Examining marketing challenges of portugues start-ups: An organizational life cycle approach

MIETE MASTER IN INNOVATION AND TECHNOLOGICAL ENTREPRENEURSHIP Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach Richard-Mikael Ancuta Dissertation Supervisor in FEUP: Prof. Gabriela Beirão Faculdade de Engenharia da Universidade do Porto 2016-07-29 Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach i Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach ii Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach Abstract This cross-sectional study aimed at examining which marketing challenges to expect in the different stages of firm development. Marketing in newly founded firms, such as start-ups has shown to be a very important subject for stimulating firm growth and success. However, due to their smallness, newness, and uncertain and turbulent environment, marketing becomes a difficult discipline for these firms resulting in various marketing challenges. Using two concepts from the literature on development and change in organizations and entrepreneurial marketing, this study adapted an organizational life cycle approach as a diagnostic tool in analyzing current stages of growth, and investigated where various marketing challenges identified from the literature, occurred relatively to the growth stages. Through categorization techniques this study compared different groups of the sample based on various criteria. The data for this study was collect thorough a self-categorization questionnaire which was developed for the purpose of this study, and was sent by email to 287 Portuguese startups in Porto and Lisbon. The results from this study were obtained from a sample of n=20, limiting its generalizability and validity. The results show that marketing challenges are present in all stages of firm growth, but with variability in degree of challenge, mostly of "somewhat of a challenge". However, marketing challenges show to become more of a challenge in the second stage of development, regardless of whether incubated or not. Furthermore, start-ups serving the domestic market rate marketing challenges higher in general than start-ups serving international markets, and start-ups utilizing one source of finance tend to rate marketing challenges much higher than start-ups utilizing more than one source of finance. Regarding size and age, start-ups in their early stages of development are heterogeneous, and so they might not grow equally. iii List of content 1 An introduction to the study ................................................................................................................. 1 2 Literature review .................................................................................................................................. 3 2.1 Introducing organizational life cycle ..................................................................................................... 3 2.2 The life cycle assumptions ................................................................................................................... 4 2.3 Contextual dimensions ......................................................................................................................... 5 2.4 Structural dimensions ........................................................................................................................... 5 2.5 Selecting an appropriate model ............................................................................................................ 5 2.6 The life cycle stages ............................................................................................................................. 7 2.7 Definition of marketing.......................................................................................................................... 9 2.8 Marketing challenges and characteristics of start-ups .......................................................................... 9 2.9 How these characteristics create marketing challenges ..................................................................... 10 2.10 How these challenges can be overcome ............................................................................................ 12 3 Research objectives .......................................................................................................................... 14 4 Research design and methodological consideration ........................................................................ 16 4.1 Design ................................................................................................................................................ 16 4.2 Data collection method ....................................................................................................................... 16 4.3 Sample technique .............................................................................................................................. 17 4.4 Questionnaire development ............................................................................................................... 17 4.5 Mailing procedure and response ........................................................................................................ 19 4.6 Sample profile .................................................................................................................................... 20 4.7 Descriptive and summary statistics .................................................................................................... 21 4.8 Sub-groups ......................................................................................................................................... 23 4.9 Summary statistics of marketing variables ......................................................................................... 24 5 Results .............................................................................................................................................. 26 6 Discussion ......................................................................................................................................... 32 7 Concluding remarks .......................................................................................................................... 34 7.1 Limitations of the study and future research ....................................................................................... 34 7.2 Conclusion ......................................................................................................................................... 34 iv List of references and bibliography ........................................................................................................ 36 Appendix A: Methodological considerations from past life cycle studies ............................................... 44 Appendix B: Overview of scale, measurements, and data type of items ............................................... 45 Appendix C: Section 1 of survey (Growth Stage) ................................................................................... 46 Appendix D: Section 2 of survey (Marketing Challenges) ...................................................................... 47 Appendix E: Section 3 of survey (Marketing Communications) ............................................................. 48 Appendix F: Section 4 of survey (Company Demographics) ................................................................. 49 Appendix G: Summary of sample........................................................................................................... 50 Appendix H: Sub-group of sample ......................................................................................................... 51 Appendix I: Age and size to growth stages ............................................................................................ 52 Appendix J: Mean score of marketing challenges according to market(s) served ................................. 53 Appendix K: Mean score of marketing variables recorded for each growth stage ................................. 54 Appendix L: Mean score of marketing challenges in stage of growth in relation to amount of finance sources ................................................................................................................................. 55 v List of figures FIGURE 1: EXAMPLE OF ORGANIZATIONL LIFE CYCLE MODEL .................................................................................................. 3 FIGURE 2: SEQUENTIAL STAGES AND THEIR CHARACTERISTICS ................................................................................................ 7 FIGURE 3: FREQUENCY OF SAMPLE SIZE (N=22) ............................................................................................................... 