Ja. Pearce et Sc. Michael, MARKETING STRATEGIES THAT MAKE ENTREPRENEURIAL FIRMS RECESSION-RESISTANT, Journal of business venturing, 12(4), 1997, pp. 301-314
The recession of 1990-1991 adversely affected nearly every industry in
the United States, and entrepreneurial manufacturing firms were among
those hardest hit by the recession. The failure rate among this group
by mid-year 1991 had risen 37% from the previous year. Thus, recessio
ns pose a serious threat to the survival of entrepreneurial firms. Und
erstanding how the business cycle influences performance and what stra
tegies are effective in such turbulent rimes has practical value for m
anagers of entrepreneurial firms. In this paper we report a large-scal
e empirical research study involving subjective and financial informat
ion from 118 publicly traded U.S. manufacturing firms. The participati
ng firms are involved in technologically demanding and highly innovati
ve industry segments: Industrial and Computer Equipment; Electrical Eq
uipment and Components; and Measuring Analysis, and Control Instrument
s. None of the firms has achieved a market share of more than one half
of one percent (< 0.5%). The goal of the study was to determine the c
omponents of a marketing strategy that enabled a firm in these industr
ies to withstand the negative financial consequences of a recession. W
e find that, in these industries, a company's marketing strategies pre
ceding a recession strongly impact the extent of economic downturn on
the firm, and influence its odds of a timely and complete recovery. Ou
r specific prescriptions follow: First, maintain marketing activities
in the core business as assurance against recession. Increasing sales
and advertising, increasing breadth of production, and increasing geog
raphic coverage improve performance during both the peak and the contr
action of the business cycle. Second, during the peak period, cautious
ly expand with an emphasis on marketing efficiency. Increasing the num
ber of channels of distribution and cutting price have a negative effe
ct unless accompanied by sales-force performance measurement. A simple
emphasis on incentives and efficiency alone hurts a firm as a recessi
on hits. All of these prescriptions run counter to existing views that
suggest that recession simply requires cutbacks and retrenchment. Rec
essions seem to be different from other threats to firm viability, and
marketing activities appear to help pull the firm through a macroecon
omic downturn. (C) 1997 Elsevier Science Inc.