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

The main variablesincluded supplier’s market orientation with three inside variables as customerorientation, competitor orientation, and inter-functional coordination; andenvironmental c

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

CHUNG NGOC HIEU

THE EFFECT OF SUPPLIER’S MARKET

ORIENTATION AND SUPPLIER’S ENVIRONMENTAL CONDITIONS ON MANUFACTURER’S TRUST

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: Dr Nguyen Dinh Tho

HOCHIMINH CITY - 2012

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

This study is desired to investigate about the effect of supplier‘s marketorientation and environmental conditions on manufacturer’s trust and was taken thesurvey in Ho Chi Minh and some South province markets The main variablesincluded supplier’s market orientation with three inside variables as customerorientation, competitor orientation, and inter-functional coordination; andenvironmental conditions contained two variables as market turbulence andcompetitive intensity.

From many previous researches about supplier’s market orientation and trust onmanufacturer, some main variables have been extracted and selected to synchronizewith Vietnamese conditions and after passing the pilot interview with the quantitativemethod, 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 managingtheir enterprises in Ho Chi Minh city and south provinces, included Long An, BinhDuong, Dong Nai, about 180 sets have been answered and returned in which 150 setshave satisfied the purpose of the research The findings from a sample of 150 sets haverevealed that the supplier‘s market orientation and environmental conditions has apositive influence on manufacturer’s trust

After analyzing by the Reliability between variables (Cronbach Alpha),Correlation (Exploring Factor Analysis) and test Multiple Regression Model, theresearch’s results indicated that the supplier’s customer orientation variable andenvironmental conditions affect significantly on manufacturer’s trust

CONTENTS

CHAPTER 1: INTRODUCTION

1.1 Research background 1

1.2 Problem statement 3

1.3 Research question and objective 4

1.3.1 Research question 4

1.3.2 Research objective 4

1.4 Research delimitation 4

1.5 Research methodology 5

1.6 Research implications 6

1.7 Thesis structure 6

CHAPTER 2: LITERATURE REVIEW 2.1 Market orientation and supplier’s market orientation 8

2.1.1 Customer orientation 9

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

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

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

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 14Figure 3.1: Research process 17Figure 4.4 Histogram, Normal P – P plot and Scatter plot of Dependent Variable -

Trust 57

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

MO: Market Orientation

EFA: Exploring Factor Analysis

MRL: Multiple Regression Model

CHAPTER 1: INTRODUCTION

The introduction chapter identify the research background, present the problemstatement, the research questions, and introduce the research methodology, the objectives aswell as limitation of the study Furthermore, the significance of the research problem and thesisstructure is also outlined

1.1 Research background

Market Orientation is one of the most important concept in modern marketing (Pandelica etal., 2009) This concept has been researching and developing during past two decades (Brettel etal., 2008) Most of these researches and studies are concentrated on the components of marketorientation and the relationship between market orientation and the firm’s business results.Although these researches were studied from variety of fields and categories, many developedand developing countries, many results founds that market orientation had such positive effectswith business results (Pandelica et al., 2009) In Vietnam, the research also record that marketorientation can explain up to 30% the firm business results (Hung and Hau, 2007) Vietnameconomic policies nowadays have been re structuring and developing as market orientation Thisstep brings for Vietnam to become such very brilliant business environment, attracts the foreigninvestments to innovate the technique in many fields so far to impulse the development ofeconomy, especially for the transitional economy in Vietnam now However, from the past twodecades, 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 bothare private or government companies, especially when Vietnam is joining WTO

In the literature, market orientation is born from the western – where these conceptsnowadays are continuing and leading in the world Kohli and Jaworski (1990) conceptualizedMarket 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 organizationalfunctions Narver and Slater (1990: 21) offer a similar view, suggest that market orientation

consists of three behavioral components (customer orientation, competitor orientation, and interfunctional 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 aswestern literature results are not enough They suggest for the contributions from othercontinents such as South America, Africa or Asia, especially from the impressive developingcountries such as Malaysia, Vietnam, Thailand, India and China (Tsui, 2004, p.492) However,there is not much research focus on this concept so as to assess, evaluate and investigatecomprehensively 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 managementteam, in case they would like to invest to improve their market orientation, which factors theymust contribute or focus on

