Collaborating Small Business to Overcome Financial, Social and Political Constraints

Small businesses have a hard time competing due to financial, social, and political constraints on their resources. A paper by Evans (2013) explores the political dynamics and process of institutional change that underlines policy approaches that focus on modernizing small firms in Portugal. Their comparative-historical analysis helps show that successful industrial upgrading relies on intense and sustained political action led by leadership in an effort to develop benchmarks and proper implementation of financial strategy. 

Small businesses often lack resources to compete in a market dominated by better financed international companies. Payroll, financing, business, systems, etc… were not always updated appropriately. Small businesses also regularly failed to meet inappropriate legislation focused toward larger organizations leaving them unable to grow or develop.  

Other problems small business face is the legal and political structure of a country that focuses more heavily on larger industries. This structure can make it difficult for small businesses to meet regulations, export quantities, and other minimum standards. The lack of understanding of the needs of small business can have a long-term impact on the success of new entrepreneurial development. 

Small business can work in collaboration to build a stronger political voice that can impact the legal frameworks of a nation and encourage greater fairness in development. They may also work together to share resources such as payroll, financing, legal representation, etc… Sharing resources narrowed economies of scale advantages found in larger businesses. 

The study helps highlight how local and national governments must work together to ensure fresh development of industry innovation, new businesses, and stronger economic competitiveness. Small businesses will need to overcome their individualistic approaches and rivalry oriented strategies to create stronger collaboration that leads to social, economic and political transformation.  Leaders can encourage changes within the structure to ensure greater concern and competitiveness of small businesses development within their sectors that has an impact on economic development.  

Evans, A. (2013). Building institutional capacity: from pervasive individualism to sustained coordination in small firm sectors. Business & Politics, 15 (2).

Using Marketing Databases to Foster International Growth in Multiple Businesses

The global world is complex and contains floating pieces of information that are difficult for marketing researchers and businesses to collect and understand. For most businesses it can be difficult to collect data in a way that is useful for strategic decision-making. According to a paper by Michael Anastasiou businesses should consider using shared databases that allow for higher levels of understanding and analysis of international market information (2012). 

Because the market continues to change it is important for businesses to have relevant information for making adjustments that meet new demands.  By collecting information about the international market, companies can adjust their strategies to predict and respond to market changes. 

Lack of information can be deadly for businesses and even more so for small businesses that lack capital to recover from mistakes. A deficiency in market research and technological capabilities to collect and analyze data can lead to risks of failure (Craig and Douglas, 2001). This failure occurs as a direct result of not understanding the market or how to reach potential customers. 

Research becomes more difficult when dealing with ambiguous information such as beliefs, values, ideologies, preferences and perceptions (Wheeler, 1998). To understand these nuances it is necessary to have lots of useful information and engage in content analysis. The results can be used in designing new products or adjust processes to market realities.

The author argues that by allowing for shared databases businesses can contribute to the data collection process of international markets and then exploit that information for stronger performance. Before information can become useful it must be analyzed in a proper theoretical framework.

Small businesses generally don’t have the ability to complete high levels of analysis. They may hire researchers to understand the data or use software that searches on defined characteristics. Analytical software helps ensure that businesses are using proper methodology and obtaining useful information for their purposes (Maclaran & Catterall, 2002).

The author’s point of collective gathering of information by businesses can foster greater market analysis appears correct. The use of such information by small businesses and business clusters is beneficial for those trying to reach a wider market. As each business collects information they can upload that data for other database users based upon their agreement terms.

What the author does not discuss is how a database like this can be fostered for economic growth. One can foresee business organizations (i.e. small business association or local association) including this service as part of membership, building for-profit databases, or collective sponsorship by clustered businesses within a geographical area. Each business can analyze the data on their own, use available software or hire researchers to analyze the data based upon their needs and preferences. 

Anastasiou, M. (2012). International marketing research: exploring E-marketing research and its implications. The Cyprus Journal of Sciences, 10. 

Craig, C. and Douglas, S. (2000). International Marketing Research, (2nd ed). Wiley, New York.

Maclaran, P. & Catterall, M. (2002). Analyzing Qualitative Data: Computer Software Program and the Marketing Research Practitioner. Qualitative Marketive Research: An International Journal, 5, pp. 28-39.

Wheeler, D. (1998). Content Analysis: An Analytical Technique for International Marketing Research. International Marketing Review, 52, pp. 39-47.

The Competitive Benefits of Business Collaboration

Organizations collaborate for a number of reasons that range from necessity to strategic enhancement. Smaller organizations may collaborate to develop stronger responses to collective problems (Sowa, 2009) while larger organizations collaborate with smaller organizations to incorporate new competencies. Collaboration is an exercise of hedging the different knowledge and skills of each organization to compete together on the global market.  Without collaboration businesses may suffer for a lack of resources and abilities to meet new market pressures.

Organizations collaborate due to internal and external drivers resulting from changes in the environment (Yankey & Willen, 2005). These organizations do not have the current internal or external abilities to meet the new demands of global change. Collaboration gives them an opportunity to work together to face market pressure (external drivers) or share abilities and knowledge to lower operational costs (internal drivers).

