analyzing the impact of electronic word of mouth on purchase … · 2020. 2. 1. · word of mouth...

AsiaPacificBusiness&EconomicsPerspectives,Summer2016,4(1).

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Analyzingtheimpactofelectronicwordofmouthonpurchaseintentionand

willingnesstopayfortourismrelatedproducts

LizbethMarieJ.LimSouthernTaiwanUniversityofScienceandTechnologyTainan,RepublicofChina(Taiwan)[email protected]

ABSTRACT

This study investigates deeper on how electronic word of mouth (eWOM) found acrossdifferent platformson the Internet is able toaffect the intentionsof tourists topurchasetourpackagesforPuertoPrincesa,acityintheprovinceofPalawaninthePhilippines,andinturn,howtheirintentiontopurchasethesetourpackagesaffecttheirwillingnesstopayforthesaidtourpackages.Datacollectedfrom368respondentswereanalyzedthroughtheuseofConfirmatoryFactorAnalysis(CFA),StructureEquationModelling(SEM)andConjointAnalysis.ConjointAnalysisresultsshowthatfortourpackages,priceisthemostimportantattribute,followedbytourinclusions,lengthofstay,andlastly,accommodation.Theresultsof SEManalysis show that a significant relationship exists betweeneWOMandpurchaseintention, but the relationship between purchase intention and willingness to pay isinsignificant.Keywords: Electronic Word of Mouth (eWOM), purchase intention, Willingness to Pay,conjointanalysis

INTRODUCTIONInthepast, informationaboutproductsandservicesweresharedthroughword-

of-mouth (WOM) (Jalilvand, Esfahani & Samiei, 2011). Since the introduction of theInternet,ithassignificantlychangedthewayinformationwasbeingshared,leadingtotheemergence and rise in popularity of electronic word ofmouth (eWOM) (Lin,Wu, Chen,2013; Gretzel & Yoo, 2008; Lerrthaitrakul & Panjakajornsak, 2014. The term eWOM isdefined by Hennig-Thurau et al. (2004) as “any positive or negative statementmade bypotential, actual, or former customers about a product or company, which is madeavailabletoamultitudeofpeopleandinstitutionsviatheInternet.”(p.39).eWOMcanbefoundondifferentsocialmediaplatformsonlineandmaybegroupedintoblogs,discussionforums,andconsumerreviews,tonameafew(Lo,2014).

Information can come from sellers and other end consumers, and informationcreatedbytheconsumersaresaidtobemorecredible(Park,Lee&Han,2007;Confente,2014).TheworkofFanandMiao(2012)mentionedthattheinformationpeoplefindonlinehaveanimpactontheirofflinepurchasedecisions.


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Itwas stated in the research done by Chiang, Lin, Fu,& Chen (2012) that priorpurchase intentionmaybeused to assess thewillingness topayof consumers. Thiswasdone to improve the accuracy of the researchers’ estimations. In the study done byCorrigan and Rousu (2008) involving perishable goods, itwas pointed out that purchaseintentioncriticallydeterminedaconsumer’swillingnesstopay.

Thekeyobjectivesofthispaperaretoanalyzethesignificanceoftherelationshipbetween eWOM and purchase intention, as well as the relationship between purchaseintentionandwillingnesstopay.Theseobjectiveswillhelpanswertworesearchquestions,particularly: “What is the impactof eWOMon thepurchase intentionof tourism relatedproducts?”and“Howwillatourist’spurchaseintentioninfluencehisorherwillingnesstopayfortourism-relatedproducts?”

CURRENTLEVERSINPHILIPPINETOURISM

WordofMouthandElectronicWordofMouth

Wordofmouth(WOM)isoneofthemost influentialwaysthat informationmaybe shared in the early days of human society (Vimaladevi&Dhanabhakaym, 2012). TheintroductionoftheInternethasgivenrisetotheexpansionofthescaleandscopeofWOM,leadingtoelectronicwordofmouth,asweknowittoday.ItcanbeobservedthateWOMhasbeengainingattentionfromseveralresearchersintherecentyears(Zhang,Craciun&Shin,2010).ElectronicWordofMouthintheTourismIndustry

TheInternethassignificantlychangedthewaytourismisbeingpromoted(CroftonandParker,2012).TheincreaseintheusageoftheInternetplaysanimportantroleinthedistribution of tourism-related information, as well as changing the way itineraries arebeing planned for nowadays (Zhang, Pan, Smith, & Li, 2009; Xiang and Gretzel, 2010).Gretzel and Yoo (2008) noted that searching for travel related information is one of themostpopularactivitiesdoneonline.Socialmediahelpstravellersmakeinformeddecisionsbasedonthepastexperiencesofothers,whichmaycomeintheformofonlinereviewsorblog entries. Travel review websites are also known to give recommendations fordestinationsthattouristsmayhaveinmind(Zhangetal.,2009).DimensionsofElectronicWordofMouth

Lin et al. (2013) considered three factors under eWOM that have an effect onpurchase intention:eWOMquality,eWOMquantityand informationprovider’sexpertise.eWOMqualitypertainstothequalityofinformationfoundonlineintermsofitsobjectivity,usefulness, understandability, and significance. DeLone and McLean (2003) also addedaccuracy, completeness, dynamism, currency, personalization and variety as criteria forassessing the quality of information. In the context of travel, this information quality isimportant since this is part of the itinerary planning process, and will influence thetraveller’s decision as towhereheor shewill be eating, staying and visiting. For eWOMquantity, the work of Cheung and Thadani (2010) defined it to be the total number ofreviews posted online. Chevalier andMayzlin (2006) noted that the number of reviewsposted about a particular product is a good indicator of its popularity in the market.Cheung and Thadani (2010) referred to information provider’s expertise as the ability ofthesourceoftheinformationtoshareinformation.TheresultsofthestudydonebyPark


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etal.(2007)showedthatapositiverelationshipexistsbetweenthetrustworthinessofthesourceandthecredibilityoftheinformation.

PurchaseIntention

According toLinetal. (2013),purchase intentionpertains to thewillingnessofaconsumer to purchase a particular product or service. There have been assumptions onintentions being good predictors of purchase behaviors for individuals, giving rise to thewidespreaduseof intentions toderiveanestimate for sales forecasts (SunandMorwitz,2005). Smith, Parker, and Davenport (1963) as well as Smith (1965) have noted thatconsumers who have the intention to buy certain products are likely to gather moreinformation such as advertisements for the products they have in mind (as cited inWarshaw,1980).TheRelationshipbetweeneWOMandPurchaseIntention

LerrthaitrakulandPanjakajornsak(2014)notedthatWOMdoeshaveanimpactonthedecisionmakingprocessofconsumerswithregardtothinkingofpurchasingproductsorservices,andthat italsoaffectsthe loyaltyofcustomers.Dellarocas,Zhang,andAwad(2007) mentioned that people utilize the information that they get online for makingdecisions offline, and that people become reliant towards the opinions given by otherconsumers when coming up with decisions that are related to purchasing (watching amovieorinvestinginwhichkindofstock).

