The Impact of Relational Variables on Export Performance: An Empirical Investigation in Australia and the UK

Transcription

1 The Impact of Relational Variables on Export Performance: An Empirical Investigation in Australia and the UK by Chris Styles Tim Ambler Abstract: The impact of relational variables on export performance is tested across two countries the UK and Australia. The key drivers are shown to be two kinds of commitment: to the market (country), and to the relationship with the distributor, both of which begin with experiential data gathering, or social learning. The constructs are operationalised and tested with data from the early stages of export ventures by small and medium sized enterprises (SMEs). The results support the importance of social learning and relational variables to export performance. Keywords: EXPORT PERFORMANCE; RELATIONSHIP MARKETING; INTERNATIONAL MARKETING. School of Marketing, University of New South Wales, UNSW Sydney, NSW London Business School, Regent s Park, London NW1 4SA, UK. tambler@london.edu The authors gratefully acknowledge the Australian Trade Commission (Austrade) and the UK Department of Trade and Industry for their assistance with this research. Australian Journal of Management, Vol. 25, No. 3, December 2000, The Australian Graduate School of Management 261

2 AUSTRALIAN JOURNAL OF MANAGEMENT December Introduction R It s all about linking in to form a proper working partnership: selling with the distributor not to the distributor (UK exporter quoted in Department of Trade and Industry, 1997, p. 11). esearch into export performance has so far mostly focused on factors relating to the firm, marketing strategy and the market environment (e.g. Aaby & Slater 1989; Madsen 1989; Cavusgil & Zou 1994). Relational issues have not featured prominently. Yet in the US Department of Commerce s (1987) list of 12 reasons for export failure, the second and third are insufficient managerial commitment to exports and insufficient care in selecting overseas distributors. Reports of practitioner experiences also support the importance of distributor relationships (e.g. Department of Trade and Industry 1997; Australian Financial Review 1997). While substantial interest has been shown in domestic manufacturer/distributor relationships (e.g. Morgan & Hunt 1994), this emphasis has only just started to be carried over to an international, and in particular, an export context (e.g. Lee 1997; Leonidou & Kaleka 1998). This paper seeks to fill this gap in the literature by empirically examining the impact of relational variables, such as trust and relationship commitment, on export performance. The next two sections summarize and review the relevant export marketing performance literature, as well as research in internationalisation, channels and relationship marketing. We derive a set of hypotheses that link relational variables with each other and export performance. The key drivers are shown to be two kinds of commitment: to the market (country), and to the relationship with the distributor, both of which begin with experiential data gathering, or what is termed social learning. The constructs are operationalised and tested in a cross-country setting, with data from Australian and UK exporters. The article concludes with implications for export practice and future research in the area. 2. Prior Research on Export Marketing Performance A summary of the major export marketing performance findings is given in table 1. The drivers are grouped in three types: environment, firm and marketing strategy. Review articles (Aaby & Slater 1989; Bilkey 1978; Ford & Leonidou 1991) and meta-analytical techniques (Chetty & Hamilton 1993; Madsen 1987) combined studies to develop and validate general sets of guidelines and macro models of export success. More recently, studies have sought to test comprehensive models empirically (Cavusgil & Zou 1994; Cooper & Kleinschmidt 1985; Koh 1991; Madsen 1989). This prior work mostly fell within the neo-classical (Arndt 1983), or microeconomic, or marketing mix (Gronroos 1994) paradigm which views the central task of the firm as the manipulation of the marketing mix to optimise sales, market share and profitability by gathering objective information on consumers and competitors, and then conducting micro-economic analysis to determine the optimal mix (Arndt 1983). The environment, or more specifically the nature of the industry 262

