The effects of managerial factors on performance of seafood exporters in ba ria – vung tau

The Effects of Managerial Factors on Performance of Seafood Exporters in Ba Ria – Vung Tau SUMMARY: The study aims to measure impact of managerial factors on performance and s of these elements Survey of 141 seafood exporters in Ba Ria-Vung Tau shows managerial factors (senior management commitments of production organization, human resource training, and customer focus) and explains 66.88% of the variation in enterprise performance Research results also show that the senior managerial commitment of performance has a positive impact as following: human resources training (.311), consumer orientation (.214), the relationship in the enterprise (.183) and committed the organization of production management of enterprise (.179) Furthermore, the results show strong correlation of the managerial factors Keywords: Enterprise performance, human resources, senior management, production organization Overview Since the early 1990s, performance measurement has become an important issue for scholars and practitioners The literature has suggested that the managers should design new performance measurement, including measuring financial and nonfinancial Kaplan and Norton (1992, 1993, and 1996) advocated the design of the Balanced Scorecard Dixon et al (1990) and Nanny et al (1992) proposed the use of integrated performance measurement system All these systems will be more emphasis on non-financial measures and will allow the organization more valuable to customers and internal processes in the operation of their measurement systems Overall, this change will help businesses to improve their performance substantially Performance measurement development history has extended and discussed (Neely, 1999), Utter and Larker (2003) showed that performance measurement used to allocate resources to support direct assessment and goal-oriented communication strategies, and evaluate the effectiveness of management Neely et al (1994) suggested that measurement activities help managers to identify good performance, to make tradeoffs between profit and investment more clearly, to provide a means of introducing individual strategic objectives long term, and to ensure for corporate managers to know when to intervene if enterprise performance decreases In the current competitive environment, integration, and globalization of economy, efficiency is crucial to the economic development of a country, an industry, and business in each (Stench’s & Bruin, 2006) Objectives of this study are to: 1) identify managerial factors affecting enterprise performance and relationship of these factors, 2) identify the relationship between strategic planning and implemental results actively done To achieve the above objectives, the author presents the theoretical background and research model, with appropriate research methodology A survey was sent to 170 businesses fisheries production of Ba Ria - Vung Tau, randomly chosen to gather data on the performance measurement system of them There are 141-survey responses The research related to performance measurement Research of performance measurement has experienced several stages during the past 30 years In the 1970s, researchers examined how organizations use accounting management systems, especially the budget as a tool to measure performance The research scope of performance measurement began to expand into the early 1990s Dixon et al (1990) and Kaplan and Norton (1992, 1993, 1996) has developed a new perspective and framework of organizational performance measurement system Nanny et al (1992) suggested that the company should increase the level of competent performance measurement The level of competence depends on the match between the design of performance measurement systems and corporate strategy Most published studies focus or structure of new measurements or additional advice Franco and Bourne (2003) explains that only recently the documentary practitioners, scholars have tried to provide insights about "how to manage organizations and measures how they get value from the data collected." The influence of the structural characteristics and the nature of the industry in the organized activities, have been addressed in the literature related to strategic planning (Storehouse and Pemberton, 2002; Grant, 2003) However, very few studies of the effects of performance measurement were published (Hudson et al, 2001; Kimberley and Neely, 2003) Moreover, Langfield2 Smith (1997) suggests that there are few studies to examine the relationship between strategy and management control systems had published De Wale (2003) studied the behavioral factors are important and complement the successful use of performance measurement systems, and suggests that more researches are needed with "other factors, such as environmental schools and organizations." Therefore, beside common factors, this study includes strategic planning factor to find effects of experimental performance