Salient Features

There are various similarities between IaT8 and RM theory. RM advocates treating

each customer as an individual who is knowledgeable, and actively participates in collaborating with the firm to jointly create value, resulting in a win-win situation and thereby making long-term relationships plausible (Gummesson, 2002). RM emphasises building customer relationships that would create loyal customers who act as advocates for the suppliers (Bridgewater & Egan, 2002). IaT also establishes the roles of buyer and seller as active participants in the exchange process who strive for stability and longevity in their relationship by understanding their counterparts and, if needed, making adaptations in order to reap mutual benefits (Håkansson, 1982).

The antecedents of RM include trust, commitment, gratitude (acknowledgement of favours or benefits), and the resultant reciprocity (Beck & Palmatier, 2012). Similarly, in IaT, trust plays an important role and is seen as an outcome of the accumulation of individual exchange episodes and positive history of having expectations fulfilled over the course of the relationship. Such trust would lead to commitment to the relationship since trustworthy partners are reliable, and

7 _{JV: Joint venture} 8 _{IaT: Interaction Theory}

12 adaptations are made to ascertain longevity with the confidence that they will be safeguarded.

Taking the norm of reciprocity, we see that extant RM literature ascribes reciprocity as an antecedent of trust and commitment in iterative exchange relations. Although there is some research on reciprocity in RM (Houston & Gassenheimer, 1987; Kashlak et al., 1998; Kashlak & Sherman, 2004; Lee et al. 2008) its effect on importer-exporter relationship is not known. In a very recent study Lee et al. (2008) attempted to build a model of reciprocity based on the relative efficacy of social versus economic aspects of benevolence, commitment, satisfaction, business performance, and cultural distance. They concluded that both mutualistic and altruistic benevolence help build reciprocity in a relationship by implying an obligation on the part of the receiver (mutualistic benevolence) and creating a feeling of indebtedness which brings about a moral obligation to reciprocate when the need arises (altruistic benevolence).

In the above context, reciprocity helps bring the relationship to an equilibrium where what one gives is matched by what one gets in return (Homans, 1958). Bagozzi (1995) extends the tit-for-tat strategy concept of reciprocity and takes it into the realm of IaT by pronouncing it a relational norm which is institutionalised in the relationship when occurring frequently in various episodes, and acts as a glue to bond relationships especially during periods of instability and conflict. Bagozzi‟s ideas are in line with the definition given by Becker (1990) who states that people are compelled to “return good for good, in proportion to what we receive; …… resist evil but not do evil in return; ………(and) make reparation for the harm we do” (p. 4). This means that reciprocity involves a moral disposition to

13 do good even in the face of bad which places a moral obligation on the receiver to do good in return.

In the context of IaT, reciprocity then is the relational norm that is

institutionalised9 through iterative relational exchanges between exchange-

partners. It follows then that reciprocity may play a vital role in building or maintaining relationships when there is lack of, or breach of, trust by allowing relationships to form and continue even when feelings of distrust exist. For example, social exchange and open, upfront, and candid exchange of procedural information, or advance payments may result in timely deliveries from an unfamiliar supplier. A supplier may be bound to give preference to a buyer who had recently breached the trust because the buyer had stood by him during trying times. Showing gratitude for favours and reciprocating with like acts increases likelihood of continued exchange episodes.

By its nature, trust is an emotive concept and involves expectations of positive outcomes of actions whereas reciprocity does not warrant immediate returns but a promise of balancing out over a period of time (Homans, 1958). Over time, consistent acts of reciprocity should help build trust in the behavioural outcomes of relational exchanges. It is easy to see the consequence of reciprocity on commitment in marketing relationships where “motivations for reciprocity emphasize cooperation, collaboration, and coordination among organisations, rather than domination, power, and control as in the asymmetrical approach” (Nevin, 1995, p. 331).

9

Institutionalization of norms: The relationship context advocated in the interaction model where repeated actions become expected routine behavior and are institutionalized to the extent that they are accepted without question.

14 Reciprocity also has a positive effect on commitment. Commitment is an implicit or explicit pledge of relational continuity between exchange partners (Dwyer, et al., 1987). Commitment theory (Meyer & Allen, 1991) suggests that a buyer‟s commitment develops from three distinguishable aspects of its relationship with the seller. The social aspect considers the firm‟s desire to continue based on its

perception of positive experiences with its partner over an indefinite time horizon. The calculative aspect concerns a firm‟s need to continue the existing relationship

based on its pragmatic consideration of the economic benefits of remaining in the

relationship compared with the costs of leaving. The normative aspect considers

the firm‟s responsibility to continue based on its understanding of duty and felt obligation to reciprocate with its trading partner. Hence, like trust, commitment in a relationship may develop as an outcome of the motivations of reciprocity when reciprocity is defined in the broader concept as presented by Homans (1958).

