The effect of suppliers market orientation and suppliers environmental conditions on manufacturers trust

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY CHUNG NGOC HIEU THE EFFECT OF SUPPLIER’S MARKET ORIENTATION AND SUPPLIER’S ENVIRONMENTAL CONDITIONS ON MANUFACTURER’S TRUST Major : Business Administration Major Code : 60.34.05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr Nguyen Dinh Tho HOCHIMINH CITY - 2012 ACKNOWLEDGEMENTS First gratefulness to, Dr Nguyen Dinh Tho, This thesis would not have been possible unless his helps to supervise me For his wise knowledge and kindly patience, he remained forever in my respect Second gratefulness to, My colleagues & benefactors in Nestle, Unilever, Coca Cola, Rich, Masan, Doan Ket, Vinamilk, Vina Australia Packaging Labels Co, InterPet Group, Van Don Plastic, Rang Dong Plastic, VinaPlast, Imperial Tobacco, BAT, Kimberly Clark, Tracimexco, Hapro Group, Binh Vinh, Crown, Hercules, Ngoc Nghia Plastic, Bao Van… For their dedicated supports in questionnaire surveying and answering Last but not least, gratefulness to, My family, for always being in my side ABSTRACT This study is desired to investigate about the effect of supplier‘s market orientation and environmental conditions on manufacturer’s trust and was taken the survey in Ho Chi Minh and some South province markets The main variables included supplier’s market orientation with three inside variables as customer orientation, competitor orientation, and inter-functional coordination; and environmental conditions contained two variables as market turbulence and competitive intensity From many previous researches about supplier’s market orientation and trust on manufacturer, some main variables have been extracted and selected to synchronize with Vietnamese conditions and after passing the pilot interview with the quantitative method, main variables have been selected for taking the survey for this study About 300 questionnaire forms have been sent out to 300 respondents who are managing their enterprises in Ho Chi Minh city and south provinces, included Long An, Binh Duong, Dong Nai, about 180 sets have been answered and returned in which 150 sets have satisfied the purpose of the research The findings from a sample of 150 sets have revealed that the supplier‘s market orientation and environmental conditions has a positive influence on manufacturer’s trust After analyzing by the Reliability between variables (Cronbach Alpha), Correlation (Exploring Factor Analysis) and test Multiple Regression Model, the research’s results indicated that the supplier’s customer orientation variable and environmental conditions affect significantly on manufacturer’s trust i CONTENTS CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Problem statement 1.3 Research question and objective 1.3.1 Research question 1.3.2 Research objective 1.4 Research delimitation 1.5 Research methodology 1.6 Research implications 1.7 Thesis structure CHAPTER 2: LITERATURE REVIEW 2.1 Market orientation and supplier’s market orientation 2.1.1 Customer orientation 2.1.2 Competitor orientation 10 2.1.3 Inter-functional coordination 10 2.2 Environmental conditions - Market turbulence and Competitive intensity 11 2.3 Trust and manufacturer’s trust 12 2.3.1 Trust 12 2.3.2 Manufacturer’s trust 12 2.4 Theoretical model 12 2.4.1 Independent Variables 13 2.4.2 Dependent Variable 13 2.4.3 Theoretical model and Hypotheses 14 2.4.3.1 Theoretical model 14 2.4.3.2 Research hypotheses 14 2.5 Summary 15 CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research design 16 ii 3.1.1 Pilot test 16 3.1.2 Main survey 16 3.1.2.1 Sample size 17 3.1.2.2 Research process 17 3.2 Measurement validation 18 3.2.1 Measures of Customer orientation 18 3.2.2 Measures of Competitor orientation 18 3.2.3 Measures of Inter-functional coordination 19 3.2.4 Measures of Market turbulence and Competitive intensity 19 3.2.5 