On the other side, supply chain management also is a fresh category in Vietnam With thecurrent world wide economy context, managing such good supply chain allows companies todeal with daily challenges related to production, suppliers, retail, inventory, sales, product checkand delivery, warehouse operation among other or maximize the use of their resources includingfinance 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 Thisrelation is not simply a transaction “buy – sell” as before, but now, it becomes an integral part ofbusiness to business operations Global competition, tough local market, financial crisis…haveaffected to all the firms in the business environment These pressures have encouraged the firmscome 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 bevery particular on their relations, especially in choosing their suppliers In the relation with theirsupplier, 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 companyneeds and contribute to the value of the customers

From these reasons, this research is studied to answer for above problems By putting themarket orientation concept to the relationship between supplier and manufacturer and by usingthe market orientation component as Narver and Slater (1990) to investigate the market oriented

supplier in relations with their customer (manufacturer), the specific targets are verified theaffects of market orientation components and environment challenge to the relationship betweensupplier and manufacturer

1.2 Problem statement

This theoretical model is based on literature review, in which previous researchdemonstrated that market orientation affects positively the level of customer’s trust (Morgan andHunt, 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 getcompetitive advantages and to differentiate themselves on the market place This study exploresthe effects of market orientation and environmental conditions of a firm to their customer’s trustover the seller - buyer relationship

Narver and Slater (1990) identifies three market orientation components as customerorientation, competitor orientation, and inter-functional coordination, therefore, the supplier’smarket orientation also contain three above components A market-oriented supplier, can bedefined as a customer-focused and goal-oriented firm (George and Weimerskiirch, 1998),throughout their activities, understands well the customer’s needs and satisfies them; alwaysknows well about strengths and weaknesses, capabilities and strategies of their key current andpotential competitors (Narver and Slater 1990) and the firm can being responsive tocompetitor’s activities (Balakrishnan 1996); and, internally, the information is transferredthoroughly across all departments with the same purpose of serving for customer needs Amarket oriented supplier can contribute many values to their customers and enrich thecustomer’s profits Besides, the literature also recommend as supplier’s environmental factorssignificantly mediatory influence to their customer’s trust In this research, market turbulenceand competitive intensity in the supplier are stated to influence to manufacturer’s trust

The literature recommends these variables are very significant, so, the author decidesinclude all of them on the conceptual model, is to understand the level of supplier’s marketorientation affects on manufacturer’s trust The empirical test which proposed through the

hypotheses might provide evidences on how supplier’s customer orientation, supplier’scompetitor orientation, supplier’s inter-functional coordination, market turbulence andcompetitive intensity affect positively the manufacturer’s trust.

1.3 Research question and objective

1.4 Research delimitation

The research was narrowed down to Ho Chi Minh city and three Southern provinces asBinh Duong, Dong Nai and Long An However, they are locating variety of manufacturers intheir industrial zones therefore, the taken samples from these areas can represent for wholeVietnam The research focused on manufacturers which produced the physical products, theproducts categories such as services and banking, financial services were not included in thisstudy

of the relationship and the view of others involved in the relationship, providing support for thevalidity of data collected solely from supplier informants.

This study explored the supplier’s market orientation affects on manufacturer’s trust.From this step, further researches can extent more to manufacturer’s long term orientation come

to strengthen significantly the relationship between the seller and buyer in nowadayscompetitive business environment

1.5 Research methodology

From the relationship between the supplier and the manufacturer, this research studied apart of this relation as the manufacturer’s trust under the effect of the market orientation ofsupplier The research went through two phases: (1) an exploratory study and (2) a main survey

In exploratory study, a qualitative study was undertaken by a pilot survey Collected informationwas used to explore, adjust, and supplement to the measuring scale of the factors affected onmanufacturer’s trust for supplier’s market orientation

The main survey was conducted by quantitative research in the form of questionnaire.The result of questionnaire data was presented in the numerical form such as the age groups, joblevel of respondents who attended this survey, time for doing business with manufacturer andothers These numbers were, then, demonstrate in tables, graphs or other forms of statistics.Conducted in Ho Chi Minh city and some areas nearby were to confirm the components as well

as value and reliability of the measuring scales of manufacturer’s trust Cronbach alphacoefficient, Exploring Factor Analysis (EFA), and Multiple Linear Regression analysis (MLR)were applied through SPSS software; and convenience sampling was used

1.6 The research implications

This study has several important implications for both practical business (head ofenterprises, marketing managers…of both suppliers and manufacturers; advertising agency andmarket researchers ) and academic (educators, students of the business administrationdepartment especially in supply chain management division) as follows:

