ippc6 tammi
DESCRIPTION
IPPC6TRANSCRIPT
Market orientation and SMES’ activity in public sector procurement
participation
Timo Tammi, Jani Saastamoinen and Helen Reijonen University of Eastern Finland Business School
IPPC 2014, Dublin 14th – 16th August 2014
Overview
• Overview
• Related research
• Market orientation and public procurement
• Empirical analysis
• Discussion
• Conclusions
Overview Related research Market orientation Empirical analysis Discussion Conclusions
Overview
• SMEs are under-represented. Why?
• Many (single) factors
• Try to open the black box of a firm (a bit more)
– Little is known of strategic and behavioural aspects of SMEs’s participation in PP
• Does MO help to understand the problem?
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Related research
• Market orientation
– Theory
– Empirical
• Public procurement
– SMEs and PP
• Under-reprsenttion
• But have much potential
Overview Related research Market orientation Empirical analysis Discussion Conclusions
Related research
• Market orientation: theoretical perspective
• Origin
– Narver & Slater 1990; Kohli & Jaworski 1990
• Development
– More emphasis of learning, innovativeness and performance in other domains than the general business performance
• Present usage
– Customers, competitors, internal coordination (to adapt oneself to the environment)
Overview Related research Market orientation Empirical analysis Discussion Conclusions
Related research
• Market orientation: empirical studies
• [development related to measuring scale]
• Does MO have an influence on firm performance?
– Yes
– SMEs are often market oriented
– MO helps SMEs to overcome resource limitations
– MO helps to compete with larger firms
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Market Orientation and Public Procurement
• MO dimensions
– Customer orientation, competitor orientation and interfunctional coordination
– Which means: collecting information about customers and competitors and using it intelligently
• Does MO work in PP context? A theoretical conjecture
– Since MO is about generating market information, it also directs attention to (i) seek information about and (ii) participate in public tendering
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Empirical analysis
• Data collected • By questionnaire • In North Karelia, Finland • Septemper-October 2012 • N: 191 respondents
• Measurements • MO: both as a single and a threefold construct • How actively SMEs look for public sector tender
opportunities • How actively SMEs submit bids in public sector tender
opportunities
• Controlling/background variables • Size, age, industry
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Empirical analysis: measuring MO
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Factor loading
Customer orientation (Alpha: 0.786. Initial eigenvalue: 1.449. Percentage of variance explained: 0.192.)
We have a strong commitment to our customers 0.719
We are always looking at new ways to create customer value in our products 0.663
We encourage customer comments and complaints because they help us do a better job 0.793
We measure customer satisfaction on a regular basis 0.809
After-sales service is an important part of our customer strategy 0.526
Competitor orientation (Alpha: 0.889. Initial eigenvalue: 6.103. Percentage of variance explained: 0.232.)
We regularly monitor our competitors’ marketing efforts 0.838
We frequently collect marketing data on our competitors to help direct our marketing plans 0.895
Our people are instructed to monitor and report on competitor activity 0.751
We respond rapidly to competitors’ actions 0.724
Our top managers often discuss competitors’ actions 0.706
Interfunctional coordination (Alpha: 0.852. Initial eigen-value: 2.470. Percentage of variance explained: 0.202.)
Market information is shared inside our organization 0.625
Persons in charge or different activities in our organization are involved in preparing business plans/
activities
0.721
We do a good job integrating the activities inside our organization 0.786
We regularly have interorganizational meetings to discuss market trends and developments 0.798
We regularly discuss customer needs in our organization 0.703
Empirical analysis: measuring MO
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Factor loading
Market orientation (Alpha: 0.891. Initial eigenvalue: 5.542. Percentage of variance explained: 0.462.)
We are always looking at new ways to create customer value in our products 0.493
After-sales service is an important part of our customer strategy 0.480
We regularly monitor our competitors’ marketing efforts 0.766
We frequently collect marketing data on our competitors to help direct our marketing plans 0.790
Our people are instructed to monitor and report on competitor activity 0.690
We respond rapidly to competitors’ actions 0.774
Our top managers often discuss competitors’ actions 0.772
We target customers and customer groups where we have, or can develop, competitive advantage 0.626
Market information is shared inside our organization 0.770
Persons in charge or different activities in our organization are involved in preparing business
plans/activities
0.684
We do a good job integrating the activities inside our organization 0.596
We regularly discuss customer needs in our organization 0.616
Empirical analysis: measuring MO
• Thus – One variable measuring MO in general
– Three variables measuring each dimension of MO
• Labels – MO in general MOR
– MO dimensions • Customer orientation CUSTOR
• Competitor orientation COMPOR
• Interfunctional coordination INTOR
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Empirical analysis: measuring activity in PP
Sought open public
tendering opportunities
(SEEK)
(%) Had submitted a bid in a
public tender call
(BID)
(%)
Never 26.2 Never 41.9
Irregularly 44.0 1 – 5 times 30.9
Regularly 29.8 6 – 10 times 8.4
11 – 20 times 4.7
21 – 30 times 4.2
31 – 40 times 2.1
41 – 50 times 1.6
More than 50 times 6.3
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Empirical analysis:models
Overview Related research MO and PP Empirical analysis Discussion Conclusions
• Model 1: Does MOR influence on SEEK?
• Model 2: Do CUSTOR, COMPOR and INTOR influence on SEEK?
• Model 3: Does MOR influence on BID?
• Model 4: Do CUSTOR, COMPOR and INTOR influence on SEEK?
