• Journal of Global Scholars of Marketing Science
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• v.19 no.4
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• pp.32-43
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• 2009

Trust has been studied extensively in psychology, economics, and sociology, and its importance has been emphasized not only in marketing, but also in business disciplines in general. Unlike past relationships between suppliers and buyers, which take considerable advantage of private networks and may involve unethical business practices, partnerships between suppliers and buyers are at the core of success for industrial marketing amid intense global competition in the 21st century. A high level of mutual cooperation occurs through an exchange relationship based on trust, which brings long-term benefits, competitive enhancements, and transaction cost reductions, among other benefits, for both buyers and suppliers. In spite of the important role of trust, existing studies in buy-supply situations overlook the role of trust and do not systematically analyze the effect of trust on relational performance. Consequently, an in-depth study that determines the relation of trust to the relational performance between buyers and suppliers of business services is absolutely needed. Business services in this study, which include those supporting the manufacturing industry, are drawing attention as the economic growth engine for the next generation. The Korean government has selected business services as a strategic area for the development of manufacturing sectors. Since the demands for opening business services markets are becoming fiercer, the competitiveness of the business service industry must be promoted now more than ever. The purpose of this study is to investigate the effect of the mutual trust between buyers and suppliers on relational performance. Specifically, this study proposed a theoretical model of trust-relational performance in the transactions of business services and empirically tested the hypotheses delineated from the framework. The study suggests strategic implications based on research findings. Empirical data were collected via multiple methods, including via telephone, mail, and in-person interviews. Sample companies were knowledge-based companies supplying and purchasing business services in Korea. The present study collected data on a dyadic basis. Each pair of sample companies includes a buying company and its corresponding supplying company. Mutual trust was traced for each pair of companies. This study proposes a model of trust-relational performance of buying-supplying for business services. The model consists of trust and its antecedents and consequences. The trust of buyers is classified into trust toward the supplying company and trust toward salespersons. Viewing trust both at the individual level and the organizational level is based on the research of Doney and Cannon (1997). Normally, buyers are the subject of trust, but this study supposes that suppliers are the subjects. Hence, it uniquely focused on the bilateral perspective of perceived risk. In other words, suppliers, like buyers, are the subject of trust since transactions are normally bilateral. From this point of view, suppliers' trust in buyers is as important as buyers' trust in suppliers. The suppliers' trust is influenced by the extent to which it trusts the buying companies and the buyers. This classification of trust using an individual level and an organization level is based on the suggestion of Doney and Cannon (1997). Trust affects the process of supplier selection, which works in a bilateral manner. Suppliers are actively involved in the supplier selection process, working very closely with buyers. In addition, the process is affected by the extent to which each party trusts its partners. The selection process consists of certain steps: recognition, information search, supplier selection, and performance evaluation. As a result of the process, both buyers and suppliers evaluate the performance and take corrective actions on the basis of such outcomes as tangible, intangible, and/or side effects. The measurement of trust used for the present study was developed on the basis of the studies of Mayer, Davis and Schoorman (1995) and Mayer and Davis (1999). Based on their recommendations, the three dimensions of trust used for the study include ability, benevolence, and integrity. The original questions were adjusted to the context of the transactions of business services. For example, a question such as "He/she has professional capabilities" has been changed to "The salesperson showed professional capabilities while we talked about our products." The measurement used for this study differs from those used in previous studies (Rotter 1967; Sullivan and Peterson 1982; Dwyer and Oh 1987). The measurements of the antecedents and consequences of trust used for this study were developed on the basis of Doney and Cannon (1997). The original questions were adjusted to the context of transactions in business services. In particular, questions were developed for both buyers and suppliers to address the following factors: reputation (integrity, customer care, good-will), market standing (company size, market share, positioning in the industry), willingness to customize (product, process, delivery), information sharing (proprietary information, private information), willingness to maintain relationships, perceived professionalism, authority empowerment, buyer-seller similarity, and contact frequency. As a consequential variable of trust, relational performance was measured. Relational performance is classified into tangible effects, intangible effects, and side effects. Tangible effects include financial