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A Conceptual Model and Study of Cross-Cultural Business Relationships
A Conceptual Model and Study of Cross-Cultural Business Relationships Jerome D. Williams PENNSYLVANIA STATE UNIVERSITY
Sang-Lin Han CHUNGNAM NATIONAL UNIVERSITY
William J. Qualls MIT-SLOAN SCHOOL OF MANAGEMENT
Business-to-business marketing relationships have taken on a variety of names, ranging from long-term relationships, buyer-seller partnerships, strategic alliances, joint ventures, network organizations, to fully integrated hierarchical firms, cross-marketing agreements, etc. (Oliver, 1990, Gross and Neuman, 1989; Webster, 1992). Despite the plethora of terms used to describe business relationships, we know little about what determines a successful business relationship. This article develops a conceptual model of cross-cultural business relationships. An exploratory study was conducted to examine the impact of social and structural bonding as determinants of business relationship performance. The study found that knowledge of cultural orientation and its relationship to the social and structural bond that exists between partners is a key predictor of longterm commitment in cross-national business relationships. J BUSN RES 1998. 42.135–143. 1998 Elsevier Science Inc.
K
enichi Ohmae once said that, ‘‘Companies are beginning to learn what nations have always known: in a complex, uncertain world filled with dangerous opponents, it is best not to go it alone. Entente—the striking of an alliance—is a responsible part of every good strategist’s repertoire. In today’s competitive environment, this is also true for corporate managers’’ Ohmae (1989, p. 143). In an attempt to gain greater competitive advantage through relationships, firms have been shifting away from adversarial interactions, typical of the arm’s-length, traditional buyer-seller transaction, and seeking longer-term relationships based on mutual advantage and mutual survival (Wheatley, 1991). Webster (1992) notes that these new organizational forms are replacing simple market-based transactions, and in the future
Address correspondence to Jerome D. Williams, College of Business Administration, Pennsylvania State University, 701 Business Administration Building, University Park, PA 16802-3007. Journal of Business Research 42, 135–143 (1998) 1998 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010
business relationships will be increasingly perceived as a strategic resource much like other resources as products and technology. This trend is particularly evident in the formation of business relationships between firms from different countries (Hergert and Morris, 1988; Harrigan, 1988). Fortune magazine recently reported that U.S. corporations formed over 2,000 alliances in the 1980s with European companies alone (Kraar, 1989). There are many reasons for this growth. For one, the dynamics of the world business environment are forcing companies to cooperate in order to compete, and in some cases, in order to survive. Consequently, companies are finding that the sharing of risk and resources is an increasingly desirable strategy (Business International Corporation, 1987). The primary thesis of the present study was to determine and understand the antecedent variables that contributed to the performance of cross-national business relationships, as manifested by commitment. From a theoretical standpoint, the answer to the above concerns provides researchers with a more established framework for explaining and estimating the success of cross-national business relationships. From a managerial point of view, it suggests that the chances of success of cross-national business relationships are determined partially by the appreciation and understanding that each country partner has of the other’s social as well as structural bonding requirements and expectations. Where American firms are more likely to rush into a business relationship as it is defined in the contractual arrangement, firms from the Asian-Pacific Rim are more likely to focus on establishing the social requirements of the relationship between the two organizations as a prerequisite for establishing and maintaining a business relationship. This article will analyze the role of culture, focusing on interpersonal orientation as manifested by the individualistic/ collectivistic national characteristic, in affecting business-toISSN 0148-2963/98/$19.00 PII S0148-2963(97)00109-4
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business relationships. A conceptual model will be developed based on social and structural bonding as antecedents to relationship performance, measured by commitment. We will then report on an exploratory study to test hypotheses developed from the model.
Culture in Business Relationships: Interpersonal Aspects Central to the research premise underlying the concept of interpersonal orientation in business relationships and the role that culture plays in influencing these relationships is the definition of culture. As such, culture is an important force determining managerial attitudes and practices; it influences the practice of management and is considered an essential tool for understanding the process of doing business (Allen, Miller, and Nath, 1988). Despite numerous areas in which culture can influence business relationships (Sheth, 1981), most of the research has centered on only one domain, namely bargaining negotiations (e.g., Graham, 1983, 1984, Harnett and Cunningham, 1980). In this article, we attempt to move beyond merely treating culture as a descriptive variable in business relationships. Emphasis is placed on establishing prepositional statements and testable hypotheses that could serve as the foundation of a theoretical framework to explain culture’s impact on business relationships (Williams et al., 1989; Wilson and Moller, 1988).
Culture as an Obstacle in Cross-National Business Relationships Since the mid 1980s, firms have accelerated the pace at which business relationships are being formed, despite the fact that success rates for interfirm ventures and cooperative strategies are reported to be low (Harrigan, 1985; Levine and Byrne, 1986). Previous research has shown that developed country joint ventures tend to have an instability rate of around 30% with developing countries between 45% to 50% (Beamish, 1984, 1985; Killing, 1983; Reynolds, 1984). One possible explanation that has been identified by researchers as one of the major obstacles in successful performance in cross-national business relationships is the degree of ‘‘culture distance’’ (i.e., the extent to which the norms and values of the two firms differ because of their separate national characteristics) that exist between partners (Geringer and Hebert, 1990; Lewis, 1990; Ford, 1984). For example, Park (1991) notes that although a large number of cross-national relationships are structurally and contractually sound, they have been reported to be organizationally unstable and performing poorly. Therefore, it is critical to understand the role of culture in business marketing and especially in establishing and maintaining cross-national relationships (Samli, Grewal, and Ma-
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thur, 1988; Clark, 1990) if we are ever going to be able to predict their success.
Defining Culture: Focus on Individualism/Collectivism Researchers have identified several dimensions of national character and proposed numerous definitions of culture. In the present study, we use the definition proposed by Hofstede (1980), which defines culture not as a characteristics of an individual but of a group of people that are conditioned by the same education and life experience, (i.e., the collective mental programming that people have in common.) Hofstede determined empirically four key criteria by which national cultures differed, which includes the dimensions of power distance, uncertainty avoidance, individualism-collectivism, and masculinity-femininity. Kale and Barnes (1992) detailed how each of Hofstede’s four dimensions could shape aspects of the content and style of participants from different countries in a buying-selling situation, (e.g., preferences for certain product attributes, selling approaches, etc.) Of the four, individualism-collectivism seems to be most pervasive difference associated with the cultures of various countries. Basically it relates to the status of the individual and his/her role in society and is closely related to a number of similar concepts referred to by many different terms, e.g., situation centeredness, social orientation, etc. (Wheeler, Reis, and Bond, 1989). Individualism and collectivism both characterize how individuals interact with one another on an interpersonal level, or what other researchers have called the interpersonal orientation (IO) continuum (Rubin and Brown, 1975). A society that values individualism is one in which the ties between individuals are very loose. A society that values collectivism is one in which individuals are expected to look after each other, and thus are more people oriented. Similarly, high IO societies are highly responsive to interpersonal aspects of relationships with others, whereas low IO societies are just the opposite.
