Increasing Knowledge Focus - a Means for Entrepreneurs to Remain on a Growth Path: Essays on the Role and Nature of Knowledge Management in Finnish SMEs (summary section only)

This study explores the role and nature of knowledge management (KM) in small and medium-sized companies (SMEs). Even though the role of knowledge as a competitive advantage is commonly recognized in the SME sector, almost no attention has been paid to the managing and developing of knowledge in SMEs. This thesis consists of three different sub-studies that were reported in four individual essays. The results of the questionnaire study indicate that nearly all companies that responded to the questionnaire (N = 108) found intangible assets, i.e. knowledge resources to be their main source of competitive advantage. However, only less than a third of the companies actively deal with knowledge management. The results also indicate a significant correlation between activity in knowledge management and sustainable organic growth of the company. The interview study (N = 10) explored the context and motives of the SMEs for managing their intangible assets, and the concrete practices of knowledge management. It turned out that KM facilitated change management, clarification of the vision and new strategy formulation. All the interviewed companies were aiming at improved innovation process, new ways of doing business and attaining an increased “knowledge focus” in their business. Nearly all also aspired to grow significantly. Thus, KM provides a strategy for these SMEs to guarantee their survival and sustainability in the turbulent markets. The action research was a process to assess and develop intangible resources in three companies. The experienced benefits were the clarification of future focus and strategy, creation of a common language to discuss strategic issues within the company, as well as improved balance of different categories of intangible assets. After the process all the case companies had developed in the chosen key areas. Thus, by systematic knowledge management the implementation of new strategic orientation (knowledge focusing) was facilitated. The findings can be summarized in two main points. First, knowledge management seems to serve the purpose of change, renewal and new strategic orientation in the SMEs. It also seems to be closely related to organic growth and innovation. All of these factors can be considered dimensions of entrepreneurship. Second, the conscious development of intangible assets can increase the balance of different categories of intangible assets and the overall knowledge focusing of business. In the case companies, this in turn facilitated the path to the improved overall performance.

The Impact of Cultural Factors on Post-Acquisition Integration: Domestic and Foreign Acquisitions of Finnish Companies in 1993-2004

Acquisitions are a central component of corporate strategy. They contribute to competitive advantage by offering possibilities for both cost reductions and for revenue enhancements. However, many acquisition benefits cannot be realized without a successful integration of the acquiring and the acquired firms. Previous research shows that national and organizational culture can play a major role in determining the integration outcomes. Therefore, the overall aim of the thesis is to map out and illustrate the impact mechanisms of cultural factors in post-acquisition integration in order to explain the cultural aspects of acquisitions. This study has three main contributions. First, the study shows that international and domestic acquisitions differ concerning both strategic and cultural fit. Second, the findings highlight the importance of acculturation and cultural integration in determining post-acquisition outcomes. Finally, the study uncovers several impact mechanisms that shed light to the contradictory results related to cultural differences in previous research.

The Finnish Leadership Style in Transition - A Study of Leadership Criteria in the Insurance Business, 1997-2004 (summary section only)

The aim of the study was to explore the importance of evaluating leadership criteria in Finland at leader/subordinate levels of the insurance industry. The overall purpose of the thesis is tackled and analyzed from two different perspectives: - by examining the importance of the leadership criteria and style of Finnish insurance business leaders and their subordinates - by examining the opinions of insurance business leaders regarding leadership criteria in two culturally different countries: the US and Finland. This thesis consists of three published articles that scrutinise the focal phenomena both theoretically and empirically. The main results of the study do not lend support to the existence of a universal model of leadership criteria in the insurance business. As a matter of fact, the possible model seems to be based more on the special organizational and cultural circumstances of the country in question. The leadership criteria seem to be quite stable irrespective of the comparatively short research time period (3–5 years) and hierarchical level (subordinate/leader). Leaders have major difficulties in changing their leadership style. In fact, in order to bring about an efficient organizational change in the company you have to alternate the leader. The cultural dimensions (cooperation and monitoring) identified by Finnish subordinates were mostly in line with those of their managers, whilst emphasizing more the aspect of monitoring employees, which could be seen from their point of view as another element of managers’ optimizing/efficiency requirements. In Finnish surveys the strong emphasis on cooperation and mutual trust become apparent by both subordinates and managers. The basic problem is still how to emphasize and balance them in real life in such a way that both parties are happy to work together on a common basis. The American surveys suggests hypothetically that in a soft market period (buyer’s market) managers employ a more relationship-oriented leadership style and correspondingly adapt their leadership style to a more task-oriented approach in a hard market phase (seller’s market). In making business better Finnish insurance managers could probably concentrate more on task-oriented items such as reviewing, budgeting, monitoring and goal-orientation. The study also suggests that the social safety net of the European welfare state ideology has so far shielded the culture-specific sense of social responsibility of Finnish managers from the hazards of free competition and globalization.

