Principal Topic

This research is concerned with understanding the ways that customers influence very young firms. In most entrepeneurship, strategy and marketing research, the role of customers is taken for granted: it is assumed they provide a revenue stream and can play a role in new product development. While these views of customers may be adequate for established firms, it seems likely that in new and young, growing firms, customers may play additional critical roles. This research attempts to broaden our understanding of what these roles may be, and to develop a grounded theory that will help to predict when and under what circumstances customers may be a valuable influence, a neutral factor, or a negative constraint, on the emergence process of new firms.

Method

The grounded theory approach has been adopted. Data was gathered through interviews with and observations of a variety of emerging firms. Given the focus of the investigation, the firms studied had had customers for a maximum of two years. Data collection proceeded to the point of theoretical saturation, with some firms being interviewed multiple times. As data was collected, taped interviews were transcribed and field notes were typed. QSR* Nudist was used to assist with coding the data and identifying patterns within interviews and across interviews. As provisional findings were identified, interviewees were consulted to help ensure the adequacy of interpretations. Interpretations of data were compared and contrasted with the enfolding literatures (from marketing and consumer behavior, as well as from strategy and entrepreneurship) in order to ensure that the theory developed built on extant knowledge.

Results and Implications

A typology of the roles played by customers was developed. Variable elements in the typology include: resources provided, influences on strategic direction, and constraints on evolution imposed by customers playing the various types of roles.  For example, one type of customer role is the “active organizational player.” A customer playing this role provides financial, knowledge and reputational resources; has a considerable influence on the young firms strategic direction, and constrains the firms’ evolutionary path in terms of its market niche. This research, in addition to contributing to our theoretical understanding of the early evolutionary process, will assist nascent entrepreneurs in managing their early customer base so to reap benefits in terms of resources acquired and avoid the unintended strategic constraints that may be imposed.

CONTACT: Eileen Fischer, Schulich School of Business, York University, 4700 Keele St., Toronto, Ontario, Canada; (T) 416-736-2100 x 77957; (F) 416-736-5762; efischer@ssb.yorku.ca