Relational competency's role in Southeast Asia business partnerships

Journal of Business Research 58 (2005) 173 – 184

Relational competency’s role in Southeast Asia business partnerships Michel C.T. Phana,*, Chris W. Stylesb, Paul G. Pattersonb a

b

School of Business, University of Sydney, Sydney, NSW 2006, Australia School of Marketing, University of New South Wales, Sydney, NSW 2052, Australia

Abstract As business continues to globalize, firms are increasingly looking to international business partnerships (IBP) as a means of expanding and competing in new markets. However, many of these partnerships fail. The causes of these failures have often been attributed to managers’ inability to form and maintain successful relationships with their partners at an interpersonal level. The extant research in business-tobusiness relationships has largely focused on the firm-to-firm level and the macroenvironment of these firms. We extend this stream of research to the interpersonal level by introducing the concept of relational competence from social psychology and linking it to existing relationship marketing constructs. We build our theory from a case study research methodology using a ‘‘discovery-mode; multicountry’’ approach. This research yields theoretical insights from an extensive qualitative study of successful IBP in four countries—Australia, Thailand, Indonesia, and Malaysia. The degrees-of-freedom analysis (DFA) technique was used on the case data. The result is a theoretical framework for examining the impact of manager’s relational competence on relationship performance, mediated by interpersonal relationship quality and communication behavior. D 2002 Elsevier Inc. All rights reserved. Keywords: Relational competency; Degrees-of-freedom analysis; Southeast Asia

1. Introduction International business partnerships (IBP) are an increasingly popular strategy for expanding and competing in new markets. They are defined as international collaborative relationships as opposed to transactional relationships. A collaborative relationship is ‘‘a process where a customer firm and a supplier firm form strong and extensive social, economic, service, and technical ties over time, with the intent of lowering total costs and/or increasing value, thereby achieving mutual benefit’’ (Anderson and Narus, 1991, p. 96). Although relationship marketing has been widely researched in a domestic context, studies of cross-cultural relationship marketing remain scarce. In today’s world of global markets, we see an increasing number of IBP being formed as a way of developing and maintaining competitive advantage (Mohr and Spekman, 1994). Despite their popularity, more than 60% of these partnerships fail and the causes of their failures have been attributed primarily to an

* Corresponding author. Tel.: +61-2-9351 3637; fax: +61-2-9351 6732. E-mail address: [email protected] (M.C.T. Phan). 0148-2963/02/$ – see front matter D 2002 Elsevier Inc. All rights reserved. doi:10.1016/S0148-2963(02)00492-7

insufficient focus and understanding of the interpersonal role of partnership management (Spekman et al., 1996). To succeed good ‘‘alliance managers’’ need to possess a number of ‘‘unteachable’’ competencies, such as the ability to ‘‘simultaneously consider multiple points of view’’ (Spekman et al., 1996). Thus, a key underlying characteristic of these roles is the managers’ ability to communicate effectively with the managers of the partnering firm. Communication, and other such ‘‘unteachable competencies,’’ needs to be examined within a broader theoretical framework. We acknowledge that little is known about the exact role managers’ personal traits play in developing successful interpersonal relationships with their counterparts. Our research focuses on interpersonal relationships between IBP managers. Specifically, we (1) examine 10 personal traits and characteristics that predispose managers to be relationally competent to develop and maintain successful IBP and (2) we develop and test a theoretical framework that links these traits and characteristics to interpersonal relationship quality, communication behavior, and IBP performance. To achieve these objectives, we introduce relational competence theory into international marketing and examine the nature of the relationship between managers’ rela-

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tional competence and their interpersonal relationship quality. Specifically, we build our arguments from a case study research methodology using a ‘‘discovery-mode; multicountry’’ approach. This research yields theoretical insights from an extensive qualitative study of 27 successful IBP from four countries—Australia, Indonesia, Malaysia, and Thailand. We concentrate our effort on successful partnerships only. These partnerships are those that survived the 1997 – 1999 Asian economic crisis, and hence are defined as ‘‘successful’’ by default (however, the degree of success among these firms may vary). The qualitative research reported here consisted of a series of in-depth interviews with senior managers involved in a successful western – eastern business partnership (i.e., Australia – Thailand, Australia – Indonesia, and Australia – Malaysia). The sample included Australian firms who were operating in these three Southeast Asian countries with a variety of partnership arrangements, such as joint ventures, exporter – distributor relationships, and other forms of alliances. Analysis of the interviews allowed us to confirm and disconfirm our theoretical insights and to revise the theoretical model highlighting the nature and role of a manager’s relational competence in IBP. To explore the relevance and importance of the relational competence construct, we have adopted the multistep research process of the degrees-of-freedom analysis (DFA) technique (see Wilson and Woodside, 1999; Wilson and Vlosky, 1997). The DFA technique is a post-positivist approach to theory development by inducing a theoretical framework from qualitative data of in-depth interviews, and the heart of this technique is the development and testing of

a ‘‘prediction matrix’’ (Wilson and Woodside, 1999). The prediction matrix sets up the ‘‘pattern’’, based on theory, to be either confirmed or disconfirmed by the case data (Wilson and Woodside, 1999). We first develop, from the literature, a framework that links relational competence to interpersonal relationship quality, communication behavior, and partnership performance. A prediction matrix of the proposed importance and relevance of the key constructs of the framework is then presented. We then discuss the results of the study in terms of the ‘‘hits’’ and ‘‘misses’’ of predictions to observations. Finally, we revise the proposed predictions based on the findings, examine the implications and suggest future research directions.

