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MBA Research Report

Presented to:

The UCT Graduate School of Business

In partial fulfilment of the requirements for the

Masters of Business Administration Degree

Modular 2008/9

Factors affecting the relationship between Vodacom

(Pty) Ltd and its Outsourced suppliers and their effect on

Performance

BY

Ugestra Alwar

Supervisor: Dr. Hamieda Parker

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CONTENTS

ABSTRACT .................................................................................................. 5

1. INTRODUCTION ................................................................................ 6

1.1. RESEARCH AREA ..................................................................................... 6 1.2. BACKGROUND ON PREVIOUS RESEARCH .................................................... 9 1.3. PURPOSE OF THE RESEARCH .................................................................. 10 1.4. RESEARCH QUESTIONS .......................................................................... 11 1.5. SCOPE AND LIMITATIONS ........................................................................ 12

1.6. RESEARCH ASSUMPTIONS & ETHICS ............................................... 12

2. LITERATURE REVIEW ...................................................................... 13

2.2. RELATIONSHIP MARKETING ORIENTATION ................................................ 15 2.3. ELEMENTS OF RMO .............................................................................. 16

2.3.1. Trust ..................................................................................................... 16 2.3.2. Bonding ................................................................................................ 18 2.3.3. Communication .................................................................................... 19 2.3.4. Shared Value ........................................................................................ 20 2.3.5. Empathy ............................................................................................... 21 2.3.6. Reciprocity ........................................................................................... 21

2.4. RMO AND ORGANISATIONAL PERFORMANCE ........................................... 22 2.5. CONCLUSION ......................................................................................... 23

3. RESEARCH METHODOLOGY ............................................................ 24

3.1. RESEARCH APPROACH ........................................................................... 24 3.2. RESEARCH DESIGN, DATA COLLECTION METHODS AND INSTRUMENTS ....... 27 3.3. SAMPLING ............................................................................................. 28 3.4. ACCESS TO DATA ................................................................................... 29 3.5. RESEARCH CRITERIA (VALIDITY AND RELIABILITY) .................................... 29 3.6. DATA ANALYSIS ..................................................................................... 30

4. RESEARCH FINDINGS, ANALYSIS AND DISCUSSION ......................... 31

4.1. RESEARCH FINDINGS ............................................................................. 31 4.2. RESEARCH ANALYSIS ............................................................................. 32

4.2.1. Introduction .......................................................................................... 32 4.2.2. Item Reliability .................................................................................... 33 4.2.3. Descriptive Statistics ............................................................................ 34 4.2.4. Correlation Results............................................................................... 36 4.2.5. Regression Analysis ............................................................................. 38

4.3. ANALYSIS DISCUSSION ........................................................................... 39

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4.4. RESEARCH LIMITATIONS ......................................................................... 42

5. RESEARCH CONCLUSIONS ............................................................... 43

5.1. INFLUENCE OF RMO ON RELATIONSHIPS ................................................. 43 5.2. RMO AND PERFORMANCE ...................................................................... 45 5.3. CONTRIBUTIONS TO LITERATURE ............................................................. 45 5.4. IMPLICATIONS FOR MANAGERS................................................................ 46

6. RECOMMENDATIONS FOR FUTURE STUDIES .................................. 47

7. BIBLIOGRAPHY ............................................................................... 48

APPENDICES ............................................................................................. 52

APPENDIX A – RESEARCH SURVEY .................................................................... 52 APPENDIX B – SPEARMAN’S RANK CORRELATION MATRIX ................................... 53

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Acknowledgments

This report is not confidential and may be used freely by the UCT Graduate School of

Business.

I would like to thank my Supervisor Dr Hamieda Parker for her unwavering support

and sincere guidance. The effort and dedication invested in my research was way

above the call of duty.

To my mom and dad, thank you for always supporting me and guiding me in the right

direction, and being such a positive influence in my life.

My outmost gratitude goes out to Pranisha for sacrificing so much for me to go

through this process and for always being there.

Thanks to my little sister Karishma for the encouragement and motivation. To my

family and friends for always understanding and encouraging the sacrifices made.

And lastly, thank you to all those participants who made the time and participated in

the survey, this could not have been possible without you.

I certify that this report is my own work and that all references used are accurately

reported.

Ugestra Alwar

December 2009

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Abstract

This study tests the influence of the six hypothesised dimensions of Relationship

Marketing Orientation (RMO) proposed by Sin, Tse, Yau, Lee & Chow (2002) to

Vodacom (Pty) Ltd and four of its Outsourced suppliers. RMO evolves from the

principle of Relationship Marketing which is based on the premise of doing business

whilst establishing committed, trusting and co-operative relationships (Harker, 1999).

The six dimensions namely trust, bonding, communication, shared value, empathy

and reciprocity are applied on a dyadic level to establish their influence on the

relationship between the organisations involved in this study. The study is taken

further to establish if the practice of RMO has a positive influence on the financial

performance of the organisations participating in this research. Data was obtained

from 126 completed surveys by participants involved in the relationship at Vodacom

(Pty) Ltd and the Outsourced Companies.

Strong evidence is found supporting a positive association of the six hypothesised

dimensions influence on the relationship between Vodacom (Pty) Ltd and the four

organisations participating in this study, however not all dimensions were found to be

directly linked but there is evidence to suggest an indirect association exists. A

positive correlation is also established between RMO and the financial performance

of the participating organisations.

The results of this study present serious considerations for the management of

business to business relationships in an Outsourcing context.

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1. Introduction

1.1. Research Area

The outsourcing services market has exploded in recent years as more and more

companies recognize the benefits of outsourcing to qualified firms (Webb & Laborde

2005). Outsourcing has become quite popular in South Africa with a number of

companies adopting this approach due to the perceived benefits associated with this

strategy.

Fan (2000) suggests that some of the reasons an organisation would choose to

outsource a particular function or functions to a qualified company could be to:

Reduce cost

Improve quality

Improve organisational focus

Improve flexibility

Facilitate change

This view is supported by Kannan & Tan (2006) who suggest that firms are constantly

exploring ways to leverage their supply chain and better utilize their resources and

this has resulted in firms outsourcing activities not considered to be core

competencies. Kannan & Tan (2006) do caution though that increased outsourcing

implies greater reliance on suppliers and a greater requirement to develop closer

relationships with suppliers.

Webb & Laborde (2005) suggest that the success of the relationship between the

client and vendor greatly influences the longevity of the outsourcing arrangement. In

the context of this research I would like to analyse the factors which influence the

relationship between an Outsourcing organisation and its client. I would specifically

like to analyse the relationship between Vodacom (Pty) Ltd and the companies which

provide outsourced services on its behalf. This transaction between the organisations

in question can be termed as a business to business or inter-organisational relationship

which Gil-Saura, Frasquet-Deltoro & Cervera-Taulet (2009, p.595) characterise as a

“set of interwoven business strands wherein the strands represent a series of exchange

episodes”. In the context of this business to business relationship which Gil-Saura et

al (2009) state has shifted from emphasising concepts such as power, conflict and

opportunism towards trust, commitment and long term orientation, I will analyse the

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components of the relationship marketing orientation put forward by the research of

Sin, Tse, Yau, Lee & Chow (2002) using Vodacom (Pty) Ltd and four of its

outsourced suppliers. Sin et al (2002) argue that the philosophy of doing business has

evolved from a production orientation, to a selling orientation, and finally to a

relationship marketing orientation.

Vodacom is South Africa’s largest cellular Network with over 28 million subscribers

both on prepaid and contract. Vodacom established itself in South Africa in 1994 and

has seen double digit growth since inception, and has subsequently established

international operations in Tanzania, Lesotho, Congo, and Mozambique. Vodacom

chose to engage in an outsourced partnership in 2006 in an attempt to take advantage

of some of the perceived benefits of Outsourcing mentioned earlier in this study.

Vodacom initially engaged by outsourcing a small portion of its prepaid customer

support to service driven outsourcers and has grown this portion to approximately

80% of all its customer care support for prepaid customers. Vodacom’s monthly

expenditure for these Outsourced partners is quite significant and the services

provided are always under scrutiny to ensure value is added to the organisation.

As the researcher, I am interested in this area as I inherited the Outsourcing portfolio

from a colleague at Vodacom and one of my key responsibilities is the “relationship”

between Vodacom and these Outsourced businesses which Wong & Sohal (2002)

define as a series of transactions which improve our awareness of a shared

relationship, and are built on trust and commitment amongst other factors. There is

very little consideration given to what actually constitutes a relationship (Wong &

Sohal, 2002), as well as how it is practiced in business and therefore in the context of

this research I would like to verify the six dimensions of relationship marketing

orientation hypothesised by Sin et al (2002), and test if these relationship constructs

hold true in the service based Outsourcing scenario at Vodacom (Pty) Ltd.

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Sin et al (2002) devised a measure of relationship marketing orientation for business

to business organisations in the service oriented economy of Hong Kong. The authors

hypothesised that the following six dimensions are constructs of a relationship

marketing orientation:

Trust

Bonding

Communication

Shared value

Empathy

Reciprocity

Relationship Marketing Orientation

Trust

Bonding

CommunicationShared Value

Empathy

Reciprocity

Relationship

Figure 1: Relationship Marketing Orientation proposed by Sin et al (2002)

I will highlight the definitions and conceptual theories around these dimensions in the

literature review which follows.