Measures of Trust 20 3.3 Summary 21 CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Descriptive data analysis 22 4.2 Testing factors of research model 23 4.2.1 Cronbach Alpha Reliability Analysis 24 4.2.2 Exploring Factor Analysis (EFA) 25 4.2.2.1 EFA results of the independent variables 25 4.2.2.2 EFA results of the dependent variables 27 4.3 Hypotheses Testing 27 4.3.1 Testing Assumptions of Multiple Regression 27 4.3.2 Testing hypotheses between Independent Variables and Dependent variable 28 4.4 Summary 31 CHAPTER 5: CONCLUSIONS 5.1 Overview 32 5.2 Main findings 32 5.3 Theoretical Implications 35 5.4 Managerial Implications 35 5.4.1 Supplier’s customer orientation 35 5.4.2 Supplier market turbulence 39 5.5 Further research 41 References 42 iii Appendices 51 Appendix 1: Questionnaire Form for Pilot Test 51 Appendix 2: Questionnaire in Vietnamese 52 Appendix 3: Questionnaire in English 54 Appendix 4: EFA results of independent variables 56 Appendix 5: EFA results of dependent variable 58 Appendix 6: Testing assumptions of multiple regression 59 Appendix 7: Multiple Regression Line results 60 Appendix 8: Histogram, Normal P – P plot and Scatter plot 61 iv LIST OF FIGURES Figure 2.4: The conceptual model of the effect of supplier’s market orientation and supplier’s environmental conditions on manufacturer’s trust 14 Figure 3.1: Research process 17 Figure 4.4 Histogram, Normal P – P plot and Scatter plot of Dependent Variable Trust 57 v LIST OF TABLES Table 3.1: Scale of Customer orientation 18 Table 3.2: Scale of Competitor orientation 19 Table 3.3: Scale of Inter-functional coordination 19 Table 3.4: Scale of Environment conditions .20 Table 3.5: Scale of Trust 20 Table 4.1: Sample characteristics 23 Table 4.2: Cronbach Alpha of observed variables 24 Table 4.2.2: EFA for independent variables 26 Table 4.3: Multi regression between independent variables and dependent variables 28 Table 4.4: Anova between independent variables and dependent variables 29 Table 4.5: Coefficients between independent variables and dependent variables 29 vi ABBREVIATIONS MO: Market Orientation EFA: Exploring Factor Analysis MRL: Multiple Regression Model CHAPTER 1: INTRODUCTION The introduction chapter identify the research background, present the problem statement, the research questions, and introduce the research methodology, the objectives as well as limitation of the study Furthermore, the significance of the research problem and thesis structure is also outlined 1.1 Research background Market Orientation is one of the most important concept in modern marketing (Pandelica et al., 2009) This concept has been researching and developing during past two decades (Brettel et al., 2008) Most of these researches and studies are concentrated on the components of market orientation and the relationship between market orientation and the firm’s business results Although these researches were studied from variety of fields and categories, many developed and developing countries, many results founds that market orientation had such positive effects with business results (Pandelica et al., 2009) In Vietnam, the research also record that market orientation can explain up to 30% the firm business results (Hung and Hau, 2007) Vietnam economic policies nowadays have been re structuring and developing as market orientation This step brings for Vietnam to become such very brilliant business environment, attracts the foreign investments to innovate the technique in many fields so far to impulse the development of economy, especially for the transitional economy in Vietnam now However, from the past two decades, the market orientation concepts has not been populated correspondingly in Vietnam ( Hac and Nghi, 2006) This is considered such as big challenge for Vietnam’s enterprises both are private or government companies, especially when Vietnam is joining WTO In the literature, market