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Article
The Origins of Trust Asymmetry in International Relationships: An Institutional View
Mengyang Wang, Qiyuan Zhang, and Kevin Zheng Zhou
Abstract Trust is key to relationship marketing. Although trust is bilateral, studies on the dispersion of trust among exchange parties remain limited, leaving the antecedents and outcomes of trust asymmetry largely underexplored. To fill the gaps, this study empirically examines the effects of different types of trust asymmetry on exchange performance and then investigates the institutional origins of trust asymmetry in international interfirm exchanges. Drawing on a survey of 134 international buyer– supplier relationships in China, the study finds that both calculative trust asymmetry and relational trust asymmetry have negative influences on exchange performance. The study also finds that formal institutional distance constrains calculative trust asymmetry and informal institutional distance increases relational trust asymmetry. Moreover, prior interactions and expectations of con- tinuity significantly moderate the effects of formal and informal institutional distance. This study advances trust studies in cross- border settings.
Keywords trust asymmetry, formal institutional distance, informal institutional distance, international buyer–supplier relationships
Trust is central to interorganizational relationship marketing
(Aulakh, Kotabe, and Sahay 1996; Katsikeas, Skarmeas, and
Bello 2009; Leonidou et al. 2014). When trust exists,
exchange parties are willing to cooperate, share information,
and make adaptations (Griffith, Myers, and Harvey 2006;
Gulati and Nickerson 2008). In an international marketing
relationship characterized by high unpredictability and com-
plexity, cross-border players usually face more challenges in
effectively dealing with their exchange partners and achieving
satisfactory outcomes, making the role of trust even more
pivotal (Katsikeas, Skarmeas, and Bello 2009; Leonidou
et al. 2014). For instance, Robson, Katsikeas, and Bello
(2008) show that in cross-border relationships, trust is critical
for increasing transaction value and reducing transaction
costs, which in turn result in better performance. Katsikeas,
Skarmeas, and Bello (2009) also reveal that importer trust
enhances performance in international exchange relationships
by motivating participants to contribute resources and share
sensitive information. Although many studies have validated
the importance of trust in an international marketing context,
several aspects of this issue remain unexplored.
First, the extant studies on interorganizational trust mainly
investigate the topic from a single perspective (Aulakh,
Kotabe, and Sahay 1996; Poppo and Zenger 2002; Zaheer,
McEvily, and Perrone 1998), and few have studied trust dis-
persion (McEvily, Zaheer, and Kamel 2017). Trust asymmetry,
which refers to the difference in trust between exchange part-
ners, adds significant uncertainty to cross-border exchanges
and generates uncertain performance implications (Graebner
2009; Zaheer and Zaheer 2006). For example, despite a 20-
year partnership, Ford Motor and China’s Changan Automobile
Co. Ltd still have high trust asymmetry, which not only hinders
team cooperation but also generates lackluster global perfor-
mance. And not until recently did Ford Motor commit itself to
the partnership with Changan by localizing its management
team and offering more tested talents to product R&D, manu-
facturing, and marketing areas (Li 2018). In studying the fail-
ures of interorganizational relationships, Oliveira and
Lumineau (2019) suggest that trust may backfire, and the
Mengyang Wang is Associate Professor, Huazhong University of Science and
Technology, China (email: [email protected]). Qiyuan Zhang is
Associate Professor, Zhejiang University, China (email: [email protected].
cn). Kevin Zheng Zhou is Chang-Jiang Scholar Chair Professor and Professor
of Management and Strategy, The University of Hong Kong, Hong Kong (email:
Journal of International Marketing 2020, Vol. 28(2) 81-101
ª American Marketing Association 2020 Article reuse guidelines:
sagepub.com/journals-permissions DOI: 10.1177/1069031X19898492
journals.sagepub.com/home/jig
extant literature mainly focuses on the inverted curvilinear
effect of trust without a multiparty consideration of the effects
of trust. By adopting a dyadic view to examine trust asymme-
try, our study attempts to enrich the understanding of the dark
side of trust. Furthermore, distinct types of trust exist. Poppo,
Zhou, and Li (2016) argue that calculative trust and relational
trust coexist and characterize most business relationships. By
examining alternative forms of trust asymmetry, our study dee-
pens our understanding of the performance implications of
trust.
Second, despite abundant attention on the origins of trust,
few studies explicitly consider how institutional factors influ-
ence trust asymmetry (for a review, see Table 1). Oliveira and
Lumineau (2019) posit that a topic less studied in interorgani-
zational relationships is how country-related antecedents influ-
ence interaction outcomes. For international exchange
relationships, the distinct institutional backgrounds of interfirm
partners may shape their attitudes and behaviors toward eco-
nomic transactions and thus drive the level of trust asymmetry.
However, related studies mainly focus on the informal aspects
of institutions (i.e., culture) and argue that cultural distance
leads to a lower level of trust (Homburg et al. 2009; Leonidou
et al. 2014). Whereas informal institutions influence relational
trust by emphasizing business participants’ internal interpreta-
tions and knowledge obtained from repeated social interactions
(Kostova and Roth 2002; Yang, Su, and Fam 2012), formal
institutions mainly influence calculative trust by providing a
basis for exchange parties to calculate the benefits and costs of
their actions (Cai, Jun, and Yang 2010). Given this dissimilar-
ity, a collective consideration of both formal and informal
institutional distance to understand different types of trust
asymmetry is critical but lacking in the current literature.
Third, past studies on the origins of trust imply that histor-
ical interactions and future expectations matter (Poppo and
Zenger 2002; Poppo, Zhou, and Ryu 2008). According to the
relational view, prior interactions breed familiarity and mutual
understanding, which in turn promote trust (Gulati 1995).
According to game theory, expectations of continuity instill a
forward-looking calculus of costs and benefits that drives trust
perception (Parkhe 1993; Poppo, Zhou, and Ryu 2008).
Although institutional distance demonstrates a macro-level
institutional force exerted by the external environment, the
exchange parties themselves intentionally determine the ways
in which they assess their relationships and shape their attitudes
and actions. When parties hold dissimilar perceptions regard-
ing the transaction, they may react differently in dealing with
institutional challenges when forming their trust perceptions.
However, few studies have developed an interdependence per-
spective in studying trust asymmetry. Thus, researchers have
not resolved how the factors involved with the institutional
view, the relational view, and game theory jointly account for
the emergence of trust asymmetry.
Accordingly, the following three important questions
remain unanswered: (1) How do calculative/relational trust
asymmetry (TA) affect exchange performance? (2) What are
the effects of institutional distances on the formation of
calculative/relational trust asymmetry? and (3) How do past
perceptions and future expectations held by the exchange par-
ties moderate the relationships between institutional distance
and calculative/relational trust asymmetry? To answer these
research questions, we first explore the different performance
logics associated with calculative and relational trust asymme-
try. Second, we show that different forms of institutional dis-
tance (i.e., formal and informal institutional distance) have
divergent effects on the formation of calculative and relational
trust asymmetry. Third, we examine the moderating roles of
prior interactions and expectations of continuity to examine
when institutional distance matters more under various
conditions.
By conducting an empirical study with 134 international
buyer–supplier dyads, this article contributes to the extant
international marketing studies in several ways. First, by
empirically examining the roles of trust asymmetry in reducing
exchange performance in international buyer–supplier relation-
ships, our study enriches the understanding of performance
implications and the dark side of trust (Korsgaard, Brower, and
Lester 2015; Scheer 2012). Second, by integrating an institu-
tional view in understanding how formal and informal institu-
tional distance influence calculative and relational trust
asymmetry in international marketing relationships, we
enhance the understanding of the institutional origins of trust
asymmetry in an international context with empirical evidence
(Zaheer and Kamal 2011; Zaheer and Zaheer 2006). Third, by
incorporating prior interactions and expectations of continuity
as moderators, we apply an interdependence perspective to
understanding the influences of institutional distance on trust
asymmetry in international markets. Figure 1 displays our con-
ceptual framework.
Theory
Calculative Versus Relational Trust
Trust is the confidence that a partner will act in a reliable,
predictable, and fair manner (Zaheer, McEvily, and Perrone
1998). With the belief that their partners will not pursue self-
interest, business participants show a “willingness to be
vulnerable” (Mayer, Davis, and Schoorman 1995, p. 712).
Trust is not unitary but multidimensional. As a multifaceted
concept, trust has distinct implications with different bases
(Dyer and Chu 2000; Rousseau et al. 1998). The extant
research mainly defines interorganizational trust from the fol-
lowing two perspectives: economic and social (Gulati 1995;
Rousseau et al. 1998; Williamson 1993). The economic per-
spective (e.g., transaction cost economics, game theory) empha-
sizes calculative trust, in which the trustor uses rational
reasoning to recognize that the calculated benefits of cooperative
behaviors are greater than those of opportunism (Rousseau et al.
1998; Williamson 1993). As a rational choice based on calcu-
lated gains and losses in economic exchanges, calculative trust
requires economic incentives, such as credible commitments, to
make deliberate calculations (Williamson 1993). It relies on a
82 Journal of International Marketing 28(2)
T a b
le 1 .
S e le
ct e d
S tu
d ie
s o n
T ru
st in
In te
rf ir
m R
e la
ti o n sh
ip s.
S tu
d y
C o n te
x t
T h e o re
ti ca
l P e rs
p e ct
iv e
A n
te c e d
e n
ts M
a jo
r F
in d
in g s
T r u
st C
o n
c e p
t
A n d e rs
o n
an d
N ar
u s
(1 9 9 0 )
2 4 9
d is
tr ib
u to
rs an
d 2 1 3
m an
u fa
ct u re
rs S o ci
al e x ch
an ge
th e o ry
(R e la
ti o n al
)
C o m
m u n ic
at io
n , co
o p e ra
ti o n
C o m
m u n ic
at io
n an
d co
o p e ra
ti o n
p ro
m o te
tr u st
. T
ru st
re d u ce
s co
n fl ic
t an
d in
cr e as
e s
sa ti sf
ac ti o n .
U n ila
te ra
l tr
u st
G an
e sa
n (1
9 9 4 )
1 2 4
re ta
ile rs
an d
5 2
ve n d o rs
T ra
n sa
ct io
n co
st s
e co
n o m
ic s
(T C
E )
(E co
n o m
ic )
S p e ci
fi c
in ve
st m
e n ts
, re
p u ta
ti o n , in
te ra
ct io
n e x p e ri
e n ce
, sa
ti sf
ac ti o n
R e ta
ile r
tr u st
is re
la te
d to
sp e ci
fi c
in ve
st m
e n ts
, re
p u ta
ti o n ,
in te
ra ct
io n
e x p e ri
e n ce
,a n d
sa ti sf
ac ti o n ,a
n d
it p la
ys a
k e y
ro le
in d e te
rm in
in g
lo n g-
te rm
o ri
e n ta
ti o n .
U n ila
te ra
l tr
u st
M o rg
an an
d H
u n t
(1 9 9 4 )
1 2 9
as so
ci at
io n
p re
si d e n ts
in th
e U
n it e d
S ta
te s
R e la
ti o n al
e x ch
an ge
th e o ry
(R E T
) (R
e la
ti o n al
)
S h ar
e d
va lu
e s,
co m
m u n ic
at io
n , o p p o rt
u n is
ti c
b e h av
io r
F ro
m th
e b u ye
r p e rs
p e ct
iv e , co
m m
it m
e n t
an d
tr u st
ar e
k e y
m e d ia
ti n g
co n st
ru ct
s in
re la
ti o n sh
ip m
ar k e ti n g.
