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Aims and ScopeJournal of Global Business Review is a peer-reviewed journal, published by the Graduate School of Commerce, Burapha University. The journal aims to be an arena for international exchange of knowledge in the field of business, management, marketing, finance, operations management, economics, human resource management and relevant subjects. Quality research articles and academic articles from around the world are welcomed to be considered for publication.

Managing EditorAsst. Prof. Banpot Wiroonratch, Ph.D. Burapha University

Editorial BoardProf. Carla Locatelli, Ph.D. Social Science University of Trento, Trento, ItalyProf. Margaret Deery, Ph.D. Victoria University, Melbourne, AustraliaProf. Ainin Sulaiman, Ph.D. University of Malaya, Kuala Lumper, MalaysiaProf. Ir. Didik Sulistyanto, Ph.D. Embassy of Indonesia, IndenesiaProf. Norma Mansor, Ph.D. University of Malaya, Kuala Lumper, MalaysiaProf. Andrew Criswell, Ph.D. Hedmark University College, NorwayProf. Fauzias Mat Nor. Ph.D. Graduate School of Business, Banji, MalaysiaProf. Brian Corbitt, Ph.D. College of Business RMIT University, MelbourneProf. Emeritus. Harry J. Bury, Ph.D. Baldwin Wallace College, Berea, Ohio, USA.Assoc. Prof. Robert Inbakaran, Ph.D. University of Canberra, Australia.Assoc. Prof. Olivier Guyottot, Ph.D. Montpellier Business School, Montpellier, FranceAsst. Prof. Benjamin C. Powell, Ph.D. A ppalachian State University, Boone, North Carolina, USA Assoc. Prof. Rana Pongruengphan, Ph.D. Burapha UniversityAsst.Prof Adisak Chanprapalert, D.B.A. Burapha UniversityAsst. Prof. Yordying Thanatawee, Ph.D. Burapha UniversityAsst. Prof. Suchonnee Methiyothin, D.B.A. Burapha UniversityAsst. Prof. Sarunya Lertputtharak, D.B.A. Burapha UniversityKrit Jarinto, D.B.A. Burapha UniversityHugh Fox III, Ph.D. Burapha University

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Tel: 038-394900 ext. 132 E-mail address: [email protected]: 16897165

Journal of Global buSineSS review

volume 19 no. 1 January-June 2017

Journal of Global buSineSS review

iSSn 1689-7165

volume 19 no. 1 January-June 2017

Table of Contents

The Development Guidelines for Working Efficiency of ASEAN Employees 1Krisada Chienwattanasook, Boontharika Wongwanich

The Relation between Institutional Context and Business Performance of the Firms within VAT Refund for Tourists in Chiang Mai 11Satha Waroonkun

Strategy and Success of the Small and Medium Enterprisesin Bangkok and its Vicinities 21Pornapa Peamchai The Effect of Service Marketing Mix Factors on Decision Making to Choose a Nursery of Parents in Meaung Chonburi District, Chonburi Province 37Angkanita Muangput, Sarunya Lertputtarak, Wilailuk Khamloy

The Study of Relationship between the Level of Sustainability Report Disclosure and Security Prices of Listed Companies in the StockExchange of Thailand 47Sumalee Hodkum, Sakchai Chanruang

THe DeveloPmenT GuiDelineS for worKinG

effiCienCy of aSean emPloyeeS

Krisada Chienwattanasook1*,Boontharika Wongwanich1*

1Faculty of Business Administration, Rajamangala University of Technology Thanyaburi, Pathum Thani, 12110

abSTraCT

The objectives of this research were 1) to examine opinions regarding the desirable characteristics, working efficiency and 21st century working skills of employees in the selected ASEAN-employee organizations according to the organization’s perception and employee’s self-assessment, and 2) to review relationships between desirable characteristics and working efficiency as well as relationship between 21st century working skills and working efficiency. The study area included the organizations located in Bangkok, Thailand. Purposive sampling method was employed in this study in order to select participants from the ASEAN-employee organizations. The data were collected with questionnaires distributed to 80 managers and 400 employees from eight selected organizations. The findings indicated the levels regarding the working efficiency and employee’s working skills were found indifferent in the views of the organization’s need and , employee’s self-assessment. For the desirable characteristics, it was found that the employees evaluated themselves higher than what the managers had perceived. Also, the desirable characteristics had a significant relationship with the working efficiency (R = .573 for managers, R = .725 for employees). Lastly, the 21st century working skills had significant relationship with the working efficiency (R = .405 for managers, R = .499 for employees) at the statistical significance level of 0.05.

Keywords: Performance efficiency, desirable characteristics, 21st Century Skills

*Author e-mail address: [email protected]; [email protected]

Journal of Global Business Review : Volume 19 No. 1 January-June 2017 pp. 1-9

Journal of Global Business Review 2

introduction

Entrepreneurs these days need to adjust themselves to trends while implementing new business strategy in order to keep up with products and services’ standard. At the same time, cost should be maintained at low level in order to gain advantage over competitors. Unfortunately, one significant factor to success is “employees” who were difficultly found in the labor market. Thus, most organizations call for a great number of skillful, yet affordable, employees as their performance efficiency with professional moral could pave the way to success.,Thangpreechaparnich (2012). In 2015, Thailand joined ASEAN community with Mutual Recognition Arrangement (MRA) that allowed certain professions to voluntarily transfer within member countries. So far the agreement has been applied to 7 professions: engineer, medical, nurse, architect, physician, dentist and accountant. (Chula Uniresearch, Chulalongkorn Univerysity, 2015). With free trade, skilled labors would be able to migrate within ASEAN countries. It was expected that once Thailand joined ASEAN community, foreign skilled labors from other member countries would be able to work despite the differences in language, culture and levels of work performance. Organizations must adjust themselves with this new environment for more human resource practice efficiency in order to have an approach to skillful employees (Vichiennoi, 2015). With diversity in races and cultures, it was a challenge for human resource management under new circumstance, changing economy, politics and technology in modern days in order to acquire the personnel who were efficient at work, However, each employee held different thoughts and attitudes towards organization managements. The study; therefore, aims at studying the guidelines for optimizing performance efficiency of ASEAN employees regarding their working efficiency, desirable characteristics, and 21st century working skills. Organizations hiring ASEAN employees which were situated in Bangkok were selected to be further explored. Findings will become a guideline for schools to produce eligible graduates who fit employers’ needs.

research Purpose

1. To study the opinion levels regarding working efficiency, desirable characteristics and 21st century working skills measured by both selected ASEAN-employee organizations’ need and employee’s self-assessment. 2. To study relationship between desirable characteristics, 21st century working skills and working efficiency which meets the expectation of the selected ASEAN-employee organizations located in Bangkok.

research Hypothesis

1. Performance efficiency, desirable characteristics and 21st century working skills of staff in ASEAN-employee organizations measured by organization’s need and employee’s self-assessment are indifferent.2. The employee’s desirable characteristics and 21st century working skills have an effect on their performance efficiency in ASEAN-employee organizations.

literature review

Performance efficiency concept Thanawangnoi (2012, p.170) explained that personnel was the key to the success of organization. It was generally accepted that human was the most valuable and important factor of the management principle. Reinforcing working requirement to employee would increase employee’s positive working attitude and devotion for company’s progressive success. It was essential for the executive to take the ultimate efficiency into consideration as there were theories regarding employee’s motivation that focused on means to get employee’s devotion, responsibility and attention leading to loving, positive relationship and loyalty towards the organization. In other words, personnel needed a lot of factors: knowing time management, having ways to increase confidence, being a good team player, working morally with positive attitude, to work efficiently from his or her potential and to stick to the goal,. In addition, work system of organization


with solid management policy plan and systematic management would also facilitate the faster and more efficient working process. The concept of employee’s desirable characteristicsAlthough plenty of studies have described desirable employee’s characteristics of various professions, there was not yet a direct study regarding ASEAN employees who could be massive and different in each organization. However, significant desirable characteristics could be referred to in some vocations as following; Brown (1989, pp. 89 cited in Chueasraku, 2008) had summarized the service staff’s characteristics into 3 categories; 1. Staff who displays courage and out-going personality has self-confidence and determination to complete jobs given. 2. Staff who is able to enthusiastically adjust himself to others with flexibility in interpersonal interaction is able to deal with tasks tactfully. 3. Staff who is compassionate is essential, and the service staff should be amicable and carry courtesy while handling customers. The characteristics mentioned above reflected service staff’s “attitude” during their proper interaction with clients and could predict behaviors in selecting services afterwards. The service provider business grew once their staff delivered service that met the client’s expectation. Therefore, an organization would look for new recruits with working talent, responsibility and service mind to raise the possibility to success.

Joseph (1983, p. 11 cited in Chueasraku, 2008) studied consumer’s perception and suggested 5 characteristics every service provider’s organization should possessed as follows; 1) pleasant attitude, 2) giving responsive and correct answer, 3) being well-equipped, 4) being skilled and trained and 5) punctuality.Chueasraku (2008) had divided characteristics of service staff into 2 categories which were personal characteristic and professional characteristic. For instance, personal characteristics referred to bright personality and “service mind” while professional characteristic was related to “knowledge”, “skills” and “working abilities.”21st century working skill concept According to studies and articles regarding 21st century working skills (Tisana Khammani, 2002; Wichan Panich, 2002 cited in Thanormchayathawat, 2016), educational challenges in 21st century prompted the students to adjust themselves to changing environment and to dwell with “learning skill” as it has been the age of studying strategically by building patterns and guidelines to strengthen the learning management capability. Students would be encouraged to build knowledge, skill and expertise to dwell in modern days. Partnership For 21st Century Skills (www.p21.org), or P21 network in short, also suggested a “model” for 21st century learning that integrated knowledge, specific skills, and proficiency for both working and living aspects. Researchers would like to summarize literature review as below.

Figure 1 Research framework

Employee’s performance efficiencySwiftnessAccuracyKnowledgeExperienceCreativity

Desirable characteristicsProfessional Knowledge Foreign Language Skill Technology Proficiency Moral and EthicsLeadership

21st century working skills

independent variable Dependent variable


research method

This is a Quantitative Research using Survey Research Method in which information was collected in the form of questionnaire. 1. Population and samplingExecutives and staff in eight selected ASEAN-employee organizations in Bangkok represented 8 different industries which included 1) agricultural and food chemistry, 2) fast moving consuming goods industry (FMCG), 3) financial institutes, 4) industrial goods, 5) real estate business, 6) resource business and (7) technology service cooperation 8) Technology corporation. Purposive Sampling and Quota Sampling were used to select 80 executives (10 of each selected organization) and 400 staff (50 of each selected organization). The total number of the sampling was 480. 2. Research toolsQuestionnaire was distributed and concepts and theories were analyzed from related documents and studies to cover the research concepts. The questionnaire was also presented to 3 processionals to assess content validity using the index of item-objective congruence measure as well as to assess reliability of each variable with Cronbach’s coefficient alpha.

research findings

Part 1 Finding of general survey response analysis For executive profile, most of them were women aged 25-35 years, single, and having bachelor’s degree, and their entry level was manager in an organization with over 201 employees. They had 5 – 10 years of work experiences in Thai organizations in agricultural and food chemistry, fast moving consuming goods industry (FMCG), financial institutes, industrial goods, real estate business, resource business and technology service cooperation and earned 20,000 – 25,000 baht a month. For staff profile, most of them were women aged 25-35 years, single, having a bachelor’s degree and earning 20,001 – 25,000 baht a month in an organization with over 201 employees. They had 11 – 15 years of work experiences in Thai organizations in agricultural and food chemistry, fast moving consuming goods industry (FMCG), financial institutes, industrial goods, real estate business, resource business and technology service cooperation. Part 2 Performance efficiency, desirable characteristics and 21st century working skills in ASEAN-employee organization.

Work efficiencyManager Employee

t valueX SD X SD

1. Swiftness 3.89 0.55 3.92 0.54 - 0.4071

2. Accuracy 3.77 0.49 3.78 0.53 - 0.1521

3. Knowledge 3.89 0.50 3.93 0.54 - 0.5964

4. Experience 3.99 0.55 3.96 0.57 0.4068

5. Creativity 3.75 0.55 3.82 0.58 -0.9491

Total 3.86 0.39 3.88 0.43 - 0.3822

Table 1 Mean and Standard Deviation of staff’s performance efficiency level perceived by manager versus employees in the selected ASEAN-employee organization’s self-assessment.

In conclusion, managers preferred staff with experience, swiftness and knowledge respectively while staff from the staff’s self-assessment ranked experience the first which was followed by knowledge and

swiftness. T-test result turned out to be less than t critical value (t

.05,478 = 1.96496) as manager’s

perception towards work efficiency was not different from employee’s self - assessment either.


Table 2 revealed that all of t-statistic was higher than t critical value since staff seemed to rate themselves higher than what manager had perceived. However, manager favored staff with experience the most, followed by moral and ethics, technology proficiency and leadership while foreign language

skill was ranked the last. Meanwhile, employee’s self-assessment suggested that employees highly rated their desirable characteristics in all aspects such as moral and ethics, leadership, professional knowledge, technology proficiency skill and foreign language skills, respectively.

Desirable characteristicsManager Employee

t valueX SD X SD

1. Professional knowledge 3.00 0.57 3.92 0.57 - 12.0428

2. Foreign language skill 2.20 0.67 3.58 0.74 - 15.3540

3. Technology Proficiency 2.50 0.70 3.91 0.71 - 15.0269

4. Moral and Ethics 2.75 0.60 4.14 0.64 - 17.2728

5. Leadership 2.50 0.67 4.10 0.64 -17.8621

Total 2.95 0.43 3.93 0.46 - 16.9919

Working skillsManager Employee

t valueX SD X SD

1. Reading and Comprehension Skill 3.69 0.82 3.86 0.79 -1.5474 2. Writing for Organizational Communication Skill 3.75 0.77 3.90 0.77 -1.4534 3. Mathematics Skill 3.60 0.82 3.76 0.81 -1.4560 4. Judgmental Thinking Skill 3.66 0.73 3.88 0.73 -2.2486 5. Systematical Analysis Skill 3.73 0.73 3.97 0.69 -2.4544 6. Personal Problem Solving Skill 3.76 0.73 3.95 0.74 -1.9417 7. Work Problem Solving Skill 3.88 0.68 4.01 0.72 -1.4255 8. Cooperative Working Skill 4.00 0.80 4.12 0.73 -1.1202 9. Team Working Skill 3.98 0.73 4.12 0.69 -1.4317 10. Leadership Skill 3.91 0.60 4.04 0.64 -1.6154 11. Supporting Skill 3.91 0.62 4.01 0.66 -1.2025 12. Technology Proficiency 3.93 0.67 3.88 0.70 0.5565 13. Various Technology llikS 3.70 0.74 3.88 0.72 -1.8154 14. Computer Literacy 3.80 0.83 3.99 0.75 -1.7096 15. Learning Skill 3.95 0.69 4.05 0.71 -1.0810 16. Creative Thinking Skill 3.76 0.73 3.97 0.71 -2.1470 17. Inventive Management Development Skill 3.75 0.75 3.97 0.73 -2.1892 18. Stress Management Skill 3.71 0.83 3.91 0.78 -1.7990

Table 2 Mean and Standard Deviation of staff’s desirable characteristics perceived by managers versus employees in the selected ASEAN-employee organization’s self-assessment.

