Global Enterprise Management, Volume I

New Perspectives on Challenges and Future Developments

A. Camillo

• Publisher: Palgrave Macmillan
• Year: 2015
• ISBN:
  9781137429599
• Topic: Business
• Subtopic: Management
• Index: Business

Global Enterprise Management unites theory, academic knowledge, and practitioner experience to provide students, educators, and practitioners with the skills to succeed in the global managerial landscape.

CHAPTER 1

The Firm’s Global Strategies and the Effect of Group Knowledge Environmental Variables on the Decision-Making Process

Angelo A. Camillo, Francesca Di Virgilio, and Loredana Di Pietro

Introduction

A firm can only be successful if it applies effective strategies and possesses appropriate intrinsic resources and capabilities and related extrinsic information in order to analyze market opportunities and to capture market share to sustain competitive advantage in the global business landscape. In this context, consumer knowledge, within the framework of a groups’ consumer behavior, is a critical strategic factor in creating competitive advantage. Within this framework it is important to understand that competitive advantage can no longer be measured solely by the amount of resources that are readily accessible or by material production. Accessibility to consumer knowledge is an integral part of a firm’s core competencies. Strategically, consumer knowledge is an intangible resource that helps firms become more flexible and thus more competitive in the business environment (de Vita, Mercurio, & Testa, 2007).

To remain economically viable in the marketplace, a firm must constantly meet the needs and wants of consumers while providing superior services and products more effectively than its competitors. Therefore, consumer knowledge allows firms strategically to place themselves in a superior position compared to their competitors in providing these services. Unfettered access to new knowledge provides the firm with the flexibility to create new products or services or to innovate on current products, services, and processes. Thus, understanding what consumers know has been a topic of persistent interest for scholars of marketing science (Deshpande, 1983; Peter & Olson, 1983; Wilkie & Moore, 2003).

Within the framework of consumer knowledge from the firm’s global perspective, this chapter discusses the work of scholars on understanding the knowledge of both the single consumer and a group. Published literature, although limited, shows the importance of a group’s consumer knowledge as a research topic of interest that deserves merit and should be continued in the field of scientific inquiry. Scholars of strategic marketing and consumer behavior suggest that consumer knowledge in general is complex and that traditional measures have provided only a basic understanding of its fullness (Levy, 2006; McInnis, 2004; Myers, Greyser & Massy, 1979; 1993; Summers, 2001). In fact, an analysis of the published literature reveals that the evolution of consumer knowledge has not led to the development of a “theory of consumer choice” (Summers, 2001; Teas & Palan, 1997).

Analysis reveals a gap in the literature on consumer’s knowledge and it identifies the importance of a “group of consumers.” Accordingly, researchers have focused primarily on individual behaviors, studying the performance of individuals in purchasing goods for consumption (Bagozzi, 2000). Nevertheless, there have been a few studies conducted to determine whether the interpersonal interactions within a group influence consumer behavior (Briley & Wyer, 2002; Cummings, 2004; Thomas-Hunt, Ogden, & Neale, 2003).

Therefore, amplifying the organizational behavior literature by researching the effect of environmental variables, this study introduces a theoretical framework for refining the rather limited current consumer knowledge illustration through the integration of a crucial standpoint: the group (Cummings, 2004; Thomas-Hunt, Ogden, & Neale, 2003). In this study I present a theoretical exemplification of consumer group knowledge that includes important influential moderating environmental variables of a group and incorporate the direct effects of these variables on the decision-making process of a consumer group. I also present an illustration of the decision-making process of a consumer group as a problem-solving process, including a continuous flow of reciprocal individual and collective interactions among environmental factors.

I then discuss the likely role of emerging technologies and their impact on the development of a theory. Technologies are valuable tools-know-how that improve the efficiency of decision-making, especially in the process of the purchase of consumer goods and the accuracy of consumer knowledge (Chi, 2009; Thomas-Hunt, Ogden, & Neale, 2003). Today, like never before, the development, evolution, and use of new technologies for supporting and influencing consumers during their shopping experience plays a key role for all stakeholders: firms, consumer groups, and researchers (Chi, 2009). In closing, I discuss the limitations, implications, and directions for future research.

