THE ROLE OF NETWORKING IN ENTREPRENEURIAL MARKETING FOR SMALL FIRMS: A CASE STUDY

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T H E R O L E O F N E T W O R K I N G I N

E N T R E P R E N E U R I A L M A R K E T I N G

F O R S M A L L F I R M S : A C A S E S T U D Y

Abstract

Through an explorative study, this Master Thesis examines entrepreneurial marketing, and what it looks like in practice. More specifically, it aims to understand the way in which firms incorporate entrepreneurial marketing activities, what kind of marketing challenges firms face, and what the role of networking is in the concept of entrepreneurial marketing. Three cases from different industries are presented, and a multiple case study is performed. Ultimately, a model is proposed.

Keywords: entrepreneurial marketing, networking, marketing, marketing-related challenges, SMEs, small business, entrepreneurship

Rick Schuring S2179512

University of Groningen

MSc Business Administration – Small Business & Entrepreneurship

16 March 2018

Supervisor: dr. M.J. Brand

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Acknowledgements

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1 INTRODUCTION

The academic domains of entrepreneurship and marketing have long been separate entities until a few decades ago. Marketing as an academic study already had its roots around 1910 (Webster, 1992). Marketing is defined by the American Marketing Association (2017) as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”. Although the field of entrepreneurship has developed later, the role of the entrepreneur has become more important nowadays (Audretsch & Thurik, 2000). Kuratko (2006) argued that only over the last few decades the field of entrepreneurship has rapidly developed. That being said, the field of entrepreneurial marketing (EM) is still a young research field that crosses the more or less separate academic domains of marketing and entrepreneurship (Hills et al., 2008).

From an academic point of view, there are still several literature gaps concerning the concept of EM. First, research in the field of marketing predominantly neglected small firms and entrepreneurship, and instead focused on large firms. The definition of marketing from the American Marketing Association (2017) does not provide any information on the organizational context in which the marketing function is incorporated. Entrepreneurs recognize the role of marketing to their successes, but they view the marketing function differently than large firms as the marketing function is context dependent (Morris et al., 2002; Hills et al., 2008). From this point of view, it makes sense that entrepreneurs in small and medium-sized enterprises (SMEs) have a different marketing approach than large firms. Second, within this small firm context, EM literature has not yet provided insights into the marketing-related challenges SMEs typically face, and how incorporating EM into the small firm’s businesses may overcome these challenges. Third, the literature (see also Morrish, 2010) suggests that a firm’s networking activities play a role in EM activities, but this area has not yet been further explored.

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being more entrepreneurial may overcome certain resource challenges with regards to the firm’s marketing activities. Second, introducing elements of entrepreneurship into marketing practices may reinforce the firm’s marketing capabilities. The study of Verhoef & Leeflang (2009) explains that the marketing department should retain its influence as it has both a direct and indirect effect on firm performance. In order to do so it must increase its innovativeness. Third, Zaheer & Bell (2005) find that both a firm’s innovative capabilities and network structure have a positive influence on firm performance. Furthermore, networking has a significant and positive effect on firm survival, and to a lesser extent on firm growth (Watson, 2007). From the Resource-Based View (see Barney, 1991) it is argued that an increase in internal resources and capabilities causes a decrease in strategic tendency to network (Meiseberg & Ehrmann, 2013). Thus, small firms with a tendency to rely on its network may be provided with marketing-related opportunities it would otherwise not be.

The objective of this research is to further conceptualize EM from a small business context. More specifically, it aims gain deeper insights into the marketing-related challenges that are typical to small firm, how small firms incorporate EM activities into their businesses, what the role of small firm networking is in these EM activities. This leads to the following research question:

How do small firms engage in entrepreneurial marketing activities, and how do they incorporate networking in these activities in order to overcome marketing-related challenges they face due to their smallness?

Following the research questions, several subquestions are formulated. First, in order to understand why small firms would adopt EM into their businesses, better insights must be developed regarding the marketing-related challenges these firms face.

1 What marketing-related challenges do small firms typically face?

Furthermore, the aim is to gain further insights on EM in a small business context, and it must be clarified how it is different from traditional marketing activities.

2 How does EM in a small business context work in practice, and to what extent is EM being adopted?

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3 How do small firms use their network for their EM activities?

Ultimately, the role of EM activities and networking activities in overcoming these marketing-related challenges is examined.

4 How are EM activities and networking related to the marketing-related challenges in a small business context.

The structure of this Master Thesis will be as follows. The theoretical background section discusses the existing literature regarding the definition of small firms and the marketing-related challenges they face. The organizational context of marketing is discussed, and literature regarding EM and networking are discussed. In the methodology section, the cases are presented, the design of the study is explained, and quality issues of the study are discussed. In the results section, the within-case results are provided, followed by the cross-case results. Subsequently, a model is proposed based on these results. In the discussion section, the results as well as the model are further discussed. In the conclusion section, theoretical as well as managerial implications are provided, as well as the limitations of this study.

2 THEORETICAL BACKGROUND

This section discusses the existing literature on small business and their marketing-related challenges, the organizational context of marketing, EM, and networking in a small business context. It concludes with presenting the research framework of this study.

2.1 SMES AND THEIR MARKETING-RELATED CHALLENGES

2.1.1 Definition of SMEs

Small and medium-sized enterprises (SMEs) play an important role in today’s economy. In the OECD area, they account for 60% of total employment and create on average about 50 to 60% added value to the economy (OECD, 2017). The European Commission (2017) classifies SMEs in terms of the number of employees, and the firm’s turnover and balance sheet (Table 1). One of the earliest definitions of a small business comes from the Bolton Report (1971), which the small business to:

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- have legal independence; and - have a small market share.

As the owner often is also the manager and the entrepreneur of the firm (Cosh et al., 2005), The characteristics of the owner-manager typically has an influence on the characteristics of the SME (O’Dwyer et al., 2009). Owner-managers have to deal with more risk than their counterparts (Hart & Oulton, 1996; Delmar, 2006). There is a difference concerning the goals of small and large firms (Gray, 2002; Hart & Oulton, 1996). Furthermore, small firms have at best some local loyalty, but no (inter)national brand value (Shocker et al., 1994). Small firms lack market power (Storey & Greene, 2010), meaning that they do not have the ability to set prices in the market and are thus price takers.

