Instrumental and Interpersonal Determinants of Relationship Satisfaction and Commitment in Industrial Markets

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Instrumental and interpersonal determinants of relationship satisfaction and commitment in industrial markets

Alhassan G. Abdul-Muhmin*

Department of Management and Marketing, King Fahd University of Petroleum and Minerals, P.O. Box 1185, Dhahran 31261, Saudi Arabia Received 1 November 2002; accepted 1 August 2003

Abstract

Although factors relating to suppliers’ performance on core marketing functions (instrumental factors) and those relating to the climate of interpersonal relations between supplier and customer resource personnel (interpersonal factors) have both been independently advocated as determinants of relationship satisfaction in business-to-business (B2B) markets, there is a dearth of studies that have investigated their joint effects. The author develops and tests a model of relationship satisfaction and commitment in which both instrumental and interpersonal factors are included as joint determinants of relationship satisfaction. The model also examines the links between satisfaction and commitment on one hand, and customers’ propensity to terminate relationships on the other. It is tested with data from a survey of 282 manufacturing firms in Saudi Arabia in which respondents evaluated relationships with foreign suppliers of industrial components and raw materials. The results confirm the hypothesized joint effect of instrumental and interpersonal factors on relationship satisfaction. They also provide evidence in support of a theory-based positive link between satisfaction and commitment, and negative links between propensity to terminate a relationship on one hand, and relationship satisfaction and commitment on the other. Theoretical and managerial implications of the results are outlined and discussed.

Keywords:Relationship satisfaction; Commitment; Industrial markets

1. Introduction

Relationship satisfaction and commitment are two key constructs in the evolving paradigm of relationship marketing in business-to-business (B2B) contexts, a paradigm whose general theme is the shifting of emphasis from short-term, transactional exchanges to long-term collabora- tive relationships with key customers. Both in academic and practitioner circles, the current received wisdom is that the ability to engineer relationship satisfaction and commitment among customers is a fundamental basis for implementing relationship marketing. Consequently, research interest in satisfaction and commitment is currently quite substantial and growing, and has spanned a wide variety of contexts, including distribution channel relationships (e.g.,Anderson and Narus, 1990; Ganesan, 1994; Morgan and Hunt, 1994;

Selnes and Gronhaug, 2000; Schellhase et al., 2000), busi-

ness services (e.g., Moorman et al., 1993), and consumer services (e.g.,Sharma and Patterson, 2000).

Researchers have been particularly interested in identify- ing the key drivers of relationship satisfaction and commitment, and a relatively large body of models and empirical findings can be traced in the literature. Ideas from the development and maintenance of relationships in interpersonal contexts like friendship and marriage have had a significant influence on this effort, and have led to identifi- cation of variables like trust, fairness, shared values, relational social norms, and communication as determinants of relationship satisfaction and commitment in B2B contexts.

These variables are here referred to asinterpersonal factors.

For relationship satisfaction, the literature suggests additional variables relating to suppliers’ performance on key marketing functions like product quality, pricing, and distribution effectiveness as key determinants. In this paper, these are termedinstrumental factors.

Studies examining the effects of instrumental or interpersonal factors on relationship satisfaction can be traced in the

doi:10.1016/j.jbusres.2003.08.004

* Tel.: +966-3-860-4265; fax: +966-3-860-4265.

E-mail address:[email protected] (A.G. Abdul-Muhmin).

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literature. However, there is a relative dearth of studies that have examined their joint effects. The objectives of this study are therefore: (1) to develop and test a model in which both instrumental and interpersonal factors are included as joint determinants of relationship satisfaction in B2B markets, and (2) to examine the impact of relationship satisfaction and commitment on the customers’ propensity to terminate relationships. In doing so, the study contributes to the literature in a number of respects. By examining the joint effects of instrumental and interpersonal factors, it gives an indication of the relative importance of the two sets of factors and therefore, provides a broader theoretical perspective on relationship satisfaction and commitment than has hitherto been suggested in the literature. It also helps answer the managerial question of whether or not to prioritize instrumental or interpersonal factors in efforts at building satisfaction and commitment in the face of resource limitations.

Furthermore, in contrast to the majority of previous studies that have been conducted in supplier – reseller contexts, the model is tested in a supplier – manufacturing firm context. Since the supplier selection literature suggests that manufacturing firms and resellers use different criteria in supplier selection(Wagner et al., 1989), with manufacturing firms widely using quality – delivery – price selection criteria, and retail buyers tending to emphasize product selling history, markup, and delivery in vendor selection, a relevant question is whether relationship satisfaction and commitment are also driven by different sets of factors for manufacturing firms and resellers. Results of this study will help answer this question. Additionally, in contrast to the majority of previous studies that have been conducted in Western industrialized countries with customers evaluating suppliers from the same country, the present study is set in a developing-country context with customers evaluating foreign suppliers. Thus, support for the model will provide evidence of the generalizability of these previous findings.