orientation is born from the western – where these concepts nowadays are continuing and leading in the world Kohli and Jaworski (1990) conceptualized Market orientation as the implementation of the marketing concept and developed a measure (Kohli et al., 1993) that focused on the firm’s activities and behaviors regarding customer needs, competitive information, market intelligence, and the sharing information among organizational functions Narver and Slater (1990: 21) offer a similar view, suggest that market orientation 49 Research, February 26, p.106– 116 Siguaw, Judy A., Simpson, Penny M., & Baker, Thomas L (1998), “Effects of supplier’s market orientation on distributor market orientation and the channel relationship - The distributor perspective”, Journal of Marketing, March 6, p.99–111 Slater, Stanley F., & Narver, John C (1994), “Does competitive environment moderate the market orientation – performance relationship?”, Journal of Marketing, January, p.46– 55 Spekman, Robert E (1988), “Strategic supplier selection: Understanding long-term buyer relationships”, Business Horizons, p 31, 75– 81 Steinman, C., Deshpandé, R and Farley, J.U (2000), "Beyond Market Orientation: When Customers and Suppliers Disagree", Journal of the 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identity design”, New York, Wiley, ISBN 0-47128947-7 50 Wally Olins (1995), “The new guide to identity How to create and sustain change through managing identity”, Aldershot, Gower, With bibl., index, ISBN 0-566-07750 Walter, Achim; Mueller, Thilo A.; Helfert, Gabi (2000), “The Impact of Satisfaction, Trust, and Relationship Value on Commitment: Theoretical Considerations and Empirical Results”, Proceedings of the 16th Annual IMP Conference, Bath, England Webb D, C Webster, A Krepapa (2000), “An exploration of the meaning and outcomes of a customer-defined market orientation”, Journal of Business Research, issued no 48, p.101-112 Wilson, D.T (1995), “An Integrated Model of Buyer-Seller Relationships”, Journal of Academy of Marketing Science, 23 (4), 335-345 Yushan Zhao & S Tamer Cavusgil(2006), “The effect of supplier’s market orientation on manufacturer’s trust”, Industrial Marketing Management , 35 (2006), p 405 – 414 51 Appendix 1: Questionnairse Form for Pilot test ( English version) Construct Competitor orientation Customer Orientation Inter functional coordination Items We respond slowly to competitive actions that threaten us We target customers where we have an opportunity for competitive advantage Top Management often fiscuss competitor's stategies We closely monitor and assess our level of commitment in serving customer's needs Our business strategies are driven by the goal of increasing customer value Our competitive advantage is based on understanding customers' needs 5 5 Narver and Slater ( 1990) We frequently measure customer satisfaction We pay close attention to after - sales service Information about customers if freely communicated throughout our organization Business fuctions within are integrated to serve the target market needs In our organization, salespeople share information about competitor information In our relationship, this supplier can not be trusted at times ( R) In our relationship, this supplier can be counted on to what is right In our relationship, this supplier has high integrity In our kind of business, customers' product preferences change quite a bit over times We cater to many of the same customers that we used to in the past ( R) Our customers tent to look for new products all the time Sometimes our customers are very price - sensitive, but on other occasions, price is relatively unimportant Narver and Slater ( 1990) There are many " promotion wars" in our industry Anything that one competitor can offer, others can match readily Our competitors are relatively weak ( R) 5 5 Morgan and Hunt ( 1994) 5 Anderson and Narus (1990); Field