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LITERATURE REVIEW SAMPLE SERIES

NO. 1

“JM Cadeaux (1997), “Counter-revolutionary Forces in the Information Revolution”, European

Journal of Marketing, 31, 11/12, 1997, pp. 768-785”

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July 2014 updated

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Market Transformation

Cadeaux argues that market transformation, which is “continually subject to

redefinition”, is strongly under the influence of entrepreneurial actions (p.769). I agree that

market transformation is more pronounced in some markets such as telecommunications,

financial services and FCMG, than others. Those markets are often highly competitive and

characterised by short product life cycles, rapid technology adoption and innovation-driven.

And it is common to find empirical evidence that entrepreneurial actions are exhibited in those

markets.

But how should we account for those markets that exhibit infrequent or almost no market

transformation? Can we explain this phenomenon by a lack of entrepreneurial actions?

Lumpkin and Dess (1996) define “entrepreneurial orientation” as consisting of five elements:

autonomy, innovativeness, risk taking, proactiveness and competitive aggressiveness.

Entrepreneurial orientation can be considered as a pre-requisite of any type of entrepreneurial

actions in an organization. In light of Lumpkin and Dess’s definition, it is likely that Cadeaux

has addressed three of these elements in his paper: innovativeness, proactiveness and competitive

aggressiveness. In my view, the treatment of entrepreneurial actions would be more

comprehensive if we would consider the other two elements: autonomy and risk taking.

Regarding risk taking, an organization could give up its entrepreneurial actions because the

“strategic choices” are perceived to be risky. Regarding autonomy, organization could give up

its entrepreneurial actions because there is limited freedom within the organization to support

them. As a result, the reason that we do not see outward entrepreneurial actions from some

markets or industries is because they are masked or inhibited.

Lambkin and Day’s Ecological Model

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In relation to Lambkin and Day’s model, Cadeaux argues that customers should not be

treated as “food” of the “hungry competitors” where they would lose their partnership status in a

market exchange relationship (p.773). I can understand Cadeaux’s concerns but there may be an

explanation in Lambkin and Day’s model. Their model proposes that the rate of change of the

competitor “population” (dN/dt) is a function of the carrying capacity of customers, which poses

a limit on the number of competitors.

In an ecological setting, animals compete against others for food to survive. As food is

gradually consumed up, animals that cannot adapt to food shortage will eventually perish. Thus,

the number of animals is a function of the food source. By the same token, if we apply the

ecological setting to a market environment, competitors would complete against others for

“customers”, whose numbers (so-called “channel capacity” in Lambkin and Days’ model) would

impose a limit on the number of competitors (so-called “population”). Though Lambkin and

Day’s model is rather crude and simplistic, it might be justified.

Drivers of Market Transformation

Cadeaux (1997) argues that entrepreneurial actions, not “information intensity”, are the

prime drivers of market transformation that shape the “markets of products, customers and uses”

(p. 783). According to Cadeaux, though “information assets” and “information exchange” have

become important factors in market transformation, they should be considered as outcomes, not

determinants, of market transformation. He also contrasts high-value information, which is

suitable for making “strategic choices”, and ordinary information, which is merely used for

“marketing mix actions”.

I agree with Cadeaux that not all information is appropriate for making “strategic

choices” but I argue that entrepreneurial actions by themselves cannot be the sole driver of

market transformation. I take the view that both entrepreneurial actions and “information

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intensity” are needed to produce any resultant effect in market transformation. Porter (1985)

discusses the impact of information revolution in three areas: it changes industry structure and

hence the rule of competition; it creates competitive advantage by giving companies new ways to

outperform their rivals; it spawns new businesses. It is therefore critical for an organization to

collect, analyse, review and process high-value or strategic information rapidly and proactively

in order to be competitive. Business functions within an organization should tap into

“information assets” that reside within and act upon them swiftly in order to gain competitive

advantage in the market. “Information assets” are continuously generated, deployed and re-

generated as part of the organization learning process. Consequently, new “information assets”

that are generated at various stages of a business process can instantly be utilized by the same or

other business processes. “Information intensity”, as a measure of the rate that “information

assets” are produced, cannot simply be considered as having significance either as input or

output of market transformation. Glazer’s claim that “the greater the information intensity of a

firm, the shorter are its products’ life cycles” (Glazer 1991) is hence not entirely true either.

Reference:

Glazer, R.M. 1991. Marketing in an Information-Intensive Environment: Strategic Implications of Knowledge as an

Asset, Journal of Marketing, 55 (October), 1-19.

Lumpkin, G.T., and Dess, G.G. 1996. Clarifying the entrepreneurial orientation construct and linking it to

performance. Academy of Management Review 21(1):135–172.

Porter, M., and Millar V. 1985. How information gives you competitive advantage. Harvard Business Review July-

Aug:148–174.