DIRE DAWA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MARKETING MANAGEMENT

RESEARCH PROPOSAL

KEY ACCOUNT MANAGEMENT PRACTICES AND

PERFORMANCE OF ETHIOTELECOM IN THE
EASTERN CLUSTERS

BY FUAD MOHAMMED ABRAHIM

Advisor: Dr. MULUGETA D.

September, 2022
Dire Dawa

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Contents
ABBREVIATIONS AND ACRONYMS .........................................................................iv

CHAPTER ONE: INTRODUCTION .................................................................................. 1

1.1 Background of the study ......................................................................................... 1

1.2. Background of the Ethio-Telecom ..................................................................... 2

1.3. Statement of the Problem.................................................................................... 4

1.4. Basic Research Questions ................................................................................... 8

1.5. Objectives of the Study........................................................................................ 9

1.5.1. General objective of the study ........................................................................ 9

1.5.2. Specific objective of the study ......................................................................... 9

1.6. Significance of the Study ..................................................................................... 9

1.7. Scope of the Study.............................................................................................. 10

1.8. Limitations of the Study .................................................................................... 10

1.9. Organization of the Research ........................................................................... 11

1.10. Operational definitions .................................................................................. 11

CHAPTER TWO: LITERATURE REVIEW ................................................................... 14

2.1. Introduction ........................................................................................................... 14

2.1.1. Key Account Management Practices ........................................................... 14

2.1.2. Market Sensing Capabilities ......................................................................... 15

2.1.3. Organizational Characteristics ..................................................................... 16

2.1.4. Firm Performance .......................................................................................... 17

2.2. Theoretical Foundations ....................................................................................... 18

2.2.1. Relationship Marketing Theory ....................................................................... 18

2.2.2. Resource Dependance Theory .......................................................................... 19

2.2.3. Dynamic Capabilities Theory ........................................................................... 19

2.3. Key Account Management Practices and Firm Performance .......................... 20

2.4. Key Account Management Practices, Market Sensing Capabilities and Firm
Performance ..................................................................................................................... 21

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 2.5. Key Account Management Practices, Organizational Characteristics and
Firm Performance ............................................................................................................ 22

2.6. Key Account Management Practices, Market Sensing Capabilities,

Organizational Characteristics and Firm Performance .............................................. 23

2.7. Summary of Knowledges Gaps ............................................................................ 24

2.8. Conceptual Framework ........................................................................................ 27

CHAPTER THREE: RESEARCH METHODOLOGY................................................... 29

3.1. Introduction ........................................................................................................... 29

3.2. Description of the study area ............................................................................... 29

3.3. Research design ..................................................................................................... 29

3.4. Research approach ................................................................................................ 30

3.5. Sources of data ....................................................................................................... 31

3.6. Sampling................................................................................................................. 31

3.7. Measurement and scaling ..................................................................................... 32

3.8. Data presentation and analysis ............................................................................ 32

3.9. Model specification ................................................................................................ 35

3.10. Validity and reliability ...................................................................................... 35

3.11. Research ethics ................................................................................................... 36

4. Time and Budget Schedule....................................................................................... 36

4.1. Time Schedule........................................................................................................ 36

4.2 Budget Schedule ..................................................................................................... 37

REFERENCES ................................................................................................................. 38

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ABBREVIATIONS AND ACRONYMS

FSD Financial Services Deepening

KAM Key Account Management
KAMO Key Account Management Orientation
KAMP Key Account Management Practices
MSC Market Sensing Capabilities
RDT Resource Dependency Theory
ROI Returns on Investment
RDT Resource Dependency Theory
OP Organizational Performance
OC Organizational Characteristics

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 CHAPTER ONE: INTRODUCTION

1.1 Background of the study

Workman, Homburg, and Jensen define key account management as “the performance of
additional activities and/or designation of special personnel directed at an organization’s most
important customers” (Workman Jr, Homburg, & Jansen, 2003, p. 7). They further define key
account management effectiveness as “the extent to which an organization achieves better
relationship outcomes for key accounts in comparison with average accounts.” Key account
management represents a specific business strategy involving complex sales processes, large-
scale negotiations, and the alignment of multiple internal and external stakeholders. The
decision to implement a key account program stems from two separate conclusions reached
by a supplier:
❖ The largest and best customers are critical to success and must be managed differently.
❖ To ensure the success with these critical clients, you must proactively change the
organization.
Key account management (KAM) is labeled strategic, global, or corporate account
management is an established approach to organizing business relationships with important
customers and an important field of research. KAM encompasses the “performance of
additional activities and/or designation of special personnel directed at an organization's most
important customers” (Workman Jr, Homburg, & Jensen, 2003, p. 7).
Key account management has evolved from the principles of customer focus and relationship
marketing in business to business markets. Unlike key account selling, key account
management gives priority to lasting, symbiotic relationships between buying and selling
firms which will lead to increased profits for both parties (McDonald et al., 2000). In
interconnected business markets, companies adopt key account management
programs so as to build relationships with large and important clients (Ivens & Pardo,
2007). Davies and Ryals (2014) report a positive correlation between key account
management practices and firm performance. Market sensing capabilities have been
reported to influence the association between key account management practices and
organizational performance (Piercy, 2009). These capabilities enable an organization to
be proactive in its response to changes in consumer needs. As a result of this customer

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orientation, market sensing capabilities have been shown to influence business
performance (Foley & Fay, 2004). Organizational characteristics have been linked to
successful planning, implementation, goal achievement and eventual sustainability of
marketing programs (Lynette & Holt,2007).
This research is underpinned by the relationship marketing theory, the resource dependence
theory and the dynamic capabilities view. The relationship marketing theory seeks to explain
the key drivers that have an impact on certain firm outcomes and the causal relations between
them (Sheth & Parvatiyar, 2007). The resource dependence theory holds that firms use
resources to exist in their environments (Peteraff, 2006).
The dynamic capabilities view explains the relationship between a firm‟s core capabilities
and its performance (Anderson & Tushman, 1990).The theory seeks to explain how firms
react to change and links it to key account management practices, market sensing
capabilities and firm performance (Makkonen Et al.,2014).
Telecom infrastructure and services have been recognized as enabler and catalyst for the
socio-economic development of a country. Cognizant of the relevance and multiple active
role Ethio telecom has in our country’s overall progress and prosperity, our company has been
undertaking a wide range of projects and operations to expand telecom infrastructures and
systems, improve the quality of service and increase the outreach of benefits to the
community.
Performance of telecom is a concern owing to the fact all other sectors in an economy rely
on a stable telecom sector. Any performance issues that affect telecom will inevitably have
far reaching negative repercussions in the economy.

1.2. Background of the Ethio-Telecom

Telecommunications service was introduced in Ethiopia by Emperor Menelik II in 1894

when the construction of the telephone line from Harar to the capital city, Addis Ababa,
was commenced. Then the interurban network was continued to expand satisfactorily in
all other directions from the capital.
The Imperial Board of Telecommunications of Ethiopia (IBTE) was established by
proclamation

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No. 131 on October 15, 1952. The main purpose of the Board, as stated in its establishment
charter of article 5 was “to rehabilitate, extend, repair and maintain the telecommunication
facilities of Ethiopia and to engage in the business of telecommunication for profit.”
Under the Dergue regime, the Ethiopian telecommunications was renamed again as
“ETHIOPIAN TELECOMMUNICATIONS AUTHORITY (ETA) in January 1981. It
retained its name as ETA up to November 1996.At this period, the telecommunication
services had made a major change in technology ranging from Automatic to Digital
technology.

As a continuation of the last five-year plan and after concentrating its efforts on education,
health, and agriculture, the Ethiopian government has decided to focus on the
improvement of telecommunication services, considering them as a key lever in the
development of Ethiopia, Ethio-Telecom is born, on Monday 29th November 2010, from
this ambition of supporting the steady growth of our country, within the Growth
Transformation Plan (GTP), with ambitious objectives for 2015.