2.1.2 Marketing-related challenges

The marketing-related challenges discussed here are divided into resource constraints, market power constraints, and organizational goal constraints. SMEs face several resource constraints. To begin with, SMEs tend to have less access to financial resources than large businesses. Apart from the scale differences of large and small businesses: SMEs are often privately owned and thus reliant on the business owner instead of the stock market (Ang, 1991). This may constrain the firm as the SME often has no publicly traded securities, and the owner has an undiversified investment portfolio (i.e. a large amount of his/her wealth is included in the business). Furthermore, SMEs tend to have less access to debt finance than their counterparts (Storey & Greene, 2010). These constraints are very likely to have an effect on an SMEs marketing budget. SMEs also face human resource constraints. As a consequence of fewer financial resources, SMEs are likely less able to attract well-skilled employees that can carry out marketing activities. This is also reflected by a study from Verpraag & Versloot (2007), who argue that small businesses tend to pay less wage than larger firms. With regards to knowledge resources, SMEs to face constraints in that they provide less formal training to their employees

Number of employees Turnover Balance sheet

Micro firms < 10 ≤ € 2m ≤ € 2m

Small firms < 50 ≤ € 10m ≤ € 10m

Medium firms < 250 ≤ € 50m ≤ € 43m

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than large firms (Forth et al., 2006). Furthermore, people with higher formal education tend to be attracted by large firms (Storey & Greene, 2010).

Market power constraints exist for SMEs in several ways. For example, they face higher market uncertainty. As already mentioned, the small businesses are less likely to set prices as they have relatively little market share (Bolton, 1971). They typically find it hard to compete with large firms in certain sectors where entry barriers and scale advantages play a role, which means that they often operate in a market niche (Storey & Greene, 2010). This lack of market power is also reflected by the absence of brand value (Shocker et al., 1994), and the fact that SMEs are sometimes less able to commercialize innovations (Verpraag & Versloot (2007).

Finally, personal goals of the business owner may constrain an SME in their marketing activities. Webster (1992) argues that marketing literature and marketing professionals tend to assume value maximization as the main goal of an organization. When personal goals and organizational goals are mixed, this will likely have an effect on marketing activities in two ways (Hills et al., 2008). First, the owner may be reluctant to losing control over the firm and therefore reluctant to firm growth. In such a case, marketing activities may be constrained in order to hold back firm growth. Second, if the owner does not have the objective to grow, he/she may not be willing to invest in marketing activities.

2.2 ORGANIZATIONAL CONTEXT OF MARKETING

In order to define marketing as an academic domain we turn back to the definition of the American Marketing Association (2017): “The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” However, this definition does not clarify how the marketing function differs across different organizational contexts – or more specifically – how the marketing function is different for small and large businesses.

To overcome the ambiguity regarding context dependency when defining marketing, Webster (1992) recognized that marketing can operate at distinct: marketing as a culture, marketing as a strategy, and marketing as tactics. Stokes (2000) further elaborated on Webster’s (1992) work and added the element of marketing intelligence:

i. Marketing as an organizational philosophy defines the set of values and beliefs with

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can be refined to market orientation (MO) or customer orientation (CO), which place the highest priority on creating and delivering superior customer value as a determinant of superior firm performance (Hagen et al., 2012; Kohli & Jaworski, 1990; Narver & Slater, 1990).

ii. Marketing as a strategy explains how a firm competes with other firms in the

marketplace. Marketing strategy is most often linked to the stages of market segmentation (e.g. research and analysis of the marketplace), targeting (e.g. selecting market segments for marketing activities), and positioning (e.g. appealing a certain target group through products and/or services) (Stokes, 2000).

iii. Marketing methods, or marketing tactics, are the specific activities that are carried out

to implement the marketing strategy. Stokes (2000) argues that this concerns the four elements of the marketing mix, commonly referred to as ‘The Four Ps’. These concern product development (Product), pricing (Price), and advertising (Promotion) activities, as well as the selection of appropriate distribution channels (Place).

iv. Market intelligence concerns the information-related activities that underpins each of

the before mentioned marketing elements (Stokes, 2000).

These elements shape the organizational context in which marketing takes place. The assumption is that in different organizational context, marketing processes, practices, outcomes, etc. differ on the elements of marketing culture, strategy, tactics/methods, and the way market intelligence is used for these elements. This means that the marketing elements that are emphasized differ according to their organizational context, and adding these elements allows marketing to become a matter of the organization as a whole instead of just a part of the organization. In order to be able to provide a good insight of EM in a small business context, the four different elements described here are used. For this reason, the AMA definition is replaced by the definition of marketing by Stokes (2000, p. 5):

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2.3 ENTREPRENEURIAL MARKETING

EM is most often associated with marketing activities in small firms with scarce and constrained resources, meaning that these firms have to rely on creativity and often unsophisticated marketing tactics that make heavy use of personal networks (Morris et al, 2002). The interface between marketing and entrepreneurship was first discussed by Carson et al. (1995), where they introduced EM. Subsequently, Stokes (2000), Morris et al. (2002), Hills et al. (2008) and Morrish (2010) further defined the concept of EM. Table 1 provides an overview of those definitions.

TABLE 2 ENTREPRENEURIAL MARKETING DEFINITIONS

Even though the papers presented in Table 2 are probably the most influential papers with regards to EM, they are not coherent in defining EM. The definition by Stokes (2000) is mostly a comparison between AM and EM, whereas Morris et al. (2002) and Hills et al. (2008) aim to identify different dimensions of EM. On the other hand, Jones & Rowley (2011) fail to provide a real definition of EM and focus mostly on the strategic orientations that are linked to EM. The following subsections further explains EM in its different context: organizational philosophy, strategy, methods, and intelligence. The different constructs within the different contexts are further explained, and linked to EM literature. This is done in order to better understand how EM differs from AM with regards to what EM firms believe in, how they behave, how they view strategy, and how they use intelligence. At the end of this subsection, Table 3 summarizes the different constructs within every marketing element explained above.

Source Definition

Stokes (2000, p. 13) “The entrepreneurial marketing concept is focused on innovations and the development of ideas in line with an intuitive understanding of market needs; traditional marketing assumes that a thorough assessment of customer needs precedes product or service development.”

Morris et al. (2002, p. 5) EM is “the proactive identification and exploitation of opportunities for requiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation.”

Morrish et al. (2010, p. 305)

“EM is fundamentally an opportunity-driven and opportunity-seeking way of thinking and acting . . . (However) EM is not a panacea. It is an approach to marketing that becomes more appropriate depending on the firms’ circumstances.”

Jones & Rowley (2011, p. 27)

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2.3.1 Organizational philosophy

As mentioned before, marketing defined as an organizational philosophy concerns the values and beliefs with regards to the customer and the kind of strategic orientation that relates to it. The most influential papers on the conceptualization of EM argue that EM contains EO, MO, CO, and innovation orientation (IO) as the main strategic orientations (Morris et al., 2002; Hills et al., 2008, Morrish et al., 2010; Jones & Rowley, 2011).

