For Submission to the Marketing Strategy Track, 19th ...



For Submission to the Marketing Strategy and Leadership Track, 3rd December 2005

Chair: Robert Morgan, Cardiff Business School 

Co-chair: Douglas W. Vorhies, University of Mississippi  

37th EMAC Conference

University of Brighton 27-30th May 2008

The Marketing Landscape: A Pause for Thought

DYNAMIC BUSINESS MODELS AND CORPORATE IDENTITY

Dr. Katy J. Mason

Lancaster University Management School,

Lancaster,

LA1 4YX,

United Kingdom.

Tel. No: +44(0)1524 594840

Fax No: +44(0)1524 593928

E-Mail: k.j.mason@lancaster.ac.uk

Dr. Claudia Simões

Marketing & Strategic Management Group

School of Economics and Management

University of Minho

4710-057 Braga

Portugal

E-Mail: csimoes@eeg.uminho.pt

DYNAMIC BUSINESS MODELS AND CORPORATE IDENTITY

ABSTRACT

An increasingly

Although much is known about the dynamics and drivers of successful market relationships it is perhaps surprising that little is known about the affect an organization’s image, branding or Corporate Identity, have on these relationship. This paper presents an exploratory investigation into the multiple levels of corporate identity that develop within supply networks. Corporate identity (CI) deals with the impressions, image and personality that an organization presents to its constituents. As such, CI may be a relevant tool to create behaviour consistency and develop a strong and committed link between companies and their supply network members. While useful insights have been generated into a range of different factors affecting market relationships within supply networks, no study to-date has explicitly focused on how Corporate Identity informs such a relationship. This study sets out to generate insights through the explication of how multiple levels of CI evolve within supply networks. The paper begins with a review of the relationship marketing literature and the research into CI. Thereafter, the methodology for the study is subsequently described. The preliminary results uncover three levels of CI – personal, operational and strategic.

KEYWORDS: Corporate Identity, Business Models, Marketing Strategy

DYNAMIC BUSINESS MODELS AND CORPORATE IDENTITY

INTRODUCTION

The term ‘business models’ is now widely used in the business press and are increasingly recognized as a valuable managerial tool for capturing, sharing and realizing strategic intent {Zott, 2007 #1191}. Recent research has focused on clarifying the business model concept {also see\Morris, 2005 #873; Schweizer, 2005 #802; Linder, 2000 #894}. This research is grounded in the observations of Hamel and Parahald (1994) who identify two cornerstones of business models; 1) structure: how firms perceive the structure of their firm, their business network and their position within it and 2) routines: how firms develop effective operational routines to exploit the potential value of the network.

Structure has been explored from a firm perspective and a network perspective. At the firm level, internal hierarchies, their departments and their functions have been shown to affect organizational efficiency and effectiveness (Hayek 1945; Kodama 2004; Wildavsky 1983). Similarly, at the network level, the way firms identify, interact and exploit network value has been shown to influence organizational performance and learning (Lampel and Shamsie 2003; Möller and Svahn 2006). Principally, information and knowledge flows within organizational and network structures appear to affect organizational performance (Araujo et al. 2003; Bångens and Araujo 2002). In this way, the Actors-Resources-Activities (ARA) model of business networks offers a useful analytical framework to explore structure at multiple levels; from individuals to firms, via departments and the wider business network.

Actors represent repositories of knowledge, of an individual or institutional nature {Lam, 2000 #1196}. This knowledge, in turn represents a resource that can be deployed in the execution of activities. Actors are understood to have agency and freedom to change or influence these activities. However, actors may be restricted by the extent to which they can access resources. There may be institutional constraints, for example constraints on individuals by expectations of their seniors, their firm, department or other affiliations; firms may be constrained by their industry sector or by the expectations of specific stakeholders, for example, major customers or suppliers {Spring, 2001 #1197}.

Resources are used by actors to perform activities and may be depleted, augmented or changed by this process {Håkansson, 1995 #1198}. Clegg {, 1989 #1199} explores the deployment of resources in organizational power processes and observers that anything is potentially a resource, depending on context. This raises two important issues. First, taking a network perspective, resources need not be owned or directly controlled by the focal organization, they can be external resources that have been strategically identified and accessed through the development of business models. Second, the accessing and deployment of resources may be deliberate and knowing or implicit and accidental {also see /Spring, 2001 #1197}.

Activities may be production or service delivery processes or other organizational processes such as new product development. As Spring and King (2001) observe, activities are carried out by actors utilizing resources and during in this process, actors may learn about the activities, how they might be improved and what further resources might be accesses. In other words, the activities that organizations carry out form the intra and inter-organizational routines that allow the operation and evolution of the business model.

