The influence of selected factors on the perceptions of managers of medium business firms regarding legal firms

Tait, M.; Tait, M.; Van Eeden, S. M. Article The influence of selected factors on the perceptions of managers of medium business firms regarding legal firms South African Journal of Business Management Provided in Cooperation with: University of Stellenbosch Business School (USB), Bellville, South Africa Suggested Citation: Tait, M.; Tait, M.; Van Eeden, S. M. (2000) : The influence of selected factors on the perceptions of managers of medium business firms regarding legal firms, South African Journal of Business Management, ISSN 2078-5976, African Online Scientific Information Systems (AOSIS), Cape Town, Vol. 31, Iss. 4, pp. 166-170, https://doi.org/10.4102/sajbm.v31i4.748 This Version is available at: https://hdl.handle.net/10419/218235 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ 166 S AfrJ.Bus.Manage.2000,)!(4) The influence of selected factors on the perceptions of managers of medium business firms regarding legal firms M. Tait* Department of Business Management, University of Port Elizabeth, P.O. Box 1600, Port Elizabeth, 6000 South Africa [email protected] M.Tait Department of Public Law, Vista University. Private Bag X6 I 3. Port Elizabeth, 6000 South Africa [email protected] S.M. van Eeden Department of Business Management, University of Port Elizabeth, P.O. Box 1600, Port Elizabeth, 6000 South Africa [email protected] Received August 2000 The South African service provider is faced with an increasingly turbulent and complex competitive environment. Factors which impact specifically on the environment of service firms include the growing importance of consumerism and a drastic increase in competition. A factor that impacts directly on the growing competition amongst providers of legal services is the increase in law graduates and commensurate increase in qualified attorneys and advocates entering the market. This article represents an exploratory study establishing the relative value attached by medium business in South Africa to certain factors pertaining to firms providing legal services. • Author to whom correspondence should be addressed. Introduction Finns cannot survive on their own, in other words completely isolated, because finns are part of the environments within which they function. Finns receive inputs such as the factors of production from the external environment and deliver outputs to the environment. Enterprises are exposed to changes in these environments. These changing environments may have positive or negative consequences for enterprises. Various interactive forces (environmental variables) affect the environment of enterprises. This creates certain opportunities or threats for finns (Marx, Van Rooyen, Bosch & Reynders, 1998: 37). The South African service provider is thus faced with an increasingly turbulent and complex competitive environment (Griffith & Rust, 1997: 109-116). Factors which impact specifically on the environment of service finns (such as the providers of legal services) include the growing importance of consumerism and a drastic increase in competition (Harrel & Fors, 1992: 299-306; Kahn, 1998: 45-53). The latter factor has a number of causes including, amongst others, a stagnating economy (Griffith & Rust, 1997: 109116). A factor that impacts directly on the growing competition amongst providers of legal services is the increase in law graduates and commensurate increase in qualified attorneys and advocates entering the market. Figures supplied by the Law Society of the Cape of Good Hope and the Law Society of the Transvaal indicate an increase in excess of 50% in the number of practising attorneys in both the fonner provinces of the Cape and Transvaal between the years 1990 and 1997. In the fonner Cape Province (including the fonner Ciskei and Transkei) there were 2 027 practising attorneys in 1990. This figure increased to 3 173 in 1997, amounting to an increase of 56.5%. In the fonner Transvaal there were 3 632 practising attorneys in I 990. This figure increased by 54. 7% to a total of 5 621 in 1997. These figures represent a drastic increase in the number of providers of legal services, specifically as far as attorneys are concerned. Objectives and problem investigated In order for a finn to survive and prosper in an environment as indicated above, the finn must adopt a marketing· orientated strategy. This means that responsiveness to customer needs should be the central focus of all marketing activities (Lamb, Hair & McDaniel, 1998: 833; Menon. Jaworski & Kohli, I 997: 187-200; Ramsey & Sohi, I 997: 127-137). Historically, customer service has been seen from a some· ,--.