Stay ahead of the competition
How the perception of Competitive Intelligence influences
the way Swedish startups are dealing with international
competition.
Master’s Thesis 15 credits
Department of Business Studies
Uppsala University
Spring Semester of 2020
Date of Submission: June 3
rd2020
Abstract
This thesis is within the field of Competitive Intelligence. The thesis’s main purpose is to investigate how Swedish startups perceive Competitive Intelligence and how their perception influences how they are dealing with international competition in the domestic market. Even though Competitive Intelligence is not a new field, the existing literature over this topic is not very rich, especially regarding startups. In our work, through qualitative research based on eleven semi-structured interviews, with CEOs and founders of startups in Sweden, and a CEO of an Intelligence firm in Sweden, we argue that there are three approaches to Competitive Intelligence from Swedish startups. The competition-centric, the customer-centric and the market-centric approach. Furthermore, we propose that dealing with competition requires startups to establish an intelligence culture that involves everyone, as it enhances their alertness, contributes to the building of a competitive advantage, increases their sales efficiency and lastly using their “insidership” as it is proposed in the revised Uppsala Model, to gather information and deal with the competitors. Finally, from our findings we propose two new classifications in addition to Murphy’s five classifications of firms based on their engagement in Competitive Intelligence activities, “the Hesitant” and “The Arrogant”.
Keywords: Competitive Intelligence, Competition, Intelligence Culture, Classifications,
Acknowledgements
As with the end of this work the journey in the Master Programme in Entrepreneurship ends, we can conclude that it leaves us wiser, with many experiences, lots of knowledge and many good memories. For that reason, before we thank everyone that made this work possible, we would like to thank all our teachers, Katarina Blomkvist, Philip Kappen, Gundula Lücke and Ivo Zander, for their support and making learning interesting. We thank our fellow classmates, for being more than just classmates, but also good friends and good co-travelers. During the time that we have been working in our thesis, we had the privilege to meet many interesting people, to hear their thoughts and help us to deliver the current thesis. Writing this thesis during Corona times, means that many of our participants probably were facing their own problems keeping their businesses alive, yet they were very willing to talk with us, share their thoughts and contribute to our work. We are really grateful for all those people that devoted part of their time to give us an interview.
Lastly but foremost, we would like to thank our supervisor, Lena Zander, for her guidance and her constructive feedback on our work, and our fellow peers for their comments on our work.
Uppsala, Sweden, June 2020
“What enables the wise commander to strike and conquer, and achieve things beyond the reach of ordinary men,
TABLE OF CONTENT
1. INTRODUCTION 6
1.1 Background 6
1.2 Aim of this work 7
1.3 Research Question 7
1.4 Contribution 8
1.5 Thesis overview 8
2. LITERATURE REVIEW 9
2.1 Conceptual background 9
2.2 The content and spectrum of CI 11
2.3 Competitive Intelligence and the social construction of the world 12 2.3.1 Competitive Intelligence and Cultural Intelligence 13 2.4 Globalization’s effect concerning CI processes 15 2.5 SMEs’ Challenges with Competitive Intelligence 15 2.6 Reasons for the slow adoption of Competitive Intelligence 16
2.7 Theories 16
2.7.1 The Uppsala Internationalization model 16 2.7.2 The Uppsala Internationalization Model Revised 18 2.7.3 Born to be Global - Toward a theory of international new ventures 19
1.Foreign local advantage 19
2.7.4 Competitive Intelligence: Gathering, Analysing and Putting It to Work 20
3. METHODOLOGY 22
3.1 Research framework 22
3.2 Research Design 23
3.3 Data collection method 25
3.3.1 Operationalization 26
3.3.2 Ethical considerations regarding data collection and analysis 27
3.4 Sampling 27
3.5 Roadblocks and data quality issues of qualitative research 27
3.6 Quality criteria 30
3.7 Data analysis method 30
3.8 Quality issues 31
4. Analysis 31
4.1 Transcription and data analysis 31
4.1.1 The 1st order concepts 32
4.1.2 The 2nd order themes 42
4.2.1 Dealing with competition 44
4.2.2 The CI approaches 45
4.2.3 Murphy’s Classifications 46
4.2.4 New classifications 46
4.3 Classification of the startups according to their CI engagement 46 4.4 Assessment of the interviewed startups 51
5. Discussion and Conclusion 52
5.1 Limitations 53 5.2 Future research 54 References 55 Accessed Reports 60 Websites 60 Appendix 61
1.1 Pre-interview statement letter to interviewees 61
1.2 Interview guide 62
1. INTRODUCTION 1.1 Background
“Today’s business environment demands a comprehensive system for managing risks in the external business environment. Never before have the forces of globalization been as intense as they presently are. Most business executives feel that these forces of change will have a major impact on their organizations” (Global Intelligence Alliance 2007a, as cited in Calof and Wright 2008).
This statement was stated during the outbreak of the 2007 - 2009 US recession and revealed the need for formal intelligence systems in companies, especially in periods of crisis.
Ever since then, we saw an economic crisis spreading almost all over the world, with giant companies such as the Lehman Brothers collapsing, and new big players emerging on the remains of them. Sweden since 2007 saw some of its biggest companies such as SAAB Automobile going bankrupt, Volvo Cars changing hands from Ford Motor Company to the Chinese Zhejiang Geely Holding and being reborn, breaking sales records (source Volvo Cars, April 2020), Ericsson changing its focus from mobile phones to the development of the 5G network, and at the end of 2019 being fined $1 billion to resolve U.S. corruption probes (Reuters 2019). Furthermore, Sweden saw Spotify becoming a “Unicorn” (a market slang for a startup valued at over $1 billion) and the world’s biggest music streamer. As it is apparent, the rapid changes in technology and digitalization have changed, and will continue changing the business environment. Businesses, in order to survive in this fast-changing environment, besides being innovative need to be aware of the current and upcoming trends (Björk et al. 2014). Even more, according to Tarek, Zouhayer and Adel (2017) the competitiveness of SMEs, besides the reaction to an information need, calls for the implementation of a real decisive approach (Tarek et al. 2017 p.752).
regarding the competition, the customers and other market factors that add to the firm’s competitive advantage and support the decision making processes within the organization. CI has a rich heritage and originates thousands of years ago, with many to believe as the birth of CI in “ The Art of War” a collection of war-methods from Sun Tzu, a Chinese general and war strategist, written almost 2.5 thousand years ago. Yet it is not a well-explored topic in the literature so far even though as it is apparent from the introduction, CI is needed now more than ever before.