The rest of the paper is organized as follows. The next section presents the theoretical background to the study.

There, I review previous conceptualizations of relationship satisfaction and commitment, and discuss their proposed antecedents and consequences. Following this, I present the conceptual framework and develop hypotheses for the study. Next, I present the research methodology and hypotheses tests. I then discuss the results and outline their theoretical and managerial implications. In a final section, I discuss the study’s limitations and make suggestions for future research.

2. Theoretical background

The key constructs in this study are relationship satisfaction and commitment. In this section, I review previous studies on the determinants and consequences of the two constructs. Relationship satisfaction has been defined as a positive affective state resulting from an appraisal of all

aspects of a firm’s working relationship with another firm (Anderson and Narus, 1990; Dwyer and Oh, 1987; Ganesan, 1994). It encompasses all characteristics of a relationship that a focal firm finds rewarding, profitable or instrumental- or frustrating, problematic, or inhibiting (Ruekert and Churchill, 1984). As defined here, relationship satisfaction is conceptually different from product- or transaction-specific satisfaction, for which the backbone of research has been the expectancy-disconfirmation framework (Oliver, 1980). While product- and transaction-specific satisfactions deal with a customer’s experiences with specific episodic product or transaction encounters with an exchange partner, relationship satisfaction has to do with the customer’s experience with the sum-total of product and transaction encounters over the life span of the relationship. Although individual episodic encounters within this sum-total may have provided positive, negative, or neutral disconfirma- tions of expectations, it is the customer’s overall affect for the sum-total that is the focus of relationship satisfaction.

Relationship commitment has variously been defined as an exchange party’s belief that a relationship is important enough to warrant maximum efforts at maintaining(Morgan and Hunt, 1994); as an enduring desire by an exchange party to maintain a relationship to which it attaches value (Moor- man et al., 1992); and as an exchange party’s intention to continue in a relationship (Anderson and Weitz, 1989;

Dwyer et al., 1987; Geyskens et al., 1996). Thus, there appears to be a consensus in the literature that commitment has to do with an exchange party’s willingness to remain in, and safeguard a valued relationship. In this sense, relationship commitment in B2B markets is akin to the concept of loyalty in consumer goods marketing.

2.1. Determinants of relationship satisfaction and commitment

Early work on relationship satisfaction and commitment in B2B markets examined the constructs within the context of distribution channel relationships, and focused largely on how a channel entity’s use of different power and influence strategies impact on channel member satisfaction and commitment (e.g., Gaski, 1986; Wilkinson, 1979). With the evolving paradigm of relationship marketing, and the associated emphasis on the building and maintenance of healthy long-term relationships, some researchers have broadened the examination of relationship satisfaction drivers to include variables related to a supplier’s performance on core marketing program variables like product range, product quality, product support, customer service efficiency, sales promo- tion effectiveness, pricing, sales force expertise and knowl- edge, etc. (e.g.,Biong, 1993; Gosh et al., 1997; Schellhase et al., 2000). These factors are herein referred to as instrumental factors. Other researchers, however, have focused on the nature of interpersonal relations between resource personnel in the supplier and customer firms. Variables that have been examined include suppliers’ reliability and benevolence

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(Selnes and Gronhaug, 2000), and salespersons’ customer or selling orientation, ethical behavior, and expertise(Bejou et al., 1998). In this paper, these are referred to as interpersonal factors. Thus, models of relationship satisfaction that include either instrumental or interpersonal factors can be traced in the literature. However, there is a relative dearth of studies that have modeled the joint effects of the two sets of factors.

The present study addresses this limitation by examining their joint effect on relationship satisfaction.

For relationship commitment, theories of commitment in interpersonal contexts like friendship and marriage have had a heavy influence on researchers’ efforts at understanding the construct in B2B contexts. This has led to a consensus in the literature that in B2B relationships, commitment is driven largely by the climate of interpersonal relations between key resource personnel in the supplier and customer firms (Ganesan, 1994; Morgan and Hunt, 1994). Consequently, this study examines only the effect of interpersonal factors as determinants of relationship commitment.

