Introduction and Background of the research
The importance of small and medium sized Enterprises (SMEs) to a country’s economic growth has become more evident in both the developed and developing countries. According to McDaniel (2002), Small and Medium sized Enterprises plays a pivotal role in ensuring that the economy is sustainable. This is achieved through various ways. One of the main areas where SMEs have played a major role in helping to ensure that the economy is sustainable is through creation of jobs. In both developed and developing countries, SMEs employ higher percentage of citizens as compared to large corporations and government agencies.
They also contribute directly to the economic grow by contributing a giving percentage to the GDP of a country. As Husted (2011) says, the Small and Medium sized Enterprises are the drivers of a country’s economy.
Saudi Arabia is one of the fastest developing economies in the Middle East (Hills & Hultman, 2011). This country has numerous Small and Medium sized enterprises that have helped it experience a relatively stable economic growth. According to Laszlo (2003), about 90 percent of all registered business units in this country are small and medium sized Enterprises. They also employ the majority of Saudi Nationals.
This demonstrates how the SMEs are vital in the country’s economic growth. The report by Ricketts (2010), says that most of the multinational corporation operating in this country depend on SMEs for their normal operations. They depend on these firms to provide them with raw materials or to sell their products as either wholesalers or retailers. This strong co-relation means that success of these large corporate organizations directly depends on the success of the small and medium sized enterprises.
The importance of SMEs has raised a massive attention among researchers and other stakeholders on how these firms can be made successful. According to Gladwin (2010), although the SMEs are very important for a country’s economic growth, most of them always fall soon after starting. In the Kingdom of Saudi Arabia, it is estimated that the average life span of Small and Medium sized Enterprises is seven years. These means that most of these firms fail to celebrate their seventh anniversary.
This is very unfortunate given their importance to the economy of this country. Another major concern has been that although the SMEs account for about 90 percent of all the registered firms in this country, their contribution to the country’s GDP has consistently remained below 30 percent. Maser (2012) says that this is very unfortunate, especially given the fact that this sector employs about 80 percent of the country’s population. This is in sharp contrast with what is happening in developed countries such as the United States and United Kingdom where this sector is one of the leading contributors to the GDP (McKenzie-Mohr, 2011). This issue has attracted attention of many scholars who have been concerned of how to make these business units not only sustainable, but also efficient enough to make them profitable in their operations.
Scholars have defined sustainability in various ways and in different contexts, but the meaning comes out as one. According to Laszlo (2003), sustainability refers to the ability to maintain a given resource at a given desirable level for future use. This scholar was defining sustainability in the context of natural resources. Sustainability of Small and Medium sized Enterprises can therefore, be defined as the ability of business unit to support its operations in a way that will ensure its continuity.
In this context, sustainability of SMEs will be looked at from the perspective of being able to support future growth. As Maser (2012) observes, growth and development may not translate to sustainability. Some developments may not be sustainable within these business units. However, they form part of sustainability, especially if based on clear plan that focuses on the current forces, and ability of future growth.
When sustainability of SMEs is assured, the next important thing will be to ensure that they are profitable in their operations, and are able to meet its expectations in their contributions to the country’s GDP. This means that they must be operated efficiently to be able to with stand market forces such as stiff competition from other players, including other SMEs, changes in technology, and economic forces that may disrupt their normal operation. To achieve this, McKenzie-Mohr (2011) says that entrepreneurial marketing will be important. In the current competitive market, marketing plays a very important role in determining success of a firm.
A firm must be able to understand the market forces, and determine how they can be manipulated to yield the best-desired results. A firm must also be able to balance what it produces with what the market needs in order to create a pool of loyal customers. This can only be achieved when there is a proper marketing strategy that a firm uses in the market. Entrepreneurial marketing goes beyond creating awareness of a firm’s product in the market. It involves identifying the niche that is targeted by the current products of a firm, and coming up with the best ways of meeting their needs in a manner that would make them loyal to the firm’s product.
Some of the pertinent issues have been identified as lacking in most of the SMEs in this country. This has contributed to their dismal performance in various industries where they operate. This research focuses on sustainability can be ensured in Small and Medium sized Enterprises in this country, and how entrepreneurial marketing can be used to support this. The researcher intends to use both primary and secondary sources of data to come up with findings on how this can be done to ensure that SMEs in this country are not only sustainable, but also profitable in their operations in the market.
It is clear from the background information above how important Small and Medium Enterprises are important to Saudi’s economic growth. As Ricketts (2010) notes, the issue of sustainability is becoming very important among Small and Medium sized Enterprises in this country because most of them rarely celebrate their seventh birthday. This scholar further says that the first two years of a business are always crucial in determining its sustainability.
After surviving the first two years, a firm will be considered sustainable if the owner shall have met most of his or her objectives that made him or her start the business in the first place. The period running to the seventh year, and other subsequent years should be characterized with success for the firm and increased contribution to the country’s GDP.
However, it is of great concern to note that a number of Small and Medium sized Enterprises in this country fail before the second year. This is of great concern because this is a clear sign of lack of sustainability of these business units. Those that manage to survive these first two crucial years fail to become profitable even after being in operation for seven years or more. As McDaniel (2002) observes, these firms are barely able to support their normal operations. Others operate in huge debts that hinder the possibility of development. Some of these SMEs operate without understanding a clear market niche they are serving with their products.
