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2 Environmental conditions – market turbulence and competitive intensity

2 Environmental conditions – market turbulence and competitive intensity

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2.3 Trust and manufacturer’s trust
2.3.1 Trust
Trust is appeared in most of relationship models (Wilson, 1995) and is a necessary
measurement of successful relationships (e.g, Mohr and Spekman, 1994; Morgan and Hunt,
1994). Given from this theory, the higher level of trust increases, the higher of long cooperation
between the participants is committed. Morgan and Hunt (1994) also defined trust as “the
perception of confidence in the exchange partner’s reliability and integrity” (p.23) , mean that a
firm expects their partners not only provide activities resulting in positive outcomes for the firm
but also, not perform any actions that harming to the firm outcomes ( Anderson & Narus, 1990).
2.3.2 Manufacturer’s trust
In supplier – manufacturer relationships, the manufacturer’s trust in supplier means the
manufacturer believes supplier can respond for their requirements and needs, satisfies for all
manufacturer’s wants; by supplier’s activities, provide the best services and products to the
manufacturer and perform as an useful partner in maximizing the value returns for manufacturer.
Given from this, a market – oriented supplier is likely to demonstrate to the manufacturer that
(1) the supplier will provide the best products and services, (2) the supplier is behaving in the
best interests of the manufacturer because the market orientation of the supplier creates
customer values and satisfies customer needs, and (3) the supplier is less likely to act
opportunistically for its own benefits (Anderson, Fornell, & Lehmann, 1994; Joshi & Randall,
2001).
2.4 Theoretical model and Hypotheses
Base on the literature review and the findings in the exploratory study, the conceptual
model was built, to understand the level of supplier’s market orientation affects on
manufacturer’s trust. The hypotheses were proposed from the empirical test to examine the
relationships between the independence variables and dependent variable.

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2.4.1 Independent variables
The independent variables were those factors affecting the Manufacturer’s Trust. They
were selected from some last relevant researches in literature review, basically from Narver and
Slater (1990); and Jaworski and Kohli (1993). There were two factors as supplier’s market
orientation and environmental conditions.
Supplier orientation factor included three components as customer orientation, competitor
orientation and inter-functional coordination. Environmental conditions included two
components as market turbulence and competitive intensity. These five components were this
research’s independent variables.

2.4.2 Dependent variable
Manufacturer’s trust was the key dependent variable of this research. In this research,
the definition of manufacturer’s trust was developed by Morgan and Hunt (1994); Anderson and
Narus (1990).

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2.4.3 Theoretical 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
and
and
supplier’s
supplier’s
environmental
environmental
conditions
conditions
onon
manufacturer’s
manufacturer’s
trust
trust

2.4.3.2 Research hypotheses:
According to the literature stating that the manufacturer tends to develop relationships
with few but selective suppliers (Kalwani &Narayandas, 1995), respond with great trust to the
devoted supplier (Siguaw et al., 1998) while market-oriented supplier is purposed to serve for
the manufacturer’s needs. Therefore, the following hypotheses were proposed as supplier’s
market orientation directly proportional to manufacturer’s trust:
Hypothesis H1: Supplier’s customer orientation is positively related to the Manufacturer’s Trust
in the supplier.
Hypothesis H2: Supplier’s competitor orientation is positively related to the Manufacturer’s
Trust in the supplier.

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Hypothesis H3: Supplier’s inter-functional coordination is positively related to the
Manufacturer’s Trust in the supplier.
In such a highly uncertain and competitive environment, the consumers ‘choices and
preferences changes rapidly ( Kohli & Jaworski, 1990), the supplier’s assistances are important
for manufacturer’s business strategies. By their high market turbulence and competitive
intensity, market-oriented supplier will reflect rapidly the fluctuation in consumer’s demands
and react quickly to the competitive environment and the competitors.
Hypothesis H4: Supplier’s market turbulence is positively related to the manufacturer’s trust in
the supplier.
Hypothesis H5: Supplier’s competitive intensity is positively related to the manufacturer’s trust
in the supplier.

2.5 Summary
This chapter summarizes the previous theories and research results of research models
which are reckoned basic theories and inheritability knowledge to support this study. Based on
literature review, we select and adjust the appropriate elements for the research - the supplier’s
market orientation factors in Ho Chi Minh City and some south province markets. Along with
the research, we also consider the dependence of manufacturer’s trust variable impacted by the
five independent variables concluding supplier’s customer orientation, supplier’s competitor
orientation, supplier’s inter-functional coordination, supplier market turbulence and supplier
competitive intensity. The theories and concepts are shown that the supplier’s market orientation
having the influence to the manufacturer’s trust. By passing the research method, the data
collection process and method of data analysis and through the research methodology of the next
chapter, the researcher will present all of these problems.

