Saku Hirvonen

The effect of strategic orientations on business performance in SMEs

Purpose – The present study sheds light on the role of strategic orientations (SOs) in explaining business growth. The purpose of this paper is to examine how different SOs, namely learning orientation, entrepreneurial orientation, market orientation and brand orientation simultaneously affect business performance measured with brand performance, market performance and business growth in SME context and whether these effects vary across countries. Design/methodology/approach – An extensive data set of 1,120 effective responses is collected from two European countries, namely Hungary, representing a post socialist rapidly growing market, and Finland with a stable, highly developed and competitive economy. A multigroup moderation analysis is conducted. Confirmatory factor analysis is used in testing measurement invariance, subsequently followed by structural equation modeling procedure used in testing research hypotheses developed on the basis of a literature review. Findings – The results show that entrepr...

Brand orientation in small firms: an empirical test of the impact on brand performance

Increasing attention has been paid to the concept of brand orientation over the last decade. However, research on brand orientation in small firms is only in its infancy, the present study being among the first contributions to this emerging stream of research. An empirical dataset of 255 responses from small service firms operating in Finland is used to test a model of the performance effects of brand orientation in the small business context. In addition, the moderating effects of internal branding are investigated. Confirmatory factor analysis is used in validating the constructs. The research hypotheses are tested using structural equation modeling. The results show a positive relationship between brand orientation and brand performance. However, brand orientation does not have a direct effect on performance, but instead the effect is fully mediated by brand identity. Interestingly, internal branding does not moderate any of the paths in the conceptual model.

Does market orientation pay off without brand orientation? A study of small business entrepreneurs

ABSTRACT Market orientation and brand orientation are usually modelled as distinct antecedents of business performance, and the simultaneous performance effects of these orientations are empirically under-explored. Moreover, studies of market orientation and branding tend to focus on large corporations and the views of managers rather than the views of small business entrepreneurs. Addressing these research gaps, the current study explores market orientation and brand orientation by empirically testing their simultaneous effects on the business performance of small firms. Using primary data from 328 effective responses gathered from small business entrepreneurs, the study finds that market orientation improves the financial performance of a small firm only if it is implemented through brand orientation and eventually translated into brand performance. The results further indicate that older firms benefit more than younger firms from investing in branding, while younger firms benefit from paying attention to the actions of their rivals.

Does brand orientation help B2B SMEs in gaining business growth

The purpose of this study is to examine the relationship between brand orientation and business growth in business-to-business (B2B) small- and medium-sized enterprises (SMEs). The authors also explore whether this relationship is moderated by internal firm-related factors (firm age, firm size) and/or external market-related factors (market life cycle, industry type).,The authors develop and empirically test a conceptual model using data from 396 B2B SMEs operating in Finland. Structural equation modeling is used for testing the research hypotheses.,Brand orientation contributes to business growth via two indirect paths, the first one going through brand performance and the second one going through brand performance and customer relationship performance. However, although the effects are positive, the results reveal that the regression coefficients are relatively small, implying only a limited impact of brand orientation on growth among B2B SMEs. The results further suggest that firm age, firm size and industry type moderate the brand performance–business growth relationship, whereas market life cycle moderates the effect of brand orientation on brand performance.,Future research could extend this study by examining brand orientation in industrial markets simultaneously with alternative strategic orientations, such as market, technology and innovation orientation. New moderator variables should also be considered, such as market or technological turbulence. Furthermore, given that this study uses a cross-sectional data set, it is recommended that future research should attempt to test the model using longitudinal data sets.,B2B SMEs are able to gain business growth through developing a strong brand. However, brand orientation per se appears to be of limited relevance for such an endeavor. Consequently, managers of small industrial firms should consider brand orientation only with, and in comparison to, alternative strategic orientations.,Brand orientation has been very rarely examined from the perspective of B2B firms or that of SMEs. Interestingly, the findings indicate that the performance benefits of brand orientation seem to be smaller among B2B SMEs than what earlier research would imply. The analysis of moderation effects offers additional insights into whether there are differences between industrial SMEs as to the relevance of brand orientation.