U n ila
te ra
l tr
u st
K u m
ar , S ch
e e r,
an d
S te
e n k am
p (1
9 9 5 )
4 1 7
U .S
. d e al
e rs
B ila
te ra
l d e te
rr e n ce
th e o ry
(E co
n o m
ic )
T o ta
l in
te rd
e p e n d e n ce
, in
te rd
e p e n d e n ce
as ym
m e tr
y T
o ta
l in
te rd
e p e n d e n ce
in cr
e as
e s
d e al
e r
tr u st
, w
h e re
as in
te rd
e p e n d e n ce
as ym
m e tr
y re
d u ce
s d e al
e r
tr u st
. U
n ila
te ra
l tr
u st
A u la
k h , K
o ta
b e , an
d S ah
ay (1
9 9 6 )
6 5 2
U .S
. fi rm
s w
it h
fi rm
s fr
o m
o th
e r
co u n tr
ie s
R E T
(R e la
ti o n al
) C
o n ti n u it y
e x p e ct
at io
n s,
fl e x ib
ili ty
, in
fo rm
at io
n e x ch
an ge
, o u tp
u t
co n tr
o l,
p ro
ce ss
co n tr
o l,
so ci
al co
n tr
o l
B o th
b ila
te ra
l re
la ti o n al
n o rm
s an
d in
fo rm
al m
o n it o ri
n g
m e ch
an is
m s
fo st
e r
tr u st
an d
im p ro
ve p ar
tn e rs
h ip
p e rf
o rm
an ce
. H
o w
e ve
r, tr
u st
is n o t
si gn
if ic
an tl y
re la
te d
to p e rf
o rm
an ce
.
M u tu
al tr
u st
D o n e y
an d
C an
n o n
(1 9 9 7 )
2 0 0
p u rc
h as
in g
m an
ag e rs
S o ci
al e x ch
an ge
th e o ry
(R e la
ti o n al
)
F ir
m ch
ar ac
te ri
st ic
s (r
e p u ta
ti o n , si
ze , e x p e rt
is e , p o w
e r)
, re
la ti o n sh
ip ch
ar ac
te ri
st ic
s (i n fo
rm at
io n
sh ar
in g,
si m
ila ri
ty ,
le n gt
h o f re
la ti o n sh
ip , e tc
.)
B o th
fi rm
ch ar
ac te
ri st
ic s
an d
re la
ti o n sh
ip ch
ar ac
te ri
st ic
s si
gn if ic
an tl y
in fl u e n ce
b u ye
r tr
u st
. T
ru st
is si
gn if ic
an tl y
re la
te d
to an
ti ci
p at
e d
fu tu
re in
te ra
ct io
n .
U n ila
te ra
l tr
u st
Z ah
e e r,
M cE
vi ly
, an
d P e rr
o n e
(1 9 9 8 )
1 0 7
b u ye
r– su
p p lie
r re
la ti o n sh
ip s
R E T
(R e la
ti o n al
) N
.A .
E n h an
ce d
su p p lie
r p e rf
o rm
an ce
, lo
w e re
d co
st s
o f n e go
ti at
io n ,
an d
re d u ce
d co
n fl ic
t ar
e sh
o w
n to
b e
re la
te d
to h ig
h le
ve ls
o f
in te
ro rg
an iz
at io
n al
tr u st
.
M u tu
al tr
u st
D ye
r an
d C
h u
(2 0 0 0 )
4 5 3
su p p lie
r– au
to m
ak e r
re la
ti o n sh
ip s
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) L e n gt
h o f re
la ti o n sh
ip , co
m m
u n ic
at io
n , re
la ti o n sh
ip co
n ti n u it y,
as si
st an
ce to
th e
su p p lie
r, b u ye
r’ s
o w
n e rs
h ip
o f
su p p lie
r st
o ck
, in
st it u ti o n al
e n vi
ro n m
e n t
S u p p lie
r tr
u st
is h ig
h ly
co rr
e la
te d
w it h
st ab
le an
d co
n si
st e n t
b u ye
r p ro
ce ss
e s/
ro u ti n e s
th at
re p re
se n t
cr e d ib
le co
m m
it m
e n ts
to lo
n g-
te rm
in te
ra ct
io n s.
T h e
in st
it u ti o n al
e n vi
ro n m
e n t
h as
an im
p o rt
an t
in fl u e n ce
o n
th e
d e ve
lo p m
e n t
o f tr
u st
.
U n ila
te ra
l tr
u st
P o p p o
an d
Z e n ge
r (2
0 0 2 )
2 8 5
co m
p u te
r e x e cu
ti ve
s R
E T
(R e la
ti o n al
) E x ch
an ge
h az
ar d s,
p re
vi o u s
re la
ti o n s
R e la
ti o n al
go ve
rn an
ce an
d co
n tr
ac ts
fu n ct
io n
as co
m p le
m e n ts
in e x p la
in in
g e x ch
an ge
p e rf
o rm
an ce
. M
u tu
al tr
u st
D ye
r an
d C
h u
(2 0 0 3 )
3 4 4
su p p lie
r– au
to m
ak e r
re la
ti o n sh
ip s
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) N
.A .
T ru
st lo
w e rs
tr an
sa ct
io n
co st
s, p ro
m o te
s in
fo rm
at io
n sh
ar in
g, an
d is
an im
p o rt
an t
so u rc
e o f p e rf
o rm
an ce
. U
n ila
te ra
l tr
u st
K ri
sh n an
, M
ar ti n , an
d N
o o rd
e rh
av e n
(2 0 0 6 )
1 2 6
In d ia
n fi rm
s w
it h
in te
rn at
io n al
al lia
n ce
s
R E T
(R e la
ti o n al
) N
.A .
T h e
p o si
ti ve
re la
ti o n sh
ip b e tw
e e n
tr u st
an d
p e rf
o rm
an ce
is st
ro n ge
r u n d e r
h ig
h b e h av
io ra
l u n ce
rt ai
n ty
an d
w e ak
e r
u n d e r
h ig
h e n vi
ro n m
e n ta
l u n ce
rt ai
n ty
.
M u tu
al tr
u st
Z ah
e e r
an d
Z ah
e e r
(2 0 0 6 )
C o n ce
p tu
al st
u d y
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) D
if fe
re n ce
s in
in st
it u ti o n al
e n vi
ro n m
e n ts
T ru
st as
ym m
e tr
y ar
is e s
fr o m
d if fe
re n ce
s in
in st
it u ti o n al
e n vi
ro n m
e n ts
an d
h as
gr e at
e r
n e ga
ti ve
e ff e ct
s o n
co lla
b o ra
ti o n
p e rf
o rm
an ce
w it h
h ig
h in
te rd
e p e n d e n ce
.
T ru
st as
ym m
e tr
y
B st
ie le
r an
d H
e m
m e rt
(2 0 0 8 )
1 0 0
p ro
d u ct
d e ve
lo p m
e n t
p ar
tn e rs
h ip
s
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) C
o m
m u n ic
at io
n , fa
ir n e ss
, co
n fl ic
ts , n at
io n al
cu lt u re
R e la
ti o n al
b e h av
io rs
im p ac
t tr
u st
fo rm
at io
n ,a
n d
n at
io n al
cu lt u re
h as
a d ir
e ct
an d
a m
o d e ra
ti n g
e ff e ct
o n
tr u st
d e ve
lo p m
e n t.
U n ila
te ra
l tr
u st
G u la
ti an
d N
ic k e rs
o n
(2 0 0 8 )
2 2 2
co m
p o n e n t–
so u rc
in g
ar ra
n ge
m e n ts
o f tw
o as
se m
b le
rs
T C
E (E
co n o m
ic )
N .A
. T
ru st
co m
p le
m e n ts
b u y
an d
al ly
go ve
rn an
ce ch
o ic
e s
b y
lo w
e ri
n g
co n fl ic
t an
d e n h an
ci n g
p e rf
o rm
an ce
. M
u tu
al tr
u st
(c o n ti n u ed
)
83
T a b
le 1 .
(c o n ti n u e d )
S tu
d y
C o n te
x t
T h e o re
ti ca
l P e rs
p e ct
iv e
A n
te c e d
e n
ts M
a jo
r F
in d
in g s
T r u
st C
o n
c e p
t
P o p p o , Z
h o u , an
d R
yu (2
0 0 8 )
1 3 7
m an
u fa
ct u re
rs T
C E
(E co
n o m
ic )
A ss
e t
sp e ci
fi ci
ty , u n ce
rt ai
n ty
, p ri
o r
e x ch
an ge
h is
to ry
, e x p e ct
at io
n o f co
n ti n u it y
T h e
re la
ti o n sh
ip b e tw
e e n
as se
t sp
e ci
fi ci
ty /u
n ce
rt ai
n ty
/p ri
o r
h is
to ry
an d
tr u st
is m
e d ia
te d
b y
e x p e ct
at io
n s
o f co
n ti n u it y.
M u tu
al tr
u st
R o b so
n , K
at si
k e as
, an
d B e llo
(2 0 0 8 )
1 7 7
in te
rn at
io n al
st ra
te gi
c al
lia n ce
s R
E T
(R e la
ti o n al
) D
is tr
ib u ti ve
fa ir
n e ss
, p ar
tn e r
si m
ila ri
ty B o th
d is
tr ib
u ti ve
fa ir
n e ss
an d
p ar
tn e r
si m
ila ri
ty ar
e p o si
ti ve
ly as
so ci
at e d
w it h
in te
rp ar
tn e r
tr u st
, w
h ic
h is
p o si
ti ve
ly as
so ci
at e d
w it h
al lia
n ce
p e rf
o rm
an ce
.
M u tu
al tr
u st
G ra
e b n e r
(2 0 0 9 )
C as
e st
u d y
o f 1 2
e n tr
e p re
n e u ri
al fi rm
s an
d e ig
h t
ac q u ir
e rs
T C
E (E
co n o m
ic )
In fo
rm at
io n
as ym
m e tr
y B o th
b u ye
rs ’ an
d se
lle rs
’ as
se ss
m e n ts
o f th
e ir
co u n te
rp ar
ts ’
tr u st
w e re
o ft
e n
m is
ta k e n , an
d th
e se
im b al
an ce
s fo
st e r
se lle
r vu
ln e ra
b ili
ty an
d b u ye
r d e ce
it .
T ru
st as
ym m
e tr
y
H o m
b u rg
e t
al . (2
0 0 9 )
5 1 1
b u ye
r– su
p p lie
r re
la ti o n sh
ip s
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) T
ra n sn
at io
n al
it y
o f b u ye
r– su
p p lie
r re
la ti o n sh
ip , n at
io n al
cu lt u re
o f b u ye
r fi rm
T ra
n sn
at io
n al
it y
an d
cu lt u re
b o th
af fe
ct th
e b u ye
r’ s
ch o ic
e o f
go ve
rn an
ce m
o d e s.