Table 3 Mean and Standard Deviation of 21st century working skills perceived by managers and employees from the selected ASEAN-employee organization’s self-assessment.


Table 3 According to manager’s expectation for staff’s 21st century working skills which ASEAN-employee organization’s executive prefer were put into categories, the most favorable skills were cooperative working skill (4.00), team working skill (3.98) and learning skill (3.95) consecutively while the least expected skill was mathematics skill (3.60). At the same time from employee’s self-assessment results, team working skill was ranked first (4.12) followed by learning skill (4.05) and leadership skill (4.04).

Also, Table 3 indicated that most t-test results were lower than t critical value (t

.05,478=1.96496) implying

that the perceived 21st century working skills by employers and employee’s self-assessment were not different except for judgmental thinking skill, systematic analysis skill, creative thinking skill and inventive management development skill.Part 3 Desirable characteristic factors and 21st century working skills affect staff’s performance efficiency in ASEAN-employee organization in Bangkok.

Model R R Square Adjusted R Square

Std. Error of the Estimate

Manager 0.573 0.328 0.283 0.326

Employee 0.725 0.526 0.520 0.297

Model R R Square Adjusted R Square

Std. Error of the Estimate

Manager 0.405 0.164 0.154 0.354

Employee 0.499 0.249 0.247 0.372

Table 4 Findings of coefficient of multiple correlation of staff’s desirable characteristics versus their performance efficiency.

Next, the desirable characteristics and staff’s work efficiency based on manager’s perception exhibited R = 0.573 with forecast possibilities when all five desirable characteristics combined at 28.3% while

those from employee’s perspective demonstrated R = 0.725 with forecast possibility when all five desirable characteristics were combined at 52.0%

Table 5 Findings of coefficient of multiple correlation of 21st century working skills versus staff’s work efficiency.

Table 5 displayed the relationship between 21st century working skills and staff’s work efficiency based on manager’s perception, and R equals 0.405 with forecast accuracy of 15.4% and the relationship between 21st century working skills and staff’s work efficiency based on employee’s self-assessment, and R equals 0.499 with forecast accuracy of 24.7%

Discussion and analysis

Hypothesis 1 Performance efficiency, desirable characteristics and 21st century working skills of staff in ASEAN-employee organizations measured by organization’s need and employee’s self-assessment are indifferent.

It was discovered that performance efficiency from manager’s perception and staff’s self-assessment were in high level and were indifferent in every aspect in accordance with Yuenyong (2014) who pointed that there was no different among employee performance despite being diverse genders, age, status and education. The research on desirable characteristics found that employees evaluated themselves higher than that of managers’ perception which was not consistent with Thangpreechaparnich (2012). Thangpreechaparnich studied desirable characteristics of accountants and advised that all organizations needed staff with professional background and basic knowledge such as language and technology


proficiency to gain advantages in work performance. In 21st century working skills aspect, both managers and employees were like-minded except for judgmental thinking skill, systematic analysis skill, creative thinking skill and inventive management development skill in which employees assessed themselves higher than what managers had perceived. Hypothesis 2 Employees’ desirable characteristics and 21st century working skills have an effect on their performance efficiency in ASEAN-employee organizations. Hypothesis 2.1 Employee’ desirable characteristics affect their performance efficiency in ASEAN-employee organizations.From the coefficient of multiple correlations of employees’ desirable characteristics and performance efficiency from manager’s perception, it was found that in general the efficiency perceived by the mangers was 0.573 while that of employee’s self-assessment was 0.725. When each aspect was identified separately, the desirable characteristics from manager’s perception towards employee’s professional skill altered their performance efficiency of experience and creative thinking skill and the desirable characteristics in technology proficiency affected knowledge efficiency by 0.05 while employee’s self-assessment demonstrated that all desirable characteristics (professional knowledge, foreign language skill, technology proficiency, moral and ethics and leadership) had an impact on performance efficiency at 0.05. The finding supported Krootboonyong (2014) who observed that with rapid changes in economy and society, Thai labor market required candidates with higher professional skills to compete with other countries. Development in education model management entailed more educated, skillful candidates with experience in accordance with organizations in which there was still the lack of employees with foreign language skill. Hypothesis 2.2 employees’ 21st century working skills affect their performance efficiency in ASEAN-employee organizations. The coefficient of multiple correlations of employees’ 21st century working skills and performance efficiency

perceived by managers was 0.405 while that of employee’s self-assessment was 0.499.Both manager’s perception and staff’s self-assessment on 21st century working skills and performance efficiency endorsed Phetchara (2015) who mentioned that 21st century working skills were not only for professors and students but could also applied to all staff who attempted to strengthen their skill to get accepted among working society and to continue living in modern days. The finding also aligned with the study from Thanormchayathawat (2016) that it was crucial that schools getting prepared to foster their students to be able to handle their future living and career among current challenges in 21st century advanced education development. 21st century.

recommendation

1. Recommendation from this research 1.1 Employee’s performance efficiency aspect The results of both managers and employee were generally satisfied. However, it is even better for employees to adjust themselves to have higher performance efficiency and to increase organization’s competitiveness. Moreover, organization should be on alert on circumstances that would enhance employee’s performance efficiency such as initiating working motivation and task appreciation, giving appropriate compensation, developing self-development encouragement and authorization. Such suggestions would result in employee’s devotion leading to higher performance efficiency. 1.2 Employee’s desirable characteristics The employee’s overall desirable characteristics was at the moderate level. Employees should realize and develop their foreign language skill, technology proficiency and leadership to advance their own advantages in the labor market although the manager’s perception of which was still minor. It could be staff’s additional learning or organizations could arrange internal training sessions or provide qualified instructors to improve employee’s talent. It is also inevitable for employees to be able to adopt technology to both their daily and working life for increasing their technology proficiency


aspect. Organizations should arrange an orientation regarding technology tasks for the new recruits in order to familiarize themselves with technology and to be able to perform accurately. The desirable characteristics from employee’s self-assessment issued in high rating and this could be comprehended into 2 directions : In case of a valid statement, it was positive that employees were so confident in their own potential that they could overcome challenges efficiently. Thus, organization should provide advance support of specific field for employee’s career path. In case of exaggeration, staff recognize their performance to be higher than that of reality, and this could cause concerns within organization’s personnel management since it would alter employee’s self- acknowledgement and satisfaction towards compensation. To prevent such circumstances, organization should directly tell employee that there was the correlation between performance efficiency and compensation and should justify why assessment system is important because it indicates levels of performance efficiency and its explanation could also build employee’s confidence. 1.3 Employee’s working skill Both manager’s perception and employee’s self-assessment were appraised as high score in terms of employee’s working skill with must-have abilities. However, employees should improve their abilities in accordance with organization’s expectation for the higher performance efficiency. In Leadership aspect, most organizations distribute authorization to entry level managers (horizontal authority) for flexibility in running operation. Consequently, it is essential to have employees with leadership skills in most organization to initiate and complete task rather than waiting for leader’s order and they should be able to understand their role appropriately. Also, manager could specifically identify employee’s role in order to root their confidence when running operation. Manager could even encourage staff’s leadership skill by giving them opportunities to make their own judgments as well as cheer them up and support their decision.In At the present time, Thai schools prioritize student’s talent development before graduation for

their future career to catch on to organization’s expectation and life. Skills that are necessary for work nowadays are life and career skills which could be further studied from 21st century learning management concept (P21, 2015)

2. Recommendation for future research 2.1 This research engaged factors of desirable characteristics and working skills to examine employee’s performance efficiency. In the future, there might be other factors such as motivation, stress, conflict, awareness of organizational support, bonding within organization and so forth that have an impact on employee’s performance efficiency for better understanding. Also, study regarding new innovation to boost performance efficiency would be beneficial. 2.2 This research was conducted within Bangkok. Therefore, future research could compare employees’ performance efficiency and management’s expectation from different areas. 2.3 This research used quantitative method. Consequently, future research could add some qualitative approach using in-depth interview or open-ended questions for deeper understanding towards manager’s expectation or different context in a wider organization category.

references

Chueasraku, C. (2008). Perceived Service Staff’s Characteristics and Servic Quality of Employees and Customers of True Move. Master’s Thesis (Industrial and Organizational Psychology), Psychology Department, Faculty of Liberal Arts, Thammasat University.

Chula Uniresearch, Chulalongkorn University. (2015). ASEAN Economic Community. Retrieved from http://www.unisearch.chula.ac.th.

Krootboonyong, C. (2014). Desirable Characteristic of Accountant for Japanese Manufacturing Companies in Thailand: Research Report. Bangkok: Thai-Nichi Institute of Technology.

Phetchara, Y. (2015). Skills of the Future [Review of the book 21st Century Skills: Rethinking How Students Learn (Leading Edge), by James Bellanca & Ron Brandt]. Information. 22(2), 97-100.


P21. (2015). Framework for 21st Century Learning. Retrieved from http://www.p21.org/our-work/p21-framework.

Thanawangnoi, L. (2012). The Relationship between Human Resource Management and Performance Efficiency of Betagro Group Employees. In Proceedings the 2nd STOU Graduate Research Conference (pp. 170-171). School of Management Science, Sukhothai Thammathirat Open University.

Thangpreechaparnich, P. (2012). The Favorable characteristics and qualifications of accounting staffs preferred by enterprises: A case study of the Samutsakorn Industrial Estate. RMUTT Global Business and Economics Review, 7(2), 158-173.

Thanormchayathawat, B. (2016). 21st Century skills: A challenge for student development. The Southern College Network Journal of Nursing and Public Health, 3(2), 208-222.

Vichiennoi, N. (2015). Review of AEC. Retrieved from http://www.thai-aec.com/161.

Yuenyong, T. (2014). Factors related to work efficiency of staff at the municipality in Pathumthani district, Pathumthani. Pathumthani University Academic Journal, 6(3), 29-40.

THe relaTion beTween inSTiTuTional ConTeXT anD buSineSS

PerformanCe of THe firmS wiTHin vaT refunD

for TouriSTS in CHianG mai

Satha Waroonkun1*

1Faculty of Business Administration, Maejo University, Chiang Mai 50290, Thailand.

abSTraCT

This article demonstrates the effects of business motivation on implementing value added tax refund for tourists’ systems (VAT refund). It examined the relationship between the institutional context and business performances of the firms within value added tax (VAT) refund for tourists in Chiang Mai, both in internal context and external context. The findings showed that internal institutional context, consisting of management factor and marketing factor had the positive effect on business performance. Therefore, a key decision for managers or owners was to focus on internal institutional context for making a decision to implement VAT refund which helped to achieve business performance.

Keywords: Value added tax, VAT refund, internal institutional, external institutional, business performance

*Author e-mail address: [email protected]



introduction

The tax system is one of the main elements of market economy. It is the government’s main instrument influencing the development of economic and social development. Tourism industry is important industry in Thailand. Thailand tourism industry is growing at the rate of 5.45 percentage of tourism direct GDP (TDGDP) compared within the country whose ratio is likely to increase. This has contributed to new jobs, approximately 4.45 million in 3 quarters of 2015 or 11.64 percentage of overall employment (Staff, 2015). Tax free shopping provides many advantages, such as new jobs, opportunity for exports, and support of tourism market which does not require high initial cost. Moreover, businesses have an opportunity to sell their products at the lower price. Governors have promoted the tourism industry by using recovery systems of the value added tax on goods and services to tourists. Value added tax can be recovered on purchases made by foreigners in the reverse crossing border of the country in which they were acquired. Several countries have implemented value added tax refunds system for tourists, such as Tax Free in Europe, GST refund in Singapore, Tourist Refund Scheme (TRS) in Australia and other systems of their cover of value added tax during the export of goods bought by foreigners during their stay in the country (Nikolaevna, 2013). Foreigners visiting the country imposing the VAT are exempt if the aggregate purchases do not exceed a predetermined amount. The procedure for collection of the VAT from foreigners, particularly tourists, is time consuming and a financial drain on the foreigner, the retail establishment, and the government.The VAT Refund for Tourists Office was established on June 1st, 1999 by the Revenue Department to promote tourism in Thailand through the tax incentives. The office reports directly to the Director-General of the Revenue Department or a person assigned by the Director-General for a precise, prompt and efficient management. At the beginning, the offices were operated at 4 major international airports which were Bangkok International Airport (Don Mueang), Chiang Mai International Airport, Hat-Yai

International Airport, and Phuket International Airport. Presently, the VAT Refund for Tourists Offices is available at 8 international airports which are Suvarnabhumi, Don Mueang, Chiang Mai, Phuket, Hat-Yai, U-Tapao, Krabi and Samui International Airports (Thailand, 2016).According to VAT Refund systems, traveler with purchase must first retrieve the VAT voucher from their luggage and then present the voucher to the customs authority at the airport. In many cases, the baggage has previously been checked in to the airline, thereby preventing the presentingof the voucher to the customs authority. Even after the voucher has been presented and certified by the customs authority, it is still necessary to go to a separate office to receive the refund. Such procedures are intolerable to a typical tourist. The computerized system disclosed herein eliminates the necessity for visiting both the customs authority and the refund office since the VAT refund is simply posted to the credit card account at the time of purchase. Due to the complexities of the procedures and the number of companies that operate refund programs long lines at the airport counters make many tourists either lose out or being charged with exorbitant fees (Mingjie, 2016). However, small business is the most flexible and easily-adaptable to market fluctuations of the market forms of business and it needs active government support (Nikolaevna, 2013).Therefore, the role of taxation enhances the competitiveness of organization in Chiang Mai for tourism and takesg national features and current trends of VAT Refunds in Chiang Mai Thailand into account. This study investigated factors influencing firm performance in order to formulate guidelines to apply VAT refunds for an organization. The research questions for this investigation are as follows:1. What factors influence firm performance after organizations implementing VAT refunds systems?2. Which factors can motivate the organizations to implement VAT refunds systems?

