Qualitative Market Research: An International JournalEmerald Article: A resource-based view of the small firm: Using aqual...
The current issue and full text archive of this journal is available at                                                www...
Introduction                                                                                A resource-basedSmall business...
QMRIJ   resource for businesses (Coleman, 1990). Close relationships can create trust and10,4    obligations, and define ex...
Brand identity                                                                               A resource-basedBrand and ima...
QMRIJ   township were obtained from the US Census Bureau’s “Factfinder” web site (US Census10,4    Factfinder, 2004). The ge...
. . . [our town] was the second largest furniture producer east of the Mississippi, . . . but the   A resource-based   fur...
QMRIJ      . . . the downtown to me is sort of like the focal point and the focal point has to be entertaining           a...
had for many years centered on its downtown, and had no large discounters (or big-box                A resource-basedretai...
QMRIJ      Businesses operate in an environment that can be viewed as either benign or10,4    hostile. When the environmen...
improving the overall performance of all businesses within the downtown area. Miller           A resource-based(2001) stud...
QMRIJ   Barkley, D.L. (1993), Economic Adaptation: Alternatives for Nonmetropolitan Areas, Westview               Press, B...
Miller, N. and Kim, S. (1999), “The importance of older customers to small business                   A resource-based    ...
QMRIJ   About the authors        Rodney C. Runyan is an Assistant Professor of Retailing. He teaches international retaili...
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A resource based view of the small firm

  1. 1. Qualitative Market Research: An International JournalEmerald Article: A resource-based view of the small firm: Using aqualitative approach to uncover small firm resourcesRodney C. Runyan, Patricia Huddleston, Jane L. SwinneyArticle information:To cite this document: Rodney C. Runyan, Patricia Huddleston, Jane L. Swinney, (2007),"A resource-based view of the small firm:Using a qualitative approach to uncover small firm resources", Qualitative Market Research: An International Journal, Vol. 10Iss: 4 pp. 390 - 402Permanent link to this document:http://dx.doi.org/10.1108/13522750710819720Downloaded on: 07-12-2012References: This document contains references to 42 other documentsCitations: This document has been cited by 2 other documentsTo copy this document: permissions@emeraldinsight.comThis document has been downloaded 2016 times since 2007. *Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF THE ARTS LONDONFor Authors:If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.Information about how to choose which publication to write for and submission guidelines are available for all. Please visitwww.emeraldinsight.com/authors for more information.About Emerald www.emeraldinsight.comWith over forty years experience, Emerald Group Publishing is a leading independent publisher of global research with impact inbusiness, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, aswell as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization isa partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archivepreservation. *Related content and download information correct at time of download.
  2. 2. The current issue and full text archive of this journal is available at www.emeraldinsight.com/1352-2752.htmQMRIJ10,4 A resource-based view of the small firm Using a qualitative approach390 to uncover small firm resources Rodney C. Runyan Department of Retailing, University of South Carolina, Columbia, South Carolina, USA Patricia Huddleston Department of Advertising, Public Relations and Retailing, Michigan State University, East Lansing, Michigan, USA, and Jane L. Swinney Department of Design, Housing and Merchandising, Oklahoma State University, Stillwater, Oklahoma, USA Abstract Purpose – The purpose of this paper is to describe a qualitative study of small retailers, designed to uncover perceptions of resources which may be utilized to create competitive advantages and improve performance. The resource-based view (RBV) of the firm has focused on large firms, and this study extends RBV to the small firm. Design/methodology/approach – Using focus groups of small retailers within four communities in the USA, open-ended questioning and discussions were utilized to help elicit responses about owner’s resources. Findings – The concepts of community brand identity, local social capital and environmental hostility (though not part of the original discussion guide), emerged as important constructs. Both community brand identity and social capital were articulated by focus group participants as resources which helped them to be successful. Brand identity was seen as important regardless of environment, while social capital emerged as a resource used more in hostile environments. Research limitations/implications – Brand identity and social capital are non-economic resources which may help small retailers to compete in increasingly competitive environments. The RBV holds that to provide a competitive advantage, a firm’s resources must be valuable, rare, imperfectly mobile and non-substitutable. This qualitative study supports the conceptualization of brand identity and social capital as such resources. Practical implications – Small business owners need to recognize the value of non-monetary resources. Once these are recognized they can then be leveraged by the business owner to improve performance. Originality/value – Few studies exist which apply the RBV to small firms. Only recently have scholars begun to operationalize constructs of the RBV. Researchers have not investigated social capital or brand identity as mitigators of environmental hostility. This study addresses each of theseQualitative Market Research: An issues.International JournalVol. 10 No. 4, 2007 Keywords Brand identity, Small enterprises, Social capital, Community behaviour,pp. 390-402 United States of Americaq Emerald Group Publishing Limited1352-2752 Paper type Research paperDOI 10.1108/13522750710819720
