Factors Influencing Japanese Decision Makers in Thailand When they Purchase Capital Measurement Equipment for Automotive Industry

Abstract

The business-friendly environment in Thailand has encouraged many foreign businesses to invest in the nation especially in auto industry. Japanese investors have most of the market share in foreign direct investment that counts for 36.2% of total FDI (Supakorn and Udomthanayong, 2020). The Japanese investor invests in capital goods then ship finished products from Thailand to other nations. Therefore, suppliers need to understand how Japanese go about purchasing all these products, as a result the research objective is to figure out factors driving Japanese purchasing behavior when it comes to buy capital equipment for the automotive industry in Thailand. Hence, the sampling framework includes Japanese capital equipment decision-makers in Thailand.

The conceptual model is hypothesized as second-order and third-order latent construct Structural Equation Modelling (SEM).  Independent variables include 7Ps, brand, relationship, financing, three second-order latent factors and one third-order latent factor. Since RMSEA fit statistic of .059 is slightly below the desired .06 cutoff and the Goodness of Fit Index (GFI) is .901 denoting model fit. Therefore, the model seems to fit the data according to the descriptive measures of fit.

More importantly, due to highly complex nature of capital equipment purchase behavior, we incorporate both second-order and third-order constructs into our third-order factor structural equation model as mentioned earlier. And it turns out that both second-order factors (MKT: Marketing, CHNL: Channel, HMN: Human) and third-order factor (ITGB: Intangibles) are all significant due to their p-values < .05 except for HMN’s p-value is marginally significant. Moreover, relationship and brand are also significant as well.