History Mystery Lies & Ties€¦ · management representing your party in this joint venture and...

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Challenges in International Marketing Relationships:

History, Mystery, Lies & Ties

Lisa K. ScheerEmma S. Hibbs Distinguished Professor

International Business Week -- February 9, 2009

1565 St. Augustine

Ponder . . .

927 700 30 753 1045

g

Trulaske College of Business © 2009, Lisa K. Scheer

1045 1400 2800 3000

Ponder . . .

1565 St. Augustine

& its Impact History

927 700 30 BC 753 BC 1045 BC

gEnglandKrakowTrierRomeBeijing


1045 BC 1400 BC 2800 BC 3000 BC

BeijingAthensJerusalemBeirut

Ponder the Mystery of Language

Get the book. “Get” isn’t easy to

& its Impact

Get the idea. Get going.

Get from him. Get for him.

Get isn t easy to get!


Get for him. Get over him. Get by him. Get to him. Get through him.

Nearly 50 meanings of get!

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Implications for International Business?

Lies !!Lies ??“You said that you

would handle that!”


would handle that!

What are perceived as “lies” are often

Miscommunicationd d

This makes it difficult t d t d Misunderstanding

Different behavioral and social norms

“Yes.”

to understand complex concepts like . . .


Ponder . . .

375,000,000

the reach of spoken English

, , 1,000,000,000+

English is the language of global communications

Cultural differences in verbal & non-verbal communication norms


science aviation motion pictures diplomacy

Difficult for non-native speakers to grasp or convey nuance

“I did not tell him that.”

Ponder . . . What did you say?

“I did not tell him that.” “I did not tell him that.” “I did not tell him that.” “I did not tell him that.”


I did not tell him that.

Emphasis changes everything & often is not well-conveyed cross-culturally in person, much less in print or e-mail !!

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Ponder . . .

375,000,000 native English-speakers

the future of spoken English

g p 1,000,000,000+ other English-speakers

English belongs to the world.

English is being changed by


English is being changed by the world.

Effective communication is a competitive advantage.

To discuss

Our Goal Tonight? Consider B2B Relationships

International B2B (business-to-business) marketing relationships


and how cross-cultural linkages complicate the situation

Why do firms do business together?

Our Goal Tonight? Consider B2B Relationships

How do firms do business together?

Why do firms do business together?


How do partners from different cultures complicate B2B relationships?

Why do business with a partner?


DependenceDependence

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Positive MotivesPositive Motives

Irreplaceable value received from the relationship DependenceDependence


Negative Motives

Termination costs that would be realized if the relationship ends


Positive MotivesPositive Motives

Irreplaceable value received from the relationship


Negative Motives

Termination costs that would be realized if the relationship ends

Positively-motivated dependence:

Motivation for dependence matters

Greater trust

Better performance

Lower conflict

Negatively-motivated dependence:


Scheer, Miao & Garrett, forthcoming JAMS

Negatively-motivated dependence: Intent to continue relationship

Insensitive to competitor offerings

More partner influence

How do we structure our relationship?

Transactional Relational


Relationship orientation– desire for relational exchange

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Range of Relationship Orientations

Relationship-

Relationship-neutral

Relationshipseeking


Relationship-averse

Configuration of the Relationship?

Relationship-Seeking

Relationship-Neutral

Relationship-Averse

Firm

Partner


Seeking

Relationship-

NeutralAverse


Neutral

Relationship-Averse

Different types of Relationships!


Relationship-Neutral

Relationship-Averse

Firm

Partner


Seeking

Relationship-

NeutralAverse

Enmeshed Relationship

Close

XComfortable

Cultivated by Partner

Cultivated by


Neutral

Relationship-Averse

Transactional

Comfortable Arms’ Length XComfortable

Arms’ Length

Arms’ Length Firm

How can we cultivate a B2B Relationship?

Buyer’s Exchange Inefficiency

Buyer’s Trust

Seller’s Relationship Marketing

Seller’s Performance Outcomes

Buyer’s Positive Response


Source: Palmatier, Scheer, Evans & Arnold (2008), JAMS

But research results have been inconsistent!

