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Nearly half of B2B startups choose not to market themselves — study

Early-stage startup firms were more likely to conduct systematic marketing if they had top management team members with previously successful entrepreneurial experience and were backed by investors with a financial stake in the firm.

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Marketing is one of the most effective ways for an early-stage business-to-business (B2B) startup firm to grow, yet nearly half of such firms that would benefit from it choose not to do any marketing, according to the findings of a paper co-authored by a Smeal College of Business professor and published in the journal Industrial Marketing Management.

The researchers focused on systematic marketing — where a firm has an ongoing process of collecting and using customer data to improve its offerings, communications and distribution programs. They specifically examined which startup firms conduct systematic marketing, what causes them to do so and what benefits they derive from that investment. The findings may help future startup firms determine whether or not to use systematic marketing and when it is best to do so, the researchers said.

“We have a recipe that tells you whether or not to add that marketing side to this particular dish,” said Smeal Distinguished Research Professor of Management Science Gary Lilien, co-corresponding author on the study.

Lilien and University of Technology Sydney Associate Professor Ofer Mintz used data from the online valuation platform Equidam, analyzing 693 B2B or business-to-consumer (B2C) startup firms that had launched between July 2016 and April 2018, 202 of which also provided current and anticipated financial information for 2019 and 2020.

The startup firms had contacted Equidam for financial valuation, making them a self-selected population different from the larger startup population. To address potential bias in the Equidam data and validate their initial findings, Lilien and Mintz conducted an additional study surveying 377 startup firms selected from a Survey Sampling International panel of entrepreneurs.

The researchers found that 55% of the sample startup firms reported conducting systematic marketing and 45% said they did not. In both studies, the researchers discovered that early-stage B2B startup firms were the least likely of all B2B startup firms to conduct systematic marketing but the most likely to benefit from it, while early-stage B2C startups were the most likely to conduct systematic marketing but the least likely to benefit from it. Late-stage B2B startup firms also benefited less from conducting systematic marketing than early-stage firms.

They also found that startup firms’ decision to conduct systematic marketing influenced the firms’ valuations. More than half of the startup firms surveyed in the two studies — 60% of those in the Equidam study and 61% in the validation study — got the decision about whether to conduct systematic marketing wrong, which would have negative effects on their valuations.

The study provides a framework, which used insights from interviews with startup founders, investors and startup firm consultants, that focuses on the consequences of startup firms conducting systematic marketing. The researchers found that the success of marketing efforts, and the likelihood it will improve a firm’s valuation, depends on the startup firm’s type of customer — direct consumers or other businesses; early versus late-stage development of the firm; previous startup experience of the firm’s top management team; and the environment of the firm’s industry.

Mintz said he initially thought the study would be more about “what types of marketing are best for startups?” but discovered during early interviews that many startup managers didn’t consider marketing at all, often because it would mean redirecting already scarce financial resources.

“I would ask if, say, an investor gave you $10,000 or $100,000, or whatever additional number, how much would you spend on marketing? And most would say zero,” Mintz said. “That was the ‘aha’ moment, when we knew we were on to something bigger than we thought.”

Lilien and Mintz also found that early-stage startup firms were more likely to conduct systematic marketing if they had top management team members with previously successful entrepreneurial experience and were backed by investors with a financial stake in the firm. They observed that some B2B startup firms — many of them spinoffs from existing companies — had smaller but more knowledgeable customer bases than B2C startup firms and therefore a greater ability to verify the credibility of their firms through marketing.

“Marketing for these companies is really sales and tech support and getting a deep understanding of the evolving needs of the existing customers and co-developing products with them,” Lilien said.

Startup firms that conducted systematic marketing provided an observable signal to potential investors about the firms’ level of quality. The researchers said entrepreneurs could use the study to provide guidance for both early-stage startup firms and for investors. They concluded that future research is needed to determine how to best encourage early-stage B2B startups to conduct systematic marketing.

“I think this work is going to be of most benefit to venture capitalists,” Lilien said.

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Modern slavery is a business decision – not an accident

Many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

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Modern slavery persists because the way global supply chains are designed allows it to remain hidden, according to new research led by Professor Glenn Parry from the University of Surrey and Dr Mike Rogerson at the University of Sussex.  The findings argue that exploitation often stems from business decisions that cut costs by pushing work further down the supply chain, leaving companies with little direct contact with workers and less visibility over how they are treated. 

Around 27 million people worldwide are estimated to be living in conditions of modern slavery, embedded within the production of everyday goods and services. While governments have introduced laws to force companies to report on risks, the research suggests that disclosure alone is not changing behaviour in a meaningful way. 

Instead, firms often maintain distance from the most vulnerable parts of their supply chains. This distance can be geographical, organisational or even digital, such as the use of algorithms that control workers without direct oversight. As a result, companies rely on indirect signals rather than engaging directly with workers, leaving serious gaps in knowledge and accountability. 

The special issue on “Modern Slavery and Supply Chain Management”, published in Supply Chain Management, brings together insights from multiple international studies across sectors including construction, social care, logistics and global manufacturing. Drawing on interviews with practitioners, workers and experts, as well as analysis of corporate reports and policy frameworks, the work examines how governance, partnerships and digital systems shape labour conditions across complex supply networks. 

Glenn Parry, co-editor of the issue and Professor of Digital Transformation at the University of Surrey, said: “Modern slavery is a problem buried in supply chain structures and it is often the result of how those chains are built and managed. When companies prioritise cost and efficiency above all else, they create the conditions where exploitation can thrive.”

The research found that many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

It also finds that partnerships between businesses, governments and NGOs can help, but only when they are built on genuine understanding and shared goals. Superficial collaboration risks becoming a tick-box exercise rather than a driver of real change. 

A major recommendation is to shift focus from reporting to knowledge. Companies need to invest in understanding their supply chains in depth, including listening directly to workers. Bringing “upstream voices” into decision making is seen as critical to designing effective anti-slavery measures. 

Professor Glenn Parry added: “If we are serious about tackling modern slavery, we need to stop treating supply chain complexity as an excuse. It is often a choice. That means it can be changed.” 

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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