(Mt) – Read the articles and identify the problem purpose framework and alignment

572778 research-article2015 JOBXXX10.1177/2329488415572778International Journal of Business CommunicationLloyd et al. Article From Listening to Leading: Toward an Understanding of Supervisor Listening Within the Framework of LeaderMember Exchange Theory International Journal of Business Communication 2017, Vol. 54(4) 431­–451 © The Author(s) 2015 Reprints and permissions: sagepub.com/journalsPermissions.nav DOI: 10.1177/2329488415572778 journals.sagepub.com/home/job Karina J. Lloyd1, Diana Boer2, and Sven C. Voelpel1 Abstract This study explores the value of supervisor listening as a seeming key competence in effectively leading employees. We conceptualize listening within the theoretical framework of leader-member exchange (LMX). Specifically, we argue that supervisor listening contributes to satisfaction with the supervisor, interactional justice, and job satisfaction, and that listening unfurls its effect through fostering strong LMX. Data from 250 German employees from various professional backgrounds was used to assess validity criteria as prerequisites for the examination of listening vis-à-vis LMX for the three outcome variables. Good performance in all validity criteria and path-modeling results indicated that perceived supervisor listening provides value for future research on supervisor-employee interactions in the work setting. Keywords leader listening, construct validation, leader-member exchange theory, empathy Introduction Since Rogers and Roethlisberger’s (1952/1991) thought-provoking essay in the Harvard Business Review, “Barriers and Gateways to Communication,” scholars and practitioners have embraced the concept of empathic listening in management literature or handbooks on effective leadership (e.g., Drucker, 2004; Frey, 1993; Reave, 2005; Steil & Bommelje, 2004). Although this concept is elusive, there appears to be 1Jacobs University, Bremen, Germany of Koblenz-Landau, Germany 2University Corresponding Author: Karina J. Lloyd, Jacobs University, Bremen, Campus Ring 1, D-28759 Bremen, Germany. Email: k.lloyd@jacobs-university.de 432 International Journal of Business Communication 54(4) a practical and intuitive appeal of the positive effects of listening, which has led to increased attention of this concept in psychological literature (e.g., Bavelas, Coates, & Johnson, 2000; Beukeboom, 2009; Pasupathi & Hoyt, 2009). However, in the fields of organizational psychology and management research, the term listening still appears both vague and conjectural due to a lack in theory and specification (e.g., Bodie, Cyr, Pence, Rold, & Honeycutt, 2012; Brownell, 1994). Bodie (2012) summarizes approaches to listening research in a variety of academic fields and argues that research is in need of incorporating “listening” into theoretical frameworks that are “capable of explaining how listening works and functions to the betterment of people’s lives” (p. 121). The current article aims at contributing to this call by investigating perceived supervisor listening and its links to related constructs and work outcomes within the theoretical framework of leader-member exchange (LMX) theory. LMX theory in its core suggests that “effective leadership processes occur when leaders and followers are able to develop mature leadership relationships (partnerships) and thus gain access to the many benefits these relationships bring” (Graen & Uhl-Bien, 1995, p. 225). Such quality leader-member interaction has been linked to more positive organizational outcomes such as increased performance, job satisfaction, or commitment (Gerstner & Day, 1997). However, LMX is a rather broad term (see below) and does not detail what specific leader behavior may establish strong leader-member relationships. Listening to employees has the positive potential to create and maintain strong leader-follower partnerships (Bodie, 2012; Steil & Bommelje, 2004) and may thus be one specific component that fosters LMX. Work by Comer and Drollinger (1999) for instance proposed that sales persons’ active-empathic listening (AEL) behaviors can establish and maintain more positive relationships with clients (see also Drollinger & Comer, 2013). Originally based on Carl Rogers’s (1951) observations in client-centered therapy, empathic listening or “active listening” has been described as an accepting and nonjudgmental approach of attending to an individual (Rogers, 1959). Emphatic listening creates a mutual bond between interaction partners, which over time evolves into a relationship of trust and reciprocal understanding (Rogers, 1957, 1975). When applied to organizational settings, listening may have similar effects in the supervisoremployee interaction (e.g., Brownell, 1990; Reave, 2005). Rogers’s work on empathic listening