Ties that bind: The dimensions and outcomes of relational embeddedness in Hungarian marketing channels

The key concept in this dissertation is relational embeddedness which represents the social context of an economic transaction. The goal of the dissertation is to develop a model to measure relational embeddedness and to test the model in the context of retailer-supplier relationships in a transforming economy. The context was chosen because of the historical role of interpersonal relationships in facilitating transactions in a command economy. In contrast to other studies of marketing channel relationships, this study uses the individual, rather than the firm, as the unit of analysis. The model of relational embeddedness is composed of tie strength, homophily, fairness, and reciprocity. Relational embeddedness is linked to antecedents of institutional trust, interpersonal trust, environmental uncertainty, and industry opportunism. Outcomes of the embedded relationship are access to resources, supply stability, and nontransferability. The surrounding industry context is suggested to modify the relationship between embeddedness and outcomes. The data for the study were collected through a mail survey of Hungarian retailers. The results indicate that interpersonal trust is a major factor in an embedded relationship. Relational embeddedness is less necessary when institutional trust is perceived to be higher and is more important when industry opportunism is perceived to be higher. Relational embeddedness has value beyond the value of the product being supplied and provides access to additional resources. The moderating role of the industry context varies for supply versus third-party networks. In industries where multinational companies play a stronger role, relationships are more embedded. Further, product brands are positively associated with supplier performance. This study approaches relational embeddedness as an institutional response to the external environment. Limitations of the embeddedness paradigm are discussed. For multinational companies, strong interpersonal relationships among Hungarians may represent a barrier to increased trade. Further, brands may be providing a form of institutional trust in the dynamic environment which has implications for resource decisions concerning channel development and product promotion