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Does salesperson's customer orientation create value in B2B relationships? Empirical evidence from India Ramendra Singh a, , Abraham Koshy b,1 a W-404 New Teaching Block, Indian Institute of Management Calcutta, D.H.Road, Joka, Kolkata 700104, India b Wing 10, Indian Institute of Management Ahmedabad, Vastrapur, Ahmedabad 380015, India abstract article info Article history: Received 23 February 2009 Received in revised form 10 February 2010 Accepted 15 April 2010 Available online 8 October 2010 Keywords: Salesperson Customer orientation Value creation b2b relationships SOCO Although value creation in business relationships has taken an important position in the literature, yet scant attention has been paid to the precise nature of creation or destruction of value in b2b customer-oriented selling. Moreover, very few empirical studies in the b2b customer value research have focused on emerging markets, especially the BRIC countries. This study carried out in the context of small and medium sized rms in India, empirically examines from the SOCO perspective (Saxe and Weitz, 1982), value creation in customer- oriented selling, and value destruction in sales-oriented strategies. We model value creation, relationship development, and customer satisfaction as direct and indirect consequences of salesperson's customer orientation. Based on a sample of 249 small and medium sized Indian rms, we show that salesperson's customer orientation directly leads to value creation and relationship development with customers. On the other hand, a sales orientation destroys value, although it may lead to relationship development in the short- term. We also found that customer satisfaction was unrelated to both types of salesperson's orientations. Our study has considerable impact for small and medium sized businesses in emerging BRIC markets such as India, as it throws light on how supplier rms can leverage their salesforce to create value creation with their customers. © 2010 Elsevier Inc. All rights reserved. The 2003 Goldman Sachs global economics paper, Dreaming with BRICs: Path to 2050,suggests that BRIC countries currently contribute 13% of global economic output, and are expected to grow at 8% per annum for the next few years. The report also predicts that India, being an important BRIC member, could witness its economy become larger than Japan's by 2032, and become the third largest economy in the world in next 30 years. Much of the expected economic growth is likely to be driven by the small and medium enterprises after the Indian economy is further liberalized. However, India also presents a cultural milieu that is in contrast to most developed western societies. Cultural values are also known to affect the interests, priorities, and strategies used in business negotiations (Brett, 2000), that eventually impacts an individual's approach towards exchange relationships (Shi, 2001). India is known to be a society characterised by a collectivist, high-context, strong uncertainty-avoidance, and large power-distance culture (Hall, 1976; Hofstede, 1981). In high context societies, communication between individuals is characterized by focus on non-verbal cues, more implicit than explicit (Cohen, 1991), and displaying trust toward people in ways different from those in low-context cultures (Hsu, 1983). Such individuals are also more risk averse (Lewicki & Bunker, 1996), which in turn impacts their economic rationality (Bazerman, 1994), towards assessing costs and rewards associated with their behaviors (Doney, Cannon, & Mullen, 1998). In this socio-cultural milieu, exploring the role of value creation in business relationships becomes important, since value is considered to be the raison d'etre of collaborative customersupplier relationships (Anderson, 1995). Value creation has been examined at the rm level in the b2b context in several studies (e.g., Beverland, Farrelly, & Woodhatch, 2004; Eggert, Ulaga, & Schultz, 2006; Flint, Woodruff, & Gardial, 2002; Lapierre, 2000; Ulaga & Eggert, 2005). However, research on customer value in business markets is still in an early stage (Flint et al., 2002), focusing predominantly on the value of the physical product, neglecting relational dimensions of customer-perceived value (Dwyer & Tanner, 1999). The popular concept of relationship value (Payne and Holt, 1999) too focuses on products, delivery, service, and interactions, as key dimensions (Dorsch, Swanson, & Kelley, 1998; Eggert & Ulaga, 2002; Gassenheimer, Houston, & Davis, 1998; Möller & Törrönen, 2003; Ulaga, 2003; Walter, Ritter, & Gemünden, 2001), ignoring the salesperson's customer-oriented behaviors that may impact on the value creation. Although a rm's market orientation consists of market sensing, dissemination, and response, market sensing as an aspect becomes more important in which salespersons play a vital role. This study too only includes those aspects of salesperson's customer orientation (focussed more on market Industrial Marketing Management 40 (2011) 7885 Corresponding author. Tel.: +91 33 24678000x552, +91 9998493034. E-mail addresses: [email protected], [email protected] (R. Singh), [email protected] (A. Koshy). 1 Tel.: +91 79 66324895; fax: +91 79 66306896. 0019-8501/$ see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2010.09.012 Contents lists available at ScienceDirect Industrial Marketing Management

Does salesperson's customer orientation create value in B2B relationships? Empirical evidence from India

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Industrial Marketing Management 40 (2011) 78–85

Contents lists available at ScienceDirect

Industrial Marketing Management

Does salesperson's customer orientation create value in B2B relationships? Empiricalevidence from India

Ramendra Singh a,⁎, Abraham Koshy b,1

a W-404 New Teaching Block, Indian Institute of Management Calcutta, D.H.Road, Joka, Kolkata 700104, Indiab Wing 10, Indian Institute of Management Ahmedabad, Vastrapur, Ahmedabad 380015, India

⁎ Corresponding author. Tel.: +91 33 24678000x552E-mail addresses: [email protected], s_ramendr

[email protected] (A. Koshy).1 Tel.: +91 79 66324895; fax: +91 79 66306896.

