Final comment

A study of 16 businesses of large UK banks, building societies and insurers shows that product development success is associated with particular styles of head office involvement. Apart from providing financial resources, effective head offices provide leadership in the agreement of objectives based on a wider vision of opportunities. This allows constituent businesses to capitalize more fully on entrepreneurial opportunities. Such head office support is particularly valuable when a business is complex and related to others in the corporate portfolio. Lesser performance was found to be associated with distinctly different styles of head office involvement. At the extreme it involved unnecessary meddling.     

The Significance of Customer Base in the New Economy: Satisfaction and Perceptions of Success among Small Suppliers and Small Nonsuppliers1

Outsourcing of operations from large businesses to small business suppliers has become a prominent feature of the new global economy. This paper compares the perceived success and work satisfaction of small businesses that supply goods and services to other businesses compared with other small businesses. Small business suppliers and their customers may be engaged in a mutually beneficial relationship, or small suppliers may be disadvantaged as a result of the relationship. Using data from interviews with 715 small business operators, partial support was provided for the disadvantaged position. Suppliers had lower perceived business success compared with other small businesses when other variables were controlled. However, there was no difference in job satisfaction.     

Small business growth through geographic expansion: A comparative case study

Although the small business sector as a whole is achieving phenomenal growth, an important concern in the field has been identifying the problems, challenges, and success characteristics associated with the prudent growth of individual firms. A strategy utilized by many small firms to achieve their growth objectives is one of geographic expansion. This approach involves expanding a firm’s business from its original location to one or more additional geographic sites, and is particularly well suited for firms that cannot expand in their present location but believe that their products or services may be appealing to consumers in other markets.Surprisingly, despite the prevalence of geographic expansion as a means of small firm growth, this is a neglected area of small business research. Although researchers have examined the common challenges associated with small firm growth, a small business that expands from one location to several locations is subject to a number of potentially unique challenges. For example, during the course of opening a new geographic site, a small business manager will be confronted with the task of managing an existing business and a start-up at the same time. The challenge created by this undertaking, along with the other challenges associated with geographic expansion, have not been specifically identified. An improved understanding of these challenges may help small firm managers maximize their changes of leading successful expansion efforts.As a result of the lack of research in this area, this study used a comparative case study methodology to develop a theoretical model of the antecedents of effective small business geographic expansion. The model was developed in two steps. First, a preliminary model of the antecedents of effective small business geographic expansion was developed from the existing small business growth literature. Second, using analytic induction, the preliminary model was compared with the experiences of five small businesses that have engaged in a growth strategy of geographic expansion for the purpose of developing a more thorough and more valid theoretical model. A unique attribute of the sample is that not all of the businesses have been successful in their expansion efforts. Two of the five small businesses included in the study have had failed expansions, providing us the rare opportunity to contrast failed expansion efforts against successful ones.The model that emerged from this approach supports the notion that geographic expansion involves a unique set of managerial challenges. The consistent evidence across the five case studies indicated that effective small business geographic expansion involves the following six major areas of concern: planning for growth, managing growth, reasons for growth, expansion site characteristics, a set of moderator variables, and expansion performance.Among the implications of the study is that the unique nature of the geographic expansion process adds a layer of complexity to firm growth that exacerbates the need for planning. Along with the normal challenges involved with adding structure to accommodate growth, a firm that engages in geographic expansion must do this in an unfamiliar location, where the market potential and legitimacy of the firm’s business concept is untested. The consistent evidence that emerged from the cases is that planning helps attenuate these challenges. In addition, the recruitment and selection of qualified personnel to staff expansion sites is a critical activity, along with networking in the expansion site locations to establish organizational legitimacy. Three variables were found to moderate the relationship between managing growth and expansion performance. Learning and flexibility were found to have a positive influence on the managing growth expansion performance relationship, whereas environmental turbulence was found to have the opposite impact. Finally, a complex set of relationships emerged from the study pertaining to expansion site characteristics. For instance, the evidence generated across the cases suggested that planning helps a firm develop a set of heuristics for expansion site selection, which helps a firm avoid placing a site in an undesirable location.     

