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

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found limited evidence of a buyer satisfaction and supplier performance relationship (Gyskens et al., 1999). Although the buyer satisfaction and supplier performance relationship is important, even more important is the issue as to whether buyer satisfaction is a meaningful indicator. As satisfaction in channel contexts has an economic aspect, it should be related to a buyer’s firm value in order to be meaningful as an indicator. If the buyer is satisfied with the economic value provided by the strategic supplier, it in turn should increase the buyer’s cash flow, and therefore, buyer firm value. Fifth, our model provides preliminary evidence that IdRR reduction is a reliable indicator that has a link to customer firm value and supplier brand value. For managers, this finding provides a framework for thought. However, it may not be possible or desirable to solely focus on those activities that reduce IdRR because some market orientation activities may influence both IdRR and buyer satisfaction, but a firm should rely more on IdRR measures than customer satisfaction measures. Chapter 3 builds on the research presented in Chapter 2 by testing it across two nations. We find that the main hypothesis and theoretical contribution regarding the supplier responsiveness-idiosyncratic risk-performance relationship holds true across nations. However, we find that there is a difference in soft relational indicators of buyer satisfaction. We explain these differences in light of the Hofstede index, suggesting that national culture may moderate the soft indicator-performance relationship. In sum, the current paper validates the main findings of the Chapter 2 model by providing evidence that IdRR matters across nation. In chapter 4 to the best of our knowledge is the first study to examine the issue of objective versus subjective performance measures in the context of strategic supplier responsiveness or market orientation and buyer IdRR. In Chapter 4 we make three theoretical contributions. First, we provide evidence that the type of data used for supplier responsivenessidiosyncratic risk-performance analysis can change the strength and direction of the relationships in the Chapter 2 model. We were able to show that there is a disconnect between key indicators when subjective and objective data are used. We believe this is because of a lack of metric substitutability rather than a problem with the model itself. Second, we explain why managers’ evaluations may not be in line with the objective data indicators. For example, because objective data are calculated at a macroorganizational level, they may not reflect the performance of the various functions at different levels within the organization. On the other hand, a manager’s heuristic ability can shed light on latent areas of performance that traditional objective performance measures cannot. Third, we explain that financial managers often fail to see the value of marketing initiatives because they do not understand the intangible value such initiatives create. Practical Implications From a managerial perspective, we provide insights into how investments in market orientation affect IdRR. If we consider the financial 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 reduces idiosyncratic relational 124
isk 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 U.S. Our data indicates that buyer satisfaction does have a relationship with the buyer’s own profits. However, in The Netherlands it does. 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. Future Research Directions Although we have tried in this thesis to address the research questions as comprehensively as possible, but there are still many possible future research directions open to future researchers. Below, we have summarized and organized some interesting research avenues for future researchers: i) Longitudinal research design. Our cross-sectional study allowed us to draw associations at best but not conclusions about causality. To further improve this design, data collected for a time series analysis could allow the deduction of evidence regarding causality. However, there 125
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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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indicator that has a link to custom
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and strengths and their stock marke
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accompanies any innovation, accordi
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Page 137 and 138: Businessweek. (2012). S&P/BusinessW
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Page 141 and 142: Langerak, F. (2001). Effects of mar
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