2.2. Consequences of relationship satisfaction and commitment

Both practitioners and academicians have become interested in relationship satisfaction and commitment because they are thought to lead to desirable relational outcomes like cooperation, long-term orientation (Ganesan, 1994) and decreased propensity to terminate relationships (Morgan

and Hunt, 1994). The latter outcome is of particular interest to the present study. As a construct, it has been defined as the perceived likelihood that a focal firm will terminate the relationship with another firm in the reasonably near future (Morgan and Hunt, 1994, p. 26).

3. Conceptual framework

A number of summary points can be derived from the discussion in the previous section, namely: (1) drivers of relationship satisfaction and commitment suggested in the literature can be categorized into instrumental and interpersonal factors; (2) instrumental and interpersonal factors have been independently suggested as determinants of relationship satisfaction, (3) only interpersonal factors have been advocated as determinants of relationship commitment, and (4) relationship satisfaction and commitment lead to positive relational outcomes, one of which is a decrease in a customer’s propensity to terminate the relationship. These points form the basis for the study’s conceptual model shown in Fig. 1.

Specific instrumental variables in the model are satisfaction with a supplier’s product, pricing, distribution, and marketing communication. These are essentially the ‘‘marketing mix’’ variables in traditional marketing texts (e.g., Kotler, 1994). The model itself distinguishes between satisfaction with these variables and satisfaction with the rela-

Fig. 1. Conceptual model and hypothesized relationships.

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tionship, a distinction that is consistent with recent conceptualizations of satisfaction distinguishing between satisfaction with attributes of an object and overall satisfaction with the object(Oliver, 1993; Spreng et al., 1996).

For interpersonal factors, the specific variables included in the model are supplier benevolence, credibility, and opportunism. These are chosen because they have been identified as key dimensions of trust (Mayer et al., 1995;

Doney and Cannon, 1997). Trust itself is a multidimensional construct that is believed to play a critical role in the development and maintenance of long-term supplier – customer relationships (cf. the commitment – trust theory of Morgan and Hunt, 1994).Benevolencehas been defined as the extent to which a trusted firm is perceived as willing to act in the best interest of a trusting firm, over and above an egocentric profit motive(Mayer et al., 1995). It reflects the belief by a trusting firm that the trusted firm is interested in the focal firm’s welfare and will not take actions that will negatively impact it(Anderson and Narus, 1990; Anderson and Weitz, 1989).Credibilityreflects the extent to which a relationship partner is believed to stand by their word (Ganesan, 1994; Morgan and Hunt, 1994), and to make promises with the intention of fulfilling them(Moorman et al., 1993).Opportunismis best understood from the definition by Williamson (1975) as ‘‘self-interest-seeking with guile’’. The essence of opportunistic behavior is deceit- oriented violation of implicit or explicit promises (John, 1984), and is exemplified by distortion of information, failure to fulfill promises, a shirking of obligations, and willingness to twist facts for material gain.

4. Hypotheses

4.1. Instrumental factors and relationship satisfaction

There are practical and theoretical bases for expecting a positive link between a customer’s satisfaction with a supplier’s performance on each of the four instrumental variables and the customer’s satisfaction with the overall relationship with the supplier. In practitioner circles, customer satisfaction programs are often implemented by manipulating relevant aspects of the marketing mix based on the logic of such a positive link. From a theoretical standpoint, a number of previous studies have confirmed this link empirically (e.g., Biong, 1993; Gosh et al., 1997; Schellhase et al., 2000).

4.2. Interpersonal factors and relationship satisfaction

Evidence from the literature supports a positive relationship between trust (or any of its dimensions) and relationship satisfaction, although different causal orderings of the relationship have been suggested. For example,Ganesan (1994) argues that satisfaction with a supplier indicates a perception of equity in exchange and leads to a perception of supplier benevolence and credibility. He finds empirical support for a

model in which satisfaction is causally antecedent to both benevolence and credibility. On the other hand, Anderson and Narus (1990)find support for a hypothesis in which trust is causally antecedent to satisfaction. Similarly,Selnes and Gronhaug (2000)find support for positive effects of benevolence and credibility on satisfaction. I adopt the view that trust is a determinant rather than a consequence of relationship satisfaction because, in cross-sectional studies like the present one, the argument that relationship satisfaction is likely to result because a partner is perceived as trustworthy is more plausible than the argument that a partner will be perceived as trustworthy because the focal firm is satisfied with the relationship. Therefore, I propose that, as positive indicators of trust, benevolence and credibility will positively impact on relationship satisfaction, while as a negative indicator, opportunism will negatively affect it.