High quality reviews, defined by Park et al. (2007) to be reviews that arepersuasive,logical,andgivesreasonsbasedonspecificfactsabouttheproduct,aresaidtohave a positive effect on a consumer’s purchasing intention. In the same paper, it ishighlightedthatconsumerreviewsareanimportantconsiderationforindividualswhovisitonline shopping websites, and that the quantity and quality of online reviews have aneffect on the way consumers process the information that they receive. The quality ofeWOM is crucial for consumers since the usefulness and correctness of information issomethingthatmatterstothem(Fan,Miao,Fang,&Lin,2013).Peoplealsobelievedthatserviceproviders thathavebeengivenmore reviewsare trustworthycompared to thosethathavelessreviewswrittenaboutthem(Lo,2014).Fanetal.,(2013)aswellasLinetal.(2013) observed that the number of reviews is helpful when it comes to reducing aconsumer’s anxiety when making purchase-related decisions since consumers’ reason,“Therearealotofotherconsumerswhohavealsopurchasedtheproduct”.Thedegreeofexpertiseof is oneof the factors thatwillmake consumers followa certain advicewhenmakingpurchasedecisions(Linetal.,2013;Cheung,Lee&Rabjohn,2008).WillingnesstoPay

The definition of willingness to pay (WTP), according to thework of Le Gall-Ely(2009), is the maximum price that a consumer finds acceptable to pay for products orservices. In the same paper, severalmethods related to assessing thewillingness to payhave been enumerated, which include contingent valuation, Vickrey auctions, Becker,DeGroot, Marschak (BDM) lotteries, and conjoint analysis to name a few. Being able toevaluatetheWTPofaconsumerissignificant,especiallyfortheformulationofcompetitivestrategies,thedevelopmentofnewproducts,andwhenvalueauditsarebeingconducted(Miller, Hofstetter, Krohmer, & Zhang, 2011). Bishop and Barber (2014) considered the


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willingness to pay of consumers to be an important factor for designing optimal pricingpoliciesforgettinganestimateforthedemandofnewproducts.

ThemethodsofassessingwillingnesstopaymentionedintheworkofLeGall-Elly(2009)havebeenusedinpaststudiestoanalyzetangibleproducts(e.g.bananas(Corriganand Rousu, 2008); blueberries (Shi et al., 2012); geneticallymodified food (Chiang et al.(2012);fairtradecoffee(DePelsmacker,Driesen,&Rayp,2005)),howeverthereareonlyalimitednumberofmaterialsthatdiscusstheassessmentofaconsumer’swillingnesstopayinthecontextofservices.ConjointAnalysis Conjoint analysis is a multivariate technique developed for the purpose ofspecifically understanding how respondents develop preferences for objects (Hair, Black,Babin,andAnderson,2009).Itisusedformeasuringbuyer’strade-offsamongproductsandservicesthathavemanyattributes(includingprice)(GreenandSrinivasan,1990).Also,itisused to get estimates of the impact of characteristics of products/services on consumerpreferences (Cattin and Wittink, 1982). In studies making use of conjoint analysis, it ispossibletopinpointtheimportanceofeachattributefortheconsumers,whichisknowntobe the relative importance of an attribute (RIA), and according toWind, Grashof, andGoldhar(1978),theRIAmaybecalculatedusingtheformula:

(max) (min)

(max) (min)1

100%i ii ni i

i

A ARIA

A A=

⎡ ⎤−⎣ ⎦= ×⎡ ⎤−⎣ ⎦∑

(1)

where: i =eachattributebeingtested,i=1,2,…,n iRIA =Therelativeimportanceofattributei (max)iA =themaximumutilityvaluefortheithattribute (min)iA =theminimumutilityvaluefortheithattribute

Althoughtherearesomematerialsinvolvingcertainaspectsoftourism(e.g.travelpackages (Chiametal.,2009);destinationchoice (TripahiandSiddiqui,2010);destinationbrandofShandong,China(LiandHudson,2016))thatmakeuseofconjointanalysis,thesestudies focus on identifying the importance of the attributes being studied and thepreferencesoftheconsumers.Forconjointanalysisstudiesthatfocusedonthewillingnesstopayofconsumers,thosewerestillfocusedontangibleproducts(e.g.fairtradecoffee(DePelsmacker,Driesen,&Rayp,2005);woodfurniture(Veisten,2007)).TheRelationshipbetweenPurchaseIntentionandWillingnesstoPay

Some studies have explored the relationship between purchase intention andwillingness to pay. Chiang et al. (2012) noticed that if a consumer’s prior purchaseintention was not considered, their willingness to pay for a premium would likely beoverestimated, and considered screening their potential respondents through identifyingtheir prior purchase intention first,which is beneficial for their study as the accuracy of


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their estimation is improved. Corrigan and Rousu (2008) found that the prior purchaseintentionof theBDMauctionparticipants in their study is related to theirwillingness topay, particularly for the behavior of the auction participants who understand that theauctionconducted isable toreveal thedemandthat is foundtobeconsistentwithwhattheorypredicts,givingan insightofanunbiasedestimateof theirwillingness topay.Shi,House,&Gao(2012)notedthatresearcherspayattentiontotheconsumer’swillingnesstopay for product attributes, emphasizing the importance of understanding how thepurchase intentionof consumershavean impacton thepartialbids for theattributesofproductswhenitcomestoexperimentalauctions,amethodwhichcanbeusedtoassessthewillingnesstopayofconsumers.TourisminthePhilippines ThePhilippinesisacountryinSoutheastAsiathatismadeupof7,107islandsthatcan be grouped into three major island groups, namely Luzon, Visayas and Mindanao(AboutthePhilippines,n.d.).Thetourismindustryissaidtobecontributingsignificantlytothe Philippine economy and it is an industry that has been experiencing remarkablegrowth.

In its National Tourism Development Plan (2011), the Philippine Department ofTourism has identified nine areas of tourism included in its product portfolio, namelynature tourism, cultural tourism, sun and beach tourism, leisure and entertainmenttourism, MICE and events tourism, health, wellness and retirement tourism, cruise andnautical tourism, diving andmarine sports tourism, education tourism. According to theTravel and Tourism Competitiveness Report that was released in 2015 by the WorldEconomicForum,thePhilippinesranked74thoutof141countries.

Beachesaredeemed to still be themostpopularproductsof the country (2012Tourism Year End Report, n.d.). A list written by Jefferys (2016) for the travelmagazineCondeNastTravelerenumeratestwoPhilippinebeaches,particularlyElNidoinPalawanaswellasPukaBeach inBoracay,as twoof “The20MostBeautifulBeaches in theWorld”.Thecountryisnotedtobethe“centerofglobalmarinebiodiversity”basedonthefindingsof scientific studies, thus it is regarded to be the best diving destination in the world(DepartmentofTourism2013Year-EndReport,n.d.)

ThePhilippineshas launched thePhilippineMedicalTourismProgramunder theDepartment of Tourism back in 2004 during the Arroyo administration (Picazo, 2013).BasedonthelistreleasedbytheInternationalHealthcareResearchCenterandtheMedicalTourismAssociation for the year 2015, the Philippines has been ranked 8th as amedicaltourism destination (Magkilat, 2016). Evangelista (2013) pointed out factors that werelisted in the study “Philippine Medical Tourism Compendium 2011: Facts, Figures &Strategies”suchasthecountrybeingabletoprovidehighqualityhealthcareatlowercostscomparedtoothercountries,internationallyaccreditedhospitalsthathavestate-of-the-artmedicalfacilities,competentmedicalprofessionalssuchasthathaveagoodcommandoftheEnglishthatputsthePhilippinesatanadvantagetogaina largermarketshareacrosstheglobe.ApplicationofeWOMinthePhilippineTourismIndustry

The Philippine Department of Tourism has launched several tourism campaignsover the years, including the2012 “It’sMore Fun in thePhilippines” campaign (Gatdula,2014),andthe2014“VisitthePhilippines2015”campaign(Cacho,2014).LonelyPlanet,a


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travelmagazine andwebsite, has recognized the Philippines as one of the ten countries(ranked8th)includedinits“BestinTravel2015”list(Hegina,2014). The table belowpresents the number of international arrivals for themonth ofFebruary for theyears2011up to2015. It canbeobservedthat thenumbershavebeenincreasingyearbyyear.

