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Thai Entrepreneur and Community-Based Enterprises’ OTOP Branded Handicraft Export Performance: A SEM Analysis

Thai Entrepreneur and Community-Based Enterprises’ OTOP Branded Handicraft Export Performance: A... Thailand’s One Tambon One Product (OTOP) branded handicraft and food export program is expected in 2016 to reach nearly US$3 billion, with products coming from approximately 6,000, five-star-ranked community-based and small–medium enterprises countrywide. This study therefore examined influences of perceived quality, perceived price, trust, and satisfaction on enterprise export performance using the OTOP product brand. Structural equation modeling used LISREL Version 9.1 to conduct a confirmatory factor analysis and test the hypothesized interrelationships on the variables’ effect on export performance. The vast majority of the entrepreneurs selected by simple random sampling either owned or worked in groups that had 50 or fewer employees, which represented 472 of the survey’s 500 respondents, or 94.4%. Additional results indicated a high and positive correlation between perceived quality, perceived price, trust and satisfaction, and export performance, with the most significant factor affecting export performance being customer satisfaction. In addition, perceived quality also has a positive and direct effect on trust as well as on the exporter’s customer satisfaction. Perceived price plays a role as well and has a direct and positive impact on both customer satisfaction and a customer’s trust of the exporter. Perceived quality also affects export performance in a direct and positive way with trust having a direct and positive impact on satisfaction. Keywords microenterprise, satisfaction, perceived quality, perceived price, trust A key strategy of the Thai government has been to help OVOP concept and implementing it in 2001 with a “twist,” “grass roots” level, community-based enterprises (CBEs) which in this case reversed the Japanese focus from bottom- promote their home-grown agricultural and handicraft prod- up initiatives to a Thai government–managed, top-down ucts into larger, export-focused, small–medium enterprises driven scheme (Thu, 2013). Being relabeled in Thailand as (SMEs; Foreign Office, Office of the Prime Minister, 2016). “One Tambon One Product” or OTOP (Kurokawa, 2009), the These present-day Thai policies and programs are, however, Thai word “Tambon” is translated into English as “subdis- rooted to a much earlier, 1979 Japanese program called “One trict,” which is the third smallest administrative unit below Village One Product” (OVOP), which was started in Japan’s district and province in Thailand. Numbering 7,256 tambons poorest prefecture (Oita) by Governor Morihiko Hiramatsu throughout Thailand (Hörstemeier, 2013), the program which stressed the importance for locals to lessen their exploded after its inception, growing from a little more than dependence on government subsidies as well as help with US$7 million in 2001 to US$2.24 billion in 2008 (Figure 1), retaining youth and improving the quality of life (Prayukvong, with officials projecting nearly US$3 billion in 2016 2007; Thu, 2013). Governor Hiramatsu’s motto was “Think (Changsorn, 2015). globally, act locally” (Prayukvong, 2007; Ramon Magsaysay With the OTOP program’s explosive growth after its Award Foundation, 2016). Even the United Nations Industrial inception (Figure 1), global confirmation of its importance Development Organization (UNIDO) in 2008 released a came as early as 2003 when in the 20-nation Asia-Pacific report committing itself to rural development and poverty Economic Cooperation (APEC) Ministerial SME Meeting reduction in Africa using a OVOP-type project style (Haraguchi, 2008), whereas other developing nations around King Mongkut’s Institute of Technology Ladkrabang, Bangkok, Thailand the world have adopted Governor Hiramatsu’s vision. Corresponding Author: The emergence of the Asian financial crisis in mid-1997 Vipada Sitabutr, King Mongkut’s Institute of Technology Ladkrabang, redirected many Asian governments to strengthen their Chalongkrung Rd., Bangkok 10520, Thailand. SMEs (Moha-Asri, 2002), with Thailand adopting Japan’s Email: meaw2498@gmail.com Creative Commons CC-BY: This article is distributed under the terms of the Creative Commons Attribution 3.0 License (http://www.creativecommons.org/licenses/by/3.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage). 2 SAGE Open approximately 70,000 OTOP enterprises registered country- wide (Changsorn, 2015), and according to the Thai Interior Ministry’s Community Development Department, 10,000 of these have been granted a “five-star” rating. It is the “five- star” rating that qualifies the enterprise to export, and in 2015, 5,687 exporters were generating more than 100 billion THB (US$2.88 billion) yearly in foreign revenue for Thailand (Changsorn, 2015). Although the terms CBE, SME, and OTOP might at first appear to be interchangeable, they are not. To make the nomenclature even more confusing, in Thailand’s bordering neighbor of Malaysia, SMEs are often referred to as “micro- enterprises” by scholars (Tock & Baharun, 2013). Many CBEs and entrepreneurs have aspirations to become Figure 1. Thailand’s OTOP program “early years” from 2001 to SMEs, and one mechanism to achieve this is to market their products under the Thai government product branding of Source. Adapted from Natsuda, Wiboonpongse, Cheamuangphan, Shingkharat, and Thoburn (2011). “OTOP.” The brand personifies the perceived value (Tock & Note. OTOP = One Tambon One Product. Baharun, 2013), and by becoming an OTOP branded prod- uct, many doors to foreign markets can open, which is cur- rently growing at nearly 2% per year (“Know global-build held in Chiang Mai, Thailand, a ministerial statement was local fair,” 2015; Mass Communication Organization of issued proclaiming that Thailand’s OTOP promotion “is a Thailand [MCOT], 2013). This is also supplemented by a good model that could have application in developing an large domestic market which has also been growing at a con- entrepreneurial society, especially in local areas.” stant annual rate of 13% over the past several years During this period, it was the Thai Department of Rural (Changsorn, 2015). Community Development that was the coordinating office to Thailand for many years has focused on the development select the champion product at all administrative levels with and the sustainability of the rural regions and citizens, which the selection criteria focused on (a) export potential, (b) became official government policy with the release of the maintaining quality production, (c) high production stan- Eighth National Economic and Social Development Plan dards which contributed to product quality and customer sat- (1997-2001) which included the King of Thailand’s “Theory isfaction, and (d) the product’s history (Prayukvong, 2007). of Economic Self-Sufficiency” (Prayukvong, 2007). In addi- In addition, a rating system of one to five stars was imple- tion, community-based development can revitalize commu- mented with five stars necessary for export potential. nity solidarity (Suindramedhi, 2016). The government plays a supporting role as well, assisting Recently, a new program called “From Hundred to in supply chain issues, consultation with enterprise entrepre- Million” has also been conceived which is designed to help neurs, networking, and opening up new markets for the stimulate young entrepreneurs’ creativity and innovation OTOP products, which in 2016 has included 10 selected (“OTOP fairs generate 2 billion,” 2015), which is actually OTOP products being sold on the national flag airline Thai mirroring one of the main objectives of Governor Hiramatsu Airways with 128 OTOP products available through their in- OVOP concept in 1979. Further program incentives can be flight catalog (“Government cooperates with Thai,” 2016). found in Thai Commerce Ministry statistics which state that In addition, OTOP shops are being established in each of two Thai OTOP products now represent more than 10% of national gas stations (PTT) in each province with OTOP fairs Thailand’s exports (MCOT, 2013). Further incentives for and booths common throughout Thailand. entrepreneurs to join in OTOP branding of their products The basic idea of the OTOP scheme is to have each include initiatives such as the OTOP Product Champion Tambon (subdistrict) concentrate on one certain type of (OPC) certification that aims to improve the quality of CBE product which is best suited for production in each subdis- products (Natsuda et al., 2011). trict. Presently, approximately 40% of the Thai OTOP enter- prises are engaging in food processing and handicraft production, with a heavy concentration of the enterprises in Problem Statement Thailand’s Northern provinces. Three product categories Innovators are, first and foremost, entrepreneurs (The World have recently been identified as export rising stars, which Bank, 2010) with Thailand’s CBE/OTOP entrepreneurial includes processed foods and beverages, utensils, decorative enterprises critical to national economic health, with various items and souvenirs, and cloth, apparel, and accessories factors contributing to their export performance success (Changsorn, 2015). (Hirohata, 2013). In the past, Thai entrepreneurial agricultural In research reported in 2015 from the Thailand and handicraft exporters have experienced various challenges Productivity Institute, it was indicated that there were Sitabutr and Pimdee 3 in overseas markets, including customer confidence, trust, and has been empirically validated in a cross-national study of lack of product branding and identification (Kurokawa, 2010; U.S. and Japanese exporters, as well as in a study of U.K. and Piriyakul & Wingwon, 2011). Production capacity for export Australian exporters (Styles & Ambler, 1994), and a study of purposes is a great challenge for developing nations, which in British exporters, strengthening its value as a valid general- turn influences the quality, service standard, and production ized export performance measure (Beleska-Spasova, 2014). scale (The World Bank, 2010). Customer satisfaction with The literature does also suggest that export performance goods and service are critical to export performance (Julian, is closely associated with the characteristics of the enter- 2003; The World Bank, 2010). prise, including such things as the size, the age, and who the entrepreneurs are, as in this study’s case (Sinkula, 1994; Zou et al., 1998). The research, however, did identify other stud- Literature Review ies concerning export performance which were focused on Multiple experts and studies were analyzed in the lead-up to smaller SME organizations. This included Styles and Ambler development for the variables for the study’s hypotheses con- (1998); Bartlett and Bukvić (2001); Leonidou (2004); cerning Thai entrepreneurial CBE/OTOP export performance. Leonidou, Katsikeas, and Samieec (2002); and Ogunmokun Among these and most frequently mentioned were the CZ and Ng (2004). (Cavusgil & Zou, 1994) and the export performance Styles and Ambler (1994) revised an earlier export perfor- (EXPERF) (Zou, Taylor, & Osland, 1998) models. The mance framework from Aaby and Slater (1989) and con- authors, however, found the history of European SMEs as cluded that it was the partnership and relationship factors discussed by the Dutch scholar Voerman (2003) particularly which had the greatest influence on export performance interesting as well as the detailed analysis on export perfor- improvement. Later, Styles (1998) refined Cavusgil and mance from the Brazilian authors Carneiro, da Rocha, and da Zou’s (1994) model for use in the analysis of SMEs in Silva (2007). Australia and U.K. firms and determined that economic per- Finding agreement, however, on what components actu- formance, improvement of competitive position, future ally contribute to a firm’s export performance is complex expansion, and passive exporting were the keys to SME with confirmation of this difficulty coming from early export performance. research from Aaby and Slater (1989) which conducted a Research from Bartlett and Bukvić (2001) also focused on review of 55 studies on the management influences on export SMEs and investigated what hindered their growth the great- performance from 1978 to 1988 and synthesized the findings est, and strongly suggested that unless flexibly and deregula- down to the independent variables environment, competen- tion are embraced, there will be significant barriers to small cies, firm characteristics (i.e., firm characteristics, firm capa- business growth. Ogunmokun and Ng (2004) explored bilities, and management characteristics), and strategy Australian SME export performance (companies with fewer (Voerman, 2003) which affected export performance. Madsen than 200 employees) but did so by comparing why some (1987) also synthesized 17 export performance studies from SMEs had better success than others in export performance. 