Scientific Article b2b

Does brand orientation help B2B SMEs in
gaining business growth?

Saku Hirvonen and Tommi Laukkanen
Business School, University of Eastern Finland, Joensuu, Finland, and
Jari Salo
Oulu Business School, Oulu, Finland
Abstract
Purpose – The purpose of this study is to examine the relationship between brand orientation and business growth in business-to-business (B2B)
small- and medium-sized enterprises (SMEs). The authors also explore whether this relationship is moderated by internal firm-related factors (firm
age, firm size) and/or external market-related factors (market life cycle, industry type).
Design/methodology/approach – The authors develop and empirically test a conceptual model using data from 396 B2B SMEs operating in
Finland. Structural equation modeling is used for testing the research hypotheses.
Findings – Brand orientation contributes to business growth via two indirect paths, the first one going through brand performance and the second
one going through brand performance and customer relationship performance. However, although the effects are positive, the results reveal that
the regression coefficients are relatively small, implying only a limited impact of brand orientation on growth among B2B SMEs. The results further
suggest that firm age, firm size and industry type moderate the brand performance– business growth relationship, whereas market life cycle
moderates the effect of brand orientation on brand performance.
Research limitations/implications – Future research could extend this study by examining brand orientation in industrial markets simultaneously
with alternative strategic orientations, such as market, technology and innovation orientation. New moderator variables should also be considered,
such as market or technological turbulence. Furthermore, given that this study uses a cross-sectional data set, it is recommended that future research
should attempt to test the model using longitudinal data sets.
Practical implications – B2B SMEs are able to gain business growth through developing a strong brand. However, brand orientation per se
appears to be of limited relevance for such an endeavor. Consequently, managers of small industrial firms should consider brand orientation only
with, and in comparison to, alternative strategic orientations.
Originality/value – Brand orientation has been very rarely examined from the perspective of B2B firms or that of SMEs. Interestingly, the findings
indicate that the performance benefits of brand orientation seem to be smaller among B2B SMEs than what earlier research would imply. The
analysis of moderation effects offers additional insights into whether there are differences between industrial SMEs as to the relevance of brand
orientation.
Keywords Brand orientation, Business growth, Brand performance, B2B SME, Customer relationship performance, Moderation analysis
Paper type Research paper
1. Introduction results have not so far made their way into the strategies of
these firms (Baumgarth, 2010).
The theory and practice of brand management builds on
evidence from consumer goods companies (Leek and Of course, few B2B firms would say that they do not want
Christodoulides, 2011) and branding plays a virtually a strong brand. The skeptical attitudes toward brands may
unquestioned role in consumer firms (Keller, 1998). rather derive from the fact that while B2B firms hear
However, firms from outside the consumer domain have been arguments that branding is important, little actual guidance is
more skeptical about whether branding is important for them available on the strategies that would help to build a strong
as well. This skepticism is evident in the business-to-business industrial brand. For example, Leek and Christodoulides
(B2B) market context. Even though a growing body of (2011) suggest that the minor role of branding in B2B firms is
research shows branding also to be pertinent for the success of because of their uncertainty about the positive effects of
industrial firms (for literature reviews, see Glynn, 2012; branding on their financial gains. Such considerations are
Keränen et al., 2012; Leek and Christodoulides, 2011), the especially relevant for small- and medium-sized enterprises
(SMEs). Given their limited resources, SMEs cannot afford
the luxury of making mistakes in branding (Keller, 1998).
The current issue and full text archive of this journal is available on Investing in branding without knowing its likely outcomes
Emerald Insight at: www.emeraldinsight.com/0885-8624.htm
appears as a risk too big to take. Indeed, Baumgarth (2010)
Journal of Business & Industrial Marketing Received 4 November 2014

31/4 (2016) 472–487 Revised 8 April 2015
© Emerald Group Publishing Limited [ISSN 0885-8624] 25 May 2015
[DOI 10.1108/JBIM-11-2014-0217] Accepted 1 June 2015
472
Does brand orientation help B2B SMEs Journal of Business & Industrial Marketing
Saku Hirvonen, Tommi Laukkanen and Jari Salo Volume 31 · Number 4 · 2016 · 472–487
finds that small industrial firms are not as brand oriented as solution providers (Jalkala and Keränen, 2014). Others
their larger counterparts. arguing for the importance of branding for B2B firms include
The present study addresses the concerns of industrial Kotler and Pfoertsch (2007), Roberts and Merrilees (2007)
firms – focusing in particular on SMEs – about the relevance of and Walley et al. (2007).
branding by investigating if and how brand orientation affects The existing academic literature, however, offers little
business growth in B2B SMEs. The authors develop and empirical evidence for industrial firms on the strategies of how
empirically test a conceptual model using data from 396 to build, develop and manage their brands in a way conducive
Finnish B2B SMEs. The model further includes brand and to business growth. Recently, Keränen et al. (2012) conducted
customer relationship performance as additional performance a systematic literature review on B2B branding, concluding
measures mediating the effect of brand orientation on business that the extant literature is nascent and fragmented.
growth. Venkatraman and Ramanujam (1986) argue that Baumgarth (2010) reports one of the few empirical studies
business performance divides into two related sub-categories, investigating the role of brand orientation in the B2B context,
namely, operational (i.e. non-financial) performance and showing that developing a brand orientation has a positive
financial performance (Eccles, 1991; Neely, 1999). Both effect on market and financial performance. In a study
brand performance and customer relationship performance conducted among B2B SMEs, Merrilees et al. (2011) show,
represent operational performance, while business growth is a however, that despite the positive effect of branding
financial measure. Researchers widely agree that the strategic capabilities on the marketing performance of B2B firms, it is
orientation of a firm – in the present study being brand notably weaker than that of innovation capabilities.
orientation – contributes to financial performance only Ohnemus (2009) reports that although investments in
indirectly via operational performance (Baumgarth, 2010; branding generally enhance the financial performance of
Homburg and Pflesser, 2000; Lee et al., 2008). For instance, industrial firms, excessive investments seem to have the
Baumgarth (2010), in a research study on brand orientation in opposite effect. In addition, even though B2B buyers pay more
industrial firms, argues that brand orientation’s “effect on attention to emotional brand qualities (e.g. brand personality)
economic performance can be only indirect” (p. 658). than researchers previously assumed, functional brand
Moreover, this study explores whether internal firm-related qualities (e.g. product quality) nevertheless drive their final
factors (firm age, firm size) and/or external market-related decisions (Leek and Christodoulides, 2012). For instance,
factors (market life cycle, industry type) moderate the paths in Bendixen et al. (2004) find that the role of brand names in
the model. An understanding of the effect of brand orientation industrial buying is smaller than that of delivery period, price
on performance, especially in terms of business growth, and technology. Al-Kwifi and McNaughton (2013), in turn,
enables industrial SMEs to make informed decisions about report that product features represent the main factor behind
whether the rewards of developing a brand orientation brand switching among customers buying magnetic resonance
outweigh the risks. Although the performance effects of brand imaging equipment. The findings of Kuhn et al. (2008) offer
orientation have gained increasing research attention over the similar insights as they report that industrial buyers pay great
past few years (Gromark and Melin, 2011; Hankinson, 2012; attention to the functional product offering and less, for
Huang and Tsai, 2013), only a few papers adopt the B2B example, to brand values and personality.
(Baumgarth, 2010) or SME perspective (Hirvonen and The emotional brand qualities that B2B buyers do seek
Laukkanen, 2014) or examine moderation effects (Hirvonen relate mostly to risk reduction and reassurance rather than
et al., 2013). Research integrating these perspectives is even self-expression (Mudambi, 2002). Importantly, these
rarer, one of the very few exceptions being the study by emotional qualities build upon functional brand qualities
Merrilees et al. (2011). Such research is, however, much (Leek and Christodoulides, 2012). Industrial marketers can,
needed. For instance, a study that examines B2B firms, but hence, enhance the risk reduction and reassurance qualities of
leaves aside the SME perspective, is of only limited value to their brands by investing, for instance, in after sales services.
firms that are both “B2B” and “SME”. Such investments contribute to the emotional brand qualities
The rest of the study proceeds as follows. The paper begins by decreasing the buyers’ perceived risk as they know that the
with a literature review on branding in B2B SMEs. Next, the product or service delivers on its promises (Leek and
authors define the research constructs and hypothesize the Christodoulides, 2012). According to Hirvonen et al. (2013,
relationships between them. The following section discusses p. 629):
the measurement items and data collection. Finally, the
authors report and discuss the results and their implications, [. . .] strong business brands may thus derive from technological,
innovation, relationship and customer orientations as they all have the
draw conclusions and propose directions for future research. potential to facilitate the brand attributes valued by business buyers.
Balancing between a brand-oriented business strategy and

