The impact of national culture on perceived fairness: A supplier perspective

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The impact of national culture on perceived fairness:

A supplier perspective

Master Thesis, MSc Supply Chain Management University of Groningen, Faculty of Economics and Business

Author: Hannah Liebetanz

Student Number: 3571661

E-Mail: h.l.liebetanz@student.rug.nl Supervisor: dr. Kirstin Scholten

Co-Assessor: prof. dr. Manda Broekhuis

Date: June 24, 2019

Word Count: 11.966

Acknowledgements:

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Abstract

Purpose: This research addresses how national culture impacts the fairness perception during the pre-contractual stage in a buyer-supplier context, to identify the mechanism of fairness perception to ensure buyer-supplier relationship quality.

Method/Design: Exploratory interviews were conducted by collecting multi-source data and included: 12 semi-structured interviews, company websites, code of conduct, and the annual report of the supplying companies, from regulated industries.

Findings: This research identified that the suppliers’ perception of fairness is based on the alignment of the buyers’ behaviour, attitude and business practices to the suppliers own cultural values. Moreover, the research identified that cultural awareness and sensitivity reduce the impact of own cultural values on the perceived fairness.

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1. Introduction

In business practices, the role of fairness is receiving increased attention (Gelfand et al., 2002; Poppo & Zhou, 2014; Suh, 2005), as it determines the outcome and the buyer-supplier relationship quality (Kumar, Scheer, & Steenkamp, 1995). Moreover, whether or not a supplier perceives the buyers’ actions as fair affects the suppliers’ commitment and strengthens the relationship (Suh, 2005). Specifically, Husted and Folger (2004) outline that governance designs of buyer-supplier relationships fail by not taking in account informal rules, such as fairness. Nevertheless, the perception of fairness is a complex construct based on national culture (Gelfand et al., 2002;) as national culture is a powerful force to shape perceptions and behaviours (Markus & Kitayama, 1991). However, it remains unknown how national culture impacts the perception of fairness, which is crucial to understand the development of long-term buyer-supplier relationships (Kumar et al., 1995).

The impact of national culture on buyer-supplier relationships is already acknowledged. Cannon et al. (2010) outline collectivistic values impact the long-term orientation of the relationship based on the supplier’s performance, while Hewett et al. (2006) stress that the buyer-supplier relationship is more important in a high power distance culture. Handley & Angst (2015) found that relational governance in buyer-supplier relationships is more effective in high collectivism and high uncertainty avoidance cultures. Moreover, assertiveness impacts the communication behaviour and attitude across the buyer-supplier relationship (Brett, 2014; Ribbink & Grimm, 2014). Thereby, literature acknowledged that in a buyer-supplier context, national culture values impact the perception of procedural and distributive fairness, which is an important factor for the relational establishment (Dunfee, Smith, & Ross, 1999; Eckerd & Hill, 2012; Gelfand et al., 2002; Kim & Choi, 2015; Kumar et al., 1995; Poppo & Zhou, 2014).

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Hence, this research addresses the question of how national culture of a supplier impacts

perceived fairness in the pre-contractual phase.

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2. Theoretical Framework

2.1 National culture of suppliers

National culture has received increased attention in buyer-supplier relationships (Ribbink & Grimm, 2014). In buyer-supplier relationships, Cannon et al., (2010) identified that the cultural values of suppliers are crucial to acknowledge in order to understand how to manage buyer-supplier relationships, which is caused due to increased global business practices of the buyer. Thereby, norms and values across buyer-supplier relationships might be not aligned due to cultural differences, which affects the outcome of the relationships. For example, some cultures require trust to pursue a long-term relationship, whereas others focus on performance (Cannon et al., 2010). In general, culture is defined as a set of shared values which are established in a society and shapes individual behaviour (Schwartz, 2014). Cultural values are developed in countries and society, and are turned into guidelines of generally expected behaviour (DesAutels, Berthon, Caruana, & Pitt, 2015). In a buyer-supplier relationship context, national culture is influencing the relational strength and the continuation of the relationship (Boyer, Qi, Eckerd, Hill, & Eckerd, 2015; Hewett et al., 2006). Moreover, cultural differences may hinder effective communication and the negotiation of contracts (Schepker, Oh, Martynov, & Poppo, 2013).

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distance are mainly acknowledged (Boscari et al., 2018; Cannon et al., 2010; Handley & Angst, 2015; Hewett et al., 2006), and are also recognized by both the Hofstede and GLOBE model. In a buyer-supplier relationship context, those values especially impact the relational strategy, as well as the relational interaction between buyer and supplier (Boscari et al., 2018; Hewett et al., 2006). Moreover, the culture characteristic assertiveness, which was acknowledged in the GLOBE model (House et al., 2004), receives attention in studying culture by recognizing the role of communication in buyer-supplier relationships (Brett, 2014; Hall, 1976; Ribbink & Grimm, 2014). Therefore, assertiveness is considered an important factor while investigating the role of national culture, next to the cultural values collectivism, uncertainty avoidance, and power distance. These variables are further explained from a supplier perspective in the next four sub-sections and are depicted in table 1.

2.1.1 Collectivism

Collectivism refers to the appreciation and the reward of collective actions and resources (House et al., 2004). Particularly, collectivism impacts the suppliers’ motivation of pursuing

goals, as well as the vision of the buyer-supplier relationship (Cannon et al., 2010). In a

buyer-supplier relationship context, Cannon et al. (2010) outline that collectivism has an influence on the long-term orientation of buyer-supplier relationships. The collectivistic values impact whether the supplier values trust or performance to develop a long-term partnership (Cannon et al., 2010). Moreover, Handley & Angst (2015) found that effectiveness of relational governance is impacted by collectivism. For example, in a buyer-supplier relationship context, collectivism impacts relational governance and as an outcome affects the appearance of opportunistic behaviour (Handley & Angst, 2015).

2.1.2 Uncertainty avoidance

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uncertainty avoidance impacts the tendency and need of the supplier to maintain the same customer base. As an outcome, uncertainty avoidance impacts the relational strength of the buyer-supplier relationship, as well as repurchase intentions (Hewett et al., 2006).

