Do Relationships with Multinational Buyers Improve the Marketing Capabilities of Suppliers in Transition Economies

Transition economies are characterized by a move away from central-planning towards open markets and increased competition. During the transformation process, managers face pressure to adapt to competition and to acquire marketing capabilities -- the ability to meet customer needs more effectively than rivals. Consequently, an important question to be asked is: what factors affect the ability of a transition economy manager to learn the skills or capabilities of marketing?;Past research on this subject tends to be limited to those relatively rare transition economy firms that are directly linked with foreign firms, either through joint ventures or export exchanges. However, the focus of analysis in this study is the supply-relationships linking indigenous suppliers with multinational buyers domiciled within transition economies. In contrast with studies examining the marketing capabilities of transition economy-exporters, this study examines transition economy firms whose main business is limited to the domestic market. The premise of this study is that exchange relationships with multinational buyers can serve as conduits for the transfer of marketing capabilities. If so, the absence of joint venture participation or export exchanges need not be a barrier to learning marketing capabilities.;Building on research investigating buyer-seller relationships, organizational learning, and marketing capabilities, several hypotheses are developed in this study. These hypotheses are tested using quantitative data collected through structured interviews with 200 indigenous manufacturers in China. The findings reveal that the marketing capabilities of suppliers are enhanced by their learning orientation and by the quality of their relationships with multinational buyers. However, the cultural distance separating suppliers from their multinational buyers moderates the effect of relationship quality. Finally, marketing capabilities are found to have positive effects on various dimensions of business performance.;This study contributes to the marketing, international business, organizational learning and strategic management literatures by improving our understanding of the antecedents and consequences of marketing capabilities within transition economies. It provides arguably the first test of the link between relationship quality and marketing capabilities in the context of exchange relationships between suppliers and multinational buyers. Effect sizes are discussed and substantive conclusions are drawn for both researchers and transition economy managers.