0019-8501/$ – see front matter © 2010 Elsevier Inc. Aldoi:10.1016/j.indmarman.2010.09.012

a b s t r a c t

a r t i c l e i n f o

Article history:Received 23 February 2009Received in revised form 10 February 2010Accepted 15 April 2010Available online 8 October 2010

Keywords:SalespersonCustomer orientationValue creationb2b relationshipsSOCO

Although value creation in business relationships has taken an important position in the literature, yet scantattention has been paid to the precise nature of creation or destruction of value in b2b customer-orientedselling. Moreover, very few empirical studies in the b2b customer value research have focused on emergingmarkets, especially the BRIC countries. This study carried out in the context of small and medium sized firmsin India, empirically examines from the SOCO perspective (Saxe andWeitz, 1982), value creation in customer-oriented selling, and value destruction in sales-oriented strategies. We model value creation, relationshipdevelopment, and customer satisfaction as direct and indirect consequences of salesperson's customerorientation. Based on a sample of 249 small and medium sized Indian firms, we show that salesperson'scustomer orientation directly leads to value creation and relationship development with customers. On theother hand, a sales orientation destroys value, although it may lead to relationship development in the short-term. We also found that customer satisfaction was unrelated to both types of salesperson's orientations. Ourstudy has considerable impact for small andmedium sized businesses in emerging BRICmarkets such as India,as it throws light on how supplier firms can leverage their salesforce to create value creation with theircustomers.

, +91 [email protected] (R. Singh),

l rights reserved.

© 2010 Elsevier Inc. All rights reserved.

The 2003 Goldman Sachs global economics paper, “Dreaming withBRICs: Path to 2050,” suggests that BRIC countries currentlycontribute 13% of global economic output, and are expected to growat 8% per annum for the next few years. The report also predicts thatIndia, being an important BRIC member, could witness its economybecome larger than Japan's by 2032, and become the third largesteconomy in the world in next 30 years. Much of the expectedeconomic growth is likely to be driven by the small and mediumenterprises after the Indian economy is further liberalized.

However, India also presents a cultural milieu that is in contrast tomost developed western societies. Cultural values are also known toaffect the interests, priorities, and strategies used in businessnegotiations (Brett, 2000), that eventually impacts an individual'sapproach towards exchange relationships (Shi, 2001). India is knownto be a society characterised by a collectivist, high-context, stronguncertainty-avoidance, and large power-distance culture (Hall, 1976;Hofstede, 1981). In high context societies, communication betweenindividuals is characterized by focus on non-verbal cues, more implicitthan explicit (Cohen, 1991), and displaying trust toward people inways different from those in low-context cultures (Hsu, 1983). Such

individuals are also more risk averse (Lewicki & Bunker, 1996), whichin turn impacts their economic rationality (Bazerman, 1994), towardsassessing costs and rewards associated with their behaviors (Doney,Cannon, & Mullen, 1998). In this socio-cultural milieu, exploring therole of value creation in business relationships becomes important,since value is considered to be the raison d'etre of collaborativecustomer–supplier relationships (Anderson, 1995).

Value creation has been examined at the firm level in the b2bcontext in several studies (e.g., Beverland, Farrelly, & Woodhatch,2004; Eggert, Ulaga, & Schultz, 2006; Flint, Woodruff, & Gardial, 2002;Lapierre, 2000; Ulaga & Eggert, 2005). However, research on customervalue in business markets is still in an early stage (Flint et al., 2002),focusing predominantly on the value of the physical product,neglecting relational dimensions of customer-perceived value(Dwyer & Tanner, 1999). The popular concept of relationship value(Payne and Holt, 1999) too focuses on products, delivery, service, andinteractions, as key dimensions (Dorsch, Swanson, & Kelley, 1998;Eggert & Ulaga, 2002; Gassenheimer, Houston, & Davis, 1998;Möller &Törrönen, 2003; Ulaga, 2003; Walter, Ritter, & Gemünden, 2001),ignoring the salesperson's customer-oriented behaviors that mayimpact on the value creation. Although a firm's market orientationconsists of market sensing, dissemination, and response, marketsensing as an aspect becomes more important in which salespersonsplay a vital role. This study too only includes those aspects ofsalesperson's customer orientation (focussed more on market

79R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

sensing) which creates value for customers. Cross, Brashear, Rigdon,and Bellenger (2007) too validates this concern empirically byshowing that market-oriented firms' impact on salesperson's perfor-mance is completely mediated by salesperson's customer-orientedbehaviors. Therefore, it makes sense to posit theoretical linkagebetween salesperson's customer orientation and value creation withcustomers, even though value creation also involves other firm-levelactivities going beyond the individual salesperson.

In the relationship selling paradigm, the practice of customerorientation by salespeople is well-documented (e.g., Beverland, 2001,Boles, Babin, Brashear, & Brooks, 2001; Frankwick, Porter, & Crosby,2001). The salespersons' customer orientation concept has beenpopularised by Saxe and Weitz (1982), as consisting of selling vs.customer orientation, as practiced with their customers (i.e., the‘SOCO’ perspective). A customer-oriented selling strategy focuses onhelping customers make satisfactory purchase decisions, while asales-oriented selling strategy focuses on making quick sales, often atthe expense of long term interests of the customer (Saxe & Weitz,1982).