review of the literature and Theoretical

Concept

This study applies a concept of the neoinstitutionalism


theory to help the understanding of the relationship among variables in the conceptual model. The neoinstitutionalism theory is the organizational behavior which is determined by cultural norms and values rather than by efficiency consideration in each society where there are fundamental institutions embodying expectations that specify why it may be useful for the organizations, what purposes they should fulfill, and how they should be designed (Bresser & Milloning, 2003). Institutional isomorphic change occurs with three mechanisms, consisting of coercive isomorphism, mimetic processes, and normative pressures which come from different conditions and lead to different outcomes (Dimaggio & Powell, 1983).Additionally, Neoinstitutionalism is a consequence for the firms’ strategic management because internal and external institutional environments have a profound impact on organizational success and survival. Internal institutional context affects firm to elicit varying responses and influences from the external environment. On the other hand, external institutional context affects firm by means of act of the state, regulative processes of rule setting, monitoring, and sanctioning. This will help a firm to have a competitive advantage when it creates a successful strategy suitable for its firm environment which can increase its performance. Moreover, it has been found that institutional pressure is significant on firm performance (Fikru, 2014; Huo, Han, Zhao, Zhou, Wood, & Zhai, 2013). Therefore, this study aims at examining the relationship among internal institutional context, external institutional context, and firm performance. The internal institutional contexts include management factor, marketing factor, and technology and machinery factor. In additionthe external institutional contexts include economic condition factor and politics and legal factor. Thus, the research model shows that the relationships between institutional context and firm performance. These are shown below. 2.1 Internal Institutional Context Internal institutional context is dominated by the normative component which exerts external pressures on an organization by specifying

institutionally desirable behavior considered to be organizationally internalized to the extent that it is reflected in an organization’s structures, strategies, and routines (Bresser & Milloning, 2003). Moreover, normative pressures explain not only the adoption of an innovation, but also the implementation of the innovation (Huo, Han, Zhao, Zhou, Wood, & Zhai, 2013). This is relevant for all types of organizational decision to extent?? specific environment demands that are compatible with an organization’s system of norms and values and should therefore be adopted. Organizations can anticipate emerging regulatory constraints, reduce the stringency of anticipated mandatory regulations and thus reduce the expected costs of compliance in the future (Phan & Baird, 2015). Management factor According to institutional theory companies sometimes, under pressure from stakeholders, adopt practices which are environmentally friendly and beneficial to society. There is a dire need for companies, especially those engaged in manufacturing activities, to take a proactive, rather than a reactive, approach in this regard (Dubey, Gunasekaran, & Ali, 2015). Then, top management uses organization’s resources into a unique and viable posture based on its relative internal competencies and shortcoming, anticipated changes in the environment, and contingent is moved by intelligent opponents. Manager can use strategic planning to create organizations goal congruence, support creativity, change circumstances (Whittington & Cailluet, 2008), and determine the success or failure of an organization (Hyness, 2009). Moreover, this can lead to clear operation, understanding evaluating job accomplishment systematically, and correct direction for investment (Ocasio & Josephe, 2008). VAT refund for tourism can reduce prices for tourist services. Given that the price is the most important factor in the competitiveness of tourism organization, their competitiveness will increase as a result of the modernization of the tax system and the development of the tourism market (Nikolaevna, 2013). Manager can use VAT refund as strategic planning to support creativity and changing circumstance for their organization


performance. Thus, management factor seems to have a positive relationship with firm performance. Therefore, we posit the hypothesis as follows:H1a: The management factor positively impacts firm performance.Marketing factor Market pressures such as competitive pressure help an organization to improve the economic benefits available from adoption of different management practices (Zhu & Sarkis, 2007). Marketing benefits from VAT refund for tourism (VRT) come from the Revenue Department that provides VRT sign to show the privilege from joining in VRT system. A trader in VRT system can get VRT sticker and VRT desktop sign at the Area Revenue Office where the store is located. Or trader can make the sign which is specified the size by the Revenue Department to suit the store (Thailand, 2016). Moreover, company advertises the store by goods’ photos, store’s photos and location to get sales promotion through the Revenue Department’s website (www.rd.go.th/vrt). Also, tourists get manuals, related documents and foreign language brochure from traders to communicate with tourists about VRT system at the Area Revenue Office where the store is located The stores can request the brochure from the Area Revenue Office where the store is located. Joining VRT system, the firms have benefits because it supports their market and improve their performance. Thus, marketing factor seems to have a positive relationship with firm performance. Therefore, we posit the hypothesis as follows:H1b: The marketing factor positively impacts firm performance. 2.2 External Institutional context External institutional context is another dimension of neoinstitutional theory that is based on institutional theory which specifies three mechanisms through which the influence of institutional transfers to organization (Dimaggio & Powell, 1983; Zailani, Eltayeb, Hsu, & Tan, 2012), 1) coercive isomorphism resulting from pressures exerted by other organizations that firm depend, which may be felt as force, persuasion, or as invitations to join in collusion. In some circumstances, organization changes are a direct response to government mandate; 2) mimetic

isomorphism resulting from the firm’s rational desire to imitate the behavior of other organization. Uncertainty is powerful force that encourages imitation because an organization faces a problem with ambiguous causes or unclear solutions and wants its own model different from that of other organizations; and 3) normative isomorphism or set of expectation in particular organizational contexts about what constitutes appropriate and legitimate behavior, as established by social organization, professional association, or academic institutions. There are three benefits of VAT: neutral effect on taxation, transparency of taxation and prevention against tax evasion. The principle of tax neutrality means that taxes should be indifferent to corporates that are taxable, which means that the business taxation should not be an advantage or disadvantage for businesses (Hajduchova, Sedliacikova, & Viszlai, 2015). However, VAT refund is implemented by voluntary organization rather than mandated systems. Tax mechanism excludes tax bundle together when there is application of the tax on the tax. Taxation subject of taxpayer is a natural or legal person who registers in competent Tax office. Neoinstitutional theory is used to provide explanations for whether to adopt an innovation or the intention to adopt an innovation (Teo, Wei, & Benbast, 2003). In the context of value added tax (VAT), the element which most significantly affects tourism is its rates at which the traffic of goods and services is calculated and paid (Dombrovski & Hodzic, 2010)Economic condition FactorThe usefulness of VAT as a scheme to tax tourism would be reduced when government has tourism problems and concerns. The different regional taxation could tackle the problems associated to tourism (Gago, Labandeira, Picos, & Rodriguez, 2009). Furthermore, specific tourism taxes generate negative attitudes in tourists and businesses against what is perceived as discriminatory policies (fiscally predatory governments) that also encourage bad practices (tax evasion through black markets).It is well known that any taxes are distortionary when supply and/or demand is relatively elastic, since the price differential caused by taxes leads to


a significant change in the behavior of business and consumers (Gago, Labandeira, Picos, & Rodriguez, 2009). Thus, economic condition factor seems to have a positive relationship with firm performance. Therefore, we posit the hypothesis as follows:H2a: The economic condition factor positively impacts firm performance.Politics and legal FactorThe regional administrations and governments are important to normal market forces because they are not only acting as policy makers, but frequently as market actors. The government can also potentially induce the improvement of business policies indirectly through appropriately designed public incentives, since there are normative pressures from a variety of sources, including employees, professional groups, media and the community (Phan & Baird, 2015). For example, environmental legislation in Australia imposes liabilities not only on corporations but also on director and managers for their corporations’ offences thereby forcing business to minimize their environmental impacts to comply with legal requirements (Phan & Baird, 2015). They found that the government can induce improvements in environmental performance by creating regulatory pressures such as the threat of more stringent mandatory regulation. The impact of VAT increase prices of tourist products. It can decrease competitiveness of tourist services, demand and loss of revenue from tourism due to collecting VAT. Jensen and Wanhill (2002) found that the highest rate of VAT on tourism in Denmark is a subject of continual concern to the Danish tourist industry, notably the hotel sector, due to the belief that this is a key factor in the industry’s poor financial performance in a very competitive market. The Revenue Department promotes tourism in Thailand through issuing the VAT refund system for tourists. This system is voluntary system that firms can select to implement. However, firms engage in political strategies in order to achieve access to critical decision-makers in their surroundings, to actively inform them about their firms’ strategies and views, to influence these actors’ opinions, and to build reputation (Nell, Puck, & Heidenreich, 2015).

Thus, politics and legal factor seems to have a positive relationship with firm performance. Therefore, we posit the hypothesis as follows:H2b: The politics and legal factor positively impacts firm performance.Technology and machinery factorThe majority of those business operators that are not in the system of VAT refunds to tourists agree that the primary restraining element is the difficulty in practice to follow the Revenue Department’s regulation, followed by the reasons of complicated application procedure to get approval. They have to pay attention to the conditions that business operators must observe offer approval for being VAT refunds to tourists ‘store, to filling of application for VAT refunds (Pandee, 2005). The Revenue Department of Thailand (RD) tries to use technology such as e-Tax invoice systems to collect tax invoice data from taxpayers especially in business. This will provide information for businesses that join VAT refund for tourist service. The service prevents forging of tax invoices which effectively increase tourists’ confidence in Thai business (Suwisuthikasem & Tangsripairoj, 2008).The implementation of system integration facilitates information sharing, shortens cycle time, reduces costs, and improves customer service, and this leads to improved financial performance. Then firms can put an effort to strengthen their system integration because companies that have adopted system integration would achieve financial benefits (Huo, Han, Zhao, Zhou, Wood, & Zhai, 2013). Moreover, the e-procurement systems provide a unique opportunity for supply managers because of the application of technology to boost competitiveness and profitability. The actions that can improve profitability and value creation are generally under the firm’s control. Better management of operations should have a major impact on revenue growth, cost reduction, and asset turnover (Presutti, 2003). Thus, technology and machinery factor seems to have a positive relationship with firm performance. Therefore, we posit the hypothesis as follows:H2c: The technology and machinery factor positively impacts firm performance.


research method

Population and SampleFirms that designated as the population and sample for the data analysis are firms implementing value added tax refund of tourists (VRT) by The Revenue Department of Thailand. With regards to the population and sample, 165 firms are gathered to provide database of Revenue Department of Thailand. Mailed questionnaire distributed to all companies is used as instrument for data collection. For the analysis, 53 returned mails are complete and usable for the analysis according to the suggestion of Aaker, Kumar, and Day (2001), indicating the acceptable response rate should exceed 20%. The response rate of this study is 32.12% indicating that the gathered data for the analysis of this study is acceptable. In addition, non-response bias between early and late respondents is also examined using t-test comparisons which indicate that there is no difference between both groups of respondents.MeasureAll the variables were obtained from the survey. The independent variables include internal and external institutional context, containing five factor issues:

management, marketing, economic condition, politics and legal, and technology and machinery. Internal and external institutional context were measured on 5-point Likert scales (e.g., 5 = Strongly Agree, 4 = Agree, 3 = Neutral, 2 = Disagree, 1 = Strongly Disagree). Most of the scales employed have been adopted from the existing and validated scales used in the present and extant literature. Also, firm performance which is assigned as dependent variable was measured on 5-point Likert scales (e.g., 5 = Strongly Agree, 4 = Agree, 3 = Neutral, 2 = Disagree, 1 = Strongly Disagree).MethodConfirmatory factor analysis (CFA) was employed to investigate the validity of constructs. Moreover, factor scores were used to estimate for regression analysis. This research demonstrates the results of factor loading and Crobach’s alpha efficiencies show that all factors loading are greater than acceptable cut-off score which is 0.40 as minimum (Nunnally & Bernstein, 1994). Crobach’s alpha of all variables are greater than 0.7 (Nunnally & Bernstein, 1994). Overall, the results in Table 1 indicate the reliability and validity of these constructs.

Table 1 Results of validity and reliability testing

Variables Factor Loading Cronbach’s Alpha Coefficients

Management Factor (MA) 0.884 – 0.910 0.886

Marketing Factor (MK) 0.556 – 0.793 0.841

Economic condition Factor (EC) 0.834 – 0.865 0.807

Politics and legal Factor (PL) 0.826 – 0.846 0.777

Technology and machinery (TM) 0.866 – 0.878 0.839

Firm performance (FP) 0.809 – 0.863 0.789

The regression analysis using ordinary least squared method (OLS) is operated to estimate parameters

in hypotheses testing. The equation models are shown as follows:

FP = β0 + β

1MA + β

2MK + β

3EC + β

4PL + β

5TM + β

6FA + β

7FS + ε

Where FP is firm performance; MA is management factor; MK is marketing factor; EC is economic condition factor; PL is politics and legal factor; TM

is technology and machinery factor; FA is firm age; FS is firm size; and ε is error term.


research results

Table 2 shows the descriptive statistics and correlation matrix between variables analyzed by Pearson correlation efficiencies. Although it indicates a high

correlation between independent variables, it does not have severe multicollinearity problems according to the VIF range from 1.299 to 2.782 (Hair, 2006).

Table 2 Descriptive statistics and correlation matrix

Variables MA MK EC PL TM FP FA FS

Mean 4.1195 4.1368 4.0314 4.0943 4.1006 4.1887 2.7547 1.3962

S.D. .65403 .57296 .66108 .57875 .65236 .59381 .97873 .56635

MA

MK .345*

EC .535** .475**

PL .517** .642** .478**

TM .392** .528** .726** .433**

FP .585** .667** .638** .581** .540**

FA -.094 .061 -.325* -.128 -.212 -.095

FS -.009 .319* -.051 .158 -.058 .078 .317*

Effects of Internal Institutional Context on Firm PerformanceTable 3 presents the results of OLS regression analysis of the relationships between internal institutional contexts and firm performance. The inference hypotheses 1a and 1b whether examines the relationship among management factor, marketing factor, and firm performance. The result shows that both independent variables consisting of management factor and marketing factor have a significant positive effect on firm performance (b1 = .243, P<0.05; b2 = .457, P<0.5). Management factor is when the manager can use VAT refund as strategic planning (e.g., pricing) to support creativity and changing circumstance for their organization performance (Nikolaevna, 2013). Managers have to concern about

planning which affects performance no matter it is a large/small firm or capital/ labor intensive firm which can benefit from the adaptation aspect of strategic planning (Miller & Cardinal, 1994). VAT refund has strongest impact on tourism and price with taxes because it affects the formation of prices (Dombrovski & Hodzic, 2010). Moreover, marketing factor has benefit from VAT refund program. It will also help firm to know about crediting and advertising which improve their performance. This is consistent with Morgan, Vorhies, and Mason (2009) who found that market orientation and marketing capabilities are complementary assets that contribute to superior firm performance. As the results, Hypotheses 1a and 1b are supported.