I begin my research by testing the individual dimensions put forward above by Sin et

al (2002) to establish if they hold true in the Vodacom outsourcing scenario. To

continue the study further I test the influence of the six hypothesised dimensions

above to the performance of these local organisations to establish if a correlation

exists between the relationship and performance of these organisations. Wong &

Sohal (2002) found that higher levels of trust and commitment between companies

which improve shared relationships tend to lead towards higher levels of customer

retention, which in turn leads to profitability. The performance dimension in this

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survey is particularly geared towards financial performance and has been included in

this study by obtaining a view from the research participants via their response to the

research survey. Due to the subjective nature of the survey data, it will be

complemented by actual data in the form of the percentage increase in the value of the

transaction for each relationship dyad in an attempt to bring further credibility to the

findings.

1.2. Background on previous research

There have been numerous studies in the area of relationship marketing. Previous

research in the RMO field was conducted by Yau, McFetridge, Chow, Lee, Sin & Tse

(2000). The authors proposed four dimensions of RMO, namely trust, bonding,

empathy and reciprocity. Sin et al (2002) enhanced the studies by Yau et al (2000) to

operationalize the concept further. Their research focused mainly on the dimensions

affecting the relationship of business to business organisations in the service oriented

economy of Hong Kong. Sin et al (2002) surveyed randomly selected companies from

the Hong Kong Trade Development Council and received 279 completed surveys

from a sample of 1000 targeted organisations.

Sin et al (2002) tested the effects of the dimensions of trust, bonding, communication,

shared value, empathy, and reciprocity as measures of relationships between

organisations in Hong Kong. The research was conducted in an attempt to obtain a

reliable measure of relationship marketing, as Sin et al (2002) argue that relationship

marketing will not develop further until a reliable measurement tool is identified and

operationalized.

Sin et al (2002) also tested the components of relationship marketing orientation to

business performance of the participating organisations using factors like sales

growth, customer retention, ROI and market share which is particularly important in

the application of this research where churn in the mobile industry is highly prevalent

and thus customer retention is critical. The findings were based on the respondent’s

response to the mailed survey and thus there is a level of bias as this is based purely

on the respondent’s perception.

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A positive association was found between the six hypothesised dimensions and

relationship marketing for the Hong Kong based companies. Support was also found

for the link between RMO and organisational performance measures of sales growth,

customer retention, ROI, and market share.

There are numerous other researchers whom have proposed similar dimensions to

those hypothesised by Sin et al (2002), such as Wong & Sohal (2002) who look at the

effect of trust and commitment on relationships and Gil-Saura et al (2009) who

analyse how relationship value, trust, commitment, satisfaction and loyalty intentions

relate to one another in business to business relationships.

1.3. Purpose of the research

The purpose of this study is to identify specific drivers of the relationship between the

organisations engaged in this ongoing transaction. The dimensions included as part of

the relationship marketing orientation have been selected for use to establish their

requirement and contribution towards the relationship between Vodacom and the four

Outsourced organisations participating in this study.

The intended research will be useful firstly for me in my career in this field, as well as

that of understanding and maintaining business relationships going forward. RMO

should have a strong influence on services industries like Outsourcing which is

characterized by dyadic exchanges between a firm and its customers (Sin et al, 2002).

The research should assist others interested in this field and provide a platform for

them to build upon in other contexts and fields.

Given the importance of strong relationships for services businesses, the application

and understanding of RMO can potentially be a very powerful tool for business

professionals Sin et al (2002). The research being conducted will help individuals

understand the drivers of relationships and the factors which require attention to build

and maintain relationships.

Laing & Lian (2005) suggest that the effective management of inter-organisational

relationships is increasingly viewed as a source of competitive advantage for firms.

The findings from this research can be useful for firms and assist them to identify the

benefits of applying this practice in their relationships with key vendors (Gil-Saura et

al, 2009).

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Further benefits include the identification of key characteristics of relationships which

service professionals can utilise to develop targeted strategies for the management of

inter-organisational relationships in their particular service market (Laing & Lain,

2005).

1.4. Research Questions

RMO is concerned with relationship building aimed at maintaining loyalty and

continual patronage from customers (Tse et al, 2004). Sin et al (2002) propose that

RMO is a multi dimensional construct consisting of trust, bonding, communication,

shared value, empathy and reciprocity. Thus the following research questions are

proposed:

Research Question 1

With reference to the six constructs of Relationship Marketing Orientation

hypothesised by Sin et al (2002):

A. Does the dimension of Trust influence the relationship between Vodacom

and its outsourced partners?

B. Does the dimension of Bonding influence the relationship between

Vodacom and its outsourced partners?

C. Does the dimension of Communication influence the relationship between

Vodacom and its outsourced partners?

D. Does the dimension of Shared Value influence the relationship between

Vodacom and its outsourced partners?

E. Does the dimension of Empathy influence the relationship between

Vodacom and its outsourced partners?

F. Does the dimension of Reciprocity influence the relationship between

Vodacom and its outsourced partners?

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Research Question 2

RMO assists parties to achieve higher levels of co-operation and interdependence and

thus leads to higher levels of satisfaction and performance (Yau et al, 2000). Thus the

following research question is proposed:

A. Do the relationship marketing orientation dimensions of trust, bonding,

communication, shared value, empathy and reciprocity influence the

performance of the outsourced vendors?

1.5. Scope and limitations

This research will not cover other Vodacom business partners in fields such as

Information Technology, and will be limited to the four companies providing an

Outsourced Customer Service function only. The study will only cover those

hypothesised relationship dimensions of RMO as proposed by Sin et al (2002), and

will exclude other possible relationship dimensions such as commitment and

satisfaction proposed by authors like Gil-Saura et al (2009).

The performance dimension of this study refers to performance of a financial nature

and does not include other performance dimensions such as efficiency, effectiveness,

and adaptability (Sin et al, 2002).

1.6. Research Assumptions & Ethics

This study attempts to test if the six dimensions hypothesised by Sin et al (2002) of

trust, bonding, communication, shared value, empathy and reciprocity influence the

relationship between Vodacom (Pty) Ltd and its outsourced partners. It is assumed

that the relationship between the parties involved in this study is constructed only of

these six dimensions, and other dimensions such as commitment and satisfaction

proposed by authors like Gil-Saura et al (2009) are excluded from the study.

Due to the nature of the relationship between the organisations and in order to protect

the identity of participants, I have kept the survey data anonymous. I have also

omitted the names of the organisations participating in the study so as not to

compromise their current position. I have masked the costs spent on Outsourcing in

the form of percentage increase in order to avoid eroding any competitive advantage

that Vodacom or its suppliers may be achieving by participating in this research.

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2. Literature review

2.1. Introduction

Outsourcing is one of the few sectors that continues to thrive in the current poor

economic climate (Scott, 2009). This is mainly because issues like cutting costs,

downsizing, reducing debt, and unloading underperforming portfolios is on every

CEO’s agenda with revenues under pressure and high operating costs to maintain

(Narayanan, 2009). Outsourcing has been widely considered to boost the bottom line

for most clients (Scott, 2009). Jiang & Qureshi (2006) suggest that Outsourcing is one

of management’s most recent strategies in the search to find more efficient ways to

improve organisational competitiveness.

A call centre is one of the services which have been outsourced by many

organisations as it represents structured work which can easily be prescribed and

trained (Gupta, 2009). Vodacom (Pty) Ltd engaged in the Outsourcing of a portion of

its prepaid customer support in 2006. The core objective was to leverage cost as the

proposals from vendors were very attractive and didn’t compromise quality of service.

One of the reasons the Outsourced firms are able to provide comparable services

cheaper is due to differences in input labour costs and productivity differentials

between the outsourcing firm and the customer (Jiang & Qureshi, 2006).

Dibon (2009) suggests that it is important for companies to source novel ideas from

its external environment and one of the ways to achieve this is by partnering with

other companies which have expertise in your area of interest. This is especially true

for contact centre providers who provide a service on behalf of a number of different

customers. Vodacom hoped to benefit from the relevant vendors expertise in this

specialised area and this combined with the attractive pricing mentioned above,

concluded the deal (Jiang & Qureshi, 2006).

Outsourcing holds many benefits for organisations in that it can assist firms to focus

on their core business competencies (Bowness, 2009), by freeing key employees time

to focus on key issues instead of being caught up with issues that are not key to the

firms success. These outsourced vendors usually provide specialised competencies

gathered by assisting other organisations which faced similar issues and are able to

operate more efficiently (Narayanan, 2009). These vendors also use experience and

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knowledge in an area to recommend service improvements to reduce costs, and

improve the customer’s ability to achieve business goals (Bhat & Decker, 2009).

It is advisable for firms considering outsourcing to outsource the low yield repetitive

type of transactions, and hold on to the value adds which is strategic for the company

(Keenan, 2009). This is confirmed by Gasparro (2009) who highlights the fact that

outsourcing is a sound strategy when the operation being outsourced is not part of the

companies’ core competency. Vodacom’s core competency is the provision and

maintenance of GSM networks and providing customer service, although important, is

not one of its core competencies. It made sense for Vodacom (Pty) Ltd to outsource

its high volume, low value, transactional call types to an organisation with

competitive advantages in terms of reliability, quality and cost (Jiang & Qureshi,

2006).

Effective outsource vendor management includes contractual and financial issues,

vendor performance management, customer-vendor relationship quality, and ongoing

value from technology innovation and service/cost improvements (Bhat & Decker,

2009). Effective governance is also required to keep both parties focused on

performance and value rather than misaligned objectives where each party wants

what’s best for them. The contract between the customer and the vendor must drive

the intended behaviour e.g. reducing costs or driving innovation (Unknown, 2009).

Noodleman (2009) implies that it is a lot easier to manage an outsourced operation as

you can drive performance by instituting penalties for not achieving agreed Service

Targets. Managing an outsourced vendor via contractual obligations alone though is

not sufficient and Dibon (2009) suggests that maintaining the relationship between the

two companies is very important to form an effective outsourcing partnership and thus

effective vendor management is crucial (Bhat & Decker, 2009). Wong & Sohal

(2002) suggest that there is considerable merit to service companies building

relationships with its customers to improve the level of trust and commitment between

the two organisations.