In the last two decades, plethora of studies have shown that asalesperson's customer orientation impacts his/her job attitudes,turnover intentions, adaptive selling, relationships with supervisors,and organizational citizenship behavior (e.g. Boles et al., 2001; Dadzie,Johnston, Dadzie, & Yoo, 1999; O'Hara, Boles, & Johnston, 1991). It hasalso been shown to affect salesperson's job satisfaction, motivation,and organizational commitment (e.g. Kelley, 1992; Pettijohn, Petti-john, & Taylor, 2002; Siguaw & Honeycutt, 1995), job satisfaction (e.g.Hoffman & Ingram, 1991, 1992; Pettijohn et al., 2002), customerrelationship development (e.g. Williams, 1998), customer satisfactionand loyalty (e.g. Gillis, Pitt, Robson, & Berthon, 1998; Goff, Boles,Bellenger, & Stojack, 1997; Pettijohn et al., 2002; Reynierse & Harker,1992), and individual-level performance (e.g. Boles et al., 2001,Brown, Widing, & Coulter, 1991; Keillor, Parker, & Pettijohn, 2000).However, recent studies (e.g., Franke & Park, 2006; Schwepker, 2003)have expressed concern that much still remains to be learned aboutthe association between SOCO and salesperson's performance. Giventhat in the relational selling approach salespersons play a greater rolethan their firms in sustaining customer relationships (Palmatier, Dant,Grewal, & Evans, 2006), we do not yet know if b2b salespersonsactually create value in their relationship with customers, especiallyin the context of emergingmarkets. This study's objective is to addressthis void in the literature.

In this article, we empirically demonstrate the linkages betweensalesperson's customer orientation with b2b customers and valuecreation in these relationships. Value creation, captured from thecustomer's perspective, has been defined in this study as, customer'sperspective of achieving desired benefits attributable to the salesperson,and the company. Going beyond the traditional definition of value asbenefits net of costs, we attempt to define the term more holistically,based on how the customers perceive value in the relationships,beyond the product offering itself. We model direct as well as indirectassociation of customer vs. sales oriented selling behaviors with valuecreation, customer relationship development, and customersatisfaction.

The paper contributes uniquely to our understanding about b2bsalespersons in the context of an emerging market, and throws freshlight into how, and why value is created by salespersons in theirrelationships with customers. It explicates the extent to which sellingorientation (SO) and customer orientation (CO) differs in their abilityto extract value in the b2b buyer–seller relationships. In an emergingmarket such as India, salespersons are extremely important forbuilding relationships, and for delivering value to b2b customers,specially the small and medium enterprises. These small enterprisesthat constitute our sample in the study are considerably less tech-savvy and less dependent on other means of information likewebsites, making the salespersons a credible source of information,

a relationship builder, and a value creater in the relationship. From aselling perspective, the paper throws new light into why, and howsales vs. customer orientations are important in creating or destroyingvalue in b2b relationships, and extends our extant understanding inthis direction.

The rest of the paper is structured as follows. In the next section,we develop our conceptual model, and propose a few hypotheses. Wethen empirically test our model using a sample of 249 small andmedium-sized business customers from a wide array of product andservice categories in India. In the subsequent sections, we discuss keyresults, managerial implications of our study, and important theoret-ical contributions of the paper. We end the paper with limitations ofour study and give some directions for future research.

2. Model development

2.1. Salesperson's customer orientation

Among one of the earliest studies, Strong (1925) emphasized thatpersonal selling should be oriented toward securing customersatisfaction, and not just purchase orders. Subsequently, scholarshave emphasized the importance of meeting customer needs overselling more volumes to customers (e.g. Kurtz, Dodge, & Klompmaker,1976). However, the well established and widely adopted conceptu-alization by Saxe and Weitz's (1982) in the personal selling literaturestates that salesperson's customer orientation is, ‘the degree to whichhe or she(the salesperson) practice(s) the marketing concept bytrying to help his or her customers make purchase decisions that willsatisfy customer needs’ (p. 344). The SOCO perspective has been sincebeen widely researched in the personal selling literature (e.g., Brownet al., 1991; Kennedy, Lassk, & Goolsby, 2002), as well as the servicesmarketing literature (e.g., Brady & Cronin, 2001; Brown, Mowen,Donavan, & Licata, 2002).

2.2. Salesperson's customer orientation and value creation

Customer orientation is based on customer-driven value creation(Jolson, 1997). At the firm level, Slater and Narver (1995) emphasizedthat market-oriented firms place highest priority on the profitablecreation, and maintenance of superior customer value. In this study,value creation has been defined as customer's perspective ofachieving desired benefits attributable to the salesperson and thecompany. Saxe andWeitz (1982) suggest that customer orientation atan individually employee level is closely related to a ‘concern forothers’ (See Blake & Mouton, 1970; Buzzotta, Lefton, & Sherberg,1972; Thomas, 1976) dimension. Therefore, salespersons high oncustomer orientation are likely to show higher concern for self and forothers, but salespeople with sales orientation or having low customerorientation would exhibit high concern for self, but low concern forothers. Therefore, it is also likely that a customer oriented salespersonis more likely to create value for customers, since s/he is likely to bemore concerned for others (customers). Moreover, most organiza-tional buyers seek increased value-added services from salespeople(Liu & Leach, 2001), demand more adaptations, and a consultativeselling approach which requires higher exchange of information withthe customers (Brennan & Turnbull, 1999). From the service-centeredview of marketing too, the customer value is defined by thesalesperson along with the customer, rather than being embeddedin the product (Vargo & Lusch, 2004). Michel, Vargo, and Lusch (2008)argue that shifting the focus of the offering from an output to a processof value creation makes the customer perceive the supplier as anorganizer of this process, in which the customer is a co-producer,rather than a receiver of value. Michel and his colleagues further notethat ‘dematerialization’ of resources allows greater scope for valuecreation. Such a process of value creation requires a salesperson to

80 R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

play a greater role in the process being the key contact person for his/her company.

