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A cross-cultural comparison ofindividualisms moderating effect

on bonding and commitmentin banking relationships

Satyabhusan DashIndian Institute of Management, Lucknow, India

Ed BruningI.H. Asper School of Business, University of Manitoba, Winnipeg, Canada, and

Kalyan Ku Guin

Vinod Gupta School of Management, Indian Institute of Technology,Kharagpur, India

Abstract

Purpose The purpose of this paper is to describe a cross-cultural study which examinedindividualisms moderating effect on the relationship between bonding and commitment betweenbanks and their corporate clients.

Design/methodology/approach Data were collected through surveys completed by corporatecustomers from 126 Canadian companies and 156 Indian companies. Multiple regression analysis wasused to calculate relative effects of structural and social bond on commitment across the two samples.Hierarchical moderated regression analysis was used to examine individualisms moderating effect onthe bonding-commitment relationship.

Findings The papers findings indicate that social and structural bonding are both antecedent to

commitment, but that social bonding is given higher importance in the low individualism Indian society,while structural bonding is more important in the high individualism Canadian society. Individualismmoderates the relationship between both social and structural bonding and commitment.

Practical implications Bank relationships are dependent upon specific cultural contexts in whichbuyers and sellers interact. The type of bonding relationship (e.g. social or structural) determines thestrength of commitment. Bank managers must understand the proper emphasis to place on developingsocial connections versus business transactional relationships with clients in individualistic versuscollective cultures.

Originality/value This paper dramatizes the importance of understanding ways in which bondingrelates to commitment, particularly when societal values vary and thus alter the relative importance offorms of bonding that generate commitment. Through empirical analyses, the paper demonstrates themoderating effect of individualism on the social bonding-commitment and structuralbonding-commitment linkages in the context of an important service sector. To date, these

relationships have not been explored in either the Indian or Canadian context.Keywords National cultures, Banking, Customer relations, Consumer behaviour, Canada, India

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0263-4503.htm

The authors gratefully acknowledge the financial support for this study from the Department ofForeign Affairs and International Trade, Government of Canada, and the Shastri Indo-CanadianInstitute.

MIP27,1

146

Received November 2007Revised June 2008Accepted September 2008

Marketing Intelligence & Planning

Vol. 27 No. 1, 2009

pp. 146-169

q Emerald Group Publishing Limited

0263-4503

DOI 10.1108/02634500910928380


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IntroductionThe importance of maintaining long-term relationships is an established fact inmarketing theory and practice. A plethora of books (Sheth and Parvatiyar, 2000;Gummesson, 2002), special journal issues, and conference proceedings (both academic

and managerial) in recent years exhibit testimony to the continuing interest in therelationship-marketing paradigm. In the past two decades marketers have shifted theirthinking about transactions and relationships. Scholars have argued for a shift from atransaction to a relationship viewpoint (Gronroos, 1994), from a goods-dominated to aservice dominated viewpoint (Vargo and Lusch, 2004), and for acceptance of the factthat relationships can enhance financial returns (Gummesson, 2004) through creatingcustomer and shareholder value (Payne and Frow, 2005). Furthermore, relationshipmarketing has been advocated as being the most relevant strategy for success incorporate banking (Moriarty et al., 1983; Perrian et al., 1991; Paulin et al., 1998). Hence,relationship marketing has become an important issue in the academic discipline andin banking practice.

With the globalization of the world economy, cultures role in shaping businessrelationships has become a critical focus of academic researchers attention as well.Although considerable effort has been devoted to identifying factors that enhance thedevelopment of business relationships, few studies have explored the connectionbetween cultural values and key elements of a business relationship particularlybuyer-seller bonding and the development of a committed tie between them.Furthermore, most studies that address business relationships and cultural valuesfocus on North America and Europe (Williams et al., 1998; Donthu and Yoo, 1998). Itremains to be seen whether the findings from these studies apply to other regions of theworld. The search still continues among marketing researchers to develop a generaltheory of relationship marketing that is useful in explaining a wide range ofbuyer-seller relationships across cultures (Palmer, 1993).

