Academic journal article Journal of Small Business Strategy

Customer-Firm Interaction and the Small Firm: Exploring Individual, Firm, and Environmental Level Antecedents

Academic journal article Journal of Small Business Strategy

Customer-Firm Interaction and the Small Firm: Exploring Individual, Firm, and Environmental Level Antecedents

Article excerpt

INTRODUCTION

Customer- firm interaction (CFI) is considered a communication process through which firms and customers share information and knowledge (Gales & Mansour-Cole, 1995). CFI has been considered the core of customer-firm relationship (Gronroos, 2004) that plays a crucial role in building trust and relationship through communication (Anderson & Narus, 1990). The relationship between a firm and its customers creates a competitive setting through which firms can enjoy long term success (Gotlieb, Levy, Grewal, & Lindsey-Mullikin, 2004, Lehmann & Neuberger, 2001; Mills & Margulies, 1980).

Over the past decade, much research has been done on the interaction between firms and their customers (Bonner, 2010; Foss, Laursen, & Pedersen, 2011; Huffman & Skaggs, 2010; Ramani & Kumar, 2008; Song, Wang, & Parry, 2010). The research revolved around the nature, characteristics, and effects of those interactions. Overall, research supports the notion that interaction between a firm and its customers yields positive outcomes for the firms (Gruner & Homburg, 2000; Foss, Laursen, & Pedersen, 2011).

The research on customer-firm interaction has been conducted in a variety of contexts. CFI has been extensively studied in the past for its effects on customer satisfaction (Ramani & Kumar, 2008; Wang & Feng, 2012), new product success (Bonner, 2010; Grumer & Homburg, 2000; Narver, Slater, & MacLachlan, 2004), and firm performance (Moorman, 1995; Ramani & Kumar, 2008; Skaggs & Galli-Debicella, 2012). However, current research is lacking in two respects. First, only little attention has been given to the antecedents of customer interaction or to the factors that facilitate or inhibit firms from interacting with their customers. Second, not much research exists that focuses specifically on entrepreneurial and small firms, especially on the role that the entrepreneur's/owners and the firm's characteristics play in customer-firm interaction. This paper addresses those gaps. In this paper we argue that CFI is a strategic and deliberate action of a firm, and therefore, the extent to which it is used can be affected by certain factors that are unique to the firm. We specifically analyze CFI in entrepreneurial and small firms because the orientation of such firms is different from that of large firms (Coviello, Brodie, & Munro, 2000). Entrepreneurial / small firms are an ideal candidate to study antecedents of CFI because for entrepreneurs and small business owners, customer interaction is a primary source of customer information and knowledge that leads to strategic decision making. Because entrepreneurs and small business owners tend to experience greater resource constraints compared to larger and established firms, interaction with customers is of special importance in that it allows for direct and easy way to gain information and knowledge (Carson, Cromie, McGowan, & Hill, 1995; Hisrich, 2005).

Exploring the Antecedents of CFI in Entrepreneurial and Small firms

As a starting point, we propose that the antecedents of CFI be grouped into individual, firm, and environmental level factors. Entrepreneurs often mold the structure and system of their firms. They identify their business as an extension of their beliefs and personality, and make strategic decisions accordingly. Since CFI is strategic in its disposition, it is highly influenced by the entrepreneur's individual characteristics. Firm level characteristics such as the product or service provided by the firm are another central factor around which firms weave their strategic decisions. As such, a firm's product or service is a critical link between a firm and its customers. Lastly, the environment is also a key factor affecting strategic decisions that constitute a third category in the framework. The paper thus addresses the following general research question: a) do entrepreneurs' individual experiences affect the degree to which their firm engages in interaction with its customers? …

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