The HBAT company case study: E-Commerce Activities,

Customer Satisfaction, Likelihood of Recommendation and

Likelihood of Future Purchase affect the Consideration of
Partnership in the future

A submitted midterm report of Quantitative method class

Presented by
Daranrat Jaitiang, P10522015
Department of Tropical Agriculture International Corporation
Beny wahyudi, G10582009
Department of International Masters Degree Program in Agribusiness
Management

Instructor

National Pingtung University of Science and Technology

 The HBAT company case study: E-Commerce Activities, Customer Satisfaction,
Likelihood of Recommendation and Likelihood of Future Purchase affect the
Consideration of Partnership in the future

Daranrat Jaitiang, P10522015 and Beny Wahyudi, G10582009

Abstract
HBAT company is a premium manufacturer in United State, specialize in paper
production. Additionally, the paper product is widely well-known and used in the new print
industry and the magazine industry both inside and outside North America.

Introduction

Objective
To identify the independent variables that impact the
To determine group independent variable affecting the consideration of partnership in the
future

Literature review
This study looks over the HBAT consideration of partnership or alliance in the future.
Consideration of Strategic Alliance/ Partnership in Future
Strategic partnership consideration was being increased in American firm () Most
industries pay attention to this.
E-Commerce Activities

Customer Satisfaction

Likelihood of Recommendation
 Likelihood of Future Purchase

Methodology
This study used logistic regression with a binary dependent variable, which can explain
and predict a two-group categorical viable (Pearson, 2014).
Database
The data was retrieved from HBAT Case Data, which included the dependent variables
and the independent variables (Table1)

Model
Perc = 0 + 1ECom + 2CSat + 3Rec + 4FPur + e
Where:
Perc = Perception of future relationship with HBAT
ECom = E-Commerce Activities
CSat = Satisfaction
Rec = Likelihood of Recommendation
FPur = Likelihood of Future Purchase

Sample size
Based on the HBAT data, data was consisted of 200 observation and 18 separate
variables referring from the market segmentation study from HBAT of customer.

Hypothesis
Hypothesis Model
H0 = Independent variables are simultaniosly affecting to dependent variable
H1 = Independent variables are not simultaniosly affecting to dependent variable
Hypothesis Variable
a. E-Commerce Activities/Web Site
H0 = E-commerce activities are not affeting to consider strateguc alliance
H1 = E-commerce activities are affeting to consider strateguc alliance
b. Satisfaction
H0 = Satisfaction is not affeting to consider strateguc alliance
 H1 = satisfaction is affeting to consider strateguc alliance
c. Likelihood of Recommendation
H0 = Likelihood of recommendation is not affeting to consider strateguc alliance
H1 = Likelihood of recommendation is affeting to consider strateguc alliance
d. Likelihood of Futur Purchase
H0 = Likelihood of Future Recommendation is not affeting to consider strateguc alliance
H1 = Likelihood of Future Recommendation is affeting to consider strateguc alliance

Result and Discussion

1. Distribution Data
a. Consider Strategic Alliance/ Partnership in Future
Tabel 1. Distribution Data of Consider Strategic Alliance/ Partnership in Future
Consider Strategic Alliance/ Frequency Percent Cumulatif
Partnership in Future (Perc)
0 114 57.00 57.00
1 86 43.00 100.00
Total 200 100.00

Based on table -------, frequency of 1 (could consider) and 0 (not consider) is not too lame. It
means that data of strategic alliance partnership in the future is normal distribution. In other
word, this data is spread evenly to 1 (firm could consider) and 0 (firm could not consider). So
this data can use to analyze with logistics regretion.
b. E-Commerce Activities
 .8
.6
Density

.4
.2
0

2 3 4 5 6
E-commerce Activities/Website

c. Customer Satisfaction
.4
.3
Density

.2
.1
0

5 6 7 8 9 10
Satisfaction

d. Likelihood of Recommendation
 .4
.3
Density

.2
.1
0

4 6 8 10
Likelihood of recommendation

e. Likelihood of Future Purchase

.6
.4
Density

.2
0

4 6 8 10
Likelihood of future purchase

Variable Obs Pr (Skewness) Pr (Kurtosis) Adj chi2 Prob > chi2

E-Commerce Activities 200 0.0057 0.7146 7.29 0.0261
(Ecom)
Customer Satisfaction 200 0.5960 0.0004 11.19 0.0037
(CSat)
Likelihood of 200 0.6773 0.5415 0.55 0.7590
Recommendation (Rec)
Likelihood of Future 200 0.2255 0.1188 3.94 0.1392
Purchase (FPur)