* p<0.05, ** p<0.01


* P<0.05

Effects of External Institutional Context on Firm PerformanceTable 3 presents the results of the relationships between external institutional context and firm performance. Interestingly, economic condition factor, politics and legal factor, and technology and machinery factor have no significant effect on firm performance. In the voluntary of VAT refund of Revenue Department of Thailand, there is the need of improvement of VAT refund law and regulations, and it is recommended that the regulations would be easy and well understood regulations so that they would attract firm to implement VAT refund (Sirithanangkool, 2001). Technology and machinery factor might not be affected because the capital expenditure of some technologies is too high for cost-efficient recovery (Khor, Udin, Ramayah, & Hazen, 2016). Moreover, Zhu, Sarkis, and Lai (2007) find a significant effect only on internal

environmental management of economic performance but there is no effect on externally oriented green supply chain initiatives. This reason might affect the external institutional context on firm performance. Therefore, Hypothesis 2a - 2c are not supported.

Conclusions and discussion The governors’ element to support and promoted the tourists’ business is the VAT refund system because tourists’ business is sensitive to prices, and also to taxes affecting the formation of price. This will give opportunity for business to sell the product at the lower price because foreigners can receive tax refund form their purchase. The firm that implements VAT refund system can gain the competitive advantage and improve their performance. However, literature advocates that institutional context will have an effect on the organizational behavior whose different conditions can lead to different outcomes. The results show that the benefits of prices reduction from tax which can increase business performance depend on their manager and competitiveness. Manager that acknowledge VRT system will use VAT refund as some strategies to attract tourist customers and to compete rivals. Moreover, the market environment also affects business performance because firms can use Revenue Department’s support by using some advertising providing goods’ photos, store’s photos and store’ location on its website. The finding shows that internal institutional context (management factor, marketing factor) has the most powerful effect on firm performance. According to the results of the study, it is suggested that the Revenue Department should present firms management benefit and marketing benefit which will create the internal motivation for implementing VAT refund for tourists. However, the results show that the external institutional context (economic condition factor, politics and legal factor, and technology and machinery factor) does not affect business performance. The economic condition factor might not affect much because of the price competition. The shops in VRT system are formal shops which sell products with

Table 3 Results of OLS regression analysis

Independent Variables Dependent Variable (FP)

Management Factor (MA) .243*(.104)

Marketing Factor (MK) .457*(.143)

Economic condition Factor (EC)

.251(.134)

Politics and legal Factor (PL)

.047(.134)

Technology and machinery (TM)

-.020(.126)

Firm Age (FA) .008(.063)

Firm Size (FS) -.061(.107)

Adjusted R2 .583


higher price than the smaller shop and the VAT system in our country also allows small shop to use VAT system voluntarily. Also, some shops can gain benefits from tax evasion because it is easy for firms that do not register in VAT system. Moreover, the politics and legal factor might not affect much because VRT is the voluntary system for business. Some businesses such as furniture business can’t gain the benefit from VRT system because accord-ing to the law, to gain tax refund, it is required that goods have to carried out of Thailand on the departure date. In addition, the technology and machinery factor is might not affect because VRT system has several requirements for tourist such as goods have to be taken out of Thailand within 60 days from the date of purchase, Tourist must have his name or passport number on the original tax invoices that are attached to the tourist VAT Refund Application form. This study provides the results of the effects of internal institutional context (management factor, marketing factor) and external institutional context (economic condition factor, politics and legal factor, and technology and machinery factor) on firm performance. The Revenue Department can use the results to attract firms to implement VRT system. There are alternative ways to attract firms. For example, some rules should be reduced and supporting systems should be provided not only to motivate firms to implement VAT and VRT system but also to boost economic and social development in tourism industry.

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STraTeGy anD SuCCeSS of THe Small anD meDium enTerPriSeS in

banGKoK anD iTS viCiniTieS

Pornapa Peamchai1*

1Department of Management, Rajamangala University of Technology Thanyaburi, PhathumThani 12110, Thailand

abSTraCT

The research aimed to study the strategy and the success of small and medium enterprises in Bangkok and its vicinities. A survey questionnaire was a tool for data collection from 400 entrepreneurs of SMEs in Bangkok and its vicinities. Data analysis was based on descriptive statistics including Frequency, Percentage, Mean and Standard Deviation; whilst inferential statistics including Independent Samples t-test, One-Way ANOVA, LSD and Stepwise Multiple Linear Regression at the significance level of .05.The results showed that differences in type of business, business duration and registered capital can affect the entrepreneurial success The findings from stepwise multiple linear regressions revealed that innovation, business alliance and customer focus can predict the entrepreneurial success in terms of business growth; nevertheless, business alliance and customer focus can predict the entrepreneurial success in terms of satisfaction at the significance level of .05

Keywords: Business strategy, entrepreneur’s business success, SMEs

Author e-mail address: [email protected]



introduction

Small and medium enterprises are very important for entire economic systems of both developed and developing countries. It is also referred as a main mechanism to drive the country economy by providing more employment over the country. In 2015, Office of Small and Medium Enterprise Promotion (OSMEP) indicated that there were 2,765,986 SMEs entrepreneurs, accounted as 99.72% of all SMEs creating 10,749,735 employees or 80.44% of employment in the country. Also, GDP was 41.1% and export value was 1.98 trillion baht 27.4%. Most of SMEs operate in trading sector (42.32%), and then followed by service sector (38.13%), production sector (18.24%) and agricultural sector (1.31%), respectively. Bangkok was the most important area of SMEs establishment with 43.15% (Office of Small and Medium Enterprise Promotion, 2016). Since the government continuously focused on the importance of SMEs, it then established Office of Small and Medium Enterprise Promotion (OSMEP) in 2000 to be the center of work collaboration, to promote SMEs, and to assist and develop SMEs system in order to achieve master plan and practical plan (Office of Small and Medium Enterprise Promotion, 2012). However, operating SMEs can be successful and failure because the SMEs owners will encounter with many problems including investment funding, inputs, lack of human power, lack of knowledge related to market and marketing. In addition, they also face with pressures from five force model, Porter’s concept (Porter& Collins, 2012) causing many companies’ breakdown. Information derived from the Department of Business Development, the Ministry of Commerce, revealed that approximately 9,010 companies were closed in 2012 and the majority of the shut-down companies (3,189 or 35.40%). (Department of Business Development, 2013)Nevertheless, there are still successful SMEs owners operating their businesses under the pressure from various aspects by adjusting their business strategies in order to match with global change of economy.

Sharma (2011) stated that “long-run business plan can help business owner to be successful in the future”. Sutthison, Chaowakeeratiphong and Wongnaya (2015) indicated that strategies for small business operation of entrepreneur consisted of increasing channels of distribution of products and services, building a strong brand, upgrading product and service quality according to the standards, increasing production technology manufacturing, developing new products and services responding to customer requirement, increasing the entrepreneurs’ capability to access to financial institutes, improving efficient management structure, increasing the workers’ efficient skills, and finding network and business alliance. Moreover, to achieve SMEs business operation the entrepreneurs should analyze either external or internal business environment can affect the business success. In line with that, the researcher then concentrates on studying SMEs strategies to achieve SMEs operation. The results derived from this research will explore the beneficial knowledge to entrepreneurs and initiator.

objectives of study

1. To study about business strategies and success of the small and medium enterprises in Bangkok and its vicinities. 2. To compare success of the small and medium enterprises in Bangkok and its vicinities divided by general business characteristics. 3. To study identify business strategies affecting success of the small and medium enterprises in Bangkok and its vicinities.

Hypothesis

H1: Different general business characteristics (business type, business model, business duration, investment capital and location) have influenced entrepreneur’s success differently. H2: Business strategies have an influence on business success (business growth and satisfaction).


literature reviews

Concepts related to small and medium enterprises (SMEs) Small and medium enterprises (SMEs) means the business that has less invest funds, small volume of sale and less numbers of personnel. SMEs can be divided into three groups including production, service and wholesale and retail. Firstly, a production group refers to a business that sells products to wholesalers or retailers in order to sell to customers directly. This production group includes agriculture, animal hunting and forest, fishery, mining and minerals, electricity, gas, and water. Secondly, a service group refers to a business that provides the service to the customers. This type of business includes constructions, hotels and restaurants, financial mediators, real-estate agencies (renting and business consultations), education, health service and social welfares. Lastly, a wholesale and retail group refers to a businesses that sell products and materials to industries or ended customers directly (Department of Business Development, 2013).The characteristics of SMEs can be identified by

permanent asset value excluding land and employment. In terms of permanent asset value, the medium production and service enterprises are limited to 200 million baht and the small one is limited to 50 million baht. In aspects of wholesale and retail, this business group is divided into 2 sub-groups. The medium wholesale is limited to 100 million baht and small wholesale is limited to 50 million baht. And, the medium retail is limited to 60 million baht and small retail is limited to 30 million baht (Ministry of Industry,2002). In aspects of employment, the SMEs can be classified by numbers of employees in the organization. A medium production and service enterprises are limited to 200 employees and the small one is limited to 50 employees. In aspects of the wholesale and retail, this business group is divided into 2 sub-groups. A medium wholesale is limited to 50 employees and small wholesale limits to 25 employees. And, a medium retail limits to 30 employees and a small retail is limited to 15 employees (Ministry of Industry,2013).A small and medium enterprise has an important role toward Thai economy. Theeravanich(2001)

Conceptual framework

Figure 1 Research conceptual framework

General business characteristics1. Business type2. Business model3. Business duration4. Investment capital5. Location Business success

1. Business growth2. Satisfaction

Business strategies1. Low cost 2. Differentiation 3. Innovation 4. Business alliance 5. Customer focus 6. Product/ service improvement7. Customer relationship

independent variables Dependent variable


mentioned that SMEs are so crucial to employment and job creation because SMEs require less employees then the business owner can easily establish their own business and it could reasonably be sources of jobs which they finally have positive effects on population growth and national economy. Furthermore, SMEs can also create innovation because these owners have specific skills and inspiration to launch new invented products and services to the market. Also, SMEs can provide sources of raw inputs, distribution or automobile parts, as for instance. Lastly, SMEs can also efficiently provide products and services because they are flexible and deliver customers. However, small and medium enterprises encounter various problems such as funding. Most of SMEs are lack of cash flow and investment capital to expand the business. Problems related to ability to manage the business such as marketing, accounting, personnel management, procurement and distribution can also affect negatively SMEs owners. Another problem for SMEs is related to number of staff. This frequently happens to the SMEs owners because working in this type of business is seen as unstable works. When the staff is offered new job with higher compensation, they will resign the job easily. With that reason, the entrepreneurs will be required to deal with staff recruitment, selection and training. In addition, the entrepreneurs need to work longer than usual, have no time for self-relaxation. Lastly, SMEs are very risky compared to the large scale business because it has less capital investment which it can negatively affect the power to purchase or stock materials or inputs in order to gain cost reduction or even remain the staff (Rumakom, 1997).

Concepts related to strategies

Luecke& Collis (2008) defined a strategy that it is a process to search and consider the environmental factors in order to plan the business operation so that the business owner can use it to develop the business to gain the competitive advantages. Meanwhile, Porter and Collins (2012) stated that the strategy is establishment of goal and clear position

and organizational value of various activities to gain organizational performance. Therefore, the strategy is very important for utilizing and controlling the resources (Personnel, machines, equipment and finance) by having the purposes to create and promote the business maximization. Business strategy is divided into 3 levels consisting of cooperate, business and functional levels. The corporate level covers the overall competition of business and focuses on setting the business in the industry. The business level includes strategies to enhance the business in doing marketing for themselves. Lastly, the functional strategies focus on maximizing the organizational resource utilization. Under the limitation of the corporate and business level, the functional level should determine the strategies that can support the corporate and business level (Nawikan, 2000).Doing business needs to interface with competition always. Michael E. Porter, a professor from Harvard University, developed Five Force Model including threat of new entrants, bargaining power of suppliers, threat of substitutes, bargaining power of customers and industry rivalry. Firstly, the threat of new entrants describing as the market will have new business incomers which they can take a market share by launching the competitive product. Secondly, the bargaining power of suppliers refers to a supplier of sources of materials, components, labor, and services has power to bargain the price over the firm when there are few substitutes. Thirdly, bargaining power of customers is described as the ability of customers to pressure the firm’s product/service price. Fourthly, the threat of substitutes can be referred to existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Lastly, the industry rivalry refers to intensity of competitive rivalry the existing market with the objectives to get the market share by providing product/service with competitive price, launching new products/ services and service improvement (Porter & Collins, 2012).Derived from Five Force Model analysis, the results can determine the strategies that are suitable to


business so that the entrepreneurs can use it to effectively operate their business. In addition, the entrepreneurs should also consider the internal and external environmental factors, strength, weakness, opportunity, and threats in order to achieve the business goal (Luecke & Collis, 2008). Many academicians explores various strategies including low-cost strategy, business distribution, merging and acquisition, globalization strategy, customer focus, product leadership, integrative growth strategy, flexibility, product/service differentiation, customer relationship, networking strategies, innovation, business alliances and others (Luecke & Collis, 2008; Boonbongkarn & Kecharananta, 2001; Tantayanon, 2010; Lertnaisat, 2004 & Piyawongwattana, 2012). In addition, Srijumpa (2009) presented marketing strategies for business survival which they included 1) price strategies, 2) value differentiation, 3) brand loyalty,

4) media selection, 5) research strategies on attitude and behaviors toward brand, 6) customer relationship, 7) research strategies on purchasing behavior, 8) dominant service specification strategy and 9) convenient distribution of service and product. These were found very beneficial to the entrepreneurs. Furthermore, Siriyong (2012) studied strategies used in small and medium enterprises of Thailand to increase SEMs’ competition potentials. The finding indicated that SMEs used the following strategies: cost leadership, differentiation, market development, product development, price strategy, focus strategy, customer retention, service specification strategy, quick responsiveness, business alliance, pledge and return strategy, channel of distribution, business public relations and strategies to access furniture’s market, can increase the competitive potentials of SMEs sustainably.

