• 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 Distribution Research
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• v.16 no.4
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• pp.65-93
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• 2011

As relationship between buyer and seller has been brought closer and long-term relationship has been more important in B2B markets, the importance of service and service convenience increases as well as product. In homogeneous markets, where service offerings are similar and therefore not key competitive differentiator, providing greater convenience may enable a competitive advantage. Service convenience, as conceptualized by Berry et al. (2002), is defined as the consumers' time and effort perceptions related to buying or using a service. For this reason, B2B customers are interested in how fast the service is provided and how much save non-monetary cost like time or effort by the service convenience along with service quality. Therefore, this study attempts to investigate the impact of service convenience on relationship factors such as relationship satisfaction, relationship commitment, and relationship performance. The purpose of this study is to find out whether service convenience can be a new antecedent of relationship quality and relationship performance. In addition, this study tries to examine how five-dimensional service convenience constructs (decision convenience, access convenience, transaction convenience, benefit convenience, post-benefit convenience) affect customers' relationship satisfaction, relationship commitment, and relationship performance. The service convenience comprises five fundamental components - decision convenience (the perceived time and effort costs associated with service purchase or use decisions), access convenience(the perceived time and effort costs associated with initiating service delivery), transaction convenience(the perceived time and effort costs associated with finalizing the transaction), benefit convenience(the perceived time and effort costs associated with experiencing the core benefits of the offering) and post-benefit convenience (the perceived time and effort costs associated with reestablishing subsequent contact with the firm). Earlier studies of perceived service convenience in the industrial market are none. The conventional studies that have dealt with service convenience have usually been made in the consumer market, or they have dealt with convenience aspects in the service process. This service convenience measure for consumer market can be useful tool to estimate service quality in B2B market. The conceptualization developed by Berry et al. (2002) reflects a multistage, experiential consumption process in which evaluations of convenience vary at each stage. For this reason, the service convenience measure is good for B2B service environment which has complex processes and various types. Especially when categorizing B2B service as sequential stage of service delivery like Kumar and Kumar (2004), the Berry's service convenience measure which reflect sequential flow of service deliveries suitable to establish B2B service convenience. For this study, data were gathered from respondents who often buy business service and analyzed by structural equation modeling. The sample size in the present study is 119. Composite reliability values and average variance extracted values were examined for each variable to have reliability. We determine whether the measurement model supports the convergent validity by CFA, and discriminant validity was assessed by examining the correlation matrix of the constructs. For each pair of constructs, the square root of the average variance extracted exceeded their correlations, thus supporting the discriminant validity of the constructs. Hypotheses were tested using the Smart PLS 2.0 and we calculated the PLS path values and followed with a bootstrap re-sampling method to test the hypotheses. Among the five dimensional service convenience constructs, four constructs (decision convenience, transaction convenience, benefit convenience, post-benefit convenience) affected customers' positive relationship satisfaction, relationship commitment, and relationship performance. This result means that service convenience is important cue to improve relationship between buyer and seller. One of the five service convenience dimensions, access convenience, does not affect relationship quality and performance, which implies that the dimension of service convenience is not important factor of cumulative satisfaction. The Cumulative satisfaction can be distinguished from transaction-specific customer satisfaction, which is an immediate post-purchase evaluative judgment or an affective reaction to the most recent transactional experience with the firm. Because access convenience minimizes the physical effort associated with initiating an exchange, the effect on relationship satisfaction similar to cumulative satisfaction may be relatively low in terms of importance than transaction-specific customer satisfaction. Also, B2B firms focus on service quality, price, benefit, follow-up service and so on than convenience of time or place in service because it is relatively difficult to change existing transaction partners in B2B market compared to consumer market. In addition, this study using partial least squares methods reveals that customers' satisfaction and commitment toward relationship has mediating role between the service convenience and relationship performance. The result shows that management and investment to improve service convenience make customers' positive relationship satisfaction, and then the positive relationship satisfaction can enhance the relationship commitment and relationship performance. And to conclude, service convenience management is an important part of successful relationship performance management, and the service convenience is an important antecedent of relationship between buyer and seller such as the relationship commitment and relationship performance. Therefore, it has more important to improve relationship performance that service providers enhance service convenience although competitive service development or service quality improvement is important. Given the pressure to provide increased convenience, it is not surprising that organizations have made significant investments in enhancing the convenience aspect of their product and service offering.

