Competitive Intelligence at Small Enterprises

By Tarraf, Patrick; Molz, Rick | SAM Advanced Management Journal, Autumn 2006 | Go to article overview

Competitive Intelligence at Small Enterprises


Tarraf, Patrick, Molz, Rick, SAM Advanced Management Journal


Introduction

Competitive intelligence (CI) is a relatively new and underdeveloped field in the management literature. CI is meaningful information that allows an executive to be aware of and respond to changes in his or her competitive environment. It has become increasingly important to companies over the last 15 years, and the last decade has witnessed many efforts to formalize CI into a company's strategic process and a structure, accompanied by a substantial increase in CI spending (Vedder, Vanecek, Guynes, and Cappel, 1999). This growing interest in CI parallels the progressive use of information systems by organizations over the last few years. In a benchmarking study, Lackman, Saban and Lanasa (2000) found that 94% of responding market intelligence directors considered technology to be crucial to the success of the CI function in a company.

Although CI is being more and more recognized among company managers, it remains poorly studied in the academic literature (Wright, Pickton and Callow, 2002). Porter (1980, p.71-74) recognized the need for a "competitor intelligence system" at companies and for a CI system that encompassed several processes, including gathering information, compiling, cataloging, analyzing, and communicating the analysis to the company's decision makers and strategy formulators.

We used ProQuest to search peer-reviewed academic journals, using the keywords "competitor intelligence" or "competitive intelligence." The search resulted in 538 articles, which we reviewed each article to differentiate between theoretical work, articles that provided a review on matters relating to CI, and empirical studies on some aspect of CI. The results are summarized in Table 1.

A significant number of the empirical studies related to computer and information systems that are of potential use for competitive intelligence, as well as studies of technical subjects such as data mining and Web searches. Relatively few empirical studies tackled the subject from a strategic business point of view.

There was little research into competitive intelligence as it pertains to small companies. In this study, we research decision-makers' attitudinal and perceptional issues most likely to shape CI activity in small companies.

Literature Review

The relatively few studies on competitive intelligence have focused on the companies' micro or macro economic environments, such as company size or particular industry (Wright et al., 2002; Groom and David, 2001; Wood, 2001) and also the manner in which CI functions, such as which departments are involved and what resources are typically allocated to the function (Prescott and Smith, 1989; Lackman et al., 2000; Ghoshal and Westney, 1991; Tao and Prescott, 2000; Wright and Ashill, 1998; Breeding, 2000). However, little is known about how the decision-maker's perceptions or attitudes toward the business environment affect the formation of competitive intelligence activity.

Most surveys and studies of competitive intelligence have focused on large corporations and Fortune 500 companies with formal, working CI units (Prescott and Smith, 1989; Lackman et al., 2000; Tao and Prescott, 2000; Breeding, 2000). Wright, Pickton and Callow (2002), while studying CI practices in the U.K., excluded sole proprietorships or partnerships in their sample, assuming that they were less likely to use competitive intelligence. In one of the few studies on CI in small companies, Groom and David (2001) found evidence to suggest that they were not very concerned with it. Yet, some notable differences were evident among companies regarding to the resources allocated to CI activity. For example, companies with a greater number of employees were also those that relied on their employees more extensively for CI activity (Groom and David, 2001).

One of the main differences between small and large companies is that strategy at small companies is driven to a large extent by the character of the decision maker (Burke and Jarrat, 2004; McCarthy, 2003). …

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