Research Articles (Business Management)

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Are consumers’ quality perceptions influenced by brand familiarity, brand exposure and brand knowledge? results from a wine tasting experiment
(AOSIS, 2017) Priilaid, D.; Human, G.; Pitcher, K.; Smith, T.; Varkel, C.
Theory posits that, over time, placebo-type brand-equity effects may develop through the process of wine purchase and consumption. This being so, the extent to which factors like brand familiarity, brand exposure and brand knowledge combine to inform and reinforce such brand-equity effects remains still largely unexplored. With the aim of modelling this potentially mediating dynamic, we present a two-stage wine tasting experiment employing the combined reportage of fourteen experimental groups, each consecutively tasting seven Sauvignon Blanc wines first blind, and then, afterwards, sighted. Results demonstrate how brand familiarity mediates the effect of brand exposure on the sighted assessment of wine both directly, and via its relation to brand knowledge. This novel finding extends the literature on the consumer response to brand information, suggesting that conventional mass media marketing strategies aimed merely at imparting brand knowledge may prove insufficient unless they also create a degree of brand familiarity in the minds of their customers.
Are South African equity investors rewarded for taking on more risk?
(AOSIS, 2019-09-25) Steyn, Johannes P.; Theart, Lomari
Orientation: It is rational for investors to expect additional compensation for an increased risk exposure. This positive risk–return relationship is in line with traditional financial theory; however, this relationship does not always hold in empirical research. Research purpose: The aim of this article was to investigate the prevalence of the low-risk anomaly in the South African equity market. Motivation for the study: If there is evidence of a low-risk anomaly, where low-risk shares outperform high-risk shares, then the additional return expectation of investors may be misplaced. Research design/approach and method: A unique sampling procedure and an extended time frame were employed in a quintile portfolio analysis methodology. Main findings: The article presents evidence that South African listed shares with low historical volatility earned higher risk-adjusted returns over the period July 2004 to September 2018. Low-volatility shares delivered a Sharpe ratio of 1.10 compared to 0.65 produced by the Financial Times Stock Exchange / Johannesburg Stock Exchange Shareholder Weighted Index over the same period. Practical/managerial implications: The assumption that return in an investment portfolio could be enhanced by taking on more risk could be wrong. It seems that fund managers could potentially enhance returns and decrease risk in their portfolios by focussing on shares with low historical volatility. Contribution/value-add: The negative relationship observed between volatility and return is inconsistent with theoretical expectations. Therefore, the results of this article suggest that investors are not rewarded for assuming higher levels of risk.
Assessing the business case for environmental, social and corporate governance practices in South Africa
(AOSIS, 2019-11-28) Johnson, Ruth; Mans-Kemp, Nadia; Erasmus, Pierre D.
Background: By focusing on sustainable financial and environmental, social and corporate governance (ESG) returns, companies and investors can do well by doing good. Despite growing interest in sustainable corporate practices, limited ESG-related research has been conducted in South Africa. Previous researchers have mainly focused on corporate governance. All three ESG aspects should, however, be addressed to ensure corporate sustainability. It is possible that the consideration of a composite ESG measure can conceal varying levels of consistency in the individual aspects. Aim: The main objective was to investigate the relationship between ESG and corporate financial performance (CFP) measures. Setting: Firms listed on the Johannesburg Stock Exchange between 2011 and 2016. A total of 66 firms were considered from six sectors. Methods: Data for the sample (359 firm-year observations) were analysed by conducting panel regressions. In line with international research, ESG was considered as the independent variable, while eight measures of CFP were individually considered as the dependent variables. Composite and individual ESG disclosure scores were obtained from Bloomberg. The respective accounting-based, market-based and value-based CFP measures were sourced from IRESS. Results: Two main trends emerged from this study. The majority of the significant relationships identified between variables were only observed: (1) once the composite ESG disclosure score was disaggregated and (2) when a distinction was made among sectors. Conclusion: The empirical evidence suggests that ESG aspects are not homogeneous across sectors. Firm leaders should hence employ a differentiated approach to address the most important risks relevant to their operating environments.