research 5 5 Jaworski and Kohli ( 1993) 5 Competition in our industry is cutthroat Competive intensity 5 This supplier keeps promises it makes to our firms Market turbulence Narver and Slater ( 1990) Our business objectives are driven by customers satisfaction We share resources with other business units The level of trust our company has in its working relationship with this supplier is very high Trust Sources Rating (1:Strongly disagree 5: Strongly agree) Jaworski and Kohli ( 1993) 5 52 Appendix 2: Questionnaire (Vietnamese version) BẢNG CÂU HỎI NGHIÊN CỨU Khu vực: THỊ TRƯỜNG THÀNH PHỐ HỒ CHÍ MINH Nghiên cứu nhằm mục đích tìm hiểu tác động định hướng thị trường từ công ty bán hàng (nhà cung cấp) ảnh hưởng đến lòng tin công ty mua hàng Xin anh/ chị lưu ý trả lời hay sai Các trả lời anh/ chị có giá trị nghiên cứu Thông tin người vấn [Họ tên] : Giới tính: Tuổi: [Tên công ty] [Chức vụ] [Vd.,Tổng Giám Đốc, Phó Giám Đốc, Giám Đốc Tiếp Thị, Giám Đốc Kinh Doanh, NVKD, etc.] [Thời gian làm ăn với khách hàng] [Vd., năm,, 1-3 năm, 3-5 năm, >5 năm, etc.] Mô hình công ty bạn gì? a Công ty sản xuất □ b Thương mại mua bán lại/trung gian □ A Thông tin khảo sát: Để trả lời câu hỏi bên dưới, anh/chị vui lòng tập trung vào khách hàng (KH) X công ty mà họ KH nằm top KH có doanh thu cao cho công ty anh/chị Anh/chị vui lòng cho biết: Tên khách hàng X là:… ………………………………………… Sáu tháng gần đây, công ty bạn có giao dịch với khách hàng X không? a Có □ b Không □ Sản phẩm/ mặt hàng công ty bạn cung cấp cho khách hàng X này? a Nguyên phụ liệu □ b Bao bì □ c Quảng cáo & In ấn □ d Khác:…………………… Thông tin vấn : Xin cho biết mức độ đồng ý anh/ chị phát biểu cách khoanh tròn đánh dấy X vào MỘT số theo qui ước sau cho dòng phát biểu Cụ thể sau: Hoàn toàn đồng ý Đồng ý Không có ý kiến Không đồng ý Tương đối đồng ý Tương đối không đồng ý Hoàn toàn không đồng ý Ví dụ: Quản lý cấp cao thường thảo luận chiến lược đối thủ cạnh tranh  Câu trả lời Hoàn toàn đồng ý, KHOANH TRÒN ĐÁNH DẤU X vào số 53 STT Diễn giải Đánh giá Chúng phản ứng nhanh nhạy với hoạt động đối thủ cạnh tranh Chúng tập trung phục vụ thị trường mà phát triển lợi cạnh tranh 7 7 7 Quản lý cấp cao thường thảo luận chiến lược đối thủ cạnh tranh Chúng thường kiểm tra đánh giá mức độ cam kết việc đáp ứng nhu cầu khách hàng Chiến lược kinh doanh định hướng mục tiêu làm tăng lợi ích cho khách hàng Lợi cạnh tranh dựa sở hiểu biết nhu cầu khách hàng Mục tiêu kinh doanh định hướng chủ yếu theo thỏa mãn khách hàng Chúng thường đo lường thỏa mãn khách hàng Chúng việc hậu dịch sau sau bán hàng 1 2 3 4 5 6 7 7 12 Thông tin khách hàng thông đạt rộng rãi tổ chức Giữa phận liên quan công ty phối hợp lẫn để đáp ứng nhu cầu thị trường mục tiêu Trong tổ chức chúng tôi, nhân viên bán hàng chia sẻ thông tin đối thủ canh tranh 13 Chúng chia sẻ thông tin với phận chức khác công ty 14 Trong ngành nghề kinh doanh chúng tôi, sở thích khách hàng thay đổi lớn theo thời gian 15 Khách hàng tìm kiếm sản phẩm 16 Đôi khi, khách hàng nhạy cảm với giá, thỉnh thoảng, giá không quan trọng họ 17 Sự cạnh tranh ngành kinh doanh gay gắt 18 Có nhiều “cuộc chiến khuyến mãi” ngành kinh doanh Bất mà đối thủ đưa ra, công ty khác làm tương đương không khó khăn 7 1 2 3 4 5 6 7 23 Các đối thủ cạnh tranh tương đối mạnh Trong mối quan hệ chúng tôi, khách hàng X tín nhiệm Trong mối quan hệ chúng tôi, khách hàng X tin tưởng luôn làm điều ngành nghề họ Trong mối quan hệ , khách hàng X giữ lời hứa họ với công ty 24 Trong mối quan hệ chúng tôi, khách hàng X trung thực 10 11 19 20 21 22 CHÂN THÀNH CẢM ƠN SỰ GIÚP ĐỠ CỦA CÁC ANH/ CHỊ 54 Appendix 3: Questionnaire (English version) SURVEY QUESTIONNAIRES AREA: …………………… This research is studied the effect of supplier market’s orientation to manufacturer’s trust Please be noted that there is no answer is judged right or wrong, all your answers are valuable to our research Demographic Information ( For interviewee) [Name] Age: Gender: [Company