2. Grounding in the literature From the literature, we review the nature of relational competence and its relevance to IBP success, then discuss its links with interpersonal relationship quality, communication behavior, and IBP performance. This discussion leads to our theoretical model in Fig. 1. 2.1. Relational competence and its dimensions Social psychologists Carpenter et al. (1983, p. 273) define relational competence as the ‘‘characteristics of the individual that facilitate the acquisition, development, and maintenance of mutually satisfying relationships.’’ It consists of 10 dimensions: the first 5 predispose individuals to initiate relationships with others, while the last 5 help enhance those

Fig. 1. Proposed theoretical model.

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relationships over time (Carpenter et al., 1983). Table 2 provides a detailed definition of these 10 dimensions. The concept of relational competence is highly relevant to international business-to-business relationships as we observe that: (1) relationship marketing concepts have largely been derived from the personal and nonbusiness relationships literature, (2) individuals have been found to play a key role in business-to-business relationships (Doney and Cannon, 1997), and (3) past research in international marketing suggested the importance of the ‘‘human factor’’ in successful business relationships (Ambler et al., 1999). In an international business setting Harich and LaBahn (1998) have proposed a model in which a salesperson’s traits (open-mindedness, self-monitoring, and empathy) and characteristics (knowledge and skill) indirectly influence customer satisfaction, trust and commitment. Although these traits and characteristics are closely related to some of the dimensions of relational competence, they fail to capture the complete domain of relational competence. Despite this limitation, Harich and LaBahn’s (1998) model suggests that personal characteristics are important to the success of business relationships across cultures. One of the key challenges of doing business across cultures is to understand cultural differences. Thus we argue that, in an IBP context, we must incorporate cultural sensitivity into the ‘‘interpersonal sensitivity’’ dimension of relational competence. Characteristics of business partnership success have been shown to be positively associated with the partnership attributes (commitment, coordination, and trust), communication behavior (communication quality and participation) and joint problem solving technique (Mohr and Spekman, 1994). Mohr and Spekman (1994) suggest the importance of the interpersonal interaction between partnering-managers in the success of their partnership. However, their study has not indicated any antecedent that may predispose some managers (and not others) to have ‘‘successful’’ interaction with their partners. Yet, it seems obvious that not all managers have equal ability to develop effective interaction. The social psychology and organizational behavior literature has established that open and honest information exchange between two people is positively associated with the level of trust between them (Jackson and Crockenberg, 1998), and trust between two people is also positively associated with assertiveness (Korsgaard et al., 1998). Therefore, assertiveness has a positive impact on the interaction quality between two parties. However, we argue that managers’ characteristics are not directly associated with partnership performance. For a manager’s characteristics to be relevant to partnership performance, they must be translated into a behavior. We argue that relational competence is not directly associated with partnership performance but is mediated by interpersonal relationship quality, which will generate a better communication behavior. Better communication behavior will then enhance the partnership performance, and this is reflected in Fig. 1.

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2.2. Relationship quality The importance of relationship quality has been well established in the literature (e.g., Crosby et al., 1990). However, Table 1 shows that there is a lack of a general consensus on its dimensionality (Naude and Buttle, 2000). For our research, relationship quality is defined as a higher-order construct composed of interpersonal trust (Boles et al., 2000), satisfaction with the other partner (Crosby et al., 1990), commitment to the relationship (Dwyer et al., 1987), and joint problem solving (Mohr and Spekman, 1994). This definition represents a manageable compromise of past definitions and is deemed to be appropriate to the research objectives. 2.2.1. Interpersonal trust We adapt Ganesan’s (1994) definition of credibility and benevolence trust to an interpersonal context because interfirm trust is distinct from interpersonal trust although these two levels of trust are interdependent (Doney and Cannon, 1997). In cross-country partnerships where both physical and psychic distances are great, the foreign partner must rely heavily on the local partner for managing the partnership on daily basis. Consequently, we argue that, in such a partnership, for the partner A to have credibility trust in the partner B, the partner B must exhibit signs of self-confidence and ability to express clearly his/her views (i.e., assertiveness) and skills, knowledge and/or technical competence required for the assigned role/tasks (i.e., instrumental competence). Similarly, for the partner A to have benevolence trust in the partner B, the partner B must exhibit (1) behavioural tendency towards helping and supporting the other partner (i.e., altruism) and (2) a tendency to promote and seek closeness with the other partner by encouraging sharing, understanding, mutual interest and openness (i.e., intimacy). In a business partnership context, without a propensity to trust the partners will be consistently suspicious of each other’s motives by fear of being cheated and hence will be more likely to engage in untrustworthy behavior that will damage the quality of their relationship. Table 1 Major constructs of relationship quality (Naude and Buttle, 2000) Constructs

Crosby Mohr and Storbacka Wilson and Naude et al. Spekman et al. Jantrania and Buttle (1990) (1994) (1994) (1996) (2000)

