The article describes a qualitative study using focus groups of small retailers within four communities in the US. The study aimed to uncover perceptions of resources that small businesses can utilize to gain competitive advantages, applying a resource-based view of the firm. Key findings were that community brand identity and local social capital emerged as important constructs for small business success, even though they were not part of the original discussion guide. Both resources were seen as helping small retailers compete, with brand identity providing value regardless of environment, and social capital emerging as particularly valuable in hostile environments. The study provides support for conceptualizing brand identity and social capital as unique, valuable resources for small firms according to the resource-based view.

1. Qualitative Market Research: An International Journal
Emerald Article: A resource-based view of the small firm: Using a
qualitative approach to uncover small firm resources
Rodney C. Runyan, Patricia Huddleston, Jane L. Swinney
Article 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. 10
Iss: 4 pp. 390 - 402
Permanent link to this document:
http://dx.doi.org/10.1108/13522750710819720
Downloaded on: 07-12-2012
References: This document contains references to 42 other documents
Citations: This document has been cited by 2 other documents
To copy this document: permissions@emeraldinsight.com
This document has been downloaded 2016 times since 2007. *
Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF THE ARTS LONDON
For 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 visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in
business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as
well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is
a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.

2. The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1352-2752.htm
QMRIJ
10,4 A resource-based view
of the small firm
Using a qualitative approach
390 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 these
Qualitative Market Research: An issues.
International Journal
Vol. 10 No. 4, 2007 Keywords Brand identity, Small enterprises, Social capital, Community behaviour,
pp. 390-402 United States of America
q Emerald Group Publishing Limited
1352-2752 Paper type Research paper
DOI 10.1108/13522750710819720

3. Introduction A resource-based
Small businesses in the USA often operate in less than benign environmental view of the small
conditions. Since, the early 1980s, significant changes have occurred in communities
across the USA, including continued suburbanization, gentrification of urban firm
areas 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 391
small downtown retailers within rural or semi-rural communities (McGee and Rubach,
1997; Runyan and Huddleston, 2006). Changes in the demographic landscape of the
USA, and consolidation in the retail industry have led to concentration of retail outlets
in large-scale retail formats (Stone, 1995, For example, the number of Wal-Mart stores
and 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, harsh
business 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 economic
conditions (e.g. loss of manufacturing jobs).
While small retailers possess fewer resources with which to survive in hostile
environments than do their larger competitors, little exists in the extant
literature regarding how small retailers should respond to these threats. Rather the
literature focuses on large retailers or industrial firms (Zahra, 1993). The
resource-based view (RBV) holds that competitive advantages are generated by the
firm, 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 of
those resources are tantamount to survival for small firms. The RBV of the firm
provides a framework for small firm owners to strategize based on those resources
which will provide the basis for a sustainable competitive advantage. Yet little has
been done to uncover the resources which small firms possess or utilize to gain
competitive advantage. Thus, the use of a qualitative method is called for when there is
a lack of understanding of the phenomenon under investigation (Summers, 2001).
In a benign environment, small firms may be able to survive (or be successful) with
inferior resources. But in a hostile one, a firm’s resources must be superior (Covin
and Slevin, 1989). In the current study, we posit that two key resources for small
retailers who face a hostile environment will be the collective brand identity of the
downtown area within which they exist, and the individual social capital that each
small firm has built up with local consumers. Fiol (2001) argued that an organization’s
identity can be a source of competitive advantage. Brand identity or image has been
posited as a resource in the strategy literature (Barney, 1991; Peteraf, 1993; Runyan and
Huddleston, 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 extent
that they bring equal value to the new owner. Thus, the creation of brand identity may
be 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 brand
identity), small retailers must access other resources to be successful, or survive.
Social capital may be a resource that small businesses can acquire with limited
financial capital. Like the economic version of capital, social capital is a productive

4. QMRIJ resource for businesses (Coleman, 1990). Close relationships can create trust and
10,4 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 local
392 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. Brand identity A resource-based
Brand and image have long been considered resources (Barney, 1991; Peteraf, 1993). For view of the small
this study, brand identity is conceptualized as the image that a group of small retailers
within a downtown area possesses, that differentiates the downtown group from other firm
community shopping areas, as well as from competing downtown areas. To differentiate
themselves from other groups of sellers, small retailers may collectively create and
maintain a brand identity (Walmsley and Young, 1998; Coshall, 2000). The message that 393
conveys brand image to consumers is often referred to as positioning, and is often
accomplished through slogans or symbols, designed to convey and reinforce a position
in the marketplace (McDaniel and Gates, 2001). A positioning statement communicates
to 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 capital
Portes and Sensenbrenner (1993) conceptualized social capital as the expectations
for 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 comprised
of relationships (Putnam, 1995). Close relationships can create trust and obligations, and
define expectations among trading partners (Gulati, 1995). For small retailers, a key set
of trading “partners” include local consumers. Social capital theory provides a means
to help explain the interaction between local consumers and downtown business
owners. Social capital explains some of the “in-shopping” (i.e. shopping locally instead
of going to another community) of local consumers in rural communities (Miller and
Kim, 1999).
The sort of social capital manifested in relationships between local consumers and
small retailers is referred to as reciprocity. This is a “network” in which each member
has something to provide to the other (Tsai and Ghoshal, 1998). When something is
provided, 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 and
local retailers. They found that local consumers were more likely to shop with local
retailers when those retailers expressed a high level of support for the community.
Support for the relationship between reciprocity’s effect on small business owners was
found by Miller (2001). In her study of consumers in two rural towns, consumer
satisfaction with reciprocity levels was a significant predictor of in-shopping behavior.
Relationships between individuals who have built trust, reciprocity and commitment
through their networks have a competitive advantage (Burt, 1997; Tsai and Ghoshal,
1998). Thus, reciprocity helps small business owners to develop social capital with
local consumers and this leads to a resource which may be parlayed into a competitive
advantage.
Methodology
Focus group research
Focus groups are appropriate when one’s goal is to uncover factors related to complex
behavior (Krueger, 1998a), thus focus group interviews were conducted with small
business owners and directors of the downtown development authority or similar
group, in four towns in a Midwestern state. The towns had populations of between
4,700 and 14,000. Population figures and characteristics for both the city and the