Socially Responsible Processes of Small Family Business Owners: Exploratory Evidence from the National Family Business Survey

The purpose of this exploratory study is to ascertain the impact of family, business, and community factors on the socially responsible processes of small family businesses, and investigate the influence of financial success and attitudes toward community on these processes. The research is grounded in the Sustainable Family Business Theory, which has been enhanced to include the interactive and collaborative action, both economically and socially, of family businesses and their communities. Data are from the National Family Business Survey, 2000 panel. The processes studied include interpersonal transactions in the form of community leadership and holding an elected or appointed office, and resource transactions in the form of providing financial or technical assistance in community development, and providing donations to local programs. Models assessed the probability and intensity of assistance provided by family businesses. The findings indicate that the social and economic climate of the community may contribute to the performance of responsible actions by businesses because human, social and financial capital resources from both the family and the business can be used to solve problems in the community. The most robust result was that individuals with very positive attitudes about their local communities were more likely to serve in leadership positions and make financial and technical contributions to the community. Business owners in economically vulnerable communities were willing to assume more responsibility to fill leadership positions in the community and make substantial contributions of financial and technical assistance than those in less vulnerable communities. Policymakers must recognize the many contributions of family businesses and forge rural developmentpolicies that not only help sustain existing businesses and fuel the engine of economic growth, but encourage human capital development, and, in turn, enhance the contributions of the family and the business to their community.     

Craft Retailers' Criteria for Success and Associated Business Strategies

This research was designed to fill the void in understanding how art–related retailers define and achieve success. A two–phase data collection process was implemented. Preliminary personal interviews were conducted with 12 craft retailers followed by a mailed survey to 1000 craft retailers in nine southeastern U.S. states. Factor analysis was employed to reduce the number of items for defining success. Cluster analysis followed to develop empirical groupings of craft retail businesses based on the success factor scores, of which four different groups were identified. Multivariate analysis of variance (MANOVA) and analysis of variance (ANOVA) were used to compare retail clusters related to business strategy variables of competitive strategies, product assortment, pricing, and distribution strategies, and networking activities. Significant differences were found in the craft retailers' business strategies used to achieve success. Craft retail entrepreneurs were found to define success with both traditional criteria such as profit and growth and also with intrinsic factors such as personal satisfaction and the opportunity to elevate the craft tradition. Successful small craft retail firms offered more focused product assortments of specialized craft products, implemented more differentiated strategies of stocking unique crafts in their assortments, as well as offering unique services to educate consumers about crafts, craft artisans, and a region's culture. Craft retailers who reported greater success did not engage in competitive pricing. Collaborative strategies included networking among family, friends, and business peers.     

Managing Family Businesses in Small Communities

Small businesses located in communities with populations of less than 10,000 were identified in a national sample of family businesses and examined for differences in their management strategies (n = 384). These businesses were first clustered by level and type of management strategy and then analyzed to ascertain differences and similarities in both personal and business firm characteristics among the family business manager groupings. Problems associated with small business management and sources of assistance were also identified. Findings suggest that managers of small family businesses located in small U.S. communities who practiced strategies focusing on extensive planning and controlling perceived their businesses to be successful; however, these managers noted that their greatest problem involved development of sound marketing strategies.     

Strategic Goals and Practices of Innovative Family Businesses

A profile of 231 Washington state family businesses is presented. This article focuses on the business strategies of these firms, analyzing the relationship between strategy, performance, and business practices. Firms categorized as Prospector firms reported more gains in their current market position than all other strategic types. These firms were more likely to value an effective management and employee team and to develop new quality products and services and career development plans for non-family employees. Implications for family businesses are discussed.     

Occupational Choice: The Influence of Product vs. Process Innovation

Prior studies have found that knowledge gained from work experience is a way to gather insights for business opportunity recognition. However, little is known about the specific types of knowledge that lead to business founding. Utilizing concepts from knowledge spillovers and from the opportunity recognition literatures, this paper argues that an organization’s technological innovation activities can help its employees develop specialized knowledge that provides them with the entrepreneurial opportunities to found new businesses. Besides highlighting the positive relationship between technological innovation activities in organizations and the propensity of individuals leaving the organizations to start new businesses, this paper also provides a more fine-grained explanation of the types of technological innovation activities that can lead to business founding. We argue that knowledge acquired through product innovations is more easily adopted by individuals for commercial uses, while knowledge acquired through process innovations must be integrated with other parts of the organization to be valuable. This study proposes that product innovation activities in an organization, more so than process innovation activities, are related to new business founding. Implications for opportunity exploitation and ways to exploit knowledge spillovers are discussed.      