This means that they cannot custom-make their products to deliver high value to this market niche they serve with their products. Joyner (2002) also notes that some of these SMEs struggle to capture a very market segment that it nearly becomes impossible to satisfy any of the segments. This can be attributed to lack of entrepreneurial marketing. Most of these business units lack skills that can take them to the next level, and this has resulted into many years of stagnation at one level, making them barely sustainable. This means that something must be to revert this unfortunate situation in order to make these business units prosper, and be able to increase their contribution to the country’s GDP. This is what the paper seeks to achieve.
In research, research questions are very important in guiding the researcher during the process of collecting data from the field. According to Hills and Hultman (2006), conducting a research is a complex process that involves various activities. When a researcher goes to the field to collect data, he or she will encounter a lot of information, most of which are always irrelevant to the topic at hand. Some of this irrelevant information can be very interesting on a personal basis, and if care is not taken, then can be very misleading. The researcher may end up collecting a lot of information that do not respond to the issues raised in the research. This may not only waste time for the researcher, but also jeopardize the quality of the final document from such a research.
A research question therefore, acts as a guide. A researcher would always refer to the questions while collecting both the primary and secondary data. The researcher would always focus on answering these questions when in the field. This means that any of the information that does not respond to the questions either directly or indirectly will be considered as irrelevant. The questions would guide the researcher in every stage of data collection in order to minimize the time taken in collecting data, and enhance quality of the research by picking specific information that are covering the topic of interest. With this knowledge, the researcher developed the following research questions for this research.
- What are some of the measures that can be used to ensure that there is sustainability in small and medium sized enterprises within this country?
- Is there a significant relationship between entrepreneurial marketing and sustainable advantage of small and medium sized enterprises?
- Which dimensions of entrepreneurial marketing have significant impact on small and medium enterprises’ profit?
- Which dimensions of entrepreneurial marketing have significant impact on small and medium enterprises’ contribution towards its serving communities (people)?
- Which dimensions of entrepreneurial marketing have significant impact on small and medium enterprises’ contribution towards its environment (planet)?
The researcher will focus on responding to these and other related research questions when collecting primary and secondary data. The above questions will form the basis of the questions that will be developed in the questionnaire.
According to McKenzie-Mohr (2011), a piece of research is always very important in contributing to knowledge in the particular area it focuses on. It is always important to define objectives of a research because it is important in various fronts. The researcher will use the objectives to understand what should be achieved by the end of the research. The objectives will help the researcher to determine if the final document is successful or not.
Success is always based on how well each of the objectives is met in the final document. If any of the objectives are not met satisfactorily, the researcher can always make necessary changes before finalizing the document. This helps in improving the quality, validity, and reliability of the final document. To the consumers of the document, this helps in specifying some of the important issues that are addressed in the research. This helps to determine how relevant the research is in addressing issues of interest to them. In this research, the following are some of the specific objectives that the researcher seeks to achieve in this research.
- To come up with a detailed report on how small and medium sized enterprises can achieve sustainability in their operations within the Kingdom of Saudi Arabia.
- To determine whether entrepreneurial marketing have positive impacts on SMEs sustainable advantage
- To establish how and the extent to which each of the dimensions of entrepreneurial marketing influence sustainable advantage of small and medium sized enterprises in terms of people development.
- To establish how and the extent to which each of the dimensions of entrepreneurial marketing influence sustainable advantage of small and medium sized enterprises in terms of profitability.
- To ascertain the extent to which each of the dimensions of entrepreneurial marketing influence sustainable advantage of small and medium sized enterprises in terms of environmental sustainability (plant).
- To come up with a detailed recommendation on how business unit can use entrepreneurial marketing to ensure that they gain competitive advantage in the market.
The above objectives will form the basis of this research. The researcher seeks to ensure that the document achieve all of the above objectives.
Significance of the Research (Justification)
According to Gladwin (2010), conducting a successful research involves a series of activities that involves consumption of time and other resources. For this reason, it is always important to ensure that when undertaking a piece of research, its clear significance is stated as a way of justifying its relevance. It is important to justify the costs and time that is spent in conducting the research because this also helps in validating it as a scholarly work done to improve a given area of knowledge.
Studies have been conducted about sustainability and entrepreneurial marketing in small and medium sized enterprises. According to Krueger (2007), the need to ensure that small and medium sized enterprise is sustainable. They should be able to remain sustainably profitable in order to be able to experience growth. Their importance to the economy, especially in offering employment, gives them a special position that makes it necessary to ensure that they are always protected from any harsh environmental conditions. Scholars have identified entrepreneurial marketing as a means through which firms can remain sustainable in the market. Several models have been developed to explain this, and to demonstrate how this can work in various economic conditions.
However, Hills, Hultman and Miles (2008) note that these theories were developed in developed countries, especially in the United States of America. Some of the common models in practice today were developed by scholars in these developed countries, and within the context of their environmental forces.
The economic condition in the United States is very different from that in the Kingdom of Saudi Arabia. For instance, consumer behavior in the US cannot be compared to that in this country. In the United States, human development index is very high, and people trust that they will always get money tomorrow even if they used all they have today (Asif, Searcy, Zutshi & Ahmad, 2011). This means that they do not fear spending. This explains why the United States market is considered as the most desirable in the world. On the other hand, most of the population in this Kingdom is not assured that they will get money in the future if they were to spend all that they have.