Trust B Satisfaction B Commitment Communication Joint problem solving Bonds Goal congruence Investments Power Profit

B B B B

B B B B

B B

B B B

B B

B B

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2.2.2. Satisfaction with partner Satisfaction with a partner is an emotional state that occurs in response to an evaluation of interaction experiences with the other partner (Westbrook, 1981). It has been shown in the services literature that satisfaction is determined not only by perceptions of service performance, but also by perceptions of the interaction between buyer and seller (Patterson and Spreng, 1997). Studies have variously shown that satisfaction is inextricably linked to perceptions of being treated with respect, dignity, courtesy, and empathy. Empathy is consisted of affective and cognitive dimensions (Long and Andrews, 1990). The affective component designates one’s ability to take on the feelings of others (Mehrabian and Epstein, 1972) while the cognitive part denotes the perception of others’ viewpoint and is measured by perspective and role takings (Davis, 1980). Hence, we argue that manager’ assertiveness, trusting ability, intimacy competence, and perspective taking are positively associated with satisfaction with their partners. 2.2.3. Commitment of the partners We suggest that, like trust, personal commitment needs to be examined separately from organizational commitment, although these two types of commitment might be correlated. To be able to commit themselves to the relationship, managers need to be able to develop and maintain close relationship with their partners. For instance, being socially anxious or shy would make them feel intimidated by the other partners, and thus no relationship can be initiated. Once a relationship is initiated, they would need to be able to trust, develop closeness with their partners and have some degree of interpersonal sensitivity to make the relationship work. 2.2.4. Joint problem solving between the partners Mohr and Spekman (1994) argue that conflict is part of interfirm relationships due to the inherent interdependencies between the parties, and the way partners resolve conflict has a direct influence on the partnership success (e.g., constructive technique). We argue that, in order to carry out constructive conflict resolutions, managers are required to assess conflict not only from their own perspective but also from their partners’ perspective (i.e., perspective taking). They also need to be able to express their view and get their message across without being forceful (i.e., assertiveness). Consequently, managers’ assertiveness and perspective taking ability are posited to be positively associated with joint problem solving. 2.3. Communication behavior Communication behavior consists of overall communication quality, information sharing, and participation (Mohr and Spekman, 1994), and, in this paper, we adapt interfirm communication constructs to an interpersonal level.

2.3.1. Communication quality Although there are several variant definitions in the literature, the consensus seems to narrow communication quality down to a multidimensional construct that includes timeliness, accuracy, usefulness, and credibility of information exchanged (Frone and Major, 1988). Timely, accurate, useful, and credible information exchanged between partners will help them make better decisions, and therefore will contribute to the partnership success. Hence, we posit that communication quality is positively associated with IBP relational and business performance. 2.3.2. Information sharing Information sharing is defined as the degree to which partners proactively provide critical and confidential information to each other (Doney and Cannon, 1997). Lusch and Brown (1996) found a positive correlation between information sharing among channel members and the level of performance of individual firms and the channel. We argue that, in an IBP, the more the partners share important information, the more effective and timely their decision making will be and the more effective they will perform their role within the partnership, and finally the better their contribution to the partnership success will be. This is reflected in Fig. 1. 2.3.3. Participation Participation is defined as ‘‘the extent to which partners engage jointly in planning and goal setting’’ (Mohr and Spekman, 1994, p. 139). Mohr and Spekman (1994) found that the level of active participation is a significant predictor of sales; hence, participation has a strong and positive association with partnership performance. However, active participation involves sharing confidential information (e.g., financial data) and therefore increases the vulnerability of the partner who provides the information. As a result, the partner – sender needs to trust the partner – receiver prior to actively participating in joint planning and goal setting. Hence, we argue that managers’ participation is positively associated with interpersonal trust and performance. 2.4. Partnership performance Partnership performance refers to relational outcomes such as overall satisfaction with the partnership (Mohr et al., 1996) as well as business outcomes such as achievement of marketing and financial objectives (Lusch and Brown, 1996). In business partnerships, Mohr and Spekman (1994) found that one of the three contributing factors to the partnership success is the communication behavior between the partners. A positive communication behavior helps reduce dysfunctional conflict between the partners and increase the confidence in the continuity of the relationship. A reduction of dysfunctional conflict and increase of the confidence in the continuity of the relationship in turn will lead to a smoother running of the operations, a reduction of

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Table 2 The prediction matrix of relational competence, relationship quality, and communication behavior Constructs

Variables

Relational competence (a) Relationship Assertiveness initiation competence Dominance

Instrumental competence

Shyness (negative variable) Social anxiety (negative variable) (b) Relationship maintenance competence

Intimacy

Trusting ability

Interpersonal sensitivity

Altruism

Perspective taking

Variable definitions

Predicted relative importance

The tendency of the individual to accept, express, actively seek after, and protect reasonable personal needs and desires, including resistance to unreasonable infringements by others (Carpenter, 1993). The desire and ability to be in charge, at least of one’s own situation, and to engage in tasks reflecting leadership, ascendance, and independence (Carpenter, 1993). Belief that one is generally capable, skilled, and accomplished. The emphasis is on successfully completing tasks or meeting goals (Carpenter, 1993). Self-perception that one is inhibited and reluctant in social situations, or has poor skill in meeting and getting to know others (Carpenter, 1993). Increased feelings of anxiety, worry, and negative self-evaluation in situations involving other people (Carpenter, 1993). Behavioural tendency toward helping and supporting others, especially those in need or distress (Carpenter, 1993).