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Buyer’s Exchange Inefficiency

When is Relationship Marketing Effective?

• I feel that time is wasted when dealing with this salesperson.

• I feel hassled or annoyed by my salesperson's relationship building efforts.

• I feel that my interactions with this


I feel that my interactions with this salesperson are inefficient.


SalespeopleBuyers Data from 269 Matched Dyads

When is Relationship Marketing Effective?

Lower Propensity to Switch

Share of Buyer Wallet

S l G th t

Buyer’s Exchange

Inefficiency

Seller’s Relationship

Marketing Activities


Selling Firm Outcomes

Sales Growth to Customer

Buyer’s Trust in

Salesperson


SalespeopleBuyers Data from 269 Matched Dyads

Which relationship marketing effect will occur?

Lower Propensity to Switch

Share of Buyer Wallet

S l G th t

Buyer’s Exchange

Inefficiency

Seller’s Relationship

Marketing Activities

Buyer’s Relationship Orientation


Selling Firm Outcomes

Sales Growth to Customer

Buyer’s Trust in

Salesperson


With whom is the With whom is the relationship built?relationship built?

Business‐to‐Business RelationshipWeb of Multi‐level Relationships

Individuals Individuals


Firm

Organization Organization

Partner

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Interlevel: Person‐Firm

Firm’s Cross‐Firm Relationships

Individuals Individuals


Firm


Partner

Interfirm


Individuals’ Cross‐Firm Relationships

Individuals IndividualsInterpersonal


Firm


Partner


Relationships simultaneously exist at different levels

Individuals IndividualsInterpersonal


Firm


Partner

Interfirm

Parent firm Relationships

Relationships in International Joint Ventures in China Source: Fang, Palmatier, Scheer & Li (2008), JM

AgencyRelationship

AgencyR l ti hi

Intra‐JV Relationships

Chinese Mgrs

Foreign Mgrs


Relationship

Joint Venture

Chinese Parent Foreign Parent

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Parent firm RelationshipsMutual Trust Between

Parent Firms

Trust in International Joint Ventures in China Source: Fang, Palmatier, Scheer & Li (2008), JM

AgencyRelationships

AgencyRelationships

Chinese Parent Firm’s Trust in

Own Representatives

Foreign Parent Firm’s Trust in

Own Representatives

Chinese Mgrs

Foreign Mgrs

Mutual Trust Between Reps

of Different Parent Firms


Representatives Representatives

Intra‐JV Relationships

g g

Different effects on Different effects on Parent Firms’ Parent Firms’

investments & JV’s investments & JV’s effective use of effective use of

investmentsinvestmentsChinese Parent Foreign Parent

Preface: Please think of “we” and “us” as senior management representing your party in this joint venture and “our partner” as the senior management representing

Single informants Firm-level constructIJV Example – Measurement

the other joint venture party.

Agency Trust: Collaborating Firm’s Trust in Its Representatives

Our parent company trusts us in our ability to run this joint t


venture. Our parent company trusts us in keeping their best

interests in mind when running this joint venture.

Source: Fang, Palmatier, Scheer & Li (2008), Journal of Marketing

Interfirm Trust: Mutual Trust Between Collaborating Firms Both partners’ parent companies trust each other. Both partners’ parent companies are always frank and truthful in

d li i h h h

Dual informantsDyadic constructIJV Example – Measurement

dealing with each other. Both parent companies believe that the other parent company

would go out of its way to make sure the relationship is not damaged or harmed.

Intraentity Trust: Trust Between Reps of Different Firms Our partner and we can rely on each other to do our job in the


Our partner and we can rely on each other to do our job in the joint venture.

In this relationship, our partner and we are both concerned about what happens to each other.

When our partner and we share problems with each other, both of us know that the other party will respond with understanding.

Fairness in B2B RelationshipsConventional wisdom:


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What is fair?


Is fairness always important?Are other factors sometimes more important?

