Welcome

How sustainability orientation makes market-oriented firms more market

oriented 

Dr. Satyendra SinghDirector, Centre for Emerging Markets

Professor, Marketing and International BusinessEditor, International Journal of Business and Emerging Markets

University of Winnipeg, Canadas.singh@uwinnipeg.ca

www.uwinnipeg.ca/~ssingh5

Outline

• Model, Definitions, and Theory• Hypotheses Development• Methodology

– Data collection and Sample Characteristics• Analyses – Moderated Regression• Results• Discussions• References

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The Model

Market Orientation-Customer-Competitor-Interfunctional

Sustainability

Business Performance-ROI-Market Share Growth-New Product Success Rate

H1 H2

Control Variables-Rel. Size, and cost-competitor conc.

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Sustainability

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Definitions•Sustainability Orientation (OS)

• Consumption that can continue indefinitely without the degradation of natural, physical, human, and intellectual capital (Costanza, 1991)

•Market Orientation (MO)•Firms’ ability to satisfy present and future needs of customers by developing products or services (Slater and Narver, 1994)

•Business Performance (BP)• Return on Investment, Market Share Growth, New Product Success Rate 4

Resource Agency Theory(Hunt and Morgan, 1995)

•Marketing strategies and activities are inextricably linked to the future of natural environment that sustains all life.

•↓ consumption of scarce resources•Not harming natural environment•Ensuring sustainable supply chain management•↓Reducing climate change impact

•Global warming, Child labor, Water supply

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Hypotheses

• H1: MO leads to superior BP

• H2: SO moderates MO—BP relationship•↑ SO ↑ BP

• SO=sustainability Orientation• MO= Market Orientation,• BP= Business Performance

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Data Collection

•Data Collection from Kompass Directory/Database• New Delhi (Okhla Phase, PIN 110020; Naraina, PIN 110028; and, Wazirpur, 110052)• Mumbai (Laxmi, PIN 400053; Powai, PIN 400076; and, Thane Wagle, PIN 400604)

•Stratified Sampling•18% percent response rate•Telephone calls (1100) made, then followed up by personal interviews if agreed to participate•Three graduate students were recruited in each city•78% asked for a copy of the results•Questionnaire•Respondents were knowledgeable (6.3 on 7-pt scale)

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The Scales…•Market Orientation (Narver and Slater, 1990)

•Measured on a 7-pt. scale, 1=strongly disagree, 4=neutral, and 7=strongly agree •Customer Orientation (6)

•We have customer commitment •We create customer value •We understand customer needs •We have customer satisfaction objectives •We measure customer satisfaction •We do after-sales-service

•Competitor Orientation (4)•Our salespeople share competitors’ information •We respond rapidly to competitors’ actions •Our top managers discuss competitors’ strategies •We target opportunities for competitive advantage

•Inter-functional Coordination (5)•We make inter-functional customer calls• We share information among functions• We integrate functional strategy• All functions contribute to customer value• We share resources with other business units 8

The Scales…•Sustainability Orientation (Dow Jones Sustainability Index, (2009); Based on disclosure)

•Measured on a 7-pt. scale, 1=strongly disagree, 4=neutral, and 7=strongly agree •Economic Orientation (5)

•Products and services breakdown •Market share by region •Information on major suppliers or creditors •Employee stock option or bonus program•Dividend distribution

•Social Orientation (5)•Employee benefits – health, disability, retirement•Human rights •Job satisfaction•Community involvement and charitable donations•Employee training and education

•Environment Coordination (5)• Energy, water or pollution related strategies•Recycling strategies•Waste management•Environmental expenditures•Environment non-compliance incidents

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The Scales (Slater and Narver, 1994)•Relative Size

•Measured on 7-pt scale, -3=Much smaller, 0=same, and +3=Much bigger•to that of your largest competitor

•Relative cost•Measured on 7-pt scale, -3=Much smaller, 0=same, and +3=Much bigger•Average total operating cost relative to the largest competitor in your main market segment

•Concentration•Within served market(s), the sales are dominated by•Measured on 7-pt scale, 1=less than 10 firms, 4=about 10 firms, and 7=by many firms

•Business Performance•Measured on 7-pt scale, -3=very poor, 0=same, and +3=very good•Return on Investment•Market Share Growth•New Product Development

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Sample Characteristics•Total Sample Size 205

