To test hypotheses one to four, the proposed structural model without the moderators is estimated with all measurement items from the CFA model, using EQS for Windows 6.1. The results show a good fit of the model with the empirical covariance provided by the data with χ2 = 399.85 on 145 d.f., NNFI = .905, CFI
= .920, and RMSEA = .085. Based on the good fit of the structural model, the proposed hypotheses 1 through 4 are tested. Specifically, Hypothesis 1, which claims that a firm’s customer orientation affects KAM
capability positively, is supported (b = .495, p < .01). In Hypothesis 2, it is posited that supplier dependence cultivates KAM capability. However, it is not supported (b=.079, p >.10). In Hypothesis 3, we contended that trust enhances KAM capability and it is supported by the results (b=.333, p<.01). We also claimed
(Hypothesis 4) that KAM capability enhances a firm’s market performance and it is supported (b=.453, p
<.01). These results are summarized in Figure 2.
Insert Figure 2 Here
To test the moderating effects of IT advancement and cultural distance between the supplier and buyers, two additional models are estimated. First, for the moderating effects of IT advancement on the three paths between KAM capability and customer orientation, supplier dependence, and trust, the observations are split
around the mean into two groups based on the level of IT advancement for a two group analysis. Then, all three paths hypothesized were equal-constrained across the groups to test the moderating effects of IT
advancement. The estimation results reveal a good fit of the model with the data with χ2 = 481.87 on 258 d.f., NNFI = .909, CFI = .923, and RMSEA = .084. The results further show that the path between customer orientation and KAM capability is moderated by IT advancement (p < .10, blow= .347 and bhigh= .456).
However, the moderating effects of IT advancement on other two paths between KAM capability, and supplier dependence (p>.10, blow= .070 and bhigh= .047) and trust (p>.10, blow= .215 and bhigh= .289) are not significant.
Therefore, hypothesis 5a is supported but hypotheses 5c and 5e are not.
To test hypotheses 5b, 5d, and 5f that are about the moderating effects of cultural distance, another two group analysis is carried out by grouping all the observations into two groups (e.g., high vs. low groups) using mean split according to calculated cultural distance between the supplier and buyer. The formula suggested by Kogut and Singh (1988) was used. And, then the three paths between KAM capability and customer orientation, supplier dependence, and trust were equality-constrained across the groups for the moderating effects of cultural distance. The estimation results indicate a goof fit of the model with the data with χ2 = 439.33 on 258 d.f., NNFI = .928, CFI = .939, and RMSEA = .076. The results also show that the path between customer orientation and international KAM capability is moderated by cultural distance between the supplier and buyer (p < .10, blow= .371 and bhigh= .479). However, the moderating effects of cultural distance on other two paths between KAM capability, and supplier dependence (p>.10, blow= .067 and bhigh= .064) and trust (p>.10, blow= .230 and bhigh= .233) are not significant. Therefore, hypothesis 5b is supported but hypotheses 5d and 5f are not.
5 Discussion
With a tremendous increase in outsourcing and a substantial shift towards demand-driven global supply chains, suppliers are charged with higher value adding activities and required to develop specific dynamic capabilities (Shi, Zou, White, McNally, & Cavusgil, 2005) in order to serve their demanding global customers. This study sought to gain a greater understanding on how suppliers can enhance international KAM capabilities in
international customer-supplier relationships and the resultant influence on the supplier’s market performance.
Drawing on RBV and relational exchange theory and taking a supplier’s perspective, this study develops and empirically tests an integrative model that delineates the antecedents and performance outcomes of KAM capabilities in an international customer-supplier relationship. Moreover, we examined the moderating effect of IT advancement and cultural distance on the development of international KAM capabilities. Our research can serve as an initial effort to understand how suppliers can develop international KAM capabilities
capability and create competitiveness in international exchange relationships with key customers.