6. QMRIJ township were obtained from the US Census Bureau’s “Factfinder” web site (US Census
10,4 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 12
394 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. . . . [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 small
Interestingly, there were few comments about the auto industry or its recent problems firm
in our focus groups. The focal point of discussions related to threats like Wal-Mart and
other 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 prices
local merchants out of the market. Just the idea of Wal-Mart coming into a community
may cause animosity and perceptions of unfair business practices. Local merchants
often perceive Wal-Mart tactics as unfair (e.g. pricing tactics) while local consumers,
faced with suddenly reduced prices for goods, often question why prices were
previously so high. Several business owners reported that some local consumers
expressed 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 a
community, local consumers will not maintain their loyalty to the small businesses.
Again, the perception that large companies are intent on putting small retailers out of
business leads to a feeling of fear and uneasiness (which is manifested in hostile
environments).
Small business owners seem to adapt to changes based on local business cycles
which indirectly affect them (e.g. closing of a local factory, etc.), and have years of
experience dealing with those changes. 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 competition from large retailers such as Wal-Mart,
perceive this situation as a grave threat and describe it in the terms of a hostile
environment. 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 not
surface often in the focus group discussions. However, the concept of community
identity did. Each focus group identified the downtown area as a resource which
helped individual businesses compete and achieve success. Downtown was described
by a few participants as their community’s “heart,” and reflective of the community as
a whole. It was agreed that the image of downtown was an important issue to all
stakeholders, 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 be
seen 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. 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 was
396 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. had for many years centered on its downtown, and had no large discounters (or big-box A resource-based
retailers) in its area. The community was divided on the issue, with local merchants view of the small
against and many residents for Wal-Mart receiving zoning approval. Participants in
this community were less positive about the existence and value of social capital. Some firm
said that if they stopped supporting the community (e.g. donations, etc.), local
consumers 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 they
view social capital. Those in an environment which is hostile may not initially realize
the 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 upon
which they can rely for revenue. For small retailers in environments perceived as
benign, the idea of social capital seems to be articulated as civic duty or even a method
of 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 implications
Interviews with nearly 40 small business owners in four communities yielded insight
into the influence of social capital and downtown brand identity within the business
environment of a community. This research provided a forum for these business owners
to give voice to underlying constructs of the business environment in their communities.
Qualitative research is valuable in eliciting responses allowing researchers to build the
terminology that can be used in quantitative research. Participants may not have
considered the elements of social capital and downtown brand identity, thus traditional
scientific and quantitative approaches to data collection were inappropriate. The terms
brand identity and social capital distinctly emerged during the dialogue with the
business owners in the communities. Both of these constructs represent dimensions of
the 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 an
important issue to all stakeholders.
Social capital represented the people-to-people aspect of the community. The
general consensus was that local consumers trusted downtown business owners to be
honest and fair in their business dealings and agreed that most local consumers
appreciated downtown retailers. Most participants did feel that customers reciprocated
with 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 rely
for revenue.

10. QMRIJ Businesses operate in an environment that can be viewed as either benign or
10,4 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 competitive
398 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. 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 small
reciprocity levels to be a significant predictor of in-shopping behavior. Relationships
between individuals who have built trust, reciprocity and commitment through their firm
networks have a competitive advantage (Burt, 1997; Tsai and Ghoshal, 1998).
The linguistic construction of social capital (reciprocity) and brand identity is a
contribution of this research. By identifying the components of each term, further 399
quantitative research on their presence in a community can be measured. Business
owners and consumers will have views on the presence of these two constructs in any
given community. Understanding whether congruence of the two views exists will be a
necessary first step to strengthen community identity and reciprocity (which serves as
evidence of strong social capital). When the views of business owners and consumers
are divergent, community development leaders can use both views to build a platform
for developing a consistent brand image for the community. The implication is that
consistency is important for the brand identity of a community; both brand identity
and reciprocity are important resources for small business owners. The value of our
qualitative study is in gaining understanding of how business owners view the
non-monetary resources they possess and the business environment of their
community. Our study offers insights into small communities and the perceptions of
resources small business owners have to improve firm performance.
Future research
Our study provides several avenues for future research. First, it would be beneficial to
conduct further qualitative work, strategically selecting communities that exhibit
hostile, benign and thriving environments in order to insure that all of the relevant
constructs related to environmental hostility, brand identity and social capital have
been captured. For example, we could identify small towns that have not yet faced
competition from Wal-Mart to pinpoint differences in perceptions of the downtown’s
brand 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 of
social 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 social
capital 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-region
sample of small businesses in benign and hostile environments to enable comparison of
performance indicators (e.g. profit, sales growth) in these environments. We would
then examine the degree to which social capital and brand identity mediate the
environmental influence on business performance. Gaining an understanding of the
most influential non-economic resources on business performance for small businesses
would provide another tool for their strategic arsenal.
References
Annual Report (2005), Annual Report, Wal-Mart Stores, available at: www.walmartstores.com/
Files/2005AnnualReport.pdf (accessed December 1, 2006).

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. 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 small
Mintzberg, 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. 401
Peng, 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 reading
Perry, 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. QMRIJ About the authors
Rodney C. Runyan is an Assistant Professor of Retailing. He teaches international retailing at
10,4 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.edu
402 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