Therefore, the customer perceived value is more amenable to thesalesperson's behaviors, due to the intangible nature of the servicesprovided by the salesperson. Moreover, market matching (Dickson,1992) or finding the degree of fit between the customer and theoffering, is influenced by the salesperson. A customer-orientedsalesperson therefore is more likely to respond and adapt to thesewants of the customers than a sales-oriented salesperson. It istherefore hypothesised that:

H1a. Salesperson's customer orientation is positively associated withvalue creation with customers.

H1b. Salesperson's sales orientation is negatively associated withvalue creation with customers.

H1a (+) H2a (+) H3 (+)

H1b (-) H2b (-)

H4b (-)

Customer Orientation

Selling Orientation

Relationship Development

Value Creation

Customer Satisfaction

H5 (+)

H4a (+)

Fig. 1. Hypothesized model of salesperson's value creation, relationship developmentand customer satisfaction in b2b relationships.

2.3. Salesperson's customer orientation and relationship development

Salespeople are often called relationship managers, since they playa key role in the development and management of partneringrelationships (e.g. Beverland, 2001; Frankwick et al., 2001; Landry,Arnold, & Arndt, 2005; Tellefsen & Eyuboglu, 2002; Weitz & Bradford,1999). Relationship development in this study is defined by us as, theability of the salesperson to build and maintain relationships withtheir customers successfully. A salesperson's customer orientation hasa significant impact on the relationships developed with customers(Williams & Attaway, 1996). Homburg and Stock (2004) too pointsthat in the b2b selling context, a salesperson is still considered themain contact point for the customers; s/he is also primarilyresponsible to make successful relationship with them (Wilson &Jantrania, 1995). Moreover, most organizational buyers seek long-term relationships, and higher level of contact from salespeople (Liu &Leach, 2001). Customer orientation is also focused on establishingmutually beneficial, long-term relationships (Anderson, 1996; Saxe &Weitz, 1982). It is also a high-risk selling strategy to be adopted by thesalesperson since it requires considerable upfront investment in time,and relational asset building to meet customer requirements (Joshi &Randall, 2001). From this perspective, customer orientation and not asales oriented approach, involves taking a long-term approach tocustomers interactions (Franke & Park, 2006), congruent with therelational selling approach (Weitz & Bradford, 1999). It is thereforeposited that:

H2a. Salesperson's customer orientation is positively associated withrelationship development with customers.

H2b. Salesperson's sales orientation is negatively associated withrelationship development with customers.

Value creation and delivery is not an individual activity for thesalesperson. Rather the salesperson creates and delivers value to theircustomersby continuouslyunderstandingandmeeting theunexpressedneeds, wants and preferences by supplying product offerings and acontinuous stream of unmatched value laden services to customers inthe entire relationship. Therefore, creating value in the relationship islikely to be positively associated with building of relationship withcustomers, since both these go hand in hand. Relationship withcustomers is also likely to be developed as a consequence of thecustomers' perception of value being created in the relationship withsalespersons. Lusch and Vargo's (2006) service-dominant logic ofmarketing also suggests that customer-centric relationships becomesthe means for value co-creation, while profit maximization as a goaltakes a back-seat, and information feedback is encouraged to facilitatethe seller to learn faster on serving its customers better. Therefore, it isalso hypothesised that:

H3. Salesperson's value creation (customer-perceived) is positivelyassociated with relationship development with customers.

2.4. Salesperson's customer orientation and customer satisfaction

Satisfaction in interpersonal relationships revolves around theroles performed by the individual relational partners (Murstein,1977). The dynamic and complex role played by salespeople in long-term sales contexts enhances the customer's perception andevaluation of the salesperson's efforts to manage the often multifac-eted relationship over time (Frazier, 1983). Satisfaction, is alsodefined as a subjective emotional state that occurs as a response to aset of experiences (Locke, 1969). A customer-oriented salesperson islikely to satisfy customers' preferences (Saxe & Weitz, 1982; Spiro &Weitz, 1990), both in the immediate and long term, and provide a setof satisfying experiences to his/her customers. In a b2b buyer–sellercontext, Huntley (2006) has defined the quality of relationship interms of buyers' overall satisfaction with product, service andrelationship with salesperson and company. Therefore it is hypoth-esized that:

H4a. Salesperson's customer orientation is positively associated withcustomer satisfaction.

H4b. Salesperson's sales orientation is negatively associated withcustomer satisfaction.

Since, customer orientation is directed toward providing cus-tomer satisfaction and establishing mutually beneficial, long-termrelationships (Anderson, 1996; Saxe &Weitz, 1982), it is argued thatdeveloping relationship with customers will increase their satisfac-tion. Similarly, in the absence of adequate relational assets in thebuyer–seller relationship, customer satisfaction decreases. There-fore, it is posited that:

H5. Salesperson's relationship development is positively associatedwith customer satisfaction.

Our proposed conceptual model for salespersons' value creationbased on their customer orientation is shown in Fig. 1.

