A new article in the Journal of Marketing demonstrates what can happen when “little guys” work together to pursue common interests. In most established industries, large companies are dominant: Think of the technology, foods and beverages, entertainment, and banking sectors, for example. However, in some industries, this dominance is effectively challenged by small and medium firms that carve out vibrant niches and build substantial customer bases in categories such as craft beer, specialty coffee, community-supported agriculture, and credit unions.
In our article, we identify the backstage work through which small and medium-sized businesses can increase their political and economic clout. Specifically, we reveal the importance of collective action, identifying a strategy we call “collaborative market driving.” We identify how firm owners form a strong sense of shared identity and pool their resources to jointly develop a market category in ways that benefit all of them. Their collective work ranges from exchanging critical economic resources to fighting together for more favorable regulation.
We also analyze the key role trade associations can play as coordinators of this form of collective firm action. Trade associations can offer inspiring templates for how smaller firms should relate to each other and make sense of their competitive environment. Further, we discover that consumers can play key role as allies of these firms by providing some of the resources that they may lack to develop a market category.
Our insights offer a new understanding of how industries can be driven to evolve. For the most part, marketing researchers have focused on evolution powered by individual firms that cooperate with members of their supply chain, but compete fiercely with their peers. By contrast, we bring into focus the role of collective action among peer firms. These firms follow the motto “a rising tide floats all boats,” finding ways to manage their own interests while working toward the interests of their collective.
Perhaps most importantly, our findings suggest a viable course of action for entrepreneurs interested in developing new market categories when they lack adequate resources to do so individually. By acting in concert, they can become a force to be reckoned with, enacting a marketplace version of the parable of David and Goliath.
From: Andre Maciel and Eileen Fischer, “Collaborative Market Driving: How Peer Firms Can Develop Markets Through Collective Action,” Journal of Marketing.
Go to the Journal of Marketing
Related: Watch Andrew Maciel Discuss Findings About the Craft Beer Industry
Andre F. Maciel is Assistant Professor of Marketing, College of Business, University of Nebraska–Lincoln.
Eileen Fischer is Professor of Marketing and Anne & Max Tanenbaum Chair in Entrepreneurship and Family Enterprise, Schulich School of Business, York University, Canada.