This means that they always spend with a lot of caution, always keen to ensure that they spare something for tomorrow’s use. There is already a skew in expenditure in these two countries, which means that consumer behavior in the two environments is different. For any marketing research model to be applicable in two different environments there must be a similar consumer behavior in the two environments. Consumer behavior forms the backbone of any marketing research, because the focus is always on how to provide them with products that will be appealing enough to facilitate purchase.
In most of the developing countries, including The Kingdom of Saudi Arabia, there is scanty information and models that can help explain the relationship between entrepreneurial marketing and organization’s sustainable advantage. There has been a general misconception where people use some the popular models developed in the developed countries universally. However, this can be disastrous, especially when dealing with the delicate issue of customer management. Each environment is unique to itself, with customers who can be defined based on the social, economic, political, and cultural practices. The existing models that were developed in other countries can be tested to determine if they can work in this environment. They can also be used to develop other more relevant models that are more specific to this environment.
This research seeks to determine the viability of the current models in terms of their appropriateness to the Saudi economic and social environment. Sustainability will be looked at based on the local Saudi society. The primary data will be collected within the borders of this country to reflect the local economy. This means that the ability of entrepreneurial marketing to provide sustainable advantage to firms will be determined in the context of Saudi’s economic and social environment. This makes this research very important to the locally operating small and medium sized enterprises in this country.
Contribution to theory and knowledge
This research will focus on determining the relationship that exists between entrepreneurial marketing and sustainable advantage. Of interest will be to determine how small and medium sized enterprises can achieve sustainable advantage through entrepreneurial marketing. The research will look at key dimensions of entrepreneurial marketing that have direct impact on sustainable advantage on business units. In this research, the focus will be on some of the relevant theories that have been developed in this field. The research will analyze these marketing and management models to determine their relevance to the Saudi economic and social environment.
This will contribute to the existing body of theory and knowledge in this field. This research will also involve empirical evidence that will help in supporting or challenging some of the existing theories. Saudi Arabia is considered as one of the developing countries in the world. As mentioned in the sections above, theories relevant to developing economies are very limited. Given the fact that this research will be based on a developing economy, it will help expand knowledge in this area. This piece of research will also serve as a reference to future researchers who will be interested in furthering research on this topic. It will offer very important insights to various issues relevant to this field, and the most appropriate method that can be used to achieve desired results.
Contribution to management practice
According to Ricketts (2010), most of the current business units in Saudi Arabia have failed to achieve sustainability in their operations because of lack of sufficient knowledge of the best practice in their field. The term sustainability is strange to most of the entrepreneurs in this country. They also do not have any knowledge about entrepreneurial marketing. This has led to the dismal performance that has been witnessed in these businesses. This study will provide a detailed understanding of sustainability and what it means to small and medium sized entrepreneurs in this country, and other countries having a similar socio-economic and political structure as that if Saudi Arabia.
This research study also seeks to provide knowledge to the entrepreneurs and other business executives managing small and medium sized enterprises on how entrepreneurial marketing can help them achieve sustainable advantage in their operations. This research will also give expert advice to business executives of small and medium sized enterprises on the importance of hiring skilled employees who understand marketing dynamics and able to define the best ways of achieving sustainable competitive advantage in the market.
This will help in enhancing their prosperity. Small and medium sized enterprises can also use this information to help them diversify their market offering in order to increase their chances of survival in the market. As Ricketts (2010) notes, most business units have failed to diversify because of lack of sufficient knowledge in the field of entrepreneurial marketing. With these skills, such businesses will be able to prosper, and this will increase their possibility to diversify. These enterprises will be able to understand how to apply entrepreneurial marketing as an antecedent for gaining competitive advantage in the market.
Scope of the research
It is essential to define scope of the research for the benefit of various users of this document. As mentioned above, this piece of research is meant to contribute significantly to theory and knowledge. This means that many people will rely on its findings to make decisions that may have far-reaching effects on their business units. The researcher was keen to ensure that usage of the findings of this research is strictly based on the relevance of the study to the environmental factors of the user. This means that this research cannot be used in a context that is opposite or very different to the environmental factors in Saudi Arabia. Defining scope of the research will help guide users of this study its relevance to their context under which they intend to use the research.
This research used both primary and secondary data sources in order to draw conclusions on various issues under investigation. Secondary data was collected from books, journal articles, and other online sources of information. The researcher was keen to determine the approach taken to develop these secondary sources of data. Some of these sources were focused on the Saudi economy, while others focused on other countries, especially the United States and other developed countries.
To this extent, the scope of this research was not limited to this country. It was broad enough to include data from developed countries. This means that the information in the literature review of this report can be used in a very broad context. However, this is not the case with primary data used in this research.
The primary data was taken from a sampled population within Saudi Arabia. This means that the relevance of this data is strictly limited to this country, or any other country that may be sharing socio-economic factors with Saudi Arabia. Analysis and conclusion was also made in the context of Saudi Arabia because it was guided by the empirical research done using the primary data. This means that when using the conclusions and recommendations of this research paper, care should be taken to ensure that these factors are observed. This will help in avoiding scenarios where useful information from this research is applied wrongly. The scope and limitations of the research will further be discussed in chapter three of this research study.
Chapter one of this research has given a comprehensive insight into this research. The chapter has given a comprehensive discussion of the background of the research. This helps in understanding what the research seeks to achieve. This section also helps in explaining the current state of affair on the topic under investigation. The chapter has also given the problem statement of the research to help readers understand some of the prevailing issues that makes this research very important in providing solution. The chapter also states the research questions that would guide the process of collecting both primary and secondary data.
