Customer Relationship Value in the Business-to-Business Railway Market of Southern Africa by Noanne Botha submitted in accordance with the requirements for the degree of DOCTOR OF ADMINISTRATION in the subject Business Management at the UNIVERSITY OF SOUTH AFRICA SUPERVISOR: Prof Peet Venter November 2019 1 DECLARATION Name: Noanne Botha Student number: 55321049 Degree: DAdmin (Business Management) I declare that Relationship Value in the Business-to-Business (B2B) Railway Industry of Southern Africa is my own work and that all the sources that I have used or quoted have been indicated and acknowledged by means of complete references. ________________________ 19 November 2019 Signature: N Botha Date 2 ABSTRACT This study involves establishing imperative customer relationship value anteced- ents and mediators within the business-to-business (B2B) railway industry of Southern Africa and determining whether these relationship value antecedents and mediators will achieve customer retention as an outcome. The goal is to create a conceptual model for the B2B railway industry of Southern Africa, which will be done through reviewing well-established theories and past literature on the topics of relationship marketing, relationship value, and retention within the B2B industry. After an examination of the existing literature, a proposed concep- tual model will be developed and tested using confirmatory factor analysis (CFA) with a sample of 265 B2B supplier companies operating in the Southern African railway market. The CFA represents the measurement model of this research, which proposes the relationship value antecedents, mediators, and their influ- ence on retention within the B2B railway industry of Southern Africa. Secondly, structural equation modelling (SEM) will be conducted, in order to test relation- ships with latent factors. The results indicate that the factors of service, supplier, relational, and financial performance are important antecedents, and that satis- faction and relationship value are significant mediators of customer retention in the B2B railway industry of Southern Africa. KEY TERMS Relationship marketing, Relationship value, B2B railway industry, trust, satisfac- tion, retention, Relationship value antecedents, Relationship value mediators 3 CURRICULUM VITAE OF AUTHOR – N. BOTHA Ms. Botha is currently the Regional Director of Sub Saharan Africa at DB Engi- neering & Consulting GmbH, a subsidiary of Deutsche Bahn AG (the German Railways), which primarily focus on the management of railway engineering and consulting projects, business development and strategic management for DB Engineering & Consulting in Sub Saharan Africa. Ms. Botha is responsible for the company’s management operations in addition to business development functions within the railway and engineering industries of Sub Saharan Africa. She is actively involved in working closely with DB Engi- neering & Consulting’s corporate clients to ensure their project-related require- ments are effectively satisfied. Ms. Botha holds a Bachelor’s Degree in Consumer Science from the University of Pretoria awarded in 2008; a Diploma in Advance Project Management from the University of Pretoria, awarded in 2009 and a Master’s in Business Admin- istration (MBA) awarded in 2012 from the University of South Africa – School of Business Leadership (SBL). 4 Contents 1 Introduction to the Study 15 1.1 Background to the Study 15 1.2 Rationale for the Study 18 1.2.1 The Main Research Question 22 1.2.2 Objectives of the Study 23 1.3 Summary of the Main Theoretical Foundations of the Study 23 1.3.1 Difference between Customer Value and Customer Satisfaction 23 1.3.2 Relationship Value Antecedents and Mediators in Literature 25 1.3.3 Relationship Value Mediators 29 1.3.4 Retention as potential Customer Relationship Value Outcome 31 1.4 Key Definitions 31 1.4.1 “B2B Railway Industry” 32 1.4.2 Defining Relationship Marketing 33 1.5 Research Methodology 36 1.5.1 Research Philosophy 37 1.5.2 Research Approach 37 1.5.3 Methodological Choice 37 1.5.4 Research Strategies 38 1.5.5 Time Horizons 39 1.5.6 Techniques and Procedures 39 1.5.7 Data Analysis 41 1.6 Ethical Compliance 42 1.7 Delimitations 42 1.8 Chapter Outline 43 2 An Overview of the Southern African B2B Railway Industry 44 5 2.1 Introduction into Chapter 2 44 2.2 The current context of the B2B Railway Industry in Southern Africa 45 2.2.1 Railway Activity in each Southern African Country 46 2.2.2 Freight Rail Transportation is Cost Effective 51 2.3 Quality of the Southern African Rail Infrastructure and Operations 54 2.3.1 Quality of Operational Performance 57 2.3.2 Regulatory Framework in Southern Africa 59 2.4 Relationship Value in the B2B Railway Industry 60 2.5 The Road versus Rail Debate 61 2.6 Conclusion 63 3 Theoretical Foundations of the Study 65 3.1 Chapter Introduction 65 3.1.1 