External Environmental Factors Essay Example

External Environmental Factors Paper In the past, the relation of total quality management (TTS), market orientation, and performance are equivocal. These mixed results may be due to some factors or not to include the environmental factors. This study adopts the Unprepossessing-Output (PIP) concept model to construct all variables research model. The research surveyed samples of 588 and used Structural Equation Model and discriminate analysis for analysis and testing. The results show that TTS positively affects hotel performance. Market orientation positively affects hotel performance. Market orientation has the mediating effect between TTS and hotel performance. External environment factors truly play a moderator between TTS, market orientation and hotel performance, especially when external environment factors greater changes are going to help to build relationship with customer, to enhance hotel performance and further to gain chance of hotels survival. Crown Copyright 0 2011 Published by Elsevier Ltd. All rights reserved. Keywords: Total quality management Market orientation Hotel performance External environmental factors Structural Equation Model 1 . Introduction Total quality management (TTS) is a widely recognized management philosophy, and has become the key slogan as organizations strive for competitive advantage in markets (Surcharged et al. , 2001 TTS focuses on continuous process improvement within organizations to provide superior customer value and meet customer needs. Meeting customer needs involves company operations focused on understanding, sharing, and responding to customers through marketing concept. Firms adopting and implementing the marketing concept are said to display a market orientation Lamb et al. , 2005). We will write a custom essay sample on External Environmental Factors specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on External Environmental Factors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on External Environmental Factors specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Market-oriented firms have been demonstrated to be successful at maintaining a strong competitive position (Walker et al. , 2006). Therefore, TTS and market orientation can constitute a valuable firm strategy and provide a competitive advantage to respond to the competitive business environment. Studies have claimed that marketing and TTS are complementary business philosophies (Longboat et al. , 2000; Mohr Jackson, 1 AAA,b). However, departments responsible for implementing T KM policy may consider increasing sales through higher quality products or service needs rather than marketing. Poor coordination among departments, or even rivalries and distrust, are not * Corresponding author at: 396 Changing Rd. , Sec. 1, Sway Jean, Taiwan 71101, Taiwan, ROCCO. Tell. : +886 8 7338241. E-mail address: [emailprotected] Path. Gob. Two (S. -C. Chin). Unusual. Moreover, partial enterprises that have conducted TTS have not considered their attributes or properly used them in marketing, preventing top managers from understanding marketing topics. Therefore one-third of TTS-adopting enterprises continue to exhibit prejudice (Hitcher, 1 995), or have failed in TTS implementation. These factors cause many organizations o have little or no to complement to TTS and market orientation together. However, even when both are linked in hotel performance effect, the empirical findings are mixed, and homogeneous results regarding their relationships are lacking. Furthermore, scholars have also argued that relationships among TTS, market orientation and organization performance often vary considerably in terms of magnitude, or when improving performance, generating mixed and controversial results. Additionally, the hotel industry suffers a lack of information regarding TTS or barriers to developing market orientation (Gray et al. 2000; Harris and Watkins, 1998; Lazars and Counterproposal, 2007); few studies have addressed this lack of information or the existence of such barriers in the Taiwanese hotel industry. In the competitive market environment, quality is considered the basic consuming condition. Hotels seeking to improve their performance cannot simply rely on quality, but must also design inducements to attract customers. Long and Cox (1997) and House et al. 1996) addressed the PIP (Input-processing-output) model of TTS, which displays the relationships between the TTS system and participants. This model defines input to enlarge the process and involve both internal and external environments. Process improvement and products are designed to focus on present 0278-4319/$ -? see front matter. Crown Copyright C) 2011 published by Elsevier Ltd. All rights reserved. Doily. 1 016/j. Jim. 2011. 03. 