International Marketing

1. International Marketing

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

3. 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

4. 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)

5. 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)

6. 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)

7. 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”

8. 1. Role of culture on trust

9. 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)

10. “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

11. 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)

12. 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)

13. 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)

14. 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

15. As a conclusion… Calculative trust is a… …Contradictioninterms Williamson 1993

16. 2. International Relationship Marketing and its successful components

17. 2.1. Commitment • “An intention to continue a course of action or activity” (Hocutt, 1998) • Influenced by social bonding

18. 2.2. Experience / Satisfaction • Decision to continue  satisfaction increases • Good experience

19. 2.3. Customer Orientation & Empathy • Sellers emphasis buyers • Liking • Important in the development of close interpersonal and business relationship (Friedman et al., 1988; Moorman et al., 1992)

20. 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

21. 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]

22. 3. Role of culture on trust in relationship marketing(Ali, Haider and Sue Birley, 1998)

23. Enthusiasm • Share value Trust Customer Marketer • institutional based trust • characteristic based trust • process based trust

24. 4. Importance of culture on trust in relationship marketing

25. 3.1. Loyalty • Increases while trust increases • US suppliers still lost customers to competitors with being particular automakers for over 50 years

26. 3.2. Economic Trust • Calculative trust • E.g. supplier stock

27. 3.3. Good Image & History Development • Social memory – e.g. Ford, Coca-Cola • Serial equity

28. 3.4. Intensity of Relationship • Between buyers & sellers trust increase • Face-to-face interactions

29. 3.5. Long Term Relationship • Find the correct ones, cooperate and become business partners • E.g. Nike & Michael Jordan

30. 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

31. 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

33. 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

34. 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

35. 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

36. Case study: Hong Kong Disney

37. Hong Kong Disney Web-site

38. Case study: Paris Disney

39. Paris Disney Web-site

40. 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

41. Conclusions • Trust has a very complex building process • Trust, one of the key element of a successful relationship • Trust and international relationship marketing

42. 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

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

44. Web-site References: • Believe in Your Team: [http://www.classifiedpost.com/jsarticle.php?lcid=HK.EN&arttype=CADV&artsection=CAREER] • The Role of Trust in the Marketing Activities of Entrepreneurs Establishing 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=uk] • Paris Disney: [http://www.disneylandparis.com/uk/introduction.htm?c=uk&l=uk] • Bourdieu, ‘Habitus’, and Educational Research: is it all worth the 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‘]

45. Photo References: • Ford Car [http://hk.wrs.yahoo.com/_ylt=AknLi7fxvT4l8DrDfXrH9MW.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]