shoppers spend more when they use multiple channels.
A lower price is still the main driver of customers to spend money at favourite retailers, but customers value quality and innovative brands over lower prices when they shop at favourite multichannel retailers. So there is still a way to not only compete on price. Research also shows that fast and reliable delivery, innovative products and innovative marketing increases customer spending a lot more (>10%). Exclusive access to products and websites (also webshops) that store personal information, are also likely to let a customer spend more (1-10%). What should be prevented is giving advice on products; this has a negative impact on the spending pattern of a consumer (PricewaterhouseCoopers, 2013). This probably because of the fact that customers do not believe that companies are fully honest. They just want to sell their products and promote the products that deliver the company the most value. Given this information companies have the opportunity to differentiate by making use of the Internet as a marketing tool. Going online also means transforming an organization, as it needs specific co-specialized resources in order to create competitive advantage (Sirmon et al., 2011). Which means that a company needs to manage assets that are bilaterally dependent to each other, such as a train and its rails.
3.3 Differences between online and offline
Now that we know that the Internet has valuable opportunities to offer, we compare the online environment with the offline environment. After this comparison a new marketing mix will be presented to show what it means to go online, as it is all about: having the right resources in place. That is why marketing related resources and capabilities will be discussed, as we see that the Internet is an important marketing tool. This because of its nature in supporting the business, the available customer information and transforming customer needs. Once you read
this chapter, the differences between online and offline will be clearer, allowing managers to orchestrate their resources in a more effective way.
The biggest difference between online and offline, or also called digital and non-digital marketing is “costs”. In online marketing the cost per incremental contact is effectively zero. This in the contrary with direct mail that does not make use of the Internet, in that case the cost per direct mail increases when more people are targeted. Next to that, the mind-set is different, as people target a smaller group for offline direct mail to make it as relevant as cost-efficient as possible. Whereby you can send lots of personalized and customized direct mails to a wider audience easily online. With e-mail marketing (also known as E-DM or electronic direct mail) it works the other way around, as people do not have the economic necessity to target the audience, and give multiple personalized offerings to the a larger group of people who gave permission. One can question if the meaning of “campaign” is losing, due to the fact that marketers have to reverse their marketer-centric approach. Thanks to dynamic content technology, single communication with multiple offers can be specified to
individuals. Also think of multichannel, in which people now can use the website or online store to shop products that were seen offline. Stating that there will always be an offline and online environment and that they will merge with each other as it becomes more accepted (Johnson, 2011).
These examples show that generating and converting leads is different between the online and offline context, as the costs of contacting existing and prospective clients vary between online and offline marketing tools. Deploying the most effective resources helps to lower costs and make the process more efficient. This can be done for example by developing a webshop (e.g. Magento) or newsletter application (e.g. MailChimp) that is integrated with a customer relationship management (CRM) and enterprise resource planning (ERP) system. In that way there is more control on the process and the outcome of online commercial activities.
But also bear in mind that customer support changed due to the Internet. Customers nowadays ask questions using online chat applications and post questions on Social Media such as Facebook and Twitter. Allowing companies to not only lower costs but also increase the customer experience by delivering valuable support online.
One can conclude that when a company is aware of the trends within the online context and differences between online and offline marketing, it knows that successfully establishing and transforming the organization for the online environment will lead to more effective business. And to achieve more effective business, a company needs to acquire, combine and leverage specific resources and capabilities. But what resources and capabilities exactly, is still an unanswered question for a lot of managers.
3.4 Revising the marketing mix for the web
The Internet changed the way in which companies look at their organizations. This means that companies have the opportunity to choose new distribution channels for sales and support, other logistics for delivery, modern working hours and places and so on. The point is that online has also an enormous impact on how we do marketing. The famous marketing mix existing of the four P’s (product, price, place and promotion) of McCarthy (1960) had to be revised in order to be applicable for the online context. Transforming these P’s into the 4 S’s: scope, site, synergy and system. This new web-based marketing mix identifies the following critical factors: Scope (strategic issues), the Site (operational issues), the Synergy (integration into the physical processes) and the System (technical issues).