3 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE (concentration etc.), is a major influence on the firm s profitability (Porter 1980). The central unit of analysis is the transaction (Bagozzi 1975). Table 1 Variables Influencing Export Marketing Performance Independent Variable Association with Export Performance Examples of Relevant Literature Environment Psychic Distance Bilkey and Tesar 1977; Johanson and Vahlne 1977, 1990; Wiederscheim-Paul, Olsen and Welch 1978 Export Market Attractiveness + Madsen 1989; Naidu and Prasad 1994 Infrastructure + Green 1982; Michell 1979 Government Barriers McGuinness and Little 1981; Rabino 1980 Firm Commitment to Exporting + Cavusgil and Kirpalani 1993; Cavusgil and Zou 1994; Madsen 1989; Naidu and Prasad 1994; Amine and Cavusgil 1986; Koh 1991 Planning mixed Cavusgil 1984; Christensen, da Rocha and Gertner 1987; Reid 1982; Walters 1993 Market Knowledge/Information + Tookey 1964; Kirpalani and MacIntosh 1980; Amine and Cavusgil 1986 Market Research mixed Madsen 1987; 1989 International Experience mixed Cavusgil and Zou 1994; Naidu and Prasad 1994; Amine and Cavusgil 1986 Quality Control + Burton and Schlegelmilch 1987; Christensen, da Rocha and Gertner 1987 Resources/Size mixed Bilkey and Tesar 1977; Cooper and Kleinschmidt 1985; Reid 1982; Tookey 1964; Naidu and Prasad 1994 Marketing Strategy Market Segmentation + Cooper and Kleinschmidt 1985 Product Uniqueness/Quality + Cavusgil and Nevin 1981; Madsen 1989; McGuinness and Little 1981; Tookey 1964 Product Adaption mixed Cavusgil and Zou 1994; Christensen, da Rocha and Gertner 1987; Kirpalani and MacIntosh 1980; Koh 1991; Amine and Cavusgil 1986; Tookey 1964 Price Competitiveness mixed Kirpalani and MacIntosh 1980; Hirsch 1981 Price Premium vs Domestic + profit/ sales Bilkey 1982; Koh 1991 Promotion Adaption mixed Cavusgil, Zou and Naidu 1993; Cavusgil and Zou 1994 Promotion Support + Kirpalani and MacIntosh 1980; Amine and Cavusgil 1986 Channel Strategy/Support + Bilkey 1982; Cavusgil and Zou 1994; Rosson and Ford 1982; Yaprak 1985; Koh

4 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 Content analysis of leading international marketing textbooks (e.g. Cateora 1993; Czinkota & Ronkainen 1993; Keegan & Green 1997; Onkvisit & Shaw 1990; Terpstra & Sarathy 1991) shows a similar pattern in which relational considerations only feature in a small minority of chapters. However, research in areas such as internationalisation, distribution channels and relationship marketing suggest that relationship oriented variables could have a significant impact on export performance. These variables are discussed below. 3. Relational Variables 3.1 Social Learning, Market Commitment and Export Performance A firm s international development has been viewed as an evolutionary process with identifiable stages covering pre-engagement, initial and advanced levels of internationalisation (Cavusgil 1982). Exporting is the most frequent first stage (Leonidou & Katsikeas 1995). Johanson and Vahlne (1977) developed a theory of internationalisation, the Uppsala model, whereby a firm begins the exporting process by forming relationships that will deliver experiential knowledge about a market (i.e. knowledge gained through personal interactions in the local market), and then commits resources in accordance with the degree of experiential knowledge it progressively gains through these relationships. See Eriksson, Johnasin, Majgard and Sharma (1997) for an update of the Uppsala model in the course of considering the cost associated with experiential knowledge. Penrose (1966) originally distinguished objective knowledge, which can be formally taught, learned from books or reports, and transmitted to others, from experiential knowledge, which arises from subjective personal experience. The concepts correspond broadly to explicit (objective) and implicit, or tacit (experiential) knowledge (Nonaka & Takeuchi 1995). The latter refers to the knowhow embodied in hunches, ideals and skills, all of which is hard to share with others. Nonaka and Takeuchi attribute the commercial success of Japanese firms to the development and sharing of experiential knowledge in distinction from Western preoccupation with objective, typically quantifiable, information. Boisot (1995) regards implicit information, which he terms uncodified, as the precursor of explicit, codified information. Wiederscheim-Paul, Olson and Welch (1978) maintain that information production through face-to-face, direct personal contact is preferable when the exchange of information involves high levels of uncertainty. These authors are drawing attention to the progressive evolution of information acquisition, learning and knowledge as being essentially a social phenomenon, at least in the early stages. Furthermore this social learning is a driver of performance (McKee, Conant, Varadarajan & Mokwa 1992). In international (versus domestic) marketing, the acquisition of experiential knowledge exchange takes on greater importance because of the higher levels of risk (Robock & Simmonds 1983) and uncertainty (Cundiff & Hilger 1988) associated with entering unfamiliar markets. Objective information is important, but should be preceded by experiential information which will not only provide a frame of reference for interpretation, but motivate its collection. A positive association between personal contact and export performance has been repeatedly found (Madsen 1989; Amine & Cavusgil 1986; Kirpalani & 264

