perceived environmental turbulence and its effect on selected entrepreneurship, marketing, and...

Perceived Environmental Turbulence and Its Effect on Selected Entrepreneurship, Marketing, and Organizational Characteristics in Industrial Firms

Duane Davis University of Central Florida

Michael Morris University of Central Florida

Jeff Allen University of Central Florida

Entrepreneurship and marketing are approached as proactive corporate responses to an increasingly dynamic, threatening, and complex external environment. Both repre- sent organizational orientations built around creativity, innovativeness, flexibility, and risk-taking. A conceptual model is proposed relating the levels of entrepreneurship, marketing activity, and marketing-related structure of a firm to the degree of perceived environmental turbulence con- fronting the firm. Results of a survey involving personal interviews with managers in 93firms representing six industries are reported. Turbulence is found to have a significant causal impact on both the levels of entrepreneurship and the marketing orientation of the firm, but not on structural variables.

INTRODUCTION

In recent years, emphasis has been placed on the need for managers in medium and large-sized firms to adopt an en-

Journal of the Academy of Marketing Science Volume 19, Number 1, pages 43-51. Copyright �9 1991 by Academy of Marketing Science. All rights of reproduction in any form reserved. ISSN 0092-0703.

trepreneurial orientation (Brandt 1986; Drucker 1985; Kao 1989; Zeithaml and Zeithaml 1984). This refers to a re- newed focus on the creative, risk-taking characteristics that typify many start-up ventures, but which are resisted in larger organizational structures. The entrepreneurial firm achieves competitive advantage with a continuous flow of product, service, and process innovations.

Considerable attention has also been given to the need for firms to become more market-driven and customer-oriented (Canning 1988; Deshpande and Webster 1989; McNamara 1972; Webster 1988). This is the essence of the marketing concept. Anecdotal and empirical evidence has been produced which suggests a positive relationship exists between company financial performance and the amount of emphasis placed on user requirements and customer satisfaction (Lusch and Laczniak 1987; Cooper 1979; Peters and Water- man 1982; Rothwell 1980).

Both the entrepreneurial and customer orientations have generated a fair amount of controversy. There is no general consensus regarding the definitions and underlying dimensions of each construct. Moreover, if entrepreneurship is desirable, how much is enough? Is there an "entrepreneurial trap", where unfettered entrepreneurship creates chaos and a loss of operational control? In a similar vein, can a customer be "over-satisfied'? Is there an optimal level of in- vestment in customer needs?

The resolution of such questions requires a better under- standing of the factors motivating the need for entrepre-

JAMS 43 WINTER, 1991

TURBULENCE AND ITS EFFECT ON ENTREPRENEURSHIP, DAVIS, MORRIS, MARKETING, AND ORGANIZATIONAL CHARACTERISTICS AND ALLEN

neurial and customer orientations in established firms. Chief among these factors would appear to be the degree of turbulence in the external environments of companies (Khandwalla 1977; Miller and Friesen 1982; Murray 1981; Stevenson and Gumpert 1985; Smart and Vertinsky 1984; Zeithaml and Zeithaml 1984). Specifically, as environments become more dynamic, threatening, and complex, tradi- tional managerial orientations are proving to be inadequate. The result is all too often a loss in market position, de- clining profits, or outright business failure (Cooper 1979; Hayes and Abernathy 1980; Covin and Slevin 1989; Water- man 1987).

Consequently, the purpose of this paper is to investigate relationships among perceived environmental turbulence, corporate entrepreneurship, and marketing. Selected dimensions of each of these variables are assessed, and the corre- sponding measurement problems examined. The results of an empirical investigation involving 93 companies are reported. Implications are drawn, and suggestions are made for ongoing research.

ENTREPRENEURSHIP IN A CORPORATE SETTING

The term "entrepreneurship" has historically been approached in a variety of ways (e.g., Cauthorn 1989; Hebert and Link 1988). Current perspectives focus on "the process of creating value by bringing together a unique package of resources to exploit an opportunity" (Carland et al. 1984; Drucker 1985; Kao 1989; Kanter 1983; Stevenson et al. 1985). This definition transcends the more narrow perspectives of entrepreneurship as a personality characteristic, or entrepreneurship as the starting of a small business. Ap- proached as a process, the concept has potential applica- tions not just in start-up ventures but in organizations of all sizes and types.