It then gives focus to the objectives that should be achieved by this research. This is necessary for the researcher to determine how to approach the entire research in order to produce a document that reflects on all the important issues under investigation. The chapter also looks at the factors that justify its undertaking. Finally, the research focuses on the scope of the research to help users understand the relevance of this material when using it. This creates the environment under which secondary sources of information can be analyzed in the second chapter of this research.
This chapter will focus on the relevant secondary sources of data in respect to the topic under investigation. The issue of sustainability of small and medium sized enterprises has raised a lot of attention among various stakeholders both in the developed and developing countries around the world. According to the study Aras and Crowther (2009), the SMEs play a very important role in economic development of a country.
This study further emphasizes the fact that in developing economies, SMEs are the leading employers. This makes their sustainability an issue that should be addressed with a lot of concern. Sustainability of a country’s economy is always determined by, among other things, its ability to increase employment rate of its population. This problem is solved by presence of sustainable small and medium sized enterprises.
Scholars have conducted massive investigation into this field in order to come up with some of the best practices that can be used by SMEs to help them become sustainable. Theories have been developed to help emphasize sustainability and entrepreneurial marketing in the context of small and medium sized enterprises. Most of the available literatures were research conducted in the United States and other developed nations such as United Kingdom. A few literatures conducted by local researchers on these issues was also available, though they do not comprehensively address the relationship between entrepreneurial marketing and sustainable advantage among SMEs. This chapter will help give a comprehensive understanding of this topic based on some of the readily available literatures
This research is meant to develop key knowledge that can be used by various stakeholders to help improve the performance of Small and Medium sized Enterprises within this country. However, there are terms that may appear stranger to the consumers of this document. It is not possible to find common synonyms of these words because such replacements may end up with a different meaning altogether. This section seeks to define some of the terms that may be new to users of this document.
Sustainability has been defined differently in different contexts. Hult (2011) defines sustainability as “The careful and efficient stewardship of resources by businesses, communities, and citizens. It is the practice of meeting our needs in ways that are respectful of future generation and restorative of natural, cultural, and financial asset.” This is a broad definition, but it brings out the meaning of sustainability as the process of using resources responsibility, conscious of the need to use them again in future. In the context of SMEs, sustainability would ability of a firm to use its resources, including human resource, efficiently in order to generate profits, but in a way that is conscious of the need to protect the environment.
Corporate sustainability can be defined as a business strategy that seeks to create long-term value to all the stakeholders within an organization while protecting is socio-economic and cultural environment. It involves development that is conscious of risks that may be countered during normal operations. Corporate sustainability is a term that has been commonly used in reference to large corporate organizations with global market coverage. The term is rarely used in reference to small and medium sized enterprises. However, SMEs will also find sustainable development a necessity in their development because the need to protect natural resources in the process of growth encompasses all business units.
Sustainable development may mean different things to different people in different contexts. It has commonly been defined as the kind of development that helps in meeting the current needs in a way that do not compromise future generation’s ability to achieve their needs (Welcomer, 2011). In the context of SMEs, sustainable development refers to the ability of firm to achieve the current developmental needs in a way that would assure it of future developments. Most of the small and medium sized enterprises are always able to experience development in the early months of their initiation. However, as they grow in size, this development stagnate, or even depreciate, a fact that has made them unable to contribute to the growth of the country’s economy in a significant manner.
According to Jaworski and Kohli (1993), Entrepreneurial marketing is defined as “An integrative construct for conceptualising marketing in an era of change, complexity, chaos, contradiction, and diminishing resources, and one that will manifest itself differently as companies age and grow.” These scholars say that this is a marketing using a completely different approach from what is considered as conventional marketing. It involves risk taking, the use of innovation, and the need to be proactive in marketing. It also entails displaying the capacity of a business unit in a special way that makes it stand out above others as a unique firm. It is through entrepreneurial marketing that a firm can have the capacity to compete favourable with other market giants.
Small and Medium sized Enterprises are small business units with a limited number of employees, and a certain limit of revenues generated in a given year. SMEs are micro, small, and medium sized businesses. According to McDaniel (2002), different countries define micro, small, and medium sized enterprises differently based on the number of employees and revenue generation.
SMES in Developed And Developing Countries
According to Kamyabi and Devi (2011), small and medium sized enterprises are common in both developed and developing economies. These scholars note that in both economies, SMEs play important role in economic growth of a country. However, the performance of small and medium enterprises has been different in the two economies. According to Diamond (2005), the performance of SMEs in developed countries has been better than their performance in developing countries. It is important to understand this performance by analysing the SMEs in both developing and developed countries.
SMEs in Developed countries
According to Sandberg and Tsoukas (2011), SMEs are considered as strong pillars of economic growth. They play a major role in creation of employments to the country’s population. The report by Kraus, Harms and Fink (2010) indicates that about 65 percent of jobs created by the private sector are attributed to the small and medium enterprises. In the United States, SMEs have been considered as the pillars that have sustained economic growth. Although economic performance of SMEs have been considered as lower than the performance of multinational corporations (MNC), they have proven to be sustainable in their operations.