1.2 Aim of this work
Since technology evolves and advances economies and business practices, it also affects the operational part of competitive intelligence and the globalized economy and competition (Loufrani-Fedida, Hauch, Elidrissi, 2019). With the scarce finding of this research aspect, our ambition is to explore more accurately how CI is used in today’s world, in the geographical isolation of Sweden, by looking at how startups are perceiving and managing CI. Through this work, we aim to discover how Swedish startups are facing competition, how they shape their businesses to gain increased advantages and growth against other actors on the market. We aim at exploring how start-ups are working with CI through their ways of collecting information, analyzing, evaluating and making decisions on their analyses. Our objectives with this research are to gain contemporary answers to how Swedish start-ups are perceiving CI operations, how the CI operations are functioning in Swedish start-ups and how these perceptions are influencing how the startups are dealing with international competition.
1.3 Research Question
In line with the aim of this work, we want to investigate the following research question:
This will allow us to do an exploratory research on the topic of CI through the prism of domestic companies that compete with foreign companies in the domestic market. In order to answer this question, we will conduct qualitative research.
1.4 Contribution
As the contribution of CI in businesses can be too broad according to the existing literature, for example, ranging from supporting the decision making, contributing to the strategic management process (Bernhardt 1993 cited by Priporas et al. 2005), to the formation of competitive advantage (Tarek et al. 2017) and to help businesses in the internationalization process (Tarek et al. 2017, Tuan 2015) we want to focus on aspects that have not drawn a lot of attention in the literature. In this work, we are building upon the Uppsala internationalization model (Johanson & Vahlne, 1977) and the born global theory (Oviatt & MCDougall 2005) but from a reverse perspective, the one of the domestic company that deals with international competition in the domestic market. Our contribution thus is twofold. Enriching the existing literature, in which CI has been examined so far as a tool for tracing opportunities and not threats, and from a practitioner’s perspective, we give insights on how to use CI as a defensive tool against the competition.
1.5 Thesis overview
2. LITERATURE REVIEW 2.1 Conceptual background
The concept of CI as mentioned in the introduction is not new. The need for information is connected with the existence of humankind and therefore is not easy to tell when was the birth of CI. Calof and Wright (2008) mentioned in their work some historical examples of the usage of CI, yet they are unsure about the birth of CI, giving an approximate estimation of a time 5.000 years ago. Indeed, what is apparent to us during this whole period that we are exploring the concept of CI, is a general fuzziness in the existing literature over CI. Tarek et
al. (2017) argue that the conceptualization of the term of intelligence in the literature was strongly biased by the geographic context in which it occurs. To this end, while practitioners of CI are not bothered with definitions but rather focusing on the activities and their outcomes, academics have tried to come with a definition of CI. Calof and Skinner (1998) defined CI as:
The art and science of preparing companies for the future by way of a systematic knowledge management process. It is creating knowledge from openly available information by use of a systematic process involving planning, collection, analysis, communication and management, which results in decision-maker action (Calof & Skinner, 1998 as cited by Wright & Calof, 2006).
Nevertheless, as the CI activities are vaguely defined, the definition of CI is relatively unclear and easy to confuse CI with Marketing Intelligence (MI). Indeed, when reading the definition of CI from Calof and Skinner (1998) that we mentioned above, and afterward reading the definition of MI given by Tan and Ahmed (1999) as cited by Wright and Calof (2006), which they describe as the most comprehensive definition, the reader might get confused. Thereafter, MI is defined as
decision-makers to improve their marketing planning, implementation, and control.
Another finding in our literature research is the aged and relatively limited number of articles and books around CI. After conducting a search on Google Scholar (see Figure 1.1 below) in articles and books that include in the title the term “Competitive Intelligence” we found 4.630 of them, excluding articles that CI had a peripheral mention. The bar chart below illustrates the allocation of them through time and number of publications within each period of five years, starting from 1980 until 2019. Another finding of this literature research was that there is only one article regarding CI and startups originating in 2005. Nevertheless, we conducted another research, this time using the term “Business Intelligence” in order to find out if more research was done on this term. The results were devastating, with only six results appearing.
In our previous research within CI, we noticed that CI is very often examined through a diverse set of aspects, such as emerging market studies, Tej Adidam et al (2012), aspects of cultural intelligence, (Tuan, 2015), studies of the tourism sector, Salguero, Quintero (2016), processes and tools of competitive intelligence (Bose, 2008). Our research resulted in a greater understanding of the discovered research in CIand our findings showed certain trends within CI, foremost the usage of CI in emerging markets is still under exploration, Tej Adidam et al (2012). Also, CI in SME’s is very scarcely studied, Abdul-Mohsin, Abdul-Halim, Ahmad (2015)
.
We found limitations of articles exploring the usage of CI in the Swedish market, an article from Søilen & Solberg (2017) did a comparison between two large Swedish companies, but research regarding Swedish SME and CI was limited.2.2 The content and spectrum of CI
The outlook and values of what a certain sector or business are looking for in CI can be different, but the core purposes are all the same, with Tao and Prescott (2000) to summarize the three main objectives of CI activities that are classically seen as the framework of CI operations;
1. To maintain a general understanding about the industry and competitors
2. To identify areas of vulnerability of competitors
3. Accessing firm’s own actions on competitive reactions and vice versa.
2.3 Competitive Intelligence and the social construction of the world
Baumard (1994) in his work presents intelligence as a “psychological build-in process” instead of a structure or a department or a team supposed to be the eyes of an organization. In that sense, intelligence is more than the superficial perception of it as a number of practices and tasks that an individual or a group of people are engaging in order to spy what is going outside the organization. It is a continuous human activity that gives sense to the stimuli received from the environment (Baumard,1994) and therefore, it requires an understanding of the environment that the firm is embedded within. Firms are seen thus as living organizations with their own history, culture, biases, interpretation of the environment and learning capabilities, that interact with their own environment. There are two assumptions that lying centrally in his work, which assume that (1) search is a highly personal process that is more dependent on the personal experience, motivation and awareness that to any organizational structure, and (2) as physical, psychological and cultural distance decreases collective understanding between individuals involved in intelligence production, thus intelligence and intimacy are highly related and play a core role in organizational consistency (Baumard, 1994 p. 5, see also the Figure 2 and 3 below).
