This article was downloaded by: [Toften, Kjell] On: 25 September 2009 Access details: Access Details: [subscription number 915281832] Publisher Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Journal of Food Products Marketing Publication details, including instructions for authors and subscription information: http://www.informaworld.com/smpp/title~content=t792304003 Niche Firms and the Role of Commitment: An Exploratory Study of Seafood Exporters Kjell Toften a ; Trond Hammervoll b a Nofima Market and Tromsø University Business School, Tromsø, Norway b Harstad University College, Harstad, Norway Online Publication Date: 01 October 2009 To cite this Article Toften, Kjell and Hammervoll, Trond(2009)'Niche Firms and the Role of Commitment: An Exploratory Study of Seafood Exporters',Journal of Food Products Marketing,15:4,436 452 To link to this Article: DOI: 10.1080/10454440902907748 URL: http://dx.doi.org/10.1080/10454440902907748 PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf This article may be used for research, teaching and private study purposes. Any substantial or systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.
Journal of Food Products Marketing, 15:436 452, 2009 Copyright Taylor & Francis Group, LLC ISSN: 1045-4446 print/1540-4102 online DOI: 10.1080/10454440902907748 Niche Firms and the Role of Commitment: An Exploratory Study of Seafood Exporters WFPM 1045-4446 1540-4102 Journal of Food Products Marketing, Vol. 15, No. 4, Aug 2009: pp. 0 0 An K. Toften Exploratory and T. Study Hammervoll of Seafood Exporters KJELL TOFTEN Nofima Market and Tromsø University Business School, Tromsø, Norway TROND HAMMERVOLL Harstad University College, Harstad, Norway The purpose of this research article is to explore the relationships and challenges that export-oriented niche firms experience in terms of commitment to customer firms. The research has been conducted through case methodology, including in-depth interviews with key informants in five firms. The findings show that these case firms display strong niche firms characteristics and high affective commitment to their major customers. The relationships are few, close, and long-term. Potential challenges resulting from customer commitment are personal friendships that could hamper sound business decisions, difficulties with terminating long-lasting personal relationships in favor of others, and opportunistic behavior. Further reported challenges are vulnerability due to specific production investments or product adaptation combined with a vulnerable production, challenging price negotiations, and potential conflicts of commitment down the marketing channel. KEYWORDS Relationship marketing, commitment, niche, seafood INTRODUCTION Relationship marketing has rapidly emerged as one of the dominant paradigms of marketing (e.g. Baker, 1995; Eiriz & Wilson, 2006). Relationship marketing refers to establishing, developing and maintaining relational Address correspondence to Kjell Toften, Scientist and Associate Professor, Norwegian Institute of Fisheries and Aquaculture Research, P.O. Box 6122, NO-9291 Tromsø, Norway. E-mail: kjell.toften@fiskeriforskning.no 436
An Exploratory Study of Seafood Exporters 437 exchanges (Morgan & Hunt, 1994), where its main objective is to foster a bond with each customer for mutual benefit (Shani & Chalasani, 1993). Relationship marketing is often combined with niche marketing (Dalgic & Leeuw, 1994), which has been sited frequently as a viable strategic alternative within the food industry (Phillips & Peterson, 2001). Strong relationships offer an effective way to exploit these increasingly narrow niches through superior market and customer knowledge and thereby superior ability to serve customer needs, accompanied by high customer loyalty. Also, strong relationships with customers may reduce some of the risks inherent in niche marketing, such as reduced risk of failed transaction-specific investments (Ghosh & John, 1999). For an internationally oriented niche firm, the increased uncertainty through international exposure (McAuley, 1993) may further add importance to creating long-term relationships with a core group of its most important customers. Commitment has long been viewed as a central aspect in the relationship marketing literature (Morgan & Hunt, 1994). Commitment reflects the desire to develop a stable relationship, a willingness to make short-term sacrifices to maintain the relationship, and a confidence in the stability of the relationship (Anderson & Weitz, 1992), signaling long-term orientation toward a partner firm (Narus & Anderson, 1986). The motivation is to enhance the value of the marketing offerings to its customers and/or lowering the total costs (Brown, Lusch, & Nicholson, 1995; Stern & El-Ansary, 1992). Such advantages could be achieved through a committed relationship to gain greater access to market information, obtain more distributor assistance in launching new products and developing loyalty among end-users, and reduce distributor interest in promoting competitive brands (Anderson & Weitz, 1992). In spite of the recognized importance of mutual commitment for enhancing mutual profitability (Anderson & Weitz, 1992), research is scarce on commitment related to export-oriented niche firms in food and agricultural business-to-business. This scarcity makes it difficult to advise firms in this industry on how best to act and adapt to improve long-term profitability through relationship commitment. Thus, this article attempts to explore the nature of the firms settings and their customer relationships, the types of customer commitment and the current challenges that niche firms experience in terms of commitment to customer firms. Cases from the seafood export industry have been selected for this research. These selected firms are niche firms and are heavily internationally oriented with around 90% of their revenues coming from exports. Thus, managers in the selected case firms are well positioned to address the research questions at hand. In the following, conceptual aspects regarding niche marketing and commitment are identified and briefly discussed with reference to the
438 K. Toften and T. Hammervoll existing literature. Next, the methodology for the research at hand is presented, followed by its findings and discussion. The article then continues with a conclusion and implications of this research, followed by pinpointing some of its limitations and providing recommendations for future research. NICHE MARKETING To the best of the authors knowledge, no widely accepted conceptual definition of niche marketing exists. However, several attempts, which share similarities, have been made to capture this concept, including the following: niche marketing has been defined as a method to meet customer needs through tailoring goods and services for small markets (Stanton, Etzel, & Walker, 1991), or positioning into small, profitable homogenous market segments which have been ignored or neglected by others (Dalgic & Leeuw, 1994, p. 42). A third definition is a marketing strategy that uses product differentiation to appeal to a focused group of customers (Phillips & Peterson, 2001, p. 1). Also, Kotler (2003) characterizes niche marketing as focusing on customers with a distinct set of needs who will pay a premium to the firm that best satisfies their needs, where the niche is not likely to attract other competitors, where the niche firm gains certain economies through specialization, and where the niche preferably has sufficient size, profit, and growth potential. Although it seems difficult to agree on a single stated definition of niche marketing, the following characteristics may be illustrative for niche activities: Segmenting the market creatively, focusing activities only on areas where the firm has particular strengths that are especially valued (Hammermesh, Anderson, & Harris, 1978); Focusing (Linneman & Stanton, 1991), by thinking and acting small (Hammermesh et al., 1978) through offering small production volumes, focusing on a few customers and avoiding markets with many competitors or a dominant competitor (e.g. Hezar, Dalgic, Phelan, & Knight, 2006); Gathering market information (Linneman & Stanton, 1991); Focusing on customer needs (Dalgic & Leeuw, 1994); Treasuring firm reputation and using word-of-mouth references (Dalgic & Leeuw, 1994); Applying specialization and differentiation (Dalgic & Leeuw, 1994; Kotler, 1991; Linneman & Stanton, 1991); Charging a premium price (Dalgic & Leeuw, 1994); and Building long-term and strong relationships (Dalgic & Leeuw, 1994).
