International Marketing. Culture, trust and international relationship marketing Evaluation of the role of culture on trust and importance in international.

International Marketing

Culture, trust and international relationship

marketing

Evaluation of the role of culture on trust and importance in international

relationship marketing

After this you will be able to…..

Understand the meanings, roles and functions of culture and trust

What is international relationship marketing

The importance of culture on trust in international relationship marketing

Introduction

The globalisation process is creating an international business environment

Thus, companies have to develop partnerships through an International Relationship Marketing (IRM)

“The concept of trust has gained increased importance in the study of interorganisational relationships” (Ring & Van de Ven 1994)

What is culture? This is a notion vague and abstract. It exists lots of

definitions for culture

The most known: “Culture is a collective programming of the mind which distinguishes the members of one human group from another … culture in this sense, includes systems of values; and values are among the building blocks of culture” (Hofstede 1980)

“A system of values and norms that are shared among a group of people and that when taken together constitute a design for living” (Doney 1998)

“Culture affects people and the way they live their lives; in many respects it dictates how they live their lives and it influence many day-to-day decisions that people make” (Conway 1998)

What is trust? Defining trust is not easy. Each trustor will

emphasize on different beliefs to define trust

Economists definition: “expectation that an exchange partner will not engage in opportunistic behaviour, despite short-term incentives and uncertainty about long-term rewards” (Bradach & Eccles 1989)

Psychologists definition: “actions and behaviours that do not promote individual interests over the interests of the group accompanied by a positive attitude about the social behaviours of others” (Strong and Weber 1998)

Sociologists definition: “one party’s ability to rely on another’s word or promise, stressing the need for consistency” (Rotter 1971)

What is Relationship Marketing? Organizations gathering information about customers

Allow buyers & sellers to look together in problem solving, easing the pressures on buyers

Morgan and Hunt (1994, p. 22) produce the following definition: “Relationship marketing refers to all marketing activities directed toward establishing, developing and maintaining successful relational exchange”

1. Role of culture on trust

1.1. Culture as driver of trust

Trust is a concept with many meanings, but most concepts of trust share 3 common elements: Degree of interdependence between trustor and trustee Trust provide a way to cope with risk or uncertainty in

exchange relationship The vulnerability resulting from the acceptance of risk

will not be taken advantage of by the other party in the relationship

Recap: Culture is “a system of values and norms that are shared among a group of people and that when taken together constitute a design for living” (Doney 1998)

“Trust cannot develop unless individual share common values” (Talcott Parsons 1951)

“Trust comes out of shared values” (Fukuyama 1995)

“Trust depends on the social norms and values that guide people behaviour and beliefs” (Hofstede 1980)

In 1983, Hofstede defined that there are 5 dimensions in order to interpret the world:

Power distance Uncertainty avoidance Individualism/Collectivism Gender identity Time perspective

He argued that all these dimensions have impacts on trust attitude

According to him, we have the following hypotheses: Hypothesis 1: Managers from small power distance

cultures will have higher levels of self-interest than managers from large power distance cultures who will promote group interest Example: “in France (large power distance country),

government attempted to create more democratic work environments. However, it failed because workers believed that they would give superiors a means of avoiding responsibility to the group” (Wilson 1991)

Hypothesis 2: Manager from individualist cultures will have higher levels of self-interest than manager from collectivist cultures Example: “in an collectivist culture, a personal manager will be

more likely to hire candidates based on their perceived trust worthiness rather than on their technical qualification” (Adler & Jelinek 1986)

1.2. Rational development of trust

In 1998, Strong and Weber worked on Hofstede assumptions, only by considering individualism and power distance

The result of their study was that there were not significant differences among the 4 culture groups they choose:

small power distance with high individualism, small power distance with low individualism, large power distance with high individualism, large power distance with low individualism.

Thus, they rejected Hofstede hypotheses “The power distance dimension can not be applied

because for international transactions, relations might be from equal to equal” moreover, trust development “depends on the amount of the transactions” (Strong & Weber 1998)

Some people argue that trust is based on a calculative and rational process

“Trusting involves expectations about another, based on calculations which weight the cost and benefits of certain course of action to either the trustor or the trustee” (Axelrod 1984, Coleman 1990, Dasgupta 1988)

“An element of calculation may be present in most trusting behaviour” (Kramer, Brewer & Hanna 1996)

For example, “in Asian Business Systems, it is obviously very important to avoid behaviour which might be interpreted as a sign of distrust” (Sako 1992)

1.3. Both rational and cultural developments of trust

According to Lane (1998) trust can not be based, neither only on common values and norms, nor only on a calculative process

Example: “People from different cultural backgrounds or between individuals who share no values beyond their narrow business goals can built trust” (Lane 1998)

The development of trust induces 2 considerations: rational and cultural

Example: When a French company enters into a partnership with a Moroccan company, there will be 2 different ways to develop trust:

Cultural: because of their common history and culture, French and Moroccan have common values and norms which govern the business environment

Rational: because of the Moroccan susceptibility, French have to be careful about what they are saying to their suppliers/clients…. Indeed, a sign of distrust can conduce to the partnership’s breach

As a conclusion…

Calculative trust is a…

…Contradiction in terms

Williamson 1993

2. International Relationship Marketing and its successful

components

2.1. Commitment

“An intention to continue a course of action or activity” (Hocutt, 1998)

Influenced by social bonding

2.2. Experience / Satisfaction

Decision to continue satisfaction increases

Good experience

Sellers emphasis buyers

Liking Important in the development of close interpersonal

and business relationship (Friedman et al., 1988; Moorman et al., 1992)