Relationships form an important part of the outsourcing process and Webb & Laborde

(2005) suggest that successful relationships lead to successful outsourcing

arrangements in which both businesses can benefit from the transaction, and this is

linked to relationship marketing orientation. Yau et al (2000) suggest that in business

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to business dealings, the emphasis is on long term interactive and profitable

relationships. It is with this in mind that we apply the research conducted by Sin et al

(2002) on relationship marketing orientation to measure the influence of the six

hypothesised dimensions on the relationship between Vodacom and its Outsourced

partners.

2.2. Relationship Marketing Orientation

The paradigm shift from transactional to relational conceptualisations of marketing

has resulted in an increased focus being placed on buyer seller type relationships

(Laing & Lain, 2005). Relationship marketing is marketing seen as relationships,

networks and interaction (Harker, 1999). Researchers studying services were among

the first to embrace the concept of relationship marketing (Sin et al, 2002). A shift

towards relationship orientation by companies is stimulated by the growth of the

service economy as well as the increasing competition in the market (Wong & Sohal,

2002). Wong & Sohal (2002) continue to state that the intangibility of the services

being offered in the service economy makes it difficult for customers to evaluate, and

therefore customers are more likely to establish relationships with the individuals and

the companies they represent than with the intangible services being offered and

provided. This is especially true for the outsourcing of customer services which is an

intangible service being rendered on behalf of the client organisation.

Relationship marketing is a strategy in which firms invest in long term bonds with

customers (Roberts, Varki & Brodie, 2003). Harker (1999, p. 16) proposed the

following definition of relationship marketing:

“An organisation engaged in proactively creating, developing and maintaining

committed, interactive and profitable exchanges with selected customers (partners)

over time is engaged in relationship marketing”.

From an organisations point of view, the concept of relationship marketing can be

viewed as a philosophy of doing business with the buyer-seller relationship at the

centre of the firm’s strategic thinking (Tse, Sin, Yau, Lee & Chow, 2004). Geddie,

DeFranco & Geddie (2005) suggest that the objective of relationship marketing is to

build relationships to keep existing customers and to encourage them to be even better

customers, rather than constantly trying to win over new customers. RMO is a

concept upon which relationships are based and Sin et al (2002) provide a framework

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of behavioural dimensions or components which constitute this relationship

highlighted in Figure 1 above.

Sin et al (2002) also suggest that given the importance of relationships in services

organisations, relationship marketing orientation can have a significant impact on the

business. We will use this study as an opportunity to evaluate the effect of the

dimensions of RMO on the relationship between Vodacom and its Outsourced

partners, and go further to test if an association exists between the relationship

composed of these six hypothesised dimensions and the financial performance of the

outsourced organisations in question.

2.3. Elements of RMO

The six dimensions hypothesised by Sin et al (2002) which influence relationship

marketing orientation are trust, bonding, communication, shared value, empathy and

reciprocity. These dimensions were hypothesised based on past literature by authors

such as Yau et al (2000) who hypothesised trust, bonding, empathy and reciprocity as

primary dimensions of RMO. The six dimensions proposed by Sin et al (2002) which

include the four dimensions proposed by Yau et al (2000), as well as the additional

dimensions of communication and shared value will be defined and briefly discussed

in the literature below.

2.3.1. Trust

Sin et al (2002) define trust as a willingness to rely on an exchange partner in whom

one has confidence. Welch (2006) claims that trust is a necessity in relationships and

is the foundation of relationship marketing, and without which no relationship exists.

Trust is a fundamental building block of relationships and is included in most

relationship models (Wong & Sohal, 2002). Gil-Saura et al (2009) suggest that trust is

a key mediating ingredient in successful relationships. Hon & Grunig (1999) argue

that the dimension of trust is constructed by the elements of integrity, dependability

and competence and that trust is a key element of relationships. They theorise

“integrity” as the belief that an organisation is fair and just, “dependability” as the

belief that an organisation will do what it says it will do, and “competence” as the

belief that an organisation has the ability to do what it says it will do.

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Sin et al (2002) conceptualise trust as the degree to which each party feels that they

can rely on the integrity of the promises made by the other party. Welch (2006)

considers trust as a marketing tool and hypothesises ways that relationship marketers

can demonstrate their trustworthiness, and highlights opening two way lines of

communication, guaranteeing the level of service offered, and building higher

standards of organisational conduct. Trust plays a pivotal role in reducing the

perceived risk for purchasers and must be viewed as a key indicator in the

development of relationships (Laing & Lain, 2005).

Welch (2006) in her research paper entitled “Rethinking relationship management”

considers trust to be a multi dimensional construct involving confidence, goodwill,

faith, integrity, justice, veracity, competence, reliability, dependability, benevolence,

risk and vulnerability. Gil-Saura et al (2009) suggest that the parties involved have to

be vulnerable to an extent for trust to become operational, and there is usually

vulnerability in business to business relationships due to the interdependency that is

required in these transactions. Webb & Laborde (2005) argue that outsourcing

agreements that are mutually beneficial are a requirement for trust to develop in long

term strategic relationships. Johnston, McCutcheon, Stuart & Kerwood (2004) suggest

that a distinguishing component of trust is benevolence which is the forbearance of

opportunism, which only develops through behaviours which demonstrate

trustworthiness. Roberts et al (2003) argue that trust serves to limit risk and is the

single most powerful relationship marketing tool available to a firm.

Webb & Laborde (2005) note that if trust is lacking in outsource relationships, then

the outsourcer has little incentive to invest additional effort, and the client inturn has

little reason to value the effort. Welch (2006) continues further to highlight the lack of

literature of “distrust” in relationships which is defined as the “lack of confidence in

the other, a concern that the other may act so as to harm one, that he/she does not care

about one’s welfare or intends to act harmfully, or is hostile”, it would be interesting

to explore the effects of distrust on business to business relationships.

Lee & Trim (2006) suggest that Marketers still need to determine how trust in

relationships relates to issues such as improving the performance of existing products,

product innovation, product development, reducing costs and eliminating

opportunistic behaviour. Sahay (2003) suggests that trust is susceptible to cultural

norms and is therefore quite subjective. Selnes (1998) suggests that trust is a similar

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concept to that of satisfaction and that satisfaction is in fact a source for trust. Larson

(1992) found that Trust is not a requirement for all relationships and found that price

based, arm’s length market exchange is sufficient in some cases.

2.3.2. Bonding

Sin et al (2002) define bonding as the dimension of a business relationship that results

in two parties acting in a unified manner towards a desired goal. There are a number

of bonds including social bonds (social support), knowledge bonds (expertise based

support), psychological bonds (reputation related assurance) and ideological bonds

(ethical compatibility) (Roberts et al, 2003). Social bonding in particular is used in

this study. Bonds are made up of a number of components including performance

satisfaction (Sin et al, 2002), and a major driver of satisfaction in relationships is the

perceived performance of the relationship (Johnston et al, 2004).

Szmigin, Canning & Reppel (2006) acknowledge that relational exchange requires the

involvement of human beings, and the social bonds that form during this exchange

can be an important feature of a relationship. Szmigin et al (2006) go on to say that

repeated interpersonal interactions between customers and suppliers leads to a process

where individuals act and react to each other developing common assumptions and

shared understanding. Laing & Lain (2005) recommend that organisations partake in

relationship specific investments in order to create closer ties. The outcome of these

repeated interactions and depending on the parties satisfaction thereof, results in the

development of some degree of emotional attachment or mutual appreciation between

the parties.

Laing & Lain (2005) argue that the gap in relationship expectations between

organisations is likely to narrow as time elapses due to the pursuit of mutual goals

bringing about a sense of benevolence in which each party acts in the best interest of

the other. A lack of social bonding will make it very difficult for companies to

develop relationships with its customers. Laing & Lain (2005) view the closeness of a

relationship as being directly related to the formality of communication with closer

relationships characterised by more informal spontaneous interactions. The authors

highlight that bonding contributes towards the “closeness” of a relationship which is a

critical component in the formation of inter-organisational trust. The strength of the

social bonds between organisations provides a valuable indicator of the status of the

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inter-organisational relationship, thus the stronger the bond, the stronger the

relationship (Laing & Lain, 2005).

The validity of the concept of Bonding has been called into question recently,

particularly where information technology has replaced the human to human

interaction which is a feature of many service operations Szmigin et al (2005).

2.3.3. Communication

Sin et al (2002) define communication as the formal and informal exchange and

sharing of meaningful timely information between two parties. Webb & Laborde

(2005) also support the requirement of two way communication in successful

outsourcing relationships which allows for the formation of mutual respect and aligns

understanding between the parties. Szmigin et al (2005) suggest that a central theme

for strong market relations is communication and customer involvement in dialogue is

advantageous.

Marshall, Fynes & Lynch (2006) propose that communication lies at the heart of any

analysis conducted on organizational relationships and is a requirement of any

business relationship. Marshall et al (2006) go on to claim that communication should

be frequent and timely as it assists in resolving disputes and avoiding disputes by

constantly aligning perceptions and expectations. Laing & Lain (2005) found that the

“closeness” of relationships can be determined by the formality of communication. In

the more transactional type contexts, communication is in the form of formal

meetings, whereas in closer relational contexts, communication is more informal,

spontaneous and extensive. The erosion of organisational boundaries by enhanced

communication can lead to a process of social exchanges and social relationships

(Laing & Lain, 2005). The authors also note that boundary spanning staff between

organisations facilitates effective communication, such multi dimensional

communication is a crucial lubricant for relationship development as it integrates

economic and social exchanges and in doing so reduces the distance between the

organisations (Laing & Lain, 2005).