Table1.InternationalArrivals(February2011-2015)2015 456,5242014 422,6312013 418,1082012 361,9252011 318,912

Source:PhilippineDepartmentofTourism(http://www.tourism.gov.ph)

The campaign “It’sMore Fun in The Philippines” by theDepartment of Tourismwascreatedduetothe lackof imageaswellas theneedto increasethetargetmarkets’awareness of the Philippines (“Philippine Tourism Competitiveness”, 2015). Diola (2013)wrote about the campaign winning the Carmencita Esteban Platinum Award, thedistinctiongivenforthemostvalue-drivenandeffectivecampaignattheTambuliAwards2013, a competition, which recognizes the best, integrated marketing communicationscampaigns. In the same news article, itwasmentioned that theDepartment of Tourismwaspresentedwiththe“EffectivenessAdvertiseroftheYear”award.

InthewordsoftheSecretaryoftheDepartmentofTourismRamonJimenez,whatmadethecampaigneffectivewasthatitis“simple,easytoberemember,andclosesttothetruth”(Flores,2012).Thehashtagforthecampaign(#ItsMoreFunInThePhilippines)trendedworldwide,holdingthetopspot,onthesocialnetworkingsiteTwitterinjusttwodaysafterthemedia launch of the campaign (Buenaventura, 2013). In the same case study, itwasmentioned that aside from trending on Twitter, online searches for the Philippines havetremendously increasedfrom38millionin2011toover89millionin2012,aswellasthenumberofsearchesfor“VacationPhilippines”wentupby7%for2012.Thecampaignhasbeeneffectiveinbringinginternationaltouristsin,seeingthenumbersrisefrom3.9millionin2011to4.2millionin2012,4.6millionin2013,and4.8millionin2014(VisitorArrivalsbySubcontinentofResidence1996-2014,n.d.).

Figure1.ApplicabilityofeWOMDimensionstoPhilippinetourism


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ConsideringthatonlinetourismcampaignsareoneofthemanyformsofeWOMutilized for promoting particular destinations, the dimensions of eWOM that werediscussed earlier may be applied to the Philippine tourism industry setting as appearsbelow:

Itemsmarkedwith an asterisk (*)may be regarded as themost common leverswhenitcomestothePhilippines.

In addition,majority of the international tourists that visit the Philippines comefromAsia(Korea,Japan,China,Singapore,Taiwan,Malaysia,HongKong)aspresentedinthetablebelow.Table2.Top12MarketsbyVolumefortheMonthsofJanuaryandFebruary(2014/2015)

Rank Country Jan-Feb2015 %ShareJan-Feb2014 %Share

GrowthRate(%)

1 Korea 268,381 28.68% 220,831 24.98% 21.532 USA 142,226 15.20% 131,978 14.93% 7.763 Japan 83,489 8.92% 75,383 8.53% 10.754 China 62,976 6.73% 99,017 11.20% -36.405 Australia 40,906 4.37% 38,009 4.30% 7.626 Canada 31,068 3.32% 28,506 3.22% 8.997 Singapore 27,274 2.91% 27,538 3.12% -0.968 Taiwan 27,002 2.89% 24,615 2.78% 9.709 Malaysia 23,444 2.51% 19,741 2.23% 18.76

10 UnitedKingdom 23,341 2.49% 23,321 2.64% 0.09

11 HongKong 21,029 2.25% 21,160 2.39% -0.6212 Germany 15,244 1.63% 15,395 1.74% -0.98

Source:PhilippineDepartmentofTourism(http://www.tourism.gov.ph)

Palawan province will be the focus of this study. A part of Region IV-B, thisprovince that is made up of 1700 islands has made it to the list of the major touristdestinationsinthecountrybytheDepartmentofTourismofthePhilippinesfortheyears2009, 2010, 2011, and 2012, particularly its capital city Puerto Princesa. Palawan hasgainedrecognitionglobally,as it ranked firstamongthe“Top30 Islands in theWorld” intheCondeNastTraveller’s“Readers’ChoiceAwards2014”(Scherer,2014).PalawanisalsohometooneofUNESCO’sWorldHeritageSitesandoneoftheNew7WondersofNature,specificallythePuertoPrincesaSubterraneanRiverNationalPark(PuertoPrincesa,n.d.).


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RESEARCHDESIGNANDMETHODOLOGYBasedontheliteraturereview,theresearchframeworkusedforthestudybased

ontheworksofLinetal.,(2013),andZangeneh,Mohammadkazemi,andRezvani(2014)isshownbelow:

Figure2.FrameworkoftheStudy

Thefollowingarehypothesesbeingtestedinthisstudy:

H1 eWOMpositivelyaffectspurchaseintention.H2 Purchaseintentionpositivelyaffectswillingnesstopay.For thecollectionof thedataused in this study,paper copiesof the surveywere

giventorespondentsinthePhilippines.Atthesametime,anonlinesurveytoolwasusedso thatmore data can be collected. The link for the online surveywas shared on socialmedia,particularlyonFacebookandInstagram,anditwasintendedforrespondentswhoare university students aged 21 to 25 and young professionals aged 26 to 35who areworking in corporate offices in the Philippines, as individuals in these categories areobservedtologontotheirsocialmediaaccountsthemost.

Threescreeningquestionswereincludedinquestionnairesoastofilteroutinvalidresponses. Out of the 680 responses collected both electronically and through papercopies,only368wereusableafterfilteringoutinvalidresponses.

Some items initially included in the survey were deleted due to it having lowfactor loadings (less than 0.7),which affected the Construct Reliability (CR) andAverageVarianceExtracted (AVE) valuesaswell as themodel fitof the constructs that the itemsbelongedto.TheitemsthatwereleftafterotheritemsweredeletedareQUAL4(Themoredetailed theonline information, themore confident I feel aboutmy decision to visit thedestination), QUAL5 (Online information about the place are given by sources that aredeemed credible), QUAL6 (Online information given about the destination has sufficientreasons supporting the opinions), QUAL7 (Generally speaking, the quality of informationthatcanbefoundonlineishigh),QUAN1(Thereisalargenumberofonlineinformationforthe destination and accommodation, indicating its popularity), QUAN3 (The number ofonlineinformationallowsmetocollectandselectinformationthathelpsmemakebetterdecisions in line with the trip), QUAN4 (The destination and accommodation have highrankings online as well as gained positive comments, inferring that these places have agood reputation), EXPERT2 (Inmy opinion, the peoplewho provide the information are


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knowledgeable), EXPERT4 (Thepeoplewhoprovide the informationhavegivenme ideasthataredifferent from theopinionsofotherpeople), EXPERT5 (Thepeoplewhoprovidethe informationhavementionedsomeimportantthingsthat Ihavenotconsidered inmytravelplanning),EXPERT6(Therankofpeoplegivingthereviews(inreviewwebsites)helpsmecomeupwithbetterdecisions),EXPERT7(Thenumberof“helpfulvotes”giventotheonline reviewers (in review websites) are important in my opinion), PI1 (After readinginformation found online, it makes me want to see the places for myself), PI2 (I willconsider visiting the places in the future after reading information that can be foundonline)andPI3(Ihavetheintenttovisittheplacesdiscussedonlineinthefuture).