can help provide specificity to the meaning of listening in the business context. Empirical research in the organizational context suggests that listening may be a crucial factor in the supervisor-employee relationship that may affect other workrelated attitudinal (e.g., Ellinger, Ellinger, & Keller, 2003) and behavioral outcomes (Lloyd, Boer, Keller, & Voelpel, 2014; Stine, Thompson, & Cusella, 1995). For instance, Lobdell, Sonoda, and Arnold (1993) showed that perceived supervisor listening competence is positively associated with employee perceptions of leader responsiveness and support. Similarly, empirical evidence suggested a link between supervisor listening and perceived relationship quality with employees (Stine et al., 1995), which might, in the long term, also affect more distal variables such as employee perception of the climate of organizational openness and supportiveness (Husband, Lloyd et al. 433 Cooper, & Monsour, 1988), overall job satisfaction (Brownell, 1990; Ellinger et al., 2003), and organizational citizenship performance (Lloyd, Boer, Keller et al., 2014). Listening research suggests positive links of listening with work outcomes such as perceived leadership effectiveness (Johnson & Bechler, 1998), employee commitment (Lobdell et al., 1993), organizational trust and performance (Stine et al., 1995). Two studies by Lloyd, Boer, Keller et al. (2014) recently demonstrated that perceived supervisor listening contributes to three important work outcomes—one proximal (emotional exhaustion) and two more distal (organizational citizenship behavior and turnover intentions). Together, these findings indicate that assessing listening in the workplace may promise similar value as in clinical or psychological research and hence needs specification in terms of its relationship to related constructs and outcomes. We propose that supervisor listening contributes to positive organizational outcomes via its related construct LMX (see Graen & Uhl-Bien, 1995 for a detailed review). This article’s overall purpose is to foster the scholarly dialogue and advance the understanding of listening in organizational research by providing a more precise clarification of listening in the workplace. Specifically, our main focus is to integrate listening and LMX in a holistic model based on theoretical considerations that listening fosters strong relationships between leaders and followers. To establish a sound basis, we seek first to evaluate validity criteria of perceived listening quality in the context of supervisor-employee relationships and its links to work-related variables. Empirical examination of internal reliability as well as convergent, discriminant, and predictive validity intends to foster the refinement of listening within the supervisor-employee relationship. The Concept of Listening Listening is a multifaceted process (Bodie, Cyr et al., 2012) and as such, conceptualizations have ranged from studying listening attitudes and skills (e.g., Mishima, Kubota, & Nagata, 2000) to behaviors (e.g., Bodie, Cyr et al., 2012; Ramsey & Sohi, 1997), and differ in terms of underlying theory and measurement. To provide a conceptual framework for listening in the supervisor-employee relationship, it is helpful to review Rogers’s initial work on empathic listening. In this article, we build on Rogers’s (1951, 1975) definition of empathic listening as an appreciating and nonjudgmental way of perceiving and responding to an individual. When the individual feels accepted and cared for, Rogers argued, mutual understanding and trusting bonds are possible. Hence, in this article, we focus on how the person being listened to perceives the listener (see also Barnlund, 1962; Stone, Patton, & Heen, 1999; Tyler, 2011) and conceptualize listening as a subjective perception of listening quality. Listening quality captures the individual’s perception of being attended to, accepted, and appreciated (Rogers, 1975). This is in line with the leadership literature that describes supervisor listening as demonstration of active acceptance of employee opinions and ideas (Spears, 1995) or the willingness to do so (Bass & Avolio, 1994). 