2. Literature review: branding in business-to-
adapting to customer needs presents industrial firms with
business small- and medium-sized enterprises additional challenges (Hirvonen et al., 2013). Beverland et al.
Baumgarth (2010) argues that increased homogeneity of (2007) report not only that successful B2B brands are highly
product quality and decreased personal customer adaptable to customer requirements but also that “there were
relationships are among the reasons why business marketers tensions between their desired positioning, their desire to
need to regard branding as a strategic choice. Ohnemus build consistent brand image, and the need to adapt to
(2009) goes as far as to argue that branding has become a individually important customers” (p. 1,086). Such tensions
question of survival for B2B firms. More recently, the may occur especially in SMEs, where the success of a business
relevance of brands has been stressed in the context of B2B may depend on just a few (or even one) key customers. The
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fear of losing a major customer can drive small firms to strive brand development. Others note that brand orientation can be
for the continuation of customer relationships even if this seen as a specific type of marketing orientation (Baumgarth,
entails conforming to customer requirements despite the 2010), or market orientation plus (Urde, 1999), that
effects on long-term branding being negative (Raymond and supplements the external perspective of market orientation
St-Pierre, 2004). According to Urde (1999), satisfying with an internal approach that regard brands as a source of
customer needs unconditionally compromises brand identity long-lasting competitive advantage (Reid et al., 2005). The
and is antithetic to what the brand orientation concept view of brands as assets affects, among other things, how a
represents. firm positions its brand. In brand-oriented firms, positioning
takes place within the limits of the brand (Urde and Koch,
3. Conceptual model and research hypotheses 2014).
3.1 Brand orientation and brand performance Regarding brand performance, the present study follows
Brand orientation refers to a business approach – a mindset – Wong and Merrilees (2008), who argue that it refers to the
that regard brands as strategic resources and, consequently, strategic achievements and success of a brand in the markets.
uses them as the hub around which brand-oriented firms Brand image, brand awareness, customer brand loyalty and
organize their operations and strategies (Urde, 1999; also brand reputation pertain to this concept. Brand performance,
Gromark and Melin, 2011; Urde et al., 2013). Simões and thus, draws on the operational, that is, non-financial,
Dibb (2001) argue that brand-oriented firms consider the role perspective of business performance (Venkatraman and
of brands in achieving market leadership, turning their brands Ramanujam, 1986). Hence, brand performance, as
into “powerful strategic assets which aid organizational conceptualized by Wong and Merrilees (2008), is concerned
existence and survival” (p. 221). Hankinson (2001) further with how customers perceive the brand and what kinds of
states that brand orientation indicates the acceptance of the attitudes they have toward it, rather than its bookkeeping
theory and practice of branding. Wong and Merrilees (2008) value.
maintain in a much similar vein that brand-oriented firms Research shows that brand orientation positively affects
recognize, feature and favor the brand in the marketing brand performance (Huang and Tsai, 2013; Wong and
strategy. Merrilees, 2008). Even though recent research suggests that
Urde (1999) suggests that brand orientation, therefore, brand orientation’s effect on brand performance may be
represents an alternative to the dominant logic of market
weaker in the B2B market context than in the consumer
orientation. It challenges such popular mantras as “the
markets (Hirvonen et al., 2013), it is reasonable to assume
customer is always right” and “everything for the customer”
that a positive effect also exists among B2B SMEs.
(Baumgarth et al., 2013, p. 973). Satisfying customer needs is
Industrial buyers often rely on brand names to reduce their
naturally important for brand-oriented firms as well but not to
perceived risk (Leek and Christodoulides, 2012). The
the extent of compromising brand identity. Instead, in brand
orientation, the brand sets the boundaries, within which the perceptions they possess about an industrial brand depend
business operates in relation to both its customers and very much on how consistently a firm communicates about
competitors (Alsem and Kostelijk, 2008). The brand its brand and acts according to brand values. The content,
orientation approach suggests that constantly adapting the clarity and credibility of a brand play an important role in
brand to satisfy changing customer needs only confuses the reducing customer uncertainty (Erdem and Swait, 1998).
customers about the brand’s true meaning and what it stands Unless a firm pays constant attention to its brand building
for. efforts and regard brands as a critical resource (i.e. develops
Following this, Urde et al. (2013) propose that brand a high degree of brand orientation), there remains a risk of
orientation can be understood as an inside-out approach so making decisions that might hamper the brand’s success
that the vision, mission and values of an organization guide (Figure 1):
Figure 1 Conceptual model and research hypotheses
Firm-related internal factors Market-related external factors