2.3. Customer Orientation & Empathy

2.4. Communication

“Process of establishing a commonness or oneness of thought between a sender and a receiver” (Schramm, 1954, p. 3)

Feedback is important

2.5. Trust

Virtual factor of successful relationship

Dealing with employees, clients, partners…etc

Can run profitably

Higher degree of trust better result of company [Kerry Larkan, Value Your Workforce]

3. Role of culture on trust in relationship marketing (Ali, Haider an

d Sue Birley, 1998)

Enthusiasm

Share value

TrustCustomer Marketer

institutional based trust characteristic based trust process based trust

4. Importance of culture on trust in relationship marketing

3.1. Loyalty

Increases while trust increases

US suppliers still lost customers to competitors with being particular automakers for over 50 years

3.2. Economic Trust

Calculative trust

E.g. supplier stock

3.3. Good Image & History Development

Social memory – e.g. Ford, Coca-Cola

Serial equity

3.4. Intensity of Relationship

Between buyers & sellers trust increase

Face-to-face interactions

3.5. Long Term Relationship

Find the correct ones, cooperate and become business partners

E.g. Nike & Michael Jordan

3.6. Reduce Paradox Psychic Distance

“Applicable for different culture, language, level of economic development” (Vahlne and Wiedersheim-Paul 1973)

“A degree of uncertainty about a foreign market for a company” (Kogut and Singh 1988)

Companies start internationalization process

Important variable in understanding the dynamics of the internationalization process

Fail, due to: the unexpected differences Similarity Proximity Success size and certainty

paying not enough attention

e.g. USA and Canada are in different business pattern, HK and China as well

3.7. Bourdieu Habitus Structural code of the culture is inscribed as the “habitus”

and generates the production of social practice

Principles which structuring the culture

“Habitus as a method for achievement”

2 types: specific habitus general habitus

3.8. Gift Exchange

Increases while trust increases

Different cultures in different styles: Arab business offer tea as an important ritual of

establishing friendship & trust Chinese negotiations include banquets

Case study: Toyota

Japanese automakers develop trusting relationships with US suppliers as offering assistance (1996)

US suppliers received more assistance from Japanese automakers than required

US suppliers were surprised as the Japanese automakers willingness

Case study: Hong Kong Disney

Hong Kong Disney Web-site

Case study: Paris Disney

Paris Disney Web-site

Case study results:

Due to the cultural differences between Asia & Europe,

style pattern design, color welcome tone

are respectively different, so as the different business running and international marketing

relationship patterns

Conclusions

Trust has a very complex building process

Trust, one of the key element of a successful relationship

Trust and international relationship marketing

References

Articles References:

Paradox Psychic Distance, (1999),

Doney, P. M., Cannon, J. P. & Mullen, M. R. (1998), Understanding the influence of national culture on the development of trust. Academy of Management Review, 23 No.3: 601-620.

Conway, T. & Swift, J. S. (2000), International relationship marketing. the importance of psychic distance. European Journal of Marketing, 34 No.11/12: 1391-1413

Kelly Strong, James Weber (Jun 1998), The myth of trusting culture, Business and Society; 37, 2; ABI/INFORM Global, pg. 157

Books References: P. Christopher Earley and Harbir Singh, (2000) Innovations in Int

ernational and Cross-cultural Management

Jean-Claude Usunier, (1998) International & Cross-Cultural Management Research

McGraw Hill, (2005) International Marketing

Jeannet / Hennessey, (2004) Cases in Global marketing Strategies

Lane and Bachmann (1998), Trust within and between organisations, Oxford University Press

Web-site References: Believe in Your Team: [http://www.classifiedpost.com/jsarticle.ph

p?lcid=HK.EN&arttype=CADV&artsection=CAREER] The Role of Trust in the Marketing Activities of Entrepreneurs Estab

lishing New Ventu [https://dspace.lib.cranfield.ac.uk/retrieve/1293/SWP1298.pdf] OR

[http://scholar.google.com/scholar?hl=en&lr=&q=cache:lXZKN7kYRf4J:https://dspace.lib.cranfield.ac.uk/retrieve/1293/SWP1298.pdf+]

Hong Kong Disney: [http://www.disneylandparis.com/uk/introduction.htm?c=uk&l=u

k] Paris Disney: [http://www.disneylandparis.com/uk/introduction.ht

m?c=uk&l=uk] Bourdieu, ‘Habitus’, and Educational Research: is it all worth th

e candle? [British Journal of Sociolog y of Education, Vol. 20, No. 2 1999] [http://www.paulofreireinstitute.org/Documents/Habitus-educational_implication.pdf#search='is%20it%20all%20worth%20the%20candle‘]

Photo References: Ford Car [http://hk.wrs.yahoo.com/_ylt=AknLi7fxvT4l8DrDfXrH

9MW.ygt./SIG=11ro2c738/**http%3a//files.psycco.de/1967_Ford_Mustang_Shelby_GT-500]

Coca-cola [http://www.scanraptor.com/cabernet/ccolaads8/pages/p-Coca_Cola_195.htm]

Disney [http://www.mrshmedia.com/bella/tnews/0905/hkdisney-mickeycastle.jpg] [http://mch3w.ch.man.ac.uk/theory/staff/student/mbdtszt/images/france_disney2.jpg] [http://www.alfatour.ru/contents/cities/photos/France_Disney_6.jpg]

[http://www.mrshmedia.com/bella/tnews/0905/hkdisney-castle.jpg]