Routines have largely been explored at the level of the firm and focus on the development of a firm’s dynamic capabilities (Salvato 2003; Zollo and Winter 2002; Zuniga-Vicente and Vicente-Lorente 2006). Zollo and Winter (2002: 340) define dynamic capabilities as

“…a learned and stable pattern of collective activity through which the organization systematically generates and modifies its operating routines in pursuit of improved effectiveness.”

While the dynamic capabilities literature recognizes that the external environment affects learning (Argote 1982; Teece et al. 1997), and that routines evolve as a result of dialogue and interaction within and across units, departments or functions, these studies have not attempted to adopt a network perspective[1] or explore how firms co-evolve inter-firm routines within their business network. This observation is important for two reasons. First, it suggests a relationship between the structures and routines captured by a firm’s business model. Second, it suggests a constant and iterative need for creating and sharing ‘know-how’ to drive improvements to both structure and routines (Kogut and Zander 1992; Nelson and Winter 1982; Teece et al. 1997; Zahra et al. 2006; Zollo and Winter 2002). This makes the business model ‘dynamic’ in a way that moves beyond the boundaries of the firm. In line with this literature Mason and Leek {, forthcoming (2008) #1193} conceptualized dynamic business models as preconceived organizational and network structures built through the development of interdependent operational and administrative routines that evolve through problem solving activities.

Additionally, the extant literature suggests organizations conceptualize their business models in a sequence; managers first conceive the structure of the network they wish to build (c.f. Morris et al. 2005). Routines are then established to support work and knowledge flows (Bångens and Araujo 2002; Brown and Duguid 1998). Finally, as the networked organizations encounter problems, problem solving generates the development of knowledge that feeds back into improved structures and routines in a cyclical way. Thus, dynamic business models evolve through inter-firm learning and knowledge transfer (c.f. Zollo and Winter 2002).

The dynamic business model sequence described suggests that the way managers model their initial network structure is likely to affect the routines that emerge. For example,

the geographically dispersed structure of an offshore business model may result in less frequent face-to-face meetings with senior personnel, supported by frequent and detailed written reports in order to track work-in-progress (WIP). Conceivably, a network structure that encompasses only local firms may evolve different routines for WIP monitoring. In this regard, the initial network structure brings cultural and institutional influences to bear on the application of shared knowledge and practices (Gertler 2003; Whitley 2005), that co-evolve through problem solving activities.

Much of our understanding of marketing theory emerges from the study of exchange activates within and across markets. Indeed, the continuing focus on the conceptualization of relationship marketing since its begins in the mid 1980’s (Gronroos 1989; Gronroos 1991; Gummesson 1987; Lindberg-Repo and Gronroos 2004) remains a pertinent issue for academic research in the area of business-to-business marketing and, as such, the construct continues to be a central tenant of the marketing and management attention (Beverland and Lindgreen 2004; Gronroos 2004; Johnson et al. 2004). Indeed, much of the continued attention can be attributed to the finding of a consistent link between the management of market relationships and competitive advantage (see for example, Day 2000; Mehta et al. 2003). These findings have ensured that relationship marketing remains of significant interest not only to marketing scholars but also to commentators from both a strategic and management perspective. Recent publications across a wide range of fields provide an increasingly sophisticated interpretation of the dynamics of market relationships through empirical investigation into trust, commitment, co-operation, channel leadership, channel communications. Concurrently, a range of studies have found that different firms adopt different forms of market relationships (see Robicheaux and Coleman). However, despite a number of useful contributions to our understanding of market relationships, it is perhaps surprising that the recommendation of Ravald et al. (1996) that more research is needed into the evolution of these market relationship forms, has yet to be systematically studied. Furthermore, as Ravald et al. (1996) explain, the industrial marketing literature has focused on market relationships between suppliers and customers through a network perspective (see for example, Awuah 2001; Bask 2001; Bengtsson and Kock 1999). More recently, there has been increasing interest into how branding might effect market relationships (Bengtsson and Servais 2004). This has been paralleled by an increased interest from the marketing and strategy literature focusing on the conceptualisation (Dowling 1986; Riel and Balmer 1997), antecedents (Balmer and Soenen 1997) and consequences (Drumwright 1996) of Corporate Identity (CI).

CI deals with the impressions, image and personality that an organization presents to its constituents. In this sense, it appears that CI may be a relevant tool to create behaviour consistency and to develop a strong and committed link between companies and their supply networks. Thus, while useful insights have been generated into a range of different ‘forms’ of market relationships and research has begun to explore the nature and managerial impact of corporate identity, no study, to-date, has explicitly focused on the how corporate identity affects market relationship dynamics.