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CHAPTER 3: RESEARCH METHODOLOGY
The methodology consists of four main stages: (1) questionnaires design, (2) pilot test, (3) data
collection, (4) hypothesis testing. Each stage of the methodology will be discussed briefly in this
section of this chapter. A more detailed discussion can be found in Chapter 3.

3.1 Research design
Through the previous relevant researches, the questionnaire was built then running the
pilot test for checking the efficiency and the meaning of the questions. The pilot test was
purposed to explore and define the relevant items and buiding a completed questionnaire. Then,
the main survey was published to respondents for surveying, data collection, analysis of
collected data as well as model measurement.

3.1.1 The pilot test
In the pilot test, the 30 questionnaire forms were sent to 30 head of enterprises and head
of departments for answering. After five days, the forms have been returned and from the
outcome of this pilot test, some small changes on the questionnaire form so as to synchronized
and fitted with the nature of respondents and made clear for the questions in forms. Appropriate
adjustment in measurement scale also was adjusted from five Likert scales to seven Likert scales
so as to make more choices on the answer for respondents and aligned with some previous
researches before going live with the main survey in Ho Chi Minh City and south provinces as
Long An, Dong Nai, Binh Duong.

3.1.2 Main survey
The main survey was a quantitative research which was conducted in Ho Chi Minh city,
Long An, Dong Nai and Binh Duong with convenient sampling; and the final questionnaires
were sent to Head of enterprises, Management Board, Head of Department, especially for

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Marketing and Sales Department, in summary, the questionnaires were sent to the decision
makers who are leading the enterprises and giving the decisions. For each enterprise, we sent
only one questions form so as to get single informant.

3.1.2.1 Sample size
In Multipe Linear Regression Analysis, we should ensure a sample size following the
below formula (Tabachnick & Fidell, 1996).
N > = 8M + 50
N: sample size
M: the number of independent variable of model
Base on as above study, the research has taken sample size was 150 samples.

3.1.2.2 Research process
The research process was demonstrated in figure 3.1 as below:
Figure 3.1 Research process

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3.2 Measurement
Measurement scale used in this study was multi-item seven point Likert scales, which
developed and validated by previous researches (including Narver and Slater (1990); Morgan
and Hunt (1994); Anderson and Narus (1990); Jaworski and Kohli (1993)…).

3.2.1 Measure of Customer Orientation
Customer orientation implies that a firm puts the customer’s interest first (Deshpande,
Farley, & Webster, 1993; Joshi & Randall, 2001). From a total quality perspective, all strategic
decisions a company makes are “customer-driven”. In other words, the company shows constant
sensitivity to emerging customer and market requirements (Evans and Dean, 2000). Knowing
the customer is basically a customer satisfaction measurement process (Player and Keys, 1999).
The best measures are customer-focused and goal-oriented (George and Weimerskiirch, 1998).
Six observed variables with a seven-point Likert from Narver & Slater (1990) and Gray et al
(1998) were primarily used to measure Customer orientation.
Table 3.1: Scale of Customer Orientation
Construct

Customer
Orientation

Items
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

Stand for
COSO1
COSO2
COSO3
COSO4
COSO5
COSO6

3.2.2 Measure of Competitor orientation
Competitor orientation is understood as the firm knows well about strengths and
weaknesses, capabilities and strategies of their key current and potential competitors (Narver
and Slater 1990) and the firm can being responsive to competitor’s activities (Balakrishnan

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1996). Understanding well about competitors, it may allow the firm prevent and minimize the
adverse effects (e.g. Dickson 1996, p. 102 - 106).
Competitor orientation was measured on three observed variables, a seven-point Likert
scale developed by Narver & Slater, (1990) and Jaworski and Kohli (1993)

Table 3.2: Scale of Competitor orientation
Construct
Competitor
orientation

Items
We respond fastly to competitive actions that threaten
us
We target customers where we have an opportunity for
competitive advantage
Top Management often discuss competitor's strategies

Stand for
COMO1
COMO2
COMO3

3.2.3 Measure of Inter-functional coordination
Measurement scales for perceived quality factor were developed by Narver & Slater,
(1990). The firm always requires inter-departmental coordination and sharing of information and
resources. Inter-departmental coordination was defined as the coordinated utilization of
company resources in creating superior value for target customers (Narver & Slater, 1990).
Four observed variables with a seven-point Likert from Narver & Slater (1990) were
used to measure inter-functional coordination as below table.
Table 3.3: Scale of Inter - functional coordination
Construct

