HULL UNIVERSITY BUSINESS SCHOOL AN INDUCTIVE INVESTIGATION INTO RELATIONSHIPS BETWEEN GEOGRAPHICALLY CO-LOCATED ACTORS: THE CONTRIBUTION OF RELATIONSHIP MARKETING TO REGIONAL COMPETITIVENESS Being a thesis submitted for the degree of Doctor of Philosophy at the University of Hull By John D Nicholson j.d.nicholson@hull.ac.uk 2010 Abstract This thesis is grounded in the discipline of marketing and draws, substantively, on literature from within the regarded sub-discipline of relationship marketing However, the literature drawn upon is firmly interdisciplinary, drawing heavily on theories from economic geography The crucial construct drawn from this outwith literature is that of geographic co- location, the phenomenon of geographic proximity between businesses and other organisations This thesis isolates and defines two modes of regional marketing activity, a defensive and an offensive variant It is to the defensive variant that this thesis makes contributions by proposing a macro theory of relevant marketing geography, a regional relationship lifecycle that examines the notion of loyalty to a region and a competence-based view of regional relationship marketing activity between co-located actors The conclusions and models presented here mark the first thesis in the discipline of marketing examining the contribution of the marketing discipline to regional competitiveness The thesis also deploys a novel methodology within the marketing discipline to understand the research phenomena in time and space, and in terms of agency and structure The methodology developed for, and deployed in, this thesis is based on Anthony Giddens‘ theory of structuration John D Nicholson Table of contents ABSTRACT I: ACKNOWLEDGEMENTS CHAPTER ONE: INTRODUCTION AND BACKGROUND TO THE STUDY 1.1: Research motivation and inspiration 1.2: Research problem 11 1.3: The objectives of the thesis 15 1.4: Thesis structure 16 1.4.1: Section A: Literature review 16 1.4.2: Section B: Methods and methodology 18 1.4.3: Section C: Conclusions and contributions 19 SECTION A: LITERATURE REVIEW 21 i: Section introduction 21 CHAPTER TWO: RELATIONSHIP MARKETING 26 2.1: Chapter introduction 26 2.2: The discipline of marketing 27 2.3: Marketing and market orientations 29 2.3.1: Market orientation 32 2.3.1.1: Customer orientation 33 2.3.1.2: Competitor orientation 35 2.3.1.3: Interfunctional co-ordination 35 2.3.1.4: The outcomes of market orientation 36 2.3.1.5: Non-profit market orientation 37 2.3.2: Marketing orientation 38 2.4: The evolution of relationship marketing and a relationship marketing orientation 41 2.4.1: Relationship marketing orientation 41 2.4.2: Relationship marketing: background conditions and definitions 42 2.4.3: Relationship marketing as a paradigm shift? 46 2.5: Business to business marketing and the IMP Group 48 2.6: Relationship marketing constituencies 52 2.7: Temporal models of relationship marketing 56 2.8: Loyalty and the development of relationships 60 2.9: Defining constructs of relationship marketing 70 2.9.1: Relationship value 72 2.9.2: Trust 75 2.9.3: Commitment 82 2.9.4: Communication in relationships 86 2.9.5: Opportunistic behaviour 90 2.9.6: Reciprocity 92 2.9.7: Involvement 94 2.10: Chapter summary 97 CHAPTER THREE: THE RESOURCE-BASED VIEW OF THE FIRM AND COMPETENCY-BASED COMPETITION 98 3.1: Chapter introduction 98 3.2: Resource-based competition 99 3.3: Competencies and capabilities 100 3.3.1: Competencies 100 3.3.2: Capabilities 