434 International Journal of Business Communication 54(4) Leadership handbooks (e.g., Covey, 1989; Gordon, 1977; Steil & Bommelje, 2004), business journals, and management scholars have long argued in favor of listening as a “key management skill” (e.g., Drucker, 2004; Ewing & Banks, 1980; Frey, 1993) that enables both understanding of feelings and the demonstration of concern (Gabarro, 1991). Some empirical evidence has been put forward in support of this, demonstrating, for example, a link between supervisor listening and perceived relationship quality with employees (Stine et al., 1995). Overall, however, it is noteworthy that leader listening and leadership styles have only rarely been considered simultaneously (for exceptions, see Bechler & Johnson, 1995; Johnson & Bechler, 1998; Kluger & Zaidel, 2013). Yet listening most commonly takes place in dyadic interactions, develops in a unique way during the process of interacting (Pasupathi & Hoyt, 2009), and may consecutively develop each interaction in a unique way. Hence, to enhance our understanding of listening in the supervisor-employee relationship, it is necessary to embed it in leadership theories. The leadership approach arguably most closely related to our conceptualization of listening is LMX theory. The Listening Leader and Leader-Member Exchange LMX theory, which originated from vertical dyad linkage theories (Dansereau, Graen, & Haga, 1975), is unique among leadership theories in that it focuses on the dyadic and specific leader-follower relationship (Graen & Uhl-Bien, 1995; Liden, Sparrowe, & Wayne, 1997). According to LMX theory, this relationship may have a unique quality for each dyad, which in turn predicts organizational outcomes at the individual level of analysis (Gerstner & Day, 1997). Meta-analytical results also suggest that strong leader-member relationships significantly influence outcomes such as job performance, satisfaction with supervision, overall satisfaction, commitment, role conflict, role clarity, member competence, and turnover intentions (Gerstner & Day, 1997). LMX contains certain aspects that relate to listening. Strong LMX requires that employees feel appreciated, cared for, and supported by a supervisor (e.g., Graen & Uhl-Bien, 1995; Liden & Graen, 1980). These are essential features of the listening construct (Rogers, 1951, 1975). The strongest similarity is that both concepts predict tight bonds and strong relationships between the interaction partners. The range of components inherent in the LMX construct appears fairly broad and touches various components such as support, responsiveness, and consideration, leaving room for the actual behavior and interpersonal perceptions that elicits the creation of strong relationships. The theory does not specify which specific behavior fosters such strong leader-follower bonds. Listening—as a mean to actively demonstrate acceptance of follower opinions and suggestions (Bass & Avolio, 1994; Spears, 1995)—may be a viable component in developing sustainable leader-follower relationships. Since listening facilitates the development of mutual understanding and trust (Lloyd, Boer, Kluger, & Voelpel, 2014; Stine et al., 1995) it might lay the basis for fruitful partnerships and strong relationships. In the long run, this fosters further positive interactions, mutual cooperation, and support. Inevitably, this will also Lloyd et al. 435 enhance further communication. In other words, listening and leader-member interaction are mutually interwoven; yet, especially in an early stage of a relationship, listening may have the beneficial effect of creating strong leader-member interaction which both, in turn, will be positively related to organizational outcomes. In this article, we examine the possibility that listening quality may precede the development of LMX— that is, suggesting a sequence of listening quality affecting positively on LMX, which then contributes positively to outcomes. From numerous potential outcome variables of organizational behavior, we will focus on a choice of three that reflect different interaction levels: (a) employee satisfaction with the supervisor, (b) interactional justice, and (c) overall job satisfaction. Listening quality should have the strongest effect on the more proximal outcomes that are affected by direct interaction with the supervisor. Perceived supervisor listening affects employee perceptions of interaction processes. As outlined earlier, listening quality can influence speaker attitudes and feelings toward the listener (Bavelas et al., 2000; Beukeboom, 2009). Hence, not being listened to and not feeling understood by a supervisor may elicit negative affective reactions such as the feeling of disrespect and injustice (Bass & Riggio, 2006; Blader & Tyler, 2003). Thus, we chose satisfaction with the supervisor and interactional justice (Kim & Leung, 2007) as proximal outcome of supervisor listening. Interactional justice captures the degree to which individuals feel treated with respect and dignity by authorities or third parties (e.g., the leader) involved in executing or implementing procedures (Colquitt, 2001; Greenberg, 1987). Although we expect that listening quality will affect outcomes closely related to the interaction, listening quality might also have effects on more distal variables related to the job and affect overall job satisfaction (Allen, Bryant, & Vardaman, 2010). Hence, to get a more inclusive view on listening quality’s predictive