Outline

1. Welcome to presentation onEffects of Organizational Slack, Outsourcing, and Market Orientation on Business Performance in the Emerging Markets Dr. Satyendra Singh Centre for Emerging Markets Professor, Marketing and International Business University of Winnipeg, Canada s.singh@uwinnipeg.ca www.uwinnipeg.ca/~ssingh5

2. Outline • The Model and Theory • Hypotheses Development • Methodology • Data collection and Sample Characteristics • Analyses – Moderated Regression • Results • Discussions • References

3. The Model and Theory Control Variables -Rel. Size, and cost -competitor conc. Organizational Slack Market Orientation -Customer -Competitor -Interfunctional H2 H1 Business Performance -ROI -Market Share Growth -New Product Success Rate H3 Outsourcing

4. Hypotheses • H1: MO leads to superior BP • H2: OS moderates MO—BP relationship • ↑ OS  ↑BP • H3: O moderates MO—BP relationship • ↓O  ↑BP • O=Outsourcing, OS=Organization Slack, MO= Market Orientation, • BP= Business Performance

5. Definitions • Organizational Slack (OS) • More resources than necessary to produce a given level of organizational output (Bourgeois, 1981) • Outsourcing (O) • Outsource activities despite its ability to make in-house, so focus  core capability (Deavers, 1997) • Market Orientation (MO) • Firms’ ability to satisfy the need of their customers by developing products or services (Slater and Narver, 1994) • Business Performance (BP) • Return on Investment, Market Share Growth, New Product Success Rate

6. Data Collection • Data Collection from Kompass Database • New Delhi (Okhla Phase, PIN 110020; Naraina, PIN 110028; and, Wazirpur, 110052) • Mumbai (Laxmi, PIN 400053; Powai, PIN 400076; and, Thane Wagle, PIN 400604) • Stratified Sampling • 18% percent response rate • Telephone calls (1100) made, then followed up by personal interviews if agreed to participate • Three graduate students were recruited in each city • 78% asked for a copy of the results • Questionnaire • Respondents were knowledgeable (6.3 on 7-pt scale)

7. The Scales… • Market Orientation (Narver and Slater, 1990) • Measured on a 7-pt. scale, 1=strongly disagree, 4=neutral, and 7=strongly agree • Customer Orientation (6) • We have customer commitment • We create customer value • We understand customer needs • We have customer satisfaction objectives • We measure customer satisfaction • We do after-sales-service • Competitor Orientation (4) • Our salespeople share competitors’ information • We respond rapidly to competitors’ actions • Our top managers discuss competitors’ strategies • We target opportunities for competitive advantage • Inter-functional Coordination (5) • We make inter-functional customer calls • We share information among functions • We integrate functional strategy • All functions contribute to customer value • We share resources with other business units

8. The Scales • Organizational Slack (Bourgeois, 1981; Lant, 1985) • Measured On a 7-pt. scale, 1=severely, 4=does not affect, and 7=not at all • If we had to work with 10% less time allocated than now, how seriously we will be affected? • If our budgets were to cut by 10%, how significantly will our work be affected in the next year? • Core and Peripheral Outsourcing (New Scale) • Measured on 7-pt scale, 1=strongly disagree, 4=neutral, and 7=strongly agree • Ratio of outsourced production to in-house production • Ratio of outsourced product to in-house production • Business Performance (Slater and Narver, 1994) • Measured on 7-pt scale, -3=very poor, 4=same, and +3=very good • Return on Investment • Market Share Growth • New Product Development

9. Sample Characteristics • Total Sample Size 205 • Manufacturing Products 115 (56%) • Providing Services 90 (44%) • Sales Turnover (<Rs.99m) 88 (43%) • Sales Turnover (between Rs.100 and Rs. 149m) 74 (36%) • Sales Turnover (>Rs.150m) 43 (21%) • Employee Turnover (<49) 66 (32%) • Employee Turnover (between 50 and 99) 84 (41%) • Employee Turnover (>100) 55 (27%) • Respondents’ designation (CEO/MD/Proprietor) 125 (61%) • Respondents’ designation (senior manager) 57 (28%) • Respondents’ designation (mid-level manager) 23 (11%) • Respondents’ relevant business experience (in years) 11.8 • Respondents’ international business experience (in years) 10.7 • Proportion of outsourcing activities 48%

