CORRELATION ANALYSIS

In the conceptual framework of market orientation in Figure 5.1 in Chapter 5 it is proposed firstly that the market orientation of the consumer goods manufacturing companies in Bangladesh is determined by a set of internal and external factors, and secondly that market orientation affects a set of dependent variables for both economic and non-economic performance of business. More specifically, in the proposed framework, market orientation is identified as having two different roles. Firstly, it works as a dependent variable, and secondly it becomes an independent variable affecting both economic and non-economic performance of business.

In order to test hypotheses 1and 2,identification of the internal and external variables that better determine the market orientation components and overall market orientation of the consumer goods manufacturing companies in Bangladesh was required. In order to test hypothesis 3, identification of the market orientation components that significantly determine the economic and non-economic performance of business was required, and in order to test hypothesis 4, identification of the effect of overall market orientation on economic and non-economic performance of business was required. For these tests it was necessary to conduct two sets of correlation analyses. The first set related to hypotheses 1 and 3,and the second set related to hypothesis 4.Correlation analysis was not required for hypothesis 2, as the overall market orientation was computed by adding all the components of market orientation (e.g. customer emphasis + intelligence/information generation + intelligence dissemination or interfunctional coordination + responsiveness or taking action). Further, for testing the fourth hypothesis it was not necessary to show correlation between the components of market orientation and the dependent variables (economic and non-economic performance), as it hypothesised the overall effect of market orientation on economic and non-economic performance of business. In addition, for the first hypothesis, it was not necessary to show correlation of overall market orientation with independent variables.

This study utilised correlation analysis for two purposes, firstly to examine the presence of multicollinearity, and secondly to explore the relationships between the variables. Rowntree (1981) provided a guideline that interpreted the strength of the relationships between the variables. He indicated that, when the correlation coefficient (r) ranges from .00 to .20, the relationship is very weak and negligible; when the correlation coefficient ranges from .20 to .40, the relationship is weak and low; when the correlation coefficient ranges from .40 to .70, the relationship is moderate; when the correlation coefficient ranges from .70 to .90, the relationship is strong, high and marked; and finally, when the correlation coefficient ranges from .90 to 1.0, the relationship is very strong and very high. As noted earlier in the chapter, in order to check the presence of multicollinearity, this study applied the ceiling of .80 for the correlation coefficient as suggested by Berry and Feldman (1985) and Hair et al. (1995).

In this study the bivariate Pearson product-moment correlation test was applied. The test was subject to a one tailed test of statistical significance at two different levels: highly significant (p < 0.01) and significant (p < 0.05). The results of the correlation analysis are shown in Table 7.2 and 7.3.

Table 7.2 shows the correlation between antecedents of market orientation (internal and external variables) and components of market orientation (customer emphasis, intelligence/information generation, intelligence dissemination or interfunctional coordination, and intelligence responsiveness or taking action. Top management emphasis was found to be significant and positively correlated with customer emphasis (r = .30, p < 0.01), intelligence/information generation (r = .30, p < .01), intelligence dissemination coordination (r = .39, p < .01), and intelligence responsiveness (r = .39, p < .01) of the consumer goods manufacturing companies in Bangladesh. This suggested that emphasis placed by the top management on market-oriented activities encourage market orientation of the consumer goods manufacturing companies in Bangladesh. Risk aversion was found to be significant and negatively correlated with each of the components of market orientation of the consumer goods manufacturing companies in Bangladesh. The examination of the correlation between risk aversion and customer emphasis (r = -.25, p < .01), risk aversion and intelligence generation (r = -.23, p < .01), risk aversion and intelligence dissemination (r = -.15, p < .05), and risk aversion and intelligence responsiveness (r = -.14, p < .05) suggested that the risk aversive attitude of the top management discourages market orientation of the consumer goods manufacturing companies in Bangladesh.

Management training was also found to be significant and positively correlated with all four components of market orientation. The statistical significant correlations between management training and customer emphasis (r = .53, p < .01), management training and intelligence generation (r = .65, p < .01), management training and intelligence dissemination (r = .60, p < .01), and management training and intelligence responsiveness (r = .56, p < .01) indicated that the market orientation of the consumer goods manufacturing companies in Bangladesh was a positive function of management training.

