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 2.1.3 Inter-functional coordination 2.2 Environmental conditions - Market turbulence and Competitive 2.3 Trust and manufacturer’s trust 2.3.1 Trust 2.3.2 Manufacturer’s trust 2.4 Theoretical model 2.4.1 Independent Variables 2.4.2 Dependent Variable 2.4.3 Theoretical model and Hypothes 2.4.3.1 Theoretical model 2.4.3.2 Research hypotheses 2.5 Summary CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research design ii 3.1.1Pilot test 3.1.2Main survey 3.1.2.1 Sample size 3.1.2.2 Research process 3.2 Measurement validation 3.2.1Measures of Customer orientation 3.2.2Measures of Competitor orientation 3.2.3Measures of Inter-functional coordin 3.2.4Measures of Market turbulence and C 3.2.5Measures of Trust 3.3 Summary CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Descriptive data analysis 4.2 Testing factors of research model 4.2.1Cronbach Alpha Reliability Analysis 4.2.2Exploring Factor Analysis (EFA) 4.2.2.1 EFA results of the independent variables 4.2.2.2 EFA results of the dependent variables 4.3 Hypotheses Testing 4.3.1Testing Assumptions of Multiple Re 4.3.2Testing hypotheses between Indepen 4.4 Summary CHAPTER 5: CONCLUSIONS 5.1 Overview 5.2 Main findings 5.3 Theoretical Implications 5.4 Managerial Implications 5.4.1Supplier’s customer orientation 5.4.2Supplier market turbulence 5.5 Further research References 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 51 Appendix 1: Questionnairse Form for Pilot test ( English version) Construct Competitor orientation Customer Orientation We respond slowly to com We target customers wher competitive advantage Top Management often fisc We closely monitor and as serving customer's needs Our business strategies ar customer value Our competitive advantage customers' needs Our business objectives ar We frequently measure cu We pay close attention to a Information about custome our organization Business fuctions within ar Inter market needs functional In our organization, salesp coordination competitor information We share resources with o The level of trust our comp with this supplier is very hi In our relationship, this sup In our relationship, this sup Trust right This supplier keeps promis Market turbulence In our relationship, this sup In our kind of business, cu quite a bit over times We cater to many of the sa past ( R) Our customers tent to look Sometimes our customers occasions, price is relative Competition in our industry Competive intensity There are many " promotio Anything that one competi Our competitors are relativ 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 lịng tin cơng ty mua hàng Xin anh/ chị lưu ý khơng có trả lời hay sai Các trả lời anh/ chị có giá trị nghiên cứu Thông tin người vấn [Họ tên] : [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.] Mơ hình cơng ty bạn gì? a Cơng 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 cơng ty mà họ KH nằm top KH có doanh thu cao cho cơng ty anh/chị Anh/chị vui lịng cho biết: Tên khách hàng X là:… ………………………………………… Sáu tháng gần đây, cơng ty bạn có giao dịch với khách hàng X khơng? a Có □ b Khơng □ 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 Tương đối đồng ý Ví dụ: Quản lý cấp cao thường thảo luận chiến lược đối thủ cạnh tranh  Câu trả lời Hồn tồn đồng ý, KHOANH TRỊN ĐÁNH DẤU X vào số 53 Diễn giải Chúng phản ứng nhanh nhạy với hoạt động đối thủ cạnh tranh STT Chúng tập trung phục vụ thị trường mà phát triển lợi cạnh tranh 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 10 Thông tin khách hàng thông đạt rộng rãi tổ chức Giữa phận liên quan công ty phối hợp lẫn để đáp 11 ứng nhu cầu thị trường mục tiêu Trong tổ chức chúng tôi, nhân viên bán hàng chia sẻ thông tin đối 12 thủ canh tranh 13 Chúng chia sẻ thông