validity, we will examine its relationship to three outcomes related to the supervisor, the supervisor-employee interaction, and the job. Overview of the Present Study To extend our understanding of listening within the supervisor-employee relationship, we investigate listening quality based on Rogers’s conceptualization of empathic listening within the framework of LMX theory. We obtain validity evidence for the listening quality scale by assessing its relation with measures closely related to listening such as feeling understood (Lun et al., 2008) and AEL (Bodie, 2011; Drollinger, Comer, & Warrington, 2006), as well as LMX (Janssen & Van Yperen, 2004), which all already have a validity portfolio. We expect that employee perceptions of supervisor listening quality will be positively related to both, employee ratings of their supervisor’s AEL and ratings of feeling understood by the supervisor. We then examine in detail how listening quality is related to LMX and the unique predictive contribution of the two constructs to three outcome measures. We then simultaneously examine listening vis-à-vis LMX in predicting satisfaction with the supervisor, interactional justice, and job satisfaction. We then integrate listening quality and LMX in a path model that tests a sequence between listening quality, LMX, and work outcomes. 436 International Journal of Business Communication 54(4) Building on theoretical considerations, we examine the possibility that listening precedes LMX, which in turn is related to the three outcomes. In sum, we propose and test four hypotheses: Hypothesis 1 (convergent validity): Listening quality will be positively related to AEL and feeling understood as well as LMX. Hypothesis 2 (divergent validity): Listening quality will be conceptually distinct from LMX. Hypothesis 3a (predictive validity): Listening quality will predict satisfaction with the supervisor. Hypothesis 3b (predictive validity): Listening quality will predict interactional justice. Hypothesis 3c (predictive validity): Listening quality will predict job satisfaction. Hypothesis 4 (sequential model): Listening quality is associated with LMX, which in turn relates to outcomes (satisfaction with the supervisor, interactional justice, and job satisfaction). Method Participants Two hundred and fifty-one German employees from different companies participated in this survey study voluntarily and without monetary reward (57% women; mean age = 34.1, SD = 8.7; 60% with university degree or equivalent). Participants were recruited by convenience sampling methods as described below. A wide range of job functions were represented in the sample—including administration, engineering, finance, marketing, and teaching. The average tenure at the company was 4.8 years (SD = 5.4), and the average time participants had been working for their current supervisor was 3.2 years (SD = 2.6). Procedure Convenience sampling measures were taken to recruit a heterogeneous sample of employees to increase generalizability. We administrated an online survey through various online discussion forums to reach a maximum variety in age, job level, and industry. Examples included general work related forums in which employees discuss or exchange work related information as well as job specific forums for occupational groups (e.g., police officers, mechanics, engineers, etc.). Permission to post an invitation to participate in our study was obtained from the web administrators. Only questionnaires that were fully completed were included in the analysis. Measures All measures were adapted to German by translation and back-translation techniques (Brislin, 1970) by a team of bilingual psychologists and professional translators. Unless Lloyd et al. 437 otherwise noted, we measured items using 7-point Likert-type scaling (1 = strongly disagree, 7 = strongly agree). All items (i.e., the set of items belonging to each measure) as well as the measures were presented in random order to control for order effects (Bishop, 2008). Since all measures referred to internal psychological states and perceptions (e.g., job satisfaction), employees were best positioned to provide ratings on these. Perceived Listening Quality. To assess the extent to which employees felt listened to by their supervisor, we adapted a seven-item listening quality scale (Lloyd, Boer, Keller et al., 2014; Lloyd, Boer, Kluger et al., 2014) to the context of supervisor-employee interactions (appendix). Participants were asked to refer to a typical interaction with their supervisor when answering the questionnaire. The items were prefaced with the statement “Generally, when my supervisor listens to me, I feel my supervisor . . . ”; sample items included “is interested in what I have to say,” “makes me comfortable so I can speak openly,” and “understands my feelings.” A