H6 Firm age H8 Market life cycle
H7 Firm size H9 Industry type
Brand
performance
H1 H4
Brand Business
Orientation H3 Growth
H2 H5
Customer rel.
performance
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H1. Brand orientation has a positive effect on brand 3.4 Brand performance and business growth
performance. Business growth, in this study, refers to change in annual
turnover. This definition is consistent with those presented in
3.2 Brand orientation and customer relationship several earlier studies (Weinzimmer et al., 1998). Turnover
performance growth offers a straightforward, yet reliable indicator of how
Customer relationship performance refers to the success of a firm well a business is performing overall. Researchers widely agree
in terms of customer relationships relative to the competition that having a strong brand name allows firms, among other
(Jayachandran et al., 2005). In industrial markets, it is of high things, to charge price premiums (Keller, 1998) that directly
importance to concentrate on current customer relationships, contribute to their financial gain. The results by Bendixen
as the number of potential new customers is often limited et al. (2004) and Hutton (1997) show that the price premiums
(Glynn, 2012). Jayachandran et al. (2005) identify two factors, associated with strong brand names also are possible in
namely, customer retention and customer satisfaction, as industrial markets. Research in the B2B market context also
pertaining to the concept. The relationship marketing lends support to the view that brands help firms in acquiring
literature suggests that firms should retain as many of their new customers. For instance, Walley et al. (2007) report that
current customers as possible – assuming that they are brand name plays an important role in the industrial purchase
profitable to the firm (Storbacka et al., 1994) – as acquiring a of agricultural tractors. Leek and Christodoulides (2012)
new customer is often more expensive than retaining a current argue that brands help firms to acquire customers, especially
one (Dawes and Swailes, 1999). Related to retention is in the early stages of customer–supplier relationships, by
customer satisfaction, research suggests that satisfaction reducing the perceived risk of customers and creating trust in
predicts retention (Gustafsson et al., 2005; Rust and Zahorik, the otherwise unfamiliar supplier firm. Even in later stages,
1993). Furthermore, retention allows a firm to better satisfy industrial buyers keep buying “a brand which they know
customer needs because over time, the firm comes to better conveys the qualities they require rather than risk purchasing
know these needs (Ahmad and Buttle, 2001; Reichheld, an unknown brand” (Leek and Christodoulides, 2012,
1993). Glynn (2012) points out that brands increasingly affect p. 110). Earlier research evinces that brand performance
B2B relationships. As brand-oriented firms emphasize brands indeed positively affects financial performance (Wong and
throughout their business decisions and relations (Urde, Merrilees, 2008):
1999), they can better align with and respond to the increasing
focus on brands on the part of customers. That is, H4. Brand performance has a positive effect on business growth.
brand-oriented firms can plausibly communicate with
customers at the brand level, making it easier for themselves to 3.5 Customer relationship performance and business
improve customer satisfaction and retention: growth
Customer satisfaction and retention play an important role,
H2. Brand orientation has a positive effect on customer especially in industrial markets, where the number of potential
relationship performance. customers is often limited (Glynn, 2012). That is,
compensating customer exit by attracting new customers is
3.3 Brand performance and customer relationship often very difficult. Although customers are not always
performance profitable to the firm (Zeithaml et al., 2001), researchers argue
Brands provide industrial buyers with added value, such as for a positive relation between relationship longevity and
increased reassurance, that combines with and supports the financial gains. Reichheld (1993), for example, offers multiple
value customers receive from the core product or service the examples of firms whose financial success is attributable to
firm serves the markets with (Leek and Christodoulides, their successful retention strategies. Ahmad and Buttle (2001,
2012)[1]. Leek and Christodoulides (2012) argue that this p. 36) further argue that “customer retention helps increase
value drives the development of business relationships. Aaker revenue through increases in sales volume and/or premium
(1992) suggests in a similar vein that customer satisfaction and prices as well as reducing the expenses or costs of generating
repeat buying patterns serve as good indicators of how strong those revenues”. For example, when the buying firm finds that
a brand is. A well-known brand name may, for instance, the selling firm meets or even exceeds its expectations, thus
streamline a customer’s purchase process (Doyle, 1989) and, indicating customer satisfaction, it may devote a larger share
as such, enhance customer convenience and eventually of its business (i.e. share-of-wallet) to the seller as time
satisfaction and retention. Moreover, positive brand image proceeds (Keiningham et al., 2003):
and a strong reputation generate trust toward the supplier in
the B2B markets, especially in high-risk purchases (Leek and H5. Customer relationship performance has a positive effect on
Christodoulides, 2012). Trust, in turn, has a positive effect on business growth.
customer retention via the building of long-lasting customer
relationships (Wilson, 1995). According to Doyle (1989), 3.6 Moderation effects
strong brands also endure failures better than weak ones and, 3.6.1 Firm age
consequently, do not necessarily lose their customers (i.e. Firm age refers to the number of years a firm has operated. In
their retention rate is better) if something goes wrong, such as the early stages of the business, managers are often
if there are technical problems or delays in delivery: preoccupied with daily operations and concerns about
whether the business will even survive (Churchill and Lewis,
H3. Brand performance has a positive effect on customer 1983), rather than brands. Young firms may not have the
relationship performance. routines and practices ingrained in old and well-established
475
businesses that would help them in implementing a brand mature, that is, as demand ceases to grow or even starts to
orientation. Furthermore, to succeed, firms cannot ignore decline, the competition generally intensifies, as firms can
customer needs but must understand their customers to attract new sales and gain market share mainly at the expense
sustain brand relevance (Keller, 2000). However, firms of others (Doyle, 2008). Mullins et al. (2008) suggest that
develop a good understanding of their markets only over time, brands can play a major role in such markets, as not all brands
putting younger firms at a disadvantage relative to older firms, in an industry reach maturity or the declining stage at the same
which, because of their experience, can focus on issues of time. Changes in the general economy also affect the demand
greater complexity and weed out irrelevant market for a firm’s products and/or services. Kohli and Jaworski
information from relevant information (Sinkula, 1994). Leek (1990) note that customers are highly value conscious in a
and Christodoulides (2012) further note that in the industrial weak economy. Trusted brand names help B2B buyers to
market setting, firm age affects buyers’ perceptions of the reduce the perceived risk and offer reassurance that the
trustworthiness of the selling firm. Young firms, relative to old purchase they are about to make does not hold any major
ones, may thus find it difficult to enhance their performance negative consequences (Mudambi, 2002; Ohnemus, 2009).
through brand orientation, as such actions may lack credibility On the other hand, research suggests that industrial buyers
in the eyes of customers. Similarly, young age potentially “are not willing to compromise on the performance of the
reduces the role that brands play in driving customer
product but they are prepared to do without the brand
relationship performance and business growth as customers
especially during a recession” (Leek and Christodoulides,
may be more sensitive about using the brand as a shortcut for
2012, p. 110). It appears that the strategic intentions of B2B
decision-making, as they do not know the selling firm well
firms to build a strong brand (i.e. brand orientation) and the
enough. Consequently, buyers may, for instance, ask for
role of the brand (i.e. brand performance) are, hence, likely to
substantial discounts from a young selling firm, so that the
vary depending on the market life cycle, but the actual
monetary savings are great enough to outweigh the greater risk
direction of the moderating effect is difficult to determine:
associated with buying from a less well-established seller:
H6. Firm age moderates the relationship between brand H8. Market life cycle moderates the relationship between brand
orientation, brand performance, customer relationship orientation, brand performance, customer relationship
performance and business growth. performance and business growth.
3.6.2 Firm size 3.6.4 Industry type