2.1.3 Assertiveness

Assertiveness refers to behavioural attitude and communication behaviour, which might affect whether the behaviour is dominant or passive (Hall, 1976; House et al., 2004). Specifically, assertiveness impacts the communicated directness, the tendency to show

strong and direct behaviour, as well as how explicit and accurate information is shared

(Brett, 2014; Ribbink & Grimm, 2014). In a buyer-supplier relationship context, assertiveness impacts the suppliers’ relational attitude in terms of strong and direct behaviour or the desire to create a harmonious relationship (House et al., 2004). Assertiveness is also closely related to power distance values (Kozan, Wasti, & Kuman, 2006; Terpend, Krause, & Dooley, 2011). The suppliers’ behaviour and attitude are based on assertiveness values, which is also reflected in power usage within the buyer- supplier relationship. As an outcome of the relationship, the interaction of assertiveness and power usage impacts the level of cooperation across the buyer-supplier relationship (Kozan et al., 2006).

2.1.4 Power distance

Power distance refers to the acceptance of power usage and (in)equality in society (Hofstede & Bond, 1984). More specifically, power distance refers to the necessity of legitimate power usage (Hofstede, 2011). In a buyer-supplier relationship context, power usage impacts the decision-making within the buyer-supplier relationship (Heide & John, 1992) and the suppliers’ acceptance of power usage impacts the suppliers’ commitment to meet the buyers’ needs (Chae, Choi, & Hur, 2017). Moreover, power distance impacts the suppliers’ (in)formal approach towards the relationship, and is thereby as an outcome impacting the long-term orientation of the relationship (Hewett et al., 2006).

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relationship, fairness is considered an important aspect of those values and norms (Poppo & Zhou, 2014), which was also acknowledged in social contract literature (Dunfee & Donaldson, 1994; Dunfee et al., 1999; Eckerd & Hill, 2012; Kim & Choi, 2015). Within buyer-supplier relationships, cultural differences may create misunderstandings and misjudgements in the buyers’ behaviour. Cultural similarities give the supplier the chance to better judge and manage the buyers’ expectations (Ribbink & Grimm, 2014). As such, fairness is a perception based on cultural values (Markus & Kitayama, 1991) and is determining the pre-contractual outcome of a buyer-supplier relationship (Gelfand et al., 2002), which is further elaborated on the following section.

TABLE 1

Operationalisation of national culture of suppliers

Variable Definition Classification Source

Collectivism

The suppliers’ appreciation and reward

of collective actions and resources (House et

al., 2004).

The suppliers’ tendency to pursue shared goals or individual

organizational goals.

House et al., 2004 The suppliers’ prioritizing of

developing a shared vision with the buyer.

Cannon et al., 2010

Uncertainty avoidance

The supplier felt fear and stress when facing the unknown (Hofstede,

2011).

The tendency of risk aversion of the supplier.

Hofstede, 2011; House et

al., 2004

The required need for structure, rules,

and regulations of the supplier.

al., 2004

Assertiveness

The suppliers’ tendency to show assertive, tough, dominant, or initiative behaviour and

communication (House et al., 2004).

The suppliers’ tendency to appreciate

strong and direct behaviour across the

buyer-supplier relationship.

House et al., 2004

Communicated directness is how

explicit information is shared by the supplier that it needs little engagement

to infer the meaning

Brett, 2014

Explicit and accuracy of the shared

information of the supplier.

Ribbon & Grimm, 2014

Power distance

Acceptance of power

usage and (in)equality

across the buyer-supplier relationship (House et al., 2004).

(In)equality of power across the

buyer-supplier relationship.

al., 2004

Power usage within the

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2.2 The perception of fairness in social contracts

Social contracts are unwritten, informal agreements within a buyer-supplier relationship, which are defined as shared values and norms, based on national culture, and determine commitment (Eckerd & Hill, 2012; Heide et al., 2007; Morgan & Hunt, 1994; Ribbink & Grimm, 2014). In a buyer-supplier relationship, social contracts are established in the initial phase of the relationship (Jap & Ganesan, 2000). In this phase, social contracts develop while values and norms are shared, which has a greater influence on the buyer-supplier relationship than any formal agreement (Huang & Chiu, 2018). As part of the established values and norms in the social contract, the role of fairness is acknowledged (Dunfee & Donaldson, 1994; Dunfee et al., 1999; Eckerd & Hill, 2012; Kim & Choi, 2015). Within the pre-contractual phase, the suppliers’ perception of fairness determines whether the established norms and values of the social contract are perceived as fair or not (Poppo & Zhou, 2014) and is fostered as an outcome commitment (Gelfand et al., 2002), as no formal agreements are made. Therefore, it is crucial for the buyer to understand the suppliers’ perception of fairness to establish a successful relationship; particularly, in case the buyer is dealing with multiple suppliers from different cultural backgrounds (Cannon et al., 2010).

Within social contract theory, Eckerd and Hill (2012) outline that fairness is the main aspect between buyer and supplier which makes processes social, rather than transactional. Fairness in buyer-supplier relationships is characterized by mutual outcomes. Specifically, the balancing and correctness of mutual outcomes, and the evaluation of how the allocation of decisions is made during the process (Eckerd & Hill, 2012; Poppo & Zhou, 2014). Fairness is a perception which outcome is related to and based on culture (Gelfand et al., 2002; Luo, 2007). As a result, the suppliers’ perceived fairness determines the attitude and behaviour of the supplier towards the relationship (Konovsky, 2000). In a buyer-supplier relationship context, Poppo and Zhou (2014) conceptualize perceived fairness as procedural and distributive fairness, which is also supported by Konovsky (2000) and Luo (2007). However, Luo (2007) considers interactional fairness as part of the conceptualization of perceived fairness. This characteristic is considered as minor for the buyer-supplier relationship context, as interactional fairness reflect the fairness perception on an individual employee level, rather than an organizational level (Poppo & Zhou, 2014).

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decisions (Cohen-Charash & Spector, 2001). Marketing research identified that procedural and distributive fairness interact, while procedural fairness has an higher impact on fairness perception than distributive fairness (Kumar et al., 1995; Qiu, 2018). Moreover, the leadership study of Pillai, Scandura, and Williams, (1999) implies that the perception and importance of procedural and distributive fairness dependent on cultural values, which have a lower impact when employees develop a certain level of cultural awareness. As a result, this research characterizes perceived fairness as procedural and distributional fairness, which is further explained in the following sections from the suppliers’ perspective. Moreover, the operationalization of perceived fairness of social contracts depicts table 2.

