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1. Introduction
Despite their structural dominance in the Russian economy (small businesses account for 99% of the total number of market entities) and the stability of the number of new enterprises registered annually (over 1 million/year), the number of active SMEs has been declining in recent years.
At the end of 2021, 6.2 million SMEs were officially registered in Russia, of these, 95.8% were micro enterprises, 3.8% small businesses and only 0.4% were medium-sized enterprises. Analysis of SME survival problems indicate that in developed European economies, 6-8% of small enterprises survive their first three years in business, while in Russia this figure is no higher than 3%.
According to the results of the Global Entrepreneurship Monitoring project, from 2021, in Russia 75% of entrepreneurs cited unprofitability as the primary reason for closing their business. Other reasons include lack of funding (7.4%) and high taxes and bureaucracy (4%). Incompetence of business founders and lack of experience in various areas of management, including marketing, is considered the main reason for the closure of small enterprises in Russia.
The importance of using well-balanced marketing strategies (the ability to identify and manage market demand, as well as building relationships with the customer base) as a survival and development factor for SMEs is confirmed by multiple experts, practitioners, and specialized global consulting companies.
Many researchers have demonstrated the significant impact marketing has on the performance of SMEs. However, less explored is the issue of the development of marketing models in SMEs. In this regard, a SME marketing modeling that ensures business effectiveness and growth is of clear relevance.
Small and medium-sized enterprises (SMEs) play an important role in the economies of both developed and developing countries, and the Russian Federation is no exception. According to the statistical data, the share of small businesses in the total number of enterprises in the Russian Federation is 99%. Nevertheless, the share of the SME sector in GDP remains low-20% maximum. According to the Federal Tax Services (FTS) unified register of SMEs, at the start of 2021 there were 6.2 million SMEs in the Russian Federation (see Table 1).
Table 1 SME growth dynamics
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Total | 5,523,765 | 5,865,780 | 6,039,216 | 6,041,195 | 6,212,137 |
| Micro | 5,032,956 | 5,235,664 | 5,879,644 | 5,986,652 | 5,949,712 |
| SE | 238,796 | 239,904 | 239,030 | 223,335 | 217,373 |
| ME | 19,980 | 19,951 | 19,944 | 18,492 | 18,061 |
Source: Prepared by the author based on Government of Russia (2022).
The statistical data on the number of SMEs per 1,000 population shows a lower number of SMEs in Russia compared to other countries (see Figure 1)-27.6 SMEs per 1,000 population. The global average is 32.2 enterprises per 1,000 population.
Source: Prepared by the author based on OECD, 2021.
Figure 1 Number of SMEs per 1,000 population in countries and regions of the world
Analysis of statistical data reveals several problems and trends in the development of SMEs in Russia.
Classification of problems facing SMEs was determined while interviewing entrepreneurs during a qualitative study. One question was about the significance of the problems they faced that hindered business development. The response results are presented in Table 2 (see Table 2).
Table 2 Ranking SME problems
| Problems | Average score (1-7) | V (variation coefficient), % |
|---|---|---|
| Lack of qualified personnel | 6.8 | 7.6 |
| Lack of competencies on the part of the owner (manager) for business strategic development | 6.4 | 14.7 |
| Unqualified and irregular marketing and promotion | 6.2 | 8.8 |
| Low market demand | 6.1 | 10.4 |
| Lack of financial and other material resources | 5.3 | 13.2 |
| High competition | 4.7 | 9.1 |
| Ineffective government regulation and support for entrepreneurial activity | 4.3 | 28.8 |
Source: Prepared by the author.
The most prominent and pressing issues facing SMEs are lack of qualified personnel (6.8 out of 7); a lack of competent owners/managers for strategic development (6.4); and a lack of qualified and regular marketing techniques (6.2). The first and third factors are widely held views (V=7.6% and 8.8%). The variation coefficient demonstrates either the uniformity of the population or lack of it. In the case when V (variation coefficient) is less than 10%, the population is considered homogeneous, and the opinions are similar. If V is between 10 and 20%, it is average variation, and if it is greater than 33%, the population is considered heterogeneous. In this case, the highest level of heterogeneity was determined to be ineffective government regulation of entrepreneurial activity and state support (V = 28.8%), which shows that this factor is not relevant for all companies. Thus, the lack of qualified and regular marketing is one of the most important issues for SMEs contributing to the development and growth of a business. The leading problem facing small businesses overall is poor management, including misunderstanding of the market and customer behavior. Therefore, this study examines the impact of marketing activities on the successful development of small and medium-sized enterprises (SMEs) in Russia.