Background

Companies strategize using a planned set of actions and processes such as marketing strategies that are designed and intended to achieve a particular objective. A marketing strategy allows a firm to efficiently allocate its resources while seeking ideal opportunities, with the objectives of increasing sales and achieving a sustained competitive advantage. Marketing strategy uses a framework similar to other business-related strategies, including short- and long-term marketing activities.

The results of a global search of the existing literature indicate that global strategic marketing may indeed be an underresearched topic. However, the results of a search on global and transcultural marketing indicates that the topic of “transcultural marketing” may derive from the former hypersegmented ethnic or cultural marketing, which can be defined as diversity marketing or multicultural marketing. This apparent transformation in marketing strategy indicates that marketers concentrate their efforts on cultures in general, instead of just one ethnicity or ethnic diversity. Typically, multicultural marketing has concentrated its efforts on an ethnic group’s different cultural characteristics, such as language, traditions, celebrations, religion, rituals, and so on, to communicate the marketing message and persuade them as customers. This scenario represents an attempt to understand how these strategies influence groups with these characteristics.

Defining and Understanding Group and Group Knowledge

A group is defined as two or more individuals who are connected to one another by social relationships (Forsyth, 2006, pp. 2–3). Davenport (1999) suggests that a group is “a collection of two or more interacting individuals with a stable pattern of relationships between them who share common goals and who perceive themselves as being a group.” These definitions can be applied also to consumer groups, which are conceived as two or more people in social interaction who share a common goal: purchase decision-making.

Knowledge represents a multiplicity of resources that are renewable, reusable, and accumulating and are of great value to the organization, especially when applied in the production of products and services. Knowledge, however, cannot be stored in electronic retrieval systems for later use; instead, it can only be stored in the human brain and used as needed. Knowledge for any human being has the strongest personal value. Until it is naturally lost without the opportunity for the mind to recall it, knowledge can be used as a strong influence on others and it can have a significant effect in their decision-making process. Knowledge is power, and therefore, it may have great influence on a specific situation or circumstance (Poston & Speier, 2005; Tanriverdi, 2005; Wasko & Faraj, 2005). Knowledge must exist before information can be verbalized and before data can be processed and measured to form information. In fact, when knowledge exists, it is articulated, verbalized, and structured, and it becomes information, which in turn, when assigned a fixed representation and standard interpretation, becomes measurable data (Alavi & Leidner, 2001).

Within the scope of this research, consumer knowledge can be defined as the subset of the total amount of information stored in memory that is well structured and is relevant to product purchase and consumption (Blackwell, Miniard, & Engel, 2001). Numerous studies investigating consumer knowledge and its influence on the differentials in consumer behavior have been conducted to identify the consequences and the effect on the behavior of a firm. The standard depiction of a consumer knowledge structure shows a network of concepts that are linked to each other without any restrictions placed upon membership in the network (Rulke & Galaskiewicz, 2000).

Marks and Olson (1981) describe knowledge structures as containing factual knowledge, evaluations, affect, purchase criteria, and decision rules. Russo and Johnson (1980) developed a five-level classification scheme based upon presumed stages in a brand choice process. A factor analysis suggests that three factors were operative: knowledge of product attributes, knowledge centered on situational usage that distinguishes experts from novices, and personal knowledge. While all these types of aspects have been proven to exist, many other aspects of consumer knowledge have been neglected (Bagozzi, 2000). One of these aspects is the study of “consumer groups.” Consumers groups are assumed to be simply an additive function of the individual activities. Examination of the limited literature revealed that researchers (Rudd & Kohout, 1983; Witt 1969) have investigated the influence of small, informal social groups on member brand choice and consumer information processing. Then a comparison of information acquisition depth and decision time across individuals, ad hoc cross-gender dyads, and married couples was performed (Witt 1969). Ward and Reingen (1990) analyzed how a social group’s structure influences cognitive structure and how a shared cognitive structure influences choice. They determined that these factors help explain how a group (with several subgroups) makes a consumer decision with consequences for the entire group.

A single pioneering study was conducted by Ratchford (2001). The study concerned the theoretical and empirical investigation of the “human capital interpretation” in consumer behavior. Within this context, “human capital” refers to the accumulated and embodied knowledge, skills, and expertise that have been acquired and preserved by consumers. In essence it is a variable accumulation of knowledge that can reflect all those qualities of consumers that affect their capacities to reach objectives. In this study, the term “knowledge” is used as synonymous with ability, attribution, capability, competence, experience, interpretation, intuition, know-how, persuasion, skill, and tradition. Also within this context, great importance is given to human resources, the actual “consumers,” who, according to Ratchford (2001), contribute to (1) better rational choices that have a direct effect on the purchase; (2) more effective interactions for the best possible purchase deals; and (3) better informed consumer decision-making processes. The study is one of the first within the framework of consumer behavior that focused not on one individual consumer but on a multitude of consumers.