The Impact of Readily Detected- and Underlying Attributes on Social Integration in Cross-Cultural Settings

The benefits and drawbacks of homogeneity and heterogeneity have been debated at length. Whereas some researchers assert that heterogeneity is beneficial for groups that are engaged in complex problem solving, the other researchers emphasize the potential costs associated with diversity. The inconsistency is a result of the incomplete measurement of diversity and focus one or two types of diversity. Most research concentrates on the readily detected/visible characteristics, making the assumption that such characteristics are related to underlying attributes (e.g., attitudes and values). In many cases, the demographic characteristics do not covary perfectly with the psychological attributes. Thus both types of attributes need to be utilized to fully understand the impact of diversity. The present research with four essays takes into account both types of attributes and tests their impact on social integration in cross-cultural settings. The results indicate that: (1) readily detectable- and underlying attributes are not related; (2) diversity has overall a negative impact on social integration; (3) socio-cultural context potentially influences the salience of diversity; and (4) diversity and social integration influences the formation of social cognition in form of transactive memory directories. The limits of research and managerial implications are discussed.

Finnish Business Repatriates' Coping Strategies

This thesis explores Finnish business repatriates’ coping strategies. Managing repatriation has been recognized as a demanding task for companies and an important issue in international human resource management. However, we still know relatively little about how repatriates respond to the demands of the return. This thesis addresses this problem by applying a process approach to coping with repatriation. The focus is on identifying repatriates’ coping strategies and the various forms of them. This study also aims to investigate what might influence the use of repatriates’ coping strategies and forms of coping. The background of this doctoral study is provided by earlier research that identified factors influencing repatriates’ adjustment, either positively or negatively. The empirical material of this doctoral thesis comprises twenty-two Phase I semi-structured interviews and ten Phase II follow-up interviews conducted for the purposes of verification. The main findings of the study are formulated as propositions. For instance, it was suggested that repatriates are likely to use different forms of problem-focused strategy more often than various forms of emotion-focused strategy. Moreover, they also are likely to use a larger range of problem-focused strategies than emotion-focused strategies. In addition, in contrast to specialists, repatriates occupying managerial positions are likely to use a greater number and a greater variety of different forms of problem-focused strategy than of emotion-focused strategy, especially in the context of preparing for their return and in different work role changes. This thesis contributes to research on repatriation, expatriation, coping and identifies implications for management.

Being in between: An Ethnographic Study of Opera and Dialogical Identity Construction

The paradoxical co-existence of conflicting logics governs practices in cultural organizations. This requires ‘balancing acts’ between artistic and managerial efforts, which are often subjects to struggle among the organizational members. This ethnographic study aims to go beyond either-or thinking on the paradoxical organizational context by examining how the organizational members of an opera house construct views on their organization in dialogical meaning-making processes. Various professional groups, dozens of upcoming productions, increased international cooperation, and global competition combined with scarce financial resources make opera houses a complex though interesting context for organization studies. In order to provide a deeper knowledge of the internal dynamics of an opera organization this thesis takes an interpretative view to examine the ways organizational members construct and make sense of their organization. How is the opera organization constructed by the organizational members? How do the members draw on different logics when relating to their organization? Or what are the elements that characterize the relational processes of organizational identity construction in an opera organization? The thesis aims to answer these questions by providing a detailed description of the everyday life of an opera organization and a particular focus put on organizational identity construction. The processes of organizational identity construction are approached from a relational point of view. This may involve various relations between multiple positions, different professional groups, other organizations in the cultural field or between past and present understandings of an organization. The study shows that the construction of an opera organization involves not only the two conflicting logics of art and economy, but also the logic of a national institution. The study suggests also that organizational identities are constructed through processes related to the dialogics of positions, work and management practices. The dialogics involve various struggles through which the organizational members find themselves between the different organizational aspects such as visiting ‘stars’ and an ensemble or between ‘Finnishness’ of opera productions and internationalization. In addition, the study argues that a struggle between different elements is a general mode of relation in cultural organizations and therefore an inherent and enduring aspect in the organizational identity construction. However, the space of ‘being in between’ involves both the enabling and constraining elements in the dialogical identity construction in the context of cultural organizations, which present the struggle in a more generative light.