  3. 3. Introduction A resource-basedSmall businesses in the USA often operate in less than benign environmental view of the smallconditions. Since, the early 1980s, significant changes have occurred in communitiesacross the USA, including continued suburbanization, gentrification of urban firmareas and the entrance of large retail chains. Restructuring of many economic sectors(e.g. manufacturing, agriculture, services) has led to economic stress for many areas(Barkley, 1993; Leistritz and Hamm, 1994; Kean, et al., 1998). This is especially true of 391small downtown retailers within rural or semi-rural communities (McGee and Rubach,1997; Runyan and Huddleston, 2006). Changes in the demographic landscape of theUSA, and consolidation in the retail industry have led to concentration of retail outletsin large-scale retail formats (Stone, 1995, For example, the number of Wal-Mart storesand Supercenters grew 26.4 percent between 2000 and 2005 (Annual Report, 2005).These changes have created what can be characterized as a hostile environment.Hostile environments are distinguished by precarious industry settings, harshbusiness climates, and the relative lack of exploitable opportunities (Covin and Slevin,1989). Small retailers face an increasingly hostile environment (Ozment and Martin,1990; McGee and Rubach, 1997) caused by intense competition and shifting economicconditions (e.g. loss of manufacturing jobs). While small retailers possess fewer resources with which to survive in hostileenvironments than do their larger competitors, little exists in the extantliterature regarding how small retailers should respond to these threats. Rather theliterature focuses on large retailers or industrial firms (Zahra, 1993). Theresource-based view (RBV) holds that competitive advantages are generated by thefirm, from its unique set of resources (Wernerfelt, 1984; Barney, 1991; Peteraf, 1993).Since, the RBV of the firm focuses on a firm’s unique set of resources, identification ofthose resources are tantamount to survival for small firms. The RBV of the firmprovides a framework for small firm owners to strategize based on those resourceswhich will provide the basis for a sustainable competitive advantage. Yet little hasbeen done to uncover the resources which small firms possess or utilize to gaincompetitive advantage. Thus, the use of a qualitative method is called for when there isa lack of understanding of the phenomenon under investigation (Summers, 2001). In a benign environment, small firms may be able to survive (or be successful) withinferior resources. But in a hostile one, a firm’s resources must be superior (Covinand Slevin, 1989). In the current study, we posit that two key resources for smallretailers who face a hostile environment will be the collective brand identity of thedowntown area within which they exist, and the individual social capital that eachsmall firm has built up with local consumers. Fiol (2001) argued that an organization’sidentity can be a source of competitive advantage. Brand identity or image has beenposited as a resource in the strategy literature (Barney, 1991; Peteraf, 1993; Runyan andHuddleston, 2006). Brands are often used as examples of imperfectly mobile resources(Wernerfelt, 1984; Peteraf, 1993). They may be traded, but are mobile only to the extentthat they bring equal value to the new owner. Thus, the creation of brand identity maybe a key strategy in marketing a downtown to local consumers and visitors. When a downtown area does not have a positive brand identity (or any brandidentity), small retailers must access other resources to be successful, or survive.Social capital may be a resource that small businesses can acquire with limitedfinancial capital. Like the economic version of capital, social capital is a productive
  4. 4. QMRIJ resource for businesses (Coleman, 1990). Close relationships can create trust and10,4 obligations, and define expectations among trading partners (Gulati, 1995). Social capital exists in organizations and communities alike (Coleman, 1990) and there is a positive relationship between the amount of available social capital in an area, and the area’s economic well being (Putnam, 1993). Our research question is: RQ1. Do the resources of brand identity and social capital mitigate a hostile local392 environment for small retailers? We used a qualitative approach to the study, conducting focus group interviews with small retailers within four downtown areas in a Midwestern state. Utilizing insights from these sessions, we offer research propositions to depict the relationships between the local business environment, brand identity, and social capital. A framework is offered to establish the theoretical underpinnings of the study, followed by our research propositions, methodology, and the focus group results. Discussion and implications are offered and suggestions on how the findings can inform both practitioners and researchers. Finally, we offer suggestions for future research. Theoretical framework: resource-based view The RBV of the firm is recognized as the most influential framework for understanding strategic management (Barney et al., 2001; Peng, 2001) and is used to describe and operationalize constructs of competitive advantage. The key to competitive advantage is for firms to be able to sustain the advantages gained from superior resources. Sustained competitive advantage comes from a firm’s resources and capabilities and includes management skills, organizational processes and skills, information and knowledge (Barney, 1991). There are four key attributes that a resource must have in