Name] [Job title] [e.g., Chairman, President, Vice President, Marketing Manager, Sales Director, Salesman, etc.] [Business time with manufacturer] [e.g., year, 1-3 years, 3-5 years, >5 years,, etc.] What kind of your company? a Manufacturer □ b Trading □ A Screening Information: To answer these below quizs, please concern to the X manufacturer, who is in the top customers that provides the most benefit/revenue for your company Customer X’s name is: Recent months, does your company have any business transaction with this manufacturer? a Yes □ b No □ Which category your company supply for this manufacturer? a Raw materials □ b Packaging □ c Ad & Promotion □ d Other : Anchor & Chain B Survey Information: Please express your adjustment with these below speeches then please circle or tick X on ONE number in rating list The details as follow: Strongly Agree disagrees Agree Somewhat disagree Somewhat agree Disagree Neither agrees nor Strongly Disagree 55 Example: Top Management often discusses competitor's strategies  The answer is Strongly Agree, then, please CIRCLES or TICK X the number N o Items Rating We respond very fast to competitive actions that threaten us We target customers where we have an opportunity for competitive advantage 7 7 Top Management often discuss competitor's strategies We closely monitor and assess our level of commitment in serving customer's needs Our business strategies are driven by the goal of increasing customer value Our competitive advantage is based on understanding customers' needs 7 Our business objectives are driven by customers satisfaction We frequently measure customer satisfaction We pay close attention to after - sales service Information about customers if freely communicated throughout our organization Business functions within are integrated to serve the target market needs In our organization, salespeople share information about competitor information 7 7 We share information resources with other business units In our kind of business, customers' product preferences change quite a bit over times 7 16 Our customers tent to look for new products all the time Sometimes our customers are very price - sensitive, but on other occasions, price is relatively unimportant 17 Competition in our industry is cutthroat 18 There are many " promotion wars" in our industry 19 Anything that one competitor can offer, others can match readily 20 Our competitors are relatively strong 21 7 23 In our relationship, this X customer can be trusted at times In our relationship, this X customer can be counted on to what is right In our relationship ,This X customer keeps promises it makes to our firms 24 In our relationship, this X customer has high integrity 10 11 12 13 14 15 22 THANK YOU VERY MUCH FOR YOUR VALUE CONTRIBUTIONS 56 Appendix 4: EFA results of independent variables KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 668 Approx Chi-Square 1153.369 df 190 Sig .000 Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Initial Eigenvalues Component Total % of Cumulative Variance % Total % of Cumulative Variance % Total % of Cumulative Variance % 4.252 21.262 21.262 4.252 21.262 21.262 3.334 16.668 16.668 3.201 16.004 37.265 3.201 16.004 37.265 2.648 13.242 29.910 1.772 8.862 46.128 1.772 8.862 46.128 2.419 12.097 42.008 1.676 8.379 54.507 1.676 8.379 54.507 1.992 9.960 51.968 1.193 5.963 60.470 1.193 5.963 60.470 1.700 8.502 60.470 995 4.976 65.446 877 4.387 69.833 838 4.189 74.022 710 3.550 77.572 10 685 3.425 80.996 11 575 2.873 83.869 12 566 2.830 86.699 13 525 2.623 89.322 14 486 2.429 91.752 15 418 2.088 93.840 16 375 1.875 95.715 17 325 1.625 97.340 18 248 1.239 98.579 19 206 1.032 99.610 20 078 390 100.000 Extraction Method: Principal Component Analysis 57 Rotated Component Matrix a Component COSO5 CUSTOMER SATISFACTION MEASUREMENT 935 COSO2 CUSTOMER BENEFIT 747 COSO3 CUSTOMER DEMAND 741 COSO1 CUSTOMER COMMITMENT 738 COSO4 