The research result has been a scientific foundation so that based on it, the suppliermanagers will make an effective strategy to enhance the manufacturer’s trust Andmanagers from manufacturers understand its role in this relationship together withthe need of market orientation from supplier; will know how to contribute to thesuccess of the relations

The research result contributes additionally to the supply chain managementliterature in particular in market orientation and trust factor

1.7 Thesis structure

This research is organized in five chapters The beginning is the introduction chapter Itincludes a brief overview of the research background, problems and objectives Thedelimitations and research methodology, the implications of research, and structure are alsopresented

Chapter 2 is the literature reviews and conceptual model It explores and reviews the

extant literature on market orientation, supplier’s market orientation and manufacturer’s trust.The factors of supplier’s market orientation and two environmental conditions impact tomanufacturer’s trust are also discussed in this chapter Based on the literature reviews, aresearch model is proposed

Chapter 3 is the research methodology An attention is concentrated on the research

design, then interprets and illustrates the way that primary and secondary data is collected Themeasurement scales apply for the research factors will be determined clearly and suitably

Chapter 4 analyzes the collected data and presents the findings from the survey in terms

of customer orientation, competitor orientation, inter-functional coordination, market turbulence

and competitive intensity Then, the results from the interviews for the effective levels of thesefactors on manufacturer’s trust are show as well

Chapter 5, the final part of this research is the chapter of conclusion and signification.

The researcher will suggest several recommendations for focusing the factors of developing themanufacturer’s trust in terms of the theoretical and managerial significance In addition, thischapter also made a brief summary about the main content of the dissertation and furtherresearch

CHAPTER 2: LITERATURE REVIEW

Before carrying out the survey on the effect factors of supplier’s market orientation andits influence level on manufacturer’s trust, this chapter will provide a theoretical backgroundabout market orientation, supplier’s market orientation, and environmental factors as marketturbulence, competitive intensity, trust and manufacturer’s trust Based on these, the conceptualmodel is constructed

2.1 Market orientation and supplier’s market orientation

To study about the supplier’s market orientation definition, a detail consideration of thedefinitions and characteristics of market orientation (MO) is necessary Literature on MO is wellestablished and initially postulated by Drucker in 1954 To 1965, King has defined MO as anmarketing concept as “a managerial philosophy concerned with mobilization, utilization andcontrol of total corporate effort for the purpose of helping consumers solve selected problems inways compatible with planned enhancement of the profit position of the firm” – ( King, 1965,p.85) And in 1971, Barksdale and Darden 1971) and McNamara (1972) identify threecomponents of the marketing concept: (1) the customer as a focal point for business activities,(2) the necessity of integrating marketing activities across functions, and (3) the need for a profitorientation However, in the same period, Bell and Emory (1971) believes that profit is aconsequence of customer orientation; therefore, customer orientation should replace the profitorientation while Day and Wensley (1983) assigned that marketing concept needed for acompetitor orientation adequately

During that time to 1990s, many researchers have studied and developed the MO tocompleted definitions Narver and Slater (1990) with their study found that MO was anorganizational culture and consists of three components, included customer orientation,competitors orientation, and inter-functional coordination, include all the activities involved increating superior value for the buyers in the target market They insisted that to satisfy the targetcustomers’ current and expected needs, market oriented organization needed to understand and

Base on above theoretical concepts, we study in line with Narver and Slater’s proposal tomeasure market orientation as includes three constructs as customer orientation, competitororientation and inter-functional coordination Following this, supplier’s market orientation alsomeasure with three constructs as supplier’s customer orientation, supplier’s competitororientation and supplier’s inter-functional coordination.

2.1.1 Customer orientation

Customer orientation is defined as the understanding of a firm about their customers,their buyers From this understanding, the buyer’s needs and wants will be fully satisfied inwhich these needs and wants are considered as buyer’s entire value chain, not only as it is todaybut also as it will evolve over time (Narver & Slater 1990)

In a competitive market, the supplier, by their specialized knowledge, consults and assiststhe buyer in defining the buyer decision, for example, provides more information about newtechnology or guides the uses of a new high tech machine that the seller believes it will be goodfor their buyer From this, the seller’s customer can be decrease the cost and increase thebenefits In other words, the supplier must put the customer requirements in priority; alwayscustomer-focused and goal-oriented (George and Weimerskiirch, 1998) According to Hartline

et al (2000), a customer-oriented supplier has to establish a continuous communication channelwith its actual and potential customers so as to create such a customer-focused environment fortheir company