The strategy of Ethio-Telecom will achieve its goal of both providing a reliable network
and of improving customer services through a range of different levers that are part of its
development strategy. Ethio-Telecom will develop and enhance the information system.
This will help to decrease the delay for provision, sales, and activation as well as to provide
more reliable information to the customer In line with its ambitious mission, Ethio-
Telecom has ambitious goals: Being a customer-centric company, Offering the best
Quality of Services, Meeting world class standards Building a financially sound company.

Currently Ethio-telecom is organized under 12 divisions. These divisions are namely;

Finance, Legal, Human Resource, Sourcing and Facilities, Residential Marketing and
Sales, Customer
Services, Enterprises, Internal Audit, Program Management Office/Security/Public
Relations, Quality and Process, Information System, and Network Divisions. Each
division has its chief officer.

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Ethio-Telecom’s network coverage and type of services rendered are increasing from time
to time. The same is true for its revenue. The annual gross profit growth rate is showing
an increase from year to year. (Ethio-Telecom, 2017)
Enterprise Division is a sales division established in Dec 2010 on the account of serving
those customers that generates the highest revenue to the company and those mission-
critical institutions operating in the country to provide a tailor-made solution, support
countries big & complex IT related support projects. It is organized in three departments
and two sections namely: Key Account Department; SOHO/SME Department; Sales
Support Department; Indirect Channel Section; Reporting and Telesales Section.

The two main departments fully engaged in sales to enterprise customers are Key Account
and SOHO/SME Departments. Key Account department oversees developing, managing,
and maintaining enterprises sales activities for large Enterprise customers through
dedicated teams organized by sectors, zones, and regions. The business market is managed
through 6 sectors: Financial Institutions, Public Service Enterprises, Private Service
Enterprises, Production and Industries, Government and Administration, International
organizations, and Embassies.

The division has more than 3500 Key Account customers throughout the country. where
by each Key Accounts customer has a dedicated sales executive for any telecom service
inquiry. Even if there is no standard on how many customers should be managed by a
single sales executive, the division continues to increase the number of managed
customers. The number of managed customers per sales executive varies from 7 to 60
depending on the nature of the customers. Some customers do have many branches while
the other customers do have less. All the sales have been monitored and evaluated by the
sales administration section.

1.3. Statement of the Problem

Business-to-business (B2B) marketing is not new in academic research and has become a prevalent
topic since the beginning of organizational history (A. Hadjikhani and P. Laplaca, 42, 3, 294-305
(2013). Nevertheless, through history of business research, most research has been focused on
personnel selling and consumer markets (B.P. Shipiro and J. Wyman, 59, 4, 103-110 (1981).

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With the challenging business market, and increasing influence on the economy, the research on B2B
field has not obtained as much attention, and its contributions to B2B marketing theory has only been
introduced since the early 1980s (S. Johansson and D. Gedda, (Halmstad, 2016). In B2B markets, the
customers are more powerful and fewer than business-to-consumer markets (B2C), thus the
relationships between companies are more independent and complicated within markets (J. B. Heide
and G. John, 4, 32-34, (2013).

Many companies have reduced their base of suppliers and worked closely with a limited number of
preferred suppliers (I. A. Davies and L. J. Ryals, 43, 7, 1182-1194 (2014). Given this trend, suppliers
face the challenge of becoming the preferred suppliers and defend that position (S. Johansson and D.
Gedda, (Halmstad, 2016). Consequently, academic researchers are starting to focus on B2B research
which initially predominant on larger companies and expanded to small and medium sized enterprises
during the last couple of decades. To handle this model shift, the concept of relationship marketing
(RM) was emerged as a competitor to traditional marketing in the early 1990s. RM is a rejuvenation
of the marketing theory of the pre-industrial era in which consumers and producers contacted each
other directly and established structural and emotional bonds in them economic market behavior’s (J.
N. Sheth and A. Parvatiyar , 4, 4, 397-418 (1995).RM was intended to consolidate suppliers, customers
and other infrastructural parties into a company’s marketing and developmental activities D. Shani
and S. Chalasani, 9, 3, 33-42 (1992).

Over the years, Relational Management has been expanded into different subsets, namely customer
relationship management (CRM) and KAM (S. Johansson and D. Gedda, (Halmstad, 2016).
Customer Relational Management is a cross-functional concept with the purpose to develop and
maintain long-term customer relationship with suppliers. Furthermore, business customers’ behaviors
have become more dynamic in today’s hypercompetitive marketplace, this leads to increasing pressure
on suppliers. Therefore, the suppliers have been forced to take specific customer behaviors’ and needs
into consideration. This situation is consistent with the 80/20 rule, where 20% of the customers often
are contributed to 80% of the sales (J. J. Zboja and M. D. Hartline, 9, 3, 117-131 (2010). These
strategically important customers are called as key accounts and serviced by suppliers with dedicated
resources. Key Account Management as a subset of RM has been developed to handle these key
accounts successfully. Key Account Management is a systematic supplier-initiated approach for
managing strategically important customers in B2B markets and the approach is considered as one of
the most significant marketing developments in the next decade S. Johansson and D. Gedda,
(Halmstad, 2016). Since the introduction of Key Account Management, it has been widely used as
a marketing strategy targeting to achieve higher growth and revenues through better managing of key
accounts. It has developed to be one of the most significant changes in the way companies manage
sales and marketing activities (I. A. Davies and L. J. Ryals, 43, 7, 1182-1194 (2014).

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The objectives of key account management include the likelihood of increasing sales volume,
the capacity to develop the seller’s image, reducing conflicts, the need to facilitate know-how
transfer or to enable the organization create the network effect (Turnbull, 1990). To achieve
these outcomes, the management has to implement certain key account management
practices. The intensity of managerial commitment to these key account management
practices is related to organizational performance (Davies & Ryals, 2014). Organizational
characteristics such as size, technology and culture determine how key account management
practices influence organizational performance. The firm’s ability to foresee changes in the
market and respond to the changes has also been cited to influence the association between
key account management practices and organizational performance (Foley & Fay, 2004).

A number of knowledge gaps on the association between key account management practices,
market sensing capabilities, organizational characteristics and firm performance have been
identified. Firstly, there are conflicts in literature on the conceptualization of key account
management practices. A study by Davies and Ryals (2014) posit that critical success factors
of KAM and the subsequent KAM program practices are often treated as equal especially in
relation to culture. Their argument is that there are higher level and lower-level KAM
practices which should be separated during measurement. Gosselin and Bauwen (2006)
narrowed KAM practices to only two: customer alignment and selection

Also, there is inadequacy of reporting on an integrated approach that studies the four variables
together in the same model. Foley and Fay (2004) studied the relationship between market
sensing capabilities and organizational performance with market orientation as the mediating
variable. Market sensing capabilities were used as the study’s independent variables.
Montgomery and Yip‟s (2000) study on the activities, actors and outcomes of key account
management does not consider any moderating or mediating variables. Gounaris and
Tsempelikos (2013) measured the direct relationship between key account management
practices and performance. Additionally, a number of studies on key account management
have market orientation or customer orientation as the moderating or mediating variables
while some studies did not consider any moderating or mediating variables (Muhia, 2014;
Gosselin & Bauwen, 2006). In terms of context, most studies involving key account
management have been conducted in the manufacturing sectors (Salojärvi et al., 2010; Foley
& Fay, 2004).

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In a business world, a few major accounts can easily contribute to most of the companies‟
turnover. These accounts are hard to retain and even harder to replace. The retention and
growth of major customers often makes the difference in the success of the business.
Workman et al. (2003) found that Key Account Management effectiveness has a direct effect
on performance (which includes achieving customer satisfaction and providing value for
customers) in the market that then leads to profitability. As the result key account
management becomes a strategically-important approach for both the suppliers and a buyer.

Retaining customers is key in giving a competitive edge in the Telecommunication industry

hence Ethio-Telecom must identify factors that they need to improve on so as to increase
customer retention. Ethio-Telecom need to come up with ways of rewarding the sales for
retaining customers. Organizations should endeavor to create value for their customers, for
the Ethio-Telecom to gain a sustainable competitive advantage; Ethio-Telecom need to
extend their services beyond the core services.

Ethio-Telecom, which was previously the monopoly at the national level, was the only
telecom service provider to the public. Previously, Ethio-Telecom was earning 80% of its
revenue from 20% of its customers. These customers are the two main departments fully
engaged in sales to enterprise customers are Key Account and SOHO/SME Departments.

