The inverted curvilinear effects of business relationships on institutional success: the moderating role of global role complexity

Abstract

PurposeContrary to the widely held belief in the linear positive effects of business relationships (BRELs) on performance outcomes, the authors posit that the quality of a manager's BRELs with a foreign business partner has an inverted curvilinear effect on managing challenges arising out of institutional differences between two countries, which the authors define as institutional success. The authors further propose that managers' global role complexity (GRC) negatively impacts institutional success and dampens the inverted curvilinear effects of BRELs on institutional success.Design/methodology/approachThe proposed model is tested using questionnaire survey data from 186 senior Indian managers doing business with New Zealand.FindingsThe authors find significant support for the inverted curvilinear effects of BRELs and the negative effects of GRC on institutional success. They did not find significant results for the moderating role of GRC on the inverted curvilinear relationship between BRELs and institutional success. However, significant linear interactive effects of GRC and BREL are evident.Practical implicationsThe key managerial implication is that managers should focus on building BRELs of appropriate quality with their overseas counterparts to keep producing relational rents. They should, however, also be sensitive to when such relational rents start to be eroded by internal and external factors and treat them as a dynamic equilibrium rather than a static one.Originality/valueThe study findings challenge the assumption of linear positive effects of BRELs within the relational view. They highlight the significance of BRELs, even for emerging economy managers doing business in advanced economies.