The collaborative efforts between businesses and various suppliers create greater interactivity which leads to economic and functional advantages (Hughes, 2008). Collaboration helps suppliers understand the needs of their customers and work together to create better operations to enhance their services. Both the purchaser and the supplier work together as a unit and become co-creators in the process of development.

Companies that need to improve certain areas of knowledge may want to work with other businesses to speed up the process of information transference (Rodriguez & Nieto, 2012).   The gaining and use of new knowledge can help both companies learn to compete better on the market. It is this learning and development that lends itself to industry innovation (Cox, 2012).

Companies rarely work well in isolation from one another. They need access to shared resources, knowledge, and human capital. Not all companies can be everything to everyone. Some will naturally have abilities in one area while others have abilities in different areas. For example, collaboration between e-commerce businesses and distribution businesses may raise the functionality of both (Kuo-pin & Graham, 2011).

There are many different ways in which companies can work together that range from collaborative projects to full integrations. They can formalize these efforts in contracts and service agreements or work with third-party vendors on shared projects. Regardless of the type integration, organizations that hedge their skills and abilities regularly find competitive advantages on the global market.

Cox, P. (2012) Strategies for collaboration agreements focusing on innovation. Journal of Commercial Biotechnology, 18 (1). 

Hughes, J. (2008). From vendor to partner: Why and how leading companies collaborate with suppliers for competitive advantage.  Global Business & Organizational Excellence, 27 (3). 

Kuo-pin, C. & Graham, G. (2012). E-business strategy in supply chain collaboration: an empirical study of B2B e-commerce project in Taiwan. International Journal of Electronic Business Management, 10 (2). 

La Piana, D. (2010). Merging Wisely. Stanford Social Innovation Review, 8 (2). 

Rodriguez, A. (2012). The internationalization of knowledge-intensive business services: the effect of collaboration and the mediating role of innovation. Service Industries Journal, 32 (7). 

Sowa, J. (2009). The collaboration decision in nonprofit organizations: views from the front line. Nonprofit and Voluntary Sector Quarterly, 38 (6).

Yankey, J. & Willen, C. (2005). Strategic alliances. In R&D. Herman & Associates (EDS). The Jossey-Bass handbook of nonprofit leadership and management. San Francisco: Jossey-Bass

Growing Small Business and the Economy Through Clustering

Small and medium businesses have difficulty getting past a critical threshold that allows them to grow in the market. Helping them collaborate with like-minded businesses helps their growth potential. A paper by Dhakal, et. al. (2013) discusses an open-innovation concept of living labs that allows stakeholders and customers to engage in the co-creation process together. They studied a cluster in Australia to show how this enhances business development and the economic engine.  

A living lab is a user-centered open innovation ecosystem (Hippel, 1986).  It uses modern technology to foster communication between stakeholders and customers to co-develop products.  The natural environment becomes the testing grounds for new products and services and this allows users to offer feedback on the success of changes and provide ideas on how to improve on the products and services. 

It provides a collaborative space (virtual or physical) that distributes problem-solving tools, capacities, and responsibilities to the end user to create greater innovation (van der Valt et. al., 2009).  This innovation is used to enhance the offerings of companies through enhanced products and services. In this context, innovation is seen as enhanced discovery whereby innovation equals invention plus exploitation (Roberts, 2007). 

Before an open innovation living-lab can be successful the stakeholders will need to agree on joint goals, and focus on the resolving of problems in the real world (Bergyall-Karaborn, et. al., 2009).  This process allows stakeholders to work collaboratively on developing products and consideration customer feedback to enhance their offerings. The information is shared among the stakeholders to further develop mutual products and services. 

When living labs have the right stakeholders and functionally work well together, each of the businesses receives a benefit for both the co-creation product/service as well as gain important knowledge for the enhancement of other products/services. When innovations are significant, it can have an impact on the regional well-being and local employment opportunities (Keniry, et. al. 2003). 

Living labs are beneficial to enhancing knowledge clusters. Clusters are defined as “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities (Porter, 1998, p. 4). Cluster members need a way to communication to foster mutual growth. Greater growth contributes to the functionality of a larger economic hub.

The authors found that geographical togetherness of small businesses form around competence similarities. To enhance the local interaction it is possible to use open innovation (i.e. living labs) to further their growth. It requires a method operationalizing processes and developing mechanisms that help further innovation. Organizations that willingly collaborate around certain key objectives with other stakeholders and use customer feedback to enhance their products are likely to reap growth while the region experiences greater economic enhancement. 

Bergvall-Kåreborn, B., et. al. (2009). A Milieu for Innovation – Defining Living-Labs. In K. R. E. Huizingh, S. Conn, M. Torkkeli and I. Bitran (eds) Proceedings of the 2nd ISPIM Innovation Symposium: Simulating recovery - the Role of innovation management, New York City, USA. 6-9 December 2009.

Dhakal. et. al. (2013). The innovation potential of living-labs to strengthen small and medium enterprises in regional Australia. Australasian Journal of Regional Studies, 19 (3). 

Keniry, J., et. al. (2003). Regional Business – A Plan for Action, Department of Transport and Regional Services, Canberra.

Porter, M. (1998). Clusters and competition new agendas for companies, governments, and institutions. In M. Porter (Ed) On Competition (pp. 197-287), Harvard Business School, Boston.

Von Hippel, E. (1986). Lead users: a source of novel product concepts. Management Science 32, 791–805.