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Strategies for the Acquisition of Market Intelligence, and Implications for the Transferability of Information Inputs

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The recent fast growth of producer services has led to an expanding literature on the contribution of high-order services to innovative and successful industries. Countless studies have shown that greater competitiveness is associated with the use of outside expertise and information in the form of technical and management services, and information about markets and user needs. The objectives of this paper are twofold. First, from the point of view of an industry, allinformation accessed for input into the innovation process is relevant, not just that acquired through market transactions with service suppliers. Defining market intelligence (MI) as the overall process of acquiring information about markets, this paper identifies seven types of MI-generating activities, involving both market transactions and informal networks, that provide essential information inputs to product innovation. Second, the existing literature suggests that information is best acquired when a firm is located in close proximity to the source, suggesting a distance-decay effect for MI if markets are distant. Empirical analysis of MI acquisition in one industry, the software product sector in Canada, shows all products, whether standardized or customized, benefit from inputs of MI. Yet regardless of distance to the market, more successful products are consistently associated with greater inputs of MI. Firms are found to use four distinct strategies to acquire MI, and it is evident that local and long-distance techniques are both available and readily substitutable with no necessary loss of information quantity or quality. In effect, processes other than localized face-to-face interaction support the effective transmission of complex information. The case of MI suggests that the transferability characteristics of information are far more complex than for material goods, and that there is considerable scope for further research on processes of information exchange.
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Keywords: Information inputs; informal networks; market intelligence

Document Type: Research Article

Affiliations: University of Georgia

Publication date: 1997-01-01

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