·hat narrow perspective. This narrow perspective suggests that the primary role of customer service is concerned with getting the right product to the right place at the right time and the focus was primarily from a distribution and logistics viewpoint. However, a new vision of customer service has started to emerge (Christopher, Payne & Ballantyne, 1993: 5). In essence one has to listen to one's clients and potential clients and build a relationship with them (Duhan, Johnson, Wilcox & Harrell, 1997: 283). In the case ofa finn providing a service, it may be even more important to know what the perceptions are of one's finn as opposed to a finn providing a physical product. In the latter situation the customer may be more interested in the physical product as an entity separate from the producer or provider of the product, whilst in the S AfrJ Bus. Manage 2000.31 ( 4) case of a service provider, the provider is seen as synonymous with the product (service). Consumers apply various decision strategies in their information processing tasks because they cannot process all of the information that is available for purchase decisions (Duhan et al .. 1997: 283 ). These decision strategies can be divided on the one hand into processes whereby the consumer processes information on both product alternatives and their attributes, without the assistance of others. Factors such as location, personal knowledge. knowledge of the service and perception of the service, may be relevant information in the decision process of a client in deciding on support for a particular provider of legal services. On the other hand there are processes whereby the consumer makes use of the assistance of people to help him or her in his or her decision, for example by means of word-of-mouth and advertising. The perceptions of a firm may be influenced by a host of factors, inter alia the factors mentioned above. Clearly, positive perceplions about a firm (and the service it renders) will determine support and loyalty for such a firm. This article considers a selected number of factors in order 10 determine their impa1.:t on the perceptions held by managers of medium business firms regarding legal firms. These factors are advertising. word-of-mouth. personal knowledge. knowledge of the service. location and perceptions of the service. For the purposes of this article the factor personal knowledge is understood to mean that the respondents personally know member(s) of legal firms, who may be friends or family for example, whilst knowledge of the service is understood to mean the actual knowledge the respondent has in respect of lhe service provided by a specific legal firm. Research objectives The primary objective of this research is to establish the value attached by current and potential clients from a medium business firm market segment to certain factors pertaining to finns providing legal services. Once this has been established it will be possible to advise these firms as to the relevant importance of these various factors facilitating, hopefully. more effective strategising as well as better service delivery to clients. A secondary objective is the design (and testing) of a measuring instrument for use in future research of this nature. The factor analysis done on the collected data will assist in establishing the relative worth of the different individual measuring items used in the measuring instrument. Methodology Sample selection The focus of the article is manaoers of medium firms and jud~mental sampling was used. The sample size was 230, which yielded 126 useable questionnaires. The response rate or 54 .78% was regarded as acceptable. Questionnaires were mailed to each respondent's work address with a reply-paid envelope and covering letter. Completed questionnaires were mailed back directly to the researchers I . 167 Measuring instrument 1:h~ measuring instrument used for this specific study, cons1stmg of_ 39 items, was developed and used by the researchers ma similar study. Data analysis and empirical findings A stepwise reliability analysis was performed by using SAS PROC_ C_O~R (SAS Institute. Inc. 1990). In this stepwise analysis md1vidual measurements of a measuring instrument are r_emoved if such deletion will result in an improvement of the mt~rnal consistency ( as measured by Cronbach 's alpha coe~c1ent). The procedure terminates when the alpha co- ~ffic1ent of the measuring instrument can no longer be improved by deleting individual measurements. For the purpose of this study the recommended cut-off value of0.7, as suggested by Nunnaly (1978), was used to indicate significance of the individual measuring instruments. After a Cronbach alpha analysis was conducted it became evident that certain items had to be removed from further analysis to obtain higher Cronbach alpha values for the different factors. These items included those for word-of-mouth and knowledge of the service (see Table I). Table 1 Final instruments