Russo (1997) says that SMEs in this country have performed well on issues such as flexibility to changing environmental factors and innovativeness. This has given them an advantage in market competition. Most of the SMEs in this country have also specialized in specific market segment, which they can offer the best satisfaction. In these segments, these firms would offer the best would offer products of very high quality, a fact that has helped most of them create pools of loyal customers.
Individuals who have knowledge on how these business units should be managed run SMEs in this country, as Hult (2011) states. This scholar notes that knowledge in market forces and marketing in general has helped managers of these business units prosper in various ways. Another factor that has made SMEs successful in the developed countries is the readily available sources of finance. Unlike in developing countries, financial institutions in developed countries readily offer loans or grants to small business units to help them sustain their operations. Government policies are also friendly to the SMEs, especially new firms that are just starting operations.
Such incentives as tax holidays would always be offered to the small start-ups in order to enable them to experience growth. The economic stability, and buyer behaviour has helped boost SMEs sustainability. Americans like spending, and this creates a very stable market for them. The political stability in this country and the currently stable economic growth has further helped these firms experience sustainable growth and development (Russo, 1997). Their contribution to the country’s GDP is high, making them be considered as very strong pillars in the country’s economy.
SMEs in Developing countries (Saudi Arabia)
Just like in developed countries, SMEs play a very important role in the economy of the developing countries. The report by McDaniel (2002) shows that over 90 percent of registered private business units in the Kingdom of Saudi Arabia are SMEs. They also employ about 80 percent of the country’s total population. This clearly demonstrates how important these business units are to the country’s economic growth. This When analysing SMEs in developing countries, the picture given about developed countries becomes opposite. Diamond (2005) observes that the rate of failure of SMEs in developing countries is about four times as high as it is in the developed countries.
Sustainability of SMEs in developing countries is always not assured, and this may be attributed to many factors. McDaniel (2002) says that one of the leading factors that affect success of SMEs in this kingdom is the limited knowledge of the owners or people trusted with management of these business units. These managers do not know what sustainability is, and how relevant it is to their business units. They also lack knowledge of what entrepreneurial marketing. As Hult (2011) puts it, people who knows very little about good governance operate most of these SMEs.
In developing nations, SMEs struggle to get financial support from the leading financial institutions. In Saudi Arabia, Husted (2011) says that the capital market is not friendly to small business units. These institutions do not trust small firms to be able to generate enough income and remit back the amount of money loaned to them. This has affected their performance, as most of them have to rely on the financial capacity of their owners.
The Saudi society has also played a role in creating a troubled market for the SMEs. The market trust brand name when it comes to purchasing most of the items. This means that small brands will find it difficult fighting with some of the already established brands in the market. The market’s trust for brand name has forced some of the start-ups to close because they find it nearly impossible to penetrate them market (Loucks, Martens & Cho, 2010). The purchasing power and consumer behaviour of the local population has also been a factor that has limited the capacity of SMEs to prosper in the market and be able to experience the desired growth.
It is true that SMEs in this country are barely managing to survive. However, Maser (2012) notes that the future is not that bleak as the government has realized the need to support them as a way of motivating the country’s economic growth. Some government initiatives are meant to support SMEs in this country in order to make them grow. The government has also been keen to sensitize financial institutions on the need to offer SMEs financial support.
Fisk (2010) cites Samba Financial Group as one of the leading banks that have developed programs that focus on small and macro business institutions. The society is also slowly getting to appreciate the local brand. Flexibility of the SMEs also gives them an advantage over large corporate organization when it comes to initiating change or introducing new management approaches. With proper management and support from the government and other relevant stakeholders, Joyner (2002) says that SMEs in this country can flourish and be able to increase its percentage contribution to the country’s GDP.
Herman (2010) simply defines entrepreneurship as the qualities that define an entrepreneur. It would therefore, be prudent to understand the definition of an entrepreneur. Maser (2012) defines an entrepreneur as “Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good or service will be produced.” An entrepreneur has also been defined as a risk taker, an innovator, and a creative mind that is able to identify a gap in the market and determine how the gap can be filled to generate economic benefits. In this research, entrepreneurship is the independent variable.
It always happen once one decides to venture into any business activity. As Gladwin (2010) says, entrepreneurship spirit is always exhibited in every human being. The only difference comes when others are willing to take the risks associated with it, while others would prefer playing safe. The fact that SMEs account for over 90 percent of all the registered private firms in this country is a clear demonstration that the spirit of entrepreneurship is high in this Kingdom (Hitchcock & Willard, 2009).
The existence of these enterprises demonstrates the will power that individual investors have towards creating business units. However, Sharma (2011) says that there is the issue of sustainability. Making the move to start a business unit (entrepreneurship) is very important, but also equally important is the need to ensure that the started business can be able to support itself and experienced sustained development (sustainability) in the market. Starting an unsustainable business is a waste of time and resources because it will take a short while before the business unit is forced out of operations. This means that entrepreneurship needs to be supported by sustainability for it to be realistic (The EU-GCC Chamber Forum, 2010). This means that there must be sustainable entrepreneurship for a business enterprise to thrive. SMEs that have succeeded in this and other countries have achieved this.
Marketing is defined by Laszlo (2003) as a management approach that seeks to create a positive interaction between a firm and its customers with the view of creating loyalty to a given brand or products. Marketing has faced massive transformation over the years. The research by Maser (2012) notes that marketing has become core management issue that would define ability of a firm to be sustainable. For SMEs, it is through marketing that they can make their products conspicuous in the market. Marketing also offers them opportunity to use new creativity in convincing the market that their products is the most appropriate in the market.