5.1 Theoretical implications
5.1.1
Following a shift in KAM research towards a better understanding of resources and capabilities dimensions of KAM (Kim & Umanath, 2005; Workman, Homburg, & Jensen, 2003), we contribute to KAM and GAM
The role of international KAM capabilities in developing supplier’s competitiveness
research in terms of international KAM conceptualization and empirical assessment relating to supplier
performance. Drawing from resource-based view, we conceptualize international KAM capabilities as a firm’s interorganizational capabilities to effectively coordinate and reconfigure organizational processes to serve key customers in international exchange relationships. Our data show that international KAM capabilities enhance market performance for suppliers positively. Therefore, international KAM is an effective interaction and organizational capability. It serves as a governance mechanism for suppliers to reduce transaction cost and enhance transaction value with key customers. Moreover, consistent with RBV and dynamic capability views, dynamic organizational capabilities developed through effective cross-border coordination and
reconfiguration can create competitive advantage for suppliers in international exchange relationships in the face of intensifying global competitions. This study also contributes to KAM research by linking international KAM capabilities to supplier market performance. Despite the importance of performance implications of international KAM strategies, empirical evidence on this issue is scarce in the extant literature (Workman, Homburg, & Jensen, 2003). Therefore, this study sheds lights on this important gaps in international marketing and international business field.
5.1.2
In terms of antecedents to KAM capabilities in international exchange relationships, our findings demonstrate that supplier customer orientation and trust enhance KAM capabilities. Moreover, we find that customer orientation has the strongest effect on the development of KAM capabilities, followed by trust in international exchange relationships. However, against our expectations, the supplier dependence was found not
significantly and directly linked to KAM capabilities. This research thus contributes to the call for research on the facilitating conditions n the formulation of international KAM capabilities (Shi, Zou, & Cavusgil, 2004).
Antecedents of KAM capabilities
The strength of the impact of customer orientation on international KAM capabilities is consistent with prior findings and thus reinforces the importance of key customer-orientated culture as a key foundation of
effective KAM strategies in the exchange relationship (Workman, Homburg, & Jensen, 2003). KAM literature has emphasized that successful KAM requires obtaining information from customers, environment and
competitors. Development of an organizational culture that supports customers plays a key role in the success of KAM strategies (Shi, White, Zou, & Cavusgil, 2009). Further,. the results of our study show the mediating effect of international KAM capabilities on the relationships between customer orientation and supplier market performance. The results indicated that suppliers should move beyond cultivating customer-driven culture and focusing on developing international KAM capabilities. Customer-oriented culture is necessary but not sufficient to help suppliers in developing successful international exchange relationships. Complex routines and skills for coordination and reconfiguration in international customer-supplier relationships are more vital to creating sustainable competitive advantage and leads to superior performance for suppliers. This finding lends support to the capability-building view, which argues the important of the development of distinctive capabilities to enhance the productivity of other resources possessed by the firm (Teece, Pisano, &
Shuen, 1997) (Griffith, Yalcinkaya, & Calantone, 2010).
This study proposed another potential driver of KAM capabilities: supplier dependence. H2 postulated that the higher the supplier dependence on the international key customer, the greater is the supplier deploying KAM
capabilities. In other words, asymmetry in the exchange relationship may motivate the supplier to adopt KAM as a dependence-balancing strategy. Empirical does not support this relationship. This may indicate that, when a suppler is dependent on the international key customer, its perceived vulnerability and uncertainty of the focal relationships increase as well. Recent study argued that focusing on a key account creates strategic vulnerabilities and shared business risk for suppliers (Piercy & Lane, 2006). The concerns of potential risks may offset the incentives of adopting KAM strategies for suppliers. This is consistent with literature on relational exchange which argued that a weaker party may not be willing to adopt relational governance strategies in an asymmetric interorganizational relationship.
The findings also show that trust can enhance KAM capabilities in an international exchange relationship. The finding indicates that a trusting relationship set up a foundation of developing supplier’s KAM capabilities.