Especially the Scope deals with the fact that the propositions must be proprietary, hard to be imitated by competitors and flexible enough to adapt easily to change the external
environment. The Site is concerned with the customer experience and is the most important communication element for e-commerce and uses websites as a communication platform. Synergy enables companies to connect the front- and back office to each other, integrating the e-commerce physical support activities (customer service, order processing, fulfilment and reverse logistics) into existing organizational processes. But also think of third parties such as search engines (i.e. Google), or co-operative partners that promote content (i.e. affiliate network) and online advertising. The System covers all the technological issues within a company, think for example of web site administration, maintenance and service, web server hosting (place where the website is stored at), site construction, content management, site security, transaction functionality, collection, processing and dissemination of web site traffic and transaction data and system backup (Constantinides, 2002). These Activities are different in comparison to the offline context and need special attention and coordination.
Model: The 4 Ss of the Web-Marketing Mix framework (Constantinides, 2002)
3.5 Marketing related resources & capabilities
There has been talked a lot about the importance of marketing when companies do online business, whereby the Internet even revised the marketing mix into a web-based version. But we also want to know what these changes mean for an organization. This will be revealed, by opening the black box of: marketing related resource orchestration within an online context. Within a company there are lots of resources and capabilities, just like a toolbox full of tools, but do you know exactly what tools you possess? Try even to imagine how you define all those tools or so-called resources and even more difficult try to relate each resource to a certain activity. This seems almost impossible, as organizations do not always have a clear overview. Mapping a firms resources and capabilities cleans up the huge mess full of tools, enabling the conductor to pick only its most valuable resources and deliver the highest value for his audience in the orchestra.
Research into the marketing related resources and capabilities that are important to create customer value online is needed to answer that question. At this moment there is no specific answer to that question. What is known is which marketing resources (such as knowledge, financial, physical, human, organizational etc.) and capabilities (such as dynamic, cross functional, specialized and architectural) can be used to gain marketing and business performance (Morgan, 2012).
Model: Conceptual framework linking marketing and business performance (Morgan, 2012)
Continues adaption on the external environment is needed to survive, which means that updating the knowledge through training programs is needed. Next to that human resources must be flexible as the tasks might vary over time when demand for specific channels change. Think for example of shifting into social media platforms using cross-medial approaches, where customers get discount coupons that they have to cash in online in order to receive special offerings. Or customers that have a demand for chat support during the day and later in the evening want help via Facebook. Demand is changing and that means that the
deployment of resource also should change.
Alignment between the strategy formulation and execution is needed to gain positional
advantages in order to gain market- and or financial performance. So that companies can learn and continuously improve the implementation of marketing resources and capabilities.
3.6 Importance of online resources orchestration
The increasingly becoming more important online context, developments and differences between online and offline marketing show that there is something out there. As soon as a company has decided to go online, it is important to know what resources there are available, what goals a company wishes to accomplish and what activities will be needed to achieve
these goals. Streamlining the resources portfolio through resource orchestration will help, and that is exactly what will be discussed during this research. The online context enables
managers to shape a new form of competitive advantage reacting to the dynamic environment using its most valuable resources.
But, the question is still how to use the most valuable resources? I will illustrate the importance of this problem with an example of my time at T-Mobile, where I had the
assignment to present a plan to improve the work processes of the online department, which I have told earlier. While creating my advisory report, I had to deal with lots of marketing resources and capabilities, which was very hard because I had no idea how to manage all these resources. I had no overview and there was no framework out there to help me. This example shows that it could be interesting to know how to manage resources using marketing related resources and capabilities within the online context.
And still we do not know how to be different within an online context. But we will get there, just consider for now a CEO of an organization who is responsible for the long-term success of a company, what are his or her drivers to achieve this? One could say that doing the right thing is what a CEO should do but what is the right thing? From a marketing perspective creating customer equity is one of the greatest goals, which is the total of discounted lifetime values of all the firm’s customers (Lemon, Rust, & Zeithaml, 2001). This so called customer equity brings together customer value management, brand management and relationship / retention management (Vogel et al., 2008). Some authors state that customer value is the next source of competitive advantage (Woodruff, 1997), which means that an organization puts the customer central into the whole organization.
That means that when a company strives to successfully orchestrate its resources online, it has to manage their online marketing related resources and capabilities to create customer value.