An Exploratory Study of Seafood Exporters 439 COMMITMENT There are various views about the nature of commitment (Fullerton, 2005). These definitions often assume that commitment is an attitudinal construct (Gilliland & Bello, 2002). Marketing scholars have previously defined commitment as a desire to maintain a relationship (Moorman, Despandé & Zaltman, 1993; Morgan & Hunt, 1994), a pledge of continuity between parties (Dwyer, Schurr, & Oh, 1987), the sacrifice or potential for sacrifice if a relationship ends (Anderson & Weitz, 1992), and the absence of competitive offerings (Gundlach, Achrol, & Mentzer, 1995). These various sources facilitate customer loyalty to a brand or firm even when satisfaction may be low (Gustafsson, Johnson, & Roos, 2005). Consequently, marketing scholars should view customer commitment as a psychological force linking the customer to the selling organization (Fullerton, 2005). The various definitions suggest two dominating dimensions of relationship commitment: affective and calculative, or continuance, commitment (Fullerton, 2005; Gilliland & Bello, 2002, Gruen, Summers, & Acito, 2000; Gustafsson et al., 2005). Affective commitment includes shared values, trust, benevolence and relationalism (Fullerton, 2003; 2005), and exists when one party identifies with and is attached to the relational partner. Affective commitment is also perceived to be a more emotional factor (Gustafsson et al., 2005). Affective commitment is associated with the willingness to trust that partners contribute the way they are supposed to. The higher affective commitment, the more repeated (and probably severe) the violations of expectation necessary to cause the deterioration of a relationship (Bouty, 2000). Calculative commitment involves switching costs, sacrifice, lack of choice, and dependence (Fullerton, 2005), and is considered to be a more rational, economic-based dependence on product benefits (Gustafsson et al., 2005), or pledges in terms of specific actions binding a channel member to a relationship (Anderson & Weitz, 1992). Considering relationships in a marketing strategy perspective, Ghosh & John (1999) define three types of such pledges: (1) transaction-specific investments, (2) adaptation to uncertainty, and (3) accommodation of performance measurement difficulties. Transaction-specific investments are assets with a high amount of specificity that represent sunken costs: they have lower value outside the exchange relationship (Williamson, 1985). Williamson (1991) distinguishes six types of asset specificity: site specificity, physical asset specificity, human asset specificity, brand name capital, dedicated assets, and temporal specificity. Such investments create a lock-in effect for the investing party, and enable opportunistic behavior by the other party (Ghosh & John, 1999). For example, Rokkan, Heide, & Wathne (2003) point to how Wal-Mart can make demands, such as for new packaging solutions or delivery terms, without paying for them when suppliers
440 K. Toften and T. Hammervoll have made transaction-specific investments. In general, firms can behave opportunistically by shirking (reducing their own costs) or engaging in haggling or hold-up threats (imposing costs on exchange partners). In supply chain relationships, Ghosh and John (1999, p. 138) suggest that higher levels of adaptation by supply chain partners (compared to their competitors) are required by the market leaders, Coca-Cola and Pepsi, to undertake increasingly complex promotional campaigns. Finally, Ghosh and John (1999, p. 139) argue that firms that position their products by emphasizing end-customer benefits must accept greater levels of performance evaluation difficulties compared to firms that emphasize end-customer cost reduction. To the extent that one or more of these factors are low, value creation opportunities are not fully exploited in the relationship. Only the calculative type of commitment can be attributed to transaction-specific investments and adaptations because they create switching costs, lack of choice, and dependence (Fullerton, 2005). METHODOLOGY In order to examine customer relationships and commitment in regard to niche seafood exporters, an exploratory approach was found appropriate. Past research on this matter is scarce, and in cases where relatively little is known about the matter to be investigated, exploratory research is recommended (Churchill, 1992). Case analyses were used as the data collection method through in-depth personal interviews with key informants in the case firms and secondary research. This method allows insight into the respondents own interpretations of their environments and improves the researcher s possibility for understanding underlying or latent constructs (Miles & Huberman, 1994). The population selected for this research is the Norwegian seafood industry. This industry consists of a number of small- and medium-sized firms with a strong export dependency, and the general managers are therefore well positioned to address export-specific issues. The cases selected for this niche research were based on the individual suggestions from three industry experts who applied their own interpretations when suggesting niche firms, and represented different product types, production methods, sizes, and geographic locations. Such a nonrandom selection of cases is suitable for extending the emergent theory (Eisenhardt, 1989). An interview guide with 23 questions was developed, inspired by the interview guide developed by Larson (1992), and efforts were made to ensure that the questions were not biased toward preordained theoretical perspectives (Eisenhardt, 1989). The questionnaire was tested for face validity by marketing scholars. Further testing was deemed unnecessary because our primary concern was to include relevant topics and make plans for
