Essays on supplier responsiveness and buyer firm value - Nyenrode ...

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Regarding the resource-based view and market-based assets theory, market-based assets are those assets that fulfill the requirements of the resource-based view (Srivastava, Shervani, & Fahey, 1998). Primarily, these are whether the assets are inimitable, hold value, are rare, and lack perfect substitutes. The link is discussed in chapter two in terms of building up market-based assets through internal processes. A key antecedent of building market-based assets that was not previously identified is IdRR. IdRR qualifies on all four of the resource-based view tests. Furthermore, a reduction in IdRR can be detected by the external marketplace by increased buyer firm performance. This leads to a position of prestige for the supplier and adds value to the supplier’s brand that is difficult to replicate because this increase in brand value is based on knowledge that the supplier has, and it can only be gained by working in a specific sector and with a specific customer. Linimar is a case in point. It has recently outperformed market expectations because of its responsiveness as a supplier and, as a result, it has acquired a position of prestige in the market (Marketwire, 2007). Similar to the contribution to the market orientation theory of this dissertation, market-based assets theory has focused on the inter-firm perspective rather than the intrafirm perspective. By focusing on the benefits that both the supplier and the buyer acquire via IdRR reduction, this study adds a new dimension to the theory. Regarding brand theory, in business-to-business branding, some scholars have argued that successful B2B brands require risk reduction, increased information efficiency, and image benefit creation (Kotler, & Pfoertsch, 2006). Though these facets have been highlighted, how the different processes work and the sequence of brand value creation through these various mechanisms has not been explored. In chapter two of this dissertation, we explore the sequence of activities that creates brand value. This led to the supplier responsiveness/IdRR/supplier brand value/customer value sequence. This dissertation is a clarification of how the activities of brand building interact with each other to create supplier brand value and customer performance value. Regarding performance measurement theory, in the fourth chapter of this dissertation, we deal with the thorny issue of performance measures. In the taxonomy of marketing performance measures, a broad categorization that is applied is the distinction between subjective and objective performance measures. Though some scholars have recognized that subjective and objective performance measures are imperfect substitutes for one another, other scholars expect that such measures should reinforce each other because they measure similar phenomena. One of our findings is straightforward: subjective and objective performance measures do not reinforce each other in the context of the model outlined in Chapter 2. However, our qualitative interviews revealed auxiliary insights, one of which was that managers do not expect such measures to reinforce each other. This could be because subjective and objective measurement differ. The contribution of our research is that we recognize that, although marketing initiatives have a positive influence on performance, revealing the performance of all types of measurement is not suitable. 118
5.5 Practical Implications From a managerial perspective, we provide insights into how investments in market orientation affect IdRR. If we consider the risk impact, our results suggest that an increase in market orientation by one standard deviation reduces IdRR by 0.98 standard deviations. In other words, an increase in marketing focus idiosyncratic reduces relational risk by 0.98 standard deviations. Suppliers can use this reduction in idiosyncratic relational risk as justification towards buyers for charging higher prices. In these difficult times of recession, when sales are difficult to come across cost saving is a preferred alternative to finding new clients. Moreover, it would also serve the purpose of internal justification to the financial department as how marketing investment produces returns and higher margins. Market orientation is a process of continuous innovation (Kohli & Jaworski, 1990). More risk is typically involved in the case of commercializing innovations. In terms of risk of introducing innovations risk increases as the degree of newness of the innovation increases (Chandy & Tellis, 2000). Launching extremely new to the world innovations are a high risk and high return endeavor. However, involving the strategic supplier can reduce the cost by up to 18% of launching the innovation (Siemens, 2013). Our research indicates that as a unique supplier’s response is based on the understanding of a specific client that is highly involved with the customer be it producing an innovation or otherwise, leads to a reduction idiosyncratic relational risk resulting in accelerated and stable cash flows for the buyer. Hence, from a strategy perspective we propose that marketing managers focus on spending marketing budgets on those strategic activities where they can possibly reduce the IdRR. However, we recognize that this may not always be a possibility, but supplier’s should try their utmost to reduce IdRR as much as is possible. Another practical contribution is the difference in the role of satisfaction strategic buyer supplier relationships in The Netherlands and the United States. Our data indicates that buyer satisfaction does have a relationship with the buyer’s own profits in The Netherlands, but not in the United States. Our findings were confirmed by an informal confirmation with a senior manager at the HMG group (a strategic supplier of bean bags to Leenbakker and Hema). Our findings are of relevance because many managers in The Netherlands hold satisfaction as an important metric when evaluating their relationships. But when they want to expand their business to the US or vice versa they have to develop more hard core metrics, one of which we have expounded in this thesis, namely IdRR. In addition, our research investigates perceptual and objective or accounting based performance measure. We find that all perceptual measures cannot be confirmed by accounting measures. The practical implication of this research finding is that businesses should focus on bridging the gap between perceptual and accounting measures. Firms could adopt measures that are likely translatable into financial measures or adopt a dashboard strategy that show financial managers the value marketing is creating. 119
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ISBN 978-90-8980-055-8 © M. Abrahi
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Examination Committee Supervisor: P
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2.3 DEVELOPMENT OF THE CONCEPTUAL M
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5.1 RESEARCH FINDINGS 114 5.2 OVERA
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List of Tables Table 2.1 Representa
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PREFACE Oscar Wilde once said, “I
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Chapter 1 Introduction to the Thesi
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Figure 1.1 Mckinsey Survey Results
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1.4 Scope PhD thesis This thesis fo
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Netherlands. We used the maximum li
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2.1 Introduction A central tenant o
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only provide an assessment of the s
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Table 2.1 highlights several promin
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other hand, they later argue that m
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Therefore, there is a convergence i
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usiness performance, firms need to
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means is that the more better a str
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Supplier responsiveness or market o
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Naryandas, 1995). Further, idiosync
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They might also include the ease wi
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they ask about intimate supplier in
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Table 2.2 Modified Items of the MAR
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Table 2.2 Modified Items of the MAR
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market intelligence, offering flexi
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We considered several scales before
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Table 2.7 Component Matrix Buyer Sa
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een monitored to make sure they gav
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satisfaction and strategic supplier
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2.5 Measurement Model For creating
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In the third step, we used maximum
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incremental fit index (IFI) is one
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ange of 100-150 (Hair et al., 2006,
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