2.2.1 Procedural fairness

Procedural fairness is from the suppliers’ perspective considered as the process of how allocation decisions are made by the buyer (Konovsky, 2000) and it concerns the suppliers’ evaluation of the buyers’ procedures and processes in relation to itself (Kumar et al., 1995), such as fair treatment, involvement, and fair dealings (Dunfee & Donaldson, 1994; Dunfee et al., 1999; Kim & Choi, 2015; Paulraj, Lado, & Chen, 2008). In the pre-contractual stage of the buyer-supplier relationships, perceived procedural fairness is based on fair treatment of the buyer during the interaction process (Dunfee et al., 1999; Eckerd & Hill, 2012), which implies fair behaviour of the buyer towards the supplier, such as honest communication (Dunfee et al., 1999). Procedural fairness is also reflected in the suppliers’ perceived involvement during decision-making processes, which implies the suppliers’ perceived impact on processes and procedures (Dunfee & Donaldson, 1994). Moreover, procedural fairness is characterized by the suppliers’ perception of fair dealings of the buyers, which implies the perception of fair business practices of the buyer, such as the consistency of decision-making and information exchange (Kim & Choi, 2015; Paulraj et al., 2008; Poppo & Zhou, 2014). In this context, the perception of procedural fairness might be characterized by bilateral communication, objectivity, refutability, explanation and transparency, and courtesy of the buyer (Kumar et al., 1995).

2.2.2 Distributive fairness

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9 compensations and outcomes (Poppo & Zhou, 2014). Distributive fairness is characterised

by the suppliers’ perception of fair compensation by the buyer for the suppliers’ commitment during the pre-contractual stage, as otherwise the relationship terminates (Kumar et al., 1995; Luo, 2007). Moreover, the evaluation of the decision-making is dependent on the suppliers’ perception of what the supplier deems to deserve as an outcome relative to its input (Kumar et al., 1995; Qiu, 2018). In the pre-contractual stage of buyer-supplier relationships, the suppliers’ perception of distributive fairness is based on fair compensations and outcomes, which are compatible with the established shared values of the social contract, such as shared benefits (Kim & Choi, 2015).

Due to the influence of national culture, the perception of procedural and distributive fairness is not consistent (Gelfand et al., 2002). As research shows, national culture also impacts interaction between procedural and distributive fairness (Kumar et al., 1995). However, it remains unclear how culture impacts the perception of procedural and distributive fairness and therefore, the following sub-chapter proposes a conceptual framework to explore this construct.

TABLE 2

Operationalisation of perceived fairness of social contracts

Variable _Definition _{Classification} _Source

Procedural fairness

The suppliers’ evaluation of the process of how allocation decisions are

made by the buyer (Konovsky, 2000).

Fair treatment of buyer towards

supplier during interaction process in which norms are established.

Eckerd & Hill, 2012; Dunfee et

al., 1999

Involvement of the supplier in the

decision-making process of values and norms.

Dunfee & Donaldson, 1994

Fair dealings, which include

accurate and consistent procedures, of buyer towards the supplier.

Kim & Choi, 2012; Poppo &

Zhou, 2014

Distributive fairness

The supplier’s evaluation of allocated decisions from

the buyer, which are outcome related, e.g. received compensations by

the supplier (Poppo & Zhou, 2014).

Fair compensation of buyer for the

suppliers’ commitment into the relationship.

Kim & Choi, 2012

Outcomes of the buyer-supplier

relationship are compatible with shared values and are evaluated as

balanced and fair by the supplier.

Poppo & Zhou, 2014; Dunfee et

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2.3 Conceptual framework

Fairness is a perception which is based on cultural values (Gelfand et al., 2002; Markus & Kitayama, 1991). This research aims to identify how the dependent variables procedural and

distributive fairness are impacted by the independent variable national culture. In the context

of buyer-supplier relationship, the national culture values collectivism, uncertainty

avoidance, power distance, and assertiveness are considered the main aspects which

determine the relationship. Therefore, it is assumed that those values are relevant to explore perceived fairness of the supplier in a buyer-supplier relationship context, which depicts figure 1. Nevertheless, even though research has already shown that national culture impacts perceived fairness, it is currently unknown how national culture impacts perceived fairness of the supplier. Therefore, the following research question is derived: How does the national

culture of a supplier impact the perceived fairness in the pre-contractual phase?

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3. Methodology

3.1 Research design

The purpose of this study is to explore how the national culture of a supplier impacts the perceived fairness within the pre-contractual phase of the buyer-supplier relationship, where the social contract develops. While quantitative research has already identified the link between national culture and the perception of fairness (Dunfee et al., 1999; Gelfand et al., 2002), the aim of this research is to identify how the perception of fairness is constrained by national culture. For this research, exploratory interviews is considered the most suitable approach to investigate the perception of fairness, as it stimulates the interviewee to contribute to a valuable descriptions of a phenomenon while leaving room for interpretations for the analysis to reveal deeper insights of this process (DiCicco-Bloom & Crabtree, 2006). DiCicco-Bloom & Crabtree (2006) identified this method as suitable to explore the perception of an experience, which is in this study perceived fairness. The unit of analysis (UoA) is a supplier organization, as in a buyer-supplier relationship context, different cultural values of suppliers are crucial to acknowledge and to understand (Cannon et al., 2010). This UoA makes it possible to identify how cultural values impact the perception of distributive and procedural fairness in the pre-contractual phase.

3.2 Research context

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3.3 Interview selection

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13 TABLE 3 Interview selection Interview National Culture Delivered Industry Company size Leading position Inter- national experience Data Source A German Food retail Mid-sized Yes No

Interview Head of Key Account (01:15:38 h)

Company Website

B German Food retail Large sized Yes No

Interview Head of National Sales (00:37:20 h)

Corporate Governance Report Annual Report

C German Pharmacy Large sized No Yes

Interview Area Sales Manager (01:04:28 h)

Company Website D Greece Marine Mid-sized Yes No

Interview Manager International Sales (01:03:08 h)

Company Website E Greece Marine Mid-sized No Yes

Interview Key Account Manager (00:48:49 h)