3.7 Conceptual framework for online resources orchestration
Managers want to know how to orchestrate the firm’s online resources in order to achieve a sustainable competitive advantage. Knowing this is still relatively unknown, commonalities between current literature on the “resource orchestration framework” of Sirmon (2011), the
latest developments on the rapidly changing online context, its dynamics and recent literature of marketing resources and capabilities will be connected in this section.
But before we propose a new conceptual framework for marketing related resources and capabilities within the online context, I want to make you aware of the following generally known facts. In 1999 the Economist taught us that the Internet would turn the business upside down. This because of companies could make direct connections with customers and that buyers would gain more power, they are just one mouse-click away to another company. Also the speed, range and accessibility of information on the Internet and low cost of distributing and capturing it create new commercial possibilities. It can therefore be said that e-business is far more about strategy than about technology (Symonds, 1999)
The conceptual framework that will be presented below is mainly based on the previous chapters and its relevant literature. But also on information from websites that are an authority in their own field (i.e. The Economist). In order to make the model more vivid, examples based on more than ten years of experience in the online marketing field are used. This experience exists from: experience at various businesses, interviews of marketing managers and CEO’s from previous (empirical) research and information that is gained during
congresses and brainstorms sessions with other online marketing professionals.
ONLINE RESOURCE ORCHESTRATION
Breadth
Marketing department
Differentiation takes place when knowledge development gets priority, in order to be able to use new tactics.
Administration
Cost efficiency can be realised when processing information (i.e. orders and post) is done in another way.
Logistics
Getting faster access to information when processes are streamlined through tickets and online registration.
Distribution
Enabling the customer to buy online and pick up offline differentiates a business using e-commerce and support.
Purchase
Giving transparency of the stock and purchasing value lets customers decide for themselves what value means.
Sales
Cutting costs is possible using e-business possibilities and makes lead generation more efficient.
Depth
Bottom-up Access to information creates transparency that might shape a less bureaucratic organization within the bottom layers.
The Internet also contributes to standardise work processes enabling companies to make the work more efficient and by cutting on costs. Also a clearer strategy execution is possible when more transparency is created and supports the synchronization of internal communication. This because there is faster access to information. The Internet therefore gives organizations a more open culture, as information becomes more
transparent within and between organizations.
Top-down Faster access to information enables mangers to see what there is actually happening on the workplace. In that way a manager is able to control its resources more effectively and is able to give the attention needed to individuals. This might make the organization more efficient and makes personal control more effective and this in a fair and personal way. Centralisation of information makes the work more efficient as information is accessible from multiple places. Mangers have more visibility on the production through reliable real-time information.
Lifecycle
Start up It is easier to start a new business; entry barriers of online resources are relatively low comparing to conventional resources (i.e. building and finance). In the start-up phase structuring the company is most important in which it is easier to start a new e-business.
To be allowed to play, you have to exist. This means that the focus must lie on the creation of (online) brand awareness using online tactics. Also the Internet enables companies in the start-up phase flexible opportunities, as no offices are needed: people can work everywhere.
Growth When the business grows, developing online policies should be created to
formalise work processes. This can be done to standardise, making the organization more efficient during its growth. This can be done by using managed services (ERP) and focusing on IT (i.e. with cloud solutions).
Mature Strengthen the resources by pursuing innovation to minimize adverse
effects of increased competition in the market, this can be done by updating or developing a new website / webshop and improving the support system implementing social media channels, chat and ticket systems in the organization.
Streamlining formalised work processes help to stabilize the firm’s operations within the current situation, as the online context also enables expansion leveraging from the process and coordinated resources via online solutions for international growth (i.e. online formula).
Decline Surviving from decline can be done with the help of online resources that help to identify valuable resources, which can be up- or down tuned. Depending on the value that a resource or capability has directly but also indirectly as some resources might be bundled (i.e. sales team for personal assistance).
Due to transparency there is more control over online resources enabling the management of online resources more easily as there is no direct need for contract within the firm as it can also outsource contract to
outsourcing partners. This because of the visibility of information. Therefore firms have lower risks, as they have no need to renew contracts.
Model: Conceptual framework Online Resource Orchestration (Simons, 2014)
Online resource orchestration with marketing related resources:
• Knowledge: employees need to learn more about the latest tactics relevant for the local business(es). Especially for international oriented companies. Training into measuring and controlling the returns (ROI) are needed to control more effectively online.
