The Influence of Firm's Age and Size on Its Environmental Scanning Activities

Abstract

Marketplace information is a critical ingredient needed for firms to make more informed decisions. New ventures generally do not have a great deal of internal secondary data or historical experience to help fill their information needs, so in some ways new ventures may have a greater need for external marketplace information than more established ones. Research in entrepreneurship often describes the importance of scanning the marketing environment (Timmons 1985; Hills 1987; SBA 1987, 1988; Hills and Narayana 1989; Brush 1992). Research also suggests that the lack of marketplace information is a major problem for new ventures (Hisrich and Peters 1989; Chrisman and Leslie 1989; Kraft and Goodell 1989), and it is also a major barrier to new venture creation (Vesper 1990). This article is an extension of a recent article by Brush (1992) in which four research questions were addressed: (1) What are the marketplace information scanning practices of new ventures? (2) What are the sources, methods, and frequencies of collection of marketplace information used by new ventures? (3) What is the perceived importance of different types of marketplace information? and (4) Is there a relationship between marketplace information scanning behaviors and performance of new ventures? Brush's sample was composed of 66 new manufacturing ventures (three to six years old) located in Massachusetts. Brush's work provides an important building block in understanding the marketplace scanning activities of new ventures. However, it left some important questions unanswered. For example, are the marketplace scanning activities of new ventures significantly different from those of older firms? Furthermore, are the marketplace scanning activities of smaller firms significantly different from those of larger firms? These are the primary research questions addressed in this article. Too often in entrepreneurship and small business research, we only view one side of the coin and are left with an incomplete picture. This is not meant to suggest that a single study should answer all the relevant questions; however, it is meant to argue that research which contributes additional building blocks and provides other dimensions to an area of interest should be encouraged. It is good that initial studies describe the behavior of successful firms, new ventures, or small firms. However, we also need to understand how successful firms differ from unsuccessful firms, or how new ventures compare to older firms, or smaller firms to larger. It is when we start constructing studies which build on each other that we can start to gain a better perspective on entrepreneurship and small business management issues. CONCEPTUAL FRAMEWORK Brush (1992) categorized studies on marketplace information scanning in entrepreneurship into three groups: (1) business planning behaviors; (2) market research activities; and (3) environmental scanning. Fahey and King (1977) characterized environmental scanning as the process of seeking and collecting information about events and relationships in a company's environment. Daft and Weick (1984) describe the process as formal or informal. Environmental scanning is the general process of information acquisition; market research activities are the methods utilized in the process (they can be formal or informal). Business planning behaviors are the utilization of the information acquired by the venture. Figure 1 illustrates the conceptual framework employed in this research. The fundamental axioms and assumptions are derived from previous conceptualizations. Figure 1 CONCEPTUAL FRAMEWORK COMPONENTS OF THE FIRM'S INTERNAL ENVIRONMENT ([A.sub.i]) [A.sub.1] Characteristics of Owner/Manager (the decision-making nucleus) [A.sub.2] CHARACTERISTICS OF FIRM (AGE, SIZE, type of industry) [A.sub.3] Internal processes (Business planning activities) COMPONENTS OF FIRM'S EXTERNAL ENVIRONMENT Opportunities and Threats in environment ([B. …

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 130 citations exist upstream.