Developing Pharmacy Services: a Customer-driven Interaction and Counselling Approach

In recent years, many traditional businesses have been facing demands to extend their core product and incorporate a substantial service element. The transition from traditional business to service enterprise cannot be accomplished without considerable attention being given to ways of fulfilling cus- tomer needs. This study looks at the pharmacy business and asks what kind of pharmacy services different customer groups want, how these groups can be distinguished and what the implications are for pharmacy service development. It identifies four customer groups - the contented, phormacist- dependent customer, the independent customer, the infor- mation seeker and the discontented customer -and concludes that the future success of the pharmacies depends on how much they take the desires of these groups into consideration in developing their services.     

The Impact of the New Product Development Project on the Success of Financial Services

This article explores the impact of a number of aspects of the new product development project on the success of new financial services in the United Kingdom. It is found that synergy between the new product and the organisation, and the quality of internal marketing are particularly associated with eventual success for the new product. Technological advantage, market research and responsiveness (i.e. speed of development) are also associated with success. Banks seem to be particularly effective in their use of market research, whereas Building Societies are good at in ternal marketing and synergy. New interest accounts have been particularly successful due to the use of market research and the speed of their development.     

Retail franchising: an intellectual capital perspective

Retailers appear to have found franchising to be a valuable means by which to develop their businesses, both domestically and abroad. In the UK franchising accounts for approximately one-third of all retail sales (Franchise Survey, 2003). This paper explores the implications of franchising on the intellectual capital (IC) development and knowledge management (KM) for retail organisations, given that for retail organisations asset intangibility is a particular feature. As such, this paper breaks new ground in engaging currently topical concepts from leading-edge debates in the management literature (IC and KM) to examine franchising in service sector businesses.The paper should hold considerable interest for, not only academics interested in franchising per se, but also business researchers examining fields such as innovation and intangible asset growth.     

The influence of innovation orientation in human resource management on new product development: The moderating role of innovation type

Despite substantial prior research on new product success, there are still high failure rates. Why might this be the case? This paper argues that (1) the most important determinants of new product success involve managerial behavior and therefore a need exists to examine the influence of innovation orientation of human resource management (IO-HRM) on these determinants, and (2) these relationships are moderated by the type of innovation, product versus service. Data from 275 product innovation projects suggest that IO-HRM is a significant predictor of not only new product success but also its prime determinants: the proficiency of development activities, product advantage, marketing synergy, and top management support. Further, the linkage between IO-HRM and new product success and marketing synergy is found to be stronger in service than in product innovation projects.     

Fan-centric social media: The Xiaomi phenomenon in China

In this highly competitive century, social media offers both opportunities and challenges. The concept of social media is top of mind for many entrepreneurs today. Fans are assuming an increasingly active role in co-creating marketing content with companies and their respective brands. Based on the Xiaomi success story in China, we provide a framework for building the power of the fan base and propose a new fan-centric social media business model. We examine the best practice case study of an emerging company's successful efforts to leverage social media in order to reach an important audience of young consumers. Thereafter, we conclude with several lessons related to the integration of social media into a new firm's operation strategy. We strongly recommend that businesses, and especially startups, make good use of powerful social media to develop a business model with fan demand as the core. This is what we call the ‘fan-centric’ social media business model.     

