چگونگی تاثیر گذاری کیفیت رابطه خریدار_فروشنده بر انطباق و نوآوری شعبات خارجی شرکت های چند ملیتی

Based on embeddedness theory and transaction cost theory, this study explores the influences of innovation and adaptation, which benefit from relationship quality between the subsidiaries of foreign MNC and their local suppliers, on the corporate performance of foreign subsidiaries. In order to examine the hypothetic relationships, 104 subsidiaries of foreign MNCs operating in Taiwan were surveyed. The results indicate that the relationship quality, including social capital, information exchange, and frequency of contact, have positive impacts on innovation and adaptation. Additionally, innovation and adaptation function as the mediating mechanism delivering the beneficial influences of relationship quality to the foreign subsidiary's performance. These results imply that the foreign subsidiaries not only devote their resources to innovation for their own interest, but also adjust themselves and invest in the relationships with local suppliers.

The relationship between buyer and supplier received increasing awareness and attentions from academicians and practitioners (Björkman and Kock, 1995, Cannon and Perreault, 1999 and Fynes and Voss, 2002). This importance of business relationship lies in its functions of exchanging knowledge and resources, and developing further activities (Harris & Wheeler, 2005). Managers and researchers deem this relationship as the greatest resource for developing sustainable competitive advantage for both buyers and sellers (Claycomb & Frankwick, 2010). While buyers can reduce transaction costs associated with multiple service ordering, sellers can develop loyalty from their customers whose loyalty is challenged by competing brands (Palmer & Bejou, 1994). It is particularly important that buyers have close relationships with their suppliers to stay ahead of competition (Parsons, 2002). For example, the leading edge of Toyota in the automotive industry and the survival of Chrysler are achieved by investing in the establishment of a network of supplier partnerships (Ploetner & Ehret, 2006). Accordingly, the establishment, development, and maintenance of relationships between buyer and seller are crucial to achieving success (Morgan & Hunt, 1994). Within the business-relationship research stream, the term “relationship quality” is used to describe business relationships (Ulaga & Eggert, 2006). Relationship quality, deemed as a critical aspect in maintaining and evaluating business relationship (Nguyen & Nguyen, 2010), represents an overall assessment of the nature of business relationship (Skarmeas and Robson, 2008 and Woo and Ennew, 2004). If the relationship is characterized by high relationship quality, it is recognized as a stable and healthy one (Lai, Bao, & Li, 2008). In terms of the elements of business relationship quality, some studies stated that the social capital (Björkman and Kock, 1995 and Harris and Wheeler, 2005), information exchange (Björkman and Kock, 1995 and Cannon and Perreault, 1999), and frequency of contact (Cannon and Perreault, 1999, Harris and Wheeler, 2005 and Holm and Eriksson, 2000) were critical antecedents to form linkages and would influence the development of the focal relationship. Two significant theories particularly underline the beneficial consequences of relationship quality as to buyer-seller relationship. Building on embeddedness theory, Uzzi and Gillespie (2002) found that the one actor could gain the competencies and resources through embedded relationship with another actor, and use these resources to enhance transactions with a third actor. Based on Uzzi and Gillespie (2002), buyers can operate better in the market by means of the business relationship quality which they develop with their sellers, in that the relationship can be regarded as a conduit through which information benefits or resources flow (Borgatti and Foster, 2003 and Uzzi and Gillespie, 2002). Thus, the buyer-seller relationship with good quality aids innovation (Harris & Wheeler, 2005) due to information benefits (Lewis, 2003). In practice, the embedded and close interactions between buyer and seller lead to innovations of better quality (Athaide & Klink, 2009). Many benefits accruing to buyer and seller encourage their willingness to maintain the long-term relationship (Holm & Eriksson, 2000). This process can also be viewed as the so-called adaptation, which occurs when suppliers adapt to the need of specific important customers and customers adapt to the capabilities of specific suppliers (Hallén, Johanson, & Nazeem, 1991). Buyers incline to invest in the relationship with specific supplier in that their switches to new alternates will cause higher transaction cost (Mudambi & Mudambi, 1995). Accordingly, transaction cost theory's notion of asset specificity, which refers to investments that are idiosyncratic to a focal relationship, is related closely to the concept of adaptations (Athaide and Klink, 2009 and Cannon and Perreault, 1999). Adaptation processes include relationship-specific investments in areas such as technology, logistics, administration, financing, and knowledge (Claycomb & Frankwick, 2010). Buyers decide to continue investing in a relationship due to favorable evaluation of relationship performance (Palmer & Bejou, 1994). Once the