2.1.2 Competitor orientation

Competitor orientation is understood as the firm knows well about strengths andweaknesses, capabilities and strategies of their key current and potential competitors (Narverand Slater 1990) and the firm can being responsive to competitor’s activities (Balakrishnan1996) This might assist the company in performance increasing such as, if we know well aboutcompetitor products or a marketing strategy, the company can react by a better strategy orperform a relative products as competitor ( e.g Ohmae 1982, p.91-98) Or, understanding aboutcompetitor strengths or strategies might help the company to know which product markets orparts of those markets to enter or avoid (Porter 1979)

2.1.3 Inter-functional coordination.

The term inter-functional coordination appeared, from the perspective of externalmarketing, as one of the three components of market orientation concept (Narver & Slater1990); or, Kohli and Jaworski (1990) stated inter-functional coordination as a kind of market-related information between departments or functions (p.5-6) It requested a chain ofinformation and resources must be go through and share for all departments The sharinginformation could be related to customers, competitors, payment schedule, issue on production,import – export policy…It might help other department or function can adjust its operations tosuit with external conditions (Kohli and Jaworski 1990)

In recently, there were several definitions for inter-functional coordination such as, Tay

& Tay (2007) referred inter-functional coordination as the degree of cooperation between thedifferent functions or departments within an organization Or, Farzard et al., (2008) wasspecified inter-functional coordination as “rapid and synchronized flow of information” and

“adoption between structure and strategy” (p.1483) From above theories, inter-functionalcoordination can be identified as two dimensions as (1) the integration and collaboration ofdifferent functional areas/departments; (2) the communication and sharing of information andresources

2.2 Environmental conditions – market turbulence and competitive intensity

As the analysis of customer orientation and competitor orientation, supplier’senvironmental conditions were considered as a factor influence to manufacturer Slater andNarver (1994) suggested competitive environment as a factor for the market orientation whileJaworski and Kohli (1993) considered market turbulence, competitive intensity andtechnological turbulence to have effect to manufacturer

Market turbulence was defined as “changes in the composition of consumers and theirpreferences (Kohli & Jaworski, 1990, p.14) An unstable economic climate, ever changingcustomer needs, then it continually stirs up market turbulence The customers are moredemanding they want: new, innovative products, increased availability, shorter lead-times, andincreased differentiation of product/service, better quality and most of all, at the same price Forexample, the mobile phones industry illustrates a market where turbulence exists There are alsothousands of tariffs and dozens of mobile phone handsets to choose from Every six monthsthere are new mobile phones available with new features and functions

In unstable economic market, the firm has to ensure that they continually improve theirbusiness processes and generate new ideas so to take advantages of the business opportunitiesthat such changes offer Also Jaworski defined the competitive intensity was as the conditionsand level of competition in a market due to number and activities of alternative suppliers, i.e.competitors, for the customers in this market (Jaworski & Kohli 1993) Further, in 1998,Appiah-Adu and Singh suggested market dynamism and competitive intensity to have a directinfluence on customer orientation, then Gray et al (1998) considered market environmentalconditions as a relevant variable together with market orientation influence on company

In this framework, the researcher use in line with Jaworski & Kohli in suggesting marketturbulence and competitive intensity are used to measure the influence of environmentalconditions to manufacturer’s trust in supplier

2.3 Trust and manufacturer’s trust

2.3.1 Trust

Trust is appeared in most of relationship models (Wilson, 1995) and is a necessarymeasurement 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 cooperationbetween the participants is committed Morgan and Hunt (1994) also defined trust as “theperception of confidence in the exchange partner’s reliability and integrity” (p.23) , mean that afirm expects their partners not only provide activities resulting in positive outcomes for the firmbut 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 themanufacturer believes supplier can respond for their requirements and needs, satisfies for allmanufacturer’s wants; by supplier’s activities, provide the best services and products to themanufacturer 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 thebest interests of the manufacturer because the market orientation of the supplier createscustomer values and satisfies customer needs, and (3) the supplier is less likely to actopportunistically 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 conceptualmodel was built, to understand the level of supplier’s market orientation affects onmanufacturer’s trust The hypotheses were proposed from the empirical test to examine therelationships between the independence variables and dependent variable

2.4.1 Independent variables

The independent variables were those factors affecting the Manufacturer’s Trust Theywere selected from some last relevant researches in literature review, basically from Narver andSlater (1990); and Jaworski and Kohli (1993) There were two factors as supplier’s marketorientation and environmental conditions

Supplier orientation factor included three components as customer orientation, competitororientation and inter-functional coordination Environmental conditions included twocomponents as market turbulence and competitive intensity These five components were thisresearch’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 andNarus (1990)

2.4.3 Theoretical model and Hypotheses

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.

