Chung-Leung Luk, Oliver H.M. Yau, Alan C.B. Tse, Leo Y.M. Sin, and Raymond P.M. Chow
Executive Summary
A company’s stakeholder orientation represents how much a company attends to the interests of all its relevant stakeholders, and thus it attempts to address such interests. From a strategic management perspective, a strong stakeholder orientation can lead to competitive advantage. Stakeholder orientation has four components that are relevant to most markets and industries: customer orientation, competitor orientation, employee orientation, and shareholder orientation. Yet prior research has examined only the main effects of the four components on business performance; it has ignored the interaction effects that result from different combinations of the components. In this article, Luk and colleagues set out to fill this gap in the literature by examining the interaction effects among 193 service companies in China.
Luk and colleagues propose that there are two types of interaction effects among the components of the stakeholder orientation: synergy effects and hindering effects. The components that are likely to produce synergy effects are customer orientation, competitor orientation, and employee orientation. Conversely, shareholder orientation should hinder the effectiveness of other components of the stakeholder orientation because of the competing interests between shareholders and other stakeholders. In support of the hypothesized synergy effect, customer orientation, competitor orientation, and employee orientation positively interact to enhance business performance. However, the results do not support the notion that shareholder orientation hinders other components of stakeholder orientation. The findings show that service companies in China can achieve competitive advantage by endorsing customer orientation, competitor orientation, and employee orientation simultaneously.
Luk and colleagues randomly selected 700 service companies in Mainland China, 193 of which agreed to participate. They used a questionnaire to measure stakeholder orientation and various areas of business performance, and they used regression analyses to test the hypotheses. They found that customer orientation, competitor orientation, and employee orientation can jointly produce synergy effects on various areas of business performance. Companies that operate in China can strategically manage their relationships with the three stakeholders to attain competitive advantage.
Biography
Chung-Leung Luk is an assistant professor, Department of Marketing, City University of Hong Kong.
Oliver H.M. Yau is Chair Professor, Department of Marketing, City University of Hong Kong.
Raymond P.M. Chow is an instructor, Department of Marketing, City University of Hong Kong.
Alan C.B. Tse is a professor, Department of Marketing, Chinese University of Hong Kong.
Leo Y.M. Sin is a professor, Department of Marketing, Chinese University of Hong Kong.
Journal of International Marketing, Vol. 13, No. 1, March 2005
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