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

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Supplier responsiveness or market orientation’s fundamental purpose is the creation and maintenance of superior customer value (Narver & Slater, 1990). Moreover, market orientation encourages a focus on the customer’s needs. As a consequence of customer focus, the supplier firm develops an idiosyncratic understanding of the current needs of the buyer. Furthermore, customer understanding helps the supplier avoid risk taking and provides the buyer with reliable solutions for their current needs. Supplier responsiveness involves generating market responses in the form of products, services, and strategic information. Supplier responsiveness also positively influences the relational factors of a B2B supplier-and-buyer relationship (Narver & Slater, 1990; Siguaw et al., 1998). In addition, channel partners are willing to share strategic information with their supplier when relationships are healthy and of a strategic nature (Frazier, Maltz, Antia, & Rindfleisch, 2009). This information-sharing process is important, as such information allows the supplier to come up with low risk and high use solutions. For example, a supplier’s market orientation affords them the ability to identify expert or lead users of a product. These lead users, in turn, provide valuable intelligence on breakthrough innovations which are used in the supplier’s products. Some studies have suggested that the lead users have invented up to 80% of breakthrough innovations (Von Hippel, 1976). Hence, the supplier needs to invest very little in the development of new products, besides investing in a good market orientation process. A consequence of this investment is that the risk associated with user adoption and product failure is very low. Furthermore, an employee of a consulting company observed that “most of our profits come from value co-creation activities. The customer’s inputs are essential to creating solutions which are low in risk and which offer high returns.” Not all components of a market orientation are negatively associated with managerial risk averseness, specifically intelligence generation and intelligence dissemination (Jaworski & Kohli, 1993). This is observable when seller firms have the necessary technology in place to launch a successful innovation, but do not do so. For instance, consider Xerox, which had most of the knowhow for the first personal computers but did not launch them (USC, 2008). Thus, although the knowledge existed, the response element was lacking. Hence, we infer from the results presented by Jaworski and Kohli (1993) that managers who are risk averse are indifferent to developing new knowledge, but they do have concerns when it comes to launching or responding to market needs based on new knowledge. Some scholars suggest that one way of perceived customer risk reduction is by enhancing buyer tolerance for supplier risk taking (Roselius, 1971). Supplier market orientation or supplier responsiveness increases buyer tolerance for risk taking by strengthening the buyer and supplier relationship (Siguaw et al., 1998). Supplier market orientation causes the supplier to collaborate with the buyer to a greater degree and share important information with the buyer. As a consequence, the buyer is more likely to accept the supplier’s motives as being a genuine expression of the supplier’s interest in their welfare (Siguaw et al., 1998). Overall, the result here is an increase in the buyer’s level of trust in the supplier and that, in turn, allows the supplier to take greater risks without a negative reaction from the customer (Siguaw et al., 1998). Furthermore, risk reduction is an important aim of both the buyer and the supplier (Roselius, 1971). A risk reduction tactic used by the buyer and the supplier is called ‘risk relievers’ and refers to the implementation of any marketing action or concept which causes the probability of a purchase loss to decrease (Roselius, 1971). Stated another way, the implementation of the marketing concept or 36
market orientation reduces risk for the buyer and the supplier. The risk reduction occurs when action, based on the knowledge about the customer and marketplace in general, is taken. Inherently, market orientation includes a learning organization that involves producing solutions or responses based on environmental learning (Slater & Narver, 1995). Hence, the supplier’s response must be based on the implementation of the marketing concept (i.e., supplier responsiveness), in order to reduce the specific risk for both the supplier and the buyer in their relationship or in their transactions (i.e., idiosyncratic relational risk). Hence, our first hypothesis is: H1: Supplier responsiveness negatively influences IdRR. Market Orientation and Buyer Satisfaction. The aim of a market orientation is to satisfy the customer’s needs with a long-term focus on the relationship with the customer (Steinman, Deshpande, & Farley, 2000; Kalwani & Naryandas, 1995; Kotler & Armstrong, 1991; Day, 1998). A market orientation is also a measure of the supplier satisfying customer needs through market-sensing capabilities (Day, 1994). Buyer satisfaction with their supplier is the result of positive expectation disconfirmation, and buyer dissatisfaction with their supplier is when negative expectation disconfirmation occurs (Oliver, 1980). Buyer expectations are influenced by three factors: (i) the product or service itself, past experiences with the supplier that set the norm for future exchanges, and symbolic expectations the brand (Oliver, 1980); (ii) the communications from sales personnel or organizational spanners (Oliver, 1980); sales personnel’s influence on the customer’s expectations by their promise of delivering a certain level of a supplier’s offering. If the sales personnel’s organization is not market-oriented enough, then there could be a lack of communication from the salesperson to the firms operations about the customer’s expectation; in turn, that will lead to customer dissatisfaction when the customer’s needs are not met. Another scenario is that the salesperson could not be fully informed about his organization’s delivery capability, specifically in the case of services; as a result, he or she could overextend promises to the customer. Then, the customer will be dissatisfied when expectations are not met. (iii) The third aspect to consider is comprised of individual factors, including persuadability and intellectual distortion (Oliver, 1980). However, in a market orientation philosophy, it is not enough to meet customer expectations; instead, the ability to exceed customer expectations is required in order to create superior value (Narver & Slater, 1990; Anderson, Fornell, & Lehmann, 1994). Such superior value is delivered by: i) operational excellence, which involves providing better channel and business process management while maintaining close customer links; ii) customer intimacy, which involves customizing responses to customer needs and implementing early warning systems for detecting changes in the market place; and iii) product leadership, which involves continuous product and service innovation through market-sensing capabilities to achieve a position of leadership in the market. In addition, market sensing capabilities allow firms to identify potential product leadership opportunities early on (Treacy & Wiersema, 1993). Some authors criticize market orientation for encouraging too narrow a focus and the perception that it leads suppliers to ignore upcoming markets and potential new entrants (Hamel & Prahald, 1994). As a consequence, this narrow focus may lead to customer dissatisfaction. However, focusing on markets allows suppliers to acquire idiosyncratic knowledge about how their specific clientele operates and, therefore, they are able to drive down costs for customers (Kalwani & 37
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BFV Hypothesis 4 IdRR->SBV Hypothes
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products. Overall, the effects of s
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Chapter 4 The Quest for Performance
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should reinforce objective measures
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Table 4.2 Standardized Regression W
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Table 4.5 SEM Results Construct Dir
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4.7 Discussion We start this discus
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Jaowrski and Kohli (1993) provided
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Using the findings of our current s
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iii) iv) Indeed, there may not be m
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uyer firm performance through a ser
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specifically highlighted the import
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5.5 Practical Implications From a m
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Summary in English This dissertatio
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is that, when developing marketing
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isk by 0.98 standard deviations. Su
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collectivist culture and a Confucia
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Overwegende dat Verhoef en Leeflang
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van de waarde te communiceren dat d
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Langerak, F. (2001). Effects of mar
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Quelch, J. (2007). How to brand an
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Verhoef, P. C., & Leeflang, P. S. H
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1. The name of the company where yo
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9.The supplier seems to have good i
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17. The supplier takes a very long
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25. If the supplier were to find ou
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33.Does your strategic supplier als
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41.To what degree do those specific
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Supplier Brand Value 51.How likely
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Appendix B Scatter Plot Diagrams fo
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