Examining institutional effects on B2B relationships through the lens of transitioning economies

Abstract

Our study addresses the limited attention paid to the role of indigenous institutional environments in framing the legitimate forms of governance used to shape buyer-supplier exchanges. Drawing on institutional theory and marketing channel literature, the study suggests that the emphasis in buyer-supplier exchanges on communication modalities and norms has much to do with the effectiveness of legal systems in a buyer's country. Three contexts for legitimacy are conceptualized from an examination of exchanges in developed economies with strong formal institutions and transitioning economies with underdeveloped institutions. Using surveys of US buyers to represent strong formal institutional environments, we conclude that buyers heavily influenced by regulative enforcement place a relatively greater emphasis on formal information sharing in their partnership efforts to build trust and enhance supplier performance. From surveys of buyers in India and China, we conclude that buyers place a relatively greater emphasis on informal information sharing when their legitimacy derives from the endogenously enforced moral codes of their private networks. Finally, surveys administered in Brazil and Russia revealed that buyers in environments pressured by the familial loyalty practices of their private networks place a relatively greater emphasis on the norm of solidarity to build trust in their suppliers.