Empirical analysis: results
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Model 1 2
Regression method Multinomial logistic Multinomial logistic
Dependent variable SEEK = 2 SEEK = 3 SEEK = 2 SEEK = 3
IND_1 .765
(.544)
.832
(.637)
.767
(.558)
.889
(.662)
IND_2 .661
(.617)
1.112
(.697)
.602
(.631)
1.105
(.717)
IND_3 .206
(.507)
.195
(.649)
.120
(.519)
.118
(.663)
IND_4 1.003
(.788)
2.070**
(.846)
.797
(.797)
1.814**
(.860)
Ln(SIZE) .215
(.250)
1.086***
(3.19)
.306
(.292)
1.140***
(.334)
Ln(AGE) .251
(.284)
.027
(.297)
.169
(.266)
.025
(.315)
CUSTOR - - .172
(.190)
.336
(.236)
COMPOR - - .148
(.210)
.134
(.243)
INTFC - - .434**
(.197)
.721***
(.245)
MOR .421**
(.207)
.615**
(.243)
- -
Obs. 185 182
χ2 42.86*** 44.17***
Pseudo-R2 .108 .114
Empirical analysis: results
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Model 1 2
Regression method Multinomial logistic Multinomial logistic
Dependent variable SEEK = 2 SEEK = 3 SEEK = 2 SEEK = 3
IND_1 .765
(.544)
.832
(.637)
.767
(.558)
.889
(.662)
IND_2 .661
(.617)
1.112
(.697)
.602
(.631)
1.105
(.717)
IND_3 .206
(.507)
.195
(.649)
.120
(.519)
.118
(.663)
IND_4 1.003
(.788)
2.070**
(.846)
.797
(.797)
1.814**
(.860)
Ln(SIZE) .215
(.250)
1.086***
(3.19)
.306
(.292)
1.140***
(.334)
Ln(AGE) .251
(.284)
.027
(.297)
.169
(.266)
.025
(.315)
CUSTOR - - .172
(.190)
.336
(.236)
COMPOR - - .148
(.210)
.134
(.243)
INTFC - - .434**
(.197)
.721***
(.245)
MOR .421**
(.207)
.615**
(.243)
- -
Obs. 185 182
χ2 42.86*** 44.17***
Pseudo-R2 .108 .114
Empirical analysis: results
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Model 1 2
Regression method Multinomial logistic Multinomial logistic
Dependent variable SEEK = 2 SEEK = 3 SEEK = 2 SEEK = 3
IND_1 .765
(.544)
.832
(.637)
.767
(.558)
.889
(.662)
IND_2 .661
(.617)
1.112
(.697)
.602
(.631)
1.105
(.717)
IND_3 .206
(.507)
.195
(.649)
.120
(.519)
.118
(.663)
IND_4 1.003
(.788)
2.070**
(.846)
.797
(.797)
1.814**
(.860)
Ln(SIZE) .215
(.250)
1.086***
(3.19)
.306
(.292)
1.140***
(.334)
Ln(AGE) .251
(.284)
.027
(.297)
.169
(.266)
.025
(.315)
CUSTOR - - .172
(.190)
.336
(.236)
COMPOR - - .148
(.210)
.134
(.243)
INTFC - - .434**
(.197)
.721***
(.245)
MOR .421**
(.207)
.615**
(.243)
- -
Obs. 185 182
χ2 42.86*** 44.17***
Pseudo-R2 .108 .114
Empirical analysis: results
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Model 3 4
Regression method Ordered logistic Ordered logistic
Dependent variable BID BID
IND_1 .493
(.390)
.509
(.397)
IND_2 .467
(.425)
.463
(.433)
IND_3 -.210
(.423)
-.175
(.428)
IND_4 .327
(.475)
.389
(.487)
Ln(SIZE) .799***
(.185)
.776***
(.189)
Ln(AGE) .207
(.193)
.334*
(.201)
CUSTOR - .020
(.149)
COMPOR - .129
(.156)
INTFC - .262*
(.149)
MOR .292*
(.158)
-
Obs. 185 182
χ2 45.66*** 46.22***
Pseudo-R2 .081 .084
Empirical analysis: results
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Model 3 4
Regression method Ordered logistic Ordered logistic
Dependent variable BID BID
IND_1 .493
(.390)
.509
(.397)
IND_2 .467
(.425)
.463
(.433)
IND_3 -.210
(.423)
-.175
(.428)
IND_4 .327
(.475)
.389
(.487)
Ln(SIZE) .799***
(.185)
.776***
(.189)
Ln(AGE) .207
(.193)
.334*
(.201)
CUSTOR - .020
(.149)
COMPOR - .129
(.156)
INTFC - .262*
(.149)
MOR .292*
(.158)
-
Obs. 185 182
χ2 45.66*** 46.22***
Pseudo-R2 .081 .084
MO affects how actively SMEs look for public sector tender opportunities. MO affects how actively SMEs submit bids in public sector tender opportunities. Interfunctional coordination affects how actively SMEs look for public sector tender calls. Interfunctional coordination affects how actively SMEs submit bids in public sector tender calls.
Hypotheses not rejected
Discussion • Results
– Found evidence that firms that have adopted MO and have a high score in firm’s interfunctional coordination are more active both in seeking tendering opportunities and submitting bids
• Meaning – Required that a firm knows public sector as a customer
and its preferences as well as its competitors’ activities,
the forceful factor is the competence to assess the relevance of one’s own resources and abilities to satisfy the customer’s needs.
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Discussion
• Managerial implications
– Improve MO
– Make PP more salient
– Provide feedback
– Form networks
• Limitations and future research
– Do results happen again in other areas and cultures?
– Other strategic orientations?
– More effort to see inside the black box of SMES?
Overview Related research MO and PP Empirical analysis Discussion Conclusions
Conclusions
• MO is a strategic orientation of gathering information on customers and competitors and of using this information to meet the demands of customers
• A stronger MO is related to a greater activity in participating PP
• Time to questions and discussion!
Overview Related research MO and PP Empirical analysis Discussion Conclusions