Interpersonal Orientation and Bonding in Business Relationships In previous research examining interpersonal influence in marketing, most of the studies have focused on consumer situations, such as the study of the market maven (Feick and Price, 1987), relationship quality in selling consumer whole life insurance (Crosby, Evans, and Cowles, 1990), and attributional sensitivity (Netemeyer, Bearden, and Teel, 1992). Fewer studies have focused on the role of interpersonal influence in business marketing settings and even fewer studies examine the problem in a cross-national context. The one exception is the Henthorne, LaTour, and Williams (1990) study on risk reduction. In business marketing, the process of interpersonal orienta-
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tion is closely related to what has been termed ‘‘bonding.’’ This concept, bonding, has been successful in explaining withincountry buyer-seller relationships (IMP Group, 1982; Wilson and Moller, 1988) and has been identified as an important concept for examining the performance of business relationships between countries. Bonding is typically concepturalized as a dichotomy between structural and social bonding. Spitzberg and Lane (1983) reviewed many approaches to conceptualizing IO constructs and in synthesizing all the similarities and approaches. They identified four dimensions, of which two (social relations, task orientation) are directly associated with the structural and social aspects of bonding. They found a social relations area (affiliation, cooperation, socialability, etc.), and a task orientation area, which are similar to the constructs of social and structural bonding. Social bonding is similar to what Turner (1970) has called personal bonding. During social bonding, individuals are bonded together via the organizational members’ personal and social relationships with their counterparts in a particular firm. Personal factors such as trust or satisfaction with the relationship partner play an important role in developing social bonding. Other researchers have noted the importance of personal and noneconomic satisfaction in a business relationship and have suggested that as relationships continue members in each organization become more and more enmeshed in the social networks of the other and their relationship becomes more binding, stable, and predictable (Dwyer et al., 1987; Pfeffer and Salancik, 1978). Jackson (1985) suggests that the buyer may rely on personal representatives of the seller to provide important business values, and that the personal relationship may be the best available evidence that the representative is interested and committed enough to provide that value. On the other hand, structural bonding is similar to what Turner (1970) called ‘‘task bonding,’’ but in a much broader sense. In this article, structural bonding is defined as the degree to which certain ties link and hold a buyer and seller together in a relationship as the result of some mutually beneficial economic, strategic, technological, and/or organizational objective, etc. For example, organization A could be involved in a business relationship and closely tied to organization B because: (1) organization B provides A with a high level of technological expertise, e.g. computerized delivery system), (2) B supplies better priced products (economic benefit), (3) B supplies most of the parts needed (the component is central to the product of A), (4) A has already invested considerably in the relationship with B and will incur a high switching cost, and (5) A wants to have a business relationship with B to secure future business opportunities. Both social and structural bonding have been identified in previous research as antecedents to commitment, a critical variable indicating performance of business relationships. Similar to other researchers, we operationalize commitment to serve as a surrogate measure of the performance of a business
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relationship. For example, Wilson and Mummalaneni (1988) argue that the greater the commitment of the organization to a specific relationship, the greater the stability of that relationship and the greater the chance that the duration of the relationship will be longer. Whereas there actually can be different types of commitment, Jackson (1985), we concentrate on two: commitment to an organization (through structural bonding) and commitment to a person (through high interpersonal orientation and social bonding).
A Conceptual Model Using the Hofstede framework as a foundation, a conceptual model of the effects of culture and interpersonal orientation on business-to-business relationships is presented in Figure 1. Briefly, the model suggests national culture as defined by Hofstede’s four dimensions impacts an individual’s behavior both directly and indirectly (through organizational culture). We are primarily interested in the influence of Hofstede’s individualism/collectivism dimension because of its connection with interpersonal interactions as explained above. When national culture has a direct effect (Figure 1, right-hand side), the dimension of individualism/collectivism (which is highly correlated with interpersonal orientation) leads to an emphasis on social bonding as a determinant of commitment in the business relationship (i.e., commitment based on the people involved). Because individualistic countries tend to have people who rank low in IO and collectivistic countries tend to have people who are high in IO, the corresponding IO behavior in turn determines the relative importance of social bonding in impacting commitment in a business relationship. When assessing the indirect effect of national culture (Figure 1, left-hand side), Hofstede’s dimensions are filtered through organizational culture, and hence, more emphasis is placed on the individual’s relationship with the other firm or organization, rather than just interpersonal interaction with the people in the organization. Therefore, structural bonding takes on greater importance and leads to commitment in the business relationship based on the organization involved and its structural aspects, such as the other firm’s technology, etc. In filtering the effects of national culture and the influence on interpersonal interactions, organizational culture encompasses the pattern of shared values and beliefs that enables people within the organization to understand its functioning. As such, it furnishes them with behavioral norms and influences the way members of the organization think, behave, and manage in their relationship with other organizations and includes aspects such as structure, technology, organization philosophy, and organizational policy and decision-making (Deshpande and Parasuraman, 1986; Deshpande and Webster, 1989; Allen, Miller, and Nath, 1988). These aspects tend to put more emphasis on the structural aspects of business relationships, i.e., structural bonding, as opposed to the interpersonal aspects, i.e., social bonding.
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Figure 1. Effects of National Culture, Interpersonal Orientation, and Bonding on Business Relationships.
Even if one looks at an organizational culture that emphasizes a ‘‘people orientation,’’ relationship performance will still be based on the structural aspects, i.e., commitment to another ‘‘people-oriented’’ organization, as opposed to commitment to individuals through social and interpersonal interactions, as influenced by the direct effects of national culture. For example, one aspect of organizational culture identified by Reynolds (1986) is task versus social focus, which contrasts the relative priorities of an organization between organizational work versus concern for the personal and social needs of its members. Firms with a purely task-driven focus will strive toward almost robotic efficiency in the attainment of their financial and growth objectives, whereas social-focus firms attempt to accommodate the social needs of its members. Our model suggests that individuals in a task-focus organizational culture, or for that matter a social-focus organization, will be more likely to commit to a relationship with another organization with similar structural aspects, i.e., structural bonding. At the same time, though, individual will be more likely to commit to a relationship with another individual by interacting on an interpersonal level, i.e., social bonding.