10. Factor Analysis… Reliability and Validity Assessment of the Theoretical Construct Measures Variables Factor loading Customer Orientation (α = .79, adjusted α =.76) Customer commitment .73 Create customer value .77 Understand customer needs .79 Customer satisfaction objectives .83 Measure customer satisfaction .78 After sales service .74 Customer Orientation (α = .82, adjusted α = .81) Salespeople share competitors’ information .78 Respond rapidly to competitors’ actions .80 Top managers discuss competitors’ strategies .83 Target opportunities for competitive advantage .78 Interfunctional Coordination (α = .79, adjusted α = .77) Interfunctional customer .80 Information shared among functions .77 Functional integration in strategy .74 All functions contribute to customer value .80 Share resources with other business units .83

11. Factor Analysis… Reliability and Validity Assessment of the Theoretical Construct Measures Variables Factor loading (std.) Organizational Slack Correlation = .29 How we will be affected, if 10% less time allocated .77 How work will be affected, if 10% less budget was allocated .74 Outsourcing Correlation = .31 Ratio of outsourced production to in-house production .64 Ratio of outsourced product to in-house production .61 Business Performance (α = .73, adjusted α = .71 ) Return on Investment .78 Market Share .74 New Product Success rate .71

12. Moderated Regression Analyses Standardized Coefficients (Standard Error) • DV=Business Perf BP BP BP BP • IV=MO, O, OS Model 1 Model 2 Model 3 Model 4 • Market Orientation .24 *(.08) .23 *(.12) .21 *(.13) .27 *(.09) • Concentration .12(.05) .17(.16) .11(.08) .10(.13) • Relative Size .18(.15) .14(.13) .13(.11) .12(.04) • Relative Cost -.15(.08) -.13(.11) -.09(.23) -.12(.14) • Orgn. Slack (OS) .21 *(.11) .23 *(.14) • Orgn Slack * MO .22 *(.09) • Outsourcing (O) .24 *(.11) .25 *(.13) • Outsourcing* MO -.23 *(.08) • F 7.34* 8.73 7.22 8.43 • R2 .27 .30 .24 .26 • VIFmax 3.41 3.55 2.32 2.35 • N 205 205 203 203 R2 = .22 (w/o OS and O); R2 = .32 (w/ OS and O)

13. Discussion • H1: MO leads to superior BP • Supported (b=.24*, .23*, .21*, .27*; p< .05) • H2: OS moderates MO—BP relationship • ↑ OS  ↑BP • Supported (b=.23*, p< .05) • H3: O moderates MO—BP relationship • ↓O  ↑BP • Supported (b=.24*, p< .05) • O=Outsourcing, OS=Organization Slack, MO= Market Orientation, • BP= Business Performance

14. References • Atuahene-Gima, K. (2005), “Resolving the capability-rigidity paradox in new product innovation,” Journal ofMarketing, 69(Oct): 61-83. • Bourgeois, L.J. (1981), “On the measurement of organizational risk,” Academy of Management Review, 6: 29-39. • Day, G.S. (1994), “The capabilities of market-driven organizations,” Journal of Marketing, 58(4): 31-44. • Deavers, K.L. (1997), “Outsourcing: A corporate competitiveness strategy, not a search for low wages,” Journal of Labour Research, 18(4), 503-518. • Lant, T. (1985), Modeling organizational slack: An empirical investigation. Stanford University Research Paper #856. • Narver, J.C. and Slater, S.F. (1990), “The effects of a market orientation on business profitability,” Journal ofMarketing, 54(4): 20-35. • Slater, S.F. and Narver, N.C. (1994), “Does competitive environment moderate the market orientation-performance relationship?” Journal of Marketing, 58(Jan): 46-55.

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