5 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE MacIntosh 1980). Rosson and Ford (1982) researched 21 matched pairs of exporters (based in Canada) and importers (based in the UK) and found that both contact and resource intensity with respect to the distributor had a positive and significant association with export performance. Styles and Ambler (1994) also highlighted the importance of the distributor relationship to an exporter s performance. Finally, Johanson and Vahlne (1977) suggest that a firm strives to increase its long-term profit, which is assumed to be equivalent to growth (p. 27). Thus, commitment decisions (e.g. allocation of resources to the venture) are said to have a direct impact on its business performance (sales, profitability). This is supported by the empirical findings summarized in table 1 (e.g. Naidu & Prasad 1994; Cavusgil & Zou 1994; Cavusgil & Kirpalani 1993; Madsen 1989). This discussion leads us to the following hypotheses: H1: There is a positive relationship between experiential data collection and a firm s market knowledge. H2: There is a positive relationship between experiential data collection and objective data collection. H3: There is a positive relationship between objective data collection and a firm s market knowledge. H4: There is a positive relationship between a firm s market knowledge and a firm s market commitment. H5: There is a positive relationship between a firm s market commitment and the business performance of an export venture. 3.2 Channel Relationships and Performance Heide (1994) divides the distribution channels literature into two main streams. The first originates in microeconomics (e.g. transaction cost economics) and the other, of particular interest here, is behavioural (Stern & Reve 1980). The behavioural stream includes contributions by Frazier (1983), Dwyer, Schurr and Oh (1987), Heide (1994) and Weitz and Jap (1995), who used constructs such as commitment, trust and cooperation from social psychology to dimensionalise personal relationships. Frazier (1983) and Dwyer, Schurr and Oh (1987) suggested evolutionary approaches to the development of these business relationships. In terms of empirical work, Anderson and Narus (1984) used social exchange theory (Thibaut & Kelley 1959) to develop a model of distributor/manufacturer working relationships, with constructs such as relationship satisfaction, cooperation, conflict, communication and comparison levels (of alternative/similar relationships). Anderson and Weitz (1989) found stable channel relationships to be characterised by cordial interpersonal relationships and trust, which is in turn strongly influenced by the level of communication within the dyad. Anderson and Narus (1990) found that communication and cooperation (i.e. interaction between the two parties) was an antecedent to trust, and, in the manufacturers case, satisfaction with the relationship. Commitment (to a channel relationship) was tested empirically by Anderson and Weitz (1992) and found to be important for profitability, particularly for the manufacturer. Communication appeared to be an antecedent. They concluded that manufacturer/distributor relationships with high levels of communication and 265