An Exploratory Study of Seafood Exporters 441 TABLE 1 Key Information Regarding the Firm Cases Issues firm Niche product Sales volume for niche product (in weight) # of years in operation # of employees, average this year Estimated niche revenues (total firm revenues), in 1000 Case One Stockfish* 130 tonnes 55 12 1544 (4631) Case Two King crab 600 tonnes 10 22 3518 (3518) Case Three Ecological 150 tonnes 33 20 550 (6872) salmon* Case Four Stockfish* 140 tonnes 86 16 2300 (5400) Case Five Ecological salmon* 400 tonnes 10 95 1066 (5330)** *The niche product in question constitutes only a part of the total product scope. **The two main contracts were initiated at the end of last year, and the firm is thus in position to expand its revenues significantly this current year. probing interesting avenues for investigation that were presented during the interviews, rather than the exact wording of questions. The six suggested firms were all contacted through an informational letter and a telephone call. Five out of six firms agreed to participate in the study. The sixth firm was interested in participating in this research as well, but repeated cancellations of interviews from the firm s side and expressed time pressure for its general manager made this interview impossible. For the other firms, a meeting was scheduled at the firms locations, and the key informants, in terms of the general manager or export manager, were requested to allow a one-hour interview. In most cases, the interviews lasted from one hour up to one and one-half hours. The average duration was one hour and twenty minutes. The interviews were machine-typed immediately after their completion, and the qualitative analysis was conducted manually. Key information regarding the firm cases is provided in Table 1. FINDINGS AND DISCUSSION This section will lay out and discuss the findings stemming from the interviews with the five case firms in terms of nature of the firms setting and customer relationships, type of commitment, and current challenges facing each niche exporter in terms of commitment to customer firms. Firms Settings and Nature of Customer Relationships Case One represents a firm that has been in operation for several decades, and the respondent has been in charge for nearly 20 years. The firm has
442 K. Toften and T. Hammervoll specialized in a seafood product that has especially good conditions for succeeding in that region (stockfish). This is based on ease of seasonal capture of a distinct cod type (skrei) and particularly well-suited drying conditions, which have provided grounds for building core competencies and a local industry cluster. This firm targets few, but long-term customer relationships. Currently, there are five main firm customers in Veneto, Italy, three of which are large. All the main customers have been customers for 12 to 15 years. Case Two is dedicated to selling king crab, and is at the forefront of utilizing the entire crab and targeting different market niches with the different product parts. The case firm has superior access to king crabs of premium quality, and the harvesting and production methods are of an accordingly high quality. The main customers are located in Japan and Europe, consisting of ten importers. The respondent emphasizes the importance of close relationships and commitment, particularly in Japan. As he says, everyone is building relationships here... and personal friendship provides longterm customer relationships. Most of the customer relationships have lasted for several years, but the case firm has a policy of attempting to expand its customer base with at least one new customer firm each year, resulting so far in some relationships of shorter duration. Case Three focuses on ecological salmon farming. According to the respondent, the case firm has one dominating international customer, which is a large retailer. There seem to be few competitors producing for this ecological market, and the case firm is also profiting from the image of the cold and clean Arctic waters, according to the respondent. Case Four also operates in the stockfish industry. It has been in operation for generations and has few and long-term customers. The dominating customer has been with the case firm since 1922. The case firm uses an exporter for marginal customers, and is also affiliated with a joint export organization, which attempts to coordinate prices and other terms for the member firms. Case Five is a dedicated producer of ecological salmon. It is a somewhat recent start-up firm and has, so far, two dominating customers (international retail chains). When summarizing the findings regarding the nature of customer relationships of these case firms, a couple of key characteristics seem to be in common for the case firms. First, the case firms focus on providing premium quality products of limited volume targeting particular niches where the case firms have particular and valued strengths. This follows general characteristics for niche activities, as discussed by e.g., Dalgic & Leeuw (1994), Hammermesh et al. (1978), Hezar, Dalgic, Phelan, & Knight (2006), Kotler (1991) and Linneman & Stanton (1991). Second, the case firms seem to prefer having few and long-term customers. The case firms reported a number of customers ranging from one to ten, which by many standards could be described as a situation with having