The entrepreneurial process appears to have three key dimensions: innovation, risk-taking, and proactiveness (Covin and Slevin 1989; Miller and Friesen 1983; Morris and Paul 1987). Innovativeness refers to the seeking of creative, unusual, or novel solutions to problems and needs. This includes the development of new products and services, as well as new processes and technologies for performing organizational functions (e.g., production, packaging, deliv- ery, sales, promotion, administration). The innovativeness dimension is missing from a large number of small business start-ups that do little more than mimic existing establish- ments. Similarly, many so-called "new" products and services are imitative replications of proven market successes (Calantone and Cooper 1977; Cooper 1979, 1983).

The risk-taking dimension involves the willingness of management to commit significant resources to opportunities having a reasonable chance of costly failure. These are moderate and calculated, not extreme risks. Entrepre- neurship does not entail reckless decision-making, but rather, a reasonable awareness of the risks involved, and an attempt to manage these risks.

Proactiveness is the opposite of reactiveness. The focus here is implementation, on making events happen through

whatever means are necessary. Obstacles arise in virtually any attempt at innovativeness and must be overcome. This frequently means breaking with established, or even ac- cepted, ways of accomplishing a task. Bending or ignoring rules, and asking for forgiveness rather than permission are commonplace occurrences in successful entrepreneurial efforts. Moreover, the proactiveness dimension implies a "hands-on" management style, where executives work with employees, customers, suppliers, and others to overcome obstacles.

These three dimensions combine to indicate the extent to which a given endeavor is highly, moderately, or nominally entrepreneurial. That is, entrepreneurship is a matter of degree, not an either/or proposition. Certain environmental conditions would appear to facilitate high degrees of innovativeness, risk-taking, and proactiveness, while other conditions produce results which are less entrepreneurial (Baklnoff and Brannon 1984; Brockhaus and Nord 1979; Kent 1986). As a variable phenomenon, then, entrepreneurship occurs to some extent in all societies, and all organizations. It is merely a question of environmental context. As such, distinctions between entrepreneurship and intra- preneurship (e.g., Pinchot 1985) are meaningless.

To foster development along each of the entrepreneurial dimensions, a number of established firms are experiment- ing with entirely new approaches to running their busi- nesses. Flatter organizational structures, broader spans of control, smaller staff functions, customized reward systems, formal goals for innovations, and greater individual autonomy are examples of the efforts underway in such firms as AT&T, 3-M, IBM, Apple, Citicorp and General Electric. Professor Steven Brandt, of Stanford University, explains that the ultimate goal of such efforts is to "get a substantial percentage of all the members of the company thinking innovation on a daily basis so that business as usual is subject to experimentation and change" (1986 p. 37).

At the same time, there are significant constraints on entrepreneurship in medium and large-sized firms (e.g., Knight 1987; MacMillan et al. 1986; Stefflre 1985). Entre- preneurship represents a process of institutionalized change and, as such, is threatening to the status quo. Further, as former ITT Chairman Harold Geneen (1984) has suggested, large public corporations are public trusts from which inves- tors expect annual returns approximating 10 percent. The risks inherent in entrepreneurship pose a threat to such stable returns.

MARKETING AS A CORPORATE ORIENTATION

The debate regarding the nature and scope of marketing has produced at least one general conclusion: that marketing is concerned with the facilitation of exchange processes between organizations and their environments (Bagozzi 1975; Hunt 1976; McCarthy and Perreault 1987). The facilitation generally takes the form of marketing mix activities, such as branding, pricing, customer service, advertising, and personal selling.

More than a set of specific activities, however, marketing represents a philosophy of business (Deshpande and Web-



ster 1989). Drucker (1977) explains that "the aim of marketing is to know and understand customers so well that the product or service fits them and sells itself." The essence of this orientation is captured in the marketing concept, in which companies are encouraged to (a) focus on specific target markets, (b) concentrate on customer needs, (c) inte- grate an emphasis on customer satisfaction throughout all the activities and personnel of the firm; and (d) invest in long-term profitability (Kerby 1972; Kotler 1988; McKet- terick 1957; McNamara 1972).