Thus, both instrumental and interpersonal factors jointly impact positively on relationship satisfaction. It is important, however, to note that this joint effect is assumed to be additive rather than multiplicative. Indeed it is difficult to argue, for example, that the effect of product quality on relationship satisfaction depends on the level of benevolence demonstrated by a supplier firm or that the effect of benevolence depends on the level of product quality. I therefore advance the following formal hypothesis:

H1: Industrial customers’ relationship satisfaction relates positively to their satisfaction with the (a) product, (b) pricing, (c) distribution, and (d) marketing communications components of suppliers’ marketing programs, and to their perceptions of suppliers’ (e) benevolence and (f) credibility; and negatively to their perceptions of suppliers’ (g) opportunism.

4.3. Interpersonal factors and relationship commitment

As discussed earlier, benevolence, credibility, and opportunism are used as representative interpersonal factors because they have been identified as key determinants of trust, a construct whose role in fostering relationship commitment is particularly very salient in the literature (Morgan and Hunt, 1994). In a meta-analysis of studies in leading marketing journals that have examined such a trust – commitment relationship between 1970 and 1996, Geyskens et al.

(1999) conclude that there is unanimous agreement of a positive relationship between the two. Therefore, since benevolence and credibility are positive indicators of trust, it follows that they should be positively related to commitment, while opportunism, as a negative dimension of trust will be negatively related to commitment.

4.4. Relationship satisfaction and relationship commitment

In the consumer behavior literature, numerous studies have suggested a positive link between customer satisfaction on one hand, and repeat purchase and brand loyalty on the

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other (e.g.,Fornell, 1992). For B2B relationships, especially within the context of distribution channels, satisfaction has also been found to lead to desirable outcomes like cooperation, long-term orientation(Ganesan, 1994), loyalty(Biong, 1993), and relationship commitment (Bejou et al., 1998;

Ganesan, 1994; Sharma and Patterson, 2000). Thus, there is unequivocal evidence in support of a positive association between relationship satisfaction and commitment. Combin- ing this with the effects of interpersonal factors on relationship commitment discussed earlier, leads to the hypothesis that:

H2: Industrial customers’ relationship commitment relates positively to their perceptions of suppliers’ (a) benevolence and (b) credibility, negatively to their perceptions of suppliers’ (c) opportunism, and positively to their (d) relationship satisfaction.

4.5. Relationship satisfaction, commitment, and propensity to terminate a relationship

Propensity to terminate a relationship has earlier been defined as the perceived likelihood that a focal firm will end the relationship with another firm in the reasonably near future (Morgan and Hunt, 1994, p. 26). This definition appears to be the antithesis of relationship commitment as defined byAnderson and Weitz (1989)and others, and raises the question as to whether propensity to terminate a relationship is a dimension of commitment or a separate construct. In this study it is treated as a separate construct because although commitment necessarily implies an intention to continue with a relationship, the opposite is not always true. It is possible for a party to continue in a relationship to which it is not committed due, for example, to legal constraints or lack of viable alternative partners.

Moreover, the empirical evidence from Morgan and Hunt (1994) suggests that the two are separate and negatively related constructs. Therefore, I expect a negative relationship between an industrial customer’s commitment to a relationship and their propensity to terminate the same. A similar association with relationship satisfaction is expected because of the hypothesized positive relationship between satisfaction and commitment. Therefore, I hypothesize that:

H3:Industrial customers’ propensity to terminate relationships with their suppliers relates negatively to their (a) relationship satisfaction and (b) commitment.

5. Method

The model and hypotheses are tested using data collected in a cross-sectional survey of manufacturing firms located in two industrial cities in the Eastern Province of Saudi Arabia.

The study is an extension to one conducted earlier by the author, results of which Abdul-Muhmin (2002) reports.

Respondents completed a structured self-administered questionnaire in which they evaluated relationships with their major suppliers of raw materials and/or components. Both English and Arabic versions of the questionnaire were distributed. A signed introductory letter on the author’s university letterhead explained the study purpose, promised anonymity of responses, and promised summary results for interested respondents.

A survey methodology was chosen in spite of the seem- ingly causal nature of the hypotheses because relationship satisfaction, commitment, and the other interpersonal variables examined in this study are phenomena that develop over long periods of time, and are very difficult to manipulate and/

or observe in experimental test situations. Moreover, there are precedents in the literature for employing this methodology in similar situations.