3. Method

3.1. Research setting and sample

Data collection for this study took place in Ahmedabad, India.Ahmedabad is a well-known business city which has several small andmedium sized businesses, especially in trading businesses. Therespondentswere the owners of thesefirmswhohad a prior experienceof interacting with business-to-business salespeople in any product orservice category. Multiple industries and product categories wererepresented in the sample to incorporate heterogeneity. Sampling wascarried out using convenience, and data was collected using a surveyinstrumentwith paper and pencil. All respondentswere given a pen as a

81R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

reward for participating in the study. The sample consisted of 249business customers. The mean age of respondents was 30.43 years(range: 17-65 years), and 91.5% were male. The responses repre-sented product and service categories such as insurance, bankaccounts and credit cards, DVD players, mobile phones, cars, twowheelers, machinery, cement, furniture, machine parts, accessories,and computers. The application for these products and services werefor their business organizations, and not for their personalconsumption. We recognized that nonresponse bias could creepin, since there could be respondents outside the sample who mayhave responded differently to the survey. Therefore, the data wascollected in two waves, and using Armstrong and Overton's (1977)suggestions, potential responses from both waves were compared,but no significant difference were found.

3.2. Development of measures

Since the study is based in an emerging market, we developed ourown measures for this context, due to absence of these measures inthe literature. The new measures (value creation, relationshipdevelopment and customer satisfaction) were developed using thetwo-step approach suggested by Gerbing and Anderson (1988). Thesemeasures are given in the Appendix A. Using Churchill's (1979) eight-step process of scale construction, we first specified the domain of thenew measures, and then developed items. To develop items for thenew measures that capture the phenomenon, we first conducted afocus group discussion with customers.

We conducted a focus group discussion (FGD) with 10 businesscustomers (purchase managers, stores managers, and owner-managers). These respondents were chosen by a professionalagency, using convenience, and were given a token gift in lieu ofparticipation. The duration of each FGD was approximately 1 h, andwas moderated by a professional moderator. All FGDs were video-recorded and later translated from Gujarati (local language spokenin Ahmedabad) into English, and transcribed for content analysis.The situation given to the customers was that of describing asituation where they interacted with a salesperson with intent ofany b2b purchase. The selling situations covered a wide variabilityin selling situations, across product categories such as computers,stationary, insurance, and financial services. These discussions wereopen-ended in nature and covered a diverse range of situations, toidentify various facets of value creation by salespeople, relationshipdevelopment, and customer satisfaction. These were examined foremergent themes and were then integrated with the multiple,theoretical perspectives obtained from the literature survey.Following the procedures suggested by Huntley (2006), the responsesfrom the in-depth interviewswere coded using an iterative process, andwere sorted and combined to determine broad categories, to reflect thedominant themes. Based on the content analysis of the FGD, wegenerated items for the newmeasures and subsequently purified thesemeasures using exploratory factor analysis, based on the suggestions formeasure development by Gerbing and Anderson's (1988). Exploratoryfactor analysis was used to assess the underlying factor structure of theitems, and based on it unidimensionality of the measures wasestablished. The cronbach alpha reliabilitieswere found tobe acceptablefor all measures.

3.3. Measurement model validation

Confirmatory factor analysis (CFA) was used to assess themeasures properties. Since inclusion of a large number of measureswould render the measurement model for AMOS 4.0 too complex, wefollowed Bentler and Chou's (1987) recommendation to analyze submodels in lieu of the complete model. Therefore, two separatemeasurement models were run, consisting of related constructs. Thefirst sub-model consisted of the sales orientation and the customer

orientation constructs, while in the second sub-sample, we analyzedthe three outcome constructs (value creation, relationship develop-ment and customer satisfaction). The fit indices indicate that themodels fit the data well. All item-standardized loadings for eachconstruct were found to be significant (pb0.01), which supports theunidimensionality of the constructs. In the CFA for SO and CO, the chi-square statistic was significant (pb0.001). The fit statistics showed agood model fit (NFI=0.99; RFI=0.984; CFI=0.995; TLI=0.992;RMSEA=0.064). Similarly, in the second sub-sample consisting of theoutcome variables, all standardized item loadings were significant,and also showed a good fit (chi-square significant at pb0.001;NFI=0.986; RFI=0.981; CFI=0.994; TLI=0.992; RMSEA=0.053).Therefore, the entire measurement model was found to be valid.

3.3.1. Convergent validity and reliabilityThe convergent validity of the constructs was assessed by item

reliability, and construct (composite) reliability (Fornell & Larcker,1981). Item reliability indicates the amount of variance in an item dueto the underlying construct rather than to error and can be obtainedby squaring the factor loading, and should be greater than .50. Theitem reliability was found to be adequate for CO, but short of thethreshold of 0.5, for few items in other constructs (SO-2 items; REL-2items; VAL- 1 item; CUS- 2 items). Nunnally (1978) suggested aminimum of .80 value of construct reliability as an evidence ofconvergent validity. Construct reliability was found to be 0.716 for SO,0.641 for CO, 0.681 for REL, 0.681 for VAL, and 0.640 for CUS. However,since the three outcome variables had newly developedmeasures, theconstruct reliabilities are acceptable, although it is slightly lower forSO and CO. Overall, the constructs had sufficient convergent validityfor new measures.

3.3.2. Discriminant validityDiscriminant validity of each construct was determined in several

ways. For the outcome variables (value creation, relationshipdevelopment and customer satisfaction), the discriminant validityfor each construct was established, as each correlation was found tobe less than one by an amount greater than twice its respectivestandard error (Bagozzi & Yi, 1988). However, the independentvariables(SO, and CO) did not pass this test, and therefore, theirdiscriminant validity was established using Bagozzi and Phillips's(1982) suggestion of using chi-squared difference tests (with onedegree of freedom) with two-factor models by restricting the factorintercorrelations once to unity(constrained model) and comparingwith the unconstrained models. The chi-square was found to behigher in the constrained model, thus establishing the discriminantvalidity of the two constructs. These tests together suggest that allmeasures had sufficient discriminant validity.