An Exploratory Study of Seafood Exporters 443 few different customers. The case firms also reported an intention and desire of having long-term customers, and even though the newly started firm could not present a long track-record, the intention of having long-term customers was still clear, and another case firm could present a firm customer relationship that has lasted for two to three generations. This is also consistent with characteristics of niche activities (e.g. Dalgic & Leeuw, 1994; Narus & Anderson, 1986) and adherent to the concept of relationship marketing (e.g. Anderson & Weitz, 1992). Also, during the interviews, it became clear that the notion of customer is problematic is it the end customer or some of the intermediaries? This could probably be attributed to the firm s size and a narrow core of capabilities in-house. Small niche firms have few administrative positions and it may be effective to leave most export activities to an exporter. This, of course, calls for a capable exporter. Based on this research, it seems like a long-term and strong personal relationship is an important success factor for niche firms. Indeed, the common strategy is to use only one exporter. This makes the relationship strong, but also vulnerable due to possible opportunity loss. One remedy for this is to use alternative sources for market information to monitor market developments. Type of Customer Commitment Case One claims to be committed to its main customers, and that this commitment is reciprocal. The personal relationships are deep (mutual visits and extended information exchange). There is a mutual understanding among the case firm and the main and long-term customer firms in that in periods with low supplies, we prioritize deliveries to our customer firms, while in periods of ample supplies, our customer firms tend to put in larger orders to help us out. The expressed commitment is mostly affective, as described by e.g. Fullerton (2005) and Gustafsson et al. (2005). The respondent emphasizes trust when describing how the relationship works, and he is comfortable with the security and low risk since he knows the customers and they have a history of a well-functioning relationship. The case firm has the possibility to pursue other customers without much product adjustment, as there are potential alternative firm customers and there are no other compelling switching costs, such as formal long-term and binding contracts. Still, the case firm prefers to hold onto its long-term customers because these can be trusted not to act opportunistically. In particular, opportunistic behavior can be a problem in two regards: (1) payments (insufficient amount or delayed) and (2) that the customer will attempt to claim a discount after delivery due to poor product quality without compelling reasons. As long as a fish is a fish and even if the customer is able to show the supplier a fish of poor quality, the supplier cannot be sure that it was she or he who actually
444 K. Toften and T. Hammervoll delivered this fish because the possibility of traceability is low. This is a wellknown strategy opportunistic customers use to cheat on seafood suppliers. Case Two provides several examples of its customer commitment, such as having few and long-term customers and personal friendships. This latter example could prove to be very important as many employees, particularly in Japan, remain with the employer their entire career. The case firm regularly visits the main customers, and in cases where a key employee at the customer firm leaves his position, his successor is formally presented. At these visits, the case firm also visits customers further downstream in the market channel, and also brings along employees from the production floor of the case firm to increase their understanding of and commitment toward producing quality products. Further, the case firm provides presents, gives dinners, and arranges for product and production inspections. The case firm also provides product adaptations at the requests of its regular customers, but not so much adaptations of the core product, but particularly regarding the use of packaging materials. The case firm also prioritizes selling to longterm customers as opposed to acquiring new customers. Based on the list of examples, there seems to be little doubt that this case firm presents a high degree of customer commitment. The case firm declines the possibility of selling to alternative and potentially better-paying customers in case of short supplies. In addition, minimal switching costs exist and the respondent emphasizes personal friendship as a key factor. Both examples support the view of an affective commitment at large (Anderson & Weitz, 1992; Dwyer et al., 1987; Morgan & Hunt, 1994). Case Three points at several examples of attempts to increase commitment. There are frequent reciprocal visits between the case firm and its main customer, supplemented with regular telephone calls and dinners. The respondent also emphasizes the high degree of trust between the case firm and this customer, particularly related to payment and information. Information here could relate to delivery security and production instability due to weather and temperature conditions. Further, the long-term affiliation and some product adaptations could also support the notion of commitment. However, this case firm also reports that this type of commitment is even stronger to the exporter. In addition to the examples of frequent and reciprocal visits, telephone calls, and dinners, the respondent also emphasizes a strong personal friendship as well as participating at seminars and lectures arranged by the exporter. This implies that the commitment to the exporter is stronger than to the customer firm. There are sufficient numbers of examples to conclude that this case firm expresses an ample degree of commitment. The reported trust (Fullerton, 2003; 2005; Gustafsson et al. 2005) and mutual understanding between the case firm and the customer firm support a dominating affective use (e.g. Fullerton, 2005). However, the respondent also expressed his worries about switching costs, since ecologically produced salmon cannot be converted
