Marketing innovation represents a pathway for achieving legitimacy, viability, and growth for SMEs that typically operate with resource constraints in uncertain and competitive environments. However, our understanding of the organizational determinants of marketing innovation by SMEs is limited. We advance the literature by drawing on a longitudinal (5-year) data set obtained through an Australian Bureau of Statistics (ABS) national-level panel and offering a comprehensive picture of the organizational determinants that affect the likelihood of marketing innovation by SMEs. Logistic regression analysis conducted on 4378 firm-year observations generally supports our theoretical framework and reveals how marketing innovation by SMEs is driven by institutional, resource, innovation, and performance measurement factors. Our findings offer SME managers a clear line of sight between organization-wide practices and innovative marketing practices.
The importance of marketing innovation cannot be underestimated. Innovation in marketing represents a source of competitive differentiation and growth for most firms, particularly for small and medium-sized enterprises (SMEs). Unlike larger organizations that have established business models, SMEs are typically constrained by liabilities of smallness and newness, and a struggle for legitimacy (Eggers, 2020; Kraus et al., 2007). Moreover, SMEs typically operate in highly competitive and resource constrained environments (Clauss et al., 2022). Under such circumstances, marketing innovation at SMEs represents a crucial mechanism for survival and gaining a competitive advantage (CarrascoCarvajal et al., 2022; Hock-Doepgen et al., 2021; Naidoo, 2010; O’Dwyer et al., 2009).
Despite the importance of marketing innovation, practitioners generally lack an understanding of the antecedents and consequences of marketing innovation (Purchase & Volery, 2020). We address this knowledge gap by focusing on the organizational determinants of SME marketing innovation. Based on the unique characteristics of SMEs, we advance a theoretical framework that draws across the institutional theory, resource dependence theory, product/service innovation and, strategic performance measurement literatures. We test our framework on longitudinal (5-year) data obtained through the Australian Bureau of Statistics’ (ABS) national-level panel of SMEs (comprising 4378 firmyear observations). Using logistic regression analysis, we find support for our position that SME marketing innovation is driven by institutional pressures, resource dependencies, product/service innovation, and performance measurement requirements.
The present study offers significant contributions to the SME marketing innovation literature given our holistic perspective on SME marketing innovation. Although the literature outlines specific determinants of marketing innovation, relatively few studies simultaneously examine a comprehensive set of organization-wide drivers of marketing innovation. We demonstrate that the triggers of marketing innovation can arise from numerous organizational factors. Theoretically, we broaden the scope of the antecedents of SME marketing innovation. From a practical standpoint, our results enable SME managers to clearly visualize the catalysts of marketing innovation, permitting clarity and focus for future planning and goal setting.
6. Discussion and implications
Management guru Peter Drucker believes that the raison d’ˆetre of any business is to create a customer and thus the two fundamental functions of any business are marketing and innovation (Webster, 2009). We focus on the intersection of marketing and innovation; a domain that is growing (Henseler et al., 2021). The current study is an exploratory attempt to understand the determinants of marketing innovation by Australian SMEs (examining the outcomes of marketing innovation is beyond the scope of the present investigation).
The degree of competition significantly predicts marketing innovation in the present study, though this effect seemed small. Nonetheless, this result implies that competitive (mimetic) pressures seem to enhance the likelihood of adopting marketing innovations. This result is consistent with the ‘fear of missing out’ logic whereby SMEs fear falling behind their competitors’ marketing efforts. A theoretical implication of this finding is that SME marketing innovation can have a reactionary orientation, which complements O’Dwyer et al.’s (2009) view that SME marketing can be either proactive or reactive.