Company Website F Greece Building and

construction Large sized No Yes

Interview Sales Manager (00:51:53 h) Company Website

G Greece Automotive Large sized No Yes

Interview Sales Manager (01:04:28 h) Company Website

Company Code of Conducts H Dutch Aerospace Large sized No Yes

Interview Market Manager (01:10:59 h) Company Website

Company Code of Conduct I Dutch Aerospace Large sized No Yes

Interview Market Manager (00:57:53 h) Company Website

Company Code of Conduct J Dutch Food retail Small-sized Yes No Interview Owner (00:54:24 h)

Company Website

K Dutch Food retail Small-sized No No Interview Sales Manager (00:50:30 h) Company Website

L Dutch Retail Mid-sized Yes No Interview Head of Sales (00:44:13 h) Company Website

3.4 Data collection

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interview took place were the established interview questions, which are developed based on extensive literature research, were evaluated and adjusted. The semi-structured interviews are based on predetermined questions, where emerging questions out of the conversation followed up (DiCicco-Bloom & Crabtree, 2006). Prior to the interview, the interviewees received an interview guide, which includes a form of consent (Appendix A). This information gave the possibility to prepare for the interview, by considering a specific sales situation where the suppliers’ (UoA) perception of fairness is investigated. To ensure reliability, the interviews were conducted with compliance to the developed interview protocol and the interviews were recorded with the interviewees’ permission. To avoid language barriers, the interviewees had the possibility to choose the language in which the interviews were conducted. Therefore, the interviews were held in English, German, Dutch, and Greek and were transcribed and translated to English afterwards. The English transcriptions were then sent back to the interviewees to ensure validation.

The interviews began with general questions, such as “How would you describe your role

and responsibility with the organization?” to identify the circumstances of the interviewee.

Furthermore, questions considering a specific sales situation were asked to receive in-depth knowledge regarding the national culture and the perceived fairness. Questions such as “How

did you agree on the way of doing business together?” led the conversation to explore how

cultural values impact the evolved sale and to identify how decisions are made. Moreover, questions such as “How satisfied were you with the result of the relationship in terms of

fairness?” were asked to explore the perception of the supplier.

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3.5 Data analysis

After the completed data collection, the data was reduced based on the three steps of Miles and Huberman (1994). First, the data was reduced by assigning first-order codes to quotes of the conducted interviews. Those first-order codes are based on the fairness (sub-) variables procedural and distributive fairness by keeping national culture values in mind. Second, based on a deductive approach, second-order codes are developed to organize the collected data. Those second-order codes are based on values and norms which lead to procedural or distributive fairness. Furthermore, the second-order codes, which led to the same values and norms that make a process perceived as procedural or distributive fairness, are grouped as themes. Third, the data was revisited several times to cross-check and to verify the emergent solutions based on the first- and second-order codes of the analysis. Therefore, the data is checked for plausibility to ensure validity. Abbreviations of the coding trees are depicted in table 4a, 4b, 4c, and 4d for collectivism, uncertainty avoidance, assertiveness, and power distance respectively. The extensive coding trees are included in Appendix B.

By reducing the data, procedural and distributive fairness categories are evaluated based on cultural values. First, perceived fairness based on collectivistic values is dependent on the relational prospect of the buyer-supplier relationship. Quotes such as “We were not on time

for the delivery, but we found a solution to solve it.” (E) and “Obviously, people in sales focus on developing trust with their customers and to have a good relationship with them.” (I) are categorized as procedural fairness by fair dealings and involvement, as it considers

the perceived fairness of the relational process. Quotes such as “I consider it fair if we can

both create a margin, and we can help each other in creating it. Then you think I have built up a good relationship. (K)” are categorized as distributive fairness, as the perceived fairness

is depending on the relational outcome. The second-order codes are identified based on the relational level, such as relational mutuality, involvement, and responsiveness.

Second, perceived fairness based on uncertainty avoidance values is dependent on the need for rules, regulations, and structure, as well as the tendency of risk aversion. Quotes such as “This means that if the rules of the game are adhered, fairness is in the behaviour of the

buyer reflected. (A)”, are categorized as perceived procedural fairness by fair dealings, as

the need to follow the rules is required during the relational process. Quotes such as, “We

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16 only once and have to rely on the dealer”. (B), are categorized as distributive fairness, as

fairness is perceived by fair compensations when the business is based on what was discussed earlier. Second-order codes are based on following the suppliers’ needs and on aspects of reliable behaviour.

Third, perceived fairness based on assertiveness values is dependent on the appreciated communication behaviour and attitude of the supplier. Quotes such as “We have to carefully

evaluate the communicated requirements of the customer and we also require accurate and detailed information by our customer”(C) and “They are open and share their needs, and also, we are able actually to understand how we can add value to the customers.” (I) are

categorized as procedural fairness, by considering involvement, fair treatment and dealings and describes the process of communication, rather than the outcome. Second-order codes are based on the perception of the buyers’ attitude, such as collaboration, quality of shared information, involvement and communication behaviour, which cause perceived procedural fairness by the supplier.

Fourth, perceived fairness based on power distance values is dependent on the acceptance of power usage in the buyer-supplier relationship. Quotes such as “When we encountered

problems, they allowed us to look for solutions that might not be totally fitting with their actual demands, so I would say this is a fair treatment.” (J) are categorized as distributive

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TABLE 4a Coding tree collectivism

First-order codes Second-order

codes Theme

Sub-Variable Fairness

Variable Fairness

They clearly wanted someone that can provide solutions and can be there all the way, there were many people involved that could help to get future projects. (F) Future

enquiries Continuous relationship Fair compensations Distributive Fairness

The dealer continued with massive sales from us, he is a good guy, he actually assists us, and we assist him. (G)

I consider it fair if we can both create a margin, and we can help each other in creating it. Then you think I have built up a good relationship. (K)

Fair deal

Equal participation

It is important to have the matching goal of both parties to conclude a fair compromise. (A)

Mutual fit of business

Fair behaviour involves to opening the value chain for each other. This implies that I communicate how my value chain works and how I earn my money. If both sides do this equally it implies fairness. (B)

Shared Norms

Then after some points, you see if you both match and you continue with and trying to get a stronger relationship. Then you try to make a win-win relationship for both. (D)

Goal of Win-Win relationship

Shared goals Outcome

I was quite satisfied with the sale. For me it was also winning a new country, that is not so open, so all the action was from that company. (D)

Openness

They gave very specific instruction about what they want, so it was more than clear. We had the opportunity to provide all these things. (G)

Shared vision

We are in close contact with the client and his consultants in order to identify the specifications for which you are going to give a tender. (F) Close interaction Clear instruction of needs Involvement Procedural Fairness

They clearly state to us during our meetings and our phone calls what they need to, so we can offer exactly that. (F)

Communicated needs

I was involved, maybe not in the decision-making, but the technical requirements. (D) Involvement in technical requirements Process involvement

Because I had much questions for him, I was able to dive in the product that he needed. So, I believed that this also made an impact. (D)

Relational bonding

Relational responsiveness

We were not on time for the delivery, but we found a solution to solve it. (E)

Adjusting to

supplier needs Flexibility

Fair dealings

Obviously, people in sales focus on developing trust with their customers and to have a good relationship with them.