3.4. Measures

3.4.1. Salesperson's customer orientationWe measure salesperson's customer orientation using an adapted

shortened version of the customer orientation dimension of SOCO(Saxe & Weitz, 1982). Several other studies (e.g. Periatt, LeMay, &Chakrabarty, 2004; Thomas, Soutar, & Ryan, 2001) have also used ashortened SOCO scale, and found the shortened scale to lowerrespondent fatigue, without any loss in validity or reliability. We useda parsimonious measure in this study containing 5 items which has acronbach alpha coefficient value of 0.693.

3.4.2. Salesperson's sales orientationSimilar to customer orientation, we measure salesperson's sales

orientation too, using an adapted shortened version of the sellingorientation dimension of SOCO (Saxe & Weitz, 1982). The sellingorientation measure used in this study has 5 items and has Cronbachalpha coefficient value of 0.762.

0.402*(0.181)

0.630*(0.342)

0.429*(0.207)

*p<0.05

Customer Orientation

Selling Orientation

Relationship Development

Value Creation

Fig. 2. Empirically validated structural model with unstandardized parametercoefficients (standard errors) [Arrows indicate significant relationships].

82 R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

3.4.3. Value creationWe developed a new measure for value creation. Exploratory

factor analysis yielded a 5-item measure that meets the requisitereliability threshold (Cronbach alpha=0.693).

3.4.4. Relationship developmentA new measure for relationship development was developed and

subsequent exploratory factor analysis yielded a 5-item measure thatmeets the requisite reliability threshold (Cronbach alpha=0.693).

3.4.5. Customer satisfactionWe developed a newmeasure for customer satisfaction in the same

way, and exploratory factor analysis yielded a 5-item measure thatmeets the requisite reliability threshold (Cronbach alpha=0.656).

Data for all scales were collected using five-point likert scalesanchored by “strongly disagree” and “strongly agree.”

4. Results

Following the two-step approach of estimating the structuralmodel (Anderson & Gerbing, 1988) using structural equationmodeling (SEM), after the measurement model validation, thestructural model validation is carried out, using CFA with MLestimation method. The structural model was first evaluated for itsgoodness of fit. Although chi-square was significant at pb0.00, otherfit indices suggesting a good fit (Hu & Bentler, 1995; Schreiber, Nora,Stage, Barlow, & King, 2006), are RMSEA valueb0.05, and bothabsolute and incremental fit indices valuesN0.90, and parsimony fitindices too be high. The model fit statistics suggest a good fit(NFI=0.977; RFI=0.972; TLI=0.99; CFI=0.992; PNFI=0.79;PCFI=0.809; RMSEA=0.046; PRATIO=0.815), and besides themodification indices were small, suggesting that no changes wererequired in the proposed a priori model. Therefore, our proposedstructural model is strongly supported by the data.

We found support for only hypotheses H1a, and H2a. Otherhypotheses were not supported at pb0.05. Therefore, empiricalevidence suggests that salesperson's customer orientation leads tovalue creation in customer relationships, and relationship develop-ment with them. Although H2b was not fully supported, the positedassociation was found to be significant at pb0.05, with a positivesign instead of the hypothesized negative sign. This suggests thatsalesperson's sales orientation too leads to relationship develop-ment with customers, maybe in the short-term. Also, salesorientation probably destroys value in customer relationships. Allother posited relationships were insignificant even at pb0.1. Otherhypotheses results indicate that neither salesperson's customer, norsales orientation brings customer satisfaction either directly, orindirectly via relationship development. It is plausible that customersatisfaction being transitory in nature does not make itself amenableto a stable association with customer orientation of salespeople, thelatter consists of stable traits, attitudes and behaviors that bringlong-term results. We suggest that this association be tested byother researchers using a larger and more homogenous sample ofcustomers. Results also indicate that value creation does not lead torelationship development. Based on these results, the final validatedmodel is shown in Fig. 2. We now discuss these results in the nextsection.

5. Discussion

Our research throws up some very interesting findings. The positiveassociation between customer orientation, and relationship develop-ment was significant, congruent to existing understanding in theliterature. However, the key finding of our study is the positiveassociation between salesperson's customer orientation, and valuecreation in relationship. We find empirical support that suggests that

salespeople do create value in relationships with customers; this is newinformation. However, value creation in b2b relationshipsmay not leadto relationship development. Instead, the results indicate that customerorientation that creates value in customer relationships, simultaneouslyhelps in developing relationships with customers. In other words, bothvalue creation and relationship development are direct result ofsalesperson's customer orientation. As suggested by Saxe and Weitz(1982) andother studies, since salesperson's customer orientation is thepractice of themarketing concept by salespeoplewith customers,wheresalespeople help their customers to make purchase decision, it is likelythat these activities lead to customers' perception of value creation, andrelationship development.