U n ila
te ra
l tr
u st
K at
si k e as
, S k ar
m e as
, an
d B e llo
(2 0 0 9 )
2 1 4
im p o rt
in g
d is
tr ib
u to
rs In
st it u ti o n al
th e o ry
(I n st
it u ti o n al
) In
te rn
al u n ce
rt ai
n ty
, e x te
rn al
u n ce
rt ai
n ty
, in
te rf
ir m
p sy
ch ic
d is
ta n ce
, tr
an sa
ct io
n sp
e ci
fi c
as se
ts , o p p o rt
u n is
m In
te rf
ir m
p sy
ch ic
d is
ta n ce
, in
te rn
al u n ce
rt ai
n ty
, an
d e x p o rt
e r
tr an
sa ct
io n -s
p e ci
fi c
as se
ts an
d o p p o rt
u n is
m ar
e re
la te
d to
im p o rt
e r
tr u st
.
U n ila
te ra
l tr
u st
C ai
, Ju
n , an
d Y
an g
(2 0 1 0 )
3 9 8
C h in
e se
m an
u fa
ct u re
rs In
st it u ti o n al
th e o ry
(I n st
it u ti o n al
) L e ga
l p ro
te ct
io n , go
ve rn
m e n t
su p p o rt
, im
p o rt
an ce
o f gu
an x i
G o ve
rn m
e n t
su p p o rt
an d
im p o rt
an ce
o f gu
an x i si
gn if ic
an tl y
af fe
ct tr
u st
, w
h ic
h su
b se
q u e n tl y
in fl u e n ce
s in
fo rm
at io
n sh
ar in
g an
d co
lla b o ra
ti ve
p la
n n in
g.
U n ila
te ra
l tr
u st
N ya
ga , W
h ip
p le
, an
d L yn
ch (2
0 1 0 )
3 7 0
b u ye
rs an
d 2 5 5
su p p lie
rs R
E T
(R e la
ti o n al
) C
o lla
b o ra
ti ve
ac ti vi
ti e s
(i n fo
rm at
io n
sh ar
in g,
jo in
t re
la ti o n sh
ip e ff o rt
, an
d d e d ic
at e d
in ve
st m
e n ts
) C
o lla
b o ra
ti ve
ac ti vi
ti e s
le ad
to tr
u st
an d
co m
m it m
e n t.
T ru
st an
d co
m m
it m
e n t,
in tu
rn , le
ad to
im p ro
ve d
sa ti sf
ac ti o n
an d
p e rf
o rm
an ce
.
M u tu
al tr
u st
Ji an
g e t
al . (2
0 1 1 )
1 0 8
C h in
e se
se n io
r e x e cu
ti ve
s In
st it u ti o n al
th e o ry
(I n st
it u ti o n al
) C
u lt u ra
l si
m ila
ri ty
O ve
rs e as
p ar
tn e rs
o f cu
lt u ra
l e th
n ic
it ie
s d if fe
re n t
fr o m
h o st
- co
u n tr
y e x e cu
ti ve
s ar
e d is
ad va
n ta
ge d
in th
e tr
u st
d o m
ai n
w h e n
co m
p ar
e d
w it h
p ar
tn e rs
w h o
sh ar
e si
m ila
r cu
lt u ra
l e th
n ic
it ie
s.
U n ila
te ra
l tr
u st
Z ah
e e r
an d
K am
al (2
0 1 1 )
C o n ce
p tu
al st
u d y
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) H
o m
e co
u n tr
y, h o st
co u n tr
y B o th
th e
h o m
e an
d h o st
co u n tr
y o f th
e e x ch
an ge
p ar
tn e rs
in fl u e n ce
th e
n at
u re
an d
o u tc
o m
e s
o f d ya
d ic
tr u st
. M
u tu
al tr
u st
A lt in
ay e t
al . (2
0 1 4 )
2 0 0
m u lt is
e ct
o r
fr an
ch is
e e s
In st
it u ti o n al
th e o ry
(I n st
it u ti o n al
) R
o le
p e rf
o rm
an ce
, cu
lt u ra
l se
n si
ti vi
ty T
h e re
is a
p o si
ti ve
re la
ti o n sh
ip b e tw
e e n
fr an
ch is
e r’
s ro
le p e rf
o rm
an ce
/c u lt u ra
l se
n si
ti vi
ty an
d fr
an ch
is e e ’s
tr u st
. T
ru st
p o si
ti ve
ly af
fe ct
s th
e fr
an ch
is e e ’s
sa ti sf
ac ti o n .
U n ila
te ra
l tr
u st
L e o n id
o u
e t
al . (2
0 1 4 )
7 6
e m
p ir
ic al
st u d ie
s In
st it u ti o n al
th e o ry
(I n st
it u ti o n al
) O
p p o rt
u n is
m , co
n fl ic
t, co
m m
u n ic
at io
n , cu
lt u ra
l d is
ta n ce
, ad
ap ta
ti o n
O p p o rt
u n is
m , co
n fl ic
ts , an
d cu
lt u ra
l d is
ta n ce
e n d an
ge r
re la
ti o n sh
ip q u al
it y,
w h e re
as co
m m
u n ic
at io
n an
d ap
p ro
p ri
at e
ad ap
ta ti o n s
e n h an
ce re
la ti o n sh
ip q u al
it y
(i .e
., co
o p e ra
ti o n ,
tr u st
, an
d co
m m
it m
e n t)
. R
e la
ti o n sh
ip q u al
it y
st re
n gt
h e n s
b o th
re la
ti o n al
an d
fi n an
ci al
p e rf
o rm
an ce
.
M u tu
al tr
u st
M cE
vi ly
, Z
ah e e r,
an d
K am
e l (2
0 1 7 )
8 6
b u ye
r– su
p p lie
r re
la ti o n sh
ip s
T C
E (E
co n o m
ic )
E x ch
an ge
h az
ar d s,
p o w
e r
im b al
an ce
T h e
sa m
e d e gr
e e
o f e x ch
an ge
h az
ar d s/
p o w
e r
im b al
an ce
h as
co n tr
as ti n g
e ff e ct
s o n
tr u st
ac ro
ss th
e d ya
d .
T ru
st as
ym m
e tr
y
S h e n
e t
al . (2
0 1 9 )
2 4 3
IT se
rv ic
e su
p p lie
rs R
E T
(R e la
ti o n al
) C
o n tr
ac t
d e si
gn ca
p ab
ili ty
A p ar
tn e r’
s co
n tr
ac t d e si
gn ca
p ab
ili ty
re ve
al e d
in th
e co
n tr
ac ti n g
p ro
ce ss
ca n
e n ge
n d e r
re la
ti o n al
tr u st
. U
n ila
te ra
l tr
u st
84
forward-looking decision rule, in which business participants
must envision the future situation and make decisions with an
assumption of self-interest calculations (Rousseau et al. 1998).
During the conscious process, calculative trust forms rational
expectations and motivates the exchange parties’ behaviors to
maximize their economic interests within the exchange (Poppo,
Zhou, and Li 2016; Rousseau et al. 1998).
The social perspective (e.g., social exchange theory), how-
ever, challenges this rational basis of trust and instead posits
that trust arises from social interactions (Blau 1964; Morgan
and Hunt 1994; Uzzi 1997). Relational trust refers to the trust-
ing party’s positive beliefs about the shared understanding and
common identity regarding the specific relationship (Rousseau
et al. 1998). In contrast to rational reasoning, relational trust is
more comparable to relational beliefs, which generally arise
from intrinsic values, social interactions, and understanding
of goodwill (Schilke and Cook 2015; Uzzi 1997). Distinct from
the forward-looking logic of calculative trust, relational trust
relies on repeated interactions to guide the parties’ decisions
and transactional actions. With an emphasis on the noneco-
nomic aspects of exchange relationships, business participants
with high relational trust would follow the norm of mutuality to
behave and consider the relationship as a whole (Rousseau
et al. 1998; Schilke and Cook 2015).
As different facets of trust, calculative and relational trust
coexist and characterize most business relationships (Poppo,
Zhou, and Li 2016). Trust studies can lead to misattributions if
they fail to account for the various types of trust (Poppo, Zhou,
and Li 2016; Schilke and Cook 2015). Therefore, we distinguish
between calculative and relational trust and explore their distinct
bases and decision logics in studying the origins, boundary con-
ditions, and performance outcomes of trust asymmetry.
Trust Asymmetry Across Borders
Although trust is multidimensional, it is also important to note
that trust is bidirectional, which involves both a trustor (the
trusting party) and a trustee (the trusted party) (Korsgaard,
Brower, and Lester 2015). When examining trust asymmetry,
we take both parties’ perceptions into consideration to capture
the bilateral nature of trust. To achieve relational benefits, it
usually requires the mutual consent of dyadic parties to make
adaptations and provide information, and a shared value of trust
between exchange partners is, therefore, essential (Heide and
John 1992). However, in practice, the perceptions of the parties
often vary across the dyad, especially in an international con-
text, making trust asymmetry in such contexts more prevalent
(Zaheer and Zaheer 2006).
Zucker (1986) highlights the importance of institutions in
determining trust. As “the rules of the game,” institutions
define what is institutionally appropriate for social actors and
shape the firms’ perceptions through formal and informal
forces (DiMaggio and Powell 1983; Scott 1995). In interna-
tional exchanges, cross-border partners’ expectations and per-
ceptions are likely to vary across the dyad given their different
institutional backgrounds (Zucker 1986). Institutional distance,
which is defined as the differences in the institutional environ-
ments of the exchange parties, can be characterized into two
types: formal institutional distance and informal institutional
distance (Xu and Shenkar 2002; Yang, Su, and Fam 2012). For
Expectation of continuity
Prior interaction
Formal institutional distance
Informal institutional distance
Exchange performance
Calculative trust asymmetry
Relational trust asymmetry
H2a: (−**)
H2b: (+*)
H1a: (−**)
H1b: (−*)
H3a: (n.s.) H3b: (−*)
H4a: (−**) H4b: (−*) Control Variables
Shared calculative trust Shared relational trust
Shared asset specificity Asset specificity asymmetry Supply market uncertainty
Guanxi importance Buyer age
Supplier age Buyer size
Supplier size Mechanics
Heavy Electronics
Figure 1. Conceptual model. Notes: n.s. ¼ not significant, *p < .05, **p < .01.
Wang et al. 85
formal institutional distance, we examine the differences in the
legal and regulatory institutions of the home and host countries
(Kaufmann, Kraay, and Mastruzzi 2009). For informal institu-
tional distance, we focus on the national culture differences in a
cross-border context (Salomon and Wu 2012). By doing so, we
attempt to offer a clear picture of how institutional distance
influences different types of trust asymmetry in international
relationships.
According to Scott’s schema (Scott 1995), we suggest that
formal institutions mainly apply to calculative trust, whereas
informal institutions mainly explain relational trust given their
different emphases and implications. Formal institutions
mainly refer to the regulatory and political bodies of a nation,
such as regulatory policies, constitutions, and property rights
(Scott 1995). Using legal deterrence, formal institutions sanc-
tion deviant behaviors according to written regulations and
laws, thereby shaping business participants’ recognitions about
rewards or punishments for specific behaviors (Scott 1995). In
addition, since formal institutions are generally characterized
as objective and formalized frameworks, it is easy for business
participants to obtain explicit information (Gaur and Lu 2007;
Scott 1995), which provides a basis for exchange parties to
make economic calculations of their actions, thereby applying
to the formation of calculative trust (Cai, Jun, and Yang 2010).