2.3.1 Competitive Intelligence and Cultural Intelligence
Figure 3 - A roadmap for tracking intelligence in organizations, Baumard 1994, p. 12
2.4 Globalization’s effect concerning CI processes
Franco et al (2011) illuminated in their study along with Casado Salguero, Jiménez Quintero (2016), a correlation between the increased need for CI activities with increased competition, simply said is the growing globalization and technology an ignition of fierce international competition among many markets and companies. Another finding was that the sizes of companies have a property of the approach of CI work, that the globalized competition puts a high demand for small companies to develop in-house strategies to tackle the market competition and to be at phase with trends and new market situations (ibid). As agreed with other authors such as Murphy (2005), also Franco et al (2011) tell us that the collective responsible to gather information for the companies is a crucial core in a successful business, that the shared knowledge and newly collected information bring forth one of the strongest assets companies can acquire in the sense of intelligence. By implementing methods and structures, how the shared knowledge and the market analysis should be practiced, provides a tremendous wealth to business success (ibid).
2.5 SMEs’ Challenges with Competitive Intelligence
2.6 Reasons for the slow adoption of Competitive Intelligence
Priporas et al. (2005) provide us with insights into why Greek companies are lagging behind in the use of CI. As in previously exposed findings, as well in here, are confirming the lack of knowledge and skills on how to implement CI tools into a business and also cost and time-consuming reasons. An interesting fact that has been revealed in this study, is that companies that are not using CI are more focused on short-term customer satisfaction, rather than long-term competitiveness (Priporas et al. 2005, as cited by Blomkvist and Tsagkidis 2019).
Murphy (2005) also explored this phenomenon in his studies of different levels of CI engagement and the company's level of engagement is very associated with how the business opportunities and adjustments to market trends are working. These levels are categorized by companies’ intensity of work with CI and attitude towards generating insights and knowledge about market and competitions which later leads to how far companies are implementing their market strategies (Murphy, 2005).
2.7 Theories
Nowadays, firms since their birth are operating in a global arena whether they choose to become global from day one, or expand in new markets later in their lives. Even for those that prefer to stay local, globalization has a strong effect upon them. In this section, we are presenting two of the most prominent theories of internationalization, and raise the point that in a theoretical level, depending on how the internationalization process is approached, firms can use CI in different ways for dealing with competition.
2.7.1 The Uppsala Internationalization model
There is no doubt that multinational firms have a central role in the design of modern economies. Yet, multinational companies are not a creation of our times but they exist long enough now. Until before the 1960s, with the “portfolio theory” (Cohen et al. as cited by
and in many different foreign markets. As the “portfolio theory” wasn’t able to explain well enough the phenomenon of internationalization, soon its place took Hymer’s work as a doctoral student, which wasn’t published as a book until 1976, triggering the development of a more comprehensive theory on foreign direct investment (Forsgren 2017 p. 15). One year later, in 1977 two academics from Sweden, published their work with the title “The internationalization progress of the firm - a model of knowledge development and increasing foreign market commitments” (Johanson & Vahlne, 1977). The so-called Uppsala Internationalization process model was presented and became one of the most impactful papers in international business, being cited more than 14.000 times (source Google Scholar).
The Uppsala model is a dynamic model that emphasizes the importance of knowledge in the internationalization process. The main claim is that the main obstacle that firms are facing when going abroad, is the lack of knowledge, named “the liability of foreignness” and that knowledge can be acquired only through the active presence in the foreign market (Johanson & Vahlne, 1977). Furthermore, being dynamic the model indicates that internationalization is a gradual, knowledge-intensive, and cautious process, performed in four steps. At first, the company has no regular export activities, then it establishes exports through an independent agent, followed by the implementation of a sales subsidiary, and finally the production in the foreign country (Tarek et al. 2017). As for those reasons, the Uppsala model suggests that firms will choose to expand in neighboring markets first and later expand to distant ones, introducing the term “psychic distance”.
market. In that sense, at least on a theoretical level engaging in CI activities will enhance proactiveness of the domestic firm and contribute in dealing with competition.
2.7.2 The Uppsala Internationalization Model Revised
As every model is a product of its time, the Uppsala model being descriptive, called for a revision. Later studies from Coviello and Munro (1995, 1997) found that network relationships have an impact on foreign market selection as well as on the mode of entry in the context of ongoing network processes (Johanson and Vahlne, 2009 p.1413). Therewith, other researchers have looked at networks in studies of internationalization strategy (Johanson and Vahlne, 2009 p.1413) and so the original Uppsala model needed to be revised in such a direction, including the importance of networks in the internationalization process of a firm. In the revised Uppsala model, a business network is defined under the prism of a market structure in which businesses are embedded and interact. As for that reason, business relationships are of significant importance in the internationalization process, for two reasons.
Firstly, as has been shown from previous literature (Bonaccorsi, 1992; Erramilli & Rao, 1990; Majkgård & Sharma, 1998; Sharma & Johanson, 1987, as cited by Johanson and Vahlne, 2009) business relationships influence to a certain degree the decision over an expansion to another market and the choice of the particular one that the firm will enter. Hence, one important aspect that had been neglected in the original Uppsala model was the significance of relationship development between the firm and its counterparts, and the mutual commitment to internationalization (ibid.). Thus, the psychic distance is referred to here in terms of business relationships “insidership” (Coviello, 2006) in the business network. Therefore, Johanson and Vahlne (2009 p. 1414) conclude that the higher the psychic distance is, the more difficult is to build new relationships. This is the effect of the liability of foreignness (ibid.) or in terms of insidership, the liability of outsidership.
elseways. Hägg and Johanson (1982) and Kogut (2000) concluded that a network of business relationships provides a firm with an extended knowledge base (ibid.).