101 3.3.3: Firm addressable and firm specific resources and competencies 105 3.4: The RBV and CBV in marketing 109 3.5: Chapter Summary 111 CHAPTER FOUR: NETWORKS IN MARKETING 112 4.1: Chapter introduction 112 4.2: Network principles 113 4.3: Business and social networks 114 4.4: Focal dyads in networks 116 4.5: Network change 117 4.6: Network structure and positioning 119 4.7: Word of mouth and personal networks 123 4.8: Chapter summary 125 John D Nicholson CHAPTER FIVE: OUTWITH LITERATURE 127 5.1: Chapter introduction 127 5.2: Globalisation 128 5.3: Collaborative strategy 130 5.3.1: Collaboration and competition 130 5.4: Regional competitiveness 133 5.5: The role of a central agent in regional development activity 136 5.6: Public-private partnership in regional development 138 5.7: Stakeholders, shareholders and beneficiaries 144 5.8: Proximity and local economic geography 148 5.8.1: Industrial clusters 148 5.8.2: Innovative mileaux 152 5.8.3: Co-location and relational space 153 5.8.4: Social capital and weak ties 158 5.8.5: Embededness 161 5.9: Chapter summary 168 SECTION B: METHODS AND METHODOLOGY 169 I: Section Introduction 169 CHAPTER SIX: METHODOLOGY, META AND MESO-LEVEL ISSUES 171 6.1: Chapter introduction 171 6.2: The research problem and context 172 6.3: The philosophy of science 172 6.3.1: Why is it important to understand the philosophy behind the research 173 6.3.1.1: Ontology, epistemology and axiology 174 6.3.1.2: Positivism and anti-positivism 175 6.3.2: Research paradigms 178 6.3.3: Interpretivism and the research context 181 6.3.3.1: Interpretivism and current relationship marketing research 181 6.3.3.2: Interpretivism and current research within the outwith literature 183 6.3.4: Atomism versus holism 186 6.4: Paradigm wars 187 6.5: Pluralism and pragmatism 193 6.5.1: Determinism versus voluntarism, agency and structure 197 6.5.2: Time and temporality 205 6.5.3: Structuration 208 6.5.4: A conclusion of the structurationist debate 218 6.6: Implementing an investigation based on structuration 219 6.7: Critical plurality and meta-theory 221 6.8: Critical plurality and meso-methodological solutions 224 6.8.1: Qualitative traditions of enquiry 226 6.8.2: Summary of meta-theoretical and meso-methodological stances taken in this thesis 231 6.9: Chapter summary 233 CHAPTER SEVEN: MICRO METHODICAL SOLUTIONS 235 7.1 Chapter introduction 235 7.2: Research objectives and propositions 235 7.2.1: The journey through which the terminal objectives of this thesis were developed 236 7.2.2: The final objectives of the thesis 238 7.3: Sampling 239 7.3.1: Sampling units 239 7.3.2: Sampling method 242 7.3.3: Sample size 243 7.4: Data collection method 244 7.4.1: Interviewing 244 7.4.1.1: Interview schedules 247 7.4.2: Practical considerations when conducting semi-structured convergent depth-interviews 248 7.4.2.1: Access and Rapport 249 7.4.2.2: Quality of the researcher as a sensing instrument 251 7.4.2.3: Ethical concerns 252 7.5: Data, data analysis and presentation 253 7.5.1: Structuration in micro-methodology 259 7.6: Qualitative equivalence to reliability, validity and generalisability 263 7.7: Chapter summary 268 John D Nicholson SECTION C: FINDINGS, CONCLUSIONS AND CONTRIBUTIONS 269 I: Section introduction 269 CHAPTER EIGHT: POSITIONING THE FINDINGS IN THE MARKETING LITERATURE 272 8.1: Chapter introduction 272 8.2: A macro-theory of relevant marketing geography 273 8.2.1: Marketing relevancy 273 8.2.2: Geographic relevancy 281 8.2.3: Relevant marketing geography 288 8.3: Chapter conclusion 299 CHAPTER NINE: THE RELATIONSHIP LIFECYCLE AND GEOGRAPHIC CO-LOCATION 300 9.1: Chapter introduction 300 9.2: Regional isolation 302 9.2.1: How to identify regional isolation 303 9.2.2: Causes of isolation 306 9.3: Regional involvement 309 9.3.1: Terms and constructs 309 9.3.2: The scope of involvement activity 319 9.4: Satisfaction with involvement activity 323 9.4.1: Reciprocity and exchange 328 9.5: Embeddedness and historical loyalty to a region 335 9.6: The regional relationship lifecycle, offensive and defensive marketing 346 9.7: Chapter summary 347 CHAPTER TEN: A COMPETENCE-BASED VIEW OF RELEVANT MARKETING GEOGRAPHY 349 10.1: Chapter introduction 349 10.2: Regional relationship marketing orientation 350 10.3: The core skills of regional relationship marketing 354 10.4: Meta-assets accrued from regional involvement 361 10.5: Organisational dynamic capabilities 362 10.6: Chapter summary 365 CHAPTER ELEVEN: THE STRUCTURATION OF REGIONAL INVOLVEMENT 367 11.1 Chapter introduction 367 11.2: Ligitimation and interdependence 370 11.3: Involvement: Norms, sanctions and compulsion 375 11.4: Domination, power and trust 381 11.5: Signification through communication 386 11.6: Signification and a notion of semiosphere 390 11.7: Summary of the enabling structuration of involvement 396 CHAPTER TWELVE: CONTRIBUTIONS TO KNOWLEDGE AND RESEARCH LIMITATIONS 401 12.1: Chapter Introduction 401 12.2: Empirical contributions to knowledge 401 12.2: Theoretical contributions to knowledge 402 12.3: Practical contributions 405 12.3.1: Integrated local marketing communications 405 12.3.2: Relevant marketing boundaries 408 12.4: Limitations and further research directions 409 BIBLIOGRAPHY 413 John D Nicholson List of Figures and Tables FIG 1.1: REGIONAL MARKETING MYOPIA? 13 FIG A.1: THE MAIN LITERATURE REVIEW STAGES IN RELATIONSHIP TO THE PHASES OF THE RESEARCH AND THESIS PREPARATION 21 FIG A.2: DIAGRAM SHOWING THE LOGIC OF THE LITERATURE REVIEW STRUCTURE 22 FIG 2.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 26 FIG 2.2: THREE ORIENTATIONS TOWARDS THE MARKET 30 FIG 2.3: FOUR APPROACHES TO CURRENT AND FUTURE CUSTOMER NEEDS 34 FIG 2.4: RELATIONAL CONFIGURATION MATRIX 47 FIG 2.5: ORGANISATIONAL BUYING AS AN INTERACTION PROCESS 49 FIG 2.6: THE IMP INTERACTION MODEL 51 FIG 2.7: THE SIX MARKETS MODEL OF RELATIONSHIP MARKETING 55 FIG 2.8: NETWORK LEVEL AND RELATIONSHIP FUNCTION 56 FIG 2.9: ENDURING AND INTERMISTIC RELATIONAL EXCHANGE 59 FIG 2.10: THE LOYALTY LADDER 64 FIG 2.11: INTEGRATED MODEL OF RETAIL SERVICE RELATIONSHIPS 68 FIG 2.12: THE KMV MODEL OF RELATIONSHIP MARKETING 71 FIG 2.13: THREE FORMS OF VALUE 72 FIG 2.14: THE IDENTITY SALIENCE MODEL OF RELATIONSHIP MARKETING SUCCESS 73 FIG 2.15: LEVEL OF EFFECTS IN THE RELATIONSHIP 74 FIG 2.16: TRANSACTIONAL AND COLLABORATIVE EXCHANGES 87 FIG 2.17: HIERARCHY OF COMMUNICATIONS IN A RELATIONSHIP 88 FIG 2.18: DESIGN OF COMMUNICATION MEANS AND STRATEGIES 89 FIG 2.19: FORMS OF OPPORTUNISM AND POSSIBLE OUTCOMES 92 FIG 3.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 98 FIG 3.2: THE FOUR DIMENSIONS OF CORE CAPABILITY 102 FIG 3.3: A TAXONOMY OF INTANGIBLE ASSETS 104 FIG 3.4: STRATEGIC RESOURCES 105 FIG 3.5: RESOURCES, OFFERINGS, CUSTOMERS AND CAPABILITIES 108 FIG 3.6: CLASSIFYING MARKETING CAPABILITIES 110 FIG 4.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 112 FIG 4.2: FROM DYADIC CHANGE TO CHANGING BUSINESS NETWORKS 118 FIG 5.