Executive Summary
Homburg and colleagues examine the effects of both transnationality (cross-border versus domestic exchange) and national culture (U.S. versus German buyers) on the use of three primary modes of governance: (1) the market mechanism, (2) trust, and (3) formal contracts. Drawing on theory, they develop a series of hypotheses. The results show that transnationality and culture both affect the choice of governance modes.
The authors predict that both transnationality of the buyer–supplier relationship and national culture of the buyer firm directly affect each mode of relationship governance. First, drawing on theories examining governance in commercial exchange, uncertainty, and international business, they discuss the effects of transnationality on governance modes. Specifically, they develop hypotheses on the relative use of active market monitoring, trust, and formal contracts in transnational versus domestic relationships. The first hypothesis proposes that the use of active market monitoring is lower in transnational than in domestic buyer–supplier relationships. The second hypothesis indicates that a customer’s trust in a supplier is lower in transnational than in domestic buyer–supplier relationships. The third hypothesis proposes that the degree of reliance on formal contracts is higher in transnational than in domestic business relationships.
Second, using country-specific differences on uncertainty avoidance and formalism, for each of the three governance modes the authors develop a hypothesis regarding their relative use by German versus U.S. buyers (H4–H6). Germany represents a culture with high levels of uncertainty avoidance, and the United States represents a culture with low levels of uncertainty avoidance. The hypotheses predict that high-uncertainty-avoidance countries will use (1) active market monitoring more, (2) trust less, and (3) formal contracts more than low-uncertainty-avoidance countries.
Data were collected from more than 500 key informants to a large-scale survey. Respondents were buying firms in Germany and the United States, with approximately half in each country reporting on a relationship with a domestic supplier and half reporting on a relationship with a supplier from the other focal country (e.g., German buyers reported on relationships with U.S.-based suppliers). The authors use structural equation modeling to assess the measures and to test the hypotheses.
Homburg and colleagues test the hypotheses separately for Germany and the United States (home country of the buying firm); in general, the hypotheses were supported. However, in each country, one hypothesis was not supported: In the United States, active market monitoring was not used to a lesser extent in transnational relationships than in domestic relationships; U.S. buying firms tend to use active market monitoring both in domestic and in transnational relationships. In Germany, the hypothesis that buying firms would focus more on the use of formal contracts in transnational than in domestic relationships was not supported. H4–H6, which hypothesize differences with respect to active market monitoring and trust, were clearly confirmed. For reasons of missing scalar invariance in the case of formal contracts across the two country samples, differences with respect to formal contracts could not be tested empirically in a methodological viable way. The article concludes with contributions to practice and theory.
Biography
Christian Homburg is a professor of marketing, chair of the Marketing Department, and director of the Institute for Market-Oriented Management at the University of Mannheim, Germany. Furthermore, Christian Homburg is Professorial Fellow at Department of Management and Marketing at the University of Melbourne, Australia. He holds a master’s degree in business administration and mathematics as well as a Ph.D. in business administration from the University of Karlsruhe, Germany, a Ph.D. honoris causa from the Copenhagen Business School, Denmark, and from the Technische Universität Bergakademie Freiberg, Germany. He also holds a habilitation degree from the University of Mainz, Germany. His research interests include market-oriented management, buyer-seller relationships, and business-to-business marketing. He has published in outlets such as Journal of Marketing, Journal of Marketing Research, Strategic Management Journal, and Journal of the Academy of Marketing Science. He is also the founder of Professor Homburg & Partners, an internationally operating management consulting firm.
Joe Cannon, is Associate Professor of Marketing at Colorado State University. He was previously at the Goizueta Business School at Emory University and Instituto de Empresa in Madrid, Spain. He received his Ph.D. at the University of North Carolina at Chapel Hill. Joe’s research has been published in the Journal of Marketing, Journal of Marketing Research, Journal of the Academy of Marketing Science, Academy of Management Review and other academic journals. He is the author of Basic Marketing and Essentials of Marketing. Joe serves on the Editorial Review Boards of the Journal of Marketing, Journal of the Academy of Marketing Science, and the Journal of Supply Chain Management. Before pursuing an academic career, Joe worked in technical sales and marketing for the Eastman Kodak’s Professional Photography Division.
After studying business administration in England, France, and Germany, Harley Krohmer completed his dissertation at the Koblenz School of Corporate Management in Germany under the supervision of Christian Homburg. Subsequently, he was assistant professor of marketing at the University of Mannheim in Germany, working in the research team of Christian Homburg. Then he worked as an associate professor of marketing at the University of Cologne, Germany. Since 2004 Krohmer is the executive director of the Institute of Marketing and Management and chairman of the marketing department at the University of Bern in Switzerland. He is member of the board of the Berne Economic Development Agency and vice-president of the board of directors of the Biella Group, one of Europe's leading manufacturers of office products. Krohmer's research interests include pricing, brand management, marketing organization, and international marketing. He has co-authored marketing textbooks and has published in academic marketing journals. Harley Krohmer is married and has two daughters.
Ingo Kiedaisch is Co-Founder and Managing Director of RIX GmbH, a leading contract sales organization. The company provides sales solutions and takes over tasks in the sales area, either by providing sales capacities on one-time special assignments, or longer, more complex projects. He holds a master’s degree in business administration from the University of Mannheim and a Ph. D. in business administration from the WHU - Otto Beisheim School of Management, both in Germany. His research and work focuses on the management of buyer–seller relationships and the development and optimization of a company’s sales activities. He is particularly interested in the role of buying centers and how they can be addressed to enhance supplier’s sales performance. He has extensive consulting and operational experience in the sales of complex and innovative products and has provided services to private equity companies, start-ups and established companies as well as troubled and seriously under-performing businesses.
J International Marketing, Volume 17, Number 3, September 2009
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