6 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 limited past conflict will be characterised by strong commitment to the relationship by both parties. The role of commitment in channel relationships has also been explored empirically by Kumar, Hibbard and Stern (1994) and Gundlach, Ravi Achrol and Mentzer (1995). As Morgan and Hunt (1994) showed, the more trust in the relationship, the greater will be the long-term commitment to the relationship. One of the benefits of long-term commitment in a channel relationship is enhanced business performance (Weitz & Jap 1995). Larson (1992) found that long-term orientation in a business relationship led to performance enhancing operational and strategic integration as well as data exchange and improvements in innovation and quality, both of which had positive economic consequences. The above can be summarized in the following hypotheses: H6: There is a positive relationship between experiential data collection by the exporter and the intensity of the relationship it has with its distributor. H7: There is a positive relationship between an exporter s market commitment and the intensity of the relationship it has with its distributor. H8: There is a positive relationship between relationship intensity and trust. H9: There is a positive relationship between trust and the exporter s long-term commitment to the relationship with its distributor. H10: There is a positive relationship between trust and the business performance of an export venture. H11: There is a positive relationship between an exporter s long-term commitment to the relationship with its distributor and the business performance of an export venture. These hypotheses are summarized in the path diagram shown in figure Methodology 4.1 Research Design A two-country survey design was used to test the hypotheses. The UK and Australia were chosen as the country settings as they are similar enough for the same theoretical framework and measurement instrument to be relevant, but different enough to achieve contextual variation and allow cross-country generalization to be explored. Key similarities include: (1) language; (2) cultural roots and values (Australia and Great Britain were almost identical on three out of four of Hofstede s (1983) key cultural dimensions power distance, individualism, and masculinity and only 15 points (out of 100) apart on uncertainty avoidance ); and (3) export processes as a result of both countries being island exporters. The key difference between the two countries is their major export markets (UK Western Europe; Australia South-east Asia), which enables differences in export destination (from culturally similar source countries) to be considered and tested. Consistent with past work (Cavusgil & Kirpalani 1993; Cavusgil & Zou 1994; Madsen 1989), the unit of analysis was an export venture (single product/brand exported to a single country) during its first five years. 266

7 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE Figure 1 Conceptual Model of Export Performance Social learning and Commitment Objective Data Collection H2 (+) H3 (+) Experiential Data Collection H1 (+) H4 (+) Market Knowledge Market Commitment Performance H5 (+) H6 (+) H7 (+) H10 (+) Business Performance Relationship Intensity H8 (+) H9 (+) H11 (+) Trust Relationship Commitment Distributor Relationship The population under study was small and medium sized manufacturing enterprises (SME s), that is, firms with less than 500 employees (OECD 1994). This provided some degree of homogeneity in the sample, given the evidence that SME s may operate in different ways to larger multinationals (Carson 1990; Carson & Cromie 1990), and because of the importance of exporting to these firms as their first stage of internationalisation (Leonidou & Katsikeas 1995). An initial survey instrument (self-completion questionnaire) was developed and subjected to a critical review (Bagozzi 1994) by a group of experts to check the content validity of the scales. These experts included academics in the UK and Australia, as well as personnel from the UK Department of Trade and Industry (DTI) and the Australian Trade Commission (Austrade). A second draft was then tested in a series of qualitative interviews with export managers in the UK. The result of this pre-pilot procedure was only minor wording changes to the scale items, confirming their applicability beyond the North American setting in which most were originally developed. A pilot study was then conducted in which questionnaires were sent to a sample of 70 exporters, yielding 25 usable questionnaires (36%). This pilot data was used to verify reliability and unidimensionality of the multi-item scales, and to confirm that the planned procedure of recruiting by telephone, mailing the questionnaire, and conducting telephone follow-ups, would deliver a reasonable response rate. The questionnaire 267