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 andpreferences changes rapidly ( Kohli & Jaworski, 1990), the supplier’s assistances are importantfor manufacturer’s business strategies By their high market turbulence and competitiveintensity, market-oriented supplier will reflect rapidly the fluctuation in consumer’s demandsand react quickly to the competitive environment and the competitors

Hypothesis H4: Supplier’s market turbulence is positively related to the manufacturer’s trust in

CHAPTER 3: RESEARCH METHODOLOGY

The methodology consists of four main stages: (1) questionnaires design, (2) pilot test, (3) datacollection, (4) hypothesis testing Each stage of the methodology will be discussed briefly in thissection 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 thepilot test for checking the efficiency and the meaning of the questions The pilot test waspurposed 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 ofcollected 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 theoutcome of this pilot test, some small changes on the questionnaire form so as to synchronizedand fitted with the nature of respondents and made clear for the questions in forms Appropriateadjustment 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 previousresearches before going live with the main survey in Ho Chi Minh City and south provinces asLong 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 questionnaireswere sent to Head of enterprises, Management Board, Head of Department, especially for

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

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

3.2 Measurement

Measurement scale used in this study was multi-item seven point Likert scales, whichdeveloped and validated by previous researches (including Narver and Slater (1990); Morganand 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 strategicdecisions a company makes are “customer-driven” In other words, the company shows constantsensitivity to emerging customer and market requirements (Evans and Dean, 2000) Knowingthe 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

We closely monitor and assess our level of commitment in

COSO1serving customer's needs

Our business strategies are driven by the goal of increasing

COSO2customer value

Customer Our competitive advantage is based on understanding

COSO3Orientation customers' needs

Our business objectives are driven by customers

COSO4satisfaction

We pay close attention to after - sales service COSO6

3.2.2 Measure of Competitor orientation

weaknesses, capabilities and strategies of their key current and potential competitors (Narverand Slater 1990) and the firm can being responsive to competitor’s activities (Balakrishnan

Table 3.2: Scale of Competitor orientation

We respond fastly to competitive actions that threaten

COMO1us

Competitor

We target customers where we have an opportunity for

competitive advantageTop Management often discuss competitor's strategies 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 andresources Inter-departmental coordination was defined as the coordinated utilization ofcompany resources in creating superior value for target customers (Narver & Slater, 1990)

Four observed variables with a seven-point Likert from Narver & Slater (1990) wereused to measure inter-functional coordination as below table

Table 3.3: Scale of Inter - functional coordination

Information about customers if freely communicated

CORO1throughout our organization

Inter - functional Business functions within are integrated to serve the CORO2

target market needscoordination

In our organization, salespeople share information about

CORO3competitor information

We share resources with other business units CORO4

3.2.4 Measure of Environmental conditions.

preferences” (Kohli & Jaworski, 1990, p 14) Competitive intensity is the degree of competition

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 tomanufacturer’s needs from a market – oriented supplier Market turbulence and competitiveintensity 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 withVietnamese respondents, including:

Table 3.4: Scale of Environmental conditions

In our kind of business, customers' product preferences

MATUR1change quite a bit over times

Market turbulence Our customers tent to look for new products all the time MATUR2

Sometimes our customers are very price - sensitive, but on

MATUR3other occasions, price is relatively unimportant

Competitive There are many " promotion wars" in our industry COMIN2

Anything that one competitor can offer, others can match COMIN3intensity

Table 3.5: Scale of Trust

In our relationship, this manufacturer can be trusted at

TRUST1times

In our relationship, this manufacturer can be counted

TRUST2Trust on to do what is right

In our relationship, this manufacturer keeps promises it

TRUST3makes to our firms

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 generallywere decision makers to answer for the questionnaires Only one set has been sent to eachenterprise so as to avoid duplicate answer view About 180 sets have been returned and afterverifying, 150 samples have been approved for test The survey was processed in Ho Chi MinhCity, 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 inorder to handle these collected data for the next chapters of research results

CHAPTER 4: RESEARCH RESULTS

The purpose of this chapter was to present findings which were collected from the actualquestionnaire survey Besides, the researcher proposed an official assessment of measures andalso carried out the analysis to give the accurate answers for the research questions, hypothesestesting in the chapter two