Informal institutions include social beliefs, values, beha-
vioral norms, and conventions (Scott 1995). Informal institu-
tions can be manifested in terms of individualism versus
collectivism, masculinity versus femininity, power distance,
uncertainty avoidance, and long-term orientation (Hofstede
2001). When operating in China, guanxi is a key informal
institution that shapes exchange parties’ interpretation and
behaviors. Literally, guanxi means social connections and rela-
tionships (Xin and Pearce 1996). Because Chinese society is
heavily structured according to social relations, guanxi affects
not only personal interactions but also business practices (Peng
and Luo 2000). Guanxi influences interfirm exchanges through
the operating rules of reciprocal obligation and face saving
(i.e., the idea of maintaining one’s prestige; Park and Luo
2001). Considering that guanxi mainly originated from a col-
lective mindset, which correlates with the collectivism–indivi-
dualism dimension of the tradition distinction of informal
institutions, we focus on a more generalized form of informal
institutions (i.e., national culture) to develop our hypotheses
(Hofstede 2001; Salomon and Wu 2012). Informal institutions
emphasize the knowledge and perceptions developed from
repeated social interactions, which constitute the basis of rela-
tional trust (Kostova and Roth 2002; Yang, Su, and Fam 2012).
In this regard, the logics underpinning informal institutions are
more in line with the formation of relational trust.
Hypotheses
Effects of Trust Asymmetry
We first posit that both calculative and relational TA show
negative influences on exchange performance. First, high
calculative TA implies that the exchange parties attach differ-
ent importance to the economic reasoning of gains and losses.
Thus, when allocating jobs to fulfill performance goals, high
calculative TA would motivate exchange parties to understand
their roles and obligations in different ways (Rousseau et al.
1998). Whereas the exchange party who emphasizes a calcula-
tion of gains and losses in building trust would pay more atten-
tion to actions that are related to high rewards and low
punishments (Poppo, Zhou, and Li 2016), the other would
understand their roles with less calculation. This inconsistency
would generate conflicts when interpreting each other’s expec-
tations, leading to additional transaction costs and, thus, lower
performance satisfaction.
Second, according to economic evaluations, calculative
trust relies on a forward-looking decision rule to guide how
the exchange parties would work (Bromiley and Harris 2006;
Poppo, Zhou, and Li 2016). In this regard, when interfirm
partners have asymmetric levels of calculative trust, they show
inconsistent reliance on this forward-looking logic. We argue
that such an inconsistency indicates divergent time horizon
expectations regarding the specific exchange relationship and
drives different behavioral patterns of international partners.
To be specific, the international partner with relatively lower
calculative trust tends to adopt a short-term perspective about
the transaction relationship and pursue interests in the short run
(Bromiley and Harris 2006), whereas its partner is more likely
to show less concern about short-term benefits and be long-
term oriented. The misalignment of motivations between
international exchange parties leads to inconsistent and even
contradictory transactional behaviors, thus decreasing overall
satisfaction regarding the exchange.
H1a: Calculative trust asymmetry is negatively associated
with exchange performance.
We further argue that relational TA decreases exchange
performance for two reasons. First, relational TA indicates
that the exchange parties rely differently on past interactions
to interpret the partner’s intentions and obligations (Gulati
1995). In this situation, interfirm partners are likely to have
divergent understandings about the roles and responsibilities
of each of the parties. To be specific, the partner who has
higher relational trust tends to show higher learning capabil-
ity in understanding roles and more inertia in linking their
expectations to prior interactions (Gulati 1995), whereas its
partner relies less on the past to consider each other’s roles
and obligations. This generates misunderstandings between
transaction parties and, thus, increases conflicts in the inter-
national exchange relationship, resulting in lower exchange
performance.
Second, exchange parties with relational TA tend to place
inconsistent emphases on mutuality when carrying out roles
and jobs. Such divergence causes interfirm partners to behave
in very different ways. Specifically, the party who attaches
more importance to mutuality is more likely to care about its
partner’s welfare and act beneficially because it is in its
86 Journal of International Marketing 28(2)
partner’s interest (Lewicki and Bunker 1996), whereas its part-
ner shows less care regarding the other’s benefits and has a
higher tendency to pursue self-interest. Such a misalignment
fails to support business partners to work well together and
proceed smoothly to achieve joint goals, thereby increasing
transaction costs and curtailing exchange performance. Thus,
we propose the following hypothesis:
H1b: Relational trust asymmetry is negatively associated
with exchange performance.
Institutional Distance and Trust Asymmetry
We argue that formal institutional distance decreases calcula-
tive trust asymmetry. First, high formal institutional distance
implies high dissimilarity between two nations’ regulations,
rules, and sanctions that influence business practices (Salomon
and Wu 2012; Scott 1995). International parties become more
concerned about the aspects of the foreign legal rules and
practices that are unfamiliar to them to avoid any misbehaviors
that would invite legal sanctions (Yang, Su, and Fam 2012).
Due to the perceived high risk within the relationship, both
sides tend to be more cautious and sensitive about their invest-
ments and rewards, which in turn fortifies their calculative
mindsets. In this regard, both sides continually assess the gains
and losses for cooperation and noncompliance, attempting to
use this as an internal remedy to curtail external hazards. Dur-
ing the process, exchange partners align their calculative trust
perceptions and thereby lower their calculative TA.
Second, given that formal institutions contain rules and
practices that are objective and explicit (Scott 1995), interna-
tional business participants can easily recognize the specific
differences between the two nations. For instance, formal insti-
tutions constrain business participants’ behaviors through
explicit rules and observable sanctions such that international
exchange parties can still obtain specific information despite
distance (Gaur and Lu 2007; Scott 1995). The observable
nature of those codes and practices enables international inter-
firm partners to make comparable assessments of the costs and
benefits of compliance and noncompliance, thus allowing them
to better build similar forward-looking decision rules between
them. As a result, the exchange parties are more likely to
develop similar levels of calculative trust. Thus, we propose
the following hypothesis:
H2a: Formal institutional distance is negatively associ-
ated with calculative trust asymmetry.
We argue that informal institutional distance increases rela-
tional TA for two reasons. First, informal institutional distance
reflects differences in national cultures in terms of the attitudes,
beliefs, values, and norms of business participants (Yang, Su,
and Fam 2012). For example, whereas Western relationships
usually emphasize a fair and even relationship, guanxi does not
demand an equal level of reciprocity but may request a sacri-
fice of self-interest in the anticipation of future favors (Gu,
Hung, and Tse 2008). This divergence adds complexity and
difficulty to interactions within the international dyads and
increases the perceived risk for international exchanges (Leo-
nidou et al. 2014). Facing such risk, it is likely that international
interfirm partners with dissimilar cultural backgrounds will
have different views regarding mutuality (Eden and Miller
2004). Specifically, one may show more goodwill and care
regarding mutuality, whereas the other may be more likely to
show willingness to pursue self-interest. Therefore, we argue
that international exchange parties are more likely to develop
different levels of relational trust toward each other because of
such dissimilar behavior patterns, thus resulting in higher rela-
tional TA.
Second, in the forms of values, beliefs, cognitions, and
norms of conduct, informal institutions are imprinted in parti-
cipants’ mindsets and are characterized as implicit and tacit
(Scott 1995; Yang, Su, and Fam 2012). Informal institutions
are, therefore, difficult for outsiders to understand and interpret
(Johnston et al. 2012; Leonidou et al. 2014). Reciprocal obli-
gation and face saving, which are two operating norms of
guanxi, can be difficult to understand even in other collectivist
cultures such as Russia’s and Japan’s (Guthrie 1998). Given the
implicit nature of informal institutions, exchange parties tend
to organize their perceptions and develop norms with reference
to their cultural backgrounds (Scott 1995). Because informal
backgrounds influence the way that firms understand and inter-
pret situations (Samaha, Beck, and Palmatier 2014), exchange
parties with high informal institutional distance also tend to
interpret previous interactions within the specific exchange
through different perspectives, allowing more opportunity for
relational TA to arise. Thus, we propose the following
hypothesis:
H2b: Informal institutional distance is positively associ-
ated with relational trust asymmetry.
Moderating Effects of Prior Interactions and Expectations of Continuity
We also explore how prior interactions and expectations of
continuity moderate the effects of formal and informal institu-
tional distance. Prior interactions are essential in interorganiza-
tional relationships (Poppo, Zhou, and Ryu 2008; Rindfleisch
and Heide 1997). With a longer transacting history and more
frequent interactions, interfirm partners learn about each other
and gain familiarity (Lee 2013). Expectations of continuity
capture business parties’ prospects for their future exchange
relationships (Lusch and Brown 1996). When exchange parties
anticipate continued relationships, they generally attach more
importance to the relationships (Poppo, Zhou, and Ryu 2008).
As key characteristics capturing the past and the future of inter-
firm relationships, both factors play roles in the trust-building
process that cannot be ignored (Ganesan 1994; Lusch and
Brown 1996; Poppo, Zhou, and Ryu 2008). Whereas institu-
tional distance serves as an external force that shapes the par-
ties’ behaviors, prior interactions and expectations of
continuity serve as two internal forces that jointly influence
Wang et al. 87
the participants’ perceptions and behaviors in the formation of
trust asymmetry.
We contend that a high prior interaction level intensifies the
effect of formal institutional distance on constraining calcula-
tive TA. First, with high levels of repeated interactions,
exchange parties accumulate knowledge and specific informa-
tion about each other (Kwon, Haleblian, and Hagedoorn
2016). Such prior learning enables international parties to
develop a better understanding of their partners’ expectations
and decision rules. Whereas high formal institutional distance
motivates participants to adopt more calculative decision
rules and behavior patterns, prior interactions facilitate parti-
cipants’ calculations by offering unified and precise informa-
tion (Gulati 1995; Poppo, Zhou, and Ryu 2008) and thus
provide a common ground for exchange parties to better align
their assessments of gains and losses, further lowering calcu-
lative TA. Conversely, when levels of prior interaction are
low, international parties cannot predict their potential gains
and losses on the basis of historical interactions. Even though
great formal institutional distance fortifies their calculative
perspectives, the lack of sufficient historical information pro-
hibits their ability to form a consistent level of calculative
trust toward each other.
Second, prior interactions facilitate the establishment of a
standardized approach (Poppo, Zhou, and Ryu 2008; Reuer and
Ariño 2007). With collaborative histories, both parties gain a
better mutual understanding of how the transaction can be
organized to achieve greater benefits and how the routinized
process based on prior history can reduce costs (Reuer and
Ariño 2007). Whereas formal institutional distance exerts
influence through dissimilar codes and practices and motivates
firms to adopt more calculative thinking, a standardized
approach developed on the basis of prior interactions would
enable participants to assess the costs and benefits in the same
way, thereby strengthening the effect on constraining the
potential calculative TA. In contrast, a low prior interaction
level fails to support exchange parties with different formal
institutions to effectively build a standardized process, thereby
increasing the possibility of a divergence in calculative trust.