Instead of using power to ask supplier to provide consistent KAM programs in the exchange relationship, bilateral governance mechanism like trust is a more powerful tool in facilitating the process of developing KAM strategies. Trust can reduce the risk of opportunistic behaviors and therefore can serve as signal of in pursuit of long term relationships (Zhang, Cavusgil, & Roath, 2003). A trusting relationship results in the willingness of the supplier to commit resources to design a KAM program to deliver superior value to the customer.
5.1.3
This study also examines the moderating effect of supplier IT advancement and cultural distance, two important but under-research dimensions on the process of developing KAM capabilities. Regarding the moderating effect of supplier IT advancement on the development of KAM capabilities, our study finds that supplier IT advancement can shape the development of KAM process. In particular, the two-group analysis results indicate the enhancement in the influence of customer orientation on KAM capabilities when a suppler possesses greater IT advancement in SCMs. The findings demonstrate that a supplier’s IT capabilities in supply chain management can facilitate information process capabilities and thus enhance the driving effects of key customer orientation on KAM capabilities. Customer orientation, an information intensive
organizational culture, can be facilitated by adopting effective IT infrastructure in supply chain relationships.
This finding provides some empirical evidence on the potential power of IT in developing successful international KAM strategies.
Moderating role of IT advancement and cultural distance
Further, the moderating effect analysis also reveals that the influence of customer orientation on KAM capabilities is stronger and significant when an international business relationship is characterized by high cultural distance. The results are interesting and demonstrate that culture differences between exchange partners can complement the extent of key account orientation and result in shaping KAM capabilities development in the relationships. That is, when a supplier is in relationship with a high cultural distance customer, uncertainties and cultural difference can drive the supplier to convert more customer and market information into developing specific interorganizational capabilities in order to create greater customer value.
This is one of the first empirical studies to demonstrate the importance of national culture in shaping the process of KAM in international exchange relationships.
5.2 Managerial implications
Managerially, these research findings suggest that suppliers need to develop specific interorganizational capabilities through effective coordination and reconfiguration with key customer in international markets.
Despite time and resource consuming in terms of developing specific interorganizational capabilities to serve the key customer, our empirical results show that KAM capabilities do have a significant and positive impact on supplier’s market performance. As globalization increases pressure on suppliers to serve their demanding customer beyond their home market, suppliers must employ KAM strategies to develop specific dynamic capabilities in response to customer needs and ahead of competition. KAM can be seen as a specific interaction capability which acts as a leveraging mechanism to stimulate supplier’s market performance.
Our study further demonstrates some drivers of KAM capabilities. Imbalanced bargaining power and cultural distance in cross-border relationships increase barriers and costs for effective managing interfirm relationships.
Managers should understand and develop specific mechanisms to drive KAM strategies. In addition, the supplier’s key account management orientation also plays a crucial role in facilitating KAM in international exchange relationships. This suggests to managers the importance to develop a supplier’s organizational culture emphasizing key customer priority. Firms that place a strategic priority on key customers are more likely to keep using various resources to collect customer and market information to address customer
concerns. In addition, trust between exchange partners serves as a key foundation to stimulate effective KAM capabilities. Thus, maintaining a trusting instead of adversary relationship play an important role in
developing successful KAM strategies. Instead, power and dependence do no seem to play an important role in driving effective KAM strategies. Managers should realize the dark side of asymmetric power in the interfirm relationship which can discourage suppliers to commit their resources in developing specific KAM strategies for the key customers.
Moreover, the findings suggest that managers should recognize that the advanced of IT in SCMs can stimulate KAM strategies. The more a supplier deploy state-of art IT infrastructure, the more the supplier can enhance KAM capabilities through enhancing customer-oriented organizational culture.
Finally, managers should be careful in dealing with cultural differences in the development of KAM capabilities. Particularly, our research shows that different cultural distance can shape the process of KAM capabilities. A key customer oriented supplier can develop greater KAM capabilities with the customer from a high cultural distance country.