National Culture, Market Orientation and Network-Derived Benefits: Conceptual Model for Service Sme's

By Luczak, Cheryl; Mohan-Neill, Sumaria et al. | Academy of Entrepreneurship Journal, July 1, 2010 | Go to article overview

National Culture, Market Orientation and Network-Derived Benefits: Conceptual Model for Service Sme's


Luczak, Cheryl, Mohan-Neill, Sumaria, Hills, Gerald, Academy of Entrepreneurship Journal


ABSTRACT

Do the cultural roots of business owners influence the owners' market orientation and social networks, and ultimately affect the benefits derived from the owners' networks? This research focuses on the relationship between culture and perceived network benefits of small and medium sized service firms. A thorough literature review which examined Hofstede's model of national culture, network theory, social capital theory and relationship marketing was conducted. It is an attempt to construct a theoretical foundation upon which the framework of a collectivist culture and an individualist culture and business owners' abilities to achieve perceived network derived benefits in service firms can be analyzed. The primary goal of this paper is to employ a variety of theoretical frameworks from the literature to create a holistic conceptual model from which one can derive research propositions and hypotheses concerning the influence of culture, market orientation, and social networks on the perceived benefits gained by SMEs in the service sector. The conceptual model presented in this paper contributes to our scholarly understanding of networking theory, and provides insight into how the relationship between cultures, business owners' market orientations and network benefits influence small service firms and their owners as they conduct business.

BACKGROUND AND SCOPE

Does a collectivist culture foster a more relational commitment between people in social networks than an individualist culture, and does this represent a competitive advantage in the services sector of business? Research into this area is both relevant and timely due to the increase in the service sector within the world economy. It provides an opportunity to explore the perceived benefits derived from networks in the service sector. The authors examine a possible link between national culture and market orientation and focus on the relationship between business owners' culture and perceived network benefits and further consider the possible moderating effects of the owners' market orientation on benefits derived from the owners' networks. The authors identify several fundamental differences that distinguish collectivist cultures from individualist cultures from a market orientation vantage point, and consider what effects these differences have on networking activities. These findings are used to derive several research propositions and develop a conceptual model.

There has been a considerable amount of research conducted to study factors that lead to the success of small service firms; however few of these attempts include research into the effects of culture on market orientation and networking practices in small service firms (Ramachandran and Ramnarayan, 1993; Arnold and Bianchi, 2001; Birley, Cromie, and Myers, 1991; Aldrich et al., 1989). An examination of Hofstede's model of national culture, network, social capital and relationship marketing theories are used to build a foundation upon which to analyze business owners from both collectivist and individualist cultures.

HOFSTEDE MODEL

The Hofstede model characterizes national cultures based on five independent dimensions including: power distance, collectivism/individualism, femininity/masculinity, uncertainty avoidance and long-term/short-term orientation. According to Hofstede, these dimensions "allow us to make predictions on the way that society operates" based on cultural considerations (Hofstede, 1993). Hofstede describes culture as assumptions, values, and beliefs that are shared between members of a specific group (1991). The self is formed by its membership and interaction within a specific group. The self then affects the way that a person assesses and evaluates information and ultimately affects social behavior. Although some aspects of self may be universal there are certain aspects that are culturally dependent (Hofstede, 1991). Robert and Probst describe culture as the human-made part of society which consists of shared perceptions of the social environment. …

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