Under entrepreneurial orientation, how does logistics performance activate customer value co-creation behavior?

Published date08 May 2017
DOIhttps://doi.org/10.1108/IJLM-12-2015-0242
Pages600-633
Date08 May 2017
AuthorLuu Trong Tuan
Subject MatterManagement science & operations,Logistics
Under entrepreneurial
orientation, how does logistics
performance activate customer
value co-creation behavior?
Luu Trong Tuan
School of Government, University of Economics, Ho Chi Minh City, Vietnam and
Swinburne Business School, Swinburne University of Technology, Australia
Abstract
Purpose For its sustainable gr owth, an organization should drive c ustomers from the role of consumers
of products or service s to value co-creators . Logistics performa nce, which produces va lue for customers,
may activate value co-cr eation behavior among t hem. The purpose of this pap er is to investigate
entrepreneurial ori entation (EO) as the det erminant and customer va lue co-creation beha vior as the
outcome of logistics perf ormance.
Design/methodology/approach The data for this research came from 328 dyads of logistics managers of
chemical manufacturers and purchase managers of their customer companies in Vietnam context.
The data were analyzed using structural equation modeling approach.
Findings The research results confirmed the role of EO in predicting logistics performance.
Logistics performance was also found to positively influence customer-organization identification, which, in
turn promoted customer value co-creation behavior.
Originality/value Entrepreneurship, logistics, and marketing research streams converge through the
researchmodel of the relationship betweenEO, logistics performance, andcustomer value co-creation behavior.
Keywords Vietnam, Entrepreneurial orientation, Logistics performance,
Customer value co-creation behaviour, Customer-organization identification
Paper type Research paper
Introduction
Customers nowadays are dynamic, not only in terms of their constantly challenging demands
but also in their roles, which may vary from challenging purchasers or consumers of products or
services to value co-creators of an organization. Business-to-business (B2B) customers were also
found to be able to play the role of value co-creation (Ballantyne and Aitken, 2007;
Roser et al., 2013). For instance, Intel, as an industrial component provider, has enhanced its
brand image through value co-creation from computer hardware manufacturers and assemblers,
which visibly place its brand mark on their products (Ballantyne and Aitken, 2007).
Moreover, the role that customers play for an organization is contingent on the degree to which
they attach to and identify with the organization (Maignan and Ferrell, 2004). The more they
identify with the organization, the more they perceive themselves as its partial members
(McColl-Kennedy et al., 2012) rather than its outsiders. In other words, customer-organization
identification, viewed as the extent to which customers identify with and are committed to the
organization (Bhattacharya and Sen, 2003), may influence the level of value co-creation behavior
in customers. By identifying with an organization, customers may be able to partially meet their
self-denitional needs (Bhattacharya and Sen, 2003), namely, redefining their needs and roles in
their relationships with the organization (Alsem and Kostelijk, 2008). Identied customers are not
only loyal, but also generously promote the organizations image and its products or services to
others (Bhattacharya and Sen, 2003) in particular, and co-create value for the organization in
general. Vargo and Lusch (2011) also reported that B2B customers which engage in relationships
with the organization have access to its resources and contribute values to it.
The International Journal of
Logistics Management
Vol. 28 No. 2, 2017
pp. 600-633
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-12-2015-0242
Received 29 December 2015
Revised 26 April 2016
18 July 2016
Accepted 1 September 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
600
IJLM
28,2
In addition to supplying quality products, an organization that is sufficiently dynamic to
produce constant improvement in logistics performance in their service toward customers
may further develop customer-organization identification. Logistics performance influences
the relationship between customers and the organization (Davis and Mentzer, 2006) since it
provides the best comparative net value to customers (Stahl and Bounds, 1991). The quality
of logistics performance is also a key marketing component that helps engender customer
satisfaction (Mentzer et al., 1989), leading to the strong relationship between customers and
the organization.
Referring to an organizations proactiveness, innovativeness, and risk-taking in its strategy
and actions (Covin and Slevin, 1989; De Clercq et al., 2013), entrepreneurial orientation (EO) may
leverage its performance in general and logistics performance in particular (Cui et al., 2012).
Since EO has a bearing on its competitive positioning (Sebora and Theerapatvong, 2010), an
organization with entrepreneurial strategic posture may be more likely to engage in logistics
process innovations to provide better services for customers. It finds and experiments new
ways to amplify product or service delivery effectiveness. An entrepreneurial organization with
external orientation (Sebora and Theerapatvong, 2010) furthermore treats customer feedback
on the market as well as its performance in general and its logistics performance in particular
as cues for it to further explore customer value as well as increase its responsiveness to
customer needs to tighten its relationship with customers. For instance, an entrepreneurial
plastic manufacturing company is more proactively open to feedback on seasonal patterns of
plastic bag (polypropylene woven bags) consumption for agricultural crops, thereby flexibly
modifying quantity or specification of plastic bags for customer orders. In other words, through
leveraging logisticsperformance,entrepreneurialor ganizations enhance customer-organization
relationship and identification, thereby activating customersrole as value co-creators with
the organization.
