R&D Projects Fostering Small Firms’ Market-Sensing and Customer-Linking Capabilities: A Multivariate Statistics Approach

A large number of empirical studies have recently explored the processes and the conditions under agri-food companies acquire and develop market orientation (e.g. Martin et al. 2009), entrepreneurship (e.g. Holster 2008) and innovation (e.g. Verhees 2005), which have been proven to have a positive relationship with their performance (e.g. Micheels and Gow 2008). A much smaller number of studies focused on how agri-food firms can acquire the capabilities that are necessary to become market-oriented and innovative (e.g. Anderson & Narus 2007), specifically market sensing and customer linking (Day 1994). As a number of public-private partnership projects are attempting to enhance agri-food companies' market orientation and innovation, it is useful to identify which research and dissemination methods effectively develop these capabilities and under which conditions. To attempt to start filling this gap, this study analyses under which conditions public-private projects based on research and dissemination manage to foster market-sensing and customer-linking capabilities of small agri-food firms. Fostering these capabilities in small firms is particularly challenging, as they have limited resources to absorb the new information, learn and apply strategic changes as a result of the learning process. The case of five knowledge-building Seafood Cooperative Research Centre projects based on supply chain mapping and benchmarking methods with the oyster, wild prawn, farmed prawn and finfish industries provides the instrumental cases to the study. We collected data both quantitatively and qualitatively to gain more insight on the cause-effect relationship among variables (Eisenhardt 1989). Then, we analysed data with a structural equation model, whose multivariate statistic approach allows a rigorous analysis of the relationships between latent variables such as market-sensing and customer-linking capabilities and attitudes. Preliminary results can be summarized as follows. First, an estimation of profit margins that different customers make along the chain and an assessment of customers' needs, when customers' concentration and rivalry along the chain is low, are crucial to foster small farms' capabilities. Second, informal networks play a key role for fostering these capabilities from few small firms to the majority of the target.