Key Account department oversees developing, managing, and maintaining enterprises sales
activities for large Enterprise customers through dedicated teams organized by sectors, zones,
and regions. The business market is managed through 6 sectors: Financial Institutions, Public
Service Enterprises, Private Service Enterprises, Production and Industries, Government and
Administration, International organizations, and Embassies.
The division has more than 3500 Key Account customers throughout the country. where by
each Key Accounts customer has a dedicated sales executive for any telecom service inquiry.
Even if there is no standard on how many customers should be managed by a single sales
executive, the division continues to increase the number of managed customers. The number
of managed customers per sales executive varies from 7 to 60 depending on the nature of the
customers.

To address these issues, and to gain a better understanding of what results Key Account
Management practices are driving, I needed to investigate a considerably broader range of
both Key Account Management practice and Key Account Management effectiveness

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measures than are currently explored in the literature. and other research question is therefore
to examine how effective implemented Key Account Management practices are at predicting
desirable effectiveness measures.
Some customers do have many branches while the other customers do have less Therefore,
Ethio-Telecom is expected to do its utmost to keep these customers from going to the newly
launched company. It must protect the interests and benefits of these customers to retaining
these customers. There does not appear to be any work being done to retaining these
customers. If Ethio-telecom loses these customers, it will lose 80% of its revenue. To do this,
it should examine the effectiveness of these Key Account Management programs. After
examining the effectiveness and identifying the strengths and weaknesses, it should continue
to strengthen its strengths and improve the existing weaknesses. However, no research has
been conducted to solve this problem as per Ethio-Telecom.

Another problem is that since Ethio-telecom implemented the Key Account Management
program in 2014 E.C, there has been no research conducted by Ethio-telecom and local
research institutions on Key Account Management Practices and Performance. For reasons
such as the Key Account Management program has been in place for only a year now, the
program has not been implemented throughout the company and is new in the country. So,
this research is new. This is why it has been found necessary to investigate this study.

To determine the practices by Ethio-Telecom in the management of their key accounts, the
mediating influence of market sensing capabilities and the moderating role of organizational
characteristics and them performance, this study seeks to answer the following broad research
question; what is the relationship between key account management practices, market sensing
capabilities, organizational characteristics and the performance of Ethio-Telecom?

1.4. Basic Research Questions

1. What is the influence of Key Account Management Practices on Performance of

Ethio-Telecom?
2. What is the effect of market sensing capabilities on the relationship between key
account management practices and performance of Ethio-Telecom?

3. What is the influence of organizational characteristics on the relationship between

Key Account Management Practices and Performance of Ethio-Telecom?

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 4. What is the joint effect of Key Account Management Practices, Market Sensing
Capabilities and Organizational Characteristics on Performance of Ethio-Telecom?

1.5. Objectives of the Study

1.5.1. General objective of the study

The study’s general objective is to establish the relationship between key account
management practices, market sensing capabilities, organizational characteristics and the
performance of Ethio-Telecom.

1.5.2. Specific objective of the study

The study’s specific objectives are to:

❖ Establish the influence of key account management practices on performance of Ethio-
Telecom.
❖ Assess the effect of market sensing capabilities on the relationship between key account
management practices and performance of Ethio-Telecom.
❖ Establish the influence of organizational characteristics on the relationship between key
account management practices and performance of Ethio-Telecom.
❖ To determine the joint effect of key account management practices, market sensing
capabilities and organizational characteristics on performance of Ethio-Telecom.

1.6. Significance of the Study

This study will contribute to knowledge in key account management sub-discipline of

marketing by establishing the influence of moderating and mediating variables on the
relationship between key account management practices and firm performance. Other
researchers have concentrated on the moderating effect of market orientation and customer
orientation. This study is anchored on the relationship marketing theory resource-based view
and the dynamic capabilities theory. These theories have not been thoroughly interrogated in
key account management literature. It is expected that this study will provide greater insight
on the relationship between key account management practices, market sensing capabilities,
organizational characteristics and performance of Ethio-Telecom. The study will also enhance
the resolution of the conflicts in then conceptualization of KAM practices.

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Ethio-Telecom will benefit from this study in that managers will be able to put the right
structures in place and encourage organizational cultures that enhance the relationship
between key account management practices and performance. Managers will also be able to
isolate the core capabilities of their institutions and seek to strengthen them because they
understand their influence on the outcomes of any key account management practices they
may have in place. The management of Ethio-Telecom will also benefit from the realization
that performance of Ethio-Telecom is dependent on other variables such as key account
management practices and not just prudent financial management and sound governance.

1.7. Scope of the Study

The study is delimited in terms of geographical, conceptual and methodological aspects to
achieve the objective of the study within the time and budget framework. It is to determine
the influence of key account management practices, marketing sensing capabilities, and
organizational characteristics on performance of Ethio-Telecom eastern cluster, Ethiopia.
Specifically, the research focuses on select Ethio-Telecom under Eastern Cluster. These
Eastern Cluster are from three regions namely Dire Dawa Region, Harar Region, and Jijjiga
Region in terms of geographical delimitation.

Conceptually the study will focus to establish the association between key account
management practices, market sensing capabilities, organizational characteristics and the
performance of Ethio-Telecom Eastern Cluster.Moreover, the perspective present and analyze
from the both Suppliers and Buyers point of view.

Methodologically, the study will base on both primary and secondary resources of data. The
Sampling is made based on some practical reasons from the Senior Management, Leaders and
Contributors of Ethio-Telecom. The selection of sample Ethio-Telecom Eastern Cluster is
based on duration of membership, access to transport, size of membership and the availability
of budget. As a result of those different constraints the study considered only respondents for
the questionnaires, which is believed to be representative of the population.

1.8. Limitations of the Study

Currently Ethio-telecom is organized in all parts of country, the research only deals with two
main departments fully engaged in sales to enterprise customers are Key Account and

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SOHO/SME Departments and taking Ethio Telecom Eastern cluster (Dire Dawa region,
Harar Region, and Jijjiga Region) as a case study.

1.9. Organization of the Research

This research study organized under five chapter the first Chapter one Introduction. This
chapter contain background of the study, statement of the problem, basic research questions,
objectives of the study definition of terms, significance of the study, and delimitation/scope
of the study. Chapter two Literature review. This chapter deals with the literature relevant to
your study. It has introduction, theoretical review, empirical review and the conceptual
framework of the study. Chapter three Research Methodology. Under this chapter are the
type and design of research; the subjects/participant of the study; the sources of your data; the
data collection tools/instruments employed; the procedures of data collection; and the
methods of data analysis used. Chapter four Results and discussion/Data presentation,
analysis & interpretation: - This chapter summarize the results/findings of the study, and
interpret and/or discuss the findings. And lastly Chapter five Summary, Conclusion,
recommendation: -This chapter comprises four sections, which include summary of findings,
conclusions, limitations of the study and recommendations. Summary of findings drawn from
the results discussed under chapter four; conclusions drawn from the summary of findings.

1.10. Operational definitions

Key accounts can be defined as those customers who are particularly important for the
company and have a real impact on the supplier’s strategy (Pardo, 1999).

Key accounts management is a selling company’s adopted approach aimed at building a

portfolio of loyal key accounts by offering them a product/service package in customized
form on an ongoing basis (McDonald, Millman and Rogers, 1997).

Successful key account management is the extent to which an organization achieves better
relationship outcomes for key accounts in comparison with average customers (Workman et
al., 2003).

Organizational performance is the extent to which a firm’s financial performance, product

market performance and shareholder return are achieved (Richard et al., 2009).

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Senior management role in KAM can be defined as the extent to which senior management
participates in key accounts management that develops the positive customer perceptions
about the senior management’s commitment towards the KAM program (Homburg et al.,
2002; Millman and Wilson, 1999).
Organization wide practices :- Extent to which the Ethio-Telecom shows commitment to
procuring the buy-in of senior managers, harmonizing Key Account Management and
corporate strategy, active involvement of top management & reorganization of organizational
structure to make it compatible with Key Account Management.