relationship is terminated, the values from the relationship are lost (Ploetner & Ehret, 2006). Thus, transaction cost theory can explain why the business relationship quality is a driver of adaptation. The embeddedness theory is consistent with the transaction cost theory in some respects. The former focuses on the benefits stemming from embedded ties, whereas the latter regards these benefits as the driver of exchange behavior (Borgatti & Foster, 2003). The embeddedness theory contends that the arm's-length relationship is characterized by opportunistic actions (Uzzi & Gillespie, 2002), with which adaptation cannot be realized (Williamson, 1991). Additionally, the information and resources exchanged in the arm's-length relationship are in the form of general assets and publicly accessible (Uzzi & Gillespie, 2002), which are nothing to enhancement of innovation. The levels and influences of relationship quality may depend on the nature of the organizations involved and the nature of the situation (Parsons, 2002). In order to empirically examine the important role of relationship quality as to buyer-seller relationship, this study confines the research scope to the international context. Specifically, this study concentrates on the buyer-seller relationships between foreign subsidiaries (buyer) and local suppliers (seller) and investigates the roles of relationship qualities on buyers’ successes. The conditions of multinational companies (MNCs) can particularly underline the importance of buyer-seller relationship. When operating in foreign markets, MNCs will face different conditions from those in home country. Eriksson and Chetty (2003) argued that learning about unfamiliar markets occurred through collaboration with other firms who have this knowledge. Since foreign subsidiaries are not familiar with the local environment so well, they can learn about the local context by means of collaboration with other local firms. In addition, Pagano (2009) argued that MNCs’ unit performance was influenced by the behavior of suppliers. Lewis (2003) consented that frequent contacts with suppliers would constitute strategic resources. Accordingly, the relationship between foreign subsidiaries and local suppliers may be critical to successes of the former. In sum, this study focuses on the business relationships between foreign subsidiary (buyer) of MNC and its local suppliers (seller). The objective of this study is to explore the essential role played by relationship quality in the business relationship between foreign subsidiary and its local suppliers. Specifically, this study attempts to examine influences of elements of relationship quality on foreign subsidiary's innovation and adaptation, and thus its performance. Based on the embeddedness theory and transaction cost theory, this study proposes that the business relationship quality, composed of social capital, information exchange, and frequency of contact, will have positive impacts on foreign subsidiaries’ innovation, adaptation, and corporate performance. Besides, the mediated roles of innovation and adaptation between relationship quality and corporate performance of buyer are taken into consideration. Nevertheless, culture has a strong influence on how relationship quality is evaluated and perceived in business market (De Búrca, Fynes, & Roche, 2004). Therefore, it is difficult to develop a generalized model across the world to evaluate the impacts of relationship quality on innovation, adaptation, and performance. In order to eliminate the cultural effect, this study confines the research scope to foreign subsidiaries in Taiwan. Business relationships are particularly important as conducting business in Asia counties, especially in Chinese market (Kwon, 2010). This study can provide unique and deeper insights on this specific context. These focuses of this study attempt to link the literature gap to make some contributions. First, understanding of the foreign subsidiary's relationship quality with local suppliers can highlight the importance of business relationship in the context of MNC and offer some ways to enhance business relationship. This issue in relation to business relationship for MNC is seldom investigated by previous studies except for Anderson and Forsgren (2000) and de L. Veludo, Macbeth, and Purchase (2004). Accordingly, the role of relationship quality is vague in the context of MNC. Second, although some researchers focused on the business relationship quality in the international market (e.g., exporter and foreign importer), their emphases placed on seller's perspective (e.g., Chang, 2005, Nguyen and Nguyen, 2010 and Ural, 2009). Specifically, these researchers argued that a seller should create relationship quality in the buyer-seller relationship. Nevertheless, the theory of supply chain management and network approach indicate that the buyer should attend to its relationship with supplier (Ghauri et al., 2008 and de L. Veludo et al., 2004). Accordingly, this study discusses the role of relationship quality from buyer's perspective. Third, the findings of this study can provide several implications for theories of supply chain management and MNC management. Our arguments add an important nuance to the acclaimed benefits of relationship quality for MNC foreign subsidiary and to approaches to managing business relationship.