EO is a strategic orientation that is very often linked to EM. It refers to the firms’ proclivity to search for new market opportunities, thereby having a tendency towards innovativeness, risk-taking, and proactiveness. (Lumpkin & Dess, 1996; Boso et al., 2013). It is a strategic orientation that captures specific entrepreneurial aspects of decision-making styles (Lumpkin & Dess, 1996). Wiklund & Shepherd (2003) argue that EO moderates the effect of knowledge-based resources on firm performances, meaning that being more innovative, proactive, and willing to take risk results in better resource leveraging. Innovativeness is described as the tendency towards supporting novelty and new ideas, proactiveness is referred to as an attitude towards anticipating and acting on future needs in the marketplace, and risk-taking is referred to a willingness to commit a large part of a firm’s resource to a project with a high risk of failure (Renko et al., 2009). Firms that adopt EM into their businesses have a more positive attitude towards managing risk, are more opportunity-driven, have a more proactive orientation towards market exploration, is more innovation-focused, wants to create value from novel sources, and wants to do more with less resources (Morris et al., 2002). Hills et al. (2008) also argue that EM firms are more committed to seizing opportunities and less willing to spend resources to formal planning.

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Hills et al. (2008) argue that EM firms behave less rational than assumed in traditional AM theory, meaning that they constantly live with the market (Hultman, 1999), thereby thinking about ways to improve customer value. They further argue that EM firms tend to have an opportunity-recognition mechanism where the entrepreneur continually analyzes the environment through interaction with the market, meaning that the entrepreneur relies more on his/her intuition and often rich understanding from daily customer contact. EM firms are also often strongly intuitive in their decision-making instead of analytical.

There has been some academic discussion about the nature of the concept of CO, i.e. whether the CO is a different concept or interchangeably used with MO (Deshpandé et al., 1993; Jones et al., 2003). Whereas in MO the focus is on the generation, dissemination, and responsiveness with regard to market intelligence, CO is more focused on creating value for the customer. Various elements of CO are: communication with customers (Narver & Slater, 1990), responsiveness towards customers (Kohli et al., 1993; Shah et al., 2006), and understanding and delivering customer value (Deshpandé et al., 1993; Shah et al., 2006). According to Morris et al. (2002), EM firms are more customer intensive, meaning that they tend to emphasize customer equity and close relationships. Furthermore, they add an emotional dimension to their marketing efforts, i.e. they reinforce passion for customers. There is often a shorter line between customers and the entrepreneur, who often knows his/her customers personally (Weinrauch et al., 1991). This is also seen as an advantage of small firms, as large firms have problems in getting as close to its customers (Zontanos & Anderson, 2004). In EM, the interaction between the entrepreneur and its customers is interesting. Whereas in AM there is a customer-centric approach in shaping the business (meaning that a high degree of central importance is given to the customer in value-creation processes), in EM both the entrepreneur and the customer play a role of customer value co-creation (Morrish et al., 2010.

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magnitudes of innovativeness (Hult et al., 2004) and thus business performance (Hult et al., 2004; Verhoef & Leeflang, 2009; Boso et al., 2013). Morris et al. (2002) argue that firms adopting EM have a supporting culture towards innovativeness. In EM, the marketing function to innovation is to identify new opportunities, generate a new concept, provide technical support, or to creatively leverage the firm’s resources to support innovations. Furthermore, process innovation in marketing operations are ongoing in that managers constantly innovate in their approaches to marketing strategy and marketing methods. Thus, the role EM plays with regards to innovation is in providing a supportive organizational climate towards innovation. An orientation towards innovation is more likely to develop in organizations that have a flat, decentralized, and crossfunctional structure, where there is a focus on learning and development (Hurley & Hult, 1998).

In summary, the four constructs presented here are to a certain extent linked to each other. Whereas MO and CO are sometimes used interchangeably, there is also a connection between EO, MO, and EO. In order to obtain as much in-depth information from the small business owners, these four constructs are being used. Regarding EO, the focus is on the firm’s innovativeness (tendency to support novel ideas), risk-taking, and proactiveness towards new market exploration. MO focuses on the way market intelligence is generated by small firms, how small firms respond towards competitors, and how they integrate business processes. CO focuses on how small firms respond to their customers, the way in which they communicate with their customers, and how they create and deliver customer value. Ultimately, in this study IO focuses mainly on the supporting organizational climate (structure and culture) of small businesses towards innovation.

2.3.2 Strategy

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strategy where one first starts with selecting, subsequently targeting, and finally, positioning. Stokes (2000) proposes a bottom-up strategy for EM, where the entrepreneur first identifies a market opportunity in an informal way and tests products or services through trial and error. Subsequently, the entrepreneur attempts to attract an initial customer base. In this customer base, not all customers conform to the profile that the entrepreneur anticipated. However, as the entrepreneur continues to interact with the customer base, he/she learns the customer preferences and needs. Ultimately, the entrepreneur seeks to expand the initial customer base by finding new customers that conform the profile of the customer base, which is often a natural process being left to the customer base that recommend the business of the entrepreneur to others with similar needs.

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For this study, it is analyzed how the small business owners view marketing strategy, i.e. the way in which they aim to create a competitive advantage, how they view STP as a process, and how they view segmenting, targeting, and positioning strategies.

2.3.3 Methods/tactics

Stokes (2000) argues that this marketing element is considered most important by entrepreneurs as they do not tend to be aware of the philosophical and strategic meaning of marketing. Marketing strategy (STP) is implemented by using the marketing mix (Four Ps). The Four Ps are: Price, Product, Place, and Promotion. Regarding Price, it has already been argued that in general, small firms do not have the necessary market power to set prices and are therefore price takers instead of price makers (Storey & Greene, 2010). However, EM literature suggests that as the EM firm creates a new market segment, there will be less competition, meaning that the EM firm is able to set price based on the value to the customer (Morrish et al., 2010). Also, because the EM firm creates a market niche and does not operate in a mass market, it does not face the fierce competition from large firms (Storey & Greene, 2010). In AM, Price strategies are set based on financial models or marketing objectives like market share or sales volume (Morrish et al., 2010)

For Product issues, EM literature argues that the EM firm creates new customer needs by means of radical innovations, an innovative strategy, constantly interacting with the market, or a constant eye for new opportunities (Morris et al., 2010; Hills et al., 2008), or through entrepreneur-customer co-creation, co-production (Morrish et al., 2010), and service-dominance logic – a theory that argues that in order to create value, customers and the entrepreneur engage in an interdependent and reciprocally beneficial service exchange, i.e. service is an interactive process of helping each other out that creates value (Lusch & Vargo, 2014). In AM, Product development is designed to solve expressed customer needs. In order to find these customer needs, and innovation is continually informed by market research (Morrish et al., 2010)

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Additionally, the entrepreneur relies on intuition. Regarding the approach to promotion itself, an AM approach would be to inform, persuade, and remind (prospective) customers of their products and services. EM firms tend to have heterogeneous approaches to Promotion activities, like word-of-mouth (Stokes, 2000) and viral e-mailing or creating a cult or community following of product lovers (Morrish et al., 2010).

