Entrepreneurial Practices of Small and Medium Enterprises

Introduction

Background of the Study

Entrepreneurial practices of Small and Medium Enterprises (SMEs) and new ventures are actively discussed as they contribute towards the economic growth in both developed and developing countries. Nowadays, SMEs and new ventures focus on modern marketing tools (Arend 2014; Lahtinen 2013; Lawrence et al. 2006; Sharma 2011). The SMEs have a tendency to use entrepreneurial marketing, a modern approach of marketing. According to Morris and members, entrepreneurial marketing focuses on the exploitation of opportunities and adopts innovative approaches to attract customers and increase profitability (Morris et al. 2002). It is valuable to examine the role of entrepreneurial marketing and how it influences SMEs’ sustainability. Achieving business sustainability and addressing the economic, social, and environmental issues are the main tasks for all businesses regardless of their size and scope of activities (Morrish 2011; Rezvani & Khazaei 2013). Subsequently, the sustainability concept dictates that an entrepreneurial entity should have the capacity of meeting the present needs of the current generation without compromising the ability of future generations to meet their own need (Masurel 2007; Starik & Kanashiro 2013).

Sustainable entrepreneurship is based on establishing a balance between the planet, people and profit. It means, in achieving sustainability, SMEs (i) engage in the environmental activities that help a business to utilize market opportunities; (ii) concentrate on creating the value for the society; and (iii) implement effective strategies to increase profits (Lawrence et al. 2006; Parrish 2010; Tambunan 2008). In fact, it is more difficult for the SMEs to achieve sustainability than for large companies because they often overlook environmental and social considerations in their plans and activities, thus threatening their sustainability (Loucks et al. 2010; Simpson et al. 2004). For example, 60% of carbon dioxide emissions in the UK are from the SMEs, and this is a threat to their growth and development (Alsaleh 2012; Simpson et al. 2004). Thus, research in SMEs business sustainability would provide valuable information for SMEs in their business decision.

SMEs play a major role in economic development and ensure sustainability as they have been the central source of employment generation and output growth (Kongolo 2010; Simpson et al. 2004; Tambunan 2008). In both developed and developing countries, SMEs employ a higher percentage of citizens as compared to large corporations and government agencies. They represent the highest percentage of all enterprises (Stefanović et al. 2010; OECD 2009). For example, in developed countries, SMEs represent over 99 % of all enterprises in the European Union, and 99.3% in the United Kingdom business sphere (Mark Ware Consulting Ltd 2009; OECD 2009). In addition, SMEs in developing countries also witness a high percentage in total business. For example, in Saudi Arabia, the majority of businesses are SMEs, representing 92% of all business in the country (Alsaleh 2012; OECD 2009).

Saudi Arabia is one of the fastest developing economies in the Middle East, and it is regarded as one of the biggest economies in the Gulf Cooperation Council (OECD 2009; Saudi Arabian Monetary Agency 2010). The country has numerous SMEs that have helped it to experience a relatively stable economic growth. According to Alsaleh, about 92% of all registered business units in Saudi Arabia are SMEs and 80% of the country’s workforce is from these SMEs. However, their contribution to the GDP is only around 33% (Alsaleh 2012; Riyadh Camber Commerce & Industry 2011). The importance of SMEs has raised a massive attention among researchers and other stakeholders on how these firms can become successful. Gladwin argued that although the SMEs are very important for a country’s economic growth, most of them fail soon after starting operations, which is an issue of sustainability (Gladwin 2010). In Saudi Arabia, it is estimated that the average lifespan of SMEs is seven years. It means that most of these firms fail to celebrate their seventh anniversary (Allurentis Limited 2013; Alsaleh 2012; Ahrholdt 2011; Ramachandran et al. 2006). Another major concern is that although the SMEs account for about 92% of all the registered firms in Saudi Arabia, their contribution to the country’s GDP has consistently remained below 33% (Nasr & Rostom 2013; Sadi & Iftikhar 2011). Maser (2012) argued that this is critical, especially given the fact that this sector employs about 80% of the country’s population. In contrast with developed countries such as the United States and the United Kingdom, SME is one of the leading contributors to the GDP (Gilmore, Carson & Grant 2001; Hall et al. 2010). This issue has attracted attention of many scholars who have been concerned on how to enhance SMEs’ sustainability and efficiency in their operations.

Generally, the SMEs face many challenges that inhibit their sustainability and survival such as lack of future planning, absence of innovation, managerial skills, financial support, marketing knowledge and competencies or human resources capabilities (Alsaleh 2012; Dyer & Ross 2008). In literature, it is postulated that entrepreneurial marketing is a potential driver and predictor of SMEs’ sustainability. Entrepreneurial marketing is effective to address challenges associated with SMEs’ sustainability. Thus, researchers have demonstrated the relationships between the dimensions of entrepreneurial marketing and business sustainability (Franco et al. 2014; Hacioglu et al. 2012). From this point, much research is needed in order to further examine and confirm the positive effect of entrepreneurial marketing on SMEs’ performance and sustainability (Hall et al. 2010; Morris et al. 2002). Furthermore, the research is necessary to accentuate the importance of integrating different dimensions of entrepreneurial marketing in their combination to achieve sustainability because entrepreneurial marketing dimensions are not independent in their nature (Morris et al. 2002).

With regards to this study context, the Saudi government and the private sector initiatives to provide the support for Saudi SMEs in terms of capital (debt and equity) are recently in place. Under the supervision of the Ministry of Finance, the Saudi Industrial Development Fund (SIDF) had established a special program called “Kafala” fund, which provides financial facilities for Saudi SMEs (Alsaleh 2012; Aragon-Correa et al. 2008). The Saudi Credit Bank had also distributed social loans to low-income Saudis, helping them to start their own businesses (Hertorg 2010; Sivakumar & Sarkar 2012). These efforts by the government are meant to foster the expansion of SMEs (Saudi Arabian Monetary Agency 2010; Sivakumar & Sarkar 2012). The private sector also plays a considerable role in supporting SMEs in Saudi Arabia. Hertog (2010) indicates the essence of support programs executed by private agencies that help SMEs in the Gulf region to gain external resources through learning and sharing (Hertorg 2010; Sivakumar & Sarkar 2012).

Despite the fact that the government has outlined policies to support the Saudi SMEs, this move is still considered shallow and ineffective (Saudi-US Relation Information Service 2011; Shalaby 2010). Masurel advocates for policies that enable SMEs to control their level of production by regulating external networks, for example, suppliers, customers and local authorities (Masurel 2007). Moreover, most of the supporting programs focus on financial support while ignoring other sustainable factors such as environmental and social programs (Alsaleh 2012; Saudi-US Relation Information Service 2011; Shalaby 2010). This research focuses on SMEs’ sustainability that can be practiced in SMEs in Saudi Arabia through entrepreneurial marketing dimensions. Specifically, this research intends to investigate the relationship between entrepreneurial marketing dimensions and SMEs business sustainability in relation to Saudi SMEs.

Problem Statement

The progress of SMEs in developing countries depends on the organizations’ approaches to sustainability and success. Thus, the success of SMEs is defined as the ability of an SME to endure the first two critical years after startup (Moore & Manring 2009; Müller & Pfleger 2014). Kesper states that developing countries have unpredictable market conditions, and there is little chance for the SMEs to become successful (Kesper 2001). In addition, the owner should meet the majority of goals and objectives, and managers in many SMEs are under the increasing pressure to address the issue of sustainability (Asif et al. 2011; Moore & Manring 2009). From this point, the achievement of sustainability for the SMEs in developing countries becomes a problematic task, and it is associated with the concept of competitive advantage. The resource-based view discussed in literature indicates that resources, core competencies and capabilities are imperative in defining a firm’s competitive advantage (Müller & Pfleger 2014; Sull & Escobari 2004). This competitive advantage is vital in ensuring SMEs’ sustainability. The strong support for SMEs in Asian developing countries, including countries such as Saudi Arabia, is necessary to develop sustainability and achieve competitive advantage (Loucks et al. 2010; OECD 2009). Therefore, researchers should examine the SMEs’ sustainability in developing countries in order to identify appropriate strategies and tactics to achieve long-term sustainability.

Strategic resources are fundamental to gain the competitive advantage and to secure SMEs’ sustainability. These resources are necessary to achieve better firm performance in comparison to competitors because these resources help the firms deal with their constraints; thereby, realizing the development and strategic growth (Amoah-Manseh 2013; Sull & Escobari 2004). The competitive advantage is gained through the possession of unique firm resources that are often absent in Saudi Arabian firms (Alsaleh 2012; Nasr & Rostom 2013; Sadi & Iftikhar 2011). The ability of a firm to appropriately manage resources determines its performance level and attainment of competitive advantage. However, without the right personnel, management of resources becomes difficult and SMEs’ sustainability is not guaranteed. From this perspective, the SMEs in Saudi Arabia need to find specific resources and strategies to promote their sustainability.

In fact, the key concern for the SMEs in Saudi Arabia is the sustainability issue (Alsaleh 2012; Hertorg 2010; Sivakumar & Sarkar 2012). The SMEs in Saudi Arabia, on average, last only about seven years because of the inability to achieve sustainability in perspective (Alsaleh 2012; Hertorg 2010). A range of problems have been cited as the drawbacks, making the SMEs unable to compete effectively and grow sustainably (Nasr & Rostom 2013; Sadi & Iftikhar 2011). The challenges faced by SMEs in general are funding, high cost of capital, restriction of financial application, lack of managerial and marketing capabilities (Al-Jasser 2011; Alsaleh 2012; Alsamari et al. 2013; Hertorg 2010; Rocha et al. 2011, Shalaby 2004, 2010). The identified challenges can be addressed with appropriate strategies and approaches, thus achieving sustainability in SMEs.

For illustration, the study by Alsamari on the SMEs’ challenges and opportunities in Saudi Arabia and Bahrain found that poor implementation of the marketing process was a precedent factor for failure of the enterprises (Al-Jasser 2011; Alsamari et al. 2013; Berghman et al. 2013; Saudi-US Relation Information Service 2011). Other studies also confirmed that marketing is one of the main problems in SMEs in Saudi Arabia. Thus, in an investigation conducted by the Small and Medium Enterprises Development Council (SMEDEC) on 60 SMEs in the Eastern province of Saudi Arabia, it was shown that over 78% of these SMEs had problems of marketing (Alsamari et al. 2013; Shalaby 2010). From this point, it is necessary to focus on researching marketing or entrepreneurial marketing as it influences the sustainability of SMEs in Saudi Arabia.

In literature, it has been discussed that entrepreneurial marketing is very much needed in SMEs’ context due to the challenges and financial constraints encountered (Kurgun et al. 2011; Müller & Pfleger 2014). Entrepreneurial marketing based on a specific entrepreneurial behavior is an effective approach to revise the vision of a range of constraints and to focus on the ways that are appropriate to gain benefits and attract stakeholders (Gaweł 2012; Kurgun et al. 2011). Thus, entrepreneurial marketing is associated with innovation and innovative techniques and strategies that are discussed as effective to address the needs of modern and developing SMEs in finding new approaches to build their competitive strategies (Gaweł 2012; Kurgun et al. 2011).

Researchers state that entrepreneurial marketing dimensions such as proactiveness, innovativeness and resources leveraging are associated with enhancing business sustainability in companies (Hacioglu et al. 2012; Kurgun et al. 2011). In this context, researchers pay attention to the role of the businessman’s active behavior while selecting opportunities in order to develop organizations; to the specific role of choosing innovative techniques to use for adding the competitive advantage; and to the role of resources leveraging for the effective planning and utilization of the available resources and business opportunities (Gaweł 2012; Kickul & Gundry 2002; Morris et al. 2002). Thus, much research is necessary to state whether the aspects of entrepreneurial marketing can contribute in creating sustainability in different companies, including SMEs.