An Exploratory Study of Seafood Exporters 445 into traditional farmed salmon at a later stage without incurring unreasonably high production costs. To begin with, the case firm was committed to the customer firm for this reason (indicative of calculative commitment) (Anderson & Weitz, 1992; Fullerton, 2005; Gustafsson et al., 2005), but a high demand for ecologically produced salmon has essentially eliminated this market difficulty. In sum, this case firm expresses affective commitment to its main customer. The respondent s commitment to the exporter, with their close friendship in addition, also suggests an affective commitment to the exporter. Case Four conveys a strong commitment to its main customer through reciprocal visits, contacts, dinners, and gifts. Further, the respondent emphasizes the trust between them, which is particularly important regarding potential false product complaints and which has been built up through a long history of successful trading. The respondent also emphasizes the mutual understanding and their mutual efforts to help each other out in difficult times. Again, the commitment seems to be of the affective type. This is due to the emphasis on friendship, trust, and mutual pragmatism (Fullerton, 2003; 2005; Gustafsson et al., 2005) to help each other, which is a result of a long history of successful partnership. The preference for a long-term relationship, almost in terms of an alliance, despite the presence of alternative buyers and low switching costs, supports this view (Fullerton, 2005; Morgan & Hunt, 1994; Gruen et al., 2000). As the respondent puts it: It is literally impossible to terminate such a long-term customer, and this statement was based on friendship and tradition. Case Five is, without doubt, truly dedicated to producing the best ecologically produced salmon possible. The respondent and his co-founder hold lectures and seminars about this topic at the request of their customers. They also participate in ecological trade fairs. The commitment to the customers is demonstrated by frequent and reciprocal visits, telephone calls and many dinners. Further, the use of long-term contracts of three years compared to the industry norm of three to six months and few customers to concentrate on also strengthen the view of commitment. Most important, though, are the shared values and production philosophy. The respondent strongly emphasizes the need for being dedicated to ecological production in order to be considered a large firm customer of this case firm. The respondent did report of some specific investments for one of the two main customers related to production. This investment can also be used for other present or potential customers, but it increased the production costs. This expressed commitment is mostly of the affective type and can be illustrated by the insistence of shared values and a dedication to an ecological production philosophy (Fullerton, 2005). Long-term contracts, a personal relationship and few customers also support this view (Fullerton, 2005; Gustafsson et al., 2005). The reported specific investment in production
446 K. Toften and T. Hammervoll facilities could have tilted the commitment toward calculative commitment (Gustafsson et al., 2005; Williamson, 1985), but the personal dedication of the respondent to true ecological production as such and an abundance of alternative ecological firm customers seem to outweigh the risk for such an outcome. This case firm relies on different exporters, but only on one importer for each of its two customers, which are located in two different countries. These importers also benefited from a strong commitment from the case firm, and they all shared the beliefs about true ecological production. In sum, it seems clear that all the case firms are committed to their main customer relations, and that this commitment is of the affective type. Challenges of Customer Commitment When it came to reported challenges of this commitment, Case One emphasized only the role of the exporter as a potential conflict or challenge. The exporter that this case firm uses has developed even stronger ties with the customers and potential customers for this type of product than the case firm. Further, this exporter was founded by a previous employer of the case firm, and there exists a deep and personal friendship among this founder and key person at the exporter and the case firm s employees, particularly with the general manager. This close relationship is not a problem, but, as the respondent puts it, it may be difficult to maintain the integrity that is necessary. The close relationship might prove to be too close, and thus it may be difficult to focus on doing the best possible job for the case firm. This may work well in good times, but the respondent is obviously worried about what could happen in case times get worse. For instance, would fears of compromising this friendship with the exporter influence the possible decision of replacing the exporter or using other exporters as additional exporters, if need be? Also, by putting all its eggs in one basket (i.e., using only one exporter), the case firm could increase the market risk. Most notably, this could prove to be fatal if the exporter went out of business or the relationship turned sour for some reason. Also, using only one exporter could cause opportunity loss, since alternative exporters could potentially provide better business opportunities, such as better market information or prices. The respondent also felt a responsibility towards the exporter due to this personal friendship, in case the case firm had to close down and caused serious trouble for the exporter. Case Two did not report many challenges directly related to his commitment. However, he did comment that although he was committed to maintaining close relationships, some of the customers occasionally displayed an opportunistic behavior, particularly on pricing issues. This suggests that the partner sometimes takes advantage of the case firm s vulnerability and weaker position in times of buyer s market.