1964 to 1985 into 23 latent variables grouped into three cate- From these and other studies concerning theories about gories, which were referred to as organizational performance export performance, a synthesis of the research led to the fol- (O-performance), the structure and performance of its envi- lowing observed variables being determined. ronment (E-structure), and strategies (strategy). Sousa (2004) later reviewed 43 empirical studies pub- Perceived Quality (PQ) lished between 1998 and 2004 and noted 50 different opera- tional aspects of export performance, whereas Leonidou According to an export marketing performance survey con- (2004), on the contrary, compiled data from 32 empirical ducted on Thai SMEs, one of the four factors determined to studies and identified 39 barriers to export performance of have a significant contribution was product characteristics small businesses. (Julian, 2003). The three others included competition, com- Cavusgil and Zou (1994) in their model focused on larger, mitment, and the export market characteristics. Concerning U.S. organizations and how organizational performance was product characteristics, it was stated that concentration based on the organization’s profile; environmental aspects should be focused on product flexibility, which meets the including cultural and political/legal factors; management need of the market, specifically cultural specificity and the factors including experience, education, and commitment; degree of uniqueness of the product. and finally the product and where it is destined for. Although Aaker (1991) discussed brand equity and indicated that a good model with many useful elements, the present study perceived quality as having five elements including reason- is focused on very small, rural entrepreneurs and artisans and to-buy, differentiate/position, price premium, channel mem- therefore was not a “perfect” guideline to follow. ber, interest, and brand extensions. Zou et al. (1998) are also recognized for their EXPERF Fornell, Johnson, Anderson, Cha, and Bryant (1996) also model whose key dimensions for measuring export perfor- felt that quality awareness was crucial, whereas Bei and Chiao mance include financial, strategic, and satisfaction. This scale (2001) concluded that the most significant factor was the 4 SAGE Open quality of goods. The World Bank (2010) has also indicated the supporting sustainable corporate growth. Lo (2003) elaborated importance of solid infrastructure for norms, standards, and further by indicating that trust consisted of integrity, benevo- quality control, which therefore assures the proper commer- lence, ability, perception, and communication. Jin, Park, and cialization of products for either domestic or foreign markets. Kim (2007) highlighted trust in Korea as coming from a firm’s Similarly, Brown (2003) stipulated the necessity of prod- reputation. Brenčič, Ekar, and Virant (2008) indicated that a uct and service excellence in perceived quality which corre- long-term orientation is a consequence of trust and relation- sponds to research from Tsiotsou (2005) concluding ship commitment with Lin (2013) indicating that significant competitive comparisons as a key success factor. In addition, and positive relationships were found between trust and satis- Türkyılmaz and Özkan (2007) cited overall quality, product faction, and between satisfaction and loyalty. quality, and appropriateness to usage purposes, including Furthermore, according to Moliner (2009), trust is defined customer service, and service quality as significant factors. as being trustworthy, honest, and having a good reputation. This is consistent with Moliner (2009), which discussed Stuart, Verville, and Taskin (2011), however, saw trust as corporate strategies and indicated that perceived value was being built principally through supplier centric traditional more important than quality. Other factors such as fulfilling performance metrics such as delivery reliability and product expectations, meeting customer’s goals, and having positive quality conformance. customer relationships are also significant (Tohidinia & Trust is also earned when performance meets expecta- Haghighi, 2011). Product performance, conformance to tions and comes from reliable products (Valvi & West, 2013). specifications, reliability, and durability are also applicable To achieve trust, enterprises need to respond to a customer’s (Agus & Hajinoor, 2012). need, have honesty and sincerity, keep commitments, and In addition, Wang and Tsai (2014) stated that outstanding possess competency and effectiveness in their service deliv- quality, reliability, and consistency are crucial elements of ery (Alsajjan, 2014). This is consistent with Chang et al. perceived quality as well with Laosirihongthong, Teh, and (2014) which determined that for businesses to promote Adebanjo (2013), stating that a product’s performance, its trust, they must provide excellent service which is reliable conformance to specifications, reliability, and durability are and delivered with good intentions and Rijkers (2014) which equally important. Chang, Kuo, Hsu, and Cheng (2014) cited found that trust is earned from firms being reasonable, fair, broader factors of information, service, and system quality. and having appropriate services and price consistency. Perceived Price (PP) Satisfaction (ST) Dodds, Monroe, and Grewal (1991) indicated that perceived Zou and Stan (1998) found 50 papers published between price (PP) let to perceived quality which thus led to per- 1987 and 1997, and from the seven categories measuring ceived value. Bei and Chiao (2001) also indicated the impor- export performance, satisfaction was a key element. Hill, tance of a reasonable price, whereas Moliner (2009) stressed Jones, and Schilling (2015) stated that identification of the the importance of customer loyalty and perceived value. This customer’s needs along with superior fulfillment of customer is consistent with Dai (2010), which also indicated that rea- satisfaction over rivals contributed to a competitive sonable pricing is important which was in agreement with advantage. Wang and Tsai (2014). Anderson and Fornell (2000) divided customer satisfac- In Thailand, Julian (2003) studied SME export perfor- tion into three determinants: perceived service quality, per- mance and indicated that price competitiveness in the export ceived value, and customer expectations. Satisfaction can market and product commitment as important factors in also be defined broadly as a customer being satisfied with a export marketing success with Leonidou et al. (2002) in product or service (Bei & Chiao, 2001). In addition, Tohidinia agreement indicated that price flexibility and the ability to and Haghighi (2011) indicated that relationship quality had a offer lower prices (i.e., penetration pricing) were positive for significant impact with customer satisfaction and that cus- export performance. tomer satisfaction had a positive impact on repurchase inten- Valvi and West (2013) in their discussion about E-loyalty tions, positive word-of-mouth, and customer’s positive indicated that perceived value was a significant predictor of feedback. satisfaction while price notably influenced e-trust develop- This is consistent with Türkyilmaz and Özkan (2007) ment. Perceived price is also defined as pricing that is com- which conducted research in Turkey on Istanbul mobile petitive or equal to competitors “pricing scales as well as phone subscribers and determined that that these providers corresponding to market trends” (Rijkers, 2014). with limited resources should focus on improving customer satisfaction and customer loyalty. Calvo-Porral and Lévy-Mangin (2015) indicated that both Trust (TR) service value and corporate image exerted the strongest In Thailand, Piriyakul and Wingwon (2011) felt consumer influence on customer satisfaction and loyalty. Dai (2010) trust toward a product brand played a critical role in indicated that satisfaction can also be derived from a Sitabutr and Pimdee 5 successful purchase decision which leads to happiness and a completed survey. From this added level of collection, the overall satisfaction (Tsiotsou, 2005; Vesel & Zabkar, 2010). researchers were able to obtain 545 questionnaires. This repre- sented a collection rate of 75.69% (545 of the original 720 enterprises identified). Subsequent quality control and audit- Export Performance (EP) ing of the responses eliminated 45 sets, leaving a final survey Bilkey (1978) determined that management quality is the response rate of 69.44% or 500 of the originally identified 720 greatest single determinant of a firm’s export success. This is enterprises. consistent with Ayan and Percin (2005) which determined Based on statistical sampling requirements for research that export market success can also be determined by multi- conducted for the U.S. National Education Association ple indicators including environmental factors such as for- (NEA), Krejcie and Morgan (1970) indicated that sample eign environments, managerial characteristics, and the firm’s sizes larger than 380 are unnecessary. Yamane (1967) and marketing strategies. Israel (1992) also have indicated that sample sizes beyond Brown (2003) focused on market share, rapid growth, and 400 are almost irrelevant as well. profit as components of export performance, yet Brenčič Furthermore, during the period between March and May et al. (2008) defined export performance as profitability, 2015, qualitative research was further conducted by use of which is reflected in sale volume, rapid growth, global com- in-depth, semistructured, guided interviews with seven own- petitiveness, strategic position, global market share, perfor- ers and executives covering the following five topics: mance satisfaction, and success with the export venture which fully meets expectations. Export performance factors 1. Measurement of perceived quality. are also determined by profit, return of investment (ROI), 2. Measurement of perceived price. revenue, total sales, market shares, sales growth rate, export 3. Measurement of trust. growth rates, or number of new customers (Abu-Jarad, 4. Measurement of customer satisfaction. Yusof, & Nikbin, 2010). 5. Measurement of export performance. This is consistent with Ural (2009) which demonstrated that there is a positive impact of information sharing, stra- For the study, Cronbach’s alpha (Cronbach, 1951) was tegic positioning, and performance on financial export per- used to evaluate the initial 30 samples which used a 6-point, formance and satisfaction with the export venture. Stuart unipolar scale survey rating matrix with 5 indicating excel- et al. (2011) examined trust between supplier and buyer lent and 0 indicating no opinion. The value of alpha that is firms as well as the impact that trust has on export perfor- considered acceptable ranges in value from 0 to 1 and may be mance outcomes which included customer satisfaction, used to describe the reliability of factors extracted from mul- market share, and profitability. This was similar to Agus tipoint formatted questionnaires or scales, with a reliability and Hajinoor (2012) and Laosirihongthong et al. (2013) score of .70 or higher being considered a reliable score by that emphasized the importance of market share, profit- many researchers (Hair, Hult, Ringle, & Sarstedt, 2013; ability, sales growth, and market growth on export perfor- Nunnally & Berstein, 1994). The correlation coefficient indi- mance (Table 1). cated high reliability with a score of .953. Quantitative Data Analysis Method To determine whether the sample size of 500 exporters Data Collection selected by use of simple random sampling for the study From the 2015 Thai Exporter Directory Database from the was adequate, the researchers further confirmed this to be Ministry of Commerce’s Department of International Trade the case from previous researchers (Hair et al., 2013; (DIP), 1,353 Thai OTOP handicraft exporters which were Schumacker & Lomax, 2004). The questionnaire used a listed were extracted. Starting in November 2014, phone 6-point unipolar scale with 5 indicating excellent and 0 calls were placed to 720 enterprise entrepreneurs involved in indicating no quality (Krosnick & Presser, 2009). This was export of Thai handicraft- and food-related products. Upon similar to the export performance rating scale used by Pope contact with these owners, the best method for sending the (2002) to measure small firms. Analysis of Thai owner and export performance questionnaire was determined (post, entrepreneur export performance was conducted using email, courier, etc.). Subsequent follow-up calls and emails descriptive statistics including frequency, percentage, were made to those owners who had not returned the survey mean, and standard deviation (Keengwe, Onchwari, & in December 2014 and January 2015, with the completion of Wachira, 2008). the follow-up process ending in February 2015. From this From literature reviews, the following latent and observed process, the targeted collection number was not achieved. variables were analyzed for this study. Therefore, 10 teams were selected and deployed to physi- The study defined the hypothesized framework as shown cally travel to the enterprises’ location in May 2015 and gather below and in Figure 2. 