performance; intangible effects include improvements in relations, network developing, and internal employee satisfaction; side effects include those not included either in the tangible or intangible effects. Three hundred fifty pairs of companies were contacted, and one hundred five pairs of companies responded. After deleting five company pairs because of incomplete responses, one hundred five pairs of companies were used for data analysis. The response ratio of the companies used for data analysis is 30% (105/350), which is above the average response ratio in industrial marketing research. As for the characteristics of the respondent companies, the majority of the companies operate service businesses for both buyers (85.4%) and suppliers (81.8%). The majority of buyers (76%) deal with consumer goods, while the majority of suppliers (70%) deal with industrial goods. This may imply that buyers process the incoming material, parts, and components to produce the finished consumer goods. As indicated by their report of the length of acquaintance with their partners, suppliers appear to have longer business relationships than do buyers. Hypothesis 1 tested the effects of buyer-supplier characteristics on trust. The salesperson's professionalism (t=2.070, p<0.05) and authority empowerment (t=2.328, p<0.05) positively affected buyers' trust toward suppliers. On the other hand, authority empowerment (t=2.192, p<0.05) positively affected supplier trust toward buyers. For both buyers and suppliers, the degree of authority empowerment plays a crucial role in the maintenance of their trust in each other. Hypothesis 2 tested the effects of buyerseller relational characteristics on trust. Buyers tend to trust suppliers, as suppliers make every effort to contact buyers (t=2.212, p<0.05). This tendency has also been shown to be much stronger for suppliers (t=2.591, p<0.01). On the other hand suppliers trust buyers because suppliers perceive buyers as being similar to themselves (t=2.702, p<0.01). This finding confirmed the results of Crosby, Evans, and Cowles (1990), which reported that suppliers and buyers build relationships through regular meetings, either for business or personal matters. Hypothesis 3 tested the effects of trust on perceived risk. It has been found that for both suppliers and buyers the lower is the trust, the higher is the perceived risk (t=-6.621, p<0.01 for buyers; t=-2.437, p<0.05). Interestingly, this tendency has been shown to be much stronger for buyers than for suppliers. One possible explanation for this higher level of perceived risk is that buyers normally perceive higher risks than do suppliers in transactions involving business services. For this reason, it is necessary for suppliers to implement risk reduction strategies for buyers. Hypothesis 4 tested the effects of trust on information searching. It has been found that for both suppliers and buyers, contrary to expectation, trust depends on their partner's reputation (t=2.929, p<0.01 for buyers; t=2.711, p<0.05 for suppliers). This finding shows that suppliers with good reputations tend to be trusted. Prior experience did not show any significant relationship with trust for either buyers or suppliers. Hypothesis 5 tested the effects of trust on supplier/buyer selection. Unlike buyers, suppliers tend to trust buyers when they think that previous transactions with buyers were important (t=2.913 p<0.01). However, this study did not show any significant relationship between source loyalty and the trust of buyers in suppliers. Hypothesis 6 tested the effects of trust on relational performances. For buyers and suppliers, financial performance reportedly improved when they trusted their partners (t=2.301, p<0.05 for buyers; t=3.692, p<0.01 for suppliers). It is interesting that this tendency was much stronger for suppliers than it was for buyers. Similarly, competitiveness was reported to improve when buyers and suppliers trusted their partners (t=3.563, p<0.01 for buyers; t=3.042, p<0.01 for suppliers). For suppliers, efficiency and productivity were reportedly improved when they trusted buyers (t=2.673, p<0.01). Other performance indices showed insignificant relationships with trust. The findings of this study have some strategic implications. First and most importantly, trust-based transactions are beneficial for both suppliers and buyers. As verified in the study, financial performance can be improved through efforts to build and maintain mutual trust. Similarly, competitiveness can be increased through the same kinds of effort. Second, trust-based transactions can facilitate the reduction of perceived risks inherent in the purchasing situation. This finding has implications for both suppliers and buyers. It is generally believed that buyers perceive higher risks in a highly involved purchasing situation. To reduce risks, previous studies have recommended that suppliers devise risk-reducing tactics. Moving beyond these recommendations, the present study uniquely focused on the bilateral perspective of perceived risk. In other words, suppliers are also susceptible to perceived risks, especially when they supply services that require very technical and sophisticated manipulations and maintenance. Consequently, buyers and suppliers must solve problems together in close collaboration. Hence, mutual trust plays a crucial role in the problem-solving process. Third, as found in this study, the more authority a salesperson has, the more he or she can be trusted. This finding is very important with regard to tactics. Building trust is a long-term assignment; however, when mutual trust has not been developed, suppliers can overcome the problems they encounter by empowering a salesperson with the authority to make certain decisions. This finding applies to suppliers as well.