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Sin et al (2002) suggests that timely communication fosters the dimension of trust by

assisting in solving disputes and aligning expectations. Webb & Laborde (2005) argue

that effective communication can assist to minimize stress and anxiety in client

vendor relationships and advises establishing clear communication channels and using

good communicators to help facilitate and stimulate information flow between the

organisations.

Olkkonen, Tikkanen & Alajoutsijarvi (2000) propose that one can draw a parallel

between the concepts of “social exchange episodes” and “communication in long term

relationships, suggesting that interlinked exchange episodes of various types like

legal, economic and information, forms the interaction process between the parties.

2.3.4. Shared Value

Sin et al (2002) defined shared value as the extent to which partners have beliefs in

common about what behaviours, goals, and policies are important or unimportant,

appropriate or inappropriate, and right or wrong. Zineldin (2004) suggests that when

an organisation’s objective is to create long term shared value with its customers, the

elements of the marketing mix change dramatically and this is a much more effective

approach. Zineldin (2004) continues to argue that effective relationships are only

possible when mutual value is continuously created and shared.

Sin et al (2002) theorize that when partners have common goals and shared value, the

commitment towards the relationship is increased. Commitment defined as “an

enduring desire to maintain a valued relationship”, is an important variable to

understand the strength of a marketing relationship and is a useful construct to

measure customer loyalty (Wong & Sohal, 2002). Gil-Saura et al (2009) suggest that

commitment goes beyond an evaluation of current benefits and implies a long term

orientation to achieving valuable outcomes. Commitment which Sin et al (2002)

suggest is an outcome of shared value, extends to resolving problems or conflict

which may arise in a relationship in order for the relationship to endure (Roberts et al,

2003).

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2.3.5. Empathy

Sin et al (2002) define empathy as seeking to understand somebody else’s desires and

goals, and can be stated as the dimension of a business relationship in which both

parties seek to see a situation from the others perspective. Sin et al (2002) highlight

the empathetic abilities of sales people which has been identified as a requirement to

successful selling. Sin et al (2002) highlight empathy as a sub component of the

Chinese dimension of “guanxi”, which can be defined as “the social interaction within

a networked group where repeated favour exchanges ensure a measure of trust among

the participants of this network” (Geddie et al, 2005, p.615).

Bagozzi (2006) suggests that empathy can facilitate communication between sales

personnel and customers, thereby promoting interpersonal liking, which can be linked

to the bonding dimension highlighted above.

Yau et al (2002) suggest that empathy plays a major role in business relationships,

both eastern and western and is a necessary condition to foster a positive relationship

between two parties.

2.3.6. Reciprocity

Sin et al (2002) define reciprocity as the dimension of a business relationship that

causes either party to provide favours or make allowances for the other in return for

similar favours or allowances to be received at a later date. Sin et al (2002) make

specific reference to converged value that is reached in which the equivalent is given

and received from each party. Reciprocity links with creating shared value and

therefore commitment as customers should be willing to reciprocate a firm’s effort

based on past benefits received (Wong & Sohal, 2002), and in this case the authors

refer to the parties willingness to make short term sacrifices in order to realise longer

term benefits.

Hon & Grunig (1999) refer to reciprocity in relationships as organisations

demonstrating gratitude for supportive beliefs and behaviours. Webb & Laborde

(2005) highlight going the extra mile and fulfilling the unwritten contract as

opportunities to contribute towards building the relationship between a client and its

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outsourcer. Roberts et al (2003) suggest that business to business relationship theories

are based on the assumptions of rational behaviour and mutual reciprocity due to their

contractual nature.

Yau et al (2000) suggests that reciprocity is linked to bonding as a reciprocal

arrangement is indicative of co-operation. Sanders & Schyns (2006) refer to a concept

called “interest” in exchange relationships. They argue that the interest of a person

changes from self to mutual as relationship quality increases, proposing a focus on

mutual interest to obtain mutual benefits and a deep concern for the other party in

higher quality relationships. This suggests that “interest” in the form of a deep

concern for the other party improves with the quality of the relationship and not based

gratitude as eluded to above.

2.4. RMO and Organisational Performance

Jiang & Qureshi (2006) suggest that research considering the context surrounding

outsourcing decision results is likely to be essential to corporate outsourcing

management. Webb & Laborde (2005) argue that relationships are a key requirement

to creating value in an expanding outsourcing universe, and a positive relationship

between RMO and performance in this study should support this argument. The

authors go on to highlight that it is the strength of a relationship that can determine

whether or not the client awards a firm further business and not just whether the

Outsourced firm is achieving its contractual commitments.

Sin et al (2002) argue that building strong relationships between the firm and its

customers can assist in increasing customer loyalty thereby offering the firm an

advantage over its competitors. The authors go on to elaborate that in order for an

organisation to maximise its long term performance in aspects such as profitability,

customer retention, and sales growth, it has to build long term mutually beneficial

relationships with its customers.

Johnston et al (2004) suggest that there is a paucity of empirical evidence highlighting

that trust has an impact on inter-organisational activities. Johnston et al (2004)

highlight that although it is apparent that RMO has a direct impact on performance, its

importance may depend on factors in the competitive environment, such as price

changes, new product introductions and promotional intensities. Laing & Lain (2005)

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argue that economic exchanges which is the focal point of inter-organisational

exchanges, is strengthened when embedded as part of the social relationship as

highlighted by the bonding dimension of RMO. For the purposes of this study,

performance is considered to be financially inclined.

Tse et al (2004) suggest that RMO is a strategy aiming at maintaining loyalty and

continual patronage, this loyalty may lead to a performance advantage for firms due to

the re-occurring business and reduced costs required to acquire customers.

2.5. Conclusion

Relationship Marketing Orientation can be a very powerful tool for businesses if used

in the correct manner and this study will attempt to contribute towards the literature.

The Relationship Marketing Orientation dimensions proposed by Sin et al (2002)

were constructed in the service driven economy of Hong Kong and are a good fit for

the Outsourcing industry which can be characterised as an intangible service.

The study conducted by Sin et al (2002) provides a good foundation to base a similar

study testing the effect of each construct of the relationship between Vodacom and its

Outsourced partners. The RMO dimensions are also geared towards business to

business relationships and this is ideal for the research being conducted.

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3. Research Methodology

3.1. Research Approach

I have conducted research on a deductive approach which entails studying the

literature available on the topic and formulating a research design.

My research is of a quantitative approach which is similar to the approach followed

by Sin et al (2002) in which specific respondents were invited to respond to a self

completion survey, however the surveys in this research study were administered by

the researcher. Data was gathered from the surveys which were completed by pre

selected research participants who are involved in the Outsourcing process in their

respective organisations. The surveys provide information which is of a subjective

nature, and this is combined with an objective measure for the performance

dimension, however past studies have found a strong association between objective

measures and subjective measures (Sin et al, 2002). The survey was adopted from Sin

et al (2002) and Johnston et al (2004) and is designed to capture a measurement for

each dimension of RMO, as well as the performance construct using multi item scales

for reliability.

Participants are more likely to give unbiased responses when anonymity is assured

(Yau et al, 2000), and for this reason respondents will be assured of anonymity as no

details will be required on the response sheet. The researcher made it clear to

respondents that the research was being conducted in his personal capacity and that no

information would be divulged and anonymity was assured in good faith. Each

respondent received a document attached to the survey which contained the

definitions for each dimension of RMO, completion instructions and the rating scale

in order to complete the survey.

The interviews were conducted with key people involved in the Outsourcing arena at

Vodacom and their Outsourced partners, who comprise mainly of listed corporate

organisations. Respondents from the outsourced organisation were selected based on

interactions with Vodacom and all employees at the outsourced organisations which

were involved in any sort of ongoing interaction with Vodacom were included as

participants. A total of 126 surveys were completed by both Vodacom and the four

outsourced partners bearing in mind that Vodacom participants completed an

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individual survey for each outsourced partner with whom they had interactions. The

organisations involved in this study have been doing business with each other for a

minimum of 24 months and thus a fairly mature relationship exists. This meant that an

existing relationship was present between the participants of the study and the

researcher, and this made it relatively easy for the researcher to arrange meetings with

participants and facilitate the completion of the survey.

The research participants completed a twenty five question survey which consisted of

two sections. The first part is adopted from the research by Sin et al (2002) on the six

hypothesised dimensions of RMO, and the second is adopted from Johnston et al

(2004) and consists of a multi item scale for the performance dimension. The survey

contains questions on the following areas:

Part 1

trust (four items)

bonding (four items)

shared value (four items)

communication (three items)

empathy (four items)

reciprocity (three items)

Part 2

the link between RMO and performance (three items)

Sin et al (2002) generated this multi item scale per dimension by hosting a focus

group with eight business managers in Hong Kong. The authors then exposed the

generated items to scrutiny by using 11 faculty members from a Hong Kong

university to evaluate its content/face validity. After completing this process, the

authors then exposed the updated items to nine more faculty members from another

Hong Kong university to further refine the items that were generated. Lastly to test

the internal consistency of the proposed RMO scale, the authors conducted a pilot

study by using 120 business executives on the part time MBA program at a Hong

Kong university and requested that they rate the items on a seven point scale based on

whether they agreed or disagreed with respect to a major customer. All items with an

item to total correlation of below 0.3 were deleted.

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The adopted survey questions for this study were pre-tested by a focus group

consisting of five University of Cape Town MBA students to ensure validity in a local

context. The focus group recommended a number of changes and enhancements

which were updated before being administered to the participants of this study. The

research Supervisor was also in agreement of the survey.