(I) Buyers' trust Trust

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TABLE 4b

Coding tree uncertainty avoidance

codes Theme

Sub-Variable Fairness

Variable Fairness

The rules are intended to protect consumers against pricing and sales terms of products or services that do not result in fair competition. (G) Reliable behaviour Reliability Fair compensations Distributive Fairness

This also results in the fulfilment of their agreements. So that's the 'return' of the effort you put into it. (J)

We also shared risks within the project. If we as a company do this business, then we can do it only once and have to rely on the dealer. (B)

We made costs and put effort in the relationship, as they now have a professional attitude … they actually bought those products without trying to cut costs. (J)

Keeping your word. Because the structure of the procedure is very clear, it is very transparent, although they have some gaps. And these gaps make a lot of people to exploit them.

(G) _Following agreed rules and regulations Acknowledg ement of supplier require-ments

Fair dealings Procedural Fairness

This means that if the rules of the game are adhered, fairness is in the behaviour of the buyer reflected. (A)

This is about reliability, we expect a long-term relationship, so we are prepared to put a lot of energy into the

relationship and expect that vice versa. (L)

Reliability is important to us, but also to our customers. So, by breaking the CoC of the ISO norms or even law regulation, we put our reliability at risk. (I)

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TABLE 4c

Coding tree assertiveness

codes Theme Sub-Variable Fairness Variable Fairness

The manufacturer is that one who actually decides what are the standards of each product. So, we follow the manufacturers characteristics. (G) Direct communication Explicit information Fair dealings Procedural Fairness

Early communication is also a sign of fair behaviour in which, the buyer informs early on that he no longer wishes to buy a particular product. (A)

Early

communication

Transparency

They are open and share their needs, and also, we are able actually to understand how we can add value to the customers. (I)

Open

communication

Fair treatment is being open and honest to each other if something cannot be done, then it can really not be done and the other way around. (L)

Correctness of

information Honesty

Fair treatment

A respectful and sustainable dealing within the relationship is

very important. (A) Respectful

dealings Respect

Other customers who then came up with complaints and claims are not worth it. (K)

In the Indian market, it is sometimes more difficult to get clear information compared to other markets due to their way different culture, they exchange information in a different way,

and you have to be prepared for that. (C) Cultural _awareness

Common understanding

Involvement

When you speak in a conversation, things can be

misinterpreted, depending on cultures, that is why you need contracts. (H)

They never whine for example about rebate. On the basis it's more about easy collaboration. (L)

Collaboration

We have to carefully evaluate the communicated requirements of the customer and for properly building the machines we also require accurate and detailed information by our customer. (C) Fairness is also displayed if the buyer communicates the pro - and con - arguments communicated and therefore a scope of action arises for us. (A)

Discussion of

needs _Impact decision-making

When we encountered problems, they allowed us to look for solutions that might not be totally fitting with their actual demands, so I would say this is a fair treatment. (J)

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TABLE 4d

Coding tree power distance

codes Theme Sub-Variable Fairness Variable Fairness

I was very satisfied because it was not just words, sometimes you tend to speak with a person like more than a month about big projects and so on, and then suddenly it gets cancelled. (D)

Future prospects _Acceptance of bid by buyer Outcome Distributive Fairness

The manufacturer is that one who actually decides what are the standards of each product. So, we follow the manufacturers characteristics. (G)

Update of buyer requirements

You are going to support them to get that cost advantage as well … it has to be fine for everybody. They have to sacrifice a little bit.

(H) Adjustments to

both parties

needs _Fair compromise

We have really talked about what they had to change. That is the way to interact and talk about this. (J)

When we encountered problems, they allowed us to look for solutions that might not be totally fitting with their actual demands, so I would say this is a fair treatment. (J)

Flexibility

I saw that I used a lower price than I could have, so it was too fair for them. (D)

Higher Sales price

High margin

We often say, a business should be a business and both parties should be happy. … The same order from India for a much more cheaper price because you need to feed the customers all over the world and not destroy any markets. (C)

Cultural differences

Therefore, it is important to have the matching goal of both

parties to conclude a fair compromise. (A) Shared beliefs

Mutual satisfaction

So, we always got delayed because I was not in the position of doing my own stuff. I said, I'm not going to do that. I'm going to

create pull. (H) Buyer accepts

the suppliers'

support The buyer is open for advice

This customer is open for advice. This is also the way they have grown. (K)

They are open and share their needs, and also, we are able actually to understand how we can add value to the customers. (I)

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4. Findings

In analysing the data, the research indicates that national culture impacts perceived procedural and distributive fairness by different mechanisms. The cultural value collectivism impacts perceived procedural fairness by the suppliers’ perception of the process of relational development and the relational bond within the buyer-supplier relationship. Collectivism impacts perceived distributive fairness by evaluating the relational vision and expectation of the buyer-supplier relationship. Furthermore, the research indicates that the procedural and distributive fairness based on collectivistic values interact by the process of establishing a relational bond which impacts the relational vision as an outcome. The cultural value uncertainty avoidance impacts perceived procedural fairness by the evaluation of the buyers’ compliance to agreed rules and regulations while performing business practices. Uncertainty avoidance impacts perceived distributive fairness by the suppliers’ evaluation of the reliable behaviour the buyer, which is especially reflected by fulfilment of promises. The research also indicates, that perceived procedural and distributive fairness based on uncertainty avoidance values interact by the evaluation of the buyer’s compliance during the process, which impacts as an outcome the perceived reliability of the buyer. The culture value assertiveness impacts the perceived procedural fairness by determining the relational process by communication behaviour and attitude of the buyer towards the supplier. Moreover, the cultural value power distance seems to impact the perception of distributive fairness by determining the perception of the negotiation outcomes and the evaluation of the relational development. Moreover, the research identified that the perceived procedural fairness based on assertiveness and the perceived distributive fairness based on power distance interact by the evaluation of the buyers’ behaviour and attitude during the pre-contractual process, which leads to accepted power usage by the supplier and a perceived fair outcome of the relationship.