measurement on it Theoretical background 3.1 The concept of performance There are many different perspectives on performance The concept of performance has changed over time and expanded with the development of production management In broad term, concept of performance can change depending on the scope of use (Tangent, 2005) Performance is also a theme that has been concerned by technicians, sociologists, economists and most managers for many years In technical aspect, efficiency is the ratio between output and input It measures performance-using resources to produce the required output However, this can lead to focus on quantity but little attention to quality aspects Performance is also a social concept: "Performance is an attitude of mind It is an attitude of seeking continuous improvement of existing ones, with the belief that people can work better today than yesterday and tomorrow better than today Moreover, it requires constant effort to adapt to the economic activity in the everchanging conditions, always apply the theory and methods It is the strong belief in the progress of humankind" (The European Productivity Agency's Conference Rome, 1958) In economic aspect, the performance involves creating more value for customers For many companies, the economic purpose and basis for existence is to create value Performance growth is measured in terms of value (Tangney, 2005) In managerial aspect, performance includes performance and efficiency of performance This means to ensure the products/ services are produced with lowest and acceptable cost and can provide to customers on time competitive prices with the quality that they desire (Khan, 2003) According to the traditional definition, concept of efficiency is a very simple It is a relationship (ratio) between outputs and inputs, which is used to form the output Performance is measured by amount or volume of products created by a labor per unit of time Thus, performance is considered as the same meaning with working efficiency Due to the rapidly changing of the economic environment, politics, society, technology, especially the economic globalization trend, trade liberalization and the fierce competition of quality, cost, product distribution, and delivery performance, etc., performance has a new approach Following to the new approach, in addition to use inputs in an optimal way, performance is expressed through quality and usefulness of outputs As performance orientates outputs, production must be considered in intimate relationship between itself and needs and expectations of the market Therefore, performance and quality are not mutually exclusive but rather, performance - quality associated with each other; support each other (Khan, 2003) For a manufacturing business, in management aspect, performance is the optimal use of resources to create products best meets the customer's requirements (Bernolak, 1997, cited in Tangen, 2005) This definition mentions two important features: first, performance closely relates to resources using (efficiency), and second, the performance links closely with customer satisfaction (quality) This view of performance is consistent with, the above view of Khan, which both performance efficiency and effectiveness) Performance efficiency means doing things right with correct methods while effectiveness mentions to doing right things at the right time with good quality (Tangen, 2005) This study applies new performance concept in enterprise managerial aspect, which is improving the efficiency of resource use This means to increase numbers and quality of products and delivery to customers timely as required with lowest price In other words, performance is optimal use of resources to meet customers and shareholders’ requirements, which are also profit maximizing through customer’s highest satisfaction with the lowest prices can be (Phan Quoc Nghia, 2004) Therefore, performance measurement must include both the effectiveness and efficiency, which is to measure customer requirements of product quality, product price, delivery time, and financial results of the business 3.2 The concept of strategic planning Strategic plan is a set of processes undertaken to develop a range of strategies that can contribute to achieving organizational direction A variety of definitions of strategic planning has published Grant (2003) exposed the comprehensive review of the history of strategic planning from the "long term plan" concept to the current debates between "management strategy" and "strategic thinking." "Effort to strategic planning processes system allows an organization to achieve its objectives and goals There are five basic steps in the process of strategic planning: objective/goal setting analyze the situation, consider alternative, implementation, and evaluation "(Crittenden and Crittenden, 2000) 3.3 The relationship between these factors of management with enterprise performance There have been some studies on performance and the factors affecting it based on different