In addition, some isolated studies have shown that value creation and customer intensity might relate to proactiveness, innovativeness, and resource leveraging (Hacioglu et al. 2012; Kurgun et al. 2011). This supports further examination of the inter-relationships between the dimensions of entrepreneurial marketing (Gaweł 2012; Hills & Hultman 2011). To date, not many studies present the evidence to explain the inter-relationships between these dimensions. It would enhance current understanding by empirically examine the effects of value creation and customer intensity on proactiveness, innovativeness, and resource leveraging in the context of the SMEs.

The reason to focus on the inter-relationships between the dimensions of entrepreneurial marketing is in the fact that these dimensions can be implemented by managers to achieve sustainability and contribute to the company’s growth in various combinations (Morris et al. 2002). As a result, SMEs can achieve progress while integrating not all dimensions of entrepreneurial marketing, but only specific bundles of them. In this case, the success depends on the choices made by the manager at different stages of the company’s development (Morris et al. 2002). From this point, it is significant to study the inter-relationships between the dimensions in order to conclude what dimensions and in which combinations can add more to the progress of SMEs.

One more point is that dimensions of entrepreneurial marketing can influence each other while being integrated by leaders differently. It is necessary to study the inter-relationships between the dimensions of entrepreneurial marketing because the difference in outcomes is based on differences in creative approaches made by leaders and managers in order to focus on the innovative marketing (Fiore et al. 2013; Gaweł 2012; Hacioglu et al. 2012). As a result, the observed marketing behaviors and the combinations of dimensions are quite various. Moreover, while focusing on the inter-relationships between the dimensions, it is possible to understand how integrated innovative strategies work to reduce risks for SMEs in the situation when different dimensions can not only influence each other but also strengthen the effectiveness of the selected marketing behavior (Franco et al. 2014; Hacioglu et al. 2012).

The existing studies are rather fragmented. Studies commonly focused either on sustainability, the progress of SMEs, or on the elements of entrepreneurial marketing and their role for the firm performance (Hacioglu et al. 2012; Hills & Hultman 2011). There is still lack of an integrated study to examine the effect of entrepreneurial marketing dimensions on SMEs’ business sustainability (Collinson & Shaw 2001; Hacioglu et al. 2012). Thus, the key research problem statement would be to what extent entrepreneurial marketing impact on SMEs’ sustainability and how the dimensions of entrepreneurial marketing relate to each other. Subsequently, how applicable are these conceptual relationships in the Saudi SMEs’ context.

Research Questions and Objectives

The general research question of this research is whether entrepreneurial marketing dimensions have a significant effect on SMEs’ business sustainability, and what are the likely inter-relationships between the dimensions of entrepreneurial marketing. This research aims to answer the following specific research questions:

1. To what extent proactiveness, innovativeness and resource leveraging (i.e. dimensions of entrepreneurial marketing) affect SMEs’ business sustainability?
2. To what extent value creation and customer intensity have effects on SMEs’ proactiveness?
3. To what extent value creation and customer intensity have effects on SMEs’ innovativeness?
4. To what extent value creation and customer intensity have effects on SMEs’ resource leveraging?

The general objective of this research is to examine the effect of entrepreneurial marketing on SMEs’ business sustainability and to examine the inter-relationships between the dimensions of entrepreneurial marketing.

Specifically, this research aimed at achieving the following objectives:

1. To examine the predictive effect of proactiveness, innovativeness and resource leveraging on SMEs’ business sustainability.
2. To examine the predictive effect of value creation and customer intensity on SMEs’ proactiveness.
3. To examine the predictive effect of value creation and customer intensity on SMEs’ innovativeness.
4. To examine the predictive effect of value creation and customer intensity on SMEs’ resource leveraging.

Scope of the Research

The scope of research focuses on the investigation of entrepreneurial marketing dimensions in achieving SMEs’ sustainability in the context of Saudi Arabia. Legally registered SMEs will be selected. SMEs have been targeted because of their highly competitive nature and their potential contribution to GDP. Business entrepreneurs and owners of SMEs will be interviewed using structured questionnaires that will be administered personally by the researcher. The present study adopts the definition presented by Shalaby of SMEs in the Saudi context, which states that SMEs as companies that employ less than 100 employees (Shalaby 2004).

Contribution of the Study

This study is expected to contribute to the theory and management practice. In terms of theoretical contribution, this research will focus on determining the relationship that exists between entrepreneurial marketing and SMEs’ business sustainability. This study will add to the existing knowledge of entrepreneurial marketing and sustainable development studies by examining the relationship between value creation, customer intensity, proactiveness, innovativeness, resource leveraging and SMEs’ business sustainability. In comparison to other studies, this study will test the relationship between value creation and resource leveraging, customer intensity and proactiveness for the very first time.

Furthermore, this study will examine, particularly, the specific key dimensions that affect SMEs’ business sustainability. In addition, the study will also provide empirical evidence on the entrepreneurial marketing by validating a model of sustainability in SMEs. This study also provides support for addressing the call by Morris et al. (2002) regarding having more insight about the inter-relationships between the entrepreneurial marketing dimensions, which will contribute significantly to the existing knowledge.

In the aspect of management practice, most of the current business units in Saudi Arabia have failed to achieve sustainability in their operations due to lack of sufficient knowledge of the best practices in their field. The term sustainability is relatively new especially among Saudi SMEs. This study will provide useful practical information in relation to entrepreneurial marketing dimensions and its effect on SMEs’ business sustainability. The information is valuable in order for SMEs to structure their limited resources in the areas that directly influence their business sustainability. The results of this study would indicate which entrepreneurial marketing dimensions would potentially explain the variance in business sustainability and the likely predictive effect of value creation and customer intensity on SMEs’ proactiveness, innovativeness and resource leveraging; thus, enable SMEs to fully maximize their limited resources. The findings also serve as a reference for small and medium sized entrepreneurs and managers in other countries with similar socio-economic and political structure as Saudi Arabia.

This research study also seeks to provide knowledge to the entrepreneurs and other business executives managing SMEs on how entrepreneurial marketing can help them to achieve sustainable advantage in their operations. This research will also give advice to business executives of SMEs on the importance of hiring skilled employees who understand marketing dynamics and able to define the best ways of achieving sustainability. SMEs will also gain further understanding of how to apply entrepreneurial marketing as an antecedent for gaining a sustainable advantage.

Operational Definitions of Key Variables

Small and Medium Enterprise (SME) business sustainability refers to the management and coordination of economic, environmental, and social demands and concerns to ensure organizational survival and growth (Khan et al. 2014).

Proactiveness refers to the marketing actions through which the firm redefines its external conditions to reduce uncertainty and lessen dependency and vulnerability (Becherer et al. 2012).

Innovativeness refers to the ability of an organization to come up with ideas that lead to new markets, products or processes (Becherer et al. 2012).

Resources Leveraging refers to creative synergistic process to access resources with less, often mitigating risk through a greater use of leveraging (Becherer et al. 2012).

Value Creation refers to a business operator’s tendency to use marketing efforts and resources to discover and deliver untapped sources of value for the customer (Fiore et al. 2013).

Customer Intensity refers to organizational orientation in employing innovative approaches to create, build, and sustain customer relationships (Becherer et al. 2012).

Structure of the Proposal

This proposal consists of four chapters. Chapter I is introductory. The chapter presents the background of the study, the problem statement discussing the importance of the study, research questions and objectives of the study; it discusses the scope of the research and its contribution to the field; and it provides the operational definitions applied to the study. Chapter II presents the literature review on the main aspects of the topic. The chapter discusses the related theories, the sustainability concept, the SMEs’ sustainability, entrepreneurial marketing and its dimensions. The chapter also analyzes the research gap in recent studies on the problem to support the need for the current study. Chapter III presents the conceptual framework for the research and hypotheses aligned with research questions. Chapter IV provides the methodology used for the research with the focus on explaining the sampling, data collection, and data collection procedures. The proposal also includes the research schedule.

Literature Review

Introduction

This chapter illustrates the theories related to the organizational performance and sustainability concept. Then, it focuses on explaining Small and Medium Enterprises’ (SMEs) sustainability and its predictors in the form of entrepreneurial marketing. It is followed by the discussion of SMEs in Saudi Arabia context and the research gaps with reference to the existing literature.

Institutional and Contingency Theories

Institutional Theory

Institutional Theory is a theory concerned with organizations that are developed in the same institutional environment. The main aspects of Institutional Theory were formulated by DiMaggio and Powell in the 1980s, and then the theory was developed by Meyer and Scott. DiMaggio and Powell focused on the idea that regulatory structures, social institutions, and the government influence organizations, and they need to conform to the rules in order to develop and succeed (DiMaggio & Powell 1983). Then, Meyer and Scott developed that idea by focusing on the conformance pressures as regulating expectations regarding the organizations’ development (Meyer & Scott 1983). As a result, Institutional Theory offers insights and explanations regarding the reasons why entrepreneurs choose certain practices without focusing on direct economic revenues and profits (Brunton & Ahlstrom, 2010; Rivera 2004; Webb et al. 2011).

Institutional Theory suggests that a firm must formulate strategies addressing institutional concerns and compliance with rules and regulations for survival or further growth (DiMaggio & Powell 1983; Glover et al. 2014). That is why Institutional Theory explains how entrepreneurs can improve their positions in the business world while focusing on the aspects of regulation and legitimacy; thus, the theory explains how it is possible to operate within the legal environment and benefit from it (Delmas & Toffel 2004; Glover et al. 2014). According to the concepts of the theory, social and legal institutions serve as a set of working rules, and these rules provide a framework for effective decision-making (Delmas & Toffel 2004; Lai et al. 2006). Thus, the main premise of Institutional Theory is that in order to survive, firms must focus on the idea of legitimacy by conforming to prevailing institutional pressures and rules in the legal and societal environment while focusing on the environmental, social, and economic sustainability.

Institutional Theory forms the framework for the research conducted by Delmas and Toffel and Starik and Kanashiro in the field of sustainability. Delmas and Toffel used Institutional Theory to explain the role of the environmental management for the company’s growth (Delmas & Toffel 2004). Starik and Kanashiro chose to focus on approaches to achieve sustainability while explaining them with references to Institutional Theory (Starik & Kanashiro 2013). Thus, the theory provides the ground for organizations within different industries in relation to the choice of the effective practice in order to stay profitable in the changing environments. Institutional Theory states that it is necessary to seek legitimacy by conforming to prevailing institutional rules in order to address the issues associated with the sustainable progress (Bansal & Clelland 2004; Starik & Kanashiro 2013). In this context, Institutional Theory is helpful to create the framework for discussing the role of entrepreneurial marketing dimensions for the sustainability of SMEs because it is effective to explain how changes in social environments and values, as well as changes in the social and environmental regulations, can influence sustainable practices of businesses (Delmas 2002; Glover et al. 2014; Wu, Ding & Chen 2012).

Contingency Theory

Contingency Theory is one of the most used organizational theories that explain contingencies on which the progress of organizations depends. The main principles of Contingency Theory were formulated by Burns and Stalker and then by Lawrence and Lorsch in the 1960s, but the theory became to be used in the organizational context only in the 1980s (Burns & Stalker 1961; Lawrence & Lorsch 1967; Buttermann, Germaina & Iyer 2008). Contingency Theory has been widely referred and used in studies on measuring the performance and effectiveness of an organization due to the fact that the theory focuses on determining and measuring a range of contingencies that are influential for building sustainability. These contingencies are important for the theory including the size of a business, uncertainty of the environment along with environmental issues, the development of technology, and risks (Buttermann, Germaina & Iyer 2008; Ketokivi 2006). Following Contingency Theory, it is possible to state that these indicators affect significantly the progress of the business and the success of entrepreneurs’ activities. The impossibility to influence the contingencies associated with the aspects of the social, economic, and environmental areas affects negatively businesses’ abilities to achieve sustainability (Ketokivi 2006; Stonebraker & Afifi 2004).

According to Contingency Theory, there is no optimum method to develop or systematize a strategy for a firm and propose the framework for the organization (Buttermann et al. 2008; Stonebraker & Afifi 2004). As a result, entrepreneurship becomes dependent on contingencies, and a company cannot regulate its activities to meet the changes in the progress of the social, economic, and environmental areas (Canina et al. 2012; Raduan et al. 2009; Starik & Kanashiro 2013). In this context, it is possible to state that Contingency Theory argues that the most appropriate structure for an organization is that the one that can best fit a given operating contingency, such as technology or the environment.