Thus, we propose the following hypothesis:
H3a: The negative relationship between formal institu-
tional distance and calculative trust asymmetry is stronger
when the prior interaction level is high than when it is
low.
We further posit that high levels of prior interaction weaken
the link between informal institutional distance and relational
TA. As international parties repeatedly interact, they tend to
rely more on prior experience than cultural stereotypes to form
perceptions about their partners (Kwon, Haleblian, and Hage-
doorn 2016). Whereas informal institutional distance would
enlarge relational TA given the dissimilar cultural imprints of
international partners, prior interactions build a collective
experience that narrows the perception gap between the two.
Through repeated interactions, exchange parties gain specific
knowledge about each other and develop a greater understand-
ing of their partners’ idiosyncrasies (Reuer and Ariño 2007).
Buckley, Clegg, and Tan (2006) echo that active guanxi build-
ing in China facilitates the development of a common under-
standing of the aspects of ongoing interactions. This provides a
relational basis for exchange parties to bridge their original
divergence in cultural values and align their methods of inter-
pretation with mutual experience during the interaction pro-
cess. Progressing from distinct cultural backgrounds to
shared experiences helps to mitigate the initial effect of diver-
gent informal institutions. Conversely, when prior interaction is
low, with limited shared experiences, international exchange
parties would rely more on their dissimilar cultural back-
grounds to form perceptions and trust, thus allowing a higher
degree of relational TA to emerge from informal institutional
distance. Therefore, we propose the following hypothesis:
H3b: The positive relationship between informal institu-
tional distance and relational trust asymmetry is weaker
when the prior interaction level is high than when it is
low.
We also propose that a high expectation of continuity level
amplifies the influence of formal institutional distance in
reducing calculative TA. First, in the presence of a high expec-
tation of continuity, exchange parties recognize that it is impor-
tant to maintain a long-term relationship with their partners
(Ganesan 1994). Under this condition, international interfirm
partners tend to exert more effort to make plans and show more
concern about potential risks arising from formal institutional
distance (Yang, Su, and Fam 2012). For instance, they need to
pay more attention to the possibility of a government transition
occurring when requiring government support to deal with sud-
den issues. As a result, when the expectation of continuity level
is high, exchange parties with distant formal institutions are
more likely to show similar sensitivity and make coordinated
assessments to constrain external risks, leading to a lower level
of calculative TA. By contrast, when expectation of continuity
is low, it is less possible that international interfirm partners
will show comparable levels of sensitivity in response to per-
ceived risks.
Second, when the expectation of continuity level is high, the
transaction partners are more willing to regularly share useful
and confidential information with each other (Dyer and Singh
1998; Poppo, Zhou, and Ryu 2008). The provision of contin-
uous and unified knowledge to formally distant exchange par-
ties facilitates their calculating efforts to clearly specify their
responsibilities and rights to deal with the divergence in expli-
cit formal institutions (Gaur and Lu 2007), thereby enabling
them to make more aligned evaluations about benefits and
costs, resulting in an even lower degree of calculative TA. In
contrast, when the expectation of continuity is low, exchange
parties who view their relationships as short-lived tend to with-
hold specific information. This fails to help international inter-
firm partners with formal institutional distance work well
together to make consistent assessments of gains and losses,
88 Journal of International Marketing 28(2)
thereby weakening the effectiveness of efforts to constrain cal-
culative TA.
H4a: The negative relationship between formal institu-
tional distance and calculative trust asymmetry is stronger
when the expectation of continuity level is high than
when it is low.
We further hypothesize that a high expectation of continuity
mitigates the influence of informal institutional distance on
relational TA. When the expectation of continuity is high, both
exchange parties show more willingness to signal goodwill
through actively sharing information and making commitments
within the relationship (Dyer and Singh 1998; Parkhe 1993).
While dissimilar cultural backgrounds increase relational TA
through the occurrence of divergent understandings and inter-
pretations, high expectations about the relationship continuity
align the perceptions of cross-border exchange dyads and
encourage mutual engagement (Poppo, Zhou, and Ryu 2008).
Such joint efforts weaken the role of divergent informal back-
grounds in shaping exchange parties’ perceptions and trust,
thereby mitigating the effect of informal institutional distance
on relational TA. In contrast, under the condition of a low
expectation of continuity, the implicit character of informal
institutions can still be a concern for cross-border transaction
parties with different informal backgrounds, allowing rela-
tional TA to emerge. Therefore, we propose the following
hypothesis:
H4b: The positive relationship between informal institu-
tional distance and relational trust asymmetry is weaker
when the expectation of continuity level is high than
when it is low.
Method
Sampling and Data Collection
For the empirical research setting, we focused on international
buyer–supplier relationships within various manufacturing
industries in China. China engages heavily in international
business. In 2017, the amount of international trade of goods
and services with China was $4.63 trillion USD, which
accounts for 10.16% of all world trade (World Bank 2017). Despite this achievement, China also faces increasing
challenges to effectively manage its cross-border exchange
relationships due to the complexity of transition economies
and the recent global rise in protectionism. Moreover, China
is characterized by an underdeveloped legal framework and
a traditional culture (Armstrong and Yee 2001). Its distinct
institutional environment not only places an emphasis on
trust for relationship management but also underlines the
necessity for firms to better understand the role of institu-
tional distance when dealing with cross-border players
(Armstrong and Yee 2001). All these aspects make China
a suitable context for our study.
We collected data at both the interorganizational level and
institutional level. For the interorganizational-level data, we
approached both buyers and suppliers to retrieve dyadic data.
By randomly selecting firms using a list from the National
Bureau of Statistics of China, we identified an initial sample
of 1,200 manufacturing firms located in more developed areas
in China (Beijing, Shanghai, and Guangdong) and in the sur-
rounding less developed areas, such as Hebei, Anhui, and
Jiangxi. These firms operated within the four-digit Chinese
Industrial Classification codes 1311–4290, covering industry
sectors such as medicine, electronics, telecommunication,
mechanics, automobiles, chemicals, apparel, food, textiles, and
furniture. As such, this sample provides significant variations
in China’s institutional environments.
We conducted a questionnaire survey to collect the interor-
ganizational data. Drawing on a thorough review of the related
literature and in-depth discussions with experienced research-
ers in the area, we developed an initial version of the question-
naire in English. Two independent translators then translated it
into Chinese (i.e., Chinese Mandarin). We then conducted
back-translation and compared the different versions to ensure
conceptual equivalence and accurate calibration. To verify the
validity and clarity of our questionnaire content, we invited 20
senior managers with practical experience to pretest the survey.
The respondents not only answered the survey questions but
also provided suggestions about the questionnaire content.
With their feedback, we made minor changes to refine the
questionnaire.
To guarantee survey quality, we ensured that our inter-
viewers were well-trained before sending them to conduct
onsite interviews (Hoskisson et al. 2000; Ju, Jin, and Zhou
2018). Before they gave the survey, the interviewers explained
the objectives and importance of the study to participants and
offered to provide a report with the findings and conclusions to
encourage their participation. For the main data collection, we
contacted senior managers from matched buyers and suppliers
to gather dyadic data. We first contacted the senior purchasing
managers who are mainly and directly responsible for dealing
with major suppliers, as they are the key respondents. We asked
them to identify a major supplier and then answer the distrib-
uted survey questions referring to the specific relationship with
the supplier. With their responses and information, we
approached the corresponding supplier managers and collected
matched assessments regarding the specific relationship with
the buyer.
After excluding 17 responses with missing values on the key
variables of interest, we obtained a sample of 433 matched
buyer–supplier relationships, yielding a response rate of
36.08%. Of the 433 dyads, there were 134 international buyer–supplier relationships, which constitute the final sample
for this study. The sample size is comparable to prior interna-
tional marketing studies (Ju, Jin, and Zhou 2018). To avoid
potential nonresponse bias, we adopted t-tests to compare the
samples of respondents and nonrespondents in terms of firm
size (t ¼ .68, p ¼ .50) and firm age (t ¼ .90, p ¼ .38) (Lambert and Harrington 1990). According to the results, there was no
statistically significant difference between the groups, indicat-
ing limited risk of nonresponse bias for this study.
Wang et al. 89
Among the final sample, 74 of the dyads were local buyer–
foreign supplier relationships and 60 were foreign buyer–local
supplier relationships. Appendix A shows the details of the
sampling characteristics. On average, as senior managers, the
participants had 7.52 years of experience within the firm and
12.89 years within the industry. Moreover, we included a
qualification question to measure the respondents’ familiarity
with the survey content (Cannon and Perreault 1999), and the
average score was 5.40 (seven-point scale). These statistics
offered support to the assertion that our informants were
knowledgeable about our research questions and qualified to
offer reliable assessments about their ongoing exchange rela-
tionships, thereby enhancing the validity of our study (John
and Reve 1982).
The final sample covered 19 economies, including mainland
China, the United States, the U.K., France, Japan, Singapore,
Australia, Germany, Denmark, India, South Korea, the Nether-
lands, Luxembourg, Norway, Philippines, Sweden, Switzer-
land, Hong Kong, and Taiwan. On the basis of this sample,
we collected corresponding institutional-level data. To evalu-
ate the lagged effect of institutions, we obtained data regarding
the formal institutions and informal institutions one year before
the survey data was collected. For the effect of trust asymmetry
on exchange performance, although we considered a time-
lagged data collection, it was difficult to collect adequate sam-
ples given the dyadic relationship context of our research
design. Because the major focus of our study is institutional
origins of trust asymmetry, we ultimately decided to save the
lagged effect of trust asymmetry as an empirical challenge for
future research.
Measures
Appendix B shows the measurement details of the multi-item
constructs from the survey. To examine calculative trust, we
adapted three items from Lewicki and Bunker (1996) and
Rousseau et al. (1998) to capture the degree of the participants’
perception of calculative confidence regarding the relationship.
For relational trust, we followed Lewicki and Bunker (1996) to
adopt a three-item scale to assess the extent of the exchange
parties’ relational beliefs about the business relationship in
terms of shared understanding and common identity. We then
calculated the absolute value of the buyer calculative/relational
trust minus the supplier calculative/relational trust within the
relationship to examine calculative TA and relational TA. For
exchange performance, we relied on a four-item scale adapted
from Bercovitz, Jap, and Nickerson (2006) to assess relation-
ship performance. We computed the average value of the buyer
and supplier evaluations to indicate the exchange performance.
We examined two main aspects of institutional distance—
formal and informal institutional distance—to gain a more
comprehensive picture of the cross-border business relation-
ships. To compute formal institutional distance, we first fol-
lowed Kaufmann, Kraay, and Mastruzzi (2009) and adopted
the following six dimensions to measure the quality of formal
institutions: voice and accountability, political stability, control
of corruption, government effectiveness, regulatory quality,
and rule of law. All these are critical indicators of legal and
regulatory institutions (Kaufmann, Kraay, and Mastruzzi
2009). Using data from the World Bank Governance Indicators
database (World Bank 2014), we created the composite vari-
able of formal institutional distance (FD) with the deviation
along each of the dimensions, as follows:
FD j ¼ X6 i¼1
ðD ij � D iChinaÞ2 =V i n o
= 6
FD j stands for the formal institutional distance of country j
from China. D ij is the index for country j on the ith formal
dimension. D iChina indicates the index for China on the ith
formal dimension. V i is the variance of the index of the ith
dimension across countries.