Stories of Survival: Knowledge Intensive Organisations and the Finnish 1990s Recession

The recession that hit the Finnish economy at the beginning of the 1990s has been regarded as unusually severe. Organisations’ failure to survive the recession has been researched in their various aspects. However, the reasons for why and how organisations that survived did so have been explored to a somewhat lesser extent. This study concerns organisations that survived rather than those that failed to do so, as studying successful experiences is acknowledged as an important source for learning how to counteract future failure. The thesis examines four knowledge intensive organisations, with the focus on managerial and social aspects of the crisis handling processes. The study deals with managers’ and co-workers’ stories about organisational attempts to survive, rather than seeking to identify causal relationships. Drawing upon a narrative approach and a social constructionist perspective, the crisis handling processes are treated as reconstructions and rationalisations of what happened. A primary assumption of this thesis is that we make sense of experiences in retrospect, and the aim is to describe the handling of crisis situations and the hardships related to economic difficulties, by focusing on the interviewees’ explanations of how those difficulties were dealt with. The stories are about taking control despite the threats induced by an extremely severe economic recession, remaining active, how the managers and their co-workers dealt with the uncertainty experienced, and how the organisations subsequently survived. The analysis also interrogates such issues as trust, authenticity, legitimacy, identity and nostalgia in crisis contexts.

Multiple Perspectives on Networks: Conceptual Development, Application and Integration in an Entrepreneurial Context

Multiple Perspectives on Networks: Conceptual Development, Application and Integration in an Entrepreneurial Context. The purpose of this thesis is to enhance cross-fertilization between three different approaches to network research. The business network approach may contribute in terms of how relationships are created, developed and how tie content changes within ties, not only between them. The social network approach adds to the discussion by offering concepts of structural change on a network level. The network approach in entrepreneurship contributes by emphasizing network content, governance and structure as a way of understanding and capturing networks. This is discussed in the conceptual articles, Articles 2 and 3. The ultimate purpose of this thesis is to develop a theoretical and empirical understanding of network development processes. This is fulfilled by presenting a theoretical framework, which offers multiple views on process as a developmental outcome. The framework implies that change ought to be captured both within and among relationships over time in the firm as well as in the network. Consequently, changes in structure and interaction taking place simultaneously need to be included when doing research on network development. The connection between micro and macro levels is also stressed. Therefore, the entrepreneur or firm level needs to be implemented together with the network level. The surrounding environment impacts firm and network development and vice versa and hence needs to be integrated. Further, it is necessary to view network development not only as a way forward but to include both progression and regression as inevitable parts of the process. Finally, both stability and change should be taken into account as part of network development. Empirical results in Article 1 show support for a positive impact of networks on SME internationalization. Article 4 compares networks of novice, serial and portfolio entrepreneurs but the empirical results show little support for differences in the networks by type of entrepreneur. The results demonstrate that network interaction and structure is not directly impacted by type of entrepreneur involved. It indicates instead that network structure and interaction is more impacted by the development phase of the firm. This in turn is in line with the theoretical implications, stating that the development of the network and the firm impacts each other, as they co-evolve.

Customer Value of Website Communication in Business-to-business Relationships

During past years, we have witnessed the widespread use of websites in communication in business-to-business relationships. If developed appropriately, such communication can result in numerous positive implications for business relationships, amplifying the importance of designing website communication that meet customer needs. In doing that, an understanding of value of website communication for customers is crucial. The study develops a theoretical framework of customer value of website communication in business-to-business relationships. Theoretically, the study builds on the interaction approach to industrial marketing, different approaches to customer value and inter-organisational communication theory. The empirical part involves a case study with a seller and nine different customer companies in the elevator industry. The data collection encompasses interviews and observations of representatives from the customer companies, interviews with the seller and an analysis of various reports of the seller. The continuous iteration between the theory and the case study resulted in the integrated approach to customer value and in the holistic theoretical framework of customer value of website communication in business-to-business relationships. The framework incorporates and elicits meanings of different components of customer value: website communication characteristics that act as drivers of customer value, customer consequences – both benefits and sacrifices, customer end-states as the final goals that lead customer actions, and different types of linkages between these components. Compared to extant research on customer value, the study offers a more holistic framework of customer value that depicts its complexity and richness. In addition, it portrays customer value in the neglected context of website communication. The findings of the study can be used as tools in any analysis of customer value. They are also of relevance in designing appropriate website communication as well as in developing effective website communication strategies. Nataša Golik Klanac is associated with the Centre for Relationship Marketing and Service Management (CERS) at Hanken.

