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

have their own limitations. Some of these limitations have to do with the way in which data
are collected and employee motivation while compiling them. For instance, San Miguel
(1997) has argued that they may not be very reliable since many times, the data have been
complied by people who do not have sufficient training or familiarity with accounting such
data. Furthermore, he argues that some managers may lack interest when such data are
being compiled, which may adversely affect their reliability.
We also use the definitions delineated in Chapter 2 to define the five variables in the
model. 6 This is because the model in Chapter 2 is the basis for comparison of objective and
subjective measures in the current study. We only modify the way we measure the variable
buyer firm value. For the current model, we use the net income difference between the
years 2009 and 2011 in the SEM model instead of the subjective measures used in Chapter
2.
4.2 Intended Theoretical Contribution
To our knowledge, this is the first study to examine the issue of objective versus
subjective performance measures in the context of supplier responsiveness or market
orientation and buyer IdRR. In the current study, we aim to make four 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 to some extent, 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 macro-organizational 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. Fourth, from a managerial
perspective, our study suggests specific steps that businesses can implement to avoid
the dissonance between subjective and objective measures.
4.3 Specific Contribution to Chapter 2
The model in Chapter 2 contributes to the literature by providing evidence that market
orientation or supplier responsiveness is negatively related to IdRR. However, since
the model is only based on perceptual data (for both market orientation and
performance), it remains to be seen whether the model in Chapter 2 is applicable if
objective performance data are used in tandem with subjective market orientation
data. For any model to be generalizable, its findings should be replicated with both
subjective and objective data sources. One of the strengths of a theory is fulfilling this
criterion. Our current study elaborates the model in Chapter 2 by testing it using
perceptual and objective performance data. We believe that the main hypothesis and
6 One issue is that our perceptual measures for firm value and objective measure of accounting profits
are not the same. However, since accounting profits are indicators of the firm’s value, we have used
them for this analysis. Moreover, cash flows and accounting profits are positively correlated. Current
accounting indicators signal to the market how well the company is doing and would be an incentive
for investors to purchase stocks if profits are good. This would in turn drive up the value of the stock
because the market would anticipate increased future earnings.
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