An Exploratory Study of Seafood Exporters 447 Case Three expressed concerns and challenges similar to Case One, and they were all related to the use of a single exporter and a very close relationship with this exporter. Examples could be high market risk and vulnerability due to the use of only one exporter, and could result in loss of market information, loss of customer contracts if the exporter went out of business or the relationship turned sour. Also, the potential opportunity loss by using other and more beneficial exporters could be added as a challenge. Finally, the personal friendship could potentially affect the case firm s business decisions in a disadvantageous way for the case firm in the long run. Case Four did not report many challenges related to this commitment. It was quite the opposite, since the respondent claimed that relationship commitment was absolutely necessary to succeed in this marketplace. The potential challenges could relate to the fact that the customer knows more about total production volume and weather conditions than the case firm does. When negotiating the final product prices, this is a disadvantage. Case Five emphasized only one potential problem with this commitment, and that was based on the fact that it is a very specific product. In case of potential production problems, there could be a challenge explaining this to customers, since no excessive supplies or product alternatives exist. This potential situation necessitates a sincere understanding from the firm s customers. The type of applied commitment and reported main challenges for the case firms are listed in Table 2. TABLE 2 Summary of Type of Commitment and Challenges in the Customer Commitment Firm issues Case one Case two Case three Case four Case five Type of commitment Challenges Affective Affective Affective Affective Affective Vulnerable due to the use of only one exporter Potential decisionmaking problems due to close friendship Potential conflicts of loyalty down the market channel Potential opportunistic customer behavior Vulnerable due to the use of only one exporter Potential decisionmaking problems due to close friendship Some specific production investments Virtually impossible to terminate relationship and sell to others instead Too knowledgeable customer, for purpose of price negotiations A specific product request combined with vulnerable production
448 K. Toften and T. Hammervoll CONCLUSION AND PRACTICAL IMPLICATIONS This research article has attempted to explore the nature of the firms settings and their customer relationships, the types of customer commitment, and the current challenges that niche firms experience in terms of commitment to customer firms. As expected, the case firms display strong niche firms characteristics and high commitment to their major customers. Relationships are few and long-term, and the parties know each other quite well. The personal relationships are strong, and there is extensive information exchange and contact amongst the parties. The customer commitment we were able to detect was generally of the affective type. Affective commitment is an important aspect of long-term relationships because it reduces the probability that there will be problems following on from opportunistic behavior (such as insufficient or delayed payments and unnecessary discussions on delivered product quality). Such commitment is reflected when a firm prioritizes deliveries to their main customer, and when the customer helps the exporter out when there are market difficulties by ordering larger quantities than the customer really wanted. This successful use of affective commitment should be viewed as highly favorable by the firms, since affective commitment has been claimed to be vital to the development and maintenance of effective marketing relationships (e.g., Fullerton, 2005). Further, several challenges in regard to their customer commitment were identified in this study. Some firms reported a potential problem if personal friendship became too close to make sound business decisions, i.e., that the friendship could cause decision making that was not the most favorable to the case firms. Related to this challenge is the potential problem of terminating customer relationships that have lasted for a very long time and have also turned into friendship, in favor of newer and potentially more profitable customer relationships. Other reported challenges are potential opportunistic customer behavior, vulnerability due to specific production investments, or product adaptation combined with a vulnerable production. Further, one case firm reported a challenge related to the fact that the close relationship and commitment contributed to a highly knowledgeable customer, which could affect the outcome of the annual price negotiations. Also, whereas the textbook approach is to consider a firm and its customers, this research identified several examples of international niche firms being committed to successive stages in the supply chain (e.g., both the trader and the importer). More specifically, during the interviews, it became clear that the notion of customer is problematic from the case firms point of view, and that both the intermediaries and end customers could be viewed as customers. This research suggests that niche firms have close relationships with their exporters as well as their main customers. By all means, the limited administrative capacity in many international niche firms