order to yield a sustainable competitive advantage; a resource must be: valuable (worth something), rare (unique), imperfectly mobile (cannot be easily sold or traded), and non-substitutable (is not easily copied) (Barney, 1991). Environmental hostility Environmental hostility refers to a perceived threat to an organization’s primary goals (Khandwalla, 1972) and is characterized by intense price, product and distribution competition, labor shortages and unfavorable demographic trends (Miller and Friesen, 1983). Hostile environments are unpredictable in nature (Mintzberg, 1998), and in such environments, successful firms will be those who are proactive in gaining and maintaining competitive advantage (Covin and Slevin, 1989). Environmental hostility has been shown to negatively affect small firms’ competitive behavior (Miller and Friesen, 1983; Miles et al., 1993). Kean et al. (1998) found that as environmental hostility increased, small retailers relied less on a focused strategy which led to decreased retailer performance. Hostile environmental effects on small firms pose a severe hazard since resources are limited, and the consequences of poor managerial decisions may be dire (Covin and Slevin, 1989). Whether operating in hostile or benign environments, small firms must exhibit certain competitive behaviors, or possess certain resources in order to survive (Covin and Slevin, 1989; McGee and Rubach, 1997; Runyan, 2006). However, firm size limits resources, thus resources which are both non-economic and immobile may offer the best chance of survival for small retailers.
  5. 5. Brand identity A resource-basedBrand and image have long been considered resources (Barney, 1991; Peteraf, 1993). For view of the smallthis study, brand identity is conceptualized as the image that a group of small retailerswithin a downtown area possesses, that differentiates the downtown group from other firmcommunity shopping areas, as well as from competing downtown areas. To differentiatethemselves from other groups of sellers, small retailers may collectively create andmaintain a brand identity (Walmsley and Young, 1998; Coshall, 2000). The message that 393conveys brand image to consumers is often referred to as positioning, and is oftenaccomplished through slogans or symbols, designed to convey and reinforce a positionin the marketplace (McDaniel and Gates, 2001). A positioning statement communicatesto consumers how one firm’s offerings are differentiated from competitors’ offerings.It also signals to the consumer how the firm wishes to be seen or perceived.Social capitalPortes and Sensenbrenner (1993) conceptualized social capital as the expectationsfor action within a group or organization that affect economic goals of its members.Social capital is an intangible resource and is manifest from social structures comprisedof relationships (Putnam, 1995). Close relationships can create trust and obligations, anddefine expectations among trading partners (Gulati, 1995). For small retailers, a key setof trading “partners” include local consumers. Social capital theory provides a meansto help explain the interaction between local consumers and downtown businessowners. Social capital explains some of the “in-shopping” (i.e. shopping locally insteadof going to another community) of local consumers in rural communities (Miller andKim, 1999). The sort of social capital manifested in relationships between local consumers andsmall retailers is referred to as reciprocity. This is a “network” in which each memberhas something to provide to the other (Tsai and Ghoshal, 1998). When something isprovided, there is an expectation of some sort of quid pro quo. Miller and Kean (1997)refer to community reciprocity as an expected exchange between local consumers andlocal retailers. They found that local consumers were more likely to shop with localretailers when those retailers expressed a high level of support for the community.Support for the relationship between reciprocity’s effect on small business owners wasfound by Miller (2001). In her study of consumers in two rural towns, consumersatisfaction with reciprocity levels was a significant predictor of in-shopping behavior.Relationships between individuals who have built trust, reciprocity and commitmentthrough their networks have a competitive advantage (Burt, 1997; Tsai and Ghoshal,1998). Thus, reciprocity helps small business owners to develop social capital withlocal consumers and this leads to a resource which may be parlayed into a competitiveadvantage.MethodologyFocus group researchFocus groups are appropriate when one’s goal is to uncover factors related to complexbehavior (Krueger, 1998a), thus focus group interviews were conducted with smallbusiness owners and directors of the downtown development authority or similargroup, in four towns in a Midwestern state. The towns had populations of between4,700 and 14,000. Population figures and characteristics for both the city and the
  6. 6. QMRIJ township were obtained from the US Census Bureau’s “Factfinder” web site (US Census10,4 Factfinder, 2004). The general profile of these cities supported including them in this focus group study. The review of literature served as the foundation for our interview discussion guide. Owing to the exploratory nature of the study, all questions were open-ended to encourage discussion. Interviews were conducted with groups of between 6 and 12394 participants, as recommended for optimal feedback and group interaction (McDaniel and Gates, 2001). We had a total of 35 participants from all four focus groups. All interviews were audio-taped, and then transcribed for further analysis. Field notes were kept from each meeting (Krueger, 1998a) and served to fill in gaps where answers from participants were garbled, or too faint to understand. Following the focus group session with the fourth CBD, convergence (theoretical saturation) (Krueger, 1998b, p. 72) was found on most of the