An Inside-out Model of Retail SME Brand Orientation for an Emerging Market

The dynamic capacity theory posits that, to accomplish strategic goals, firms need to cultivate wide-ranging capabilities, which will give them the ability to better control and organise their resources (Yueqiang, 2022). In such firms, the actions of the organisation are centred around establishing, developing and maintaining a brand identity that will preserve the firm’s competitive advantage (Awan et al., 2021). In strategic brand management, this focus on the brand is termed brand orientation. Brand orientation as a concept was coined by Urde (1994) in his seminal case study, which highlighted the importance of branding for industry and commerce. He suggested that brand-oriented firms focus on establishing and maintaining a strong brand identity to deliver a superior brand experience (Jha & Sarabhai, 2024). In a brand-oriented company, the marketing strategy and firm activities are centred around the brand, with the aim of turning the brand into a strategic asset (Kusi et al., 2022; Osakwe et al., 2020; Temprano-García et al., 2023). The rationale behind emphasising brand orientation is the expected outcomes: stronger brands with higher brand equity and improved financial performance (Harrison-Walker, 2014). For SMEs, brand orientation helps with superior performance by helping SMEs create customer value, differentiate their offerings from those of competitors, and help develop brand building strategies for long-term competitive success (Ranjan, 2024).

Small and medium-sized enterprises play a pivotal role in driving an emerging economy's economic development (Makanyeza et al., 2023; Pingali et al., 2023). However, SMEs in developing economies face the challenge of resource limitations and other challenges, such as economic uncertainty, turbulent environments, and the reality of competing with their Western counterparts (Ranjan, 2024; Sayal & Banerjee, 2022). Scholars have suggested that SMEs can adopt brand orientation to bolster their competitive positions within the competitive global environment (Jha & Sarabhai, 2024; Mandizwidza-Moyo, 2024). Brand orientation theory has generally been developed based on large commercial organisations (Hodge et al., 2018). However, scholars have argued that SMEs do not have the same circumstances as their larger counterparts, hence their branding activities will be different (Mijan, 2022; Odoom & Mensah, 2019). According to Muhonen et al. (2017), SME owner/managers think that the branding process is out of their reach. This attitude is reflected in their behaviour, which includes seeing branding as secondary to short-term sales objectives. To address this deficiency, brand orientation in SMEs has received considerable scholarly attention in the past decade. Researchers have examined brand orientation in SMEs in various contexts. These contexts have included brand positioning and the enactment of brand orientation in SMEs (Fluhrer & Brahm, 2023; Hodge et al., 2018; Mijan et al., 2022), brand identity in SMEs (Mandizwidza-Moyo, 2023; Muhonen et al., 2017; Osakwe et al., 2020), brand orientation and brand performance (Jha & Sarabhai, 2024; Odoom & Mensah, 2019; Yueqiang, 2022).

While brand orientation research has coalesced into a considerable body of work over the past 20 years, studies in this research tradition have primarily focused on the outcomes of a brand orientation strategy (Ismail & Mohamad, 2022; Jha & Sarabhai, 2024; Narh et al., 2023; Ranjan, 2024). More recently, scholars have been engrossed in discovering brand orientation constituents (Li et al., 2022; Sepulcri & Mainardes, 2023). Regarding the dimensions of brand orientation, there are two schools of thought. The first school of thought sees brand orientation as a unidimensional construct (Piha et al., 2021). For instance, Huang and Tsai (2013) define it as the extent to which the brand is seen as a strategic hub by all internal stakeholders in the business. Recognising the limitation that such an approach can have on the conceptualisation of the construct, other researchers assume that the construct is better reflected in multiple dimensions, suggesting a multidimensional structure for brand orientation (Piha et al., 2021; Temprano-García et al., 2023). For instance, Osakwe et al. (2020) conceptualised it as a multidimensional construct, with brand artefacts, norms and values as first order constructs. The differences in the number and content of the dimensions have prevented the brand orientation concept from being well established as a field of academic enquiry.