High

Tendency to believe that others are dependable, loyal, and trustworthy, and behavioural tendency to show such confidence in others (Carpenter, 1993). Tendency to promote and seek closeness in relationships by encouraging sharing, deep mutual understanding, mutual interest, and openness (Carpenter, 1993). Attitudes and behaviors which show consideration, warmth, and caring and which reflect active attempts to be aware of and responsive to the needs of others (Carpenter, 1993). Tendency to view issues from several perspectives, especially that of another with whom one is interacting (Carpenter, 1993).

High

Relationship quality (a) Trust Credibility trust

(b) Satisfaction

(c) Commitment

(d) Joint problem solving

The extent to which one partner believes that the other partner has the required expertise to perform the job effectively and reliably (Ganesan, 1994) Benevolence trust The extent to which one partner believes that the other partner has intentions and motives beneficial to him/her when new conditions arises, conditions for which a commitment was not made (Ganesan, 1994). Satisfaction with the other manager An emotional state that occurs in response to an evaluation of interaction (interpersonal) experiences with the other partner, such as the role performed and assumed by each partner (Westbrook, 1981). Personal commitment (of managers) An implicit or explicit pledge of relational continuity between exchange to the relationship partners. The notion of commitment connotes solidarity and cohesion and includes three measurable criteria-inputs (significant economic, communication, and/or emotional resources may be exchanged), durability (of the association over time), and consistency (with which the inputs are made to the association) (Dwyer et al., 1987). Conflict resolution technique The manner in which partners resolve conflicts (Mohr and Spekman, 1994).

Communication behavior (a) Communication Timeliness, accuracy, usefulness, quality and credibility of information exchanged between the managers (b) Information Proactive provision of critical and exchange confidential information useful to the other manager (c) Participation The extent to which the managers engage jointly in planning and goal setting

Low

High

Low Low High

High

Low

High

High

High

High

High

High

Quality of the information transmission between partners (Mohr and Spekman, 1994).

High

The extent to which critical, often proprietary, information is communicated from one partner to another (Mohr and Spekman, 1994).

High

The extent to which partners engage jointly in planning and goal setting (Mohr and Spekman, 1994).

High

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transaction costs and an increase of business and relational outcomes. Consequently, managers’ communication behavior will be positively associated with the partnership performance. It follows as a corollary that, being satisfied with the partnership performance, the relationship quality between the partners will be more likely to improve (i.e., higher trust, higher satisfaction, greater commitment, better coordination, and less conflict). When the partnership performance is satisfactory, the partners are even more likely to exhibit a positive communication behavior because they know from experience that their communication will help the partnership achieve its future objectives. Hence satisfaction with the partnership performance will positively affect the partners’ communication behavior, as reflected in Fig. 1 (i.e., double-edged arrows). Based on the literature reviewed herein, we now turn to the development of the prediction matrix for purposes of conducting a DFA.

3. The prediction matrix The matrix in Table 2 includes predictions for the relevance (i.e., whether the 10 dimensions of relational competence are directly mentioned or inferred by the respondents) and the importance (in form of a percentage of hits) of relational competence in IBP. To increase the validity and generalizability of the findings, we test our model across two regions—Australia and Southeast Asia. The matrix also includes predictions relating to the importance of the dimensions of relationship quality and communication behavior. Although the importance of the two latter constructs has been well accepted in the marketing literature, our contribution here is to show for the first time their association with manager’s relational competence in an IBP context. While six out of the 10 dimensions of relational competence are predicted to be of high importance to businessto-business relationship marketing, four dimensions—dominance, social anxiety, shyness, and altruism—are predicted be of low importance in our research context. In an IBP context, people who are assigned to the task of managing their firm’s partnership are business-minded individuals. It is obvious that such-minded individuals by nature should be capable of social interaction without excessive fear (not socially anxious) and possesses minimum skills in getting to

know other people (not shy). In addition, ‘‘altruism’’ should play a comparatively minor role in a business relationship since one of the economic fundamentals of any business is to prioritise the profit motive (opposite of an altruistic behaviour). These predictions apply to both Australian and Southeast Asian managers. Finally, in a collaborative business partnership context, by definition, each manager has to collaborate with the other manager and cooperate to succeed. Hence, the managers cannot show excessive ascendance nor take control of the entire partnership (e.g., making decisions for the other manager). Therefore, ‘‘dominance’’ should be of lesser importance in an IBP context.