While generally supported by academics, the marketing concept has been the object of considerable criticism (e.g., Bennett and Cooper 1979; Sachs and Benson 1978). Under- lying this controversy are two major problem areas: a lack of definitional clarity with the concept itself; and pragmatic difficulties in concept implementation. The definitional problems include conflicts between customer and profit ob- jectives; trade-offs between customer needs and the needs of other publics served by an organization; and uncertainty regarding the relative distinction between short-term and long-term customer satisfaction. In addition, some have suggested that the marketing concept has different meanings dependent on situational contingencies (e.g., Gobeli 1983).

Pragmatic problems include difficulties in measuring customer needs; operational problems in getting those not in marketing or sales to perceive a relationship between pri- oritizing customer interests and accomplishing their own interests; and a hesitancy to invest tangible dollars in customer satisfaction when the payoff to individual managers and the firm is indirect and long-term. Further, some claim the adoption of the marketing concept has led firms to emphasize the superficial, transitory, expressed wants of buyers in product development, while devoting large resources to differentiation through packaging and promotion- al appeals (Bennett and Cooper 1979; Hayes and Abernathy 1980).

Nonetheless, investing in customer satisfaction does appear to affect company performance. Peters and Waterman (1982), in their landmark study on excellence in American business, found "closeness to the customers" to be a leading characteristic of the top-performing companies. Cooper (1979; 1982) has provided empirical evidence that "market knowledge and marketing proficiency" was a critical factor differentiating successful from unsuccessful new products. Rothwell (1980) reported evidence that "attention to marketing, user needs and after-sale servicing" distinguished the most successful innovators and technically progressive firms from others.

THE ENVIRONMENTAL CONTEXT OF ENTREPRENEURSHIP AND MARKETING

The relative importance of both the entrepreneurial and marketing orientations would appear to be strongly influ- enced by environmental turbulence. The external environments (e.g., legal, technological, economic, supplies, customer, competitive, financial and social environments) of most firms can increasingly be characterized as dynamic,

threatening, and complex (Ansoff 1979; Drucker 1980; Khandwalla 1977; Miller and Friesen 1983). The implications of this turbulence are many. If managers perceive themselves faced with greater environmental turbulence, they are likely faced with smaller decision windows, di- minishing opportunity streams, changing decision consti- tuencies, increased resource specialization, lack of predict- able resource needs, fragmented markets, greater risk of resource and product obsolescence, and a general lack of long-term control (Hayes and Abernathy 1980; Jain 1983; Stevenson and Gumpert 1985). In many instances, this has meant learning entirely new ways to compete.

Miller and Friesen (1982), in a study of conservative and entrepreneurial firms, found significantly higher degrees of environmental hostility and heterogeneity in the latter. Sep- arately, Miller and Friesen (1983) demonstrated a significant relationship between environmental dynamism, hostility, and heterogeneity and the amount of proactive, risk- taking, and innovative behavior in successful firms, but not so in unsuccessful firms. Ettlie (1983) has proposed a link between perceived environmental uncertainty and changes in corporate strategy which spur innovation and entrepreneurship. Zahra (1986), also found corporate entrepreneurship to be related to environmental dynamism and complexity, but found organizational and strategic variables to be more important influences on entrepreneurship.

Environmental turbulence holds potential implications for a firm's marketing orientation as well. Khandwalla (1977) points to marketing activities as a principal mecha- nism for dealing with the uncertainty inherent in turbulent environments. Jain (1983) argues that only through marketing inputs can perspectives regarding changing social, economic, political, and technological environments be effec- tively incorporated into the planning and development of corporate strategy (see also Murray 1984). Buzzell explains more succinctly: "If you have to change how to compete, then all of a sudden marketing is a very important function" (Business Week 1983).

Marketing is a boundary function, responsible for inter- acting with key components of the environment on a daily basis. As these components become more dynamic and complex, boundary functions such as marketing logically receive more attention and a greater share of corporate resources. These functions are also forced to become more proactive and flexible under these circumstances (Bonoma 1986). Moreover, a company-wide marketing orientation would seem most critical when customers, their needs, the technologies for addressing those needs, and the economics of doing so are in a state of flux.

Environmental change does more than create a need for entrepreneurial and marketing orientations. It is, in fact, the essence of these orientations. The entrepreneurial firm does not simply adapt to external developments, but instead, becomes the agent of change (Burgelman 1984; Pinchot 1985). Similarly, Zeithaml and Zeithaml (1984) have suggested that marketing be reconceptualized as a proactive undertaking whose aims are to effect and manage change. The marketer, accordingly, strives to redefine the product and market context within which the organization operates, rather than merely choosing a strategy within a given environment.



