Competition in international micro-niche markets: New England high-tech SMEs.

• Author: Suchon, Kathleen

1. INTRODUCTION

   Competitive Intelligence (CI), the collection and analysis of information about competitor capabilities and intentions (SCIP, 2008), can provide information critical to successful strategic decision-making as well as formal strategy development and implementation in organizations. In the increasingly competitive world in which businesses operate today, every company needs to understand its competition in order to survive. Large organizations can afford to expend significant resources in the pursuit of this essential information. Small to medium-sized enterprises (SMEs), on the other hand, seldom have dedicated resources to devote to CI, and thus they seldom engage in as thorough CI activity (Kula & Tatoglu, 2003; Li, Li & Dalgic, 2004). Yet their CI needs are no less urgent than the needs of larger organizations. Those SMEs that engage in international activities experience an additional dimension of information need, as they must sort through a mix of different laws, regulations, customs, and language. All these differences combine to create an extra layer of potential confusion or mistaken understanding about market and competitive conditions in international environments. But the development of the internet as a sophisticated and inexpensive source of information offers SMEs an opportunity to gain access to information quickly and inexpensively. Though it would make sense that SMEs, especially those with technological expertise, would quickly adopt the internet as a substantial contributor to their CI activities, they have in fact been surprisingly slow to do so (Groom & David, 2001). In a 1999 study one of the authors also found that high tech firms doing business internationally did not in fact utilize internet resources to any significant extent (Randall Haley, 2000). In attempting to interpret the results of the 1999 study, we theorized that this was an anomaly caused by the narrow sample of companies exclusively from the small state of Rhode Island as well as lack of development of the internet at that time. Compared to today, in 1999 there were fewer search engines, they were less powerful, there was less material available online, and the average non-expert individual had less familiarity with them. For example, many small businesses still did not engage in e-commerce, although they were beginning to utilize the internet for other purposes (Honeywill, 2001 and Czuchry, 2002). A 2001 survey of 500 Louisiana small businesses showed that while 88% were connected to the internet, only 36% had actually created their own sites. Of those, 42% used the Internet to "keep up with the competition." Overall, 73% used the Internet to find product information, and 58% looked for news and information (Waiker et al. 2002).

   In 2006 we conducted a survey of 197 high tech New England based SMEs doing business internationally, similar to the 1999 survey, expecting to find substantial utilization of the internet for competitive intelligence gathering in this wider sample from a study conducted at a later date. Again, this was not found. In the current study we report the results of semi-structured, open-ended interviews with individuals responsible for competitive intelligence gathering in 30 companies from the 2006 New England study whose representatives agreed to participate in this personal follow up. The interviews were designed to elicit respondent views on the challenges facing their international operations as well as the elements key to success in those activities, with a view to better understanding why responses in the prior surveys downgraded online sources of competitive intelligence.

2. COMPETITIVE INTELLIGENCE

   The definition of competitive intelligence provided by the Society for Competitive Intelligence Professionals (SCIP) is "the legal and ethical collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors" (SCIP, 2008). Historically, competitive intelligence has been seen as the utilization of publicly available information sources regarding aspects of a company's environment to develop intelligence that supports an organization's strategic and operational decisions. It is distinct from industrial or business espionage in that it is an activity that is conducted legally and ethically, utilizing publicly available information and/or legal investigative techniques (Hendrick, 1996). CI can be gathered through formal collection schemes such as scheduled alerts from selected online databases on particular firms or regularly scheduled patent or trademark searching online or informal means such as conversations with customers or competitors at trade shows or print subscriptions to general industry publications.

   International usage has begun to incorporate the wider domain typified by the French concept of "economic intelligence" (Salles, 2006) as well as the systematic process of managing "business intelligence" (BI) described by Lonnqvist (2006). Interestingly, the majority of the French firms surveyed by Salles were more concerned with market information than with competitor intelligence. Most authors focus on a technological approach to the "systematic collection, evaluation, and organization of information ... in an analysis of the business environment for subsequent strategy formation." (Hodges, 2005) Within this usage is included the concepts of market research, competitor and customer intelligence, and even strategic or technical intelligence. Most broadly interpreted, it could incorporate environmental scanning. Generally, North American authors focus on external environmental factors and information sources, looking critically at competitors and information pertaining to them, while Europeans seem to use BI as an "umbrella concept" for all CI-related activities, including internal technologies for managing knowledge obtained outside the organizations. Few organizations actually measure the value of business intelligence to their operations, however. (Lonnqvist, 2006)

   Particularly useful is a recent special issue of the European Journal of Marketing, in which an article by Calof and Wright (2008) attempts to trace the origins of competitive intelligence and identify the practitioner, academic and inter-disciplinary views on CI practice. It supports the environmental scanning approach, and is particularly useful in that it is applicable to both scholars and managers. An earlier overview by Wright and Calof (2006) surveyed current international practices, comparing studies from Canada, the UK and Europe, and presented an extensive literature review of CI, BI and marketing intelligence (MI), particularly emphasizing definitions of each term. The overall conclusion is that the intelligence process is critical to the strategic capability of organizations.

   Another relatively recent article expressly explores attitudes of decision-makers in Montreal firms representing varied industry areas in primarily small companies, and concentrates on the issues affecting the decision to undertake CI. Within this article is also a brief discussion of the literature on competitive intelligence as available through ProQuest's ABI/Inform Global database, a limitation also mentioned in the 2008 Calof study. (Tarraf, 2006)

3. SMALL AND MEDIUM-SIZED FIRMS

   Definitions of small business vary by country and by purpose. In the United States size standards for categorizing a company as a small business differ by industry, in some cases linked to number of employees and in others linked to revenues. Further, the actual number of employees or amount of average annual revenues necessary to qualify for the designation also varies. (Summary of Small Business Size Standards, 2008; Frequently Asked Questions about Small Business Size Standards, 2008) The U.S. does not categorize mid-sized companies.

   The European Union has a simpler...