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The moderating role of institutional networking in the customer orientation–trust/commitment–performance causal chain in China

  • Original Empirical Research
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Abstract

This study uncovers the ignored role of institutional environment for marketing strategy and customer relationship management. Hypothesis tests in a sample of Chinese firms find support that channel networking strengthens the customer orientation–customer trust/commitment–firm performance (CTP) causal chain. In addition, the results show that government networking moderates this chain in a non-linear fashion. The CTP linkages are most salient when the firm develops a moderate level, rather than a high or low level of networking ties with government agencies.

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Notes

  1. We thank one anonymous reviewer for this point.

  2. Our results are robust to a number of covariates. We control the influence of firm size, firm ownership type, management position, market growth, Chinese cities, to industry sectors, consistent with controls in the literature (Deshpandé and Farley 2000, 2002; Luo et al. 2005a, b; Sin et al. 2005; Zhou et al. 2005).

  3. This study does not disagree with prior findings on the importance of culture, innovativeness, and other performance drivers in China (Deshpandé and Farley 2000, 2002; Luo et al. 2005a, b; Sin et al. 2005). Rather, we here are concerned with adding new insights beyond these drivers (i.e., the moderating role of institutional networking and CTP chain with the mediator of trust/commitment explaining why market orientation matters in China).

  4. For readers who want to know more about the antecedents and consequences of institutional networking, they are encouraged to consult the strategy literature (e.g., Peng and Luo 2000; Wu et al. 2007). Nevertheless, the strategy literature has not related institutional networking with customer orientation or trust/commitment. In this sense, we may also contribute to the institutional networking literature for strategy researchers with some marketing flavor (i.e., via customer orientation).

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Author information

Authors and Affiliations

  1. Department of Marketing, College of Business Administration, University of Texas at Arlington, Arlington, TX, 76019, USA

    Xueming Luo

  2. Department of Marketing, College of Business and Economics, University of Wisconsin at Whitewater, Whitewater, WI, 53190, USA

    Maxwell K. Hsu

  3. Department of Consumer Sciences and Retailing, Purdue University, West Lafayette, IN, 47907-1262, USA

    Sandra S. Liu

Authors
  1. Xueming Luo
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  2. Maxwell K. Hsu
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  3. Sandra S. Liu
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Corresponding author

Correspondence to Maxwell K. Hsu.

Additional information

The authors are indebted to Tricia Borchardt, Scott Swanson, the Editor, and reviewers for many helpful comments and suggestions. The usual disclaimer applies.

Appendix A

Appendix A

Measures used in the study

Customer orientation (1 = “strongly disagree” and 7 = “strongly agree”)

Our business objectives are driven primarily by customer satisfaction.

We constantly monitor our level of commitment and orientation to serving customer needs.

We freely communicate information about our successful and unsuccessful customer experiences across all business functions.

Our strategy for competitive advantage is based on our understanding of customer needs.

We measure customer satisfaction systematically and frequently.

We have routine or regular measures of customer needs.

We are more customer-focused than our competitors.

I believe that our business exists primarily to serve customers.

We poll end users at least once a year to assess the quality of our products and services.

Data on customer satisfaction are disseminated at all levels in our business unit on a regular basis.

Customer trust toward the firm (1 = “strongly disagree” and 7 = “strongly agree”)

Our firm can be trusted by our customers at all times.

Our firm can be counted on by our customers to do what is right.

Our firm has high integrity.

Our customers are satisfied with our firm.

Customer commitment toward the firm (1 = “strongly disagree” and 7 = “strongly agree”)

Our firm is very committed to the relationship our firm has with the customers.

Our firm intends to maintain indefinitely our relationship with the customers.

Our relationship with the customers deserves maximum attention.

Business partner social capital (1 = “very little” and 7 = “very extensively”)

Managers at our firm have utilized personal guanxi, networks, and connections with managers at distributor (retailer, wholesaler) firms.

Managers at our firm have utilized personal guanxi, networks, and connections with managers at supplier firms.

Governing agency social capital (1 = “very little” and 7 = “very extensively”)

Managers at our firm have utilized personal guanxi, networks, and connections with political leader in various levels of the government.

Managers at our firm have utilized personal guanxi, networks, and connections with officials in industrial bureaus.

Managers at our firm have utilized personal guanxi, networks, and connections with officials in regulatory and supporting organizations, such as tax bureaus, state banks, commercial administration bureaus and etc.

Firm performance (1 = “very inferior” and 7 = “very superior”)

Comparing with our major competitors,

our firm’s performance in market share growth in our primary market last year.

our firm’s performance in sales growth last year.

our firm’s performance in percentage of sales generated by new products last year.

our firm’s performance in ROI last year.

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Luo, X., Hsu, M.K. & Liu, S.S. The moderating role of institutional networking in the customer orientation–trust/commitment–performance causal chain in China. J. of the Acad. Mark. Sci. 36, 202–214 (2008). https://doi.org/10.1007/s11747-007-0047-z

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