Culture values, beliefs and attitudes are important factors in consumers decisionprocesses, and researchers consider culture an important determinant of consumerbehavior (Aaker and Lee, 2001; Aaker and Maheswaran, 1997; Aaker and Williams,1998; Desphande et al., 1986; Gurhan-Canli and Maheswaran, 2000; Han and Shavitt,1994; Henry, 1976; Howard and Sheth, 1969; Klein et al., 1998; Ter Hofstede et al., 1999;Bruning, 1997). As antecedents of personal behaviors, different value orientationsdisplay different behavior patterns (Rokeach, 1973). Roth (1995), in a ten-country samplestudy, found significant moderating effects of culture on the market share performanceof brand image strategies. Studies by Donthu and Yoo (1998), Furrer et al. (2000) andMattila (1999) have demonstrated that a significant linkage exists between culture andservice quality expectations. Hence, marketing efforts would be most effective whencultural value differences are considered, and would achieve better results when they

match the cultural values of target consumers (Farley and Lehman, 1994).Most research to date that has examined antecedents of loyalty and commitment has

focused on industrial markets, distribution channels and consumer goods. Professionalservice organizations such as legal, consulting and accounting firms, represent anunder-researched area in terms of exchange relationships (Beaten and Beaton, 1995). Forservice firms, maintaining strong customer relationships is especially important due tothe intangible, ephemeral and often interpersonal nature of the service delivery process.Commercial banking relationships are stronger cases than most service sectors for the

Bonding andcommitment

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development of ongoing relationships. In the face of increasing competition, themaintenance of relationships between banks and their corporate customers has beenadvocated as an excellent way for banks to establish a unique long-term relationshipwith their customers (Watson, 1986; Man So and Speece, 2000).

Taken together, we believe business relationships and cultural values are amongthe more important issues facing international marketers. In this study, we focus on themanner in which one element of culture impacts upon business relationships in thebanking sectors of two countries. More specifically, we focus on individualismsmoderating influence on the bonding-commitment relationship in a commercialbanking context. As we will demonstrate, our contribution not only adds to knowledgeabout cultures role in affecting business relationships, but it also provides evidencethat shows cultural values impact the bonding-commitment relationship differentlyacross two countries in an important service sector.

Our paper has four main sections. First, the studys theoretical framework isreviewed in order to develop an understanding of the structure of thebonding-commitment-individualism relationship between a corporate customer andits commercial bank. Second, details of our survey methodology are discussed. Wepresent our research findings in third section. Finally, in the fourth and final sectionwe discuss our findings, draw our conclusions, and discuss the implications for bankmarketing as well as suggest avenues for future academic research.

Theoretical background and hypothesesThe foundation for this research was the extant literatures in relationship marketing inbusiness-to business networks and national culture. Figure 1 shows the theoreticallinks between relational bonding and commitment, with the moderating effect ofindividualism, an important element of national culture.

CommitmentRelationship commitment as defined by Moorman et al. (1992) is an enduring desire tomaintain a valued relationship. As per the authors, a valued relationship exits whenthe relationship is considered important. Similarly, their enduring desire to maintainbasically means that a committed partner wants the relationship to endure indefinitelyand is willingly to work at maintaining it. Morgan and Hunt (1994, p. 23) define

Figure 1.Conceptual model

Conceptual Model

Social Bonding

Structural Bonding

Relationship

Commitment

Cultural Moderator

Individualism

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commitment as an exchange partner believing that an ongoing relationship withanother is so important as to warrant maximum effort to maintain it. They viewrelationship commitment as central to all relational exchanges between buyers andsellers. In services relationship marketing, Berry and Parasuraman (1991) make

mention of the fact that relationships are built on the foundation of mutualcommitment.

Processes that build and nurture commitment are central areas of research.Similarly, the process through which consumers become loyal to specific brands hasbeen widely discussed. Initially, loyalty was viewed as repeat buying. However, as thefield of consumer behavior matured researchers came to realize that repurchase is notsufficient evidence of brand loyalty. Assael (1969) defines brand loyalty as acommitment to a certain brand. Firms see brand loyalty as one of their main assets andmake efforts to build and nurture it. Wang (2008) conducted a cross-departmentalstudy of the financial services industry based on three consumer samples fromTaiwan. His empirical evidence suggests that commitment had a positive andsignificant effect on behavioral loyalty. In summary, establishing commitment is afundamental condition for building strong relationships. As we will argue in thefollowing section, the type of bonding between two parties influences commitment tothe relationship, and the specific bonding-commitment relationship is dependent uponnational cultural values.