It identifies and analyses a set of customer-oriented business processes and entrepreneurial marketing competencies to benefit SMEs. The focus of this research is to analyze developmental patterns and the specifics of SME marketing modelling to ensure the effectiveness and growth of small businesses.
2. Theoretical framework: Literature review
Theoretical research into specificity of SME marketing modeling began with the work of Hills (1984); Morris & Paul (1987); Carson et al. (1995); Gilmore & Carson (1999); Gilmore et al., (2001); Morris et al. (2002); Morrish et al. (2010); Miles et al. (2003); Simpson et al. (2006). These studies define the distinctive nature of the marketing style used by SMEs, characterized by its “informal, simple and casual approach” (Carson et al., 1995), and their view of marketing as a means for survival and growth. It quickly becomes evident that marketing by SMEs is closely related to entrepreneurial orientation, which spurs the concept of entrepreneurial marketing as a counterweight to the administrative marketing of large corporations. Modern research in the field of SME marketing is integrated with the theory of entrepreneurship, since it is recognized that entrepreneurs’ knowledge of marketing has a significant influence on the market orientation of SMEs.
A number of researchers should be noted separately. They devote their work to a combined analysis of the impact of market and entrepreneurial orientation on SME performance (Lumpkin & Dess, 1996; Matsuno et al., 2002; Baker & Sinkula, 2009; Boso et al., 2013), which is particularly relevant to this study.
In order to adapt different approaches to small and medium-sized enterprises (SMEs), the authors see the need to substantiate the origins of marketing model concepts and determine their types. In marketing literature, the marketing models and their types are described according to three constructs:
Market (customer) orientation described in the work of Deshpande & Farley (1998), Kohli & Jaworski (1990), Narver & Slater (1990), and Fritz (1996). On the types of market orientation models, the most salient are proactive, reactive, and interactive.
Entrepreneurial capabilities of a company that impact the development of the company’s innovative abilities and/or competencies Covin & Slevin (1989), Day (1994), Andersén & Ljungkvist (2015), Nuryakin et al. (2018), Rezvani & Fathollahzadeh (2020), Khouroh et al. (2020), and others.
Marketing practices (processes) as a set of dominating marketing tools, used by companies to implement marketing activities and reach maturity in the work of Coviello & Brodie (2010), and others.
Market (customer) orientation
Research of the evolution of market orientation (Kohli & Jaworski, 1990; Narver & Slater, 1990; Fritz, 1996) and buyer-customer orientation (Deshpande & Webster, 1989; Deshpande & Farley, 1998) showed a trend towards increasing customer-centricity (Sheth et al., 2000), and a transition to a customer-dominant marketing logic (Heinonen et al., 2010; Heinonen & Strandvik, 2015; Heinonen et al., 2013). Russian publications also confirm the strengthening of the customer orientation in Russian companies (Gulakova et al., 2015; Tretyak et al., 2015; Shirshova & Yuldasheva, 2016).
Entrepreneurial capabilities
A significant contribution to the present research was made with the concept of entrepreneurial capabilities (Covin & Slevin, 1989; Day, 1994), dynamic capabilities (Teece et al., 1997) and dynamic marketing capabilities of SMEs (Morgan et al., 2009; Bruni & Verona, 2009; Monferrer et al., 2015; Hernandez-Linares et al., 2018; Tartaglione & Formisano, 2018, Zehir et al., 2015, etc.).
Teece et al. (1997)) showed that companies must be able to adapt their capabilities in order to be resilient to changes in the external environment. Teece understood dynamism as the ability to integrate and reconfigure the company’s external and internal competencies to accommodate to changes in the environment (Teece et al., 1997). Dynamic marketing capabilities create preconditions for an increase in SMEs’ competitiveness.