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 127 FIG 5.2: NEW LABOUR AND THE PUBLIC SECTOR 141 FIG 5.3: STAKEHOLDER MAPPING AND VAULATION: ECONOMIC ENVIRONMENT 146 FIG 5.4: STAKEHOLDER MAPPING AND VAULATION: POLITICAL ENVIRONMENT 147 FIG 5.5: ALTERNATIVE IMAGES OF SOCIAL AND INSTITUTIONAL EMBEDEDNESS 164 FIG 5.6: THE DETERMINANTS OF SUBSIDIARY AUTONOMY: A CONCEPTUAL FRAMEWORK 166 FIG 6.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 171 FIG 6.2: REPRESENTATION OF BURRELL AND MORGAN‘S PARADIGM TO DEMONSTRATE DOMINANCE OF THE FUNCTIONALISM PARADIGM IN SOCIAL SCIENCE RESEARCH 180 FIG 6.3: EXPLANATORY EMPHASES IN CORPORATE STRATEGY 201 FIG 6.4: DIMENSIONS OF THE RELATIONAL TIME CONCEPT 207 FIG 6.5: SOCIAL PRACTICES STABILISING THROUGH TIME AND SPACE 207 FIG 6.6: THE DIMENSIONS OF STRUCTURATION 212 FIG 7.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 235 TAB 7.2: TABLE SHOWING DETAILS OF THE SAMPLE OF RESPONDENTS USED IN THIS THESIS 241 TAB 7.3: FINAL CODING OF INTERVIEW TRANSCRIPTS IN NVIVO 257 FIG 7.4: VISUAL SYSTEM MAPPING TECHNIQUE 262 FIG 7.5: APPLYING STRUCTURATION TO EMPIRICAL DATA AND ITS ROLE IN THEORY DEVELOPMENT 263 FIG 8.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 272 TAB 8.2: PERCEIVED BOUNDARIES IN THE RESEARCH CONTEXT 287 TAB 8.3: TYPOLOGIES OF RESPONDENT FIRMS 294 FIG 8.4: WORKING CONCEPTUALISATION OF RELEVANT MARKETING GEOGRAPHY AND THE POSITION OF REGIONAL BUZZ 296 John D Nicholson FIG 8.5: THE LINK BETWEEN THE MACRO THEORY OF RELEVANT MARKETING GEOGRAPHY AND REMAINING THEORY AND CHAPTERS IN SECTION C 298 FIG 9.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS 300 TAB 9.2: TYPOLOGIES OF RESPONDENT FIRMS: RESTATEMENT OF TAB 8.2 304 TAB 9.3: TYPOLOGIES OF RESPONDENT FIRMS WITH ADDITION OF A TYPE FOUR FIRM 304 FIG 9.4: THE RELATIONSHIP LIFECYCLE BETWEEN CO-LOCATED ACTORS, THEORY DEVELOPMENT: STEP 316 FIG 9.5: THE RELATIONSHIP LIFECYCLE BETWEEN CO-LOCATED ACTORS, THEORY DEVELOPMENT: STEP 319 FIG 9.6: TOTAL SET OF INVOLVED RELATIONSHIPS IN CO-LOCATED GEOGRAPHY FROM THE PERSPECTIVE OF A PRIVATE SECTOR ACTOR 322 FIG 9.7: MODIFICATION OF FIG 9.6 FOR A FOCAL THIRD SECTOR AND PUBLIC SECTOR ACTOR 322 FIG 9.8: THE RELATIONSHIP LIFECYCLE BETWEEN CO-LOCATED ACTORS, THEORY DEVELOPMENT: STEP 327 FIG 9.9: THE RELATIONSHIP LIFECYCLE BETWEEN CO-LOCATED ACTORS, THEORY DEVELOPMENT: STEP 333 TAB 9.10: TABLE SUMMARISING EXPRESSED SOURCES OF SATISFACTION WITH ORGANISATIONAL INVOLVEMENT WITH CO-LCOATED ACTORS 334 FIG 9.11: THE RELATIONSHIP BETWEEN STRUCTURAL AND REALTIONAL EMBEDDEDNESS, NETWORK DENSITY AND RELEVANT MARKETING GEOGRAPHY 338 FIG 9.12: THE RELATIONSHIP MARKETING LIFECYCLE AMONGST CO-LOCATED ACTORS 344 FIG 9.13: THE RELATIONSHIP LIFECYCLE BETWEEN CO-LOCATED ACTORS, THEORY DEVELOPMENT THE POSITION OF OFFENSIVE AND DEFENSIVE REGIONAL MARKETING 347 FIG 10.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS349 FIG 10.2: FIRM SPECIFIC CO-LOCATIONAL COMPETENCIES IN TIME AND SPACE 364 FIG 11.