013 120 C. -H. Wang et al. / International Journal of Hospitality Management 31 (2012) 119-129 and future customer needs. Output describes the way in which participant quality is enhanced to ensure profitability and custom satisfaction. To gain competence of hotels faster than competitors and create superior customer alee strategically within conflicts and interest of inter-departments are critical for hotel survival. This study adopted the PIP concept model of TTS to develop a research model and further probed the relationship between TTS and market orientation to understand its influence on hotel performance. Environmental uncertainty arises from organizational ability to make environmental forecasts (Milliken, 1987). As a result, organizational decision making is influenced by environmental complexity and volatility (May et al. , 2000). Organization attempting to ignore environmental factors or that effuses to respond to such factors create trouble for themselves and placing themselves at a competitive disadvantage. On the contrary, understanding and responsiveness can contribute to hotel effectiveness and benefits. Several studies have argued that market and technological turbulence and competitive intensity may moderate the relationship between market orientation and performance (Circa et al. 2005; Qua and New, 2003; Rose and Shame, 2002; Subliminal et al. , 2009), or that this relationship does not moderate effects (Aziza and Haskins, 201 0; Gasworks and Kohl, 1993; Slater and Nearer, 1994; Subliminal and Espaliering, 2001). TTS is an open system that interacts with the surrounding environment (Steel and Jennings, 1992). However, scholars have argued that TTS does not adapt to dynamic situations (Dooley and Floor, 1998). Business environment is complicated by the dynamics of change and competition producing a degree of uncertainty such that the results after TTS implementing are unclear (Months et al. 2003). Moreover, prior scholars have studied the influence of external environmental factors on the hotel performance effect; most studies have probed legal, political, social, economic, cultural, and technological dimensions. New advanced technologies and a changing market environment have provided quality and marketing concepts with a new dimension. Empirical studies have largely overlooked external environmental factors (for example, market and technological turbulence, and competitive intensity) related to hotel performance. This study incorporates these factors to examine and fill the gaps in the literature. The maturing of the hotel industry has seen competition gradually intensify and customers become increasingly sophisticated. To compete, hotels require a breadth of resources to transform them into more flexible forms to meet the needs of the changing toll industry marketplace. This study simplifies the complex reality of the hotel industry, in which hotels examine their performance using TTS, market orientation, and the moderating effects of external environmental factors. This study tested the research model using data gathered from hotels using a questionnaire survey method, and used the Structural Equation Model and discriminate analysis for analysis and testing. This paper is organized as follows. A literature review discusses four variables and establishes the study hypotheses. Subsequent sections then describe the methodology, results, ND analysis. Finally, the last section discusses conclusions and presents limitations and recommendations. Literature review 2. 1 Total quality management From Seraph et al. 1 989), many studies have attempted to develop an appropriate set of critical quality management constructs to represent an integrated approach to TTS implementation in a business unit (Rehire et al. , AAA,b; Anderson et al. , 1995; Flynn et al. , 1995; Grandson and Greenhorns, 1998; Rah et al. , 1999). Months et al. (2003) synthesized and induced their works to classify five generic constructs: (1) managerial leadership and Mom- mitten; (2) human resources management; (3) the relationship between customers and suppliers; (4) internal organizational culture; and (5) process management. Subsequent studies have relied on these works to assess TTS program effectiveness. TTS is widely recognized as a management philosophy. Numerous controversies exist regarding the elements proposed by different researchers and professionals in relation to TTS. These elements do not fully coincide, and not all such fundamentals that compose the TTS theoretical framework can be called TTS without management factors being implemented in the organizations where they are based (Months et al. , 2003). TTS is largely not applied because executives have not contended with it or consider it unnecessary in the hotel industry (Lazar I and Counterproposal, 2007). The TTS system accords to the PIP (Input-processing-output) concept model to display the relationships between the TTS system and participants (Long and Cox, 1 997; House et al. , 1996). Input is defined as that which enlarges the process and involves both internal and external environments. Processing is focused on both present and future customer needs until top management just combine input with organizational ability to achieve desired goals. Output is defined as all participants (that is, organization members and departments, suppliers and customers) delivering designed services as reliably and economically as possible to ensure profitability and customer satisfaction. Hotels thus satisfy customer needs not only through contain souse improvement (Dale and Plunked, 1990), but