BondingBonding is defined as the dimension of a business relationship that results in twoparties (customer and supplier) acting in a unified manner towards a desired goal.Various bonds exist between parties that indicate different levels of a relationship(Callaghan et al., 1994). Bonding has been successful in explaining within countrybuyer-seller relationships (IMP Group, Hakansson, 1982; Wilson and Moller, 1988).

Bonds reflect and cause commitment in business relationships (Hakanson and Snehota,1995). Wang (2008) provided evidence that relationship bonding affected commitmentand behavioral loyalty through trust. Bonds, or strong ties between business firms, areimportant aspects of exchange relationships in the network approach, and areclassified under two broad categories: structural and social bonding.

Structural bonding is the task orientation between buyer and seller. It is the degreeto which certain ties link and hold a buyer and seller together in a relationship as aresult of some mutually beneficial economic, strategic, technological, or organizationalobjective (Williams et al., 1998). Social bonding is the bonding that takes placebetween individuals (i.e. the buyer and seller). During social bonding, individuals arebonded together via the organizational members personal and social relationship withtheir counterparts in a particular firm. Personal factors, such as trust or satisfaction

with the relationship partner, play an important role in developing social bonding(Williams et al., 1998). Wilson (1995) defines social bonding as the degree of mutualpersonal friendship and liking shared by the buyer and seller.

Recent findings support the position that both structural and social bonding areimportant in terms of establishing committed customers. In their study of commercialbanking relationships, Paulin et al. (2000) demonstrated that, despite the currentemphasis on technology, key contact personnel remain important for the success ofprofessional business-to-business services. When account managers are changed,


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the business clients feel that their commitment relationship with the bank is weakerand less client-oriented. This phenomenon is indicative of a lessening of both structuraland social bonding structural bonding, in the sense that the client is dependent uponthe ability of the banks representative to service his needs and does not receive the

needed service, and social bonding, to the extent that the client feels a personal loss inthe departure of the valued bank representative. Paulin et al. (2000) also providedevidence that changing account managers is negatively associated with a banksexternal effectiveness as measured by client satisfaction, purchase intention, servicequality and by a willingness to recommend the bank to another party. In a similarstudy, Colgate and Danaher (2000) demonstrated that excellent personal bankerscould increase overall customer satisfaction, commitment and loyalty compared tocustomers who do not have a personal banker. Moreover, personal bankers establishboth structural as well as social bonds with clients. While studying members of thePurchasing Management Association of Canada, Smith (1998) reported that social,functional, and structural bonds provide the context from which relational outcomes,

such as trust, satisfaction and commitment, are evaluated. Furthermore, he arguedthat communication, cooperation, and relationship investment are important predictorsof social bonding, while relationship investment predicted structural bonding.Williams et al. (1998) assert that both social and structural bonding are positivelyrelated to commitment; however, structural bonding has a greater effect oncommitment than social bonding. In sum, based on the research on bonding andcommitment, we propose that relational bonding (both structural and social), from theview point of the corporate customer, will be positively related to a customerscommitment to a bank. Thus, bonding is an important antecedent to commitment.Our formal hypotheses are as follows:

H1. Social bonding between a corporate customer and its bank will be positively

related to commitment in:

H1a. India.

H1b. Canada.

H2. Structural bonding between a corporate customer and its bank will bepositively related to commitment in:

H2a. India.

H2b. Canada.

As Williams et al. (1998) have demonstrated, social bonding will be higher in countries

where relationships between buyers and sellers are more important than transactionalexchanges, while structural bonding will be more important in transaction-orientedcountries. Given Malhotra et al.s (1994) finding that, compared to developed countries,developing countries assign more importance to social dimensions of businessrelationships, we hypothesize that:

H3. Social bonding will be given higher importance by Indian corporatecustomers compared to their counterpart Canadian corporate customers.

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H4. Structural bonding will be given higher importance by Canadian corporatecustomers compared to their counterpart Indian corporate customers.