To dicede whether data of variables are normal distribution, we can look from skewness and
kurtosis test. If probability chi2 of skewness kustosis is more than 0.005
2. Data Summary
Variable Obs Mean Std. Dev. Min Max
Consider Strategic Alliance/ 200 0.43 0.496318 0 1
Partnership in Future (Perc)
E-Commerce Activities 200 3.765 0.768916 2.2 5.7
(Ecom)
Customer Satisfaction 200 6.952 1.241128 4.7 9.9
(CSat)
Likelihood of 200 6.9525 1.082893 4 9.9
Recommendation (Rec)
Likelihood of Future 200 7.665 0.893233 4.3 9.9
Purchase (FPur)

From the summary table, number of observation is 200 firms. We use Perc as dependent
variable. Perc is dummy variable with value 0 and 1, so minimum value of Perc is 0, and
maximum value of Perc is 1. To predict Perc, we use some independent variables, there are
Ecom, CSat, Rec, FPur. All of independent variables were measured on a grapich scale 0
(poor value) to 10 (excellent value).
3. Correlation
Consider E- Customer Likelihood of Likelihood
Strategic Commerce Satisfaction Recommendation of Future
Alliance/ Activities (CSat) (Rec) Purchase
Partnership (Ecom) (FPur)
in Future
(Perc)
Consider Strategic 1.0000
Alliance/
Partnership in
Future (Perc)
E-Commerce 0.3069 1.0000
Activities (Ecom)
Customer 0.6928 0.3416 1.0000
Satisfaction
(CSat)
Likelihood of 0.6815 0.3040 0.7616 1.0000
Recommendation
(Rec)
Likelihood of 0.5861 0.2352 0.7258 0.6609 1.0000
Future Purchase
(FPur)

Based on matrix correlation table, there are not independent variables which have
multicollinearity. Because there are not value of correlations more than or equal 0.8 between
 independent variables (Gujarati, 2001). So all of independents variable can used to predict
dependent variable
4. Logistic Regression
Log Likelihood = -57.756677 Number of obs = 200
LR chi2 (4) = 157.81
Prob > chi2 = 0.0000
Pseudo R2 = 0.5774

Perc Coef. Std. Err. z P>z [95% conf. Interval]

Ecom .6642076 .3935321 1.69 0.091 -.1071012 1.435516
CSat .9403997 .342572 2.75 0.006 .2689708 1.611829
Rec 1.697149 .4214644 4.03 0.000 .8710938 2.523204
FPur 1.045687 .4526921 2.31 0.021 .1584269 1.932947
_cons -29.59466 4.672458 -6.33 0.000 -38.75251 -20.43681

Table of coefficient logistic show that model in this study is statistically significant, because
value of Prob > chi2 = 0.0000 or less than significant level at 0.01. In other word, rejecting H0
and accepting H1, so there are independent variables affecting to dependent variable. This
table also show that independent variables can explain 57% dependent variable (Pseudo R2),
and 43% of dependent variable is explained by other factors outside of model.
All of the independent variables significantly affect to dependent variable, because the P > z
of all of independent variables are less than 0.1 (significant level). The coefficient of
independent variables have sign positive, it means that increase in the each independent
variable is associated with an increase the firm probability to consider strategy
alliance/partnership with HBAT. Coefficient value of constanta is negative, it is mean that if
all of variable are zero (or firms are not consider all independent variables), so the firm
probability to consider strategy alliance with HBAT is decreasing.

Log Likelihood = -57.756677 Number of obs = 200

LR chi2 (4) = 157.81
Prob > chi2 = 0.0000
Pseudo R2 = 0.5774

Perc Odds Ratio Std. Err. z P>z [95% conf. Interval]

Ecom 1.94295 .7646133 1.69 0.091 .8984348 4.201814
CSat 2.561005 .8773286 2.75 0.006 1.308617 5.011967
Rec 5.458363 2.300505 4.03 0.000 2.389523 12.46848
FPur 2.845353 1.288069 2.31 0.021 1.171666 6.909845
_cons 1.40e-13 6.56e-13 -6.33 0.000 1.48e-17 1.33e-09
 Table of odd ratio show that odds ratio value of Ecom is 1.94295. This is mean that if E-
commerce activities from HBAT increase 1 scale, so the probability of firm to consider to
strategy alliance or partnership increased 94% (1.94295 1 = .94295). The odds ratio of CSat
is 2.561005, it is mean that if customer satisfaction increase 1 scale, so the probability of firm
to consider to strategy alliance increase 156%. Odds ratio of Rec is 5.458363, it means that if
likelihood of recommending HBAT increase 1 scale, so the probability of firm to consider to
strategy alliance with HBAT increase 445%. Odds ratio of FPur is 2.845353, it means that if
likelihood of future purchase from HBAT increase 1 scale, so the probability of firms to
consider to strategy alliance increase 184%.

