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Willingness of foreign customers to accommodate emerging market suppliers with a more favorable price
Chou, Szu Yu
Chiou, Jyh Shen
Tan, Dan Chi
Chou, Szu Yu
international customer-supplier relationships
|Issue Date: ||2013-02-01 16:49:27 (UTC+8)|
This study explores the strategies that emerging market firms can use to increase their bargaining positions and increase the willingness of foreign buyers to offer more favorable prices. It has been shown that customers are willing to accommodate their suppliers when they intend to maintain longer cooperative relationships with them. Accordingly, we propose that emerging market suppliers can receive more favorable prices through decreasing their customers’ perceived threat of product quality and increasing the customers’ perceived value of relationships. Based on a survey of 217 foreign customers of emerging market suppliers, our empirical testing identifies two major strategies that emerging market firms use to increase the willingness of their customers to offer better prices. First, emerging market suppliers can improve their capabilities through making brand investment and upgrading manufacturing competencies in areas such as product quality, service, and innovation know-how. Second, emerging market suppliers can strengthen the relationship with their foreign customers by making transaction-specific assets investments (TSIs) and developing relational norms with the customers. In addition, the results suggest that the supplier’s capabilities display a stronger impact on its customer’s perceived value of relationships than other strategies.
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