8 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 was then finalised by deleting some of the questions not essential to measuring the key constructs (to reduce its overall length to ten A4 pages). 4.2 Data Collection The data for the main study was collected from firms listed on the DTI s Regional Database and Austrade s Export Marketing Development Grant (EMDG) data base. In addition to being constantly updated, these databases provided the information necessary for efficient contact (addresses, telephone numbers, contact names, firm size). As a preliminary step, the lists were screened to identify firms that: (1) had had their entry on the respective database updated within the last two years; (2) were SME s; and (3) were manufacturers. Firms were randomly selected from the screened lists and their export managers telephoned to cross-check the database (particularly whether the firm was still exporting and whether the manager listed was the most appropriate respondent). The manager was then asked if a questionnaire could be sent to her/him. At this stage there was little refusal by eligible firms (3%). The questionnaire was then mailed to the export managers of 1203 separate firms asking for their responses about the first five years of a single export venture. A total of 434 usable questionnaires were returned, representing, as for the pilot, a response rate of 36% (UK 35%, Australia 37%). This compares favourably with the 17 export studies using a mail survey design reviewed by Madsen (1987). The response rates for these studies were mostly between 24% and 35%. Of the 434 ventures, 54% originated from Australia and 46% from the UK. 67% involved industrial products and the balance were consumer products. As expected, the majority of the Australian ventures were in South-East Asia (50%), while 44% of the UK ventures were in Western Europe. North America was the second most represented export market for both country data sets (19% UK, 23% Australian). Overall, the UK exporters were more experienced than their Australian counterparts (25% of the UK exporters had five years or less experience compared with 42% of the Australian sample). 66% of all ventures were by firms with 100 or less employees. A non-response questionnaire was administered over the telephone to 147 non-respondents (19% of those initially screened) across the two countries. Data relating to firm demographics and a major export venture (including its performance) was compared with respondents data. No significant differences were found. 4.3 Measurement Following Cavusgil and Zou s (1994) call for a more integrated approach to measurement in export studies, existing measures from the export and distribution channel literature were used. Some (e.g. export performance) were refined and adapted through the questionnaire development process described above. In addition, three new scales were developed (experiential data collection, objective data collection, and market knowledge). The origin of all the scales used in the study, and the specific items, are listed in appendix A. Before the hypotheses were tested, measurement analysis was conducted both within each country and between the two datasets. The aim was to test the 268

9 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE reliability and validity of the measures and metric equivalence between countries (in which case the two datasets could be combined). The confirmatory factor analysis (CFA) procedure suggested by Gerbing and Anderson (1988) was carried out for the single country datasets, and then metric equivalence was tested using the guidelines of both Mullen (1995) and Singh (1995). The result of the CFA (LISREL8) showed acceptable measurement models were produced for each country dataset (UK χ2 = (183), p < 0.00; CFI = 0.95; RMSEA = 0.04; TLI = 0.94; Australia χ2 = (183), p < 0.00; CFI = 0.94; RMSEA = 0.05; TLI = 0.92). However, metric equivalence was not established (see app. B), indicating differences in the measurement properties across the two countries. The hypotheses were therefore tested for each country separately. Table 2 shows the mean, standard deviation and correlation/covariance matrix for the constructs, and table 3 shows the results of the CFA and reliability analysis. Table 2 Construct Means, Standard Deviations, Correlation/Covariance Matrix Mean SD Perf Exp. Data Obj. Data Knowledge M. Commit Intensity Trust R. Commit Note: Correlations are on and below the diagonal, covariances are above the diagonal. For the UK sample: correlations > are significant at the p < 0.05 level; and correlations > are significant at the p < 0.01 level. n = 202. For the Australian sample (italics): correlations > are significant at the p < 0.05 level; and correlations > are significant at the p < 0.01 level. n =