The statistical methods that were used for this study are Conjoint Analysis,ConfirmatoryFactorAnalysisandStructuralEquationModelling.TheworkofTripathiandSiddiqui (2010)shows an example of a conjoint analysismodel, like the equation shownbelow:

( )m ki

i=1 j=1U X ij ija x=∑ ∑ (2)

where,

( )U X representstheoverallutility(importance)ofeachattributeija representsthepart-worthutilityofthej

thleveloftheithattribute

i =1,2……….,m j =1,2……….,ki

ijx =1,ifthejthleveloftheithattributeispresent

=0,otherwise.The conjoint analysis portion of the study considered 4 attributes, particularly

accommodation, lengthof stay, tour inclusions, andprice.Eachattribute consideredhadtwolevels.Foraccommodation,theoptionsareSubliGuestCabinsandBalayInatoPension.Forthelengthofstay,theoptionsare3daysand2nights(3D2N)and4daysand3nights(4D3N).Forthetourinclusions,theoptionsareCityTourandUndergroundRiver,andCityTour,UndergroundRiver,andHondaBay.Fortheprice,theoptionsarePHP3,700andPHP5,600. Respondents then were asked for their willingness to avail of 8 different tourpackagesonasevenpointLikertScale(with1beingtheleastlikelytoavailand7beingthemost likely to avail) as generated by the statistical software SPSS using an orthogonaldesign(outof16possiblecombinations).Oneofthetourpackagesgenerated(3daysand2nights stay in Puerto Princesawith accommodation in Subli Guest Cabins, and the toursincludedareacitytourwithinPuertoPrincesaandatouroftheUndergroundRiverforPHP3,700)isatourpackagethatcurrentlyexistsinthemarket.


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TheworkofChou(2009)showstwoequationswhichisthewayconjointanalysismay be used to calculate for willingness to pay, where the price coefficient must becalculatedfirstandthenthepricewillingtobepaid.

High Price Low Pricehigh price low price

p

β ββ

−=

− (3)

where

pβ =pricecoefficient

high priceβ =partworthutilityvalueofthehighestprice

low priceβ =partworthutilityvalueofthelowestprice

High Price =HighestPriceLow Price =LowestPrice

any

p

WTPβ

β

Δ= − (4)

where pβΔ =differencesinutilityvaluesofdifferentlevelsofanattribute

The studywill be analyzing electronicword ofmouth using a second order CFA

model,witheWOMquantity,eWOMquantity,andinformationprovider’sexpertiseatthefirstorder, followedbyeWOMas the secondordermeasurement.Tobeable toanalyzethe relationships between eWOM and purchase intention as well as the relationshipbetweenpurchase intentionandwillingness topay, structuralequationmodellingwillbeutilized.Thefigurebelowrepresentsthefinalmodelusedforthisstudyaftersomeitemsweredeleted.


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Figure3.FinalSEMModel

RESULTSANDDISCUSSIONSAlmosthalf(43.2%)oftherespondentsofthestudyweremaleand56.8percent

of the respondents were female. The 21-25-age bracket made up 36.4 percent of thesample.27.4percentoftherespondentsearnmorethanPHP35,000,followedbythePHP15,001 toPHP20,000 incomebracket,whichaccounts for17.9percentof the sample.Amajorityoftherespondentsaresingle,whichisequalto69.6percentofthesample.Morethanhalf(57.5%)oftherespondentsareemployedinthecorporateworld.

Thesurveydatashowthattherespondentsgotinformationaboutthedestinationmostly from social media (75.8%), their family and friends (69.3%) and travel websites(54.6%).Asfortheirsourcesoftravelrelatedinformation,theInternetisthemostpopularsource,whichischosenby304respondents.ForthefamiliarityoftherespondentstowardseWOM,thethreeformstheyaremost familiarwithareonlinereviews(71.8%), followedbyfeaturearticles(49.2%)andblogentries(49.2%).

For Puerto Princesa tour packages, it can be seen that the respondents viewedprice as themost important attribute (38.987%), followed by tour inclusions (25.232%),lengthofstay(18.215%),andlastbutnottheleastistheaccommodation(17.566%).ConjointAnalysisResults

Forthecalculationofthepricewillingtobepaidbyonerespondent,theexistingtour package used in the study will be used as the basis for the calculation of therespondent’s willingness to pay (particularly the minimum price to be paid). The pricecoefficientwillbebasedontheutilityvaluesofthehighestpackagepriceandthe lowestpackageprice,and itwillbedividedbythedifferencebetweenthehighestpriceandthelowest price. After which, the willingness to pay of each respondentmay be calculatedthrough getting the difference between each level of the other attributes excluding theprice, anddividing it by the price coefficient calculatedbeforehand. The formula for the


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pricewillingtobepaidcarriesanegativesign,soiftheresultingvalueisnegative,itwillnothaveaneffectontheoverall/totalpricethattheconsumeriswillingtopay.

Forexample,onerespondentpreferstostayintheoriginalaccommodation(SubliGuestCabins),andwouldliketostayinPuertoPrincesacityfor3daysand2nights(sameasthebasepackage),butwouldprefertohaveanextratour forHondaBay,wouldhavePHP 20,800 as the price he/she is willing to pay, since the utility that the concernedrespondentwouldhaveforanextratourwouldbehighercomparedtothetoursincludedin the base package. The utility values for this particular respondent is as shown in thetableonthenextpage.

Table3.PartWorthUtilitiesforRespondentX

UtilityEstimate Std.ErrorAccommodation SubliGuestCabins 0.625 0.554 BalayInatoPension -0.625 0.554LengthofStay 3days2nights 0.375 0.554 4days3nights -0.375 0.554TourInclusions CityTourandUndergroundRiver -1.125 0.554 CityTour,UndergroundRiver,and

HondaBay1.125 0.554

Price 3700 -0.250 1.109 5600 -0.500 2.217(Constant) 4.000 1.753

Substitutingthepartworthutilityvaluesfortheattribute“price”into(3),theprice

coefficientiscalculatedtobe:

[ ][ ]( 0.500) ( 0.250)

0.0001316(5600) (3700)p

β− − −

= = −−

TheΔβvaluecomesfromsubtractingthepartworthutilityvaluesofonelevelofa

particular attribute from the other level of the same attribute (part utility of BalayInatoPension–partworthutilityofSubliGuestCabins;partworthutilityof4days3night–partworth utility of 3 days 2 nights; part worth utility of City Tour, Underground River, andHondaBay–partworthutilityofCityTourandUndergroundRiver).Giventhat thepricecoefficientfortherespondentmentionedabovecarriesanegativesign,theresultingWTPvalue for each attributemay also be negative. NegativeWTP valueswould not have aneffectontheoverall(final)pricethattherespondentiswillingtopayfor,inthiscase,tourpackagesforPuertoPrincesa,Palawan.

Table4.WillingnesstoPayCalculationforRespondentX

Attribute Δβ βp WTP FinalWTPAccommodation -1.25 -0.0001316 -9500 3700LengthofStay -0.75 -0.0001316 -5700 3700TourInclusions 2.25 -0.0001316 17100 20800


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StructuralEquationModellingResults

Themainpurposeofthestudyistoknowhowelectronicwordofmouthaffectsaconsumer’s intention to purchase tourism-related products, and in turn, how purchaseintentionhasaneffectonaconsumer’swillingnesstopayfortheaforementionedproduct.