According to Morris, Schindehutte and Forge (2002), entrepreneurial marketing is defined as a marketing strategy that uses innovation, pro-activeness, and risk taking initiatives to make use of limited resources within a firm to create awareness of the firm’s brand and products within the market. Given the fact that SMEs have limited resources, entrepreneurial marketing is the only way it can manage to market itself in the midst of stronger competitors in the market.
Entrepreneurial Marketing Dimensions
It is important to understand some of the dimensions of entrepreneurial marketing. Joyner (2002) says that entrepreneurial marketing dimension has always been considered to have three main dimensions of being proactive, taking calculated risks, and innovativeness. However, this can be expanded as shown below.
Entrepreneurial marketing encourages proactive decision market in all business strategies within a firm other than being reactive (Morris, Schindehutte & Forge, 2004). This involves making decisions and strategies, not because something negative has happened and there is need to make a corrective measure, but because a need has been identified and the move is meant to satisfy this need. SMEs must understand market forces and other external factors that affect their normal business operations. Maser (2012) says that being proactive is an important strategy that helps business units develops creative strategies for various issues within organizations.
This means that the management wait for an unfortunate incident to motivate an action within the firm. This reactive approach to management has been the reason why many SMEs in various parts of the world have failed. The need to react should be identified early enough to avoid the unfortunate incidents from taking place. Measures should always be put in place to ensure that the firm has the capacity to develop new and better approaches of handling various activities during its normal operations.
Calculated risk taking
According to Tsai and Hung (2009), risk cannot be avoided in any business venture. The most defining factor of an entrepreneur is the ability to take risks. Entrepreneurial marketing therefore, involves creativeness that borders risk-taking in an attempt to achieve a positive difference in the market. However, Bornstein (2007) warns that any risk taken within an organization should be a calculated risk. This means that the management should be able to identify some factors that makes a certain venture a risky one in the market. It should then determine how this risk could be mitigated, and some of the opportunity costs related to the venture.
When this detailed evaluation is conducted, a firm will be able to determine the worth of the initiative. The risk would only be taken if the management has a detailed understanding of all the underlying issues related to the initiative, and a detailed description of measures that can be taken to mitigate the risks. One of the main problems with SMEs in this country is that sometimes they take uncalculated risks. Husted (2011) says that there are cases where SMEs undertake new projects without any clear feasibility study. Such project may involve massive investments that accounts for a massive share of the firm’s revenues. When such projects flop, firm get seriously affected, and some may even be forced out of operations (Motwani, Levenburg & Schwarz, 2006).
Another defining characteristic of entrepreneurial marketing as Herman (2010) observes is innovativeness. This scholar defines innovativeness as the ability of a firm to come up with new creative ways of handling normal business operations. It entails going beyond the conventional strategies in the market. Innovativeness as a dimension of entrepreneurial marketing has been identified as one of the best ways through which SMEs can gain an advantage in the market over other established corporate businesses (Motwani, Levenburg & Schwarz, 2006). It involves determining new better ways of managing customers in a manner that is not currently used by other existing firms.
Bornstein (2007) says that small firms are always more flexible. They have a greater capacity to develop new ways of dealing with the issue of customer management. They can easily change from one customer segment to another. They can also create their own unique marketing niche and strive to deliver unique products to this niche as a way of gaining competitive advantage in the market. This innovativeness needs some understanding of the market forces, and how they can be manipulated to generate specific outcome.
In marketing, there is always a need to identify windows of opportunity and use them to create competitive advantage (Organization for Economic Co-operation and Development, 1997). Opportunity focused marketing is considered as one of the strong factors that make entrepreneurial marketing uniquely powerful. This is because the concern goes beyond awareness creation and convincing customer about a brand or a product. It also involves identifying an opportunity in the market and making the most out of it for the benefit of the firm.
Large corporate organizations have resource advantage over SMEs. This forces SMEs to find better ways of gaining competitive advantage using their limited resources in the market. It is through this that they can remain sustainable. Entrepreneurial marketing involves putting an effort to market a product or a brand despite limited resources that a firm may have at its disposal (Raduan, Jegak, Haslinda & Alimin, 2009).
Entrepreneurial marketing emphasizes on customer intensity. This involves increasing focus on customer satisfaction as a way of making them loyal to a brand or a product. This can help SMEs gain competitive advantage over other established entities (Bell & Morse, 2008).
When a customer makes a purchase, he or she would want to get the best value that matches with the expenditure. Entrepreneurial marketing focuses on creating the best value out of every purchase a customer makes. This will increase customer loyalty that will enhance sustainability of a business unit (Corley & Gioia, 2011).
Sustainability has been defined in the sections above as an effort to protect the future while still ensuring that there is development within the current setting. This is the dependent variable. This research seeks to determine how SMEs in the Kingdom of Saudi Arabia can achieve sustainability in their operations. This means that sustainability is dependent on other factors. If these factors fail to happen the way they are expected to, then sustainability cannot be achieved (Cavagnaro & Curiel, 2012).
In this case, entrepreneurial marketing has been identified as an independent factor that may influence sustainability of the SMEs. In this research, it is of interest to determine the relationship between entrepreneurial marketing and sustainability. For the SMEs in Saudi Arabia to be successful, they must be able to achieve sustainability in their operations. Their future must be assured, based on their current operational activities. It is necessary to understand some of the pillars of sustainability in order to understand the concept.
