Market-sensing Capability and Business Performance of Retail Entrepreneurs

Abstract

This study aims to shed light on the market-sensing capabilities of retail entrepreneurs and the effect of these capabilities on their business performance. A conceptual model based on a literature review is presented, followed by an Internet survey of 226 K-retailers from the Finnish K-alliance. Structural equation modeling (SEM) is used to test the conceptual model and to investigate the effect of market-sensing capability on growth and profitability. The study reveals that most of the studied retail entrepreneurs have relatively well-developed market-sensing capabilities. A weak positive relationship is found to exist between market-sensing capability and company growth. However, no positive relationship is found between market-sensing capability and profitability. Factors other than market-sensing capability were not considered in the present study. However, other factors that might affect business performance in the present research context are identified and discussed. The article sensitizes practitioners to think how entrepreneurs’ market-sensing capabilities should be conceptualized and developed in the retail chain context. The paper presents a novel and distinctive empirical investigation of the relationship between entrepreneurs’ market-sensing capability and firm performance in the retailing context.