5.1. Sample and data collection

The target population of the study was manufacturing firms who buy products and services for use in their own production processes rather than for resale. Due to docu- mented difficulties in obtaining probability samples in Saudi Arabia(Tuncalp, 1988), a convenience sampling procedure was employed in the data collection. Research assistants visited the industrial cities over a two-week period and went from company to company soliciting the cooperation of purchasing managers in filling out the questionnaire. The assistants personally handed out a structured self-administered questionnaire to managers who agreed to participate in the study and returned at a later time to pick up the completed questionnaires. Of a total of 550 questionnaires distributed, 282 usable ones were retrieved, resulting in a response rate of about 51%. Responding companies are mostly small- to medium-sized manufacturing establishments, and company officials who completed the questionnaires reported titles like Buyer, Assistant Buyer, Associate Buyer, Purchasing Manager, General Manager or Owner/Manager. Thus, respondents were generally competent to evaluate their companies’ relationships with suppliers.

5.2. Measurement

Relationship satisfaction, relationship commitment, propensity to terminate relationship, and the interpersonal factors were measured on five-point Likert scales drawn from the extant literature (see Appendix A for scale sources).

Measurement of instrumental variables was achieved through single-item indicators (see Appendix A). Satisfac- tion with product quality, prices and delivery were used as measures of suppliers’ performance on the product, price, and distribution components of the marketing mix because, along with after-sales service, these have been identified in the literature as key supplier selection criteria used by manufacturing firms(Wilson, 1994). Satisfaction with product brochures was used as an indicator of suppliers’ perfor-

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mance on the Marketing communications construct because earlier discussions with some purchasing officers revealed that this is the main vehicle by which foreign suppliers communicate product information to purchasing officers in Saudi Arabia. Responses on all instrumental variables were solicited on five-point category scales.

5.3. Measure validation

In accordance with the two-step procedure suggested by Anderson and Gerbing (1988), prior to testing the hypotheses, confirmatory factor analysis was performed to assess unidimensionality and reliability of the multiitem construct measures using LISREL 8.51(Joreskog and Sorbom, 2001).

Initial specification search led to deletion of one of the items in the credibility scale. Selected statistics for the final overall-model assessment show acceptable fit of the measurement model to the data: [v²(75) = 228.76 (P< .001);

Comparative Fit Index (CFI) = 0.86; Root Mean Square Error of Approximation (RMSEA) = 0.08; Root Mean Square Residual (RMR) = 0.06; Goodness-of-Fit Index (GFI) = 0.90; Adjusted Goodness-of-Fit Index (AGFI) = 0.84)]. Loadings of individual items on their respective constructs are shown in Appendix A. The individual item loadings are all above the recommended 0.5(Anderson and Gerbing, 1988), indicating acceptable individual item reliabilities as more than 50% of each item’s variance is shared with its respective construct.

Composite reliabilities and average variance extracted for each construct were also computed using the formulae proposed by Fornell and Lacker (1981). The results are shown inTable 1, which also presents descriptive statistics and correlations among the study constructs. The composite reliabilities are all above the recommended value of 0.7

suggested by Hulland (1999) thus indicating acceptable internal consistency and reliability of the respective measures. Furthermore, the average variance extracted for each construct is above 0.5 indicating acceptable convergent validities(Smith and Barclay, 1997).

6. Analysis and results

The hypotheses were tested using three separate ordinary least squares multiple regression equations, results of which are shown in Table 2. Least squares regression was chosen over covariance structure analysis because of the relatively large number of single- and two-item constructs in the study.

Although in the literature, there are precedents for using single- and two-item constructs in covariance structure analysis,Anderson and Gerbing (1988)suggest that models that include large numbers of such constructs produce unreliable structural parameter estimates.

The first equation tested the effects of satisfaction with suppliers’ product, pricing, distribution, and marketing communication as well as perceptions of suppliers’ benevolence, credibility, and opportunism on relationship satisfaction.

Estimates for this equation were used to test H1 (a) to (g), and are shown in the second column ofTable 2. The results show that relationship satisfaction is positively related to satisfaction with the product component of suppliers’ marketing programs (b=.19; P< .001), supplier benevolence (b=.41; P< .001), and credibility (b=.20; P< .001). Thus, support is found for H1 (a), (e), and (f), while H1 (b), (c), (d), and (g) are not supported by the data.