Themodelshowninthenextpageissaidtonotbeagoodmodelbasedontheχ2

test, as thep-valueof the test is less than0.001.However, thenormed chi value showsotherwise,asthevalueofthenormedchiis2.203,whichislessthan3.BoththevaluesforGFI (0.929) and AGFI (0.905), and show a good model fit and the PGFI value (0.690)indicatesthatthemodelissimpleenough.

Figure4.ResultsofSEMAnalysis

TheconclusionaboutthemodelfitbasedontheRMSEAvalueisnotalignedwith

theotherindicessincetheRMSEAvalue(0.057)forthismodelonlyindicatesareasonablefit.Hoelter’sNvaluesareabove200forboththe0.05(207)and0.01(226)levels,whichisgood. The model fit, as seen from the NFI (0.881) and RFI (0.859) values, is not goodenough as their values are lower than 0.9. The values of IFI (0.932), TLI (0.918), andCFI(0.931)showthatthemodelhasanokayfit.Parsimony-wise,themodelissimpleenoughasseenfromthevaluesofthePNFI(0.742)andPCFI(0.783).

Overall,mostof the indices (GFI,AGFI,RMSEA,Hoelter’sN, IFI,TLI,CFI) indicate

anokay/goodmodelfit forthemodelshownabove,exceptforsomeindicesthatshowabadmodelfit(NFI,RFI).ThemodelissimpleenoughbasedonparsimoniousfitindicessuchasPGFI,PNFIandPCFI.


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ResultsoftheHypothesisTestTable5.ResultsoftheHypothesisTestHypothesis Relationship Coefficient P-Value Conclusion

H1 eWOMàPurchaseIntention

0.676 *** Thehypothesisissupported.

H2 Purchase Intention àWillingnesstoPay

0.032 0.569 Thehypothesisisnot

supported.***indicatesap-valuelessthan0.001.

It can be seen that electronic word of mouth has a positive influence on aconsumer’sintentiontopurchasetourpackages.Asfortheotherhypothesisthatinvolvesanalyzing the effect of purchase intention on a consumer’s willingness to pay, it is notsupportedbasedontheresultsofthisstudy.

Theremay be several reasonswhy the findings of this study are not consistentwithpreviousones.Itcanbeduetotheobjectusedforthestudyisinfact,aserviceratherthanatangibleproduct.Theintentiontopurchaseproductsiseasiertoquantifycomparedtoservices,sinceapersonwillalreadyknowwhataproductislikeevenbeforepurchasingit.As for services, it ismoredifficult since it is intangible, and thereareother factors toconsiderpriortopurchasingservicesliketourpackagessuchaswhetherornothe/shecanpayfortheseservices,andatthesametimeifhe/sheactuallyhasthetimetogoonatour(given a particular package);whereas for products, the factors that the individual has toconsiderissimpler–inmostcases,theyonlyconsidermoneyasoneofthefactorsbeforetheybuycertainproducts. Ithasbeenobservedthatthedemandforproductsandservicescanbeinfluencedbypricingstrategies(Inkson&Minnaert,2012).Thismeanstosaythatwhenthepriceofaparticularproductorserviceisdecreased,thedemandforitwillincreaseandviceversa.Inthe research done by Voss, Parasuraman, & Grewal (1998), it was explained thatcompanies that provide services utilize the demand oriented pricing approach, whichpertains tothevariations in thepriceof theproductsdependingonthetime,asservicescannotbeinventoriedunlikeproducts.Chiametal.(2009)notedpricetobeakeydecisionconsideration when it comes to the purchase of products related to travel. The tourpackagesused for this studyare lowcostpackages, since the initial considerationof theresearcheristhattravellerswouldbeconsciousoftheexpensesthatwillbeincurredwhenitcomestotravelling.

CONCLUSIONANDRECOMMENDATIONSThe study conducted placed emphasis on the role of electronic word of mouth.

Basedonthedatacollectedfrom368respondents,itcanbeseenthattheserespondentshavereliedontheInternetingeneral(84%),andspecificallyonsocialmedia(roughly76%),travel websites (approximately 55%) and blogs/online feature articles (about 48%) fortravel planning as well as for information related to the destination in focus, PuertoPrincesa. It canalsobeseen in the results that theabout72percentof the respondentswhoparticipated in this study aremost familiarwithonline reviews as oneof themanyformsofeWOM.


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The findings of this study highlighted the positive effect of eWOM on purchaseintention.TheresultofthisstudyisconsistentwiththestudiesdonebyParketal.in2007,Linetal. in2013,andZangenehetal. in2014.Thecoefficient indicating the relationshipbetweeneWOMandpurchase intention is0.68,andthep-valueof thehypothesis is lessthan0.001,whichindicatesthattherelationshipbetweenthesetwovariablesissignificant.Thisgoestoshowthatmakinguseof information(intheformeWOM)prior tomakingapurchase decision does have an impact on the intention to purchase. As for therelationshipbetweenpurchase intentionandwillingnesstopay,thefindingsofthisstudyarenotinlinewiththeworkofCorriganandRousuwhichwaspublishedintheyear2008.Thecoefficientthatshowstherelationshipbetweenpurchaseintentionandwillingnesstopay is 0.032, and the p-value of the hypothesis is 0.569, which means to say that therelationshipbetweenthesetwovariablesisinsignificant.

ManagerialImplications

The findings of this studymay be taken into consideration individually. From thedatacollected, itcanbeseenthat therespondents’mostused Internet-basedsourcesofinformationabout thedestination inquestionaresocialmediaandtravelwebsites.Also,therespondentscollectedinformationfortheiritinerarymostlyfromtheInternet.Havingsaid this, businesses in the hospitality and tourism industries should take advantage ofInternet-based information sharing platforms (particularly social media and travelwebsites) for their operations. Given the positive relationship between eWOM andpurchaseintentionasproveninthisstudyaswellaspastresearch(Parketal.,2007;Linetal.,2013;Zangenehetal.,2014),utilizingsocialmediaaswellasotherformsofelectronicinformation distribution channels may help these businesses to gain popularity, attractprospectiveclients,retaincurrentcustomers,collectfeedbackabouttheservicesthatarecurrently being offered, and promote newly launched offerings such as tour packages,promotionalroomratesandthelikethattravellerswouldconsidertohavethebestvaluefor themoneytheyaregoingtospendontravel.When itcomesto theconjointanalysispart of this study, it can aid businesses come up with new offerings that would, mostimportantly, take price into consideration. As an attribute considered when performingconjoint analysis, it would be possible to come up with an optimal combination ofattributesfornewofferings,whicharereasonablypriced.This isconsideringthefactthatconsumers have varied preferenceswhen it comes to product and/or service attributes,especiallyforproductsthatarehighlycustomizableliketravelpackages.

LimitationsoftheStudy

Thisstudywasbasedonpreviousresearchthatinvolvedtheintentiontopurchasetangible products. As for analyzing the relationship between purchase intention andwillingness to pay, it also involved tangible products. The items that were used for thesurvey questionnaire were based on these studies, which is a limitation since the thingbeingresearchedonforthisstudyistourpackages,whichisessentiallyaserviceduetoitsintangible nature. Also, there are only a limited number of materials available when itcomestoanalyzingtherelationshipbetweenpurchaseintentionandwillingnesstopayinthecontextofservices.Thedifferenceinthemethodsusedtoanalyzewillingnesstopayinpreviousstudieswaslikelytobethereasonwhyadifferenceintheresultsexists.