• Journal of the Korean association of regional geographers
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• v.3 no.2
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• pp.163-193
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• 1997

Medical services are a fundamental and essential service in all urban areas. The location and accessibility of medical service facilities and institutions are critical to the diagnosis, control and prevention of illness and disease. The purpose of this paper is to present the results of a study on the location of medical facilities in Kwangju and the utilization of these facilities by the inhabitants. The following information is a summary of the findings: (1) Korea, like many countries, is now witnessing an increase in the age of its population as a result of higher living standards and better medical services. Korea is also experiencing a rapid increase in health care costs. To ensure easy access to medical consultation, diagnosis and treatment by individuals, the hierarchical efficient location of medical facilities, low medical costs, equalized medical services, preventive medical care is important. (2) In Korea, the quality of medical services has improved significantly as evident by the increased number of medical facilities and medical personnel. However, there is still a need for not only quantitative improvements but also for a more equitable distribution of and location of medical services. (3) There are 503 medical facilities in Kwangju each with a need to service 2,556 people. This is below the national average of 1,498 inhabitants per facility. The higher locational quotient and satisfactory population per medical facility showed at the civic center. On the other hand, problem regions such as the traditional residential area in Buk-Gu, Moo-deung mountain area and the outer areas of west Kwangju still maintain rural characteristics. (4) In the study area there are 86 general medicine clinics which provide basic medical services. i. e. one clinic per every 14,949 residents. As a basic service, its higher locational quotient showed in the residential area. The lower population concentration per clinic was found in the civic center and in the former town center, Songjeong-dong. In recently build residential areas and in the civic center, the lack of general medicine clinics is not a serious medical services issue because of the surplus of medical specialists in Korea. People are inclined to seek a consultation with a specialist in specific fields rather than consult a general practitioner. As a result of this phenomenon, there are 81 internal medicine facilities. Of these, 32.1% provide services to people who are not referred by a primary care physician but who self-diagnose then choose a medical facility specializing in what they believe to be their health problem. Areas in the city, called dongs, without any internal facilities make up 50% of the total 101 dongs. (5) There are 78 surgical facilities within the area, and there is little difference at the locational appearance from internal medicine facilities. There are also 71 pediatric health clinics for people under 15 years of age in this area, represents one clinic per 5,063 people. On the quantitative aspect, this is a positive situation. Accessibility is the most important facility choice factor, so it should be evenly located in proportion to demander distribution. However, 61% of 102 dongs have no pediatric clinics because of the uneven location. (6) There are 43 obstetrical and gynecological clinics in Kwangju, and the number of residents being served per clinic is 15,063. These services need to be given regularly so it should increase the numbers. There are 37 ENT clinics in the study area with the lower concentration in Dong-gu (32.4%) making no locational differences by dong. There are 23 dermatology clinics with the largest concentration in Dong-Gu. There are 17 ophthalmic clinics concentrated in the residential area because of the primary function of this type of specialization. (7) The use of general medicine clinics, internal medicine clinics, pediatric clinics, ENT clinics by the inhabitants indicate a trend toward primary or routine medical services. Obstetrics and gynecology clinics are used on a regular basis. In choosing a general medicine clinic, internal medicine clinic, pediatric clinic, and a ENT clinic, accessibility is the key factor while choice of a general hospital, surgery clinic, or an obstetrics and gynecology clinic, thes faith and trust in the medical practitioner is the priority consideration. (8) I considered the efficient use of medical facilities in the aspect of locational and management and suggest the following: First, primary care facilities should be evenly distributed in every area. In Kwangju, the number of medical facilities is the lowest among the six largest cities in Korea. Moreover, they are concentrated in Dong-gu and in newly developed areas. The desired number of medical facilities should be within 30 minutes of each person's home. For regional development there is a need to develop a plan to balance, for example, taxes and funds supporting personnel, equipment and facilities. Secondly, medical services should be co-ordinated to ensure consistent, appropriate, quality services. Primary medical facilities should take charge of out-patient activities, and every effort should be made to standardize and equalize equipment and facility resources and to ensure ongoing development and training in the primary services field. A few specialty medical facilities and general hospitals should establish a priority service for incurable and terminally ill patients. (9) The management scheme for the inhabitants' efficient use of medical service is as follows: The first task is to efficiently manage medical facilities and related services. Higher quality of medical services can be accomplished within the rapidly changing medical environment. A network of social, administrative and medical organizations within an area should be established to promote information gathering and sharing strategies to better assist the community. Statistics and trends on the rate or occurrence of diseases, births, deaths, medical and environment conditions of the poor or estranged people should be maintained and monitored. The second task is to increase resources in the area of disease prevention and health promotion. Currently the focus is on the treatment and care of individuals with illness or disease. A strong emphasis should also be placed on promoting prevention of illness and injury within the community through not only public health offices but also via medical service facilities. Home medical care should be established and medical testing centers should be located as an ordinary service level. Also, reduced medical costs for the physically handicapped, cardiac patients, and mentally ill or handicapped patients should be considered.