6 SAGE Open Table 1. Summary of Latent and Observed Variables Along With Their Associated References. Latent variables Observed variables Knowledge base (theory) PQ (PQ1) Best Quality Bilkey (1978); Julian (2003); Fornell, Johnson, Anderson, (PQ2) Excellent Standards Cha, and Bryant (1996); Bei and Chiao (2001); The (PQ3) Overall Quality World Bank (2010); Tock and Baharun (2013); Brown (PQ4) Meeting Customer’s Goals (2003); Tsiotsou (2005); Türkyılmaz and Özkan (PQ5) Durability (2007); Moliner (2009); Tohidinia and Haghighi (2011); (PQ7) Service Quality Agus and Hajinoor (2012); Wang and Tsai (2014); Laosirihongthong et al. (2013); Chang, Kuo, Hsu, and Cheng (2014) PP (PP1) Reasonable Price Aaker (1991); Bei and Chiao (2001); Moliner (2009); Dai (PP2) Fair price (2010); Wang and Tsai (2014); Julian (2003); Leonidou, (PP3) Acceptable price Katsikeas, and Samieec (2002); Valvi and West (2013); (PP4) Competitive Market Price Rijkers (2014) (PP5) Market Trends TR (TR1) Trustworthy Piriyakul and Wingwon (2011); Lo (2003); Jin, Park, and (TR2) Ability Kim (2007); Brenčič et al. (2008); Lin (2013); Moliner (TR3) Judgment (2009); Stuart et al. (2011); Valvi and West (2013); (TR4) Product Trust Alsajjan (2014); Chang et al. (2014); Rijkers (2014) (TR5) Integrity (TR6) Honesty (TR7) Trust in Promise ST (ST1) Overall Satisfaction Zou and Stan (1998); Anderson and Fornell (2000); (ST2) Satisfaction with Goods Bei and Chiao (2001); Tohidinia and Haghighi (2011); (ST3) Exceeds Expectations Türkyilmaz and Özkan (2007); Calvo-Porral and Lévy- (ST4) Satisfied Service Mangin (2015); Dai (2010); Vesel and Zabkar (2010); (ST5) Purchase Decision Satisfaction Tsiotsou (2005) (ST6) Needs satisfied EP (EP1) Market Share Abu-Jarad, Yusof, and Nikbin (2010); Ayan and Percin (EP2) Profitability (2005); Brown (2003); Brenčič et al. (2008); Ural (EP3) Rapid Growth (2009); Stuart et al. (2011); Agus and Hajinoor (2012); (EP4) Sales Volume Laosirihongthong et al. (2013) (EP5) Strategic Position Growth (EP6) Satisfied Performance (EP7) Global Competitiveness Note. PQ = Perceived Quality; PP = Perceived Price; TR = Trust; ST = Satisfaction; EP = Export Performance. Hypothesis 1 (H1): Perceived Quality (PQ) has a direct and positive impact on Export Performance (EP) through and positive impact on Trust (TR). Satisfaction (ST). Hypothesis 2 (H2): Perceived Quality (PQ) has a direct Hypothesis 8 (H8): Satisfaction (ST) has a direct and and positive impact on Satisfaction (ST) as well as an positive impact on Export Performance (EP). indirect and positive impact on Satisfaction (ST) through Trust (TR). Results Hypothesis 3 (H3): Perceived Price (PP) has a direct and positive impact on Satisfaction (ST) as well as an indirect Respondents’ Characteristics and positive impact on Satisfaction (ST) through Trust (TR). Of the 500 respondents for the study, 301 were female Hypothesis 4 (H4): Perceived Price (PP) has a direct and (60.2%) and 199 were male (39.8%). These respondents positive impact on Trust (TR). were divided into five age groups: 41 to 50 years (156 Hypothesis 5 (H5): Perceived Quality (PQ) has a direct respondents or 31.2%), 31 to 40 years (154 respondents or and positive impact on Export Performance (EP) as well 30.8%), 51 to 62 years (85 respondents or 17.0%), below 30 as an indirect and positive impact on Export Performance years old (76 respondents or 15.2%), with the remaining (EP) through Trust (TR) and Satisfaction (ST). group above 60 years old of age with 29 respondents (5.8%). Hypothesis 6 (H6): Trust (TR) has a direct and positive Regarding education, 220 of the 500 surveyed respon- impact on Satisfaction (ST). dents had bachelor’s degrees (44.0%); the second largest Hypothesis 7 (H7): Trust (TR) has a direct and positive group with 141 respondents had vocational education impact on Export Performance (EP) as well as an indirect (28.2%), with the remaining respondents represented by Sitabutr and Pimdee 7 TR1 Trustworthy TR 2 Ability TR 3 Judgment PQ1 Best Quality TR4 Product Trust PQ 2 Excellent TR 5 Integrity Standards TR 6 Honesty PQ 4 Meeting Customer’s Goals TR 7 Trust in Promise EP 1 Market Share PQ 5 Durability (TR) Trust H1 EP 2 Profitability H7 PQ 7 Service Quality H5 EP 3 Rapid Growth (PQ) Perceived (EP) Export Quality EP 4 Sales Volume Performance PP1 Reasonable H6 H2 EP 5 Strategic Price H4 Position Growth H8 (ST) PP2 Fair Price ST 1 Overall EP 5 Performance Satisfaction (PP) Perceived Satisfaction Satisfied PP3 Acceptable Price H3 Price ST 2 Satisfaction with EP 7 Global Goods Competitiveness PP4 Competitive Market Price ST 3 Exceeds Expectations PP5 Market Trends ST 4 Satisfied Service ST 5 Purchase Decision Satisfaction ST 6 Needs Satisfied Figure 2. Hypothesized framework. other types of education including 15 with master’s degrees between 51 and 75 million THB followed by 53 respondents (3.0%) and with the remaining 124 respondents representing between 6 and 25 million THB (10.6%). Respondents with other or lower educational levels (24.8%). assets between 76 and 100 million THB included 42 respon- Among the total 500 respondents, 440 respondents were dents (8.4%); between 101 and 125 million THB, 21 respon- business owners, representing 88% of the total, with the dents (4.2%); between 126 and 150 million THB, 20 remainder 60 (12.0%) indicating “business executives” as respondents (4.0%); between 151 and 175 million THB, nine their title/position. Work experience was broken down into respondents (1.8%); between 176 and 200 million THB, six those with 10 or more years’ experience (231 or 46.2%), respondents (1.2%); and, finally, the last group with assets those with 6 to 10 years of work experience (124 or 24.8%), more than 200 million THB was just one respondent (0.2%). those with 1 to 5 years of experience (120 or 24.0%), and, The respondents were engaged in various forms of busi- finally, the smallest group was those with less than 1 year of ness including manufacturing (151 respondents or 30.2%), experience (25 respondents or 5.0%). wholesalers (134 respondents or 26.8%), retail (125 respon- The vast majority of the entrepreneurs surveyed either dents or 25.0%), wholesale and retail (45 respondents or owned or worked in groups that had 50 or fewer employees 9.0%), manufacturing and wholesale (35 respondents or representing 472 of the respondents (94.4%). This was fol- 7.0%), and combined manufacturer, wholesaler, and retailer lowed by 22 respondents (4.4%) working in groups with 51 (10 respondents or 2.0%). to 100 employees, with only two of the total of 500 surveyed working in organizations larger than 101 employees (0.4%). Confirmatory Factor Analysis (CFA) In addition, the respondents are divided into 10 groups according to their assets. The largest group was represented According to Magistris and Gracia (2008), to access the by those with maximum assets not exceeding 5 million THB measurement models, a CFA is used followed by structural (US$144, 400 on September 27, 2016) which had 216 mem- equation modeling (SEM) to examine the general fit of the bers (43.2%). This was followed by those who worked with proposed model with data and also to identify the overall 76 businesses (15.2%) with assets between 26 and 50 million relationships among these constructs. Wong (2013) indicated THB. Another group with 56 respondents (11.2%) had assets also that for marketing research, a significance level of 5%, a 8 SAGE Open statistical power of 80%, and R values of at least .25 are considered typical. Standard modeling accepts the proposed model if the p value is higher than .05 and if the χ /df ratio is smaller than 2 (Byrne, Shavelson, & Muthén, 1989) which is consistent with Kline (1998) and Ullman (2001) which also indicated that the relative χ should be less than 2. It is also common to display confirmatory factor models as path diagrams in which squares show the observed variables and circles show the latent concepts (Albright & Park, 2009). In addition, another commonly reported statistic and a potential mechanism for accommodating large sample sizes may be to use the root mean square error of approximation (RMSEA) as a measure of goodness-of-fit in SEMs (Chen, Curran, Bollen, Kirby, & Paxton, 2008; and to measure the Figure 3. CFA for PQ (value from completely standardized discrepancy per degree of freedom (Hu & Bentler, 1999). solution). The Amos 22 user’s guide suggests that “a value of the 2 Note. χ = 0.54, p value = .764, and RMSEA = 0.000. CFA = confirmatory RMSEA of about 0.05 or less would indicate a close fit of the factor analysis; PQ = Perceived Quality; RMSEA = root mean square error of approximation. model in relation to the degrees of freedom” (Arbuckle, 2013). RMSEA values range from 0 to 1, with a smaller RMSEA value indicating better model fit. Acceptable model fit is indicated by an RMSEA value if recommendations for RMSEA cutoff points have been reduced considerably over the past couple of decades (Hu & Bentler, 1999). Perceived Quality (PQ) Using SEM, the researchers specified the CFA model (Hox & Bechger, 1998) where the Perceived Quality (PQ; Figure 3) is influenced by (PQ1) Best Quality, (PQ2) Excellent Standards, (PQ4) Meeting Customer’s Goals, (PQ5) Durable Products, and (PQ7) Service Quality as shown in Figure 3. From the modeling, the χ was indicated to be 0.54, with a p value of .764 and RMSEA of 0.000 which indicates an acceptable fit with the model. This ensures that the observed variables are sensitive to Perceived Quality (PQ) and are Figure 4. CFA for PP (value from completely standardized suitable for further analysis. solution). Note. χ = 0.06, p value = .970, and RMSEA = 0.000. CFA = confirmatory factor analysis; PP = Perceived Price; RMSEA = root mean square error of Perceived Price (PP) approximation. CFA of Perceived Price (PP) in Figure 4 shows the factors (PP1) Reasonable Price, (PP2) Fair Price, (PP3) Acceptable 11.03, with a p value of .273 and RMSEA of 0.021 which Price, (PP4) Competitive Market Price, and (PP5) Market indicates an acceptable fit with the model. This ensures that Trends. From the modeling, the χ was indicated to be 0.06, the observed variables are sensitive to Trust (TR) and are with a p value of .970 and RMSEA of 0.000 which indicates suitable for further analysis. an acceptable fit with the model. This ensures that the observed variables are sensitive to Perceived Pricing (PP) Satisfaction (ST) and are suitable for further analysis. CFA of Satisfaction (ST) in Figure 6 shows the factors (ST1) Overall Satisfaction, (ST2) Satisfaction With Goods, (ST3) Trust (TR) Exceeds Expectations, (ST4) Satisfied Service, (ST5) CFA of Trust (TR) in Figure 5 shows the factors (TR1) Purchase Decision Satisfaction, and (ST6) Needs Satisfied. Trustworthy, (TR2) Ability, (TR3) Judgment, (TR4) Product From the modeling, the χ was indicated to be 11.03, with a Trust, (TR5) Integrity, (TR6) Honesty, and (TR7) Trust in p value of .273 and RMSEA of 0.021 which indicates an Promise. From the modeling, the χ was indicated to be acceptable fit with the model. This ensures that the observed Sitabutr and Pimdee 9 Figure 6. CFA for ST (value from completely standardized solution). Note. χ = 0.03, p value = .986, and RMSEA = 0.000. CFA = confirmatory factor analysis; ST = Satisfaction; RMSEA = root mean square error of Figure 5. CFA for TR (value from completely standardized approximation. solution). Note. χ = 11.03, p value = .273, and RMSEA = 0.021. CFA = confirmatory factor analysis; TR = Trust; RMSEA = root mean square error of approximation. variables are sensitive to Satisfaction (ST) and are suitable for further analysis. From the modeling, the χ was indicated to be 0.03, with a p value of .986 and RMSEA of 0.000 which indicates a good fit with the model. This ensures that the observed vari- ables are sensitive to Satisfaction (ST) and are suitable for further analysis. Export Performance (EP) CFA of Export Performance (EP) in Figure 7 shows the fac- tors (EP1) Market Share, (EP2) Profitability, (EP3) Rapid Growth, (EP4) Sales Volume, (EP5) Strategic Position