As for assessing the effectiveness of eWOM when it comes to influencing theintentiontovisitaparticulartouristdestination,itwouldbebetterifonlyfirsttimevisitors


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Strategicmanagementwithlearningfromfailure:ACaseStudyonSagikyoCorporation

inJapan

SanetakeNagayoshiShizuokaUniversityShizuoka,Japan

[email protected]

JunNakamuraShibauraInstituteofTechnology

Tokyo,[email protected]

ABSTRACT

Every company can failwhen theymake an attempt on a new challenge, and it is quiteimportant to learn from the failure in order to avoid repeating it and improve theirorganizationalcapability.Unfortunately, fewcompanieshavebeengoodat learning fromfailure.Inthispaper,webrieflyshowedauniquecompanyinJapan,whichhadsucceededinestablishingtheirsystemforlearningfromfailure,andimprovedtheirperformanceandhadsustainedtheircompetitiveness.Westudiedtheirstrategicmanagement,whichoptimizedtheorganizationwiththeirlearningactivityfromfailure.Keywords:Learningfromfailure,StrategicManagement,Alignment

INTRODUCTION

TherewasauniquecompanyinJapan,whichhassucceededinestablishingtheirwayforlearningfromfailure.Thepresidentinthecompanysaidtheyhadneverrepeatedsame failures after reviewing them through their learning system, and eventually theyimprovedtheirbusinessperformanceandsustainedtheircompetitiveness.

Manypeopleknow importanceof learning fromfailure,andmostmanagerswanttheirorganizationtodo it inorderto improvetheirperformance. It is importantto learnfrom successful case study, but it is more important to learn from failure (Edmondson,2011).MadsenandDesai(2010)findthatorganizationslearnmoreeffectivelyfromfailurethan success, that knowledge from failuredepreciatesmore slowly than knowledge, andthat prior stocks of experience and the magnitude of failure influence how effectivelyorganizationscanlearnvariousformsofexperience.

We should note that there are few organizations, which are very good at andsucceedinlearningfromfailure(CannonandEdmonson,2005).Companieshaveinvestedsignificantmoneyandeffortintobecomingleaningorganizationwithabilitytolearnfromfailurestrugglewithday-to-daymindsetandactivitiesoflearningfromfailure(Edmondson,2002).

We assume that there are a lot of company executives who are eager for theircompanytosucceedinlearningfromfailureforbusinessperformanceimprovement.Sincethere are however also a lot of barriers to conduct learning-from-failure activity inorganization, it isdifficult forthemtogetthroughtheactivity.Thustheyneedastrategyforlearningfromfailure.Butitunfortunatelyseemstobeveiled;wecannotreferthekeyforlearningfromfailure.Thusalotofcompaniesstillstragglewithlearningfromfailure.


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Weapply,inthispaper,theJapanesecompany,whichhassucceededinestablishingtheir system for learning from failure and improved their business performance. Weexplorekeysforsuccessinlearningfromfailurefromthepointofstrategicmanagement.

Thepurposeofthispaperistoprovideareferentialcasestudytowardasuccessinorganizationlearningfromfailure.Weheresetageneralresearchquestionforthepurposein this paper. “What is the strategicmanagement in SangikyoCorporation (2016),whichhassucceededinlearningfromfailure?”

RELATEDSTUDIES

Saavedra, Fernandez and Lindemann (2015) suggest a comprehensive model forknowledgeapplication.Inthemodel,knowledgetransferisinfluencedbyfactorsrelatedtothe company’s infrastructure like organizational roles, stabling teams and IT system.Knowledgeintegration/creationisinfluencedbyfactorsrelatedtoknowledgeitself,whichareknowledgeaffinity,depthandbreadth.Knowledgeapplication is influencedbysocio-psychological factors, because it is personal decision whether a person apply availableknowledge or not. They, however, do not mention the strategic alignment in detailalthough they cite Zack (1999), which suggests influence to the infrastructure-relatedfactors,knowledge-relatedfactorsandpsychosocialfactors.

Inthisregard,wehaveonequestionthatwhatisstrategicalignmentinknowledgemanagement,especiallylearningfromfailure.

The infrastructure-related factors include organizational infrastructure (Saavedra,Fernandez & Lindemann, 2015). On the contrary, Carmeli (2007) suggests barriers forlearningfromfailurelikethis:

Failureandfaultarevirtuallyinseparableinmosthouseholds,organizations,andcultures.Everychild learnsatsomepoint thatadmitting failuremeanstakingtheblame.Thatiswhysofeworganizationshaveshiftedtoacultureofpsychologicalsafetyinwhichtherewardsoflearningfromfailurescanbefully realized.When you feel psychologically safe, learning from failures isenabled.

Ardichvili and Page and Wentling (2003) study motivation and barriers for

knowledge sharing and suggested it is necessary to develop various type of trust forremovingthebarriers.LiandChang,etal.(2014)testpreviousstudiesandconcludestrongtie in organization, trust and common cognition are influencing factors for knowledgetransfer.

Itseemstobeakeystrategytoestablishstrongtie,trustandcommoncognitioninorganizationforconductingwelllearningfromfailure.Herewealsohaveanotherquestionthat how we can establish strong tie, trust and common cognition in organization forconductinglearningfromfailureregardingbusinessstrategy.

Nagayoshi and Nakamura (2015a) have already explored the motivation andremoverofbarriersforlearningfromfailureinthecompany.AndNagayoshiandNakamura(2015b) have explored encouragement for knowledge application and positive feedbackloopinthecompany.TheITsysteminthecompanywasalsomentionedinNagayoshiandNakamura (2015a, 2015b). But wewere unfortunately not able to reach a study, whichmentionstherelationshipbetweenbusinessstrategyandlearningfromfailure.Thushereisnecessitytoexploreastrategyinlearningfromfailure.


43

RESEARCHQUESTIONWealreadymentionedthegeneralresearchquestioninthispaperas“Whatisthe

strategic management in Sangikyo Corporation, which has succeeded in learning fromfailure?”Andweheredecompose it intotwosubjectiveresearchquestionsbasedontherelatedstudiesintheprevioussection.

Thefirstoneisstrategicalignmentrelatedquestion,as“Whatisalignmentbetweenbusinessstrategyandlearningfromfailureinthecompany?”

Thesecondoneisstrongtie,trustandcommoncognitionrelatedquestion,as“Howcan we establish strong tie, trust and common cognition in organization for conductinglearningfromfailureregardingbusinessstrategyinthecompany?”

RESEARCHMETHOD

Since a lot of company executives do not disclose their organization’s failureexperience, thereareunfortunately so fewavailable cases to study thatwecannothaveenoughknowledgeaboutthewaytosucceedin learningfromfailure. Inthispaper,thus,weneedtodoacasestudyindetail.

We conduct a qualitative research with a case in the Japanese company namedSangikyoCorporation(2016).Firstofall,weintroducethelearning-from-failureactivityinSangikyoCorporation in thenextchapter.Second,weanalyzethecase fromthepointofalignment between their business strategy, their learning-from-failure activity and workstyle.Third,asdiscussion,weexploreastrategicreasonforthemtoconductlearning-from-failureandthewaytocreatestrongtie,trustandcommoncognitioninthecompany.

Since thecase itselfwashoweveralready introduced inNagayoshiandNakamura(2015a,2015b,2015c) indetail,weprovideabriefdescription inthenextchapter inthispaper.Wewould likeaskyoutoreferthearticles ifyouwishtoknowthedetail.Forthesakeofreader’sconveniencehere,weshowasummarizeddescriptionfromNagayoshiandNakamura(2015a,2015b,2015c)inthenextchapter.