The second equation examined the effects of relationship satisfaction and perceived supplier benevolence, credibility, and opportunism on relationship commitment, and was used

Table 1

Descriptive statistics, reliabilities and correlations among study constructs

Scale No. of

items

M S.D. 1 2 3 4 5 6 7 8 9 Composite

reliability

Variance extracted

1. Product 1 1.99 1.42 – NA NA

2. Price 1 2.27 1.45 .18 – NA NA

3. Distribution 1 2.46 1.35 .26 .29 – NA NA

4. Marketing communication

1 3.57 2.51 .02 .03 .09 – NA NA

5. Benevolence 3 1.98 0.67 .32 .37 .49 .06 – .90 .76

6. Credibility 3 2.18 0.77 .22 .28 .32 .05 .40 – .82 .62

7. Opportunism 3 2.96 0.93 .16 .11 .20 .17 .29 .33 – .83 .62

8. Relationship satisfaction

2 1.94 0.66 .35 .22 .31 .06 .54 .43 .26 – .82 .69

9. Relationship commitment

2 1.86 0.68 .23 .12 .27 .20 .54 .34 .04 .42 – .86 .61

10. Propensity to terminate

2 3.28 0.98 .20 .03 .16 .05 .32 .16 .47 .27 .23 .81 .69

For product, price, distribution, and marketing communications: 1 = very satisfied, 2 = moderately satisfied, 3 = neither satisfied nor dissatisfied, 4 = moderately dissatisfied, 5 = very dissatisfied; for all other constructs: 1 = strongly agree, 2 = agree, 3 = neutral, 4 = disagree, 5 = strongly disagree.

NA = Not applicable.

Composite reliability=(Skyi)²/((Skyi)²+Svar(ei)) where var(ei) = 1 kyi

2, Average variance extracted =Skyi 2/(Skyi

2+Svar(ei)) where var(ei) = 1 kyi 2.

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to test H2 (a) to (d). Parameter estimates for this equation are shown in the second column ofTable 2. The results show statistically significant effects of benevolence (b= .46;

P< .001), credibility (b= .17; P< .005), opportunism (b= .28; P< .005), and relationship satisfaction (b= .16;

P< .01) on relationship commitment, thus, supporting H2 (a) to (d). However, contrary to expectations, the coefficient for opportunism is positive, indicating that higher commitment is associated with higher perceived supplier opportunism. Possible explanations for this unexpected result are presented in the discussion section.

Finally, the third equation was used to test H3 (a) and (b) concerning the effects of relationship satisfaction and commitment on customers’ propensity to terminate relationships.

Estimates for this equation are shown in the last column of Table 2. The results show statistically significant negative relationships between propensity to terminate relationships and relationship satisfaction (h= .20; P< .005) and between propensity to terminate relationships and relationship commitment (h= .14;P< .05), thus providing support for H3 (a) and (b).

7. Discussion

Although support is not found for some of the study’s hypotheses, taken as a whole, the results provide some support for the conceptual model presented in Fig. 1. In particular, they support the central premise that instrumental (product quality) and interpersonal factors (benevolence and credibility) are jointly important determinants of relationship satisfaction in B2B markets. In terms of relative effects, the pattern of parameter estimates suggests that interpersonal

factors are relatively more important drivers of satisfaction than instrumental factors, insofar as the regression parame- ters for benevolence and credibility are higher than for product quality. This finding confirms a suggestion by Abdul-Muhmin (2002) that previous results on the effects of instrumental factors on relationship satisfaction may be attenuated by interpersonal factors if both sets of factors are included in a given model, and calls attention to the need for models of relationship satisfaction in B2B contexts to include both sets of factors.

One possible direction in which such future model development could take is to integrate the present findings with temporal models of the development of buyer – seller relationships. For instance,Ford (1982)suggests five stages in the development of buyer – seller relationships and iden- tifies distinguishing characteristics of each stage in terms of initiation of supplier evaluation, conditioning of the evaluation, and the extent of customer commitment to the relationship. It may well be that the relative effects of instrumental and interpersonal factors on relationship satisfaction depend upon the particular stage of relationship development. Instrumental and interpersonal factors may function much like facilitating and enhancing factors in the services marketing literature (see, e.g., Lovelock, 2001, p.

232), with instrumental factors constituting the basis for starting a relationship (i.e., the foundations upon which the relationship is built), while interpersonal factors help to cement the relationship. In that case, instrumental factors may be critical determinants of satisfaction during early stages of relationship development, while interpersonal factors will be drivers during later stages. Unfortunately, these propositions could not be tested in the present study because it did not include a temporal dimension.