THE ENTREPRENEURSHIP-MARKETING INTERFACE

It may be that entrepreneurial and marketing orientations not only have much in common, but are part of the same business philosophy (Miles and Arnold 1989). Gobeli (1983) has suggested the firm's marketing orientation has at least three variants: an opportunity focus, a customer focus, and a competitor focus. Of concern here is the opportunity focus, which refers to an emphasis on unproven wants, new market segments, new technologies, and innovation in all areas of the marketing mix.

This perspective is consistent with Murray's (1981) argu- ment that marketing is the natural "home" for the entrepreneurial process in established organizations. He explains (p. 96),

Of all the areas of specialist technical and professional expertise in the firm, marketing is uniquely equipped, and indeed should feel uniquely responsible, for analyzing environmental evolution and translating its observations into recommendations for the redesign of the corporate resource base and its product- market portfolio.

The common link between entrepreneurship and marketing appears to be value creation. Entrepreneurs create value where there was none before. They engineer a unique package of resources to capitalize on untapped opportunities. Marketing represents a set of value-creating activities directed at identifying and satisfying a consuming public. Marketing-oriented firms organize the efforts of every department and function around the concept of customer value.

THE STUDY

To analyze the relationships among perceived environmental turbulence, corporate entrepreneurship, and marketing, a survey was designed and directed at marketing managers in industrial organizations. The hypothesized relationships are detailed in the causal model in Figure 1. Environmental turbulence is hypothesized as a direct causal influence of selected (a) marketing activities within a firm, (b) organizational characteristics of the marketing function, and (c) the innovative, risk-taking, and proactive behavior of the organization. These three outcome variables are hypothesized to be intercorrelated with one another.

FIGURE 1 A Causal Model Representing Perceived Environmental Turbulence and its Effect on Selected

Entrepreneurship, Marketing, and Organizational Characteristics in Industrial Firms.

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In order to test the model, multiple measures were assessed for the major relationships in the study. While the constructs in the study are indeed multi-dimensional and complex, this investigation focused on a few select variables of interest to marketing theorists and practitioners alike. The measures selected were those felt to be minimally representative of the constructs of interest, and ones which would provide an initial test of the theoretical linkages among those constructs. The major variables selected were those related to perceptions of environmental dynamism and threat, the role of marketing and specific marketing activities within the firm, the extent to which the organization structure is decentralized and emphasizes the marketing function, and the relative emphasis on bold decisions em- phasizing new product, service process, and market development.

METHODOLOGY

Sample

The sample used for the present investigation was drawn from six industries in the Central Florida area. Six industries were chosen in order to maximize the potential turbulence effects in the study. Turbulence is the critical variable in sample selection because it was hypothesized to effect entrepreneurship and marketing.

The selection of sample industries was accomplished by a review of Standard and Poor's Industry Guide (1988). The general characteristics of technological change, degree of competition, and industry growth rate was used to select the six industries represented in the study. A jury of executive opinion technique was utilized to finalize sample industry selection. The Guide to Florida Industries (1988) was used to identify the individual firms.

The industries chosen were banking, chemicals, compu- ters and electronics, food and beverage, health care, and media. A random quota sampling procedure using telephone directories was utilized to attain a final sample of at least 15 firms in each industry. This sampling process re- sulted in 93 respondent firms for a final response rate of 88%.

Data Collection

The data was collected via telephone. Interviewers asked to speak with the primary marketing officer of the sampled firm. On average, the survey took about 7 minutes of the respondent's time.

Instrument Design

Instrument design centered around the development of multidimensional scales designed to tap the complex constructs of environmental turbulence (TURB), marketing activities (ACTS), entrepreneurship (ENT), and marketing organization structure (STRUC). The instrument was pre- tested on a convenience sample of ten (10) organizations in

the geographic area of interest. This pretest checked for scale clarity and content validity.

The measurement of each of these constructs was as follows.