The aim of this research is to move some way towards filling this gap by exploring the way firms perceive CI of themselves and their supply network members. In this regard its seems likely that the corporate identity portrayed by an organization is likely to effect the level of influence that firm is able to leverage within a business-to-business relationship (see Mason and Simoes, 2005) and beyond into the supply network. It is our argument that, the explication of how CI is perceived and managed within supply networks is likely to affect the competitive advantage of individual firms within the context of these market relationships. The paper begins by reviewing CI literature, first explaining the CI construct and then pertaining to the dynamics of market relationships. Thereafter, a brief description of the exploratory research design is presented and three subsequent levels of corporate identity are identified and discussed. The paper concludes with conclusions and implications for future research.

LITERATURE REVIEW

Recently, market relationship dynamics have been associated with marketing developed at the corporate level (see for example Bengtsson and Servais 2004) Mason and Simoes, 2005. It is clear that companies are keen to encourage positive attitudes towards their offers and themselves by ensuring that different audiences identify with them. For instance, an empirical investigation by Drumwright (1996) concludes that it is more advantageous for a company to associate advertising with a social message (incorporating values such as trust and commitment) to the organisation than to link it to the brand or product/line level.

In this context, the literature delineates three inter-linked constructs: identity, image and reputation. Identity “comprises the ways that a company aims to identify itself or position its product” (Kotler, 1997: 292). It has, in this sense, an internal perspective in that it represents what is reflected by the company. Image has an external foundation since it refers to the way in which the publics perceive an organisation and/or its selling elements (Hatch and Schultz, 1997; Kotler, 1997, Dibb et al., 2001). Bernstein (1984), Barich and Kotler (1991), Kotler, (1997) and Gray and Balmer (1997) define image, when associated with corporate organisations, as the expression of overall mental pictures that people hold about an organisation. This leads to the next concept – corporate reputation. Corporate reputation represents image endowed with a judgement. Reputation is underpinned by an entity’s willingness and ability to consistently undergo an activity or action (Herbig and Milewicz, 1994). Although some authors acknowledge the similarities between image and reputation, several distinctions are made. Weiss et al. (1999: 75) introduce clear-cut definitions for reputation and image: “(...) an image reflects a set of associations linked to a brand or company name that summarises a brand or firm’s identity. (...) Reputation (...) reflects an overall judgement regarding the extent to which a firm is held in high esteem or regard, not the specific identity it has”.

This notion of reputation has been further explored and linked to the stakeholder theory (Freeman and Reed 1983). In this regard, stakeholders are thought to form their perceptions of a corporation from a set of objects which are relevant and particular to (though not necessarily exclusive to) their trading activity with, for example, supply network members. That is, the different stakeholders within a supply network are likely to perceive corporate identity differently, dependent on the objects they select and interface with in order to form their projected reputation of that firm. Kwon et al. (2005) articulate this concept of what they label ‘reputational objects’, through the example of a Business School. They cite the way potential students might form their perceptions of an organisations reputation from highly ranked MBA programme, references in the media and associations with the parent university, and contrast this with how members of the faculty might form their perceptions of the same organisation from different reputational objects, such as academic journal output. In this way, reputational objects can be seen as an instrument of CI. Similarly, in a supply network environment, different suppliers might hold different perceptions of the core firm based on different reputational objects. We also argue that different stakeholders within a single supply firm are likely to result in multiple perspectives of corporate identity. This apparent fragmentation acquires further complexity when the entire supply network is envisaged (see Figure 1. below).

Thus, when first and second tier suppliers each hold multiple perceptions of corporate identity of each supply network member, it seems likely that the ability of the core firm to identify and ‘manage’ corporate identity might be increased through a better their understanding and manipulation of mechanisms and structures of relevant reputational objects. We argue that these multiple perspectives of corporate identity are likely to exist at multiple levels within supply networks. In this regard, the aim of this research is to explore the multiple perspectives of corporate identity within a supply network context.

Figure 1: Reputational Objects in Supply Networks

Adapted from (Kwon, Easton and Clarke, 2005)

[pic]

This exploratory study forms part of a larger study into the association between market relationship dynamics and corporate identity. As such, a brief explanation of the research design for this phase of the study is presented below.