Table 1 Summary of strategies in SMEs

Variables Strategy Author

1. Cost leadership Price strategy Srijumpa(2009)

Cost leadership strategy Luecke & Collis, (2008)

2. Differentiation of products and service

Value differentiation strategy Srijumpa (2009)

Differentiation strategy Boonbongkarn and Kecharananta (2001)

3. Innovation Innovation strategy Tantayanon (2010)

4. Business alliance Alliance strategies Lertnaisat (2004)

5. Customer focus Focus strategyDominant service specificationstrategy

Piyawongwattana, (2012) Srijumpa (2009)

6. Product and service improvement

Product and service conveniencestrategy

Srijumpa (2009)

7. Customer relationship Customer relationship strategy Srijumpa (2009)

Customer relationship strategy Luecke and Collis (2008)

Concepts of entrepreneurs’ success

Entrepreneurs’ success means the success from the entrepreneurs running the business. Piyawongwattana (2012) indicated that the measure to evaluate the success of the entrepreneurs can be divided into four

aspects including 1) finance 2) customers 3) internal organization process and 4) learning and developing. Firstly, finance refers to the income growth considered by the growth of sale volume of products and services, cost reduction, increase in productivity


considered by income/employee, cost compared to competitors, cost per unit and benefits from assets by considering the return on investment. Secondly, customer refers to the customer remain, customers’ satisfaction, customer acquisition and market share. Thirdly, internal organization process refers to innovation, number of invented product/service and product/service quality. Lastly, learning and development refers to the increase in employees’ potentials, employee remaining, employee retention, and information system development. In the meantime, Wangbenmad and Bindulem (2014) studied about the key success factors for small and medium enterprises in Muang Hadyai, Songkhla Province by collecting data from 280 enterprises by survey questionnaire. Their variables of business included the business acceptance, the stability of business and the reputation of business. After the study, the results indicated that all business success aspects were rated at the high level. The researcher gathered the issues related to the entrepreneurs’ success and divided into 2 points including 1) business growth (market share, number of customer, business profits and business growth rate) and 2) satisfaction refers to entrepreneurs’ satisfaction toward business operation, employees’ satisfaction and customers’ satisfaction.

research methodology

Population and samplesPopulation in this study is SMEs owners in production, service and wholesale and retail sectors in Bangkok and its vicinities. Data derived from registered data of the Department of Business Development, the Ministry of Commerce, dated 1st April, 2013, indicated that there were 338,010 (99.6%) of SMEs owners in Bangkok and its vicinities (Department of Business Development, 2013and OSMEP, 2011).Through the sampling computation employing unknown population (Silpcharu, 2005) at the confident level as of 95%, there were 400 samples used in the study. After that, the researcher employed stratified random sampling to divide samples into 3 groups including production, service and wholesale and retail and hired convenience sampling to collect the data.

research instruments

Researcher used close–ended questionnaires divided into 3 parts. Part 1 consisted of check-list questions asking about the general business characteristics including business type, business model, business duration, investment capital and location. Part 2 included rating scale questions (five Likert’s scale) asking about the business strategies (low cost, differentiation, innovation, business alliance, customer focus, product/service improvement and customer relationship) and business success (business growth and satisfaction). And, Part 3 covered opened questions asking about the opinions and recommendation toward critical business strategies.

validity and reliability

For validity check, the researcher had experts in related fields inspect the accurate and consistency of contents and questions used in the questionnaires and recommend for improvement and edition. For reliability check, researchers distributed 40 questionnaires to similar SMEs entrepreneurs. The finding discovered Cronbach’s alpha coefficient as of 0.901 for business strategies and as of 0.844 for business success.

Data analysis

Researchers analysed data derived from samples by using descriptive statistics including percentage, mean and standard deviation and inferential statistics consisting of independent t-test and ANOVA (One-Way Analysis of Variance) in order to compare the difference of entrepreneurs’ opinion related to business success by considering general business characteristics. LSD (Least Significant Different) was employed in the study in order to consider the pair difference in the particular sample group. In addition, stepwise multiple regression analysis was employed to study the relationship between business strategies (Low cost, differentiation, innovation, business alliance, customer focus, product/service improvement and customer relationship) and business success (Business growth and satisfaction) with the purpose of predicting business success for entrepreneurs.


General business characteristics Frequency Percentage

Business type

Production 78 19.50

Service 190 47.50

Wholesale/ retail 132 33.00

Business model

Company Limited 373 93.25

Partnership limited 12 3.00

Juristic person 2 0.50

Private company (only 1 owner) 13 3.25

Business duration

1-3 Years 109 27.25

3– 5Years 209 52.25

5–7Years 61 15.25

7-10 Years 5 1.25

10 Years above 16 4.00

Investment capital

Lower than 5 million baht 21 5.25

5-10 million baht 35 8.75

11-50 million baht 166 41.50

51-100 million baht 168 42.00

101-200 million baht 4 1.00

More than 200 million baht 6 1.50

Total 400 100.00

Location

Bangkok 299 74.75

Metropolitan area 101 25.25

Total 400 100.00

results

Table 2 General business characteristics

From Table 2, it found that samples of this study were SMEs in service group, with business duration as of between 3 years and 5 years, investment capital

between 51-100million baht, staff between 51 and 100 persons, located in Bangkok.


From Table 3, the overall business strategies were rated at high level with mean score as of 3.72. When considering each strategies, customer relationship, low cost strategy and business alliance strategy with mean score as of 3.89, 3.76 and 3.72, respectively were rated at high level. In terms of business success, the overall score was rated at high level, with the mean score as of 3.55. After considering each aspect, business growth and satisfaction were rated at high level with mean score as of 3.47 and

3.63, orderly.

Hypothesis testing

Hypothesis 1: Different general business characteristics (business type, business model, business duration, investment capital and location) have entrepreneur’s success degree differently. Hypothesis 1.1: Different general business characteristics in terms of location have entrepreneur’s success degree differently.

Table 3 Mean and standard deviation of business strategies and business success

Variables Mean S.D.

Business strategies 3.72 0.360

Low cost strategy 3.76 0.496

Differentiation strategy 3.70 0.521

Innovation strategy 3.62 0.621

Business alliance strategy 3.72 0.599

Customer Focus Strategy 3.61 0.573

Product/ service improvement strategy 3.71 0.551

Customer relationship strategy 3.72 0.360

Business success 3.55 0.519

Business growth 3.47 0.611

Satisfaction 3.63 0.557

Table 4 Statistics displaying comparison of entrepreneurs’ opinion toward entrepreneurs’ business success classified by location

General business characteristics

N X SD t p

Location Bangkok 299 3.55 0.492 0.190 0.850

Vicinity 101 3.54 0.593

From Table 4, the result indicated that different general business characteristics in terms of location do not have entrepreneur’s success degree differently. Hypothesis 1.2 Different general business characteristics

in terms of business type, business model, business duration, and investment capital have entrepreneur’s success degree differently.


From Table 5, the results indicated that different general business characteristics in terms of Business Type, Business Duration and Investment Capital affect entrepreneur’s success degree differently because p value is less than 0.05 at then statistically significant level as of .05.

From the study, it found that the aspects including business type, business model, business duration and investment capital between the groups are different. Therefore, the research used LSD (Least Significant Different) to investigate the pairwise difference. The details are given below.

Table 5 Statistics displaying comparison of entrepreneurs’ opinion towardentrepreneurs’ business success classified by business type, business model, business duration, and investment capital

General business characteristics

Source of variation DF SS MS F p

Business type Between groups 2 2.994 1.497 5.697 0.004*

Within groups 397 104.336 0.263

Total 399 107.330

Business model Between groups 3 1.822 0.607 2.279 0.079

Within groups 396 105.509 0.266

Total 399 107.330

Business duration Between groups 4 12.297 3.074 12.778 0.000*

Within groups 395 95.033 0.241

Total 399 107.330

Investment capital Between groups 5 5.189 1.038 4.003 0.001*

Within groups 394 102.142 0.259

Total 399 107.330

Table 6 Mean difference of pairwise comparison of entrepreneurs’ opinion toward entrepreneurs’ business success classified by business type

Business Type Production Service Wholesale/Retail

X 3.43 3.52 3.66

Production 3.43 - 0.09 0.23*

Service 3.52 - 0.14*

Wholesale/Retail 3.66 -

* Significance level as of .05

When considering the results of pairwise comparison by LSD on entrepreneurs’ opinion toward entrepreneurs’ business success classified by business type, the finding indicated that the mean score of entrepreneurs’

opinion in the Wholesale/retail type is than the Production and Service type at the significance level as of .05.


When considering the results of pairwise comparison by LSD on entrepreneurs’ opinion toward entrepreneurs’ business success classified by business duration, the finding indicated that, firstly, the mean score of entrepreneurs in 5-7 years and 3-5 years business is higher than 1-3 years business. Secondly, the

mean score of entrepreneurs in 5-7 years and 3-5 years business is higher than 10-year-above business. Lastly, the mean score of entrepreneurs in 5-7 years and 3-5 years business is higher than 3-5 years business.

Table 7 Mean difference of pairwise comparison of entrepreneurs’ opinion toward entrepreneurs’ business success classified by business duration

Business duration1-3 Years 3-5 Years 5-7 Years

7-10 Years

10 Years above

X 3.34 3.61 3.81 3.64 3.16

1-3 Years 3.34 - 0.27* 0.47* 0.30 0.18

3-5 Years 3.61 - 0.20* 0.45 0.45*

5-7 Years 3.81 - 0.65 0.65*

7-10 Years 3.64 - 0.48

10 Years above 3.16 -


Table 8 Mean difference of pairwise comparison of entrepreneurs’ opinion toward entrepreneurs’ business success classified by business duration investmentcapital.

Investment capital (Million baht)

<5 5-10 11-50 51-100 101-200 >200

X 3.31 3.65 3.47 3.65 3.48 3.21

<5 3.31 - 0.34* 016 0.34* 0.17 0.10

5-10 3.65 - 0.18 0.00 0.17 0.44

11-50 3.47 - 0.18* 0.01 0.26

51-100 3.65 - 0.65 0.44*

101-200 3.48 - 0.27

>200 3.21 -


When considering the results of pairwise comparison by LSD on entrepreneurs’ opinion toward entrepreneurs’ business success classified by business duration, the finding indicated that, firstly, the mean score of entrepreneurs in the business with investment capital of 5-10 million baht and 51-100 million baht is higher than the business with investment capital of lower that 5 million baht. Secondly, the mean score

of entrepreneurs in the business with investment capital of 51-100 million baht is higher than the business with investment capital of 11-50 million baht. Lastly, the mean score of entrepreneurs in the business with investment capital of 51-100 million baht is higher than the business with investment capital of 200 million baht above.


Hypothesis 2: Business strategies have an influence on business success (business growth and satisfaction).Stepwise multiple regression analysis had been employed to predict the business success in terms of business growth and satisfaction by using

confidence level as of 95%. The hypothesis would be accepted when p value is lower than 0.05. Hypothesis 2.1: Business strategies have an influence on business success in terms of business growth.

Table 9 The result of stepwise multiple regression analysis between business strategies and business success in terms of business growth.

VariablesUnstandardizedCoefficients

StandardizedCoefficients t p

Beta Std.Error Beta

(Constant) 1.882 0.235 8.021 0.000*

Innovation strategy (X3) 0.127 0.055 0.129 2.309 0.021*

Business alliance strategy (X4) 0.127 0.054 0.124 2.361 0.019*

Customer focus strategy (X5) 0.180 0.057 0.169 3.158 0.002*

R = 0.407; R2 = 0.166; Adjusted R2 = 0.199; S.E.E. = 0.579

From the table, the finding indicated that the business strategies have an influence on business success in terms of business growth at the significance level as of .05; multiple correlation coefficients as of 0.407 and adjusted R square as of 0.199, indicating that the model can predict the business success as of 19.90 percent. When considering each variable, the result indicated that innovation strategy, business alliance strategy and customer focus strategy have p value as of


0.05. Therefore, the hypothesis was accepted. The model of prediction can be drawn as follows.

Y1

= a+b3X

3+b

4X

4 +b

5X

5

or can be replaced as

Y1

= 1.882+0.127X3+0.127X

4+0.180X

5

Hypothesis 2.2: Business strategies have an influence on business success in terms of satisfaction.

Table 10 The result of stepwise multiple regression analysis between business strategies and business success in terms of satisfaction.

variablesUnstandardizedCoefficients

StandardizedCoefficients t p

Beta Std.Error Beta

(Constant) 2.515 0.212 - 11.881 0.000*

Business alliance strategy (X4) 0.149 0.047 0.160 3.151 0.002*

Customer focus strategy (X5) 0.156 0.049 0.160 3.157 0.002*

R = 0.409; R2 = 0.167; Adjusted R2 = 0.162; S.E.E. = 0.540


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From the table, the finding indicated that the business strategies have an influence on business success in terms of satisfaction at the significance level as of .05; multiple correlation coefficients as of 0.409 and adjusted R square as of 0.162, indicating that the model can predict the business success as of 16.20 percent. When considering each variables, the result indicated that business alliance strategy and customer focus strategy have p value as of 0.05. Therefore, the hypothesis was accepted. The model of prediction can be drawn as follows.

Y2

= a+b4X

4+b

5X

5

orcan be replaced as

Y2

= 2.515+0.149X4+0.156X

5

results regarding correspondents’ opinions

and recommendation

From the data collection regarding the entrepreneurs’ opinions, the results indicated that doing business encounters with risks and high competition. Thus, there should be the studies related to the marketing before launching the business. Not only having marketing research conduction, the entrepreneurs should have well selected and trained the staff by using new technology enhancing their strength to compete with other competitors. In addition, new strategies in doing business are also important because it would help the business success. These business strategies include having a good plan in order to reduce the possible risks interrupting the business operation. The entrepreneurs who are successful suggested that doing SMEs business needs time to prove the success. The business itself should jump into the business immediately because jumping needs more funds and investment. In addition, cost of production and customers’ satisfaction are very crucial in SMEs too.The business should supply the right product and service to the customers on time and quickly, and network and make business alliances in order to increase the distribution channels. Alliance in business

now is very desirable; it could make the business reduces the time to find the income customers.The lack of labors, uncertainty of country economy and politic situation and economy depression can also severely have a negative impact on doing SMEs.