4. Data collection An extensive exploratory qualitative study was conducted in Australia and three Southeast Asian countries, i.e., Thailand, Indonesia, and Malaysia, between 1997 and 2000. The study had two specific objectives: (1) to explore the relevance of the relational competence theory from a practical point of view and (2) to explore the importance of specific dimensions of relational competence in IBP. The unit of analysis of the qualitative study was the business partnership between an Australian and an Asian organization, operating in that Asian country (e.g., a business partnership between an Australian exporter and a Thai importer serving the Thai market). The sample of partnerships was selected from the Australian Trade Commission (Austrade) databases to represent a diverse pool of industries and partnership forms. They have all survived the 1997– 1999 Asian economic crisis, hence, can be considered as ‘‘successful’’ by default. Respondents were initially screened and identified as the key informants of their business partnerships with a thorough understanding of their particular ventures. In order to analyse data, all the interviews were taperecorded then transcribed. The transcripts were then checked for face validity by simultaneously listening to the recorded tapes and checking the transcripts for any discrepancy. In total, we interviewed the key informants of 27 partnerships who were located in Sydney, Melbourne, Brisbane, Bangkok, Jakarta, and Kuala Lumpur. Table 3 gives a breakdown of the sample. The two judges independently recorded all the instances in which the constructs had been mentioned or implied.

Table 3 Breakdown of the sample of Study 1 Countries

Type of partnerships

Consumer goods

Agricultural produce

Services

Industrial goods

Total

Australia Indonesia Malaysia Thailand Total

Export – import and equity joint-venture Export – import and equity joint-venture Equity joint-venture Export – import

2 2 0 1 5

1 0 2 0 3

1 1 2 1 5

6 3 3 2 14

10 6 7 4 27

M.C.T. Phan et al. / Journal of Business Research 58 (2005) 173–184 Table 4 Four possible results for each variable Judge 1 Judge 2 Observe Not-observe

Observe

Not-observe

Observe/observe Not-observe/observe

Observe/not-observe Not-observe/not-observe

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possible in the context of IBP. Therefore, an indirect inference was deemed to be acceptable. Based on a review of the transcripts, the judges have two choices: (1) observe or (2) not-observe that the variables were directly or indirectly inferred to in the interviews. We then examine the level of observation and non-observation between the two judges. With two judges and two possibilities each (observe or non-observe) there are four possible results for each variable (Table 4). For the 27 cases analysed, the level of observation and non-observation for each variable is summarised in Table 5. In total, the two judges were in agreement (observe/observe and not-observe/not-observe) for 85% of all evaluations of the transcripts, i.e., (245 + 169)/(245 + 169 + 60 + 12) = 0.85. The Cochran-Mantel-Haenszel test (Agresti, 1990, pp. 230– 237) is the traditional approach for testing 2  2  k contingency tables where the third variable is a control variable with k categories. In this application, the 18 different variables were treated as the control variables, and the null hypothesis that the judges’ ratings were statistically independent was rejected ( p < .0001).

Based on a review of the transcripts, the judges have two choices: (1) observe or (2) not observe that the variables were directly or indirectly inferred to in the interviews.

5. Interjudge reliability and data analysis We use two independent ‘‘judges’’ with very different educational backgrounds to analyse the transcripts. One has a business education background while the other has an arts (English literature) background. They were given a list of the constructs with their definitions (see Table 2) and then asked to thoroughly analyse the transcripts and search for these constructs. These constructs may have been directly or indirectly referred to in the interview transcripts. They both independently recorded all the instances in which the constructs had been mentioned or implied. Given that the dimensions of relational competence were of a socio-psychological domain, a direct inference was not always

5.1. Record of hits and observations Table 6 records all the direct and indirect ‘‘hits’’ on the variables. Each judge recorded a ‘‘hit’’ when one of the

Table 5 Interjudge reliability percentage Variables

Assertiveness Dominance Instrumental competence Shyness (negative variable) Social anxiety (negative variable) Intimacy Trusting ability Interpersonal sensitivity Altruism Perspective taking Credibility trust Benevolence trust Satisfaction with the other manager (interpersonal) Personal commitment (of managers) to the relationship Conflict resolution technique Timeliness, accuracy, usefulness, and credibility of information exchanged between the managers Proactive provision of critical and confidential information useful to the other manager The extent to which the managers engage jointly in planning and goal setting Total

Observe/ observe

Not-observe/ not-observe

Observe/ not-observe

Not-observe/ observe

Interjudge reliability percentage

3 2 21 0 0 14 27 22 1 8 18 17 14

17 18 1 26 27 9 0 4 20 11 6 5 8

6 6 4 1 0 4 0 0 6 6 2 3 5

1 1 1 0 0 0 0 1 0 2 1 2 0

74% 74% 81% 96% 100% 85% 100% 96% 78% 70% 89% 81% 81%

27

0

0

0

100%

19 27

4 0

3 0

1 0

85% 100%

11

8

6

2

70%

14

5

8

0

70%

245

169

60

12

Interjudge reliability percentage is calculated as sum of (observe/observe)+(not-observe/not-observe) divided by sum of (observe/observe)+(observe/notobserve)+(not-observe/observe)+(not-observe/not-observe).