Hypotheses This conceptual model now allows us to develop hypotheses about the performance of business relationships between firms from different national cultures. Structural and social bonding are the antecedents to commitment in business relationships. The importance an individual will place on social bonding,
which focuses on commitment to people, will be determined by national culture (i.e., IO as reflected by the individual’s individualist/collectivistic background). In the context of the framework presented in Figure 1, social and structural bonding impact the degree of commitment in a business relationship. For example, Turnbull and Wilson (1989) analyzed how a specific firm could build a strong bond between itself and its customer and found that bonding between the specific firm they analyzed and its customer was mostly at the social level. However there also was some structural bonding, particularly with medium-sized accounts. Therefore, both social and structural bonds should contribute in committing firms from different cultural backgrounds to a relationship. As such it is hypothesized: H1a: Structural bonding is positively related to commitment for different national cultures. H1b: Social bonding is positively related to commitment for different national cultures. Wilson and Mummalaneni (1986, 1988) have posited that structural aspects of the relationship should be more dominant in the bonding process. Similarly, Dant and Wilson (1989) found that structural commitment to be the key explanatory variable of relational continuity, i.e., long-term relationship. Typically, two firms are likely to get involved initially in a relationship because of some structural aspects of the relationship (e.g., technical relevance, economic advantage, future opportunity) and such factors are critical to the establishment
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of the relationship. In this sense, organizational decision-making may be influenced more by the structurally bonded situation than the socially bonded situation. Therefore, structural bonds should be more dominant in the establishment and maintenance of a long-term relationship than social bonds. As such, the second hypothesis suggests: H2: Structural bonding has a greater influence than social bonding on commitment for different national cultures. Wilson and Mummalaneni (1988) allowed for variation in commitment based on the relative importance of social and structural bonding in business relationships. They posit that commitment is greater in business relationships where there are strong social relationships compared to those that are pure structural business relationships. Given the importance of high IO in collectivistic countries, social bonds should be more dominant in business relationships among collectivistic countries than among individualist countries. Similarly, given the importance of task focus in organizational culture, structural bonds should be more dominant in business relationships among individualist countries than among collectivistic countries. This is similar to what the literature suggests in organizational commitment. Randall (1993) notes that one would anticipate greater affective attachment (a sense of loyalty) to institutions in collectivistic cultures and greater calculative involvement (a cost-benefit approach) with institutions in individualistic cultures. Boyacigiller and Adler (1991) argue that the commitment of employees with collectivistic values may arise from ties with managers, owners, and co-workers, whereas the commitment of employees with an individualistic orientation may be due to the job itself or the compensation system. Therefore, the third hypothesis suggests the following for structural and social bonds: H3a: Structural bonding has a greater influence on commitment for individualistic countries than for collectivistic countries. H3b: Social bonding has a greater influence on commitment for collectivistic countries than for individualistic countries.
Research Method To test these hypotheses, we collected data from five national cultures. This research is an extension of a larger study based just on business relationships in the United States. Our study was designed as an exploratory study to begin testing the validity of our conceptual model.
Sampling Procedure and Data Collection A descriptive field study was designed to test the above hypotheses. The study used a questionnaire survey method using a
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sample of business people in five countries: the United States, China, Jamaica, Costa Rica, and Germany. The convenience sample was drawn from a set of executive education courses taught in the respective countries. We collected 279 questionnaires from the business managers in the five countries (China 25; Germany 31; Costa Rica 40; Jamaica 54; the Unites States 129). In the case of U.S. data, nonresponse bias was assessed by comparing early with late respondents as suggested by Armstrong and Overton (1977). The test found no evidence suggesting that respondents might differ from nonrespondents in terms of the study variables.
Country Cluster Classification Comparative management researchers have tended to use a nation or country as the primary unit of analysis when studying culture (Nath, 1988). In this study, we selected nations, but rather than compare just specific countries, we chose to compare individual countries and ‘‘clusters’’ of countries, as recommended by Randall (1993). Based upon previous research, we estimated that the five countries selected for our study would be placed along the continuum of Hofstede’s dimensions, as illustrated in Figure 2. As the individualisticcollectivistic dimension is the most related to IO, we particularly examined Hofstede’s (1980) characterization of these countries on that dimension and other literature to assure differentiation between the selected clusters of countries. North American culture typically is characterized as individualistic, with the United States specifically being highly individualistic (Hsu, 1981). There seem to be strong similarities between North America and the Anglo group of countries of Western Europe in terms of a strong individualistic orientation (Nath and Sadhu, 1988). Thus, it was hypothesized that Germany and the United States would be countries that would exhibit a high degree of individualism and would fall on the individualistic end of the continuum. Among the collectivistic countries, very little research has been conducted specifically on Jamaica. However, we know that the Caribbean area was populated by migrants primarily from Africa and Asia (Brodber, 1985), both of which tend to be collectivistic societies. Today 90% of Jamaica’s population is made up of people form African descent, and research has shown that most African cultural groups tend to score high on collectivism because of the prevalence of the extended family social network that characterizes most societies in Africa (Kiggundu, 1988). Latin America exhibits similar cultural norms as Africa in terms of collectivism (Quezada and Boyce, 1988; Nath and Sadhu, 1988). In Latin American business relationships, the social contacts, i.e., social bonding, developed between the parties are often far more significant than the technical specifications and the price, i.e., structural bonding (Herbig and Kramer, 1992; Ghauri, 1986). Similar to Jamaica, no empirical study as been done on the People’s Republic of China, using Hofstede’s conceptual
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Figure 2. Comparison of country clusters on Hofstede’s cultural dimensions.
framework. However, other researchers have observed that a primary characteristic of Chinese culture appears to be the collectivistic orientation (Chan, 1986; Ch9ien, 1973; Tung, 1988). Thus, in the present study, Jamaica, Costa Rica, and China were classified a priori as largely collectivistic societies, as reflected by the preponderance of evidence in the literature.
interpersonal orientation. The dependent measure of commitment was based upon similar measures used by IMP Group’s standardized questionnaire (IMP Group, 1989) and Mummalaneni’s (1987) study. All items were measured on a 7-point Likert scale.