An Exploratory Study of Seafood Exporters 449 calls for using a capable exporter, and it seems that a long-term and strong personal relationship is an important success factor for niche firms. A common strategy seems to be using only one exporter, which makes the relationship strong, but also vulnerable due to possible opportunity loss. High affective commitment could, in some instances, mislead niche firms to product offerings that would only be requested by this (large) customer. Also, high affective commitment could mislead niche firms to preserve the relationship by all means, even when they should not. This might occur, for example, when the niche firm deliberately or not is not successful in explaining their plans or ambitions to the customer. The customer might just develop mistrust because of this lack of transparency, which rules out future business. What happens is that such firms are really focusing on themselves, and not on the relationship, as they should. Finally, high affective commitment could mislead niche firms to alter their values to fit with those of larger customers. There were few examples of transaction-specific investments (although products in some cases were customized without producing the desired results), and consequently no examples of adaptations in such investments. The negative implication of this is that the value creation potential in these relationships is not fully exploited (Ghosh & John, 1999). As it stands, a niche firm has a narrow core of capabilities in-house and it is challenging to maintain a wide and varied capability set to assist them in developing positioning advantages and superior customer value. Through relationships, external actors can play a key role in capability development and maintenance in this area (Håkansson & Snehota, 1995), but the challenge is to create such calculative commitment. The positive implication is that the niche firms retain flexibility, that otherwise would have been lost (Håkansson & Snehota, 1995). In order to cope with some of the potential challenges that result from high affective commitment (without calculative commitment), niche firms should carefully consider the consequences of adapting their products on request from their main customer, their communication toward partners, and any changes they make in their marketing strategy based on their interaction with their partner. Of course, it is difficult to be rational when you are falling in love, but at least niche firm managers should stick to the concept they believe in, that is, to be committed to their visions and policies. Customers will stay interested as long as they view the offerings as competitive and that they are prioritized through long-term relationships. RESEARCH LIMITATIONS AND FUTURE RESEARCH This research has only focused on five firm cases, and the limited data makes our results unfit for generalization to a larger population. Still, the data is suitable for practical implications, and such an approach is also wellsuited to extend the emergent theory (Diamantopoulos & Cadogan, 1996;
450 K. Toften and T. Hammervoll Eisenhardt, 1989). Further, this research concentrated on export-oriented niche firms in the seafood industry. Accordingly, our results constitute a starting point for more detailed studies in this industry in particular, but other industries constituting small suppliers selling to large customers in foreign markets could possibly benefit from this. Inevitable weaknesses are associated with cross-sectional research. The data is collected at only one time. The respondents were asked to tell their stories, but data collection conducted at several times, as in longitudinal research, would have produced data that are more reliable. Further, this study has not explored differences among branches of the seafood industry or in terms of differences in processing levels. This provides an opportunity for future studies exploring or testing possible differences among such subgroups, which could gain additional insight into how these groups develop their marketing strategies. It is also possible to repeat this study by using industries other than seafood, or using firms based in other geographical locations. One problem identified in this research is that niche firms deal with customers at different levels in the supply chain, ranging from their first intermediary to the final consumers. Therefore, we hope to see studies focusing on supply chain management that explore international niche firms commitment to several of the successive stages in their supply chain. Future research should also aim at developing theoretical models that link commitment and marketing strategy in order to guide niche firms in their efforts to get more out of their customer relationships. As far back as in 1967, Thompson (1967) presented the paradox of administration, but there is still little or no literature in marketing that has sought to discover the process of interaction in relationships and how this influences the firms goals regarding flexibility and efficiency: when should a firm commit heavily, and when should it not? One important exception is Danneels (2003), who studied tight and loose coupling with customer firms. The existing literature is further mostly concerned with large companies (such as Coca-Cola Company and General Motors). How do partnerships between small niche exporters and large international customers develop? How are they initiated, maintained, and terminated? What clever things can be done for successful value creation when there is little room for undertaking nonnegligible transaction-specific investments? These important questions should be dealt with in future research. REFERENCES Anderson, E. & Weitz, B. (1992). The use of pledges to build and sustain commitment in distribution channels. Journal of Marketing Research, 29, February, 18 34. Baker, M. J. (1995). Marketing philosophy or function? In Baker, M. J. (Ed.), Companion encyclopaedia of marketing (pp. 3 22). London: Routledge.
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