These perspectives suggest that, while knowledge is “owned” at the individual level, the integration of this knowledge at a collective level is necessary. This integration of knowledge typically takes place in groups. Marketers posit that such group factors (as dimension, social class, and ethnic group) all play an important role in consumer decision-making (Briley & Wyer, 2002; Okhuysen & Eisenhardt, 2002).

The current literature shows that a new technological phenomenon is taking place that affects the consumer’s decision: the interactions of individuals and groups on social media. These interactions create groups, which in turn influence other individuals and affect the way in which marketers promote products. Indeed, social media has created “social commerce,” compelling firms to have a presence on social media websites in order to generate consumer demand and create loyalty (Di Pietro & Pantano, 2012; Ho, Kauffmann, & Lai, 2010; Kozinets, 2010). As a result, social media has permeated the purchasing funnel, helping consumers make informed decisions, whether individually or as a group, from what to have for lunch to where to go on vacation. Depending on the decision that needs to be made, groups turn to social media resources for all types of information (Booth & Beyond, 2012).

In sum, the absence of theoretical and empirical research on consumer group knowledge has inspired this research and the development of a conceptual model (see Figure 1.1). This study considers group environmental variables as an important step in understanding consumer group knowledge. Group variables are seen as key determinants in attitude formation and attitude change, as well as for other phenomena of importance at the collective level. Subsequently, analyses of the influence and the effect of these group variables on the most important process at the base of consumer knowledge, namely the decision-making process, are conducted. Given the strategic and organizational behavior orientation of the research, the study underlines consumer group decision-making process in reference to a purchase or a purchase intention. The ultimate objective is to provide insight into global firms concerning the importance of group knowledge and to educate firms about how consumers make decisions or take actions based on the influence of the group with which they are affiliated.

Interpretation of Consumer Group and Group Knowledge

The literature identifies possible benefits for groups that engage in information exchange and communication within the group (Gruenfeld, Mannix, Williams, & Neale, 1996; Keller & Staelin, 1987; Rulke & Galaskiewicz, 2000), especially on social media platforms. Groups’ study and group dynamics have been the focus of scholarly research since the early 1900s (Cooley, 1909; Lewin, 1948; Thrasher, 1927). As interest in groups progresses and group dynamics continue to develop, the research base of this area of interest is strengthening.

From the firm’s point of view, demands for efficiency and flexibility by global organizations have compelled them to no longer focus on the single consumer alone but rather to consider group-based structures as well. This is more evident with the groups’ and firms’ presence on social media (Camillo & DiPietro, 2014), which posit that consumers seem especially to appreciate the ability to participate in the creation of new web content, acquire knowledge, and share opinions and experiences with other users wh...

Table of contents

• Cover
• Title
• 1   The Firm’s Global Strategies and the Effect of Group Knowledge Environmental Variables on the Decision-Making Process
• 2   International and Comparative Human Resource Management
• 3   Physical and Psychosocial Sources as Potential Predictors of Job Stress in the Workplace
• 4   The Confluence of Diversity and Ethics in Global Managerial Performance
• 5   A Dynamic Model for the Global Corporation: The Triad Networks—Coevolution—Competitiveness
• 6   Is the International Marketing Channel Strategy Adapted? An Empirical Study
• 7   Business Model Design and Innovation in the Process of the Expansion and Growth of Global Enterprises
• 8   The Glocalization of International Firms: An Empirical Investigation in the Hospitality Sector
• 9   Strategic Tax Issues Confronting Managers of Global Enterprises
• 10   From Relationality and Behavioral Dynamics to Dynamic Relationality: A New Perspective on Cross-Cultural Negotiations
• 11   On the Support of the General Contractor’s Decisions in the Processes of Event Project Management
• 12   Liability of Country of Origin and Postacquisition Strategies of Emerging Market MNCs in Advanced Economies
• About the Editor
• List of Contributors
• Index