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS367 FIG 11.2: THE DIMENSIONS OF STRUCTURATION 369 FIG 11.3: THE RELATIONSHIP BETWEEN LOCAL SEMIOSPHERE, INDUSTRIAL ATMOSPHERE AND NON-LOCAL PIPELINES 395 FIG 11.4: REGIONAL INVOLVEMENT: ENABLING STRUCTURES, MODALITIES AND INTERACTION 397 TAB 11.5: TABLE TO SHOW THE DISAGREGTAED STRUTURCAL PROPERTIES THAT ENABLE INCREASING INVOLVEMENT LEVELS 398 FIG 12.1: THE POSITION OF THE CURRENT CHAPTER IN THE STRUCTURE OF THE THESIS401 FIG 12.2: POSSIBLE SEGMENTATION APPROACH FOR MASS COMMUNICATION AUDIENCIES IN LOCAL GEOGRAPHY 407 John D Nicholson i: Acknowledgements The author wishes to thank Prof Philip Kitchen for his support as supervisor throughout the duration of this thesis, and additionally; Prof Adam Lindgreen, Prof Frank McDonald and Dr Norman O‘Neil for their support as second supervisors at different periods of the thesis A great debt is owed to many Senior Executives who have given their time to the researcher and without which this thesis would have been impossible Thanks also go to Hull University Business School for its support of the researcher during the period of study The author also wishes to thank the examiners of this thesis for their constructive criticism of the document; Prof Bradley Barnes of Sheffield University, Dr Ross Brennan of the University of Essex and Dr Kevin Orr of the University of Hull On a personal level, the author wishes to thank his Mother, Judith and Wife, Vania, for their emotional support during the time that he has spent reading and researching for this award John D Nicholson Chapter One: Introduction and background to the study 1.1: Research motivation and inspiration The author of this thesis has had a long-term fascination with Eastern Europe having studied in Russia and as a result of this period of study, become a speaker of the Russian language At the point of applying for this PhD and seeking funding, this thesis was destined to examine the connectivity between business networks in the Baltic States of Estonia, Lithuania and Latvia, and those of a region of the UK which was linked to the Baltic States through high levels of trade The inspiration for the metamorphosis of this PhD into its current form lies in a consultancy project in 2003 in which the author took part It became apparent during this study that there were many relationships between actors from different organisational sectors, grounded in local geography, that were strategically managed and vital to regional competitiveness An idea came into sharp focus during one conversation with a respondent who, when approached for an interview, responded with such animosity to the idea of giving his views on the issue under investigation, that it became apparent that some past experience of interaction had led to such a stance on the part of this respondent In current relationship marketing (RM) parlance, he was a dissatisfied customer It seemed that this respondent was geographically proximate to other actors who were very willing to take part in the survey and seemed to interact quite enthusiastically The example of the isolated firm can be better understood with reference to an analogy… A local domestic neighbourhood in an average suburban street contains individuals or families who engage with, and contribute the energies of their private life to, John D Nicholson neighbourhood activities This could manifest as lobbying the local council or indeed acting as local councillors, driving community social events, being head of the local scout troop, sitting on the PTA, neighbourhood watch schemes, and many other such activities Others neighbours may live next to each other but have hardly ever exchanged a word in years They may resent any interference from their neighbours These people live in geographic proximity but also in social isolation to their neighbours, but why? 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