Variables Alpha cocflic1ents Advertising 0.887 Word-of-mouth 0.659 Personal knowledge 0.920 Location 0.914 Knowledge of service 0.619 Perceptions of service 0.916 The discriminant and construct validity of the instruments were assessed by means of a stepwise exploratory factor analysis. In the application of this procedure individual measurements are removed from measuring instruments if this action yields an instrument with an acceptable level of validity. In each step of this analysis, a maximum likelihood factor analysis with a Direct Quartimin oblique rotation of the original factor matrix was performed by using the computer program BMDP4M (Frane, Jennrich & Solomon, 1990: 331-337). The rotated factor loadings of the final set of adapted measuring instruments are listed in Table 2. From the results reflected in Table 2 it can be deduced that from the selected factors advertising, personal knowledge, location and perception of the service yielded instruments with acceptable levels of validity. Mean values for the different variables were identified. Table 3 ranks the variables in order of importance according to their mean values. The mean values indicate that perception of the service rated the highest amongst respondents and advertising the lowest. Implications for management Continuous environmental scanning is necessary for strategy formulation. When the capability of the enterprise is syn- 168 S.Afr.J.Bus.Manage.2000,J Ii Table 2 Rotated factor loadings (final step) Variable Factor I Factor 2 Factor 3 Factor 4 Advert 6 -0.021 0.964 0.002 0.011 Advert 7 0.132 0.879 -0.032 -0.023 Advert 8 -0.045 0.890 0.057 O.o31 Advert 10 -0.016 0.835 0.014 0.004 Perknowl 0.132 0.055 0.695 0.120 Perknow2 0.074 0.050 0.821 0.016 Perknow3 -0.050 0.047 0.951 0.014 Perknow4 0.011 -0.060 0.981 -0.013 Locate I 0.649 0.126 0.054 0102 Locate2 0.860 0.007 0.104 -0.160 Locate3 0.924 0015 -0.010 -0.0147 Locate4 0.731 0.062 0.036 0.009 Locate5 0.663 -0.055 -0.048 0.293 Locate6 0.602 0.105 O.D78 0.101 Locate7 0.630 0.006 0.070 0.146 Percep3 -0.018 -0.032 0.128 0.865 Percep4 0.098 Percep5 0.088 Table 3 Mean values Variable Mean Perception of service 5. 765 Personal knowledge 4.567 Location 4368 Advertising 3.430 chronised with opportunities in the business environment, it provides a better understanding of the role of the enterprise in society and constant awareness enables management to overcome threats from a changing environment timeously and to exploit opportunities meaningfully. Apart from the above, various other aspects for consideration by the manager of a service providing firm, are revealed by the research. The mean values indicated that the respondents regarded perception of the service as being the most important factor (as compared to the other factors) when they chose a legal firm with whom to do business. The research affirms that personal knowledge and contact with a service provider, such as a firm of attorneys, is a significant factor in determining perceptions of clients of service providers. The location of a firm of attorneys is also a consideration for a manager of a medium business firm. If, for example, a legal firm is located in a so-called 'good area' managers of medium business firms will perceive such a legal firm positively. Interestingly, firms of attorneys that advertise will be per- :eived less positively by managers of medium business firms. 0.195 -0.024 0.663 0.025 0.093 0.779 References Berry. L.L. 1990. 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C.W., Hair, J.F. & McDaniel, C. 1998. Marketing. Cincinnati. Ohio: South Western, 693p. Marx, S .• Yan Rooyen, D.C., Bosch, J.K. & Reynders, H.J.J. Eds. 1998. Business management. 2nd Ed. Pretoria: J.L. Yan Schaik, 797p. Menon, A., Jaworski, B.J. & Kohli, A.K. 1997. Product quality: im· pact of interdepartmental interactions, Journal of the Academy of Marketing Science, 25(3): 187-200. Nunnaly, J. 1978. Psychometric theory. 2nd Ed. New York: McGraw· Hill. Ramsey, R.P. & Sohi, R.S. I 997. Listening to your customers: the impact of perceived salesperson listening behaviour on relationship outcomes, Journal of the Academy of Marketing Science, 52 (2): 127-137. SAS Institute Inc. 1990. SAS Procedures. (Release 6.03 Ed.) Cary. N.C.: Author. S.Afr.J.BusManage 2000.31 ( .J) 169 Annexure A Evaluate your attorney or firm of attorneys Instructions: The following statements. refer to y_our perceptions as a professional person regarding your attorney or finn of attorneys. Please show the extent to which you think your attorney or finn of attorneys possesses the features described by each statement Do you strongly agree that your attorney or finn of attorneys possesses a feature. circle the number 7. If vour feelings are not particularly strong, circle 4. There are no right or wrong answers~ you must merely indicate a number