Main Theoretical Concepts of the Study 65 3.2 Conceptual Review of Relationship Marketing 68 3.2.1 Introduction to Relationship Marketing 68 3.2.2 Evolution of Relationship Marketing 79 3.3 Benefits and Sacrifices of Relationship Marketing in Value Creation 81 3.3.1 Relationship Performance in B2B 81 3.3.2 Rail Operators as Suppliers of Rail Services: Benefits and Sacrifices in B2B Relationships 83 3.3.3 Customers’ Perceived Benefits and Sacrifices in the B2B Relationship 88 3.4 Conclusion of this Chapter 94 4 Relationship Value Antecedents and Mediators 95 4.1 Introduction to Relationship Value Antecedents 95 4.2 Existing Conceptual Models for Relationships Value in B2B 96 6 4.2.1 Menon, Homburg and Beutin (2005): Conceptualising Value in B2B 97 4.2.2 Ulaga and Eggert (2006): Value Drivers in Key Supplier Relationships 104 4.2.3 Biggemann and Buttle (2005, 2012): Conceptualising B2B Relationship Value 109 4.2.4 Woodruff and Flint (2003): Customer Perceived Value Drivers 116 4.2.5 Conclusion of Relationship Value Antecedents in B2B 120 4.2.6 Literature Review Framework on Relationship Value Antecedents in the B2B Railway Industry 121 4.3 Mediators of Relationship Value in B2B 122 4.3.1 Jemaa & Tournois (2014): Key Concepts of Relationship Marketing 122 4.3.2 Retention as possible outcome of customer relationship value 130 4.4 Conclusion of the Literature Review 132 4.5 Study Approach 133 4.6 Combined Literature Review Framework 134 4.7 Proposed Conceptual Model based on Existing Literature 138 4.7.1 Importance and Contribution of this Study 139 4.8 Conclusion 142 5 Methodology 144 5.1 Introduction to the Research Methodology 144 5.2 Research Onion of Saunders, Lewis, and Thornhill (2012) 145 5.2.1 Primary Research Objective 146 5.2.2 Secondary Research Objectives 146 5.2.3 Research Philosophy 147 5.2.4 Research Approach 151 7 5.2.5 Methodological Choice 153 5.2.6 Research Strategy 153 5.2.7 Time Horizon 162 5.2.8 Data Collection and Analysis 163 5.3 Validity and Reliability 171 5.4 Limitations and Delimitations 172 5.5 Ethical Considerations 173 5.6 Conclusion of Chapter 174 6 Research Results and Findings 175 6.1 Introduction into this Chapter 175 6.2 Order of Operation 176 6.3 Case and Variable Screening 177 6.3.1 Missing Data and Analysis of Outliers 177 6.3.2 Extreme Cases of Skewness and Kurtosis 179 6.4 Sample Characteristics 181 6.5 Common Method Variance 184 6.5.1 Harman’s One-Factor Test 184 6.6 Factor Analysis 185 6.6.1 Confirmatory Factor Analysis (CFA) 187 6.6.2 Discriminant Validity 187 6.6.3 Assessing the internal consistency reliability of construct measures 188 6.6.4 Descriptive statistics and one-sample t-test 194 6.7 Correlations 196 6.7.1 Pearson’s Correlation Coefficient (r) 197 6.7.2 Sig (2-Tailed) Value / P- Value 197 8 6.7.3 Path Analysis / Structural Equation Modelling (SEM) 198 6.7.4 Mediation 201 6.8 Conclusion of the Chapter 202 7 Conclusion and Recommendations 204 7.1 Introduction into this Chapter 204 7.2 Achieving the Research Objectives 204 7.2.1 Proposed Relationship Value Model for the B2B Railway Industry 205 7.2.2 The strength of the relationship between antecedents constructs and mediator constructs 207 7.2.3 How trust, satisfaction, and commitment correlate to relationship value 208 7.2.4 Determine the connection between relationship value and retention 209 7.3 Recommendations based on the Findings and Results of this Study 210 7.3.1 Recommendations to Rail Operator Managers 210 7.3.2 Achieving Satisfaction in B2B railway industry of Southern Africa 211 7.3.3 Relationship Value in the B2B Railway industry of Southern Africa 211 7.3.4 Retention within the B2B Railway Industry of Southern Africa 212 7.3.5 Recommendations to Researchers 212 7.4 Conclusion of this Study 214 7.5 Future Research 214 References 216 Annexures 277 9 List of Figures Figure 1: Basic Components for Efficient Railway Operations in Balance (Löwer, 2013). 17 Figure 2: Basic Railway Components in an Unbalanced State (Löwer, 2013). 17 Figure 3: North and Southern Africa GDP growth (IMF World Economic Outlook, 2017). 19 Figure 4: Rail Network Size and Traffic by African Region (World Bank, 2009). 20 Figure 5: Africa Railway Network (IFC, 2013) 21 Figure 6: Relationship between independent and mediator variable (Valeri & VanderWeele, 2013) 26 Figure 7: Layout of Chapter 2 (Overview of Southern African B2B Railway Industry) 44 Figure 8: Southern African Continent (Finlayson, 2016) 45 Figure 9: Region’s Share of the Global Freight Market (UIC Rail Database, UN World Population Prospect, 2012). 52 Figure 10: Regional Rail Densities (UN World Population Prospect, 2012). 53 Figure 11: Comparative weights and ranking of modal choice criteria 54 Figure 12: The Spectrum of Buyer-Seller Relationships (Hutt & Speh, 1995) 71 Figure 13: Exchange Relationship Framework (based on Johnson & Selnes, 2004).