also through process management in preventing problems from recurring. Cooperation between internal and external elements is critical for successful TTS implementation. Such successful implementation enhances the morale of employee lifetime, increasing hotel efficiency (Lazars and Counterproposal, 2007). Leadership and guest focus are the principles most commonly incorporated into TTS programs of hotels (Beerier and Balloonist, 1998; Lie et al. , 2007). Learning involves company-wide training that acquires a strategic value for hotels (Boudoirs et al. , 2001 ; Claver et al. , 2006; Thinly et al. , 2000) and enhances both staff skill level and service commitment (Costa, 2004; Haynes and Fryer, 2000). This study finds that TTS-adopting hotels focus on customer focus, continuous improvement, leadership, internal/external operation, employee fulfillment, learning and process management. This study adopted the constructs of TTS stated by Grandson and Greenhorns (1998). Studies have assessed hotel performance using the lodging index (Wassermann and Stafford, 1991), revenue growth rates (Van Doreen and Gusset, 1982), both objective and perceptual (Huber and Richer, 2005), or financial and non- financial performance (Banker et al. , 2000, 2005). Objective is measured by occupancy rate per room, gross operating profit, and gross operating profit per available room per day. Perceptual contains competitive performance and stakeholder satisfaction. Any organization needs finance support. To maximize long-term performance businesses must build and maintain mutually beneficial relationships with buyers (Nearer and Slater, 1990). Therefore, this paper adopts that Norman and Rust (1999) and Nervier and Slater (1990) developed measures Of hotel performance that included financial and customer-based performance. Some studies have suggested that TTS-adopting firms enjoy a competitive advantage over non-TTS (Brash et 2002; Powell, 1995). Furthermore, studies have variously reported that TTS and organizational performance are positively related (Demurrage et al. AAA; Fen et al. 2006), or no effect of T KM on various performance measures (Hair, 1993; Selenga and Faze, 1995), or that TTS is negatively related with organizational performance (McCabe and Wilkinson, 1998; Young and Chain, 1998), which may result from different measures of TTS, ineffective implementation, or a lack of management support, among other reasons (Atari et al. , 121 2010). However, hotel industry has identified outperforming in TTS committed hotels (Claver-Courts et al. , 2008; Lange, 1997) and T KM is likely to improve customer satisfaction, and ultimately financial performance (Gags t al. 2000; Claver-Courts et al. , 2008). This study proposes that hotel adoption of TTS may improve hotel performance. Therefore: Hypothesis 1 . TTS positively affects hotel performance. 2. 2. Market orientation T KM stresses viewing employees as internal clients who deserve special attention (Skilled and Dullard, 2000), aiming to achieve organizations objectives. Satisfaction of external clients is central to the marketing concept (Santos-Vaginal and ?leaver-Gong;leg, 2009). Firms that adopt and implement marketing concepts are said to be market oriented (Lamb et al. , 2005). Market orientation is defined differently within different parts of the research community (Deckhands et al. , 1993; Kohl and Gasworks, 1990; Nearer and Slater, 1990). However, the basic concept still involves generating disseminating, sharing information, and responding appropriately to changing market needs to achieve organizational goals and satisfy customer needs and wants whilst simultaneously considering the interests of all company stakeholders. Several scales exist for measuring market orientation. Kohl et al. (1993) developed a valid measure that includes intelligence generation, dissemination and responsiveness. Furthermore, Gray et al. (1998) proposed a parsimonious model of market orientation based on the work of Eden and Dart (1 994), Gasworks and Kohl (1993), and Nearer and Slater (1990) comprising five dimensions: customer orientation, competitor orientation, inter-functional coordination, responsiveness, and profit emphasis. Additionally, Onward (2008) determined that market orientation should include customer focus, competitive focus, environmental scanning, strategy implementation, and new service development. Different firms may adopt different strategies. This study believes that market orientation is better suited to data collection, including information generation and dissemination, shared interpretation, and organization responsiveness. Previous studies have investigated the antecedents and consequences of market orientation. Viral (2010) used Brazilian Meta- Analysis and International Mega-Analysis to determine that interdepartmental connectedness, interdepartmental environment, and rules for job execution significantly and positively influence market orientation, displaying consequences in improved performance, organization commitment, innovation, and learning. Market orientation is positively related to firm reference (Kara et al. , 2005; Lie et al. , 2008; Chou et al. , 2005). Similarly, Han et al. (1998), Harris (2001), Unhook (2008), and Perry and Shah (2002) failed to find a direct relationship between market orientation and firm performance, even hotel performance (Sergeant and Mohammad, 1999). However, Sin et al. (2005) found market orientation to be critical to hotel performance. These references show that empirical findings related to market orientation have yielded complex and mixed results (Voss and Voss, 2000). Effective information acquisition and dissemination produced high market orientation hat is essential for creating and managing closer customer relationships and requires a solid understanding of customer wants (Rehire et al. , 1 AAA). A market-oriented hotel can afford enhanced product or service quality based on consumer data to boost customer satisfaction. Satisfied customers increase sales and market share through more frequent purchases. This study thus hypothesizes that: Hypothesis 2. Menace. Market orientation positively affects hotel perform- Numerous similarities exist between the concepts of TTS and market orientation (Morgan, 1992). However, partial researchers have thought that TTS implementation is an important mediator helping strengthen the association between market orientation and performance (Demurrage et al. , Bibb); market orientation is statistically significantly associated with quality orientation (Alai, 2003; Mozart and Hyssop, 2009); TTS directly and positively affects market orientation (Santos-Vaginal and ?Aviary-Gong;leg, 2009; Yam et 2005). TTS also benefits market orientation (Maraschino, Bibb). Despite the clear relationship between TTS and market orientation, the empirical findings are mixed and has failed to obtain homogeneous results about their relationship. Marketing practices are important in improving firm performance (Santos-Vaginal et al. , 2005). Market orientation means the implementation of marketing concepts (Kohl and Gasworks, 1990), borrows from the management and strategy domains to avoid an isolationist perspective (Dobbin and Alfalfa, 2003; Storehouse and Van Iraqi, 2004), and depends on other constructs to strengthen its relationship with performance (Menage and AAU, 2006). These constructs may arise in relation to where the influences that may determine market orientation originate (Balloonist and Signoras, 1997). TTS is considered fundamental to the successful application f the marketing concept and is considered a means of increasing marketing preponderance (Santos-Vaginal and Olivarez-Gong;leg, 2009). These show mutual need for TTS and market orientation. TTS involves ongoing monitoring of market forces by implementing organizational processes, and engages all departments of a firm to develop the right market response, all of which are also hallmarks of operative market orientation (Kohl and Gasworks, 1990). Restated, TTS promotes the generation and dissemination of market information to enable firms to consistently and rapidly respond to changing market conditions (Rehire et al. AAA). TTS thus positively affects market orientation. Hypothesis 3 thus is proposed. TTS linked activities to help the development of distinctive competencies which is a mediating variable in the relationship between TTS and performance (Tenant et al. , 2001). Thus, TTS and market orientation are complementary. TTS encourages competencies of adept at generating and sharing market knowledge to enhance customer value and satisfaction, a prerequisite for longtime success (Kerri et al. , 2006). Market orientation positively impacts firm effectiveness and boost market share in TTS (Wang and Wee, 2005). Market orientation mediates the effect of quality orientation on competitive superiority, and competitive superiority drives business performance (Raja and Leonia, 2002; Strangulation and Hart, 2004). Quality orientation originates from TTS (Mozart and Hyssop, 2009). Based on the above literature, this study proposes that hotels link TTS and market orientation. TTS will be help for effective and efficient of implementing market orientation, in turn enhancing performance. TTS- adopting hotels on performance might be channeled through market orientation. Hypothesis 4 thus is proposed. Hypothesis 3. TTS positively effects market orientation. Hypothesis 4. Market orientation has the mediating effect on the relationship between TTS and hotel performance. . 3. Moderating effect of external environmental factors Different organizations are affected by different numbers of environmental factors. External environmental factors change rapidly, are uncertain, and complex, and also create problems for organizations. Any organization ignoring or being unresponsive environmental factors is creating trouble for inviting trouble. Hotel external environment affects the relationship between strategic planning and performance (Phillips, 1999). Competition is a key characteristic of the external environment. Within their com- 122 petition environment hoteliers tend to understand the strengths, weaknesses, and performance associated with providing specific products or services when seeking information about customers and modifying their offerings based on customer data. Market turbulence describes the rate of change in customer