Firm size refers to the number of people a firm employs and its Industry type indicates whether a firm operates in the
annual turnover. Many SMEs regard themselves as lacking production or service industry. Findings by Leek and
adequate resources, such as time and money, for serious brand Christodoulides (2012) suggest that in the B2B context,
building (Horan et al., 2011; Ojasalo et al., 2008). Limited brands play a larger role in firms producing commodities than
resources hinder firms from reaping the benefits of brand in firms customizing their products to meet and satisfy specific
orientation, as they cannot properly support the translation of customer needs. Commoditization is a problem especially for
brand-driven strategies into actual practice. The problem is production firms, as tangible products are easier for
especially evident in the very smallest firms, which often competing firms to copy than services, which are intangible
operate under tighter budgetary constraints than do larger and often involve high levels of interaction with the customer
firms. Also, especially in the B2B context, these firms are often (de Chernatony and Segal-Horn, 2003; Vallaster and de
more dependent on their customers and consequently have Chernatony, 2005). However, on the other hand, as services
less negotiating power than larger firms (Raymond and are often more difficult for the buyer to evaluate than products
St-Pierre, 2004). The smallest firms may not have a say in the before purchase, buyers seek familiar brand names to reduce
contracts with large buyers and trying to operate within the the perceived risk and make upfront judgments about service
framework of the brand may be of little value for these firms. quality (Berry, 2000). Developing a service brand may also
Similarly to firm age, firm size plays a role in promoting require an even more holistic approach than branding a
customers’ confidence in their decision-making (Leek and product, necessitating organization-wide commitment to the
Christodoulides, 2012). Small size may, therefore, reduce the brand. That is, a brand-oriented culture that ensures that
role that the brand plays in enhancing both customer everyone within the firm acts in a manner supportive of the
relationship performance and growth. Instead, buyers may brand (de Chernatony and Dall’Olmo Riley, 1999; de
look for other things before becoming willing to do business Chernatony and Segal-Horn, 2003). Production firms, in
with a small firm. For example, buyers may ask for discounts turn, may refer to careful product designs and management of
to compensate the higher risk or technical demonstrations that their production processes and techniques to ensure high
would show that the seller is able to meet the requirements of quality (Ahire and Dreyfus, 2000). In the extreme case, a firm
the buyer: may produce high-quality products that are on a par with the
H7. Firm size moderates the relationship between brand intended brand image, even if its employees would show only
orientation, brand performance, customer relationship limited interest in and commitment to branding issues.
performance and business growth. Indeed:
3.6.3 Market life cycle H9. Industry type moderates the relationship between brand
Market life cycle refers to variations in the market demand for orientation, brand performance, customer relationship
a firm’s products and services. As the markets become more performance and business growth.
476
4. Measures and data collection moderator, the authors identified two categories, namely,
declining markets (demand either declining or leveled) and
4.1 Brand orientation and performance variables growing markets (demand on the increase) (Mullins et al.,
Brand orientation was measured with a five-item scale 2008).
adopted from the work of Wong and Merrilees (2008). The
scale items emphasize the strategic importance associated with 4.3 Data collection
the brand, hence aptly capturing the focal idea of the concept. The research data were collected using an online
The scale used for measuring brand performance also comes questionnaire sent to 9,454 Finnish SMEs, the total number
from Wong and Merrilees (2008), with four items addressing of responses received being 820 (response rate 8.7 per cent).
brand image, awareness, customer brand loyalty and Of the responses received, 396 were effective for the present
reputation. A seven-point Likert scale ranging from 1 – totally study (i.e. the respondents operated in the B2B markets and
disagree – to 7 – totally agree – was used for both brand had no missing values for any of the variables). Most of the
orientation and brand performance. respondents (over 90 per cent) were owners or managers. The
With regard to customer relationship performance, two sample covers a range of industries, with the greatest number
items were used to measure a firm’s performance relative to its of responses coming from manufacturing (n ⫽ 50),
competitors in gaining customer satisfaction and retaining information and communication (n ⫽ 41), construction (n ⫽
current customers. The two-item scale followed a five-point 36) and human health and social work (n ⫽ 26). Importantly,
Likert-type rating ranging from 1 – clearly poorer – to 5 – a total of 81 firms opted for the other service activities category.
clearly better. The customer relationship performance scale is This category covers those industries that are not included in
similar to the one by Jayachandran et al. (2005), even though any of the 20 main categories of the Standard Industry
the scales are developed independently. Classification system by Statistics Finland (the national
Finally, the study measured business growth with a single authority for Finnish statistics). Repair of computers and
item asking the respondents to indicate how their turnover had communication equipment, repair of personal and household
developed in the twenty-first century on a five-point scale goods, washing and dry-cleaning services for enterprises and
ranging from 1 – significantly decreased – to 5 – significantly physical well-being activities are among the industries
increased. It is argued by Weinzimmer et al. (1998) that belonging to this category.
turnover growth describes business growth better than, for
example, increases in employee numbers or firm assets. That 4.4 Non-response bias
is, a firm may grow in terms of sales even if the number of The next step involved testing for non-response bias
employees or amount of assets remains the same. For (Armstrong and Overton, 1977). The first and fourth quarters
example, a firm may charge its customers higher prices of the respondents based on the response time represented
without needing to hire more people or acquire more assets. early and late respondents, respectively. The authors
compared the two groups against each other using
4.2 Moderator variables
independent sample t-tests to ascertain whether they were
Regarding firm age and firm size, the respondents first needed
similar or not. The testing builds on the assumption that
to report the year the firm was founded, thereby enabling the
late respondents are similar to theoretical non-respondents: In
authors to calculate firm age. The authors then asked the
the absence of differences between early and late respondents,
respondents to report the average number of people employed
the non-respondents are likely to be similar to those who did
by the firm, advising the informants to count two part-time
respond the survey. The results show no statistically
employees as one full-time employee. The respondents also
significant (p ⬎ 0.05) differences between the two groups in
reported their annual turnover (€). Regarding market life cycle
relation to any of the research variables, thus confirming that
and industry type, the questionnaire asked the respondents
non-response bias is not a problem in this study.
how demand in their respective markets had developed in the
twenty-first century (1 – decreased considerably, 5 – increased
5. Results
considerably) and whether they operated in the production or
service industries (a dichotomized variable). 5.1 Confirmatory factor analysis
For the purposes of the multi-group moderation analysis, The authors performed a confirmatory factor analysis (CFA)
the authors dichotomized firm age, firm size and market life to validate the measures, using AMOS 21 software. The initial
cycle variables. For firm age, the two new groups were young measurement model, however, showed a weak fit with ␹2 ⫽
firms (⬍ 5 years) and old firms (ⱖ 5 years). Churchill and Lewis 287.11 (df ⫽ 41, p ⬍ 0.001), ␹2/df ⫽ 7.00, GFI ⫽ 0.89,
(1983) argue that in their early stages, small firms concentrate TLI ⫽ 0.91, CFI ⫽ 0.94 and RMSEA ⫽ 0.123. The weak
virtually all their efforts on existence and survival. The model fit indicates that the collected data does not support
overwhelming concern related to business survival during the how the theory-driven measurement model depicts that the
first years of operation distracts attention, for example, from observed variables correspond with the unobserved latent
acquiring the skills for branding. With regard to firm size, the construct. Put differently, the covariance (correlation) matrix
resulting two groups were micro firms (employees: 1-9 – estimated based on the measurement model is not equivalent
turnover: less than €2m) and SMEs (employees: 10-249 – to the observed covariance (correlation) matrix derived from
turnover: €2-50m). The categorization follows the official the data (Hair et al., 2010). Given the inadequate model fit,
classification by the European Commission and also appears the following steps involved re-analyzing and modifying the
elsewhere in the literature using firm size as a moderator initial model. The authors 1) specified a covariance between
(Martín-Tapia et al., 2010). Regarding the market life cycle the error terms of two brand orientation items (Bo4-Bo5) as a
477
freely estimated parameter (Byrne, 2010) and 2) removed an AVE explains how much variance a latent construct is able to
item (Bp2) indicating the brand performance construct from capture in observed variables it theoretically associates with
the model. The item was deleted as the other alternatives for (Farrell, 2010). The AVE values for brand orientation, brand
model modification, such as allowing a cross-loading on the performance and customer relationship performance exceed
brand orientation factor, were of limited substantive meaning. the threshold level of 0.50 (Table II), supporting convergent
The modified model provides a good fit with ␹2 ⫽ 110.53 validity. Convergent validity gains support if more than half of
(df ⫽ 31, p ⬍ 0.001), ␹2/df ⫽ 3.57, GFI ⫽ 0.95, TLI ⫽ 0.97, the variance in the measure items is explained by their
CFI ⫽ 0.98 and RMSEA ⫽ 0.081, thus indicating a respective latent construct. Furthermore, the composite
correspondence between the theoretical model and observed reliability values exceed the recommended threshold of 0.70
data. Moreover, all the standardized CFA factor loadings meet (Hair et al., 2010). The next step involved comparing the AVE
the minimum level of 0.70 (p ⬍ 0.001) (Hair et al., 2010) values for each construct to their shared variance, that is, the
(Table I). GFI, TLI and CFI similarly meet the amount of variance that the latent construct explains in
conventionally applied cut-off value of 0.95 (Hair et al., 2010). observed variables associated with another latent construct
The chi-square is statistically significant, being an undesirable (Farrell, 2010). Shared variance is calculated by squaring the
result. However, this is often the case when the sample correlation between two constructs. The AVE values for each
size is large (Cheung and Rensvold, 2002). Furthermore, the construct exceed the respective shared variance values,
RMSEA is relatively high, even though falling within therefore lending support to discriminant validity and thus
the range of cut-off values (0.05 [. . .] 0.08) suggested in the indicating that the latent constructs included in the model are
literature (Byrne, 2010; Chen et al., 2008; Hair et al., 2010). indeed distinct from each other.
On the other hand, Chen et al. (2008) argue that using fixed
RMSEA cut-off values should be avoided and that the 5.2 Common method bias
RMSEA be evaluated only together with other fit indices. As Common method bias refers to variance that is explained by
noted above, the other fit indices show a good model fit. the measurement method rather than the theoretical
The authors then assessed the convergent and discriminant constructs in question (Podsakoff et al., 2003). The authors
validity of the constructs following the recommendations by hence examined whether common method bias was a problem
Fornell and Larcker (1981). To this end, the average variance in this study by conducting Harman’s single factor test using
extracted (AVE) and shared variance were calculated. The the CFA approach. The measurement model was altered, so
Table I Confirmatory factor analysis results

CFA factor
Construct/measure item Mean SD loading
Brand orientation
Bo1: Branding is essential to our strategy 4.01 1.63 0.96
Bo2: Branding flows through all our marketing activities 3.92 1.69 0.97
Bo3: Branding is essential in running this company 3.98 1.71 0.95
Bo4: Long-term brand planning is critical to our future success 4.30 1.71 0.81
Bo5: The brand is an important asset for us 4.21 1.75 0.88
Brand performance
Bp1: We have reached desired image in market 4.38 1.55 0.81
Bp2: Our firm has built a strong brand awareness in the target marketⴱ – – –
Bp3: Our firm has built a solid reputation 4.91 1.40 0.93
Bp4: Our firm has built strong customer brand loyalty 5.30 1.41 0.70
Customer relationship performanceⴱⴱ

Crp1: Gaining customer satisfaction 4.04 0.68 0.86
Crp2: Retaining current customers 4.03 0.71 0.81
Notes: ⴱ Item omitted from the final measurement model; ⴱⴱ in regards to customer relationship performance, the following question was used:
“Compared to your competitors, how would you estimate your performance with regards to the following”
Table II Discriminant and convergent validity

Composite Brand Brand Customer relationship
Construct reliability orientation performance performance
Brand orientation 0.98 0.84a – –
Brand performance 0.86 0.21b 0.67a –
Customer relation performance 0.82 0.13b 0.42b 0.70a
Notes: a Average variance extracted (AVE); b between-construct correlation (i.e. shared variance); discriminant validity ⫽ AVE ⬎ 0.50; convergent
validity ⫽ AVE ⬎ squared between-construct correlation
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that all the measure items were specified to load on the same models for each sub-sample. The models were cross-validated
latent construct. This one-factor model was then compared by using the regression equation from one sample to predict
against the hypothesized multiple-factor model. The results the dependent variable in the other sample, then calculating
show that the one-factor model yields a poor model fit (␹2 ⫽ the correlation of the predicted scores with the actual scores
948.68 (df ⫽ 34, p ⬍ 0.001), ␹2/df ⫽ 27.90, GFI ⫽ 0.67, (Table III). The rationale is to assess whether the
TLI ⫽ 0.66, CFI ⫽ 0.74 and RMSEA ⫽ 0.261) and that there hypothesized model is able to yield meaningful results (i.e.
is a statistically significant decrease in the model fit in have predictive power) when tested with a new data set. The
comparison to the multiple factor model (⌬␹2 ⫽ 838.15, results suggest that the model holds predictive validity,
⌬df ⫽ 3, p ⬍ 0.001). The risk of common method bias is although not as much as would be desirable, the highest
limited, as the single latent factor model cannot properly estimate being 0.46 (p ⬍ 0.001). Importantly, all the
explain variance in the measure items. correlation estimates are statistically significant.
5.3 Structural model (H1-H5) 5.4 Moderation analysis (H6-H9)

