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Do market information processes improve new venture performance?

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  • Song, Michael
  • Wang, Tang
  • Parry, Mark E.

Abstract

Does market information improve new venture performance? While some researchers argue that entrepreneurs do not need formal processes to collect and use market information, others suggest that the use of formal market information processes is positively related to firm performance. In this paper, we hypothesize that new venture performance is an increasing function of (1) the firm's level of customer interaction and (2) the use of formal processes for collecting and utilizing market information. We also hypothesize that these linkages will be stronger among new ventures serving emerging markets (i.e., markets in which customer needs and segments are evolving). We test these hypotheses using data collected from 224 new ventures located in the United States. Our findings indicate that, regardless of market condition, formal processes for the collection of market information are positively associated with the use of formal processes for market information utilization and this relationship is stronger among firms serving established markets. In addition, new venture performance is positively associated with the use of formal processes for utilizing market information and this relationship is also stronger in established markets. We also find that, in emerging markets, new venture performance is a positive function of the use of formal processes for collecting market information. Contrary to expectations, we find that, regardless of market condition, the level of customer interaction has a negative relationship with the use of formal processes for market information utilization and no significant relationship with performance.

Suggested Citation

  • Song, Michael & Wang, Tang & Parry, Mark E., 2010. "Do market information processes improve new venture performance?," Journal of Business Venturing, Elsevier, vol. 25(6), pages 556-568, November.
    • Handle: RePEc:eee:jbvent:v:25:y:2010:i:6:p:556-568
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    2. Martin, Silvia L. & Javalgi, Rajshekhar (Raj) G. & Ciravegna, Luciano, 2020. "Marketing capabilities and international new venture performance: The mediation role of marketing communication and the moderation effect of technological turbulence," Journal of Business Research, Elsevier, vol. 107(C), pages 25-37.
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    6. Tischler, Joachim, 2014. "Characteristics of technological base, pace of technological development, and growth of young technology-based firms," EconStor Preprints 96156, ZBW - Leibniz Information Centre for Economics.
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    9. Sanja Mitić, 2015. "External Relationships And Marketing Practices In Serbian Firms: The Intangible Capital Perspective," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 60(204), pages 75-104, January –.
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