In conclusion, whether it is the knowledge or the business relations that the internationalizing firm has to overcome, the key concept that we highlight is the gradual process of internationalization. Graduality is very important, since it indicates that domestic firms have the opportunity to take action and adapt accordingly in the news that a foreign competitor is entering their market. Thus, engaging in CI activities, at least on a theoretical level, can contribute in dealing with foreign competition.
2.7.3 Born to be Global - Toward a theory of international new ventures
One of the theories of internationalization that will be used to examine the research question is the 2004-decade award-winning article in International Business Studies from Oviatt and McDougall, Towards a theory of international new ventures. The reason behind this decision to use this theory in our work is to more clearly identify how Swedish startups manage international competition, by how the core values of the Swedish start-ups are used as competitive advantages in both local and international markets. This article explores in-depth how SMEs are internationalizing. In comparison to the Uppsala Model, this article rejects the chronological steps of internationalization that previously been recognized, Oviatt & McDougall (2005).
1.Foreign local advantage
with the previous knowledge or experience that the manager of the company has of a certain country or culture. Once the initial decision of internationalization has been taken and the establishment to the new markets are running, is there an enhanced value of continuing the internationalization (ibid). One asset that empowers this is the power of mobility, to easily transfer knowledge with low marginal cost and time. This gives the possibility to diversify sales on multiple markets simultaneously as well as rapidly transfer knowledge throughout the organization (ibid).
This propelled effect of internationalization contributes to a forced competition to local companies, since the rapidity of adoption to market via fast communication of assets that communicates within an organization. This effect of rapid market changes increases the importance for companies to scout on their competitors to not fall behind and to stay up-to-date of market trends (ibid). By use of competitive intelligence, try to observe and uncover the essence or core values of competitor’s product or services to gain insight and added values for the company own product portfolio. The theory explicitly confirms the disadvantages of non-international companies that are competing with international companies to be able to achieve internationalisation in a later stage of development than from company inception (ibid).
This section of the theory will be practiced to see how recognisance of international competitors on the local market are operated and what methods are used to compete with them.
2.7.4 Competitive Intelligence: Gathering, Analysing and Putting It to Work
start-ups are categorized into, the reason for that and how it affects the companies. The motive for not using all five levels of CI are that the indifference between the last two levels are only a question of intensity of CI work, which in our case will be very difficult to separate in our study, therefore we use four levels that have all different attributes.
Sleepers:
These are companies that believe they have all the relevant information regarding their business atmosphere and therefore do not engage in any CI activities, they are passive actors who have a dismissive attitude to gather information outside their office (Murphy, 2005).
Reactive:
Reactive companies are the ones that have no particular continuity in their CI studies, instead they respond ad hoc once an observed competitive disadvantage is revealed in the market (Murphy, 2005).
Active:
The companies that qualify for this category are the ones that constantly and repeatedly engage in CI activities, they are distinguished from previous categories by their aspiration of trying to identify opportunities and threats in the market, by trying to be in the lead of trends rather than following them (Murphy, 2005). But they have not developed a structure to handle the information that they gather (ibid).
Assault:
These companies have a serious viewpoint of the importance of CI, they put a lot of resources into this operation by using advanced searches, they use war-game simulations to accurately investigate strengths and weaknesses of products or markets (Ibid). The Assault companies are aiming for a deeper understanding of market and trends, which leads to a greater scope of time and concealed values and opportunities (ibid).
Not one department or person should work with CI as Murphy (2005) tells us isolated, but instead it is vital that the organization as whole and every person and position are doing their scanning and research to enhance the contribution of CI values. He highlights the very essential values, particularly for start-ups that the people have to be ensure and know what strategies the company is practicing and what type of information that has a fundamental value for the company, especially since the organizations communication space is short and therefore spreading and exchanging new insight can be done quickly (ibid). This is one of the competitive advantages small companies have, and that is more difficult for bigger ones (ibid). Conclusively is it required to have a functioning mechanism in work for CI procedures, a collective responsible for gathering useful information about competitors or markets, have awareness of company strategies and directions and understanding of the underlying values CI operation can contribute with (ibid).
3. METHODOLOGY 3.1 Research framework
Since there is no earlier work in this field examining how CI can be used as a defensive tool against the forces of globalization, we chose to focus on Swedish market for our research. The reasons behind this choice are presented in this section. Firstly, Sweden is according to the World Economic Forum (henceforth WEF) one of the most technologically advanced, innovative, and dynamic economies in the world (The Global Competitiveness Report 2019 ). Furthermore, Sweden suits our analysis as it has one of the world’s most internationalized economies (Sellgren, 2019) and it is a market that attracts lots of foreign direct investments. Lastly, Sweden is putting emphasis on developing and supporting the startup ecosystem which characterizes it, as Sweden is the home of many of the biggest startups, such as Spotify, Klarna, Skype and many more.
Growth, 2019). In line with trends such as gig-economies they contribute to a higher level of more start-ups and solo-firms to be established, (ibid.)
3.2 Research Design
As Bell and Thorpe (2013) state in their book, “research questions and methods are mutually constituting” thus, a researcher when it comes to choose which methods should use in his/her work, he or she should revisit the research question. In our work, we aim into answering how startups perceive CI and how can startups use CI in order to tackle competition from foreign companies in the domestic market. As we have mentioned before, the work in this field and specifically for Sweden is very limited. As a result, in our work we are exploring terra incognita and our work has a twofold character. On the one hand, we aim to burden the existing literature, examining CI from a different perspective, that sees CI as a defensive tool, in a sense that CI can be used in order to identify threats from competitors, and on the other, we are trying to shed light into the perception and the use of CI from startups.