Contingency Theory is expected to help the SMEs’ business entrepreneurs to adopt the structural innovations in the daily operations of their business because this theory can explain factors influencing the success of entrepreneurs’ efforts in realizing the principles of the sustainable development for businesses of different sizes. Therefore, Contingency Theory provides an important framework in order to discuss the idea or hypothesis that contingencies presented in the context of entrepreneurial marketing dimensions, which can affect the sustainability of the SMEs (Canina et al. 2012; Raduan et al. 2009; Stonebraker & Afifi 2004). While discussing the focus on contingencies as the focus on tools that are effective to achieve sustainability in SMEs, it is possible to state that Contingency Theory is an appropriate choice to explain why dimensions of entrepreneurial marketing can contribute to creating sustainability and support specific sustainable practices in the SMEs (Raduan et al. 2009; Stonebraker & Afifi 2004).

In summary, Institutional and Contingency Theories postulated that an organization’s performance and sustainability are affected by a range of factors, including the changes in the legal environments and regulation. The success of businesses in achieving sustainability can be predicted with reference to the organizations’ strategies and their specific responses to factors, such as social and environmental pressures (Glover et al. 2014; Raduan et al. 2009; Stonebraker & Afifi 2004). From this perspective, assuming that entrepreneurial marketing is a part of organizational strategies, it means the implementation of proactiveness, innovativeness and resource leveraging strategies would have an effect on organizations’ performance and sustainability. In the following sub-sections, the concept of sustainability will be explained and discussed.

Sustainability Concept

Sustainability can be viewed from various dimensions, but environmental and social dimensions have received immense emphasis (Brilius 2010; Moore & Manring 2009). Based on the environmental approach, sustainability is achieved by SMEs using informal methods that entail waste reduction and development programs (Han et al. 2014; Lawrence et al. 2006). SMEs that have a strong environmental performance are discussed as financially successful in spite of resource constraints. In addition, the social aspect based on interaction with people also affects the success of social practices implemented by SMEs (Sodhi 2011; Theyel & Hofmann 2012; Welcomer 2011).

The main focus is on customers’ interests. Engagement in sustainable actions creates a positive image of the firm in the eyes of the customers, and they develop positive perceptions about the firm. A firm that takes the community into consideration before embarking on a particular project is able to develop positive relations with the community, and this enables the project to run smoothly due to reduced resistance (Brilius 2010; Theyel & Hofmann 2012; Welcomer 2011). SMEs achieve sustainability when they maintain good relations with other companies because they indulge in cooperation that is good for the survival of businesses (Brilius 2010; Moore & Manring 2009).

Subsequently, sustainable development consists of three components, namely sustainability in terms of economic, environmental/ecological, and social. It is related to a firm’s performance in one way or the others (Starik & Kanashiro 2013; Theyel & Hofmann 2012). Sustainable development may mean different things to different people in different contexts. It has commonly been defined as the kind of development that helps in meeting the current needs in a way that does not compromise future generation’s ability to achieve their needs (Avram & Kuhne 2008; McAdam 2000). In the context of SMEs, sustainable development refers to the ability of a firm to achieve the current developmental needs in a way that would assure its future developments (Brilius 2010; McAdam 2000). Most SMEs are able to experience development in the early months of their initiation. However, as they grow in size, this development stagnates, or even depreciates, and this fact makes them unable to contribute to the growth of the country’s economy in a significant manner (Gilmore et al. 2001; Newby et al. 2003; Schumacker & Lomax 2004).

SMEs attempt to have the full concentration on the need for profitability while ignoring other social responsibilities; and this approach gives quick gains. However, an SME can reach a moment when those responsibilities become a significant barrier for further development (Brilius 2010; Newby et al. 2003; Starik & Kanashiro 2013). For instance, SMEs are not able to manage their wastes, and when this continues without any measures from the responsible authorities, the wastes will reach shocking limits. Thus, responsible firms may be forced to revise their priorities for the sustainable development (Brilius 2010; Newby et al. 2003; Starik & Kanashiro 2013).

Three Pillars of Sustainability

The three pillars of sustainability include people (social pillar), profit (economic pillar), and planet (environmental pillar) (Brilius 2010; Theyel & Hofmann 2012; Welcomer 2011). The three pillars are very important in ensuring that there is sustainability, and any weakness in any of the pillars would render the whole system unsustainable. This means that if a firm has excellent economic and environmental policies, but lacks clear policy on how to deal with social issues of its employees, the firm will be considered as unsustainable (Brilius 2010; Moore & Manring 2009; Theyel & Hofmann 2012; Welcomer 2011). These three pillars can be presented diagrammatically, in which sustainability is like a house with three cornerstones (Figure 2.1).

Each of the three cornerstones has its role in ensuring that the house remains stable. Any form of interference on either of the three pillars would always bring it down. This means that the three pillars must always be protected to achieve sustainability.

Theories have been developed to help explain how these three pillars relate to one another, and how they can be supported through various operational activities of a firm (Asif et al. 2011; Han et al. 2014; Lawrence et al. 2006). The environment must be supportive for an SME’s activities in order to obtain profits. The economic pillar depends on the other two pillars of the natural environment and profitability. A society cannot exist without the support of the natural environment. The society also needs existence of business units in order to get jobs and acquire goods and services desired (Brilius 2010; Moore & Manring 2009; Theyel & Hofmann 2012; Welcomer 2011). Any form of compromise of the two pillars may render the entire system unsustainable, and this may lead to its collapse. Figure 2.2 shows the sustainability pillars as interdependent entities (next page).

Small and Medium Enterprises’ Sustainability

There are various versions of the term ‘business sustainability’. According to the complex approach, business sustainability is achieved when a business is able to align its needs and objectives with the external and internal environments’ developments while attaining a dynamic balance (Moore & Manring 2008; Pojasek 2007). Thus, business sustainability is associated with creating the value for a business with the focus on utilizing opportunities and monitoring business risks (Moore & Manring 2008; Oribu et al. 2014; Welcomer 2011). However, to achieve business sustainability, it is necessary to focus on efficient and advantageous practices that can be discussed as environmentally and socially friendly (Loucks et al. 2010; Sarma et al. 2013).

It is important to state that when a business follows fundamental norms addressing the needs of an organization and environments, it can achieve the business sustainability with the focus on the organizational culture and needs (Oribu et al. 2014; Pojasek 2007). By combining the specific business practices and initiatives to support sustainability, businesses support the principles of business sustainability associated with three pillars of sustainability (Arend 2014; Han et al. 2014). In this case, the role of the environmental initiatives on businesses’ decisions regarding sustainability is often more important than the impact of changes in the social and economic spheres (Oribu et al. 2014; Pojasek 2007; Welcomer 2011). In this context, to find the balance, organizations choose to refer to regulating activities associated with different types of sustainability, including the environmental, social, and economic areas and adapt them to the business environment (Arend 2014; Han et al. 2014).

SMEs need to shift to sustainability practices because of a range of advantages connected with the sustainable development. According to Pojasek (2007), sustainability is associated with the vision and mission of any business. Thus, as SMEs try to achieve objectives in the short- and long-term periods, they are prompted to engage in sustainability activities. Sustainability practices enable a business to meet its obligations towards stakeholders by embracing economic, social, and environmental spheres (Han et al. 2014; Moore & Manring 2009). Researchers state that the orientation to sustainability is important for SMEs because of the ability to address the social and environmental responsibilities (Hall, Daneke & Lenox 2010; Moore & Manring 2009). This approach leads to the creation of a more solid organization that can last for a long term it avoids ambiguous strategies and focuses on the clear advantages for the society, stakeholders, and environment (Han et al. 2014; Moore & Manring 2009).

Modern SMEs should be more informed, and the shift to sustainability leads to saving resources and increasing profitability. Subsequently, sustainability practices help to attain environmental sustainability, which has a positive effect on achieving SMEs’ sustainability (Theyel & Hofmann 2012; Welcomer 2011). SMEs that embrace sustainability avoid the costly rush of compliance because they are able to override the supply chain pressure and strict regulations. In addition, embracing sustainability enables SMEs to compete in new markets and have customer loyalty (Lawrence et al. 2006; Theyel & Hofmann 2012; Welcomer 2011).

From this perspective, having achieved sustainability or being oriented to the sustainable path, SMEs can operate within the industry more actively, guaranteeing their survival in the market. In this context, it is possible to rely on the long-term business success when economic, social, and environmental strategies of SMEs are perfectly balanced and interrelated (Hall et al. 2010; Sarma et al. 2013). Those SMEs that focus on sustainability create the value for their development while focusing on aligning with standards and trends (Hult 2011; Parrish 2010). As a result, more effective strategies are selected to stimulate the sustainable development, and SMEs can achieve the higher competitive advantage (Klewitz & Hansen 2014; Sarma et al. 2013).

Researchers also suggest that the important predictors of SMEs’ business sustainability are the specific dimensions of entrepreneurial marketing (Hult 2011; Parrish 2010). The reason is that such aspects of the entrepreneurs’ behavior as proactiveness, innovativeness, and resource leveraging are predictors of SMEs’ business sustainability because if the leader is active, focused on innovative approaches, oriented to managing resources efficiently, and oriented to attracting stakeholders and meeting their interests, this leader can be discussed as following the path of sustainability in order to respond to the responsibilities in the environmental and social spheres (Hall et al. 2010; Lawrence et al. 2006).

Entrepreneurial Marketing

The conceptualization of Entrepreneurial Marketing (EM) is a complex process that is based on identifying aspects of the effective marketing and practices typical for successful entrepreneurs that can be used to conceptualize EM. Although the concept of EM was proposed only thirty years ago, it is important to focus on the aspects of its development and evolution (Becherer et al. 2008; Kraus et al. 2010). Conceptualization of EM is associated with determining the components of the business success that can be used in order to discuss EM in a context of certain concepts. From this point, it is necessary to discuss EM in the context of entrepreneurship concepts and marketing concepts and with references to the progress of small scale businesses (Kurgun et al. 2011; Mort et al. 2008; Wallnofer & Hacklin 2013). Ionita and other researchers note that problems in development of EM is in the fact that the concept lies between marketing and entrepreneurship fields, and it opposes the basic principles of these fields (Ionita 2012; Morris et al. 2002).

According to Morris and the group of researchers, EM is a marketing strategy that uses innovation, pro-activeness, and risk-taking initiatives to make use of limited resources within a firm to create awareness of the firm’s brand and products within the market (Morris et al. 2002). Thus, EM integrates opposite approaches used for marketing and entrepreneurship because the nonlinear entrepreneurial thinking is the basis on which traditional marketing models are utilized in EM (Collinson & Shaw 2001; Ionita 2012; Morris et al. 2002). Hills et al. (2008) also added to the discussion of the EM development while focusing on the evolution of EM.

Thus, according to researchers, evolution of EM is promoted by SMEs because of EM’s potential for the quick progress (Hills et al. 2008; Sole 2013). When SMEs have limited resources, they utilize EM to compete in specific industries with the aim of achieving competitive advantage by increasing customers’ value (Hills et al. 2008; Kurgun et al. 2011). EM emerged from the realization of the heart of entrepreneurship and innovation to marketing (Barrett et al. 2000; Becherer et al. 2008; Mort et al. 2008; Rezvani & Khazaei 2013). EM focuses on innovation as the means to draw clients as opposed to search for customers’ needs (Martin 2009; Stokes 2000).

Discussing EM, it is important to state that there are also radical approaches to discuss EM as a full integration of marketing and entrepreneurship (Morrish 2011; Mort et al. 2008). Small business owners develop their communication tools to attract potential investors and build effective interactions with investors using the principles of EM (Morrish 2011; Wallnofer & Hacklin 2013). EM provides opportunities that enable a marketer to create the value for customers and build the customers’ equity. Furthermore, EM is very cost-effective because it relies on informal approaches to gather and deliver data. These methods help entrepreneurs to maintain competitive advantage over other competitors (Harrigan et al. 2011; Martin 2009; Rezvani & Khazaei 2013). However, not all small business owners can be categorized as entrepreneurs (Hills et al. 2008; Ionita 2012; Kraus et al. 2010; Martin 2009). Thus, EM is a complex and inefficiently defined concept that is in a constant progress.