5.1. Conclusions Holm and Eriksson (2000) argued that the supplier's bridgehead relationship with foreign customer could function as the gangplank to entry foreign market. Likewise, the foreign subsidiary's relationship with local supplier could serve as navigator to adapt better to local market, which was proved by this study. Thus, use of relationship quality to maintain and evaluate business relationships has emerged as a top priority for most firms (Nguyen & Nguyen, 2010). Based on embeddedness theory, information benefits will be drawn from the buyer-seller relationship which contains higher degrees of social capital, information exchange, and frequency of contact. These benefits will not only lead to innovations but also further encourage both buyer and seller to maintain the long-term relationship, in that switching to new suppliers will incur high transaction cost. In terms of the influences of social capital on innovation and adaptation, the results showed that a higher level of social capital between a foreign subsidiary and local supplier would facilitate a higher degree of innovation and adaptation for the foreign subsidiary. However, the consequences of elements of social capita are different. While trust can lead to both innovation and adaptation, commitment only reigns over the extent of adaptation. Our finding in relation to the effect of trust is commensurate with Hadjikhani et al.'s (2008) argument that trust is characterized by the nature of asset specificity. The meaning of asset specificity for trust lies in its effects on innovation and adaptation. On one hand, specific asset, meeting with the criteria of resources (Barney, 1991 and Cobms and Ketchen, 1999), can further favor innovating in that resource-based view represents an innovation (Peng, 2001). On the other hand, asset specificity constraints the firm's strategic option based on transaction cost theory (Conner, 1991) and thus encourages specific inter-firm cooperation (Cobms & Ketchen, 1999). Among others, the influence of trust on innovation is larger than that on adaptation. Henke and Zhang (2010) deemed that trust could subsequently foster supplier innovation transfer. Accordingly, trust existing in buyer-seller relationship plays a critical role in foreign subsidiary's innovation. In Taiwan and Chinese context, people tend to distrust toward strangers (Kwon, 2010). Thus, foreign subsidiaries entering Taiwan market should strive for establishing local supplier's trust toward them. Henke and Zhang (2010) also indicated that trust must originate with the customer. Commitment has the most powerful impact on adaptation among elements of relationship quality. Therefore, behavioral adaptation cannot occur without high commitment. Foreign subsidiary should implement some courses of action to reinforce seller's perception of its commitment to the relationship (Henke & Zhang, 2010). However, subsidiary's commitment to the business relationship in this study is not associated with its innovation, which is inconsistent with Bidault and Castello's (2010) suggestion that joint innovation benefited from a committed environment. The rationale may lie in the controversial association between commitment and trust. Trust may be the antecedent or outcome of commitment (Hadjikhani et al., 2008). While some studies found that trust had positive effect on commitment (e.g., Lai et al., 2008 and Walter and Ritter, 2003), Rampersad et al. (2010) argued that trust mediated the influence of commitment on coordination and harmony in innovative network. Thus, commitment is insignificantly related to innovation with regarding the impact of trust. Although our findings suggest the significant association between trust and commitment, it is not sufficient to support this argument in relation to the mediating role of trust acting in the relationship between commitment and innovation. In sum, except social capital within an organization (Carmona-Lavado, Cuevas-Rodríguez, & Cabello-Medina, 2010), inter-firm social capital plays a critical role in innovation. Additionally, the result also supported that the foreign subsidiary acts the role of broker to span the structure hole. The foreign subsidiary can obtain the information and resources from the local supplier and the MNC network. This implication is in accord with the propositions of MNC studies by Almeida and Phene (2004) and Persaud (2005), which the innovation capability is to accumulate and deploy external knowledge embedded in the local country to recombine internal knowledge embedded in MNC network to create new innovations. While Coote, Forrest, and Tam (2003) proposed the importance of trust and commitment in non-Western industrial marketing context, we further indicate their benefits and find that trust and commitment toward partners can facilitate the process of adaptation. This result reveals that a well-perceived buyer-seller relationship quality, characterized by trust and commitment, can make the buyer firms content with the exchange relationship and make them more willing to invest in the relationship. The advantageous influences of social capital on innovation and adaptation imply that foreign subsidiaries should create and accumulate the social capital embedded in the relationships with their suppliers. The result is valuable for literature in that rare research explored the role of social capital with respect to MNCs except for Kostova and Roth (2003). Nevertheless, Kostova and Roth (2003) focused on the social capital “within” the MNC exclusive of the external relationships with suppliers. As a result, the social capital embedded in the relationships between foreign subsidiaries and suppliers can provide an interesting perspective. According to Cannon and Perreault (1999), the second element of the relationship quality is the information exchange. The results of this study support the positive influences of information exchange on the innovation rather than adaptation. According to the resource-based view (Barney, 1991), the useful information is regarded as the valuable resource for both buyer and seller. Jantunen (2005) indicated