Table 7.2. Correlation Matrix for Internal and External Variables (Antecedents) with Customer Emphasis, Intelligence Generation, Intelligence Dissemination, and Intelligence Responsiveness/Taking Action

VARIABLE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Customer emphasis (1) ---- .73** .54** .48** .30** -.25** .53** .43** -.53** -.29** -.25** .41** -.50** .58** .41** .27** -.08 .48**

Intelligence generation (2) ---- .76** .53** .30** -.23** .65** .53** -.62** -.36** -.37** .56** -.53** .65** .38** .37** -.12* .55**

Intelligence dissemination (3) ---- .62** .39** -.15* .60** .50** -.54** -.28** -.37** .53** -.56** .60** .48** .43** -.07 .54**

Intelligence responsiveness (4) ---- .39** -.14* .56** .47** -.41** -.25** -.20** .41** -.57** .56** .56** .44** .02 .60**

Top management emphasis (5) ---- -.13* .28** .25** -.16* -.08 -.22** .30** -.39** .27** .47** .24** -.01 .34**

Risk aversion (6) ---- -.20** -.17** .30** .09 .22** -.18** .28** -.17** -.01 -.12* .17** -.04

Management training (7) ---- .74** -.67** -.36** -.32** .59** -.55** .68** .42** .45** -.02 .56**

Formal marketing education (8) ---- -.59** -.32** -.36** .54** -.49** .59** .33** .38** .02 .46**

Centralisation (9) ---- .44** .43** -.52** .48** -.63** -.30** -.46** .17** -.39**

Formalisation (10) ---- .30** -.24** .24** -.35** -.25** -.24** .06 -.27**

Political behaviour (11) ---- -.32** .42** -.30** -.05 -.21** .07 -.12*

Market based reward system (12) ---- -.53** .60** .32** .38** -.02 .40**

Interdepartmental conflict (13) ---- -.60** -.47** -.37** .11 -.44** Interdepartmental connectedness (14) ---- .48** .56** -.05 .59** Competition (15) ---- .49** .12* .57** Market turbulence (16) ---- .06 .55** Technology (17) ---- .09 General economy (18) Notes: N = 216 **p < 0.01 *p < .05 ----

Table 7.3. Correlation Matrix for Overall Market Orientation with Business Performance, Organisational Commitment, Esprit de Corps, Customer Satisfaction, and Repeat Customer

Formal marketing education was also found to be significant and positively correlated with all four components of market orientation. The positive and significant correlations between formal marketing education and market orientation components were identified as; customer emphasis (r = .43, p < .01), intelligence generation (r = .53, p < .01), intelligence dissemination (r = .50, p < .01), and intelligence responsiveness (r = .47, p < .01). The significant correlations between formal marketing education and all four market orientation components indicated the importance of formal marketing education in determining the level of market orientation of the consumer goods manufacturing companies in Bangladesh.

Centralisation was found to be significant and negatively correlated with all four components of market orientation. These negative correlations between centralisation and customer emphasis (r = -.53, p < .01), centralisation and intelligence generation (r = -.62, p < .01), centralisation and intelligence dissemination (r = -.54, p < .01), and centralisation and intelligence responsiveness (r = -.41, p < .01) cautioned the consumer goods manufacturing companies in Bangladesh to avoid a centralisation structure and to adapt a decentralised organisational structure in becoming more market-oriented. Similarly, formalisation was also found to be statistically significant and negatively correlated to customer emphasis (r = -.29, p < .01), intelligence generation (r = -.36, p < .01), intelligence dissemination (r = -.28, p < .01), and intelligence responsiveness (r = - .25, p < .01). These negative correlations with all four market orientation components confirmed that the consumer goods manufacturing companies in Bangladesh should

VARIABLE 1 2 3 4 5 6 Business performance (1) ---- .55** .60** .72** .66** .56** Organisational commitment (2) ---- .78** .47** .44** .61** Esprit de corps (3) ---- .54** .48** .69** Customer satisfaction (4) ---- .62** .49** Repeat customer (5) --- .54**

Overall market orientation (6)

Notes:

N = 216 **p < .01 *p < .05

rethink the formalised structure of organisation and adopt an informal structure of organisation in order to become more market-oriented. Again, political behaviour of the organisation was also identified to be statistically significant and negatively correlated with customer emphasis (r = -.25, p < .01), intelligence generation (r = -.37, p < .01), intelligence dissemination (r = -.37, p < .01), and intelligence responsiveness (r = -.20, p < .05). These correlations suggested that the consumer goods manufacturing companies in Bangladesh should avoid political behaviour within their companies and prioritise customer interest rather than their self interest.

Market based reward system had significant positive correlations with customer emphasis (r = .41, p < .01), intelligence generation (r = .56, p < .01), intelligence dissemination (r = .53, p < .01), and intelligence responsiveness (r = .41, p < .01). These correlations of market based reward system with market orientation components suggested that the market based reward system is a significant tool in determining the level of market orientation of the consumer goods manufacturing companies in Bangladesh. While interdepartmental conflict posited negative correlations with all market orientation components, interdepartmental connectedness showed positive significant correlations. Interdepartmental conflict posited to decrease customer emphasis (r = -.50, p < .01), intelligence generation (r = -.53, p < .01), intelligence dissemination (r = -.56, p < .01), and intelligence responsiveness (r = -.57, p < .01). On the other hand, interdepartmental connectedness posited to enhance customer emphasis (r = .58, p < .01), intelligence generation (r = .65, p < .01), intelligence dissemination (r = .60, p < .01), and intelligence responsiveness (r = .56, p < .01). These correlations of both interdepartmental conflict and connectedness with all four market orientation components confirmed that the market orientation of consumer goods manufacturing companies in Bangladesh is discouraged by organisational conflict, and encouraged by organisational connectedness.

