The moderating role of cultural similarity in developing commitment in the industrial importer-supplier relationship

Abstract

Purpose This study aims to examine whether and how cultural (dis) similarity between business entities enhances or impairs the development of commitment in the trust building process in industrial importer-foreign supplier relationships. Design/methodology/approach Drawing on theoretical lenses of transaction cost economics, resource-based view and dynamic capability view, this study investigates how cultural (dis)similarity moderates the effects of opportunism, transaction-specific investment (TSI), the relative advantage of importing and communication on commitment, leading to building trust in business relationships. Using structural equation modeling and moderated regression analysis, the study tested several predicted effects using a sample of 154 industrial importers drawn from a developing country in Asia. Findings A key finding of the study suggests that supplier opportunism comes into play and is negatively associated with industrial importer commitment as cultural dissimilarity increases. For culturally similar countries, opportunism does not affect commitment. Conversely, TSI has a positive effect on commitment for culturally similar countries; for dissimilar countries, TSI has no effect. The study also corroborates several additional hypotheses prevalent in the literature. Research limitations/implications Cross-sectional data rather than longitudinal data, single country rather than multi-country perspectives and data from the importer’s side rather than from both importer and exporter may affect generalizability. Future research ought to address these issues to provide further insights. Originality/value The paper enriches the literature and extends the nomological network for international business theory by introducing the moderating effect of business cultural similarity in building commitment. Managerial perspectives are also gleaned from the findings.