that the useful information favors creating knowledge-based assets and further executing innovative activities. Therefore, the information exchange occurring between the foreign subsidiaries and suppliers is beneficial to the innovation of the former. However, information exchange has zero influence on adaptation for both parties. There is little evidence to confirm the relationship between information exchange and adaptation. Although Ural (2009) suggested that buyer may more easily predict seller's future plans and thus adapt its own strategy to lower cost by sharing valuable information, it is believed these fine-grained information cannot be exchanged in arm's length's ties (Uzzi, 1997). Henke and Zhang (2010) argued that information exchange could create trusting environment for both buyer and seller. Accordingly, the effect of information exchange on adaptation may be indirect. Sharing information is the tool for building trusting relationship. Given the trusting relationship, both parties can exchange fine-grained information which further helps adapt themselves to counterparts without fear of opportunistic behaviors. Frequent contacts with local supplier enable the foreign subsidiary to create innovation and invest in buyer-seller relationship. For foreign subsidiaries, the knowledge related to the local market can be learned either from practical experiences in the local market or from their local suppliers with the close contacts (Eriksson & Chetty, 2003). Lewis (2003) found that the firm could accumulate strategic competences by means of frequent contacts with the supplier. Through frequent interaction, both parties gradually develop knowledge about one another's needs and capabilities (Holm & Eriksson, 2000), leading to higher levels of adaptation. The relationship between frequency of contact and adaptation reflects an aspect of Chinese culture, that is, renqin, which means a resource that one party can present to the other as a gift in the course of social exchange (Hwang, 1987). Frequent interaction aids renqin accumulating (Ramasamy et al., 2006). Although favor done for counterpart is short-term sacrifice, it is deemed as social investment (Fang, 2001), which is akin to the concept of adaptation. Accordingly, foreign subsidiaries entering Taiwan market should enhance the frequency of contact to increase the extent of adaptation. Then local supplier will return favor for favor. The results also supported the positive impacts of innovation and adaptation on foreign subsidiaries’ performance, which is consistent with Hallén et al. (1991). This implies that the foreign subsidiaries not only devote their resources to innovation for their own interest, but also adjust themselves and invest in the relationships with sellers. Both buyers and sellers should be aware that collaborative network is an inevitable trend. Finally, the mediated roles of innovation and adaptation act in the relationship quality and performance are confirmed. Ural (2009) indicated that few studies investigated the relationship quality-performance association in the international context. Our finding examines this relationship and stresses the benefits of relationship quality. de L. Veludo et al. (2004) stated that business relationship was essential to corporate competitiveness. Nevertheless, subsidiaries should deploy resources to invest in innovation and adaptation. Then, the benefits of relationship quality can be transferred to performance. Our arguments offer some nuances to the existing knowledge. First, most studies, which focused on the business relationship quality in the international market, adopted seller's perspective (e.g., Chang, 2005, Nguyen and Nguyen, 2010 and Ural, 2009) except Skarmeas and Robson (2008). In other words, previous studies mostly encouraged that seller should develop high-quality business relationship with its foreign customers. However, the buyer's view cannot be neglected in that the development and maintenance of relationship need both parties’ cooperation (de L. Veludo et al., 2004). Although Skarmeas and Robson (2008) focused on importer's (i.e., buyer) standpoint in the international business relationship, they examined the determinants of relationship quality rather than its outcomes. Accordingly, this study explores the benefits of high-quality relationship with sellers from buyer's perspective to support the concept of supply chain management. Our argument corresponds to Henke and Zhang's (2010) implication that the element of relationship quality should originate from the buyer. Second, based on embeddedness theory and transaction cost theory, this study confirmed the acclaimed benefits of relationship quality on innovation and adaptation for a foreign subsidiary. The embeddedness theory claims that a firm should sacrifice rational goal of winning immediate gain to cultivate long-term cooperative ties (Uzzi, 1997). Although the sacrifice and cultivation entail cost, they can further lower transaction cost in the future. Our arguments support the application of embeddedness theory and transaction cost theory to buyer-seller relationship in the international market. Third, in terms of the research in relation to relationship quality, there is no consensus regarding its constituents (Skarmeas & Robson, 2008). Trust and commitment are widely accepted as the elements of relationship quality (Nguyen & Nguyen, 2010). They are also critical dimensions of social capital (Nahapiet & Ghoshal, 1998). Thus, this study employs social capital, which is new element of relationship quality, to embrace trust and commitment. Social capital denotes the embeddedness relationship (Uzzi, 1997) which captures comprehensive interfirm relationship quality. Advantageous influences of social capital embedded in external partnerships for foreign subsidiaries were seldom discussed in the literature. Although Kostova and Roth (2003) investigated the role of social capital embedded in the networks of MNCs, they focused on the social capital “within” the MNC exclusive of the external relationships with suppliers. Our argument offers a nuance to the existing knowledge of social capital and relationship quality. 