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New Venture Performance in C hina, J apan, and the U nited S tates: The Impact of Formalized Market Information Processes
Author(s) -
Kawakami Tomoko,
MacLachlan Douglas L.,
Stringfellow Anne
Publication year - 2012
Publication title -
journal of product innovation management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.646
H-Index - 144
eISSN - 1540-5885
pISSN - 0737-6782
DOI - 10.1111/j.1540-5885.2011.00895.x
Subject(s) - business , marketing , conceptual model , joint venture , industrial organization , business administration , computer science , database
New venture companies, starting from small entities comprising entrepreneurs and their teams, start to grow in scale by instigating formalized processes to enhance management efficiency. This includes the use of formalized processes for collecting and disseminating market information. Despite the fact that utilizing market information is one of the fundamental factors of market orientation, little is known about the way market information is processed in new venture companies. The first aim of this research was to investigate the impact of formalized market information acquisition and utilization on new venture performance. The second objective was to investigate the effect of organizational formalization on the acquisition and utilization of market information in new venture firms. The final goal was to explore the extent to which these relationships vary in different cultural contexts. Based on an extensive literature review and interviews with managers in C hina, J apan, and the U nited S tates, a conceptual framework is developed that relates formalized market information processes to new venture performance in the three countries. The conceptual model is tested with data collected from 453 new venture companies in these countries. The results suggest that the use of a formalized process of market information utilization has a positive effect on new venture performance regardless of country. The analysis also indicates that the effect of organizational formalization, in general, differs between countries. Organizational formalization is associated with increased formalized utilization of market information only in the U nited S tates; the relationship does not apply in the two A sian countries studied. Taken together, these results suggest that in the A sian countries, organizational formalization improves information collection, while in the U nited S tates, it also improves the utilization of information throughout the organization. One implication of these results may be the potential of added benefits accruing to organizational formalization in new ventures in countries with high levels of individualism and/or high levels of power distance, where organizational power is concentrated in formal vertical reporting relationships, as opposed to informal horizontal peer‐to‐peer networks.