Entrepreneurial Marketing and Traditional Marketing

Operations typical for traditional marketing take place in a constant environment, and they are oriented to meet well-defined customers’ needs. Thus, traditional marketing is based on an organizational philosophy or culture that stresses customers’ needs (Hills et al. 2008; Ionita 2012). Moreover, marketing is seen as a strategy that defines the competitive capability and survival of organizations in the marketplace. Furthermore, there is the marketing mix, which is defined by the 4Ps or 7Ps related to services marketing (Ionita 2012; Stokes 2000). In addition, marketing intelligence is important in each marketing domain because it entails the information gathering, dissemination, and response (Ionita 2012; Stokes 2000). In contrast, EM does not rely on customers’ needs for product development; rather, a product is created, and a market for it is pursued (Ionita 2012; Martin 2009; Stokes 2000).

Entrepreneurs are innovators, and they proactively design products to address an anticipated need. Unlike traditional marketing that is based on a strategy, EM is based on innovation. Entrepreneurs do not adopt the marketing mix, but instead refer to personal interaction with potential clients (Kurgun et al. 2011; Wallnofer & Hacklin 2013). Personal selling is important because an entrepreneur is able to get direct feedback about their products (Hills et al. 2008; Ionita 2012). Regarding market intelligence, entrepreneurs do not rely on formal methods for data collection; rather, they obtain feedback about their products through interaction with clients, and they are flexible to change. Table 2.1 shows the difference between Traditional Marketing vs. EM.

Table 2.1. Difference between Traditional Marketing and Entrepreneurial Marketing

Entrepreneurial Marketing Dimensions

Entrepreneurial Marketing (EM) is based on seven dimensions as shown in Figure 2.3, but for the purpose of this study, only five dimensions will be discussed as two of the dimensions will be excluded and they will not be considered in this study. The excluded dimensions are Calculated Risk Taking and Opportunity Focus. The reason is that Calculated Risk Taking is not completely associated with sustainability in small organizations because this dimension relies on making decisions in large organizations, in which the outcomes of actions are difficult to be predicted rather than in small organizations (Gaweł 2012; Rezvani & Khazaei 2013, p. 212). As a result, according to Morris and the other researchers, Calculated Risk Taking is directly associated with mitigating identified risks in mature institutions rather than with developing sustainability in small organizations (Morris et al. 2002; Rezvani & Khazaei 2013). Furthermore, Opportunity Focus also has no favorable relationship with sustainability because it is directly associated with entrepreneurship and marketing strategies in terms of determining effective marketing positions with the help of the environment scanning procedures, but this approach does not explain the connection of this dimension with sustainability (Morris et al. 2002; Rezvani & Khazaei 2013). Despite the fact that Opportunity Focus is indirectly associated with the economic aspect of sustainability, it does not relate to the social and environmental aspects; thus, it does not contribute to the purpose of this study. Since this study incorporated only five dimensions, the EM strategy can work even though the remaining two of the dimensions are not included in the framework, as according to Morris et al. (2002), not all of the seven dimensions have to be operating simultaneously in order for EM to work as it depends on the degree of these dimensions are applied at a certain point of time (Lahtinen, 2013; Morris et al. 2002). The remaining five dimensions are proactiveness, innovativeness, resource leveraging, value creation, and customer intensity that are explained accordingly.

Proactiveness

Proactiveness is a person’s behavior that has the potential to bring about the change. Entrepreneurs should be proactive to create new products and a market for them. Proactiveness has a positive effect on both individual and organizational performance (Gaweł 2012; Rezvani & Khazaei 2013). Entrepreneurs adopt proactiveness as a means of standing out from all other competitors because it entails acting in anticipation of future demands. Proactive entrepreneurs utilize market intelligence by gathering information from customers and fellow competitors on unarticulated and unmet needs of the population (Morris et al. 2002; Rezvani & Khazaei 2013). This dimension entails the identification of an opportunity and exploits the opportunity to obtain maximal financial benefits.

Innovativeness

Innovativeness depends on a search for creative, unique, and new solutions to meet customers’ needs, or solve problems (Morris et al. 2002; Rezvani & Khazaei 2013). Innovation is a driving force in EM because successful SMEs aim to improve current and past products by developing a new and different product. SMEs rely on improving current relations between firms and their customers and on generating the specific market knowledge (Becherer et al. 2008; Gaweł 2012). Innovativeness is important because it enables SMEs to gain and maintain the competitive advantage (Harrigan et al. 2011; Morrish 2011). Thus, innovativeness in EM means the use of the technological progress and experimentation to influence the improvement of products and processes (Gaweł 2012; Theyel & Hofmann 2012).

Resource Leveraging

This is an important dimension of entrepreneurial marketing that advocates for doing more with less (Morris et al. 2002; Rezvani & Khazaei 2013). Embracing this dimension enables firms to optimally utilize whatever that is available to develop a market base. SMEs work effectively when they refer to resource leveraging because it is associated with making optimal use of the limited resources (Gaweł, 2012; Rezvani & Khazaei 2013). Thus, the limit of resources demands a proactive response to ensure that the firm is still able to make profits. As a result, the focus is on recognizing resources effectively and on their choice to achieve the maximum (Morris et al. 2002; Rezvani & Khazaei 2013).

Value Creation

Value creation is an ultimate objective for each SME. If a firm is not able to create value, then its market success is under question (Gaweł, 2012; Rezvani & Khazaei 2013). Value creation is important for marketers as a process of finding new sources in order to contribute to the existing customer value. Furthermore, the value creation depends on a choice of unique combinations of resources to gain profits (Morris et al. 2002; Rezvani & Khazaei 2013). As a result, value creation is also based on the marketer’s ability to recognize and use provided opportunities in order to add value to the business progress (Morris et al. 2002; Rezvani & Khazaei 2013).

Customer Intensity

Customer intensity is a dimension that explains an entrepreneur’s efforts to attract and retain clients. This dimension also explains the focus on customer as the customer-centric relationships (Morris et al. 2002; Rezvani & Khazaei 2013). Researchers link the success to customer intensity, but the excessive focus on customers prevents developing innovation and interferes with the market equilibrium. However, marketers refer to changing customer circumstances and managing dynamic customer relationships because it is a way to the market success (Becherer et al. 2008; Morris et al. 2002; Rezvani & Khazaei 2013).

Entrepreneurial Marketing, Sustainability and Research Gaps

Previous studies in SMEs’ sustainability and entrepreneurial marketing can be divided into three groups, which are the studies in sustainability, studies in Entrepreneurial Marketing (EM), and studies in the relationship between SMEs’ sustainability and entrepreneurial marketing. The last group of studies is the smallest because there is a lack of research on the influence of entrepreneurial marketing and EM dimensions on the sustainability of SMEs (Dobni 2010; Guido, Marcati & Peluso 2011). The problem is in the fact that researchers mentioned and described some aspects of entrepreneurial marketing as important for developing sustainability in SMEs, but they did not focus on exploring the clear relationship between the variables to state that EM dimensions can influence the process of achieving business sustainability in SMEs significantly (Dobni 2010; Guido et al. 2011; Moore & Manring 2009).

The division of the previous studies in the field in groups allows the discussion of the research gap related to each important area. Past studies on sustainability, entrepreneurial marketing, and on the relationship between SMEs’ sustainability and entrepreneurial marketing are presented in three separate tables to demonstrate the research gap and are discussed in detail. Table 2.2 presents past studies in the field of SMEs’ sustainability. Table 2.3 presents past studies in the field of entrepreneurial marketing. Table 2.4 presents past studies on the relationship between SMEs’ sustainability and entrepreneurial marketing. Referring to separate tables, it is possible to analyze the aspects of sustainability and entrepreneurial marketi ng that are most discussed by researchers. The obvious gap in the research is the limited discussion of the role of EM dimensions in developing SMEs’ sustainability despite the fact that researchers mentioned proactiveness, innovation, resource leveraging related to EM in the context of the SMEs’ progress and competitive advantage (Avram & Kuhne 2008; Guido et al. 2011; Loucks, Martens & Cho 2010; Moore & Manring 2009).

Table 2.2 presents past studies in the field of SMEs’ sustainability. If Atkinson discussed SMEs’ sustainability with the focus on criteria selected to measure it, Newby, Watson, and Woodliff chose to discuss sustainability while focusing on business tendencies that can influence its development (Atkinson 2000; Newby et al. 2003). Bansal and Clelland proposed the discussion of sustainability with references to the legitimacy factor (Bansal & Clelland 2004). The role of sustainability in the process of creating the value was examined by Sull and Escobari (Sull & Escobari 2004). However, the complex analysis of the role of sustainability for the business development was proposed only by Berns and the group of researchers who developed the complex company analysis related to the issue of sustainability in order to understand the role of its pillars (Berns et al. 2009). Nkamnebe also added to the discussion of SMEs’ sustainability while focusing on the role of external pressures, and these findings were supported by Guido Marcati, and Peluso’s study because the researchers paid attention to the managers’ readiness to sustainable practices (Guido et al. 2011; Nkamnebe 2009). Thus, researchers are inclined to emphasize the importance of sustainability in enhancing the value of a business and increasing competitive advantage (Loucks, Martens & Cho 2010; Moore & Manring 2009; Starik & Kanashiro 2013).

Still, despite the presence of much research on SMEs’ sustainability and sustainability aspects, majority of the research are qualitative, and there is a lack of empirical research in the field to discuss social, economic, and environmental aspects of sustainability (Arend 2014; Parrish 2010). There is no adequate scientific evidence to state how sustainability brings about the increased value in terms of better financial performance. There is limited empirical research to examine business sustainability or sustainability as a whole (Arend 2014; Kraus & Britzelmaier 2012; Müller & Pfleger 2014). Most of the research on sustainability with regard to environmental and social perspectives has focused on large multinational firms (Berns et al. 2009; Müller & Pfleger 2014). Yet, there is insufficient scientific literature on the engagement in sustainability practices by SMEs, and how these firms operate to meet environmental and social needs (Guido et al. 2011; Müller & Pfleger 2014). In addition, there is little information on the relationships between sustainability practices, innovation, and stakeholder interaction (Avram & Kuhne 2008; Bansal & Clelland 2004). From this point, even if researchers mentioned innovation and proactiveness while discussing sustainability, they did not discuss these EM dimensions as predictors of sustainability (Avram & Kuhne 2008; Guido et al. 2011; Loucks, Martens & Cho 2010; Moore & Manring 2009). Furthermore, many of the past studies have focused on SMEs in the Western countries, and there is a limited focus on other countries (Avram & Kuhne 2008; Bansal & Clelland 2004). Hence, this is the reason why the present study aims to focus on SMEs’ sustainability in Saudi Arabia.

Table 2.2. Past Studies in the Field of SMEs’ Sustainability

Past studies on Entrepreneurial Marketing (EM) present the active discussion of EM dimensions as influential for the efficient growth of SMEs, as it is presented in Table 2.3 (Becherer et al. 2008; Beverland et al. 2007). The topic of EM was covered by Mitchelmore and Rowley, Rezvani and Khazaei, Morrish, and Mort, Weerawardena, and Liesch in their research, but the authors proposed only the review of the literature on E without focusing on its relationship to sustainability (Mitchelmore & Rowley 2010; Morrish, 2011; Mort, Weerawardena, & Liesch 2012; Rezvani & Khazaei 2013). Thus, EM provides entrepreneurs with a lot of strategies and approaches to develop their businesses because of the focus on innovation, attraction of customers, and value creation (Harrigan et al. 2011; Jones & Rowley 2009; Mitra et al. 2008). However, there is a lack of literature on the connection between entrepreneurship and sustainability and on the link between EM and sustainability, and there is a great need to understand the relationship between the environment and changes in the approaches to entrepreneurship (Bansal & Clelland, 2004; Bettiol, Di Maria & Finotto 2012; Hills & Hultman 2011). There are only indirect discussions of the relationship between EM dimensions and SMEs’ sustainability (Bettiol, Di Maria & Finotto 2012; Jones & Rowley 2009; Lawrence et al. 2006). In this context, it is also important to state that there is a lack of studies on entrepreneurial marketing dimensions and their relations to each other (Gilmore 2011; Kurgun et al. 2011; Morris et al. 2002). Therefore, there is a lack of studies on the relationship of these EM dimensions and aspects of sustainability and on EM dimensions’ correlation.