CASE

SangikyoCorporationwasfoundedin1965primarilyasacompany,whichdealtwithengineering services for installation and maintenance of microwave communicationsystems. The President thought new challenge sometimes led them failure, but alsothought it important to avoid repeating the same failure. They accumulated 41 failurecases and lessons learned from them since 2005. Mr. Sengoku, the president, and Mr.Tokunaga, a director at Sangikyo Corporation emphasized that they had never had thesamefailuretheyexaminedinthetaskforcessincetheystartedthem.Thenotablepointsarefollowing;

• Anemployeewhofaultedand/ormadeanincidentcausingfailurewasappointedasleaderinataskforceteam.

• Theleaderofthetaskforceteamconductedthetaskforceteam,madeareportanddeployeditthroughtheirknowledgesharingplatformtoalltheemployees

• Thereport includedverification,causalanalysisandcountermeasuresof failure,and inwhichall data includingnameof leader in task forceand customer, andnumberoflostmoneywasrevealed

• At the same time, they also disclosed a report to related customer who wassuffered from the failure, and they got trust and further business from thecustomeragain


44

• All the employees were able to browse the reports through their knowledgesharingplatformanywheretoavoidthesamefailures

• SangikyoCorporation implementedanappraisal system inwhichemployeewasevaluatednotmainlyonhis/herpersonal individualperformancebutmainlyonhis/herskill

• CompanyexecutivesinSangikyoCorporationhadtriedtobuildtheircapabilityfornewbusinessdevelopmentbyapplyinglearningsintaskforces

CASEANALYSIS

EnvironmentAnalysis

Thecompany focusedonengineering services for installationandmaintenanceofmicrowave communication systems, and their customers were companies like wirelesstelecommunicationserviceprovidersinJapan.

This industry grew rapidly between late 1990s and 2000s. The number ofsubscribers in Japanese mobile companies increased from 8.7 million in 1996 to 152.9million in2015basedonTelecommunicationCarrierAssociation in Japan.Theamountofthe capital investment in equipment from 2004 to 2013, during which the task forceactivityhadbeentakenplace,inJapanesecommunicationindustrywasstableasshowninFigure1.

Figure1.CapitalInvestmentinJapaneseCommunicationIndustry

Since the industryhadbeengrowingduring theperiod in termsof thenumberofsubscribersinJapan,akeyfactorforsuccessinthemobileindustryinJapanwascapabilityto provide stable and attractive service to customer. Accordingly, the mobile servicecompaniesinvestedhugeamountofmoneyonnewequipmenttoprovidestableandgoodqualityofattractivewirelesscommunicationservice.Andtheyneededanewtechnologytoprovideattractiveservicetocustomer.Thusakeypointtowinintheindustrywasassumedto have a capability to install new technology, which also advanced rapidly, earlier andfasterthancompetitors.

2,799

2,365

2,761 2,802 2,670 2,640

1,664 1,572 1,5441,779

0

500

1,000

1,500

2,000

2,500

3,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(Bil.Yen)


45

One of the issues was how they implemented the new technology, which wasnecessarytoprovideanattractiveserviceandwasnotestablishedyet.Theyhadarisktofailinimplementingthetechnologybecausetherewerefewprovenmethodsforsuccessfulinstallation. Japanese mobile companies were seen to be so conservative that theemployeesdidnotwanttotakerisktoselectanewtechnology,whichwasnotprovenverywell. On the other hand, one key for success was implementing a new technology toprovidegood,stableandattractiveservicetocustomer.Thustheyhadadilemmabetweenriskavoidancefortheirsafeandrisktakingforattractiveservice.

BusinessStrategyofSangikyoCorporation

Sangikyo Corporation found a business opportunity in the conflicting situation in amobileservicecompanyinJapan.Theyfoundthatmobileservicecompaniessoughtforapartnercompanywhotookarisktohaveanewtechnologyandtoimplementitonbehalfofthem.Forthisreason,SangikyoCorporationtookarisktohaveanewtechnology,andprovided implementation and maintenance service with Japanese mobile servicecompanies. Sangikyo Corporation, however, sometimes failed because they dealt with anew technology, which was not proven very well. They had to accumulate knowledgethroughexperiencewiththetechnologyinordertopreventdefect.

Learning-from-failureactivityandthebusinessstrategyinSangikyoCorporation

SinceJapanesemobileservicecompanieswerealsoassumedtoknowthat failure

mightsometimeshappenduetolittleproof,theyjustifiedinmakingonejusttimefault.Itwasquite important forSangikyoCorporationtoavoidrepeatingsamefailure inordertosucceedinthebusiness,therebythelearningfromfailurewasakeysuccessactivitytowinthebusinessinSangikyoCorporation.

Thenumberofmobile servicecompanieswas four in Japan,and itwasalsoquiteimportantforSangikyoCorporationtoretaincustomers.Since itwasakeysuccessfactorto continuously do business with same customers for long time, Sangikyo Corporationneeded to be trusted from the customers by accumulating technical knowledge in newtechnology,whichmobileservicecompanydidnotwanttodealwith.Withthisregard, itwasalso important for SangikyoCorporation toaccumulateknowledgeacquiredby theirlearningactivity.Figure2showsthatthelearningfromfailureinSangikyoCorporationwastheiroperationalstrategyforachievingtheirbusinessstrategy.

Figure2.Learningfromfailureasanoperationalstrategyinthecompany

CompetitiveFactorinTelecomIndustry

NewTechnology

FailureinImplementingNew

Technology

Allowanceforoncefailure,butnotsecondtime

Importanceoflearningfrom

failure togettrust

Thecompanyselectedtheindustry:Engineeringservicesforinstallationandmaintenanceofmicrowave

communicationsystems

• Lesscompetition->attractive• Blue-chipcompanyneverselected


46

Rule,SystemandInfrastructureforthelearningfromfailureIt was also necessary for Sangikyo Corporation to build organizational learning

systemforlearningfromfailure,andtheystartedthetaskforceactivityforreviewingandcounter measuring failure. Their appraisal system was seemed to be suitable for theirlearning activity, under which employee in the company was evaluated based more onpersonal skill than on individual performance. When employee contributed to provideimportant knowledge and/or organized a learning task force team well, he/she wasrecognizedaskilledpersonnel.Thusemployeeswerewillingtodedicatetheirtimetothelearning activity. Their annual reward was also decided based more on companyperformancethanonindividualperformance,sothatemployeeprovidedtheirknowledgeto improve company performance. In addition, employee, who contributed to provideknowledge and/orwho showed an excellent performance in learning task force activity,mightgetaprize.

TheyhadknowledgesharingplatformnamedCyberManual(SangikyoCorporation,2016) toaccelerate sharing knowledgeamongemployees,which seemed tobeuseful todeployknowledgelearntfromthelearningactivitytoalltheemployeesinthecompany.

Collaborativetaskinthecompany

Most tasks in the companywere generally achieved throughmultiple employees’collaborativework.Theysharedonetaskwithcolleaguesandsometimesworkinshifts.

Anyemployeescouldmakeafaultleadingbusinessfailurebecausetheysharedjobandwork in shifts. Even if a certain employeeby chancemakes a fault today, anyotheremployeecouldmakethesamefaultifhe/sheworksonthejobinhis/hershift.Employeesin thecompany, innature,weresoeager toprevent fromdoinga fault that theyhad tolearnhowtoavoidafault.Thustheylearnfromtheircolleagues’fault.