Growth, (EP6) Satisfied Performance, and (EP7) Global Competitiveness. From the modeling, the χ was indicated to be 11.03, with a p value of .273 and RMSEA of 0.021 which indicates an acceptable fit with the model (Table 2). This ensures that the observed variables are sensitive to Export Performance (EP) and are suitable for further analysis. Figure 7. CFA for EP (value from completely standardized From the modeling, the χ was indicated to be 6.43, with solution). a p value of .490 and RMSEA of 0.000 which indicates a Note. χ = 6.43, p value = .490, and RMSEA = 0.000. CFA = confirmatory factor analysis; EP = Export Performance; RMSEA = root mean square good fit with the model. This ensures that the observed vari- error of approximation. ables are sensitive to Export Performance (EP) and are suit- able for further analysis. Rasch (1980) evaluated χ statistics as a way of evaluating 500 has a 5% range of 0.91 to 1.09. The χ value of 302.04 fit of data to the model and indicated that a sample size of for the 109 degrees of freedom is insignificant. Thus, it could 10 SAGE Open Table 2. Goodness-of-Fit Summary Results for the Structural Model. Evaluating the data–model fit Criteria Remarks CMIN-ρ (χ ) ρ > 0.05 p value must be higher than p value the higher the better CMIN/df (relative χ ) <3 CMIN/df value <3 CMIN/df value = 0 shows appropriate fit GFI, AGFI >0.90 GFI, AGFI > 0.90 GFI, AGFI ~ 1 RMSEA <0.08 RMSEA < 0.08 RMSEA = 0 shows appropriate fit Source. Adapted from Arbuckle (2013) and Hair et al. (2013). Note. GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation; CMIN = minimum chi-square. say the null hypothesis that the model presented in the article is a good fit with the data. The error statistics of RMSEA of 0.015 confirm that the errors of fit in the covariance matrix are very low. The p value of .101 in Figure 8 is higher than .05, which shows that the criteria is a good fit with the empirical data and with each factors weight higher than 0.50 represents a latent recognition of the quality Perceived Quality to Perceived Price, Trust, Satisfaction which results in Export Performance in the construct validity of the variables and empirical variables that could explain the variance of latency as well. In addition, empirical variables enable to explain variances of observed variables ensuring suitability for SEM. Figure 8. Convergent model (value from completely standardized solution). SEM Results Note. χ = 302.04, p value = .101, and RMSEA = 0.015. PQ = Perceived The SEM results (Figure 9) showed that all models meet the Quality; PP = Perceived Price; TR = Trust; ST = Satisfaction; EP = Export 2 2 Performance. required criteria at 276.94 χ value, with χ /df (276.94/251) at 1.10, p value at .13, goodness-of-fit index (GFI) at 0.96, adjusted goodness-of-fit index (AGFI) at 0.93, root mean Hypothesis Testing residual (RMR) at 0.031, RMSEA at 0.014, and CN at The results of the hypotheses testing are indicated in Table 4. 542.74. According to Hooper, Coughlan, and Mullen (2008), items with low multiple R (less than .20) have been removed Discussion and Conclusion from the analysis as this is an indication of very high levels Results from the study indicate perceived quality (PQ) has a of error. This is confirmed by Hair et al. (2013) which indi- positive and direct effect on trust (TR) which corresponds to cated that R values should be higher than .25. From Table 3, research by Moliner (2009), Vesel and Zabkar (2010), Wang GFI is indicated to be 0.96 which is the GFI. Traditionally, and Tsai (2014), and Chang et al. (2014). Indications also an omnibus cutoff point of 0.90 has been recommended for suggest that the higher perceived quality awareness is, the the GFI (Hooper et al., 2008). Values for the AGFI also more trust a customer has. This requires Thai CBEs/OTOP ranged between 0 and 1, and it is generally accepted that handicraft and product exporters to focus on products with values of 0.90 or greater (Figure 8) indicate well-fitting excellent quality while also meeting production standards models (Hooper et al., 2008). The AGFI for the study in that are suitable for customer needs, including durability and Table 3 is 0.96. Sitabutr and Pimdee 11 studies conducted by Brown (2003), Agus and Hajinoor (2012), Laosirihongthong et al. (2013), and Laosirihongthong et al. (2013). This shows that quality awareness is an impor- tant element for export growth. The analysis emphasizes that Thai exporters need to promote high-quality products which are suitable to their customer’s needs. The products must also be durable and serviced with excellent customer services. These factors are all important to Thai export performance (EP). Trust (TR) was also shown to have a direct and positive impact on satisfaction (ST) which corresponded to previous studies from Jin et al. (2007); Sanayei, Shaemi, and Jamshidi Figure 9. Final model with values from estimates. (2011); Chang (2012); Chen et al. (2008); Lin (2013); 2 2 Note. χ = 276.94, χ /df = 1.10, p value = .13, GFI = 0.96, AGFI = 0.93, Alsajjan (2014); and Rijkers (2014). Trust (TR) therefore RMR = 0.031, RMSEA = 0.014, and CN = 542.74. GFI = goodness-of-fit promotes customer satisfaction (ST), and focus needs to be index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation. given on products that have good marketing potential, have *p < .05. **p < .01. excellent quality, and are suitable to customer’s needs. Thai OTOP exporter’s goals should be focused on promoting cus- tomer satisfaction (ST) with both production and service, good customer service. These factors highly influence a cus- which leads to better export performance (EP). In addition, tomer’s trust. Thai exporters should promote satisfaction with purchasing In addition, the results show that perceived quality (PQ) decisions, provide products suitable to consumer’s needs, has a direct and positive impact on satisfaction (ST), which and ensure overall customer satisfaction (ST) to enhance corresponds to research from e-study of Fornell et al. (1996), their export performance (EP). Anderson and Fornell (2000), Bei and Chiao (2001), Tsiotsou In addition, trust (TR) influences directly and positively (2005), Türkyilmaz and Özkan (2007), Vesel and Zabkar export performance (EP) which is similar to results of studies (2010), and Tohidinia and Haghighi (2011). This higher con- conducted by Lo (2003), and Brenčič et al. (2008) which sumer awareness translates into higher satisfaction which shows that trust (TR) influences export performance (EP) means that exporters should focus on products with excellent with the greater a customer trusting the exporter, the higher quality that meet production standards, and are suitable to the export performance (EP) value becomes. As such, Thai customer needs. Furthermore, products should be durable exporters should focus on high-quality, marketable products. and maintained through an excellent product service system. Trust (TR) leads to purchasing contracts, which leads to bet- These factors all have a significant influence over a custom- ter export performance (EP). er’s purchasing decision. In addition, Satisfaction (ST) has a direct and positive Furthermore, the study showed that perceived price (PP) impact on export performance (EP) as indicated in studies has a direct and positive impact on satisfaction (ST) corre- conducted by Ural (2009). As satisfaction (ST) levels sponding to studies conducted by Bei and Chiao (2001), increase, the greater the positive impact on export perfor- Moliner (2009), Dai (2010), and Rijkers (2014). This mance (EP). Thus, Thai exporters should aim to promote explains that the greater export customer price awareness product and service satisfaction. In addition, exporters is, the higher satisfaction they have. Hence, the Thai export- should help with their customers’ purchasing decision by ers’ customers expect reasonable and fair prices which are providing products suitable to their customers’ needs while competitive. There is also an indirect, positive factor from ensuring overall customer satisfaction. the results which show that satisfaction (ST) delivered through higher price awareness affects satisfaction (ST) through trust (TR). Implications Perceived price (PP) was also shown to have both a direct 1. Export sector success depends on properly designing and positive impact on trust (TR) which was validated in pre- production to meet the needs and growth of custom- vious studies from Moliner (2009), Wang and Tsai (2014), ers which assures the exporters’ strategic strength. and Valvi and West (2013). This proves that the higher export 2. To achieve this goal, marketable products with clear customer pricing awareness is, the more likely they are to and proper positioning must be realized. trust the exporter. Hence, Thai exporters should ensure that 3. The most significant factor affecting export perfor- their products have reasonable and fair pricing which is mance is customer satisfaction which includes main- acceptable and competitive and corresponds to market trends taining proper production levels while maintaining to promote trust among their customers. high perceived quality which is also a significant Perceived quality (PQ) was also shown to have a direct and factor. positive impact on export performance (EP) corresponding to 12 SAGE Open Table 3. Structural Equation Modeling Results. Independent variables Dependent variables R Effect PQ PP TR ST Export .61 DE 0.30** (0.08) — 0.19* (0.09) 0.41** (0.07) Performance IE 0.14 (0.09) — 0.09 (0.05) — TE 0.44* (0.10) — 0.28** (0.09) 0.41** (0.07) Satisfaction .58 DE 0.53** (0.18) 0.88** (0.20) 0.23* (0.11) — IE 0.06 (0.05) 0.03* (0.06) — — TE 0.59* (0.18) 0.91** (0.20) — — Trust .82 DE 0.29** (0.11) 0.59** (0.11) — — IE — — — — TE 0.29** (0.11) 0.59** (0.11) — — 2 2 Note. χ = 276.94, χ /df (276.94/251) = 1.10, p value = .13, GFI = 0.96, AGFI = 0.93, RMR = 0.031, RMSEA = 0.014, and CN = 542.74. Values in parentheses are standard errors. DE = direct effect; IE = indirect effect; TE = total effect, values are estimated; GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation. *p < .05. **p < .01. Table 4. Hypothesis Testing Results. Hypotheses Results H1: Perceived Quality (PQ) has a direct and positive impact on Trust (TR) Accepted H2: Perceived Quality (PQ) has a direct and positive impact on Satisfaction (ST) as well as an indirect Rejected and positive impact on Satisfaction (ST) through Trust (TR) H3: Perceived Price (PP) has a direct and positive impact on Satisfaction (ST) as well as an indirect Accepted but positive impact on Satisfaction (ST) through Trust (TR) H4: Perceived Price (PP) has a direct and positive impact on Trust (TR) Accepted H5: Perceived Quality (PQ) has a direct and positive impact on Export Performance (EP) as well as an Rejected indirect and positive impact on Export Performance (EP) through Trust (TR) and Satisfaction (ST) H6: Trust (TR) has a direct and positive impact on Satisfaction (ST) Accepted H7: Trust (TR) has a direct and positive impact on Export Performance (EP) as well as an indirect ans Rejected positive impact on Export Performance (EP) through Satisfaction (ST) H8: Satisfaction (ST) has a direct and positive impact on Export Performance (EP) Accepted 4. 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Introduction to SMEs in doi:10.1108/02651339810236290 Malaysia: Growth potential and branding strategy. World Zou, S., Taylor, C. R., & Osland, G. E. (1998). The EXPERF Journal of Social Sciences, 3(6), 189-203. Retrieved from Scale: A cross-national generalized export performance mea- http://eprints.utm.my/40455/ sure. Journal of International Marketing, 6(3). Retrieved from Tohidinia, Z., & Haghighi, M. (2011). Predictors and out- http://tinyurl.com/hm552tr comes of relationship quality: A guide for customer-ori- ented strategies. Business Strategy Series, 12, 242-256. Author Biographies doi:10.1108/17515631111166889 Vipada Sitabutr is a doctoral candidate with the Faculty of Tsiotsou, R. (2005). The role of perceived product quality and over- Industrial Education at the King Mongkut’s Institute of Technology all satisfaction on purchase intentions. International Journal of Ladkrabang (KMITL). Consumer Studies, 30, 207-217. Retrieved from http://tinyurl. com/jfl8t6y Paitoon Pimdee is an associate professor with the Faculty of Türkyilmaz, A., & Özkan, C. (2007). Development of a customer Industrial Education at the King Mongkut’s Institute of Technology satisfaction index model: An application to the Turkish mobile Ladkrabang (KMITL). He also serves has the faculty head of the phone sector. Industrial Management & Data Systems, 107, PhD program. He graduated with a Bachelor of Arts in Economics 672-687. doi:10.1108/02635570710750426 and a Master of Science (MSc) degree in science education. He also Ullman, J. B. (2001). Structural equation modeling. In B. G. holds a PhD in environmental education and behavioral sciences Tabachnick & L. S. Fidell (Eds.), Using multivariate statistics and specializes in environmental issues, energy conservation. and (4th ed.). Needham Heights, MA: Allyn & Bacon. ecotourism. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png SAGE Open SAGE