5.2. Managerial Implications This study concentrated on the business relationships between foreign subsidiaries and local suppliers. Since foreign subsidiaries are not familiar with the local environment so well, the relationship with local suppliers can aid acclimatizing (Kwon, 2010). Hence, focusing on the relationships between foreign subsidiaries and local suppliers is likely to underline the importance of buyer-seller relationship. This focus is in accord with de L. Veludo et al.'s (2004) suggestion that it is necessary to understand the partnership and collaboration in national contexts as speaking to the buyer-seller relationship. The findings can provide the some implications for MNCs as expanding their businesses to other countries. Many firms rely on and maintain closer relationship with local suppliers (Cannon & Perreault, 1999). Business relationship with suppliers significantly affects the strengths of foreign subsidiaries (Kwon, 2010). This study indicates the benefits stemming from business relationship include innovation, adaptation, and performance. However, suppliers may be loath to transfer knowledge to enhance the subsidiary's innovation or adapt to meet its need. We found that relationship quality is a good device to reduce supplier's fear of being vulnerability and of taking reciprocal actions. Furthermore, relationship quality should originate with the buyer (Henke & Zhang, 2010). Lai et al. (2008) stated that managers needed to be aware of the dynamics of business relationship and to better manage their supply chain. Relationship quality can be regarded as an approach to management of business relationship. Our findings imply that the business relationship is a conduit for transferring knowledge and investment which influence the extent of innovation and adaptation. The higher the relationship quality is, the wider and stronger the conduit grows (Chang, 2005). Thus, the relationship is capable of containing more information. Among others, frequent contact is the key to constructing and maintaining the relationship, whereas social capital and information exchange reflect the solidness of relationship. Through the conduit, the foreign subsidiary can obtain the information benefits and reduce transaction cost, which further enhance its innovation, adaptation, and performance. While innovation represents the positive consequence of conduit, conduit is the driving force of adaptation. Suppliers are regarded as a source of large innovation potential (Henke & Zhang, 2010). According to Bidault and Castello (2010), although firms are increasingly joining forces to develop innovations, 50% to 80% of such partnerships end in failure. Our findings imply that the secure approach to successful innovation consists in relationship quality. The more the supplier becomes aware of customer's needs, plans, and strategies, the more the supplier devotes to customer's innovation activities (Henke & Zhang, 2010). Moreover, customer's actions in the business relationship will be reciprocated in kind by the supplier (Ural, 2009). Customer's goodwill signifies that it is confident in the supplier's capabilities, and thus, the supplier is motivated to engage in reciprocal behavior (Henke & Zhang, 2010). As a result, partnering and MNC theory stress that subsidiaries should strengthen the components of relationship quality to facilitate the flow of resources and information through the relationship (de L. Veludo et al., 2004). 5.3. Limitations and Future Research There are several limitations, which suggest some directions for future research. First, the low response rate with respect to our sample prohibited further analysis, such as the comparison between foreign subsidiaries from different home countries. Future research can perform further efforts to improve the response rate. Second, culture sways with the evaluation and perception of relationship quality in business market (De Búrca et al., 2004). In other words, foreign subsidiaries may think they have good relationship quality with the local supplier; nevertheless, local supplier does not have the same perception. Additionally, cultural differences may hinder foreign subsidiaries’ ability to efficiently conduct business (Tu, 2010). Future research can examine the research framework in different countries to generalize our findings. Third, this study explores the buyer-seller relationship quality only based on the buyer's point of view. It reveals that anything good to the quality relationship will result in the buyer's benefits, facilitating future cooperation. The future research can extend to integrate the viewpoints of both buyer and seller, in that the both parties are involved in the relationship. Although Ural (2009) thought the evaluation of relationship quality of both sides may be similar, the author did not further contrast two sides’ evaluations. A comparative study from both buyer's and seller's perspectives may offer several interesting points. Fourth, there was no consensus of interrelationship between the trust and commitment. The key to the debate on the relationship between trust and commitment may lie in the outcome variables. Our findings imply that the influence of commitment on innovation may be mediated by trust. Walter and Ritter (2003) used the value-creating function as an outcome and found that commitment acted as a mediated role between trust and this outcome. Hence, future research can examine the relationship between trust and commitment given different outcome variables to figure out the debate on this issue. Finally, this study only concentrated on foreign subsidiaries located in specific country without taking the whole network of MNC in account. Anderson and Forsgren (2000) simultaneously explored the internal and external relationships of MNC's whole network. Furthermore, de L. Veludo et al. (2004) recognized the portfolio of relationships with respect to MNC, which highlighted the partnering inside and outside the MNC. The portfolio of relationships should deserve to receive more attentions.