Operational practices: - Extent to which the Ethio-Telecom shows commitment to;

development of individual Key account plans, establishing feedback from key accounts,
investment in joint activities & joint investments with key accounts.

People related Practices: - Extent to which the Ethio-Telecom shows commitment to the
appointment of specialist & trained managers, appointment of cross functional Key Account
Management teams and the existence of specific motivation and reward schemes for key
account managers.

Procedural practices: - Extent to which the Ethio-Telecom shows commitment to; Key
Account Management policies and procedures, Key Account Management managers‟ access
to internal resources, differential and higher service levels for key accounts and forecasting
the lifetime value of key accounts.

Target Attainment practices: - Extent to which the Ethio-Telecom shows commitment to

specification of Key Account Management targets, benchmarking against other
Telecommunication.

Learning Orientation: - Degree to which the organization shows commitment to shared

visions, learning open mindedness in learning including the tent to which the organization
values opinions of employees.

Organizational Systems: - Extent of decentralization in decision making formalization of

decision-making rules, benchmarking activities and, use of reward systems.

Market information: - Degree to which the organization is committed to development of a

market information system.

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Organizational communication: - Extent to which employees understand values and the
decision-making criteria.

Organizational Culture: - Extent to which the organization designs process to allow for
exchange of knowledge across functional boundaries and the organization bases performance
on knowledge creation.

Size of the company: - Measured by the company’s customer deposits, Total Net Assets and
Capital reserves of the company and branch network.

Technology: - The extent to which the organization uses technology and upgrades technology
to keep abreast with customer developments

Customer satisfaction: - Extent to which the organization increases its market share the
customer retention rate, handling customer complaints and new customers due to positive
customer referrals.

Internal business processes: - Extent of commitment to research and development and

innovation.

Learning and growth: - Degree of the organization’s commitment to continuous value

addition to products improvement of technology in line with organization needs, design new
products and carry out research on new products

Financial performance: - The extent to which managers agree on Ethio-Telecom

performance using ROA, ROE & Cost-Income ratio.

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 CHAPTER TWO: LITERATURE
REVIEW

2.1. Introduction

This section presents the existing literature on the association between key account
management practices, market sensing capabilities, organizational characteristics and
organizational performance by looking at the theories on which the study in anchored and
exploring different empirical studies on the same subject. The chapter also summarizes the
empirical reviews on the variables under study and provide the gaps to be addressed. The
chapter also outlines the conceptual model.
2.1.1. Key Account Management Practices

Key account management refers to the process of identification of key accounts, planning for
those accounts, implementation and monitoring their performance. Ryals (2012) defines it the
identification of accounts that are considered to be of strategic value to the firm and the design
of programs to address their current and future needs. Ojasalo (2001) observes that key
account management process entails the allocation and organization of resources to attain
optimal business with balanced account portfolios whose contributions significantly
contribute to the attainment of both present and future corporate objectives.

Key account management marks a transition from the presumption that customers are similar
in that they provide unique value to the selling firm. Workman et al., (2003) also stated that
KAM serves key customers with dedicated assets. Davies and Ryals (2014) classify key
account management practices into organization wide, target and performance, operational,
procedural practices and people related. This classification is in agreement with the
imperatives for excellence in Key Account Management developed by The Management
Center Europe (2013) as; the creation of a key account strategy driven by installation of cross-
functional teams with a multi- disciplinary approach, re-definition of the contribution of
marketing and sales, demonstration of commitment by the management by involving senior
managers, recognition of key account management as a strategic role and proper measurement
of success and progress. Homburg et al. (2003) state that across business firms, there exist
diverse approaches and implementation level of KAM practices. Their findings argue that

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exhibiting variety of complementary and specific KAM practices is essential in safeguarding
KAM effectiveness. The intensity of the firm‟s involvement in the activities identified as key
account management practices determines the performance of that firm. Palo and Natti (2012)
describe the various practices as the organizational capabilities and mechanisms which in
effect likens KAM to a dynamic capability that constitutes different practices. This variable
was operationalized into operational, organization wide, target and performance, procedural
practices and people related following Davies and Ryals(2014).

2.1.2. Market Sensing Capabilities

Marketing capabilities are the integrative processes that entail the application of collective
knowledge, skills, and firm resources in order to fulfill market-related need thus allowing the
business to adapt to market conditions, add value to its goods and services, overcome
competitive threats and take advantage of market opportunities (Day, 1994). The market
sensing capability of the firm describes its capability to gather interpret and accumulate
knowledge that is accessible in organizational platform (Zahra & Sapienza, 2006). Market-
sensing capabilities refer to the ability of the firm to apply market intelligence that could be
obtained through personal and public sources or formal and informal mechanisms (Maltz &
Kohli, 1996). Day (1994) opines that market-oriented organizations seem to have superior
market-sensing capabilities. The implication of this argument is that a company which is truly
market focused will have in place mechanisms to understand developments within its market.
Sensing capability enables the enterprises to monitor market the continuously, interpret
market opportunity accurately, and to understand emerging market threats (Fang et al., 2014).
Firms in this capability will analyze, interpret and communicate information and anticipate
better environmental change (Neill et al., 2007).

Foley and Fay (2004) cite the four components of market sensing capability as : Learning
orientation which emphasizes commitment to learning open mindedness in learning and
shared visions; organizational systems which includes decentralization in decision making,
formalization of decision making; use of information systems , benchmarking market
information through developing market information system and organizational
communication which emphasizes on clear decision making criteria.

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Market orientedfirms are distinguished by their ability to sense trends and events before the
competitors (Day, 1994b). Marketing capabilities and by extension market sensing
capabilities have been extensively used as mediating variables (Narver & Slater, 1990).

2.1.3. Organizational Characteristics

Organizational characteristics have been linked to successful planning, implementation, goal

achievement and eventual sustainability of marketing programs (Livet, 2006). The internal
organizational context broadly examines the relatively stable organizational characteristics
including culture, structure and strategic leadership. These attributes develop an environment
where organizational activities are executed and constitute to critical success factors (Barney,
1991). Several studies reveal that the size of a company and principal ownership are related
to management practices embraced by the company’s management (Ahire et al., 1995; Kotha
& Swamidass , 1998; Hoang et al., 2010). Hoang et al. (2010) suggest that size, technology
and organizational culture can sufficiently embrace organizational characteristics. The
measure of a firm’s size depends on the industry that firm is in. A firm‟s technology can be
so peculiar to that firm that it qualifies to be classified as an organizational characteristic.

Firm size has also demonstrated great association with many industry characteristics such as
concentration, vertical integration, industry-sunk costs and overall profitability of the industry
(Dean et al., 1998). According to Dean et al. (1998) large companies often take the lead with
respect to more managerial hierarchies, increased specialization of skills and functions,
greater number of departments, greater centralization, greater formalization, and more
bureaucracy than smaller companies (Hoang et al., 2010). It is on these grounds that the firm
size is considered as an important predictor of performance.

The culture of an organization is the systematic manner in which leaders, work groups and
employees behave and interact. Organizational characteristics have been established to have
a moderating effect in studies where the dependent variable is performance (Zheng et al.,
2010). Research on the RBV demonstrates that organizational culture is a source of firms‟
competitive advantage, since it is a firm-level resource Barney, 1991). Culture is
conceptualized in terms of involvement, consistency, adaptability and mission (Denison &
Mishra, 1995), and trust and collaboration (Lee & Choi, 2003). Terzioski and Samson (1999)
established that significant differences exist in the association between management practices
and organizational performance when the company size was taken into account. Larger

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companies were reported to benefit more than smaller companies from this relationship.
Organizational structure explains the manner in which responsibility and power are allocated
among members of an organization and the execution of work procedures. Gibson and Cohen
(2006) argue that organizational structure determines the ability of the firm to resolve
customer issues. According to Yavas and Rezayat (2003), corporate ownership determines
organizational culture which in turn guides a company’s interpretation and implementation of
strategy and ultimately organizational performance.