pretest (n = 51; 53% women; mean age = 32.26, SD = 9.97) was conducted to test the items concerning internal consistency and applicability to the supervisor-employee interaction. The items revealed acceptable internal reliability (α = .92). Principal component analysis yielded one principal component that explained 71% of the item variance. In the current study, listening quality was well represented by the one-factor model (χ2 [df = 13] = 74.78, p 50% of the market share) and skincare product (20% of market share) [3]. For skincare products, Thailand had less competitiveness to export to all markets when compared to Philippines. Since Thailand still has high market share in the region, it is worth to put effort to improve the competitiveness in this category. It needs to find out for which key elements needed to be focused and supported. For hair products, Thailand had absolute competitiveness in all markets. However, it seems the market share of the haircare products tended to be decreased in the last few years [3]. Thailand must put a huge effort to maintain the market share of the haircare products. Because this category is big in term of market size and it makes Thailand as a leader of the cosmetic sector in the region. As there was no previous study related to competitiveness of Thailand cosmetic industry found in extensive literature search since 2008, this study aimed to explore the country competitiveness of two major cosmetic categories; haircare and skincare products using Porter’s diamond model as a study framework. METHODOLOGY with thorough understanding about the cosmetic industry. If the information provided by the five key informants was not saturated, additional key informants would be further approached for an in-depth interview until the data were saturated. With the identification codes shown in the brackets, the informants included a representative from the Thai Cosmetics Association (R1), two small and medium enterprise executives, i.e., one from a small enterprise (R2) and the other from a medium enterprise (R3), one executive from a large local company (R4), and one manager from a multinational manufacture (R5). Study Instrument The conceptual framework of the study as shown in Figure 1 was adapted from the Porter’s diamond model [7]. This model was selected as it has been widely utilized as a tool to assess a country competitiveness in various industries [4,8,9]. Porter’s model was aimed to explain the competitiveness of the nations. The model has been widely used to explain competitiveness of various industries in many economies such as USA, Germany, Denmark, South Korea, Britain, Italy, Sweden, Switzerland, Japan, and Singapore [8,9]. The model was selected as a theoretical framework for this study to deeply understand factors that influence the competitiveness of Thailand’s cosmetic industry at the macroeconomic level. The five interrelated components of the diamond model were focused and applied in the study [7]. A total of 23 open-ended questions for the in-depth interview were constructed based on five aforementioned factors of the diamond model, i.e., government factor (3 items); demand conditions (5 items); firm strategy, structure, and rivalry (7 items); factor conditions (4 items); related and supporting industries (3 items); one additional question regarding problems and barriers to competitiveness was also added. The questions were checked for the face validity and imprecise wording by two experts who had more than 5 years of experiences in the cosmetic industry. The questions were A qualitative study with an in-depth interview to explore Thailand cosmetic industry competitiveness by an application of diamond model was carried out from September to November 2014. The study was approved by the Ethics Committee of Chulalongkorn University Faculty of Pharmaceutical Sciences (Ref. No. 13-33-011). Details of methodology; sample selection, study instrument, data collection, and data analysis are demonstrated below. Sample Selection Key persons in the cosmetic industry were purposively selected for the in-depth interview. Regarding eligibility criteria, the informants in this study should be executives who fully understood the cosmetic business very well both local and international. In addition, they should also be able to forecast the industry trend and future competitiveness. Most importantly, they should reflect or assess the competitiveness at the company and national levels. Based on Anthony’s recommendation on qualitative research data collection, five informants were selected [6]. This study started with a specific group of five key informants who were purposively asked to join the study as they were considered experiential exporters 173 Figure 1: Conceptual framework of the study based on the Porter’s diamond model [7] http://www.tjps.pharm.chula.ac.th TJPS 2016, 40 (4): 172-178 Jinachai, et al.: Competitiveness of Thai cosmetic industry adjusted for clarity. The operational definitions and examples of open-ended questions were summarized below. In this study, government factor referred to the rules, laws, and policies established by governmental agencies at national and international levels that have a major influence on the country competitiveness. Example questions reflecting government factor were as follows: • What are government agencies’ rules, laws, policies, and activities that support the cosmetic business? (Please also provide detailed examples) • Are there any problems or barriers caused by the government policies? If so, what are they? (Please also provide detailed examples). Demand conditions was defined as the consumers’ preference for cosmetic products. Demand conditions were observed at both macro and micro level. Examples of questions used to elicit this factor were: • Is there a demand for Thai skincare and haircare products? • What the demand look like? • Who and where is the demand? Firm strategy, structure and rivalry embraced relevant strategies for increasing the market share and country competitiveness. Questions for this factor were: • What are strategies that the industry implement to enhance competitiveness and wider the market? • How the strategies work? • Please provide 2-3 examples. Factor conditions referred to both positive and negative factors that have an impact on the country competitiveness. The following was the question examples: • What are factors affecting cosmetic production costs? • How such factor affects country competitiveness? • Please provide examples. • If you are an investor, what are the factors that impact your investment decision? Related and supporting industries were associated business which when matching or collaboration with cosmetic business would enhance cosmetic business. Example questions for this factor included: • What are other types of businesses that might enhance your cosmetic business? • How do such businesses help? • Please provide an example. Data Collection and Analysis An in-depth interview with the five informants was conducted in their own offices by the researcher (Neeranard Jinachai). This interview was to elicit their perceptions and assessments of the cosmetic industry and competitiveness. Although the probing questions were prepared for the interview, all interviewees could freely respond without any concern about the question sequence or specific patterns. Overall, the understanding of the informants’ points of view was gained [10]. The saturated information obtained from the informants, namely with the same answers, was the signal of information adequacy. Each interview session lasted approximately 2 h. After the interview, the informants’ answers were carefully transcribed and entered into the 174 database. The data were then thematically coded based on the diamond factors. RESULTS In this study, the informants composed of three male and two female executives with the age range between 35 and 55. From the in-depth interview, they provided a reflection of the bird-eye view of Thailand cosmetic industry and expressed their opinion on five key factors that affect Thailand’s competitiveness, especially for skincare and haircare products (Table 1). Factor 1: Government Factor From the study, all informants confirmed that the government perceived that cosmetic industry was a growing sector despite the political uncertainties, unpredictable environments disaster, and country and the world economic downturn. The government provided various positive supports for the business, for instance, the Department of Industrial Promotion, Ministry of Industry, provided training sessions for SMEs in all cosmetic business lifecycle including business startup, market expansion, and exportation. The FDA provided a lot of training sessions for SMEs; good manufacturing practice (GMP), product notification, and product information files preparation. The Department of Community Development, Ministry of Interior also provided special supports and promoted the efficient use of Thai herbal and natural ingredients in cosmetic products for SMEs and One Tambon One Product groups. Moreover, the Ministry of Agriculture and Cooperatives provided grants that support SMEs’ investments for relevant technology and equipment, whereas the Department of Intellectual Property, Ministry of Commerce has promoted the industry research and development (R and D) through the National Innovation competition awards to inspire SMEs. Aside from that, the Department of International Trade Promotion, Ministry of Commerce also encouraged manufacturers, or SMEs to export their products by arranging overseas trips for exhibition, market visits, and business