Table 2

Regression results [standardized regression coefficient (tvalue)]

Independent variables Dependent variables

Relationship satisfaction Relationship commitment Propensity to terminate relationship Instrumental factors

Satisfaction with product 0.19 (3.46)**** – –

Satisfaction with pricing 0.02 ( 0.33) – –

Satisfaction with distribution 0.01 ( 0.18) – –

Satisfaction with marketing communication

0.06 ( 1.10) – –

Interpersonal factors

Benevolence 0.41 (5.99)**** 0.46 (7.06)**** –

Credibility 0.20 (3.31)**** 0.16 (2.69)** –

Opportunism 0.09 ( 1.56) 0.28 (4.99)**** –

Relationship satisfaction – 0.16 (2.43)* 0.20 ( 3.20)***

Relationship commitment – – 0.14 ( 2.25)*

Intercept 0.78 (3.62)**** 0.38 ( 1.68) 4.25 (21.55)****

OverallF(df) 22.12 (7,230)**** 34.77 (4,239)**** 12.91 (2,271)****

R²(Adj.R²) 0.40 (0.38) 0.37 (0.36) 0.09 (0.080)

* One-tailed probabilities:P< .05.

** One-tailed probabilities:P< .01.

*** One-tailed probabilities:P< .005.

**** One-tailed probabilities:P< .001.

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Among the four instrumental factors, only product quality has a significant effect on relationship satisfaction. This finding underscores its importance in industrial marketing contexts. In the supplier selection literature, product quality has been identified as a critically important criterion in the raw materials and components purchase decisions of industrial firms(Wilson, 1994). The present results show that, in addition to serving as a critical supplier selection criterion, it also plays a significant role in postpurchase relationship satisfaction. The lack of significant effects of the other instrumental factors could be attributable to the presence of the relatively more important interpersonal factors in the model. This suggests that previous studies that examined the effect of only instrumental factors on relationship satisfaction may have overestimated the relative importance of these factors.

Consistent with the conceptual model, the present results show that relationship commitment is positively related to supplier benevolence and credibility, and customers’ relationship satisfaction. This is consistent with previous findings from supplier – reseller contexts (e.g., Doney and Cannon, 1997; Ganesan, 1994; Schellhase et al., 2000;

Selnes and Gronhaug, 2000), and underscores the growing importance of trust and its dimensions in the development and maintenance of long-term buyer – seller relationships in B2B markets. However, contrary to expectations, opportunism has a positive (rather than negative) effect on relationship commitment. One possible explanation for this could be found in the unique structure of the Saudi industrial and commercial environment, which is dominat- ed by family-owned businesses. Intense commercial rivalry among the families means that secrecy is a very prominent characteristic of the corporate cultures of these businesses.

Company data that can easily be found in the financial sections of Western newspapers are highly protected and treated as top secret in Saudi Arabia, and this is widely considered a normal way of doing business. Given this kind of corporate culture, hiding business information, being suspicious of business partners’ recommendations and exercising caution in dealing with exchange partners may not have dysfunctional effects on commitment as is the case in the West.

Another possible explanation may lie in the fact that most Saudi manufacturing firms are joint venture partnerships between these family businesses and foreign technology suppliers. Prior to 2001 when the regulations on direct foreign investment were relaxed, these foreign partners were forced into the joint venture option by government regulations that prohibited direct foreign investment in the Kingdom’s manufacturing sector. There- fore, it is not unusual for the foreign partners to include exclusive raw material and component supply clauses in their contracts with the local partners. Naturally, even if such suppliers are perceived to be acting opportunistically, this is not likely to affect the customers’ commitments to buying from them.

Thus, as generally operationalized in the literature, opportunism may not have a universally dysfunctional effect on long-term business relationships as has been previously suggested. Rather its effect may depend on the norms of business relationships in the customers’ dominant culture as well as the circumstances surrounding development of the relationship. Future research should consider examining the plausibility of this proposition.

The few studies that have distinguished between relationship commitment and propensity to terminate a relationship (e.g.,Anderson and Weitz, 1989; Morgan and Hunt, 1994) have generally found a negative relationship between the two constructs. The present study confirms these previous results and provides additional support for the notion of a conceptual distinction between relationship commitment and propensity to terminate a relationship.

7.1. Managerial implications

The results of this study have some managerial implications for foreign suppliers of industrial components and raw materials to the Saudi industrial sector. The finding that instrumental and interpersonal factors are joint drivers of relationship satisfaction implies that these suppliers need to pay attention to both sets of factors. In their efforts at building long-term relationships with their Saudi customers, it is not enough to just focus on providing, say, quality product offerings. The relatively higher regression coeffi- cients for benevolence and credibility imply that demonstrating concern for the customer organization and being credible in dealings with the customer are even more important in generating relationship satisfaction and commitment. One approach to demonstrating such concern is for foreign suppliers to occasionally send down headquarters staff just to visit and have face-to-face discussions with management of the customer firm.