For informal institutional distance, we focused on the
national culture, which broadly captures both cognitive and
normative institutions (Salomon and Wu 2012). Hofstede
(2001) classified culture into five separate dimensions (indivi-
dualism vs. collectivism, masculinity vs. femininity, power
distance, uncertainty avoidance, and long-term orientation),
which have been widely used in prior studies (Salomon and
Wu 2012). Because relationship marketing literature has well
recognized the representation of the five dimensions (Samaha,
Beck, and Palmatier 2014), we ultimately focused on them to
measure informal institutions. We used the differences across
the five cultural dimensions to measure informal institutional
distance and obtained available data from Hofstede’s database
(www.geerthofstede.nl). Similarly, we constructed informal
institutional distance (ID) as follows (Kogut and Singh 1988;
Shenkar 2001):
ID j ¼ X5 i¼1
ðD ij � D iChinaÞ2 = V i n o
= 5
ID j refers to the informal institutional distance of country j
from China; D ij represents the index for country j for the ith
informal dimension; D iChina is the index for China for the ith
informal dimension; and V i is the variance of the index of the
ith informal dimension.
We computed prior interaction with the product term of
exchange duration and exchange frequency. Exchange duration
is the number of years that the exchange parties have been
doing business together. Exchange frequency examines the
frequency that the buyer places orders with the supplier as
follows: (1) more than once a day, (2) once a day, (3) one to
five times a week, (4) two to three times a month, (5) once a
month, (6) five to ten times a year, (7) two to four times a year,
and (8) once a year. We reverse-coded the exchange frequency
to align with the concept of prior interaction as follows: the
higher the exchange frequency, the higher the degree of prior
interaction. The data was identical for buyers and suppliers. For
expectation of continuity, we adapted three items from Gane-
san (1994) and Lusch and Brown (1996) to evaluate the degree
of the participants’ belief about the continuity of their
90 Journal of International Marketing 28(2)
relationships. The items were adjusted according to interviews
with participants. We calculated the average value of the buyer
and supplier data to capture the shared level of expectations of
continuity.
To eliminate alternative explanations, we also included sev-
eral control variables that potentially influenced the dependent
variables in the analysis. First, considering the unignorable
correlations between shared values and asymmetric values,
we controlled shared calculative trust (the average value of
buyer calculative trust and supplier calculative trust) when
examining calculative TA and shared relational trust (the aver-
age value of buyer relational trust and supplier relational trust)
for analysis of relational TA.
Second, to account for the potentially significant roles of
exchange hazards in influencing exchange performance and
trust, we controlled two transactional characteristics—asset
specificity and supply market uncertainty—which have been
highlighted in prior studies (McEvily, Zaheer, and Kamel
2017; Poppo and Zenger 2002). For asset specificity, we
adapted three items following Cannon and Perreault (1999) and
Jap and Ganesan (2000) to assess the degree to which the
exchange parties had made specific and non-redeployable
investments within the relationship. With the dyadic data, we
computed both the shared asset specificity (the average value
of buyer asset specificity and supplier asset specificity) and
asset specificity asymmetry (the absolute value of buyer asset
specificity minus supplier asset specificity). For supply market
uncertainty, we followed Cannon and Perreault (1999) to adopt
a three-item scale that examined the extent to which the supply
market changes in terms of pricing, product features and spec-
ifications, and product supply and demand.
Regarding transactions in Chinese society, guanxi is an
important force that affects a firm’s business decisions and
actions, especially regarding trust (Cai, Jun, and Yang 2010;
Lee and Dawes 2005). Therefore, guanxi serves as a valuable
control for our analysis given the Chinese context. Using three
items developed by Child, Chung, and Davies (2003) that cap-
ture the respondents’ awareness of the significance of guanxi
when doing business in the market, we measured the guanxi
importance (the average value of buyer evaluation and supplier
evaluation) and incorporated it as a control.
Moreover, to further account for firm-level effects, we con-
trolled for the buyer/supplier age (i.e., the number years the
buyer/supplier has been in operation) and buyer/supplier size
(i.e., the number of people the buyer/supplier employs), which
have been shown to have important implications for firm deci-
sions and performance. For these variables, we applied natural
logarithms given the positive skewness. In addition, because
industries play a significant role in explaining performance, we
included buyer industry types to control for the potential
effects. With three dummy variables, we respectively coded
1 for mechanics, heavy (e.g., materials, automobile, chemicals)
and electronics, and 0 for all other industries.
Construct validity. We first conducted exploratory factor analysis for the multidimensional measures and did not observe high
cross-loadings between them. Using confirmatory factor anal-
ysis for the constructs, Appendix B reports the results of the fit
statistics of the measures, suggesting an acceptable model fit
for the study (w2 / df ¼ 1.94, CFI ¼ .96, IFI ¼ .96, RMSEA ¼ .075). All the loadings on the factors were statistically signif-
icant (p < .01). For all constructs, the composite reliability (CR) values fell into the range between .85 and .95, and the
average variance extracted (AVE) ranged from .66 to .87.
These results provided support for adequate convergent valid-
ity. Moreover, for every possible pair of multidimensional con-
structs, we constrained the correlation for one model to 1.0 and
freely estimated the correlation for another model. Then, we
ran chi-square difference tests to show that the difference
between them was significant, displaying discriminant validity
(Anderson and Gerbing 1988).
Common method bias. By collecting data from different sources (formal/informal institutional distance from the secondary data
and other variables from the survey data), we can safely state
that common method variance was not a significant threat for
our study (Podsakoff et al. 2003). In addition, for the subjective
responses to the survey, we took measures to ensure that
respondents clearly understood the survey content. By guaran-
teeing informants that we protected their confidentiality, we
also constrained the common method variance (Podsakoff
et al. 2003).
To further control for common method variance, we adopted
the marker variable technique, following Lindell and Whitney
(2001). We used the firm tenure of supplier respondent (i.e., the
number of years the supplier respondent had been working at
the company) as the marker variable because it was not theo-
retically related to at least one of the focal constructs in the
study, and the correlation between the firm tenure of supplier
respondent and the exchange performance variable was .01.
After conducting a partial correlation adjustment for all bivari-
ate correlations between the constructs, the significance of the
correlations remained consistent. The results indicate that com-
mon method variance was not a serious problem in this study.
Analysis and Results
Hypothesis Testing
Our study first examined the impacts of calculative and rela-
tional TA on exchange performance and then analyzed the
influences of formal/informal institutional distance on calcula-
tive/relational TA with the moderating roles of prior interac-
tions and expectations of continuity. For interaction effects, we
mean centered formal institutional distance, informal institu-
tional distance, prior interactions, and expectations of continu-
ity to constrain the potential multicollinearity between the
variables and their interaction terms (Aiken and West 1991).
Among all the variables, the maximum variance inflation factor
was 1.78, suggesting that multicollinearity was not likely to be
a significant issue. Table 2 reports the descriptive statistics and
correlations among all the variables.
Wang et al. 91
T a b
le 2 .
D e sc
ri p ti ve
S ta
ti st
ic s
an d
C o rr
e la
ti o n s.
1 2
3 4
5 6
7 8
9 1 0
1 1
1 2
1 3
1 4
1 5
1 6
1 7
1 8
1 9
2 0
1 E x ch
an ge
p e rf
o rm
an ce
2 C
al cu
la ti ve
T A
� .1
7 *
3 R
e la
ti o n al
T A
� .1
8 *
.3 6 **
4 F o rm
al in
st it u ti o n al
d is
ta n ce
� .1
0 �
.3 4 **
.0 6
5 In
fo rm
al in
st it u ti o n al
d is
ta n ce �
.0 8
� .0
1 .0
4 .2
0 **
6 P ri
o r
in te
ra ct
io n
� .0
7 �
.1 9 *
.0 2
.0 7
� .2
3 **
7 E x p e ct
at io
n o f co
n ti n u it y
.3 7 ** �
.1 0
� .0
5 �
.1 3
� .0
6 .0
4 8
S h ar
e d
ca lc
u la
ti ve
tr u st
.2 5 ** �
.1 3
� .0
1 .0
1 .0
4 .2
7 **
.2 7 **
9 S h ar
e d
re la
ti o n al
tr u st
.3 6 ** �
.1 1
� .1
2 �
.1 1
� .0
1 .0
8 .1
9 *
.3 0 **
1 0
S h ar
e d
as se
t sp
e ci
fi ci
ty �
.1 3
� .1
2 �
.1 8 *
.0 9
� .1
1 .2
6 **
.3 0 **
.0 6
.0 4
1 1
A ss
e t
sp e ci
fi ci
ty as
ym m
e tr
y �
.1 4
.3 2 **
.2 0 * �
.0 9
.0 8
� .1
8 * �
.1 8 * �
.0 2
.1 5
.0 3
1 2
S u p p ly
m ar
k e t
u n ce
rt ai
n ty
.1 2
.1 0
� .0
8 .0
6 �
.1 2
.0 6
.0 8
� .0
4 �
.2 0 * �
.1 4
� .1
4 1 3
G u an
x i im
p o rt
an ce
.2 0 *
.0 7
.0 8
� .0
3 .0
7 �
.1 9 *
.2 4 **
.2 0 *
.1 9 * �
.3 6 ** �
.0 6
.2 0 *
1 4
B u ye
r ag
e .0
7 �
.1 3
� .0
1 .1
1 .0
9 .2
6 ** �
.0 8
.0 5
.0 8
.0 2
� .1
3 .0
4 .1
2 1 5
S u p p lie
r ag
e �
.0 1
� .1
0 �
.1 3
� .0
5 �
.1 0
.3 4 ** �
.1 3
.1 1
� .0
3 .0
3 �
.2 4 **
.1 0
� .0
1 .0
7 1 6
B u ye
r si
ze .2
4 ** �
.0 5
� .1
0 �
.1 0
.0 7
.0 7
.1 7
.0 8
.1 5
.0 0
.0 2
� .0
2 .2
1 *
.2 4 **
.0 8
1 7
S u p p lie
r si
ze �
.0 9
� .0
3 .0
1 �
.0 9
.0 8
.0 0
.0 0
.2 7 ** �
.1 6
.0 7
� .0
1 �
.0 2
� .0
6 �
.1 4
.1 3 �
.0 5
1 8
M e ch
an ic
s �
.0 5
� .0
1 �
.0 2
� .0
2 .1
3 �
.1 3
� .0
7 �
.1 9 * �
.0 1 �
.1 0
.0 2
� .0
3 .0
0 �
.0 7
� .0
2 �
.1 1
� .0
8 1 9
H e av
y .2
2 * �
.1 1
� .1
0 .0
6 �
.0 9
.0 5
� .0
3 .1
0 .0
0 �
.0 7
� .0
9 .2
3 **
.0 8
.1 5
.1 1
.0 9
� .0
9 �
.3 9 **
2 0
E le
ct ro
n ic
s �
.1 2
� .0
6 �
.0 9
� .0
4 �
.0 1
.0 9
.1 1
.0 7
.0 3
.1 5
.1 1
� .2
4 ** �
.1 0
� .0
6 �
.1 3
.0 2
.1 7 * �
.3 0 ** �
.3 3 **
M e an
4 .7
7 .3
1 .4
2 2 2 .5
9 2 .9
1 2 5 .7
2 3 .8
0 4 .9
4 4 .0
5 2 .5
3 .2
9 4 .0
9 5 .1
7 1 7 .9
0 1 6 .4
0 1 .1
7 E 3
.8 7 E 3
.1 9
.5 0
.2 8
S D
.6 4
.4 5
.5 4
7 .2
5 1 .3
1 1 3 .4
3 .5
0 .4
8 1 .0
0 1 .1
8 .4
7 .8
6 .6
2 5 .5
8 5 .1
3 2 .7
0 E 3
3 .9
0 E 3
.4 0
.5 0
.4 5
*p <
.0 5 .