Marketing processes
Coviello & Brodie (2010) undertake their research in the field of process management that helps to interpret marketing as a set of dominating marketing tools, utilized by a company to implement their marketing activities. The complementary theories of organizational maturity and maturity of business management processes (De Bruin et al., 2005; Curtis & Alden, 2007) add extra value to contemporary literature on marketing and identifying performance in small businesses (Ismail & Mohamad, 2022).
After detailed review, we have developed systems to substantiate a conceptual approach to describing a marketing model on three levels: 1) value (as a mix of customer and market orientations); 2) entrepreneurial competence (a set of dynamic competencies); and 3) operations (a set of formalized marketing business processes) that impact the level of business maturity.
3. Research methodology
Following preliminary investigation and a review of the literature, we have adapted and adopted two scales and developed one scale for evaluating model variables:
Customer orientation evaluation scale (existing scale by Deshpande & Farley, 1998)
Entrepreneurial orientation evaluation scale (existing scale by Covin & Slevin, 1989)
Marketing processes maturity evaluation scale (developed by the author).
We have analyzed several scales for measuring the market (customer) orientation and concluded that the scale for measuring customer orientation by Deshpande and Farley (1998), based on 10 statements, will be included as a method for measuring the customer orientation of SMEs in our sample. This scale combines statements that measure declarative values and behavioral norms existing within the company and which are related to the evaluation of customer satisfaction and to the availability of formalized procedures in quality assessment. This scale is presented in Table 3 (see Table 3) is suitable for our purposes of measuring the focus on the customer.
Table 3 Customer orientation (CO) measuring scale
| Statements | Likert scale 1-7 |
|---|---|
| (1) Our business objectives are primarily driven by customer satisfaction | |
| (2) We constantly monitor our level of commitment and orientation serving to customer needs | |
| (3) We freely communicate information about our successful and unsuccessful customer experiences across all business functions | |
| (4) Our strategy for competitive advantage is based on our understanding of customers’ need | |
| (5) We measure customer satisfaction systematically and frequently | |
| (6) We have regular or routine measures of customer service | |
| (7) We are more customer focused than our competitors | |
| (8) I believe that this business exists primarily to serve customers | |
| (9) We poll end users at least once a year to assess the quality of our products and services | |
| (10) Data on customer satisfaction are disseminated at all levels in our organization on regular basis |
Source: Prepared by the author based on information from Deshpande and Farley, 1998.
One of the most popular scales for measuring entrepreneurial orientation is the one proposed by Covin and Slevin (1989). The scale, which can be consulted in Table 4 (see Table 4), contains 3 groups of factors determined by the level of innovation of the company, the degree of its proactivity, and the ability to take risks. The scale consists of 9 statements which are evaluated by respondents on a Likert scale (1-7) according to the degree of agreement with these statements.
Table 4 Entrepreneurial orientation (EO) measuring scale
| Groups of factors | Statements | Likert agreement 1-7 |
|---|---|---|
| Innovative orientation | (1) Top managers at my company favor a strong emphasis on R&D, technological leadership, and innovation | |
| (2) My company sold many new products over the past five years | ||
| (3) Changes in product lines are usually quite dramatic | ||
| Proactiveness | (4) In regard to competitors my company is the first to initiate actions which competitors then respond to | |
| (5) In regard to competitors my company is very often the first to introduce new products, administrative techniques, operation technologies | ||
| (6) In regard to competitors my company is very flexible in adjusting its strategy to market needs | ||
| Appetite for risk | (7) Top managers at my company strongly favor high-risk projects (with chances of very high return) | |
| (8) In general, top managers at my company believe that owing to the nature of the environment, wide-ranging acts are necessary to achieve the firm’s objectives | ||
| (9) When faced with uncertain decision-making situations, my firm usually adopts a bold and aggressive stance to exploit maximum potential |
Source: Prepared by the author based on information from Covin and Slevin, 1989.
As for a scale for measuring the operational maturity of SME marketing models, the contemporary literature doesn’t offer scales that measure the maturity of SME marketing processes (functions). Therefore, it was necessary to create a scale. According to the qualitative research carried out, a marketing model (MM) includes the following competences:
Positioning competence (understanding the target audience and effective positioning of the company’s brand in the market).
Competence in marketing management (marketing strategy, marketing budget; execution and marketing management control).
Marketing research and analytics competence (monitoring of the market and customers, marketing research and analytics).