National cultureThe concept of culture is widely interpreted in the academic literature. Kroeber andKluckhohn (1952) identified more than 160 ways culture can be defined. Kluckholn(1962, p. 25) defined culture as the part of human makeup which is learned by peopleas the result of belonging to a particular group, and is that part of learned behavior thatis shared by others. It is our social legacy, as contrasted to our organic heredity. Tostudy national culture between two countries we turn to the seminal work of Hofstede(1991, p. 5), who defined culture as the collective programming of the mind whichdistinguishes the members of one group or category of people from those of another.Hofstedes typology of culture is one of the more important and popular theories ofculture types. While his theory is based on empirical data collected from IBMemployees, scholars have relied on Hofstedes insights to study a nations cultural

values (Sondergaard, 1994). In his theoretical system, countries are grouped intocategories according to core cultural values. Samiee and Jeong (1994) make the point,however, that counties may not be homogeneous with regard to core values.Nonetheless, scholars have stated that Hofstedes (2001) core values not only reflectbeliefs of IBM employees, but also they have been found to pertain to individualcitizens and consumers as well, although strong arguments have arisen claiming thatHofstedes generalizations apply to work-related values and are inappropriate in othercontexts (Sondergaard, 1994). In this study, we accept Hofstedes notion thatindividualism is an important national value; however, we utilize an alternativemeasurement scale developed by Yoo et al. (2001) and Yoo and Donthu (2002) tooperationalize the construct.

Social bonding, structural bonding and national cultureMalhotra et al. (1994) suggest that business respondents from developing countriesgive more importance to social interaction and personal connectivity than do theircounterparts from developed countries. Similarly, Williams et al. (1998) characterizeindividualistic national cultures as those with less interpersonal orientation, whilecollectivist national cultures have high needs for interpersonal orientation. Based on anempirical study of buyer-seller relationships among business respondents from theUnited States, Germany, Costa Rica, and Jamaica, the authors confirmed theirhypothesis that buyers from collectivist countries had the strongest desire for socialbonding. Conversely, buyers from highly individualistic countries had the strongestdesire for structural bonding. According to Williams et al. (1998), people from

collectivist societies place greater importance on interaction and group-orientedrelationships compared to those from individualist societies. Less relationship-orientedcultures are more likely to choose a bank primarily based on objective performancecriteria, such as good pricing and delivery time. Conversely, buyers in morerelationship-oriented cultures are more likely to prefer doing business with a bank thatthey can establish a personal and social relationship. Because collectivists valuepersonal and social relationships, compared to buyers from individualistic-orientedsocieties, buyers from collectivistic national cultures are more likely to emphasize


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interpersonal factors and will attach greater importance to social bonding in theirrelationships (Williams et al., 1998).

From the above discussion, we conclude that buyers from collectivist countries,(e.g. India), will give more emphasis to interpersonal orientation and will attach greater

importance to social bonding. Buyers from individualistic countries, (e.g. Canada), onthe other hand, will place more emphasis on tasks to be performed and will thereforeattach greater importance to structural bonding. Thus, individualism will tend todiminish social bondings role in enhancing commitment, but it will also enhancestructural bondings effect on commitment. The following hypotheses organize ourtests of these propositions:

H5. Individualism will negatively moderate the relationship between socialbonding and commitment.

H6. Individualism will positively moderate the relationship between structuralbonding and commitment.

MethodologySurveyOur study is based on a survey of Canadian and Indian banking business customers.Two versions of the survey, mail and internet, were developed and pre-tested in bothcountries prior to fielding. The two versions were identical except for the manner inwhich they were presented to survey respondents. In developing the questionnaire, wewere careful to insure the questionnaire items reflected our study objectives. Thus,sections were included that captured respondents demographic details, attitudes,beliefs, and intentions. The instrument was subjected to several reviews by universitycolleagues and two groups of banking customers in order to remove obvious errors andto insure that the items were appropriate for the business context. Completion time for

each instrument was approximately 15 minutes. For the internet survey, respondentswere notified by the sponsor and given the internet account and password that wouldallow them access to the survey web page. Mail surveys were mailed first class,postage paid, with a stamped, return envelope included with the instrument. Becausedifferent instruments were used to collect the data, it is possible that instrument biasmay exist. We checked means and variances of the key study variables in the twoquestionnaire types and were unable to discern a significant difference, which allowedus to pool the data for analyses. Follow-up telephone calls and personal contacts weremade in an attempt to increase response rates.