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TABLE 5

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4.1 The impact of national culture on perceived fairness

The research identifies the national culture values collectivism, uncertainty avoidance, assertiveness, and power distance impact the supplier perception of procedural and distributive fairness by different mechanisms. Moreover, this research indicates that the interaction between procedural fairness and distributive fairness has an impact on how culture influences the suppliers’ perception of fairness. The following two sections elaborate further on procedural and distributive fairness based on collectivistic values and uncertainty avoidance values respectively, the third section elaborates on procedural fairness based on assertiveness values, and power distance based on distributive fairness.

4.1.1 The impact of collectivism on perceived fairness

The findings show that collectivistic values impact the perceived procedural fairness of the relationship development process based on the suppliers’ own collectivistic values, which was identified in all conducted interviews. The interviews D, E, F, and G indicate that procedural fairness is perceived by the suppliers’ evaluation of the involvement during the process, which is based on the suppliers own collectivistic values. The suppliers’ perception of involvement is based on (i) the buyers’ responsiveness to the relationship, (ii) the suppliers’ process involvement, and (iii) the clear indication of the buyers’ needs towards the supplier, such as “They clearly state to us during our meetings and our phone calls what

they need to so we can offer exactly that.” (F). Moreover, procedural fairness is perceived

by the buyers’ fair dealings due to the buyers’ flexibility to adjust to the suppliers needs,

“We were not on time for the delivery, but we found a solution to solve it.” (E), and the

buyers’ trust and non-opportunistic behaviour. The interviews A, B, H, I, J, K, and L indicate perceived procedural fairness by fair dealings due to the buyers’ trust towards the supplier, such as “I give them an advice and they follow up that advice with only minor changes. So,

it is based on trust.” (L).

The perception of distributive fairness could also be identified based on collectivistic values. The supplier perceives distributive fairness by relational outcomes, based on the suppliers’ own collectivistic values, “Then, after some points, you see if you both match and you

continue with and trying to get a stronger relationship. Then you try to make a win-win relationship for both.” (D). Therefore, the supplier perceives it as fair, when the outcome

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perceived distributive fairness when shared goals are developed, which is evaluated based on the suppliers’ own collectivistic values, which outline the interviews D, E, F, and G. Moreover, a perceived fair outcome of the relationship is achieved by developing shared goals when the buyer is open, “I was quite satisfied with the sale. For me it was also winning

a new country, that is not so open, so all the action was from that company.” (D).

Distributive fairness is also perceived by the suppliers’ perception of fair compensation due to equal participation, which indicate interviews A, B, H, I, J, K, and L. Equal participation is perceived as fair when a fair deal and a mutual fit of the business is established, and adhered shared norms are developed, “I consider it fair if we can both create a margin, and

we can help each other in creating it. Then you think I have built up a good relationship.” (K). Moreover, the supplier perceives distributive fairness based on collectivistic values, by

the development of a continuous relationship, “The dealer continued with massive sales from

us, he is a good guy, he actually assists us, and we assist him.” (G). This implies the

relational outcome is perceived as fair, when future enquiries are made, which indicate the interviews A, C, D; E; F; G, I, and K.

Furthermore, the research indicates that perceived procedural and distributive fairness based on collectivistic values seem to interact. Based on collectivistic values, the supplier perceived the process as fair when the buyer gave them the opportunity to help the buyer be successful, which indicate all the interviews. Interviews D, E; F, and G, indicate that the process evaluation of fair dealings and involvement by clear instruction of needs, process involvement, flexibility, and the level of relational bonding leads to perceived procedural fairness, which is based on the suppliers’ own collectivistic values. This leads to perceived distributive fairness, as due to this process a shared goal can be developed, and the supplier gets to know the buyers’ needs. This also leads to the relational outcome of a potential continuous relationship, which is considered as fair compensation, “They clearly wanted

someone that can provide solutions and can be there all the way, there were many people involved that could help to get future projects.” (F). Furthermore, procedural fairness is

perceived by fair dealings when the buyer trusts the supplier, which then leads to perceived distributive fairness by fair compensations due to equal partnership. This implies for instance that both parties trust each other with sharing equally confidential information, “Fair

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on the suppliers’ own values and is directly impacting distributive fairness of the relational outcome, which identified interviews A, B, H, I, K, and L. An overview of the interaction of procedural and distributive fairness based on collectivistic values shows figure 2.

FIGURE 2

Procedural fairness and distributive fairness based on collectivistic values

4.1.2 The impact of uncertainty avoidance on perceived fairness

The findings indicate that uncertainty avoidance determines perceived procedural fairness by fair dealings when the buyer acknowledged the supplier requirements, “This means that

if the rules of the game are adhered, fairness is in the behaviour of the buyer reflected.” (A).

This implies that the buyer follows the agreed rules and regulations through the pre-contractual process, which indicate the interviews A, B, F; G; I, J, K, and L. Moreover, procedural fairness is perceived by fair dealings due to the buyers’ attention to supplier requirements based on the suppliers’ own uncertainty avoidance values, which might not be important to the buyer itself, “the structure of the procedure is very clear, it is very

transparent, although they have some gaps. And these gaps make a lot of people to exploit them.” (G). This implies, fairness is perceived when the buyer incorporates the supplier

requirements, which are based on the suppliers’ own uncertainty avoidance values, into its business practices. This also impacts the process of relationship development as the supplier might aim to reduce risk across the buyer-supplier relationship.

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behaviour by buying the products without further negotiating, which is aligned with the supplier’s uncertainty avoidance values. This reflects in fair compensations of the suppliers’ effort and perceived distributive fairness of the supplier.

Within the identified perceived fairness mechanisms, a potential impact of procedural fairness, which is reflected in fair dealings, on perceived distributive fairness, which is reflected in fair compensation, identify the interviews A, B, F, G, I, J, L, and K. More specifically, the perceived procedural fairness is based on fair dealings of the acknowledgement of the suppliers’ requirements, such as following agreed norms, rules and regulations. “This also results in the fulfilment of their agreements. So that's the 'return' of

the effort you put into it.” (J), shows that when the suppliers perceived the process as fair, it

resulted in fair compensation of the procedural outcome (distributive fairness), as the buyer is reliable according to the suppliers’ own uncertainty avoidance values. An overview of the impact of perceived procedural and distributive fairness, based on uncertainty avoidance values, depicts figure 3.

