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 : 60.05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr. Nguyen Dinh Tho HOCHIMINH CITY - 2012 TIEU LUAN MOI download : skknchat@gmail.com 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. TIEU LUAN MOI download : skknchat@gmail.com 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. TIEU LUAN MOI download : skknchat@gmail.com i CONTENTS CHAPTER 1: INTRODUCTION 1.3 Research question and objective. 6 CHAPTER 2: LITERATURE REVIEW 2.1 Market orientation and supplier’s market orientation .3 Inter-functional coordination .2 Environmental conditions - Market turbulence and Competitive intensity .3 Trust and manufacturer’s trust .3 Theoretical model and Hypotheses. 15 CHAPTER 3: RESEARCH METHODOLOGY 3.
16 TIEU LUAN MOI download : skknchat@gmail.1 Measures of Customer orientation .2 Measures of Competitor orientation .3 Measures of Inter-functional coordination .4 Measures of Market turbulence and Competitive intensity .5 Measures of Trust. 21 CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Descriptive data analysis .2 Testing factors of research model .1 Cronbach Alpha Reliability Analysis .2 Exploring Factor Analysis (EFA) .1 EFA results of the independent variables.2 EFA results of the dependent variables .1 Testing Assumptions of Multiple Regression .2 Testing hypotheses between Independent Variables and Dependent variable .1 Supplier’s customer orientation .2 Supplier market turbulence. 42 TIEU LUAN MOI download : skknchat@gmail.com 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 TIEU LUAN MOI download : skknchat@gmail.com 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 .4 Histogram, Normal P – P plot and Scatter plot of Dependent Variable - Trust.
57 TIEU LUAN MOI download : skknchat@gmail.com v LIST OF TABLES Table 3.1: Scale of Customer orientation .2: Scale of Competitor orientation .3: Scale of Inter-functional coordination.4: Scale of Environment conditions .5: Scale of Trust.2: Cronbach Alpha of observed variables .2: EFA for independent variables .3: Multi regression between independent variables and dependent variables 28 Table 4.4: Anova between independent variables and dependent variables .5: Coefficients between independent variables and dependent variables. 29 TIEU LUAN MOI download : skknchat@gmail.com vi ABBREVIATIONS MO: Market Orientation EFA: Exploring Factor Analysis MRL: Multiple Regression Model TIEU LUAN MOI download : skknchat@gmail.com 1 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 Research background Market Orientation is one of the most important concept in modern marketing (Pandelica et al. This concept has been researching and developing during past two decades (Brettel et al.
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. 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 TIEU LUAN MOI download : skknchat@gmail.com 2 consists of three behavioral components (customer orientation, competitor orientation, and inter functional coordination), etc… From some research ( Tsui, 2004; Lau., 2002; Rousseau & Fried, 2001), they gave the comment for the global knowledge/value of market orientation concept as western literature results are not enough. They suggest for the contributions from other continents such as South America, Africa or Asia, especially from the impressive developing countries such as Malaysia, Vietnam, Thailand, India and China (Tsui, 2004, p. However, there is not much research focus on this concept so as to assess, evaluate and investigate comprehensively it with the business operations or identify the market orientation components so as to apply effectively to specific business culture in Vietnam.
Or, with the management team, in case they would like to invest to improve their market orientation, which factors they must contribute or focus on. On the other side, supply chain management also is a fresh category in Vietnam. With the current world wide economy context, managing such good supply chain allows companies to deal with daily challenges related to production, suppliers, retail, inventory, sales, product check and delivery, warehouse operation among other or maximize the use of their resources including finance and human capital. From this, the relationship between supplier and manufacturer takes a very important role; contribute as a link in a chain since input and output of a company.
This relation is not simply a transaction “buy – sell” as before, but now, it becomes an integral part of business to business operations. Global competition, tough local market, financial crisis…have affected to all the firms in the business environment. These pressures have encouraged the firms come to decision to decrease their investments in traditional channels, finding alternative (Arthur Andersen & Co., 1995; Frazier and Antia, 1995). Toward to this, the company will be very particular on their relations, especially in choosing their suppliers.
In the relation with their supplier, they tends to develop relation with few but selective suppliers ( Kalwai & Narayandas, 1995) and these suppliers have to have ability to response to their requirements, satisfy company needs and contribute to the value of the customers. From these reasons, this research is studied to answer for above problems. By putting the market orientation concept to the relationship between supplier and manufacturer and by using the market orientation component as Narver and Slater (1990) to investigate the market oriented TIEU LUAN MOI download : skknchat@gmail.com 3 supplier in relations with their customer (manufacturer), the specific targets are verified the affects of market orientation components and environment challenge to the relationship between supplier and manufacturer.2 Problem statement This theoretical model is based on literature review, in which previous research demonstrated that market orientation affects positively the level of customer’s trust (Morgan and Hunt, 1994). The literature suggests market orientation companies increase value for customers (Day, 1994), therefore, these constructs drive more satisfactions for customers (Anderson et al., 1990) and consequently more trust (Morgan and Hunt, 1994).
As observed by (Luhmann, 1988), trust is used to reduce the complexity of the absent and gain positive expectation and get competitive advantages and to differentiate 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 Slater (1990) identifies three market orientation components as customer orientation, competitor orientation, and inter-functional coordination, therefore, the supplier’s market orientation also contain three above components. A market-oriented supplier, can be defined as a customer-focused and goal-oriented firm (George and Weimerskiirch, 1998), throughout their activities, understands well the customer’s needs and satisfies them; always 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 1996); and, internally, the information is transferred thoroughly across all departments with the same purpose of serving for customer needs.
A market oriented supplier can contribute many values to their customers and enrich the customer’s profits. Besides, the literature also recommend as supplier’s environmental factors significantly mediatory influence to their customer’s trust. In this research, market turbulence and competitive intensity in the supplier are stated to influence to manufacturer’s trust. The literature recommends these variables are very significant, so, the author decides include all of them on the conceptual model, is to understand the level of supplier’s market orientation affects on manufacturer’s trust.
The empirical test which proposed through the TIEU LUAN MOI download : skknchat@gmail.com 4 hypotheses might provide evidences on how supplier’s customer orientation, supplier’s competitor orientation, supplier’s inter-functional coordination, market turbulence and competitive intensity affect positively the manufacturer’s trust.3 Research question and objective 1.1 Research question Consequently, based on the problem statement and the overall research framework, the main research question of this research is needed to be answered as follows: ► What the key determinants affect on manufacturer’s trust? By evaluating the influence level of the factors on manufacturer’s trust, the importance of focusing on market orientation shall be highlighted to eventually help the supplier company heads identify the right direction of their management and keep their customers under a tough competitive environment.2 Research objective Based on this above research question, the objective of this study is outlined to examine the affect of market orientation on manufacturer’s trust.