A systematic review of the literature on brand orientation by Piha et al. (2021) revealed that while brand orientation research has resulted in a satisfactory body of work, it is still limited and has recognised shortcomings, including (i) differing conceptualisations that offer divergent meanings of the concept, (ii) a fragmented picture regarding what constitutes brand orientation, (iii) the absence of a broad conceptualisation of brand orientation, except that which is contextual, and (iv) the absence of a generally accepted brand orientation scale. These limitations have resulted in the absence of a commonly accepted scale for the measurement of brand orientation. Additionally, many of the studies on brand orientation are either industry specific, focusing on the retail sector, for example (Mudanganyi et al., 2020), or context specific, focusing on SME brand orientation, for example (Odoom & Mensah, 2019). The absence of an accepted measure for brand orientation means that interest in the constituents of the construct lingers. The current study thus seeks to contribute to the understanding of the dimensions that constitute brand orientation. It is proposed that brand orientation is constituted by factors such as brand resources, brand perception, perceived advantage, brand development and brand characteristics.

SMEs are often associated with a lack of branding resources, such as limited financial resources and a lack of branding knowledge, which makes brand building a challenge for them (Fluhrer & Brahm, 2023; Mandizwidza-Moyo et al., 2023; Mijan et al., 2022). Inadequate resources, as the main obstacle in branding practice, often creates a gap in advocating for consistent branding practices (Mijan et al., 2022). Although SMEs may face resource scarcity when dealing with branding, they need to develop their brands based on their existing resources to sustain themselves in the market (Mijan et al., 2022). Previous studies have scrutinised the linking of organisational resources to a firm’s brand orientation. For instance, Mijan et al. (2022) found that the development of internal branding resources that are relevant to the firm’s capabilities is a crucial element of an inside-out view of brand orientation. Ranjan (2024) investigated how SMEs leverage branding capabilities to boost export performance and found that both internal and external capabilities are necessary for brand orientation. The resources considered in this study were finances, human resources, time, responsiveness, marketing capability and branding strategy. In line with previous research, it is posited here that committing organisational resources to branding contributes to an SME’s brand orientation. Consequently, the following hypotheses are proposed.

H1a: Brand resources have a positive direct effect on brand characteristics.

H1b: Brand resources have a positive direct effect on brand development.

H1c: Brand resources have a positive direct effect on brand orientation.

H1d: Brand resources have a positive direct effect on brand perception.

H1e: Brand resources have a positive direct effect on perceived advantage.

Studies have shown that SMEs typically overemphasise the importance of the media for developing their brand while ignoring the potential of other exciting resources. The consequence of this is the focus on tangible resources, such as names, logos, and finances, which are the only critical resources for branding (Huang et al., 2017; Mijan et al., 2020). The reality is that there may be other, more intangible aspects of a brand that may constitute brand orientation. The current study explored brand characteristics as potential constituents of brand orientation. Brand characteristics refer to the set of human characteristics associated with a brand (Chinomona & Popoola, 2017). These characteristics are the core values and fundamentals that showcase the true essence of a brand. It has been implied that in SME brand building, brand values or characteristics reflect the value system and personal conviction of the owner/manager regarding brand building (Osakwe et al., 2020). This research investigated brand characteristics such as the guarantee, innovativeness, reliability, and consistency of a brand, to name just a few. The study sought to determine owners’/managers’ perceptions of the contribution of certain brand characteristics to the development of a brand orientation, as well as other aspects of the branding process. Consequently, the following hypotheses are proposed:

H2a: Brand characteristics have a positive direct effect on brand development.

H2b: Brand characteristics have a positive direct effect on brand orientation.

H2c: Brand characteristics have a positive direct effect on brand perception.

H2d: Brand characteristics have a positive direct effect on perceived advantage.