Discussion

Study of business strategies and success of the small and medium enterprises in Bangkok and its vicinitiesInterestingly, the study indicated that overall business strategies were rated in high level. When considering each strategy, customer relationship, low cost strategy and business alliance strategy were also rated at high level, respectively. This study result is corresponding with the study taken by Siriyong (2012) studying about strategies used in small and medium enterprises of Thailand to increase SEMs’ competition potentials. The findings indicated that strategies used in SMEs have included customer relationship, low cost strategy and business alliance strategy. In terms of business success, the overall score was rated at high level. After considering each aspect, business growth and satisfaction were rated in high level, orderly. This result matches with Wangbenmad and Bindulem (2014) studying about the key success factors for small and medium enterprises in Muang Hadyai, Songkhla Province by collecting data from 280 enterprises by survey questionnaire. The results indicated that all business success aspects including customer’s satisfaction and business security, which were similar to the variables in this study, were rated at high level. Different general business characteristics (business type, business model, business duration, investment capital and location) have entrepreneur’s success degree differentlyDifferent general business characteristics (business type, business model, business duration, investment capital and location) have entrepreneur’s success degree differently. It is corresponding the study finding by Promkhun (2007) studying about factors that affecting the strategic operation of ready-to-wear clothes exporters and the results indicated that


basic factors covering business size, industry size, location and business model had not had effects on the business growth of ready-to-wear clothes meanwhile general information of samples in the aspects of business group, business duration, investment capital and numbers of employees had an impact on small and medium enterprises differently. This can be vivid evidence that the entrepreneurs who are willing to be successful are necessary to consider the business types that they are operating and its tendency because SMEs can exist in the market easily (Theeravanich, 2001) and at the same time also disappears easily. The reason may be about the problems regarding human power, investment fund and cost of business operation that are also increasing continually (Rumakom, 1997). In addition. Business duration, period in doing business, was also very crucial for business operation. The study done by Sukhothai Thammathirat Open University(2006) revealed that the success factors of small and medium enterprises is practices and experiences in doing the business which it can mean that the more the entrepreneurs do the business, the possible the business is success. Business strategies have an influence on business success (business growth and satisfaction) The study results indicated that innovation strategy, business alliance strategy and customer focus strategy can be brought to predict the business success of entrepreneurs in terms of business growth meanwhile the business alliance strategy and customer focus strategy can be employed to predict the business success of entrepreneurs in terms of satisfaction. Jedewong, Suksakul, Ruengwittayaporn & Kinjan(2006), who studied about desired entrepreneur’s characteristics of small and medium enterprises in Phetchabun Province, found that SMEs entrepreneurs, who are successful in operating SMEs in Phetchabun Province, put importance in innovation strategy, customer responsiveness, higher quality and higher efficiency. It is corresponding to the study done by Yimsook (2009), studying the relationships between entrepreneurial characteristics and small business entrepreneur’s success: a case study of plants decorating business in Ongkharak

District, Nakhon Nayok Province, indicated that the entrepreneurs’ characteristics in terms of innovation thinking had positive effect on entrepreneur’s success. In addition, this study finding also matched with the study conducted by Promkhun (2007), studying about factors affecting operation by strategy and relationship of operational strategies with the growth of selected companies engaged in the ready-to-wear clothes export business. Her study revealed that customer focus, customer relationship, low cost strategy and business alliance have an influence on business growth according to the strategic plan of exporter’s ready-to-wear clothes and also matched with the study done by Siriyong (2012),studying about Thai SME formation and business strategy: a case study of the 4 finalists on TV program “SME Tee Tak” the best SME of 2011. Her study revealed that successful entrepreneurs employed customer focus strategy as a prioritized strategy and then focused on customer responsiveness and customer relationship. In relations of customer focus strategy, the entrepreneurs concentrated on production and service provision and focused on targeted group of customers. In addition, the entrepreneurs also modernized the products and use power of word-of-mouth promotion to promote the products.

recommendations

During the economic recession, the competition in small and medium enterprises is high. The entrepreneurs should do market researches in order to establish the strategies, especially innovation, alliance and customer focus. Firstly, innovation strategy can create new and modern products and service for the business. Secondly, alliance strategy can establish the power to negotiate with the customers and create the more channels to distribute the products and services. Lastly, customer focus strategy can help satisfy the customers because the entrepreneurs can provide the right products and services to the customers. With these strategies, SMEs entrepreneurs can then enhance their potentials to compete with the other competitors in the market and be finally successful.


further study

1. Opening ASEAN community in 2558, there will be SMEs in both domestic and international markets. Thus, there should be a study regarding to the SMEs strategies by having business alliance in ASEAN community. 2. Since the growth of information technology, many organizations have implemented the information technology and Internet, such as E-commerce, in doing the business. With that, there should be a study related to business strategies of SMEs in digital era.

references

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Jedewong, S., Suksakul, C., Ruengwittayaporn, N., & Kinjan, A. (2006). Desired Entrepreneur’s Characteristics of Small and Medium Enterprises in PetchboonProvince. Phetchabun: Faculty of Management, PhetchabunRajabhat University.

Lertnaisat, R. (2004). Practical Manual: Strategic Planning. Bangkok: Technology Promotion Association (Thailand-Japan).

Luecke, R., & Collis, D. J. (2008). Strategies: Creation and Implementation, (6th ed.) [Strategy : Creating and Implementing] (JakTingsapatip, Transla-tor). Bangkok :ExpernetBooks. (Origin, 2005)

Office of Small and Medium Enterprise Promotion. (2016). Report of Situation of Small and Medium Enterprise – Year 2016. Retrieved from http://www.sme.go.th/th/index.php/data-alert/alert/report-smes-year/report-year/report-year-2559.

Porter, M. E., & Ollins, J. C. (2010). Strategies. [HBR,s Must Reads: On Strategy] (Sintakarnpo. N., translator). Bangkok: ExpernetBooks. (Origin, 2010)

Ministry of Commerce. (2002). Regulations Related to Wage and Salary and Permanent Asset of Small and Medium Enterprises 2002. Retrieved from http://law.longdo.com/law/625/sub43745

Nawikan, S. (2000). Strategic Management and Business Policy, (5th ed.) Bangkok: Bhannakij Publishing.

Piyawongwattana, P. (2012). Strategic Management: Technology and Innovation. Bangkok: Chulalongkorn University

Promkhun, J. (2007). Factors Affecting Operation byStrategy and Relationship of Operational Strategies with the Growth of Selected Companies Engaged in the Ready to Wear Export Business. Thesis of master’s degree, RajamangalaUniversity of Technology Thanyaburi.

Rumakom, P. (1997). Small Business Management, (5th ed.). Bangkok: Physics Center Press LTD.,Part.

Sharma, G. (2011). Do SMEs need to strategize? Business Strategy Series, 12(4), 186 –194.

Silpcharu, T. (2005). Research and Data Analysis by SPSS (3rd ed.).Bangkok: V InterPrint.

Siriyong, D. (2012). Thai SME Formation and Business Strategy: A Case Study of the 4 Finalists onTV Program “SME Tee Tak” The Best SME of 2011. Master’s degree in MBA, Department of Entrepreneurship, Gradate School, Silapakorn University.

Srijumpa, R. (2009). Marketing Strategies for Survival. Retrieved from http://nanosoft.co.th/maktip54.htm.

SukhothaiThammathirat Open University. (2006). Teaching Material: Human Resource Manage-ment. (11th ed.). Nontaburi: SukhothaiTham-mathirat Open University.

Sutthison, R., Chaowakeeratiphong, T., & Wongnaya, S. (2015). Strategy Development for Small Business Operation of Entrepreneur in KamphaengPhet Province.Social Sciences Research and Academic Journal. Retrieved from file:///C:/Users/Suraporn%20Onputtha Downloads/37716-85695-3-PB%20(2).pdf.


Tantayanon, R. (2010). Strategies Technology and Innovation. Retrieved from http://www.bangkokbiznews.com/home/detail/business/ceo-blogs/rewat/20100614/337515/กลยุทธ์ด้าน-เทคโนโลยี--และ-นวัตกรรม.html.

Theeravanich, A. (2001). Small Enterprise Management. Bangkok: Kasetsart University.

Wangbenmad, C., & Bindulem, T. (2014). The Key Success Factors for Small and Medium Enterprises in MuangHadyai, Songkha Province. Journal of Management Science SuratthaniRajabhat University. Retrieved from http://e-journal.sru.ac.th/index.php/msj/article/view/196

Yimsook, N. (2009). The Relationships between Entrepreneurial Characteristics and Small Business Entrepreneur’s Success: A Case Study of Plants Decorating Business in Ongkharak District, NakhonNayok Province. Master’s degree in Liberal Arts, majoring in Industrial and Organizational Psychology, Faculty of Liberal Arts, Thammasat University.

THe effeCT of ServiCe marKeTinG miX faCTorS on DeCiSion

maKinG To CHooSe a nurSery of ParenTS in meaunG

CHonburi DiSTriCT, CHonburi ProvinCe

Angkanita Muangput 1*, Sarunya Lertputtarak1*, Wilailuk Khamloy1*

1Graduate School of Commerce, Burapha University, Chon Buri 20131, Thailand

abSTraCT

The present study aims to examine the effect of service marketing mix factors on decision making to choose a nursing home of parents in Meaung Chonburi District, Chonburi Province. Sample group was 400 parents who used a nursing home in Meaung Chonburi District, Chonburi Province. A questionnaire was an instrument in this study. The content in the questionnaire consisted of personal factors, the importance of marketing mix in decision to choose a nursing home, and decision making process to choose a nursing home. The data analysis was conducted by using SPSS for Windows. Descriptive statistics, i.e. frequency, percentage, average, and standard deviation; meanwhile, inferential statistics analyzed in this study was Multiple Regression Analysis.The findings revealed that the service marketing mix factor, product, servicing process and physical evidence found the effect on decision making to choose a nursing home of parents in Meaung Chonburi District, Chonburi Province at the significant level of 0.01.

Keywords: Marketing mix factors, nursery, Chonburi

*Author e-mail address: [email protected]; [email protected]; [email protected]



background and significance of the problem

Family institutions are considered to be the foundation of a society which molds and nurtures a family member, from a child to have a strong foundation ready to face the outside world and to be a quality person. Nevertheless, today the social and economic environment of Thailand has changed. At present, family members, both husband and wife are required to work and have job for which they are responsible to help generate income and stability for families. In addition, after the marriage, the family was separated into a nuclear family whose members are father, mother and children. Most of the children have been looked after by other people since childhood. Families may not be able to do the same duty as before because of their nuclear family. 20.52 million households were the total number of households in the country, and the 65.98 million people was the total population. In some families, there are only husband and wife. In other families, there are a husband, a wife and children. It was found that there were one third (34.9%) families with a husband, a wife and their children in the2002. However, there are one quarter (27.5%) families with a husband, a wife and their children. in 2012. This showed that the number of the families with the husband, wife and children has decreased. The proportion of families living with spouses increased from 13.3% in 2002 to 15.7% in 2012, and this information is consistent with data from the families with grandparents and grandchildren, and they have tendency to increase to 29.9% in 2002 (National statistics office, 2010)Currently, there are about 3.8 million children in early childhood from newborn babies to 5-year- old children. The economic and family characteristics of a nuclear family make it impossible for parents to provide full care for their children, especially the families in urban societies whose characteristic is a large number of nuclear-families. This has changed a form of childcare according to the current environment. Parents turn to hiring other people to take care of their children, such as using the service from nursery or hiring a babysitter. (National Statistics Office, 2010).

Parents expect their children to be good people, have a good future and good education, but they have no time for their children because they have to work and to earn money for the family. Then, they send their children to a day nursery with the idea that they can take good care of them. If a day nursery is good, it is a good thing because children are given the skills to live with others, and they are developed and prepared for kindergarten and continuing education. However, if the parents sent their child to the unqualified center, there would be the problem later. If babysitters did not take good care of the children, and there were a lot of children in the same place, there would be health problems such as infection problem. If the day nursery did not have standard care, the children might experience an accident. Most importantly, the child will suffer from lack of warmth because the staff of nursery school cannot give thorough care. Chonburi is a coastal city, seaport in ocean freight, and also a home to many large industrial estates. The province is divided into 11 districts, 92 sub-districts, 687 villages. Local administrative organization consists of provincial administrative organization, 2 municipalities which are Laem Chabang City Municipality and Chao Phraya Surasak City Municipality, 9 town municipalities, 29 sub-district municipalities, 56 sub-district administrative organizations and one special form of government, Mueang Pattaya, separated by the administration of Banglamung district because it is an international tourist destination with the rapid growth. There are 11 districts of Chonburi which are Mueang Chon Buri, Phanat Nikhom District, Phan Thong District, Banbueng District, Sriracha District, Ko Chan District, Bo Thong District, Nong Yai District, Bang Lamung District, Sattahip District and Koh Si Chang District. The population of Chonburi based on the registration certificates on December 31, 2014, the Central Registry of the Department of Interior, Ministry of Interior amounted to 1,421,425, consisting of 696,038 males and 725,387 females (Chonburi Provincial Office for Local Administrative, 2015)According to the 2010 Census of Chonburi Province, it was found that the majority, 74.5% of


the population, lived in the municipality, and the remaining, 25.5 %, lived outside the municipality Compared by the district, Mueang Chonburi had the largest population of 352,301 or 22.7%, followed by Banglamung district with 335,415 people or 21.6%, Sriracha district with 332,984 people or 21.4%. For Ko Si Chang, the least populated area, there were 3,113 people, or 0.2 percent. The total number of households in Chonburi is 599,735, and 597,249 were individual households, and 2,486 were group households (Workers’ Households, institutional households). The average size of individual households was 2.5 persons and 33.2% of the households had female head (National Statistical Office, 2010). Because Chonburi Province is one of the eastern provinces and is an industrial in-vestment source, the large industrial estates have emerged. This affects the influx of people entering the industrial estate. The population has flowed into the industrial estates and had their families. This makes the very good economy in the industrial estate. Business is growing and nursery schools are growing too (Chonburi Provincial Administrative Offices, 2015).At present, there is the increase of the day nurseries in Chonburi. However, when comparing with the needs of parents, the researcher found that they do not satisfy the demand for this business. There are 82 nurseries in Chonburi, and the details are as follows:

1. Amphoe Mueang Chon Buri has 27 nurseries.2. Districts of Banglamung has 12 nurseries.3. Banbueng District has 3 nurseries.4. District of Phanat Nikhom has 2 nurseries..5. Phan Thong District has 1 nursery.6. Amphoe Sriracha has 34 nurseries.7. Sattahip District has 3 nurseries. (Department of Social Development Welfare, Ministry of Social Development and Human Security, 2015)Therefore, the researcher is aware of the importance of factors affecting decision-making of parents living in the district in Chonburi Province. This study focuses on the strategic factors of nursery marketing that affect parents’ decision to use nursery services. This study also promotes and takes the advantage of the marketing strategy and develops the nursery to meet the needs of parents.

research objectives

To study the influence of the emphasis on marketing mix on the parent’s decision-making process of choosing a day nursery in Amphur Mueang, Chonburi Province.

Hypothesis of research

The service marketing mix factors influenced the parent’s decision-making process of choosing a nursery in Mueang District. Chonburi province.