Ultimately, Place or distribution decisions are also made differently for AM and EM. Morrish (2010) argues that AM firms tend to rely on existing distribution channels market leaders use. On the other hand, EM firms tend to create their own new and alternative channels. Again, interaction with the market is essential in distribution decisions of EM firms (Stokes, 2000, Hills et al., 2008, Morrish et al., 2010).

Viewing the methods/tactics of EM, this study uses the implementation of the Four Ps by small businesses. Regarding Price, the focus is on the ability of small businesses to set their own prices and the way they set up prices, i.e. whether they take competition into account and what kind of objectives they have. Product focuses on the development of the firm’s products/services, the role customers play in it, how customer value is created, what is the role of innovation, etc. Promotion focuses on the approach the small business has towards promotional activities. Place regards the way in which the firm uses alternative distribution channels that are different from other comparable firms in the industry.

2.3.4 Market intelligence

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TABLE 3 OVERVIEW OF THE DIFFERENT ELEMENTS OF EM

Elements of EM Constructs Variables Definition

Organizational philosophy Entrepreneurial orientation Innovativeness - Tendency towards supporting value creation through novel ideas (Renko et al., 2009). - Innovation-focused (Morris et al., 2002; Hills et al., 2008; Jones & Rowley, 2011). - Resource leveraging through creativity (Morris et al., 2002). - Committed to seize opportunities (Hills et al., 2008). Proactiveness - Proactive orientation towards market exploration (Morris et al., 2002; Hills et al., 2008; Morrish et al., 2010; Jones & Rowley, 2011). - Market opportunity-driven (Morris et al., 2002; Hills et al., 2008; Morrish et al., 2010; Jones & Rowley, 2011). Risk-taking - Risk anticipation in decision-making (Morris et al., 2002; Hills et al., 2008; Morrish et al., 2010; Jones & Rowley, 2011). Market orientation Generation of marketing intelligence - Level of interaction with the market (Hultman, 1999; Hills et

al., 2008). - Degree to which intelligence is gained through the entrepreneurs own rich understanding instead of market research (Hills et al., 2008). Responsiveness towards competitors - Level of interaction with competitors (Jones & Rowley, 2011). Integration of business processes - Opportunity recognition mechanism (Hills et al., 2008). - Use of intuition in decision-making (Hills et al., 2008). Customer orientation Responsiveness towards customers - Degree to which there is intensive contact by the

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Creation and delivery of customer value - Importance given to customers in creating customer value (Morrish et al., 2010; Jones & Rowley, 2011).

- Tendency towards co-creation of value between entrepreneur and customer (Morrish et al., 2010. Innovation orientation Supportiveness of organizational structure - Degree to which the organizational structure (i.e. level of

formalization, hierarchy, centralization) supports innovation (Hurley & Hult, 1998; Hult et al., 2004; Jones & Rowley, 2011). Supportiveness of organizational culture - Degree to which organizational culture supports innovation (Hurley & Hult, 1998; Hult et al., 2004; Jones & Rowley, 2011).

Strategy Competitive advantage Differentiation - Adding value to products/services to increase revenues (Porter, 1980).

Cost leadership - Focusing on organizational efficiency as to reduce costs (Porter, 1980).

STP strategy process Bottom-up approach Bottom-up approach

1. Identification of market opportunity in an informal way; 2. Attract initial customer base, get to know customer needs

in order to adapt;

3. Expand initial customer base by looking for customers with similar needs through word-of-mouth (Stokes, 2000).

Segmentation strategy Personal characteristics - The role of personal characteristics of the entrepreneur in identifying the market (Morrish et al., 2010).

Latent customer needs - Focusing on implicit customer needs rather than explicit needs (Morrish et al., 2010).

- Use of own rich understanding of the market to find customer needs (Hills et al., 2008).

Targeting strategy Market niche - Tendency to target a market niche instead of a mass market (Morrish et al., 2010; Storey & Greene, 2010).

Positioning strategy Blue ocean strategy - Tendency to position itself in a new market space that has not yet been discovered (Morrish et al., 2010).

Methods/tactics Marketing mix: Price Price considerations - Ability to set own prices (Morrish et al., 2010).

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Marketing mix: Product Product development - Role of innovation (Morris et al., 2002; Hills et al., 2008; Morrish et al., 2010; Jones & Rowley, 2011).

Marketing mix: Promotion Approach to promotional activities - Use of alternative approaches to promotion, e.g. word-of-mouth, viral e-mailing, creating a community (Stokes, 2000; Morrish et al., 2010; Jones & Rowley, 2011).

Marketing mix: Place Approach to distributional issues - Role of interaction with customer in distribution decisions (Morrish et al., 2010).

- Use of alternative distribution channels (Morrish et al., 2010). Intelligence Market intelligence Market information generation - The level of informality in collecting market data (Stokes,

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2.4 THE NETWORKING PERSPECTIVE

EM literature (Morris et al., 2002; Jones & Riley, 2011) suggests the network of a small business play as important role in EM but fails to further explain how networking activities reinforces EM. Therefore, the dynamics between networking activities and EM activities need to be better understood. In order to do so, networking must first be defined and the different functions of networking need to be clarified. As in the past decades a considerable amount of literature has been devoted to networking (often with different approaches), Zaheer et al. (2010) provide an organizing framework of four theoretical mechanisms (resource access, trust, power/control, and signaling). In order to understand the different mechanisms, Zaheer et al (2010) first viewed networking literature from three different levels of analysis: dyadic, ego, and network level.

2.4.1 Networking level of analysis

First, the dyadic level of analysis focuses on the relationship between two firms, and how these characteristics affect the relationship’s outcomes (e.g. renewal, continuation, dissolution). This level of analysis mainly focuses on ties strength between two firms. This strength of ties influences what kind of knowledge is transferred (Uzzi & Lancaster, 2003), i.e. strong ties encourage tacit knowledge transfer, whereas weak ties encourage explicit knowledge transfer. Furthermore, strong ties increase the level of trust between two firms (Gulati, 1995), and increased levels of trust between two firms enhances firm performance (Zaheer et al., 1998). In terms of power and control, forming ties with other firms may be a strategy to constrain a powerful firm (Bae & Gargiolo, 2004).