key constructs: The rule of thumb has been to conduct three or four focus groups for a particular audience and then decide if additional groups or cases need to be added to the study. From these interviews, general constructs were confirmed, and others identified that described the perceptions small business owners had towards their own business, fellow business owners, local and regional competition and their own downtown business district. We utilized qualitative analysis methods to investigate relationships between brand identity and social capital on the one hand, and environmental hostility on the other. Specifically, we employed axial coding with the data (La Rossa, 2005). Axial coding is the process of relating categories to their sub-categories and examining relationships amongst variables, in this case environmental hostility with brand identity and social capital. Results/analysis/propositions We now provide the outcome of the focus group sessions along with supporting quotes from participants. The outcomes represent the general findings, after transcription of sessions, re-reading of sessions and keyword searches of the data. The sessions helped us uncover the constructs environmental hostility, branding and social capital; these were not part of the original discussion guide. We asked downtown small business owners to consider what types of resources they possessed which helped them compete against other businesses, large and small. Few focus group participants had considered this type of question before, so we received many different answers, some of which were difficult to categorize. From the transcripts, two general constructs began to emerge. The participants identified downtown brand identity and social capital as resources which helped them compete. Additionally, the construct of environmental hostility emerged. Next, we provide the overall results for these three constructs, as well as representative feedback from participants. We then offer research propositions which flow from the findings. Environmental hostility. The state where the focus groups were conducted has faced economic stress, including major declines in relative income (Cook, 1990), high unemployment and a general feeling of concern and anxiety in communities directly affected by the automotive industry. Several of the communities in our study were formerly manufacturing-dominated communities. When those jobs no longer exist, local merchants suffer:
  7. 7. . . . [our town] was the second largest furniture producer east of the Mississippi, . . . but the A resource-based furniture business is one thing which now is not in existence . . . view of the smallInterestingly, there were few comments about the auto industry or its recent problems firmin our focus groups. The focal point of discussions related to threats like Wal-Mart andother large companies. For small retailers, the entry of large discounters (e.g. Wal-Mart,Costco, etc.) brings intense price, product and distribution competitive pressures(Miller and Friesen, 1983). Thus, such environments would be perceived as hostile 395(McGee and Rubach, 1997), creating more competitive pressure on local merchants(Stone, 1995). Wal-Mart, by offering lower prices to the general population, often priceslocal merchants out of the market. Just the idea of Wal-Mart coming into a communitymay cause animosity and perceptions of unfair business practices. Local merchantsoften perceive Wal-Mart tactics as unfair (e.g. pricing tactics) while local consumers,faced with suddenly reduced prices for goods, often question why prices werepreviously so high. Several business owners reported that some local consumersexpressed feelings of being overcharged by downtown merchants: . . . some business owners will speak against Wal-Mart coming in . . . unfortunately, that just gives the people that say that the downtown merchants are greedy and their prices are too high (i.e. more reason to think that the downtown merchants want to charge high prices).Local small business owners and retailers worry that if big-box retailers come into acommunity, local consumers will not maintain their loyalty to the small businesses.Again, the perception that large companies are intent on putting small retailers out ofbusiness leads to a feeling of fear and uneasiness (which is manifested in hostileenvironments). Small business owners seem to adapt to changes based on local business cycleswhich indirectly affect them (e.g. closing of a local factory, etc.), and have years ofexperience dealing with those changes. For this reason perhaps they do not feel thatsuch changes manifest a hostile environment. However, those same local businessowners, when faced with new competition from large retailers such as Wal-Mart,perceive this situation as a grave threat and describe it in the terms of a hostileenvironment. Therefore, we propose that: P1. Small retailers will perceive an environment with direct competitive threats as hostile, but one with indirect threats as benign.Brand identity. The term “brand” in reference to the downtown area itself did notsurface often in the focus group discussions. However, the concept of communityidentity did. Each focus group identified the downtown area as a resource whichhelped individual businesses compete and achieve success. Downtown was describedby a few participants as their community’s “heart,” and reflective of the community asa whole. It was agreed that the image of downtown was an important issue to allstakeholders, including consumers who did not often shop downtown. In other words,if a downtown area had a negative image or identity, the entire community might beseen in the same light: Well we talked about . . . these businesses particularly the owners . . . are really great at projecting [our town] and the image of [our town] and all the great things there are to do here. I think that that makes us really unique and cannot be copied by anybody.