To excel at building and managing strong brands, SME owners/managers need to accept that brands are assets that have equity (Grigoraș, 2018; Piha et al., 2021). Companies that are brand-oriented always emphasise the use of strategic resources for branding (Mijan et al., 2020). In SMEs, which are typically managed by their owners, the brand-building process is governed by the owners’ resource commitments towards brand-building. The extent to which SMEs succeed at building a strong brand in the marketplace is determined by that commitment (Osakwe et al., 2020). Research has indicated that brand development is a crucial aspect of brand orientation. For instance, Fluhrer and Brahm (2023) found that SME entrepreneurs tend to emphasise the development of brand identity and corporate self-image as a reflection of their brand orientation. Similarly, Osakwe et al. (2020) validated the assumption that brand orientation, brand-building behaviour and brand identity are significantly related. Therefore, it is argued in the current study that the process of brand development includes the adoption and development of other branding resources, such as quality of products, brand resources and competitive advantage, to enable brand orientation. Accordingly, the following hypothesis is proposed:

H3: Brand development has a positive direct effect on brand orientation.

Much of the brand orientation research undertaken so far has been premised on the works of Urde (1994), who coined the term and conceptualised it as a behavioural approach that consists of certain behaviours and activities (Evans et al., 2012). However, other theorists have proposed their own definitions of brand orientation, including Hankinson (2001), who defined it as “the extent to which organisations regard themselves as brands and an indication of how much (or how little) the organisation accepts the theory and practice of branding”. She further refines her concept to include the extent to which a brand is embedded in an organisation’s thinking and reflected in its values (Hankinson, 2002). This conceptualisation of brand orientation highlights how deeply a brand is ingrained in an organisation’s thinking and reflected in its values (Evans et al., 2012).

In line with this latter conceptualisation, the current study seeks to uncover how SME owners/managers perceive their brands, as well as their perception of the importance of the brand/branding process in relation to brand orientation. According to Piha et al. (2021), the attitudinal component of brand orientation, known as “brand importance”, displays a robust organisational attitude that views brands as important corporate assets and places a high value on branding initiatives. It is argued in the current study that SME owners’/managers’ perception of their brands will have an impact on the firms’ brand orientation. Based on these aspects, we presume that:

H4a: Brand perception has a direct positive effect on brand development.

H4b: Brand perception has a direct positive effect on brand orientation.

An organisation that seeks to become brand-oriented needs to invest in marketing activities that establish and promote the image of its brand (Urde, 1994). This type of investment includes committing resources to the establishment, development, and maintenance of the organisation’s brand identity (Awan et al., 2021). This is important because brand identity is an important strategic resource that can be used to shift market attitudes towards the firm (Hirvonen & Laukkanen, 2014; Osakwe et al., 2020). Brands that are perceived favourably by consumers will have a competitive advantage and create sustainability for the organisation (Karunarathne & Thilini, 2022). Brand-oriented firms recognise the symbolic utility of brands, that is, their value-adding capabilities and their ability to enhance financial performance (Balmer & Podnar, 2021). For the sake of this study, perceived advantage is conceptualised as a construct that reflects owners’/managers’ perceptions of how certain advantages that their brands possess in the marketplace result in branding efforts that contribute to brand orientation. This construct relates to the way in which a strong brand of an SME inspires loyalty in the market and can enable the SME to charge higher prices for it. It also relates to a strong brand image of an SME in the market. The following hypotheses are proposed in this regard:

H5a: Perceived advantage has a direct positive effect on brand development.

H5b: Perceived advantage has a direct positive effect on brand orientation.

H5c: Perceived advantage has a direct positive effect on brand perception.

Based on the foregoing discussion, a conceptual model for empirical validation is presented in Figure 1 below. Hodge et al. (2018) note that while scholars have attempted to identify the characteristics that demonstrate a brand-oriented approach, it is still unclear whether these characteristics lead to brand orientation or manifest from a brand orientation strategy. This has the effect of creating a potentially cyclical relationship between the causes and effects of brand orientation and a brand orientation strategy. A circular model of brand orientation that tests the relationships between the different drivers of brand orientation is therefore proposed in the current study.

Figure 1.