Table 2.3. Past Studies in the Field of Entrepreneurial Marketing

Table 2.4 presents past studies on the relationship between EM and SMEs’ sustainability. The number of these studies is limited because of the obvious gap in the field of research. It was highlighted by researchers that SMEs need to be proactive, innovative, and focused on leveraging resources; however, there were no studies to support the idea of improved sustainability as a result of the focus on proactiveness, innovativeness, and leveraging resources as EM dimensions (Franco et al. 2014; Kickul & Gundry 2002). The empirical research on EM dimensions as predictive factors of SME business sustainability is necessary because there are limited sources mentioning the advantages of EM dimensions to be used by SMEs to increase their competitive advantage and sustainability. Thus, there is a lack of research to discuss the links between entrepreneurship and sustainability, but the current research is important to formulate assumptions regarding the influence of EM dimensions on SMEs’ sustainability (Gawel 2012; Hacioglu et al. 2012; Sarma et al. 2013).

Table 2.4. Past Studies on the Relationship between Entrepreneurial Marketing and SMEs’ Sustainability

Past studies indicate the role of innovativeness, proactiveness, and resource leveraging for SMEs’ sustainability. These factors are indirectly discussed as predictors of the company’s sustainable development while referring to the results of the qualitative studies (Loucks, Martens & Cho 2010; Moore & Manring 2009). Nevertheless, these factors are really discussed in their relation to EM, thus, researchers did not link directly EM dimensions with the issue of sustainability despite the presence of indirect discussions. The lack of the empirical research on the relationship between EM and SMEs’ sustainability and absence of the clear discussion of the role of EM dimensions for sustainable development indicates that an additional study is necessary to determine and explain the assumed relationship between EM and SMEs’ sustainability (Gawel 2012; Hacioglu et al. 2012; Sarma et al. 2013). Thus, this research seeks to provide more insights on the topic of sustainability and relationship between EM and sustainable development of SMEs in Saudi Arabia.

Small and Medium Enterprises

SMEs are common for both developed and developing economies where SMEs play an important role in the economic growth of a country. New firms rarely start as large corporate organizations. In most of the case, new firms start as small and medium sized firms (McAdam 2000; Moore & Manring 2009). This fact means that in every country, SMEs exist with new firms entering the market while creating better value in the existing market (Motwani, Levenburg & Schwarz 2006). SMEs usually form the majority of registered firms in both developed and developing countries and employ a great number of people. However, the performance of SMEs is different in these economies. The contribution of SMEs to the national economic growth in developed countries is more than 80% of production (Brilius 2010; Guido et al. 2011; Moore & Manring 2009). Thus, the performance of SMEs in developed countries is better than their performance in developing countries (Brilius 2010; Moore & Manring 2009; Sharma 2011). This could be attributed to the fact that SMEs are the main constituents in the Western economies. Over time, traditional factors of success have been changed with other factors, such as innovation due to radical changes and increased global competition (Brilius 2010; Moore & Manring 2009). These changes have prompted the SMEs to utilize entrepreneurial dimensions with the aim to attain competitive advantage, and subsequently, sustainability.

In developing countries, SMEs are varied in the choice of products and services offered; hence, they contribute towards a diversified economy that subsequently expands industrial production. In addition, SMEs are a source of income because they offer employment to more than 50% of a developing country’s population (Bahaddad et al. 2013; The EU-GCC Chamber Forum 2010). Thus, SMEs are entities that improve the competitiveness and support the restructuring of developing countries’ economies (Alsaleh 2012; Asif et al. 2011). In developing countries, for example Africa, the poor survival and performance of SMEs are associated with weak economies; hence, these countries have a weak human and social development framework. However, SMEs have limited resources to take part in the environmental sustainability and support the green growth recognized as a strategy that promotes the national economic growth and development while simultaneously ensuring environmental sustainability (Bahaddad et al. 2013; The EU-GCC Chamber Forum 2010). The reason is that developing countries have poor policies and regulatory frameworks that negatively influence sustainability of SMEs. These poor policies influence the access to credit, fail to support markets for products, and do not resolve the lack of adequate training facilities and up-to-date technologies. This limitation in resources makes it difficult for an SME to actively take opportunities that require the use of resources in the attainment of sustainability, for example corporate social responsibility (Alsaleh 2012; The EU-GCC Chamber Forum 2010). In developing countries, therefore, it becomes difficult for SMEs to actively involve in external social and environmental dimensions.

SMEs are important for the development and growth of Saudi Arabia because SMEs form about 92 percent of businesses in the country (Alsaleh 2012; The EU-GCC Chamber Forum 2010). However, SMEs’ contribution to the country’s economy is only about 33% of the GDP, and the period of SMEs’ operations within the market is only about seven years (Alsaleh 2012; The EU-GCC Chamber Forum 2010). In Saudi Arabia, governments declare that they provide the financial support to SMEs to give them the opportunity to attain the development plans, strategic goals, and deliver high-quality goods. However, bureaucracy is a main barrier to receive the necessary support. The activities of governmental organizations are influential for starting SMEs, but they are the main obstacles in the country to develop businesses (Allurentis Limited 2013; Asamari et al. 2013). The potential of SMEs is admitted, but the government avoids supporting SMEs directly despite a range of proposed programs (Bahaddad et al. 2013; The EU-GCC Chamber Forum 2010).

Along with the government’s initiatives, commercial banks are important financial suppliers to SMEs, and the services of the accountant are a crucial element in meeting the needs of SMEs because the accountant is labelled as the ‘most trusted adviser’ (Allurentis Limited2013; Asamari et al. 2013). However, even if SMEs receive the advice on such issues as taxation, financial management and budgeting, succession, and debt administration, there is no guarantee that banks will provide credits to SMEs (Allurentis Limited2013; Asamari et al. 2013). Commercial banks avoid supporting SMEs in Saudi Arabia, and it is a barrier to the development. As a result, SMEs cannot rely on the effective use of innovation and on the efficient business planning (Alsaleh 2012; The EU-GCC Chamber Forum 2010).

Chapter Summary

Chapter II presents the discussion of the basic constructs and concepts referenced in the research. Institutional and Contingency Theories are discussed as the framework to focus on the idea of sustainability. The chapter also presents the sustainability concept supported with the discussion of the Small and Medium Enterprises’ sustainability. The definition of Entrepreneurial Marketing is also provided in the chapter. Five EM dimensions are discussed as appropriate to be studied in the research. The chapter also provides detailed discussion of the gap in the existing research on the relationship between entrepreneurial marketing and sustainability. The chapter ends with the discussion of the literature on Small and Medium Enterprises in Saudi Arabia.

Conceptual Framework and Hypothesis

Introduction

This chapter has three sections that aim to discuss and elaborate the research hypotheses. The first section entails a detailed discussion of the relationship between variables based on supporting scientific literature. In this section, there is also a brief discussion about the interaction of these variables, in terms of how one influences another. The second section is an illustration of a research framework based on the variables. The last section is a summary of the chapter.

Definition and Operationalization of Constructs

Small and Medium Enterprise (SME) Business Sustainability is defined as an ability to maintain the operations of a business over time, progressively leading to growth and development without manipulating the needs of future generations (Brilius 2010; Starik & Kanashiro, 2013). In literature, sustainability is operationalized as the management and coordination of economic, environmental, and social demands and concerns to ensure organizational survival and growth (Khan et al. 2014). The measurement of business sustainability will cover the three main sustainability pillars; social sustainability, environmental sustainability, and economic sustainability pillars as the main components of the abstract construct of sustainability. In this study, SME business sustainability is measured by using one construct, namely business sustainability that includes the three pillars of sustainability as the main objective of this study, which is to examine the business sustainability as a whole. Treating business sustainability as a construct is appropriate, provided that the link between EM and business sustainability is yet well established. At the empirical stage, it is more valuable to confirm the relationship between EM and business sustainability, thus making the further exploratory more meaningful.

Proactiveness is the EM dimension that refers to the anticipation of future demands of firms related to market opportunities and environment (Morris et al. 2002). In literature, proactiveness is operationalized as the marketing actions through which the firm redefines its external conditions to reduce uncertainty and lessen dependency and vulnerability. In this study, proactiveness is measured by adapting seven items from the work by Becherer et al. (2012)

Innovativeness is the EM dimension that refers to the mechanism of searching for creative, unique, and new products, services, solutions, technologies and processes (Morris et al. 2002). In literature, innovativeness is operationalized as the ability of an organization to come up with ideas that lead to new markets, products or processes. In this study, innovativeness is measured by adapting four items from the work by Becherer et al. (2012)

Resources Leveraging is the EM dimension that refers to the means for unrecognized resources that has not been used in the past while considering making the optimal use of the current limited resources (Morris et al. 2002). In literature, resources leveraging is operationalized with references to creative synergistic process to access resources with less, often mitigating risk through a greater use of leveraging. In this study, resources leveraging is measured by adapting seven items from the work by Becherer et al. (2012)

Value Creation is the EM dimension that refers to the ability to find and combine different and unique resources that are undiscovered in order to produce value for customers (Morris et al. 2002). In literature, value creation is operationalized with references to the business operator’s tendency to use marketing efforts and resources to discover and deliver untapped sources of value for the customer. In this study, value creation is measured by adapting three items from the work by Fiore et al. (2013)

Customer Intensity is the EM dimension that refers to ways of customer acquisition, retentions and development that explains an entrepreneur’s efforts to provide a certain level of customer investment and customization (Morris et al. 2002). In literature, customer intensity is operationalized with referring to organizational orientation in employing innovative approaches to create, build, and sustain customer relationships. In this study, customer intensity is measured according to nine items adapted by the work of Becherer et al. (2012).

Research Framework

A research framework is proposed based on literature and identified research gaps, and it is shown in Figure 3.1. The research framework shows the inter-relationships between the identified dimensions of entrepreneurial marketing and the indirect and direct effects of entrepreneurial marketing on SMEs business sustainability.

Value creation within a firm is obtained through an innovation that is subsequently associated with customer intensity in which customers give feedback based on their preferences, and this contributes to the innovation. This feedback cannot be realized without the leveraging of resources using a proactive approach. When value creation is continually achieved, a firm’s growth is sustained, as well as its competitive advantage. Customer intensity in itself is a resource that is leveraged to inform a firm about prevailing gaps that can be addressed (Anderson & Swaminathan 2011; Arend 2014; Sawhney et al. 2005). Initially, customers had a passive role and merely received the products produced by various firms. Proactiveness, innovation and resource leveraging are directly linked to value creation because the innovation of a product instigated from customer intensity or a firm’s proactiveness requires the leveraging of resources to finalize the innovation, and subsequently create value.

Hypotheses Development

The following section elaborates and justifies each relationship between the constructs and formulates the research hypotheses.

Proactiveness and Sustainability

Gawel (2012) focuses on demonstrating a positive relationship between proactiveness as a measure of entrepreneurship orientation and sustainability. This relationship is evident from the mere nature of the definition of these terms. Whereas proactiveness is an activity aimed at pursuing greater profits, sustainability is linked to efficiency and equality, which are determined by the economic, social and environmental aspects of a society (Gawel 2012; Morris et al. 2002). Proactiveness entails the decisions, processes and practices within a firm that meet not only the firm’s needs, but the needs of the larger society. Subsequently, this leads to the creation of balance between people, planet and profit.