Environmental Turbulence: The study concentrated on three major aspects of turbulence, changing technology (Tech), competition between firms in the industry (Comp), and industry growth rate (Growth). These variables were measured by asking the primary marketing officers of each firm to assess the degree of perceived turbulence in the industry in which they competed, because if a perception of turbulence did not exist there would be no reaction to the dependent variables in this study (i.e., Why react to some- thing you do not perceive?). As noted in the sample selection, every attempt was made to ensure that the sample represented a sufficient amount of turbulence regarding the three aspects measured. The scales were 3 point scales with 1 = "very rapid or intense," 2 = "moderate," and 3 = "not present or none."

Marketing Activities: Ten items were identified from the literature and expert opinion. These activities were designed to assess the importance and use of marketing activities in the respondent firm. These items included the employment of external marketing consultants, utilization of an annual written marketing plan, use of product managers, applica- tion of market segmentation and targeting, reliance on infor- mal market feedback, existence of a complaint and/or service department, practice of formally surveying customer surveys, use of a suggestion system, and marketing's responsibility for new product and service ideas.

Factor analysis was subsequently used to identify the key underlying dimensions of the marketing activities of the surveyed firms. A varimax rotation was used to identify simple structure. Two dimensions were found to be inter- pretable, these being Information gathering activities (Info) (4 items, Cronbach Alpha = .70) and Marketing orientation of the firm (Mktg) (5 items, Cronbach Alpha = .74).

Entrepreneurship: The entrepreneurship construct was assessed utilizing an eight item scale. These items were developed to tap the dimensions of innovativeness, risk-taking and proactiveness that have been found to be inherent in the entrepreneurship construct (see Miller and Friesen 1983). The overall scale of entrepreneurship (Entre) was found to possess an acceptable degree of reliability (Cronbach Alpha : .63) based on the criteria established by Nunnally (1970).

Organizational Structure: Three scales were developed to measure important aspects of organizational structure in each of the host firms. The first of the three scales dealt with primary organizational structure for the firm (Type) (i.e., was the primary organizational structure product oriented, market oriented, functional, or none of the above).

The second scale dealt with the degree of centralization of the company's decision making process (Cent). Here, the respondent was asked on a five-point scale the degree of



TABLE 1 Input Matrix of Pearson Product-Moment and Rank Biserial Correlations for Abserved Variables.

Variables X 1 X2 X3 Y1 Y2 Y3 Y4 Y5 Y6

Tech. ,X1 1.00 .12 .24 .08 .21 .36 .02 - . 13 .09 Comp.,X2 - . 09 1.00 .21 .33 .32 .34 - . 11 - . 24 - . 09 Growth,X3 .15 - . 02 1.00 .35 .39 .36 - . 10 - . 09 - .02 Info. ,YI .02 - . 13 .09 1.00 .50 .53 .03 - . 42 - .01 Proact.,Y2 - . 11 - .24 - . 09 .12 1.00 .61 .00 - . 29 .06 Entre.,Y3 - . 10 - .09 - . 02 .24 .21 1.00 .01 - . 17 .02 S.Type,Y4 .03 - .42 - .01 .08 .33 .35 1.00 - .09 .14 Cent.,Y5 .00 - .29 .06 .21 .32 .39 .50 1.00 - . 02 Perc.,Y6 .0I - . 17 .02 .36 .34 .36 .53 .61 1.00

centralization. The scale was anchored by end points of I = "Totally Centralized" and 5 = "Totally Decentralized" with a midpoint "Evenly Centralized/Decentralized".

The final scale was a ratio (Perc) designed to tap the relative emphasis on marketing in the total organization structure. This ratio was the number of employees in marketing and sales to the number of employees in the entire f i rm.

RESULTS

Testing The Model

To test the proposed model, the data were analyzed via LISREL VI (Joreskog and Sorbom 1983). The program was selected for its capabilities in analyzing unobservable constructs utilizing multiple observable measures as indicators. The theoretical structure necessary to empirically test the proposed construct relationships (Fornell 1983) between model components is presented in Figure 1.

The causal model consists of the environmental turbulence construct (TURB) measured by its three (3) indicators, and the three dependent variables; marketing activities (ACTS), entrepreneurship (ENT), and organizational structure (STRUC), measured by their two (2), one (1), and three (3) indicators, respectively. The three endogenous variables are depicted as simultaneous outcomes caused by turbulence in the marketing environment.

The correlation matrix displayed in Table 1 was used as input for the subsequent analysis. Covariances between indicators are shown above and correlations between indicators are shown below the diagonal. The matrix is comprised of 32 Pearson product-moment correlations between measures of the endogenous variables and 34 rank-biserial correlations between the remaining observed variables.