Service marketing mix (7Ps)Products and services Price suitability Place Promotion PeoplePhysical EvidenceProcess(Saengsuwan et al., 2004; Kotler, 2012; Lovelock & Wirtz, 2010)

The decision-making process of using parents’ day care services in Mueang District Chonburi provincePerception needsSearchAlternative assessmentDecision makingBehavior after using the service(Blackwell, 2006).

independent variables Dependent variables

research framework


Theory of Strategy/ Service marketing mix

In previous theory, there were four main service marketing mix factors: product, price, distribution channels (place), and marketing promotion. Later, in the service marketing mix, three areas were added to suit the business. They are process, service personnel, and the creation and presentation of physical characteristics. Therefore, there are 7 service marketing mix factors:1. Product: Child Development Center is a semi-service business. Therefore, the products of the child development center are tangible materials such as teaching aids, bedding, food; and non-tangible things, such as teaching activities, cleanliness, caring of teachers for students (Kotler, 2012).2. Price: price refers to the tuition fee or service charge. Pricing must take target market segments or people who are likely to send their children to nurseries into account (Saengsuwan et al., 2004).3. Place: place means building, location and environment. It must be located in a safe, non-polluting, hygienic area. Space for playgrounds is allocated with suit-able and safe rides.4. Marketing Promotion: Promotion means the channel to present goods and services that can attract customers to purchase the products and services offered. It also includes promotions to encourage purchases (Lovelock & Wirtz, 2010).5. The process of service: Process means the convenience and speed that customers will receive from each purchase (Lovelock & Wirtz, 2010), which will bring the impression on goods and services (Saengsuwan et al. For the nursery, the entrepreneur should pay special attention to the quality of service and primarily take the safety of children into account.6. Personnel: Personnel refer to all people of a day nursery, ranging from cleaners and teachers who need to be skilled and able to take care of young children. They must have sacrifice and pay close attention to the children (Saengsuwan et al., 2004).7. Physical evidence and presentation: Physical evidence refers to the quality of service through the use of visible evidence, such as the creation of a clean, neat and pleasant nursery environment with

gated entrance and clean classrooms (Lovelock & Wirtz, 2010).

The process of buying decision (buying

decision process)

Blackwell, (2006) discusses consumer buying decision process as a process of consumer buying. 5 steps of buying process are as follows.1. Need recognition or problem recognition before making a purchase: Consumers must be motivated to purchase the product or service by realizing their problem or the need for having or using the goods and services.2. Search for information: When consumers want to buy any services, consumers will try to find information about the products or services through various channels such as from friends, relatives, salespeople, television sites, or even try the sample to get information about the products or the service for purchasing decision.3. Pre-purchase evaluation of alternatives: Once the information is satisfactory, consumers will use the derived information to evaluate the alternatives to use or purchase the products or services. It is estimated by quality, brand, price, service, distribution channel, etc. Consumers may evaluate the products which are expensive in details. However, some products may not be evaluated at all because they are inexpensive or they have used the product before and see that they are good, resulting in repeat purchases.4. Purchase decision: When consumers evaluate goods and know the best product, consumers will make a purchase. Marketers need to study what motivates consumers to buy products and services so that they can properly plan marketing.5. Post-purchase behavior: It is the behavior after consumers have used the product or services. They may be satisfied or dissatisfied. If they are satisfied, they purchase repeatedly. If they are not satisfied, they will search information again and buy another brand of products.

related research

Ratanadechapitak (2009) studied on service


marketing mix factors affecting parents’ decision to choose private nursery in Muang Chiang Mai. The results showed that the aspect of physical evidence factor that had the highest average was a fence to enclose the area. The aspect of process factor that had the highest average was record and evaluation for growth, behavior and development of children in all age groups. For example, they record children’s physical, mental, emotional, social attributes in every six months. The aspect of product that had the highest average was teaching activities that were consistent with the development of children. These results were consistent with another researcher’s study.Sutthisarn (2010) whose research title was “Demand for Nursery in Khlong Luang District Pathum Thani Province suggested that most parents who worked from home also had need to have a nursery school take care of their children after school hours because they sometimes had to run an errand. This type of service would influence parent’s decision-making to choose the nursery school.

methodology

In conducting research whose title was Service marketing mix factors influencing the decision-making process in the selection of nursery services of parents in Muang District Chonburi Province. the researcher studied, and collected information with survey research, in which the researcher had to invent a questionnaire with the choice of answers and open- ended questions so that the respondents were free to give comments. In addition, the researcher used statistical methods to verify the hypothesis. The samples used in this study were parents who used services from 27 nurseries in Mueang District, Chonburi Province. The sample size could be calculated by using the formula of

Moser and Kalton (1972) for unknown number of consumers. The confidence was determined at 95% , and error of estimation was not more than 5%. The sample size was n = 384.16. or 385 people and to prevent errors from incomplete survey responses the researcher then added 15 additional samples, so the total was 400 samples.Statistics used in research.Multiple linear regression analysis was used to test for autocorrelation by the test method of Durbin-Watson statistics. The statistical value was determined between 1.50 and 2.50 (Prabaripai, 2004). There was also the test of the correlation between independent variables (Durbin-Watson Testing multicollinearity) by considering the value of Tolerance. If Tolerance was greater than 0.1, this showed that the independent variables did not correlate each other (Menard, 1995). By considering the Variance Inflation factor (VIF), the researcher found that if the VIF value was less than 10, it showed that the independent variables did not correlate (Myers, 1995).

research results

Summary of hypothesis testing resultsHypotheses : Service marketing mixes influence par-ents’ decision-making process of using day nursery in Mueang Distric, Chonburi Province.H

0: Service marketing mix factors influencing parents’

decision making process of day nursery in Mueang District, Chonburi are not different.H

1: Service marketing mix factors influence parents’

decision making process of day nursery service in Mueang District, Chonburi Province are different.The results of the research showed that service marketing mix factors: product, process of services, and physical evidence had significant effects on decision making at the 0.05 significant level, as shown in the table.


Table 1 Multiple iinear regression analysis used for the test of the relationship between service market mix factors and parents’ decision-making process of day nursery service in Mueang District. Chonburi Province.

ModelUnstandardized Coefficients

Standardized Coefficients t Sig. Tolerance VIF

B Std. Error Beta

Constant 1.045 0.200 5.215 0.000**

x1

0.169 0.069 0.146 2.449 0.015* 0.418 2.392

x2

0.060 0.048 0.065 1.264 0.207 0.572 1.748

x3

0.019 0.050 0.022 0.389 0.697 0.487 2.054

x4

-0.039 0.045 -0.041 -0.869 0.385 0.687 1.456

x5

0.029 0.057 0.033 0.514 0.608 0.368 2.715

x6

0.378 0.061 0.398 6.225 0.000** 0.364 2.744

x7

0.119 0.057 0.118 2.112 0.035* 0.481 2.080

R 0.645

R2 0.416

Adjust R2 0.405

F-ratio 39.82 (0.000**)

The dependent variable is decision making.

*p-value < 0.05**p-value < 0.01

Table 1 showed that the F statistic test revealed that the p-value = 0.000, which was less than the significance level of 0.01.This showed that at least one marketing mix could predict the variance of the dependent variable which was decision making to use day nursery. The results of the t-test with

the multiple regression analysis showed that the market mix factors : product, service process and physical aspect influence the decision-making at the significance level of 0.05. Thus, the equation can be expressed as follows.


From table 2 the results of the F test showed that the p-value = 0.000, which was less than the significance level of 0.01. This revealed that at least one marketing mix could predict the variance of the dependent variable that was decision making to use the service for a day nursery in Mueang District, Chonburi Province. The results of the t-test with multiple regression analysis revealed that the marketing mix influenced the parents’ decision-making process in assessing the choice of nursery care in Mueang District, Chonburi Province. The results are as follows:. Unstandardized Y = 1.062 + 0.195X

1 **+ 0.406X

6**

+ 0.132X7*

Standardized Y = 0.169X1 **+ 0.429 X

6**

+ 0.131X7*

These equations showed that there was sufficient information to reject the null hypothesis H

0 at 0.05

significance level. There were at least three marketing mix factors affect the decision-making process of

parents in selecting nursery services in Mueang District, Chonburi Province.

Discussion of the results of the research.

The results of the test of hypothesis revealed that marketing factors influenced the parent’s decision-making process of choosing a day nursery in Mueang District. Chonburi Province. It was also found that the product mix market, the process of service and physical evidence had a significant effect on decision making at 0.05significance level due to the fact that all parents cared about their children. These factors include: 1) product factors such as learning activities that enhance the child’s appropriate development, and suitable and diverse instructional media and after school daycare in case parents have to run an errand or have to pick up their child late. Therefore, day nursery might have service to take care of the children on weekends or public holidays, 2) process factors such as convenient and fast enrollment, payment for tuition fees and provision of contact details. Moreover, the nursery was managed with the

Table 2 Relationship analysis using multiple linear regression (Enter Multiple linear regression analysis) to see the relationship between marketing factors :products, service process and physical evidence and decision-making aspect

ModelUnstandardized coefficients

Standardized coefficients t p-value Tolerance VIF

B Std. Error Beta

Constant 1.062 0.189 5.613 0.000**

Product (X1)

Process of service (X6)

Physical evidence (X7)

0.1950.4060.132

0.0640.0490.052

0.1690.4290.131

3.0538.2762.533

0.002**0.000**0.012*

0.4870.5540.559

2.0511.8061.788

RR2

Adjusted R2

0.6420.4120.407

F-ratio 92.321 (sig = 0.000)

Durbin-Watson 1.736

The dependent variable is decision making.

*p-value < 0.05**p-value < 0.01


standard of Department of Health. There should be shuttle services with the standard of the Department of Transport, and 3) Physical factors , for example the nursery was spacious, shady, ventilated, and secure with fence enclosing the area and clean and beautiful classrooms. There was adequate lighting and ventilation in the classroom, bedroom, canteen, first-aid room, and bathroom. The furniture such as desks and chairs was in good condition. The clothes and bedding were clean and tidy, and the place was well-ventilated, well-spaced, well-defined area of the classroom, bedroom, dining room, and bathroom. The results were consistent with Rattanadeepitak’s research (2009), entitled “Decision of Parents in Choosing Private Nursery in Amphoe Mueang, Chiang Mai”. The results showed that the aspect of physical evidence factor which had the highest average was fence enclosing the area. The aspect of process factor that had the highest average was record and evaluation for growth, behavior and development of children in all 4 areas, namely physical, intelligence, mental or emotional, and social attributes. For example, they record children’s physical, mental, emotional, social attributes in every six months. The aspect of product that had the highest average was teaching activities. These results were consistent with another researcher’s study entitled “Demand for Nursery in Khlong Luang District Pathum Thani Province”. In the study, it was found that most parents who worked from home still had a need for after-school childcare service, which would influence their decision-making.

research recommendations

Based on the research entitled “The Effect of Marketing Mix Factors on Parents’ Decision to Choose a Nursery in Mueang District, Chonburi Province”, the researcher has given the following recommendations:1. Policy recommendations From the study entitled “The Effect of Marketing Mix Factors on Parents’ Decision to Choose a Nursery in Mueang District, Chonburi Province”, it was found that marketing mix factors in product, service process and the physical evidence influence decision-making. Therefore, there must be a focus on

development of these service marketing mix factors.2. Actions are suggested as follows: 2.1 Improvement of the marketing mix factor in the service process. 2.1.1 Education, curriculum, personnel, teachers, and caregivers should be enhanced to meet the standards to support the opening of ASEAN community. For example, there should be cooperation with the public sector in the training, or the nursery school should send the staff to attend training with the public and other private sectors. 2.1.2 The quality of staff’s operations and services should be improved with the distribution of a questionnaire so parents or nursery users can evaluate the operation of the nursery and the services of the staff of the nursery. 2.1.3 More resources and database of childcare information should be provided for parents to have a fast and convenient access. This supports the haste of the society of people who worked outside. The information can be provided by creating electronic pages, Facebook, Instagram, and other media to facilitate the access to nursery information. 2.1.4 Channels for payment of tuition fees should be added and there should be various ways to facilitate parents by using bank channels and other various systems. 2.1.5 There should be more shuttle busses to pick up children and they should have standard specified by the Department of Transport. In addition, a teacher or a caretaker should be appointed to assist children while traveling to and from the nursery school to ensure parents for the safety and to relieve parents’ worries. 2.2 Improvement of Marketing Mix Factors 2.2.1 Location should be managed to be appropriate and diverse to enhance the learning environment for children, such as playgrounds, gardens and equipment in the classroom to make children more interested in learning. 2.2.2. The nursery should be improved and maintained to be a safe, hygienic, clean and


shady place with good ventilation for children. 2.3 Improvement of marketing mix. 2.3.1 A plan of instructional management should be developed to focus on developing skills in areas such as language, computer, music, art, and there should be diverse activities to support children of different ages. 2.3.2 Extra services should be provided for the childcare after school, or on Saturday or Sunday to support in case parents have to run an errand or work overtime on weekends or on holidays. It was also found that most parents work for a private company. . Improvement in this area can be an option for parents. 2.3.3 There should be a proper registration of nurseries in accordance with the Office of Social Development and Welfare. In addition, the nursery should have a certificate and it should be assessed and verified annually to guarantee that the nursery is efficient.

Suggestions for the further research

Based on the results of the research, the researcher gave the following suggestion for further research:1. The researcher collected only information on the nursery in Mueang District, Chonburi Province In the next research, there may be research in other districts, such as Sriracha, Panthong, which are important economic sources with a lot of registered nurseries.2. More qualitative research should also be done. Therefore the results can give good supplement to the findings. This can be done by interviewing nursery entrepreneurs about their business management, so that the information can be beneficial to improve the nursery more appropriately.3. The demand and supply quantity should be studied to see whether the number of nurseries is enough for the demand in Mueang District, Chonburi Province4. The guidelines for early childhood education should be studied in order to develop nurseries in Chonburi Province.

refferences

Blackwell, R. D., Miniard, P. W., & Engel, J. F. (2006). Consumer Behavior (10th ed.). Australia: Thomson South-Western.

Chonburi Provincial Office for Local Administrative. (2015). Chonburi Provincial Administrative District. Retrieved from http://chonburilocal.go.th/public/history/data/index/menu/22

Department of Social Development, Welfare Ministry of Social Development and Human Security. (2015). Private Nursery and Childcare. Retrieved from Http://www.google/61.19.238.233/nusery/content/search.aspx.

Moser, C. A., & Kalton, G. (1972). Servey Method in Social Investigation. New York: Basic.

Prabaripai, A. (2004). Statistical Analyses Using SPSS. Bangkok: Krasetsart University.

Saengsuwan, T. et al. (2004). Marketing Management. Bangkok: Pearson.

Ratanadecahpitak, N. (2009). Service Marketing Mix Factors Influencing Parents’ Decision to Choose a Private Daycare in Mueang District,Chiang Mai. Master of Business Administration, Marketing, Graduate School, Chiang Mai University

National Statistical Office. (2010). 2010 Census. Retrieved from http: // www.nso.go.th.

Sutthisarn, O. (2010). Demand for Nursery in Khlong Luang District Pathum Thani Province. Dissertation of Master of Economics, Department of Management Economics, Srinakharinwirot University.

Kotler, K. (2012). Marketing Management. Boston: Pearson.