•Manufacturing Products 115 (56%)•Providing Services 90 (44%)•Sales Turnover (<Rs.99m) 88 (43%)•Sales Turnover (between Rs.100 and Rs. 149m) 74 (36%)•Sales Turnover (>Rs.150m) 43 (21%)•Employee Turnover (<49) 66 (32%)•Employee Turnover (between 50 and 99) 84 (41%)•Employee Turnover (>100) 55 (27%)•Respondents’ designation (CEO/MD/Proprietor) 125 (61%)•Respondents’ designation (senior manager) 57 (28%)•Respondents’ designation (mid-level manager) 23 (11%)•Respondents’ relevant business experience (in years) 11.8•Respondents’ international business experience (in years) 10.7•Proportion of outsourcing activities 48%

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MO – Factor Analysis…

Customer Orientation(α = .79, adjusted α =.76)Customer commitment .73 Create customer value .77Understand customer needs .79Customer satisfaction objectives .83Measure customer satisfaction .78After sales service .74 Customer Orientation(α = .82, adjusted α = .81)Salespeople share competitors’ information .78Respond rapidly to competitors’ actions .80Top managers discuss competitors’ strategies .83Target opportunities for competitive advantage .78 Interfunctional Coordination(α = .79, adjusted α = .77)Interfunctional customer .80Information shared among functions .77Functional integration in strategy .74All functions contribute to customer value .80Share resources with other business units .83

Reliability and Validity Assessment of the Theoretical Construct MeasuresVariables Factor loading

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SO – Factor Analysis…

Economic Orientation(α = .75, adjusted α =.73)Products and services breakdown .74 Market share .76Information on major suppliers and creditors .74Employee stock option or bonus program .75D1vidend distribution .73 Social Orientation(α = .73, adjusted α = .71)Employee benefits – health, disability and retirement .73Human rights .72Job satisfaction .71Community development and charitable donations .73Employee training and education .75 Environment Orientation(α = .72, adjusted α = .70)Energy, water, pollution related strategies .72Recycling strategies .71Waste management .73Environmental expenditure .72Environmental non-compliance incidents .70

Reliability and Validity Assessment of the Theoretical Construct MeasuresVariables Factor loading

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BP – Factor Analysis…

 Business Performance(α = .75, adjusted α = .73 )Return on Investment .76Market Share .77New Product Success rate .73  

Reliability and Validity Assessment of the Theoretical Construct MeasuresVariables Factor loading (std.)

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Moderated Regression AnalysesStandardized Coefficients (Standard Error)

DV=Business Perf BP BP BP BPIV Model 1 Model 2 Model 3Model 4Relative Size .21*(.07) .20*(.05) .18 *(.06).15(.04)Relative Cost -.11(.06) -.14(.08) -.16 (.09)

-.18(.06)Concentration .13(.09) .07(.06) .10(.07) .11(.07)

Market Orientation (MO) .23*(.07) .21 *(.07) .22*(.08)

Sustainability orientation (SO) .23*(.08) .21*(.05)

MO * SO.23*(.06)

F 8.54* 8.23* 9.37* 9.35 *R2 .21 .26 .32 .36VIFmax 2.23 2.41 2.19 2.31N 205 203 201 202

15* = p<.05

↑5% ↑6% ↑4%

Discussion

• H1: MO leads to superior BPSupported (b=.23*, .21*, .22*; p<.05)

• H2: SO moderates MO—BP relationship•↑ SO ↑BP•Supported (b=.23*, p<.05)

• SO=Sustainability Orientation• MO= Market Orientation,• BP= Business Performance

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References

•Costanza, R., Daly, H.E. and Bartholomew, J.A. (1991), “Goals, agenda, and policy recommendations for ecological

economies,” In R. Costanza (Ed.) Ecological Economies: The Science and Management of Sustainability (pp. 1-20). New York: Columbia University Press.

•Hunt, S.D. and Morgan R.M. (1995), “The comparative advantage theory of competition,” Journal of Marketing, 59(2):1-15. •Narver, J.C. and Slater, S.F. (1990), “The effects of a market

orientation on business profitability,” Journal of Marketing, 54(4): 20-35.

• Slater, S.F. and Narver, N.C. (1994), “Does competitive environment moderate the market orientation-performance relationship?” Journal of Marketing, 58(Jan): 46-55.

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