Constructs and Measures
Results and Discussion
The dependent and independent measures used in the present study were selected from a previously developed scale to measure antecedents of buyer-seller long-term relationships in the United States (Han, 1991). In checking the internal consistency of each construct, Han (1991) examined the reliabilities of the measures by computing Cronbach’s coefficient alphas and found that the coefficients of many items exceeded 0.7, which is the threshold Nunnally (1978, p. 245) recommends. Therefore, we felt the items successfully tapped the constructs they were designed to measure and could be applied in this exploratory study. Han’s (1991) independent measures were developed primarily from previous research and the author’s conceptualization of the constructs. Using the techniques recommended by Gerging and Anderson (1988) and suggested by Churchill (1979), we adapted those measures to fit the marketing context of our study, namely, a cross-national comparison of
We conducted regression analysis to examine the hypothesized relationships between a country’s culture in affecting the interpersonal relationship in a business-to-business relationship. The basis for the specific tests of the hypotheses and their results are presented in Tables 1 and 2. The results in Table 1 and Equation 1 of Table 2 indicate that structural bonding and social bonding are positively related to commitment to the relationship and these results support H1a and H1b. A review of the individual items in Equation 1 reveals that the effect of structural bonding on commitment is much bigger than the effect of social bonding. Therefore H2 was strongly supported, and this result is consistent with Wilson and Mummalaneni (1988) who posited that structural aspects of business relationship would be more dominant in the bonding process. Equations 2 and 3 of Table 2 show the different regression models between collectivistic cluster of countries (i.e., China,
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Table 1. Regression Results from Measuring the Impact of Structural Bonding and Social Bonding on Commitment
Table 2. Regression Results for Group Data on Commitment
Variable
Standardized Regression Coefficients China Germany Jamaica Costa Rica
USA
Structural bonding Social bonding R2
0.61 (4.37) 0.37 (2.63) 0.58
0.67 (9.97) 0.03 (0.46) 0.45
0.67 (5.51) 0.28 (2.28) 0.76
0.58 (4.82) 0.09 (0.75) 0.37
0.55 (3.97) 0.18 (1.31) 0.37
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Numbers in parentheses show t-value of each coefficient. All R2 values are significant at p , .001.
Jamaica, and Costa Rica) and individualistic cluster of countries (i.e., the United States and Germany). As seen in the results, the effect of social bonding on commitment in collectivistic countries was bigger than the effect of social bonding in individualistic countries (0.20 vs. 0.09). Hypotheses 3a and 3b stated that a relationship existed between countries’ degree of individualism and collectivism and the extent of structural and social bonding. Our results supported these hypotheses and confirmed our belief that highly interpersonal orientation countries would be highly responsive to interpersonal aspects of business relationship and put more emphasis on social bonding. The United States (0.67) and Germany (0.67), which are highly individualistic countries, exhibited stronger structural bonding relationships that China (0.61), Jamaica (0.58), and Costa Rica (0.55) as expected. Although not significantly different, the direction and pattern of effects support our hypotheses. Conversely, China exhibited the strongest social bonding of all the countries. Similarly, as expected, Jamaica and Costa Rica exhibited stronger social bonding than the United States. The one outlier is the social bonding exhibited by Germany. Germany had the second highest social bonding coefficient of all the countries.
Conclusion In this study we have attempted to increase our understanding of the critical yet neglected subject of business-to-business relationships and the importance of national culture, particularly interpersonal orientation as reflected through the impact of bonding. Drawing upon past work on social and structural bonding and the framework developed by Hofstede (1980) for describing a country’s national culture, a conceptual model was developed and an exploratory empirical test was conducted that has significant implications for business-to-business marketers and researchers. At the core of this model is the set of antecedent variables of social and structural bonding that determine how firms will interact and how this interaction will determine commitment to a relationship.
Variable Structural bonding Social bonding R2
Standardized Regression Coefficients Individualistic Collectivistic Countries Countries All (i.e., USA and (i.e., China, Jamaica, Countries Germany) and Costa Rica) 0.63 (13.05) 0.10 (1.96) 0.43
0.69 (11.97) 0.09 (1.46) 0.52
0.55 (7.32) 0.20 (2.61) 0.38
The standardized regression model was specified as follows: Commitment 5 B1*Structural Bonding 1 B2*Social Bonding where B1 and B2 are standardized coefficients. Numbers in parentheses show t-value of each coefficient. All R2 values are significant at p , .001.
The framework illustrated in Figure 1 provides a mechanism for identifying variables that are important for establishing and managing long-term business relationships. The findings from the present study support the hypotheses that knowledge of the cultural orientation of the country and its relationship to the strength of the social and structural bonds serve as key predictors of the long-term commitment in crossnational business relationships. The findings from the present study support the hypothesis that cultural orientation as illustrated through the degree of individualism and collectivism across countries affects the probability of success of cross-national business relationships. As the number of marketing relationships between firms from different countries continues to increase, such findings will be essential in the establishment and management of successful cross-national business relationships. The authors gratefully acknowledge the financial support of the Korea Research Foundation.
