DRIVERS OF OPERATIONAL PERFORMANCE AND CUSTOMER RETENTION IN THE CHEMICALS INDUSTRY

Abstract

South Africa has a vibrant chemical industry that contributes significantly to the socio-economic well-being of the country. However, due to ease of entry, there is a proliferation of businesses operating in this industry, which has increased the level of competition within the industry. Most businesses operating in this industry, therefore, face the challenge of retaining their customers in the wake of the increased competition. This study aimed to investigate the drivers of operational performance and customer retention in the chemicals industry in South Africa. To achieve this aim, the study tested the relationships between supply chain relationship quality, workplace safety and health, operational performance and customer retention within firms operating in the chemicals industry in Gauteng Province. Using a quantitative approach, a survey questionnaire was distributed to a convenient sample of 184 professional employees drawn from selected businesses in the chemicals industry. Hypotheses were then tested through the structural equation modelling approach using SMART PLS 3 statistical software. The results of the study show that supply chain relationship quality positively influenced the adherence to safety regulations. Both relationship quality and safety regulations positively influenced operational performance and customer relationships. However, there was no relationship between operational performance and customer retention. Practitioners in the chemicals industry can apply the results of the study in improving the retention of customers by implementing strategies for improving the adherence to safety and health standards and the quality of relationships with all stakeholders.

Keywords

• Chemicals industry,relationship quality,safety regulations,operational performance,customer relationships

Kaynakça

1. Abuga, G. (2012). A Case study on the effects of occupational health and safety programs on organizational effectiveness. Unpublished Masters’ Dissertation. Kenyatta University. http://ir-library.ku.ac.ke/handle/123456789/7407. Accessed 2018/06/28.
2. Amponsah-Tawiah, K. & Mensah, J. (2016). Occupational health and safety and organizational commitment: evidence from the Ghanaian Mining Industry. Safety and Health at Work,7, 225-230.
3. Armstrong, M. (2012). Strategic human resource management practice. Kogan Page, London
4. Baruch, Y. & Holtom, B. C. (2008). Survey response rate levels and trends in organizational research. Human Relations, 61(8), 1139-1160.
5. Bhusnure, O.G., Dongare, R.B., Gholve, S.B. & Giram, P.S. (2018). Chemical hazards and safety management in pharmaceutical industry. Journal of Pharmacy Research | 12(3), 357-369.
6. Chemical and Allied Industries Association (CAIA). (2017). Chemical industry viewpoint: The Chemical and Allied Industries Association (CAIA) Summit. CSIR International Convention Centre in Pretoria 5-7 October 2017.
7. Byremo, C. (2015). Human Resource Management and Organisational Performance Does HRM lead to improved organizational performance? https://www.duo.uio.no/bitstream/handle/10852/49030/Cathrine-Byremo-2015--- HRM-and-Organisational-Performance--Does-HRM-lead-to-improvedorganisational-performance-.pdf?sequence=1. Accessed 2018/06/29.
8. Chan, F.T.S. & Qi, H.J. (2003). An innovative performance measurement method for supply chain management. Supply Chain Management. An International Journal, 8, 209–223.