Mitra et al. (2008) further support the establishment of this balance by discussing proactiveness in light of addressing environmental challenges with the aim of achieving equilibrium with nature. Despite much emphasis on the relationship between proactiveness and sustainability, little has been studied with regard to these variables. Mitra et al. (2008) have used the Institutional Theory to emphasize the need for proactiveness in achieving sustainability. Proactive firm practices result in an increased utilization of raw materials; thus, reduced operation costs (Mitra et al. 2008; Moore & Manring 2009). Subsequently, the firm gains a greener corporate image that increases its market share and achieves sustainability. Therefore, the following hypothesis is proposed:

Hypothesis 1: Proactiveness has a positive effect on business sustainability of small and medium enterprises.

Innovativeness and Sustainability

In the current world where businesses are competitive in order to grow and develop, innovation becomes paramount. Vanormelingen & Cassiman (2013) argued that sustainability and survival for individual firms are derived by innovation, which is a key element for economy growth and a company’s success, and therefore they show a positive relationship between innovation and sustainability. Vrontis et al. (2012) support this further by indicating the essence of innovation in achieving competitive advantage, which is crucial for the growth and development of any firm. Innovation is deemed to meet the changing demands of the customers and the larger society. Therefore, such a business is able to maintain its market share as it attempts to attract new clients, leading to sustainability and growth. In addition to Vrontis et al. (2012) support for such relationship between innovation and sustainability, Bresciani et al. (2011) further confirms that innovation is a crucial point to achieve business sustainability and therefore, companies can survive and compete in the global economy.

In the continually evolving market world, innovation remains a distinctive feature for sustainability in business. Dobni (2010) shows a positive relationship between innovativeness and sustainability by indicating that innovation is a key role in achieving escalating profit margins and growth within an organization. In the study by Arthur D in 2005, it was found that innovation is associated with increased sales and returns that enable a business to reach sustainability by engaging in activities that meet the needs of the larger society (cited in Dobni 2010, p. 49). Innovation is associated with value creation, and when a firm continuously enhances the value of its products through innovation, it is able to maintain its competitive advantage and break through to the next level. Other studies also support the relationship between innovation and sustainability. For instance, Gawel (2012) stressed that innovation involves bringing and presenting out new products, services, solutions, and technologies into the marketplace, which can be so helpful in the realization of sustainability. On the other hand, Hills and Hultman put forward that innovation as a dimension of the entrepreneurial orientation conduct is a process that is characterized as holistic, as well as complementary fundamental to achieve sustainability and success in the organization (Hills & Hultman 2011).

There is also evidence from the scientific literature that innovativeness is a vehicle to reach sustainability in the context of SMEs. For example, Gilmore (2009) indicates that the numerous undertaken processes and innovations might be necessary to obtain sustainability and future growth of small business. This can be achieved through the ability to provide target customers with latest new methods, promotions, and distributions channels, including supports that enable businesses to create additional value by having increased brand awareness and levels of efficiency. Kickul and Gundry (2002) further support this by arguing that continuous innovation in the market and the response to customers’ requirements, as well as competitors, are essential for SMEs to sustain and survive (Morris et al. 2002). Therefore, the following hypothesis is proposed:

Hypothesis 2: Innovativeness has a positive effect on business sustainability of small and medium enterprises.

Resource Leveraging and Sustainability

Wallnofer and Hacklin (2013) emphasize the positive association between resource leveraging and sustainability. These authors state that resources in the context of both internal and external resources are imperative in enhancing business survivability and sustainability. Resource leveraging can be viewed from two angles; during the initial stages of a business model, and when a business aims at gaining competitive advantage. Regardless of business stage, what a business owns is vital if external stakeholders are to collaborate with the business to ensure its growth and development (Kurgun et al. 2011; Webb et al. 2011). Dobni (2010) emphasizes that the people within an organization are drivers of innovation, but this is determined by their thoughts and actions. Despite the fact that employees within an organization are sources of value creation, alone they cannot successfully innovate because the leveraging of resources is vital. Often, an organization is not able to succeed on its own; hence, the need for resource leveraging if sustainability is to be achieved through innovation.

Innovation, unlike creativity, requires the mobilization of external partners to promote organizational learning. The innovation process is dynamic, and for a company to sustain its competitive advantage, not only it needs to develop new products, but it should also adapt reflex-adaptability and improvement on current internal capabilities (Dobni 2010; Gawel 2012; Morris et al.). Resource leveraging is positively related to sustainability because knowledge, skills and funds are important for a firm to progressively sustain its innovative environment that is imperative for the business’ survival (Gawel 2012; Rezvani & Khazaei 2013). Technology, cost structures and distribution systems are equally important in enabling a firm to maintain its competitive advantage in an incessantly changing business world. Adopting a transformational approach in a firm is vital because it helps firms to keep themselves updated with the societies and cultures as they evolve, and subsequently alter the needs of the people.

A firm that is able to maintain a working environment that is flexible to changing demands of the consumer is bound to have a higher level of innovativeness in comparison to one that separates innovation from the usual daily routine. Drawing from the environment has been a source of sustainability for most firms because the firms are able to identify and pick those elements they lack. A proactive firm is able to stay ahead of its competitors because it has the resources that enable it to predict future trends and problems that can be addressed beforehand. This gives it an upper hand because proactiveness is linked to innovation; thereby, enabling the firm to continuously produce new or better products that are preferred by customers (Sull & Escobari 2004; Rezvani & Khazaei 2013). The concept of demand stipulates that the purchasing power of future customers must be maintained to ensure that income per capita does not reduce with time. Therefore, the following hypothesis is proposed:

Hypothesis 3: Resource Leveraging has a positive effect on business sustainability of small and medium enterprises.

Value Creation and Proactiveness

The hypothesis that value creation leads to proactiveness is logical because the need to add value is associated with an opportunity that leads to development of innovative products to address the gap. A firm that is constantly seeking new ways to enhance the value of its products is deemed proactive according to Becherer et al. (2008). According to Morris et al. (2002), value creation is not only directed towards a product, but it is also geared towards the internal aspects of a business. As a result, Fiore et al. (2013) indicate that new marketing strategies that incorporate the 4Es (education, esthetic, entertainment and escapist experience) are associated with value creation. These 4Es achieve this by creating better informed customers, who give more accurate feedback that further enhances proactiveness through identification of more opportunities.

Value creation is achieved when the company continuously offers solutions to customers (Blocker et al. 2010). The ability of a firm to proactively address the latent and future needs of its customers is deemed part of a continuous value-creating and relational process, according to Beverland et al. (2007). The main focus here is the proactiveness of an opportunity; otherwise, it will not create value. The needs and perceptions of customers are continuously changing their preferences and perceptions; hence, the reason for a strong link between value creation and proactiveness (Eggert et al. 2006; Franco et al. 2014). Unless a solution is adequately proactive, no value will be derived. Therefore, the following hypothesis is proposed:

Hypothesis 4: Value Creation has a positive effect on Proactiveness practices of small and medium enterprises.

Customer Intensity and Proactiveness

Customer intensity refers to strategies and measures in place to meet customer preferences (Hauser & Shugan 1980; Morris et al. 2002). These strategies may be in various forms as various companies aim at understanding these customer preferences. Therefore, entrepreneurs engage consumers through the marketing processor in online interaction to get consumers’ views, and thereby, utilize proactiveness. Proactiveness is the ability of a company to identify and meet potential customers’ demands as indicated in various forums (Gawel 2012; Harrigan et al. 2011). A proactive approach in business is important because it creates a level of intimacy with the customers when they realize their views are appreciated and addressed, leading to sustainability as discussed earlier. Various articles and research studies indicate that there is a correlation between customer intensity and proactiveness. Customer intensity is required in the development of new products and services. Rather than providing products that have no significant value in the life of a customer, directing company’s resources to efforts aimed at identifying customers’ needs is very important. This move enables the company to develop new products/services; hence, becoming the pioneer in the market and this would mean more profits for the company (Gawel 2012; Hacioglu et al. 2012; Morris et al. 2002). Customer intensity takes various forms. In a study by Challagalla et al. (2009), proactive post sales service is associated with not only better customer-level outcomes, but also favorable supplier-level outcomes such as new product success rate.

Proactiveness allows the development and regulation of new products, processes or services ahead of any competition from another company in the market. Marketing orientation helps companies to understand the preferences and needs of their customers and thereby identifies opportunity to penetrate and generate concepts that will guide in innovation (Chen et al. 2008). The study by Hacioglu et al. (2012) revealed that customer intensity is related to proactiveness in achieving the ultimate outcome: innovation. Marketing is the avenue through which companies are able to interact with their clients. Since customers in the contemporary society expect companies to address their latent and future needs, intensifying on appropriate market strategies helps to achieve this cause. Proactiveness, coupled with intuition, liberalism, experience and immersion, is utilized by companies to focus on the unmet needs of their customers to enable them gain an advantage over their competitors. Therefore, the following hypothesis is proposed:

Hypothesis 5: Customer Intensity has a positive effect on proactiveness practices of small and medium enterprises.

Value Creation and Innovation

Literature indicates a positive relationship between value creation and innovativeness (Vrontis et al. 2012; Tanev et al. 2011). Value creation can be obtained solely within an organization, but in the contemporary market, co-opetition is embraced by firms in the value creation process (Tanev et al. 2011). While still in the competition, firms have learned to work together by working on what is already on the ground to suit the needs of the end user. As each firm tries to be better than its competitor while embracing a cooperative approach, the value of a commodity is created, and this is linked to innovation. The value of a commodity cannot be created without devising new ways to make it better. The consumer has interactively played a role in the positive relationship between these two variables (Vrontis et al. 2012; Tanev et al. 2011).

Researchers note that there is a strict correlation between value creation and innovation within the organization. On the one hand, the value creation is closely associated with collaborative innovation because of the need to focus on principles of interactivity and flexibility in the organization’s development (Sawhney et al. 2005). Thus, by focusing on value creation and choosing cooperative strategies, entrepreneurs become able to promote innovation because of the possibilities to use more resources, share responsibilities, and attract more stakeholders (Romero & Molina 2009). On the other hand, the focus on the value creation is the guarantee to promote innovation in the company (Bowonder et al. 2010).

From this point, the aspects of value creation and innovativeness are closely related to each other. According to Dobni, only those organizations that are value creators can be discussed as innovative organizations because the value creation is the necessary condition to achieve innovation in the field of marketing (Dobni 2010). Moreover, innovation strategies used by entrepreneurs often include the approaches to stimulate the value creation (Bowonder et al. 2010). Therefore, the following hypothesis is proposed:

Hypothesis 6: Value Creation has a positive effect on innovativeness practices of small and medium enterprises.

Customer Intensity and Innovation

Theoretical and empirical studies have shown a possible relationship between customer intensity and innovation. Empirically, a study by Hacioglu et al. (2012) conducted in Turkish SMEs shown that there is a significant relationship between customer intensity and innovation, resulting and confirming that Turkish firms do allocate a great importance to consumers to influence higher innovative performance.

In the current digital world, consumers are able to play a great role in the innovativeness of firms through the Internet; thereby creating a positive relationship between the two variables. There are instances when a consumer is asked to comment or give feedback about a product after purchasing or viewing it online. Despite the fact that there is a lot of talk about the use of the Internet in engaging customers in innovation, there is minimal research on the same. Initially, the customers had a passive role in product development and innovation. However, in the current society where competition is rising, firms aim at meeting the needs of a diverse number of clients by engaging them in interactive communication about current products in the market (Hacioglu et al. 2012, Sawhney et al. 2005). Customer intensity continues to increase as more social networks are created, and in these networks, customers freely give their views about particular products and services. This information is very essential to a firm because it could be a win or loss situation depending on the feedback given. Companies fear tainted reputation; hence, the reason for actively involving clients in innovation and value creation of commodities (Hacioglu et al. 2012; Kickul & Gundry 2002; Morris et al. 2002).

The Internet may be the salient mode of communication between the firms and their customers; hence, there is a need to explore if firms are utilizing other interactive channels. In addition, evaluating the effectiveness of these channels is vital in comparison to the Internet to determine the difference in intensity and coverage. In addition, there is a need to determine if the customer participation increases when the firms utilize clients’ feedback to improve the delivery of products and services. Most companies are taking their business online (Kickul & Gundry 2002; Sawhney et al. 2005). These online services at times have a live chat window, where a customer can freely communicate with a representative from the company.