RESEARCH DESIGN AND METHODS

In order to explore the multiple perspectives of CI within a supply network an exploratory-descriptive research design was adopted and twenty-eight semi-structured interviews were employed as the primary form of data collection within a single supply network. Subsequent analysis of data collected in this manner provides a means through which data-driven theory can emerge. In-depth interview methods were utilised as the main data collection medium since such techniques obtain the ‘richest’ data within the prescribed limits of the research (Yin 1994). Particular attention was given to a key issue within judgment sampling – identification of and access to ‘key informants’ who can provide genuine insights into the research issue. In this regard, it was a requirement of the research design to discover who was responsible for and directly involved with market relationships. Middle managers, executives and front-line workers were identified as the most relevant sources in achieving this objective as their day-to-day involvement with strategic development and implementation cast them in this role. In this way, this study adopted a ‘discovery-oriented’ design. Each interview commonly lasted one hour and was conducted individually. Interviews were audio-recorded and later transcribed. The interview began by exploring corporate identity and the various stakeholders’ perceptions of the core firm and other network members. The second part of the interview explored how these perceptions affected (or were affected by) the market relationships within the network. Insights were also gained via unguarded or spontaneous answers. Data analysis placed a significant emphasis on verbatim quotations from informants. All interviews were analyzed via methods of inductive reasoning and comparative methods.

PRELIMINARY FINDINGS

The analyses lead to the identification of a three levels of corporate identity (personal, operational and strategic). In pursuit of brevity, and to highlight the relationship between objects of reputation in market relationships and the level at which corporate identity is being affected; Table 1 summarizes the key findings.

Table 1: Summary of Key Findings

|Relationship Between Firms|Associated |Market Dynamic Identified |Quote From Interviewees |

|Being Commented Upon |Reputational Object | | |

|Supplier talking about the|Individual involved in|Personal: CI driven by one|“If X [person] wasn’t there… [pause]…, I don’t know, I mean, my |

|core firm |dealings: primary |to one dealings with |dealings with Y [firm name] are always with X and that’s it. |

| |contact |individuals involved in |That’s all I know…” |

| | |supply network | |

| | |relationship | |

|Core firm talking about a | | |“it’s as though we know what each other are thinking…we just work |

|supplier | | |really well together and I think there is trust; they’re a good |

| | | |firm” |

|Supplier talking about the|Mechanisms and |Operational: CI driven at |“…they tell you what will happen, when and how… really, they |

|core firm |processes established |an operational level with |already have a clear idea of how things will be done… then everyone|

| |to deliver quality |the focus on problem |understands what’s expected.” |

| |service goods |solving, quality and | |

| | |satisfaction | |

|Core firm talking about a | | |“It’s the way we work together that makes me say that…we’ve both |

|supplier | | |[firms] got a problem solving culture rather than a blame culture |

| | | |…when we hit a snag” |

|2nd Tier Supplier talking |Contract |Strategic: CI driven by |“It’s a competitive market, and XX is a key customer…so we really |

|about the core firm |Satisfaction of aims |the satisfaction of |do have to go along with things [big pause] customer satisfaction! |

| |Bottom line |strategic aims and objects|[big smile, hands held high]” |

| |Delivery on quality |set out by the purpose of | |

| |and time |the supply network | |

| | |agreement | |

|Core firm talking about a | | |“They’re a good, firm. They’ve not let us down. You know you can |

|supplier | | |count on… XX when push comes to shove” |

CONCLUSIONS AND IMPLICATIONS FOR FURTHER RESEARCH

The aim of this paper is to generate insights into how different perspectives of corporate identity (from multiple stakeholders) impact on market relationships. Adopting a theory building approach, the analysis of exploratory, in-depth interviews with executives, decision-makers and front-line operatives, revealed three levels at which corporate identity perceptions are formed (personal, operational and strategic). Further, while each stakeholder may conceive each of these three corporate identity levels, their ultimate perceptions appear to be dominated by one of these levels. In this regard, the reputational objects selected (and experienced by stakeholders) to inform corporate identity, appears to be associated with the level at which corporate identify is perceived. . These findings are important for several reasons.

Primarily, this study represents one of the first studies into the different levels at which corporate identity operates. Our findings are consistent with and contribute to, the CI literature by suggesting how and where CI can create value for an organization. Second, our findings that corporate identity exists at three levels and that one of these levels is likely to be dominate in forming the CI perceived by different stakeholders, contributes to the market relationship literature through the identification of a potential mechanism (CI management) that may facilitate the leveraging of market relationship success and, in this way, create a supply network value. On a broader level, this suggests that future studies in the field of market relationships, and more particularly in the field of industrial marketing, might benefit from drawing on alternative academies to enrich, extrapolate and inform the theory of market relationships. This has also implications for the way executives and key decision makers develop and communicate their CI with supply network members and employees. These findings are constrained by the limitations of the research design and methods employed.

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[1] For a detailed discussion on the network perspective see Anderson, Håkansson and Johanson (1994).

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Supplier A

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Supplier A

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Supplier A

Core Firm

Supplier D

2nd Tire

Supplier C

1st Tire

Supplier B

1st Tire

Supplier A

1st Tire

Supplier A

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