An assessment of consumers’ subconscious responses to frontline employees’ attractiveness in a service failure and recovery situation
(AOSIS Publishing, 2017) Boshoff, Christo
Background: Initial analyses of the impact of physical attractiveness in a business context have supported the ‘what is beautiful is good’ contention. However, in circumstances characterised by negative emotions, duress and stress, very little is known about how human beings respond at the subconscious level to the attractiveness of frontline service providers. Aim: The purpose of this study was to assess whether consumers who complain to a frontline service provider about a service failure respond differently at the subconscious level when the service provider involved in the service encounter is attractive compared with one who is less attractive. Method: Forty respondents were exposed to a video clip of a service failure and service recovery situation. While viewing the hypothetical scenario, two neuro-physiological measurements were used to collect data at the subconscious level, namely galvanic skin response (GSR) and electroencephalography (EEG). Results: The results suggest that, at the subconscious level, customers respond differently to the service recovery efforts depending on the attractiveness of the frontline service provider who attempts to rectify the service failure. Conclusion: The results seem to suggest that the physical attractiveness of a frontline service provider moderates (or softens) the negative emotions that a complaining customer might experience during a service failure and complaint situation – consistent with the ‘what is beautiful is good’ contention.
Brand recognition in television advertising : the influence of brand presence and brand introduction
(AOSIS Publishing, 2014-05) Gerber, Charlene; Terblanche-Smit, Marlize; Crommelin, Tracey
Purpose: To assess the relationship between brand recognition and brand presence and brand introduction. Problem investigated: Brand recognition and recall are established advertising effectiveness measurements to assess brand awareness. Of particular interest is whether encoding of brand information as measured by brand recognition is influenced by brand presence and brand introduction. Design/methodology/approach: A meta-analysis was performed on responses to 25 television advertisements, gathered from 50 000 respondents. Findings: The findings indicated a positive linear relationship between brand presence and brand recognition but a negative linear relationship between brand introduction and brand recognition, whilst brand introduction and brand presence predicted variance in brand recognition. Value of research: The researchers concluded that a brand should be present in an advertisement for about two-thirds of the time for optimum brand recognition.
Building long-term marketing relationships : new perspectives from B2B financial services
(AOSIS Publishing, 2013-12-31) Theron, E.; Terblanche, N. S.; Boshoff, C.
The focus of this study was on the relevance of trust, satisfaction and commitment in maintaining a long-term relationship (intention to stay) with an exchange partner in a Business-to-Business (B2B) context in the financial services industry. The perceptions of 238 B2B clients of a leading South African provider of development capital were investigated. Since support could not be found for the existence of trust, commitment and satisfaction as distinct individual dimensions, this study provides empirical support for the amalgamation of some well-established individual dimensions into broader, more holistic dimensions as drivers of long-term relationship building. Contrary to expectations, B2B banking clients participating in this study appeared to regroup individual dimensions, in a heuristic fashion, to form new dimensions that influenced their attitude towards staying in a B2B relationship. As a result, building long-term marketing relationships seems to be a less complicated process than previously thought. Against this background, the primary contribution of the study is that it highlights the need for marketing practitioners to reconsider their current relationship-marketing strategies. As the findings of the study are inconsistent with conventional wisdom, they also challenge marketing academics to reconsider the theoretical foundations of relationship building in a B2B context.
Can service firms overdo service recovery? An assessment of non-linearity in service recovery satisfaction
(AOSIS, 2012) Boshoff, C.
Owing to the human nature of service delivery service failures occasionally occur. Persistently poor service delivery will, however, have a harmful impact on the survival and growth prospects of service firms. Service failure thus calls for remedial action, better known as service recovery. A variety of remedies have been proposed over the years. These remedies or tactics include fixing the problem, apologising, compensation (financial compensation or other forms of redress), a timely response and offering an explanation. A general theme in the service recovery literature is that ‘more is better’. The validity of this contention has, however, not been adequately considered. In other words, in a service recovery context, is more always better? Can service recovery be over-done (known as ‘over-benefitting’)? If so, what are the consequences? Based on the results of two field-type experimental studies involving a sample of 12 800 respondents the conclusion is that over-benefitting can be counter-productive. Over-benefitting consistently produced satisfaction scores lower than service recovery that was more moderate in nature.