SampleFor the purpose of our study, corporate customers are those bank customers who work

in the business sector, maintain either a deposit or credit account for businesspurposes, and conduct transactions through a bank representative. In Canada, theCertified General Accountants Association sent an e-mail request with URL address forthe web site to its members asking them to participate in the study. The web surveywas provided online at a specified URL address. We also purchased a mailing list froma reputable Canadian listing service. Respondents were randomly selected based onCanadian province, sales volume and type of industry (i.e. manufacture, trade orservice). For the Indian sample, company listings were provided by the Institute of Cost

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and Works Accountants of Indian Chambers of Commerce located in different statecapitals. In order to obtain comparability with the Canadian sample, the Indian samplewas also stratified and randomly selected according to geographical region, salesvolume and type of industry.

Corporate customers from 1,000 Canadian and 1,000 Indian companies werecontacted and asked to participate in the survey. Owing to wrong addresses, 148 mailedand internet-based questionnaires from Canada and 97 mailed and internet-basedquestionnaires from India were returned. Thus, 852 Canadian and 903 Indian corporatecustomers received the survey. After eliminating questionnaires with excessiveamounts of missing data, the final Canadian sample consisted of 126 responses andthe Indian sample consisted of 156 responses. Our useable response rates were14.8 percent in the Canadian sample and 17.3 percent in the Indian sample, which areboth within the range typically reported for marketing research studies. A briefsummery of the respondent sample is presented in Table I.

As depicted in Table I, the demographic characteristics of Indian and Canadianrespondents differed in several ways. First, female respondents were more prominentin the Canadian sample than the Indian sample (29.13 and 4.49 percent, respectively).Second, comparatively more manager-level respondents were observed in the Indiansample than in the Canada sample (60.90 and 21.25 percent, respectively), althoughthere were more top-level executives in the Canadian sample relative to the Indiansample (78.74 and 21.25 percent, respectively). Third, the Indian sample was youngercompared to the Canadian sample. Fourth, in terms of business sectors, there weremore trading companies that participated in the Indian sample compared to thenumber reported in the Canadian sample (31.11 and 11.02 percent, respectively);however, the Canadian sample included more service companies than was found in theIndia sample (59.84 and 28.85 percent, respectively). Finally, the average length of thecustomer-bank relationship was 11 years in Indian companies while it was 17 years in

Canadian companies. The differences identified across the two samples are asexpected, given the cultural backgrounds of the two countries as well as their level ofeconomic development. In summary, the data appear to be representative of the twopopulations.

MeasuresAll variables were measured with multiple-item scales and were derived from previousstudies. A seven-point Likert-type scale was used for the sake of uniformity inmeasuring the variables. Commitment was measured using three items drawn fromMorgan and Hunt (1994) that addressed how important the relationship was to thecustomer and how much effort the customer feels the relationship deserves. Socialbonding was measured with four items and structural bonding was measured using

five items. Both social and structural bonding scale items were adapted from twopreviously tested scales (Rodriquez and Wilson, 1999; Smith, 1998). Smith (1998)argued that the items measuring structural bonding represent distinct sourcesof structure, not all of which would be expected in any given relationship, but whensummed would indicate the extent of structural bonding. Since different measures ofstructural bonding may not covary, because they assess different aspects, weconceptualized structural bonding as a multidimensional composite index. Consistentwith how such formative indicators are interpreted (Bollen and Lennox, 1991),


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Characteristics

Category

India

Canada

Gender

Male

149(95.5)a

89(70.9)

Female

7(4.5)

37(29.1)

Position

Exec

utive/manager

95(60.9)

26(21.3)

Top

levelexecutive

(director/VP/controller/GM)

61(39.1)

100(78.7)

Agegroups

Under30

28(17.9)

4(3.1)

30-40

66(42.3)

27(22.0)

41-50

47(30.1)

42(33.1)

.50

15(9.6)

53(41.7)

Natureofbusiness

Manufacturing

62(39.7)

37(29.1)

Trad

ing

49(31.4)

13(11.0)

Servicing

45(28.9)

76(59.8)

Salesturnover

Under$10million

91(58.3)

73(58.3)

$10million-100million

54(34.6)

38(29.9)

.$1

00million

11(7.1)

15(11.8)

Averageyears

withthebank

11

17

Business

headquarters

Bhuba

neswar,Calcutta,NewDelhi,

Mum

bai,Hyderabad,Bangalore

Qu

ebec,Alberta,Manitoba,Ontario,BritishColombia,

NovaScotia,NewBrunswick

Notes:aUnits:n(percent);samplesn

282(India

156;Can

ada

126)

Table I.Characteristics ofmulti-group sample

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we assumed that our items result in structural bonding rather than vice versa. Forexample, we assert that structural bonding will be high when economic benefits arehigh and/or when electronic ties or linkages will be more efficient; however, we do notexpect the converse (i.e. that an increase in structural bonding causes high-economic

benefits through the relationship). As per Bollen and Lennox (1991), internalconsistency is not applicable to such multidimensional composites. Support for ourhypotheses will provide substantive validity of the structural bonding construct.