** p <
.0 1 .
92
In Table 3, Model 2 shows the regression results of calcu-
lative TA on exchange performance, and Model 4 examines the
effect of relational TA. For the model analyses of H2a and H2b,
we followed McEvily, Zaheer, and Kamal (2017) and adopted
seemingly unrelated regression, which is a regression in which
two or more unrelated dependent variables are predicted by sets
of independent variables, to deal with potential correlations
between the error terms of the variables (Zellner 1962). Table 4
displays the seemingly unrelated regression results of the insti-
tutional origins of calculative TA and relational TA. In Table 4,
Models 1 and 4 report the influences of the controls on the
dependent variables, Models 2 and 5 test the main effects of
formal and informal institutional distance, and Models 3 and 6
represent the results of the full model with the product terms of
formal/informal institutional distance and the moderators.
As we can observe from Table 3, Model 2, calculative TA
shows a significantly negative influence on exchange perfor-
mance (b ¼�.21, p < .01), which supports the prediction that the increasing divergence in calculative trust between
exchange parties is detrimental for business relationships.
According to Table 3, Model 4, relational TA also significantly
reduces exchange performance (b ¼�.16, p < .05). Thus, both H1a and H1b are well supported.
As shown in Table 4, Model 2, the hypothesized relationship
between formal institutional distance and calculative TA is sig-
nificantly negative (b ¼ �.31, p < .01), which confirms H2a (that formal institutional distance has a negative effect on calcu-
lative TA). For H2b, Model 5 in Table 4 reveals that informal
institutional distance leads to a significant increase in relational
TA (b ¼ .22, p < .05), which supports the prediction that rela- tional TA becomes higher when the informal institutional dis-
tance between international exchange parties increases.
We then tested the moderating effects of prior interactions
and expectations of continuity. For significant interactions, we
employed a simple slope analysis and plotted graphs to better
explain the interaction coefficients following Aiken and West
(1991). With the mean value and standard deviation (SD) of
each moderator, we computed its high levels (one SD above
the sample mean) and low levels (one SD below the sample
mean) to illustrate the interaction effect in Figure 2 (Aiken
and West 1991).
H3a predicted that prior interactions negatively moderate the
association between formal institutional distance and calcula-
tive TA. However, the result in Table 4, Model 3, does not
show a significant moderating effect of prior interactions, fail-
ing to support H3a. A possible reason for this is that despite the
specific knowledge gained from experience, prior interactions
also breed relational inertia, which may weaken the interna-
tional exchange parties’ sensitivities to external risks and thus
inhibit their active calculations as a response (Lee 2013).
H3b posited that the influence of informal institutional dis-
tance on increasing relational TA becomes weaker when the
level of prior interactions is high. The significant and negative
interaction between prior interactions and informal institutional
distance provides support to H3b (b ¼ �.21, p < .05). As Figure 2, Panel A, shows, the positive association between
informal institutional distance and relational TA is much stron-
ger at low (simple slope: b ¼ .11, t ¼ 3.12, p < .01) rather than
Table 3. Regression Results: Exchange Performance.
Dependent Variable: Exchange Performance
Model 1 Model 2 Model 3 Model 4
Independent Variables b t b t b t b t
Shared calculative trust .15* 2.01 .14* 1.98 Shared relational trust .16* 2.01 .17* 2.22 Shared asset specificity �.26** �3.57 �.29** �4.05 �.20* �2.47 �.22** �2.78 Asset specificity asymmetry �.10 �1.49 �.03 �.44 �.13y �1.81 �.10 �1.38 Supply market uncertainty .20** 2.83 .24** 3.40 .17* 2.31 .14
y 1.82
Guanxi importance .29** 3.88 .30** 4.08 .32** 4.33 .33** 4.54 Buyer age .02 .28 .01 .11 .01 .09 .02 .30 Supplier age �.05 �.72 �.06 �.84 �.05 �.62 �.05 �.67 Buyer size .22** 3.00 .23** 3.34 .19** 2.64 .17* 2.36 Supplier size �.03 �.35 �.00 �.05 .01 .07 .02 .33 Mechanics .37* 2.27 .30
y 1.84 .37* 2.26 .33* 2.01
Heavy .54** 2.71 .44* 2.22 .57** 2.87 .52** 2.62 Electronics .44* 2.40 .37* 2.05 .45* 2.45 .42* 2.31 H1a: Calculative TA �.21** �2.95 H1b: Relational TA �.16* �2.16 R2 .31 .33 .30 .32 F-value 9.04** 9.76** 9.24** 9.14**
yp < .10. *p < .05. **p < .01. Notes: Standardized coefficients are reported for b.
Wang et al. 93
high levels of prior interaction (simple slope: b ¼ .01, t ¼ .16, p > .10).
For calculative TA, the interaction between formal institu-
tional distance and expectations of continuity is significantly
negative (b ¼ �.23, p < .01), which supports H4a. As shown in Figure 2, Panel B, the role of formal institutional distance in
reducing calculative TA is significantly negative when the
expectation of continuity is high (simple slope: b ¼ �.04, t ¼ �7.36, p < .01) and less significant when it is low (simple slope: b ¼�.01, t ¼�1.83, p < .10). H4b predicted that the influence of informal institutional distance on relational TA becomes
weaker at high levels of expectation of continuity. Our results
demonstrate that the interaction term of informal institutional
distance and expectations of continuity is significantly negative
(b ¼ �.20, p < .05), which supports H4b. Figure 2, Panel C, reveals that the impact of informal institutional distance on rela-
tional TA is insignificant for relationships with high expectation
of continuity levels (simple slope: b ¼ .00, t ¼ .00, p > .10) and is significantly positive for those with low expectation of con-
tinuity levels (simple slope: b ¼ .12, t ¼ 3.23, p < .01).
Additional Analysis
Because the final sample of our study consists of both local
buyer–foreign supplier and foreign buyer–local supplier rela-
tionships, we conducted an additional test to complement our
analysis. Since the sizes of the two types of relationships are
comparable, we split the whole sample into the following two
groups: the local buyer–foreign supplier group and the foreign
buyer–local supplier group. We then reran the analysis for the
two groups individually to examine whether there is any dif-
ference. Although the regression results of the two groups show
lower significance levels with smaller sample sizes, the results
of this analysis were highly consistent with the results of the
whole sample.
To be specific, for the local buyer–foreign supplier group,
both calculative TA (b ¼�.16, p < .05) and relational TA (b ¼ �.13, p < .05) relate negatively to exchange performance. In addition, formal institutional distance negatively influences
calculative TA (b ¼�.33, p < .05), and informal institutional distance positively influences relational TA (b ¼ .16, p < .10). With calculative TA as the dependent variable, the interaction
Table 4. Seemingly Unrelated Regression Results: Calculative and Relational Trust Asymmetry.
Dependent Variable: Calculative TA Dependent Variable: Relational TA
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Independent Variables b t b t b t b t b t b t
Shared calculative trust �.17y �1.86 �.13 �1.37 �.18y �1.84 Shared relational trust .12 1.19 .16 1.51 .12 1.17 Shared asset specificity �.13 �1.41 �.09 �.90 �.09 �.92 �.18y �1.74 �.15 �1.36 �.17 �1.57 Asset specificity asymmetry .30** 3.42 .30** 3.48 .27** 3.15 .09 .98 .08 .87 .10 1.08 Supply market uncertainty .18* 1.97 .20* 2.26 .19* 2.24 �.19* �1.96 �.19* �2.01 �.18* �1.97 Guanxi importance .03 .36 .02 .21 .01 .11 .06 .60 .09 .94 .06 .59 Buyer age �.06 �.60 .03 .31 .05 .48 .13 1.35 .09 .90 .13 1.31 Supplier age �.04 �.45 �.06 �.58 �.06 �.64 �.06 �.64 �.05 �.45 �.09 �.86 Buyer size .08 .84 .07 .71 .07 .78 �.14 �1.45 �.17y �1.71 �.18y �1.86 Supplier size .11 1.13 .07 .70 .06 .58 .18y 1.90 .16* 1.67 .20* 2.09 Mechanics �.39 �1.60 �.36 �1.56 �.42y �1.81 �.42y �1.69 �.43y �1.75 �.32 �1.32 Heavy �.51y �1.74 �.47y �1.65 �.50y �1.77 �.52y �1.73 �.50y �1.66 �.36 �1.24 Electronics �.36 �1.34 �.32 �1.24 �.36 �1.43 �.38 �1.39 �.39 �1.43 �.39 �1.47 H2a: Formal institutional distance (FD) !
calculative TA �.31** �3.60 �.33** �3.85 .00 .01 �.04 �.39
H2b: Informal institutional distance (ID) ! relational TA
.02 .25 .03 .36 .22* 2.40 .19* 2.16
Prior interaction �.06 �.63 �.05 �.45 .05 .45 �.01 �.14 Expectation of continuity �.03 �.25 .04 .41 .02 .14 �.01 �.11 H3a: FD � prior interaction ! calculative TA .02 .29 .08 .87 H3b: ID � prior interaction ! relational TA �.04 �.47 �.21* �2.29 H4a: FD � expectation of continuity !
calculative TA �.23** �2.59 .10 1.11
H4b: ID � expectation of continuity ! relational TA
.02 .25 �.20* �2.15
R2 .20 .28 .33 .15 .19 .28 F-value 2.36* 2.77** 2.65** 1.69y 1.98* 2.12**
yp < .10. *p < .05. *p < .01. Notes: Standardized coefficients are reported for b.
94 Journal of International Marketing 28(2)
of formal institutional distance and prior interactions remains
insignificant, and the interaction of formal institutional dis-
tance and expectations of continuity is significantly negative
(b ¼�.47, p < .05). For the effects on relational TA, both the interaction terms of informal institutional distance and prior
interactions (b ¼ �.35, p < .05) and informal institutional distance and expectations of continuity (b ¼ �.16, p < .10) are negative and significant.
For the foreign buyer–local supplier group, both calculative
TA (b ¼�.17, p < .05) and relational TA (b ¼�.15, p < .10) negatively influence exchange performance. Moreover, we
found a negative relationship between formal institutional dis-
tance and calculative TA (b ¼ �.37, p < .01) and a positive relationship between informal institutional distance and rela-
tional TA (b ¼ .17, p < .10). With calculative TA as the depen- dent variable, the interaction of formal institutional distance and
prior interactions is insignificant, and there is a significantly
negative interaction between formal institutional distance and
expectations of continuity (b ¼ �.39, p < .01). For the influ- ences on relational TA, both the interaction terms of informal
institutional distance and prior interactions (b ¼�.27, p < .10) and informal institutional distance and expectations of continuity
(b ¼ �.18, p < .05) are significantly negative.