Thai Entrepreneur and Community-Based Enterprises’ OTOP Branded Handicraft Export Performance: A SEM Analysis

Sitabutr, Vipada; Pimdee, Paitoon
SAGE Open , Volume 7 (1): 1 – Feb 1, 2017
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Abstract

Thailand’s One Tambon One Product (OTOP) branded handicraft and food export program is expected in 2016 to reach nearly US$3 billion, with products coming from approximately 6,000, five-star-ranked community-based and small–medium enterprises countrywide. This study therefore examined influences of perceived quality, perceived price, trust, and satisfaction on enterprise export performance using the OTOP product brand. Structural equation modeling used LISREL Version 9.1 to conduct a confirmatory factor analysis and test the hypothesized interrelationships on the variables’ effect on export performance. The vast majority of the entrepreneurs selected by simple random sampling either owned or worked in groups that had 50 or fewer employees, which represented 472 of the survey’s 500 respondents, or 94.4%. Additional results indicated a high and positive correlation between perceived quality, perceived price, trust and satisfaction, and export performance, with the most significant factor affecting export performance being customer satisfaction. In addition, perceived quality also has a positive and direct effect on trust as well as on the exporter’s customer satisfaction. Perceived price plays a role as well and has a direct and positive impact on both customer satisfaction and a customer’s trust of the exporter. Perceived quality also affects export performance in a direct and positive way with trust having a direct and positive impact on satisfaction. Keywords microenterprise, satisfaction, perceived quality, perceived price, trust A key strategy of the Thai government has been to help OVOP concept and implementing it in 2001 with a “twist,” “grass roots” level, community-based enterprises (CBEs) which in this case reversed the Japanese focus from bottom- promote their home-grown agricultural and handicraft prod- up initiatives to a Thai government–managed, top-down ucts into larger, export-focused, small–medium enterprises driven scheme (Thu, 2013). Being relabeled in Thailand as (SMEs; Foreign Office, Office of the Prime Minister, 2016). “One Tambon One Product” or OTOP (Kurokawa, 2009), the These present-day Thai policies and programs are, however, Thai word “Tambon” is translated into English as “subdis- rooted to a much earlier, 1979 Japanese program called “One trict,” which is the third smallest administrative unit below Village One Product” (OVOP), which was started in Japan’s district and province in Thailand. Numbering 7,256 tambons poorest prefecture (Oita) by Governor Morihiko Hiramatsu throughout Thailand (Hörstemeier, 2013), the program which stressed the importance for locals to lessen their exploded after its inception, growing from a little more than dependence on government subsidies as well as help with US$7 million in 2001 to US$2.24 billion in 2008 (Figure 1), retaining youth and improving the quality of life (Prayukvong, with officials projecting nearly US$3 billion in 2016 2007; Thu, 2013). Governor Hiramatsu’s motto was “Think (Changsorn, 2015). globally, act locally” (Prayukvong, 2007; Ramon Magsaysay With the OTOP program’s explosive growth after its Award Foundation, 2016). Even the United Nations Industrial inception (Figure 1), global confirmation of its importance Development Organization (UNIDO) in 2008 released a came as early as 2003 when in the 20-nation Asia-Pacific report committing itself to rural development and poverty Economic Cooperation (APEC) Ministerial SME Meeting reduction in Africa using a OVOP-type project style (Haraguchi, 2008), whereas other developing nations around King Mongkut’s Institute of Technology Ladkrabang, Bangkok, Thailand the world have adopted Governor Hiramatsu’s vision. Corresponding Author: The emergence of the Asian financial crisis in mid-1997 Vipada Sitabutr, King Mongkut’s Institute of Technology Ladkrabang, redirected many Asian governments to strengthen their Chalongkrung Rd., Bangkok 10520, Thailand. SMEs (Moha-Asri, 2002), with Thailand adopting Japan’s Email: meaw2498@gmail.com Creative Commons CC-BY: This article is distributed under the terms of the Creative Commons Attribution 3.0 License (http://www.creativecommons.org/licenses/by/3.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage). 2 SAGE Open approximately 70,000 OTOP enterprises registered country- wide (Changsorn, 2015), and according to the Thai Interior Ministry’s Community Development Department, 10,000 of these have been granted a “five-star” rating. It is the “five- star” rating that qualifies the enterprise to export, and in 2015, 5,687 exporters were generating more than 100 billion THB (US$2.88 billion) yearly in foreign revenue for Thailand (Changsorn, 2015). Although the terms CBE, SME, and OTOP might at first appear to be interchangeable, they are not. To make the nomenclature even more confusing, in Thailand’s bordering neighbor of Malaysia, SMEs are often referred to as “micro- enterprises” by scholars (Tock & Baharun, 2013). Many CBEs and entrepreneurs have aspirations to become Figure 1. Thailand’s OTOP program “early years” from 2001 to SMEs, and one mechanism to achieve this is to market their products under the Thai government product branding of Source. Adapted from Natsuda, Wiboonpongse, Cheamuangphan, Shingkharat, and Thoburn (2011). “OTOP.” The brand personifies the perceived value (Tock & Note. OTOP = One Tambon One Product. Baharun, 2013), and by becoming an OTOP branded prod- uct, many doors to foreign markets can open, which is cur- rently growing at nearly 2% per year (“Know global-build held in Chiang Mai, Thailand, a ministerial statement was local fair,” 2015; Mass Communication Organization of issued proclaiming that Thailand’s OTOP promotion “is a Thailand [MCOT], 2013). This is also supplemented by a good model that could have application in developing an large domestic market which has also been growing at a con- entrepreneurial society, especially in local areas.” stant annual rate of 13% over the past several years During this period, it was the Thai Department of Rural (Changsorn, 2015). Community Development that was the coordinating office to Thailand for many years has focused on the development select the champion product at all administrative levels with and the sustainability of the rural regions and citizens, which the selection criteria focused on (a) export potential, (b) became official government policy with the release of the maintaining quality production, (c) high production stan- Eighth National Economic and Social Development Plan dards which contributed to product quality and customer sat- (1997-2001) which included the King of Thailand’s “Theory isfaction, and (d) the product’s history (Prayukvong, 2007). of Economic Self-Sufficiency” (Prayukvong, 2007). In addi- In addition, a rating system of one to five stars was imple- tion, community-based development can revitalize commu- mented with five stars necessary for export potential. nity solidarity (Suindramedhi, 2016). The government plays a supporting role as well, assisting Recently, a new program called “From Hundred to in supply chain issues, consultation with enterprise entrepre- Million” has also been conceived which is designed to help neurs, networking, and opening up new markets for the stimulate young entrepreneurs’ creativity and innovation OTOP products, which in 2016 has included 10 selected (“OTOP fairs generate 2 billion,” 2015), which is actually OTOP products being sold on the national flag airline Thai mirroring one of the main objectives of Governor Hiramatsu Airways with 128 OTOP products available through their in- OVOP concept in 1979. Further program incentives can be flight catalog (“Government cooperates with Thai,” 2016). found in Thai Commerce Ministry statistics which state that In addition, OTOP shops are being established in each of two Thai OTOP products now represent more than 10% of national gas stations (PTT) in each province with OTOP fairs Thailand’s exports (MCOT, 2013). Further incentives for and booths common throughout Thailand. entrepreneurs to join in OTOP branding of their products The basic idea of the OTOP scheme is to have each include initiatives such as the OTOP Product Champion Tambon (subdistrict) concentrate on one certain type of (OPC) certification that aims to improve the quality of CBE product which is best suited for production in each subdis- products (Natsuda et al., 2011). trict. Presently, approximately 40% of the Thai OTOP enter- prises are engaging in food processing and handicraft production, with a heavy concentration of the enterprises in Problem Statement Thailand’s Northern provinces. Three product categories Innovators are, first and foremost, entrepreneurs (The World have recently been identified as export rising stars, which Bank, 2010) with Thailand’s CBE/OTOP entrepreneurial includes processed foods and beverages, utensils, decorative enterprises critical to national economic health, with various items and souvenirs, and cloth, apparel, and accessories factors contributing to their export performance success (Changsorn, 2015). (Hirohata, 2013). In the past, Thai entrepreneurial agricultural In research reported in 2015 from the Thailand and handicraft exporters have experienced various challenges Productivity Institute, it was indicated that there were Sitabutr and Pimdee 3 in overseas markets, including customer confidence, trust, and has been empirically validated in a cross-national study of lack of product branding and identification (Kurokawa, 2010; U.S. and Japanese exporters, as well as in a study of U.K. and Piriyakul & Wingwon, 2011). Production capacity for export Australian exporters (Styles & Ambler, 1994), and a study of purposes is a great challenge for developing nations, which in British exporters, strengthening its value as a valid general- turn influences the quality, service standard, and production ized export performance measure (Beleska-Spasova, 2014). scale (The World Bank, 2010). Customer satisfaction with The literature does also suggest that export performance goods and service are critical to export performance (Julian, is closely associated with the characteristics of the enter- 2003; The World Bank, 2010). prise, including such things as the size, the age, and who the entrepreneurs are, as in this study’s case (Sinkula, 1994; Zou et al., 1998). The research, however, did identify other stud- Literature Review ies concerning export performance which were focused on Multiple experts and studies were analyzed in the lead-up to smaller SME organizations. This included Styles and Ambler development for the variables for the study’s hypotheses con- (1998); Bartlett and Bukvić (2001); Leonidou (2004); cerning Thai entrepreneurial CBE/OTOP export performance. Leonidou, Katsikeas, and Samieec (2002); and Ogunmokun Among these and most frequently mentioned were the CZ and Ng (2004). (Cavusgil & Zou, 1994) and the export performance Styles and Ambler (1994) revised an earlier export perfor- (EXPERF) (Zou, Taylor, & Osland, 1998) models. The mance framework from Aaby and Slater (1989) and con- authors, however, found the history of European SMEs as cluded that it was the partnership and relationship factors discussed by the Dutch scholar Voerman (2003) particularly which had the greatest influence on export performance interesting as well as the detailed analysis on export perfor- improvement. Later, Styles (1998) refined Cavusgil and mance from the Brazilian authors Carneiro, da Rocha, and da Zou’s (1994) model for use in the analysis of SMEs in Silva (2007). Australia and U.K. firms and determined that economic per- Finding agreement, however, on what components actu- formance, improvement of competitive position, future ally contribute to a firm’s export performance is complex expansion, and passive exporting were the keys to SME with confirmation of this difficulty coming from early export performance. research from Aaby and Slater (1989) which conducted a Research from Bartlett and Bukvić (2001) also focused on review of 55 studies on the management influences on export SMEs and investigated what hindered their growth the great- performance from 1978 to 1988 and synthesized the findings est, and strongly suggested that unless flexibly and deregula- down to the independent variables environment, competen- tion are embraced, there will be significant barriers to small cies, firm characteristics (i.e., firm characteristics, firm capa- business growth. Ogunmokun and Ng (2004) explored bilities, and management characteristics), and strategy Australian SME export performance (companies with fewer (Voerman, 2003) which affected export performance. Madsen than 200 employees) but did so by comparing why some (1987) also synthesized 17 export performance studies from SMEs had better success than others in export performance. 