As Berger and Luckmann (1966) argue in their book, the world in which we live, work and examine is socially constructed. Consequently, before we proceed with trying to answer our research question, we need to examine and make sense of the social construction processes regarding CI. As Gioia, Corley and Hamilton (2012) argue:
An intensive focus on process requires an appreciation of the nature of the social world and how we know (and can know) that world [...] Studying social construction processes implies that we focus more on the means by which organization members go about constructing and understanding their experience.
the interviewees about this topic, firstly for us, to deepen our understanding, and therefore dig deeper in our analysis later and secondly due to the lack of such a work for Sweden, that we could recall. Again, we use Baumard’s words as they illustrate better this point:
What we notice, and what we fail to notice, draw the borders of our true and only cognitive territory. We never act, strategize or decide outside the limits of the noticed world. For noticing is opposed to simple sight, is feeding the process by which we give sense and find orientation in our environment. The first step of any intelligence process is thus not to scan, but to notice. (Baumard, 1994 p.7)
Returning back to our research question, it dictates us to conduct a qualitative study, as it is defined by P. Sauders, Lewis and Thornhill (2009) adopting an inductive approach in our work. Qualitative research will allow us to make sense of people’s perception regarding CI, and how familiar they are, as there is no former work to address it. By the same token, an inductive approach serves our purpose to try to make sense of the social perceptions regarding this topic. Thus, we can focus on their narratives from their daily practices and their experiences to see how CI can be used as a tool against competition from foreign companies.
3.3 Data collection method
The data collection methods that we chose for this study are semi structured interviews with 11 CEOs or founders of the startups in different industries, and for the purpose of gaining a broader picture of the segment itself and the customers, we had an interview with the CEO of an intelligence firm in Sweden. Semi-structured interviews are providing us with the opportunity to go in depth in our interviews and to understand the attributes that participants ascribe to CI and its practices, to explore aspects or meanings that we had not previously considered, emerging from the discussion and the interviewees answers.
As semi-structured interviews can be conducted in various ways, such as in person or through the phone and internet, due to the later circumstances with Coronavirus we had only the option of conducting the interviews online, using the Zoom platform. For many, not being able to meet the interviewees at their natural settings, where they feel the most comfortable might be seen as a limitation. Yet, even though we acknowledge and perceive it as a valid argument, we raise the argument that most of our interviewees were at their home, so we believe that they were comfortable enough. Another limitation of online interviews is the lack of direct contact with the interviewees. In that case, there was not much that we could do, rather than using a video call, instead of a call. The vast majority of them were willing to participate with their camera on. During the whole process we complied with the regulatory framework as it is described by the GDPR framework. For more information regarding the ethical aspects, there is a section below dedicated to this.
Furthermore, in order to be sure that the respondents were familiar, or at least knowledgeable of our work, we sent prior to the interview a short text (see Appendix) describing our topic alongside with some legal implications.
3.3.1 Operationalization
As mentioned before, all our interviews were conducted through the Zoom platform, over a time span of two weeks. The interview with the CEO of the Intelligence firm (henceforth CEO) was the fifth in the series, as we wanted first to gain some insights about the understandings and the practises of the startups regarding CI, through our own eyes so to get a first hand experience, and then have a deeper discussion with the CEO. This would allow us to be able to compare the perceptions and practices of startups that have been mentioned in previous interviews, to the CEO’s. Furthermore, we had the chance to ask him what are his thoughts on themes that emerged from early on from our interviews, avoiding of course to picture people, or reveal any names.
3.3.2 Ethical considerations regarding data collection and analysis
In our work with interviews and transcribing and analysing data we were constantly aware that we are handling sensitive data. With that in mind, prior the interview we asked the interviewees if it is okay to record the process. We explained that those data will be used solely for the purpose of the thesis and they will not be used in any other way rather than this one. We are the ones who have access to those data and they will not be presented or distributed to anyone. All eleven respondents gave us permission to record the discussion. We promised anonymity of their data, and for that reason in the transcribed data we removed any names of people and companies. We tried to describe the companies in a way that the reader cannot picture them, by giving on broad details such as the industry, size and the years operating, even avoiding mentioning the city that they are based.
3.4 Sampling
The sample in our work consists of 10 startups in Sweden operating from one up to seven years, and one intelligence firm in Sweden. More specifically, we interviewed 12 people in total which consist of 9 founders or co-founders of startups in Sweden, one CEO of an Intelligence company in Sweden and two future co-founders of a startup that has not been registered yet. In order to avoid potential biases originating from our sample, as for instance in a concentrated industry the need for information over competitors would be of significant importance, while in a fragmented industry it would not be of a top priority, we intentionally chose to interview companies from different sectors. Howbeit, given the circumstances with Coronavirus which made the quest for finding companies to interview a challenging task, our sample was not the optimal, as the majority of the companies were operating in a fragmented industry. The startups of which the owners or the founders/co-founders we interviewed, were operating in IT, retail, e-commerce, IT consulting, hygiene services and data science, cosmetics and the field of alternative fuels.
3.5 Roadblocks and data quality issues of qualitative research
(2009) there are often data quality issues associated with this type of interviews, related to lack of reliability due to lack of standardisation, forms of biases that emerge from the interviewer biases or the interviewees biases, lack of generalisability which refers to the extent to which the findings of the study can be applicable in other settings and lack of validity.Finally, qualitative research has been criticized for its lack of transparency (Bryman and Bell, 2007, Gioia et al. 2012).
Reliability
Reliability refers to the extent to which the research can be replicated, resulting in the same set of outcomes. Saunders et al. (2009) argue that an attempt to ensure that qualitative, non-standardised research could be replicated by other researchers would not be realistic or feasible. Our analysis bears the perceptions and understanding of ours regarding the phenomena that we investigate. Nevertheless, what can be done in that aspect, is to be transparent and analytical in the analysis of our data. The Gioia method is helpful in that sense, as it portrays the process through which raw data are transformed into findings and results.
Biases
broader setting that investigates strategic approaches to deal with competition, or marketing approaches to deal with competition, for example. This we believe had a positive impact on the validity of our work.
Validity
Validity refers to the extent to which the researcher has gained access to a participant’s knowledge and experience, and is able to infer meanings that the participant intends from the language used by that person (Saunders et al.2009). As mentioned above, by sending this pre interview memo, we believe that we made it a bit clearer to the respondents about the topic that we investigate, and so they were focusing on their answers and narratives on this specific aspect and not being general. Furthermore, the interview guide was structured in a way that allowed the questions to be formulated in a language that was as close as it could to the participant’s and also it allowed us to ask follow up questions when it was unclear the answer. The participants were asked to give examples when possible, but overall they were more than willing to give examples and speak their mind, something valuable for us. Lastly, since the vast majority of the respondents were entrepreneurs, us being students of an entrepreneurship program, and therefore being in touch with entrepreneurs during the whole program, we shared lots of understandings with our respondents.