In the discussion section, I have alluded to the possibility that the relative potency of instrumental and interpersonal factors as determinants of relationship satisfaction may depend on the stage of relationship development. This implies a need for managers of supplier firms to selectively emphasize the two sets of factors during different stages in the development of a given relationship. Specifically, they need to emphasize instrumental factors during the early stages of relationship development. This is because industrial customers widely use instrumental factors as supplier selection criteria in the purchase of industrial components and raw materials. Even in a context like Japan that is known for its closely knit system of supplier – customer relationships, Hirakubo and Kublin (1998) found that so- called rational criteria like quality, price, and delivery are more important criteria for selecting components suppliers than ‘‘keiretsu-like factors’’, akin to the interpersonal factors in the present study. Emphasis can then shift to building interpersonal relationships during later stages of the relationship.

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8. Limitations and suggestions for future research

The present study has a number of limitations that future studies should strive to overcome. First, given the relatively small size of the Saudi manufacturing sector, the study included firms from a wide variety of industries in order to ensure a larger sample than would otherwise have been obtained if data collection had been restricted to a particular industry. Thus, possible industry differences in relative importance of the factors in the model could have con- founded the results. Future studies should consider limiting the investigation to a particular industry. Also the proposed conceptual model could be tested using data from both resellers and industrial customers to assess the generalizability of the model across the two contexts. Second, the instrumental determinants of relationship satisfaction were measured using self-reports from key informants. While previous studies have provided evidence of the validity of key informant interviews, it would be informative if future studies could test this model using more objective measures

of suppliers’ product quality, pricing, delivery performance, and quality of marketing communications. Finally, the possibility that instrumental and interpersonal factors play different roles in different stages of relationship development has been raised in the discussion section of this paper.

However, design of the present study did not include a temporal dimension to enable testing this proposition.

Future studies should examine the plausibility of this proposition.

Acknowledgements

I acknowledge King Fahd University of Petroleum and Minerals for using its various facilities in the preparation of this the manuscript. I also thank the anonymous JBR reviewers for their insightful comments and suggestions for improving initial drafts of the paper. Finally, I acknowledge the help of Saleh Al-Hattab, Abdulrabbu Al-Majhad, and Abdul-Hadi Al-Ghazzal in the data collection.

Construct Scale items Loading

Product Satisfaction with quality of supplier’s product NA

Price Satisfaction with supplier’s prices NA

Distribution Satisfaction with supplier’s delivery schedules NA

Marketing communications

Satisfaction with information in supplier’s product brochures NA

Benevolence 1. Overall, our major supplier is a good company to do business with 1.00

(Dwyer and Oh, 1987) 2. All in all, our major supplier has been very fair to us 0.99

3. Overall, our major supplier’s policies and programs benefit us 0.93

Credibility 1. When we make agreements with our major supplier we can always rely on them to fulfill all requirements(John and Reve, 1982)

1.00 2. Informal agreements between our major supplier and us are as good

as written contracts^a(John and Reve, 1982)

3. In the relationship with our major supplier, there have never been instances where we have felt deceived(John and Reve, 1982)

1.39 4. We can always count on our major supplier to be sincere(Dwyer and Oh, 1987) 1.08 Opportunism 1. We are usually cautious when dealing with our major supplier(Dwyer and Oh, 1987) 1.00

2. We are sometimes suspicious of our major supplier’s recommendations (Dwyer and Oh, 1987)

1.09 3. We have the feeling that our major supplier sometimes hides important

information from us(John and Reve, 1982)

1.09 Relationship

satisfaction

1. In general, we are very satisfied with the relationship with our major supplier (Dwyer and Oh, 1987)

1.00 2. We are satisfied with the products and services we get from our major supplier

(Gaski and Nevin, 1985)

0.81 Relationship 1. The relationship with our major supplier means very much to us(Abdul-Muhmin, 2002) 1.00 commitment 2. We will never do anything to jeopardize the relationship with our major supplier

(Abdul-Muhmin, 2002)

1.01 Propensity to

terminate relationship

1. If we had to do it over again, we would not do business with our major supplier (Gaski and Nevin, 1985)

1.00 2. If we find a better supplier we will stop the current relationship with our major supplier

(Abdul-Muhmin, 2002)

1.55 For benevolence, credibility, opportunism, relationship satisfaction, relationship commitment, and propensity to terminate: 1 =Strongly agree; 5 =Strongly disagree.

For product, price, distribution, and marketing communication: 1 =very satisfied; 5 =very dissatisfied.

a Deleted from final scale.

Appendix A. Constructs and measures

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