1964 to 1985 into 23 latent variables grouped into three cate- From these and other studies concerning theories about gories, which were referred to as organizational performance export performance, a synthesis of the research led to the fol- (O-performance), the structure and performance of its envi- lowing observed variables being determined. ronment (E-structure), and strategies (strategy). Sousa (2004) later reviewed 43 empirical studies pub- Perceived Quality (PQ) lished between 1998 and 2004 and noted 50 different opera- tional aspects of export performance, whereas Leonidou According to an export marketing performance survey con- (2004), on the contrary, compiled data from 32 empirical ducted on Thai SMEs, one of the four factors determined to studies and identified 39 barriers to export performance of have a significant contribution was product characteristics small businesses. (Julian, 2003). The three others included competition, com- Cavusgil and Zou (1994) in their model focused on larger, mitment, and the export market characteristics. Concerning U.S. organizations and how organizational performance was product characteristics, it was stated that concentration based on the organization’s profile; environmental aspects should be focused on product flexibility, which meets the including cultural and political/legal factors; management need of the market, specifically cultural specificity and the factors including experience, education, and commitment; degree of uniqueness of the product. and finally the product and where it is destined for. Although Aaker (1991) discussed brand equity and indicated that a good model with many useful elements, the present study perceived quality as having five elements including reason- is focused on very small, rural entrepreneurs and artisans and to-buy, differentiate/position, price premium, channel mem- therefore was not a “perfect” guideline to follow. ber, interest, and brand extensions. Zou et al. (1998) are also recognized for their EXPERF Fornell, Johnson, Anderson, Cha, and Bryant (1996) also model whose key dimensions for measuring export perfor- felt that quality awareness was crucial, whereas Bei and Chiao mance include financial, strategic, and satisfaction. This scale (2001) concluded that the most significant factor was the 4 SAGE Open quality of goods. The World Bank (2010) has also indicated the supporting sustainable corporate growth. Lo (2003) elaborated importance of solid infrastructure for norms, standards, and further by indicating that trust consisted of integrity, benevo- quality control, which therefore assures the proper commer- lence, ability, perception, and communication. Jin, Park, and cialization of products for either domestic or foreign markets. Kim (2007) highlighted trust in Korea as coming from a firm’s Similarly, Brown (2003) stipulated the necessity of prod- reputation. Brenčič, Ekar, and Virant (2008) indicated that a uct and service excellence in perceived quality which corre- long-term orientation is a consequence of trust and relation- sponds to research from Tsiotsou (2005) concluding ship commitment with Lin (2013) indicating that significant competitive comparisons as a key success factor. In addition, and positive relationships were found between trust and satis- Türkyılmaz and Özkan (2007) cited overall quality, product faction, and between satisfaction and loyalty. quality, and appropriateness to usage purposes, including Furthermore, according to Moliner (2009), trust is defined customer service, and service quality as significant factors. as being trustworthy, honest, and having a good reputation. This is consistent with Moliner (2009), which discussed Stuart, Verville, and Taskin (2011), however, saw trust as corporate strategies and indicated that perceived value was being built principally through supplier centric traditional more important than quality. Other factors such as fulfilling performance metrics such as delivery reliability and product expectations, meeting customer’s goals, and having positive quality conformance. customer relationships are also significant (Tohidinia & Trust is also earned when performance meets expecta- Haghighi, 2011). Product performance, conformance to tions and comes from reliable products (Valvi & West, 2013). specifications, reliability, and durability are also applicable To achieve trust, enterprises need to respond to a customer’s (Agus & Hajinoor, 2012). need, have honesty and sincerity, keep commitments, and In addition, Wang and Tsai (2014) stated that outstanding possess competency and effectiveness in their service deliv- quality, reliability, and consistency are crucial elements of ery (Alsajjan, 2014). This is consistent with Chang et al. perceived quality as well with Laosirihongthong, Teh, and (2014) which determined that for businesses to promote Adebanjo (2013), stating that a product’s performance, its trust, they must provide excellent service which is reliable conformance to specifications, reliability, and durability are and delivered with good intentions and Rijkers (2014) which equally important. Chang, Kuo, Hsu, and Cheng (2014) cited found that trust is earned from firms being reasonable, fair, broader factors of information, service, and system quality. and having appropriate services and price consistency. Perceived Price (PP) Satisfaction (ST) Dodds, Monroe, and Grewal (1991) indicated that perceived Zou and Stan (1998) found 50 papers published between price (PP) let to perceived quality which thus led to per- 1987 and 1997, and from the seven categories measuring ceived value. Bei and Chiao (2001) also indicated the impor- export performance, satisfaction was a key element. Hill, tance of a reasonable price, whereas Moliner (2009) stressed Jones, and Schilling (2015) stated that identification of the the importance of customer loyalty and perceived value. This customer’s needs along with superior fulfillment of customer is consistent with Dai (2010), which also indicated that rea- satisfaction over rivals contributed to a competitive sonable pricing is important which was in agreement with advantage. Wang and Tsai (2014). Anderson and Fornell (2000) divided customer satisfac- In Thailand, Julian (2003) studied SME export perfor- tion into three determinants: perceived service quality, per- mance and indicated that price competitiveness in the export ceived value, and customer expectations. Satisfaction can market and product commitment as important factors in also be defined broadly as a customer being satisfied with a export marketing success with Leonidou et al. (2002) in product or service (Bei & Chiao, 2001). In addition, Tohidinia agreement indicated that price flexibility and the ability to and Haghighi (2011) indicated that relationship quality had a offer lower prices (i.e., penetration pricing) were positive for significant impact with customer satisfaction and that cus- export performance. tomer satisfaction had a positive impact on repurchase inten- Valvi and West (2013) in their discussion about E-loyalty tions, positive word-of-mouth, and customer’s positive indicated that perceived value was a significant predictor of feedback. satisfaction while price notably influenced e-trust develop- This is consistent with Türkyilmaz and Özkan (2007) ment. Perceived price is also defined as pricing that is com- which conducted research in Turkey on Istanbul mobile petitive or equal to competitors “pricing scales as well as phone subscribers and determined that that these providers corresponding to market trends” (Rijkers, 2014). with limited resources should focus on improving customer satisfaction and customer loyalty. Calvo-Porral and Lévy-Mangin (2015) indicated that both Trust (TR) service value and corporate image exerted the strongest In Thailand, Piriyakul and Wingwon (2011) felt consumer influence on customer satisfaction and loyalty. Dai (2010) trust toward a product brand played a critical role in indicated that satisfaction can also be derived from a Sitabutr and Pimdee 5 successful purchase decision which leads to happiness and a completed survey. From this added level of collection, the overall satisfaction (Tsiotsou, 2005; Vesel & Zabkar, 2010). researchers were able to obtain 545 questionnaires. This repre- sented a collection rate of 75.69% (545 of the original 720 enterprises identified). Subsequent quality control and audit- Export Performance (EP) ing of the responses eliminated 45 sets, leaving a final survey Bilkey (1978) determined that management quality is the response rate of 69.44% or 500 of the originally identified 720 greatest single determinant of a firm’s export success. This is enterprises. consistent with Ayan and Percin (2005) which determined Based on statistical sampling requirements for research that export market success can also be determined by multi- conducted for the U.S. National Education Association ple indicators including environmental factors such as for- (NEA), Krejcie and Morgan (1970) indicated that sample eign environments, managerial characteristics, and the firm’s sizes larger than 380 are unnecessary. Yamane (1967) and marketing strategies. Israel (1992) also have indicated that sample sizes beyond Brown (2003) focused on market share, rapid growth, and 400 are almost irrelevant as well. profit as components of export performance, yet Brenčič Furthermore, during the period between March and May et al. (2008) defined export performance as profitability, 2015, qualitative research was further conducted by use of which is reflected in sale volume, rapid growth, global com- in-depth, semistructured, guided interviews with seven own- petitiveness, strategic position, global market share, perfor- ers and executives covering the following five topics: mance satisfaction, and success with the export venture which fully meets expectations. Export performance factors 1. Measurement of perceived quality. are also determined by profit, return of investment (ROI), 2. Measurement of perceived price. revenue, total sales, market shares, sales growth rate, export 3. Measurement of trust. growth rates, or number of new customers (Abu-Jarad, 4. Measurement of customer satisfaction. Yusof, & Nikbin, 2010). 5. Measurement of export performance. This is consistent with Ural (2009) which demonstrated that there is a positive impact of information sharing, stra- For the study, Cronbach’s alpha (Cronbach, 1951) was tegic positioning, and performance on financial export per- used to evaluate the initial 30 samples which used a 6-point, formance and satisfaction with the export venture. Stuart unipolar scale survey rating matrix with 5 indicating excel- et al. (2011) examined trust between supplier and buyer lent and 0 indicating no opinion. The value of alpha that is firms as well as the impact that trust has on export perfor- considered acceptable ranges in value from 0 to 1 and may be mance outcomes which included customer satisfaction, used to describe the reliability of factors extracted from mul- market share, and profitability. This was similar to Agus tipoint formatted questionnaires or scales, with a reliability and Hajinoor (2012) and Laosirihongthong et al. (2013) score of .70 or higher being considered a reliable score by that emphasized the importance of market share, profit- many researchers (Hair, Hult, Ringle, & Sarstedt, 2013; ability, sales growth, and market growth on export perfor- Nunnally & Berstein, 1994). The correlation coefficient indi- mance (Table 1). cated high reliability with a score of .953. Quantitative Data Analysis Method To determine whether the sample size of 500 exporters Data Collection selected by use of simple random sampling for the study From the 2015 Thai Exporter Directory Database from the was adequate, the researchers further confirmed this to be Ministry of Commerce’s Department of International Trade the case from previous researchers (Hair et al., 2013; (DIP), 1,353 Thai OTOP handicraft exporters which were Schumacker & Lomax, 2004). The questionnaire used a listed were extracted. Starting in November 2014, phone 6-point unipolar scale with 5 indicating excellent and 0 calls were placed to 720 enterprise entrepreneurs involved in indicating no quality (Krosnick & Presser, 2009). This was export of Thai handicraft- and food-related products. Upon similar to the export performance rating scale used by Pope contact with these owners, the best method for sending the (2002) to measure small firms. Analysis of Thai owner and export performance questionnaire was determined (post, entrepreneur export performance was conducted using email, courier, etc.). Subsequent follow-up calls and emails descriptive statistics including frequency, percentage, were made to those owners who had not returned the survey mean, and standard deviation (Keengwe, Onchwari, & in December 2014 and January 2015, with the completion of Wachira, 2008). the follow-up process ending in February 2015. From this From literature reviews, the following latent and observed process, the targeted collection number was not achieved. variables were analyzed for this study. Therefore, 10 teams were selected and deployed to physi- The study defined the hypothesized framework as shown cally travel to the enterprises’ location in May 2015 and gather below and in Figure 2. 