The above analysis suggested that all the internal variables were found to be significantly correlated with all four components of market orientation. The correlation analysis also suggested that, while top management emphasis, management training, formal marketing education, market based reward system, interdepartmental connectedness were found to be positively correlated with all four market orientation

components; risk aversion, centralisation, formalisation, political behaviour, and interdepartmental conflict indicated negative correlations.

The external variables including competition, market turbulence, and general economy were also found to be significantly correlated with market orientation components. Competition was identified as significant and positively correlated to customer emphasis (r = .41, p < .01), intelligence generation (r = .38, p < .01), intelligence dissemination (r = .48, p < .01), and intelligence responsiveness (r = .56, p < .01); recommending its positive influence in determining the level of market orientation of the consumer goods manufacturing companies in Bangladesh. The correlation analysis also highlighted significant positive correlations between market turbulence and customer emphasis (r = .27, p < .01), intelligence generation (r = .37, p < .01), intelligence dissemination (r = .43, p < .01), and intelligence responsiveness (r = .44, p < .01). These correlations suggested that the consumer goods manufacturing companies are more market-oriented in a turbulent market than in a stable market.

General economy (week economy) of Bangladesh posited to be significant and positively correlated to customer emphasis (r = .48, p < .01), intelligence generation (r = .55, p < .01), intelligence dissemination (r = .54, p < .01), and intelligence responsiveness (r = .60, p < .01). These significant positive correlations of general economy with all four components of market orientation suggested that the extent of the market orientation of the consumer goods manufacturing companies in Bangladesh was a function of the country’s weak general economy.

While these three external variables were found to be correlated with all four components of market orientation, technology was found only to be negatively correlated to intelligence generation (r = -.12, p < .05). This indicated that technology does not necessarily determine the level of market orientation of the consumer goods manufacturing companies in Bangladesh.

The above correlation analysis confirmed the market orientation of the consumer goods manufacturing companies in Bangladesh was either a positive or a negative function of different internal and external variables. In addition, examination of the correlation matrix confirmed that none of the inter-correlations between explanatory variables

exceeded the .80 limit for correlations recommended by Berry and Feldman (1985) and Hair et al. (1995).

Table 7.3 shows the correlations between market orientation and business performance, organisational commitment, esprit de corps, customer satisfaction and repeat customer. An analysis of the correlation matrix indicated that the market orientation of the consumer goods manufacturing companies in Bangladesh was found to be significant and positively correlated to economic and non-economic performance of business. Market orientation was found to be significant and positively correlated to the business performance (r = .56, p < .01). This indicated that the business performance (economic performance) was a positive function of the market orientation of the consumer goods manufacturing companies in Bangladesh. Similarly, market orientation had a significant positive correlation with employees’ organisational commitment (r = .61, p < .01), suggesting that, market orientation induced organisational commitment. Again, a positive significant correlation was observed between market orientation and employees esprit de corps (r = .69, p < .01). This correlation suggests that the esprit de corps was a positive function of the market orientation of the consumer goods manufacturing companies in Bangladesh.

Market orientation of the consumer goods manufacturing companies in Bangladesh posited significant and positively correlated to customer satisfaction (r = .49, p < .01). Similarly, market orientation was also found to be significant and positively correlated to the repeat customer (r = .54, p < .01). These correlations suggest that customer satisfaction and repeat customer performances are a function of the market orientation of the consumer goods manufacturing companies in Bangladesh.

The above analysis confirmed correlations between antecedents and market orientation components. The analysis also confirmed correlations between market orientation and economic and non-economic performance of business. Examination of both correlation matrices displayed in Table 7.2 and 7.3 suggested that multicollinearity was not a problem in this study since none of the correlation coefficients exceeded the limit of .80 recommended by Berry and Feldman (1985) and Hair et al. (1995).

The statistical assumptions tested in this chapter have confirmed the use of parametric techniques for data analysis in this study. The reliability analysis in this chapter has provided support for the appropriateness of the measurement scales used in Bangladesh. Finally, the correlation analysis in this chapter had not only shown correlations between the variables but has also supported the use of parametric techniques, as multicollinearity was not a problem in this study.

CHAPTER 8

SYNTHESIS MARKET ORIENTATION – QUANTITATIVE RESEARCH