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alters within a network are, the more important the focal firm becomes. Structural holes exist when two actors in a network are only indirectly connected to one another through a third party, who is then the party that bridges structural holes (Zaheer et al., 2010). Bridging structural holes has several advantages. Through structural holes, a firm has access to information and control that other firms do not have. These include access (having access to information that other do not have), timing (being the first one to receive the information), and referrals (being mentioned by other actors) benefits (Burt, 1992). On the other hand, network closure (Coleman, 1990) is measured as network density, i.e. the degree to which all actors within a network are connected. argues that the higher the closure, the higher the level of cooperation and trust (Coleman, 1990), the higher the level of information sharing (Rowley et al., 2000), and the better the firm performance (Ahuja, 2000; Uzzi, 1997).

Regarding the whole network level, the characteristics and behavior of the entire network are being studied, as well as the impact of the whole interorganizational network on individual firms’ outcomes (Zaheer et al., 2010). Saxenian (1994) argued that Silicon Valley owes its success to the existing interorganizational networks that allowed firms to tap into resources and information they would otherwise not be able to. Almeida & Kogut (1999) argue that networks as a whole drive knowledge spillover within and across regions. Interorganizational network can also be used to form a strategic block (Nohria & Garcia-Pont, 1991) against firms with more power and control

2.4.1 Variables of networking

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the relationships with other firms it has. The network sends signals to the marketplace, which define the quality of the firm (Podolny, 2005). The four mentioned theoretical mechanisms are used for this study in order to gain deeper insights how networking plays a role in EM.

2.5 RESEARCH FRAMEWORK

The theoretical background section has defined several different variables. First, a definition of small businesses is provided and the marketing-related challenges have been discussed. Second, marketing has been defined according to the different elements marketing comprises in order to understand marketing from different organizational contexts. Third, different definitions of EM have been provided, and is further explained with regards to the different elements of marketing (organizational philosophy, strategy, tactics/methods, and intelligence). Ultimately, an overview of the literature regarding the different functions of networking in an organization is provided by explaining the different levels of analyses as well as the theoretical mechanisms. From an academic point of view, this study contributes to existing literature by investigating entrepreneurial marketing from a networking perspective. EM has – to the author’s best knowledge – not yet been researched from a networking perspective, i.e. how social networking plays a role in the EM function within the small firms’ context. From a practical point of view, this study investigates how small firms can overcome marketing-related challenges that are typical to their size. This study can provide owners/managers of small firm’s insights into how they can use networking to overcome certain marketing-related challenges.

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3 METHODOLOGY

In this section, the data collection method, the sampling method, and the operationalization of the variables are explained. The study design is also presented. Ultimately, some quality issues like controllability, reliability, and validity are discussed.

3.1 DATA COLLECTION

As the literature review shows, research has already been done regarding the different constructs of EM, and how they differ from traditional marketing. Furthermore, the paper by Zaheer et al. (2010) shows that extensive research has been done regarding networking. However, to the best of the author’s belief, linking these two concepts as described earlier has not yet been done. The interest of this study concerns understanding the different challenges SMEs face in the context of EM, and how networking plays a role within those EM activities. In other words, this study aims to understand these dynamics between the SME’s EM activities, the SME’s marketing-related challenges, and the SME’s networking activities. Therefore, this study is exploratory as it aims to generate new and better insights into how networking plays a role in EM (Van Aken et al., 2012). In order to gain these insights, a qualitative approach is chosen. More specifically, a multiple case study approach is used (Eisenhardt, 1989). More precisely, this case study includes three different interviews and observations from three different firms in order to enable exploration from different situations. Choosing a number of three cases for this study is the result of the limited time there is available for the Master Thesis. For true theoretical saturation, this study should be replicated and include more different cases (Eisenhardt, 1989). Primary data is the basis for this study and is obtained through in-depth interviews.

3.1.1 Sampling method

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owner, manager, and entrepreneur should be the same person. The firm should be legally independent and should at least to some extent reflect characteristics like a lack of resources and market power, while also having organizational goals that do not reflect value maximization. The criteria described are a result of the theory presented earlier on small businesses and their marketing-related challenges, and make sure that the selected cases actually provide valuable insights regarding their marketing-related challenges as a result of their small size, to better understand the EM activities within a small business context, and what the role of networking is for small businesses in their EM activities. Furthermore, the selected cases must have done some marketing activities in the past with their firm in any way to provide insights into how these small firms carry out their marketing activities, and whether we can speak of EM. Finally, the selected cases must be able to provide insights regarding their firm’s networking activities to be able to extend theory on how networking is linked to EM.

Fifteen business owners were approached (in person or via telephone) for this study. The business owners were informed about the topic of the study, and they were approached for an interview. In several cases, business owners were not willing to participate. In other cases, they did not fit the criteria (e.g. they did not perform any marketing-related activities, or were simply too small to be able to provide information regarding their network). Ultimately, three firms were willing to participate in the study. These firms also fit the selection criteria regarding firm size. The cases that participated were found based on the writer’s own network. The three cases were all situated in Emmen, The Netherlands. All three cases operate in a different industry. 3.1.2 Data collection process

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based on EM, marketing-related challenges, networking activities, and how to overcome marketing-related challenges through networking. As the interview is semi-structured, the questions were prepared in advance according to the guidelines of Emans (2004). The interviews all took place in a silent room at the location of the firm.

3.2 OPERATIONALIZATION OF VARIABLES

The variables are operationalized by turning the different market elements into theoretical variables and then into indicators, which is according to the guidelines of Emans (2004). These guidelines suggest that in order to answer a research question, theoretical variables need to be proposed. Then, these theoretical variables need to be presented by indicators (also called raw variables). Subsequently, interview questions are based on these indicators. These theoretical variables are represented by indicators according to the already discussed literature. Appendix 1 provides a complete overview of all constructs, variables, and indicators.

3.2.1 Marketing-related challenges

The marketing-related challenges were divided into three theoretical variables: resource constraints, market power constraints, and organizational goals. Regarding resource constraints, different indicators are used. It is represented by the way the selected cases evaluate their financial, human, and knowledge resources (to what extent they believe there are constraints compared to large firms), and to what extent they view these constraints as marketing-related challenges. Market power constraints are represented by the degree to which firms perceive their own power compared to competitors, customers, and suppliers, and the way in which this affects the firm’s marketing-related activities. The organizational goals are indicated by the different goals the firm has, what the main goals are and why this is the case, and whether it has any effect on their marketing-related activities.