Path analysis model

Source: own processing

The proposed model has 15 proposed paths and tests the following possible effects of:

brand resources, brand perception, brand characteristics and perceived advantage on brand development (four paths)

A total of 300 self-administered questionnaires were hand-delivered to SMEs by trained fieldworkers. The overall sample for the study consisted of 265 respondents (n=265), which represented a response rate of 88%. Males represented 64.9% of the respondents while there were 35.1% females. The 18–29 age category had the biggest portion of respondents with 35.4%, whereas 20.75% of the respondents were 40 years or older. 78.9% of the SMEs were small enterprises, with a staff complement of fewer than ten employees per establishment, while employers who provided employment to between 11 and 50 workers constituted 20.75% of the sample, meaning their enterprises could be classified as small. Almost half of the respondents, 45.9%, were located in the townships, while 29.7% were located in the central business district and the remaining 24.4% were situated in suburbs of the metropolitan area. About 41.8% of the respondents had been operating for between one and five years, while 1.1% had been in business for more than 25 years. Enterprise owners made up two-thirds of the respondents (65.66%), while the managers of the SMEs represented 32.33% of the remaining sample. This brief overview of the sample indicates that the respondents represented a satisfactory mixture of respondents from which to extract reliable findings for the study.

Systematic literature reviews on brand orientation point to the absence of a generally accepted brand orientation scale (Piha et al., 2021; Sepulcri et al., 2020). Consequently, many brand orientation researchers typically design their own scales, based on the literature and the context of their studies. The same methodology was adopted in the current study. Brand orientation was measured on the basis of two items gleaned from the literature, using a rating scale of one to five (e.g., rating from ‘focus on daily marketing operations’ to ‘focus on long-term branding strategy’). The brand resource measures were developed from the literature and measured using seven items on a five-point Likert-type scale, with responses ranging from ‘not limiting’ to ‘very limiting’. Owner brand perception was also developed from the literature and was measured using a tenitem, five-point Likert-type scale, ranging from 1=strongly disagree to 5=strongly agree. Brand characteristics were measured using nine items on a five-point Likert-type scale, ranging from 1=not very important to 5=very important. Brand development was measured using seven items, where 1=unsuccessful and 5=very successful. Lastly, owner perceived advantage was measured using a five-point Likert scale, where 1=strongly disagree and 5=strongly agree.

The internal reliability of the six brand orientation dimensions was assessed by calculating Cronbach’s alphas and the composite reliability (CR). Cronbach alpha values >0.7 are considered acceptable, while composite reliability values must exceed >0.7 (Hair et al., 2019). Composite reliability is a measure of internal consistency in scale items, much like Cronbach’s alpha (Harris et al., 2022). When measuring latent constructs, the observed variables' shared variance is indicated by composite reliability (Fornell & Larcker, 1981). High composite reliability is a good indication that all the items constantly measure the same construct. The p-values indicated that the Cronbach’s alpha coefficient was significant at the 5% level, which was a good indication that all items consistently measure the constructs they are meant to measure. The values were acceptable (BR: α=0.752, CR=0.706; BC: α=0.982, CR=0.988; BD: α=0.85, CR=0.888; BO: α=0.653, CR=0.725, PA: α=0.863, CR=0.843, BP: α=0.846, CR=0.873). For this model, all composite reliability statistics are above 0.6. This is a good indication that all items consistently measure the same construct. This confirms that the measures of the constructs are internally consistent and reliable.

Discriminant validity was assessed by inspecting the average variance extracted (AVE). An AVE of at least 0.50 is highly recommended for adequate convergent validity (Hair et al., 2019). The AVE values for each brand orientation dimension were assessed against the suggested threshold value of 0.5 (BR=0.453, BC=0.902, BD=0.531, 0.686, PA=0.414). While two of the AVE values were below 0.5, some authors agree that AVE values of 0.4 can be accepted if the CR is >0.6 (Fornell & Larcker, 1981; Pervan et al., 2017; Suprapto et al., 2020). These results confirm the convergent validity of the measurement model. The last quality criterion evaluated is discriminant validity, which is assessed using the Fornell and Larcker (1981) criterion. According to the criterion, the square root of a construct’s AVE must be bigger than the correlation between the construct and any other construct (Harris et al., 2022). The results in Table 2 show that the square root of the AVE for each construct exceeds its correlation with another construct, therefore discriminant validity was confirmed (Ab Hamid et al., 2017).