Although expected, it was found that sales orientation ofsalespeople does not lead to value creation, but intriguingly, it wasfound to be positively associated with relationship development,although to a lesser extent than customer orientation (standardizedcoefficients, 0.535 and 0.707 respectively). However, this again is newinformation, since sales orientation entails a tendency to make quicksales often at the expense of customers' long term needs. Althoughthis association between sales orientation and relationship develop-ment is counter-intuitive at face value, a deeper explanation wouldshow that in cross-sectional studies like this one, relationshipdevelopment as a long term impact won't manifest. Therefore, it isplausible that even sales orientation may lead to development ofrelationship with customers in the short, or even medium term(althoughmuchweaker when compared to customer-oriented sellingapproach), but not in the long term, unlike customer orientation.Wachner, Grégoire, and Plouffe (2009) also empirically show thatsales orientation in salespeoplewith lesser level of skills also increasestheir sales performance. Wachner and colleagues demonstrate thatcustomer orientation by itself does not always lead to desirableconsequences, and sales orientation is not always undesirable.However, much against existing understanding in the literature, noassociation was found between customer satisfaction and customerorientation or even sales orientation Relationship development wasalso not found to be associated with customer satisfaction. This studyalso suggests that value creation from customers' perspective mayalso be an alternate form of customer satisfaction. Therefore, thisstudy shows that value creation is a significant outcome of sales-people's customer orientation, which is also an important contribu-tion of the study.

5.1. Managerial implications

The study probably for the first time in the context of a BRICcountry empirically demonstrates that customer-oriented selling is auseful strategy to attain value creation, and relationship developmentwith small and medium-sized business customers. The results of thisstudy also highlight that practicing customer orientations may not

83R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

directly lead to desirable outcomes such as customer satisfaction.Most importantly, we also show that sales orientation of salespersonsdestroys customer perceived value, even though it may help indeveloping customer relationships in the short-term.

From a managerial perspective, the study also suggests that valuecreated by the salespersons in customer relationships may potentiallybe an alternate route to attain customer satisfaction in these relation-ships. In this sense, the studyprobably suggests that customer value andsatisfaction are flip sides of the same coin. This is useful for managerssince otherwise customer value as benefits net of cost, is difficult tocalculate, and tomanage. Tomanagers, the study suggests that customervalue is meaningful only when it is measured from the customers'perspective. It is also important to understand value as a stock concept,where its quantum in the existing relationship is influenced by howsalespeople make efforts to build relational assets, which may changeover time. We add a remark by extending the well known adage, thatvalue like beauty lies in the eyes of the beholder (the customer).

Salespeople with higher levels of customer orientation (vs. highersales orientation) tend to create greater value in their customerrelationships. Therefore, we suggest that the practice of customer-oriented selling by salespersons is rewarding for organizationspresent in the emerging BRIC markets. The small and mediumbusiness customers in emerging markets such as in India are notserved by highly motivated or well-trained sales force, and thepractice of customer-oriented strategies too is less prevalent.Therefore, small businesses may not be as demanding as largecustomers (probably due to the small size of their businesses). Thismay increase the customer perceived value in the relationshipsdeveloped by the salespersons of the supplier firms. On the contrary,sales oriented selling strategy destroys value in customer relation-ships, although they may be successful in building short-termrelationships with customers. Moreover, the value co-creationprocess generates a continuous up cycle loop (Jacobides, Knudsen, &Augier, 2006), which demands a relational strategy to be better suitedthan a transactional approach to selling. So in comparison, customer-oriented selling strategy seems to be a better overall strategy to createvalue and build relationships with small and medium sized businesscustomers in emerging markets, than a sales orientation.

Sales managers of supplier firms would find it useful that valuecreation, and relationship development in business relationships aredisjoint activities, and one may not always lead to the other. Whileboth are important and influence the other, yet customer-orientedselling does lead to higher perceived value in relationships withcompany's salespersons and more harmonious relationships. For-sström (2005) also suggests that exploiting and managing interde-pendence becomes a source for creating value collectively.

Adding to the extant wisdom, this study suggests that makingquick sales (through selling orientation) may not yield desirableresults such as value creation even though it may increase short termsales for the supplier firms. Interestingly, our study provides evidencethat suggests that customer-oriented selling strategies are necessaryeven with small and medium sized firms, and not only for large firms.Another important implication of our study is that salesperson'scustomer orientation does not lead to customer satisfaction, probablydue to the transitory (vs. stable) nature of the satisfaction as a feelingor emotion.

5.2. Limitations and directions for future research

We know today that salesperson's customer orientation is weaklyassociatedwith sales performance.However,wewere still not sure if thecustomer-oriented salespersons increased value for their customers.Jaramillo, Ladik, Marshall, and Mulki (2007) also suggest that, “… firmsneed to focus their attention on multiple factors that together create aperformance-oriented culture. SOCOcanbean important element in theperformance success mix.” (p 306). Prahalad and Venkat (2004) too

suggest that value creation is the way to compete in the future. Thisstudy suggests some pointers in assessing performance of salespersonsthat incorporates customer-perceived value.

However, like in other empirical studies, the current study's resultsshould also be interpreted with its limitations. While discussing theselimitations, it is also meaningful to simultaneously also highlight thefurther research questions that can be addressed by researchers intheir future research.

First, and foremost, the study is limited to the value creation in thebusiness relationship between the salespersons and their customers,rather than value creation, value change or value sharing betweenfirms in the buyer–seller relationships. Since the results of this studyare an artifact of the approach used to conceptualize and measurevalue creation in salesperson's relationship with customers, theexplicit and implicit costs associated in the relationship were largelyignored, which should be taken care of, in future studies.