The relationship between the two organisations formed the basis of the interview, as

well as the respondent’s view of the performance of the organisations participating in

this study relative to industry benchmarks and competitors. Jiang & Qureshi (2006)

found that the current data on outsourcing is very subjective and includes a lot of

subjective and perceptual data. It is for this reason that an element of actual data

highlighted in Table 14 below in the form of financial transactions between the two

organisations is used as an objective measure between RMO and performance. This

data is available to the researcher as the researcher is part of the management team of

the Outsourcing portfolio at Vodacom (Pty) Ltd. The introduction of this data should

strengthen the findings of the research as it will be based on both actual data as well

as subjective data obtained from the survey. The research findings will comprise of an

analysis of the response from interviewees to the survey highlighted below as

Appendix A.

The scales and sub scales of RMO adopted from the study conducted by Sin et al

(2002) which were in turn adopted from the study by Yau (2000) successfully met

standards for internal validity, content validity, construct validity and criterion related

validity Tse et al (2004). The scale has been included below as Appendix A.

The link between the relationship of the organisations participating in the research and

performance was evaluated by comparing the outcome of the various relationships to

selected measurements adopted from the research of Johnston et al (2004). Kitchen

(1997, p.279) suggests that while organisations may be willing to participate in

interviews and research studies, they may not be willing to divulge information which

can be considered as competitive intelligence. It was for this reason that we utilized

open ended performance measures which did not directly influence or jeopardise the

organisations competitive intelligence.

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3.2. Research Design, Data Collection methods and instruments

This research is based on a cross sectional design and is similar to the approach

followed by Sin et al (2002). The research is based on a deductive approach and

includes four participating supplier organisations which are known to the researcher

and which operate in the same business sector. The respondents were given

instructions and requested to complete the survey questionnaire. The respondents

comprised of Vodacom representatives, and representatives from its business partners

providing Outsourced Customer Services. The survey was administered by the

researcher who sensitised the participants by advising the reason for the study and

assured anonymity. The researcher remained neutral so as not to introduce any bias.

The survey was completed without any of the user’s details creating the feeling of

anonymity. Respondents were selected based on their involvement in the operations

of the Outsourced Customer Services function at their respective organisation.

Staughton & Johnston (2005) suggest that it is only possible to understand business

markets by simultaneously studying both sides of a relationship. In light of this a

company approach has been selected (Shaw, Shaw & Enke, 2004). Each

representative selected to partake in the research from Vodacom (Pty) Ltd was

required to complete a survey for each Outsourced organisation in order to obtain

specific measurements for each relationship dyad. Each representative for the

Outsourced organisation was required to complete only one survey for the

relationship between their organisation and Vodacom (Pty) Ltd. This is highlighted in

the sampling diagram below:

Figure 2: Sampling Methodology

Representative from Vodacom

(Pty) Ltd

Representative from

Outsourced Organization A

Representative from Outsourced Organization B

Representative from Outsourced Organization C

Representative

from Outsourced

Organization D

40

31 27

28

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Highlighted in blue in Figure 2 above is the number of completed surveys for each

relationship dyad. The sample size for each dyad varies due the scale of the particular

operation and the amount of participants involved in the specific outsourced

relationship. Respondents were requested to respond to each statement on the survey

based on a seven point Likert scale ranging from one to seven, one being strongly

disagree and seven being strongly agrees.

The RMO survey has been adopted from the studies completed by Sin et al (2002) in

which the researchers conducted a similar study in the service oriented economy of

Hong Kong. The performance scales were adopted from research conducted by

Johnston et al (2004). The responses for the various RMO dimensions were of a

reflective nature as it was based on the respondent’s perception of the particular

dimension. The performance construct however was based on a reflective and

formative measure as it includes questions in the survey of the respondent’s

perception, which was combined with the growth/decline of the rand value of the

monthly transactions between the organisations in percentage terms.

The survey was pre-tested by a focus group of UCT GSB MBA students before being

administered to the research participants to ensure its applicability in the local

environment.

3.3. Sampling

The participants in the survey were selected based on their involvement in the specific

relationship dyad as highlighted above in Figure 2. The extent to which the proposed

dimensions exist within each dyad can only be adequately assessed by incorporating

the views of both organisations (Johnston et al, 2004), therefore all Vodacom

employees involved in the Outsourcing arrangement were requested to complete the

survey for each relationship dyad in which they were involved, and all counterparts in

supplier firms were also requested to complete the survey. This allowed the researcher

to survey a majority of the population. The researcher is cautious to claim that the

entire population has been interviewed as there are still Adhoc interactions between

staff that take place. The researcher did however manage to survey all the targeted

participants within each organisation. All participants are at a management level at

either Supervisor, Manager or Executive level.

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The four organisations participating in this study are outsource providers who provide

a customer service function on behalf of Vodacom (Pty) Ltd in the form of contact

centres.

3.4. Access to data

A number of different resources were utilised to secure information ranging from

decision makers at Vodacom, to operational staff. The study includes representatives

from four companies who provide Outsourcing services to Vodacom. All participants

were actively involved in the Outsourcing environment at Vodacom and its

outsourced suppliers. Academic literature has been sourced from online publications,

the UCT GSB library, and academic journals.

3.5. Research Criteria (Validity and Reliability)

The research has been completed in a manner which is structured and repeatable for

further studies and the author has taken great care to record and articulate every step

in great detail.

There is evidence of construct validity due to the pattern of correlations among the

variables on Table 5 to 8 which conform to what is predicted by theory (Sin et al,

2002). The issue of internal validity is quite important when looking at the causal

relationships for Hypothesis two. The researcher has conclusively proven that the

independent variable does contribute towards the dependent variable by using a

multiple regression highlighted on Table 9 below.

Sin et al (2002) examined the reliability of each scale by using coefficient alphas

which brings some credibility to the scale being used. The scale attached as Appendix

A has been adopted from Sin et al (2002) and Johnston et al (2004) and has been

tested to ensure item reliability in a local context using cronbach alpha item reliability

displayed on Table 1 below.

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3.6. Data Analysis

The information was collected, captured and grouped in Microsoft Excel for easy

analysis and manipulation. Statistical software namely Statistica was used for all data

analysis including descriptive statistics, correlation outputs, two sample t-tests and

regression analysis.

The researcher consulted with a statistics graduate as well as a graduate completing a

doctorate in statistics for advice and guidance. The data analysis that follows will

reveal whether the dimensions of RMO influence relationships in a local context, as

well as whether they influence performance in the four organisations which

participated in this study.

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4. Research Findings, Analysis and Discussion

4.1. Research Findings

The scale which was adopted from Sin et al (2002) and Johnston et al (2004) was

exposed to a group of MBA students for enhancements. The scale met standards for

item reliability and is therefore operational in a local context.

Similar to findings by Sin et al (2002), a positive correlation was established between

the six dimensions of RMO for all four relationship dyads. This suggests that the

dimensions of trust, bonding, communication, shared value, empathy and reciprocity

positively influence the relationship between the firms participating in this study.

Some dimensions do not indicate a direct correlation though, however all dimensions

are positively correlated to at least one other dimension which suggests that the

particular dimension does contribute indirectly to RMO and as such does have an

influence (Solberg & Durrieu, 2008).

A positive correlation was found between all the RMO dimensions and performance

for both Company A and Company D. Shared Value and Reciprocity did not show

significance at the 0.05% significance level for Company B. Shared Value did not

correlate with performance in the Company C dyad as well. It must be noted here

though that although these dimensions did not correlate with performance, they do

correlate positively with other RMO dimensions which are positively associated with

performance. It can therefore be deduced that these dimensions contribute indirectly

to performance via links to the positively correlated dimensions.

The multiple regression analysis using performance as the dependent variable and the

dimensions of RMO as the independent variables revealed a positive relationship

between RMO and performance for each relationship dyad. The regression output for

each vendor highlighted significant beta coefficients for some dimensions in each

relationship, but as discussed in the correlation findings, the dimensions are inter-

related and therefore contribute indirectly to performance.

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4.2. Research Analysis

4.2.1. Introduction

A total of 126 surveys were completed for this study by participants from all four of

the relationship dyads. The questionnaire data was captured on Microsoft Excel and

Statistica was used to analyse the data. The items for each dimension were averaged

per survey in order to obtain a scoring for processing in Statistica. I started by

verifying the item reliability of the questionnaire in the local context using the

cronbach alpha item reliability test (Sin et al, 2002). I then analysed the dataset for

each respective dyad using descriptive stats looking at metrics like the means and

standard deviations to verify if any relationships were evident.

I embarked on an exploratory finding looking at the correlations between the various

dimensions. My sample sizes for each relationship dyad differed with two samples

being below the 30n level. I chose to standardise on the Pearsons correlation test

which assumes that my data has a normal distribution. I did however run the

Spearmans non parametric rank correlation test for the datasets below 30n to ensure

that the outputs were not significantly different. I attached the Spearman’s rank

correlation tests as Appendix B for the relationships with less than 30 surveys. The

non parametric test revealed the same items as significant and non significant. My

goal was to find associations between the six hypothesised relationship dimensions

proposed by Sin et al (2002) to identify if that dimension influenced the relationship

of the firms involved in this study.

To address the second research question I followed a similar approach to that of Sin et

al (2002). I used a correlation test comparing the effect of the hypothesised

dimensions on performance. I then also conducted a multiple regression with the

performance dimension as the dependent variable and the dimensions of trust,

bonding, communication, shared value, empathy and reciprocity as the independent

variables. The findings are highlighted in the discussion subsection below.