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Pfeffer, J., and Salancik, G.: The External Control of Organizations: A Resource Dependence Perspective Harper & Row, New York. 1978. Quezada, Fernando, and Boyce, James E.: Latin America, in Comparative Management: A Regional View, Raghu Nath, ed., Ballinger Publishing Company, New York. 1988. Randall, Donna M.: Cross-Cultural Research on Organizational Commitment: A Review and Application of Hofstede’s Value Survey Module. Journal of Business Research 26 (January 1993): 91–110. Reynolds, Paul D.: Organizational Culture as Related to Industry, Position, and Performance: A Preliminary Report. Journal of Management Studies 23 (1986): 333–345. Rubin, Jeffrey Z., and Brown, Bert R.: The Social Psychology of Bargaining and Negotiation, Academic Press, New York. 1975. Samli, Coskun A., Grewal, Dhruv, and Mathur, Sanjeev K. Industrial Buying Behavior: An Exploration and A Proposed Model. Journal of the Adademy of Marketing Science 16 (Summer 1988): 19–29. Sheth, Jagdish N.: Cross-Cultural Influences on Buyer-Seller Interaction/Negotiation Process. American Marketing Association Proceedings Series (1981): 100–114. Spitzberg, Brian H., and Lane, Shelley D.: Interpersonal Orientations: A Review, Synthesis and Critique. Paper presented at the Western Speech Communication Association Convention, Albuquerque, NM. 1983. Tung, Rosalie L.: People’s Republic of China, in Comparative Management: a Regional View, Raghu Nath, ed., Ballinger Publishing Company, New York. 1988. Turnbull, Peter W., and Wilson, David T.: Developing and Protecting
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Profitable Customer Relationships. Industrial Marketing Management 18 (1989): 233–238. Turner, R. H.: Family Interaction, John Wiley, New York. 1970. Webster, Jr., Fredercik E.: The Changing Role of Marketing in the Corporation. Journal of Marketing 56 (October 1992): 1–17. Wheatley, Malcolm: Partners in Purchasing. Management Today (October 1991): 84–86. Wheeler, Ladd, Reis, Harry T., and Bond, Michael Harris: Collectivism-Individualism in Everyday Social Life: The Middle Kingdom and the Melting Pot. Journal of Personality and Social Psychology 57 (1989): 79–86. Williams, Jerome D., Moller, Kristian E., Qualls, William J., and Welmon, Vernis M.: Cross-Cultural Influences on Buyer-Seller Interaction Models in World Business Marketing, in Proceedings of the Fourth Bi-Annual International Conference of the Academy of Marketing Science. William Lazer, Eric Shaw,and Chow-Hou Wee, eds., Academy of Marketing Science, Boca Raton, FL 1989, pp. 409–416. Wilson, David T., and Moller, Kristian E.: Buyer-Seller Relationships: Alternative Conceptualizations, in Research Developments in International Marketing, P. W. Turnbull and S. J. Paliwoda, eds., Proceeding of the 4th IMP Conference, Manchester, England 1988, pp. 573–597. Wilson, David T., and Mummalaneni, Venkat: Bonding and Commitment in Supplier Relationship: A Preliminary Concepturalization. Industrial Marketing & Purchasing 1 (1986): 66–58. Wilson, David T., and Mummalaneni, Venkat: Buyer-Seller Relationships as a Bonding Process: A Preliminary Conceptualization. Working Draft, Instutute for the Study of Business Markets, Pennsylvania State University Park. 1988.
Sang-Lin Han CHUNGNAM NATIONAL UNIVERSITY
William J. Qualls MIT-SLOAN SCHOOL OF MANAGEMENT
Business-to-business marketing relationships have taken on a variety of names, ranging from long-term relationships, buyer-seller partnerships, strategic alliances, joint ventures, network organizations, to fully integrated hierarchical firms, cross-marketing agreements, etc. (Oliver, 1990, Gross and Neuman, 1989; Webster, 1992). Despite the plethora of terms used to describe business relationships, we know little about what determines a successful business relationship. This article develops a conceptual model of cross-cultural business relationships. An exploratory study was conducted to examine the impact of social and structural bonding as determinants of business relationship performance. The study found that knowledge of cultural orientation and its relationship to the social and structural bond that exists between partners is a key predictor of longterm commitment in cross-national business relationships. J BUSN RES 1998. 42.135–143. 1998 Elsevier Science Inc.
K
enichi Ohmae once said that, ‘‘Companies are beginning to learn what nations have always known: in a complex, uncertain world filled with dangerous opponents, it is best not to go it alone. Entente—the striking of an alliance—is a responsible part of every good strategist’s repertoire. In today’s competitive environment, this is also true for corporate managers’’ Ohmae (1989, p. 143). In an attempt to gain greater competitive advantage through relationships, firms have been shifting away from adversarial interactions, typical of the arm’s-length, traditional buyer-seller transaction, and seeking longer-term relationships based on mutual advantage and mutual survival (Wheatley, 1991). Webster (1992) notes that these new organizational forms are replacing simple market-based transactions, and in the future
Address correspondence to Jerome D. Williams, College of Business Administration, Pennsylvania State University, 701 Business Administration Building, University Park, PA 16802-3007. Journal of Business Research 42, 135–143 (1998) 1998 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010
business relationships will be increasingly perceived as a strategic resource much like other resources as products and technology. This trend is particularly evident in the formation of business relationships between firms from different countries (Hergert and Morris, 1988; Harrigan, 1988). Fortune magazine recently reported that U.S. corporations formed over 2,000 alliances in the 1980s with European companies alone (Kraar, 1989). There are many reasons for this growth. For one, the dynamics of the world business environment are forcing companies to cooperate in order to compete, and in some cases, in order to survive. Consequently, companies are finding that the sharing of risk and resources is an increasingly desirable strategy (Business International Corporation, 1987). The primary thesis of the present study was to determine and understand the antecedent variables that contributed to the performance of cross-national business relationships, as manifested by commitment. From a theoretical standpoint, the answer to the above concerns provides researchers with a more established framework for explaining and estimating the success of cross-national business relationships. From a managerial point of view, it suggests that the chances of success of cross-national business relationships are determined partially by the appreciation and understanding that each country partner has of the other’s social as well as structural bonding requirements and expectations. Where American firms are more likely to rush into a business relationship as it is defined in the contractual arrangement, firms from the Asian-Pacific Rim are more likely to focus on establishing the social requirements of the relationship between the two organizations as a prerequisite for establishing and maintaining a business relationship. This article will analyze the role of culture, focusing on interpersonal orientation as manifested by the individualistic/ collectivistic national characteristic, in affecting business-toISSN 0148-2963/98/$19.00 PII S0148-2963(97)00109-4
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business relationships. A conceptual model will be developed based on social and structural bonding as antecedents to relationship performance, measured by commitment. We will then report on an exploratory study to test hypotheses developed from the model.
Culture in Business Relationships: Interpersonal Aspects Central to the research premise underlying the concept of interpersonal orientation in business relationships and the role that culture plays in influencing these relationships is the definition of culture. As such, culture is an important force determining managerial attitudes and practices; it influences the practice of management and is considered an essential tool for understanding the process of doing business (Allen, Miller, and Nath, 1988). Despite numerous areas in which culture can influence business relationships (Sheth, 1981), most of the research has centered on only one domain, namely bargaining negotiations (e.g., Graham, 1983, 1984, Harnett and Cunningham, 1980). In this article, we attempt to move beyond merely treating culture as a descriptive variable in business relationships. Emphasis is placed on establishing prepositional statements and testable hypotheses that could serve as the foundation of a theoretical framework to explain culture’s impact on business relationships (Williams et al., 1989; Wilson and Moller, 1988).
