Effects of exploitative innovation and branding orientation on small service firm performance.

Abstract

Managing exploitative innovation and branding orientation resources in small service firms is important to build a sustainable competitive advantage. In British Columbia, Canada, such firms’ knowledge about allocating resources to innovation and branding is not well documented. Research measuring two or more marketing strategies is encouraged by the academic community. This study uses the resource-based view of the firm to understand owners’ and managers’ level of agreement with two marketing strategies—exploitative innovation and branding orientation—revealing the strategies’ effects on performance at the firm level. This correlation and multivariate study collected quantitative data from 299 owners/managers of service firms with less than 50 employees/contractors prior to the COVID-19 pandemic. Small service firm sectors included retail, health care services, arts, entertainment, recreation services, accommodation, food services, construction, personal care services, and professional, scientific, and technical services in British Columbia. An online survey collected data using an anonymized SurveyMonkey Audience Panel, in order to answer the research question: “What are the interactions between branding orientation and exploitative innovation and how do they relate to firm performance?” Four controls were considered that impact business strategies: age of business, size of business, and business environment hostility and uncertainty. The study found that exploitative innovation and branding orientation had a significant positive interaction effect on firm performance. A covariate relationship between branding orientation and exploitative innovation was found, as well as a relationship between branding orientation and exploitative innovation, with firm performance. Business environment uncertainty was significant for firm performance, branding orientation, and exploitative innovation. Age of business and business environment hostility had significant effects on exploitative innovation, and size of business was significant for firm performance. The survey instrument measuring the constructs in this study also provides a unique contribution to the field. This research contributes to small service firm knowledge by identifying how exploitative innovation and branding orientation, and the firm’s age, size, and business environment (uncertainty and hostility) affect firm performance. The findings form the basis for further research identifying marketing factors associated with small service firm performance in other regions, in order to improve the performance of such firms.