• Journal of Global Scholars of Marketing Science
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• v.17 no.4
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• pp.51-89
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• 2007

INTRODUCTION Due to the high broadband internet penetration rate and its group-oriented culture, various types of online communities operate in Korea. This study use 'Uses and Gratification Approach, and argue that members' usage-needs satisfaction with brand community is an important factor for promoting community commitment. Based on previous studies identifying the effect of brand image on consumers' responses to various marketing stimuli, this study hypothesizes that brand image can be a moderate variable affecting the relationship between usage-needs satisfaction with brand community and members' commitment to brand community. This study analyzes the influence of usage-needs satisfaction on brand community commitment and how apparel brand image affects the relationships between usage-needs satisfactions and community commitments. The hypotheses of this study are proposed as follows. H1-3: The usage-needs satisfaction of apparel brand community (interest, transaction, relationship needs) influences emotional (H1), continuous (H2), and normative (H3) commitments to apparel brand communities. H4-6: Apparel brand image has a moderating effect on the relationship between usage-needs satisfaction and emotional (H4), continuous (H5), and normative (H6) commitments to apparel brand communities. METHODS Brand communities founded by non-company affiliates were excluded and emphasis was placed instead on communities created by apparel brand companies. Among casual apparel brands registered in 6 Korean portal sites in August 2003, a total of 9 casual apparel brand online communities were chosen, depending on the level of community activity and apparel brand image. Data from 317 community members were analyzed by exploratory factor analysis, moderated regression analysis, ANOVA, and scheffe test. Among 317 respondents answered an online html-type questionnaire, 80.5% were between 16 to 25 years old. There were a total of 150 respondents from apparel brand communities(n=3) recording higher-than-average brand image scores (Mean > 3.75) and a total of 162 respondents from apparel brand communities(n=6) recording lower-than-average brand image scores(Mean < 3.75). In this study, brand community commitment was measured by a 5-point Likert scale: emotional, continuous and normative commitment. The degree of usage-needs satisfaction (interest, transaction, relationship needs) was measured on a 5-point Likert scale. The level of brand image was measured by a 5-point Likert scale: strength, favorability, and uniqueness of brand associations. RESULTS In the results of exploratory factor analysis, the three usage-needs satisfactions with brand community were classified as interest, transaction, and relationship needs. Brand community commitment was also divided into the multi-dimensional factors: emotional, continuous, and normative commitments. The regression analysis (using a stepwise method) was used to test the influence of 3 independent variables (interest-needs satisfaction, transaction-needs, and relationship-needs satisfactions) on the 3 dependent variables (emotional, continuous and normative commitments). The three types of usage-needs satisfactions are positively associated with the three types of commitments to apparel brand communities. Therefore, hypothesis 1, 2, and 3 were significantly supported. Moderating effects of apparel brand image on the relationship between usage-needs satisfaction and brand community commitments were tested by moderated regression analysis. The statistics result showed that the influence of transaction-needs on emotional commitment was significantly moderated by apparel brand image. In addition, apparel brand image had moderating effects on the relationship between relationship-needs satisfaction and emotional, continuous and normative commitments to apparel brand communities. However, there were not significant moderate effects of apparel brand image on the relationships between interest-needs satisfaction and 3 types of commitments (emotional, continuous and normative commitments) to apparel brand communities. In addition, the influences of transaction-needs satisfaction on 2 types of commitments (continuous and normative commitments) were not significantly moderated by apparel brand image. Therefore, hypothesis 4, 5 and 6 were partially supported. To explain the moderating effects of apparel brand image, four cross-tabulated groups were made by averages of usage-needs satisfaction (interest-needs satisfaction avg. M=3.09, transaction-needs satisfaction avg. M=3.46, relationship-needs satisfaction M=1.62) and the average apparel brand image (M=3.75). The average scores of commitments in each classified group are presented in Tables and Figures. There were significant differences among four groups. As can be seen from the results of scheffe test on the tables, emotional commitment in community group with high brand image was higher than one in community group with low brand image when transaction-needs satisfaction was high. However, when transaction-needs satisfaction was low, there was not any difference between the community group with high brand image and community group with low brand image