Walden University ScholarWorks Walden Dissertations and Doctoral Studies Walden Dissertations and Doctoral Studies Collection 2018 Implementing Product Diversification Strategies for Small and Medium Retail Businesses' Sustainability Justin Daniel Vogl Walden University Follow this and additional works at: https://scholarworks.edu/dissertations Part of the Business Commons This Dissertation is brought to you for free and open access by the Walden Dissertations and Doctoral Studies Collection at ScholarWorks. It has been accepted for inclusion in Walden Dissertations and Doctoral Studies by an authorized administrator of ScholarWorks. For more information, please contact ScholarWorks@waldenu. Walden University College of Management and Technology This is to certify that the doctoral study by Justin Vogl has been found to be complete and satisfactory in all respects, and that any and all revisions required by the review committee have been made.
Review Committee Dr. Brandon Simmons, Committee Chairperson, Doctor of Business Administration Faculty Dr. Rocky Dwyer, Committee Member, Doctor of Business Administration Faculty Dr. Neil Mathur, University Reviewer, Doctor of Business Administration Faculty Chief Academic Officer Eric Riedel, Ph.
Walden University 2018 Abstract Implementing Product Diversification Strategies for Small and Medium Retail Businesses’ Sustainability by Justin D. Vogl MA, Ashford University, 2013 BA, Ashford University, 2011 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University April 2018 Abstract Small businesses make up about 90% of all business entities and employ about 60% of the total workforce, yet 50% of small businesses fail within their first 5 years. The purpose of this qualitative multiple case study was to explore how SBOs use the appropriate product diversification strategies to remain sustainable. The sample population were 3 small retail business owners in a large-sized county in the Washington, D.
metropolitan area who employed fewer than 19 people and have successfully used product diversification strategies to remain sustainable beyond 5 years. Data were collected through interviews, observations, and company document reviews. Data analysis entailed using an alphabetic coding process to identify the frequency and importance of themes. Grounded in the conceptual framework of the model of market orientation, this study revealed 4 themes that could help small business owners use the appropriate product diversification strategies to remain sustainable: customer-centric decision-making, market-trend orientation, resource orientation, and complementary products and services.
The implications for positive social change include the potential to give small business owners a decision-making framework to achieve sustainability and growth, which would contribute to healthy economic conditions through consumerism, higher employment rates, and a reduction in poverty. The findings of this study could benefit local, small businesses and communities. Implementing Product Diversification Strategies for Small and Medium Retail Businesses’ Sustainability by Justin D. Vogl MA, Ashford University, 2013 BA, Ashford University, 2011 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University April 2018 Table of Contents List of Tables.
iv Section 1: Foundation of the Study.1 Background of the Problem .2 Nature of the Study .3 Research Question and Interview Questions .6 Assumptions, Limitations, and Delimitations. 8 Significance of the Study .9 Contribution to Business Practice. 9 Implications for Social Change. 10 A Review of the Professional and Academic Literature .10 History of Product Diversification.
12 Product Diversification and Firm Performance. 14 Model of Market Orientation. 19 Resource-Based View. 26 i Decision-Making Strategies for Small Businesses.
31 Product Diversification and Small Business. 37 Small Business in the Retail Industry. 38 Achieving a Sustained Competitive Advantage. 40 Small Business Effect on the Economy.
43 Summary and Transition .44 Section 2: The Project .46 Role of the Researcher .48 Research Method and Design. 51 Population and Sampling .53 Data Collection Instruments .55 Data Collection Technique .57 Data Organization Technique .59 Reliability and Validity. 62 ii Summary and Transition .64 Section 3: Application to Professional Practice and Implications for Change .65 Presentation of the Findings.66 Participant Information and Background. 70 Emergent Theme 1: Customer-Centric Decision-Making.
71 Emergent Theme 2: Market-Trend Orientation. 73 Emergent Theme 3: Resource Orientation. 77 Emergent Theme 4: Complimentary Products and Services. 82 Applications to Professional Practice .84 Implications for Social Change .85 Recommendations for Action .86 Recommendations for Further Research .89 Summary and Study Conclusions .91 Appendix A: Invitation to Participate .112 Appendix B: Interview Protocol .113 iii List of Tables Table 1.
Frequency of MMO Components. Frequency of New Themes. Frequency of Customer-Centric Decision-Making. Frequency of Market-Trend Orientation.
Frequency of Resource Orientation. Frequency of Complimentary Products and Services. 83 iv 1 Section 1: Foundation of the Study Background of the Problem Small and medium enterprises (SMEs) play an active role in creating a healthy, competitive economy and maintaining social and political stability in a country (Neagu, 2016). SMEs generate the largest number of new jobs with a low cost in capital (Neagu, 2016).
Small businesses are important to the U. economy; just over half of all private sector workers employed in firms of less than 500 employees (Feinberg, 2013). With SMEs representing over 99% of the total number of enterprises in most economies in the world, they constitute an important alternative to fighting unemployment (Neagu, 2016). New businesses are important in promoting employment and growth in the U.
economy, as well as providing competition to well-established businesses (Feinberg, 2013). Less attention, however, has been given to the competitive sustainability of small firms, which may explain the high exit rate of small business due to business failure. Mokhtar (2013) found that small business owners (SBOs) typically lack the strategies and the long-term vision to lead to better business performance. Without having a clear growth strategy, SBOs may place the survival of the business at risk or may not achieve their full growth potential.