SME brand identity: its components, and performance effects

Purpose The purpose of this paper is to examine the performance effects of brand identity in small- and medium-sized enterprises (SMEs). Design/methodology/approach The authors examine whether brand identity mediates the relationship between brand orientation and brand performance, and further, whether brand performance leads to better financial performance. The authors also study whether these performance effects are moderated by customer type and industry type. Differing from earlier research, this study analyzes brand identity through its constituent components: brand values, brand vision and brand positioning. The data include altogether 721 effective responses from Finnish SMEs. Structural equation modeling is used for testing the research hypotheses. Findings Brand positioning and brand vision have a direct positive effect on brand performance, which in turn, positively affects financial performance. Brand orientation drives the components of brand identity. Importantly, there is variation in some of the relationships between brand orientation, brand values, brand vision and brand positioning across business-to-business firms and business-to-customer firms, and across firms in service industries and in production industries. Research limitations/implications The research is based on a single-country sample. Including additional factors for the model with the potential to moderate the described relationships is also called for. Future research could also consider new potential brand identity components currently not addressed in the paper. Originality/value This paper contributes to the literature by increasing the knowledge of SME branding.

Lacking Correspondence Between Subjective and Objective Performance Data Among Small Business Managers: An Abstract

This study examines (1) how accurate are small business managers’ subjective responses concerning the performance of their company in comparison to objective performance data and (2) whether there are factors that explain why some respondents offer more accurate responses than others. The authors collect subjective data from 487 Finnish companies in relation to how their profitability has changed over the past 12 months. Regarding objective performance data, the authors use a secondary database of comparable financial information for public and private companies across Europe. The authors collect data on how the companies’ profitability has developed in the accounting period (12 months) preceding the time the survey was administered. However, due to missing secondary data, the effective sample size was reduced to 141 companies.

From Outsourcing to Insourcing Brand Management: How Networking Helps SMEs to Become More Brand-Oriented?

This conceptual paper develops a model that describes how small and medium-sized enterprises (SMEs) can use their networks to become more brand-oriented. Most often, researchers assume brand orientation as something that simply originates from inside the firm. This study, while acknowledging the internal perspective on strategy formation, argues that firms can develop a brand orientation also through and within networks. The present study builds on and extends the view that SMEs develop their brands with the help of their network partners by explaining how networks can also be used for changing company philosophy. That is, instead of focusing on how the brand is developed and branding-related problems solved by relying on network partners, this study emphasizes the question of how firms construct their strategic orientation and develop a positive attitude towards brands through and within networks.

The Moderating Effect of the Market Orientation Components on the Brand Orientation–Brand Performance Relationship

The present study examines whether market orientation moderates the effect of brand orientation on brand performance. As these two orientations are argued to build on differing and even conflicting logics, the question of how they work together for the benefit of the firm is highly relevant. That is, market orientation emphasizes the importance of identifying and satisfying customer needs to the fullest (Narver and Slater 1990), whereas brand orientation highlights that the satisfaction of customer needs should only be pursued when no harm to the brand is done (Urde 1999). Importantly, we follow Sorensen (2009), who notes that the different components of market orientation may not be equally relevant for different firms and that researchers should therefore consider decomposing the market orientation concept into its components. To this end, we draw on the model by Narver and Slater (1990) and focus on the three key components of market orientation, namely customer orientation, competitor orientation, and interfunctional coordination. We hypothesize that (H1) the effect of brand orientation on brand performance is greater at low levels of customer orientation than at high levels of customer orientation; (H2) the effect of brand orientation on brand performance does not differ between firms at low levels of competitor orientation and at high levels of competitor orientation; (H3) the effect of brand orientation on brand performance is greater at high levels of interfunctional coordination than at low levels of interfunctional coordination.