In the flow of the above logic, our research contributes to EO, logistics, and marketing
literature in various ways. The primary aim of our research is to assess the role of EO as a
determinant of logistics performance. The second research aim is to investigate the effect of
logistics performance on customer value co-creation behavior via customer-organization
identification. The overall aim of our research is hence to investigate the effect chain from
EO, through logistics performance and customer-organization identification, to customer
value co-creation behavior.
Through these research aims, the current research fills a gap in the marketing research
stream on customer value co-creation, which has tended to focus on predictive roles of the
organizations service quality or justice in its relationship with customers (Yi and Gong, 2013),
but not the role of its logistics performance in catalyzing customer identification with the
organization and then customer behavior to co-create value with it. Our research also adds EO
as an antecedent to logistics research stream, which has revolved around infrastructure as a
foundation for logistics performance (Banomyong et al., 2015) rather than the role of dynamic
values such as innovativeness (Thomas, 1997) in promoting logistics performance.
These research gaps in EO, logistics, and marketing literature are further filled in our
research, which uses the data from Vietnam context to test the research model. As an emerging
market transitioning from a centrally planned economy to a market economy
(Ngo et al., 2016), Vietnam still has displayed uncertainty avoidance (Swierczek and Ha,
2003) and an average level of innovativeness (Farley et al., 2008), and has had ineffective
logistics management (Banomyong et al., 2015). Vietnam can thus serve as an interesting
context to investigate the role of EO in leveraging logistics performance in Vietnam-based
organizations. Among the transitional economies, Vietnam is one of the least researched, in
particular in terms of entrepreneurship performance (De et al., 2012). Moreover, Vietnams
transition to a market economy has been increasing customersawareness of their dynamic role
as contributors of values to the valuechain of the organization rather than as mere recipients of
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behavior
products or services (Mai Thuy, 2015), which raises a further need for organizations to apply an
empirical EO model to more proactively improve th eir services, including logistics services, in
order to not only address customersneeds, but activatetheir role as value co-creators as well.
This paper is structured into five sections. Following this introductory section, literature
review section discusses the premises behind the relationships among the constructs of the
research model. Research methods and results are then presented. The section on theoretical
and managerial implications ends the paper.
Literature review and hypothesis development
EO as a determinant of logistics performance
EO. The concept EOhas its origins in the works of Mintzberg (1973) and Khandwalla (1976),
who were among the pioneers to discuss entrepreneurialdecision makingand entrepreneurial
management style.Miller (1983) depicted what has since become known as EO as a strategic
posture in which an organization engages in product-market innovation, undertakes somewhat
risky ventures, and is the rst to come up with proactiveinnovations, beating competitors to
the punch(p. 771). Covin and Slevin (1989) viewed EO as the degree to which an organization is
proactive, innovative, and risk-taking. Proactiveness the first component of EO refers to an
organizations endeavors to capture new opportunities (Zellweger and Sieger, 2012).
Proactiveness displays a forward-looking and opportunity-seeking view that provides the
organization with an advantage over competitorsactions by anticipating future market
demands (Wales et al., 2013). It entails not only identifying changes, but also being willing to act
on those insights ahead of the competition (Dess and Lumpkin, 2005). Innovativeness, the
second component of EO, alludes to an organizations propensity to engage in and support new
ideas, novelty, experimentation, and creative processes that may result in new products,
services, or technological processes(Lumpkin and Dess, 1996, p. 142). Innovativeness denotes a
willingness to depart from existing technologies or practices and venture beyond the current
state of the art. Innovativeness also reflects crucial means by which organizations pursue new
opportunities (Soininen et al., 2012). The last component risk-taking is linked with an
organizations willingness to make bold and daring resource commitments toward
organizational initiatives with uncertain returns (Wales et al., 2013).
Logistics performance. A logistics system, at the micro level, is a system of technical and
organizational means and people indispensable for the flow of goods and accompanying
information, which is specifically organized and integrated within a given business area.
It consists of the ensuing subsystems: supply subsystem, production servicing subsystem,
distribution subsystem, transport subsystem, warehouse subsystem, and relations between
them ( Jacyna, 2013).
Logistics performance can be viewed as a subset of the broader concept of organizational
output (Duong and Paché, 2016). The most traditional logistics performance is based on the
creation of time and place utility (Perreault and Russ, 1974). The attributes of an
organizations product or service offering that lead to utility creation through logistics
activities are reflected in seven-R formula. It refers to the organizations ability to deliver the
right amount of the right product at the right place at the right time in the right condition at
the right price with the right information (Stock and Lambert, 1987). This implies that part
of the value of a product is created by logistics activities (Mentzer et al., 2001). The idea
of value has been expanded to incorporate value-added operational logistics tasks, such
as packaging, third-party inventory management, barcoding, and information systems
(Mentzer and Firman, 1994).
Logistics performance is defined as the degree of efficiency, effectiveness, and
differentiation linked with the accomplishment of logistics activities (Bobbitt, 2004).
This definition of logistics performance is used in the current research since it reflects the
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