2 Problem Statement The volatile nature of small and medium enterprises (SMEs) has caused nearly 50% of all small business start-ups in the United States to close within 5 years (Small Business Administration [SBA], 2016a). In 2014, there were 19,376 new, small business start-ups in Virginia; however, 21,051 Virginia small businesses failed in that same year (Bureau of Labor Statistics [BLS], 2016b). The general business problem is some SBOs lack strategies to sustain their business beyond 5 years. The specific business problem is some SBOs in the retail industry lack strategies to use product diversification strategies to remain sustainable.
Purpose Statement The purpose of this qualitative multiple case study was to explore how SBOs use the appropriate product diversification strategies to remain sustainable. The participants of this study were three small retail business owners in Fairfax County, Virginia, who each employed fewer than 19 people and had successfully used product diversification strategies to remain sustainable beyond 5 years. The results of this study could positively contribute to social change due to the number of people who rely on the sustainability of small businesses for employment. Providing SBOs with an implementation framework for making product diversification decisions could help them remain sustainable or achieve growth.
Small business sustainability and growth can contribute to healthy economic conditions through consumerism, higher employment rates, and a reduction in communities’ poverty. 3 Nature of the Study I used a qualitative research method, with a multiple case study design, to conduct this study. Researchers use qualitative methods to effectively identify and explore the meaning, interpretations, and experiences of participants (Birchall, 2014). By using a quantitative or mixed method study, a researcher can gain insight into the correlational or causal relationships among variables, but they will not be able to explain why or how participants make certain choices.
Researchers using quantitative methods answer closed-ended questions to test hypotheses or examine relationships among variables, while qualitative researchers seek to answer open-ended questions that provide vivid accounts of participants’ ascribed contextual meanings to events or situations (Koch, Niesz, & McCarthy, 2013). Gaining experienced-backed insights from SBOs was essential for providing recommendations on how and when to use product diversification strategies. Researchers use case studies to explore contemporary phenomena/business problems in-depth and in a real-world context (Yin, 2014). Utilizing multiple cases facilitates achieving data saturation, which is the point where new findings have become redundant and a researcher can demonstrate they have a sufficient understanding of the concepts they are exploring (Roy, Zvonkovic, Goldberg, Sharp, & LaRossa, 2015).
Other potential qualitative design choices included narrative, phenomenology, ethnography, and grounded theory (Lewis, 2015). However, the focus of narrative, phenomenology, and ethnography designs excluded them as viable options for my study. 4 Researchers use narrative (historical) research as a historical recount, or chronology, of a single participant’s life experiences; researchers use phenomenology to explore the meaning participants attributed to a single event; researchers use ethnography to explore the lived culture, behaviors, and beliefs of a group (Ingham-Broomfield, 2015). Researchers use grounded theory for generating new theory through studying social systems and human interactions (Ingham-Broomfield, 2015), which was not applicable for the goals of this study.
A case study design was suitable for my research because it provided a flexible structure for exploring the complexity of the research problem (Hyett, Kenny, & Dickson-Swift, 2014). Research Question and Interview Questions The following research question guided the study: How do successful SBOs use product diversification strategies to remain sustainable beyond 5 years? I used the following open-ended questions to identify and explore the product diversification strategies SBOs used to remain sustainable: 1. How did you choose a product diversification strategy? 2. How do you diversify your products and/or services? 3.
Did you consider your product diversification strategies as more consumer driven or market driven? 4. What additional resources did your product diversification strategy require? 5. How, if at all, do your available resources, either tangible or intangible, affect your product diversification decisions? 5 6. How do you assess the effectiveness of your product diversification strategies? 7.
What additional information would you like to add about how you have chosen to implement your product diversification strategy? Conceptual Framework To explore how SMEs implement product diversification strategies to enhance their sustainability, I used a modified conceptual framework that was created to help businesses manage marketing strategies. Mitchell, Wooliscroft, and Higham’s (2010) model of market orientation (MMO) was adapted from marketing models originally developed by Narver and Slater (1990) and Dobni and Luffman (2003). Mitchell et al.’s model included six operational components that direct a business’ market orientation, which eventually influenced organizational performance: intelligence generation, organizational coordination, customer orientation, competitor orientation, market responsiveness, and profit orientation. Each operational component of the framework can serve as a lens through which a business owner could view their tactical and strategical decision-making, providing a SBO a guide to evaluate their product diversification decisions against multiple business and marketing perspectives (Lonial & Carter, 2015).
To remain sustainable, a SBO could apply similar operational components to inform their product diversification strategies, decision-making, and implementation practices. Nagayoshi (2015) stated that although firms can have great products and strategies, efficient planning for strategy execution is necessary to achieve a sustainable competitive advantage. An adaptation of Mitchell et al.’s MMO could assist business 6 owners’ real-options reasoning, which is the cognitive process of strategic decision- making and uncertainty reduction through market research and understanding of related organizational capabilities (Chintakananda & McIntyre, 2014; McGrath, 2006). Operational Definitions Business success: Business success is when business owners find that there is a high acceptance of their products or services, they have personal gratification, a sense of pride and leadership, and when their business remains open and profitability for 5 or more years (Ho & Barnes, 2013; SBA, 2016a).
Model of Market Orientation: The model of market orientation is a marketing framework that will serve as the conceptual framework for this study (Mitchell et al. Product: A product can be defined as a good or service (Dixon, Karniouchina, van der Rhee, Verma, & Victorino, 2014). A good is a material product offering while a service is a non-material product (Dixon et al.