  8. 8. QMRIJ . . . the downtown to me is sort of like the focal point and the focal point has to be entertaining and sets the tone for the city.10,4 Similarly, the term “positioning” did not emerge from any of the discussions. The term “message” was articulated several times, and the general discussion was then directed towards exploring this topic further. There was mixed feedback about how each town conveyed its image to consumers (local and visitors). What was important to most was396 that their town tried to convey the message. In particular, the theme of consistency emerged; that is, the idea that all stakeholders in the downtown should be conveying the same image and the same message to consumers. This seems to be a problem in some towns, where the local government is perceived as not being in harmony with the needs and or desires of downtown business owners: . . . because we have such a wonderful, colorful heritage in [in our town] . . . we still have a lot of the beautiful historical buildings . . . we need to [continue to] really strive in that direction with uniqueness. . . . when people in the state think of our town or community, they think of our image and German heritage. This is reflected in our businesses, festivals, advertising and anything else. Focus group participants thought that, much like a mall serves as a resource for its retailers by aggregating offerings for consumers, a downtown seems to do the same for its small retailers. The ability of a downtown to attract both local consumers and out-of-town visitors is seen as a method for combating the influx of large stores to a community. Brand identity is also a resource which may meet all of the requirements of the RBV for a sustainable resource, by being valuable, rare, imperfectly mobile and non-substitutable. This leads to the following proposition: P2. In hostile environments, a strong downtown brand identity will be a resource which mitigates the negative effects of the environment on small retailers within the downtown. Social capital. The existence of social capital received mixed support from participants. Some business owners felt that local consumers expected downtown business owners to support the community, but this did not necessarily translate to improvements in their own business. Though some business owners donate to the community to help “get their name out” in the public, others felt that if they stopped supporting (e.g. donations, sponsorships, etc.) that local consumers might stop patronizing their business. Respondents generally agreed that local consumers trusted downtown business owners to be honest and fair in their business dealings. They also agreed that most local consumers appreciated downtown retailers, and this translated into revenue: . . . I always donate when they [local community members] ask me because I’m new and I feel that it lets more people know what they’re worth and lets more people know what I have. I feel that I am supported by the local community. And no matter at what level a person [business owner] does [give], that it’s still appreciated by the community. The above comments represent all four focus groups, but one group was part of a community which was facing the possibility of a Wal-Mart opening. This community
  9. 9. had for many years centered on its downtown, and had no large discounters (or big-box A resource-basedretailers) in its area. The community was divided on the issue, with local merchants view of the smallagainst and many residents for Wal-Mart receiving zoning approval. Participants inthis community were less positive about the existence and value of social capital. Some firmsaid that if they stopped supporting the community (e.g. donations, etc.), localconsumers would stop patronizing their business. Others disagreed: . . . the bottom line is the locals that support you [your clothing store] are not going to buy 397 clothing from Wal-Mart.It seems that the environment perceived by the small retailer has an effect on how theyview social capital. Those in an environment which is hostile may not initially realizethe value of social capital, but they do recognize that in the face of competitive threats,their regular customers (with whom they have built social capital) will be sources uponwhich they can rely for revenue. For small retailers in environments perceived asbenign, the idea of social capital seems to be articulated as civic duty or even a methodof advertising/promotion. Since, they are not being faced with an immediate threat,they do not necessarily think in terms of how customers are supporting their business(and thus reciprocating the social capital): P3. In hostile environments, built up social capital (manifested in reciprocity from consumers) will be a resource which mitigates the negative effects of the environment on small retailers within the downtown. P4. In benign environments, social capital may be built up, but is not recognized as a resource by small retailers and may be underutilized.Discussion and implicationsInterviews with nearly 40 small business owners in four communities yielded insightinto the influence of social capital and downtown brand identity within the businessenvironment of a community. This research provided a forum for these business ownersto give voice to underlying constructs of the business environment in their communities.Qualitative research is valuable in eliciting responses allowing researchers to build theterminology that can be used in quantitative research. Participants may not haveconsidered the elements of social capital and downtown brand identity, thus traditionalscientific and quantitative approaches to data collection were inappropriate. The termsbrand identity and social capital distinctly emerged during the dialogue with thebusiness owners in the communities. Both of these constructs represent dimensions ofthe individual community. Brand identity was represented by business owners’comments reflecting community identity, described as the “heart” of the community.This was reflective of the whole community, such that the image of Downtown was animportant issue to all stakeholders. Social capital represented the people-to-people aspect of the community. Thegeneral consensus was that local consumers trusted downtown business owners to behonest and fair in their business dealings and agreed that most local consumersappreciated downtown retailers. Most participants did feel that customers reciprocatedwith local small retailers. In the face of competitive threats, their regular customers(with whom they have built social capital) will be sources upon which they can relyfor revenue.