matching. It was mentioned by all informants that the government has endeavored to strengthen the competitiveness of the cosmetic industry. Despite the considerable supports in place, it seemed that the activities were not effectively communicated to all members in the whole industry. Many companies were not aware of the supports provided. The activities were only made known to companies that were members of the Thai Cosmetic Associations. In addition, some unnecessary technical barriers to trades created by government agencies negatively impacted export only products. This was opposed to the national policy aiming to support and improve the country competitiveness including the expansion of the export business. For example, an approved trade name in other countries was not authorized by the Thai authority due to the country-specific control [11]. Nevertheless, this example of barriers has been discussed between the exporters and the authority. Some problematic regulations, especially for processing time, should be carefully considered for the future improvement as an informant described below: “To encourage the investment in Thailand, the Department of Industrial Works, Ministry of Industry, should support the http://www.tjps.pharm.chula.ac.th TJPS 2016, 40 (4): 172-178 Jinachai, et al.: Competitiveness of Thai cosmetic industry Table 1: Themes related to five factors that affect the country competitiveness Factor Theme (number of informants) Government • Positive impacts: Training, financial support, R and D competition awards, overseas business matching and exhibition trips (5/5) • Negative impacts: Unnecessary technical trade barriers, regulations for exported products (5/5) Demand conditions • Made in Thailand products demand in neighbor countries, especially for CLM (5/5) • Medium‑ and high‑income consumers preference on imported premium skincare (3/5) • Mass MNC haircare demand in general (3/5) • Thai herbal and natural cosmetic products accepted by extra‑ASEAN countries, e.g., Japan, EU (5/5) • Thai herbal products expanded together with related industries, e.g., spa and massage (4/5) Factor conditions • Higher labor cost of Thailand when comparing with other cosmetic production base countries in ASEAN, especially Indonesia and Vietnam (5/5) • Almost 100% imported, and only 1‑2% locally produced raw materials for production in Thailand (5/5) • 70‑80% locally supplied materials for primary and secondary packaging and 20% imported (5/5) Firm strategies, structure, and rivalry • More investment on R and D (5/5) • Strategy for innovation-driven economy combing the cosmetic science and technology to meet “green,” “organic,” “natural,” and other health-related services (4/5) • GMP, COA, halal certification for exportation (4/5) • Tax incentive and incentive package, and investment strategy from BOI to attract MNC’s investment (4/5) • Strategy for the weakness on English communication, marketing skills, and branding skills (5/5) • Crucial strategies for “Thai band loyalty” and “sustainable business” (5/5) • Brand loyalty and trust building strategies via product quality, effectiveness, safety, authority’s rewards and endorsement (4/5) Related and supporting industries • Contribution of Thai service business relating to cosmetic industry competitiveness (5/5) • Supporting of wholesalers and retailers to cosmetic business (5/5) • Two major clusters for cosmetics made up of related and supporting industries (5/5) CLM: Cambodia laos and myanmar, MNC: Multinational company, GMP: Good manufacturing practice, COA: Certificate of analysis, SME: Small and medium‑sized enterprise, BOI: Board of Investment 175 industry for the plant starting up and approval. The process should not be too complicated or take too long for SMEs.” (R3) Overall, the government factor had a positive impact on the country competitiveness. However, the area for improvement would be the coverage of supporting activities throughout the country. The technical barriers to trade should be minimized particularly for export-only products. Factor 2: Demand Conditions The findings from all informants could be grouped in three major themes: (1) Existing markets for Thai cosmetics, (2) consumer preference, and (3) potential unique demand. It was found that the top three markets for Thai skincare products were Singapore, Malaysia, and Indonesia. For the haircare, the top three markets for Thai products were Indonesia, followed by Malaysia and Singapore. All informants conceded that the products required in those specified markets were MNC brands. This is because the MNC products have long established reputation and customers trust products’ quality. Moreover, MNC products did cover all cosmetic types in the market, i.e., the mass, premium, and cosmeceutics. In regard to the local Thai brands, all respondents