Given that the study involved the use of partial least squares for structural equation modelling, a further test for discriminant validity was conducted using the Heterotrait– Monotrait ratio (HTMT) of correlations. This method, suggested by Henseler, Ringle and Sarstedt (2015), has been widely used and applied in business research. The Fornell– Larcker criterion assumes consistent factor loading estimates, and the HTMT is useful for overcoming this weakness (Benitez et al., 2020). Values closer to 1 indicate a lack of discriminant validity (Ab Hamid et al., 2017; Roemer et al., 2021). Ideally, the threshold must be 0.85 (Henseler et al., 2016). An inspection of the values in Table 3 reveals that none of the values were close to 1 and below the 0.85 threshold, hence discriminant validity was confirmed.

Structural equation modelling was used for statistical analysis. The partial least squares (PLS) approach, for which SmartPLS software was employed, was adopted for the study. PLS estimates measurement and structural model parameters (Temprano-García et al., 2023). To test the structural model, model fit indices, coefficient determination (R²) and the path coefficient were examined. The R-squared value is presented in Table 4 below. The adjusted R-squared is used to explain the degree to which input variables (predictor variables) explain the variation of output variables (predicted variables). It ranges from 0 to 1. For this model, the adjusted R-squared for the brand development regression is 0.397, which means that 39.7% of the variation in brand development is explained by brand perception, perceived advantage, brand resources and brand characteristics. The adjusted R-squared for brand orientation is 0.106, which means that 10.6% of the variation in brand orientation is explained by brand development and brand characteristics. Furthermore, the adjusted R-squared for brand perception is 0.320, which means that 32% of the variation in brand perception is explained by perceived advantage and brand resources.

The results of the hypothesis testing, shown in Table 5, reveal that there are seven paths that are significant at the 5% level. The rest of the paths are insignificant. The results indicated that brand resources have a negative direct effect on brand characteristics (β=-0.226, t=3.177, p <0.002) and a positive direct effect on brand development (β=0.223, t=3.220, p <0.001) and perceived advantage (β=0.237, t=3.450, p <0.001). The results provide statistical support for H2a, as brand characteristics have a positive direct impact on brand development (β=0.163, t=2.850, p <0.005). The results also indicate that brand development has a positive direct impact on brand orientation (β=0.329, t=2.391, p <0.017). This means that hypothesis H3 is supported. The results also support H4a, as brand perception has a significant positive effect on brand development (β=0.500, t=7.439, p <0.000). With regard to perceived advantage, the results support H5a and H5c, in that perceived advantage has a positive direct effect on brand development (β=0.122, t=1.732, p <0.084) and brand perception (β=0.555, t=6.561, p <0.000). The hypothesised model, together with the path coefficients and R² estimates, is depicted in Figure 2 below.

Figure 2.

Hypotheses model with path estimates

Source: own processing

To evaluate model fit, the researchers considered the standardised root mean square residual (SRMR). The SRMR is a goodness-of-fit measure for PLS that is useful for modelling misspecification (Henseler et al., 2016). The suggested threshold for the measures of overall model fit in SRMR is 0.08 (Benitez et al., 2020). A value below the threshold indicates a good model fit. Table 5 shows that the SRMR is 0.069, which is below 0.08, thus indicating a good model fit. To measure exact fit, the squared Euclidean distance (d_ULS) and the geodesic distance (d_G) were used.