Generalisability
3.6 Quality criteria
In our work, being aware of the above mentioned issues we tried to apply some tactics to diminish or minimize them. In that sense, in order to minimize the respondent’s bias from misinterpretation of the terms we tried to formulate the interview roadmap and the questions in a way that suited her/his understanding. For instance, our first question was “Have you ever heard before the term CI or in Swedish, omvärldsanalys?”. Depending on the answer that we got, we were asking the questions using the equivalent term. CI, omvärldsanalys or “information gathering from what is going on outside your firm, regarding competition, customers and the market” for those that they were not familiar with any of the above terms. Thankfully, there were only a couple of respondents unfamiliar with those terms. Furthermore, in order to gain an understanding of how do they understand those terms, and to check whether they were honest in their answer in the first question, we were asking them “In your words, how would you describe CI/omvärldsanalys? Can you give us a short definition?”. In one case, even though the respondent answered “yes” in the first question, the definition that he gave was too vague and unclear. Thankfully again, we had a third question following that was helpful for us in that sense: “What activities or processes come to your mind when you hear the therm CI?”. He did not answer this question, making it clear for us that he was not familiar with any of the terms. Thus we used this broad description of CI when there was a question that CI was appearing. In general, this theme of asking similar questions but in a different way, and with questions intervening in between was our strategy to cope with the interviewees’ form of biases.
3.7 Data analysis method
theoretical realm, linking them to the existing theories, enriching those theories, or generate new ones (2nd order themes and aggregate dimensions). Moreover, this method brings in our analysis transparency, since the reader can see how the first order concepts were created and how they are leading us to the second order themes. A detailed presentation of the analysis of the data is presented in the section 4.1 - Transcription and data analysis. The reason for this choice is since the way that we have been processing our data has a strong linkage with our findings, it would be better for the reader to be a continuity between data analysis and our findings.
3.8 Quality issues
Nevertheless, one can argue that there are forms of biases. From our perspective, the informative email that we were sending to the interviewees (see Appendix) prior to the interview can be seen as a form of bias, since we are explaining the scope of our work, which is clearly focused on competition and this might be criticized as manipulation of their answers. Furthermore, another form of bias occurs from the deviations in meanings between the term CI, in english, and the term “omvärldsanalys” in swedish. The latter, is referring to intelligence in a broader sense as a business intelligence, or intelligence analysis, or external analysis, or market research, and therefore there is ambiguity regarding it. Lastly, even CI itself can be misleading as a term. Competitive, refers to the outcome and the aim of the activities, which is at building a competitive advantage, and it doesn’t refer to competition, as one of the respondents answered to us that “CI is information about competition”.
4. Analysis
4.1 Transcription and data analysis
them. We tried to get the keywords whenever it was possible from the respondents’ words, in order to be as pure as possible. There was no specific focus or filtering in this process. We wanted the data to lead us, and not the opposite. After finishing with that process for all our interviews, we had 109 keywords. These keywords were examined in order to identify similarities or duplications and to exclude keywords unrelated to our research, such as for example “wages, school, unique etc.”. This was work done manually, without the use of any software and it served the purpose of giving us some insights about our data, or to describe it better with an allegory, “these were the pins on the map about our journey, but the route was not already drawn”. Using NVIVO 12 software, we went through the interviews for a second time, and with the help of the keywords we managed to formulate 44 1st-order concepts, as they are illustrated in Table 2. Gioia et al. (2012) state that from 10 interviews there could be easily 50 - 100 1st-order codes. The number of 44 1st-order concepts is relatively high compared to the optimal of 25-30 that Gioia et al. (2012) mention.
4.1.1 The 1st order concepts
1st Order Concepts and Data from Interviews Supporting them
1st Order Concept Quotes
Theme: Perceptions of CI CI as a tool that helps at
foreseeing the moves of the competitors
“Competitive intelligence will definitely help us because as I said, that if we keep doing this, we are one step ahead. That means that I know in each step what my competition is doing.”
CI as a tool for
opportunities discovery during crisis
CI as a tool for understanding and foreseeing the customers' needs
“The second important, most important is to understand that that change when it comes to customers, customers demand. What would our customers like to have now and in the future? so first, ideas second, understand your, your clients or your customers. how do they change, would they like another kind of product next year or the year after the next year?”
CI as an approach of Micro and Macro environment
“Well if we start by describing what competitive intelligence is Then I would say that, I mean like you have both micro and macro objectives or keys so you have to look into those. Macro is like the economy or threats like corona while micro is inside your own company and inside your close
competitor’s (firm) and see what they are doing.”
CI as an enabler of differentiation from competition
“Yeah, I think so because I think if you do some research and stuff, you can see what needs they're trying to sell or whatever they call it. And then maybe you find something, you can get ideas like, “okay, maybe they're missing this or that and then I can offer this”
CI as an enabler to foresee and adapt to changes
“You have to adapt to changes all the time. So, you have to be quick on changing your product, changing your services or IT platforms or whatever. And to do that you need intelligence, otherwise you don't know what to do, what changes should we do then how should we do them?”
CI as intelligence about competitors
“I would say something like being aware of your
CI as market research “emphasizing the importance of doing your market research before you actually go and invest both time and money in your idea”
CI as customers’ trend analysis
“I would say this, this would be more of trends, like what's happening in trends. What do our users need or what are the changes? Mostly I think everything is evolving on trends. If the customer's trends and behavior are changing, then you need to look into those. Those would be my aspects. So they should focus on the trends, trends, trends.”
CI like doing your simple SWOT analysis
“like doing your simple SWOT analysis, really looking at numbers and trying to use those numbers in order to define the competitive landscape out of the actual numbers then.”
CI as ideas generator
“I would say that the most important thing for small startup companies is to understand what's new, what's unique and what isn't. And the most valuable thing for them is, to understand that and to, to catch ideas globally. Use intelligence as an idea generator.”
Theme: Perceptions about information gathering in startups CI as skunk works*
“I mean, this is the kind of skunk work that you're doing a start up in the beginning and they can help you.”