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4.2.2. Item Reliability

The responses to the questionnaire where tested using cronbach alpha to test item

reliability and consistency in the local context. All dimensions exceeded 0.65 and the

table below summarises the cronbach results for each dimension per organisation:

Item Reliability - Cronbach alpha Results Company A Company B Company C Company D Trust 0.861919 0.898551 0.951487 0.935311 Bonding 0.797834 0.821876 0.874574 0.837528 Communication 0.680791 0.657754 0.814974 0.690299 Shared Value 0.853964 0.89988 0.734191 0.96682 Empathy 0.84011 0.751656 0.734191 0.921482 Reciprocity 0.656394 0.682327 0.821304 0.737712 Performance 0.868589 0.827793 0.906485 0.957813 Overall 0.9399502 0.927127 0.955757 0.973491

Table 1: Item Reliability

Those items scoring less than 0.7 above have been highlighted in red.

The overall coefficient alpha for all four datasets is above the threshold of 0, 7 (Sin et

al, 2002) and therefore these findings support the case for scale reliability.

Company A Company B Company C Company D Cronbach alpha if questions were deleted Communication Q1 0.420690 0.362245 0.717272 0.417143 Communication Q2 0.773518 0.729825 0.756982 0.759733 Communication Q3 0.566450 0.590541 0.765040 0.525036 Reciprocity Q1 0.470464 0.471889 0.844680 0.573059 Reciprocity Q2 0.481375 0.647716 0.651429 0.634221 Reciprocity Q3 0.690976 0.596000 0.770270 0.726225

Table 2: Item Reliability Analysis

The table above highlights the effect of the cronbach alpha should select questions be

deleted. Quite evident is question C2 of the survey which if removed would increase

the cronbach scoring for the Communication dimension. The question posed to

participants was “we show our discontent toward each other through communication”,

and could be re-phrased, re-engineered or removed to improve the scoring. This will

be dealt with in the future recommendations portion of the report.

The questions on reciprocity, if removed would have a positive effect on some

organisations, and a negative effect on others. All other dimensions indicated declines

in scoring should items be deleted and were therefore excluded for the purposes of the

exercise on Table 2.

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4.2.3. Descriptive Statistics

Mean Std Dev Company A Trust 5.49 0.896 Company A Bonding 5.76 0.792 Company A Communication 5.28 0.962 Company A Shared Value 5.03 0.974 Company A Empathy 5.14 1.014 Company A Reciprocity 5.34 0.835 Company A Performance 5.63 0.949

Mean Std Dev Company B Trust 5.69 0.703 Company B Bonding 5.65 0.766 Company B Communication 5.06 0.762 Company B Shared Value 5.13 0.844 Company B Empathy 5.24 0.776 Company B Reciprocity 5.28 0.839 Company B Performance 5.45 0.772

Mean Std.Dev Company C Trust 5.47 0.954 Company C Bonding 5.30 1.120 Company C Communication 4.90 1.069 Company C Shared Value 4.97 0.908 Company C Empathy 5.12 0.798 Company C Reciprocity 5.32 0.998 Company C Performance 5.16 1.027

Mean Std.Dev. Company D Trust 4.52 1.258 Company D Bonding 4.48 1.069 Company D Communication 4.65 0.900 Company D Shared Value 4.33 1.266 Company D Empathy 4.43 1.224 Company D Reciprocity 4.63 1.016 Company D Performance 3.98 1.423

Table 3: Descriptive Statistics

The table above reflects the descriptive stats for the RMO dimensions, as well as

performance. The mean and standard deviation for each dimension was calculated

using the average of the multi item scale.

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4.2.4. T-test Results

Provider

p-level Mean Vodaco

m

Mean Provider

Std.Dev. Vodaco

m

Std.Dev. Provider

Valid N Vodaco

m

Valid N Provide

r

Comp A Trust p > .10 5.416667

5.609375

0.931533

0.856197 24 16

Comp A Bonding p > .10 5.593750

6.000000

0.911319

0.500000 24 16

Comp A Communication p > .10 5.02777

8 5.66666

7 0.98744

1 0.80737

3 24 16

Comp A Shared Value p > .10 5.031250

5.031250

1.045987

0.889171 24 16

Comp A Empathy p > .10 4.989583

5.359375

1.099603

0.856197 24 16

Comp A Reciprocity p > .10 5.166667

5.604167

0.890096

0.690880 24 16

Comp A Performance p > .10 5.430556

5.916667

0.955428

0.890277 24 16

p-level Mean Mean Std.Dev. Std.Dev. Valid N Valid N

Comp B Trust p > .10 5.532609

6.156250

0.720260

0.399497 23 8

Comp B Bonding p < .10 5.500000

6.062500

0.815336

0.395285 23 8

Comp B Communication p > .10 4.97101

4 5.33333

3 0.78440

0 0.66666

7 23 8

Comp B Shared Value p > .10 4.956522

5.625000

0.890774

0.422577 23 8

Comp B Empathy p < .01 5.054348

5.781250

0.815184

0.208631 23 8

Comp B Reciprocity p > .10 5.173913

5.583333

0.815689

0.886405 23 8

Comp B Performance p > .10 5.391304

5.625000

0.801842

0.700057 23 8

p-level Mean Mean Std.Dev. Std.Dev. Valid N Valid N

Comp C Trust p < .025

5.118421

6.312500

0.805228

0.752970 19 8

Comp C Bonding p < .10 4.947368

6.125000

1.091568

0.694365 19 8

Comp C Communication

p < .001

4.438596

6.000000

0.875261

0.563436 19 8

Comp C Shared Value p > .10 4.855263

5.250000

0.932871

0.834523 19 8

Comp C Empathy p < .10 4.934211

5.562500

0.753889

0.764736 19 8

Comp C Reciprocity p < .001

4.877193

6.375000

0.833041

0.330344 19 8

Comp C Performance p < .10 4.824561

5.958333

0.905187

0.880791 19 8

p-level Mean Mean Std.Dev. Std.Dev. Valid N Valid N

Comp D Trust p < .01 4.095238

5.785714

1.149664

0.466114 21 7

Comp D Bonding p < .025

4.178571

5.392857

1.043261

0.475595 21 7

Comp D Communication p > .10 4.39682

5 5.42857

1 0.86035

6 0.49867

5 21 7

Comp D Shared Value p < .005

3.916667

5.571429

1.186732

0.345033 21 7

Comp D Empathy p < .05 4.14285 5.28571 1.26137 0.54826 21 7

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7 4 7 6

Comp D Reciprocity p < .10 4.380952

5.380952

0.973457

0.780042 21 7

Comp D Performance p < .05 3.571429

5.190476

1.402945

0.503953 21 7

Table 4: t-test results per relationship dyad

A Kolmogorov Smirnov two sample t-test was completed to analyse the differences

between the means and standard deviations between the two organisations in each

relationship dyad. The purpose of this was to look at how homogenous the

respondents were using the standard deviation which could indicate the variability of

how the two firms view particular dimensions. The means were used to measure the

degree of alignment between the two organisations. A number of dimensions were

identified which showed significance at a 0.05% significance level which are

highlighted in red.

4.2.5. Correlation Results

Correlation between the six Relationship Dimensions and Performance

Trust Bond Comm Shared V Empathy Recipr Perf A Trust 1.0000 p= --- A Bonding .5243 1.0000 p=.001 p= --- A Communication .5076 .6736 1.0000 p=.001 p=.000 p= --- A Shared Value .5950 .5483 .4620 1.0000 p=.000 p=.000 p=.003 p= --- A Empathy .4542 .6157 .5917 .6361 1.0000 p=.003 p=.000 p=.000 p=.000 p= --- A Reciprocity .5367 .4232 .5462 .2806 .5105 1.0000 p=.000 p=.007 p=.000 p=.080 p=.001 p= --- A Performance .6025 .5548 .6275 .7037 .6385 .3597 1.0000 p=.000 p=.000 p=.000 p=.000 p=.000 p=.023 p= ---

Table 5: Company A correlation results including performance dimension

Trust Bond Comm Shared V Empathy Recipr Perf B Trust 1.0000 p= --- B Bonding .6732 1.0000 p=.000 p= ---

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B Communication .4941 .6211 1.0000 p=.005 p=.000 p= --- B Shared Value .4164 .5729 .3926 1.0000 p=.020 p=.001 p=.029 p= --- B Empathy .6787 .6261 .5787 .6063 1.0000 p=.000 p=.000 p=.001 p=.000 p= --- B Reciprocity .3429 .1335 .2314 .2886 .6008 1.0000 p=.059 p=.474 p=.210 p=.115 p=.000 p= --- B Performance .4115 .4583 .6346 .3509 .4327 .1301 1.0000 p=.021 p=.010 p=.000 p=.053 p=.015 p=.485 p= ---

Table 6: Company B correlation results including performance dimension

Trust Bond Comm Shared V Empathy Recipr Perf C Trust 1.0000 p= --- C Bonding .7749 1.0000 p=.000 p= --- C Communication .6286 .7236 1.0000 p=.000 p=.000 p= --- C Shared Value .6431 .5427 .1952 1.0000 p=.000 p=.003 p=.329 p= --- C Empathy .8447 .6902 .5780 .5493 1.0000 p=.000 p=.000 p=.002 p=.003 p= --- C Reciprocity .7067 .6887 .8238 .1412 .6382 1.0000 p=.000 p=.000 p=.000 p=.482 p=.000 p= --- C Performance .6787 .5923 .6610 .3317 .6798 .5317 1.0000 p=.000 p=.001 p=.000 p=.091 p=.000 p=.004 p= ---

Table 7: Company C correlation results including performance dimension

Trust Bond Comm Shared V Empathy Recipr Perf D Trust 1.0000 p= --- D Bonding .8279 1.0000 p=.000 p= --- D Communication .6759 .7885 1.0000 p=.000 p=.000 p= --- D Shared Value .8945 .8238 .6509 1.0000 p=.000 p=.000 p=.000 p= --- D Empathy .8258 .7752 .6375 .8358 1.0000 p=.000 p=.000 p=.000 p=.000 p= --- D Reciprocity .6792 .5479 .4451 .6193 .6704 1.0000 p=.000 p=.003 p=.018 p=.000 p=.000 p= ---

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D Performance .7572 .7281 .6231 .8786 .8583 .5177 1.0000 p=.000 p=.000 p=.000 p=.000 p=.000 p=.005 p= ---

Table 8: Company D correlation results including performance dimension

** Items highlighted in red are significant at the 0.05 level

Correlation analysis was used to find associations between the variables in order to

support the findings for Hypothesis 1 and 2.