Establishing a new business venture unit within a firm

The rapid growth of the United States as a whole is basically a story of the discovery and adoption of novel and improved ways of satisfying wants and needs. Previously, these wants and needs have been championed by individuals such as J.P. Morgan (finance), James B. Duke (tobacco), Andrew Carnegie (steel), Cornelius Vanderbilt (railroads), and John D. Rockefeller (oil). Each of these entrepreneurs commercialized a new idea or invention—the essence of the innovation process. Each bridged the gap between science and the marketplace by developing and commercializing a marketable innovation.Although even more of a need to reach the market as quickly as possible exists today, the majority of the innovations commercialized each year come from new or smaller organizations-often the ones with the least amount of capability and resources to accomplish the task. Existing businesses, especially larger ones, are in a much better position to bridge this gap. These companies have the existing financial resources, business skills, and usually the marketing and distribution systems to successfully commercialize a new innovation. Recognizing this capability, large companies have tried to instill an entrepreneurial spirit or an internal venturing program in an attempt to increase the amount and success of new offerings. This activity has taken on a variety of forms, one of which is the new business venture unit.What are the characteristics of a new business venture unit? Are they more successful at introducing new products than autonomous entrepreneurs? These and other questions were addressed in a research project of Fortune 1000 firms consisting of a mail questionnaire and in-depth personal interviews.The majority of these firms did not have a new business venture unit (70%). Of those firms that did, the average age of their unit was 5.3 years and the range of ages was from a few months to 20 years. In addition, the range of employees in the new business venture unit varied greatly: from one to 100. Firms in the primary product lines of chemical and medical products, computers, beauty products, and feminine products tended to have new business venture units more than did firms in other product areas. These units contained a variety of departments, including marketing (the most frequent), finance, and research and development. Through modest increases in the number of new products introduced each year, the new business venture units also significantly increased the per- centages of sales attributed to products introduced within the previous three years. A good environment for a successful new business venture unit included: encouraging new ideas; allowing mistakes and failure; making available the resources of the firm; encouraging teamwork; establishing broad per- formance goals and an appropriate reward system; and having top management strongly support the unit.     

The effects of partnership quality on business process outsourcing success in Malaysia: key users perspective

This paper proposes a theoretical framework to investigate the impact of partnership quality and other variables—business understanding, commitment, communication, relationship age and top management support—on outsourcing success. Data were gathered from a survey of nine banks, from which 105 respondents participated in this study. The results indicate that partnership quality may serve as a key predictor of outsourcing success. Partnership quality was found to be influenced positively by business understanding, commitment, communication and top management support. However, relationship age was found to be not significantly related to outsourcing success. The implications of these findings are further elaborated.     

Innovation and business research in Latin America: An overview

Innovation in Latin America is a challenge for achieving development. Several Latin American countries and businesses are attempting to increase innov ation and entrepreneurship but they face substantial challenges and difficulties. Institutional, governmental and business policies and practices need to be enhanced in order to increase such innovation. Increasing business research in Latin America and university-business partnerships is probably key in such endeavor. This special issue provides some evidence regarding these challenges at the company level, industry level, and country level. This issue also includes three cases showing Latin American company experiences with financial, marketing and new product innovations and market changes.     

Using Live Cases to Teach Ethics

This paper describes a live ethics case project that can be used to teach ethics in a broad variety of business classes. The live case differs from regular cases in that it involves a current situation. Students select an on-going or current event that involves ethical violations and write a case about it. They then present their case and run a debate about the challenges and issues outlined in the case and the actions that could have or should have been taken. The dynamic project fulfills the key criteria for effective ethics education since it increases awareness of the complexity of ethical challenges, allows application of concepts, creates a personal emotional engagement in the case, is relevant, holds students accountable for their position, and creates a setting that encourages students to think critically about ethics.Dr. Victoria McWilliams is Professor of Finance in the College of Commerce and Finance at Villanova University. Her areas of interest include pedagogical issues, as well as corporate governance and control. She has distinguished herself for her ability to provide high quality, innovative business education, and for her outstanding leadership achievements at various academic institutions.Dr. Afsaneh Nahavandi is a management faculty at the School of Global management and Leadership at Arizona State University’s West campus. Her areas of interest include leadership, teams, and culture. She has been director of the MBA program at the West campus of ASU, director of the University College, and associate dean of the ASU University College since July 2006.     

Dynamic capabilities and new product development in high technology ventures: An empirical analysis of new biotechnology firms