Inter - functional
coordination

Items
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.
We share resources with other business units

Stand for
CORO1
CORO2
CORO3
CORO4

3.2.4 Measure of Environmental conditions.
Market turbulence is defined as “changes in the composition of consumers and their
preferences” (Kohli & Jaworski, 1990, p. 14). Competitive intensity is the degree of competition

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that a firm faces. Great market turbulence helps to predict market accurately and from this,
along with market turbulence, a high competitive intensity would respond rapidly to
manufacturer’s needs from a market – oriented supplier. Market turbulence and competitive
intensity were measured by a seven – point Likert on three – item scale and four –item scale,
developed by Jaworski and Kohli (1993) then adjusted by the author for easy understanding with
Vietnamese respondents, including:
Table 3.4: Scale of Environmental conditions
Construct

Market turbulence

Competitive
intensity

Items
In our kind of business, customers' product preferences
change quite a bit over times
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
Competition in our industry is cutthroat
There are many " promotion wars" in our industry
Anything that one competitor can offer, others can match
readily
Our competitors are relatively strong

Stand for
MATUR1
MATUR2
MATUR3
COMIN1
COMIN2
COMIN3
COMIN4

3.2.5 Measure of Trust
Trust was measured by five observed variables, developed by Morgan and Hunt (1994);
Anderson and Narus (1990), used a seven-point Likert, and then adjusted by the author for easy
understanding with Vietnamese respondents as follows:
Table 3.5: Scale of Trust
Construct

Trust

Items
In our relationship, this manufacturer can be trusted at
times
In our relationship, this manufacturer can be counted
on to do what is right
In our relationship, this manufacturer keeps promises it
makes to our firms
In our relationship, this manufacturer has high integrity

Stand for
TRUST1
TRUST2
TRUST3
TRUST4

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3.3 Summary
This chapter accomplished to present the research methods, the process of data collection,
the method of analysis and measurement scales that were proposed to apply in this dissertation.
With questionnaire and the pilot interview to some Head of enterprises in Ho Chi Minh city,
then a 300 official questionnaire forms were sent out for Head of enterprises, included President,
Chairman, Directors, Head of Marketing Department and Sales Department, called generally
were decision makers to answer for the questionnaires. Only one set has been sent to each
enterprise so as to avoid duplicate answer view. About 180 sets have been returned and after
verifying, 150 samples have been approved for test. The survey was processed in Ho Chi Minh
City, Long An, Dong Nai and Binh Duong provinces. Quantitative data were collected and used
as a source of primary data. Quantitative analysis was combined effectively and efficiently in
order to handle these collected data for the next chapters of research results.

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CHAPTER 4: RESEARCH RESULTS
The purpose of this chapter was to present findings which were collected from the actual
questionnaire survey. Besides, the researcher proposed an official assessment of measures and
also carried out the analysis to give the accurate answers for the research questions, hypotheses
testing in the chapter two.
4.1 Descriptive data analysis
The collection of data was set up based on the relationships between suppliermanufacturer in Vietnam. The firms were chosen from variety of industries which included
packaging

industry,

beverages

industry,

FMCG

industry,

furniture

industry…called

manufacturer. The researcher in here defined manufacturers were the enterprises that produced
the products because when the enterprises produced the products, the interrelation between
market oriented supplier and manufacturer were presented better then a manufacturer in service
category. So, in this research, we did not survey from service manufacturer such as financial or
banking enterprises.
Approaching to few head procurement directors and executive buyers in some famous
brand name and from personal relations, letters were sent to these directors buyers in each firm
for asking their cooperation. Each buyer was asked to provide the contact details of their key
suppliers who had doing business with manufacturers. About 65 buyers were involved in this
survey and assigned more than 300 their current suppliers to contact for surveying. Letter from
buyers, included questionnaire form were sent out to suppliers for introducing author to them so
as to prepare for survey.
A total of 300 set of questionnaires were sent to suppliers. On the first week after letter
sending out, there were about 45 forms in returns. During second week to the fourth one, 85 set
were in returns. From some calls directly to the respondents, around 180 set of questionnaires
were returned after one month (the returned questionnaire ratio reached 60%).
After checking, there were 30 respondents which were not met the requirements of the
study because of un-answered, missing information, similar answers or dishonest answers with