Endogenous variables are defined as the latent, multi-item equivalent to dependent variables (Hair et al. 2010, 637). Based on our research model, the visual paths show that the three endogenous variables (BMS, customer performance, and business performance) are dependent - and affected by other exogenous constructs. Specifically, the BMS, and customer performance are dependent explanatory variables, whereas business performance is the dependent variable.
All endogenous variables were anchored on a seven-point Likert scale.
Specifically, for the construct of the BMS, the respondents evaluated various statements, and answered to which extent they agreed or disagreed - based on the firm’s decisions and practices. The scale ranged from 1 (“strongly disagree”) to 7 (“strongly agree”). Concerning the performance measures, these were anchored by 1 (“much worse than competitors”), to 7 (“much better than competitors”), with an additionally midpoint of 4 (“equal as competitors”). Moreover, measuring the constructs of customer performance and business performance, the respondents were asked to evaluate the firm’s performance in relation to the firm’s major
competitors during the last three years. This approach is well accepted, and in line with previous literature - using competitors as a point of reference (e.g. Santos-Vijande et al. 2013; Theoharakis and Hooley 2008; Vorhies and Morgan 2005;
Narver and Slater 1990). A reference point minimizes the subjectivity regarding their firm’s performance (Santos-Vijande et al. 2013, 153). In addition, the BMS is expected to have a lagged effect on the performance measures (Lee et al. 2008, 853) - thus, evaluating them during the past three years is appropriate. Lastly, to give an introduction to the next topic, the scales and different constructs were introduced with a short, and relevant transitional phrase.
3.4.1.1 The BMS
We applied the recent work of Santos-Vijande et al. (2013), who developed the multidimensional construct of the BMS to consist of; brand orientation, internal branding and strategic brand management. This more comprehensive, and validated treatment of the BMS is an important contribution in a relatively new area of research, as it encompasses important dimensions that past research has dealt with individually. Similarly to Santos-Vijande et al. (2013), we measured brand orientation by four items (table 3.2), internal branding by five items (table 3.3), and strategic brand management by five items (table 3.4). Item I_B2 was dealt with specifically, due to its double-barreled nature containing the word
“and”, e.g. “receive information about the brand and the actions involved in its management”. The solution was to reformulate the item, and merge the two words by using “and/or” in the final questionnaire.
Table 3.2 Questionnaire items for brand orientation
Item Item Statement Source
B_O1 Building a strong brand is one of the objectives set by
the firm's management. Santos-Vijande et al.
(2013);
Baumgarth (2010); Kim and Lee (2007); Lee et al.
(2008); Urde (1994, 1999); Wong and Merrilees (2007).
B_O2 An active and effective brand management is essential for achieving competitive advantages.
B_O3 Brand decisions are a very important element in the firm's business strategy.
B_O4 The firm's commercial brand is one of its most valuable assets (employees, management...).
Table 3.3 Questionnaire items for internal branding
Item Item Statement Source
I_B1 The firm's employees attend workshops to learn about the objectives and characteristics of the brand.
I_B4 The firm analyzes the brand image among its internal publics.
I_B5 The different areas or departments of the firm share information about the brand.
Table 3.4 Questionnaire items for strategic brand management
Item Item Statement Source
S_B_M1 The firm carries out significant investments to manage
its brand. Santos-Vijande et al.
S_B_M2 The firm invests more resources in brand management than its competitors.
S_B_M3 The firm has a well-coordinated, multidisciplinary team to manage its brand.
S_B_M4 The firm plans its marketing actions taking into account the possible repercussions for the brand image.
S_B_M5 The firm manages its brand from a medium- and long-term perspective.
3.4.1.2 Customer Performance
Previous research has measured customer-related outcomes concerning areas such as customer satisfaction, loyalty, and other forms of added value perceptions (Santos-Vijande et al. 2013; Lee et al. 2008; Vorhies and Morgan 2005). To measure customer performance we used scales that had been applied by Santos-Vijande et al. (2013) - which covers these aspects well. However, we adapted and changed the format of the scale to make it more reader-friendly, and more similar to the format of the business performance-scale. This involved treating individual items as a theme rather than using statements. All in all, customer performance was measured with seven items (table 3.5) - capturing the recurring topics of customer-related outcomes.
Table 3.5 Questionnaire items for customer performance
Item Item Statement Source
C_Perf1 Customer satisfaction Santos-Vijande et al.
(2013); Gounaris (2005);
Hooley et al. (2005);
Lings (2004); Vorhies and Morgan (2005);
Zahay and Griffin (2004).
C_Perf2 Customer loyalty
C_Perf3 Added value provided to customers C_Perf4 Level of communication with customers C_Perf5 Client complaints and claims
C_Perf6 Image among its customers
C_Perf7 Retains the best customers in the market
3.4.1.3 Business Performance
The three items used to measure business performance (table 3.6), was also adopted from Santos-Vijande et al. (2013) without any further changes. These were applied as they are frequently used as market and performance measures, and are fairly straightforward for key informants to answer. Previous literature has also included return on investment (ROI) as a financial indicator of performance (Theoharakis and Hooley 2008). However, frequently mentioned weaknesses of ROI are the lagged effect of investments, and the opportunity to influence the ROI by lowering costs or refrain from investing. Consequently, ROI might not be a good indicator of a firm’s overall performance, and is therefore not included in this research. Next, collecting objective data to calculate return on assets (Vorhies and Morgan 2005) could have further strengthened the measure of business performance, but due to the difficulties in collecting such information, and time-constraints, we choose to focus on the items applied by Santos-Vijande et al.
(2013).
Table 3.6 Questionnaire items for business performance
Item Item Statement Source
B_perf1 Sales growth Santos-Vijande et al.
(2013); Theoharakis and Hooley (2008); Vorhies and Morgan (2005);
Weerawardena, O´Cass, and Julian (2006).
B_perf2 Market share growth B_perf3 Profits growth