The authors first tested the conceptual model on the overall 5.4.1 Measurement invariance
sample (n ⫽ 396) to achieve a general understanding of the Before conducting between-group comparisons at the
performance effects of brand orientation in the B2B context. structural level, the authors tested whether the measurement
All the paths were significant, except for that of brand instruments were equivalent across the groups of each
orientation to customer relationship performance (p ⬎ 0.05). moderator (Byrne, 2010; Steenkamp and Baumgartner,
The results, hence, reject H2. Consequently, the authors 1998). The authors first estimated the model separately for
omitted the path from the final structural model (Figure 2). each sub-group to confirm adequate model fit in the groups.
The final model yields a good fit (␹2 ⫽ 133.12 (df ⫽ 40, p ⬍ Following the separate analyses, the authors estimated the
0.001), ␹2/df ⫽ 3.33, GFI ⫽ 0.95, TLI ⫽ 0.97, CFI ⫽ 0.97 model simultaneously for both groups of each moderator to
and RMSEA ⫽ 0.077). examine configural, metric and factor variance invariance.
Regarding the remaining paths in the model, the results Table IV summarizes the results of the measurement
show that brand orientation has a positive effect on brand invariance analysis. The results of the separate analyses show
performance, thereby supporting H1 (␤ ⫽ 0.22, t ⫽ 4.04, p ⬍ that the model fits the data well in all moderator sub-groups
0.001). Brand performance, in turn, has a positive effect on (the separate models section in Table IV). The good model fit
customer relationship performance, hence lending support to in the simultaneous estimation supports configural invariance
H3 (␤ ⫽ 0.42, t ⫽ 6.78, p ⬍ 0.001). Finally, the findings show (Model 1 in Table IV). Regarding metric invariance (Model
that both brand performance (␤ ⫽ 0.19, t ⫽ 3.18, p ⬍ 0.01) 2) and factor variance invariance (Model 3), the authors
and customer relationship performance (␤ ⫽ 0.19, t ⫽ 3.16,
p ⬍ 0.01) have a positive effect on growth. The results, thus,
Table III Predictive validity of the model
support H4 and H5.
However, the total effect of brand orientation on growth is Correlation
relatively small, being only 0.06 (p ⫽ 0.001). This suggests Sample Sample (predicted-
that brand orientation plays a somewhat limited role in B2B model data Dependent variable observed)
SMEs in terms of business growth. On the other hand, the Sample A Sample B Brand performance 0.23ⴱⴱ
total effect of brand performance on growth is notably larger Customer relationship 0.46ⴱⴱⴱ
(0.27, p ⫽ 0.001). This total effect further divides into direct performance
effect and indirect effect, so that the former is 0.19 (p ⬍ 0.01) Business growth 0.20ⴱⴱ
and the latter 0.08 (p ⬍ 0.01). Sample B Sample A Brand performance 0.15ⴱ
Following the recommendations by Woodside (2013), the Customer relationship 0.30ⴱⴱⴱ
authors also examined the predictive validity of the performance
above-mentioned model using the holdout sample technique. Business growth 0.32ⴱⴱⴱ
The authors first divided the original sample into two random ⴱⴱⴱ ⴱⴱ ⴱ
Notes: p ⬍ 0.001; p ⬍ 0.01; p ⬍ 0.05
sub-samples (na ⫽ 198, nb ⫽ 198) and then created regression
Figure 2 Research results (full sample, n ⫽ 396)
Brand β = 0.22*** Brand β = 0.19** Business

Orientation t = 4.04 performance t = 3.18 Growth
β = 0.42*** β = 0.19**
t = 6.78 t = 3.16
Customer rel.
performance
Notes: β = standardized regression coefficient; *** p < 0.001, ** p < 0.01
479
Table IV Measurement invariance

Model fit Model differences
Moderator ␹2 df Significance CFI RMSEA ⌬␹2 ⌬df Significance
Firm age
Separate models
Young firms 54.64 31 0.005 0.97 0.088
Old firms 87.97 31 ⬍0.001 0.98 0.079
1) Configural invariance 142.74 62 ⬍0.001 0.98 0.057
2) Metric invariance 150.78 69 ⬍0.001 0.98 0.055 8.04 7 Ns
3) Factor variance invariance 160.91 72 ⬍0.001 0.98 0.056 10.13 3 0.017
3a) Partial factor variance invariance (Bo, Bp) 156.94 71 ⬍0.001 0.98 0.055 6.16 2 0.046
3b) Partial factor variance invariance (Bo) 153.25 70 ⬍0.001 0.98 0.055 2.47 1 Ns
Firm size
Separate models
Micro firms 110.53 31 ⬍0.001 0.97 0.089
Small-/medium-sized firms 43.59 31 0.066 0.98 0.076
3) Factor variance invariance 160.79 72 ⬍0.001 0.98 0.056 5.28 3 Ns
Market life cycle

Separate models
Declining markets 58.75 31 0.002 0.98 0.071
Growing markets 93.62 31 ⬍0.001 0.97 0.096
Industry type
Separate models
Production industries 52.25 31 0.010 0.97 0.092
Service industries 98.62 31 ⬍0.001 0.98 0.083
Note: Ns ⫽ non-significant (invariance supported)
conducted a number of nested model chi-square difference Furthermore, Byrne (2010) suggests that researchers can also
(⌬␹2) tests. If constraining model parameters (factor loadings try to free parameter constraints while still retaining some of
in metric invariance and factor variances in factor variance them to improve model fit and establish partial invariance.
invariance) does not weaken the model fit compared to the less Models 3a and 3b (Table IV) show that freeing the customer
constrained model (if the ⌬␹2 test results are statistically relationship performance factor, as well as the brand
insignificant), then the constrained parameters are invariant performance factor, while still retaining the constraint on the
(Hair et al., 2010). The results support metric invariance, as brand orientation factor, results in an insignificant ⌬␹2 test
there were no statistically significant differences between the result (⌬␹2 ⫽ 2.47, ⌬df ⫽ 1, p ⬎ 0.05). This supports partial
configural and metric invariance models. factor variance invariance.
The results also support factor variance invariance in
respect to all but one moderator, namely, firm age (⌬␹2 ⫽ 5.4.2 Multi-group structural model
10.13, ⌬df ⫽ 3, p ⫽ 0.017). Cheung and Rensvold (2002), The authors used multi-group structural equation modeling to
however, point out that because the ⌬␹2 test becomes determine whether the path estimates differed between the
increasingly conservative as the sample size increases (i.e. it moderator sub-groups and whether the differences were in
easily rejects the null hypothesis of invariance), researchers fact because of the moderating variables (Byrne, 2010).
should examine alternative fit indices as well to ensure model Similar to the testing of measurement invariance, the ⌬␹2 test
invariance. Accordingly, the authors analyzed the change in compared the unconstrained model to the constrained one.
CFI (⌬CFI) caused by factor variances being constrained First, the authors tested the full structural model to see
equal. The results show that the change is only minor whether the paths were significant in the moderator
(⌬CFI ⫽ 0.002). Cheung and Rensvold (2002) argue that sub-groups. The analysis showed, similarly to the full sample
⌬CFI less than 0.01 supports invariance. model, that the brand orientation– customer relationship
480
performance relation was statistically insignificant in all 6. Discussion