unanimously agreed that the ASEAN consumers, i.e., Cambodia, Lao PDR, and Myanmar (CLM) in particular, trusted and liked madein-Thailand cosmetics. This group of consumers believed that the products manufactured in Thailand were high in quality compared with the same products or brand names made in their own countries. All informants revealed that consumers had different preferences for skincare and haircare products. Skincare composed of a very wide range of products. Three informants stated that the medium- and high-income consumers tended to use the imported premium products owing to their brand loyalty. The haircare, however, had a lot lesser product choices. The main consumer’s consumption was mostly mass MNC products for daily use. One informant from SMEs articulated this demand as follow: “…Middle-to-high-income people tend to use imported products in particular skin care products. For haircare stuff which is the routinely used products, the perception and trust of consumers on the MNC brands are still high; 80-90% of sales volumes are from the MNCs, but 10% from SMEs. Consumers consider hair products as general goods for daily life, while skin care products are for beauty. Fewer consumers want to switch a hair product, but most are always ready to try a new skin care one. The brand switching happens with skin products more frequent than the hair products.” (R3) All informants had simultaneously mentioned that the Thai cosmetic could be created with more unique characteristics. Having herbal ingredients and being natural were two identified characters that could add significant value to the cosmetic product. The concept idea of herbal ingredient and being natural could create high ended product that serves niche market. Moreover, four informants mentioned that as Thailand is very famous for providing service, cosmetics could be offer together with high demand services such as Thai massage or spa. All informants confirmed that most Thai herbal and spa products were perceived as premium and were greatly http://www.tjps.pharm.chula.ac.th TJPS 2016, 40 (4): 172-178 Jinachai, et al.: Competitiveness of Thai cosmetic industry accepted by extra-ASEAN markets, e.g., the US, EU, Japan, Taiwan, and Korea. One informant from SME articulated that: “…For the niche products, if the brand is built strongly, the potential markets would be worldwide. Customers will walk into the country for the products, and it is no need to do a door-knocking business. In Asia, Japan, Korea, and Taiwan are potential markets for niche items like THANN products. Price is not a key concern for this category. The unique aromatherapy and Thai spa are demanded worldwide.” (R4) On the whole, the demand conditions remained satisfactory for the Thai cosmetic industry. The markets for made-in-Thailand products, MNC brands, and the niche products had the growth potential. The positive trend of global demand for cosmetics containing Thai herbal and natural products, along with the combination of Thai services, in particular spa and massage, were clearly observed. Factor 3: Firm Strategy, Structure, and Rivalry All informants agreed that the crucial strategies should be focused on SME business, as the MNC business strategies were globally managed by the head offices. Regarding the SMEs, the main strategies cited by the informants were (1) more investment in R and D (2) combined cosmetic science and technology for Thai herbal and natural products, and (3) increased brand awareness and loyalty. To run a sustainable business, it was important to improve R and D as asserted by all informants. SMEs, at present, needed to fiercely compete in the market where the Korean and Japanese products had dominated over the past 2-3 years. The SMEs, unfortunately, did not focus on the long-term basis, but rather on the shortterm success with little innovation for cosmetic products. They slightly invested in R and D, but mostly outsource R and D tasks to OEMs. A total of 20-30 new items per year were created by the medium-size enterprises and

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AcademicWritersBay.com is a private company that offers academic support and assistance to students at all levels. Our mission is to provide proficient and high quality academic services to our highly esteemed clients. AcademicWritersBay.com is equipped with competent and proficient writers to tackle all types of your academic needs, and provide you with excellent results. Most of our writers are holders of master’s degrees or PhDs, which is an surety of excellent results to our clients. We provide assistance to students all over the world.
We provide high quality term papers, research papers, essays, proposals, theses and many others. At AcademicWritersBay.com, you can be sure of excellent grades in your assignments and final exams.