With the internationalization of the market place, many transactions involve the transfer of goods and service across national boundaries. When marketers deal with customers in a foreign market, they encounter differences in language, consumer attitudes, law and regulations, and business practices. Developing relationships in the international market requires more time and effort because of cultural differences and the inaccessibility of ethnic or informal networks. Often an exporter's lack of cultural affinity with importing countries has been advanced as a key factor in its poor exporting record (Craig and Yetton 1994).
Although the benefits of relational exchange have been discussed extensively in the marketing literature (Dwyer, Schurr, and Oh 1987; Gronroos 1995; Macneil 1980; Morgan and Hunt 1994; Sheth and Parvatiyar 1995), very little research has explored this dynamic in the relationship between exporters and importers. The overall aim of this study is to develop a model on relational exchanges in the context of small and medium-sized exporters and importers. The underlying conceptual model is shown in Figure 1.
This study focuses on the relationship between Australian exporters and Korean importers. Korea was chosen because Korea is the second largest export market for Australian exporters (Craig and Yetton 1994; Jhernan 1996), Korea is one of the countries where relational exchanges are quite pervasive, and a large cultural difference exists between the two countries (Hall and Hall 1987). Making such a selection allows this study to focus on the role of cultural distance in the export-import relationship.
This study developed and tested a model of antecedents and consequences of relational exchange between exporters and importers. Specifically, this study attempted to establish the role of cultural distance and transaction-specific assets (TSA) as determinants of relational exchange between exporters and importers. This study also examined the effect of relational exchange on exporting performance. Finally, the study examined the mediating effects of decision-making uncertainty on the relationship between relational exchange and exporting performance.
From a managerial perspective, the results of this study are particularly important for small and medium-sized exporting firms. These firms frequently lack the resources to invest abroad and tend to rely primarily on exporting for their international engagements. Most importantly, the study will provide practical guidelines for exporters on how to develop relational exchange with their foreign importers. It will also provide insights into the inter-relationships between decision-making uncertainty and performance.
This article proceeds as follows. First, we will discuss cultural distance and transaction-specific assets as antecedents to relational exchange. We then discuss performance and decision making uncertainty as consequences of relational exchange. Next, we describe an empirical test of our hypotheses in the context of the relationship between Australian exporters and Korean importers. Finally, the results of the study, an assessment of its contribution to our understanding on the exporter-importer relationships, and directions for future research are discussed.
Cultural Distance and Relational Exchange
Foreign markets are frequently characterized by differences in language, laws and regulations, business practices, and consumer attitudes. The perceived difference between the home nation and the target country is referred to as "psychic distance" or "cultural distance" (Johanson and Valhne 1977).
As cultural distance increases, investment in the foreign country is perceived by managers as less attractive (Holzmuller and Kasper 1990); joint ventures are perceived as a more acceptable mode of entry than acquisitions (Kogut and Singh 1988); and managers become increasingly willing to allow their firms to reduce their degree of control of foreign assets (Anderson and Coughlan 1987; Bello and Gilliland 1997; Erramilli and Rao 1993; Gatignon and Anderson 1988; Goodnow and Hansz 1972; Root 1983). …