Product Complexity and Cultural Distance Effects on Managing International Distributor Relationships: A Contingency Approach

Journal of International Marketing

Product Complexity and Cultural Distance Effects on Managing International Distributor Relationships: A Contingency Approach

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Published 9/1/2008

Author: Carl Arthur Solberg

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Executive Summary
How should an exporter manage its relationship with its intermediaries given different levels of performance ambiguity that imply uncertainties in the external environment and in assessing agent performance? Solberg addresses this question by exploring four different settings of performance ambiguity involving cultural distance (external uncertainty) and product complexity (internal uncertainty). Using a sample of 173 Norwegian exporting companies, he analyzes relational drivers’ effect on relationship quality between trading partners—namely, exporters and their distributors.

Often firms develop their own theories on how to treat their partners and transfer this knowledge across countries. The current research indicates that managers should be aware of the potential gains in differentiating their handling of relationships with their foreign trading partners. Simply put, different situations warrant different treatments. Managers should particularly focus on the role distribution between the trading partners. For example, exporters that sell standard products (not requiring extensive buyer–seller interaction) in culturally close markets should limit the role of the agent to the introductory phase and assume more of the marketing activities themselves in subsequent stages of market involvement. In contrast, in culturally distant countries, the agent should play a long-term role in the market. It is vital to be aware of these mechanisms at an early stage because contractual arrangements often specify the different roles of the players in the relationship and can lock the partners in to roles that are subsequently counterproductive and difficult to get out of because of tactical considerations.

Moreover, Solberg concludes that controlling the behavior and activities of the intermediary is negatively related to relationship quality—particularly in so-called complex relationships, in which the level of performance ambiguity is high. In this setting, both clan control, which involves trust and a common set of values, and an attitude of flexibility yield good rewards in the relationship with the local intermediary. In settings with complex products and services and culturally close countries, clan control, more than any other relationship lever, yields good results. More generally, social relationships are the most important factor that leads to relationship quality between exporters and their intermediaries. This study has implications for the career development of key export personnel: Managers should avoid prematurely “promoting them away” from critical relationships with local agents and distributors.

Biography
Carl Arthur Solberg is Professor of International Marketing and Associate Dean of Master of Science in International Marketing and Management at BI the Norwegian School of Management, Oslo, Norway. He has published in Journal of International Marketing, International Journal of Information Management, International Business Review, Advances of International Marketing, and Management International Review. He has extensive export industry experience in Norway.

Journal of International Marketing, Volume 16, Number 3, September 2008
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Journal of International Marketing