Second, as inherent in all cross-sectional studies, the concept ofvalue creation in this study too, has been largely treated as static innature, although in actual buyer–seller relationships, the valuecreation is a dynamically evolving one, for which longitudinal orquasi-longitudinal studies are essential.

Third, the sample used in this study consisted of small andmediumsized business customers (in terms of their sales turnover, number ofemployees, and investments). Therefore, the results may be differenthad our sample consisted of large firms. However, small and mediumsized firms constitute a large segment of the industry in India, andgiven the wide range of industries represented in the sample, itlargely reflects the current business reality in most emergingmarkets,including India.

Fourth, the study is based solely on the customer perspective.However, a balanced perspective is more desirable. Future researchshould look at both seller's and buyer's perspectives in explaininghow salesperson's customer orientation impacts value creation, andrelationship development.

Fifth, the current study does not include any possible moderatorsin the proposed model. Some of these moderators can be relationshiplength, size of the customer firm, product type, and salesperson'sattributes such as age, experience, and role stressors. Future studiesshould include at least few of these variables to shed more light onthis phenomenon, and build a contingency model of value creation inbusiness relationships.

Finally, value creation in the salesperson–customer relationshiphas been treated in this study from a dyadic perspective. Recentstudies have emphasized studying focal relationship from a networkperspective (e.g. Anderson, Hakansson, & Johanson, 1994). Futureresearch should study from a network perspective to see how valuecreation in a network of relationships impacts the salesperson–customer dyadic relationship.

Acknowledgement

The authors gratefully acknowledge the research grant receivedfrom Pawan Mehra for sponsoring data collection for this study.

Appendix A. Measures (5-point likert scales; anchors: “stronglydisagree” to “strongly agree.”)

Customer Orientation (Adapted from Saxe & Weitz, 1982;Cronbach alpha=0.649; Mean=3.618; Std Deviation=3.31)

1. The salesperson tries to achieve my goals by satisfying me.2. The salesperson tries to get me to discuss my needs with him/her.3. The salesperson offers the product that is best suited to my

problem.4. The salesperson answers my questions about products as correctly

as he/she can.

84 R. Singh, A. Koshy / Industrial Marketing Management 40 (2011) 78–85

5. The salesperson is willing to disagree with me help me make abetter decision.

Sales Orientation (Adapted from Saxe & Weitz, 1982; Cronbachalpha=0.762; Mean=3.520; Std Deviation=4.04)

1. The salesperson tries to sell as much as he/she can rather than tosatisfy me.

2. The salesperson spends more time trying to persuade me to buythan he/she does trying to discover my needs.

3. The salesperson pretends to agree with me to please me.4. The salesperson begins the sales talk for a product before exploring

my needs.5. If the salesperson is not sure a product is right for me, he/she will

still apply pressure to get me to buy.

Value Creation (New Measure; Cronbach alpha=0.693; Mean=3.694; Std Deviation=3.48)

1. The salesperson considers me a valuable customer of his/hercompany.

2. The salesperson emphasizes the advantages of buying his/herproducts/services.

3. The salesperson follows his/her company's policies and is ethicalwhen dealing with me.

4. The salesperson provides solutions for my problems.5. The salesperson compares his/her products with competitor

products/services to show benefits to me.

Relationship Development (New Measure; Cronbach alpha=0.693; Mean=3.646; Std Deviation=3.44)

1. The salesperson considers his/her time spent with me as long terminvestment.

2. The salesperson finds it difficult to satisfy me(R).3. The salesperson is eager to learn about me.4. I know the company through the salesperson.5. The salesperson tries to satisfy me about the value of buying his/

her product/service.

Customer Satisfaction (New Measure; Cronbach alpha=0.656;Mean=3.634; Std Deviation=3.39)

1. When I do not know what I really want, the salesperson helps me.2. The salesperson asks for my feedback after I have used the product/

service that he/she sold me.3. The salesperson thinks about his/her company's profits when

selling to me(R).4. The salesperson satisfies my complaints.5. The salesperson fulfils the promises made to me.

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Ramendra Singh is Assistant Professor (Marketing) at Indian Institute of ManagementCalcutta, India. He completed PhD from IIM Ahmedabad, and had earlier completed B.Tech and MBA. His doctoral dissertation involves developing a new scale forsalesperson's customer orientation, and determines its impact on salesperson'sperformance. His research has been presented at AMA Winter, and Summer Educatorsconference, EMAC Doctoral Colloquium, and Academy of Marketing conference. He isalso a 2008 AMA-Sheth Doctoral Consortium fellow. His research has been publishedin reputed international journals including, Journal of Business and Industrial Marketing,The Marketing Review, Journal of Medical Marketing, and Asia Pacific Journal of Marketingand Logistics. Ramendra has a previously worked for more than five years in sales andmarketing responsibilities in several multinational companies.

Abraham Koshy (PhD IIM Ahmedabad) is Professor of Marketing at Indian Institute ofManagement, Ahmedabad, India. He joined IIM Ahmedabad as a faculty in 1989. Hehas been a visiting scholar at INSEAD, and Group ESSEC, France. Presently he is aVisiting Professor at the European School of Management, Paris and StrathclydeBusiness School, Glasgow, UK. He has co-authored with Philip Kotler, Kevin Keller, andMithileswar Jha, widely popular book titled, Marketing Management: A South AsianPerspective (Pearson Education, 14th Edition, 2008). He is also closely associated withseveral companies in India and outside as a consultant, an independent member of theBoard of Directors of several public limited companies, and also as a member of severaladvisory committees.