10 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 Table 3 CFA and Reliability Analysis (UK/Australia) CFA (LISREL 8) Coefficient Alpha Factor Loading t Value Item Total Correlation Alpha Experiential Data (si) 0.84/ /17.99 na na Objective Data (si) 0.80/ /17.41 na na Local Market Knowledge 0.82/0.82 Know1 1.13/ / /0.55 Know4 1.08/ / /0.70 Know5 0.96/ / /0.74 Know6 1.06/ / /0.58 Market Commitment 0.73/0.79 Commit1 1.22/ / /0.59 Commit2 0.87/ / /0.70 Commit3 1.11/ / /0.58 Relationship Intensity 0.71/0.65 Coop 1.08/ / /0.49 Joint 0.89/ / /0.49 Trust 0.66/0.74 Trust1 0.97/ / /0.55 Trust2 0.94/ / /0.56 Trust3 1.08/ / /0.59 Relationship Commitment 0.86/0.87 Long1 1.29/ / /0.77 Long2 1.24/ / /0.78 Long3 1.10/ / /0.71 Business Performance 0.66/0.69 Sales 0.70/ / /0.17 Prof 0.16/ / /0.27 Strat 6.06/ / /0.29 Suc1 1.92/ / /0.38 Suc2 1.39/ / /0.33 Note: si = single item indicator 5. Results 5.1 UK Data The structural relationships were tested using LISREL8. Although the overall model produced a significant chi-square result (χ2 = (200), p < 0.00), the other main fit indices were within acceptable ranges (CFI = 0.93; TLI = 0.92; 270

11 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE RMSEA = 0.05). Table 4 shows that nine of the eleven hypothesized paths in the relational model are significant at the p < 0.05 level (t values > 1.96). Specifically, the paths to business performance from market commitment (H5) and relationship commitment (H11) are both significant and in the hypothesized direction. The path between trust and performance (H10) was not significant, but the path from trust to relationship commitment (H9) was significant and in the hypothesized direction. In terms of social learning, table 4 also provides support for the hypothesized positive paths between experiential learning and both market knowledge (H1) and objective data collection (H2). However, contrary to expectations, there was no significant path between objective data collection and market knowledge (H3). There was, however, a positive and significant link between market knowledge and market commitment (H4). The results also provide support for links between social learning and the distributor relationship, with the paths from experiential learning and market commitment, and relationship intensity (H2 and H7) being positive and significant as hypothesized. The path between relationship intensity and trust was also positive and significant (H8). 5.2 Australian Data For the Australian data, the overall model also produced significant chi-square result (χ2 = (200), p < 0.00), but again the other main fit indices were within acceptable ranges (CFI = 0.92; TLI = 0.90; RMSEA = 0.05). Table 6 shows that in this instance eight of the eleven hypothesized paths in the relational model are significant at the p < 0.05 level. Specifically, the path to business performance from market commitment (H5) was significant and in the hypothesized direction, however in this case the paths to business performance from both trust (H10) and relationship commitment (H11) were not significant. The remainder of the Australian results are the same in substance as the UK results, that is, the path between objective data collection and market knowledge (H3) was again not significant, while H1, H2, and H4 H9 were all positive and significant. 6. Discussion and Implications 6.1 Limitations Before discussing the implications of the research, its limitations should be recognised. First, although the sampling list used was considered the best available, it was not exhaustive and did not contain the full population of exporters in the UK. SME manufacturer exporters may operate differently (Carson 1990; Carson & Cromie 1990), compared with larger firms, services and other exporting countries, and this may restrict the generalisability of our results. Contact with export promotion agency (DTI) may have produced a sample biased towards more proactive firms and/or firms that rely on government assistance of some kind in order to succeed. The two samples may also have been biased by the screening procedure, through which only those firms whose details had been recently updated were included. These firms may be more active, involved exporters (Cavusgil 1984). 271

12 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 Table 4 Model Path Coefficients (UK/Australia) Path Estimate t Value Hypothesized Direction Result H1: Experiential Data Market Knowledge H2: Experiential Data Objective Data H3: Objective Data Market Knowledge H4: Market Knowledge Market Commitment H5: Market Commitment Performance H6: Experiential Data Relationship Intensity H7: Market Commitment Relationship Intensity H8: Relationship Intensity Trust H9: Trust Relationship Commitment H10: Trust Performance H11: Relationship Commitment Performance ns ns ns ns + + ns Second, there was no involvement of managers from distributor organizations to balance the exporters perceptions of the exporter/distributor relationship. The justification is that this study was concerned with the exporter s performance (e.g. profitability), and therefore the focus was on the activities, perceptions and attitudes of the exporting firm. Perceptions from both sides of the dyad would obviously strengthen our understanding of these relationships. Third, the measures in this study were a combination of new and existing scales. Analysis of the measurement model showed that these scales performed well in terms of validity and reliability. However, it is recognised that the survey instrument was administered at one point in time to a cross-sectional sample and therefore dynamics could not be fully captured. Longitudinal research is difficult to achieve and has not featured in relational research to date (Anderson 1995). This issue was addressed to some extent by focusing only on the first five years of each venture thereby allowing a sufficient interval for drivers to affect performance but not being so long as to distance them or the recollections of respondents. A related issue is that of antecedents and consequences. It seems likely that trust, commitment and business performance interact in both directions. Metaanalysis of trust models by Geyskens and Steenkamp (1998) indicated that trust was universally treated as an antecedent or a consequence but never both. Developing dynamic reciprocal relational models remains a challenge for the future. 272