2.1.4. Firm Performance

Performance is viewed as the state of competitiveness of an enterprise, explained in its ability

to reach set objectives, attained through a level of efficiency and effectiveness that ensures
the presence sustainable market (Henry, 2004). According to Fan et al. (2014), different
organizations have different goals in running their businesses and the measurement of
performance may also be varied. The process of improvement is null and void if outcomes
are not measured. Performance measurement implies to the process of measuring an
organization’s efficiency and effectiveness (Neely et al., 1995). Amaratunga and Baldry
(2002) argue that among other functions, performance measurement helps the management
in the allocation and redirection of resources and informs policy. Richard et al. (2009)
describes organizational performance as the most pertinent management constructs and is
commonly used as a dependent variable in research.

The Balanced Scorecard translates a firm‟s strategy into both financial and non-financial
performance measurements. The model examines strategy from four perspectives namely:
internal processes, financial, customer, learning and growth (Kaplan & Norton, 1996). The
perspectives provide necessary feedback on the efficiency of executing the strategic plan so
that necessary strategy adjustments can be made. The financial perspective checks on the
physical assets such as inventory and manufacturing equipment, it may not be fitted to
providing useful feedback in environments with substantial intangible asset base. Intangible
assets form an increasing proportion of the market value of the firm, there is therefore need
for better reports on assets such as customer loyalty, highly-skilled staff proprietary processes.

A large number of authors measure satisfaction using stakeholder satisfaction levels (Richard
et al., 2009; Agle et al., 1999; Graves & Waddock, 1997a). Conceptualizing firm performance

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using this approach has been adopted in both manufacturing and service companies (Carneiro
et al., 2007).

2.2. Theoretical Foundations

The section contains a discussion on the theoretical foundations underpinning studies in key
account management, market sensing capabilities, organizational characteristics and
performance an organization. The overarching theory for the study is the relationship
marketing theory. The resource dependence theory emphasizes that relationships can at times
be viewed as resources that can be used by the firm to exist in its environment. Dynamic
capabilities are perceived as firm routines that encourage the development of organizational
capabilities of the firm through modification of its current resource base. The dynamic
capabilities theory relates the resources, including capabilities, to performance.
2.2.1. Relationship Marketing Theory

The Relationship marketing theory is attributed to Berry (1981). The theory explains the
reasons, approaches and outcomes of relational exchanges between a firm with its customers
and suppliers. The relationship marketing theory ideally seeks to identify the key factors that
affect important firm outcomes and causal relations between the drivers and the outcomes
(Sheth & Parvatiyar, 2007). According to Lewin and Johnston (1997) there are six constructs
associated with relationship marketing theory; commitment, communication, relational
dependence, cooperation and equity. Relationship marketing activities help in building and
maintaining customer- seller relationships that affect the behaviors of customers which
ultimately affect the seller‟s financial outcomes. According to Mulki and Stock (2003), the
rise of relationship marketing has been attributed environmental factors such as the firms‟
trends in developed economies to be service oriented and likely to adopt information
technologies, niche-oriented, information-oriented and be global in nature. Hunt et al. (2006)
argue that industrial demand can be perceived as being remarkably heterogenous with regards
to consumer tastes and preferences and firms are seen as combiners of heterogenous and
imperfectly mobile resources. Hunt et al. (2006) also conclude that the firm can develop
relational resources. The relationship marketing theory is the most significant theory in this
study since it explains that customer – supplier relationships can determine the performance
of a firm. Moller and Hallinen‟s (2000) argument that relationship marketing theory derives

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from two paradigms: the market-based relationship marketing and the network-based
relationship marketing and regardless of paradigm a firm uses, performance is affected.

2.2.2. Resource Dependance Theory

The Resource Dependence Theory (RDT) is associated with Pfeffer and Salancik (1978). The
model conceptualizes the organization as an open system which is dependent on the external
environment’s contingencies. The basic premise of RDT is that the behavior of an
organization is affected by the context that behavior. The RDT theory upholds the effect of
external factors on the behavior of the organization and holds that even though they may be
limited by their context; managers strive to reduce environmental dependence and
uncertainty. As a result of the centrality of power, firms aspire to reduce the power of others
over them (Hillman et al., 2009). Casciaro and Pisskowski (2005) note that there are five
actions firms can take to reduce environmental dependence: mergers or joint ventures, vertical
integration and other organizational associations, reorganization of board of directors, taking
political action and engineering executive succession.

The RDT is a basic theoretical ideology for understanding joint ventures among other
organizational relationships including strategic alliances and, R & D agreements and buyer
and seller associations (Barringer & Harrison, 2000). According Goes & Park, (1997),
empirical evidence supports relationships to reduce the complexity of both the domestic and
international environments and gain resources. According to Davis (2009), firms might invite
major customers and executives of constraining suppliers into them board for exchange of
ideas. The highest level of a key account relationship is the interdependence stage a stage at
which the supplier and the buying entity are virtually indistinguishable from one another and
some of their operations are actually merged. The inclusion of this theory in the current study
is justified by the fact that the evolution of relationship marketing theory itself is explained
by the need for an organization to be responsive to environmental changes. The theory in
addition identifies the formation of relationships between buying and selling firms as a
possible response to environmental uncertainties.

2.2.3. Dynamic Capabilities Theory

According to Teece et al. (1997), dynamic capabilities are defined as the ability of the firm to
build, integrate and reconfigure both internal and external firm competencies so as to address

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the conditions of the dynamic environment. It is the ability to attain competitive advantage
through increased flexibility and pace in handling the dynamic market environment (Teece &
Pisano, 1994). A close link exists between the dynamic capabilities and the resource-based
view (Peteraf, 2006; Barney, 1991). This theory is basically, interested with basic issues for
instance competencies and organizational performance. It seeks to explain the relation(s)
between a firm‟s exploration of its capabilities and performance. The dynamic capabilities
view augments the popular view of the firm‟s external environment being increasingly
hypercompetitive and turbulent (Anderson & Tushman, 1990). According to the dynamic
capabilities view, the manner in which specific competencies are developed by organizations
to respond to business environment changes is highly linked to the business processes of the
firm, market opportunities and positions. Processes describe the manner in which transactions
are undertaken in organizations with respect to coordinating, learning and reconfiguring
positions that define specific utilization of technology, complementary assets, intellectual
property, customer base and level of interaction with suppliers. These capabilities offer
competitive advantage to the firms since firm specific assets for instance values,
organizational experiences and culture are not tradable in the external market (Gizawi, 2014).
Key account management can be treated as a resource. However, Day (1994) notes that
dynamic capabilities need to be introduced to make a resource responsive to both internal and
external developments. This theory is applicable to this study because market sensing
capabilities are viewed as dealing with mechanics for reorganizing firm resources in response
to environmental dynamics.

2.3. Key Account Management Practices and Firm Performance

Researches on the association between key account management practices and supplier
performance report conflicting findings. Galbreath (2002) and Kalwani and Narayandas
1995) argue that there is the possibility of higher profitability to prevail despite the existence
of notable power asymmetries while Narayandas and Rangan (2004) and Homburg et al.
(2002) have established higher levels of service compels suppliers to fight for profit from
their key account associations. There is substantial evidence linking customer attention to
organizational profitability and effectiveness (Reichfeld & Sasser, 1990). Tsempelikos and
Gounaris (2015) report that strong positive correlation between a firm‟s key account
management practices and performance. Davies and Ryals (2014) operationalized key
account practices into operational, organization wide, target and performance, procedural

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practices and people related. In their study, they reported a positive association between the
practices and outcomes including increased revenues, improved customer retention and
increased profit margins. According to Homburg et al. (2003) the intra organizational
activities that determine the effectiveness of KAM programs can be classified into the
activities, intensity of the activities, degree of pro activeness and top management
involvement among others. Tzempelikos & Gounaris (2015) also report that key account
management practices positively affect performance. Following Hunt et al. (2006), key
account management practices may be viewed as firm resources.