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Table 6 Recorded hits of relational competence, relationship quality, and communication behavior Variables

Relational

Competence

(1)

(2)

Initiation competence

Assertiveness Dominance Instrumental competence Shyness (negative variable) Social anxiety (negative variable) Intimacy

High Low High Low

10 10 10 10

Low

10

High

Maintenance competence

Trusting ability Interpersonal sensitivity Altruism Perspective taking

Predicted relative importance

No. of Australian cases

No. of SE Asian case

Total no. of cases

Hits (%) Australia

Hits (%) SE Asia

Total hits (%)

(3)

(4)

(5)

(6)

(7)

(8)

17 17 17 17

27 27 27 27

20 10 100 0

6 6 65 0

11 7 78 0

Low Low High Low

17

27

0

0

0

Low

10

17

27

50

53

52

High High

10 10

17 17

27 27

100 90

100 76

Low High

10 10

17 17

27 27

10 40

0 24

Actual relative importance total

Support of predictions Australia

Support of predictions SE Asia

Support of predictions total

(9)

(10)

(11)

(12)

(13)

Low Low High Low

Low Low High Low

No Yes Yes Yes

No Yes Yes Yes

No Yes Yes Yes

Low

Low

Yes

Yes

Yes

High

High

High

Yes

Yes

Yes

100 81

High High

High High

High High

Yes Yes

Yes Yes

Yes Yes

4 30

Low Low

Low Low

Low Low

Yes No

Yes No

Yes No

Quality

(1)

(2)

(3)

(4)

(8)

(9)

(10)

(11)

(12)

(13)

Trust

High High High

10 10 10

17 17 17

27 27 27

90 90 70

53 47 41

67 63 52

High High High

High Low Low

High High High

Yes Yes Yes

Yes No No

Yes Yes Yes

High

10

17

27

100

100

100

High

High

High

Yes

Yes

Yes

Joint problem solving

Credibility trust Benevolence trust Satisfaction with the other manager Personal commitment to relationship Conflict resolution technique

High

10

17

27

80

65

70

High

High

High

Yes

Yes

Yes

Communication

Behavior

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

Communication quality

Timeliness, accuracy, usefulness, and credibility of information exchanged between the managers Proactive provision of critical and confidential information useful to the other manager The extent to which the managers engage jointly in planning and goal setting

High

10

17

27

100

100

100

High

High

High

Yes

Yes

Yes

High

10

17

27

50

35

41

High

Low

Low

Yes

No

No

High

10

17

27

90

29

52

High

Low

High

Yes

No

Yes

Commitment

Information exchange

Participation

(6)

(7)

Actual relative importance SE Asia

Relationship

Satisfaction

(5)

Actual relative importance Australia

An actual importance with a hit rate equal or superior to 50% is considered as ‘‘high’’ and inferior to 50% is considered as ‘‘low.’’

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Constructs

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variables of interest was mentioned directly or inferred to in the transcripts. The hit percentage is calculated as the number of ‘‘observe/observe’’ between the two judges divided by the total number of cases. The importance of a variable was considered as ‘‘high’’ when 50% or more of the interviewees have directly or indirectly referred to it and ‘‘low when less than 50% of the interviewees have referred to it. At the aggregated level, of the 18 predictions, 11 were supported, 4 partially supported (i.e., supported in one region, but not the other), and 3 were not supported (refer to columns 11 – 13 in Table 6). Although we did not make separate predictions for each region represented in our sample (Australia and Southeast Asia), we have separated the actual hits and thus the importance of each relational construct into Australia and Southeast Asia (refer columns 5 –7 in Table 6).

6. Discussion of findings In discussing the results, we address each major antecedent construct category in turn (i.e., relational competence, followed by relationship quality, and finally communication behavior). 6.1. Relational competence –relationship initiation As shown in Table 6, four of the five hypotheses with respect to initiation competences were fully supported. That is, ‘‘dominance,’’ ‘‘shyness,’’ and ‘‘social anxiety’’ were relatively low in importance, while ‘‘instrumental competence’’ was relatively high in importance, as predicted. Dominance failed to register a high number of ‘‘hits’’ and this may be attributed to the fact that its absence is almost taken for granted by the partners or it is not an issue in their partnerships. By definition, a partnership is a business arrangement in which all parties have to work in a collaborative manner and share the responsibility for managing that partnership (e.g., joint venture partnership). Therefore, if one of the partners shows a domineering tendency, the other parties will negatively perceive him/her. Dominance probably only emerged in the discussion with interviewees in cases where it had been an issue, such as (additional quotes from the interviews are available upon request from the first author): XYZ in Belgium were arrogant and wanted their own way always. So we stopped dealing with them and found ABC, an Australian supplier of heavy gears. Our new partner is about the same size company as ourselves, and is not demanding like XYZ. Now we both make our point when need be, but neither is arrogant or too demanding. (A Thai importer) As hypothesized, ‘‘shyness’’ and ‘‘social anxiety’’ are not relevant to the IBP context and failed to emerge in our interviews. ‘‘Instrumental competence’’ recorded a high hit