Consumers' perceived risks associated with purchasing on a branded web site : the mediating effect of brand knowledge
(AOSIS, 2011) Boshoff, C.; Schlechter, C.; Ward, S.-J.
Research concerning online consumer behaviour has found that consumers are more inclined to utilise the Internet for information searching rather than actual purchasing. One reason proposed for this state of affairs is that potential buyers perceive buying on the Internet as a risky endeavour. The unique purchasing decision in an online environment is different from a traditional purchasing environment and as a result online transactions differ from the traditional 'bricks-and-mortar' environment. These differences may lead to risk perceptions among potential purchasers that are unique to online purchase intention. This study assesses the impact of the perceived risks associated with intention to purchase online from a well-established, branded web site on purchasing intentions. A secondary objective of the study was to assess whether the consumer's brand knowledge (brand awareness and brand image) mediates the impact of risk perceptions on the intention to purchase from the web site. It was found that both Performance risk and Social risk exert a strong negative influence on Intentions to purchase on a branded web site. Personal risk, however, do not impact on intentions to purchase on a branded web site. Furthermore, it was found that Brand knowledge does act as a mediating variable between Performance risk and Intentions to buy on a branded web site. Brand knowledge, however does not mediate the impact of Social risk on intentions to buy on a branded web site.
The controllable elements of the total retail experience : a study of clothing shoppers
(AOSIS, 2003) Terblanche, N. S.; Boshoff, C.
Retail clothing stores continually have to adapt to marketplace demands to remain competitive. Customer retention has become a major objective for many clothing retailers. This study combines the management of a number of the controllable personal and non-personal elements that a customer are exposed to and interacts within a retail store, as part of the shopping experience. The data analysis procedures closely followed the guidelines for scale development suggested by Churchill (1979). The empirical results suggest that there are five dimensions considered important by consumers when assessing their satisfaction with a total retail experience in a clothing store. These are: merchandise value, internal store environment, personal interaction with staff, merchandise variety and complaint handling.
Creating corporate entrepreneurship through strategic leadership
(Journal of Global Strategic Management, 2008-06) Hough, Johan; Scheepers, Retha
Strategy is not what it used to be. To compete effectively, large businesses must respond quickly, creatively and innovatively to develop an entrepreneurial environment to assist this response. Strategic leadership is crucial to develop the organizational environment needed to increase the entrepreneurial orientation in established businesses. The purpose of this article is to determine if the salient organizational factors that aid in the development of the corporate entrepreneurship (CE) capability are applicable in the South African context. A cross sectional telephone SUIVey of 315 South African companies indicated that strategic leadership of an enteiprise is crucial to develop and support CE. Strategic leadership which encourages autonomy and provides rewards for entrepreneurial behaviour creates a supportive organizational structure to strengthen corporate entrepreneurship.
Customer interaction with controlled retail mix elements and their relationships with customer loyalty in diverse retail environments
(Academy of Business and Retail Management, 2017) Terblanche, N. S.
Customer loyalty as an outcome holds various advantages for a retailer. It is therefore important that a retailer provides the type and level of retail mix elements for interaction that customers’ desire and which results in customer loyalty. In this study four elements of the retail mix offered by three diverse retailers and their relationships with customer loyalty were investigated.The findings clearly indicate that retail mix elements desired by customers vary by type of retailer. Supermarket customers’ interactions with merchandise value leads to loyalty whilst loyalty of customers of a health, beauty and lifestyle retailer (HBL), is the outcomes of positive relationships between their interaction with merchandise value and frontline staff.