13 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE Finally, there is the issue of omitted variables. The objective of this study was to test relational processes and explore the value of the relational paradigm in explaining export performance. This paper did not seek to develop an all-inclusive, holistic model. Nonetheless, it is recognised that the omission of relevant variables in the model may have led to a degree of bias in parameter estimates. Despite these limitations, the results provide strong support for the impact of relational variables on export performance. In particular, the important relational processes involved in experiential data collection, learning and relationship formation, termed here social information, have been highlighted. Interestingly, there was no support for the link between objective data collection and market knowledge as it was measured in this research. To some extent this is consistent with Madsen (1987; 1989) who found little support for a positive link between market research and export performance (although that hypothesis was not directly tested here). It appears that knowledge, in the initial stages at least, is primarily built using experiential data. The implications of this are discussed below. The data also supported previous findings on the impact of market commitment on performance, but with the inclusion of the social learning variables, a more in-depth understanding of how market commitment develops, and its impact on distributor relationships, has been provided. The study also provides evidence for a link between relationship commitment and export performance, although only in one of the datasets. The lack of support for this hypothesis in the Australian data set may reflect cultural differences, mostly probably on the distributor side. For example, it generally takes longer to build close relationships in the Eastern cultures (particularly for westerners) that dominated the Australian sample, compared with the European cultures that made up the majority of the UK sample (Ambler & Styles 2000). This is supported by separate analysis of those ventures that involved Asian distributors (n = 116) which yielded the same substantive results as the total Australian sample analysis. This may have been compounded by the fact that the Australian exporters were significantly less experienced in exporting and perhaps had not moved to greater commitment stages. However, both datasets supported the developmental approach to exporter/distributor relationships, again providing insight into the process by which such commitment develops. In doing so, this study confirms previous findings in the domestic channels literature that link intensity variables such as cooperation with the development of trust (relationship quality) and relationship commitment (Anderson & Narus 1990; Anderson & Weitz 1989). It supports the proposition, for which empirical evidence has been limited, that relational variables have a positive impact on performance (Morgan & Hunt 1994). 6.2 Managerial Implications The validation of the model confirms the importance of social learning as well as commitment both to the export market (venture) and to the distributor relationship. Few managers will make such commitments blindly they are progressive. The model structures the sequence in which those two forms of commitment develop. Managers have long known that relationships are important to business, especially transnational business. However, there is little guidance on relationship building within established international marketing textbooks (e.g. Cateora 1993; Czinkota & Ronkainen 1993; Terpstra & Sarathy 1991; Onkvisit & Shaw 1990; 273