9. Chemical and Allied Industries Association (CAIA). (2010). History of SA Chemical Industry, 1896 to 2010. https://www.google.co.za/search?q=chemical+and+allied+industries+association &rlz=1C1CHBD_enZA803&oq=Chemical+and+Allied+Industries+Association& aqs=chrome.0.0l5.964j0j7&sourceid=chrome&ie=UTF-8. 2018/06/28.
10. Churchill, G.A. (1979). A paradigm for developing better measures of marketing constructs. Journal of Marketing Research, 16(1), 64-73.
11. Clements, A., Dunn, M., Firth, V., Hubbard, L., Lazonby, J. & Waddington, D. (2010). The essential chemical industry. York: Chemical Industry Education Centre.
12. Comrey, A.L. & Lee, H.B. (1992). A first course in factor analysis (2nd edition). Hillsdale, NJ: Lawrence Erlbaum Associates.
13. Crozier, G.K.D. & Baylis, F. (2010). The ethical physician encounters international medical travel. Journal of Medical Ethics, 36, 297-301.
14. DeVellis, R.F. (2012). Scale development: Theory and application. Los Angeles: Sage.
15. Du Toit, W.J. (2012). The relationship between health and safety and human risk taking behaviour in the South African Electrical Construction industry. Theses Nelson Mandela Metropolitan University. [Online]. Available: http://www.masterbuilders.co.za/resources/docs/NewsArticles:2012,PDFs/100512_Relationship,between,H_S_Human_Risk_taking_Be haviour_in_South_African_Electrical_Construction_Ind.pdf [Accessed: 21 August 2018].
16. Fornell, C.& Larcker, D.F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
17. Foromo, M.R., Chabeli, M. & Satekge, M.M. (2016). Survey on the implementation of the Occupational Health and Safety Act at an academic hospital in Johannesburg. Curationis, 39(1), 1-10.
18. Fynes, B., de Bu´ rca, S. & Marshall, D. (2004). Environmental uncertainty, supply chain relationship quality and performance. Journal of Purchasing & Supply Management, 10, 179-190.
19. Han, H. & Hyun, S.S. (2015). Customer retention in the medical tourism industry: Impact of quality, satisfaction, trust, and price reasonableness. Tourism Management, 46, 20-29.
20. Hair, J.F., Hult, G.T.M., Ringle, C. & Sarstedt, M. (2013). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SE). Sage Publications, Inc.
21. Han, H., & Hyun, S. (2013). Image congruence and relationship quality in predicting switching intention: conspicuousness of product use as a moderator variable. Journal of Hospitality and Tourism Research, 37(3), 303-329.
22. Liu, H., Ke, W., Wei, K.K. & Hua, Z. (2013). Effects of Supply Chain Integration and Market Orientation on Firm Performance: Evidence from China. International Journal of Operational & Production Management, 33(3), 322-346.
23. Truong, H.Q., Sameiro, M., Fernandes, A.C., Sampaio, P., Duong, B.T., Duong, H.H., & Vilhenac, E. (2017). Supply chain management practices and firms’ operational performance. International Journal of Quality & Reliability Management, 34(2), 176-193.
24. Jani, D., & Han, H. (2013). Personality, social comparison, consumption emotions, satisfaction, and behavioral intentions: how do these and other factors relate in a hotel setting? International Journal of Contemporary Hospitality Management, 25(7), 970-993.
25. Jelimo, M.S. (2007). The Effects of Occupational Health and Safety on Employee Productivity (Descriptive Study). Unpublished, Moi University, Kenya. http://erepository.uonbi.ac.ke/bitstream/handle/11295/93944/Oluoch_Effect%20O f%20Occupational%20Safety%20And%20Health%20Programmes%20On%20E mployee%20Performance%20At%20Kenya%20Power%20Company%20Limited. pdf?sequence=3. Accessed 2018/06/25.
26. Jing-Bo, S., Zhe, W. & Xuan-Xuan, L. (2008). The driving factor of customer retention: Empirical study on bank card. Proceedings of the Management Science and Engineering, 15, 558-564.
27. Katsuro, P., Gadzirayi, C.T., Taruwona, M. & Mupararano, S. (2010). Impact of occupational health and safety on worker productivity: A case of Zimbabwe food industry. African Journal of Business Management, 4(13), 2644-2651.
28. Kaynak, H. & Hartley, J.L. (2008). A replication and extension of quality management into the supply chain. Journal of Operational Management, 26(4), 468-489.
29. KEMI Report. (2010). Chemical industry from an economic perspective of development trends in the world, the EU, and Sweden in 2010. https://www.kemi.se/global/rapporter/2010/rapport-5-10-chemical-industry-froman-economic-perspective.pdf. Accessed 2018/06/29.
30. Kim, J. (2017). The impact of different price promotions on customer retention. Journal of Retailing and Consumer Services, 30(40),1-8.
31. Kline, R. B. (2010). Principles and practice of structural equation modeling. (3rd ed.). New York, New York: Guilford Press.
32. Kotzee, E. (2014). Evaluating the awareness of environmental management accounting in the South African chemical industry. http://dspace.nwu.ac.za/bitstream/handle/10394/14292/Kotzee_E.pdf?sequence=1 &isAllowed=y.Accessed 2018/06/28.
33. Kumar, V., Batista, L. & Maull, R. (2011). The impact of operational performance on customer loyalty. Institute for Operational Research and the Management Sciences, 3(2), 158-171.
34. Lingard, H., Wakefield, R. & Cashin, P. (2011). The development and testing of a hierarchical measure of project OHS performance. Engineering and Construction Architect Management, 18(1), 30-49.