Demographics and consumer ethnocentrism in a developing context : a South African study
(University of Pretoria, 2014) Pentz, Chris D.; Terblanche, Nic S.; Boshoff, Christo
The continued growth in international trade results in the fact that consumers in many countries are exposed to increasing amounts of product offerings from various countries of origin. As the origin of products might have an influence on consumer behavior, many marketers realize that extended knowledge on consumer behavior toward both domestic and imported products can be useful in the formulation of more effective marketing strategies. Past research in the field of international marketing suggest that the concept of consumer ethnocentrism can be an influencing factor in the decision of consumers to purchase locally-produced rather than imported products. While the concept of consumer ethnocentrism has been actively researched in a number of contexts and countries, research on this phenomenon has been limited in developing countries. The present study aims to add to the existing body of knowledge on consumer ethnocentrism in developing markets by investigating the possible relationships between consumer ethnocentrism and a number of demographic variables in South Africa. A unique contribution of this study is that the investigation focused on two different samples in terms of race, namely on a sample of “white” respondents and a sample of “black” respondents to account for the ethnic diversity in South Africa. The results of the study revealed that for both groups of respondents there was a positive relationship between age and consumer ethnocentrism, while a negative relationship was found for both groups in terms of the relationship between consumer ethnocentrism and income. In terms of the relationship between consumer ethnocentrism and gender, the results differed between the two groups of respondents. The findings can be used rewardingly by marketers wishing to operate more successfully in developing markets, such as South Africa.
Does investing in sound corporate governance pay? A South African study
(AOSIS, 2017) Mans-Kemp, N.; Erasmus, P. D.; Viviers, S.
Despite increased recognition of the importance of sound corporate governance practices in emerging markets, previous researchers reported inconclusive evidence on the association between corporate governance and financial performance. Authors that predominantly focused on board-related variables might, however, have failed to reflect the complex nature of corporate governance. The financial performance measures employed in the majority of previous studies also ignored the potential risk-reducing benefits that sound corporate governance could hold for emerging market firms. The purpose of this article was thus to investigate the relationship between a comprehensive measure of corporate governance and the risk-adjusted performance of selected South African companies. A unique corporate governance database was compiled by conducting content analysis on the considered companies’ annual reports over the period 2002 to 2010. Aspects related to nine corporate governance categories were taken into account. In addition to the accounting and market-based performance measures that were employed in previous studies, South African companies’ risk-adjusted performance was also taken into account. The capital asset pricing model and the Fama-French three-factor model were employed to estimate risk-adjusted abnormal returns for four corporate governance-sorted portfolios. Both estimations revealed that the portfolio comprising of companies with the highest corporate governance scores managed to significantly outperform the market.
The effect of public investor activism on trust : a case study in the asset management sector
(AOSIS, 2019-02-11) Viviers, Suzette; Theron, Edwin
Orientation: Compromised global trust levels appears to be one of the lasting legacies of the 2007 financial crisis, also in the financial services industry. In order to rebuilt trust, it is not only important to identify the drivers of trust, but also to assess the contexts within which trust is cultivated. Research purpose: The researchers investigated the impact that this announcement and a subsequent apology by Futuregrowth’s chief investment officer (CIO) had on trust in the asset management sector. Motivation for the study: Trust could be compromised when investors publicly engage with investee companies on contentious issues. As most investor activism in South Africa takes place in private, a unique research opportunity presented itself when Futuregrowth Asset Management publicly announced that they would suspend their funding to six state-owned enterprises (SOEs). Futuregrowth is the biggest private fixed-income asset manager in Africa and is renowned as a responsible investor. Research approach/design and method: Content analysis was performed on 31 articles published in financial newspapers and magazines. In addition, semi-structured personal interviews were conducted with the CIO of Futuregrowth, another member of his team and six prominent local asset managers. Main findings: The findings suggest that asset managers who wish to engage with investee companies in South Africa, especially SOEs, should preferably do so in private as a first recourse. When they do decide to speak out in public, they should focus on maintaining both calculative and affective trust. Failure to recognise the importance of affective trust, especially during periods of socio-political and economic uncertainty, could jeopardise trust in the asset management sector. Practical/managerial implications: The evidence suggests that affective trust is increasingly important in the chosen sector. Asset managers should no longer only focus exclusively on credibility, reliability and competence but should also give due consideration to the affective trust elements of integrity and fairness. Contribution/value-add: The findings are particularly pertinent in countries with small stock exchanges and high degrees of director interlocking. The research methodology adopted in this study represents a novel contribution to research in the asset management field.
