Linking price satisfaction and business performance in Malaysia's dairy industry

Abstract

Purpose – Price satisfaction is an influential factor in competitive performance and business success. Strong price satisfaction enhances and sustains high quality business relationships, leading to improved profits for chain participants. The purpose of this paper is to explore the dimensions of price satisfaction in the context of the Malaysian dairy industry. The aim is to determine which dimensions of price satisfaction affect relationship performance between Malaysian dairy producers and the dairy processers who purchase their milk. Design/methodology/approach – In total, eight hypotheses are tested using partial least square methods on survey results from 133 dairy producers in Malaysia. Findings – The study results suggest that relative price, price-quality ratio and price fairness influence producers’ loyalty and improved business relationship performance. Practical implications – To achieve long-term, sustainable business relationships involving consistent high quality supplies, milk buyers need to understand and capture the price satisfaction dimensions. Originality/value – The paper provides insights into the important linkages between price satisfaction and business performance in an agriculture industry.