Discussion
Our research examines how formal and informal institutional
distance influence the formation of calculative trust asymmetry
and relational trust asymmetry in international marketing rela-
tionships. With 134 dyads of international buyer–supplier
relationships, our results first show that both calculative and
relational TA negatively influence exchange performance and
that formal institutional distance constrains calculative TA
whereas informal institutional distance leads to a higher degree
of relational TA. Moreover, exchanges with high prior interac-
tion levels show weaker links between informal institutional
distance and relational TA. A high expectation of continuity
level strengthens the role of formal institutional distance in
reducing calculative TA and mitigates the impact of informal
institutional distance on relational TA.
Research Implications
Our study contributes to international marketing research in
three ways. First, the study contributes to trust research by
empirically examining the role of trust asymmetry in interna-
tional buyer–supplier relationships, answering calls for further
exploration of trust in dyadic relationships (McEvily, Zaheer,
and Kamal 2017). Although prior studies view trust as an
important factor in interfirm interactions, there have been
mixed findings about the influence of trust on exchange per-
formance (Aulakh, Kotabe, and Sahay 1996; Gulati and Nick-
erson 2008; Katsikeas, Skarmeas, and Bello 2009). By
adopting an asymmetrical perspective and empirically examin-
ing the influences of calculative and relational TA on exchange
performance, our study offers an explanation for the inconsis-
tent results of previous studies and enriches the understanding
of the performance implications of trust. Moreover, in contrast
to mutual trust, trust asymmetry indicates a divergence in
understanding, motivation, and emphasis across the exchange
Low High
R el
at io
na l T
A
Informal Institutional Distance
High prior interaction
Low prior interaction
High
A: H3b. Informal Institutional Distance and Prior Interaction: Relational TA.
Low High
C al
cu la
tiv e
TA
Formal Institutional Distance
High expectation of continuity
Low expectation of continuity
High
B: H4a. Formal Institutional Distance and Expectation of Continuity: Calculative TA
Low High
R el
at io
na l T
A
Informal Institutional Distance
High expectation of continuity
Low expectation of continuity
High
C: H4b. Informal Institutional Distance and Expectation of Continuity: Relational TA.
Figure 2. Interaction effects.
Wang et al. 95
dyad, thereby increasing conflicts and transaction costs and
resulting in lower exchange performance. This explains the
failure of some seemingly strong relationships and further con-
tributes to research on the dark side of trust (McEvily, Zaheer,
and Kamal 2017; Scheer 2012).
Second, this article integrates an institutional view in under-
standing how formal and informal institutional distance influ-
ence different forms of trust asymmetry in cross-border
relationships. Due to the high complexity of developing trust
with counterparties from divergent institutional backgrounds, it
is urgent for international exchange parties to understand under
what circumstances trust asymmetry can emerge (Korsgaard,
Brower, and Lester 2015; Zaheer and Kamal 2011). We suggest
that a formal institutional distance urges international channel
partners to make continual assessments of gains and losses to
constrain external risk and makes them build similar forward-
looking decision rules given the objective and explicit charac-
teristics of formal institutions, thereby constraining calculative
TA. In contrast, informal institutional distance enlarges rela-
tional TA due to international exchange parties’ dissimilar
behavior patterns and different reliance on cultural back-
grounds to develop understandings and interpretations about
previous relations. The empirical results confirm our argu-
ments. By explaining the distinct implications of formal and
informal institutional distance, we extend the understanding of
institutional origins of trust asymmetry in the international
context (Zaheer and Kamal 2011).
Third, we introduce an interdependence perspective to
investigate the moderating roles of prior interactions and
expectations of continuity in understanding the institutional dis-
tance–trust asymmetry relationship. The empirical findings show
that prior interactions weaken the link between informal institu-
tional distance and relational TA by providing shared experiences
to mitigate the initial effect of different cultural backgrounds.
Moreover, an expectation of continuity strengthens the impact
of formal institutional distance on constraining calculative TA
by highlighting the importance of making continued assessments
and motivating international interfirm partners to share detailed
information. An expectation of continuity also lessens the influ-
ence of informal institutional distance on increasing relational TA
by encouraging cross-border exchange parties to share informa-
tion and make commitments to signal goodwill. The findings
underscore the importance of developing a contingent view of
the effects of institutional distance on trust asymmetry.
Managerial Implications
Our study provides important practical implications for inter-
national marketing relationships. First, managers often empha-
size the building of trust but ignore the potential trust
asymmetry. Representing the divergence in trust across the
dyad, trust asymmetry increases conflicts and transaction costs
and is disruptive to joint outcomes, thereby reflecting the dark
side of trust. By investigating the negative implications of both
types of trust asymmetry in international relationships, our
study cautions managers to also take their partners’ trust into
consideration and avoid relying too heavily on trust to manage
the exchange relationship lest their partners do not trust in the
same way.
Furthermore, managers should understand that their institu-
tional backgrounds play a nontrivial role in shaping trusting
relationships. Specifically, for culturally distant marketing
relationships, firm managers should be more cautious about
relying on relational trust to manage their exchange relation-
ships because their dissimilar cultural backgrounds could breed
higher levels of divergence in relational trust, indicating
increasingly negative consequences. For international relation-
ships with high formal institutional distance, firm managers
can worry less about the potential negative impacts of calcula-
tive trust asymmetry since both sides are motivated to make
continual assessments and are able to achieve consistency.
Third, by examining whether the parties hold a shadow of
past or a shadow of future perception, our study provides guide-
lines for international channel partners with originally diver-
gent institutional backgrounds to operate more effectively. For
exchanges with high prior interaction levels, relational TA is
less likely to be an issue for culturally distant partners because
they are able to learn about each other and develop a better
understanding during the interaction process. When the expecta-
tion of continuity is low, managers need to be more concerned
with calculative trust asymmetry when dealing with their for-
mally distant partners because their evaluation efforts become
less effective. In addition, managers should be particularly alert
to the more serious issue of relational trust asymmetry arising
from informal institutional distance because interfirm partners
are more likely to have divergent views regarding engagement.
Limitations and Future Research
The limitations of our study leave several issues up for future
investigation. First, we adopted the measures of the united
index of formal and informal dimensions with the assumption
that all dimensions have equal weight (Kogut and Singh 1988).
This method, however, has limitations because the dimensions
might vary in their effect sizes (Shenkar 2001). Future studies
might extend this by adopting specific data that allows more
solid measurements, thereby making contributions to interna-
tional marketing research.
Second, the study focuses on the generality of international
marketing parties, but it does not discuss the potentially diver-
gent characteristics of buyers and suppliers. With different posi-
tions within relationships, buyers and suppliers might have
divergent perceptions and operations concerning the role of trust
(Nyaga, Whipple, and Lynch 2010). Taking this into consider-
ation, it would be fruitful for researchers to advance the literature
in this area by comparing the potentially different roles of buyers
and suppliers in influencing the effect of trust asymmetry.
Third, our study examines exchange performance using
overall satisfaction, which is a focal consequence of transaction
relationships and has been widely used in prior research (Gulati
and Nickerson 2008; Poppo and Zenger 2002). However, it has
limitations, and future research could examine the different
96 Journal of International Marketing 28(2)
aspects of performance to investigate the performance trade-
offs of trust asymmetry in international marketing relationships
(Katsikeas et al. 2016). In addition, it is also meaningful to
adopt objective performance indicators, such as accounting
performance, to provide the validity of the findings (Katsikeas
et al. 2016).
Fourth, as trust asymmetry is still a nascent topic, future
research can investigate other possible contingencies, such as
transactional attributes for the effects of formal and informal
institutional distance, to offer a more nuanced understanding.
In addition, an extension of this study might include the use of
longitudinal data to provide a dynamic view of how the roles of
trust asymmetry evolve as exchange relationships proceed over
a longer time period. Specifically, it would be beneficial for
future research to collect time-lagged data to examine the effect
of trust asymmetry on exchange performance.
Finally, although we consider guanxi an important informal
institution regulating business interactions in China, we fail to
test it directly. Given the uniqueness of guanxi, it would be
meaningful for further research to extend our proposed model
by investigating the roles of guanxi in the links between insti-
tutional distance and trust asymmetry in a Chinese context.
Appendix A. Characteristics of sample firms.
Category Buyer Firms (%) Supplier Firms (%)
1. Number of employees Less than 100 14.93 24.63 100–499 45.52 47.76 500–999 17.16 13.43 1,000 and above 22.39 14.18
2. Annual revenue (in millions of renminbi) Less than five 63.43 68.66 5–9 9.7 13.43 10–49 14.93 13.43 50 and above 11.94 4.48
3. Industry Type Medicine 5.97 1.49 Electronics, telecommunication 27.61 27.61 Mechanics 23.88 19.40 Chemical 9.70 14.93 Metal, automobiles/parts 20.37 25.58 Others (food, shoes/clothing, furniture, print, textiles, etc.) 12.47 10.99
Appendix B. Measurement items and validity assessment.
Items Standardized
Factor Loading
Exchange performance (reported by buyers/suppliers: CR ¼ .91/.91; AVE ¼ .71/.73) Buyer Supplier In dealing with this supplier/client, to what degree do you agree (1 ¼ “very low,” and 7 ¼ “very high”): 1. The partner’s performance leaves a lot to be desired from an overall standpoint. .80 .81 2. We are satisfied with the outcomes from this buyer–supplier relationship. .88 .87 3. Our relationship with this partner has been a successful one. .85 .86 4. Our relationship with this partner has more than fulfilled our expectations. .84 .87
Calculative trust (reported by buyers/suppliers: CR ¼ .87/.88; AVE ¼ .70/.72) Buyer Supplier In dealing with this supplier/client, to what degree do you agree (1 ¼ “very low,” and 7 ¼ “very high”): 1. Considering the costs and benefits involved in the relationship, both parties act as expected. .97 .96 2. Considering rewards and punishments, both parties behave honestly in dealing with each other. .76 .85 3. The behaviors of both parties are trustworthy because the costs and punishments of misconduct are very high. .76 .72
Relational trust (reported by buyers/suppliers: CR ¼ .93/.94; AVE ¼ .83/.84) Buyer Supplier In dealing with this supplier/client, to what degree do you agree (1 ¼ “very low,” and 7 ¼ “very high”): 1. Both parties allow the other make decisions because we think like one another. .95 .95 2. Both parties can effectively act for the other because both share the same understanding of what matters. .95 .96 3. Both parties are confident that their interests will be fully protected because both parties share the common identity. .82 .84
Expectation of continuity (reported by buyers/suppliers: CR ¼ .86/.85; AVE ¼ .67/.66) Buyer Supplier In dealing with this supplier/client, to what degree do you agree (1 ¼ “very low,” and 7 ¼ “very high”): 1. Our company expects the relationship with this supplier/client to continue for a long time. .86 .88
(continued)
Wang et al. 97
Associate Editor
Kelly Hewett
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for
the research, authorship, and/or publication of this article: This study
was supported by the China National Natural Science Foundation
(Project nos.71602173, 71821002) and the Fundamental Research
Funds for the Central Universities (Project nos. 2019kfyXJJS042,
2019WKYXQN052).
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