In industries populated by entrepreneurial high technology firms, the rapid development of new products is viewed as a key determinant of success. Developing a portfolio of new products is necessary to gain early cash flows, external visibility and legitimacy, early market share, and increase the likelihood of survival (Schoonhoven, Eisenhardt, and Lymman 1990). In addition, recent research has shown that new product development improves a firm's ability to raise money through an initial public offering (Deeds, DeCarolis, and Coombs 1997).This paper develops a model of new product development which is tested on a sample of 94 pharmaceutical biotechnology companies. We hypothesize that new product development capabilities are a function of a firm's scientific, technological, and managerial skills. To test this relationship, we develop several firm specific measures in an attempt to triangulate in on the core construct of firm specific new product development capabilities.Some important implications for entrepreneurs/managers of high technology firms flow from our results. First, entrepreneur/managers need to view the choice of geographic location as an important strategic decision which will impact their firm's access to the skilled technical personnel and the streams of knowledge. Our results indicate that a choice location has a significant concentration of similar firms, but the level has not yet reached a point where competition for resources in the local environment offsets any advantages of the location. In the case of biotechnology, this would seem to indicate that the prime locations would be expanding areas such as San Diego, Seattle, and Philadelphia rather then the established locations of Silicon Valley and Boston.Second, as scientific knowledge plays an ever more important role in a firm's success the quality of the firm's scientific team is a critical ingredient in a firm's new product development capability. But how do you evaluate the quality of scientific personnel? Our results indicate that there is a strong positive relationship between the impact—as measured by citations—of a team's prior research in the academic community and the productivity of that team in a commercial research laboratory. Therefore, the judgement of a scientific field, captured by citations or perhaps expert judgement, should prove to be a useful tool when evaluating personnel for a firm's research team.Third, the results from our measures of CEO experience and the percentage of the top management team with a Ph.D. are interesting. As expected the prior experience of CEO in managing a commercial research facility enhances a firm's new product development capabilities. However, results for our top management team variable appears to indicate that the over reliance on technical personnel in the management of the organization detracts from the product development process. Taken together these results seem to imply that it is important that the leadership of the organization have knowledge of and experience in managing the new product development process, but that diverting the firm's scientific personnel's energies away from the laboratory and into the management of the organization maybe counter-productive. Therefore, what a high technology venture appears to need is leadership that understands and has experience in the new product development process, but which is separate and distinct from the scientific team. This type of leadership keeps the scientific team focused on research and development, and out of the boardroom.     

The Transition from Product to Solution Selling: The Role and Organization of Employees Engaged in Current Business

ABSTRACT

Purpose: This research investigates how to manage and organize existing employees when launching a solution sales strategy, specifically addressing whether it is possible to migrate existing sales representatives active in product sales to solution sales, and whether it is possible to combine the roles.

Methodology/approach: A case-based approach was applied to a multinational firm, engaged in business-to-business sales that simultaneously launched a solution sales strategy in 17 countries. In-depth interviews with 29 managers and sales representatives were performed to inductively identify why some countries succeeded in the launch, while others did not.

Findings: Because of fundamental differences in approach between solution and product sales, those countries where the solutions and product businesses were separated performed better. The difference in required capabilities and mindset meant that migrating sales representatives from product to solution sales is problematic.

Research implications: This research offers evidence of differences in mindset and approach between different marketing and sales strategies, extending the conclusions to how these differences affect the possibility of migrating existing sales representatives when launching a new selling strategy. Whether to separate service and product sales has been debated. The present results indicate that separating the current product business from the new solution business facilitates the successful implementation of the new strategy. In the case company, the solutions represent a mixture of product and services, suggesting that the problem is not the difference between products and services, but rather different selling strategies and approaches that require different capabilities.

Practical implications: When launching a solution sales strategy, the solution business should be separated from the current product business at both the organizational and personnel levels. Solution sales necessitates a particular approach and capabilities, making it unadvisable to transfer sales representatives and managers to the new solution business based solely on previous product sales success. Instead, a new skill profile must be developed taking account of the requirements of a demand-driven solution strategy.

Originality/value/contribution: Consensus is lacking as to whether to separate product and service businesses. This article extends the debate to the field of solution

sales, demonstrating that separation is needed to succeed in launching a solution sales strategy. Furthermore, this research extends our knowledge of the difference in approaches between different selling strategies, covering the possibility of successfully migrating existing sales representatives to a different selling strategy.     

Having Arrived: The Homogeneity of High‐Growth Small Firms*

This study explores the homogeneity of small firms that have achieved and sustained high growth. Using a recent population of the 50 “Best Managed” Canadian firms identified as achieving high business growth for three or more consecutive years, firm homogeneity in terms of current management challenges is analyzed. In contrast to the rich body of literature available regarding the heterogeneity of managerial challenges and patterns during small business growth and development, this study finds that once small businesses begin to sustain high growth, their reported management challenges converge. We find that, controlling for location and performance, the high‐growth small firms in our population experience similar management challenges regardless of the specific firm size, revenue level, or industry. Our results challenge the “received wisdom” that suggests the managerial challenges faced by small firms during their business growth and development always vary. Management implications and future research directions are discussed.