aspects and perspectives Baines (1997), Park & Miller (1998), Hoffman & Mehra (1999), Chapman & AlKha-wadeh (2002) and Khan (2003) show that the commitment of senior management is a factor indispensable in programs to improve enterprise performance They are ready to commit the necessary support in the training of human resources, provide adequate resources to enable the organization achieve high performance production Some recent studies also show that the senior management commitment on performance has a direct impact on the training of human resources and the organization of production (POLITIS, 2005; Steenhuis & Bruijin, 2006) The need to organize performance strategies according with the measurement system is established in the literature (Dyson, 2000; McAdam and Bailie, 2002) That is why a large number of frameworks are incorporated such as Balanced Scorecard development, the performance prism, pyramid performance, the best method of performance measurement and measurement methods Cambridge performance (Hudson et al) Most published studies either focus on new measurements or structure additional advices The researchers are interested in human resource elements also found a close relationship between employees’ education and training and corporate performance (Chapman & Al-Khawadeh, 2002; Chen, Liaw & Lee, 2003; Bhera, Narag & Singla, 2003; Appelbaum, 2005) Some experimental studies showed that group factors of production: working conditions, equipment maintenance, manufacturing process control is a significant contribution to enterprise performance (McKone, Schcroeder & Cua, 2001; Sauian, 2002) Several theoretical and empirical studies agree that customer orientation is a key element in business Study of Par & Miller (1998); Sauian (2002), Khan (2003) showed that customer orientation has a positive impact on enterprise performance In addition, factors involved in s were also mentioned in several studies Baines (1997), Savery (1998); Schultz, Juran & Boudreau (1999) showed that trust relationship and cooperation between management and labor have intimate relationships with enterprise performance Besides, internal corporate communication is also a factor affecting enterprise performance (Baines, 1997; Chapman & AlKha-waldeh, 2002; Appellbaum, 2005) In summary, the results of previous studies show that there are five groups of management factors affecting enterprise performance including commitment of senior management performance, human resources training, production organization, consumer orientation, and s However, the group elements have been mainly individually concerned in most studies; most previous studies focused research groups from one to two factors 3.4 Theoretical models and hypotheses Based on the theories and results of concerned previous studies this paper proposes a theoretical model with five groups of factors impacting on enterprise performance, where the senior management commitment affects performance through human resource training and production organization (Figure 1) - Impact of senior management commitment on human resource training: managers’ concern, and support in human resources training, and recruitment to creating favorable conditions for organization of production, - Impact of commitment on production organization: managers’ concern and support creating favorable conditions for the production organization, - Human Resources Training: Staff knowledge and skills training supporting and improving job performance, - Customer Orientation: Understanding customer needs to satisfy the most requirements with optimal products; improving products development by renewing products meeting most changing requirements of our customers, - Internal: reliable relationship, cooperation and information exchanging and sharing of between departments and between employees and managers within enterprises, - Production organization: Create advanced work environment, good equipments maintenance effective control, and coordination of manufacturing processes In theory, there are six models to test the hypothesis that: H1: There is a positive relationship between the commitment of senior management and human resource training and enterprise performance H2: There is a positive relationship between the commitment of senior management and organize production and enterprise performance H3: There is a positive relationship between production organization and enterprise performance H4: There is a positive relationship between human resources training and enterprise performance H5: There is a positive relationship between customer orientation and enterprise performance H6: There is a positive relationship between internal corporate relationships and enterprise performance Senior management commitment on human resource training Senior commitment on production organization Resources training Enterprise Performance Customer orientation Internal corporate relationships Production organizations Figure 1: Theoretical model METHODOLOGY Quantitative research