An exploratory study of the relations between the U.S. Manufacturers and their local distributors in developing markets

Abstract

We develop and investigate a model of long-term, inter-firm relationships in three developing countries and develop international organizational relationship antecedent factors from the local distributor's perspective. We sought to test these factors across three developing countries to see if manufacturers treated their local distributors differently in different environments. A comprehensive survey was conducted in three developing countries; South Africa, India, and Pakistan. A total of 116 interviews were carried out with local distributors in these countries to test a conceptual model of the hypothesized relationships between satisfaction, perceived conflict, use of coercion by distributor, use of coercion by manufacturer, role performance, and dependency. This study furthers our understanding of the relations between U.S. manufacturers and their local distributors. Several key findings suggest ways to improve these relationships. From our study it was clear that manufacturers treat their local distributors differently in different settings. We show that the more developed a market was (a buyers market) the better a local distributor was treated and stronger the overall relationship. The local distributors in less developed markets were found to be treated worse and there was more antagonism in the relationship. Our sample was limited to 116 interviews with higher level managers who generally spoke English. We also limited our research to a very specific industry. Care should be given in extrapolating these results to other industries.

The paper elucidates the notion that U.S. companies do not always have the best relationship with their local distributors. If they wish to develop these markets more care should be given in developing long-term relationships built on trust.