Time and Location as Customer Perceived Value Drivers

Since the emergence of service marketing, the focus of service research has evolved. Currently the focus of research is shifting towards value co-created by the customer. Consequently, value creation is increasingly less fixed to a specific time or location controlled by the service provider. However, present service management models, although acknowledging customer participation and accessibility, have not considered the role of the empowered customer who may perform the service at various locations and time frames. The present study expands this scope and provides a framework for exploring customer perceived value from a temporal and spatial perspective. The framework is used to understand and analyse customer perceived value and to explore customer value profiles. It is proposed that customer perceived value can be conceptualised as a function of technical, functional, temporal and spatial value dimensions. These dimensions are suggested to have value-increasing and value-decreasing facets. This conceptualisation is empirically explored in an online banking context and it is shown that time and location are more important value dimensions relative to the technical and functional dimensions. The findings demonstrate that time and location are important not only in terms of having the possibility to choose when and where the service is performed. Customers also value an efficient and optimised use of time and a private and customised service location. The study demonstrates that time and location are not external elements that form the service context, but service value dimensions, in addition to the technical and functional dimensions. This thesis contributes to existing service management research through its framework for understanding temporal and spatial dimensions of perceived value. Practical implications of the study are that time and location need to be considered as service design elements in order to differentiate the service from other services and create additional value for customers. Also, because of increased customer control and the importance of time and location, it is increasingly relevant for service providers to provide a facilitating arena for customers to create value, rather than trying to control the value creation process. Kristina Heinonen is associated with CERS, the Center for Relationship Marketing and Service Management at the Swedish School of Economics and Business Administration

Offering Development in the Restaurant Sector. A Comparison Between Customer Perceptions and Management Beliefs

The present study concentrates on a small – but important – area of marketing: offering development within the service sector, more exactly the restaurant sector. The empirical part of the study has been carried out in the Helsinki metropolitan area using six successful restaurants. First, a conceptual offering development model is developed based on how the management perceives the offering development processes. Second, customer perceptions of offerings and management beliefs about how the customers perceive the offerings are analysed. Finally, an extended offering development model is created based on the management perceptions (the first model) as well as on observed gaps between customer perceptions of offerings and management beliefs about the customer perceptions. The study reveals that customer perceptions and management beliefs are rather similar but also that some differences exist. These differences are taken into account in the extended offering development model (the second model). The empirical data was collected through interviews and surveys. All together 393 customers and 14 managers participated in the study. The study suggests that successful offering development has to be closely connected with the general strategy of the company. A shared vision within the company in combination with a systematic strategic offering development process create a sound basis for the practical development work. The main contribution of the study is the extended offering development model forming a framework for further studies within the area.

Understanding Customer Loyalty and Disloyalty The Effect of Loyalty-Supporting and -Repressing Factors (first edition sold out, 'print on demand' 60 €)

Customer loyalty has been a central topic of both marketing theory and practice for several decades. Customer disloyalty, or relationship ending, has received much less attention. Despite the close relation between customer loyalty and disloyalty, they have rarely been addressed in the same study. The thesis bridges this gap by focusing on both loyal and disloyal customers and the factors characterising them. Based on a qualitative study of loyal and disloyal bank customers in the Finnish retail banking market, both factors that are common to the groups and factors that differentiate between them are identified. A conceptual framework of factors that affect customer loyalty or disloyalty is developed and used to analyse the empirical data. According to the framework, customers’ loyalty status (behavioural and attitudinal loyalty) is influenced by positive, loyalty-supporting, and negative, loyalty-repressing factors. Loyalty-supporting factors either promote customer dedication, making the customer want to remain loyal, or act as constraints, hindering the customer from switching. Among the loyalty-repressing factors it is especially important to identify those that act as triggers of disloyal behaviour, making customers switch service providers. The framework further suggests that by identifying the sources of loyalty-supporting and -repressing factors (the environment, the provider, the customer, the provider-customer interaction, or the core service) one can determine which factors are within the control of the service provider. Attitudinal loyalty is approached through a customer’s “feeling of loyalty”, as described by customers both orally and graphically. By combining the graphs with behavioural loyalty, seven customer groups are identified: Stable Loyals, Rescued Loyals, Loyals at Risk, Positive Disloyals, Healing Disloyals, Fading Disloyals, and Abrupt Disloyals. The framework and models of the thesis can be used to analyse factors that affect customer loyalty and disloyalty in different service contexts. Since the empirical study was carried out in a retail bank setting, the thesis has managerial relevance especially for banks. Christina Nordman is associated with CERS, Center for Relationship Marketing and Service Management at the Swedish School of Economics and Business Administration. The doctoral thesis is part of the Göran Collert Research Project in Customer Relationships and Retail Banking and has been funded by The Göran Collert Foundation.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Adaptation in triadic business relationship settings: A study in corporate travel management