that-best reflects your perceptions about your attorney or finn of attorneys. Thank you. Agree strongly Neutral Disagree Firms of attorneys which make use of advertising are more professional than firms 7 6 5 4 3 2 which do not 2 Firms of attorneys make use of advertising because they have struggled to get sufficient 7 6 5 4 3 2 business in the past I will make use of an attorneys· firm bccaust: tht: firm uses a<h atising 7 6 5 4 3 2 4 If I have to choose between two firms of atlorncys. I would choose the one making use 7 6 5 4 3 2 of advertising 5 Firms of attorneys make use of advcrtisin!! because they want to improve their image 7 6 5 4 3 2 6 The fees charged b1 firms of atlornc1 s. which make use of advertising, are higher than 7 6 5 4 3 2 fees of firms which do not use advertising 7 I believe that firm, of attorneys. which make use of advertising, will provide a better 7 6 5 4 3 2 service 8 Today all firms of attorneys should make use of advertising 7 6 5 4 3 2 9 Firms of attorneys. which do not make use of advertising. do not need to advertise 7 6 5 4 3 2 10 Firms of attorneys which make use of advertising. are more modern and up to date than 7 6 5 4 3 2 those which do not use advertising II I do business with my current firm of attorneys because they were recommended to me 7 6 5 4 3 2 by family/friends/business acquaintances 12 I will leave my current firm of attorneys if I hear that my family/friends/business 7 6 5 4 3 2 acquaintances had an unpleasant experience with them 13 I will rather go to a firm of attorneys which my family/friends/business acquaintances 7 6 5 4 3 2 recommend. than to one which bccamt: known to me by means of advertising 14 It is important to me to know that a firm of attorneys was well accepted by my family/ 7 6 5 4 3 2 friends/business acquaintances. before I will consider such a firm 15 The more people talk about a firm of attorneys. the more successful such a firm is 7 6 5 4 3 2 16 I always choose my firm of attorneys according to the nature of a problem or situation 7 6 5 4 3 2 17 I will (without being unhappy with my current firm of attorneys) move to another firm 7 6 5 4 3 2 of attorneys if I perceive them to render a better service 18 I will move to another firm of attorneys if I perceive the fees of my current firm of 7 6 5 4 3 2 attorneys as being too high 19 I am with my current firm of attorneys, because of my personal experience of 7 6 5 4 3 2 knowledge regarding their good service 20 Knowledge I have regarding the unethical rendering of service by my current firm of 7 6 5 4 3 2 attorneys in respect of others docs not intluence my relationship with my firm of attorneys 21 I support the firm of attorneys where my family/friends/business acquaintances practice 7 6 5 4 3 2 22 I am loyal to my family/friends/husincss acquaintances that are attorneys. and will not 7 6 5 4 3 2 support their competitors 23 I prefer a protbsional relationship ,,ith the firm of attorneys 1\hich m~ business and I 7 6 5 4 3 2 use. rather than to make use of a family member or a friend who is an attorney 24 I will use a firm of attornc, s that was ·against' me in the past. but who impressed me 7 6 5 4 3 2 with their service and/or condw.:t 25 I am with my current firm of attorneys because of the fact that one or more of the 7 6 5 4 3 2 atlorneys is/are my personal fricnd(s) 26 The attorney ofmy business is also my personal attorney 7 6 5 4 3 2 170 S.Afr.J.Bus.Manage.2000,JJ(4) Agree strongly Neutral Disagree 27 I prefer firms of attorneys which are situated close to where I live 7 6 5 4 3 2 28 I prefer firms of attorneys which arc situated close to where I work 7 6 5 4 3 2 29 Firms of attorneys should be situated within the central business district 7 6 5 4 3 2 30 The location of firms of attorneys is a very important factor to me when I have to 7 6 5 4 3 2 choose an attorney 31 If I have to choose between two firms of attorneys, I will choose the one that is situated 7 6 5 4 3 2 in a 'better' pan of the city (e.g. Newton Park versus North End) 32 The location of firms of attorneys is definite)) an indication of the prestige of the firm 7 6 5 4 3 2 33 The location ofa firm of attorneys determines the clients of the firm 7 6 5 4 3 2 34 The clients ofa firm of attorneys determine the location of the firm 7 6 5 4 3 2 35 My personal information and the information of my firm arc always treated 7 6 5 4 3 2 confidentially by my firm of attorneys 36 I am of the opinion that my firm of attorneys is always ethical in their behaviour 7 6 5 4 3 2 towards me 37 My firm of attorneys always treats me and my firm professionally 7 6 5 4 3 2 38 My firm of attorneys engenders my trust as a result of the manner in which they handle 7 6 5 4 3 2 my personal matters 39 I am of the opinion that the fees charged by my firm of attorneys are always reasonable 7 6 and fair 5 4 3 2