The Context and Outcomes of Entrepreneurial Marketing as a Decision-Making Process Under Uncertainty

Abstract

Previous studies on the marketing/entrepreneurship interface have attempted to identify the core elements that constitute the entrepreneurial marketing construct mainly by describing how new ventures implement marketing activities (e.g., Stokes 2000; Coviello et al. 2000; O’Dwyer et al. 2009). Despite the advances the area has known over the last 30 years, Hills et al. (2008) emphasize the fact that there are still few studies of what characterizes entrepreneurial marketing and of its differences when compared to traditional marketing. This chapter proposes developing the understanding of the concept by focusing on the entrepreneur’s marketing decision-making process. Assuming a cognitive perspective, the study is established on the individual level, since how entrepreneurs get, process, and use information affects how they cope with external factors. Bridging entrepreneurial marketing theory and the cognitive approach to entrepreneurship, we suggest a conceptualization of entrepreneurial marketing as a decision-making process shaped by some circumstances, generally characterized by uncertainty. In order to understand the circumstances under which an entrepreneurial or managerial marketing decision-making is more appropriate, 51 entrepreneurs were interviewed in two research phases. The first involved nine in-depth exploratory interviews and the second consisted in 42 interviews using Critical Incident Technique (CIT). CIT interviews resulted in 146 usable marketing decision-making related incidents that were analyzed both qualitatively and quantitatively regarding: (1) the level of uncertainty involved, measured by the information available to found a given decision and the level of marketing competency, as a proxy of processing capacity, referring to the bounded rationality theory (Simon 1991, 1979); (2) the resulting marketing actions, classified either as entrepreneurial or managerial; and (3) their outcomes, categorized in four types: potential creation; growth; marketing effects; and negative or lower than expected results. The study concludes that entrepreneurial marketing, is more suitable for highly uncertain environments, characterized by low levels of information and when the decision maker has little marketing competency. On the contrary, in the context of abundant information to found marketing decisions and when the decision maker holds marketing competency, managerial marketing practices are more appropriate since they promote expansion; growth; and efficiency gains. New venture’s managers should, therefore, adapt their marketing practices to different contexts in order to maximize marketing decision outputs. The results also show that entrepreneurs with higher marketing competency have a natural tendency to implement managerial marketing even when information is scarce. This is a riskier decision-making style, however, since more resources are committed when managerial marketing is implemented. On the other hand, less proficient decision makers can produce more effective and efficient outputs from their marketing if they acquire marketing competencies to decide in more stable situations, which can occur in different stages of the company development.References available upon request.