2.4. Key Account Management Practices, Market Sensing Capabilities and Firm
Performance

Marketing capabilities are said to exist when knowledge and skills is repeatedly applied by a
firm‟s employees to transform marketing inputs into outputs. Key account management
practices are the marketing inputs and market sensing capabilities (MSC) facilitate their
transformation to various performance indicators. Lindblom et al. (2008) report that there
exists a relatively weak but statistically significant association between market sensing
capabilities and firm performance. Emerging from relationship marketing and the RBV,
relationships with key accounts have been identified as resources. Following this argument
then market sensing capabilities, just like any other organizational capability can be used to
exploit this resource thereby influencing firm performance. Day (1994) also reports that MSC
are important in the development of market focus and eventually influence company
performance. Generally, market-sensing capabilities have been reported to be critical in the
development of market focus and the subsequent company performance (Day, 1994).
Arguably, this is the case since firms are in a position to understand and react to changes in
its environment as a result of information and intelligence generated out of market sensing.
Even though research on market orientation is expansive, studies on the influence of market-
sensing capabilities on performance of the business are still scarce (Lindblom, 2006).
According to Vohries and Morgan (2005) MSC is the key accelerator for business
performance. Distinctive capabilities provide the firm with the capacity to deliver services
and products to the market in a superior manner compared to the competition. Market sensing
capabilities therefore influence the attainment of the desired

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KAM outcomes. Day (1994) posits that market sensing capabilities enable the firm to become
understand the changes in its markets and also accurately predict responses to its marketing
initiatives.

2.5. Key Account Management Practices, Organizational Characteristics and Firm

Performance

There is a strong association between the predisposition of an organization towards key

account management and organizational characteristics (Arun, 2013). It can therefore be
argued that the characteristics of the firm determine that firm‟s key account management
practices. Further, Arun (2013) reports that an organization’s characteristics such as culture,
size and technology and its orientation to key account management influence performance.
An organization that intends to implement KAM has to set up an organizational structure and
culture that is supportive (Woodburn, 2008). This view is supported by Davies and Ryals
(2014) who argue that key account management require significant commitment over time
including substantial changes to cultures, structures and processes.

Davies (2013) found that having a culture that supports KAM and active top management
engagement and support are essential in differentiating good KAM programs from the bad
ones. This view is supported by Workman, Homburg and Jensen (2003) and Tzempelikos and
Gounaris (2013). According to Woodburn (2008), in a KAM driven organization there has to
be a sharing culture where staff and managers are prepared to share resources and power for
the good of the enterprise. Literature on the influence of customer relationship management
(CRM) technologies on KAM performance is conflicting with some studies reporting that
such investments support performance (Richard et al., 2007) while others establish no
evidence of worthwhile performance outcomes (Avlonitis et al., 2005). The size of a firm is
viewed as a moderator of the association between key account management strategy and that
firm‟s performance. Miller et al.(1998) argues that large organizations are expected to adopt
more formal and comprehensive strategic processes since they are more sophisticated.
According to Foley and Fay (2004), a marketing capability is created when the marketing
employees of the firm continuously apply their knowledge and skills to transform marketing
inputs to outputs. For this transformation to take place there must be a combination of
intangible resources such as knowledge and tangible organizational assets. Market sensing
capabilities have been reported to influence the link between KAM practices and

22 | P a g e
organizational performance (Piercy, 1991). Organizational characteristics have also been
shown to influence the association between KAM practices and firm performance (Gibson &
Cohen, 2003).

Market sensing capabilities and organizational characteristics jointly influence the association
between key account management practices and performance of the firm. According to Day
(1994b), assets are the resources that have been accumulated by the and capabilities that
brings these assets together and allows them to be advantageously deployed. Market sensing
capability is manifested in an organization’s willingness to learn, shared vision and
organization wide communication, decentralization of decision making and use of reward
systems. Organizational characteristics such as ability to reconfigure operations very fast
determine how the activities above are performed (Norman, 2001).

2.6. Key Account Management Practices, Market Sensing Capabilities,

Organizational Characteristics and Firm Performance

According to Foley and Fay (2004), a marketing capability is developed when a firm‟s
marketing employees repeatedly apply their knowledge and skills to the transformation of
marketing inputs to outputs. For this transformation to take place there must be a combination
of intangible resources such as knowledge and tangible organizational assets. Market sensing
capabilities have been reported to influence the relationship between KAM practices and
organizational performance (Piercy, 1991). Organizational characteristics have also been
shown to influence the relationship between KAM practices and firm performance (Gibson
& Cohen, 2003). Market sensing capabilities and organizational characteristics jointly
influence the relationship between key account management practices and firm performance.
According to Day (1994b), assets are resource endowments that the business has accumulated
and capabilities are the glue that brings these assets together and enables them to be deployed
advantageously. Market sensing capability is manifested in an organization’s willingness to
learn, shared vision and organization wide communication, decentralization of decision
making and use of reward systems. Organizational characteristics such as ability to
reconfigure operations very fast determine how the activities above are performed (Norman,
2001).

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2.7. Summary of Knowledges Gaps

Several knowledge gaps emerging from the literature review are summarized in Table 2.1.
The studies that have been reviewed report varied findings in relationships among the
pertinent variables. Even though some studies examine related variables, the divergence in
findings can be explained by differences in the study designs, the units of analysis or even the
countries in which such studies were conducted.

Table 2.1: Summary of Knowledge Gaps

The Focus Methodolo Findings Gaps Focus on

Study gy Current
Study
Davies & Focus was to Studied 209 Identified Study The present
Ryals establish the with nine (9) examines study
(2014) effectiveness formal Criteria for effectiveness at will look
of Key KAM KAM KAM level not into the
Account program in effectivenes Organizational influence
management UK s Level of KAM
Practices practices at
the
organizatio
nal
level
Muhia Key account Data was The study The study did The study
(2014) management, collected found that not will
E commerce using the investigate the incorporate
implementatio questionnai implementat effect of MSC the
n models, res ion and mediating
market Data models E- characteristics impact
orientation analysis commerce of of MSC
and done using and market the firm and the
performance factor orientation moderating
of selected analysis had a impact of
Kenyan and notable firm
private structural impact on characterist
modeling performance ics
equation
Gounaris A In-depth Developed The authors The current
& conceptualiza interviews operational admit study
Tzempeli tion and followed by variables that the sample will be a
kos empirical a for KAMO size was census
(2013) validation of quantitative inadequate study in
key study which
account on 304 form
management suppliers different

24 | P a g e
 orientation from sectors
different should be
sectors more
adequate
and
sufficient

Guenzi et Cross The The study only The current

al.(2010) focused on the study
sectional perception
human(behavi will
study was of the oral) involve
aspect of both
carried Key account
KAM, behavioral
out using managers on organizational and
characteristics firm
judgment the
are characterist
sampling adoption of not addressed ics
with key a
account relational
managers strategy
as from the
respondent selling
s firm’s
perspective
is
linked with
adoption
of specific
behaviors
e.g.
customer
orientation

Gosselin A conceptual Quantitativ Competitive The study The current

& perspective on e advantage is emphasized the study’s
Bauwen strategic survey one of selection of key emphasis
(2006) customers‟ based on the key accounts only. is on all
management questionnai account Post- selection practices
in business re management undertakings not just key
markets research outcomes relating to key customer
(emphasis is accounts are selection
on ignored

25 | P a g e
 customer and
selection and alignment
alignment).

Brady Insights into a Author Marketing The author The author

(2004) case gathered orientation used a case will use a
company’s evidence literature study design census
approach to using can lean
B2B the case heavily on
relationship studies organization
method al
theory.

