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Developing successful trust-based international exchange relationships

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Abstract

Trust is a central construct in relationship marketing. Yet the literature provides mixed empirical evidence on the trust–performance linkage. Also, there is limited research on how to build trusting international buyer–seller relations. We develop a comprehensive model integrating performance-enhancing mechanisms and antecedent processes of trust in import–export relationships. Our survey results from importers trading with overseas manufacturers suggest that existing levels of trust have a positive effect on relationship performance outcomes achieved 1 year later. Importantly, trust takes on greater importance in enhancing performance under conditions of high interdependence, whereas in circumstances of low interdependence trust has no discernible effect. The findings also indicate that interfirm psychic distance, internal uncertainty, and exporter transaction-specific assets and opportunism are related to importer trust. Implications for academics and practitioners are addressed.

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  1. One may legitimately question the extent to which an importer is able to detect exporter opportunism, given the difficulties in evaluating the exporter's performance in its relationship tasks. It is possible that the exporting firm may engage in some passive forms of opportunistic behavior, such as quality shirking or responsibility evasion, without being detected by the importer, because of the difficulties in evaluating performance in its channel tasks. However, it is unlikely that the exporting firm will get away with active forms of opportunism, such as benefiting from the relationship to the detriment of the importer or breaching formal or informal agreements, owing to the presence of internal uncertainty. Given that the focus of this study is on perceived (i.e., observable by the importer and grounded in specific actions) opportunism, informants could comfortably report on exporter opportunism. Further, it is clear in the organizational behavior and strategic management fields that organizational decisions and actions are driven essentially by managerial perceptions of reality, rather than by the objective calibration of this reality (e.g., Child, 1972; Day & Nedungadi, 1994). In the context of international business relations, an importer's behavior in the relationship is driven by its own perception of the supplier's opportunism, rather than the supplier's opportunism per se. We thank an anonymous reviewer for drawing our attention to this issue.

  2. Our field interviews indicated that managerial perceptions and actions are essentially driven by an overall evaluation of relationship performance outcomes, and that reduction of transaction costs was considered an integral part of performance assessments. Hence our operationalization comprises both cost-exclusive performance (items that do not address the costs of generating performance, such as sales volume goals) and cost-inclusive performance (indicators that encompass the costs of yielding performance, such as profitability and return on investment goals). This approach is supported by contemporary thinking in the pertinent literature (see, for discussion, Geyskens, Steenkamp, & Kumar's (2006) meta-analysis of transaction cost-based empirical research).

  3. These procedures made it possible to estimate an overall measurement model (containing all constructs). The results (χ 2 (23)=28.93, p=0.183, CFI=0.99, NNFI=0.97, RMSEA=0.04, and AOSR=0.02) provide evidence of a good model fit.

  4. We also tested parts of our model (separately) using a full information estimation approach. The structural model results were consistent with those of our parsimonious estimation approach. Specifically, we estimated a structural model to assess the trust → performance link (treating them both as second-order constructs) and the moderating effect of interdependence. The results (χ 2 (245)=286.82, p=0.034, CFI=0.99, NNFI=0.98, NFI=0.91, RMSEA=0.03, and AOSR=0.05) indicated a close fit to the data; we found a positive effect of trust on performance (t=2.29, p<0.05) and a positive effect of interdependence on the trust–performance link (t=2.48, p<0.05), in line with our overall structural model results. Also, we estimated a structural model assessing the links between trust and its drivers using a full information approach. The results (χ 2 (339)=385.44, p=0.042, CFI=0.99, NNFI=0.99, RMSEA=0.03, and AOSR=0.05) showed a good model fit; opportunism is related negatively to trust (t=−4.90, p<0.01); transaction-specific assets are related negatively to opportunism (t=−1.99, p<0.05) and positively to trust (t=1.84, p<0.10); internal uncertainty is not linked to opportunism (t=1.14, p>0.05) but is related negatively to trust (t=−2.01, p<0.05); external uncertainty is associated positively with opportunism (t=2.09, p<0.05), but is not linked to trust (t=0.90, p>0.05); and psychic distance is related positively to opportunism (t=3.70, p<0.01) and negatively to trust (t=−3.14, p<0.05). In sum, this evidence provides further support for our parsimonious estimation approach. We thank an anonymous reviewer for raising this issue.

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Acknowledgements

We wish to thank Olga Epitropaki (ALBA), Jan Heide (University of Wisconsin-Madison), Neil Morgan (Indiana University), and Bodo Schlegelmilch (Vienna University of Economics and Business Administration) for their valuable suggestions on earlier drafts of this manuscript. We also thank the three anonymous JIBS reviewers and the Department Editor, Professor Tomas M Hult, for their constructive comments and guidance.

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Correspondence to Constantine S Katsikeas.

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Accepted by G Tomas M Hult, Departmental Editor, 25 January 2008. This paper has been with the authors for two revisions.

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Katsikeas, C., Skarmeas, D. & Bello, D. Developing successful trust-based international exchange relationships. J Int Bus Stud 40, 132–155 (2009). https://doi.org/10.1057/palgrave.jibs.8400401

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