regarding emotional commitment to apparel brand communities. It means that emotional commitment didn't increase significantly without high satisfaction of transaction-needs, despite the high apparel brand image. In addition, when apparel brand image was low, increase in transaction-needs did not lead to the increase in emotional commitment. Therefore, the significant relationship between transaction-needs satisfaction and emotional commitment was found in only brand communities with high apparel brand image, and the moderating effect of apparel brand image on this relationship between two variables was found in the communities with high satisfaction of transaction-needs only. Statistics results showed that the level of emotional commitment is related to the satisfaction level of transaction-needs, while overall response is related to the level of apparel brand image. We also found that the role of apparel brand image as a moderating factor was limited by the level of transaction-needs satisfaction. In addition, relationship-needs satisfaction brought significant increase in emotional commitment in both community groups (high and low levels of brand image), and the effect of apparel brand image on emotional commitment was significant in both community groups (high and low levels of relationship-needs satisfaction). Especially, the effect of brand image was greater when the level of relationship-needs satisfaction was high. in contrast, increase in emotional commitment responding to increase in relationship-needs satisfaction was greater when apparel brand image is high. The significant influences of relationship-needs satisfaction on community commitments (continuous and normative commitments) were found regardless of apparel brand image(in both community groups with low and high brand image). However, the effects of apparel brand image on continuous and normative commitments were found in only community group with high satisfaction level of relationship-needs. In the case of communities with low satisfaction levels of relationship needs, apparel brand image marginally increases continuous and normative commitments. Therefore, we could not find the moderating effect of apparel brand image on the relationship between relationship-needs satisfaction and continuous and normative commitments in community groups with low satisfaction levels of relationship needs, CONCLUSIONS AND IMPLICATIONS From the results of this study, we draw several conclusions; First, the increases in usage-needs satisfactions through apparel brand communities result in the increases in commitments to apparel brand communities, wheres the degrees of such relationship depends on the level of apparel brand image. That is, apparel brand image is a moderating factor strengthening the relationship between usage-needs satisfaction and commitment to apparel brand communities. In addition, the effect of apparel brand image differs, depending on the level and types of community usage-needs satisfactions. Therefore, marketers of apparel brand companies must determine the appropriate usage-needs, depending on the type of commitment they wish to increase and the level of their apparel brand image, to promote member's commitments to apparel brand communities. Especially, relationship-needs satisfaction was very important factor for increasing emotional, continuous and normative commitments to communities. However the level of relationship-needs satisfaction was lower than interest-needs and transaction-needs. satisfaction. According to previous study on apparel brand communities, relationship-need satisfaction was strongly related to member's intention of participation in their communities. Therefore, marketers need to develope various strategies in order to increase the relationship- needs as well as interest and transaction needs. In addition, despite continuous commitment was higher than emotional and normative commitments, all types of commitments to apparel brand communities had scores lower than 3.0 that was mid point in 5-point scale. A Korean study reported that the level of members' commitment to apparel brand community influenced customers' identification with a brand and brand purchasing behavior. Therefore, marketers should try to increase members' usage-needs satisfaction and apparel brand image as the necessary conditions for bringing about community commitments. Second, marketers should understand that they should keep in mind that increasing the level of community usage needs (transaction and relationship) is most effective in raising commitment when the level of apparel brand image is high, and that increasing usage needs (transaction needs) satisfaction in communities with low brand image might not be as effective as anticipated. Therefore, apparel companies with desirable brand image such as luxury designer goods firms need to create formal online brand communities (as opposed to informal communities with rudimentary online contents) to satisfy transaction and relationship needs systematically. It will create brand equity through consumers' increased emotional, continuous and normative commitments. Even though apparel brand is very famous, emotional commitment to apparel brand communities cannot be easily increased without transaction-needs satisfaction. Therefore famous fashion brand companies should focus on developing various marketing strategies to increase transaction-needs satisfaction.