14 AUSTRALIAN JOURNAL OF MANAGEMENT December 2000 Keegan & Green 1997) nor in the export research literature, Rosson and Ford (1982) apart. This study suggests that managers should monitor and measure relationship building using a staged model that covers formation (initial contact), development (intensity and trust), and commitment. Thus, the choice of export managers should be an early consideration and driven by the need to find personnel who not only possess analytical and general marketing skills but also relational competencies and an extensive personal network, or the ability to build one. Recognising that distributive relationships that are close, trusting and committed is a different perspective from seeing them simply as part of marketing strategy (i.e. merely fulfilling a distribution function) to be manipulated alongside other marketing mix variables. Attention should initially be to gathering market data experientially rather than relying solely on objective sources. Boisot (1995) and Nonaka and Takeuchi (1995) both see experiential information as the source of comparative advantage and wealth creation. They advise companies to hasten slowly with the codification process to objective information required as part of decision-making. This study does not go that far nor does it dismiss the importance of objective data. Rather, it has been shown that: (a) experiential information has not been distinguished from objective in the marketing literature; (b) it is important; and (c) its role seems especially strong at the initial stages. This goes some way to explain the pragmatic importance given by managers to market visits and trade shows during which managers meet and talk with retailers, wholesalers, potential distributors, advertising agencies etc. Experiential and objective data collection can be used in a complementary manner, with experiential research playing the central role. Exporters should prepare, but not over-prepare, for market visits by making use of published information (objective secondary data) relating to the country and industry, as well as distributor lists for pre-screening. The role of introducers, such as government overseas commercial staff, to begin the networking process may be valuable. The market visit itself should include a range of experiential data collection opportunities, most of which will be relational, for example, discussions with distributors and retailers. Following the visit, exporters can determine what additional information is needed and commission specific market research projects to test, for example, alternative products and advertising copy. Formal research at this stage can be more focused and used to clarify and quantify the experiential insights. Managers personal market experiences will help them interpret this research. Finally, government agencies who seek to encourage and support export efforts should focus on facilitating experiential knowledge gathering by providing assistance for market visits, introducing exporters to potential distributors and promoting trade shows. Further, given the focus on interaction and relationship development, training, advice and other assistance that helps exporters better to understand the local culture and customs, through personal experience, is a good use of export promotion resources. 274

15 Vol. 25, No. 3 Styles & Ambler: RELATIONAL VARIABLES ON EXPORT PERFORMANCE 6.3 Future Research First, domestic channel relationship research could be expanded to the international context. The key role that foreign distributors play in generating local knowledge would provide an avenue for theory development. Issues of attraction, cooperation, the effects of mutual dependence and conflict, and their link to business performance, could move us towards a more comprehensive relational understanding of export management. Second, more dyadic research from both export and import perspectives is needed. For example, future work could examine the drivers of distributors business performance as well as consider joint measures of performance which relate to both sides of the dyad. The relational paradigm implies that the combined venture should be considered rather than just the exporter s share of business performance and that culture is a mediating variable. Third, experiential information and social learning seem important aspects of export management. Topics such as effective and efficient market visits, how best to use business partners to gain access to key information, and techniques for structuring this form of data collection, all deserve attention. Further, investigations into the interaction effects of experiential and objective data collection may contribute to our understanding of how best to use formal market research methods and secondary data sources. Fourth, longitudinal research is needed which positions relational variables, such as trust and commitment, both as antecedents and consequences. In particular, tracking exporter/distributor relationship development over time would help determine causality. An alternative approach, described by Anderson (1995) as cross-sectional research which is longitudinal in character, may be a practical alternative. This involves identifying critical indicators of each stage of a relationship and collecting data from a set of buyer-seller relationships at each such point in time. These critical indicators may provide the basis for separation into relationships at similar development stages. Finally, exporter/distributor relationships are only one type of relationship found in international marketing. The study of the strategic alliances, which are increasingly being formed across borders, would also benefit from relational research. Examining these relationships would widen the scope of research from exporting to all modes of foreign market entry. (Date of receipt of final transcript: August, Accepted by Mark Uncles, Area Editor) References Aaby, N. & Slater, S.F. 1989, Management influences on export performance: A review of the empirical literature , International Marketing Review, vol. 6, no.4, pp Ambler, T. & Styles, C. 2000, The SILK Road to International Marketing: PASSION and Profit in International Business, Financial Times/Prentice-Hall, London. Amine, L.S. & Cavusgil, S.T. 1986, Export marketing strategies in the British clothing industry, European Journal of Marketing, vol. 20, no. 7, pp

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