Academic journal article Journal of Small Business Management

Understanding Market-Driving Behavior: The Role of Entrepreneurship

Academic journal article Journal of Small Business Management

Understanding Market-Driving Behavior: The Role of Entrepreneurship

Article excerpt

In recent years, the marketing literature has placed significant emphasis on market-driving and proactive market-driven behavior within firms in attempts to reconceptualize the meaning of "market orientation." For their part, market-driving firms such as Starbucks, Amazon.com, Dell, and Southwest Airlines are demonstrating how business model innovation results in sustainable advantage and superior long-term performance in a wide range of industries. In this paper, we contend that market-driving behavior is distinct from a firm's market orientation, and instead is the essence of entrepreneurial action in the Schumpeterian "creative destruction" sense. It is further argued that the firm's entrepreneurial orientation interacts with other strategic orientations, in the process determining how they are manifested and, in some cases, whether they are manifested. Furthermore, entrepreneurial orientation plays a critical role in determining transitions among various strategic orientations over time. An integrative model illustrates the dynamics of the interface between marketing and entrepreneurship from both a content and process perspective. Two case studies illustrate how trajectories can be identified in the dominant strategic orientations within companies as they evolve.

Introduction

At the nexus of the interface between entrepreneurship and marketing are value creation and value appropriation within the market. It is the market that provides signals both to the entrepreneur and marketer regarding what value is needed, when it is needed, and how it should be delivered. The market represents a control system that determines the success or failure of entrepreneurs and marketers. Yet the fundamental nature of the market poses a vexing challenge. There may be a tendency to think of markets as a given. Thus, one might assume that an amorphous market exists (for example, the market for farm products or televisions) and this market reacts to the efforts of entrepreneurs and marketers. These types of existing markets tend to evolve and can be quite dynamic at times, but such characteristics simply require firms to be efficient and develop their adaptive capabilities. In this scenario, the needs in question tend to be fairly observable or articulated, and success is associated with superior abilities to attract, serve, and retain customers. Researchers refer to this as "market-driven behavior" (Narver, Slater, and MacLachlan 2004; Jaworski, Kohli, and Sahay 2000; Day 1998).

The challenge comes into play when the market does not yet exist, or is being radically redefined. Though market-driven behavior centers on following customers and keeping abreast of competitors, there are instances where markets are fundamentally redefined and the competitive rules are changed. What has been labeled "market-driving behavior" finds a firm shaping the structure, preferences, and behaviors of all market stakeholders (Hills and Sarin 2003; Kumar, Scheer, and Kotler 2002). In such instances, high levels of learning on the part of various members of the value chain become necessary as they are introduced to a new competitive landscape and quantum leap changes in value proposition.

Firms attempt to achieve sustainable advantage by responding to the market, fundamentally modifying the market, or attempting to create a new market. The latter two options may result in market-driving behavior, a phenomenon that is not well understood. How do firms become market-driving and what are the corresponding implications for performance and sustainable competitive advantage? It would seem that such behavior has important implications for the skills, capabilities, and resources of the firm. In addition, the ability to drive markets can be hindered or facilitated by the firm's culture and a host of work environment variables. Furthermore, market driving has been referred to as a strategic orientation, behavior, organizational capability, and strategic posture, among others, which further complicates an understanding of its role in the strategic process. …

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