moderator sub-groups (p ⬎ 0.05). Consequently, the authors
omitted this path from the final moderation model before 6.1 The relevance of brand orientation for business-
proceeding in the analysis. to-business small- and medium-sized enterprises
The results (Table V) lend only partial support to the The brand orientation concept suggests that firms should
hypothesized moderation effects. Regarding firm age (H6), the integrate the brand with their business strategy (Wong and
results support the hypothesis only for the brand Merrilees, 2008). A growing body of research literature shows
performance– business growth relation (⌬␹2 ⫽ 8.57, ⌬df ⫽ 1, that the effect of brand orientation on business performance is
p ⫽ 0.003). The effect of brand performance on business strong among both B2B firms (Baumgarth, 2010) and SMEs
growth is statistically insignificant in young firms, whereas in (Wong and Merrilees, 2008). However, researchers have thus
old firms, the effect becomes significant. The results further far paid only limited attention to integrating these two
show that firm size moderates the effect of brand performance contexts. This study extends the earlier contributions by
on growth (⌬␹2 ⫽ 2.82, ⌬df ⫽ 1, p ⫽ 0.093), the relation concentrating on those firms that are both “B2B” and
being notably stronger in SMEs than in micro firms. However, “SMEs”. Interestingly, the research results reported in this
this result is significant at a confidence level of 90 per cent. study suggest a relatively weak effect of brand orientation on
Importantly, H7 is supported only in relation to this one path. business growth, indicating that brand orientation may lack
With respect to the market-related external factors, the the same relevance for B2B SMEs than one would assume
findings show that market life cycle moderates the effect of based on earlier research literature. Baumgarth (2010), for
brand orientation on brand performance (⌬␹2 ⫽ 5.28, ⌬df ⫽ example, finds brand orientation to have a strong positive
1, p ⫽ 0.022). Specifically, the results indicate that the effect effect on the market and financial performance of B2B firms.
is statistically significant and positive in declining markets, Interestingly, many of the firms in Baumgarth’s (2010) sample
whereas in growing markets, no statistically significant effect are large firms. Although the measures are different and, as
exists. The results, hence, support H8 as regard one but not all such, can explain the differences, one may also speculate that
the paths in the model. With regard to H9, that is, industry B2B SMEs are indeed different from large B2B firms when it
type, partial support exists as the results show that industry comes to the performance effects of brand orientation. Hsiao
type moderates the path from brand performance to growth: and Chen (2013), as well as Kotler and Pfoertsch (2007),
Even though the path is statistically significant in both groups, provide further evidence of the benefits of brand-driven
the effect is notably stronger in production firms than in strategies for B2B firms. However, they also use data
service firms. This finding is significant at a confidence level of concerning large industrial firms, paying little attention to the
90 per cent (⌬␹2 ⫽ 3.21, ⌬df ⫽ 1, p ⫽ 0.073). SME perspective.
Table V Moderation analysis results