FIGURE 3

Procedural fairness and distributive fairness based on uncertainty avoidance values

4.1.3 The impact of assertiveness and power distance on perceived fairness To build the relationship with the buyer, certain values are considered important to make the process be perceived as fair for the supplier. Assertiveness impacts how certain communication and behaviour in the relationship is appreciated and respected, which builds the foundation for the relationship in the pre-contractual phase. During the process, procedural fairness is received by the buyers’ fair treatment, which is reflected by the buyers’ honest and respectful behaviour (Interviews A, C, H, I, K, and L), “Fair treatment

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fairness is based on fair dealings during the process. This is indicated especially by the buyers’ business practice to share information in terms of transparency and explicit information, which included, except interview C, all interviews. “They are open and share

their needs, and also we are able to actually understand how we can add value to the customers.” (I), seems to indicate that the suppliers’ perceived procedural fairness is based

on communication and information sharing, which is a part of the relationship development process. The suppliers perceived procedural fairness based on assertiveness values is also impacted by involvement. The interviews, A, B, C, H, I, J, K, and L, indicate that this is determined especially by the suppliers’ perceived interaction. This is reflected by the impact of decision-making processes and the establishment of common understanding, based on appreciated communication and behaviour of the suppliers’ own assertiveness values. “The

client requests a lower sales price as the competitor is offering for that price. If this works financially for me then I am doing this for sure. I experience it as fair that I get the chance to do the business. (K), seems to reflect that the involvement in the process of the buyers’

business decisions makes the supplier perceive procedural fairness. Furthermore, the findings seem to indicate across all interviews, that the suppliers’ perceived procedural fairness is depending on its own appreciated communication behaviour and attitude towards the relationship and therefore the same assertiveness values, “we approach the customer

directly and say that we have a problem with what happened before was not on the screen and vice versa.” (B).

Perceived distributive fairness, based on power distance values, is based on the suppliers’ perception of the outcome, as power distance especially impacts the outcome of decision-making. Suppliers perceive distributive fairness, when relational outcome ends with a sale, which is outlined by the interviews D, E, F, and G, “The client had the final decision and we

just managed to give the final tender according to his needs. (…) Up until now it was very fair and positive.” (F). This shows, that the suppliers’ perception of distributive fairness, is

impacted by the acceptance of power usage by accepting the buyers’ needs, based on the suppliers’ own power distance values. Nevertheless, the findings indicate that the supplier seemed to perceive the outcome as too fair for the buyer, I saw that I used a lower price than

I could have, so it was too fair for them. (D). This indicates, that the supplier could have

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own power distance values. Moreover, distributive fairness is perceived by the outcome of mutual satisfaction (Interviews A, B, C) and fair compromises (Interviews H, I J, K, and L), which implies that the outcome of the pre-contractual stage is perceived as fair. “You are

going to support them to get that cost advantage as well (…) it has to be fine for everybody. They have to sacrifice a little bit.” (H) indicates, that the supplier perceives the outcome as

fair, when both parties are able to meet their goals, as satisfaction is reached across the relationship. Furthermore, distributive fairness is perceived by the relational outcomes which is based on initiative behaviour of the buyer, and buyers’ openness of advice, which indicates the interviews H, I, J, and K. “This customer is open for advice. This is also the way they

have grown.” (K)., indicates that the supplier perceives fairness by the buyers’ acceptance

of the suppliers’ support.

By analysing the data, a potential interaction between procedural fairness based on assertiveness values and distributive fairness based on power distance values could be identified. During the pre-contractual stage, the supplier perceived procedural fairness by the development of a common understanding and the suppliers’ involvement in the decision-making of the buyer. This is based on direct communication and open behaviour towards the partnership and lead to perceived procedural fairness by the supplier, based on the suppliers’ own assertiveness values. As a result, the supplier seemed to perceive the procedural outcome (distributive fairness) as fair, when a fair compromise could be established, which indicate interviews I, J, and L. For example, “when we encountered problems, (the buyer)

allowed us to look for solutions that might not be totally fitting with their actual demands, so I would say this is a fair treatment.” (J). Moreover, the analysis of the interviews A, B,

and C indicate that a common understanding (procedural fairness) leads to perceived distributive fairness of the process outcome, which is reflected in mutual satisfaction. “Therefore, it is important to have the matching goal of both parties to conclude a

fair compromise.” (A). The interviews H, I, K, and L seem to indicate, when the buyers’

treatment is honest and respectful, as well as the dealings are transparent, the supplier perceives procedural fairness. For instance, “they are open and share their needs, and we

are able to actually understand how we can add value to the customers.” (I). This indicates,

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values, that the buyer shares accurate and explicit answers, to meet in turn the buyers’ needs, “the manufacturer is that one who actually decides what are the standards of each product.”

(G). The interviews D, F, and G indicate that based on this effort, distributive fairness is

perceived, when the buyer accepts the bid, which is based on the suppliers’ power distance values. An overview of the interactions depict figure 4.

FIGURE 4

Procedural fairness and distributive fairness based on assertiveness and power distance values

4.2 The impact of cultural awareness on fairness perception

The findings indicate that awareness of cultural differences impact the perception of fairness. The interviews C, E, F, H, and I indicate that procedural fairness is less impacted by own cultural values, when the supplier is aware of cultural differences. “In the Indian market, it

is sometimes more difficult to get clear information compared to other markets due to their way different culture, they exchange information in a different way, and you have to be prepared for that.” (C) seems to indicate, that even though honest and transparent

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suppliers’ perceived fairness of the buyers’ dealings. For instance, “When you speak in a

conversation, things can be misinterpreted, depending on cultures, that is why you need contracts.” (H). Furthermore, the awareness of cultural differences impacts the perceived

distributive fairness by the consideration of the market situation across national cultures by the suppliers’ evaluation of the outcome, which indicate interviews C and I. For instance,

“We often say, a business should be a business and both parties should be happy. … The same order from India for a much more cheaper price because you need to feed the customers all over the world and not destroy any markets.” (C) indicates, that the suppliers’