Maximum likelihood estimates and associated standard errors for the model parameters are provided in column 3 of Table 2. The overall fit of the model to the data is respect- able (i.e., X 2 = 64.55, df = 27, p = .000). For clarification purposes, the chi-square (• statistic should be interpreted as one measure of the goodness of a model's fit to the data and not as a test statistic in the strict sense (Bagozzi and Yi 1988; Joreskog and Sorbom 1983). Residuals of practical insignificance can cause a model to be statistically rejected,

especially as samples became more sizable (Anderson and Gerbing 1984).

A small root mean square residual (RMR) of .09 and a Goodness- of-Fit Index (GFI) of . 89 also lend support to the model. Initial estimates of the model parameters (reported in column 2) obtained by least squares procedures are com- parable to those obtained by maximum likelihood (average difference in estimates . 14).

Tests of Relationships

Calculated t-values for the estimated paths between TURB and the ACTS (~'1 = .638, t = 5.686) and ENT (~'2 = .832, t = 7.305) constructs indicate significant (p ' s <

TABLE 2 Initial (Least Squares) and Maximum Likelihood

Estimates for the Causal Model.

Initial (LS) Final (ML) Parameters Estimates Solutions

k~ .372 .368(.115) h 2 .368 .428(.114) h 3 .567 .474(.113) h 4 1.000" 1.000(.000)* k 5 .885 .500(.091) k6 1.000" 1.000(.000)* h 7 1.000" 1.000(.000)* h 8 .278 -.093(.104) h 9 .534 .144(.104) ~1 .273 .638(.112) ~2 .316 .832(.114) ~3 - .075 -0.015(.118) ~ .659 .593(.118) ~2 .900 .308(.134) ~ .614 1.000(.148) ~1 .862 .865(.134) ~2 .865 .817(.130) ~3 .656 .776(.126) 8t ~ 0.000" 0.000(,000)* 82 ~ .424 .750(.111) 334 0.000" 0.000(.000)* ~4 ~ 0,000" 0.000(.000)* ~5 ~ .952 .991(.147)* ~6 ~ .823 .979(.145)*

(Standard errors are in parentheses and asterisks denote parameter values fixed by scaling.)



.001) causal relationships. Therefore, the relationships between environmental turbulence and marketing activities and entrepreneurship are supported. Although the parameter estimate for the path from TURB to STRUC is in the spec- ified negative direction (i.e. more turbulence--less structure) (3'3 = - .015 , t = - .124), the relationship is not supported (t < 2.0). Of the indicators of the TURB con- strnct, growth rate in the industry (Growth) can be con- sidered the most reliable followed by: competition (Comp), and technology (Tech), with squared multiple correlations (not reported in Table 2) of .224 (t -- 6.133), .183 (t = 6.284), and. 135 (t = 6.432), in that order. The total coefficient of determination for the x-variables was .39, while the total coefficient of determination for the structural equations was .75. Except for the two indicators of organizational structure (Cent. and Perc.), all other parameter estimates listed in column 2 of Table 2 have estimates at least twice their respective standard errors, and hence are significant (p < .05).

CONCLUSIONS AND IMPLICATIONS

The purpose of the study was to assess the influence of perceived environmental turbulence on selected marketing, entrepreneurial, and organizational characteristics in industrial firms. The results clearly suggest that perceived turbulence does have an influence on these organizational activities. More specifically, more turbulence is positively associated with the marketing orientation of the firm and its information gathering activities.

Apparently, as the environment becomes more uncertain, firms react by implementing more marketing activities such as collecting information from its customers and performing more internal activities to become more market oriented (i.e., market segmentation and organizing to understand more about specific needs of the customers). Similarly, a positive relationship exists between turbulence and entrepreneurship. Here, a turbulent environment suggests that a firm must be willing to be more innovative, more proactive, and generally take more risks than in relatively stable environments.

Furthermore, the relationship between turbulence and organization structure, was in the direction anticipated (more turbulence, less structure). However, the result was not significant. While this result is problematic, given the afore- mentioned significant findings, a rival plausible hypothesis is indicated. It appears an organization does indeed cope with turbulence in the environment, but the change in organization structure may proceed more slowly. This could account for the not significant path between turbulence and structure, but the positive and significant relationships between the remaining outcome variables.