Individualism was measured by administering the scale developed and validated byYoo et al. (2001) and Yoo and Donthu (2002). The advantage of this scale overHofstedes (1980, 1991, 2001) is that the instrument also applies to general consumercontexts and is not limited to work related situations. Items comprising each of thescales are presented in the Appendix.

Reliability and validityBefore using inferential statistics, we assessed the reliability and validity of our

measurement scales by means of confirmatory factor analysis (CFA). Consistent withour conceptualisation, a three-factor measurement model was estimated usingAMOS-4. The x2 values for both country models were significant: the Indianmodel, x2 123.144, df 51, p 0.00 and the Canadian model, x2 97.41,df 51, p 0.00). Other indices indicated a good fit for both the Indian sample(CFI 0.92, TLI 0.89, RMSEA 0.07) and the Canadian sample (CFI 0.96,TLI 0.94, RMSEA 0.051). Furthermore, the x2/df statistic is within acceptablelevels (approximately two), which reinforces the strength of the models fit to both datasets (Baumgartner and Homburg, 1996).

In assessing measurement reliability, Fornell and Larcker (1981) stress theimportance of examining construct reliability (CR) and average variance extracted(AVE). CR is calculated as the squared sum of the standardized individual item

loadings divided by that squared sum of loadings plus the sum of the error variancesfor the measures. AVE is calculated as the sum of squared standardized loadingsdivided by that sum of squared standardized loadings plus the sum of the errorvariances for the measures. Bagozzi and Yi (1988) suggest two criteria in assessingreliability: the estimates of each measurement scale should equal or exceed a value of0.60, and the average variance extracted should equal or exceed a value of 0.50. Table IIpresents the means, standard deviations, factor loadings, composite reliabilities andAVEs of our measurement scales. Structural bonding items are not included in theCFA analysis because they constitute a composite index. As indicated in Table II,requirements for CR and AVE are met as each multiple item scale exceeded therecommended cut-off criterion of 0.60 and 0.50, respectively, in both countrys data.

Support for convergent validity is offered through the highly significant loadings

estimated for each individual item (Anderson and Gerbing, 1991). With the exception ofone individualism item in the Indian sample, which was deleted from the final analysis,all factor loadings were highly significant and exceeded the p , 0.05 level, which iscommonly considered meaningful in factor analytic investigations (Hair et al., 1995).As shown in Table II, factor loadings range between 0.65 and 0.91 for the Indiansample and 0.69-0.93 for the Canadian sample. For each sample, the estimates fellwithin the acceptable range and are statistically significant (p , 0.01). Therefore, themeasures displayed adequate convergent validity.


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Indiansa

mple

Canadiansample

Measurementitem

Factorloading

Mean(SD)

CRa

AVEb

Factorloading

Mean(SD)

CR

AVE

Individualism

0.89

0.61

0.87

0.57

Selfinterest

0.87

2.20(1.1

9)

0.69

3.52(1.37)

Selfprotection

0.91

2.18(1.2

2)

0.69

2.90(1.20)

Individualrewards

0.68

1.96(1.0

8)

0.80

3.32(1.37)

Individualwelfare

0.70

2.14(1.2

4)

0.81

3.64(1.33)

Individualloyalty

0.73

2.15(1.2

1)

0.76

3.67(1.42)

Socialbonding

0.82

0.54

0.93

0.80

Friendship

0.67

5.68(0.9

9)

0.86

4.11(1.67)

Personalrelationship

0.75

5.28(1.1

7)

0.88

4.29(1.85)

Advicesharing

0.80

5.14(1.1

1)

0.93

3.79(1.66)

Belongingness

0.72

5.26(1.1

9)

0.90

4.45(1.66)

Commitment

0.77

0.53

0.91

0.78

Bankcommitment

0.69

5.77(0.7

2)

00.88

4.95(1.12)

Relationshipmaintenance

0.83

5.90(0.7

6)

0.91

5.03(1.34)