Emerging role of corporate treasury management in cyber space
(AOSIS OpenJournals, 2002-12) Van Rooyen, J. H.
The Internet has brought about many new implications for the way we do business and is becoming a feature of normal business (Forster 2000). The most important implication is the way in which the Internet links many different entities in a vast network, creating a pool of information that is accessible from any location in the world. The computer screen is a small window into this pool of information, allowing us to interact with other participants in cyberspace. The most important aspect of the Internet from the point of view of this research is that it allows or facilitates the flow of business information, called e-business, between businesses and consumers, allowing business-to-business and business-to-consumer interaction. One of the possibilities brought about by the Internet is that of trading on-line, also called ecommerce. This opens up a new world that allows trade with global markets from any location. The ease with which we change things (information) in this environment may cause us to be indifferent to the parties with which we do business – as long as we are able to verify their secure identities. The modern treasury environment in a corporate treasury will be affected materially by the Internet. How treasury departments are being affected and will be affected in the future is important for South Africa. As a developing country, South Africa needs to take note of important changes in the global environment. If the country does not keep up with developments, the cost of catching up, which may be substantial, will place further unnecessary strain on the SA economy. E-business is seen as one of the most important enablers of business and it seems as if SA companies are already about 18 months to two years behind their counterparts in the USA (Gordon 2000:10). Generally, South African companies have not yet fully exploited the business advantages of new technologies (Duffield 2001:18). South African corporate treasuries realize the benefits of the e-business environment but need to take note of the changes and requirements necessary to fully exploit these benefits and to enable them to better manage the overall treasury function and the increased exposure to financial risk which may come about owing to mismanagement, fraud, inefficient systems or the use of modern financial instruments. Devastating losses may come about owing to the incorrect use of, for instance, derivative financial instruments. These instruments may leverage a dramatic loss (Holton 1998) and may threaten the future existence of a company. It is today also much easier to place most or all of the capital of a company at risk with one phone call. This just underlines how important it is to employ technology to improve the flow of business information for transactional, timely and accurate information for management purposes. The management of risk from the enterprise perspective therefore becomes vital.
Enhancing the use of internet banking in an emerging market
(University of Pretoria, 2014) Nel, Jacques; Boshoff, Christo
Electronic banking services such as internet banking offer bank clients substantial benefits over traditional banking channels. Although internet banking has been around for many years, increasing the use of the service by bank clients remains a priority for many managers of internet banking services. To address this managerial concern, the study investigates the factors that contribute to the enhanced use of internet banking by bank clients. Based on a literature review, internet-banking factors that could influence bank clients’ actual use of internet banking were identified. Data were collected from 1 156 users of internet banking. The results of the study showed that two factors influence internet banking usage, namely internet banking facilitating conditions and internet banking risk beliefs. The more favourable internet banking facilitating conditions are perceived to be, the more likely bank clients are to increase their use of internet banking. On the other hand, the greater the perceived risks associated with internet banking, the less the chances are that clients will do their banking through the internet. On the basis of these results, recommendations are provided to enhance the use of internet banking.