The Three Pillars Of Sustainability
As mentioned above, sustainability has received different definitions from different quarters and under different contexts. However, all these definition agree on the fact that sustainability is based on three main pillars. In the context of small and medium sized enterprises, the three pillars include people, which the social pillar, profit which is the economic pillar, and plant which is the environmental pillar (Ramachandran, Mukherji & Sud, 2006).
The three pillars are very important in ensuring that there is sustainability, and any weakness in any of the three would render the whole system unsustainable. This means that if a firm has excellence economic and environmental policies, but lack clear policy on how to deal with social issues of its employees, the firm will be considered as unsustainable (Chrisman & McMullan, 2000). These three pillars can be presented diagrammatically as shown below.
It is important to understand how each of these three pillars provide sustainable advantage to small and medium sized enterprises.
The first pillar of sustainability is the social pillar. According to Ray, Barney and Muhanna (2004), employees and customers form the basis of any business unit. For a business to be considered as sustainable, it must have employees who are committed to their duties. As Porter (1985) says, success or failure of any business unit always depend on the employees. This is because the employees are responsible for implementation of all policies that are meant to offer success to a business unit. Policies must be put in place to ensure that employees are treated in a way that will motivate them.
One of the crucial issues that should be observed very closely is occupational health, and safety of the employees while at work. Employees should feel that the firm takes a lot of interest in providing them with a safe environment. Their health concern should also be taken care of by the firm (Esty & Winston, 2006). The working hours should also be flexible to allow employees engage in other personal activities that may mean a lot to them. The wage rate should also be fair, being conscious of the prevailing market rates.
The management should always respect basic human rights of employees at all times to avoid any disruptive industrial actions from the employees. It is also important to focus on the customers. In this respect, a firm must ensure that customers get high value for their purchases, and that they are listened to at any moment that they have an issue to address about the firm or products offered. There should also be community relation program that would help foster positive relationship between the firm and the public. In essence, the firm must satisfy all people who are related to it directly or indirectly (Chabowski, Mena & Gonzalez-Padron, 2011).
The second pillar of sustainability is the economic pillar. As Fisk (2010) observes, the main concern of any business unit is to generate some income that would help it operate normally. This scholar says that even non-profit making organization must have this economic pillar to operate even if it comes from donors. The source of income must be stable for a firm to be considered sustainable. For SMEs, the main source of income is the profit generated from the normal operations.
This must be stable. A firm must also be able to determine the kind of risks it exposes itself to during its normal operations. It should always take calculated risks that would not hurt its profitability. Fisk (2010) also says that such firms must also have access to the market where it can trade without any form of fear or intimidation. The management must have the capacity to maintain a growth of a firm’s profitability in the market.
The third pillar of sustainability involves management of the environment, also referred to as the planet. Natural resources on the planet earth are scarce, delicate, but very important for human survival. For this reason, Fisk (2010) says that care should always be taken to ensure that they are protected from any possible destruction from human activities. Firms are currently under pressure to ensure that their activities are environmentally sustainable.
For a business unit to be considered as sustainable, Savitz (2006) says that should use its natural resources responsibly, and in a manner that will make available for future use. Pollution of any kind should be minimized as much as possible. In fact Laszlo (2003) says that the rate of carbon emission should not go beyond the capacity of what naturally be assimilated. This scholar says that firms should try as much as possible to recycle most of its wastes to reduce environmental degradation.
The field of sustainable development of small and medium sized enterprises has attracted a lot of research in the past. According to the research by Joyner (2002), sustained development among SMEs in developing countries has been a big challenge. This scholar says that SMEs in developing economies have been facing serious challenges that hinder their normal operations. Krueger (2007), who says that sustaining development among SMEs in developing countries has been affected by social, political and economic environment, shares this sentiment. The social environment has been unfriendly to them, especially the consumer culture that focuses on limited spending, and the desire for cheaper prices. There is also lack of goodwill from the political class to support the SMEs. The economic woes in these countries have also contributed to their inability to achieve sustainable development.
Krueger (2007) says that SMEs have limited access to the capital market in most of the developing economies due to lack of trust. Maser (2012) confirms this by saying that financial institutions do not trust the capacity of SMEs to repay loans advanced to them. Given these unfortunate factors, Joyner (2002) says that SMEs must find ways through which they can remain sustainable. According to Runyan, Droge and Swinney (2008), entrepreneurial marketing offers these enterprises a unique capacity to achieve sustainable development in the market. It offers them ability to use their limited resources to gain competitive advantage over other established market competitors.
Entrepreneurship And Sustainability
Entrepreneurship defines the ability to start business unit by bringing all factors of production together, and being able to face some of the risks involved in the initiative (Armstrong & Botzler, 1993). However, it may not be worth the risk if such an enterprise fails after a short period. If this happens, the entrepreneurial process shall be considered to have failed, and the resources committed to it wasted. This means that there is need to ensure that there is sustainability of such enterprises as soon as they start. For this reason, Maser (2012) says that entrepreneurship should be accompanied by strategies that can enhance sustainability.