35. Majozi, T. & Veldhuizen, P. (2015). The chemical industry in South Africa. American Institute of Chemical Engineers (AIChE), 46-51.
36. Majozi, T. & Veldhuizen, P. (2015). The Chemicals Industry in South Africa. American Institute of Engineers (AICHE), 1, 46-51.
37. Naudé, P. & Buttle, F. (2000). Assessing relationship quality. Industrial Marketing Management, 29(4), 351-361.
38. Nischal, C.K. (2015). Customer relationship management and customer retention in the Amica Restaurant at Valmet Oy Ltd. Thesis, JAMK University. [Online]. Available:< https://www.theseus.fi/bitstream/handle/10024/103213/Nischal_final.pdf?sequenc e=1> [Accessed: 21 August 2018].
39. Nguegan Nguegan, C.A. & Mafini, C. (2017). Supply chain management problems in the food processing industry: Implications for business performance. Acta Commercii, 17(1), 1-15.
40. Oh H.C., Karimi I.A. & Srinivasan R. (2008). Supply chain management in the chemical industry: trends, issues, and research interests. In: Tang C.S., Teo CP., Wei KK. (eds) Supply Chain Analysis. International Series In Operational Research & Mana, Inc,119
41. Oliveira, D. (2014). South African chemicals industry has growth potential. http://www.engineeringnews.co.za/article/south-african-chemicals-industry-hasgrowth-potential-2014-03-21. Accessed, 2018/06/20.
42. Prajogo, D., Oke, A., Olhager, J. (2016). Supply chain processes. International Journal of Operational and Production Management, 36, 220–238.
43. Razavi, S.M., Abdi, M., Amirnequiee, S. & Ghasem, R. (2016). The impact of supply chain relationship quality and cooperative strategy on strategic Purchasing. Journal of Logistics Management 2016, 5(1), 6-15.
44. Roberts-Lombard, M. & Nyadzayo, M.W. (2014). Supplier-customer relationship management and customer retention: A perspective on motor dealerships in an emerging Economy. Mediterranean Journal of Social Sciences, 5(20), 792-801.
45. Saunders, M., Lewis, P. & Thornhill, A. (2012). Research methods for business students. 6th edition, Pearson Education Limited.
46. Sembe, F. & Ayuo, A. (2017). Effect of selected occupational health and safety management practices on job satisfaction of employees in university campuses in Nakuru Town, Kenya. Journal of Human Resource Management; 5(5): 70-77.
47. Sikpa F.C. (2011). An assessment of occupational health and safety practices on job performance at the Tetteh Quashire Memorial Hospital, Akuapan. Kwame Nkrumah University Publishers, Ghana. http://ir.knust.edu.gh/bitstream/123456789/4225/1/Sikpa%20Francis%20thesis.pd f. Accessed 2018/06/22.
48. Srinivasan, M., Mukherjee, D. & Gaur, A.S. (2011). Buyer-supplier partnership quality and supply chain performance: moderating role of risks, and environmental uncertainty. European Management Journal, 29(4), 260-271.
49. Taderera, H. (2012). Occupational health and safety management systems: Institutional and regulatory frameworks in Zimbabwe. International Journal of Human Resource Studies, 2(4), 99-117.
50. Department of Mineral Resources. (2017). The contribution of industrial minerals to South Africa's Economic Growth: The quest to increase food security, accelerate infrastructural development and chemical expansion. http://www.dmr.gov.za/LinkClick.aspx?fileticket=j01VskVV2o8%3D&portalid= 0. Accessed 2018/ 06/20.
51. Terblanche, N.S. & Boshoff, C. (2010). Quality, value, satisfaction and loyalty amongst race groups: A study of customers in the South African fast food industry. South African Journal of Business Management, 41(1), 1-9.
52. Tomic, I., Tesic, Z., Kuzmanovic, B. & Tomic M. (2018). An empirical study of employee loyalty, service quality, cost reduction and company performance. Economic Research-Ekonomska Istraživanja, 31(1), 827-847.
53. Tremblay, A. & Badri, A. (2018). A novel tool for evaluating occupational health and safety performance in small and medium-sized enterprises: The case of the Quebec forestry/pulp and paper industry. Safety Science, 101, 282-294.
54. Turkulainen, V. & Ketokivi, M. (2013). The contingent value of organizational integration. Journal of Organization Design, 2(2), 31-43.
55. Vermeulen, Y., Niemann, W. & Kotzé, T. (2016). Supply chain integration: A qualitative exploration of perspectives from plastic manufacturers in Gauteng’, Journal of Transport and Supply Chain Management 10(1), 1-23.
56. Odongo, W., Dora, M., Molnár, A., Ongeng, D. & Gellynck, X. (2016). Performance perceptions among food supply chain members: A triadic assessment of the influence of supply chain relationship quality on supply chain performance. British Food Journal, 118(7), 1783-1799.
57. Wirtz, B. W. & Lihotzky, N. (2003). Customer retention management in the B2C Electronic Business. Long Range Planning: International Journal of Strategic Management, 36(6), 517-532.
58. Woo, K.S. & Ennew, C.T. (2004). Business-to-business relationship quality: an IMP interaction-based conceptualization and measurement. European Journal of Marketing, 38(9), 1252-1271.
59. Young, J.A. (2000). Strategic alliances: are they relational by definition. Working Paper, Indiana State University. /http://www.sbaer.uca.edu/research/sma/1995/pdf/73.pdfS. Accessed 2018/06/29.
60. Zhu, Q., Sarkis, J. & Lai, K. (2008). Confirmation of a measurement model for green supply chain management production and environmental performance. Production and Operational Management, 10(3): 244-256.