6 SAGE Open Table 1. Summary of Latent and Observed Variables Along With Their Associated References. Latent variables Observed variables Knowledge base (theory) PQ (PQ1) Best Quality Bilkey (1978); Julian (2003); Fornell, Johnson, Anderson, (PQ2) Excellent Standards Cha, and Bryant (1996); Bei and Chiao (2001); The (PQ3) Overall Quality World Bank (2010); Tock and Baharun (2013); Brown (PQ4) Meeting Customer’s Goals (2003); Tsiotsou (2005); Türkyılmaz and Özkan (PQ5) Durability (2007); Moliner (2009); Tohidinia and Haghighi (2011); (PQ7) Service Quality Agus and Hajinoor (2012); Wang and Tsai (2014); Laosirihongthong et al. (2013); Chang, Kuo, Hsu, and Cheng (2014) PP (PP1) Reasonable Price Aaker (1991); Bei and Chiao (2001); Moliner (2009); Dai (PP2) Fair price (2010); Wang and Tsai (2014); Julian (2003); Leonidou, (PP3) Acceptable price Katsikeas, and Samieec (2002); Valvi and West (2013); (PP4) Competitive Market Price Rijkers (2014) (PP5) Market Trends TR (TR1) Trustworthy Piriyakul and Wingwon (2011); Lo (2003); Jin, Park, and (TR2) Ability Kim (2007); Brenčič et al. (2008); Lin (2013); Moliner (TR3) Judgment (2009); Stuart et al. (2011); Valvi and West (2013); (TR4) Product Trust Alsajjan (2014); Chang et al. (2014); Rijkers (2014) (TR5) Integrity (TR6) Honesty (TR7) Trust in Promise ST (ST1) Overall Satisfaction Zou and Stan (1998); Anderson and Fornell (2000); (ST2) Satisfaction with Goods Bei and Chiao (2001); Tohidinia and Haghighi (2011); (ST3) Exceeds Expectations Türkyilmaz and Özkan (2007); Calvo-Porral and Lévy- (ST4) Satisfied Service Mangin (2015); Dai (2010); Vesel and Zabkar (2010); (ST5) Purchase Decision Satisfaction Tsiotsou (2005) (ST6) Needs satisfied EP (EP1) Market Share Abu-Jarad, Yusof, and Nikbin (2010); Ayan and Percin (EP2) Profitability (2005); Brown (2003); Brenčič et al. (2008); Ural (EP3) Rapid Growth (2009); Stuart et al. (2011); Agus and Hajinoor (2012); (EP4) Sales Volume Laosirihongthong et al. (2013) (EP5) Strategic Position Growth (EP6) Satisfied Performance (EP7) Global Competitiveness Note. PQ = Perceived Quality; PP = Perceived Price; TR = Trust; ST = Satisfaction; EP = Export Performance. Hypothesis 1 (H1): Perceived Quality (PQ) has a direct and positive impact on Export Performance (EP) through and positive impact on Trust (TR). Satisfaction (ST). Hypothesis 2 (H2): Perceived Quality (PQ) has a direct Hypothesis 8 (H8): Satisfaction (ST) has a direct and and positive impact on Satisfaction (ST) as well as an positive impact on Export Performance (EP). indirect and positive impact on Satisfaction (ST) through Trust (TR). Results Hypothesis 3 (H3): Perceived Price (PP) has a direct and positive impact on Satisfaction (ST) as well as an indirect Respondents’ Characteristics and positive impact on Satisfaction (ST) through Trust (TR). Of the 500 respondents for the study, 301 were female Hypothesis 4 (H4): Perceived Price (PP) has a direct and (60.2%) and 199 were male (39.8%). These respondents positive impact on Trust (TR). were divided into five age groups: 41 to 50 years (156 Hypothesis 5 (H5): Perceived Quality (PQ) has a direct respondents or 31.2%), 31 to 40 years (154 respondents or and positive impact on Export Performance (EP) as well 30.8%), 51 to 62 years (85 respondents or 17.0%), below 30 as an indirect and positive impact on Export Performance years old (76 respondents or 15.2%), with the remaining (EP) through Trust (TR) and Satisfaction (ST). group above 60 years old of age with 29 respondents (5.8%). Hypothesis 6 (H6): Trust (TR) has a direct and positive Regarding education, 220 of the 500 surveyed respon- impact on Satisfaction (ST). dents had bachelor’s degrees (44.0%); the second largest Hypothesis 7 (H7): Trust (TR) has a direct and positive group with 141 respondents had vocational education impact on Export Performance (EP) as well as an indirect (28.2%), with the remaining respondents represented by Sitabutr and Pimdee 7 TR1 Trustworthy TR 2 Ability TR 3 Judgment PQ1 Best Quality TR4 Product Trust PQ 2 Excellent TR 5 Integrity Standards TR 6 Honesty PQ 4 Meeting Customer’s Goals TR 7 Trust in Promise EP 1 Market Share PQ 5 Durability (TR) Trust H1 EP 2 Profitability H7 PQ 7 Service Quality H5 EP 3 Rapid Growth (PQ) Perceived (EP) Export Quality EP 4 Sales Volume Performance PP1 Reasonable H6 H2 EP 5 Strategic Price H4 Position Growth H8 (ST) PP2 Fair Price ST 1 Overall EP 5 Performance Satisfaction (PP) Perceived Satisfaction Satisfied PP3 Acceptable Price H3 Price ST 2 Satisfaction with EP 7 Global Goods Competitiveness PP4 Competitive Market Price ST 3 Exceeds Expectations PP5 Market Trends ST 4 Satisfied Service ST 5 Purchase Decision Satisfaction ST 6 Needs Satisfied Figure 2. Hypothesized framework. other types of education including 15 with master’s degrees between 51 and 75 million THB followed by 53 respondents (3.0%) and with the remaining 124 respondents representing between 6 and 25 million THB (10.6%). Respondents with other or lower educational levels (24.8%). assets between 76 and 100 million THB included 42 respon- Among the total 500 respondents, 440 respondents were dents (8.4%); between 101 and 125 million THB, 21 respon- business owners, representing 88% of the total, with the dents (4.2%); between 126 and 150 million THB, 20 remainder 60 (12.0%) indicating “business executives” as respondents (4.0%); between 151 and 175 million THB, nine their title/position. Work experience was broken down into respondents (1.8%); between 176 and 200 million THB, six those with 10 or more years’ experience (231 or 46.2%), respondents (1.2%); and, finally, the last group with assets those with 6 to 10 years of work experience (124 or 24.8%), more than 200 million THB was just one respondent (0.2%). those with 1 to 5 years of experience (120 or 24.0%), and, The respondents were engaged in various forms of busi- finally, the smallest group was those with less than 1 year of ness including manufacturing (151 respondents or 30.2%), experience (25 respondents or 5.0%). wholesalers (134 respondents or 26.8%), retail (125 respon- The vast majority of the entrepreneurs surveyed either dents or 25.0%), wholesale and retail (45 respondents or owned or worked in groups that had 50 or fewer employees 9.0%), manufacturing and wholesale (35 respondents or representing 472 of the respondents (94.4%). This was fol- 7.0%), and combined manufacturer, wholesaler, and retailer lowed by 22 respondents (4.4%) working in groups with 51 (10 respondents or 2.0%). to 100 employees, with only two of the total of 500 surveyed working in organizations larger than 101 employees (0.4%). Confirmatory Factor Analysis (CFA) In addition, the respondents are divided into 10 groups according to their assets. The largest group was represented According to Magistris and Gracia (2008), to access the by those with maximum assets not exceeding 5 million THB measurement models, a CFA is used followed by structural (US$144, 400 on September 27, 2016) which had 216 mem- equation modeling (SEM) to examine the general fit of the bers (43.2%). This was followed by those who worked with proposed model with data and also to identify the overall 76 businesses (15.2%) with assets between 26 and 50 million relationships among these constructs. Wong (2013) indicated THB. Another group with 56 respondents (11.2%) had assets also that for marketing research, a significance level of 5%, a 8 SAGE Open statistical power of 80%, and R values of at least .25 are considered typical. Standard modeling accepts the proposed model if the p value is higher than .05 and if the χ /df ratio is smaller than 2 (Byrne, Shavelson, & Muthén, 1989) which is consistent with Kline (1998) and Ullman (2001) which also indicated that the relative χ should be less than 2. It is also common to display confirmatory factor models as path diagrams in which squares show the observed variables and circles show the latent concepts (Albright & Park, 2009). In addition, another commonly reported statistic and a potential mechanism for accommodating large sample sizes may be to use the root mean square error of approximation (RMSEA) as a measure of goodness-of-fit in SEMs (Chen, Curran, Bollen, Kirby, & Paxton, 2008; and to measure the Figure 3. CFA for PQ (value from completely standardized discrepancy per degree of freedom (Hu & Bentler, 1999). solution). The Amos 22 user’s guide suggests that “a value of the 2 Note. χ = 0.54, p value = .764, and RMSEA = 0.000. CFA = confirmatory RMSEA of about 0.05 or less would indicate a close fit of the factor analysis; PQ = Perceived Quality; RMSEA = root mean square error of approximation. model in relation to the degrees of freedom” (Arbuckle, 2013). RMSEA values range from 0 to 1, with a smaller RMSEA value indicating better model fit. Acceptable model fit is indicated by an RMSEA value if recommendations for RMSEA cutoff points have been reduced considerably over the past couple of decades (Hu & Bentler, 1999). Perceived Quality (PQ) Using SEM, the researchers specified the CFA model (Hox & Bechger, 1998) where the Perceived Quality (PQ; Figure 3) is influenced by (PQ1) Best Quality, (PQ2) Excellent Standards, (PQ4) Meeting Customer’s Goals, (PQ5) Durable Products, and (PQ7) Service Quality as shown in Figure 3. From the modeling, the χ was indicated to be 0.54, with a p value of .764 and RMSEA of 0.000 which indicates an acceptable fit with the model. This ensures that the observed variables are sensitive to Perceived Quality (PQ) and are Figure 4. CFA for PP (value from completely standardized suitable for further analysis. solution). Note. χ = 0.06, p value = .970, and RMSEA = 0.000. CFA = confirmatory factor analysis; PP = Perceived Price; RMSEA = root mean square error of Perceived Price (PP) approximation. CFA of Perceived Price (PP) in Figure 4 shows the factors (PP1) Reasonable Price, (PP2) Fair Price, (PP3) Acceptable 11.03, with a p value of .273 and RMSEA of 0.021 which Price, (PP4) Competitive Market Price, and (PP5) Market indicates an acceptable fit with the model. This ensures that Trends. From the modeling, the χ was indicated to be 0.06, the observed variables are sensitive to Trust (TR) and are with a p value of .970 and RMSEA of 0.000 which indicates suitable for further analysis. an acceptable fit with the model. This ensures that the observed variables are sensitive to Perceived Pricing (PP) Satisfaction (ST) and are suitable for further analysis. CFA of Satisfaction (ST) in Figure 6 shows the factors (ST1) Overall Satisfaction, (ST2) Satisfaction With Goods, (ST3) Trust (TR) Exceeds Expectations, (ST4) Satisfied Service, (ST5) CFA of Trust (TR) in Figure 5 shows the factors (TR1) Purchase Decision Satisfaction, and (ST6) Needs Satisfied. Trustworthy, (TR2) Ability, (TR3) Judgment, (TR4) Product From the modeling, the χ was indicated to be 11.03, with a Trust, (TR5) Integrity, (TR6) Honesty, and (TR7) Trust in p value of .273 and RMSEA of 0.021 which indicates an Promise. From the modeling, the χ was indicated to be acceptable fit with the model. This ensures that the observed Sitabutr and Pimdee 9 Figure 6. CFA for ST (value from completely standardized solution). Note. χ = 0.03, p value = .986, and RMSEA = 0.000. CFA = confirmatory factor analysis; ST = Satisfaction; RMSEA = root mean square error of Figure 5. CFA for TR (value from completely standardized approximation. solution). Note. χ = 11.03, p value = .273, and RMSEA = 0.021. CFA = confirmatory factor analysis; TR = Trust; RMSEA = root mean square error of approximation. variables are sensitive to Satisfaction (ST) and are suitable for further analysis. From the modeling, the χ was indicated to be 0.03, with a p value of .986 and RMSEA of 0.000 which indicates a good fit with the model. This ensures that the observed vari- ables are sensitive to Satisfaction (ST) and are suitable for further analysis. Export Performance (EP) CFA of Export Performance (EP) in Figure 7 shows the fac- tors (EP1) Market Share, (EP2) Profitability, (EP3) Rapid Growth, (EP4) Sales Volume, (EP5) Strategic Position Growth, (EP6) Satisfied Performance, and (EP7) Global Competitiveness. From the modeling, the χ was indicated to be 11.03, with a p value of .273 and RMSEA of 0.021 which indicates an acceptable fit with the model (Table 2). This ensures that the observed variables are sensitive to Export Performance (EP) and are suitable for further analysis. Figure 7. CFA for EP (value from completely standardized From the modeling, the χ was indicated to be 6.43, with solution). a p value of .490 and RMSEA of 0.000 which indicates a Note. χ = 6.43, p value = .490, and RMSEA = 0.000. CFA = confirmatory factor analysis; EP = Export Performance; RMSEA = root mean square good fit with the model. This ensures that the observed vari- error of approximation. ables are sensitive to Export Performance (EP) and are suit- able for further analysis. Rasch (1980) evaluated χ statistics as a way of evaluating 500 has a 5% range of 0.91 to 1.09. The χ value of 302.04 fit of data to the model and indicated that a sample size of for the 109 degrees of freedom is insignificant. Thus, it could 10 SAGE Open Table 2. Goodness-of-Fit Summary Results for the Structural Model. Evaluating the data–model fit Criteria Remarks CMIN-ρ (χ ) ρ > 0.05 p value must be higher than p value the higher the better CMIN/df (relative χ ) <3 CMIN/df value <3 CMIN/df value = 0 shows appropriate fit GFI, AGFI >0.90 GFI, AGFI > 0.90 GFI, AGFI ~ 1 RMSEA <0.08 RMSEA < 0.08 RMSEA = 0 shows appropriate fit Source. Adapted from Arbuckle (2013) and Hair et al. (2013). Note. GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation; CMIN = minimum chi-square. say the null hypothesis that the model presented in the article is a good fit with the data. The error statistics of RMSEA of 0.015 confirm that the errors of fit in the covariance matrix are very low. The p value of .101 in Figure 8 is higher than .05, which shows that the criteria is a good fit with the empirical data and with each factors weight higher than 0.50 represents a latent recognition of the quality Perceived Quality to Perceived Price, Trust, Satisfaction which results in Export Performance in the construct validity of the variables and empirical variables that could explain the variance of latency as well. In addition, empirical variables enable to explain variances of observed variables ensuring suitability for SEM. Figure 8. Convergent model (value from completely standardized solution). SEM Results Note. χ = 302.04, p value = .101, and RMSEA = 0.015. PQ = Perceived The SEM results (Figure 9) showed that all models meet the Quality; PP = Perceived Price; TR = Trust; ST = Satisfaction; EP = Export 2 2 Performance. required criteria at 276.94 χ value, with χ /df (276.94/251) at 1.10, p value at .13, goodness-of-fit index (GFI) at 0.96, adjusted goodness-of-fit index (AGFI) at 0.93, root mean Hypothesis Testing residual (RMR) at 0.031, RMSEA at 0.014, and CN at The results of the hypotheses testing are indicated in Table 4. 542.74. According to Hooper, Coughlan, and Mullen (2008), items with low multiple R (less than .20) have been removed Discussion and Conclusion from the analysis as this is an indication of very high levels Results from the study indicate perceived quality (PQ) has a of error. This is confirmed by Hair et al. (2013) which indi- positive and direct effect on trust (TR) which corresponds to cated that R values should be higher than .25. From Table 3, research by Moliner (2009), Vesel and Zabkar (2010), Wang GFI is indicated to be 0.96 which is the GFI. Traditionally, and Tsai (2014), and Chang et al. (2014). Indications also an omnibus cutoff point of 0.90 has been recommended for suggest that the higher perceived quality awareness is, the the GFI (Hooper et al., 2008). Values for the AGFI also more trust a customer has. This requires Thai CBEs/OTOP ranged between 0 and 1, and it is generally accepted that handicraft and product exporters to focus on products with values of 0.90 or greater (Figure 8) indicate well-fitting excellent quality while also meeting production standards models (Hooper et al., 2008). The AGFI for the study in that are suitable for customer needs, including durability and Table 3 is 0.96. Sitabutr and Pimdee 11 studies conducted by Brown (2003), Agus and Hajinoor (2012), Laosirihongthong et al. (2013), and Laosirihongthong et al. (2013). This shows that quality awareness is an impor- tant element for export growth. The analysis emphasizes that Thai exporters need to promote high-quality products which are suitable to their customer’s needs. The products must also be durable and serviced with excellent customer services. These factors are all important to Thai export performance (EP). Trust (TR) was also shown to have a direct and positive impact on satisfaction (ST) which corresponded to previous studies from Jin et al. (2007); Sanayei, Shaemi, and Jamshidi Figure 9. Final model with values from estimates. (2011); Chang (2012); Chen et al. (2008); Lin (2013); 2 2 Note. χ = 276.94, χ /df = 1.10, p value = .13, GFI = 0.96, AGFI = 0.93, Alsajjan (2014); and Rijkers (2014). Trust (TR) therefore RMR = 0.031, RMSEA = 0.014, and CN = 542.74. GFI = goodness-of-fit promotes customer satisfaction (ST), and focus needs to be index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation. given on products that have good marketing potential, have *p < .05. **p < .01. excellent quality, and are suitable to customer’s needs. Thai OTOP exporter’s goals should be focused on promoting cus- tomer satisfaction (ST) with both production and service, good customer service. These factors highly influence a cus- which leads to better export performance (EP). In addition, tomer’s trust. Thai exporters should promote satisfaction with purchasing In addition, the results show that perceived quality (PQ) decisions, provide products suitable to consumer’s needs, has a direct and positive impact on satisfaction (ST), which and ensure overall customer satisfaction (ST) to enhance corresponds to research from e-study of Fornell et al. (1996), their export performance (EP). Anderson and Fornell (2000), Bei and Chiao (2001), Tsiotsou In addition, trust (TR) influences directly and positively (2005), Türkyilmaz and Özkan (2007), Vesel and Zabkar export performance (EP) which is similar to results of studies (2010), and Tohidinia and Haghighi (2011). This higher con- conducted by Lo (2003), and Brenčič et al. (2008) which sumer awareness translates into higher satisfaction which shows that trust (TR) influences export performance (EP) means that exporters should focus on products with excellent with the greater a customer trusting the exporter, the higher quality that meet production standards, and are suitable to the export performance (EP) value becomes. As such, Thai customer needs. Furthermore, products should be durable exporters should focus on high-quality, marketable products. and maintained through an excellent product service system. Trust (TR) leads to purchasing contracts, which leads to bet- These factors all have a significant influence over a custom- ter export performance (EP). er’s purchasing decision. In addition, Satisfaction (ST) has a direct and positive Furthermore, the study showed that perceived price (PP) impact on export performance (EP) as indicated in studies has a direct and positive impact on satisfaction (ST) corre- conducted by Ural (2009). As satisfaction (ST) levels sponding to studies conducted by Bei and Chiao (2001), increase, the greater the positive impact on export perfor- Moliner (2009), Dai (2010), and Rijkers (2014). This mance (EP). Thus, Thai exporters should aim to promote explains that the greater export customer price awareness product and service satisfaction. In addition, exporters is, the higher satisfaction they have. Hence, the Thai export- should help with their customers’ purchasing decision by ers’ customers expect reasonable and fair prices which are providing products suitable to their customers’ needs while competitive. There is also an indirect, positive factor from ensuring overall customer satisfaction. the results which show that satisfaction (ST) delivered through higher price awareness affects satisfaction (ST) through trust (TR). Implications Perceived price (PP) was also shown to have both a direct 1. Export sector success depends on properly designing and positive impact on trust (TR) which was validated in pre- production to meet the needs and growth of custom- vious studies from Moliner (2009), Wang and Tsai (2014), ers which assures the exporters’ strategic strength. and Valvi and West (2013). This proves that the higher export 2. To achieve this goal, marketable products with clear customer pricing awareness is, the more likely they are to and proper positioning must be realized. trust the exporter. Hence, Thai exporters should ensure that 3. The most significant factor affecting export perfor- their products have reasonable and fair pricing which is mance is customer satisfaction which includes main- acceptable and competitive and corresponds to market trends taining proper production levels while maintaining to promote trust among their customers. high perceived quality which is also a significant Perceived quality (PQ) was also shown to have a direct and factor. positive impact on export performance (EP) corresponding to 12 SAGE Open Table 3. Structural Equation Modeling Results. Independent variables Dependent variables R Effect PQ PP TR ST Export .61 DE 0.30** (0.08) — 0.19* (0.09) 0.41** (0.07) Performance IE 0.14 (0.09) — 0.09 (0.05) — TE 0.44* (0.10) — 0.28** (0.09) 0.41** (0.07) Satisfaction .58 DE 0.53** (0.18) 0.88** (0.20) 0.23* (0.11) — IE 0.06 (0.05) 0.03* (0.06) — — TE 0.59* (0.18) 0.91** (0.20) — — Trust .82 DE 0.29** (0.11) 0.59** (0.11) — — IE — — — — TE 0.29** (0.11) 0.59** (0.11) — — 2 2 Note. χ = 276.94, χ /df (276.94/251) = 1.10, p value = .13, GFI = 0.96, AGFI = 0.93, RMR = 0.031, RMSEA = 0.014, and CN = 542.74. Values in parentheses are standard errors. DE = direct effect; IE = indirect effect; TE = total effect, values are estimated; GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index; RMSEA = root mean square error of approximation. *p < .05. **p < .01. Table 4. Hypothesis Testing Results. Hypotheses Results H1: Perceived Quality (PQ) has a direct and positive impact on Trust (TR) Accepted H2: Perceived Quality (PQ) has a direct and positive impact on Satisfaction (ST) as well as an indirect Rejected and positive impact on Satisfaction (ST) through Trust (TR) H3: Perceived Price (PP) has a direct and positive impact on Satisfaction (ST) as well as an indirect Accepted but positive impact on Satisfaction (ST) through Trust (TR) H4: Perceived Price (PP) has a direct and positive impact on Trust (TR) Accepted H5: Perceived Quality (PQ) has a direct and positive impact on Export Performance (EP) as well as an Rejected indirect and positive impact on Export Performance (EP) through Trust (TR) and Satisfaction (ST) H6: Trust (TR) has a direct and positive impact on Satisfaction (ST) Accepted H7: Trust (TR) has a direct and positive impact on Export Performance (EP) as well as an indirect ans Rejected positive impact on Export Performance (EP) through Satisfaction (ST) H8: Satisfaction (ST) has a direct and positive impact on Export Performance (EP) Accepted 4. 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Retrieved from http://tinyurl. com/jfl8t6y Paitoon Pimdee is an associate professor with the Faculty of Türkyilmaz, A., & Özkan, C. (2007). Development of a customer Industrial Education at the King Mongkut’s Institute of Technology satisfaction index model: An application to the Turkish mobile Ladkrabang (KMITL). He also serves has the faculty head of the phone sector. Industrial Management & Data Systems, 107, PhD program. He graduated with a Bachelor of Arts in Economics 672-687. doi:10.1108/02635570710750426 and a Master of Science (MSc) degree in science education. He also Ullman, J. B. (2001). Structural equation modeling. In B. G. holds a PhD in environmental education and behavioral sciences Tabachnick & L. S. Fidell (Eds.), Using multivariate statistics and specializes in environmental issues, energy conservation. and (4th ed.). Needham Heights, MA: Allyn & Bacon. ecotourism.

Journal

SAGE Open – SAGE

Published: Feb 1, 2017

Keywords: microenterprise; satisfaction; perceived quality; perceived price; trust

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