These findings support a contingency view of the role of marketing within a firm. The organizational structure and strategies for marketing will differ depending on environmental circumstances. Under placid conditions, the firm can concentrate on incremental improvements in its methods of satisfying existing customer needs. Where the environment can be characterized in terms of stronger inter- dependencies among firms ]e.g., Emery and Trist's (1965)

disturbed-reactive environment], marketers should focus more attention on anticipating and quickly responding to the moves of competitors. However, to the extent that environments are becoming more turbulent, marketing managers must take responsibility for introducing greater levels of entrepreneurship into all aspects of the firm's marketing efforts.

In terms of implementing this responsibility, marketing managers must create a work environment that reflects characteristics traditionally associated with the entrepreneurial personality. These characteristics include such traits as inde- pendence, achievement motivation, calculated risk-taking, commitment, reward consciousness, and nurturing. The structure of an organization should place a premium on flexibility and the delegation of decision-making responsibility with a commensurate level of authority. All of these aspects can be fostered through the effective design of the firm's marketing function.

In addition, reward systems should be used to encourage the seeking of new opportunities, and to ensure failure is not penalized. Goals should be set for the number and types of new products, services and markets to be developed. While planning should be emphasized, marketing plans themselves should be concise with details of implementation. Innovativeness, risk-taking, and proactiver, ess should be the central themes in strategy development, segmentation approaches, and the management of customer service.

The research implications of the present study are many. First, the complexity of the model under study necessitates the selection of a few key characteristics of each of the major constructs. Ideally, a vast array of characteristics and their interactions should be investigated in order to more fully understand the dynamics of the relationships explored in this paper. The selection, development, and measurement of these variables will ultimately lead to better theoretical structures to help explain the intricacies of these complex constructs.

Another research implication relates to recursiveness of components of the model. More specifically, can entrepreneurship drive environmental turbulence? If in fact, entrepreneurial activity is proactive, can it indeed increase turbulence, and therefore hasten changes in the marketing activities and organizational structures of industrial firms? This situation would have profound implications in the design of both the marketing function and organization structure of industrial organizations.

In conclusion, the complexity of the constructs in this study make the investigation of the theoretical structure posited in Figure 1 an inherently difficult task to undertake. This investigation was a preliminary attempt to formally model a select few characteristics of interest to a multi- disciplinary audience. While the model is obviously a sim- plification of reality, it provides a useful framework which can be subsequently refined and developed with further empirical study.

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ABOUT THE AUTHORS

Duane Davis is currently an Associate Professor and Acting Chair in the University of Central Florida's Department of Marketing. Dr. Davis received his D.B.A in Marketing from the University of Kentucky. Professor Davis has published in the Journal of Psychology, the Journal of Retail- ing, the Journal of the Academy of Marketing Science, the Journal of Travel Research, Interfaces, and Industrial Mar- keting Management. This research stream largely focuses on research methodology, marketing of services, and strategic marketing management. In addition, Dr. Davis has co- authored Business Research for Decision Making with PWS-Kent Publishing Company.

Michael Morris is currently on the faculty of the Depart- ment of Marketing, University of Central Florida, Orlando. He received his Ph.D. in Marketing from the Virginia Poly-

technic Institute and State University. Professor Morris is active in a number of areas of professional research, includ- ing industrial marketing, organizational buying, pricing, product development and management, corporate innovation, and the use of systems theory in marketing. He has written two books, Industrial and Organizational Market- ing (Merrill, 1988) and Market-Oriented Pricing: Strategies for Managers (Quorum, 1990). He has published articles in Business Horizons, the Journal of Business Research, the Journal of Business Venturing, the International Journal of Research in Marketing, the Journal of the Academy of Mar- keting Science, Industrial Marketing Management, and the American Journal of Economics and Sociology.

Jeff Allen is currently an Assistant Professor in the Depart- ment of Marketing at the University of Central Florida, Orlando. He received his D.B.A. in Marketing from the University of Kentucky. Professor Allen has published in the Journal of Travel Research, the Journal of the Academy of Marketing Science, and the Journal of Education for Business. Dr. Allen's research interests include social responsibility, distribution management, and the development of marketing strategy.


perceived environmental turbulence and its effect on selected entrepreneurship, marketing, and...

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