20 FIGURE 4: SUMMARY OF GROWTH STAGES ...................................................................................................................... 21 FIGURE 5: SUMMARY OF AGE AND SIZE ........................................................................................................................... 21 FIGURE 6: SUMMARY OF SECTOR ................................................................................................................................... 22 FIGURE 7: SUMMARY OF MARKET SERVED ....................................................................................................................... 22 FIGURE 8: SUMMARY OF PRODUCT/SERVICE OFFERINGS ..................................................................................................... 23 FIGURE 9: SUMMARY OF SOURCES OF FINANCE ................................................................................................................ 23 FIGURE 10: SUMMARY OF MEDIUM USAGE...................................................................................................................... 24 FIGURE 11: SUMMARY OF MODES OF COMMUNICATION .................................................................................................... 25 FIGURE 12: GROWTH STAGES IN GROWTH MODEL ............................................................................................................ 26 FIGURE 13: MEAN SCORE OF MARKETING CHALLENGES IN GROWTH STAGES ........................................................................... 27 FIGURE 14: MEAN SCORE OF MARKETING CHALLENGE VARIABLES TO MARKET(S) SERVED .......................................................... 28 FIGURE 15: MEAN SCORE OF INCUBATED VS. NOT INCUBATED: CONCEPTION AND DEVELOPMENT STAGE ..................................... 29 FIGURE 16: MEAN SCORE OF INCUBATED VS. NOT INCUBATED: COMMERCIALIZATION STAGE ..................................................... 29 FIGURE 17: DISTRIBUTION OF MARKETING PERFORMER FOR EACH GROWTH STAGE .................................................................. 30 FIGURE 18: MEAN SCORE OF MARKETING CHALLENGES: FINANCE SOURCE IN CONCEPTION AND DEVELOPMENT STAGE ................... 31 FIGURE 19: MEAN SCORE OF MARKETING CHALLENGES: FINANCE SOURCE IN COMMERCIALIZATION STAGE ................................... 31 List of tables TABLE 1: SUMMARY OF GROWTH MODELS, STAGES, AND FIRM TYPE ....................................................................................... 4 TABLE 2: MARKETING CHALLENGES CAUSED BY LIABILITY OF NEWNESS .................................................................................. 11 TABLE 3: MARKETING CHALLENGES CAUSED BY LIABILITY OF SMALLNESS ................................................................................ 12 TABLE 4: SUMMARY OF HYPOTHESES .............................................................................................................................. 26 Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 1 1 An introduction to the study This study sought to identify “which marketing challenges to expect in different stages of firm development”. The study was initiated based on the future direction of research within marketing in new ventures suggested by Gruber (2004: 192), which still seems to be a gap in the literature. This approach requires an understanding of two important concepts introduced in the literature, mainly development and change in organizations, and entrepreneurialmarketing. Development and change in organizations can be explained through many commonly used theories introduced in the management literature such as life cycle, teleology, dialectic, and evolution (Van de Ven and Poole, 1995). Each of these theories can be used to explain how change events progresses through a series of separate sequences. This study adapts the life cycle perspective which views the development of organizations from their initiation to their termination (or maturity) through a linear growth model. Such perspective becomes relevant for this study on many grounds. First of all, it is probably the most common explanation of development in the management literature (Van de Ven and Poole, 1995) as it reduces a complex process, into "a uniform, familiar, appealing, predictable and deterministic pattern" (Stubbart and Smalley, 1999: 274). Secondly, it has been suggested that there is a need to recognize the importance of business life cycles to entrepreneurship (Gilmore, Carson and Grant, 2001; Hite and Hesterly, 2001). Thirdly, it is consistent with the findings of many studies (e.g. Mintzberg and Waters, 1982), who through historical review found that small, personalized, highly flexible (but economically vulnerable), knowledge-based firms, like startups, transform themselves into larger firms, and that firms will continue to grow, bureaucratize, and centralize (Child, 1972). Last but not least, since the organizational life cycle segments the developmental process into stages or periods of time (Smith, Mitchell, and Summer, 1985), it becomes relevant for this research approach as the life cycle model is “a diagnostic tool to assist in analyzing a firm’s present situation” (Scott and Bruce, 1987: 51). Rather than explaining change over a period of time which most of the literature on organizational life cycle have sought to do (e.g. Steinmetz, 1969; Greiner, 1972; Lewis and Churchill, 1983; Miller and Friesen, 1983; 1984; Scott and Bruce, 1987; Smith et al. 1985; Kazanjian, 1988; Hanks, Watson, Jansen, and Chandler 1993; Dodge and Robbins, 1992), this study uses the life cycle model as a diagnostic tool, to analyze start-ups current stage of growth. Since most studies concerned with organizations, have concentrated on large organizations as legal entities (McKelvey and Aldrich, 1983), the adaption of the life cycle model to start-ups is of interest, mainly because studies (Kazanjian, 1988; Dodge and Robbins, 1992; Lewis and Churchill, 1983; Shim, Eastlick, and Lotz, 2000) found marketing problems to be prevail during the early stages of development for these firms, which must be dealt with, if these firms are to be able to manage the growth process (Boag, 1987; Carsons, 1985; Tyebjee, Bruno and McIntyre, 1983). Thus, marketing in small, emerging, newly founded, and entrepreneurial firms such as start-ups, is an important subject for stimulating firm growth and success (Gruber, 2004). Furthermore, Van Gelderen, Thurik and Bosma (2005) argue that people concerned with promoting or starting a business, are interested in knowing about what can conceivably help in achieving success (or failure) in the start-up stages. Using a life cycle model can be a great assessment to founder(s) of new firms, as it can serve as a road map to identify marketing Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 2 challenges during different developmental stages, and so, they can prepare for and ultimately prevent them from occurring (Hanks et al. 1993). Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 3 2 Literature review We commence this study by reviewing some of the literature on organizational life cycle also referred to as business life cycle, firm life cycle or corporate life cycle. These are terms we will use interchangeably throughout this study. Furthermore, in the literature there have been great efforts to distinguish, small businesses, small firms etc., from start-ups, new ventures, entrepreneurial firms, just to mention a few. For the purpose of this study, we use these terms interchangeably although it can be argued that each term has different meanings. 