Lovelock, C., & Wirtz, J. (2010). Service Marketing: People, Technology, Strategy (6th ed.). USA: Pearson Prentice Hall.

Menard, S. (1995). Applied Logistic Regression Analysis. Thousand Oaks: Department of Socail Sciences, Sag University.

Myers, T. A. (1995). An Analysis of Perceived Customer Contact Service Quality in the Public Sector. Dissertation Abstracts International, 51(4). 1385-A.

THe STuDy of relaTionSHiP beTween THe level of SuSTainabiliTy

rePorT DiSCloSure anD SeCuriTy PriCeS of liSTeD

ComPanieS in THe SToCK eXCHanGe of THailanD.

Sumalee Hodkum1*, Sakchai Chanruang1*

1Graduate School of Commerce Burapha University, Chon Buri 20131, Thailand

abSTraCT

The research’s objectives were to study the relationship between the level of sustainability report disclosure and the security prices of listed companies in the Stock Exchange of Thailand, and to study the relationship between the level of sustainability report disclosure and the security prices of each industry of listed companies in the Stock Exchange of Thailand. Data were collected from 489 companies listed in the Stock Exchange of Thailand in 8 industries during A.D. 2012 - 2014. Statistics used included simple linear regression analysis and multiple regression analysis.This research’s findings reveal that the level of sustainability report disclosure is positively related to the security prices of listed companies in the Stock Exchange of Thailand. Furthermore, 1) the level of sustainability report disclosure regarding economics is positively related to the security prices, 2) the level of sustainability report disclosure regarding social is not related to the security prices, and 3) the level of sustainability report disclosure regarding environment is not related to the security prices.

Keywords: Sustainability report, security prices

Author e-mail address: [email protected]; [email protected]



background and significance of the study

Sustainability has become a trend that all sections in the society paid attention to as for developing economic system, society, and environment sustainably and interchangeably. Such trend is a direction which many countries in the world agreed to use as a frame to develop their organizations and countries (Anakoon, 2015). Listed companies in the Stock Exchange of Thailand is one of an important part to drive national economic system. The Stock Exchange of Thailand encouraged listed companies to operate with sustainability and responded to needs of investors.Report of sustainability is an economic tool for social communication. It is a way to promote the organization and to strengthen the trustworthiness and image of the organization. The sustainability becomes a part of businesses, organizations, and activities in the world. The present study aims to examine the relationship between the level of sustainability report disclosure and security prices of listed companies in the Stock Exchange of Thailand. Tobin’s Q concept was

utilized to study the relationship, and to reveal business value and market value measurement. It also investigated the positive and negative effects of sustainability report disclosure in economic, social, and environmental aspects on business value and its cause. The level of disclosure was studied to help stakeholders to make decision.

objectives

1. To examine level of sustainability report disclosure of listed companies in the Stock Exchange of Thailand2. To investigate relationship between sustainability report disclosure and security prices of listed companies in the Stock Exchange of Thailand

Hypotheses

1. Level of economic sustainability report disclosure has a positive relationship with security prices2. Level of social sustainability report disclosure has a positive relationship with security prices3. Level of environmental sustainability report disclosure has a positive relationship with security prices

Conceptual framework

Level of sustainability report disclosureEconomicSocialEnvironmental

Control variables 1. Size of business 2. Return on Equity (ROE)3. Dividend Payout Ratio (DPR)4. Capital Structure (CS)(Tanasarnborisoot & Padungsit, 2012)

Security prices

Significance of the study

1. Listed companies can refer to the findings as for strategic adjustment and self-evaluation. The findings can also be applied in the organizations to have sustainable development2. Investors can get clear and correct information

about strategies and operations of the organizations before deciding to capital budget 3. The Stock Exchange of Thailand can refer to the findings as a base information for developing effective sustainability report disclosure


Scope of the study

The scope of this study was to study the relationship between level of sustainability report disclosure and security prices of listed companies in the Stock Exchange of Thailand. Report disclosed included annual report (Form 56-2), annual information form (Form 56-1), corporate social responsibility report, and sustainability report. An independent variable was the level of report disclosure, i.e. those reports disclosed to public. An dependent variable was the security prices (Tobin’s Q) and controlled variables included Size of Business, Return on Equity (ROE), Dividend Payout Ratio (DPR), and Capital Structure (CS).

Tobin’ Q concept

Tobin’s Q is a concept proposed by Professor James T. Tobin, a professor from Yale University who won Noble Prize in economics in 1981. Tobin’s Q was a measurement of operation integrated financial statement and market value calculated by dividing

market value of assets of organizations with replacement cost of such assets. The market value of those assets could measure the market value of stock of shareholders and liabilities. Professor Tobin believes that Tobin’s Q is a good measurement that could reveal value of the organization.

Tobin’s Q Formula

Tobin’s Q =

Sustainability report

Sustainability report is the disclosure of economic, social and environmental operations which provided to response to needs and to add the information found in annual report. The data could be positive or negative but for sustainable development. Sustainability report can be applied with Global Reporting Initiative (GRI) as a sustainability report of the organization for economic, social, and environmental aspects.

Market ValueReplacement cost

Figure 1 Sustainability dimensions

instruments

Instruments to collect data are as follows:1. Work sheets were used to collect data in accordance with variables specified in the annual report (Table 3-5)2. Checklist was the level of sustainability report disclosure referred to the checklist for annual information form (Form 56-1) and framework for GRI G4

3. Secondary source of data was the annual report (Form 56-2), the annual information form (Form 56-1), the corporate social responsibility report, and the sustainability report from year 2012 – 2014 of listed companies of the Stock Exchange of Thailand. The organization had specified details to be disclosed and to give analysis method. The details of the organization were not strictly required.

ECONOMIC

SUSTAINABILITY

SOCIAL

ENVIRONMENT


Each organization could describe their profiles differently. The evaluation was conducted by following level of GRI G4 sustainability report. Quantitative analysis was conducted by analyzing all data to find the relationship of between level of sustainability report disclosure and security prices of listed

companies in the Stock Exchange of Thailand.Descriptive analysis was to investigate the criteria, evaluation methods, and level of sustainability report disclosure.Statistics to analyze data included simple linear regression analysis and multiple regression analysis.

Type Calculation

Market value

Common stock Common stock value at the end of year

Preferred stock Dividend retrieved from return index of preferred stock

Liability Book value of current liability and non-current liability

Replacement cost

Building and materials Book value

Inventory Book value

Other assets Book value

Tobin’s Q = β0+β

1 (EP)+β

2(MP)+β

3(IEI)+β

4(PP)+β

5(PLDW)+

β6(HR)+β

7(S)+β

8(PR)+β

9(M)+β

10(E)+β

11(W)+β

12(B)+β

13(EM)+β

14(EW)+β

15

(P&S)+β16 (C)+β

17(T)+β

18(O)+β

19(SEA)+β

20(EGM)+β

21(SIZE)+β

22(ROE)

+β23(DPR)+β

24(CS)+e

model of the study

The researcher calculated Tobin’s Q from two concepts, i.e. Lindenberg and Ross (1981) and Chung and Pruitt (1994), since they were the most acceptable.

The formula was adjusted as follow. Tobin’s Q = Market Value

Replacement cost

Calculating Tobin’s Q

Table 1 Market value and replacement cost

Adjusted from concepts of Lindenberg and Ross (1981) and Chung and Pruitt (1994)

Table showing results

Table 2 Descriptive statistics of level of sustainability report disclosure based on sustainability Dimension (n = 1,467)

Sustainability dimensions MIN MAX SD X

Economic 0.06 1.00 0.19 0.22

Social 0.00 0.84 0.11 0.18

Environmental 0.00 0.93 0.12 0.11

Total 0.02 0.92 0.14 0.17


Discussions

The findings on the levels of sustainability report disclosure based on sustainability dimensions revealed that they were at the low level. The level of economic dimension was higher than others since economic data were necessarily revealed to public. The organizations commonly showed such information. Social dimension was the report about workforce and human right. It aims to create loyalty of

employees since the employees were important drivers of the organization. This dimension also revealed responsibility of the organization towards products as for building good relationship with customers and brand loyalty. The environmental dimension was found having the lowest level of sustainability report disclosure because of many reasons, e.g. companies did not do business harming environment, the effects were not able to count, the companies

Industry group Numbers MIN MAX SD X

Property and construction 91 0.03 0.89 0.12 0.16

Technology 38 0.03 0.34 0.07 0.14

Financials 60 0.02 0.54 0.09 0.29

Consumer products 40 0.03 0.42 0.09 0.16

Industrials 81 0.03 0.78 0.11 0.15

Agro and food industry 50 0.03 0.50 0.08 0.14

Resources 37 0.03 0.78 0.20 0.22

Services 92 0.01 0.39 0.06 0.13

Total 489 0.02 0.58 0.10 0.17

Table 3 Descriptive statistics of level of sustainability report disclosure based on industry group (n = 1,467)

Table 3 Results of regression analysis for relationship between level of sustainability report disclosure and security prices based on sustainability dimensions

Sustainabilitydimensions

Unstandardized(B) Standardized (β) Sig R Square Expected

(Constant) -68.005 0.001* 0.268

Economic 150.900 0.337 0.000* +

Social -96.030 -0.128 0.000* +

Environmental -44.612 -0.062 0.057** +

SIZE 7.362 0.092 0.001*

ROE 0.007 0.004 0.857

DPR -0.011 -0.009 0.728

CS 2.777 0.108 0.000*

R = 0.268 R Square = 0.072 F = 5.333

*Sig = 0.05 **Sig = 0.10


did not pay attention to this dimension, etc. The findings on the levels of sustainability report disclosure based on industry groups showed that the report disclosure were increasing. Unfortunately, the disclosures were at the low level. Average of index for all groups was about 17 percent. The group found having highest level of disclosure included financials, resources, property and construction, industrials, agro and food industry, technology, and services. Financials were crucial for national economic system as they provide working capital, support economic activities, and lead to expansion of economic. Bank of Thailand paid the most attention to economic dimension. For social dimension, financials needed work force who were proficient to drive business. Benefits and return were used to prevent corruption. The financials had little operations that have an environmental effect. Another industry group found to disclose at the high level was resources. This group dealt with nature and natural resources. The effects on environment were at the highest level. The group found the lowest level of disclosure was services. This group dealt with abstract units as for responding to needs (Satisfaction and expectation) of customers. Service provider business needs service-minded personnel. This group paid attention to professional development as the highest dimension being disclosed. The results on relationship between level of sustainability report disclosure and security prices of listed companies in the Stock Exchange of Thailand. 1. Level of sustainability report in economic dimension was found a positive relationship with security prices at the significance level of 0.05. The economic disclosure was required to report to public in annual report and annual information form (56-1) since the Stock Exchange of Thailand requested all listed companies to reveal this information. In addition, economic dimension was important factor affecting investing in securities. Economic problems can lead to other problems and affect investors psychologically Investors and stakeholders should be clear with economic report being making decision. The report showed expectation and risk to investors.According to the efficient market theory, when

stakeholders are aware of information disclosed to public, share prices may adjust. It could be inferred that when the level of sustainability report disclosure in economic dimension is high, enterprise value, i.e. security, increases. 2. Level of sustainability report disclosure in social dimension had no relationship with security prices. The social dimension is to reveal interaction between employers and employees, variety of social factors, methods and evaluation to manage effects derived from operations and communication of organizations to stakeholders, policy and responsibility to the goods, products, and services (Guideline for Sustainability Report, year). As a social disclosure, corporate social responsibility (CSR) seriously started in 2006 and it was included in business administration as for leading the sustainability of the organization The disclosure is considered as showing responsibility to employees, community, corruption, and customers. Although such disclosures have increased, there was no regulations or guideline given from the authority. Limitations of disclosure included characteristics of business, cost for disclosure, competency of employees, and effects of disclosure itself (Jantana & Monvika, 2012). Stakeholders may not have received enough information and viewed this as an effect on economic dimension. This can affect the decision of the investors. They may postpone to invest and misunderstand that social dimension affected security prices. Level of sustainability report disclosure in environmental dimension did not have a relationship with security prices because the report was to reveal effects from business operations and quantity of raw materials of the organizations. This can be negative image of the business. There was no regulations or guidelines from the authority. There were limitations to reveal some information, e.g. competency of employees, effects of disclosed information, etc. (Jantana & Monvika 2012) Reporting environmental information is crucial for organizations internationally. Quantity and quality of disclosure were different regionally and internationally (Lenciu, 2012). Many organizations were not ready to reveal this dimension or they would do very little on it. In addition, economic dimension was considered the most important factor


which drive the country to move forward. Such development actually affects environment and natural resources (Wongboonsin, n.d.). It does not support environment conservation. This may be the cause of limited numbers in environmental reports. Inves-tors and stake holders received limited information and it was not enough for making decision. They may misunderstand how can environmental report affects security prices.

Suggestions

1. The findings can support theories, i.e. agency theory. Providing correct and effective sustainability report is considered a good representative of the organization. The Stock Exchange of Thailand should encourage or request the organizations to increase numbers of such reports. 2. The findings can support business administration. 1) Listed companies adjust their strategic plans as an instrument for self-evaluation. The findings may be applied for development and sustainable operations of the organization. 2) There was a clear and correct information as a guideline for investors. 3) There was a guideline for the Stock Exchange of Thailand to develop an effective sustainability report format and to request the companies to provide such report.

Suggestions for future study

1. Further studies can be replicated in different periods of time since the change of periods may affect the relationship among factors. 2. Scoring for disclosure can be conducted with other methods, e.g. counting words, lines, etc.

references

Anakoon, B. (2015). Sustainability. Retrieved from http://www.manager.co.th/iBizChannel/ViewNews.aspx?NewsID=9560000018939.

Jantana, T., & Monvika, P. (2012). To study the relationship between the traits of company with the level of social and environment data declaring: A case study of patented companies in stock market M.A.I., The Journal of accounting Profession, 30(11), 23-40.

Tanasarnborisoot , J. & Padungsit, M. (2012). To study the relationship between the traits of company with the level of social and environment data declaring: A case study of patented companies in stock market M. A. I. The Journal of Accounting Profession, 30(11), 23-40.

Lindenberg, E. B., & Ross, S. A. (1981). Tobin’s Q ratio and industrial organizations. Journal of Business, 54(1), 1-32.

Wongboonsin, K. (n. d.). Population and Development. Bangkok: Chulalongkorn University.

Chung, K. H., & Pruitt, S. W. (1994), A simple approximation of Tobin’s Q, Financial Management, 23(3), 70-74.

Lenciu, A. I. (2012). Environmental reporting and corporate governance for FTSE 100 listed companies. Annals of Faculty of Economics, 1(2), 681–687.

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