CUSTOMER SATISFACTION TARGET 701 COMIN1 INDUSTRY COMPETITIVE MARKET 808 MATUR3 CUSTOMER 'S ATTITUDE ON PRICE 726 COMIN2 INDUSTRY PROMOTION WARS 699 COMIN4 RELATIVELY STRONG COMPETITOR 673 MATUR2 CUSTOMER TENTS TO LOOK FOR NEW PRODUCTS 536 CORO3 COMPETITOR INFORMATION SHARING BETWEEN SALESMAN 837 CORO2 INTERNAL DEPARTMENT COORDINATION 753 CORO4 SHARING INFORMATION WITH OTHER BUSINESS UNIT 701 CORO1 INTERNALLY FREELY CUSTOMER INFORMATION 607 COMO1 RESPOND FASTLY TO COMPETITIVE ACTIONS 846 COMO2 COMPANY COMPETITIVE ADVANTAGE 787 COMO3 COMPETITOR'S STRATEGY DISCUSSION 651 COMIN3 COMPETITOR ADAPTATION ABILITY 777 MATUR1 CUSTOMER PREFERENCE CHANGES 741 COSO6 AFTER SALES SERVICE Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 58 Appendix 5: EFA results of dependent variable KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 737 Approx Chi-Square 294.971 df Sig .000 Total Variance Explained Total Variance Explained Initial Eigenvalues Component Total % of Variance Extraction Sums of Squared Loadings Cumulative % 2.782 69.549 69.549 626 15.659 85.208 398 9.962 95.171 193 4.829 100.000 Total % of Variance 2.782 69.549 Cumulative % 69.549 Extraction Method: Principal Component Analysis Component Matrix a Component TRUST3 884 TRUST4 858 TRUST2 825 TRUST1 764 Extraction Method: Principal Component Analysis a components extracted 59 Appendix 6: Testing Assumptions of Multiple Regression Table 4.3: Correlations between F1, F2, F3, F4, F5 and TRUST Correlations TRUST Pearson Correlation Sig (1-tailed) N TRUST F1 F2 F3 F4 F5 1.000 324 -.139 109 171 209 F1 324 1.000 -.156 254 352 011 F2 -.139 -.156 1.000 147 -.029 394 F3 109 254 147 1.000 185 168 F4 171 352 -.029 185 1.000 -.022 F5 209 011 394 168 -.022 1.000 000 045 092 018 005 F1 000 028 001 000 445 F2 045 028 037 364 000 F3 092 001 037 012 020 F4 018 000 364 012 395 F5 005 445 000 020 395 TRUST 150 150 150 150 150 150 F1 150 150 150 150 150 150 F2 150 150 150 150 150 150 F3 150 150 150 150 150 150 F4 150 150 150 150 150 150 F5 150 150 150 150 150 150 TRUST 60 Appendix 7: Multiple Regression results Variables Entered/Removed Model Variables Entered F5, F1, F3, F4, F2 b Variables Removed a Method Enter a All requested variables entered b Dependent Variable: TRUST b Model Summary Change Statistics Model R 433 R Square a Adjusted R Std Error of R Square Square the Estimate Change 188 159 58630 Sig F F Change 188 df1 6.652 df2 Change 144 000 a Predictors: (Constant), F5, F1, F3, F4, F2 b Dependent Variable: TRUST b ANOVA Model Sum of Squares df Mean Square F Regression 11.434 2.287 Residual 49.500 144 344 Total 60.934 149 Sig 6.652 000 a a Predictors: (Constant), F5, F1, F3, F4, F2 b Dependent Variable: TRUST Coefficients Unstandardized Standardized Coefficients Coefficients a Collinearity Correlations Statistics ZeroModel B 1.091 254 F1 262 085 F2 -.124 049 F3 016 104 012 F4 093 096 F5 130 037 (Constant) Std Error a Dependent Variable: TRUST Beta t Sig order Partial Part Tolerance VIF 4.302 000 3.070 003 324 248 231 804 1.244 -.212 -2.525 013 -.139 -.206 -.190 802 1.246 149 882 109 012 011 880 1.136 078 969 334 171 080 073 864 1.158 289 3.498 001 209 280 263 828 1.207 257 61 Appendix 8: Histogram, Normal P – P plot and Scatter plot Figure 4.4 Histogram, Normal P – P plot and Scatter plot of Dependent Variable TRUST 62 63 ... themselves on the market place This study explores the effects of market orientation and environmental conditions of a firm to their customer’s trust over the seller - buyer relationship Narver and. .. orientation and supplier’s market orientation To study about the supplier’s market orientation definition, a detail consideration of the definitions and characteristics of market orientation (MO)... model and Hypotheses 2.4.3.1 Theoretical model Table Figure1:2.4: TheThe conceptual conceptual model model of the of effect the effect of supplier’s of supplier’s market market orientation orientation