Culture as an Obstacle in Cross-National Business Relationships Since the mid 1980s, firms have accelerated the pace at which business relationships are being formed, despite the fact that success rates for interfirm ventures and cooperative strategies are reported to be low (Harrigan, 1985; Levine and Byrne, 1986). Previous research has shown that developed country joint ventures tend to have an instability rate of around 30% with developing countries between 45% to 50% (Beamish, 1984, 1985; Killing, 1983; Reynolds, 1984). One possible explanation that has been identified by researchers as one of the major obstacles in successful performance in cross-national business relationships is the degree of ‘‘culture distance’’ (i.e., the extent to which the norms and values of the two firms differ because of their separate national characteristics) that exist between partners (Geringer and Hebert, 1990; Lewis, 1990; Ford, 1984). For example, Park (1991) notes that although a large number of cross-national relationships are structurally and contractually sound, they have been reported to be organizationally unstable and performing poorly. Therefore, it is critical to understand the role of culture in business marketing and especially in establishing and maintaining cross-national relationships (Samli, Grewal, and Ma-
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thur, 1988; Clark, 1990) if we are ever going to be able to predict their success.
Defining Culture: Focus on Individualism/Collectivism Researchers have identified several dimensions of national character and proposed numerous definitions of culture. In the present study, we use the definition proposed by Hofstede (1980), which defines culture not as a characteristics of an individual but of a group of people that are conditioned by the same education and life experience, (i.e., the collective mental programming that people have in common.) Hofstede determined empirically four key criteria by which national cultures differed, which includes the dimensions of power distance, uncertainty avoidance, individualism-collectivism, and masculinity-femininity. Kale and Barnes (1992) detailed how each of Hofstede’s four dimensions could shape aspects of the content and style of participants from different countries in a buying-selling situation, (e.g., preferences for certain product attributes, selling approaches, etc.) Of the four, individualism-collectivism seems to be most pervasive difference associated with the cultures of various countries. Basically it relates to the status of the individual and his/her role in society and is closely related to a number of similar concepts referred to by many different terms, e.g., situation centeredness, social orientation, etc. (Wheeler, Reis, and Bond, 1989). Individualism and collectivism both characterize how individuals interact with one another on an interpersonal level, or what other researchers have called the interpersonal orientation (IO) continuum (Rubin and Brown, 1975). A society that values individualism is one in which the ties between individuals are very loose. A society that values collectivism is one in which individuals are expected to look after each other, and thus are more people oriented. Similarly, high IO societies are highly responsive to interpersonal aspects of relationships with others, whereas low IO societies are just the opposite.
Interpersonal Orientation and Bonding in Business Relationships In previous research examining interpersonal influence in marketing, most of the studies have focused on consumer situations, such as the study of the market maven (Feick and Price, 1987), relationship quality in selling consumer whole life insurance (Crosby, Evans, and Cowles, 1990), and attributional sensitivity (Netemeyer, Bearden, and Teel, 1992). Fewer studies have focused on the role of interpersonal influence in business marketing settings and even fewer studies examine the problem in a cross-national context. The one exception is the Henthorne, LaTour, and Williams (1990) study on risk reduction. In business marketing, the process of interpersonal orienta-
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tion is closely related to what has been termed ‘‘bonding.’’ This concept, bonding, has been successful in explaining withincountry buyer-seller relationships (IMP Group, 1982; Wilson and Moller, 1988) and has been identified as an important concept for examining the performance of business relationships between countries. Bonding is typically concepturalized as a dichotomy between structural and social bonding. Spitzberg and Lane (1983) reviewed many approaches to conceptualizing IO constructs and in synthesizing all the similarities and approaches. They identified four dimensions, of which two (social relations, task orientation) are directly associated with the structural and social aspects of bonding. They found a social relations area (affiliation, cooperation, socialability, etc.), and a task orientation area, which are similar to the constructs of social and structural bonding. Social bonding is similar to what Turner (1970) has called personal bonding. During social bonding, individuals are bonded together via the organizational members’ personal and social relationships with their counterparts in a particular firm. Personal factors such as trust or satisfaction with the relationship partner play an important role in developing social bonding. Other researchers have noted the importance of personal and noneconomic satisfaction in a business relationship and have suggested that as relationships continue members in each organization become more and more enmeshed in the social networks of the other and their relationship becomes more binding, stable, and predictable (Dwyer et al., 1987; Pfeffer and Salancik, 1978). Jackson (1985) suggests that the buyer may rely on personal representatives of the seller to provide important business values, and that the personal relationship may be the best available evidence that the representative is interested and committed enough to provide that value. On the other hand, structural bonding is similar to what Turner (1970) called ‘‘task bonding,’’ but in a much broader sense. In this article, structural bonding is defined as the degree to which certain ties link and hold a buyer and seller together in a relationship as the result of some mutually beneficial economic, strategic, technological, and/or organizational objective, etc. For example, organization A could be involved in a business relationship and closely tied to organization B because: (1) organization B provides A with a high level of technological expertise, e.g. computerized delivery system), (2) B supplies better priced products (economic benefit), (3) B supplies most of the parts needed (the component is central to the product of A), (4) A has already invested considerably in the relationship with B and will incur a high switching cost, and (5) A wants to have a business relationship with B to secure future business opportunities. Both social and structural bonding have been identified in previous research as antecedents to commitment, a critical variable indicating performance of business relationships. Similar to other researchers, we operationalize commitment to serve as a surrogate measure of the performance of a business
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relationship. For example, Wilson and Mummalaneni (1988) argue that the greater the commitment of the organization to a specific relationship, the greater the stability of that relationship and the greater the chance that the duration of the relationship will be longer. Whereas there actually can be different types of commitment, Jackson (1985), we concentrate on two: commitment to an organization (through structural bonding) and commitment to a person (through high interpersonal orientation and social bonding).
A Conceptual Model Using the Hofstede framework as a foundation, a conceptual model of the effects of culture and interpersonal orientation on business-to-business relationships is presented in Figure 1. Briefly, the model suggests national culture as defined by Hofstede’s four dimensions impacts an individual’s behavior both directly and indirectly (through organizational culture). We are primarily interested in the influence of Hofstede’s individualism/collectivism dimension because of its connection with interpersonal interactions as explained above. When national culture has a direct effect (Figure 1, right-hand side), the dimension of individualism/collectivism (which is highly correlated with interpersonal orientation) leads to an emphasis on social bonding as a determinant of commitment in the business relationship (i.e., commitment based on the people involved). Because individualistic countries tend to have people who rank low in IO and collectivistic countries tend to have people who are high in IO, the corresponding IO behavior in turn determines the relative importance of social bonding in impacting commitment in a business relationship. When assessing the indirect effect of national culture (Figure 1, left-hand side), Hofstede’s dimensions are filtered through organizational culture, and hence, more emphasis is placed on the individual’s relationship with the other firm or organization, rather than just interpersonal interaction with the people in the organization. Therefore, structural bonding takes on greater importance and leads to commitment in the business relationship based on the organization involved and its structural aspects, such as the other firm’s technology, etc. In filtering the effects of national culture and the influence on interpersonal interactions, organizational culture encompasses the pattern of shared values and beliefs that enables people within the organization to understand its functioning. As such, it furnishes them with behavioral norms and influences the way members of the organization think, behave, and manage in their relationship with other organizations and includes aspects such as structure, technology, organization philosophy, and organizational policy and decision-making (Deshpande and Parasuraman, 1986; Deshpande and Webster, 1989; Allen, Miller, and Nath, 1988). These aspects tend to put more emphasis on the structural aspects of business relationships, i.e., structural bonding, as opposed to the interpersonal aspects, i.e., social bonding.