The internet is an efficient mechanism that enables a company to reach out to as many clients, and obtain as much feedback, as possible. When a company installs the right environment that continuously supports innovation, then such a company is able to meet the emerging needs of its consumers. The availability of a company representative who can readily answer queries from clients creates a feeling of trust and commitment to that particular company (Sawhney et al. 2005). Customer involvement in the innovation process is termed as an external resource. The customer is the one who determines the feasibility of a particular innovation. Tanev et al. (2011) support this by indicating that innovative ideas that are to generate new products and services can be achieved by allowing customers to participate and get access to information, resources, assets and processes at certain points across the value network of the company. Therefore, the following hypothesis is proposed:

Hypothesis 7: Customer Intensity has a positive effect on innovativeness practices of small and medium enterprises.

Value Creation and Resource Leveraging

According to Tanev et al. (2011), there is a correlation between value creation and innovation because value creation occurs when a new approach/design of a product and service emerges, and this subsequently leads to the development of innovative approaches that predict the implementation process. Hence, the need to add value to a commodity leads to the search for new ways of creating or adding value to a commodity. There is a positive correlation between value creation and resource leveraging because in every business venture, there is always the merging and use of resources so that value can be created from the product or service that these resources generate (Chen et al. 2008; Sull & Escobari 2004). Despite the fact that there is recent emphasis on the need to create relationships between businesses in order to realize the goal of innovation, few businesses have done this. Value co-creation stems from the needs of the consumer, which encourages the firms to enhance the value of a present commodity.

It is necessary to understand the willingness of firms to communicate and to obtain accurate data regarding the attainment of portfolio resources in value creation. Firms are not willing to leak their internal know-how, yet this leverage requires some level of interaction that inevitably requires some trade-offs for the sake of attaining a greater cause (Kurgun et al. 2011; Sull & Escobari 2004). Leveraging resources has been suggested as an ideal approach to ensure sustainability of firms in terms of revenue growth, making profits and thriving in the competitive business world. Sull and Escobari (2004) approach the theory of resource leveraging differently by emphasizing that a company should create its own valuable resources that cannot be duplicated in an open market.

According to Wallnofer & Hacklin (2012), the first phases of a business do not solely rely on emphasis on customers’ needs; rather, it requires the involvement of external partners, who greatly contribute towards the realization of value creation of the business. A new business requires a lot of resources in order to create notable value through unique products/services. As a beginner, a business should categorically indicate how it would create value. On a different note, Wallnofer & Hacklin (2012) discuss that investors will not only look at the business models, in most cases, but also on the characteristics of the founding team, and these are revealed through interactive communication. This being the case, it follows that resource leveraging is important in the creation of value even for new ventures, but from a different perspective in comparison to a business that is competitive in the market. It is also argued that firms can succeed in the market by forming their own resources that help them to create value (Kraus & Britzelmaier 2012; Kurgun et al. 2011). Hence, for such relationship, it can be argued that there is a positive correlation between the two variables. Therefore, the following hypothesis is proposed:

Hypothesis 8: Value Creation has a positive effect on resource leveraging practices of small and medium enterprises.

Customer Intensity and Resource Leveraging

It is important to note that customer involvement is a resource in itself that drives a firm towards innovation. However, customer intensity has a positive relationship with resource leveraging. Information from clients helps business identify necessary resources required for the attainment of improvement/evolution/creation of a product. Businesses are able to succeed by building strong relationships with their clients, and thereby, leveraging resources that help to meet the preferences of these clients. In a case study by Lahtinen (2013), the firm is ready to risk resources in a bid to meet customer preferences and demands. In this study, customers are interested in the heritage of firms, and the firms are willing to risk it all to meet project and customer preferences with the aim of improving the credibility of the firm. Sawhney et al. (2005) indicate the essence of a reliable platform where customers can communicate directly with the company representative. Sawhney et al. (2005) indicate two case studies where companies have used the Internet to develop mechanisms that engage customers in production and market testing. Because of this, businesses are willing to utilize all their resources to ensure that customers are satisfied (Kraus et al. 2010; Sole 2013). The only way to know this is to create a platform that supports interaction with customers. Setia et al. (2013) highlight the example of Wachovia bank that resolved to a sundown rule in ensuring that its clients’ complaints were resolved almost immediately. Setia et al. (2013) indicate that companies are adopting the latest technologies to ensure they meet their customer demands in the most efficient manner.

Sull & Escobari (2004) highlight that knowledge embedded in organizational processes is a valuable resource that can help create value within an organization. As indicated by Chen et al. (2008), this knowledge is obtained from information given by clients through an appropriate channel, for example, the Internet. However, there are few studies that indicate the efficacy of these feedbacks from clients, as well as other mechanisms used by firms to get information from clients besides the Internet. Nonetheless, the expertise of the staff is equally important (Sull & Escobari 2004; Wilden et al. 2013). The staff team, who is charged with the responsibility of addressing customer’s interests, should be well-equipped with the right hands-on skills to address these concerns; otherwise, efforts to attain success may be ineffective.

In recent times, customer intensity is an invaluable element of a successful business. In an effort to ensure that the business stays close to the customer, it pulls all its resources, processes and activities together in a bid to be ahead in the acquisition of customer-focused performance. Literature indicates that customer intensity is more important than the profit margins received because it enables a business to maintain superiority over its competitors. Therefore, the following hypothesis is proposed:

Hypothesis 9: Customer Intensity has a positive effect on resource leveraging practices of small and medium enterprises.

Chapter Summary

This chapter has discussed the relationship between the main variables for this study. Specifically, selected entrepreneurial marketing dimensions namely value creation, customer intensity, proactiveness, innovativeness, and resources leveraging and SMEs business sustainability have been discussed. The hypothesized relationship between the variables is explained and justified based on relevant theories and supported prior empirical studies. Furthermore, at the end of each section, the hypotheses to be tested for this study are formulated. Ultimately, this chapter introduced the hypothetical framework of this study.

Research Methodology

Introduction

This chapter contains the methodological procedures that will be used to test the research model and hypotheses. It also discusses the research design, instruments, pilot test, sample, data collection and analytical procedures in detail. The purpose of this chapter is to discuss the appropriate methods that will be used to test the research model and hypotheses with reference to the stated research objectives.

Research Design

It is suggested that the study should follow the quantitative research paradigm, as the focus of the research is not on the generation of the data that will be further transformed into usable statistics, but on gaining the understanding of what facilitates the development of sustainability within SMEs.

Descriptive Research Design

Descriptive research design is a specific study that is characterized by the collection of the observational information that can represent the participants of the study, their visions, and attitudes without changing them. From this point, descriptive research design is based on depicting or describing participants in relation to different concepts utilized in the study. Descriptive research design is observational in its nature, and its main form is a survey that can be conducted with the help of an interview (Creswell 1994, Creswell 2009; Holton & Burnett 1997). Descriptive research design is effective to be used for the current study because it is helpful to answer the research questions on what effects do EM dimensions have on sustainability of SMEs. Being involved in the descriptive study based on a survey, participants are able to present their visions of effects of EM dimensions on sustainability of SMEs.

Quantitative Survey

Surveys are usually based on the use of questionnaires in order to interview participants. Quantitative surveys are characterized by the quantitative analysis of the information collected with the help of the survey (Neuman 2003; Sekaran 2003; Stevens 2009). Despite the type of information collected during the interview procedure, this information is adapted to be analyzed with the help of the tools of quantitative analysis. One of such approaches is the use of Likert scales (Neuman 2003; Sekaran 2003; Stevens 2009). Quantitative survey is appropriate for this study because the purpose of the research is to determine the meaningful relationship between EM dimensions and the SMEs’ sustainability (Creswell 2009; Neuman 2003; Sekaran 2003; Stevens 2009). Furthermore, the focus on the quantitative survey is important to explain whether there is a numerical support to the idea that EM dimensions are predictors of the SMEs’ sustainability.

Cross-Sectional Study

The cross-sectional study is important for the collection and analysis of the information related to the field of economics. Researchers usually use cross-sectional studies in order to collect the data that is relevant to the concrete time period or time point. It is important to refer to cross-sectional studies when it is necessary to collect and analyze the data within the actively changing field or refer to the data that is important at the concrete stage of development (Creswell 2009; Neuman 2003; Sekaran 2003; Stevens 2009). The approaches used in cross-sectional studies should be applied to the current research because of the necessity to focus on the managers and leaders’ perceptions of the current state of their businesses regarding the idea of sustainability (Creswell 2009; Neuman 2003; Stevens 2009). In this context, the cross-sectional study is effective to represent the actual information characteristic for the certain point of the SMEs’ sustainable development in order to conclude about the general progress.

Measurement and Instrumentation

In order to arrange the factors in accordance with their effect on the sustainability rates within a company and come up with the theory that would help enhance sustainability in SMEs, the researcher will have to deploy certain tools, such as questionnaires, into the study aside from the general research conducted while analyzing the existing sources. Specifically, a major survey encompassing the key areas of the research variables will be designed so that the analysis of an organization’s capacity could be conducted.

The variables involved in the current study will be measured with the scale adopted and adapted from previously established scales and have been tested in some past empirical research. Basically, this study intends to examine the effect of EM dimensions on SMEs’ business sustainability. Therefore, sustainability and EM dimensions will be measured in order to achieve the aim of this study and to answer the questions under investigation. With regard to sustainability measures, several areas should be covered in order to assess the business sustainability practices in SMEs. Economic, social, and environmental pillars that sustainability holds on are the main aspects to be measured.

Specifically, the scale to measure economic sustainability is adapted from Khan, Dewan, and Chowdhury (2014); as the items had acceptable reliability with Cronbach’s alpha value of more than 0.90. Similarly, social sustainability is measured using four items adapted from Khan et al. (2014). The items are reliable with Cronbach’s alpha value of 0.90. Additionally, environmental sustainability is measured using four items adapted from the study of Khan et al. (2014). The items captured high reliability according to Cronbach’s alpha with a value of more than 0.90. The details of measurement scale of business sustainability are presented in Table 4.1.

Table: 4.1 Measurement of Business Sustainability

Entrepreneurial marketing is composed of five main dimensions. The measurement scale for each dimension is also adapted from previous research works. To illustrate, proactiveness is measured using seven items adapted from the study of Becherer et al. (2012). Similarly, innovativeness is measured according to four items adapted from the same study. To measure customer intensity, this study adopted nine items from Becherer et al. (2012) to fit the context of the present research. Moreover, value creation is measured using three items adapted from the study of Fiore et al. (2013). All the measurement scales of the four dimensions mentioned above had acceptable reliability with Cronbach’s alpha of more than 0.7. Finally, the measurement scale of resource leveraging is adapted from the study of Becherer et al. (2012). Seven items are used to measure these dimensions with the overall Cronbach’s alpha of 0.62, which is considered acceptable. The measurement scales of entrepreneurial marketing are presented in Table 4.2.

Table: 4.2 Measurement of Entrepreneurial Marketing

Questionnaire Design

This study uses a questionnaire instrument for collecting data from respondents. The first section of the questionnaire deals with questions related to sustainability. In this research, sustainability consists of social, economic, and environmental items of measurement. All of these three dimensions will be measured on a six-point Likert scale ranging from ‘1’ as “strongly disagree” to ‘6’ as “strongly agree”, with reference to the scale of measurement adapted from Khan et al. (2014).

The next section deals with questions about entrepreneurial marketing that are measured in terms of five dimensions: proactiveness, innovativeness, resource leveraging, customer intensity, and value creation. Similarly, the dimensions will be measured on a six-point Likert scale ranging from ‘1’ as “strongly disagree” to ‘6’ as “strongly agree”, a consistency in terms of scale of measurement.