Marginal effects after logit

y = Pr (Perc) (predict)
= .3226457

Variable dy/dx Std. Err. z P>z [95% C.I.] X

Ecom .1451595 .08779 1.65 0.098 -.026912 .317232 3.765
CSat .2055201 .07371 2.79 0.005 .06106 .34998 6.952
Rec .3709041 .09204 4.03 0.000 .190515 551293 6.9525
FPur .2285301 .09844 2.32 0.020 .035594 .421466 7.665

From marginal effect table, we can look marginal effect from each independent variables to
dependent variable in mean value of independent variables. From that table, we know that
independent variable which has highest marginal effect is likelihood of recommending HBAT
(Rec). Value of marginal effect from Rec is .3709041, it means that if likelihood of
recommending HBAT increase 1 scale from its mean value, so the probability of firm to
consider strategy alliance with HBAT increase 37%. Marginal effect of E-Commerce
activities is .1451595, it means that if E-Commerce activities increase 1 scale from its mean
value, so the probability of firm to consider strategy alliance with HBAT increase 14%.
Marginal effect of CSat is 0.2055201, it means that if customer satisfaction increase 1 scale
from its mean value, so the probability of firm to consider strategy alliance increase 20%.
Marginal effect of FPur is .2285310, it means that if likelihood of future purchase from
HBAT increase 1 scale from its mean value, so the probability of firm to consider strategy
alliance with HBAT increase 22%.
5. Hypothesis Test
To test our Hypothesis, we use goodness of fit, wald, and likelihood-ratio test. The result of
three tests are:
Goodness of Fit Wald Test Likelihood-Ratio Test
Prob > chi2 1.0000 0.0000 0.0035

The first, we use goodness of fit to Hypothesis test (Hosmer and Lemeshow). The purpose of
this test to know whether model that we use is in accordance with empirical data. The
Hypothesis null of this test is model fits the data well. Based on table above, the probability
chi2 of goodness of fit is 1.00. It means that rejected H1 and accepted H0, in other words that
model fits the data well. The second test we use Wald test. The Wald test approximates the lr
test, but with the advantage that it only requires estimating one model. The Wald test works
by testing the null hypothesis that a set of parameters is equal to some value. In this study, the
null hypothesis is that the 4 coefficients of independent variables are simultaneously equal to
zero. Based on table above, value of prob > chi2 is 0.0000 less than 0.05. it means that
rejected H0 and accepted H1, so coefficients of independent variables are not simultaneously
equal to zero. In other word, that including Ecom, CSat, Rec, FPur results in a statistically
significant improvement in the fit of the model.
The third test we use Likelihood-Ratio Test. The LR test is performed by estimating two
models and comparing the fit of one model to the fit of the other. The first model we use
Perc = 0 + 1Ecom + 2Rec + 3FPur + e (omit CSat). And second model we use Perc =
0 + 1Ecom + 2CSat + 3Rec + 4FPur + e (complete model). The hypothesis null of this
test is smaller model is true model. With probability chi2 of LR test is 0.0035 less than
significant level (0.005), so rejected H0, and accepted H1, indicating that the model with 4
predictors (complete model) fits significantly better than model only 3 predictors.

6. LM Test
Source SS df MS Number of obs = 200
F (5,194) = 143.16
Model 95.1054489 5 19.0210898 Prob > F = 0.0000
Residual 25.7758519 194 .132865216 R-Squared = 0.7868
Adj R-squared = 0.7813
Total 120.881301 199 .607443723
Root MSE = .36451
e Coef Std. Err. t P>t [95% conf. Interval]
Perc 2.060306 .0771197 26.72 0.000 1.908205 2.212406
Ecom -.0943299 .03600179 -2.62 0.010 -.1653668 -.0232929
CSat -.2682822 .0381937 -7.02 0.000 -.3436104 -.1929539
Rec -.2923022 .039854 -7.33 0.000 -.3709049 -.2136995
FPur -.1175451 .0435935 -2..70 0.008 -.2035231 -.0315672
_cons 4.255712 .2956078 14.40 0.000 3.672694 4.83872

7. Prediction
Tabel --. Classification Table and Hit Rate
Classified True Total
D D
+ 72 14 86
- 14 100 114
Total 86 114 200
Correctly classified 86.00%
Based on actual data, the number of firms that consider the strategy of partnership with
HBAT amounted to 86 units, while prediction by using four independent variables obtained
results that 72 firms consider partnership strategy, so there are 14 firm that do not consider
about the strategy partnership (the prediction error) ,
Based on actual data, the number of firms do consider about the strategy partnership with
HBAT amounted to 114 units, but from prediction by using four independent variables
obtained result that 100 firm do not consider about the strategy partnership, so there are 14
companies consider to strategy partnership (the prediction error ). Based on this, it can be
concluded that the four independent variables able to predict the independent variable with the
prediction accuracy of 86.00%.
 1.00
0.75
Sensitivity

0.50
0.25
0.00

0.00 0.25 0.50 0.75 1.00

1 - Specificity
Area under ROC curve = 0.9478

Diagram ---. Reciver Operating Characteristic (ROC) Graph

Lsens graph

Conclusion