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Figure 1. Effects of National Culture, Interpersonal Orientation, and Bonding on Business Relationships.
Even if one looks at an organizational culture that emphasizes a ‘‘people orientation,’’ relationship performance will still be based on the structural aspects, i.e., commitment to another ‘‘people-oriented’’ organization, as opposed to commitment to individuals through social and interpersonal interactions, as influenced by the direct effects of national culture. For example, one aspect of organizational culture identified by Reynolds (1986) is task versus social focus, which contrasts the relative priorities of an organization between organizational work versus concern for the personal and social needs of its members. Firms with a purely task-driven focus will strive toward almost robotic efficiency in the attainment of their financial and growth objectives, whereas social-focus firms attempt to accommodate the social needs of its members. Our model suggests that individuals in a task-focus organizational culture, or for that matter a social-focus organization, will be more likely to commit to a relationship with another organization with similar structural aspects, i.e., structural bonding. At the same time, though, individual will be more likely to commit to a relationship with another individual by interacting on an interpersonal level, i.e., social bonding.
Hypotheses This conceptual model now allows us to develop hypotheses about the performance of business relationships between firms from different national cultures. Structural and social bonding are the antecedents to commitment in business relationships. The importance an individual will place on social bonding,
which focuses on commitment to people, will be determined by national culture (i.e., IO as reflected by the individual’s individualist/collectivistic background). In the context of the framework presented in Figure 1, social and structural bonding impact the degree of commitment in a business relationship. For example, Turnbull and Wilson (1989) analyzed how a specific firm could build a strong bond between itself and its customer and found that bonding between the specific firm they analyzed and its customer was mostly at the social level. However there also was some structural bonding, particularly with medium-sized accounts. Therefore, both social and structural bonds should contribute in committing firms from different cultural backgrounds to a relationship. As such it is hypothesized: H1a: Structural bonding is positively related to commitment for different national cultures. H1b: Social bonding is positively related to commitment for different national cultures. Wilson and Mummalaneni (1986, 1988) have posited that structural aspects of the relationship should be more dominant in the bonding process. Similarly, Dant and Wilson (1989) found that structural commitment to be the key explanatory variable of relational continuity, i.e., long-term relationship. Typically, two firms are likely to get involved initially in a relationship because of some structural aspects of the relationship (e.g., technical relevance, economic advantage, future opportunity) and such factors are critical to the establishment
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of the relationship. In this sense, organizational decision-making may be influenced more by the structurally bonded situation than the socially bonded situation. Therefore, structural bonds should be more dominant in the establishment and maintenance of a long-term relationship than social bonds. As such, the second hypothesis suggests: H2: Structural bonding has a greater influence than social bonding on commitment for different national cultures. Wilson and Mummalaneni (1988) allowed for variation in commitment based on the relative importance of social and structural bonding in business relationships. They posit that commitment is greater in business relationships where there are strong social relationships compared to those that are pure structural business relationships. Given the importance of high IO in collectivistic countries, social bonds should be more dominant in business relationships among collectivistic countries than among individualist countries. Similarly, given the importance of task focus in organizational culture, structural bonds should be more dominant in business relationships among individualist countries than among collectivistic countries. This is similar to what the literature suggests in organizational commitment. Randall (1993) notes that one would anticipate greater affective attachment (a sense of loyalty) to institutions in collectivistic cultures and greater calculative involvement (a cost-benefit approach) with institutions in individualistic cultures. Boyacigiller and Adler (1991) argue that the commitment of employees with collectivistic values may arise from ties with managers, owners, and co-workers, whereas the commitment of employees with an individualistic orientation may be due to the job itself or the compensation system. Therefore, the third hypothesis suggests the following for structural and social bonds: H3a: Structural bonding has a greater influence on commitment for individualistic countries than for collectivistic countries. H3b: Social bonding has a greater influence on commitment for collectivistic countries than for individualistic countries.
Research Method To test these hypotheses, we collected data from five national cultures. This research is an extension of a larger study based just on business relationships in the United States. Our study was designed as an exploratory study to begin testing the validity of our conceptual model.
Sampling Procedure and Data Collection A descriptive field study was designed to test the above hypotheses. The study used a questionnaire survey method using a
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sample of business people in five countries: the United States, China, Jamaica, Costa Rica, and Germany. The convenience sample was drawn from a set of executive education courses taught in the respective countries. We collected 279 questionnaires from the business managers in the five countries (China 25; Germany 31; Costa Rica 40; Jamaica 54; the Unites States 129). In the case of U.S. data, nonresponse bias was assessed by comparing early with late respondents as suggested by Armstrong and Overton (1977). The test found no evidence suggesting that respondents might differ from nonrespondents in terms of the study variables.
Country Cluster Classification Comparative management researchers have tended to use a nation or country as the primary unit of analysis when studying culture (Nath, 1988). In this study, we selected nations, but rather than compare just specific countries, we chose to compare individual countries and ‘‘clusters’’ of countries, as recommended by Randall (1993). Based upon previous research, we estimated that the five countries selected for our study would be placed along the continuum of Hofstede’s dimensions, as illustrated in Figure 2. As the individualisticcollectivistic dimension is the most related to IO, we particularly examined Hofstede’s (1980) characterization of these countries on that dimension and other literature to assure differentiation between the selected clusters of countries. North American culture typically is characterized as individualistic, with the United States specifically being highly individualistic (Hsu, 1981). There seem to be strong similarities between North America and the Anglo group of countries of Western Europe in terms of a strong individualistic orientation (Nath and Sadhu, 1988). Thus, it was hypothesized that Germany and the United States would be countries that would exhibit a high degree of individualism and would fall on the individualistic end of the continuum. Among the collectivistic countries, very little research has been conducted specifically on Jamaica. However, we know that the Caribbean area was populated by migrants primarily from Africa and Asia (Brodber, 1985), both of which tend to be collectivistic societies. Today 90% of Jamaica’s population is made up of people form African descent, and research has shown that most African cultural groups tend to score high on collectivism because of the prevalence of the extended family social network that characterizes most societies in Africa (Kiggundu, 1988). Latin America exhibits similar cultural norms as Africa in terms of collectivism (Quezada and Boyce, 1988; Nath and Sadhu, 1988). In Latin American business relationships, the social contacts, i.e., social bonding, developed between the parties are often far more significant than the technical specifications and the price, i.e., structural bonding (Herbig and Kramer, 1992; Ghauri, 1986). Similar to Jamaica, no empirical study as been done on the People’s Republic of China, using Hofstede’s conceptual
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Figure 2. Comparison of country clusters on Hofstede’s cultural dimensions.