methods areused in this study Data collection is conducted by direct interviews, e-mails and online surveys Samples are chosen following random method Subjects answering questionnaires are managers’ fishery exporters in BR-VT Scale concepts studied in theoretical models are multivariate scale The observed concepts are measured on a 5-point Likert scale (1: strongly disagree to 5: strongly agree) The statements in each scale are references from previous studies (Hoffman & Mehra, 1998, Chapman & Al-Khawadeh, 2002; POLITIS, 2005; Steenhuis & Bruijn, 2006) Scale concepts are adjusted to suit the conditions of the BR-VT seafood exporters based on in-depth interviews of experts and business managers Theoretical models have six independent concept measured by 36 observed concepts and one dependent concept measured by seven observed concept Result measurement model is applied for all scale concepts to access Cronbach alpha coefficients Scale of senior management commitment on human resources training (S1) is measured by six observed concepts, whose content refers to how managers concern, encourage their employees, create good work conditions, and recruit sufficient human resource Scale of senior management commitment on production organization (S2) is measured by six observed concepts, whose content refer to how managers concern, support and create favorable conditions for production organization Scale of human resources training (S3) is measured by four concepts, whose content focus on effective knowledge and skills training for employees Scale of customer orientation (S4) is measured by five concepts, whose content refer to how companies understand customer requirements of product quality, and design models changing by time and satisfy their requirements by product improvements Scale of internal corporate relationships (S5) is measured by five observed concepts, whose content refer to internal relationship within organization, information exchanging and sharing between employees and managers Scale of production organization (S6) consists of three components: physical conditions (3 concepts), equipment maintenance (3 concepts), and production control (4 concepts) Their content refers to conditions of temperature, ventilation, production equipment maintenance, quality and production schedule control, and combination of manufacturing processes Scale of Enterprise Performance (F) includes levels where companies meet customer requirements of product quality measured by four observed concepts, whose content mention to how companies provide customers with quality products satisfying their requirements Products are ensured to meet product specification and quality standards committed to customers Product price is measured by observed, whose content refer to how companies set acceptable prices and competitive prices consistent with product quality Scales are evaluated by preliminary analysis method to explore factors, Exploratory Factor Analysis (EFA), and Cronbach's coefficient alpha reliability for each component using SPSS software The scales are tested again for theoretical models and hypotheses by EFA method, multivariate regression using SPSS software 10 Rotated Component Matrixa Component c2 762 c3 801 c4 725 c5 754 c6 706 c7 744 c11 799 c15 732 c16 798 c17 726 c18 712 c19 753 c20 651 c8 851 c9 724 c21 651 c22 846 c23 727 c24 763 c26 718 c27 708 c28 784 c29 709 c30 650 c31 710 c32 591 c33 679 c34 727 c35 666 C36 773 c12 731 c13 542 c14 671 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization 11 Rotated Component Matrixa Component c2 762 c3 801 c4 725 c5 754 c6 706 c7 744 c11 799 c15 732 c16 798 c17 726 c18 712 c19 753 c20 651 c8 851 c9 724 c21 651 c22 846 c23 727 c24 763 c26 718 c27 708 c28 784 c29 709 c30 650 c31 710 c32 591 c33 679 c34 727 c35 666 C36 773 c12 731 c13 542 c14 671 a Rotation converged in iterations 12 RESULT 5.1 Describe the survey The data collected from 141 seafood exporters in Ba Ria-Vung Tau with the characteristics presented in Table Table 1: Characteristics of the sample seafood exporters in BR-VT Ownership Stock enterprises Private enterprises Foreign Investment enterprises Size Under 50 50 - 100 100- 300 Up 300 Total Quantity 64 73 Quantity 22 59 50 10 141 Percentage 45.39 51.77 2.84 100.00 15.60 41.84 35.46 7.10 100.00 5.2 Preliminary evaluation scale with EFA The concept scales of the study are preliminarily assessed and screened by EFA method and Cronbach Alpha coefficients for each component Selection criteria are satisfied when concepts have correlation coefficients turn-total (item-total correlation)> 30, Cronbach alpha coefficients> 60; system load factor (factor loading)> 40; total variance extracted for ≥ 50% (Hair & CTG, 1998) Table The table summarizes the results of scale Cronbach’s Variance alpha (%) Model Variables Commitment of senior management and human resource training (S1) 0.886 Commitment of senior management and organize production ( S2) 0.862 Human resources training (S3) Customer orientation ( S4) Internal