Firm age Moderation
Path Young firms Old firms ⌬␹2 ⌬df p
ⴱⴱⴱ
Bo ¡ Bp 0.12 (CR ⫽ 1.12)
ns
0.32 (CR ⫽ 5.05) 1.11 1 Ns
Bp ¡ Crp 0.36ⴱⴱⴱ (CR ⫽ 3.37) 0.47ⴱⴱⴱ (CR ⫽ 6.36) 0.65 1 Ns
Bp ¡ Bg ⫺0.01ns (CR ⫽ ⫺0.09) 0.30ⴱⴱⴱ (CR ⫽ 4.09) 8.57 1 0.003
Crp ¡ Bg 0.34ⴱⴱ (CR ⫽ 3.17) 0.10ns (CR ⫽ 1.41) 1.41 1 Ns
Firm size
Micro firms Small-/medium-sized firms
Bo ¡ Bp 0.19ⴱⴱ (CR ⫽ 3.15) 0.35ⴱⴱ (CR ⫽ 2.85) 0.80 1 Ns
Bp ¡ Bg 0.13ⴱ (CR ⫽ 2.07) 0.41ⴱ (CR ⫽ 2.33) 2.82 1 0.093
Crp ¡ Bg 0.22ⴱⴱ (CR ⫽ 3.27) 0.05ns (CR ⫽ 0.29) 0.21 1 Ns
Market life cycle
Declining markets Growing markets
Bo ¡ Bp 0.35ⴱⴱⴱ (CR ⫽ 4.40) 0.12ns (CR ⫽ 1.60) 5.28 1 0.022
Bp ¡ Bg 0.25ⴱⴱ (CR ⫽ 2.81) 0.16ⴱ (CR ⫽ 2.01) 1.65 1 Ns
Crp ¡ Bg 0.10ns (CR ⫽ 1.09) 0.18ⴱ (CR ⫽ 2.15) 0.09 1 Ns
Industry type
Production industries Service industries
Bo ¡ Bp 0.30ⴱ (CR ⫽ 2.59) 0.20ⴱⴱⴱ (CR ⫽ 3.33) 0.46 1 Ns
ⴱⴱ
Bp ¡ Bg 0.37 (CR ⫽ 2.75) 0.14ⴱ (CR ⫽ 2.18) 3.21 1 0.073
Crp ¡ Bg ⫺0.02 (CR ⫽ ⫺0.14)
ns
0.26ⴱⴱⴱ (CR ⫽ 3.78) 2.16 1 Ns
Notes: Bo ⫽ brand orientation; Bp ⫽ brand performance; Crp ⫽ customer relationship performance; Bg ⫽ business growth; the values represent stan-
dardized regression coefficients; ⴱⴱⴱ p ⬍ 0.001; ⴱⴱ p ⬍ 0.01; ⴱ p ⬍ 0.05; Ns ⫽ non-significant
481
The causal model examined in this study hypothesized that scoring high on brand performance – but do not necessarily
brand orientation affects growth indirectly via brand need high brand orientation. Instead, they may rely on
performance and customer relationship performance. To alternative strategic orientations.
understand the reasons for the limited impact of brand The findings specifically show that the contribution of
orientation on growth, one may look at the paths individually. brand performance to business growth is both direct and
Specifically, the results show that brand orientation has a indirect. The direct effect relates to trusted brand names
direct effect on brand performance but not on customer helping firms to acquire new customers and so also a greater
relationship performance. Furthermore, the brand orientation– market share (Doyle, 1989). Brands can facilitate the initial
brand performance relationship is not particularly strong. purchase where the buyer often has to act on inadequate
Accordingly, strategic orientations other than brand knowledge and experience of the selling firm (Leek and
orientation may better explain the success of B2B SMEs. For Christodoulides, 2012). Our findings are in line with the
example, Merrilees et al. (2011) report that innovation literature, suggesting that although branding has its practical
capabilities have a stronger effect on the marketing and theoretical foundations in the consumer context, brands
performance of B2B SMEs than branding capabilities. play a notable role also in industrial markets (Glynn, 2012;
Furthermore, Hirvonen et al. (2013) find that the effect of Kotler and Pfoertsch, 2007; Ohnemus, 2009; Roberts and
brand orientation on brand performance seems to be weaker Merrilees, 2007).
in the industrial markets than in the consumer markets. Brand performance also contributes to business growth
The limited role that brand orientation plays in the indirectly through customer relationship performance. This
industrial markets may be because of B2B buyers attaching the finding first shows that having a strong brand facilitates
greatest importance to functional brand qualities such as customer satisfaction and retention in the B2B market
product performance and quality when deciding between context. For example, for high-risk products and services,
competing offerings (Bendixen et al., 2004; Kuhn et al., 2008; brand names help to build trust toward the selling firm, which,
Leek and Christodoulides, 2012). Al-Kwifi and McNaughton in turn, plays a major role in ensuring customer relationship
(2013), for example, report that product features and longevity (Wilson, 1995). The findings, hence, lend support to
innovations represent a major reason for brand switching Leek and Christodoulides (2012), who argue that business
behavior among buyers of magnetic resonance imaging buyers favor established brand names, as they find unknown
equipment. Even though emotional brand qualities also brands too risky. A strong brand may also help to reduce
receive attention from B2B customers, they mainly serve the negative impacts if something goes wrong, making it easier for
purposes of risk reduction and reassurance (Mudambi, 2002). firms to retain their current customers despite the problems.
Leek and Christodoulides (2012) argue that emotional brand Overall, the positive effect of customer relationship
qualities can potentially derive from functional brand performance on growth is in line with the majority of the
qualities. Having a well-functioning after sales service relationship marketing literature (Ahmad and Buttle, 2001;
infrastructure, for instance, can build reassurance (Leek and Reichheld, 1993).
Christodoulides, 2012), as the results by Al-Kwifi and
McNaughton (2013) demonstrate. Consequently, redirecting
6.3 Moderation effects
the focus on brand orientation away from technology or
Finally, this study explored whether firm-related internal
innovation orientations, or customer and service orientations,
factors (firm age, firm size) and/or market-related external
may in fact weaken the perceptions customers have about the
factors (market life cycle, industry type) moderate the paths in
brand. This conclusion is supported by Roberts and Merrilees’
the conceptual model. The findings reveal that all four
(2007) findings that service quality has a notable positive
moderating variables moderate some, but not all, paths in the
impact on the strength of B2B service brands.
conceptual model. These results add to the discussion in
Finally, Raymond and St-Pierre (2004) add that industrial
Hsiao and Chen (2013), where the effectiveness of following
SMEs are often dependent on single customers, which,
either a branding strategy or a contract manufacturing strategy
because of the necessity of ensuring the survival of the
is reported to be dependent on the conditions firms encounter.
business, often translates into conforming to customer needs.
Regarding the firm-related internal factors, the findings
Urde (1999) argues that constantly adapting to the needs of
show the brand performance– business growth relationship to
customers leaves little room for brand orientation to develop.
be stronger in older firms than in younger firms. Moreover, it
Earlier research confirms the conflict between satisfying
is stronger in SMEs than in micro firms. This result may relate
customer needs and the intended brand image (Beverland
to both young firms and micro firms needing to build more
et al., 2007). From the perspective of B2B SMEs, brand
upon, for example, technical features and low prices than
orientation may come with too many restrictions that make it
brands in their attempts to convince and acquire customers.
difficult to respond to customer needs.
Old firms and SMEs are likely to appear more stable and
trustworthy than their younger and smaller counterparts, and
6.2 The relevance of brands for business-to-business because of their established status, buyers may more easily
small- and medium-sized enterprises bypass any technical demonstrations and use the brand as a
As the total effect of brand performance on business growth is shortcut for decision-making. According to Leek and
notably greater than that of brand orientation, the recipe for Christodoulides (2012), firm characteristics can offer buyers
growth in B2B markets appears to have to do with brands but reassurance. Also, small firms are often more dependent than
to a lesser extent with brand orientation. Firms may, thus, larger ones on single customers (Raymond and St-Pierre,
achieve the benefits of growth by developing a strong brand – 2004). Micro firms may, thus, need to adapt to customer
482
needs more than larger firms, complicating the use of brands regarded as a universally applicable strategic option or one
as a driver of growth. High customer dependence is likely to that is context bound and as such useful only for certain firms.
characterize young firms as well because most new firms begin
with only a narrow customer base.
7.2 Managerial implications
As for the market-related external factors, namely, market
According to Leek and Christodoulides (2011), many B2B
life cycle and industry type, the research results first suggest
firms are reluctant to invest in brands because they do not
that market life cycle moderates the brand orientation– brand
know whether it will enhance their financial gains. This study
performance relation, the effect being greater in declining
allows industrial firms in general and B2B SMEs in particular
markets than in growing markets. This finding concurs with
to assess the risks and rewards associated with brand
Urde (1994), who points out that brand orientation has
orientation in B2B markets more accurately. Specifically, this
become increasingly important along with intensified
study concludes that B2B SMEs should aim at developing a
competition. Indeed, in declining markets, a firm’s success
strong brand, given its positive effect on business growth.
comes at the expense of others (Doyle, 2008). Emphasizing
However, we urge that managers strive to build a strong brand
brands helps businesses to compete more successfully
also when they are not actively pursuing growth. Given that
against other firms. Furthermore, changes in market
brand performance has a positive impact on customer
demand may also derive from the economy overall. In a
relationship performance, having a strong brand provides B2B
weak economy, customers are very value conscious (Kohli
marketers with a means of stabilizing their position in the
and Jaworski, 1990). The way firms communicate about
markets via satisfying and retaining their customers. This
their products (e.g. how consistent and credible the
helps in surviving the threats posed by current and future
messages appear) is, hence, crucial in declining markets.
competitors and enhances the likelihood of business survival
Brand orientation helps firms to build distinctiveness (i.e.
over time (Kotler and Pfoertsch, 2007). Brands are, hence,
differentiate the brand from competitors) while ensuring
vehicles not only for growing the business but also for ensuring
the consistency of communications (Reid et al., 2005).
its long-term survival in the face of competition. As
Finally, with respect to industry type, the results reveal that
Aarikka-Stenroos and Makkonen (2014) note, competition in
brand performance has a greater effect on business growth in
the B2B markets has become increasingly fierce and mere
production firms than in service firms. This finding supports
survival is more difficult than before.
Leek and Christodoulides (2012), who suggest that brands
However, for B2B marketers, an important consideration is
play a greater role in firms producing commodities than in
that developing a high brand orientation may not automatically
firms customizing their products and services to fit specific
be required for enhancing business growth – or improving
customer needs. De Chernatony and Segal-Horn (2003)
customer relationship performance, for that matter. Although
argue that commoditization is a problem especially for
a positive effect (even though limited) was found, the limited
production firms, whereas service firms can protect themselves
resources firms have make it worthwhile for them to carefully
against this more easily because of the intangible nature of
consider what the strategic initiatives they pursue should be.
services. Firms customizing their products and/or services to
Investing in brand orientation allows less investment to be
meet specific customer requirements may not need brands to
made elsewhere. Consequently, this study concludes that
convince their customers, as they often co-operate with
alternative strategies such as technology or innovation
customers in close proximity, making personal relationships
orientation may be equally – or perhaps even more –
and communication more important than brand names.
important for B2B SMEs than brand orientation. These firms
should consider brand orientation only with, and in
comparison to, such alternative strategies and make the
7. Conclusions and future research
necessary trade-offs, so that they will not allocate their
7.1 Concluding remarks resources too broadly. However, the decision concerning the
The present study investigates if and how brand orientation level of brand orientation is not an “either-or” situation, where
affects business growth in B2B SMEs. The results indicate the firm is either fully brand-oriented or not brand-oriented at
that while brand orientation indeed affects business growth, all. Instead, we urge that managers approach any trade-off in