ANNE HOLMA ADAPTATION IN TRIADIC BUSINESS RELATIONSHIP SETTINGS – A STUDY IN CORPORATE TRAVEL MANAGEMENT Business-to-business relationships form complicated networks that function in an increasingly dynamic business environment. This study addresses the complexity of business relationships, both when it comes to the core phenomenon under investigation, adaptation, and the structural context of the research, a triadic relationship setting. In business research, adaptation is generally regarded as a dyadic phenomenon, even though it is well recognised that dyads do not exist isolated from the wider network. The triadic approach to business relationships is especially relevant in cases where an intermediary is involved, and where all three actors are directly connected with each other. However, only a few business studies apply the triadic approach. In this study, the three dyadic relationships in triadic relationship settings are investigated in the context of the other two dyads to which each is connected. The focus is on the triads as such, and on the connections between its actors. Theoretically, the study takes its stand in relationship marketing. The study integrates theories and concepts from two approaches, the industrial network approach by the Industrial marketing and purchasing group, and the Service marketing and management approach by the Nordic School. Sociological theories are used to understand the triadic relationship setting. The empirical context of the study is corporate travel management. The study is a retrospective case study, where the data is collected by in-depth interviews with key informants from an industrial enterprise and its travel agency and service supplier partners. The main theoretical contribution of the study concerns opening a new research area in relationship marketing by investigating adaptation in business relationships with a new perspective, and in a new context. This study provides a comprehensive framework to analyse adaptation in triadic business relationship settings. The analysis framework was created with the help of a systematic combining approach, which is based on abductive logic and continuous iteration between the theory and the case study results. The framework describes how adaptations initiate, and how they progress. The framework also takes into account how adaptations spread in triadic relationship settings, i.e. how adaptations attain all three actors of the triad. Furthermore, the framework helps to investigate the outcomes of the adaptations for individual firms, for dyadic relationships, and for the triads. The study also provides concepts and classification that can be used when evaluating adaptation and relationship development in both dyadic and triadic relationships.

Perceived Value of Mobile Service Use and its Consequences

The thesis is positioned in the services marketing field. Previous mobile service research has identified perceived value or relative advantage as a stable predictor of use of services. However, a more detailed view of what customers value in mobile services is needed for marketing diverse types of mobile content and attracting committed customers. The direct relationships between multidimensional value and loyalty constructs have received limited attention in the previous literature, although a multidimensional view is needed for differentiating services. This thesis studies how perceived value of mobile service use affects customer commitment, repurchase intentions, word-of-mouth and willingness to pay. The doctoral thesis consists of three journal articles and one working paper. The four papers have different sub-aims and comprise individual empirical studies. Mixed methods including both personal interviews and survey data collected from end-users of different types of mobile content services are used. The conceptual mobile perceived value model that results from the first explorative empirical study supports a six- dimensional value view. The six dimensions are further categorized into two higher order constructs: content-related perceived value (emotional, social, convenience and monetary value) and context-related (epistemic and conditional value) perceived value. Structural equation modeling is used in the other three studies to validate this framework by analyzing the relationships between context- and content-related value, and how the individual perceived value dimensions affect commitment and behavioral outcomes. Analyzing the direct relationships revealed differences in the effect of perceived value dimensions between information and entertainment mobile service user groups, between effects on commitment, repurchase intentions and word-of-mouth intentions, as well as between effects on commitment to the provider and to the mobile channel as such. This thesis contributes to earlier perceived value literature by structuring the value dimensions into two groups. Most importantly, the thesis contributes to the value and loyalty literature by increasing understanding of how the different dimensions of perceived value directly affect commitment and post-purchase intentions. The results have implications for further theory development in the electronic services field using multidimensional latent constructs, and practical implications for enhancing commitment to content provider and for differentiated marketing strategies in the mobile field. The general conclusion of this thesis is that differentiated value-based marketing of mobile services is essential for attracting committed customers who will use the same providers’ content also in the future. Minna Pihlström is associated with the Centre for Relationship Marketing and Service Management (CERS) at Hanken.