  10. 10. QMRIJ Businesses operate in an environment that can be viewed as either benign or10,4 hostile. When the environment is seen as benign, businesses perceive no strong threats to their economic goals. Environmental hostility refers to a perceived threat to an organization’s primary goals (Khandwalla, 1972). Hostile environments are unpredictable in nature (Mintzberg, 1998), and in such environments, successful firms will be those who are proactive in gaining and maintaining competitive398 advantage (Covin and Slevin, 1989). Small business owners seem to adapt to changes in local business cycles which indirectly affect them (e.g. closing of a local factory, etc.). For this reason perhaps they do not feel that such changes manifest a hostile environment. However, those same local business owners, when faced with new (direct) competition from large retailers such as Wal-Mart, describe the environment in terms that characterize a hostile environment. We developed four propositions to guide future research with small businesses operating in hostile and benign business environments. Our first proposition reflects the business owners’ view of the environment as hostile, when in the presence of a direct competitive threat; indirect threats are evidence of a benign environment. This is clearly seen in one business owner’s comment: They don’t come downtown as often as they used to because they go to Wal-Mart. I think that’s a factor that we have to deal with and make sure that we still make those folks feel that we are a value to them. Businesses like Wal-Mart are piranhas. They just destroy; they come in, take and destroy. If they knocked out all the small businesses, their prices go up. Our second proposition suggests that in hostile environments, a strong downtown brand identity will be a resource that mitigates the negative effects of the business environment on small retailers. Certainly, the business owners understood the need for a strong downtown brand identity. Many business owners recognized their community identity as evidenced in comments such as: . . . when people in the state think of our town or community, they think of our image and German heritage. This is reflected in our businesses, festivals, advertising and anything else. More research is needed to see if businesses in communities with strong brand identities are performing at a higher level than businesses in communities without a strong brand identity. Does a strong brand identity mitigate business owner perceptions of an environment being hostile or benign? Our last two propositions address the community impact of social capital in both hostile and benign environments. The social capital manifested in relationships between local consumers and small retailers is referred to as reciprocity. We found that social capital, reflected in reciprocity between consumers and the businesses, penetrated the environment. In a benign environment, business owners appear not to recognize the role of social capital in their business performance, but in a hostile environment the contribution of social capital to business performance is widely appreciated. Quantitative research to confirm the presence of social capital, and its role as a resource and impact on business performance is needed. Social capital may be underutilized by the business owners. Small business owners in small communities need to recognize and exploit the value of non-monetary resources such as social capital and downtown brand identity to bolster firm performance. The creation of a downtown brand identity may be a key strategy in marketing a downtown area to local consumers and visitors and to
  11. 11. improving the overall performance of all businesses within the downtown area. Miller A resource-based(2001) studied consumers in two rural towns and found consumer satisfaction with view of the smallreciprocity levels to be a significant predictor of in-shopping behavior. Relationshipsbetween individuals who have built trust, reciprocity and commitment through their firmnetworks have a competitive advantage (Burt, 1997; Tsai and Ghoshal, 1998). The linguistic construction of social capital (reciprocity) and brand identity is acontribution of this research. By identifying the components of each term, further 399quantitative research on their presence in a community can be measured. Businessowners and consumers will have views on the presence of these two constructs in anygiven community. Understanding whether congruence of the two views exists will be anecessary first step to strengthen community identity and reciprocity (which serves asevidence of strong social capital). When the views of business owners and consumersare divergent, community development leaders can use both views to build a platformfor developing a consistent brand image for the community. The implication is thatconsistency is important for the brand identity of a community; both brand identityand reciprocity are important resources for small business owners. The value of ourqualitative study is in gaining understanding of how business owners view thenon-monetary resources they possess and the business environment