3.2.2 The four different elements of EM

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segmentation, targeting, and positioning strategies. EM methods/tactic uses the marketing mix as separate constructs. Ultimately, EM intelligence uses market intelligence as a construct. This construct should provide more insights into the way information is generated, disseminated, and responded to within the firm. The theoretical variables are already presented in Table 3 and are based on the discussed literature. These theoretical are then translated into indicators in Appendix 1 in order to be able to measure them.

3.2.3 Networking

For the construct of networking, the theoretical mechanisms of Zaheer et al. (2010) are used as theoretical variables: access to external resources from networking, gaining trust from networking, degree of power/control through networking, and the increase of status through networking. Access to external resources is indicated by what kind of knowledge the firm gets from maintaining relationships within their network (being either tacit or explicit), the degree to which the firm is able to get access to information that others are not able to, and whether they operate together with other firms in a network from which the firm gains knowledge. Trust building is indicated by the degree to which the firm builds trust through their networking activities, how this affects their organizational outcomes, and, if applicable, what the role of building trust is in operating in a network as a whole. Regarding gain in power/control, indicators are the way in which power imbalance played a role forming relationship with other actors in the network, the extent to which the firm has gained power through its network, and, if applicable, how operating in a network enables the firm to form a strategic block. Ultimately, the increase of status is indicated by the degree to which the firm has relatively important actors within its network, and how this affects firm performance.

3.3 DATA ANALYSIS

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axial coding. This means that data from the case will be analyzed through open coding, and then the codes from the different cases are compared in order to examine whether adding new cases dealing with the same topic provides additional information to the codes (Boeije, 2002). Thirdly, patterns and relationship between the extent to which a firm engages in EM activities, the challenges that the firm faces with regard to the marketing activities that the firm, and the role of networking in solving marketing-related challenges are being searched for in order to define an emerging concept and propose a conceptual model.

3.4 QUALITY ISSUES

3.4.1 Controllability

In order to create a fundament for intersubjective agreement, efforts were made to increase controllability. This is done by providing information regarding the collection of the data by recording the interviews and taking notes during the observations. Furthermore, secondary data by means of the firm’s webpage was used whenever possible to further support the findings. The way in which the sample is selected is as narrowly described as possible.The interview guide is provided in Appendix 2, the circumstances of the interview are provided in Table 4 and a thorough explanation of the conclusions drawn is provided (Van Aken et al., 2012).

3.4.2 Reliability

Reliability concerns the issues whether the results of the study can be replicated and are not influenced by particular characteristics of the specific study, i.e. whether the study is biased

Case Interviewee Circumstances Actief B.V. Pieter Alkemade, owner and CEO - The interview was held face-to-face on 2 January 2018, at 16.00. - The interview lasted for approximately 2,5 hours. - The location was at the office of Actief B.V. This was an open room where the firm normally interacts with their clients and colleagues but was empty during the interview. Café Groothuis

Emmen Jan van Es, owner and CEO - The interview was held face-to-face on 3 January 2018, at 14.15. - The interview lasted for approximately 2,5-3 hours. - The location was at the office of Café Groothuis Emmen, which is a room secluded from the rest of the building. Heeroma Zorgwinkel Geert Heeroma, owner and CEO - The interview was held face-to-face on 5 January 2018 at 13.20. - The interview lasted for approximately 2,5 hours. - The location was at a secluded office within the shop of Heeroma Zorgwinkel.

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(Maruster & Gijsenberg, 2013; Van Aken et al, 2012; Yin, 1994). Respondent bias is limited by using multiple cases with different entrepreneurs that operate in different sectors (Van Aken et al., 2012). Instrumental biased is reduced through the use of triangulation (Maruster & Gijsenberg, 2013), meaning that different data collecting instruments are used (interview recording, interview notes, observation, and where possible, secondary data through the firm’s webpage). Researcher bias is limited by partly standardizing the interview through the conduct of semi-structured interviews (Yin, 1994). Situational bias is limited by replicating the interview settings in the best possible way. To do this, all interviews were held in the afternoon, and all interviews were conducted in a room where the interviewee would not be disturbed. 3.4.3 Validity

In general, validity deals with the issues whether the results of a study is adequate with regards to the way these results are generated, and is divided into construct validity, internal validity, and external validity (Van Aken et al., 2012). Construct validity deals with the quality of operationalizing a concept, i.e. whether the meaning of the concept is actually measured (Van Aken et al., 2012; Maruster & Gijsenberg, 2013). In order to increase construct validity, semi-structured interviews are used, meaning that the same pre-defined question are asked across all cases, and these questions are based earlier literature regarding EM, networking, and challenges small firms face in their marketing activities. In this way, as much of the meaning of the concept is captured as possible.

Internal validity refers to the completeness of a suggested relationship between the variables, which can be increased through theoretical triangulation (Van Aken et al., 2012). This is a method that views problems from multiple theoretical angles. In the case of this study, it is done by examining EM practices from four different elements, and by using three levels of analysis regarding the networking activities.

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4 RESULTS

The results of the interviews are presented here. First, an introduction of the firms is provided to gain contextual insights of the firms. Second, the within-case results of the study are presented regarding the marketing-related challenges, the degree to which the firms engage in EM activities, and the firm’s networking activities. In Appendix 3, the interview coding overview is presented, containing the coding around all the different constructs and variables.

4.1 CASE INTRODUCTION

4.1.1 Actief B.V.

The first interview was with Pieter Alkemade, owner and partly manager of Actief B.V. is a firm operating in the real estate industry. The firm tries to distinguish itself from its competitors by offering as many different specialized services with regards to real estate as possible, including real estate agency, appraisal of real estate, consultancy in investments, refinancing and real estate, and software systems (Actief B.V., 2018). The firm exists now for three years and came into existence as the owner used to work for his brother in the real estate industry and wanted to meet his brother needs as customer. Only for one year, the firm has other customers than the owner’s brother. At the moment, their only settlement is in Emmen, but the firm intends to expand their number of settlements to three (in Amsterdam, Utrecht, or Groningen).

4.1.2 Café Groothuis

The second interview was with Jan van Es, owner and manager of Café Groothuis Emmen. The firm operates in the hospitality industry with a focus on the exploitation of the restaurant, but also offers a location for late night parties, a room to rent for conferences, socials, buffets, etc. Due to the nature of the firm, it only operates in Emmen. The history of the firm goes way back to 1909, when the building was established to serve as a café and a hostel/hotel for travelers. Nowadays, it serves as café, restaurant, and as a location to marry. The firm won the prestigious award for being the best café of The Netherlands in 2015 (Misset Horeca, 2015).