2.1 Introducing organizational life cycle Generally speaking, a life cycle is “understood to be a series of events or stages in a process, the cyclical nature of which means they will be repeated... Although a circular model of lifecycle is most common, linear versions are also used” (Moira, 2016: 32). According to Penrose, (1995 in Garnsey, Stam, and Heffernan, 2006: 4) firm growth is then “(…) a result of a process of development (…) in which an interacting series of internal changes leads to increases in size accompanied by changes in the characteristics of the growing object”. In organizational life cycle theory, growth is built around the concept of a linear process, in order to make it tractable (Garnsey et al. 2006). This is usually depicted in an organizational life cycle model (Figure 1). The organizational life cycle model suggests that firms grow, age and change strategies as they move through a number of systematic sequences of stages. Figure 1: Example of Organizational Life Cycle model Each stage represents a specific period which is characterized by particular arrangements of contextual, strategic and/or structural activities within the firm (Hanks, 2015; Dodge, Fullerton, and Robbins, 1994; Hanks et al. 1993; Quinn and Cameron, 1983; Lester, Parnell, and Carraher, 2003), which according to these models, become inappropriate as the firm grows, causing a transformation in the structure (Ranson, Hinning, and Greenwood, 1989). There have been great attempts to predict the amount of growth stages, however it is still unclear to conclude the exact amount of stages and what comprise a stage. As a consequence, the outcome of the vast studies on firm life cycle has resulted in a great number of different models such as industry growth models, large business growth models, small business growth models, and general growth models (Scott and Bruce, 1987), which each is characterized by Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 10 Davidsson et al. 2002; Lichtenstein and Brush, 2001; Man, Lau and Chan, 2002; Gruber, 2004; Wilson, 1995; Gruber, 2004) which will eventually determine their future (Romano and Ratnatunga, 1995). A challenge by definition is according to various dictionaries "the situation of being faced with/by" (Cambridge Dictionary, 2016; MacMillian Dictionary, 2016). Start-ups can be faced by various marketing problems such as a narrow customer base, limited scope and impact of marketing activities, variable and unplanned effort, and over-reliance on the owner-manager’s marketing competency (Carson, 1985; Wilson, 1995), thus the problems are the challenges. Knowing which challenges is critical to problem-solving, this can help in eliminating waste of time and resources which are scarce for start-ups. NEWNESS New firms, like start-ups usually suffer from liability of newness (Freeman, Carroll, and Hannan, 1983; Stinchcombe and March, 1965; Cromie, 1994). Because they are new to their internal and external environment in which they exist, they must learn how to deal effectively with problems and challenges associated with these environments, and are therefore exposed to considerably higher chance of failure (Stinchcombe and March, 1965). They are young, and have not yet fostered a company culture, have not yet established stable links (exchange relationships) with clients, supporters, and customers, which are required in order to stimulate growth, and they are heavily dependent on interactions with “strangers” as no company reputation exist (Stinchcombe and March, 1965; Freeman et al. 1983; Garnsey, 1998). SMALLNESS In addition of being of a young age, start-ups start off small during their early stages of development. They have relatively short financial and human resources due to problems in raising capital, and so they lack personnel and necessary skills to perform against larger and already established firms (McGrath, 1996; Aldrich and Auster, 1986), which makes them vulnerable, due to weak performance in their markets and competitive environment. This creates difficulties in shifting to more favorable circumstances (Gruber, 2003; 2004). UNCERTAINTY AND TURBULENCE Both liability of newness and smallness are provoked by uncertainty (Gruber, 2004), which in entrepreneurship, seem to be unpreventable. The competitive environment within the industry is always changing, which provokes turbulence in the marketplace. Furthermore, startups can be viewed as "real-life experiments" (Gruber, 2003: 3) full of trail-and-errors, in which they must identify the appropriate combination of resources and strategy (Starr and MacMillan, 1990). 2.9 How these characteristics create marketing challenges Because of these characteristics, they give rise to various marketing challenges that according to Gruber (2004) needs to be addressed by emerging firms in order to run profitably. They are hindrances to start-ups as they give them, ”the inability to compete effectively with already Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 11 established firms because of their low levels of legitimacy” (Singh, Tucker, and House, 1986: 171). Presented in Table 2 below, is a summary of some of the various marketing challenges caused by the newness of new firms like start-ups during their early development. These challenges were borrowed from Gruber (2004). Table 2: Marketing challenges caused by liability of newness Marketing challenges caused by liability of newness - Difficulties establishing social interactions (with suppliers) - Lack of exchange relationships (no established business relationships) - Lack of internal structures, processes, and routines in marketing - Lack of experience in marketing (marketing knowledge) - Lack of historical data (restricted customer base) Stinchcombe and March, 1965; Hannan and Freeman, 1984; Robertson and Gatignon, 1986; Schoonhoven, Eisenhardt, and Lyman, 1990; Becherer, 1993; Carson, 1990; Garnsey, 1998; Stokes, 2000; Romanelli, 1989 Source: Borrowed from Gruber (2004) According to studies (Hannan and Freeman, 1984; Romanelli, 1989; Robertson and Gatignon, 1986), firms such as startups must rely on “interactions with strangers” in their early stages of growth, due to their low reputation, legitimacy and experience within the industry (Brush et al. 2001; Davidsson et al. 2002; Lichtenstein and Brush, 2001; Man et al. 2002). They are relatively unknown to the outside environment such as potential customers and suppliers. For that reason, there is also a lack of trust connected to these firms in terms of their abilities and offerings. Start-ups are therefore faced with the challenge to acquire potential customers before an "identity, brand name, or track record" (Gruber, 2004: 168) is established. Because their identity is unknown (Petkova et al. 2008), they must spend marketing resources in order to create an identity, which is a process that is often very lengthy and costly. Furthermore, startups are challenged by the lack of exchange relationships between customers, distributors, and suppliers etc. Establishing such relationships is a difficult task because it is often seen as being a complementary asset. This of course creates a barrier to market entry if the relationships cannot be established. Additionally, startups lack the internal structures and processes to perform marketing activities (Rode and Vallaster, 2005) which can hinder its performance, and they also typically have a lack of experience in marketing. This lack often causes mistakes in the marketing planning and execution. Considering their scarce resources, these mistakes can further lead to serious consequences for the start-up due to their tight financial resources. Unlike larger firms, startups lack historical data they can use in the marketing planning process, which makes it more challenging. Table 3 below is a summary of some of the various marketing challenges caused by the smallness of these firms, the table is borrowed from Gruber (2004). Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 12 Table 3: Marketing challenges caused by liability of smallness Marketing challenges caused by liability of smallness - Limited financial resources available for marketing - Few human resources available for marketing - Lack of critical skills in marketing (lack of expertise) - Limited market presence - Limited market power (disadvantage in negotiations) Carson, 1985; Aldrich and Auster, 1986; McGrath, 1996; Lee, Lee, and Pennings, 1999; Gruber, 2004 Source: Borrowed from Gruber (2004) According to Carson (1985), new ventures such as start-ups, are challenged by their limited financial and personnel resources. These limitations hinder the marketing strategies startups can pursue. Due to these limited resources, startups must rely on a high degree of effectiveness and efficiency in their marketing efforts. Consequently, they must focus on creative and low-cost marketing strategies (e.g. guerrilla marketing, bootstrapping marketing). A small firm such as a start-up might not be able to employ the same marketing procedures of the big firms, even if they may sell the same kind of products. Therefore, the marketing strategy is “very likely to be different in many respects”. (Borden, 1964: 10). The limited personnel resources indicate that startups also lack skills which are necessary to perform successful marketing. This is often the case with individuals of a technological background. Besides the limited resources (financial and personnel), the smallness of the start-ups can usually be associated with "limited market presence, and lack of market power" (Gruber, 2004: 169). Therefore, there is a high probability that marketing in these firms, face much higher costs because external partners might exercise larger margins from these firms. 