The Effect of Sourcing Models on Marketing Expenditure, Medical Schemes - South Africa

Michael Mncedisi Mncedisi Willie and Abigail Chivandi

A chapter in Business, Management and Economics Annual Volume 2024 from IntechOpen

Abstract: The business sourcing model and various structural components, including sourcing models, exert a significant influence on a company's performance and sustainability in various ways. Research has consistently shown that the structural characteristics of an organization have a notable impact on its performance outcomes. This study specifically investigated how the sourcing model employed by a medical plan impacts its marketing expenditures. The examination of this relationship was guided by two fundamental theories: the resource-based perspective and the dynamic capabilities theory (DCT). Additionally, the selection of specific variables was based on empirical analysis of the study's variables. The research adopted a population-based quantitative research methodology for its analysis. Data for the study was sourced from three years' worth of expenditure data provided by the regulatory authority. The findings of this study indicate that sourcing models do not serve as deterministic factors in determining marketing expenditures. Consequently, it is recommended that further evaluation of the sourcing models utilized by medical schemes be conducted, particularly in terms of their impact on marketing capabilities. When feasible, medical schemes are encouraged to consider insourcing their marketing activities. In cases where insourcing is not a viable option, medical schemes should consider the implementation of performance-based contracting linked to specific performance targets.

Keywords: marketing expenditure; marketing initiatives; organisational performance; south African health care market; sourcing models; medical schemes (search for similar items in EconPapers)
JEL-codes: M00 M2 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:308092

DOI: 10.5772/intechopen.113203

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