4.1.3 Heeroma Zorgwinkel

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people dealing with a physical handicap in their daily life (Heeroma Zorgwinkel, 2018). The firm is currently situated in Emmen and Meppel and is currently looking to expand its operations to Zwolle. The firm both sells and rents their products, they provide advice to the customers, and if needed, they refer their customers to specialist. The firm came into existence due to private motivations of the owner.

4.2 MARKETING-RELATED CHALLENGES

The marketing-related challenges small firms face are discussed. Specifically, the challenges regarding resource constraints, organizational goal constraints, and power constraints have been examined for the three different cases. A summary of the findings can be found in Table 5 (p. 35).

4.2.1 Resource constraints

From the results, we see that Actief B.V. does not see resource constraints in any kind as a challenge and emphasizes the fact that having less resources can be an advantage for small firms. However, Actief B.V. does mention the fact that they do not have the skills and specialized knowledge to tap into regarding marketing-related activities, and that this does to at least some extent create challenges for them.

“The power of small firms is that they have the unique possibility to maintain intensive contact with their customers, which large firms with more resource cannot do in the same way. […]The marketing activities are carried out by the firm as a whole. If we grow as a firm, we would get the opportunity to have specialized workers to carry out our marketing activities.” (Pieter Alkemade, Actief B.V.)

Café Groothuis stresses the lack of well-educated and trained personnel as a challenge in their marketing-related activities. Furthermore, the firm can get at best local brand awareness, compared to larger firms in the industry:

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Heeroma Zorgwinkel mentions a lack of brand awareness, marketing-related knowledge, and high risks in terms of marketing investments as main challenges:

“It simply costs a lot of money, it almost killed our firm. If you make promotion deals with other parties, it is often a long-term deal, and for us it is not always measurable what it contributes to our performance. […] The lack of brand awareness definitely poses a challenge to our marketing activities. […] We simply did our marketing activities next to all our other work. The lack of knowledge is a big problem to us, which is why we decided to hire a marketing agency in the end” (Geert Heeroma, Heeroma Zorgwinkel)

4.2.2 Market power constraints

The results show that both Café Groothuis and Heeroma Zorgwinkel perceive a lack of market power as a challenge as they are price takers instead of price makers. However, Actief B.V. does not perceive market power constraints as a challenge. The firm explains that they are able to deliver unique value to the customer.

“We don’t really come across market power constraints due to a lack of market power. We think we can solve for this by creating unique value for the customer. We are perfectly able to make our own prices, and do not have to consider other competitors that much.” (Pieter Alkemade, Actief B.V.)

“There are clearly challenges in the power constraints we face as we’re not able to set our own prices. A way in which we can tackle those challenges is through are deserved reputation. Our good name provides us with the opportunity to increase prices to some extent.” (Jan van Es, Café Groothuis)

“The challenges we face is that we cannot set our own price. A way for us to deal with these challenges is through expansion to more stores. This way we can get better deals with our suppliers, which increases our market power.” (Geert Heeroma, Heeroma Zorgwinkel)

4.2.3 Organizational goal constraints

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TABLE 5 SUMMARY OF MARKETING-RELATED CHALLENGES BASED ON THE DIFFERENT CASES

Challenges Sample Explanation Case

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“The main challenge for us is to find personnel in whom we trust. The past has proven that it is difficult to find personnel that takes the amount of responsibility to independently run a store. […] Also, this firm is my baby, it’s part of my life. So, growing my business is nice, but only if giving away control feels like it is good for the firm.” (Geert Heeroma, Heeroma Zorgwinkel)

We almost run at maximum capacity at this moment. If I want to grow further as a firm, I would have to open a new bar/restaurant, which means I have to give away control. That is definitely something that did not serve me well in the past.” (Jan van Es, Café Groothuis)

4.3 EXTENT TO WHICH THE CASES INCORPORATE EM IN THEIR BUSINESS

The extent to which the selected cases incorporate EM in their businesses is researched on the hand of four different elements of marketing: philosophy, strategy, methods/tactics, and intelligence. These four different elements all have their own constructs and variables and are discussed below. Ultimately, Table 6 summarizes the findings and shows the results with regarding the extent to which the selected cases adopt EM.

4.3.1 EM philosophy

Of the three cases, Actief B.V. seems to have the highest level of EO. As a relatively young firm, it is able to create value from novel sources, is constantly looking for market opportunities, and is willing to take high levels of risk:

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This is rather different for the other two cases, where value is mostly created from existing source, risk is not so much anticipated, and where the owners have a moderate proactiveness towards market opportunities:

“We sell products we purchased, but also products that we make ourselves. We do not have any novel sources through which we create customer value. […] Due to our durable orientation we are able to reuse product leftovers in very creative ways, mostly for building new products. In this way we leverage more from our resources. […] We intend to grow the number of stores we own, and for this we always check ourselves whether there is an opportunity to establish a new store. Right now, we are really proactively looking for opportunities in Zwolle. […] We are willing to take risk, but not at any cost. It must not harm our current stores in Emmen and Meppel.” (Geert Heeroma, Heeroma Zorgwinkel)

In all cases the level of MO is considered high, meaning that in all cases, market information is generated as the business owners constantly and (in)directly interact with the market themselves. Both Heeroma Zorgwinkel and Café Groothuis moderately respond to competitors, albeit in the products they offer or the prices they handle. However, Actief B.V. does not respond to competitors as they have a strong belief in their own concept. All cases seem to make decisions based on their own rich understanding of the market and through the opportunity-recognition mechanism. Only the owner of Café Groothuis ever used market research, but merely did so in order to confirm his own intuition.

“We wanted to know whether building additional space would be profitable, and whether there would be a market for it. […] You always have to follow your own intuition, but let that intuition be supported by market research.” (Jan van Es, Café Groothuis)

Furthermore, all cases show considerably high levels of CO as they all tend to have intensive contact with customers and are passionate and emotional about customers. Furthermore, in two of three cases co-creation of customer value by both the business owner and the customer played a role.

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The level of IO is determined by the firm’s supportiveness to innovation due to their organizational culture and structure. Regarding the organizational culture, both Café Groothuis and Actief B.V. perceived their organizational culture to be supportive to the exploration and exploitation of business opportunities, whereas Heeroma Zorgwinkel perceived no supportive culture.

“Our team must have the guts to renew our business and dare to say things. On the one hand we are very tightly organized, and on the other hand we like to let people loose. (Pieter Alkemade, Actief B.V.)