Emphasizing know why you should engage on CI before you do it
“The most important thing is not to do it but to know why you are doing it. I think it's more important to have an idea why someone is supposed to do this and when you know that, or when you have a specific question you want to get
Information gathering is a senior level work
“it is very close to my heart just because this is so natural for me. So it's, this is what I do. Basically, I am getting called But with these companies and I just go natural to have a very uneasy formal conversation and chat. So I would say it's you should go about it with a noncompetitive
approach. I think you should go about “I'm not trying to sell you stuff I'm interested in, I have knowledge within a related field and I want to know what you feel is lacking today and what's good working today”. This is more like a not formal lunch where you do this stuff so I don't know if Junior sales person would be so good this is more like more of a C level stuff perhaps or not C level but senior stuff”
Information gathering is collective work
“But apart from that it is rather demand driven information gathering. For example, your clients ask us “can we do this or that?” and then we search for the information and find it. […] The ones closest to decision or in the function or
whatever the need is. It should be the one who is closest to the client or the one who is coding, so basically everyone.”
Information gathering not in a structured way
“I would probably do both execute and question the work task of the analysis itself. So before doing it I would question why we should do it. Again, it’s more about the value. And then I would execute And then before next time question again. And so it's that it’s not likely that every time the same person would execute the task. Because it's not going to be really in a structured way.
Information gathering as a systematic structured work
“when you say like competitive intelligence, it feels like it should be some kind of structured document where we map all the companies in the matrix, all the competitors and like proxify we're here and these companies are here, etc. etc.”
Insights about competition through directly reaching their customers
“finding out who their users are, and their customers are and speaking to them about, about their product or services.”
Information gathering through networking
“it is very close to my heart just because this is so natural for me. So it's, this is what I do. Basically, I am getting called But with these companies and I just go natural to have a very uneasy formal conversation and chat. So I would say it's you should go about it with a noncompetitive
approach. I think you should go about “I'm not trying to sell you stuff I'm interested in, I have knowledge within a related field and I want to know what you feel is lacking today and what's good working today”. This is more like a not formal lunch where you do this stuff so I don't know if Junior sales person would be so good this is more like more of a C level stuff perhaps or not C level but senior stuff”
Information gathering through online sources
“I usually try to just keep an eye on the competitors’ websites and try to sneak in their revenue and stuff.”
Information gathering through your customers
“I would say that we are now in a really good setting because we have clients that use 5-10 different e-commerce platforms that means we tap into those, pretty frequently so if any releases a new platform we get our hands into that (information). We don't have to exclude any other tasks to find it out.”
Information gathering through collaboration with insights companies
“I've been introduced to some smart intelligence like
services for services like you gather information for you with specific news and specific media updates. So I think those like technology should be used but in other ways you should just probably stay alert and read the news which coming from your market”
Information about competition is the most valuable
“I would like to know hard core numbers, because what we are selling is a percentage basically, right? How much you can automate, that is basically what I would like to have. KPIs would be nice to have also. Also fetching press
releases is valuable but just a part of it and perhaps it would be nice to have any CRM stuff.
Information about the market is the most valuable
“Well I can imagine how saturated different markets are would be a very, very valuable thing. Well for example, do we think that our model would work better in Norway or in Germany for example? That kind of question. Also like how, I mean, for example, like how, what's the differences in wages in different companies and countries ”
Theme: Contribution of CI CI can help in sales
“I think it's extremely important. And I, this is one of my core stuff that I actually do now as my work. I do a lot of sales and together with my colleagues and once that you’re doing sales this is very important because you're either you have either I mean basically either you're, you're delivering something entirely new, but that's very rare, or your value offer is better than the competitors. So you're replacing them or you're something in between. So you need to know what's out there so you can be effective in your sales basically.”
CI contributes to strategic decision making
CI optimizing sales budget
“Use your money in a more innovative way to optimize your sales. Basically, you have this competitive knowledge. […] optimizing sales budget, where to go, knowing which markets to focus on and those kinds of things.
CI for optimizing R&D
“I guess we should, we could save a lot of time and we could definitely save most the time to not create that somebody has already created not try to implement little things because if our competitor, let's say puts out new products on the market and that product does not go well, we should not try to recreate it and try to like, make the protocol.”
Theme: Ways of dealing with the competition Strong brand name for
dealing with competition
“And we are working much more to create a brand which our customers and potential customers can pull back into. So, in my company, we don't work that much with direct sales. We trying to build our brand because even the market is growing, if our competitors go to a market and they fail some way, we want to build a brand that competitors’ customers which they have failed can go come to us”
CI as a tool for dealing with competition
“like when you have done all your sales work, you find your list of companies, you're going to contact and really nail them you're so stoked. And then you manage to have all three meetings and then you actually get to the three people who actually is going to use your product or whatever you're trying to sell them, and they're saying “ well, we already have this from this and that kind of company” then you need to have it and that can happen, it does happen even if you have done your homework, but at least then we have
Cooperation with competitors to deal with competition
“We should or I should try to be alert, what they're doing and try to probably Like be friends with them to create some kind of collaboration. That's what I noticed before when we had once or twice to companies willing to try to enter Sweden, they are actually emailing around, we had a
meeting with a couple of them. And we were searching for a partner, local partner but good guidance by so I would try to be a local representative so we could actually gain from that company instead of trying to make some competition.
Customer satisfaction is important for dealing with competition
“I mean if the client wants something cheaper it’s fine, but again it’s the relations with your customers I would say. If they enjoy working with you and those kinds of factors, then international competition isn’t a problem because they will lose on all of the soft factors, but only have the hard “yeah, we might have a better price” - Sure.
Dealing with competition by having a strong
network
“And one of the strongest such nodes, I would say is network effects. So the kind of thing that I mean about Facebook, for example, no one can compete with Facebook anymore, because this time the network is too strong.”
Dealing with competition requires insights that competitors don't have
“I think it requires insights that competition companies don't have. I mean, in order for you to start a company, you should have a clear insight that few others have and can actually make a business out of it. […] So, basically, it's something that is the whole source of competition so you will know something that competition does know and you are going to act on that. That is that is, what it is”
USP and differentiation for dealing with
competition
Strong marketing budget to deal with competition
“Well, I mean, that's where I think you need to be quite big. you need to have a marketing budget. It's hard and still very focused and has quite a big R&D budget to keep staying ahead of the competition. I think you need a marketing budget because there’s always some new parts of the market emerging that aren’t visible, and you need to be able to invest in R&D.