corporate relationships (S5) Production organizations (S6) Enterprise Performance (F) 5 7 0.805 0.846 0.942 0.879 0.821 Value 66.876 Satisfactory 62.100 13 Results exploring factor analysis (EFA) showed 36 variations observed in components of the enterprise performance scale and retained factors with 33 observed concepts There are three items of excluded observed concepts: production organization 1, production organization 4, and production organization 10 After excluding the three concepts, the EFA results factors of enterprise scale As KMO coefficient = 0.812, EFA matches the data and the statistical test Chi-quare Bertlett 3.994E3 worth 0.000 significance level Thus, the observed concepts are correlated with each other considering the overall scope The variance extracted by 66,876 shows that factors derived from 66.876% explained variance of the data, eigenvalues in the system by 1171 Therefore, the scale draw is acceptable The scales have observed concepts excluded by of EFA, Cronbach Alpha coefficients were recalculated, and the results achieved reliability requirements 5.3 Analysis of the correlation matrix The first step of conducting linear regression analysis is to consider the linear correlation between all the concepts That means to consider the overall relationship between each independent variable with the dependent variable, and between the independent concepts (Hoang Trong & Chu Nguyen Mong Ngoc, 2008) Table.3 the correlation coefficient between the components 14 Correlations S1 S1 Pearson Correlation S2 Sig (2-tailed) N S2 S3 S4 S5 S6 F Pearson Correlation S3 ** 395 S4 427 ** S5 ** 519 S6 606 ** F 165 * 486** 000 000 000 000 050 000 141 141 141 141 141 141 141 395** 449** 412** 422** -.002 511** 000 000 000 979 000 Sig (2-tailed) 000 N 141 141 141 141 141 141 141 427** 449** 581** 601** 052 653** Sig (2-tailed) 000 000 000 000 540 000 N 141 141 141 141 141 141 141 519** 412** 581** 560** 003 607** Sig (2-tailed) 000 000 000 000 972 000 N 141 141 141 141 141 141 141 606** 422** 601** 560** 272** 595** Sig (2-tailed) 000 000 000 000 001 000 N 141 141 141 141 141 141 141 Pearson Correlation 165* -.002 052 003 272** 031 Sig (2-tailed) 050 979 540 972 001 N 141 141 141 141 141 141 141 486** 511** 653** 607** 595** 031 Sig (2-tailed) 000 000 000 000 000 711 N 141 141 141 141 141 141 Pearson Correlation Pearson Correlation Pearson Correlation Pearson Correlation 711 141 ** Correlation is significant at the 0.01 level (2-tailed) * Correlation is significant at the 0.05 level (2-tailed) Table shows that the dependent variable correlates have quite strong linear correlation in the sense α> 0.05 with five independent concepts S1, S2, S3, S4, and S5 Since all absolute correlation coefficients between the concepts are in range of 0395 to 0653 satisfying -1≥ r ≥+1, all concepts satisfy the rule of multiple linear regressions This proves that the value achieved distinction in other words; the scales of this study measured the different concept of studies Correlation matrix also shows that concepts of human resources training have the strongest impact on the dependent variable of the enterprise performance In contrast, variable commitment of human 15 resources management has least impact on the dependent concepts of the enterprise performance Table 4: The parameters for each variable in the regression equation COEFFICIENT (Coefficients) Model Factor Unstandardized Coefficients B Standardized Coefficients Std Error (Constant) 799 354 S1 067 074 S2 170 S3 t Sig Beta Collinearity Statistics Tolerance VIF 2.255 026 068 905 367 571 1.750 063 179 2.673 008 724 1.381 281 071 311 3.967 000 526 1.900 S4 189 069 214 2.749 007 536 1.867 S5 139 066 183 2.110 037 429 2.328 S6 -.039 052 -.046 -.760 448 877 1.140 a Dependent Variable: F From Table 4, shows that all four factors S2, S3, S4, and S5 scale factors affecting enterprise performance, have a positive impact (positive beta) on enterprise performance (HSDN) Sig = significance level 0000-0037 0:05 should not be statistically significant Therefore, the study concluded that the hypothesis S2, S3, S4, and S5 are accepted The regression equation for the standardized variable coefficient takes the following form: F = 0.068 S1 + 0.179S2 + 0.311S3 + 0.214S4 + 0.183S5 - 0.046S6 + εi (4.1) Among them: F: Enterprise Performance (F) S1: Commitment of senior management and human resource training (S1) S2: Commitment of senior management and organize production (S2) S3: Human Resource Training (S3) S4: Customer orientation (S4) S5: Internal corporate relationships (S5) S6: Production organization (S6) 16 Residuals Statisticsa Minimum Maximum Mean Std Deviation N Predicted Value 2.6756 4.8984 4.1449 47450 141 Std Predicted Value -3.097 1.588 000 1.000 141 041 222 089 032 141 2.6391 4.8949 4.1445 47329 141 -1.69757 1.18201 00000 41605 141 Std Residual -3.992 2.779 000 978 141 Stud Residual -4.091 2.844 001 1.006 141 -1.78313 1.23754 00040 44063 141 -4.357 2.923 -.002 1.023 141 Mahal Distance 310 37.266 5.957 5.536 