2.10 How these challenges can be overcome It is commonly agreed in the literature that launching a new venture requires necessary resources, skills, knowledge, and experience (Carson et al. 1995; McGrath, 1996; Aldrich and Auster, 1986; Wilson, 1995), which according to Wilson (1995) are challenges faced by these firms. These challenges can be overcome in a variety of ways, which we will discuss in the following sub sections. INCUBATION A start-up firm “represents a raw company without any organizational structure, acting legally and economically in the market for a short time” (Schmeisser, Krimphove, and Grothe, 2001 in Rode and Vallaster, 2005: 122). They are different from larger firms, as they start “from weak market positions with few resources” (Katila, Chen, and Piezunka, 2012: 117). One way to overcome this resource scarcity is through incubation. Incubation plays an important role for new ventures such as start-ups, in the realization of resource generation. Incubation is according to various literature one way in which new ventures can overcome various challenges, especially during their early stages of development. According to Chan Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 13 and Lau, (2005: 12), incubators are organizations that either "constitute or create supportive environments" during the development of new firms such as start-ups (Peters, Rice, and Sundararajan, 2004). According to some studies (Chan and Lau, 2005; Bøllongtoft and Ulhøj, 2005), incubators can support start-ups with training and business development advice and activities, accounting, legal matters, advertising and marketing through marketing events, exhibitions, press conferences, financial assistance, shared facilities and equipment, access to clients, suppliers and subcontractors through network, access to market and research centers such as universities, and access to venture capital funding, banking facilities and other funding sources (Chan and Lau, 2005). HUMAN CAPITAL Human capital has shown to affect the creation of business ideas and the resources available to the firm (Van Gelderen et al. 2005). It includes knowledge, skills, education and experience according to Deakins and Whittam (2000). Having the necessary marketing skills and knowledge can contribute to the accomplishment of eliminating the various marketing challenges encountered during the different stages of growth. For instance, Schoonhoven et al. (1990) found that new firms that have experts in marketing in their founding organizational structure experience less marketing challenges. FINANCIAL CAPITAL According to Brush, Greene and Hart, (2001), one of the greatest challenges faced by startups is attracting resources into the firm from potential resource providers. Few financial resources are believed to influence the options of selecting an alternative marketing strategy; it can restrict the marketing tasks, restrict market entry, and affect the chance of acquiring marketing specialists (Davis, Hills, and LaForge, 1985; Oakey, 1991; Weinrauch et al. 1991). Though start-ups have difficulties gaining support from financial “backers” (Timmons et al. 1977; Aldrich and Auster, 1986), mainly due to the high risk associated to these firms caused by their newness, some startups actually gain support from venture capitalists (VCs) which increases the firms' resources (Aldrich and Auster, 1986; Gompers and Lerner, 2001). Startups who are unable to raise capital from VCs, may seek other financial sources such as, funds from personal savings, borrowing from financial institutions such as bank loans or debts, government funds, and public equity offerings (Winborg and Landstrom, 2001). However, VCs according to Gompers and Lerner (2001) differ from other conventional financing, as they in addition to financial resources also contribute with coaching in the early stages of growth. Also Davila, Foster and Gupta, (2003) argue that VC firms, have the ability to overcome various obstacles during these early stages of development. Regardless of type of finance, it is agreed that they all add extra capital to the firm which helps fuel extensive firm growth (Nelson and Winter, 1977; Garnsey, 1998), as it allow other resources such as human capital to be bought in (Garnsey, 1998). However, the importance of external finance is well documented in Carpenter and Petersen (2002), who found that small manufacturing firms raise little external finance, and as a result growth was constrained by internal finance. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 14 3 Research objectives GROWTH OBJECTIVES In the life cycle literature, growth has been used as a contextual dimension along the growth model. According to Kazanjian (1988: 264) “most of the crises, and certainly those in manufacturing and marketing, were overcome by expanding numbers and types of employees”. Also Garnsey, (1998) argues that growth is limited by the rate at which new employees and experience can be obtained by the firm. However, according to the findings (Birley, 1987), firms that had increased the number of employees were of all ages. We therefore suggest the following hypothesis: H1: The more employees the higher the stage of growth Concerning age, Phelps et al. (2007) suggest that firms do not grow equally, and they vary in duration and extent of overlap (Garnsey, 1998). Although these stages occur in order, they were also found to not be strongly correlated with age of the firms (Van de Ven, Hudson, and Schroeder, 1984; Lippitt and Schmidt, 1967). The findings of Evans, (1987) suggest that firm growth decreases with age. We therefore suggest: H2: The older the firm, the higher the stage of growth. MARKETING CHALLENGE OBJECTIVES Dodge and Robbins, (1992) found in their study of 364 small business case reports, that marketing problems appeared to prevail during formation and late growth stages. Kazanjian (1988) from whom our growth model is borrowed, found marketing to be a dominant problem and significantly more important to firms in stage 3 than in other stages. His findings also suggest that sales and marketing problems were rated much higher in stage 2 than in stage 1. On a contrary Lewis and Churchill (1983) believed marketing to exist as a major issue in their “existence” stage (in this case, conception and development stage), and as the firm grows, marketing becomes a minor issue. They further postulated that with growth, marketing decreases from “critically important” to “modestly important”. Similarly, Shim et al. (2000) tested whether or not business problems differed by growth stages, their results indicate that problems of marketing and sales diminished with growth. Supporting the findings of Kazanjian (1988) is the work from Tybjee et al. (1983) who found the importance of marketing to increase alongside the firm as it grows. Other studies (Garnsey, 1998; Phelps et al. 2007) argue that important problems facing firms beyond the early stages are variable and not sequential, and that each firm has unique problems. Day (1999) argues that creating and recreating the firm is a continuous process. When changing its organizational structure, new undesired “side effects” emerges, in which new challenges must be addressed by the new organizational structure. From the above findings, we propose the following hypotheses: H3: Stage 1 and Stage 2 firms will rate marketing challenges associated with smallness and newness higher than firms in other stages. H4: There is a great variability in ratings of marketing challenges associated with smallness and newness for all stages. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 15 Another aspect that is relevant to consider in this study is the market served by the start-ups. What is meant by market served, is whether the start-up is aiming at serving the national or international market, or both (Chen, Zou, and Wang, 2009; Zahra, 2005). For instance, Ripolles and Blesa (2011) found that firms that experience early internationalization are confronted with greater marketing challenges, which then becomes an important aspect in their growth and success. Thus we formulate the following hypothesis: H5: Start-ups serving international markets or both markets (domestic and international) rate marketing challenges higher than start-ups that serve only the domestic market INCUBATION OBJECTIVES As the literature suggest start-ups benefit from access to resources and support in the early stage of growth (Garnsey, 1998). As such, it would be interesting to test whether: H6: Incubated start-ups will rate marketing challenges lower than will start-ups that are not incubated HUMAN CAPITAL OBJECTIVES According to Lewis and Churchill, (1983) the owner takes charge of the marketing and sales activities in the "existence" stage (stage 1). Kazanjian, (1988) and (Drazin and Kazanjian, 1990) concluded that different problems, must be addressed during different stages of growth, resulting in the need of different management skills. As such, we suggest the following hypotheses: H7: The owner in all stage 1 firms is responsible for the marketing activities FINANCIAL CAPITAL OBJECTIVES As discussed earlier, regardless of type of finance, it is agreed in the literature that they all add extra capital to the firm which helps fuel extensive firm growth (Nelson and Winter, 1977; Garnsey, 1998), as it allows other resources such as human capital to be bought in (Garnsey, 1998). As such we formulate the following hypothesis: H8: Firms with more financing will rate marketing challenges lower than will firms with less financing. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 16 4 Research design and methodological consideration In this section we describe the method employed for this study, which according to Brewerton and Millward, (2001) should be appropriate to the questions asked (hypotheses). 4.1 Design Most studies on organizational change, only document evidence of changes having taken place, and they all lend themselves to tracking the changes across time periods (Stubbart and Smalley, 1999). The problem with such approach is that it requires tracking organizations over a long period of time (Cameron and Whetten, 1981) and for that reason these studies are researched longitudinally (Davidsson, Achtenhagen, and Nalldi, 2005). However many of them were in fact cross-sectional designs, in which characteristics in the organization are investigated (Hanks et al. 1993). This approach involves assessing data from one specific point in time which Davidsson et al. (2005: 3) argue to be rather a "prediction of the past". Bearing in mind that this study does not intend to track down organizational change or growth, but rather trying to identify and compare start-ups in different stages of growth at a single point in time (present), a descriptive cross-sectional research design was selected, thus a large sample will be required (O'Farrell and Hitchens, 1988). The reason for analyzing the firms’ current stage and not over a longer period (longitudinally) can be based on the argument of Davidsson and Wiklund, (2006). According to their argument, trying to study growth over time by following the same firm is in fact a paradox, since that firm is very likely to adjust its activities and structures, and so it is no longer "the firm" as originally defined. The instrument used for this research design was an online self-categorization questionnaire (Hammond’s categorization in Brewerton and Millward, 2001), which is a well suited instrument for collecting large quantitative data (Malhotra and Birks, 2006) through survey technique (Kothari, 2004). It is often used in research where the differences between individuals or small groups are of interest (Brewerton and Millward, 2001). 4.2 Data collection method A survey is a method in which a research is conducted for the purpose of collecting information in terms of either some characteristics, actions, or opinions, about a large number of people (Tanur, 1983), and are thus intended to generate quantitative descriptions of the subjects being studied. According to Pinsonneault and Kraemer, (1993: 77) this is usually done by “asking people structured and predefined questions", in which their response may concern the subjects or other groups of interest. The studied sample of a given population should yield results in a way that it should allow the findings to be generalizable of the population. The purpose of selecting the descriptive survey for research purpose was to identify what situations and events were occurring in the population of start-ups, with respect to their current growth stage and their marketing problems. Such research simply ask “about the distribution of some phenomena in a population or among subgroups of a population” (Pinsonneault and Kraemer, 1993: 80), thus the researcher is only concerned with describing a Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 17 “distribution or to make comparisons between distributions” (Pinsonneault and Kraemer, 1993: 80). Thus it is meant to ascertain facts, not to test theory. This instrument is according to Romano and Ratnatunga (1995) the most predominant methods employed in marketing research. Also a variety of life cycle studies (Miller and Friesen, 1983; 1984; Smith et al. 1985; Lewis and Churchill, 1987; Kazanjian, 1988; Hanks et al. 1993; Lester et al. 2003) have implemented such instruments (see appendix A). Such research design can only report "what has happened, or what is happening" (Kothari, 2004: 3), though we can only utilize comparative methods. 4.3 Sample technique A purposive non-probability sampling also known as convenience sampling was selected for this study due to the underlying interest in a particular group (start-ups). According to Couper (2000), surveys usually include non-probability samples. A total of 287 incubated start-ups in Portugal were selected, respectively 161 incubated start-ups in Porto, and 126 incubated startups in Lisbon. This sample was selected from the websites of the incubators, which provided the necessary contact information. The sample technique used here was further appropriate as no directory on start-ups in Portugal exists. Similarly Davidsson and Wiklund, (2006) experienced similar difficulties. This might also explain why the sample from most studies (e.g. Greiner, 1972; Lester et al. 2003; Kimberly et al. 1980; Quinn and Cameron, 1983; Hanks et al. 1993; Miller and Friesen, 1984; Smith et al. 1985) were drawn from large companies. Some of these large companies who are in the stock market, or by special legal form, are required to public their financial accounts (Mata, 1994), which makes secondary data collection easier to access. The drawback of the non-probability sampling technique is that the sample may not be representative of the whole population (Malhotra and Birks, 2006). Dillman and Bowker (2001) argue that for web survey, this is rather a normal phenomenon since there is a lack of standardized email addresses which means that it is difficult to generate random samples in comparison to research utilizing telephones to collect data, where random digit dialing is an option. 4.4 Questionnaire development The questionnaire contained a combination of ordinal, dichotomous, nominal, and ratio scales, with a total of 20 items. A complete summary of each item and the type of scale is available in appendix B. It was divided into four sections, though the length of the survey was relatively short. The first (1) section contained measures for "current growth stage", the second (2) section contained measures for "marketing challenges", the third (3) section contained measures for “marketing communications”, and the fourth (4) section contained measures for "demographics". A full replica of the questionnaire is available in: Appendix C, Appendix D, Appendix E, and Appendix F. Each of these measurement scales will be presented in detail below. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 18 MEASURING GROWTH STAGE Studies on organizational life cycle have commonly used two approaches to measuring growth stages. One of these approaches is "hypothetic-deductive" approach where multiple variables determine the specific stage category (Smith et al. 1985), and another approach is a "self-typing" approach (Snow and Hambrick, 1980) used in the study of Kazanjian, (1988). Regardless of these two approaches, they both lend themselves into segmentation/categorization of stages. This approach in classifying firms into types or groups is according to McKelvey and Aldrich, (1983) an alternative to the idea that firms are either all similar, or all separately unique. In order to measure the current growth stage, an ordinal measurement scale borrowed from Kazanjian (1988) was used, in which the founder(s) of the start-ups were asked to select a description that most closely matched their own firm (see appendix C). Such measurement is also known as "self-typing" in organizational strategy studies (Snow and Hambrick, 1980). Four descriptions were provided, each indicating one of the four stages in Kazanjian's fourstage model. The descriptions were not labeled. This approach allowed the founder(s) to select a description based on their own perceptions and opinions of their firm’s current stage of development. MEASURING MARKETING CHALLENGES In order to measure marketing challenges two scales were developed, respectively one for marketing challenges associated with smallness and one associated with newness (see appendix D). The items within these two scales were borrowed from the work of