The Impact of Marketing Research Activity on SME Export Performance: Evidence from the UK

Article excerpt

Belief in the value of information for enhancing decisions by reducing uncertainty has increasingly led to the consensus that the growth and even survival of today's business entities will depend on their strategies for handling and processing information (Deshpande and Zaltman 1982; Turner 1991; Glazer 1991). Equally, in marketing literature, although there are examples of successful marketing decisions being taken on the basis of intuition and acumen, it is frequently proposed that decisions based on marketing research information are an important factor in overall business success (Kohli and Jaworski 1990; Narver and Slater 1990). That said, most of the research that investigates the nature of marketing information and its relationship to business performance has involved the relation between domestic markets and domestic marketing. However, in international marketing, it has been argued that the increased uncertainty posed by extending business to an unfamiliar market with unfamiliar environmental conditions intensifies the need for marketing information (Terpstra 1967; Johanson and Vahlne 1977; Douglas and Craig 1983).

Despite the agreement that marketing information is central to business success in both domestic and international contexts, there have been surprisingly few empirical studies that specifically examine the link between marketing research and company performance in the international domain. A number of recent seminal works have begun to explore the special issues surrounding the collection, use, and effects of marketing information in international and export marketing; the majority of studies pertain to the sources of export information used by exporters, the organization of research activities, the data collection methods employed, and the factors affecting the use of export information (Hart, Webb, and Jones 1994; Crick, Jones, and Hart 1994; Diamantopoulos and Horncastle 1997). Yet there remains a gap in empirical research examining the relationship between the marketing information-collecting behavior of exporting firms and their performance. Given the financial implications of embarking upon the collection of detailed marketing information or of making erroneous decisions, this gap in empirical research is somewhat surprising.

The research described in this article explores the relationship between such information gathering behavior and export performance. Further, this study focuses on small and medium-size enterprises (SMEs), for which previous research has identified a number of factors that impede marketing research activity (McDaniel and Parasuraman 1986; Fann and Smeltzer 1989; Kagan, Lau, and Nusgart 1990; Peridis 1992). Such research has also suggested that "academics and marketing professionals alike can aid small businesses by providing and disseminating evidence establishing the value of market research" (Callahan and Cassar 1995, p.8).

The Contribution of Marketing Information to Export Success

Several empirical studies have concluded that marketing research is indeed an important element in companies' success formulae. For example, Hooley and Lynch (1985) give evidence that the level of use of marketing research is positively related to company effectiveness, while Hart (1987) and Baker, Hart, and Black (1988) report that more successful companies carry out marketing research, in sharp contrast to less successful companies. Focusing on small firms, Dolinger (1984, 1985) found a positive relationship between the use of environmental information and small firm financial performance.

Despite these studies which appear to support the link between marketing research and performance, a number of researchers argue that to look for a direct relationship is to over-simplify the issue of how information is used within companies (Piercy 1983, 1985). Specifically, the investigation of the use of information and its eventual impact on company performance is argued to be confounded by a host of organizational factors such as power and politics, organizational structure and interactions, as well as senior management factors(1) (Deshpande and Zaltman 1982). …