141 Cook's Distance 000 126 009 019 141 Centered Leverage Value 002 266 043 040 141 Standard Error of Predicted Value Adjusted Predicted Value Residual Deleted Residual Stud Deleted Residual a Dependent Variable: F 17 18 CONCLUSION 6.1 Results and Discussion In management aspect, with in-depth study of performance, this study proposed and tested theoretical models of the relationship between management factors the impact of these factors on enterprise Performance This model includes the wide range of management factors production businesses in Ba Ria - Vung Tau Enterprise performance is affected by many different factors such as capital, technology, equipments, and management This study shows that managerial factors explain 66.88% of the variation of enterprise performance, which is a significant percentage Therefore, the enterprises should not only focus on investing in equipments and innovating technology but also improving management to improve performance The study results show strong relationship between managerial factors Therefore, when change occurs in any one factor, it has consequences for other factors as well In this study, the concept of corporate performance is comprehensively measured with the output consisting of four components: 1) senior management commitment to the production organization, 2) consumer orientation, 3) human resources training, 4) internal The research results show that the four elements have the strong correlation from 395 to 653, (Table 3), and standardized regression coefficients of the components with relatively high productivity 179 to 311(table 4) Therefore, to achieve high Enterprise performance, the companies need to satisfy the completely four components Besides, the companies should specially focus on components which gain high regression coefficient is human resources training ( 311) and customer orientation (.214) 6.2 The solution Based on the research results, each seafood exporters should improve management factors to improve performance: 1) senior management commitment to production organization, 2) customers orientation, 3) human resources training, 4) internal, 19 - The senior management commitment to production organization: It is the use of human resources in order to influence the processing of other input factors (physical, financial, information,) into the real the goods and services in line with business needs In terms of management, production organization and management plays important roles that decide the survival of advantaged production organization and management can save time and materials and help companies to cut costs, which are flexible to adapt to changes quickly and keep the production stable - Human Resources Training: Companies organize and develop special knowledge and skills training courses suitable for employees of department For food manufacturing business, prior employees taking training courses should be those who work for quality and hygiene management department Training and developing internal trainers, especially sale and seafood processing area create a strong training system, which meet training requirements when necessary and helps new employees understand specialty of the job that they work In addition, internal training educates employees about their role and enhances their awareness of obligation and responsibility in organization - Customer orientation: A type of product or service cannot satisfy all customers Therefore, companies should understand the different needs of customers, even in the same customer segment to study, design and create a good product positioning for each customer segment Success of this step strengthens other steps of making optimal product lines, product pricing, communication, distribution, sales, and after-sales - Internal: Companies build up organizational trust between staffs and company by holding meeting, dialogues of company mission, vision, value, and benefits to educate them about organizational culture and value, responsibility and benefits of each employee in the organization Manager build trust in employees by create work environment of respect recognition with reliable regulations and policies so that they keep loyal and work well 6.3 Limitations and suggestions Due to time and resource limitation, 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measures of value added” Journal of Development Economics, No 161, 11-14 21 ... requires constant effort to adapt to the economic activity in the everchanging conditions, always apply the theory and methods It is the strong belief in the progress of humankind" (The European... shows that managerial factors explain 66.88% of the variation of enterprise performance, which is a significant percentage Therefore, the enterprises should not only focus on investing in equipments... physical conditions (3 concepts), equipment maintenance (3 concepts), and production control (4 concepts) Their content refers to conditions of temperature, ventilation, production equipment maintenance,