Cultural Sensitivity and Its Impact on Business Relationship Quality

A firm’s competitive advantage can be created through developing and maintaining long-term effective relationships with customers. To achieve successful long-term business relationships, partners need to develop and maintain a high degree of relationship quality. Although the importance and benefits of high quality relationships are widely recognised, little research has been undertaken to examine the major factors that impact on relationship quality between exporters and importers. Internationalisation theory suggests that culturally distant exporters need to allocate significant resources to relationship building activities with their foreign customers in order to enhance mutual understanding and to help reduce the inherent uncertainties in international markets. Therefore, enhancing the understanding of, and adaptation to, differences in culture in foreign countries helps exporters reduce the “distance” between parties in export relationships. Consequently, it can be argued that exporters who are sensitive to their partners’ cultures will face fewer barriers to effective communication and are more likely to achieve long-lasting successful business relationships. This research examined the impact of two cultural factors, i.e., cultural sensitivity and ethnocentrism, on business relationship quality between developing country-based exporters and their foreign importers. Also, it explored the relationship between relationship quality and its outcome, i.e., export performance. A random sample of 297 exporting firms in Vietnam was surveyed to empirically test the theoretical model. The results indicated that the model had an acceptable fit to the data and all of the hypotheses were supported. Implications for business firms and directions for future research were also addressed.