Linking SMEs’ customer strategy to firm growth: the case of manufacturing suppliers in South Korea

Abstract

Purpose

This study examines the customer strategies for small- and medium-sized manufacturing suppliers (SMMSs) in customer dominance markets, particularly regarding power asymmetry. It has two key objectives: (1) to identify factors impacting SMMSs' customer strategies, including technological and marketing capabilities and the importance of the main customer and (2) to examine the impact of these strategies on firm growth.

Design/methodology/approach

Using the survey data on 279 Korean manufacturing suppliers in B2B markets, nine hypotheses were verified through a structural equation model (SEM). It involved capturing the varied influence of organizational capabilities on the two types of customer strategies and the link between customer strategy and firm growth.

Findings

Technology and marketing capabilities affect new customer acquisition directly, while in the case of main customer retention, marketing capability affects main customer retention through the overall satisfaction about the existing relationship. Although the importance of the main customer suppresses new customer acquisition strategies, SMMSs should actively pursue both customer acquisition and retention to promote firm growth.

Originality/value

The findings reveal how SMMSs, leveraging technological and marketing capabilities, can concurrently pursue new customer acquisition and main customer retention. Additionally, it empirically demonstrates the impact of the main customer’s importance on these customer strategies and underscores the positive impact of both strategies on firm growth. This provides a blueprint for a value-creation process linking capabilities, customer strategies and firm performance.