Competitive intelligence (CI) is a relatively new and underdeveloped field in the management literature. CI is meaningful information that allows an executive to be aware of and respond to changes in his or her competitive environment. It has become increasingly important to companies over the last 15 years, and the last decade has witnessed many efforts to formalize CI into a company's strategic process and a structure, accompanied by a substantial increase in CI spending (Vedder, Vanecek, Guynes, and Cappel, 1999). This growing interest in CI parallels the progressive use of information systems by organizations over the last few years. In a benchmarking study, Lackman, Saban and Lanasa (2000) found that 94% of responding market intelligence directors considered technology to be crucial to the success of the CI function in a company.
Although CI is being more and more recognized among company managers, it remains poorly studied in the academic literature (Wright, Pickton and Callow, 2002). Porter (1980, p.71-74) recognized the need for a "competitor intelligence system" at companies and for a CI system that encompassed several processes, including gathering information, compiling, cataloging, analyzing, and communicating the analysis to the company's decision makers and strategy formulators.
We used ProQuest to search peer-reviewed academic journals, using the keywords "competitor intelligence" or "competitive intelligence." The search resulted in 538 articles, which we reviewed each article to differentiate between theoretical work, articles that provided a review on matters relating to CI, and empirical studies on some aspect of CI. The results are summarized in Table 1.
A significant number of the empirical studies related to computer and information systems that are of potential use for competitive intelligence, as well as studies of technical subjects such as data mining and Web searches. Relatively few empirical studies tackled the subject from a strategic business point of view.
There was little research into competitive intelligence as it pertains to small companies. In this study, we research decision-makers' attitudinal and perceptional issues most likely to shape CI activity in small companies.
The relatively few studies on competitive intelligence have focused on the companies' micro or macro economic environments, such as company size or particular industry (Wright et al., 2002; Groom and David, 2001; Wood, 2001) and also the manner in which CI functions, such as which departments are involved and what resources are typically allocated to the function (Prescott and Smith, 1989; Lackman et al., 2000; Ghoshal and Westney, 1991; Tao and Prescott, 2000; Wright and Ashill, 1998; Breeding, 2000). However, little is known about how the decision-maker's perceptions or attitudes toward the business environment affect the formation of competitive intelligence activity.
Most surveys and studies of competitive intelligence have focused on large corporations and Fortune 500 companies with formal, working CI units (Prescott and Smith, 1989; Lackman et al., 2000; Tao and Prescott, 2000; Breeding, 2000). Wright, Pickton and Callow (2002), while studying CI practices in the U.K., excluded sole proprietorships or partnerships in their sample, assuming that they were less likely to use competitive intelligence. In one of the few studies on CI in small companies, Groom and David (2001) found evidence to suggest that they were not very concerned with it. Yet, some notable differences were evident among companies regarding to the resources allocated to CI activity. For example, companies with a greater number of employees were also those that relied on their employees more extensively for CI activity (Groom and David, 2001).
One of the main differences between small and large companies is that strategy at small companies is driven to a large extent by the character of the decision maker (Burke and Jarrat, 2004; McCarthy, 2003). Therefore, significant differences between companies' reliance on CI are expected, depending on the attitudes, perceptions, and personalities of the decision-makers at those companies. Shrivastava and Mitroff (1984) suggested that researchers' frames of reference regarding to information differed significantly from those of decision-makers. Researchers would value objective, measurable data, formal methods of data gathering, and a more systematic approach, whereas decision makers prefer subjective data based on experience, informal data gathering procedures, and "sensemaking" (Weick, 1995). One would expect CI professionals at large companies to tilt toward the researcher's stereotype, with managers being more inclined toward the sensemaking stereotype. At small companies, managers and owners would often be expected to reconcile the two roles.
Vedder et al. (1999) found that CEOs who gave the most importance to CI were at companies actively engaged in it. Wright et al. (2003) in a study of competitive intelligence in the U.K. found that managerial attitudes toward business had a direct influence on CI activity. Wright et al. (2003) differentiated between four attitudes. The first perceived the company to be immune to competition, thus viewed CI as a simple waste of resources. The second viewed the need to resort to CI as task-specific, giving CI a reactive connotation rather than a proactive one. (In this case, senior management was less interested in CI than department level management.) The third attitude viewed CI in good light on a tactical level, yet failed to see the benefit of CI long term. The fourth attitude sought to integrate CI into the different processes, including strategic decision-making.