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rate overall as predicted. This high hit rate also appeared in both regions (i.e., Australia and Southeast Asia) although higher among Australian managers. Therefore, to succeed IBP managers are expected to be competent without being shy, socially anxious, or domineering. This finding is consistent with Dabholkar et al.’s (1994) argument that ‘‘negotiator’s experience and/or skill’’ is important in developing enduring business partnerships. Contrary to our predictions, overall, only 11% of interviewees directly or indirectly referred to ‘‘assertiveness’’ when talking about the personal relationship with their partners. The case data shows that although assertiveness is relevant to social and personal relationships, it has only minor relevance to an international business relationship context. In a business partnership with shared management responsibilities, managers’ assertive attitude or behaviour may be interpreted as domineering by their counterparts, and this is even so in a western – eastern business partnership. An eastern manager may wrongly interpret a domineering attitude or behaviour from a western manager as ‘‘colonialist.’’ On the other hand, a western manager may wrongly interpret a domineering attitude or behaviour from an eastern manager as ‘‘condescending.’’ Moreover, in practice, there is only a fine line between ‘‘dominance’’ and ‘‘assertiveness’’ and perhaps our interviewees may not have been able to articulate the difference. 6.1.1. Relationship maintenance Concerning relationship maintenance competences, four of our five predictions were supported (see Table 6). As hypothesized, ‘‘intimacy,’’ ‘‘trusting ability,’’ and ‘‘interpersonal sensitivity’’ recorded a high hit rate among the interviewees in the aggregated result and in both regions. As would be expected, ‘‘trusting ability’’ plays an extremely important role in interpersonal relationships of successful IBP. It is a prerequisite of interpersonal trust between managers, regardless their cultural background. This variable recorded the maximum hit rate (i.e., 100%) among the Australian and Southeast Asian samples. This finding is consistent with Whitener et al. (1998) framework in which ‘‘propensity to trust’’ is an antecedent of ‘‘trustworthy behavior.’’ Despite its relatively lower importance in comparison with the other dimensions of relationship maintenance competence, one of every two IBP managers indicates a need to form personal and out-of-office contact with their counterparts (intimacy) to sustain and/or strengthen their business relationships. For instance one of the interviewees stated: Personally he (Indonesian partner) and I are very close. His wife and my wife also got on very well. Every time we visit Jakarta or they come to Melbourne, we got together and our wives go shopping together. (An Australian joint venture partner) In the context of our research, ‘‘interpersonal sensitivity,’’ and particularly cultural sensitivity, is deemed to be

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vital. The hit percentage for ‘‘interpersonal sensitivity’’ confirmed our prediction. In other words, managers are expected to be sensitive to their overseas partners’ culture, values and working style. An IBP manager is also expected to protect his/her company’s best interests first prior to looking after his/her partner’s interests. Hence, an altruistic behavior may be appropriate once one’s company’s best interests are preserved (this explains the low hit percentage of the ‘‘altruism’’ variable). For instance, one of our interviewees said: They (Australian partner) shouldn’t be worried about doing the wrong thing. Little mistakes are not a big deal, but having personal respect and being genuine are more important. (A Malaysian joint venture partner) The hypothesis not supported related to ‘‘perspective taking’’ where only 30% of interviewees mentioned the construct. Putting on ‘positive glasses’, we can say that almost one in three respondents have directly or indirectly mentioned ‘‘perspective taking’’ when talking about the personal relationship with their partners. The relatively minor importance of this variable in an IBP context may be attributed to the respondents’ assumption that they cannot expect their business partners to view every issue from all sides. In turn they are also less expected to embrace their partners’ business views if these views are not in the interests of their own firms. 6.1.2. Relationship quality Regarding the relationship quality constructs, ‘‘trust’’ (credibility and benevolence), ‘‘satisfaction,’’ ‘‘commitment,’’ and ‘‘joint problem solving’’ emerged as having high hit rates in the aggregated results—indicating their strong relevance to successful partnerships (see Table 6). Interestingly, however, at the cross-regional level, the hit rates were consistently higher among Australian managers. Satisfaction and benevolence trust in particular, while receiving reasonable support (47% hits) from Asian managers, were considerably higher among their Australian counterparts. This may be an artifact of our open-ended interview technique across two diverse cultures, where Australian managers were likely to speak more freely and openly about their partnerships than their Southeast Asian counterparts. Further, relationships, once established in SE Asian cultures are naturally expected to last a long time, and involve constant displays of trust (Holmes and Tangtongtavy, 1995; Usunier, 1996). It is likely that benevolence trust in particular is taken as a ‘given’ among SE Asian interviewees, and thus not overtly mentioned during the interview process. 6.1.3. Communication behavior In terms of communication behavior constructs, two of the three predictions were fully supported. ‘‘Communication quality’’ recorded a maximum hit rate overall as well as across regions (100%). These results suggest that commun-

ication quality is a crucial element of IBP managers’ communication behavior. The finding is consistent with the literature (Mohr and Sohi, 1995; Duncan and Moriarty, 1998; Sharma and Patterson, 1999). The ‘‘participation’’ dimension also recorded a high hit rate in the aggregated results (52%), suggesting a high importance in the managers’ overall communication behavior. However, at the cross-regional level, the hit rate was much higher among Australian managers (90%) than among Southeast Asian managers (29%). The cross-cultural difference in hit rates can be attributed to the intrinsic nature of our sample. To control for the macroenvironmental influences, the IBP of our sample involve exclusively Australian firms partnering with Southeast Asian companies operating in that Southeast Asian country. Hence, more often than not, the Australian partners will be assigned the financial management of the partnerships while leaving the operational, logistics and marketing issues to their Southeast Asian counterparts (especially true in ‘‘Australian exporter—Southeast Asian importer’’ relationships). Thus, when planning and setting financial goals for the partnerships, Australian managers felt more compelled to have inputs from both sides of the partnerships while the Southeast Asian managers felt less compelled to have Australian inputs in making operational, logistics, and marketing decisions. Southeast Asian managers often have a better knowledge of local markets and customers and therefore seeking Australian inputs in those decisions would be inappropriate. Our overall prediction concerning ‘‘information exchange’’ was not supported (although it did barely meet the cut-off point for acceptance among Australian managers, but not so among Asian managers). The modest overall hit percentage for ‘‘information exchange’’ (41%) may be attributed to two possible explanations. Firstly due the qualitative nature of the data, the variable ‘‘information exchange’’ may be confounded with the variable ‘‘communication quality,’’ which recorded a 100% hit. In the interviewees’ mind, communication quality implicitly includes the amount of confidential information exchanged between the managers. Without this information exchange, the communication quality may be hindered. Secondly, given we are interested in successful partnerships only (i.e., those which have survived the Asian economic crisis), information exchange between managers is an assumed requirement for success and therefore it was less important to refer to it directly or indirectly. Moreover, in successful partnerships, the process of exchanging information among managers is often well rehearsed and established. For instance, one of our interviewees commented: You must have an open, honest and frequent communication with your partner. That is the single most