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5. Discussion

Up to the researchers’ knowledge, this is one of the first studies that explores how national culture impacts perceived fairness from the suppliers’ perspective. While the research of Poppo and Zhou (2014) identified that procedural and distributive fairness have different impacts on contractual complexity and recurrence. This research differs, as the stage before contracts are established is explored, namely the pre-contractual stage. Moreover, this research extends the findings of Poppo and Zhou (2014) not just by exploring the pre-contractual stage, but also by exploring the impact of national culture on fairness perception in buyer-supplier relationships. The research of by Gelfand et al. (2002) already acknowledged the impact of national culture on perceived fairness in a business context. However, the research focusses only on the cultural value collectivism and explores negotiations. This research builds on the research of Gelfand et al. (2002) by exploring how different national culture values impact, besides perceived fairness during negotiations, the perception of procedural and distributive fairness during the entire pre-contractual stage. Moreover, literature has already acknowledged that an interaction between distributive and procedural fairness exists (Konovsky, 2000; Kumar et al., 1995; Qiu, 2018), in which it is specifically outlined that procedural fairness has an higher impact on the overall fairness perception than distributive fairness. However, this research explores another aspect, namely the impact of cultural values on this interaction.

5.1 The impact of cultural values on perceived fairness

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gain profit itself led to perceived distributive fairness, which is based on the suppliers’ own collectivistic values. Therefore, the following is proposed:

P1: Perceived procedural fairness, based on the suppliers’ own collectivistic values, impacts the foundation and continuation of the buyer-supplier relationship which leads to the relational outcome, and perceived distributive fairness by the relational prospect and expectations of the supplier.

Aligned with the study of Dunfee & Donaldson (1994), this research identified that procedural fairness is perceived when within the relationship agreed rules and regulations are followed. Moreover, especially in the pre-contractual stage, fair compensation by reliable business practices of the buyer and the adherence of established norms of the social contracts are perceived as distributive fairness, as uncertainty is reduced (Dunfee & Donaldson, 1994). This study extends those findings by acknowledging the impact of uncertainty avoidance values on the mentioned procedural and distributive fairness perceptions, which explains the importance of those values and norms. Thereby, this research identifies that the cultural value uncertainty avoidance impacts the perception of distributive fairness by the evaluation of the buyers’ integrity and reliable behaviour based on the suppliers’ own uncertainty avoidance values. This is established based on the suppliers’ perceived procedural fairness by perceived fair dealings due to compliance of norms, rules, and regulations during the interaction process. As an outcome, the continuation of the relationship might be impacted by the perceived procedural and distributive fairness based on the suppliers’ uncertainty avoidance values (Hewett et al., 2006). It is proposed that:

P2: The cultural value uncertainty avoidance impacts the suppliers’ perceived procedural fairness by the adherence of agreed norms and rules based on the suppliers’ uncertainty avoidance values. This leads to the suppliers’ perceived distributive fairness, by perceived fair compensations of the suppliers’ effort due to the buyers’ integrity and reliable behaviour, which impacts the duration of the buyer-supplier relationship.

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buyer, and based on the alignment of the suppliers’ own assertiveness values. Those findings add on the research of Paulraj et al. (2008), who identify that communication and information exchange is an important factor to build a buyer-supplier relationship, by extending that communication behaviour and attitude is based on assertiveness values, which impacts the relational development by the suppliers’ perception of procedural fairness. Therefore, the folowing is proposed:

P3: The cultural value assertiveness impacts the perceived procedural fairness of the supplier based on the alignment of fair treatment and dealings of communication behaviour and attitude of the buyer on the suppliers’ assertiveness values.

Power usage is an aspect of buyer-supplier relationships which impacts the decision-making within the relationship (Heide & John, 1992). Aligned with this finding, this research built on this notion by identifying that the cultural value power distance impacts the decision-making within the relationship. Power usage within decision-decision-making impact the relational outcome by perceived distributive fairness of the supplier, based on its own power distance values. Moreover, the suppliers’ distributive fairness is perceived by the buyer’s approach towards the relationship, which is, in turn, affected by the suppliers’ possibilities to meet the buyers’ need. This builds on the research of Chae et al., (2017), who identified that perceived power usage impacts the suppliers’ commitment, by adding the cultural aspect power distance which determines whether the power usage of the buyer is perceived as fair or not. As a result, the cultural value, power distance, determines the perceived fairness of the buyers’ approach and impacts the perceived distributive fairness of the relational outcome. Hence, it is proposed:

P4: The cultural value power distance impacts the suppliers’ perception of distributive fairness by the evaluation of the relational outcome of the buyers’ power usage approach towards the relationship, which is based on the suppliers’ own power distance values.

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those findings, which determine communication behaviour and attitude, as well as power usage within a relationship. As an outcome, this research identified that distributive fairness is perceived by evaluation of the buyers’ approach and the perception of a fair deal, based on the suppliers’ own power distance values. This is impacted by the perceived procedural fairness of the level of interaction, based on the suppliers’ own assertiveness values. Based on the above findings, the following is proposed:

P5: In consideration of the interaction of procedural and distributive fairness based on assertiveness and power distance values, the supplier perceives distributive fairness, by the evaluation of the buyers’ approach during the process and the resulting acceptance of power usage of the supplier, based on its own cultural values.

5.2 The importance of recognizing cultural values

By investigating perceived fairness based on cultural values, it is revealed that international experience is fostering cultural sensitivity and is therefore also reducing the impact of cultural values on fairness perception. This is aligned with the findings of Markus and Kitayama (1991) and Ribbink and Grimm (2014), who identified that cultural sensitivity and cultural awareness are important factors when working in an international environment. Moreover, the research of Pillai et al. (1999) stresses that cultural values have a lower impact on perceived procedural and distributive fairness when cultural awareness is developed. Therefore, this research extends those findings by identifying that the suppliers’ perception of fairness is less reliant on its own cultural values, when the suppliers is experienced in global business practices with buyers. The research shows that supplier representatives, who gained experiences outside of their own culture, are more aware of cultural differences and this is in turn less impactful on their perception of fairness. Furthermore, this indicates that besides the awareness of cultural values, international business practices across supplier organizations also reduces the effect of perceived fairness based on cultural values. Therefore, the following is proposed:

The impact of national culture on perceived fairness: A supplier perspective