of theircommunity. Our study offers insights into small communities and the perceptions ofresources small business owners have to improve firm performance.Future researchOur study provides several avenues for future research. First, it would be beneficial toconduct further qualitative work, strategically selecting communities that exhibithostile, benign and thriving environments in order to insure that all of the relevantconstructs related to environmental hostility, brand identity and social capital havebeen captured. For example, we could identify small towns that have not yet facedcompetition from Wal-Mart to pinpoint differences in perceptions of the downtown’sbrand identity and the ability of social capital to insulate against Wal-Mart. Second, because business owners in our study voiced conflicting views on the impact ofsocial capital on business, further exploration of this construct is warranted. For example,questions such as: what sorts of events or activities are most effective in building socialcapital in a community? Which businesses in a small community have the most “built-up”social capital and why? It would be particularly enlightening to hear the town residents’perspective on this issue and would be useful to businesses in their planning process. A third direction for future study would be to survey a national or multi-regionsample of small businesses in benign and hostile environments to enable comparison ofperformance indicators (e.g. profit, sales growth) in these environments. We wouldthen examine the degree to which social capital and brand identity mediate theenvironmental influence on business performance. Gaining an understanding of themost influential non-economic resources on business performance for small businesseswould provide another tool for their strategic arsenal.ReferencesAnnual Report (2005), Annual Report, Wal-Mart Stores, available at: www.walmartstores.com/ Files/2005AnnualReport.pdf (accessed December 1, 2006).
  12. 12. QMRIJ Barkley, D.L. (1993), Economic Adaptation: Alternatives for Nonmetropolitan Areas, Westview Press, Boulder, CO.10,4 Barney, J.B. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17 No. 1, pp. 99-120. Barney, J.B., Wright, M. and Ketchen, D.J. (2001), “The resource-based view of the firm: ten years after 1991”, Journal of Management, Vol. 27 No. 6, pp. 625-41.400 Burt, R.S. (1997), “The contingent value of social capital”, Administrative Science Quarterly, Vol. 42, pp. 339-65. Coleman, J.S. (1990), Foundations of Social Theory, Harvard University Press, Cambridge, MA. Cook, A.K. (1990), “Retirement migration as a community development option”, Journal of the Community Development Society, Vol. 21 No. 1, pp. 83-101. Coshall, J. (2000), “Measurement of tourists’ images: the repertory grid approach”, Journal of Travel Research, Vol. 39 No. 1, pp. 85-9. Covin, J.G. and Slevin, D.P. (1989), “Strategic management of small firms in hostile and benign environments”, Strategic Management Journal, Vol. 10 No. 1, pp. 57-75. Fiol, C.M. (2001), “Revisiting an identity-based view of sustainable competitive advantage”, Journal of Management, Vol. 27 No. 6, pp. 691-9. Gulati, R. (1995), “Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances”, Academy of Management Journal, Vol. 38 No. 1, pp. 85-112. Kean, R.C., Gaskil, L.A., Leisritz, L., Jasper, C., Bastow-Shoop, H., Jolly, L. and Sternquist, B. (1998), “Effects of community characteristics, business environment and competitive strategies on rural retail business performance”, Journal of Small Business Management, Vol. 36 No. 2, pp. 45-57. Khandwalla, P.D. (1972), “Environment and its impact on the organization”, International Studies of Management & Organization, Vol. 2 No. 3, pp. 297-313. Krueger, R.A. (1998a), Developing Questions for Focus Groups, Sage, Thousand Oaks, CA. Krueger, R.A. (1998b), Analyzing and Reporting Focus Group Results, Sage, Thousand Oaks, CA. La Rossa, R. (2005), “Grounded theory methods and qualitative family research”, Journal of Marriage and Family, Vol. 67 No. 4, pp. 837-57. Leistritz, F.L. and Hamm, R.R. (1994), Rural Economic Development, Greenwood Publishing Group, Westport, CT. McDaniel, C. and Gates, R. (2001), Marketing Research Essentials, 3rd ed., South-Western Publishing, Cincinnati, OH. McGee, J.E. and Rubach, M.J. (1997), “Responding to increased environmental hostility: a study of the competitive behavior of small retailers”, Journal of Applied Business Research, Vol. 13 No. 1, pp. 83-95. Miles, M.P., Arnold, D.R. and Thompson, D.L. (1993), “The interrelationship between environmental hostility and entrepreneurial orientation”, Journal of Applied Business Research, Vol. 9 No. 4, pp. 12-23. Miller, N. (2001), “Contributions of social capital theory in predicting rural community in shopping behavior”, The Journal of Socio-Economics, Vol. 30 No. 6, pp. 475-93. Miller, D. and Friesen, P.H. (1983), “Strategy-making and the environment: the third link”, Strategic Management Journal, Vol. 4 No. 3, pp. 221-35. Miller, N. and Kean, R.C. (1997), “Reciprocal exchange in rural communities: consumers inducement to inshop”, Psychology & Marketing, Vol. 14 No. 7, pp. 637-61.