Gruber, (2004) who identified various marketing challenges faced by new venture firms. Both scales contained five likert-type items (in total 10 items), in terms of statements which the respondents were asked to report how much of a challenge these statement were to the firm on a scale from 1 to 7 (where 1= a minor challenge, 4= somewhat of a challenge, and 7= a major challenge). Since the items were of likert-type they were not combined into a composite scale. Because these items expresses a "greater than" relationship without being able to imply how much greater, these items fall into the ordinal measurement scale (Boone and Boone, 2012). MEASURING MARKETING COMMUNICATIONS In order to collect some marketing information about start-ups, three measurements were used. One measurement concerned “marketing performer” (the person responsible for marketing within the firm), which was measured on a nominal scale where 1= founder(s), 2= employed marketer, 3= external entity, and 4= other. The fourth option “other” was an open question in which the respondents were able to provide their own response. The second and third measurements were in terms of nominal scales where multiple options could be selected. These measurement scales concerned; 1) use of medium (online vs traditional), and 2) Modes of communication (Advertising, Events and experiences, Direct marketing, Word-of-mouth marketing, Sales promotions, Public relations and publicity, Interactive marketing, Personal selling) borrowed from Kotler and Keller (2014). (See appendix E) Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 19 MEASURING DEMOGRAPHICS According to McKelvey and Aldrich, (1983) the necessity to include appropriate descriptions and classification of firms under investigation is important, in order to enhance the relevancy to those whom might contribute from such research. In fact, it is the firm characteristics which should serve as the classificatory basis of organizations (Perrow, 1967). For these reasons, a section asking for demographics of the firms was included (see appendix F). The descriptive information was requested as the last section in the survey in order to insure decrease in reactivity, accuracy, and boredom (Brewerton and Millward, 2001). Age was measured as a continuous variable providing discrete data (finite values). The respondents were asked to indicate how old the firm was in whole years (e.g. 1999, 2003) and was subtracted from current year (2016) to find the age. Even though it is common for continuous variables to be converted into categorical variables such approach was not used as it might not be a wise choice (Altman, 1998 in the Landau and Everitt, 2004). Similar to age, size was measured as a continuous variable in which the respondents were asked indicate how many number of employees they currently had employed (in whole numbers, including founder(s), excluding interns). The respondents were also asked to indicate to which market their offerings were aimed at. This was measured on a nominal scale allowing the respondents to select one option from, B2B, B2C, B2B2C, C2C2B, and B2G. Further, a nominal (dichotomous) scale was developed where the respondents could select whether they were incubated, or not. Even though the sample was drawn from incubator websites, there was doubt whether all of the sampled firms were still incubated. Further a nominal scale was created in which the respondents were asked to state which market they currently were serving. Two options were provided (National vs. International market), and the respondents were able to select both markets. Also a nominal scale asking in which category (product vs. service) their primary offerings were in was developed. Last but not least the respondents were asked to indicate their major sources of finance, the options available were borrowed from Winborg and Landstrom, (2001). This was measured using a nominal scale in which multiple options were available. 4.5 Mailing procedure and response The data collection of primary data focused on the marketing challenges experienced by 287 start-ups, in their current stage of the firm life cycle. The purpose was to compile a quantitative database. Prior to sending out the questionnaire it was thoroughly reviewed and checked for loaded questions, double questions, ambiguous questions, inappropriate vocabulary, and missing alternatives suggested by Payne (1951, in Hunt et al. 1982). The survey was created and administered through Sosci Survey (Leiner, 2015) which is free software (for non-commercial scientific research), and was made available to the participants through a link sent by email which guided them to the online survey. The questionnaire was developed with the intention to collect demographic/descriptive data. The demographic data was collected for the purpose of examining differences and similarities between groups in the sample. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 26 5 Results In this section the results from the hypotheses testing are presented. The hypotheses are summarized in table 4 below. Table 4: Summary of hypotheses Summary of hypotheses H1: The more employees the higher stage of growth H2: Age is not correlated with growth stages. H3: Stage 1 and Stage 2 firms, will rate marketing challenges associated with smallness and newness higher than firms in other stages H4: There is a great variability in ratings of marketing challenges associated with smallness and newness for all stages. H5: Start-ups serving international markets or both markets (domestic and international) rate marketing challenges higher than start-ups that serve only the domestic market H6: Incubated start-ups will rate marketing challenges lower than will startups that are not incubated H7: The owner in all stage 1 firms is responsible for the marketing activities H8: Incubated start-ups will rate marketing challenges lower than start-ups that are no incubated Testing hypothesis 1 which states that, the more employees the higher the stage of growth, and hypothesis 2 which states, the older the firm, the higher the stage of growth, can be visualized in figure 12 below (For larger visualization, please view appendix I). Figure 12: Growth stages in growth model Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 27 The two contextual dimensions, age and size were used along the x-axis (age) and y-axis (size), where each respondent from the total sample (n=20) was “mapped” into the graph according to their age and size. The visualization of the results indicates that age and size are very scattered, and that there is no symmetry between age, size and growth stage. Respondents categorized as being in the commercialization stage seem to be of the same age as those in the conception and development stage. The visualization also indicates that the majority of the sample in the conception and development stage are of higher size, in terms of employees in relation to the majority in the commercialization stage. Testing hypothesis 3 was not possible due to the lack of sample for stage 3 and stage 4 startups. However, testing hypothesis 4 was done by calculating the mean score of the rankings of the marketing challenges of the respondents from each stage. The results are provided in visualized format in figure 13 below. A descriptive version is available in appendix K. Figure 13: Mean score of marketing challenges in growth stages Each marketing challenge variable was measured on an ordinal scale recorded from 1 to 7 (1= a minor challenge, 4= somewhat of a challenge, 7= a major challenge). The mean score from each variable was calculated for the sample in each stage, which Kazanjian (1988) also did for his dominant problems. In general, the sample drawn from the commercialization stage seem to record higher on most Marketing Challenge variables with exception to “lack of historical data” and “lack of internal structure, processes and routines”, in relation to the sample from the conception and development stage, with an average mean of 4.58 against 4.01. For the conception and development stage, most of the marketing challenges seem to be in the middle score of 4 or less (minimum mean: 3.33 – maximum mean: 4.42), indicating “somewhat of a challenge”, while for the commercialization stage, the mean score is ranging from 3.75 (minimum) to 5.38 (maximum). In total, the sample in the commercialization stage record higher scores looking at the mean in relation to the sample in the conception and development stage. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 28 In order to test hypothesis 5 which states; Start-ups serving international markets or both markets (domestic and international) rate marketing challenges higher than start-ups that serve only the domestic market, the total sample was divided into the markets served, where after, the mean value for each marketing variable was computed for each group (appendix J). The results are visualized in figure 14 below. Figure 14: Mean score of marketing challenge variables to market(s) served The results show that the majority of marketing challenges were rated relatively higher for start-ups serving the national market, with exception to “limited market power” for marketing, “lack of historical data” for marketing, and “lack of internal structures, processes, and routines” for marketing. Surprisingly, start-ups serving the international market scored lowest for all marketing challenges with exception to “difficulties establishing social interactions with suppliers”. The start-ups serving both markets scored second highest on the majority of variables, with exception to “difficulties establishing social interactions with suppliers and/or buyers”. Hypothesis 6 was tested by investigating the mean scores of the marketing challenge variables for incubated and not incubated firms in each growth stage, which is demonstrated in figure 14 and figure 15. (for table format see appendix K). Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 29 Figure 15: Mean score of incubated vs. not incubated: Conception and development stage Figure 16: Mean score of incubated vs. not incubated: Commercialization stage The results show that incubated firms in the conception and development stage have, in general, a higher mean score (lowest: 3.40, highest: 4.30) for the marketing variables, with exception to "few human resources", "limited market power", and "lack of internal structures, processes, and routines”. In the commercialization stage the mean score for each variable was more or less shifting between incubated and not incubated with the lowest mean score of 3.5 and highest score of 5.75 for incubated firms, and lowest mean score of 3, and highest mean score of 5.75 for not incubated firms. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 30 In order to test hypothesis 7 which states: The owner in all stage 1 firms is responsible for the marketing activities, the frequency of the “responsible for marketing” was assessed from the variable “marketing performer” which was measured on a nominal scale. The frequency can be obtained from figure 17 below. Figure 17: Distribution of marketing performer for each growth stage In the conception and development stage, most startups from the sample (n=12) stated that the founder(s) were the ones responsible for the major marketing activities within their firms. The remaining startups within this stage of growth had either an external entity (n=1), employed marketer (n=1), or other (a business developer and a co-founder) responsible for their major marketing activities. Similar to the conception and development stage, most start-ups from the commercialization stage (n=5) reported their founder(s) to be the responsible for the major marketing activities within the firm. The rest had either, an employed marketer (n=2), an external entity (n=1), or other (Business Development Manager) employed for the marketing activities. Testing hypothesis 8, which stated: start-ups with more financing sources will rate marketing challenges lower than start-ups with fewer financing sources, was obtained by first splitting the sample according to amount of finance sources and growth stage in which the mean score of the marketing challenges was calculated. The results can be obtained in table format in appendix K and in visual form in the figure 18 and figure 19 below. In the conception and development stage, 1 case that used three types of finance source reported all marketing challenges of 7 showing that they were a major challenge. 3 cases reported using two types of finance sources. This group scored the lowest mean score for all marketing challenge variables, showing that these challenges are closer to a minor challenge than a major challenge. The last group contained 8 respondents. This group used two types of finance sources and had on average a score around 4 showing that these challenges were neither a major, nor a minor challenge, but somewhat of a challenge. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 31 Figure 18: Mean score of marketing challenges: Finance source(s) in conception and development stage In the commercialization stage (figure 19 below), none of the sample used more than two types of financing sources. Two groups were identified, one containing 4 respondents who used one type of financing source, and the other group of 4 respondents who used two types of financing sources. The group using one type of finance source indicated a higher mean score in general for the marketing variables, with exception to “lack of historical data for marketing”, “limited market presence”, and “limited market/monopoly power”. Figure 19: Mean score of marketing challenges: finance source(s) in commercialization stage Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 32 6 Discussion This discussion is based on the findings from this study. An important limitation to consider is that of the sample size for each growth stage, which limits the ability to perform statistical relationship, correlation, and regressions tests (Brewerton and Millward, 2001). Furthermore it also limits the validity of the study in that the sample is not representative of the population. In an attempt to identify marketing challenges to stages of growth, it would seem that marketing challenges, whether a minor or major challenge is a topic that will require further investigation, even though this paper might present an early attempt on this issue. The results from this study show that the majority of start-ups from this sample are in the their early stages of development, and that they are far from all alike, but rather individually unique and heterogeneous (McKelvey and Aldrich, 1983) when considering their demographic characteristics. As such, one should question whether the organizational life cycle construct is useful for such population. Start-ups from this sample, whether in the conception and development stage, or in the commercialization stage, were of all ages and sizes similar to the findings of Birley (1987), which indicate that firms do not grow equally (Phelps et al. 2007). Whether growth is limited by the rate at which new employees can be obtained by the firm (Garnsey, 1998) or whether age is correlated to stages of growth (Van de Ven et al. 1984; Lippitt and Schmidt, 1967) would require a more deep through analysis of relationship and correlation testing. Based on the mean score of each marketing challenge variable, the results show that marketing challenges become more of a challenge with growth, similar to the findings of Tybjee et al, (1983). More importantly these results can be compared to the findings of Kazanjian (1988) who found marketing problems to be rated higher in stage 2 than in stage 1, though he concluded that these problems were significantly more important in stage 3. Such trend could be explained by many reasons, such as the fact that start-ups in the conception and development stage tend to focus on product development rather than on commercializing their product, or by the findings from this study which show that the founder(s) are responsible for marketing activities for majority of these firms, thus there is over-reliance on the ownermanager’s marketing competency (Carson, 1985; Wilson, 1995). Though these results are not statistically significant in any respect, it could be of future interest to investigate such relationships. When it comes to market served, the observations from this study show that start-ups serving the domestic, national market (Portugal), rate highest on marketing challenges, followed by start-ups serving both markets (national and international). This is the contrary of the findings of Ripolles and Blesa, (2011). Whether incubation is a contributor to overcoming various marketing challenges is still of a question. The results here show that incubated start-ups in the conception and development stage rate marketing challenges related to low financial resources, lack of critical skills, limited market presence, lack of experience, lack of historical data, lack of social interactions, and lack of exchange relationships higher than start-ups that are not incubated. However, as these results have no explanatory power, they could as well indicate that challenges are variable and not sequential, and that each firm has unique problems (Garnsey, 1998; Phelps et al. 2007). Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 33 Concerning sources of finance, it seems that start-ups utilizing mainly one type of financial source tend to rate marketing challenges much higher in the conception and development stage, as well as in the commercialization stage with exception to limited market presence, limited market power, and lack of historical data. Such trend could be explained by the inability of acquiring marketing specialists (Davis et al. 1985; Oakey, 1991; Weinrauch et al. 1991), since start-ups in both stages rated “few human resources” as the highest challenge. This topic of course should also be further investigated. Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 34 7 Concluding remarks 7.1 Limitations of the study and future research One can consider the results as vague in that the small sample size for this cross-sectional, descriptive study is very low, and thus question, whether it can generalize and represent the whole population of start-ups. With that said, many limitations arise from this study. Not only does the sample size for each growth stage limit the ability to perform statistical relationship, correlation, and regressions tests (Brewerton and Millward, 2001), but it also limits the validity of the study in that the sample is not representative of the population. Furthermore, the sample size "must be big enough" (Lenth, 2001: 187), in order for an effect to be of scientific significance, which in this case is not possible. Surveys sent through emails may have some drawbacks such as; it may be deemed as "junk mail" or "spam" and can thus be an explanation to the low response rate (Sills and Song, 2002). Future research within this topic should aim at larger sample. This can be achieved by targeting populations outside of Portugal, and by extending the administration period for the survey. Furthermore, as no database on start-ups in Portugal was available, it limited the ability to perform a probability sampling which in statistics have a much higher generalizability, and unfortunately for this sampling, “conclusions about the target population cannot be drawn from the findings” (Brewerton and Millward, 2001: 120). However, a low response rate for specially mail and web surveys should not be of any surprise as these instruments have shown to decline in response rate (Sheehan, 2001). The measurements used in this study influence the type of data collected. In this research a self-typing approach was used as opposed to a hypothetic-deductive approach. Future research should try to approach this research problem by experimenting through a hypotheticdeductive approach in order to examine whether structural dimensions differ between groups of start-ups, and whether these dimension can explain why specific marketing challenges arise. This study only provides a cross-sectional view of the start-up firms in their current stage of growth. Future research should attempt to examine the growth through longitudinal research. Only then will we be able to examine whether marketing challenges changes according to stage of growth. 7.2 Conclusion Even though we have not found any evidence for our hypotheses, this research indicates that age and size seem not to be determinants of stage of growth since start-ups of all ages and sizes are dispersed alongside the organizational life cycle’s contextual dimensions. It seems that all the marketing challenges examined in this study are present in both stages of growth in start-up firms, with variability in degree of challenge, mostly of “somewhat of a challenge”. However, start-ups in the commercialization stage seem to rate multiple marketing challenges higher than those start-ups in the conception and development stage. 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Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 44 Appendix A: Methodological considerations from past life cycle studies Researcher(s) Instruments Period: Respondents: Sample size (N) Firm type: Mintzberg and Waters (1982) Company histories 19171974 n.a. N =1 Entrepreneurial company Miller and Friesen, (1983; 1984) Company histories, Secondary data, Questionnaires n.a. n.a. N =36 Corporations (at least 20 years of existence) Smith et al. (1985) Questionnaire n.a. CEOs and Managers N =27 Electronic manufacturing firms Lewis and Churchill, (1987) Questionnaires n.a. Owners/Managers N =83 Companies Kazanjian, (1988) Questionnaires (Selfcategorization) Late 1982 CEOs N =105 Technology based new ventures Dodge and Robbins, (1992) Case reports 1977 - 1989 Owners/Managers N= 364 Small Business Institutes (Service companies, retailers, distributors, manufacturers’, sportsrecreational, real estate, insurance firms) Hanks et al. (1993) Questionnaires (Descriptive variables) 1988 (summer and spring) CEOs N =275 High-tech companies (Computer software, electronic and communications equipment, chemicals, pharmaceuticals, aerospace equipment, lasers and optics, analytical and measuring devices) Dodge et al. (1994) Case reports 1977 - 1990 Owners/Managers N= 645 Small Businesses (Service firms, retailers, distributors, manufacturers, processors) Lester et al. (2003) Questionnaires n.a. Managers N =242 Variety of industries Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 45 Appendix B: Overview of scale, measurements, and data type of items Items Measurement Scale Variable Type Values Growth Stage Ordinal Ordinal 1 = Stage 1, 2= Stage 2, 3= Stage 3, 4= Stage 4 Incubated Dichotomous Categorical 1= Incubated, 2= Not incubated Market Served Nominal Categorical 1 = National Market, 2 = International market Industry Sector Nominal Categorical 1= B2B, 2=B2C, 3= B2B2C, 4=C2C2B, 5=B2G Product Category Nominal Categorical 1= Product, 2= Service Age Ratio Continuous Open Size (Employees) Ratio Continuous Open Marketing Performer Nominal Categorical 1= Founder, 2= Employed marketer, 3= External entity, 4= Other Source of Finance Dichotomous Binary 1= Yes, 2= No - Owner(s), Finance, Venture Capital, Retained earnings, Trade and other creditors, Bank and financial institutions Modes of Communication Dichotomous Binary 1= Using, 2= Not using - Advertising, Events and experiences, Direct marketing, Word-of-mouth marketing, Sales promotions, Public relations and publicity, Interactive marketing, Personal selling Marketing Challenges Ordinal Ordinal 1= a Minor Challenge, 4= Somewhat of a Challenge, 7= a Major Challenge - Smallness - Low financial resources - Few human resources - Lack of critical/important skills - Limited market presence - Limited market/monopoly power - Newness - Lack of experience - Lack of historical data - Lack of internal structures... - Difficulties establishing social interactions with suppliers - Lack of exchange relationship with suppliers Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 46 Appendix C: Section 1 of survey (Growth Stage) Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 47 Appendix D: Section 2 of survey (Marketing Challenges) Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 48 Appendix E: Section 3 of survey (Marketing Communications) Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 49 Appendix F: Section 4 of survey (Company Demographics) Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 50 Appendix G: Summary of sample Summary of Sample (N=20) Growth Stage Conception and Development Commercialization N=12 N=8 N % N % Incubation Incubated 10 83.33 4 50 Not Incubates 2 16.67 4 50 Year Founded 2008 1 8.33 1 12.5 2011 - - 1 12.5 2012 1 8.33 1 12.5 2013 2 16.67 1 12.5 2014 4 33.33 3 37.5 2015 2 16.67 1 12.5 2016 2 16.67 - - Number of Employees 1 1 8.33 1 12.5 2 2 16.67 3 37.5 3 - - 3 25 4 1 8.33 - - 5 3 25 - - 6 2 16.67 - - 8 - - 1 8.33 9 1 8.33 - - 10 1 8.33 - - 20 1 8.33 - - Sector B2B 6 50 2 25 B2C 2 16.67 3 37.5 B2B2C 4 33.33 3 37.5 Market Served National (Portugal) 4 33.33 3 37.5 International 3 25 3 37.5 Both 5 41.67 2 25 Product/Service offering Product 6 50 3 37.5 Service 6 50 5 62.5 Sources of finance Owner(s) 7 58.33 8 100 Friends and relatives 2 16.67 - - VC 5 41.67 2 25 Retained earnings 2 16.67 - - Banks and financial institutions 1 8.33 2 25 Examining Marketing Challenges of Portuguese Start-ups: An Organizational Life Cycle Approach 51 Appendix H: Sub-group of sample Categorization according to growth stage, sector, market served, and product offering Sector Market served Offering Growth Stage Count of (N=20) B2B B2C B2B2C International National Product Service Conception and Development 1 x x x 2 x x x 1 x x x 2 x x x 1 x x x 1 x x x 3 x x x 1 x x x Sum 12 6 2 4 3 9 7 5 Percentage of N=12 100% 50% 16.67% 33.33% 25% 75% 58.33% 41.67% Commercialization 1 x x x 1 x x x 3 x x x 2 x x x 1 x x x Sum 8 2 3 3 3 5 3 5 Percentage of N=8 100% 25% 37.5% 37.5% 37.5% 62.5% 37.5% 62.5% Total Sum 20 8 5 7 6 14 10 10 20 20 20 20 Percentage of total 100% 40% 25% 35% 30% 70% 50% 50%