Product management competence (development and implementation of innovations, assortment renewal according to market trends and the needs of the target audience).
Competence in consumer relationship marketing (regular customer feedback, loyalty programs, online customer support service).
Price management competence.
Competencies in the field of sales and marketing channels.
Competencies in marketing communication management.
Development of dynamic marketing abilities.
The maturity of marketing business processes.
To create the scale in Table 5 (see Table 5), statements were generated for each group of characteristics of the marketing model (MM). Thus, the construct of the SME marketing model and the scale include 10 groups of factors and 30 variables.
Table 5 MM Construct as a set of marketing competencies
| MM Construct | No. of statements (Likert scale, 1-7) |
|---|---|
| (1) Effectiveness of market positioning | 3 |
| (2) Marketing management | 4 |
| (3) Customer relationship marketing | 5 |
| (4) Marketing research and analytics | 3 |
| (5) Product marketing | 3 |
| (6) Price management | 2 |
| (7) Marketing channels management | 2 |
| (8) Marketing communications management | 2 |
| (9) Development level of dynamic marketing abilities | 4 |
| (10) Maturity level of marketing business processes | 2 |
| TOTAL | 30 |
Source: Prepared by the author.
This scale was tested according to the procedure of reliability evaluation. Calculations were carried out using the KMO test (Kaiser-Meyer-Olkin), which showed its adequacy is acceptable (0.824), since it is above the critical value (0.5). Further, the reliability of the subscales was measured using Cronbach’s alpha, which estimates its internal consistency. Cronbach’s alpha was shown to be higher than 0.8, which indicates good reliability of the subscales.
The sample was determined to be random. The questionnaire was created based on the Google Forms service. The analysis involved only questionnaires completed for companies established for at least three years. The questionnaire included questions that evaluate customer orientation (CO), entrepreneurial orientation (EO) and marketing model maturity (MMM), security questions, and questions estimating the company’s performance in the last two years. The number of received and fully completed questionnaires was 262.
As we can see in Table 6 (see Table 6), the sectoral structure is quite diverse, and corresponds to the general structure of SMEs, where wholesale and retail trade dominate.
Table 6 Sectoral structure of the sample
| Economic sectors | Number of SMEs | SMEs share, % |
|---|---|---|
| 1. Agriculture | 9 | 3.4 |
| 2. Manufacturing | 43 | 16.4 |
| 3. Construction | 19 | 7.2 |
| 4. Wholesale and retail trade | 78 | 29.8 |
| 5. IT-technology production | 21 | 8.0 |
| 6. Catering services | 29 | 11.0 |
| 7. Transport and communication | 14 | 5.3 |
| 8. Real estate operations | 12 | 4.5 |
| 9. Other sectors | 37 | 14.1 |
Source: Prepared by the author.
As for the size (type) of enterprises, 64.6% were micro enterprises (MiEs), 29.1% small enterprises (SEs), and 6.30% medium-size enterprises (MEs), as can be seen in Figure 2 (see Figure 2). Structural equation modeling (SEM) which works well with small samples, was chosen to test the conceptual models.
The conceptual model of the proposed study combined the influence of customer orientation and entrepreneurial orientation on business performance by construction of a marketing model that reflects the degree of maturity of SMEs’ marketing competencies and marketing business processes formed on their basis, as can be appreciated in Figure 3 (see Figure 3).
Source: Prepared by the author.
Figure 3 Impact of CO and EO on business performance (conceptual model)
Within the framework of the formed conceptual model, the following hypotheses will be tested:
(H1) there is a direct relationship between the level of customer orientation (CO) of the company and the level of maturity of its marketing model (MM).
(H2) there is a direct relationship between the level of entrepreneurial orientation (EO) of the company and the level of maturity of its marketing model (MM); and
(H3) the level of maturity of the marketing model of SMEs directly affects the performance of SMEs (R)
The control variables are company age, size (number of employees) and industry. Three variables in our model are latent (CO, EO and MM), which requires methods for their assessment to be defined.
4. Findings and análisis
The conceptual model (see Figure 3) with the abovementioned hypotheses was tested by methods of regression and cluster analysis (IBN SPSS) and the logistic regression method (logit model). The results are illustrated in Tables 7, 8, and 9 (see Table 7).