4.2.6. Regression Analysis

No of Cases Intercept F R² p value Std Error

Company A 40 1.006127 10.20233 0.649734 0.000002 0.610832 Company B 31 1.809085 2.987307 0.427533 0.025256 0.653419 Company C 27 1.165279 5.976357 0.641950 0.001042 0.700577 Company D 28 -0.465974 20.7986 0.855959 0.000000 0.612254

Table 9: Multiple Regression Results for RMO and Performance

Company A Regression Analysis Beta Std.Err. B Std.Err. t(33) p-level A Trust 0.231585 0.150911 0.245382 0.159902 1.534576 0.134421 A Bonding -0.058501 0.155430 -0.070166 0.186423 -0.376383 0.709041 A Communication 0.331351 0.154985 0.326874 0.152891 2.137956 0.040018 A Shared Value 0.338667 0.157627 0.330000 0.153593 2.148533 0.039104 A Empathy 0.224512 0.161982 0.210157 0.151626 1.386028 0.175033 A Reciprocity -0.130516 0.141925 -0.148321 0.161287 -0.919610 0.364450

Table 10: Company A Regression Results

Company B Regression Analysis Beta Std.Err. B Std.Err. t(24) p-level B Trust 0.125342 0.236624 0.137664 0.259886 0.529708 0.601180 B Bonding -0.051493 0.267976 -0.051934 0.270272 -0.192154 0.849238 B Communication 0.555024 0.207945 0.562508 0.210749 2.669094 0.013423 B Shared Value 0.106525 0.207251 0.097518 0.189727 0.513992 0.611958 B Empathy 0.052022 0.306218 0.051790 0.304851 0.169886 0.866524 B Reciprocity -0.096435 0.210314 -0.088752 0.193559 -0.458530 0.650697

Table 11: Company B Regression Results

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Company C Regression Analysis Beta Std.Err. B Std.Err. t(20) p-level C Trust 0.550938 0.350856 0.592971 0.377624 1.57027 0.132039 C Bonding -0.010244 0.258064 -0.009390 0.236549 -0.03969 0.968731 C Communication 0.624086 0.257951 0.599236 0.247680 2.41940 0.025197 C Shared Value -0.256021 0.230124 -0.289667 0.260367 -1.11254 0.279102 C Empathy 0.356061 0.252996 0.458325 0.325658 1.40738 0.174667 C Reciprocity -0.555767 0.305606 -0.571965 0.314513 -1.81857 0.083985

Table 12: Company C Regression Results

Company D Regression Analysis Beta Std.Err. B Std.Err. t(21) p-level D Trust -0.273747 0.214604 -0.309546 0.242668 -1.27559 0.216029 D Bonding -0.128389 0.188501 -0.170839 0.250825 -0.68111 0.503246 D Communication 0.109608 0.135451 0.173209 0.214046 0.80921 0.427467 D Shared Value 0.776598 0.208035 0.872907 0.233834 3.73302 0.001228 D Empathy 0.547041 0.169350 0.635604 0.196767 3.23024 0.004012 D Reciprocity -0.122508 0.118032 -0.171604 0.165334 -1.03792 0.311110

Table 13: Company D Regression Results

Company A Company B Company C Company D

% increase in revenue 2.92% 2.62% 5.06% 0.57% Table 14: Percentage increase in revenue per organisation for the past 12 months

4.3. Analysis Discussion

The cronbach alpha test was used test to test item reliability of the survey and to

ensure that the items used to operationalize the constructs were free of measurement

error (Kannan & Tan, 2006). The results are highlighted in table 1. The total alpha co-

efficient for each relationship dyad was greater than the suggested threshold of 0, 7 by

Sin et al (2002). Therefore these findings support the case for scale reliability.

Looking at the descriptive stats on table 3, one can immediately recognise the lower

mean in the dataset of Company D, and the higher standard deviations in comparison

to the other relationship dyads, suggesting that there is greater variability of responses

in this particular dataset and lower ratings overall.

The Kolmogorov Smirnov t-test highlighted in table 4 analyses the differences in

responses between each organisation per individual relationship dyad testing if the

data is homogenous (Kannan & Tan, 2006). Nine items highlighted in red represent

significance at an 0.05% significance level. In this instance the p-value indicates how

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significantly different the two samples are and suggests that there is misalignment

between the two organisations for the particular dimension. The standard deviation of

Company B’s Empathy dimension was considerably higher when compared to that of

the Vodacom group. This signifies that there is a disjoint between the two

organisations regarding this particular dimension.

This is also applicable to the Trust, Communication and Reciprocity variable for the

Company C dyad which also highlighted significance. The mean of the provider was a

lot higher than Vodacom suggesting that Company C rated Vodacom much higher

than Vodacom rated Company C.

The Trust, Bonding, Shared Value, Empathy and Performance dimensions of the

Company D dyad also indicate significance. Considering that the means are

significantly lower for the Vodacom sample group versus the Company D sample

group, and the standard deviations for the two samples are also significantly different,

this suggests that there is misalignment between the two organisations on these

specific relationship dimensions. Overall, most of the significant differences in the

means and standard deviations are for the Company C and Company D dyads.

The inter-dimensional Pearson correlation results beginning with table 5 highlights

the r values which is the correlation coefficient, as well as the p value which is the

statistical significance of each relationship (Utts & Heckard, 2007). Correlation

measures the strength and direction of the relationship between two variables (Utts &

Heckard, 2007).

The inter-dimensional correlation results for Company A on table 5 presents the

association between the various dimensions. Assuming that the relationship consists

of these six dimensions as hypothesised by Sin et al (2002), it would seem that all

dimensions have a positive association with each other with the exception of an

association between Shared Value and Reciprocity. These dimensions still influence

other dimensions of RMO positively and it is thus important not to discount their

influence.

The Vodacom and Company B correlation output on table 6 also highlights positive

correlations between all the dimensions except for Reciprocity. Reciprocity does

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correlate positively with Empathy in this particular dyad and thus an indirect

association can be implied.

The Company C results are similar to that of Company A, however an additional link

is excluded which is an association between Communication and Shared Value. The

Company D dyad showed a positive correlation between all the proposed dimensions

of RMO.

Utts & Heckard (2007) highlight that correlation does not imply causation, only an

association between the relevant variables and this is an important note to keep in

mind when interpreting the analysis.

When analysing the correlation results for the six dimensions specifically for the

performance variable, it would seem that all variables correlate positively with

performance for Company A and Company D. Shared Value in the Company B and

Company C dyad did not indicate positive associations with performance, as well as

Reciprocity in the Company B dyad. As mentioned earlier though, there are other

dimensions which are influenced by Shared Value e.g. Empathy, which has a positive

association with performance. Therefore, although Shared Value is not directly

correlated with Performance, it has an indirect influence as it is positively associated

with dimensions like Empathy, Trust and Bonding and therefore its influence on

performance cannot be discounted.

A regression measures the relationship between a dependant variable and one or more

explanatory or predictor variables (Utts & Heckard 2007). In this study the dependant

variable being performance and the predictor variables being the six hypothesised

relationship dimensions of Trust, Bonding, Communication, Shared Value, Empathy

and Reciprocity by Sin et al (2002). The regression results highlighted in table 9

indicates significant p values and the R² values that are also significant. The R² value

indicates how much of the proportion of the variation of the dependant variable is

explained by the explanatory variables (Utts & Heckard 2007). The positive R² values

on Table 9 indicate the predictability of the model for all relationship dyads. In the

case of Company D, the model explains approximately 86% of the variation in

Performance. The balance of the variance could be explained by other factors such as

innovation orientation, strategy fit, and other variables Sin et al (2002).

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Tables 10 to 13 display the beta co-efficient for each relationship dyad by dimension.

The items displayed in red highlight significance at 0.05%. The Company A,

Company B, Company C and Company D outputs each highlight explanatory

dimensions which explain the variance in performance. It must be noted though that

although some of the dimensions do not highlight significance in their explanatory

nature, the correlation analysis conducted earlier indicate positive association between

the variables which could suggest that even though the dimensions are not significant

in the regression, they still contribute indirectly to the performance element.

Table 14 indicates the percentage growth in the monthly transactions for each

relationship dyad in this study. All four dyads reflect positive growth corroborating

the positive regression analysis.

4.4. Research Limitations

This study uses the Relationship Marketing Orientation dimensions proposed by Sin

et al (2002) exclusively and does not consider other possible dimensions such as

shared planning, benevolence and flexibility (Johnston et al, 2004) and is therefore

limited in its approach.

The study focuses only on one organisation i.e. Vodacom and the experience of other

organisations may differ. The study includes the view of those involved in Vodacom’s

Outsourcing operations and their views may be biased based on their experiences.

The experience of these organisations alone is not a sufficient sample to generalise

upon the entire population of organisations in South Africa. It would be useful to

obtain a wider cross section of companies to sample in order to get a more

representative view of organisations in South Africa.

This research does not derive a scale to reliably measure Relationship Marketing

orientation which could then be used as a dependent variable to test the proposed

RMO dimensions, as well as others. This is a consideration for future studies.