Contentintheknowledge-sharingplatform

Content in the knowledge-sharing platform was interesting for employee. WeaskedtheentireemployeeinSangikyoCorporationtoanswerthefollowingquestion;“Doyou visit the learning from failure site on CyberManual because it shows insightful anduseful knowledge for yourdaily job?” Answer formulationwas Likert scale type from “-3(Notatall)”to“+3(Yes,definitely)”.Weasked900employeesinSangikyoCorporationinSeptember2015,andwereceived829answersinOctober2015.Figure3showsthereasonwhyemployeevisitedthewebsiteontheknowledgesharingplatform.

Theemployeesinthecompanyvisitedtheknowledgesharingwebsitebecausethepostedcontentsweredirectlyrelatedandusefultotheirdailyjob.Theknowledgesharingsite provided valuable knowledge which was directly useful to their daily job, and theywereabletosolvetheirproblem.Wecanassumethatdirectrelationtojobwasthereasonbecauseemployeewasinterestedintheknowledgelearntfromfailure.Thuswefindthatemployeevisitedthewebsitebecausethepostedcontentsweredirectlyrelatedandusefultotheirdailyjob


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Figure3.Reasonwhyemployeevisitedtheknowledge-sharingplatformInterdependencyinknowledgesharing

Employees in the company wanted to have knowledge to prevent them fromdoing a fault, and they were able to have knowledge through the knowledge-sharingplatformonlywhencolleaguekindlydisclosedtheknowledgeonit.Ifafaultingemployeedidnotdisclosehis/her fault,his/hercolleagueswerenotabletohavetheknowledgetoavoid the same fault. Even if the faulting employeemade the fault today, he/shemightmake another fault tomorrow. In other word, only when a faulting employee willinglydisclosed his/her knowledge for prevention, he/she was able to reach colleagues’knowledgeforotherprevention.Hencetherewasinterdependency,whichleadpreventingcolleagues from repeating same fault. Then the relationship among employees in thecompany got stronger into a strong tie, trust and common cognition, which meantwillingnesstocontributefortheorganization.

DISCUSSION

StrategicalignmentbetweenthebusinessstrategyandthelearningactivityWe discuss the analysis to answer the research questions. The first research

questioninthispaperis“Whatisalignmentbetweenbusinessstrategyandlearningfromfailureinthecompany?”

SangikyoCorporationdecidedtobelongtothewirelessengineeringindustry,whichgrew rapidly. The mobile service companies which wanted to have a partner companyprovidinganewtechnologyanditsimplementationservice.Sincethenewtechnologywasnot proven, even the partner company sometimes failed. Sangikyo Corporation as apartner company established their own system for learning from failure for preventingthemselvesfromrepeatingsamefailurewithaccumulatedknowledge.

15%

20%

40%

20%

2% 1% 2%

Is the Learning from failure site closely related to my daily job so that I may suffer

from the similar situation ?

3:Yes, definitely 2: 1: 0:Neutral -1: -2: -3:Not at all


48

TherewerealimitednumberofmobilecompaniesinJapan,andtheinitiativewasto get trust from the limited number of customers in the mobile industry and to getcontinuous business. In addition, they set internal management system like appraisalsystem, which was suitable for the learning system and built the knowledge-sharingplatform. Consequently, there was optimized alignment among their business strategy,providingservice,operation,internalmanagementandITinfrastructure.

As faras thecaseanalysis, itwas important for thesuccess in their learning fromfailure in the company to keep consistency among business strategy, providing service,operation,internalmanagement,ITinfrastructure.

Generatingastrongtieinthecompany

The second research question is “How can we establish strong tie, trust andcommoncognitioninorganizationforconductinglearningfromfailureregardingbusinessstrategyinthecompany?”

Firstofall,therewasinterdependencyforlearningknowledgeforpreventingfromfault. Only when employee disclosed their knowledge, he/she was able to have otherknowledge for prevention. Thiswas assumed tobeoneof the key factors to generate astrongtie,trustandcommoncognition.

Second,theappraisalsystemandcompanyexecutivemessagewereassumedtobeimportant tomakemutual trust forknowledgesharing.ArdichviliandPageandWentling(2003), Li and Chang, et al. (2014) mentioned trust is important to remove barriers forknowledgesharing.Theappraisalsystem,underwhichemployeewasevaluatedbasedonskill and company’s performance, removed individualism and got them to contribute totheircolleaguesandthecompany.Inaddition,theexecutivemessageencouragedthemtogetforwardtocollaborativelearningfromfailure.Thiswasalsoassumedtobeoneofthekeyfactorstogenerateastrongtie,trustandcommoncognition.

IMPLICATIONSaavedra, Fernandez and Lindemann (2015) suggest a comprehensive model for

knowledgeapplication.It,however,lacksdetailexplanationforstrategicalignment.Intheprevioussection,wearguedtheimportanceofoptimizingalignmentamongtheirbusinessstrategy, providing service, operation, internalmanagement and IT infrastructure for thesuccessoflearningfromfailureinthecompany.Thismayhelptovalidatethemodel.

Andthemodelshouldbeadjustedevenifourfindingscanbeappliedtothemodel,which is forknowledgeapplication,becauseour findingsarerelatedtothe learningfromfailure in the company. Although Saavedra, Fernandez and Lindemann (2015) showstrategic alignment affects infrastructure-related factors, infrastructure-related factors,knowledge-relatedfactorsandpsycho-socialfactors,itshouldbeastrategythataffectsthefactors,andallthefactors includingstrategyshouldkeepmutuallyoptimizedandalignedeachother.

CONCLUSIONInthisstudy,weexploredstrategicmanagementforthelearningfromfailurewith

the study in the Japanese company, and discussed their strategicmanagementwith thelearning from failure. Although strategy so highly depends onbusiness environment andcontext that it isdifferent fromcompany tocompany, it is suggested tobe important to


49

keep consistency among business strategy, providing service, operation, internalmanagement,ITinfrastructure.

First, we studied their learning-from-failure initiative from the point of businessstrategy.We found that they implemented toexecute the learning-from-failure initiativeforachievingtheirbusinessstrategy,andtheyalsoimplementedinternalmanagementandITinfrastructureforexecutingthelearning-from-failureinitiative.

Second,LiandChang,etal.(2014)testandconcludestrongtieinorganization,trustand common cognition are keys for knowledge transfer, but we had not had a clearknowledgeforthewaytobuildtheminorganization.Andweexploreditthroughthecase.Since employee in the company shared their taskwith colleague, every employee couldmake the same fault that colleague made. We found that there was interdependencyamongemployeeforpreventingfaultandtheysharedtheirownknowledge-evenfailureexperience-fordoingit.Thisseemedtobeakeyforbuildingastrongtieinthecompany.

The findings in this study rely just on a single case study, which is qualitativelyanalyzedinthispaper.McLaughlin,PatonandMacbeth(2008)findthatbarriersimpactonorganizational learning take place at process level rather than organizational level.Ranjbarfard, Aghdasi, et al. (2014) suggest barriers of knowledge generation, storage,distributionandapplicationaredifferentbetweenorganizationssuchasgasandpetroleum.Hencetheresultwecanhavefromthispapermaybeapplicableonlytothecasecompany.

Togeneralizethefindingswemustdomoresufficientresearchnotonlyfromqualitativeperspectivebutalsofromquantitativeperspectivebeyondthispaper.

ACKNOWLEDGEMENTS

We would like to thank Mr.Yasukazu Sengoku, the President of SangikyoCorporation and Mr.Masashi Tokunaga, a director of Sangikyo Corporation for theirdetailedcomments,suggestions,andconstantsupport.ThisresearchwaspartiallyfundedbyagrantfromJSPS(JSPSKAKENHIGrantNumber15K00319).

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