Foley & The Conclusion The The study uses The current
Fay moderating s based mediation MSC as an study
(2004) influence on 10 effects independent integrates
of market American of Market variable more
orientation on firms in the orientation variables:
the manufactur between the KAM
relationship ing relationship practices,
between MSC sector was MSC,
and reported to organizatio
performance be nal
significant characterist
relationship ics &
performanc
e

Federico Outcomes of Evidence KAM The study does The current

& KAM was practices not study
Kiichiro Practices gathered lead consider any integrates
(2004) using the to greater intervening or KAM
case study customer moderating practices
method satisfaction variables with both
intervening
and
moderating
variables

Montgom Activities, 165 Customers’ Did not study This study

ery & actors and managers demands any considers
Yip outcomes of in encompass mediating or the
(2000) KAM manufactur coordination moderating moderating
ing and of resources variables variables
services
companies

Montgom Examined the Survey of Extent of Did not use any The current
ery et. Al association 191 KAM use mediating or study
. (1998) moderating

26 | P a g e
 between firms with positively variables will use 4
KAM and global affects items in
organizational accounts performance measuring
performance performanc
e

Milman & Examined the Used Progression The study The current
Wilson managerial questionnai towards considers only study
(1995) consequences re KAM can be the considers
for selling interviews initiated outcomes of not only
companies of on top by managers KAM the
progression and middle in both outcomes
from key managers buying and but also the
account selling moderating
selling to firms variables
KAM

2.8. Conceptual Framework

The below conceptual framework illustrated as model in Figure 1 indicates that Key Account
Management Practices is the independent variable and firm performance the dependent
variable. The relationship between the two is however mediated by market sensing
capabilities and moderated by organizational characteristics.
Figure 2.1: Conceptual Model

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Key Account Management Organizational Performance
Practices Moderating variable
Financial measures
• Organizational Organizational Characteristics
• ROA
• Organizational Culture
wide practices • ROE
• Firm Size
•
• Cost-Income
Operational • Technology
• Increased share of customer
practices spends
•
• People related Revenues
• Cost to Serve
practices • Profit Margins

• Procedural Market Sensing Capabilities Non-financial Measures

• Learning Orientation • Internal Business
practices
• Organization system • Learning and Growth
• KAM Target • Market Information
• Customer Satisfaction
• Relationship Improvement
practice • Organizational
• Improving Retention
communication
Mediating Variable • Sharing Investment

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 CHAPTER THREE: RESEARCH
METHODOLOGY

3.1. Introduction

The section contains the research design, population of the study, data collection technique,
operationalization of variables to be used in the study and tests of reliability and validity. Data
analysis and the analytical models for the study objectives are also presented.

3.2. Description of the study area

This study’s population consisting of Ethio-Telecom Eastern cluster (Dire Dawa, Harar and
Jijjiga Region).

3.3. Research design

This is the overall plan for answering the research question or for testing hypotheses. It
narrows down the decisions from diverse assumptions to detail data collection and analysis
techniques. Creswell (2008) posits that the research design should be selected based on
considerations such as the researcher’s worldview assumptions, the approaches of inquiry,
and the specific data collection methods, analysis and interpretation. The study used a
descriptive cross-sectional design. Nachmias and Nachmias (2004) observe that cross
sectional studies enable the researcher to determine whether significant relationships among
variables exist.

A survey study, among other qualities, generally, describes what exists, in what amount, and
in what context without any interference with the subjects (Isaac & Michael, 1997). Cross-
sectional designs provide information on existing differences rather than changes to the
dependent variable following intervention (Hall, 2008). Data is therefore collected at a single,
specific period as opposed to longer time frames. Olsen and George (2004) note that this
research design may use either the entire population or the subset. The descriptive cross

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sectional study design has been previously used in similar studies by Owino (2014), Njeru
(2013) and Kabare (2013).

3.4. Research approach

In most cases projects are initiated by researchers are anchored on assumptions regarding the
approach to be adopted for the inquiry (Lincoln & Guba, 2000). These assumptions are
referred to variously as paradigms, epistemologies or ontologies (Crotty, 1998). Paradigms
are beliefs that guide the researcher’s actions. These beliefs are based on the discipline field
of the researcher and past experiences. The research approach adopted by the researcher is
either quantitative, qualitative or a mixed method depending on one’s beliefs. Research in
social science is mostly guided by two paradigms: positivism and phenomenology.
Phenomenology is concerned with the study of experience from the perspective of the
individual and is therefore considered to be a subjective source of knowledge. It is concerned
with theory building. Positivism holds that real world occurrences can be empirically
observed and explained through logical analysis (Lincoln & Guba, 2000). Positivism involves
theory testing aimed at rejecting or accepting the null hypotheses (Bryman & Bell, 2003).
Positivism is dependent on quantitative research which uses statistical methods and numbers
in establishing analyses and measurements that can be easily replicated by others. Under the
positivist paradigm, problem solving follows a series of formulating hypotheses where social
reality assumptions are made preceded by hypotheses testing and these quantitative
techniques are mostly employed for the process; the outcome of the process is determining
whether the hypotheses are either rejected or rejected (Buttery & Buttery, 1991). Therefore,
the positivistic approach enabled the researcher type of underlying relationships, test
hypotheses and make deductions from the findings of the study.

The current study was meant to establish relationships between the independent variable (Key
Account Management Practices), the mediating variable (Market Sensing Capabilities), the
moderating variable (Organizational Characteristics) and the dependent variable
(Organizational Performance. The positivist approach was therefore relevant in this research
because the study’s intention was to test the hypotheses formulated as predictions of
phenomena that have been objectively observed.

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3.5. Sources of data
The sources of the data for the research were both primary and secondary sources. According
to Malhotra and Birks (2006), primary data are created by a researcher for the explicit purpose
to address a problem at hand whereas, secondary data as it is already gathered for an objective
other than the problem at hand. Smith (2011) recommends the use of both primary and
secondary sources of data in combined. In order to collect reliable data, both primary and
secondary sources of data are the major focus in this study.

3.5.1. Primary Source

According to Naresh (2010 p. 132), primary data will be organized for the specific purpose
of addressing the problem on hand. The primary data that will be used is questionnaire survey
by paper. While distribute the questionnaire, the researcher needs cooperation and
clarification from the respondents. Besides that, primary data refer as firsthand information
or data obtained originally by the researcher on the variables of interest for the specific
purpose of the study (Sekaran & Bougie, 2009, p.180). To meet the objectives of this study
the questionnaires will distribute to collect primary data from Ethio-Telecom Eastern Cluster
Senior Manager of key account management, Leader and Contributors of key account
programs. Those questionnaires will be administered personally to the respondents.

3.5.2. Secondary Source

According to Sekaran & Bougie (2009 p.184), secondary data refer to information gathered
by other party that already conducted a previous study. It helps researchers to get better
understand and define the problems.

3.6. Sampling

A sample design is a definite plan for obtaining a sample from a given population. It refers to
the technique or the procedure the researcher would adopt in selecting items for the sample.
Sample design may as well lay down the number of items to be included in the sample i.e.,
the size of the sample. Sample design is determined before data are collected. There are many
sample designs from which a researcher can choose. Some designs are relatively more precise
and easier to apply than others. Researcher must select/prepare a sample design which should
be reliable and appropriate for his research study.

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There are different steps under sampling design and techniques which are determining the
target population, selection of the sampling frame, selecting sampling techniques and
determining the sampling size of respondents.

3.6.1. Target Population

The population is defined by Churchil and Brown (2004) as the totality of cases conforming
to some designated specifications. A researcher can obtain population parameters either by
considering complete enumeration of the population parameters census or by choosing a
sample subset of the population. However, this study considers a sample survey to obtain the
desired sample. The population interest of this study was situated in Eastern Cluster of Ethio-
Telecom, which is the largest key account in these areas of country.
3.7. Measurement and scaling

The operationalization of the study variables is guided by the objectives. The Key Account
Management Practice is the independent variable and is operationalized as organization wide
practices, operational practices, people-oriented practices, procedural practices and target and
performance practices. These variables were examined using a seven-point Likert type scale.
Market sensing capabilities will be used as a mediating variable and will operationalized as
learning, organizational systems, market information and organizational communication
following Foley and Fay (2004). Organizational characteristics was the moderating variable
and will operationalized as size, technology and organizational culture. These variables will
measure using seven-point Likert type scales. Firm performance will the dependent variable
and was operationalized using balanced score card measures (Kaplan & Norton, 1996) of
customer satisfaction, internal processes, learning and growth, and financial measures
including ROA, ROE and Cost- Income ratios.

3.8. Data presentation and analysis

Data preparation included checking of the questionnaires for completeness, sorting, coding,
data cleaning. The study used descriptive analyses such as mean scores, standard deviation,
percentages, cross tabular presentations and frequency distributions to describe the
demographic characteristics of the data. According to Easterby-Smith et al. (2012) most data
samples contain variability that is clustered within the mean value and the extent of variation
from the central point is an ideal way to capture data set as a whole. A composite index was
computed for both financial and non-financial data. Both financial and non-financial data will

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collect using likert scales. After computing the composite index for each, a composite index
was determined for performance by combining the two composite indices.