tin với phận chức khác công ty Trong ngành nghề kinh doanh chúng tơi, sở thích khách hàng thay đổi 14 lớn theo thời gian 15 Khách hàng chúng tơi ln tìm kiếm sản phẩm Đôi khi, khách hàng nhạy cảm với giá, thỉnh thoảng, 16 giá không quan trọng họ 17 Sự cạnh tranh ngành kinh doanh chúng tơi gay gắt 18 Có nhiều “cuộc chiến khuyến mãi” ngành kinh doanh chúng tơi Bất mà đối thủ đưa ra, cơng ty khác làm 19 tương đương khơng khó khăn 20 Các đối thủ cạnh tranh tương đối mạnh 21 Trong mối quan hệ chúng tôi, khách hàng X tín nhiệm Trong mối quan hệ chúng tơi, khách hàng X tin tưởng 22 làm điều ngành nghề họ Trong mối quan hệ , khách hàng X giữ lời hứa họ với 23 công ty 24 Trong mối quan hệ chúng tôi, khách hàng X trung thực 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] [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 Agree Somewhat agree Neither agrees nor 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 We respond very fast to competitive actions that threaten us We target customers where we have an opportunity for competitive advantage 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 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 10 organization Business functions within are integrated to serve the target market 11 needs In our organization, salespeople share information about competitor 12 information 13 We share information resources with other business units In our kind of business, customers' product preferences change quite 14 a bit over times 15 Our customers tent to look for new products all the time Sometimes our customers are very price - sensitive, but on other occasions, 16 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 In our relationship, this X customer can be trusted at times In our relationship, this X customer can be counted on to what is 22 right In our relationship ,This X customer keeps promises it makes to our 23 firms 24 In our relationship, this X customer has high integrity 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 Component 10 11 12 13 14 15 16 17 18 19 20 Extraction Method: Principal Component Analysis 57 Rotated Component Matrix a COSO5 CUSTOMER SATISFACTION MEASUREMENT COSO2 CUSTOMER BENEFIT COSO3 CUSTOMER DEMAND COSO1 CUSTOMER COMMITMENT COSO4 CUSTOMER SATISFACTION TARGET COMIN1 INDUSTRY COMPETITIVE MARKET MATUR3 CUSTOMER 'S ATTITUDE ON PRICE COMIN2 INDUSTRY PROMOTION WARS COMIN4 RELATIVELY STRONG COMPETITOR MATUR2 CUSTOMER TENTS TO LOOK FOR NEW PRODUCTS CORO3 COMPETITOR INFORMATION SHARING BETWEEN SALESMAN CORO2 INTERNAL DEPARTMENT COORDINATION CORO4 SHARING INFORMATION WITH OTHER BUSINESS UNIT CORO1 INTERNALLY FREELY CUSTOMER INFORMATION COMO1 RESPOND FASTLY TO COMPETITIVE ACTIONS COMO2 COMPANY COMPETITIVE ADVANTAGE COMO3 COMPETITOR'S STRATEGY DISCUSSION COMIN3 COMPETITOR ADAPTATION ABILITY MATUR1 CUSTOMER PREFERENCE CHANGES 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 Total Variance Explained Total Variance Explained Component Extraction Method: Principal Component Analysis TRUST3 TRUST4 TRUST2 TRUST1 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 Pearson Correlation Sig (1-tailed) N 60 Appendix 7: Multiple Regression results Model R 433 a a Predictors: (Constant), F5, F1, F3, F4, F2 b Dependent Variable: TRUST Model Regression Residual Total a Predictors: (Constant), F5, F1, F3, F4, F2 b Dependent Variable: TRUST Model (Constant) F1 F2 F3 F4 F5 a Dependent Variable: TRUST 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 ... model and Hypotheses 2.4.3.1 Theoretical model TableFigure1:2 .The4 :Theconconceptualmodelmodeloftheof effecttheeffectofsupplier’sofsupplier’smarketmarketorientationand andsupplier’senvironmentalconditionsononmanufacturerer’strusttrust... 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)