The theories of RM and IaT differ in their grounding, methodology, and scope. RM has its grounding in buyer-seller relationships and its main focus includes not only B2B marketing but also services marketing and consumer markets whereas the concept of IaT started with a concentration on industrial business-to-business relationships and has its foundations in the interorganisational theories and the new institutional economic approach.

From the perspective of studying the ultimate consumer the RM studies tend to be quantitative in nature since the population in most cases tends to be extensive. IaT studies tend to be qualitative since in order to understand the buyer-seller relationships an in-depth analysis is required of the parties to the interaction, the processes of interaction, the atmosphere within which the interactions take place,

15 and the macro-environment influencing the entire process and participants. One important reason for using qualitative studies in IaT is that the interactional model places heavy emphasis on the context in which relationships are studied. A usual procedure employed in the IaT research is the use of case studies which provide in-depth insights into the development and continuance of relationships that are unique to a particular industry.

Studies of industries and exchanges within them must account for various differences relating to size, structure, technology, management, products, processes, etc. When dyadic relationships are studied these factors are doubled since both partners to the relationship bring their own set of factors which interact when relational exchanges take place. Therefore, it is important to build a reference by explaining the context in which the exchange takes place. RM, on the other hand, does not place emphasis on context and instead studies how relationships can be developed from “satisfaction-based acquaintanceships to trust-based friendships to commitment-based partnerships” (Johnson & Selnes, 2004, p. 4) resulting in customer loyalty and desire for long-term relationships.

Interest in RM has given rise to a range of topics and constructs in RM research. Some of the most prominent topics in buyer-seller research are relationship quality/customer service, trust, commitment, power, involvement, conflict, and information exchange. Academicians have looked at various aspects of the relationship including relationship quality (RQ) and its constructs (Jap et al., 1999; Lohita et al., 2005; Ulaga & Eggert, 2006) and relationship value (RV) and its constructs (Kortge & Okonkwo, 1993; Ulaga & Eggert, 2006; Wu & Cavusgil, 2006). However, there is very limited research on RQ and RV in the importer-

16

exporter dyad context (e.g. Samiee & Walters, 2003; Leonidou et al., 2006). A

clearer understanding on the definition of these constructs in international context is necessary to understand the challenges faced by importers and exporters as they span their businesses overseas.

RQ has become a significant concept in B2C and B2B marketing because of the importance given to developing relationships with customers and businesses, but a comparison of these studies is difficult because of the confusion involved in building and operationalising the construct. Studies use the same dimensions as antecedents and consequences and, to complicate matters further, the elements of RQ and the directions of their relationships are not clear (Holmlund, 2008). This is unfortunate at a time when businesses are becoming more concerned with developing and managing lasting relationships with individual entities to build a portfolio of relationships. When the international dimension is added to that, complexities increase because of differences in cultural, social, political, and business backgrounds of the firms coming together to form the dyads. Further research on this area is therefore imperative. A dyadic study observing the views of both partners in a relationship is more useful to get a holistic picture of the concept of perceived relationship quality (PRQ).

In most studies on RM in the importer-exporter context it is assumed that the factors that result in trust, commitment, and improved RQ for exporters will be the same as those for the importers. However, as Kim‟s (2001) study shows, upstream actors of a channel of distribution are affected by different factors driving their relationships as compared to downstream actors. It is therefore essential that

17 comparative studies should be carried out that highlight these differences and the reasons behind them.

Most research by academicians is conducted on relationship development between developed nations of North America and Europe (Katsikeas & Dalgic, 1995) or between developed nations and developing countries of Eastern Europe and South America (Katsikeas & Piercy, 1990a, 1990b; Chelariu et al., 2006;). It is assumed that psychologically close countries are more similar and having business relations with them is easier because the level of uncertainty is reduced. Johanson and Wiedersheim-Paul (1975) proposed that firms first enter into neighbouring countries or countries that are perceived as similar to home country and gradually move into countries with greater psychic distances.

Perception of a country as having a small psychic distance from one‟s own can lead decision-makers to a number of faulty assumptions, creating an inability to learn about the country (O'Grady & Lane, 1996). It is important for academicians and practitioners to understand the level and effects of perceived psychic distance in order to overcome the perceived barriers and form mutually beneficial relationships.

Johanson and Vahlne (1977) proposed a model of internationalization of firms in which internationalisation occurs in series of steps where firms gradually increase their foreign operations and commitments as they gain experiential knowledge of foreign operations and work climates.

Environmental factors related to IaT include factors such as social, cultural, geographic, technological, and time distance. These factors tend to diminish in

18 severity the more interactions firms have with each other and the longer a relationship exists (Bridgewater & Egan, 2002). This is due to the fact that firms become familiar with each other through repeated exchange episodes and learn to adapt their processes and practices to the requirements of the relationship.

Making use of both the IaT and RM theory brings to fore a picture of the interaction context of dyadic firms where the quality of the relationship can be measured keeping in view the interaction process, environment, and atmosphere governing the entire network.