Managing differences, interaction, and partnership quality in global inter-firm relationships

Abstract

Purpose The purpose of this paper is to develop and to empirically test a model that explains how managing differences between an information technology (IT) provider and an overseas client influences partnership quality and ultimately affects the continuity of the relationship. Design/methodology/approach A field survey by distributing questionnaires to Indonesian IT providers was conducted over four months, yielding 78 completed responses. These empirical data were analyzed by the partial least squares–structural equation modeling technique to examine the measurement and structural models. Findings Managing differences, i.e. cultural, temporal and standards differences, has a positive impact on partnership quality through inter-firm interaction, i.e. information exchange, coordination and participation. Partnership quality, consisting of the dimensions of commitment, trust and integration, has a substantial positive impact on the continuity of the relationship. Research limitations/implications This study was limited by the use of a limited number of samples, reducing the precision of the results. Practical implications This study suggests that if the IT provider is able to manage the cultural, temporal and standards differences with the overseas client, it increases information exchange, coordination and participation between both parties, which are necessary for establishing a high-quality partnership. Originality/value This study is the first empirical examination of how the management of differences between an IT provider and an overseas client influences the continuity of their relationship through interaction and partnership quality.