Entrepreneurial intentions and behaviours of South African university students
(AOSIS Publishing, 2013-12-31) Viviers, Suzette; Solomon, Goosain; Venter, Chanel
The entrepreneurial intentions and behaviours of South African university students are important factors to consider when developing entrepreneurship offerings at local universities. This article reports on pertinent findings from a study which set out to determine South African students’ career choice intentions and entrepreneurship behaviours as well as their knowledge and utilisation of, demand for and satisfaction with entrepreneurship offerings of local universities relative to international universities. A survey, using a 15-question structured web-based instrument was used to capture the responses from university students across 26 nations in the Global University Entrepreneurial Spirit Students’ Survey (GUESSS) conducted in 2011. Key findings are that few South Africa university students intend to enter into an entrepreneurship career immediately after completion of their studies, whereas close to a third of respondents were interested in doing so five years after graduation. The vast majority of students were satisfied with entrepreneurship offerings at South African universities. More physical support such as network access platforms are however needed as well as awareness of and access to small business funding mechanisms. Better marketed and focussed entrepreneurship offerings are essential to foster an environment at South African universities to promote entrepreneurship as career choice.
Entrepreneurial mindset of information and communication technology firms
(AOSIS OpenJournals, 2008-12) Scheepers, M. J.
Limited research focuses on the entrepreneurial mindset of information and communication technology (ICT) firms, despite the opportunities in and importance of this sector for economic growth. In this article, the entrepreneurial mindset of ICT firms is described by using three indicators: entrepreneurial orientation, e-business initiatives and a supportive organizational climate. Data were obtained using structured telephone interviews with 144 ICT firms. The findings indicate that the three indicators of an entrepreneurial mindset are associated and can be linked to performance. It is recommended that managers create a supportive climate for entrepreneurship by offering rewards, empowering employees and providing leadership and support for initiatives.
Entrepreneurial opportunities in the craft- distilling market in South Africa
(Academic Journals, 2015) Ungerer, Marius; Kruger, S. M.; Vorster, S.; Mansfield, G. M.
Opportunities for entrepreneurial entry into the craft-distilling product and market domains of the agricultural sector are presented in this study. Although the craft spirits industry in South Africa is currently in its infancy, the study is able to investigate potential entrepreneurial opportunities for such activities in the farming areas of the Western Cape Province. The first part of the study explores the supply side (product-led diversification) of the market. This in turn leads to a better understanding of the current state of the craft-distilling industry, and establishes a base for the survey. An appropriate survey instrument is developed and administered to existing distillers. The subsequent findings confirm the small size of the craft spirits industry. As expected, the small number of active producers generates a limited range of products in a market with established players having strong bargaining power. To perform effectively however, the entrepreneurial craft producer is advised not to compete directly with these players but rather to exploit niche product opportunities created in the premium consumer market segment attracted to handcrafted, locally-produced and customised offerings. By developing products with a competitive positioning of focussed differentiation complementary to the current portfolio of offerings, new market space can be created and new entrants should find attraction.
Entrepreneurial women’s cognitive ambidexterity : career and cultural influences
(AOSIS, 2017) De Villiers Scheepers, M. J.; Boshoff, C.; Oostenbrink, M.
The purpose of this study was to examine how women’s career stage and Ubuntu (collectivist) values relate to their cognitive ambidexterity when pursuing entrepreneurial initiatives in multicultural South Africa. In this study individual cognitive ambidexterity was operationalised as using effectual and causal logic. More than three hundred businesswomen from diverse backgrounds were surveyed. The results revealed that career stage, self-efficacy and Ubuntu collectivism are important in women’s ambidexterity. Mature, efficacious women in their late career stage draw on their diverse networks and use effectual affordable loss, flexibility and causation when pursuing entrepreneurial initiatives. In contrast, younger, early-career women are more likely to use pre-commitment to ensure support from stakeholders. Women with Ubuntu values use their relationship skills to draw on resources from their networks and use ambidexterity (effectual and causal logic) in their entrepreneurial endeavours. The findings suggest that entrepreneurial women who develop their cognitive ambidexterity and draw on both effectual and causal approaches when initiating entrepreneurial initiatives are more likely to experience successful outcomes. These mental approaches can be developed by means of awareness, training and mentoring. This study extends the literature on women’s entrepreneurial decision-making in a culturally diverse society, demonstrating the influence of cultural values and career stage on effectual and causal logic.

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