• Financial: webshops with PayPal, Credit card or iDeal integration need to be integrated and monitored continuously to connected with the information systems.
• Physical: selling closely through the web and sending further away, especially interesting for smaller companies who want to do business abroad.
• Human: online marketeers become more important into the whole organization.
• Relationship: the relation with the customer becomes more important (E-CRM solutions). • Legal: general- and delivery terms need to be revised, also the international laws online
are different in every country: offline is not online.
• Organizational: integration of communication between and within departments is needed. • Reputation: social media team to track, trace and manage the online sentiment.
Online resource orchestration with marketing related capabilities:
• Dynamic: market changes in online environment have introduced tablet and mobile commerce, which need reconfiguration of resources with the omnichannel.
• Architectural: efficiently planning tactics and deployment of resources during the implementation of the strategy.
• Cross-functional: resources can be deployed multidisciplinary: brand management needs marketing, sales and IT. E-CRM needs to be synchronized with information from multiple departments or partners. New product development uses online marketing information. • Specialized: product management develops new online services (support), pricings are
very competitive online, channel management: different contract with distributors, marketing and communication: integration of communication channels, online research: everything is transparent.
Online resource orchestration needs to be aware of the isolating mechanisms of: causal ambiguity (we sometimes do not know what happens), asset interconnectedness (cross-functionally used resources that cannot be separated from each other), path dependence (create new paths) and asset immobility (improving or renewing resources). The whole online resource orchestration process depends on the marketing strategy that deals with the
marketing objectives, marketing choices, value propositions and timing. We are now ready to learn more about how a company has to orchestrate its marketing related resources to deliver the highest customer value within the online context.
4. Exploring online resource orchestration
4.1 Proposition development
Based on the discussions and findings of the previous chapters and the connection of divers theoretical frameworks in subsection 3.7, this chapter introduces the research propositions. The developed propositions will reflect the expected outcomes of the research question from a theoretical point of view. Since this study discussed the impact of two competing contexts, i.e. online versus offline, this also leads to propositions that strive to reflect the impact of these competing environments to online resource orchestration.
There are lots of marketing resources (knowledge, financial, physical, human, relationship, legal, organizational, reputation) and capabilities (dynamic, architectural, cross-functional and specialized) according to Morgan (2012) and we know that the scope, site, synergy and systems are important for a company that wants to do online business according to
Constantinides (2002). For this research we are going to investigate the impact of the online context on the orchestration of marketing related resources and capabilities. This investigation uses three main factors that affect managers how they manage their firm’s resources to
maximize the likelihood of achieving a competitive advantage, according to the resource orchestration framework of Sirmon et al. (2011): breadth, depth and life cycle.
Within these three main areas the impact of the marketing related resources and capabilities are going to be evaluated over resource management (structuring, bundling and leveraging resources) and asset orchestration (search, selection, configuration and deployment of
resources). Stating the propositions below concerning the breadth, depth and life cycle effects of online research orchestration. This implies that we are going to focus on what happens within these three areas, as change in the underlying areas (sub propositions) confirm that there is a change within a specific area (main proposition).
4.1.1 Breadth of online resource orchestration
In order to achieve positive returns, managers must orchestrate the firm’s assets and configure the capabilities to achieve competitive advantages (Sirmon et al, 2011). To do this, strategic execution of the firm’s activities with dynamic capabilities is critical (Teece, 2007). As a
company has to develop, manufacture and deliver relevant products and services to its
customers (Barney, 1995). Moreover a company must adjust itself to its environment (Porter, 1991) and create a competitive advantage by being different (Porter, 1996). The Internet has given new opportunities to be different, due to diminishing role of the four Ps. The strategic planning and organizational processes needed to be revised for a smooth online operation (Constantinides, 2002).
First we want to know what the impact of the online context is on the scope of the firm. Stating the propositions (P1-1.2) below. Focusing on the influence of the Internet on strategy formulation, creation of competitive advantage(s) and the degree of simplicity to create one, information flow within and across departments and how serving customers has changed. Linking to the resource orchestration framework of Sirmon et al. (2011) and online resources as described in chapter three, we expect that organizations changed in how managers
nowadays develop strategies and create competitive advantages within the online context.