  13. 13. Miller, N. and Kim, S. (1999), “The importance of older customers to small business A resource-based survival: evidence from rural Iowa”, Journal of Small Business Management, Vol. 37 No. 4, pp. 1-15. view of the smallMintzberg, H. (1998), Strategy Safari: A Guided Tour through the Wilds of Strategic firm Management, The Free Press, New York, NY.Ozment, J. and Martin, G. (1990), “Changes in the competitive environment of rural trade areas”, Journal of Business Research, Vol. 21 No. 3, pp. 277-87. 401Peng, M. (2001), “The resource-based view and international business”, Journal of Management, Vol. 27 No. 6, pp. 803-29.Peteraf, M.A. (1993), “The cornerstones of competitive advantage: a resource-based view”, Strategic Management Journal, Vol. 14 No. 3, pp. 179-91.Portes, A. and Sensenbrenner, J. (1993), “Embeddedness and immigration: notes on the social determinants of economic action”, American Journal of Sociology, Vol. 98 No. 6, pp. 1320-50.Putnam, R.D. (1993), Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton, NJ.Putnam, R.D. (1995), “Bowling alone: America’s declining social capital”, Journal of Democracy, Vol. 6, pp. 65-78.Runyan, R.C. (2006), “Tourist dependent small towns: is competitive advantage realized in different ways than for non-tourist dependent small towns?”, Journal of Vacation Marketing, Vol. 12 No. 4, pp. 329-43.Runyan, R.C. and Huddleston, P. (2006), “Getting customers downtown: the role of branding in achieving success for central business districts”, Journal of Product & Brand Management, Vol. 15 No. 1, pp. 48-61.Stone, K.E. (1995), Competing with the Retail Giants: How to Survive in the New Retail Environment, Wiley, New York, NY.Summers, J.O. (2001), “Guidelines for conducting research and publishing in marketing: from conceptualization through the review process”, Journal of the Academy of Marketing Science, Vol. 29 No. 4, pp. 405-15.Tsai, W. and Ghoshal, S. (1998), “Social capital and value creation: the role of intrafirm networks”, Academy of Management Journal, Vol. 41 No. 4, pp. 464-76.US Census Factfinder (2004), available at: http://factfinder.census.gov/ (accessed December 3).Walmsley, D.J. and Young, M. (1998), “Evaluative images and tourism: the use of personal constructs to describe the structure of destination images”, Journal of Travel Research, Vol. 36 No. 3, pp. 65-9.Wernerfelt, B. (1984), “A resource-based view of the firm”, Strategic Management Journal, Vol. 5 No. 4, pp. 171-80.Zahra, S.A. (1993), “New product innovation in established companies: associations with industry and strategy variables”, Entrepreneurship: Theory and Practice, Vol. 18 No. 2, pp. 47-69.Further readingPerry, S.C. (2000), “The relationship between written business plans and the failure of small businesses in the US”, Journal of Small Business Management, Vol. 39 No. 3, pp. 201-8.Porter, M. (1980), Competitive Strategy, The Free Press, New York, NY.
  14. 14. QMRIJ About the authors Rodney C. Runyan is an Assistant Professor of Retailing. He teaches international retailing at10,4 both the undergraduate and graduate levels, and Graduate Entrepreneurship. His research interests include small business entrepreneurship, international retailing and retail strategy. His research has appeared in the Journal of Developmental Entrepreneurship, Journal of Vacation Marketing and Journal of Product & Brand Management. Rodney C. Runyan is the corresponding author and can be contacted at: runyanrc@sc.edu402 Patricia Huddleston is a Professor of Retailing. She teaches undergraduate courses in retail buying-inventory management and retail strategy. At the graduate level, she teaches research topics in retailing. She has published in a variety of journals including International Journal of Retail & Distribution Management, International Review of Retail, Distribution and Consumer Research and International Marketing Review. Jane L. Swinney is an Assistant Professor of Merchandising, and teaches courses in retailing, and merchandising analysis. Her research interests are in rural retailing, community brand development and small business social responsibility. Her research has appeared in the Journal of Developmental Entrepreneurship and International Entrepreneurship and Management Journal. To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints

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