For a good model fit, the d_ULS and d_G values should lie within the confidence interval. Hence, the upper bound of the confidence interval should be larger than the original value of the exact d_ULS and d_G fit criteria to indicate that the model has a ‘good fit’. The 95% confidence interval is used in this study. Table 5 shows that the d_ULS value is 4.518, which is lower than the 95% value (5.523), and the d_G value is 2.842, which is lower than the 95% value (3.665), indicating that this estimated model has a good fit.

The findings of this study have significant implications with respect to the way in which SME owners/managers can manage brand orientation efforts within the SME context. The study began with a novel conceptualisation of the constituents/dimensions of brand orientation. This conceptualisation emphasised abstract dimensions of brand orientation, together with the more concrete concept of brand development. The results of the study revealed that brand development is the most significant driver of brand orientation in SMEs, even in the face of resource constraints. The study, therefore, recommends that SMEs should focus on brand development activities, prioritising practical, actionable brand development efforts such as crafting a strong brand identity, ensuring a consistent brand position and emphasising quality. SMEs can enhance their brand orientation by employing concrete branding activities. SMEs seeking to establish strong brand orientation within emerging markets need to devote their resources to establishing their brands as distinctive assets and strategic resources that guide decision-making. SMEs can also leverage intangible resources such as their personal networks, organisational expertise and SME reputation. When SMEs employ a brand orientation strategy that emphasises brand development, the brand is then placed at the core of the SME branding activities, which will improve the brand’s position and, ultimately, the overall competitive position.

The study revealed that brand resources, taken independently, do not constitute an antecedent of brand orientation. This finding was inconsistent with prior studies that have shown that brand resources are a significant barrier to brand orientation. This finding suggests that SMEs can successfully build strong brands, even in the face of their competitive constraints. SMEs must prioritise investing in brand-oriented practices, even if these practices do not necessarily involve financial resources. Managers should be strategic in how they allocate limited resources, focusing on areas that have the most significant impact on brand development, such as brand identity creation, customer service excellence, and market positioning. Another implication of this finding for SMEs is that even in the face of resource constraints, a company that is strongly brand oriented can emerge if the brand development process is managed efficiently. For instance, the study recommends that in the face of resource constraints, managers can improve their internal branding capabilities to boost brand orientation. Employees can be empowered through branding skills enhancement so that they may become brand ambassadors, which may have practical benefits for the SMEs' branding efforts.

The study’s finding that brand orientation is a multidimensional construct reinforces the current theoretical understanding that brand orientation is not unidimensional. Our study highlights the intricate relationship between dimensions like brand resources, brand characteristics, brand development and perceived advantage, further emphasising the multifaceted nature of brand orientation. Secondly, the study emphasises the role of context in SME branding theories. The branding strategies for SMEs in emerging markets should be grounded in practical actions rather than abstract constructs, unlike those of large organisations. Therefore, the study underlies the need for branding theories to account for organisational size and context-specific constraints. Thirdly, the study’s findings suggest the indirect role of brand resources. The indirect influence of brand resources on brand orientation through other dimensions such as brand characteristics and brand development highlight a nuanced relationship that requires further theoretical exploration. Lastly, the study’s findings on the centrality of SME owner/managers in the brand development process suggests a more personalised, inside out approach to brand orientation in SMEs.

This study faced certain limitations which may provide avenues for further research. Firstly, data were collected from only one emerging market, therefore, the study cannot be generalised to other emerging markets. Future research could include comparative studies across multiple emerging markets to render the data more suitable for generalisation to emerging markets generally. SMEs in the Sub-Saharan African region, particularly, can be included in future studies as research from this region is lagging. Cross-cultural comparisons examining SMEs in different cultural and economic contexts could uncover other unique or universal drives of brand orientation. Other comparative studies could examine the differences between SMEs and large firms to further delineate the differences in branding strategies and brand orientation drives across organisational sizes. Secondly, the study examined SMEs within the retail industry. Future research could investigate whether drives of brand orientation differ across industries within the SME sector. Lastly, the study adopted a cross-sectional research design. Future studies could adopt longitudinal designs to observe SME brand orientation over time.