the contribution is nevertheless somewhat limited in light of its relative terms. A firm might be, for example, brand-oriented,
small total effect. These results contribute to the emerging market-oriented and innovation-oriented all at the same time
body of literature on B2B branding by showing that while (Grinstein, 2008) but still emphasize one strategic orientation
branding is widely accepted as one of the main drivers of over the others.
business success in the consumer context, having a Analyzing one’s internal and external factors is of critical
brand-oriented strategy may not be as lucrative for B2B SMEs importance, as firms should not make trade-offs randomly or
as might be assumed. This study makes a relevant and timely based on a guess or intuition. To this end, firms need to refer
contribution, as the understanding of the relevance of brand to their operating environments (both internal and external) to
orientation for industrial firms is only emerging. Indeed, so better understand the relevance of the brand and brand
far, only a few studies have examined brand orientation from orientation in their respective situations. The results of the
the perspective of B2B firms (Baumgarth, 2010). The findings moderation analysis indicate that firms operating under
help in determining the theoretical and practical boundary different circumstances benefit from brands and brand
conditions of brand orientation – that is, how well it applies to orientation to different extents. First, firms operating in
different contexts. This is important in terms of developing an declining markets seem to benefit from brand orientation
understanding of whether brand orientation should either be more than those operating in growing markets, indicating that
483
the latter group in particular should keep alert to other each moderator. However, although many of them lend
strategic orientations. On the other hand, not all moderation further support to our initial hypotheses, there remains
hypotheses were supported by the results: For example, no uncertainty as to whether these differences are indeed
statistically significant differences were found between service attributable to the moderators or something else. Future
and production industries in relation to brand orientation. research should take these results into consideration.
From the practical perspective, this implies, for example, that Moreover, we urge researchers to consider that different
production firms attempting to expand into service markets moderators may influence only certain causal relationships, as
(and vice versa) do not necessarily need to adjust their level of our results indeed imply. Concentrating only on a few specific
brand orientation during the expansion, given that the paths and moderator variables, but in much greater detail, can
relevance and outcomes of brand orientation appear to be similarly generate important new insights. One should also
invariant across the two contexts. notice that the list of moderators presented in this study is not
Firms should also analyze how brands actually affect exhaustive, leaving much for future research to improve on in
growth. For example, in regard to firm age, the direct effect of terms of identifying and testing new moderator variables. For
brand performance on growth is statistically significant among example, such external moderators as market or technological
old firms, while among young firms, the effect proves to be turbulence may prove to be valuable factors.
non-significant (i.e. the effect on growth is indirect among Third, researchers could endeavor to analyze “causal
young firms). Thus, while young firms may rely on their brand recipes”, that is, the multiple antecedent conditions associated
in relation to their existing customers, they should think about with the dependent variable and also whether the brand
using alternative means in their other marketing activities. orientation–performance relationship is non-linear (Woodside,
They may, for example, need to emphasize their technical 2013). The notion concerning the non-linearity of the
skills rather than try to rely on their brand name to convince performance effects of brand orientation closely relates to the
new buyers. On the other hand, old firms can more easily use need to examine multiple strategic orientations at the same time.
their brand as the focal point in all their marketing efforts. If a firm constantly emphasizes only one strategic orientation,
Importantly, all this requires that firms measure their then it can invest less in others (Cadogan et al., 2009). As a
performance not only in terms of business growth but also in consequence, the performance gains may start decreasing after a
terms of brand performance and customer relationship certain point, as the additional investment in one strategic
performance. Using multiple performance measures is orientation makes it impossible to invest in any other strategic
important to ensure that corrective actions are made early orientation.
enough, as making them only when growth has turned Finally, the work at hand builds on cross-sectional data, a
negative is often too late. procedure with familiar limitations (Rong and Wilkinson,
2011). Future studies could, hence, collect and utilize
longitudinal data sets. Keränen et al. (2012) find in their
7.3 Limitations and future research
review of B2B branding research that only 3 of the 62
This study has, of course, limitations that merit attention and
empirical studies they reviewed included longitudinal data,
also suggest avenues for future research. First, it focuses
arguing that the lack of longitudinal research hampers the
exclusively on brand orientation. A strictly defined focus is
development of B2B branding research.
justifiable at a point where the research literature on the
subject is still emerging. However, to further add to the
understanding of brand orientation in the industrial market Note
context, future research should seek to examine brand 1 De Chernatony et al. (2000) state that added value refers
orientation in the B2B context simultaneously with alternative to the functional and emotional benefits accruing to the
strategic orientations, such as technology, market and customer, relative to the competition. They further argue
innovation orientations. To the best of the authors’ that “having added value is a core requirement for a
knowledge, only a few empirical research studies have brand, which enables it to perform roles which enhance
examined brand orientation simultaneously with other the purchase and consumption experience, as well as
strategic orientations (Laukkanen et al., 2013). satisfying corporate objectives” (p. 50). This study regard
Second, as for the moderators, future research may find it brand performance as a proxy of the brand’s ability to
feasible to concern itself with more subtle differences between provide customers with added value; that is,
industrial firms. For example, while the classification of firms high-performing brands are those that are able to offer the
as operating either in production or service industries offers highest value to their customers.
valuable insights, firms nowadays increasingly integrate
products with services (and vice versa). Consequently, it is
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Steenkamp, J.B.E.M. and Baumgartner, H. (1998),
“Assessing measurement invariance in cross-national Saku Hirvonen is a University Lecturer in Marketing at the
consumer research”, Journal of Consumer Research, Vol. 25 Business School at the University of Eastern Finland. His
No. 1, pp. 78-90. research has focused, in particular, on brand orientation in
Storbacka, K., Strandvik, T. and Grönroos, C. (1994), small- and medium-sized enterprises. His other research
“Managing customer relationships for profit: the dynamics interests include international marketing, brand identity
of relationship quality”, International Journal of Service development and service branding and management. He has
Industry Management, Vol. 5 No. 5, pp. 21-38. published in Industrial Marketing Management, International
Urde, M. (1994), “Brand orientation: a strategy for survival”, Marketing Review, Journal of Strategic Marketing, Journal of
Journal of Consumer Marketing, Vol. 11 No. 3, pp. 18-32. Marketing Management and Journal of Brand Management.
Urde, M. (1999), “Brand orientation: a mindset for building Saku Hirvonen is the corresponding author and can be
brands into strategic resources”, Journal of Marketing contacted at: saku.hirvonen@uef.fi
Management, Vol. 15 Nos 1/3, pp. 117-133. Tommi Laukkanen is a Professor of Marketing at the
Urde, M., Baumgarth, C. and Merrilees, B. (2013), “Brand Business School at the University of Eastern Finland. His
orientation and market orientation: from alternatives to current research interests include innovation adoption and
synergy”, Journal of Business Research, Vol. 66 No. 1, resistance, consumer behavior, bank marketing, brand
pp. 13-20. management and small- and medium-sized enterprise
Urde, M. and Koch, C. (2014), “Market and brand-oriented marketing and management. He has over 100 peer-reviewed
schools of positioning”, Journal of Product & Brand international scientific publications. His works have appeared
Management, Vol. 23 No. 7, pp. 478-490. in journals such as Journal of Business Research, Industrial
Vallaster, C. and de Chernatony, L. (2005), “Internationalisation of Marketing Management, International Marketing Review,
services brands: the role of leadership during the internal brand Tourism Management, Journal of Small Business Management,
building process”, Journal of Marketing Management, Vol. 21 Journal of Consumer Marketing, International Journal of
Nos 1/2, pp. 181-203. Information Management, International Journal of Bank
Venkatraman, N. and Ramanujam, V. (1986), “Measurement Marketing, International Journal of Mobile Communications and
of business performance in strategy research: a comparison others. He serves in editorial boards of International Journal of
of approaches”, Academy of Management Review, Vol. 11 Information Management, International Journal of Bank
No. 4, pp. 801-814. Marketing and International Journal of Electronic Finance.
Walley, K., Custanne, P., Taylor, S., Lindgreen, A. and
Hingley, M. (2007), “The importance of brand in the Jari Salo, DSc (Econ and Bus Adm), is currently a Professor
industrial purchase decision: a case study of the UK tractor of Marketing at the Oulu Business School (AACSB) in
market”, Journal of Business & Industrial Marketing, Vol. 22 Finland. Salo is the Head of the doctoral program in
No. 6, pp. 383-393. marketing. Before joining Oulu Business School, Dr Salo was
Weinzimmer, L.G., Nystrom, P.C. and Freeman, S.J. (1998), a Professor of Marketing (non-tenured) at the Aalto School of
“Measuring organizational growth: issues, consequences Business (formerly Helsinki School of Economics AACSB,
and guidelines”, Journal of Management, Vol. 24 No. 2, EQUIS, AMBA). Salo has published in Industrial Marketing
pp. 235-262. Management, International Journal of Information Management,
Wilson, D.T. (1995), “An integrated model of buyer-seller Journal of Business and Industrial Marketing, Journal of
relationships”, Journal of the Academy of Marketing Science, Business-to-Business Marketing, Computers in Human Behavior
Vol. 23 No. 4, pp. 335-345. and Online Information Review. He has over 140 publications.
Wong, H.Y. and Merrilees, B. (2008), “The performance He is the Founding Editor-in-Chief of the Journal of Digital
benefits of being brand-oriented”, Journal of Product & Marketing. Dr Salo has been an Active Lecturer in eMBA for
Brand Management, Vol. 17 No. 6, pp. 372-383. over 10 years and lectured in Australia and Italy. He has been
Woodside, A.G. (2013), “Moving beyond multiple regression working with companies such as Nokia, Outotec, Kone and
analysis to algorithms: calling for adoption of a paradigm Rautaruukki.
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Does brand orientation help B2B SMEs in

gaining business growth?

Journal of Business & Industrial Marketing Received 4 November 2014

Balancing between a brand-oriented business strategy and

Figure 1 Conceptual model and research hypotheses

Firm-related internal factors Market-related external factors

3.6.2 Firm size 3.6.4 Industry type

Table I Confirmatory factor analysis results

Customer relationship performanceⴱⴱ

Table II Discriminant and convergent validity

5.3 Structural model (H1-H5) 5.4 Moderation analysis (H6-H9)

Figure 2 Research results (full sample, n ⫽ 396)

Brand β = 0.22* Brand β = 0.19 Business

Notes: β = standardized regression coefficient; * p < 0.001, p < 0.01

Table IV Measurement invariance

Market life cycle

performance relation was statistically insignificant in all 6. Discussion

Table V Moderation analysis results

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