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The relationships in this study are not defined by level i.e. operational versus strategic

(Staughton & Johnston, 2005) and this may be useful for future application as the

results may differ depending on the orientation.

5. Research Conclusions

This research report was intended to explore the influence of the different proposed

dimensions of Relationship Marketing Orientation to the relationship between

Vodacom (Pty) Ltd and four of its Outsource service suppliers.

The study then continued to examine the relationship between the six dimensions of

RMO and the financial performance of the organisations in question. The findings of

the study are detailed below.

5.1. Influence of RMO on Relationships

For hypothesis 1A, we find a strong association between Trust and all other RMO

dimensions in each relationship dyad with the exception of Reciprocity in the

Company B dyad. In the Company B scenario, although Trust does not have a direct

influence on Reciprocity, it is associated via links with other dimensions which

influence Reciprocity. We therefore accept the hypothesis and assert that Trust has an

influence on business to business relationships in a local context and support the

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findings of Sin et al (2002) & that of Walter & Ritter (2003) who found that trust

contributed to relationships.

For hypothesis 1B we find a strong association between Bonding and all other RMO

dimensions in all relationship dyads, also with the exception of Reciprocity in the

Company B dyad. Similarly to the findings of Sin et al (2002) and considering the

indirect relationships in the findings above for hypothesis 1 (Solberg & Durrieu,

2008), we therefore accept the hypothesis that Bonding has an influence on business

to business relationships in a local context.

For hypothesis 1C we have found strong correlations between Communication and all

dimensions of RMO in all dyads, with the exception of Reciprocity in the Company B

dyad and Shared Value in the Company C dyad. Again, indirect correlations exist via

links with other significant dimensions and we thus accept the hypothesis that

Communication has a positive influence on business to business relationships. This

finding is in line with the findings of Sin et al (2002), as well as that of Olkkenen et al

(2000).

The dimension of Shared Value for hypothesis 1D is inter correlated between all

dimensions for all relationship dyads with exceptions in Company A, B, & C. Indirect

associations also exist and we therefore accept the hypothesis for Shared Value as a

positive influence on business to business relationships and share the view of Sin et al

(2002).

For hypothesis 1E, the dimension of Empathy was found to be positively correlated to

all dimensions in all relationship dyads. Similarly to the finding of Sin et al (2002),

we accept the hypothesis that Empathy has an influence on business to business

relationships in a local context.

Reciprocity was found to be positively correlated to dimensions in each relationship

dyad but it is noted that Reciprocity contained the most exceptions especially in the

Company B dyad in which Reciprocity is only positively associated with Empathy.

The positive association with Empathy implies influence to other dimensions

indirectly within the Company B dyad. We therefore accept hypothesis 1F with

Reciprocity having an influence on business to business relationships. This finding is

in line with findings by Sin et al (2002) and Tong, Johnson, Umesh & Lee (2008).

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5.2. RMO and Performance

Kannan & Tan (2006) propose that “there is an inherent logic behind the relationship

between successful relationships and performance” and a positive correlation was

found to exist between most of the relationship dimensions and performance in this

study, with each relationship dyad displaying r-values ranging from 0.13 to 0.88.

Shared Value was not correlated at the 0.05% significance level for Company B and

Company C, and Reciprocity was excluded for Company B. The exclusion of these

two dimensions for their respective relationships dyads needs to be considered in

tandem with their influence on other dimensions which are associated with

performance thereby suggesting an indirect association.

A multiple regression was conducted to query the relationship between the six

relationship dimensions of RMO as the independent variables and Performance as the

dependant variable. All four relationship dyads indicated p-values which were less

than 0.05% significance and positive R² values ranging from 0.43 to 0.86 indicating

that the variance of performance explained by the six dependent variables is fairly

large.

The positive growth in the value of the transactions for each relationship dyad also

positively supports the findings of the regression analysis.

This leads to the acceptance of hypothesis 2 as performance can be predicted by the

model consisting of the six dimensions of RMO. It must be noted though that business

performance is a multi dimensional construct and is also influenced by other

dimensions such as effectiveness, efficiency and adaptability (Sin et al, 2002) and it

would valuable to explore the impact of RMO on these constructs.

Overall, the model proposed by Sin et al (2002) gained considerable support from the

data. The results re-enforce relationship marketing as an emerging paradigm and

contribute to what dimensions actually constitute relationships on which RMO can be

considered to exist (Sin et al, 2002).

5.3. Contributions to Literature

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The findings of this research support the assertion of (Sin et al, 2002) that RMO is a

multi dimensional construct consisting of trust, bonding, shared value,

communication, empathy, and reciprocity. There are strong correlations among the six

dimensions and the data of this study supports this construct in a local services

context. The RMO link with performance was also supported by this study as RMO

was positively related to performance for the firms participating in this research.

This study contributes to literature on RMO by obtaining a wider and broader

sampling frame from other countries which is a limitation highlighted by (Sin et al,

2002). The South African cultural influence of the proposed model of RMO is also

tested in this study.

5.4. Implications for Managers

The research above applied in a local South African context re-enforces the studies

conducted by (Sin et al, 2002) in the services economy of Hong Kong. (Sin et al,

2002) suggest that in order to establish a competitive advantage, organisations should

develop long term relationships with their customers. This is especially important for

managers who need to discard old patterns of thinking and adopt new strategic ways

of doing business such as RMO which could assist managers to design and offer a

value proposition which is perceived by customers as superior whilst establishing a

competitive advantage for the organisation (Sin et al, 2002).

An understanding of the framework of RMO highlighted in this study allows

managers to shape their behaviours and re-design internal processes to take advantage

of the benefits associated with this strategy.

The approach of RMO can assist managers to create barriers against competition,

generate more revenue per customer and decrease customer acquisition costs (Venetis

& Ghauri, 2004).

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6. Recommendations for future studies

The research conducted here tests the dimensions of RMO hypothesised by Sin et al

(2002) in a South African context in the field of Outsourcing. It would be interesting

to observe the validity of other constructs or dimensions applicable in a local context

such as commitment, satisfaction and managing conflict. It may also be useful to test

whether each dimension enables, strengthens or weakens relationship marketing

orientation.

It would also be useful to compare the dimensions of RMO to other operational

measures of business performance such as efficiency and productivity rather than

strictly a financial measure used in this research.

Another possible recommendation is to investigate a larger cross section of

organisations from private and public domains which could also strengthen the

research and validate the findings in order to generalise the findings to a larger more

diverse population (Larson, 1992). Research in other fields such as Manufacturing or

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Information Technology is also advised in an attempt to replicate the findings of this

study in other contexts (Laing & Lian, 2005).

Cross sectional data was utilised in this research and thus the time sequence of the

relationship between RMO and Performance cannot be determined Sin et al (2002).

Recent events such as rigorous negotiations could influence the results of the

research. It would be interesting to extend this research over time using a longitudinal

framework to monitor the effect of time to establish more insight into probable

causation Sin et al (2002).

It is also a consideration to review the second communication question of the research

survey. Table 2 highlights the effect on the cronbach alpha result should question two

of the communication dimension be deleted. It is advisable to review the question to

achieve improved scale reliability.

A final recommendation would be to develop a reliable measure of RMO and test the

dimensions proposed by Sin et al (2002) to this construct.

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Appendices Appendix A – Research Survey 1. Trust

1.1. We trust each other 1.2. They are trustworthy on important things 1.3. According to our past business relationship, my company thinks they are

trustworthy persons 1.4. My company trusts them

2. Bonding 2.1. We rely on each other 2.2. We both try very hard to establish a long term relationship 2.3. We work in close co-operation 2.4. We keep in touch constantly

3. Communication 3.1. We communicate and express our opinions to each other frequently 3.2. We show our discontent toward each other through communication 3.3. We can communicate honestly

4. Shared Value 4.1. We share the same world view 4.2. We share the same opinion about most things 4.3. We share the same feeling towards things around us 4.4. We share the same values

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5. Empathy

5.1. We always see things from each others point of view 5.2. We know how each other feels 5.3. We understand each others values and goals 5.4. We care about each other’s feelings

6. Reciprocity 6.1. My company regards “never forget a good turn” as our business moto 6.2. We keep our promises to each other in any situation 6.3. If our customers/suppliers give assistance when my company had difficulties ,

then I would be obliged to return their kindness

7. Performance To what extent has each of the following possible performance objectives of this relationship been met? 7.1. Long term profitability 7.2. Net profits over the past year 7.3. Customer Retention

Scale: 1 - strongly disagree 2 - disagree 3 - disagree somewhat 4 - neutral 5 - agree somewhat

6 - agree 7 - strongly agree

RMO dimensions survey adopted from Sin, Tse, Yau, Lee & Chow (2002). Performance dimensions adopted from Johnston et al (2004). Appendix B – Spearman’s Rank Correlation Matrix

Trust Bond Comm Shared V Empathy Recipr C Trust 1.000000 C Bonding 0.845382 1.000000 C Communication 0.641533 0.620547 1.000000 C Shared Value 0.693157 0.650052 0.299922 1.000000 C Empathy 0.828841 0.747762 0.582606 0.545597 1.000000

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C Reciprocity 0.685644 0.623726 0.763084 0.193166 0.635146 1.000000 Table 14: Company C Regression Results

Trust Bond Comm Shared V Empathy Recipr C Trust 1.000000 C Bonding 0.837242 1.000000 C Communication 0.737653 0.798104 1.000000 C Shared Value 0.893104 0.823924 0.727401 1.000000 C Empathy 0.811404 0.853497 0.754424 0.826800 1.000000 C Reciprocity 0.671537 0.606200 0.484425 0.610933 0.656078 1.000000

Table 15: Company D Regression Results