The third section includes the demographic profile of respondents. The questions included in demographic profile are selected with references to studies at firm level. Literature indicated that the study at firm level is necessary to include questions on demographics of respondents regarding their gender, age, educational level, social position, and working position (Fiore et al. 2013; Tambunan 2008; Urban & Naidoo 2012). In the context of SMEs, it is also important to include questions on a company’s size in terms of the staff number (Choi & Yu 2014; Sarma et al. 2013; Urban & Naidoo 2012). These questions serve to understand the competence of managers and leaders as well as the professional background in relation to their approaches to develop SMEs and use EM techniques. Therefore, this research includes these questions in the last part of the questionnaire.

For confidentiality matter, a cover letter will be attached to each questionnaire mentioning that the data collected shall be kept confidential and will be used for academic and research purposes only. Examples of using questionnaires are presented in several previous studies where self-administered survey questionnaires were used to collect the data from SMEs owners and managers such as Abdullah et al. (2014); Ahmad (2012); Ayeyemi (2013); Shalaby (2010); Sadi and Iftikhar (2011); Sivakumar and Sarkar (2012); Danish and Smith (2012); and Hacioglu et al. (2012).

Sampling Design

Sampling Population

The importance of sorting out of the target population of a study cannot be underestimated. The target population is the element of study or unit that helps the researcher to collect information to achieve the purpose of the study. In other words, population is a collection of elements that the study is interested to examine (Neuman 2004). Almost all scientific methods of research obtain their information from respondents who are the people who provide information and they are called population. Population is defined as a group to which the results of the study are intended to apply (Sekaran 2003).

In this study, the targeted population is Saudi SMEs. According to Al-Mahdi (2010), there are several other reasons that encouraged our interest towards researching SMEs. Firstly, SMEs represent nearly 95% of the whole number of enterprises in Saudi Arabia, where majority of them are family businesses. Among this number, more than 1,100 SMEs were sponsored and supported according to the Kafala program started in 2006 to finance SMEs in Saudi Arabia (Saudi-US Relation Information Service 2011). Thus, the number of SMEs increases actively in the state. The second reason is the absence of empirically tested strategic intact to explain entrepreneurial strategies of SMEs in Saudi Arabia. Finally, there is a need for more research of entrepreneurship practices outside the USA and covering developing countries.

The unit of analysis is the major entity that is being analyzed in a study when measuring variables. Managers of SMEs sector in Saudi Arabia are the unit of analysis for this study. This study employs a cross-sectional survey for data collection. The collected quantitative data will be used to test the hypotheses and research framework. The elements of the population indicate that a whole group of people, events, or phenomena of interest for which the researcher desires to draw inferences relies on sample statistics (Sekaran & Bougie 2010). The study will invite managers who are currently working in Saudi SMEs to participate in this study.

It is important to include the population as diverse as possible so that the study can be thought as trustworthy and its results are credible instead of focusing on controlling demographic factors such as age and gender (Astrachan et al. 2014; Money et al. 2012). From this perspective, it is relevant to interview CEOs and senior managers because these persons are responsible for the decision-making in SMEs, and they can discuss the company’s strategy regarding sustainability and EM. The similar approach is used in previous studies on the development of SMEs in Saudi Arabia (Abdullah et al. 2014; Alsaleh 2012).

Sampling Technique

Traditionally, there are two major sampling techniques; probability and non-probability sampling techniques. Probability sampling is the type of sample in which the target population has a known chance of being selected that is above zero; whereas the non-probability sampling is the method in which some members of the target audience have no chances of being selected (Creswell 2009; Sekaran 2003). This study needs to implement the probability sampling technique because of the necessity to guarantee the equal opportunity for selection of participants and avoid possible bias (Creswell 2009; Sekaran 2003). At this stage of selecting the sample population, only the basic knowledge about the target population is required. The focus on probability sampling is important to make the research results credible because of the high representativeness level of the selected sample population.

In drawing a sample from SMEs in Saudi Arabia, it is necessary to make an SME sampling frame that includes managers of SMEs in the country. Thus, the frame will include the enumerated list of names of SMEs’ managers from Saudi Arabia. Accurate information on the company and position of a person will also be included in the frame. Simple random sampling will be used as the probability sampling technique at the next stage of selecting the sample population to participate in the study. Simple random sampling is based on the selection of participants by random methods from the prepared SME sampling frame (Creswell 2009; Sekaran 2003). It is appropriate to use computer software for random selection. Random sampling as a type of probability sampling will be used because it is necessary to guarantee that all the persons invited in the study have equal chances to participate in it in order to avoid sampling and systematic bias (Creswell 2009; Sekaran 2003). Based on the random selection, 200 managers in Saudi Arabian SMEs will be selected as the desired number of survey respondents from the prepared SME sampling frame.

The types of SMEs that are selected for the study include SMEs operating in the fields of Manufacturing, Retail/Wholesale, and Services. These types are selected because SMEs operating in these spheres represent the majority of all SMEs developing in Saudi Arabia, and it is important to compare the differences in responses of managers working in these industries to discuss the prospects in the SMEs’ development (Becherer et al. 2012; Shalaby 2010). As a result, while focusing on such industries as Manufacturing, Retail/Wholesale, and Services, it is possible to conclude about the overall situation in the sector of SMEs in the country (Alsaleh 2012; Becherer et al. 2012; Tambunan 2008; Urban & Naidoo 2012). In addition, the appropriate sample frame that needs to be used in the study includes the companies that are registered in the Chamber of Commerce in the Eastern, Central, and Western region of Saudi Arabia (Becherer et al. 2012; Shalaby 2010). The reason is that these companies are able to represent the level of competitiveness and sustainability in the sector.

Sample Size

Determining sample size and dealing with non-response bias is essential, and a common goal of survey research is to collect data that represents the population. In addition, researchers have suggested that 40 is the minimum amount of samples allowed for a quantitative research used in Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis (Editorial 2012; Editorial: Partial-least Squares 2013; Editorial: Partial Least Squares Structural Equation Modeling 2012). When research is based on an individual unit of analysis, and the population of the study is of a large size, it is recommended to employ a common rule-of-thumb. Accordingly, it has been suggested by the rule-of-thumb that a sample size of the study should be 10 respondents or more for each formative indicator of a scale, or might be 20 respondents or more for each arrow directing to certain latent variable (Henseler et al. 2009). Therefore, since the arrows for each direct link between the variables are 9, the total sample size will be 200 respondents from managers in Saudi SMEs are within the acceptable range.

Data Collection Procedure

This study employs a self-administered cross-sectional survey to collect the data from respondents once in answering research questions. In this study, a questionnaire survey method will be administered to respondents to collect relevant data from related managers and owners in regard to:

1. SMEs’ sustainability,
2. entrepreneurial marking dimensions.

The survey instrument has to be tested before collecting the final data by the researcher. A pilot test will be conducted prior to final data collection.

Pilot Test

The early version of the questionnaire is going to be piloted so that the key instrument of the study could be tested for its efficiency. To be more specific, the questionnaire will be handed to randomly selected managers of SMEs. This is to test the structured questionnaire and research instrument to ensure corrective measure (if needed) will be taken.

The pilot test with real respondents also addresses the need to rephrase statements with regards to differences of cultures and languages in Saudi. As the instrument employed in this study was developed based on the Western culture, this might need minor improvement with respect to the Middle Eastern culture. Therefore, the instruments will be pilot-tested in order to check the validity of it appropriateness to the Saudi context prior to the actual data collection.

The pilot study will assess the reliability of the measures and ensure that the respondents understand the survey questions without difficulties. The pilot study will also assess the sensitivity of the items in order to ensure that all the survey items are appropriate. Since the instruments adopted and adapted for the present survey were originally developed in English, however as this study will be conducted in Saudi Arabia where people speak the Arabic language, therefore, English scales will be translated into the Arabic language, and then translated back into English language by two experts in both (English, Arabic) languages in order to ensure the exactness and accuracy of the translation (Sadi & Iftikhar 2011; Shalaby 2010)

Data Analysis

The data collected in this study will be analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM), where relations between constructs that are represented with the help of SEM are measured with references to partial least squares (Guderan et al. 2012; Hair et al. 2011). SEM is often used to examine relationships between constructs because SEM is designed to operate multiple related equations (Guido et al. 2011). As a result, the data can be analyzed accurately. In this context, it is appropriate to use the partial least squares approach to SEM in order to achieve more credible results as PLS is one of the most efficient strategies for carrying out quantitative analysis (Astrachan et al. 2014; Henseler 2012, Noor 2012). The PLS approach is discussed by researchers as effective to be used with references to SEM due to its ability to allow “reflective and formative computations with respect to the measurement of latent variables” (Guderan et al. 2008, p. 1238). PLS-SEM is more appropriate for the current study than covariance-based SEM because it is rather difficult to address all the requirements of covariance-based SEM during the research (Astrachan et al. 2014; Becker et al 2012; Hair et al. 2011; Hair et al. 2012). As a result, it is more relevant to employ PLS-SEM in the study due to restrictions regarding the distribution of data and sample size.

PLS-SEM is efficient to be used for the analysis of the data in the study because it is usually used for small sample sizes when it is necessary to predict or explain the discussed target constructs. PLS-SEM is considered by researchers as the variance-based approach to SEM that allows the use of available data in order to minimize the possible error and maximize the value (Hair et al. 2011; Ringle et al. 2012). As a result, PLS-SEM can be used for examining not only relationships between constructs but also relationships between constructs and used measures in order to provide the complete data analysis and contribute to the purpose of the research. Thus, according to recent studies, PLS-SEM allows focusing on objective results and adds to the significant accuracy in relation to the parameter estimation (Editorial: Partial Least Squares 2012; Editorial: Partial Least Squares: The better approach to structural equation modeling 2012). Jakobowicz and Derquenne and other researchers stated that PLS as a tool for measuring the relationships between the research variables is rather perfect for a quantitative study design (Hair et al. 2012; Jakobowicz & Derquenne 2007; Rigdon, 2012). Therefore, PLS-SEM is appropriate to be used in the study in order to identify the relationships between the variables and examine the relationship between entrepreneurial marketing and the concept of sustainability.

Research Schedule

This research will be conducted with reference to the planning and activities presented in Table 4.3. The revision of the proposal and the submission for proposal defence is planned to be completed in January 2015. The revision of the questionnaire and data collection will be completed before the end of April. The initial data screening is planned to be conducted in April and May 2015. Further analysis of data will be started in May 2015 and should be completed in the same month. Thus, the writing of results and findings will be started at the end of May 2015, and it will be completed in June 2015. The preparation of the completed dissertation is planned to be conducted in July 2015. In July and August 2015, the dissertation will be reviewed by the supervisor. The work on revising the dissertation and the final variant will be submitted in September 2015.

Table 4.3. Research Planning and Activities Schedule

Chapter Summary

This chapter had discussed the research methodology that will be used in this study, and focused on the research design, measure of constructs, population and sample, data collection procedure, and analytical procedures. The present study is proposed to examine the predictive effect of EM on SMEs’ business sustainability.

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Appendix A

Construct Measurement

Appendix B

Questionnaire

Dear Sir/Madam,

You are invited to participate in an academic research study on entrepreneurial marketing and business sustainability. The purpose of this study is to secure your opinion on the role of entrepreneurial marketing in business sustainability of Small and Medium Enterprises (SMEs) in Saudi Arabia.

The result of this study will provide some guidance for business practitioners to clearly understand the effect of entrepreneurial marketing on enhancing the business sustainability of SMEs. The findings will provide useful information with regards to entrepreneurial marketing strategies that would potentially contribute towards SMEs’ sustainability, especially in the context of Saudi SMEs. Since the survey is anonymous, responses will not be linked to any individual. This questionnaire should only take around 10-15 minutes to complete.

Thank you for your cooperation and the time in completing this questionnaire.

Yours faithfully,

Part A: Small and Medium Enterprises’ Sustainability

For the following statements, please indicate your degree of agreement by circling a number between 1 and 6.

Part B: Entrepreneurial Marketing

For the following statements, please indicate your degree of agreement by circling a number between 1 and 6.

Part C: Background Information

Please tick (√) an appropriate box to indicate your answer.

Thank you for your assistance.