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important factor in the success of our relationship. We talk through problems, keep each other informed, and have frequent visits. (An Australian exporter to Indonesia) 6.2. Regional differences At the regional level (i.e., Australia vs. Southeast Asia), the results were consistent for 14 of the 18 variables, providing support for the cross-cultural validity of the findings. The four variables showing variance across regions were ‘‘benevolence trust,’’ ‘‘satisfaction with partner,’’ ‘‘information exchange,’’ and ‘‘participation in joint planning and goal setting.’’ In all cases, the Southeast Asian interviewees recorded lower hit rates than Australian managers, suggesting these constructs are relatively less important in impacting overall partnership success in that region. Another explanation of this regional difference is the Southeast Asian interviewees were relatively more ‘‘moderated’’ in expressing their views than the Australian interviewees, and preferred to stay neutral on sensitive issues such as their partner’s personality, relationship quality, and communication behavior to ‘‘save face’’ during the interviews.

7. Summary and conclusions Of the total 36 predictions (2 regions  18 variables), 28 were fully supported by the data. Four of the 10 dimensions of relational competence have high importance in an IBP context: instrumental competence, intimacy, trusting ability, and interpersonal sensitivity. Thus, it can be concluded that these relational competencies are critical to successful international partnerships. If key personnel in any international department do not naturally possess these attributes, then it is in a firm’s best interests to educate and train its personnel in the importance of exhibiting these traits and behaviors. Further, these traits might be specifically targeted when recruiting new employees to working in an international environment. The findings not only provide support to our thesis that differences in personal characteristics and traits can explain the differences in the quality of relationship that IBP managers may have with their counterparts, but also single out the most important characteristics and traits. There was also strong general support for the relationship quality and communication variables in impacting business performance. Finally, with a few exceptions, there was a general consistency across western – eastern cultures.

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the alliance manager in building successful business relationships. The specific theoretical and methodological contributions of the paper are: (1) the addition to the relationship marketing literature of a new theoretical framework that highlights the importance and role of personal characteristics to the success of IBP, (2) the conceptualization of a dyadic model of relational competence, and (3) a new application of the DFA technique to case study data for theory development. The theoretical framework proposed here provides a framework that explicitly recognizes these issues and seeks to explain its impact on partnership dynamics, and ultimately, partnership performance. Most managers involved in international business would acknowledge the importance of the ‘‘type of people’’ involved in managing cross-border business relationships. Indeed, being the ‘‘wrong’’ type of person may help explain why some domestic managers who are ‘‘promoted’’ to positions with international responsibilities often have difficulty in developing and/or strengthening their relationship with their foreign counterparts. Specific managerial applications include: (1) the relational competence construct can help decision-makers assess whether their managers’ relational skills are adequate for developing and maintaining successful partnerships with their overseas counterparts. If not, the decision-makers can use this relational competence construct as a basis for designing specific training programs; (2) specific dimensions of relational competence (i.e., instrumental competence, intimacy, trusting ability, and interpersonal sensitivity, including cultural sensitivity) are highly associated with relationship quality. Hence, it would be in a company’s best interests to measure and monitor its managers on these dimensions. It follows as a corollary that these dimensions can be used in a selection of managers for international assignments. However, it is self-evident that relationships often involve two parties, and that the actions, attitudes, and perceptions of one side impact those of the other. Despite their practical constraints, dyadic studies should become the rule rather than the exception in relational research. In order to explain the impact of relationships on performance, we also need to build a model that recognizes the long-term and dynamic effects of the key components of business relationship and their environmental context. The generalizability of the above findings requires that a variety of cultural parings be examined. Future research directions may include the operationalization of the relational competence construct in an IBP context; new longitudinal dyadic studies that track change over time and/or uses multiple cultural pairings.

8. Contributions and future research directions Our contribution is to extend the relationship marketing literature by offering for the first time a relational competence model within an IBP setting. In doing so, we add to Spekman et al.’s (1996) initial study on the importance of

Acknowledgements We gratefully acknowledge the financial assistance of the Australian Trade Commission (Austrade) and the assistance

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from their offices in Jakarta, Kuala Lumpur, and Bangkok. We also thank Lisa Hersch and Farid Ahmed for their assistance in the data collection, and the helpful comments received from the two anonymous reviewers and Elizabeth Wilson.

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