Proposition 1: Organizations have changed in breadth (scope of the firm) due to the impact
of the dynamically changing online context.
According to Sirmon et al. (2011), orchestrating resources is highly important to develop and implement the strategy of a firm. There are lots of different strategies to mention, for example international diversification. We expect that the dynamics within the online context have an influence on the type of strategy that is chosen by managers.
Proposition 1.1: The Internet has an influence on how managers develop their corporate- and
business-level strategies and the competitive dynamics of organizations.
à Corporate strategy (product diversification and international diversification) à Business Strategy (differentiation strategy, cost leadership strategy)
à Competitive dynamics (strong completive rivalry, modest competitive strategy)
According to Sirmon et al. (2011), resource orchestration focuses on how managers affect a resource-based competitive advantage. Constantinides (2002) confirms this by stating that the fast changing character of the web has impact on how organizations should react in order to maintain a competitive advantage. We expect that the Internet has an influence on the creation
of competitive advantages, in such that if companies know how to react within the online context, they should create these easier.
Proposition 1.2: The Internet has an influence on the creation of series of competitive
advantages, in such that companies can more easily create them within an online context.
4.1.2 Depth of online resource orchestration
The role of managerial actions influences the creation of a competitive advantage (Sirmon et al., 2011), because managers see things differently (Bhansing et al., 2010). This means that managers who have to deal with structuring the resource portfolio, bundling resources and exploiting leveraged capabilities in the market make different decisions (Sirmon et al., 2007). But a manager only cannot do this, it is therefore important to successfully manage marketing resources and capabilities to gain business performance (Morgan, 2011). This can be done only restructuring these in a dynamically manner (Kraaijenbrink et al., 2010).
Second we want to know what the impact of the online context is on the levels of the firm. Stating the propositions (P2-2.2) below. Focusing on the influence of the Internet on process management, the hierarchy and departments within an organization and the marketing related resources and capabilities.
Again by linking the resource orchestration framework of Sirmon et al. (2011) and online resources as described in chapter three, we also expect that organizations changed in how they manage their processes and that hierarchies changed within the online context.
Proposition 2: Organizations have transformed in depth (levels of hierarchy) due to the
impact of the dynamically changing online context.
According to Sirmon et al. (2011), resource orchestration helps managers to manage their resources in such that they know how to create and capture value from its resources. Constantinides (2002) states that there went a lot wrong due to the Internet in 2001, this resulted in lots of companies struggling to survive by downsizing, streamlining processes and cutting costs. Academics try to figure out what went wrong to learn from what happened. We
therefor expect that the Internet has an influence on how manager’s manage their processes within the online context.
Proposition 2.1: The Internet has an influence on how manager’s structure, bundle and
leverage the processes of resource orchestration within an online context.
Sirmon et al. (2007) argue that the full value of resources for creating competitive advantages is realized only when resources are managed effectively, synchronising these in all levels of an organization. Constantinides (2002) states that new activities are originated due to the Internet; such as E-Commerce activities. We therefore expect that the Internet has influenced the hierarchy of an organization.
Proposition 2.2: Hierarchies between the top level (direct), middle-level (implement) and
lower-level (operationalize) change due to the dynamically changing online context.
4.1.3 Life cycle of online resource orchestration
Competitive advantage is created through the actions of the manager and retrieved from the resources a firm owns. The value of a resource depends on various stages of firm maturity (Sirmon et al., 2011). Coming from the actions of managers (which are made subjectively within the entrepreneurial process) striving to be creative by realizing superior output in each stage. This is done by being different, different because every manager has a different
perception of a situation (Foss, 2008).
Third we want to know what the impact of the online context is on the stage of maturity. Stating the propositions (P3-3.4) below. Focusing on the life cycle effects of a firm and the influence of the Internet on each stage: start-up, growth, mature and decline.
Linking resource orchestration at various stages of firm maturity - using the framework of Sirmon et al. (2011) - with the developments of online resources, as described in chapter three, we see lots of changes have occurred. Constantinides (2002) states that the Internet changed how marketers serve customers, in such that there is much more emphasis on customer retention, customer service and relationship marketing. We therefore expect that organizations change in the stage of maturity due to the online context.