framework. However, other researchers have observed that a primary characteristic of Chinese culture appears to be the collectivistic orientation (Chan, 1986; Ch9ien, 1973; Tung, 1988). Thus, in the present study, Jamaica, Costa Rica, and China were classified a priori as largely collectivistic societies, as reflected by the preponderance of evidence in the literature.
interpersonal orientation. The dependent measure of commitment was based upon similar measures used by IMP Group’s standardized questionnaire (IMP Group, 1989) and Mummalaneni’s (1987) study. All items were measured on a 7-point Likert scale.
Constructs and Measures
Results and Discussion
The dependent and independent measures used in the present study were selected from a previously developed scale to measure antecedents of buyer-seller long-term relationships in the United States (Han, 1991). In checking the internal consistency of each construct, Han (1991) examined the reliabilities of the measures by computing Cronbach’s coefficient alphas and found that the coefficients of many items exceeded 0.7, which is the threshold Nunnally (1978, p. 245) recommends. Therefore, we felt the items successfully tapped the constructs they were designed to measure and could be applied in this exploratory study. Han’s (1991) independent measures were developed primarily from previous research and the author’s conceptualization of the constructs. Using the techniques recommended by Gerging and Anderson (1988) and suggested by Churchill (1979), we adapted those measures to fit the marketing context of our study, namely, a cross-national comparison of
We conducted regression analysis to examine the hypothesized relationships between a country’s culture in affecting the interpersonal relationship in a business-to-business relationship. The basis for the specific tests of the hypotheses and their results are presented in Tables 1 and 2. The results in Table 1 and Equation 1 of Table 2 indicate that structural bonding and social bonding are positively related to commitment to the relationship and these results support H1a and H1b. A review of the individual items in Equation 1 reveals that the effect of structural bonding on commitment is much bigger than the effect of social bonding. Therefore H2 was strongly supported, and this result is consistent with Wilson and Mummalaneni (1988) who posited that structural aspects of business relationship would be more dominant in the bonding process. Equations 2 and 3 of Table 2 show the different regression models between collectivistic cluster of countries (i.e., China,
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Table 1. Regression Results from Measuring the Impact of Structural Bonding and Social Bonding on Commitment
Table 2. Regression Results for Group Data on Commitment
Variable
Standardized Regression Coefficients China Germany Jamaica Costa Rica
USA
Structural bonding Social bonding R2
0.61 (4.37) 0.37 (2.63) 0.58
0.67 (9.97) 0.03 (0.46) 0.45
0.67 (5.51) 0.28 (2.28) 0.76
0.58 (4.82) 0.09 (0.75) 0.37
0.55 (3.97) 0.18 (1.31) 0.37
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Numbers in parentheses show t-value of each coefficient. All R2 values are significant at p , .001.
Jamaica, and Costa Rica) and individualistic cluster of countries (i.e., the United States and Germany). As seen in the results, the effect of social bonding on commitment in collectivistic countries was bigger than the effect of social bonding in individualistic countries (0.20 vs. 0.09). Hypotheses 3a and 3b stated that a relationship existed between countries’ degree of individualism and collectivism and the extent of structural and social bonding. Our results supported these hypotheses and confirmed our belief that highly interpersonal orientation countries would be highly responsive to interpersonal aspects of business relationship and put more emphasis on social bonding. The United States (0.67) and Germany (0.67), which are highly individualistic countries, exhibited stronger structural bonding relationships that China (0.61), Jamaica (0.58), and Costa Rica (0.55) as expected. Although not significantly different, the direction and pattern of effects support our hypotheses. Conversely, China exhibited the strongest social bonding of all the countries. Similarly, as expected, Jamaica and Costa Rica exhibited stronger social bonding than the United States. The one outlier is the social bonding exhibited by Germany. Germany had the second highest social bonding coefficient of all the countries.
Conclusion In this study we have attempted to increase our understanding of the critical yet neglected subject of business-to-business relationships and the importance of national culture, particularly interpersonal orientation as reflected through the impact of bonding. Drawing upon past work on social and structural bonding and the framework developed by Hofstede (1980) for describing a country’s national culture, a conceptual model was developed and an exploratory empirical test was conducted that has significant implications for business-to-business marketers and researchers. At the core of this model is the set of antecedent variables of social and structural bonding that determine how firms will interact and how this interaction will determine commitment to a relationship.
Variable Structural bonding Social bonding R2
Standardized Regression Coefficients Individualistic Collectivistic Countries Countries All (i.e., USA and (i.e., China, Jamaica, Countries Germany) and Costa Rica) 0.63 (13.05) 0.10 (1.96) 0.43
0.69 (11.97) 0.09 (1.46) 0.52
0.55 (7.32) 0.20 (2.61) 0.38
The standardized regression model was specified as follows: Commitment 5 B1*Structural Bonding 1 B2*Social Bonding where B1 and B2 are standardized coefficients. Numbers in parentheses show t-value of each coefficient. All R2 values are significant at p , .001.
The framework illustrated in Figure 1 provides a mechanism for identifying variables that are important for establishing and managing long-term business relationships. The findings from the present study support the hypotheses that knowledge of the cultural orientation of the country and its relationship to the strength of the social and structural bonds serve as key predictors of the long-term commitment in crossnational business relationships. The findings from the present study support the hypothesis that cultural orientation as illustrated through the degree of individualism and collectivism across countries affects the probability of success of cross-national business relationships. As the number of marketing relationships between firms from different countries continues to increase, such findings will be essential in the establishment and management of successful cross-national business relationships. The authors gratefully acknowledge the financial support of the Korea Research Foundation.
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