In 1000’s of pages of official complaints to US government about unfair trade

What is fairness in B2B relationships?

to US government about unfair trade actions by trading partners

there were no instances in which fairness or unfairness was meaningfully defined. (Abbott 1996:285)


My working definition:

F i i l ti th t ’

What is fairness in B2B relationships?

Fairness is an evaluation that one’s condition is appropriate when judged against standards held by the evaluator.

. . . Inherently involves comparisonFairness of:


. . . Inherently involves comparison

. . . With a referent

. . . Using a norm or standard

. . . From the evaluator’s perspective

• Outcomes

• Procedures• Overall Relationship

Outcome (Distributive) Fairness is the perception that the outcomes the firm

Evaluating the fairness of outcomes received

perception that the outcomes the firm receives from a B2B relationship are appropriate.

What is compared?


What is compared?

What standard is applied?

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Partner’s outcomes

Firm’s own prior or expected outcomes

Example: Retailer Partner’s outcomes

Firm’s own prior or expected outcomes

To what can the firm’s current outcomes be compared?

Firm s own prior or expected outcomes

Outcom es the firm receives from doing business with other partners.

Outcomes received by similar others who do business with this specific partner.

Outcomes received by similar firms in same market

p p

Outcomes firm receives from doing business with other partners.


Firm’s Outcomes compared to Ptr’s OutcomesFirm’s Inputs Ptr’s Inputs

Outcomes received by similar firms in same market, types of channel, industry, region, nation

Firm’s current inputs in the relationship

What standard or norm is applied to evaluate fairness?


Firm’s Outcomes compared to Ptr’s OutcomesFirm’s Inputs Ptr’s Inputs

Equity ?


Equity ?

Equality ?

Firm’s Outcomes should equal Ptr’s Outcomes


qFirm’s Inputs Ptr’s Inputs

Firm’s Outcomes should equal Ptr’s Outcomes

Equity ? Need ?


Equity ?

Equality ?

Firm’s and Ptr’s joint outcomes should be allocated based on what the weaker partner needs to be viable

Need ?

Power ?


based on what the weaker partner needs to be viable.

Firm’s and Ptr’s outcome allocations should be determined by the party with the greater power.

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Research to explore these issues in B2B relationships

What impact does fairness have on relationship stability versus other factors in different cultures?

Does the importance of outcome fairness and procedural fairness differ across cultures?

To what referent(s) are outcomes compared?

Does dependence impact the assessment of fairness?

Is there an emerging “global business norm”?


Is there an emerging global business norm ?

If so, do firms that have more linkages with foreign products & partners gravitate toward that norm?

Are different fairness norms are applied in domestic vs. cross-national relationships? Which norms?

Nationality and Culture General Culture Characteristics

Potential Sources of B2B Fairness Norms

General Culture Characteristics

Degree of Individual Liberty

Economic Status

Business Culture






Economic Status

Business Culture

Religion


Religion

National Identification

Underlying cultural dimensions ‐‐ e.g., Hofstede

o Collectivism, Uncertainty avoidance, Power distance, Masculinity, Long‐term Orientation





Economic Status

Business Culture


Economic freedom

Civil liberties

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Economic Status

Business Culture


Level of economic development

Standard of living





Economic Status

Business Culture


Degree of participation in world trade

Beliefs about real estate, intangible property, and intellectual property rights





Economic Status

Business Culture


Industry Norms & Standards

Firm’s Unique Values & Explicitly Negotiated Relational Norms

Countries involved in the fairness research project . . . So far !!. . . So far !!

Australia Hungary Portugal

Countries involved in the fairness research project

Austria India Romania

Brazil Jordan Russia

China Lithuania Serbia


Croatia Malaysia Switzerland

England Mexico Turkey

Germany Poland United States

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To develop effective international business‐to‐business marketing relationships . . .

History Mystery “Lies”


You must deal with the history, mystery and “lies” that complicated cross‐cultural interactions.

To key to developing effective international B2B marketing relationships?


The better you deal with those challenges, the more likely you are to build strong B2B ties.

Accept the challenge! It’s worth it.

History Mystery Lies & Ties€¦ · management representing your party in this joint venture and...

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