SMEs and Sustainability
At this point, it is now clear why sustainability of SMEs is very important. According to Joyner (2002), sustainability of SMEs depend on various factors, which can broadly be categorized as external or internal factors. External environmental factors are forces, which are beyond the control of the SMEs. This means that they must control internal environmental factors to ensure that they remain competitive in the market. Sustainability of SMEs can be achieved by using internal strengths and managing its weaknesses to capitalize on market opportunities while taking care of threats (Bansal, & Clelland, 2004).
Marketing and Sustainability
Marketing is one of the internal strengths that a firm can use to gain sustainability in the market. McKenzie-Mohr (2011) notes that ability of a firm to come up with a positively unique marketing strategy is considered as strength if it can give it competitive advantage in the market. This competitive advantage will help in increasing profitability of a firm. Because of this, such a firm will be able to create a pool of loyal customers because of their unique capacity to meet their demands. This means that SMEs can use marketing as a way of achieving sustainability in the market (McKenzie-Mohr, 2011).
Entrepreneurial Marketing & Sustainability
Fisk (2010) states that entrepreneurial marketing is always associated with the ability of a firm to integrate characteristics of entrepreneurship in marketing. It involves bringing in innovation, taking calculated risks, and focusing on customer to ensure that customers get the value they desire whenever they make purchases. According to Maser (2012), SMEs are in better position to use entrepreneurial marketing then large corporate bodies. This is because they are flexible, and can easily adopt changes taking place within the market. This means that these enterprises are able to use entrepreneurial marketing to achieve sustainability in their operations.
When talking about sustainability, Joyner (2002) says that it is always necessary to determine how it can be measured in order to be able to determine the level of success achieved. To this, there must be clear indicators that can be used to determine sustainability. Sustainability can be measured using the three pillars identified as people, planet, and profits (Herman, 2010). Economically, sustainability is by determining the profitability of firm. Socially, sustainability is measured by how well it is able to meet the interest of its stakeholders. The final measure will be how well the operations of the business units contributes to environmental conservation.
Scholars have developed theories that explain various factors related to sustainability. Sustainability has become very important not only to the SMEs, but even to large corporate bodies. The theory of sustainable development has its premise on the three dimensions of sustainability. The figure below shows a diagrammatic representation of the three main dimensions of this theory, and the way these dimensions relate to one another.
As shown in the above diagram, these three dimensions have a unique relationship. Sustainability starts by ensuring that the environment is sustainable. If environmental sustainability is not assured, then sustainability of the other two cannot be achieved. After achieving environmental sustainability, the next most important factor is social sustainability. This means that if employees, customers, and other relevant stakeholders are not satisfied, then there can be no sustainability. The last factor, which most business units always rush to achieve, is the profitability. There must be stable flow of profits for a firm to be considered sustainable.
As mentioned in the introductory section of this paper, the researcher seeks to conduct an empirical research. The researcher will collect primary data and analyse to ascertain some of the findings of the literature review. Based on the research questions developed in the research proposal, the researcher developed the following hypotheses.
- H1o. Entrepreneurial marketing is not significantly related to sustainable advantage of small and medium enterprises.
- H1a. Entrepreneurial marketing is significantly related to sustainable advantage of small and medium enterprises.
- H2o. Innovation has no significant impact on small and medium enterprises’ profit.
- H2a. Innovation has significant impact on small and medium enterprises’ profit.
- H3o. Proactiveness has no significant impact on small and medium enterprises’ contribution towards its serving communities (people).
- H3a. Proactiveness has significant impact on small and medium enterprises’ contribution towards its serving communities (people).
- H4o. Resource leveraging has no significant impact on small and medium enterprises’ contribution towards its environment.
- H4a. Resource leveraging has significant impact on small and medium enterprises’ contribution towards its environment.
The research will seek to confirm the alternative hypotheses by rejecting all the null hypotheses as stated above using the primary data analysis.
According to Krueger (2007), research is a continuous process. However, some areas are always considered grey, because of either limited knowledge or complete lack of it. It is important for a researcher to ensure that his or her research work seeks to seal some of the existing gaps. The researcher used a wide variety of secondary sources of data about the research topic. There are numerous reports about sustainability of SMEs and entrepreneurial marketing. However, most of the models developed about this topic were based on environmental factors of developed economies.
Moreover, the researcher noticed that there was limited information on this topic with specific relevance to this country. The Kingdom of Saudi Arabia has unique socio-political and cultural factors that should be focused on when analysing SMEs. This research seeks to provide more information about sustainability and relationship between entrepreneurial marketing sustainable developments among SMEs in Saudi Arabia.
This chapter has given a comprehensive review of some of the existing literatures relevant to the topic of the research. The chapter has given an overview of the topic, and definition of some of the key words used in this research. The chapter focused on some of the recent research on sustainability of small and medium sized enterprises in both developed and developing economies. It was important to give a comparison of how SMEs in developed and developing countries perform. It was also necessary to give clear reasons why these differences exist.
The chapter focused on understanding of sustainability and some of its key pillars. Entrepreneurial marketing and its dimensions have also been identified. The chapter was seeking to find how the existing literatures were linking entrepreneurial marketing, the independent variable, to sustainable development, which is the dependent variable. The chapter analyzed some of the dimensions of entrepreneurial marketing and their relationship with the three pillars of sustainability.
The chapter also focused on research hypothesis that would be used during the analysis of primary data. Finally, the chapter identified the existing knowledge gap on the topic under investigation, and the measures this research was putting to eliminate this gap. The next chapter will focus on the methodology of this research.
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