Table 7 Regression statistics
| Regression statistics | Significance |
|---|---|
| Multiple R | 0.735678 |
| R2 | 0.541569 |
| Standardized R2 | 0.478934 |
| Standard error | 1.106544 |
| Observations | 262 |
Source: Prepared by the author.
Table 8 Analysis of variance
| df | SS | MS | F | Significance F | |
|---|---|---|---|---|---|
| Regression | 2 | 22.81862605 | 11.409313 | 9.266392255 | 0.0018987 |
| Residual | 17 | 20.93137395 | 1.2312573 | ||
| Total | 19 | 43.75 |
Source: Prepared by the author.
Table 9 Regression coefficient values
| Coefficient β | Standard error | t-statistics | P-Value | |
|---|---|---|---|---|
| Y-intercept | -0.716511853 | 0.842985588 | -0.8499693 | 0.007154 |
| EO | 0.256397101 | 0.189660913 | 2.6172873 | 0.01802342 |
| СО | 0.145584309 | 0.159139587 | 2.1715798 | 0.044329914 |
Source: Prepared by the author.
The determination coefficient R2 of the model is 0.54, which is a fairly high number, showing that the two independent variables account for 54% of the variability that influences business effectiveness. Data showed the significance of regression coefficients in the multiple regression equation (see Table 8 and Table 9).
The model was tested by structural equation modeling (SEM) in the IBM SPSS Amos software. As a result, we assessed the relationship between the customer-orientation CO, the entrepreneurial orientation EO, the maturity of the marketing model MM, and the performance of the business R, as presented in Figure 4 (see Figure 4).
Note: significant at *р < 0.001, ** р < 0.005
Source: Prepared by the author.
Figure 4 Influence of СО and ЕО on business performance (conceptual model). Test results
To assess the degree of consistency of the model and its compliance with empirical data, the following indicators were calculated in Table 10 (see Table 10).
Table 10 Model Characteristics
| Direction of influence | Β coefficient |
|---|---|
| СО → ММ | 0.39** |
| ЕО → ММ | 0.21* |
| ММ →R | 0.43* |
| The coefficient of determination R2 = 0.54 | |
| *р < 0.001, ** р < 0.005 | |
Source: Prepared by the author.
The results of the model testing showed that when the variable “level of maturity of the marketing model” (MM) is included in the model as a mediator, the influence of the maturity of the marketing model on business performance is assessed as very significant and relevant (β = 0.43; p <0.001). This confirms the hypothesis that regular marketing has a significant impact on business performance. At the same time, the influence of CO on MM is quite significant (β = 0.39; p <0.005), which allows us to interpret the result as a significant influence of cultural orientations on the customer and a significant influence of regular marketing activities on the development of the company’s marketing competencies.
The impact of ЕО on ММ is also quite significant, although lower than that of СО (β =0.21; р < 0.001).
Extremely high influence of MM on R (β =0.43; р < 0.001) shows the high level of importance of real and regular marketing practices in SME activity, as realized in marketing competences and business processes.
5. Conclusion and future research recommendations
In this study, the SME marketing model has been developed as a system of connections between a customer-focused culture and an entrepreneurial mindset, with a high level of marketing maturity to the success of the business. It has been demonstrated that appropriate SME marketing models should be closely related to both customer orientation and entrepreneurial conduct, allowing for a relationship between the two. The success of the company and the degree of marketing model maturity are found to be somewhat strongly correlated. In fact, most marketers seem to believe that technology can change marketing performance positively, with the survey indicating 87% do so (Hills et al., 2005). It was shown that effective SME marketing modelling should be strongly associated with customer orientation and entrepreneurial behavior, which enables linking both customer and entrepreneurial orientations.
We have found a strong relation between the marketing model maturity level and the company’s performance. The conceptual model has been tested by empirical quantitative research.
We can draw the conclusion and assumption that the marketing model substantially influences the competitiveness of the organization. The next study on the development of SMEs will need to address several issues, including how to improve the SME marketing model through the development of specific basic and dynamic marketing competencies, suggestions for the development of the marketing business processes, and the final differentiation of the marketing business processes with an assessment of their maturity level within each type of marketing models. The present results suggest some interesting areas for follow-up studies and may be viewed as future tasks for studies of SME development.