Before testing the hypotheses, it was necessary to determine how the variables of the study
that is, key account management practices, market sensing capabilities, organizational
characteristics and performance were correlated to each other. The Pearson correlation co-
efficient was used to determine the association between key account management practices
and performance of Ethio-Telecom. Multiple regression analysis was used to determine the
relationships between key account management practices, market sensing capabilities,
organizational characteristics and organizational performance. Factor analysis was used to
verify scale construction, simplify data and represent correlated variables with a smaller set
of derived variables. To test Hypothesis1 (H1) which predicted that key account management
practices significantly influence firm performance, multiple regression was used. To do this
the dimensions of performance, namely financial and non-financial performance were
regressed on the dimensions of key account management practices. Composite scores of key
account management practices and performance were derived by totaling the scores of the
individual items and dividing them by the total number of items. This is consistent with
Pallant( 2005). The regression equation was;

OP=β0+β1 X1+ε......................................................(3.1)

Where;

OP= Composite index for Organizational performance

β0= Y- Intercept

β1=Regression co-efficient for key account management practices

X1=Composite index for key account management practices

ε = Regression error term

For Hypothesis 2 (H2) which was meant to test the mediating influence of market sensing
capabilities on the association between key account management and performance of Ethio-
Telecom and Baron (1986) four step procedure was employed. The first step involved a
simple regression with the independent variable, key account management practices the

33 | P a g e
dependent variable, performance of Ethio-Telecom to satisfy the first condition for mediation.
In the second step the independent variable (KAMP) is regressed on the mediating variable
(MSC) while in the third step is a simple regression with the mediating variable (MSC)
prediction of the dependent variable (OP).

The last step involves a multiple regression with both the independent variable (KAMP) and
mediating variable (MSC) predicting the dependent variable (OP). Full mediation would be
supported if KAMP practices were no longer statistically significant when MSC is controlled.
If both KAMP and MSC were statistically significant the study would support partial
mediation.

To test Hypothesis 3 (H3) on the moderating effect of organizational characteristics (OC) on

the relationship between KAMP and OP, a hierarchical multiple regression equation was used.
The first step involved the independent variables (KAMP and OC) in the model as predictors
of the outcome variable which is firm performance. The second step involved calculation of
an interaction term which is the multiplier of two independent variables (KAMP and OC). An
interaction term depicts a joint association between key account management practices and
organizational attributed to assess whether this association accounts for more variance in the
dependent variable beyond the one depicted by either key account management practices or
organizational individual organizational attributes. The moderation effect is proved if the
interaction term explains a statistically significant level of variance in dependent variable.

The single regression equation was: OP=βo+β1 X1+β2 X3+ β3 X1 ⃰ X3+ ε.........(3.2)

Where;

βo=Constant

β1, β2, β3=Regression coefficients

OP= Composite index for Organizational performance

X1=Composite index for key account management practices

X3=Composite index for Organizational Characteristics

X1⃰ X3=Product variable (moderator)

34 | P a g e
ε =Error term

To test Hypothesis 4 (H4) which predicted that the joint effect of key account management
practices, market sensing capabilities and organizational characteristics was greater than the
effect of key account management practices alone, regression equations were used.
Composite scores of key account management practices, market sensing capabilities and
performance were used in the analysis. The following model was used;

OP=βo+β1 X1+β2 X2+β3 X3+ε..................................(3.3)

Where;

βo=Constant

β1, β2, β3=Regression coefficients

OP= Composite index for Organizational performance

X1=Composite index for key account management practices

X2=Composite index for Market sensing capabilities

43

X3= Composite index for Organizational characteristics

ε =Error term

The adjusted R2 for the joint effect model was compared to the R2 of the individual effect
model. If the R2 of the joint effect of key account management practices, market sensing
characteristics and organizational characteristics on performance is greater than the individual
effect of key account management practices on performance then the joint effect is
statistically significant.

3.9. Model specification

3.10. Validity and reliability

3.6.1 Reliability Test

35 | P a g e
 Reliability is the degree to which a technique of measurement can be depended upon to secure
consistent results upon repeated application (Cooper & Schindler, 2006). The research
instrument is a reliable measure of the variables if the repeated application of that instrument
produces consistent results. Cronbach‟s alpha (α) coefficient is used to provide a measure of
the internal consistency of the scale. It is denoted as a number that lies between 0 and 1.
According to Nunnally

(2003) internal consistency within the instrument is considered to be high when the value of
α is 0.7 and above and is considered low when its value is below 0.5. Bagozzi and Youjae
(2012) recommend a reliability standard of 0.6 or greater but argue that a lower measure of
0.5 can also be used. The current study’s overall cronbach‟s alpha was .987 which is
consistent with Nunally (2003).

3.6.2 Validity Test

Validity shows whether the research truly measures what it intended to measure and how
correct the findings are. When behavior is measured by the researchers, validity chips in to
determine if indeed behavior was measured (Bollen, 1989). Construct validity in this study
was enhanced by pretesting the instrument on seven (7) respondents and performing factor
analysis to determine the correctness of the constructs and the respondents‟ understanding of
them. Waithaka (2014) in a study on related variables pretested the instrument on seven
respondents. Different studies have used factor analysis to determine the questionnaire’s
validity (Thuo, 2010; Njeru, 2013; Kabare, 2013). Content validity of the study was enhanced
by selective use of modified questions from related previous studies.

3.11. Research ethics

4. Time and Budget Schedule

4.1. Time Schedule
To undertaking the proposed study commence starting from March 01/2022 and will take
three months including the time for printing and submitting final copies of the study will be
finalized June 29/2022.

no March April May June

Major activities week 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

36 | P a g e
1 Finalized pre-condition to From 01-30/
Develop research proposal 07/2014 GC
2 Developing research proposal From 01-11/
08/2014 GC
3 Submitting final research From 12-14/
proposal to Department 08/2014 GC
4 Research Proposal Defense From 16-17/
08/2014 GC
5 The main thesis preparation From 22/08/14-
17/10/14GC
6 Developing questionnaire X
7 Organizing review literature X
8 Distributing questionnaire to X
respondents
9 Collecting questionnaire X
10 Data analysis X X
11 Draft thesis report writing X X
12 Submitting of draft report to my X
advisor
13 Editing, correcting and finalizing X
thesis report
14 Submitting standard research X
report to my advisor
15 Submitting final copies of X
research to Department
16 Submitting of thesis to external X
examiner by dep.
17 Preparation for thesis defense X

4.2 Budget Schedule

Regarding the budget plan of the intended research undertaking the entire process of the study
will take cost about 23,211.30 ETB

No Items
Unit Qty Unit price Total
(Birr) (Birr)
Stationary
Toner Unit 1 1000.00 1000.00
Under liner parker Pkt 1 80.00 80.00

37 | P a g e
 Duplicating paper Pkt 4 200.00 800.00
(questionnaire)
1 Computer paper Pkt 2 250.00 500.00
Writing pad (Medium) Unit 3 20.00 60.00
Pen Unit 10 5.00 50.00
Pencil Unit 2 3.0 6.00
Flash disk 16 GB Unit 1 250.00 250.00
Sound recorder with accessories Unit 1 300.00 300.00
Stapler Unit 1 50.00 50.00
Staples Pkt 2 20.0 40.00
Sub Total 3136
Per diem and Transport
2 Secretarial day 5 200.00 1,000.00
Enumerators day 11 500.00 5,500.00
For Supporting Bodies day 10 200.00 2,000.00
8,500.00
Personal expenses
For individual consumption day 30 200.00 6,000.00
For telephone minutes 500.00 500.00
3 For internet minutes 500.00 500.00
Printing 1 copies pages 120 2 240.00
Copies 4 and binding unit 460 0.05 230.00
transportation birr 1,000.00
Sub Total 8,470.00
4 Miscellaneous Expenses 2,000.00
Total 22,106.00
5 Contingency (5%) 1,105.30
Grand total 23,211.30

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