composition and customer preferences (Kohl and Gasworks, 1990; Slater and Nearer, 1 994; Subliminal and Espaliering, 2001). As the pace of change accelerates, the need for managers to change their products and services grows. Technological turbulence describes technological change (Kohl and Gasworks, 1990). Technologically advanced organizations can Stay ahead through continuing product and service improvement or advanced process management. When market and technological turbulence and competitive intensity are low, organizations can concentrate on competitive advantage by focusing on customer satisfaction (Subliminal et al. , 2009). Nevertheless, as market turbulence, competitive intensity, and technological turbulence increase, firms must move away from existing customer needs and seek to satisfy latent needs to maintain a nominative advantage (Slater and Nearer, 1998). Several researchers have argued that links between market orientation and performance depend on organizational environment Auroras and Kohl, 1993); for example, the relationship between market orientation and performance may be moderated by market and technological turbulence and competitive intensity (Circa et al. , 2005; Qua and New, 2003; Rose and Shame, 2002; Subliminal et al. 2009), or such a relationship has not moderating effects (Aziza and Haskins, 2010; Gasworks and Kohl, 1993; Slater and Nearer, 1994; Subliminal and Espaliering, 2001). TTS is based on the system respective as a method of managing change in situations involving organizations that are open systems interacting with the environment (Steel and Jennings, 1992). For example, managers should relate changes in consumer perception and competitor activity to management commitment by inspiring and motivating staff and obtaining feedback to improve hotel performance (Aziza and Haskins, 2010). Changes in technology, such as computerizing and e-commerce, can create a quantum leap in work communication, process management, and product and service innovation. Therefore, TTS can flexibly create an environment where organizations are omitted to customer satisfaction through continuous improvement (Barrater et al. , 2008) and external impacts customer satisfaction through the market (Atari et al. , 2010). However, scholars have argued that TTS is not adaptable to dynamic situations (Dooley and Floor, 1998). Business environment is complicated by dynamics of change and competitive, producing a degree of uncertainty such that the nature Of the improvement of results after TTS implementation is unclear (Months et al. , 2003). TTS stresses systematic angles to solve management problems, and stresses external environmental changes in organizational operations. Market orientation depends on changes in external demand to respond to customer needs. External environmental factors significantly impact business strategies in the hospitality industry (Operand et al. 2009). Environmental variables can moderate the effect of management strategies (Attenuate-Gimp, 1995). This study adopts external environmental factors based on the concept of Gasworks and Kohl (1 993), including market and technological turbulence and competitive intensity. External environmental factors are inferred to exert moderating efforts on TTS, market orientation, and hotel performance. This study thus hypothesizes: Hypothesis 5. The effect of TTS on hotel performance is moderated through external environmental factors. Hypothesis 6. The effect of market orientation on hotel performance is moderated through external environmental factors. Fig. 1. Research model. 3. Methodology 3. 1 . Questionnaire development and pilot test Fig. 1 depicts a path diagram for the research model, and is based on a literature review. The main method used in this study was a survey research. To do so, a questionnaire was designed. First, the authors met several times with the managing directors of three hotels to determine which questions should be included in the survey. This process obtained three main conclusions. First, the questions had to reflect features necessary for hotels and which respondents can feel. Second, the questions had to help hotels outperform their competitors in the changing marketplace. Third, the survey had to be concise. Based on the above conclusions, all the focal constructs of the model were measured using multiple items based on validated scales derived from Grandson and Greenhorns (1998), Huber (1991 Gasworks and Kohl (1 993), Kohl t al. (1993), Norman and Rust (1 999), and Nearer and Slater (1990). Table 1 lists the constructs, definitions and sources of scales. The questionnaire was first developed in English, but as the survey was conducted in Chinese, hotel management directors and academics helped with the translation. The wording and interpretation of items, and the extent to which respondents felt they possessed the knowledge required to respond appropriately were considered until a final draft of the questionnaire was obtained. Following the development of the draft questionnaire, used respondent anonymity, meaning anonymity of the measurement items and pilot-tested by 60 hotels managing directors to correct possible defects and doubts.