4.1 Descriptive data analysis

The collection of data was set up based on the relationships between manufacturer in Vietnam The firms were chosen from variety of industries which includedpackaging industry, beverages industry, FMCG industry, furniture industry…calledmanufacturer The researcher in here defined manufacturers were the enterprises that producedthe products because when the enterprises produced the products, the interrelation betweenmarket oriented supplier and manufacturer were presented better then a manufacturer in servicecategory So, in this research, we did not survey from service manufacturer such as financial orbanking enterprises

supplier-Approaching to few head procurement directors and executive buyers in some famousbrand name and from personal relations, letters were sent to these directors buyers in each firmfor asking their cooperation Each buyer was asked to provide the contact details of their keysuppliers who had doing business with manufacturers About 65 buyers were involved in thissurvey and assigned more than 300 their current suppliers to contact for surveying Letter frombuyers, 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 lettersending out, there were about 45 forms in returns During second week to the fourth one, 85 setwere in returns From some calls directly to the respondents, around 180 set of questionnaireswere returned after one month (the returned questionnaire ratio reached 60%)

After checking, there were 30 respondents which were not met the requirements of thestudy because of un-answered, missing information, similar answers or dishonest answers with

the same mark The rest of 150 respondents were analyzed, and the characteristics of the survey

sample were presented as below

Table 4.1 – Sample characteristics

The descriptive data showed that 87% respondents are belongs to board or management,

who were the decision makers of supplier enterprises, while balance 13% was middle managers

such as supply chain managers, operation managers, regional managers…who also took a very

significant role in management team And most of supplier enterprises in this survey had such

very long term cooperation with manufacturer, 61% was doing business 5 years above while the

percentage of 3-5 years was around 17%

4.2 Testing factors of research model

As presented in chapter 3, the research model included four research concepts which

were measured by five independent variables: (1) Supplier’s customer orientation, (2) Supplier’s

competitor orientation, (3) Supplier’s inter-functional coordination, (4) Supplier’s market

turbulence and (5) Supplier’s competitive intensity These components were evaluated through

Cronbach Alpha coefficiency and Exploring Factor Analysis

The reliability of each observed variable was measured by Cronbach Alpha After

checking, all observed variables which had Cronbach Alpha over 6.0 meeting the reliability

standard would be analysis in EFA

4.2.1 Cronbach Alpha Reliability Analysis

According to Nunnally & Bernstein (1994), the observed variables which were item –

total correlation value over 0.3 and the Cronbach alpha over 0.6 would be accepted

Table 4.2 showed the result of Cronbach alpha of each scale Results from the official

assessment of the measures were closed to the preliminary assessment results Therefore, all

observed variables would be continuously analyzed in EFA

Table 4.2 Cronbach Alpha of observed variables

Scale Mean if Scale Variance Corrected Cronbach's Item Deleted if Item Deleted Item-Total Alpha if

Correlation Item Deleted Supplier's Customer Orientation (Alpha = 0.820)

4.2.2 Exploring Factor Analysis

There were some criteria considered to explore factor analysis as follows:

► KMO (Kaiser – Meyer – Olkin) coefficient should be more than 0.5; significant rate of

Bartlett should be less than 0.05

► Factor loading coefficient should be equal or more than 0.5 If any observed variable

has factor loading coefficient less than 0.5, it should be eliminated

► Total variance explained criterion have to be more than 0.5 (>50%)

► Eigenvalue index have to be equal or more than 1 following Kaiser’s standard

► Differentiation of factor loading of a observed variable with factors should be more

than 0.3 (Jabnoun & Al – Tamimi, 2003)

Principal components analysis with Varimax rotated method was applied together with

the above mentioned criteria in this study

4.2.2.1 EFA results of independent variables.

All the independent factors were run through the principal component analysis, using the

Varimax rotation method There were 20 items of independent variables to enter EFA with

Eigenvalue equal 1 The analysis results indicated that there were 19 items of independent

factors being created Total Variance Explained index equal 60.47%; it meant that these created

five factors could explain 60.47% of the varying data

Moreover, KMO coefficient also got the research criteria with 0.668 (>0.5), and the

factor loading of the observed variables were meet the research requirement (>0.5) (Appendix

1) Therefore, the new five factors would be continuously analyzed in Regression analysis The

specific new five components were attached in Appendix 2

Table 4.2.2: EFA for independent variables

Rotated Component Matrix a

Component

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

Rotation converged in 5 iterations.