Theme: Misconceptions of CI The blinded startup
“It is very common when it comes to start up companies that they don't do intelligence in a proper way. I would say in Sweden, most, most of the large companies are doing it quite well. But when it comes to small companies, it is a problem. They don't know how to do it and they don't have the
capacity to do it. They don't have the resources to do it. and very often I would say they, they psychologically think that their ideas are all the time, very unique and, perhaps even a factor that they, they don't want to see, the truth. So they avoid doing intelligence but not, not consciously, but unconsciously I would say it's, it's a possibility.”
CI term and omvärldsanalys
“But I think it's a mix up when it, when you use in Swedish, we have the word, omvärldsanalys and that might lead to, think that it's about understanding the economy, economic development and political development and stuff like that.”
Gut feeling over CI
effectuation over causation
No need for CI if the grass is green for the company
“I mean, for me, I do not see that as an important part of the company at this stage now. I can imagine that becoming more important in an industry where it's more mature and because right now there's so many opportunities to go to. So, for us it hasn't been a huge focus on gathering that kind of data because like, we are getting enough opportunities anyway, basically.”
Realization of lack of knowledge over CI
“So, that's something that we are not doing that well. So, right now, it has been me so I try to internalize because I'm the one that has been out facing and doing this work, but I definitely see the value in actually, you know, following up on this and document it in different ways.”
Theme: Limitations of CI Business ethics is a
limitation of CI
“I don't actually see any limitations, or this module is just business ethics. I mean, you could allow yourself to check some of the things and I mean, I as a person would not allow myself to, like spy for 100 percent on my competitors. And that's why I called the business ethics.
CI activities take lots of time and money
“I mean I see that like there are a lot of uncertainties that could be really nice to find out about them if we had more resources and someone could research it, that would be really nice.”
Questioning the reliability of information
dissemination from competitors
“I can see a kind of bias, if you go to press releases it’s basically commercial stuff. People are claiming territories that they don’t have.”
Table 2 - 1st Order Concepts and Data from Interviews Supporting them, Tsagkidis & Blomkvist 2020
4.1.2 The 2nd order themes
4.2 The aggregated dimensions
4.2.1 Dealing with competition
The first aggregated dimension of our work, tells us the story of how CI helps in dealing with competition. What we propose here, is a mechanism through which CI is helping firms to deal with competition. Building upon Tuan’s (2015) Tarek et al. (2017) and Baumard’s
relations play an important role in the opposite direction also. In that aspect, engaging in CI activities strengthens the “insidership” of a domestic firm. The firm can increase its knowledge base by gathering information through networking, build a strong network with customers and suppliers to keep the competitors out of the market and by the same token the firm can create a dependency of its competitors to the firm (cooperation).
Figure 5 - The mechanism of dealing with competition, Tsagkidis & Blomkvist 2020
4.2.2 The CI approaches
4.2.3 Murphy’s Classifications
Two of the most prominent categories in our data were the “Reactive” and the “Active” as they were presented by Murphy (2005). The first one was portrayed by an effectual mindset that underpinned a preference to take action and make decisions based on gut feeling and gather information sporadically, and not in a systematic and structured way. On the contrary, the other approach sees CI as a broader term that includes the investigation of the micro and macro environment of the firm, which comes closer to the Swedish term omvärldsanalys. 4.2.4 New classifications
In addition to Murphy’s 5 classifications, in our work we introduce two new classifications, the “Hesitant” and the “Arrogant”. The hesitant includes all those firms that without denying the positive impact of engaging in CI activities, they hesitate to do so. Their doubts are based on the arguments about the reliability of the information that the competitors are disseminating, the ethical aspects of CI and the cost of carrying activities as such. To our intuition, those that fit into this category are people that are not really familiar with CI and its activities, or as the study of Priporas et al. (2005) indicates, they are firms that have a focus on short-term customer satisfaction. The second classification, the arrogant, shares some similarities with the “sleepers” as it was introduced by Murphy (2005), in a sense that they are not engaging in CI activities. Nevertheless, the difference between arrogant and sleepers lies upon the reason why they choose to not engage in CI activities. More specifically, it is not because they think that they know enough without engaging in CI, but because they think that they are better than competition and so the customers will always come to them or the market is big enough, and thus there is no need for CI.
4.3 Classification of the startups according to their CI engagement
Startup I, Classification: Sleeper. Proposed classification: Arrogant
This company is running an IT consultant business. The CEO described that the competition in his segment is mainly a competition in quality since there are a lot of IT consultant firms that are doing similar types of jobs as the competition of quality rather than being unique in the field with other forms of solutions. He’s not monitoring any frequent information gathering and did not mention any purposes in his case of doing it. This company is classified as a Sleeper according to Murphy (2005), because his attitude towards scanning for new information in his business environment was limited and he argued about not looking at competitors in order to compare with himself and his company only, in order to not be limited to others success or failure, so he wanted to aspire an innovative and self-improving method of running his business. This company is according to our findings classified as Arrogant, since he doesn’t do any CI and thinks he knows enough without CI engagement. Startup II, Classification: Reactive. Proposed classification: Hesitant
This startup was founded 2020 and has three co-founders. They are running the company within the sector of the single-use packaging in the food industry. The categorization of this company is at the level of Reactive CI engagement according to Murphy (2005) since the company is not doing any frequent or structured monitoring or research in the market. This company’s CEO said that he prefers to do the CI himself but would see it as a collective responsibility to share new information about trends or market etc. As it was a fragmented market that also moves fast is it according to the CEO important to stay competitive with using the company’s unique assets to compete against new competitors. By locking customers and using personalized product customization. He was very familiar with CI and explained it very well in our interview, but saw it as time consuming and not as an important process in the very start of their company. He told us that every six months his company does research on their business environment. This company is according to our findings as Hesitant, since they are familiar with CI and its value but do not put it to use.
Startup III, Classification: Reactive. Proposed classification: Arrogant
