Academic journal article Journal of Small Business Management

Achieving Growth and Responsiveness: Process Management and Market Orientation in Small Firms*

Academic journal article Journal of Small Business Management

Achieving Growth and Responsiveness: Process Management and Market Orientation in Small Firms*

Article excerpt

Achieving a consistent market orientation is a challenge for entrepreneurial manufacturers. This research seeks improved understanding of how internal process management assists and hinders small growing manufacturers in achieving the responsiveness component of a market orientation. Under process management, firms implement internal systems, procedures, and performance measures to improve performance and responsiveness to changing markets. Benefits include improved market sensing, two-way communication, and coordinated responses to market demands. Despite the potential benefits, researchers question whether the internal structure and control of process management will improve responsiveness in entrepreneurial firms. Process management may conflict with the organizational cultures, agility, and responsiveness of entrepreneurial companies. Research results identify how process management assists and hinders the responsiveness component of market orientation in small manufacturers. Management implications and strategies for coping with growth challenges are presented.

Background and Justification

A positive link between market orientation and business performance appears to exist for small firms (Pelham 2000, 1996). Market-oriented firms generate information on changes in customer needs and their markets. The information is then disseminated among internal departments. Information-generation activities include market scanning, customer ordering systems, and feedback collection on delivered products. Examples of dissemination activities include formal new-product reviews and order-review meetings. Coordinated responses to customer, competitor, and overall market changes are then implemented by market-oriented firms. Although customer orientation is important, to be market-oriented also means understanding competitor offerings and threats as well as overall changes in the market environment (Jaworski, Kohli, and Kumar 1993).

Consistently achieving such a market orientation in both strategic planning and routine daily business operations is often a major challenge for small firms, especially during periods of rapid growth (Pelham 2000; Churchill and Lewis 1983). One possible method for improving market orientation in small manufacturers is internal process management. Pelham (2000) concluded that the "extent of (internal) coordinating systems and formalization ... significantly influenced market orientation" (p. 38) in small firms. Other researchers have noted that, to achieve a comprehensive market orientation, firms of all sizes need to develop business processes that support efforts to understand and respond to customer and market changes (Day 1994; Slater and Narver 1994; Kohli and Jaworski 1990).

Day (1994) noted that more research is needed to identify and understand the components of effective processes for achieving a market orientation. As part of his research, Day developed a classification framework for these types of processes. This paper utilizes Day's classification framework of processes to improve our understanding of how process management assists and hinders responsiveness to customer and market changes, a key aspect of market orientation (Jaworski, Kohli, and Kumar 1993) in small, growing firms.

Benefits and Limitations of Process Management

Anderson, Rungtusanatham, and Schroeder (1994) define process management as "The set of methodological and behavioral practices emphasizing the management of process, or means of actions, rather than the results" (p. 480). Process management assists in achieving a market orientation for several reasons. First, it assists market sensing through consistent methods for collecting and analyzing customer, competitor, and market information and customer feedback. Second, it assists two-way communication about customer and market needs (and the firm's capability for responding) among employees within the firm. Third, it helps to coordinate and expedite the firm's responses to customers and market opportunities. …

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