The organizational structure was different for all cases. Actief B.V. has a semi-formal structure that is flat, decentralized, and is highly flexible. Café Groothuis argued that they do not need to be flexible, and that they an informal, flat, and centralized structure, Heeroma Zorgwinkel argued they have a highly informal structure that is flat and centralized and show moderate flexibility.

“We do not have to be very flexible, because the market we serve is changing very rapidly.” (Jan van Es, Café Groothuis)

4.2.2 EM strategy

With regards to strategy, all cases aimed to create a competitive advantage through differentiation and had a similar approach in their STP strategy approach, meaning that all work according to the bottom-up approach, which means that they identify market opportunities in an informal way, they attract an initial customer base to get to know their customer needs in order to adapt to them, and eventually expand this customer base with similar needs through word-of-mouth. Regarding segmentation, the personal characteristics of the business owner seemed to be quite important in finding a market segment. The focus on implicit needs was present in all cases, but particularly in the case of Actief B.V.:

“In fact, we could have been our own customer. The business is built on an unsatisfied need I came across in the market. New customers didn’t even know they were missing something but cannot do without anymore.” (Pieter Alkemade, Actief B.V.)

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competition of equally sized firms. Heeroma Zorgwinkel deviates from the other cases as they serve the mass market, sometimes even on an international level by means of their webshop. As a result, they have to compete with a large amount of small direct competitors and a few large competitors.

Ultimately, positioning strategies are somewhat different across cases. Whereas Café Groothuis and Heeroma Zorgwinkel have not been able to avoid competition, Actief B.V. has done so. Two contrasting cases:

“Because of our business model we have been able to avoid competition. Nobody offers what we do, so in that we can keep away from competitors.” (Pieter Alkemade, Actief B.V.)

“We are not capable of positioning ourselves in such a way as to avoid competitors. There are simply too many firms that can do what we do.” (Geert Heeroma, Heeroma Zorgwinkel)

4.2.3 EM methods

Regarding Price considerations, we see a difference in the ability to set your own prices. Actief B.V. is able to set its own prices, whereas the other two firms face difficulties with that:

“We’re not able to set our own prices. Our supplier demands us not go below the advisory price, and the market simply determines the price.” (Geert Heeroma, Heeroma Zorgwinkel) “We cannot set our own prices. There is a price in the local market, and to a large extent we have to deal with that. Competition is definitely a consideration. […] Because of our reputation, we can to some extent set prices above market average, but that is not much.” (Jan van Es) Product development issues are also different between Actief B.V. and the other two cases.

This in the sense that innovation has played a large role in development for Actief B.V. but did hardly play a role for the other firms.

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Promotion activities showed to some extent similarities. All firms made use of word-of-mouth marketing. However, the case of Heeroma Zorgwinkel was different as they hired an external marketing agency for their promotional activities:

“We make use of an external marketing agency to do our promotional activities, because we lost track on how to do this well ourselves. It also saves us money. It looks more professional now than we could ever do.” (Geert Heeroma, Heeroma Zorgwinkel)

In terms of distribution decisions, there is a clear distinction between Actief B.V. and the other two cases, where Actief actually differentiates itself from competitors by means of the location of their agency:

“We really wanted an office in the heart of the city center, which is completely different than what competitors do. We believe it is important to be located in a nice building where there are many people passing by. It shows that we’re a fresh and vivid firm that is approachable. (Pieter Alkemade, Actief B.V.)

Again, the results show a clear difference between Actief B.V. on the one hand, and Heeroma Zorgwinkel and Café Groothuis on the other hand in terms of product innovation, the ability to set own prices, and distribution considerations. Promotional activities of Actief B.V. and Café Groothuis, however, seem to be similar.

4.2.4 Market intelligence

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4.2.5 Summary of results

To conclude, it is found that the cases are sometimes similar, but also differ in many cases from EM literature. Table 6 summarizes the extent to which the three different cases adopt EM activities on the four different marketing levels. Actief B.V. is found to adopt EM activities to the largest extent on three levels: philosophy, strategy, and methods/tactics. However, Actief B.V. deviates from EM literature in that they are more formal regarding the market information generation and dissemination. The other two cases reflected to a smaller extent the EM literature.

TABLE 6 SUMMARY OF RESULTS REGARDING THE EXTENT TO WHICH Adoption of EM Constructs Actief B.V. Café

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4.4 NETWORKING ACTIVITIES

Next, the results regarding the way networking activities affect EM activities is discussed. The construct of networking was explained using the theoretical mechanisms of Zaheer et al. (2010) as theoretical variables: resource access, trust building, power/control, and signaling. An overview is provided in Table 7.

4.4.1 Resource access

The cases of Actief B.V. and Heeroma Zorgwinkel show that networking is beneficial in obtaining marketing-related information. Actief B.V. argued that they gain tacit knowledge from strong ties. It provides them with information regarding new products, customer needs, and markets.

“[Our business] is in a small world, with a small group of real estate owners. They provide us with the information we need to make our products perfect.” (Pieter Alkemade, Actief B.V.)

4.4.2 Trust

The trust mechanism of networking shows similarities across cases. In all cases, trust was found enhance positive word-of-mouth with customers, partners, and suppliers. Furthermore, in two cases trust building provided the firms with exclusive access to products that competitors do not have.

“As we have been loyal customer of our beer supplier AB Inbev, at a certain point we get access to products that not every other café or restaurant has.” (Jan van Es, Café Groothuis) “Gaining trust with suppliers makes us able to sell certain products that are not offered to every other competitor.” (Geert Heeroma, Heeroma Zorgwinkel)

4.4.3 Power/control

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who owns a considerable part of the real estate in this region. The real estate owners pass all the real estate-related activities to Actief B.V. The interviewee also believes that an increase in power through networking has provided them with a larger customer base.

“We want to be visible to customers. By showing yourself as many times as possible, and by talking to as many persons within the industry as possible through social events. […] I believe it is not simple to create a strategic block through networking, but it is certainly possible. […] Increasing market power does have effect on our marketing-related activities. By being visible, and expanding your network, more customers get to know us, and we will be able to attract more customers.” (Actief B.V., Pieter Alkemade)

4.4.4 Signaling

In all cases, networking is used to increase one’s status in the marketplace through partnering up with high status firms.

“After we won the prize of Best Café of the Year by Misset Horeca Nederland, beer supplier Hertog Jan wanted to intensify the relationship, which provided us with several nice promotional features. This intensified relationship opened doors to new suppliers that we never came across.”

THE ROLE OF NETWORKING IN ENTREPRENEURIAL MARKETING FOR SMALL FIRMS: A CASE STUDY