Commitmenteffort

0.65

5.84(0.7

1)

0.86

5.10(1.21)

Notes:aCRconstruct

reliability;

bAVEaveragevariance

extracted

Table II.Summary of descriptivestatistics and CFA results

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An assessment of discriminant validity was conducted for all the correlated constructs.A stringent criterion for testing discriminant validity, specified by Bagozzi and Phillips(1982), is to fix the correlation parameter between two factors at 1.0 (as thoughperfectly correlated) and then employ a x2 difference test on the values obtained for the

constrained and unconstrained models. A significantly lower x2 value for the model inwhich the trait correlations are not constrained to unity would indicate that the traitsare not perfectly correlated and that discriminant validity is achieved (Anderson andGerbing, 1991; Bagozzi and Yi, 1988). For both the Indian and Canadian data, all x2

differences were significant at the p , 0.01 significance level. In summary, the resultsindicate substantially improved model fits by separating the several constructs. Theresults support the conclusion that our measures displayed adequate discriminantvalidity.

Cross-national measurement equivalenceIn cross-national research, instruments can only be compared when showing

cross-national measurement invariance. In this study, measurement invariance islimited to metric invariance (i.e. invariance of factor loadings), which indicates thatmembers in different groups interpret and respond to measures in an identical manner(Bagozzi and Yi, 1988; Steenkamp and Baumgartner, 1998). We tested for measurementinvariance using a hierarchical ordering of two-nested models. The first model testedwhether the pattern of salient and non-salient factor loadings was equal acrosscountries, also referred as configural invariance (Steenkamp and Baumgartner, 1998).Our results indicated that the data fit well with the a priori hypothesized model:x

2 (102) 220.55 (p , 0.001), CFI 0.94; TLI 0.92; RMSEA 0.051. In thesecond model, we tested whether the factor loadings were equal across countries atest for metric invariance (Steenkamp and Baumgartner, 1998). Our results indicatedthat the data fit satisfactorily with the a priori hypothesized model: x2 (111) 247.17

(p , 0.001); CFI

0.93; TLI

0.91; RMSEA

0.055. The increase in x2

betweenthe two models is significant: Dx2 (9) 26.52 (p , 0.001). However, the remaininggoodness-of-fit indices (x2/dof, TLI, CFI and RMSEA), which are less sensitive tosample size, show very considerably less marked decrease in fit. In summary, thenational level and cross-national level analysis indicated a high level of cross-nationalequivalence at the measurement level of social bonding, commitment andindividualism constructs. Hence, we can compare mean scores as well as thestrength of relationships among them and across national cultures.

Analytical methodsWe employed hierarchical moderated regression analysis (HMRA) to examine whetherthe impact of social and structural bonding on commitment is moderated by

individualism. From the correlation matrix (see Results section), it is clear that highlysignificant correlations exist between individualism and the main-effect bondingvariables. Therefore, HMRA is the appropriate analytical approach to eliminatepossible multicollinearity problems in moderated regression analysis. To investigatethe presence of a moderator effect on the construct relationships in our study, we followSharma et al.s (1981) procedure that involved constructing a regression model thatincluded main effect terms for independent variables as well as product termsrepresenting each moderator effect. Product terms were computed using our cultural


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moderator (e.g. individualism) and appropriate main effect variables (e.g. social andstructural bonding). After accounting for main effects, each product term(i.e. moderator effect) was then entered individually. In terms of the moderatoranalysis, the key test was whether the product term accounted for a significant amount

of incremental variance. For our hypotheses to be supported, therefore, the signs of themain effect variables (i.e. social and structural bonding) needed to be positive (i.e. H1and H2), the size of the social bonding-commitment coefficient must be higher for theIndian sample (H3), the size of the structural bonding-commitment coefficient must behigher for the Canadian sample (H4), and the values of the interaction terms must be inthe predicted direction (i.e. negative for H5 and positive for H6).

In order to further substantiate and validate the moderating effect of individualismin our model, we conducted an additional regression analysis at the group level. Sincethe moderating effect of individualism was tested with pooled data at the individuallevel, we expected the effect of social and structural bonding on commitment wouldalso differ between groups within different Individualism categories. To test therelationship, we first classified respondents into low and high individualism groups

based on a median split, and followed with our regression analysis to examine therelative effects of social and structural bonding on commitment (i.e. H5 and H6).

ResultsNational value differencesUsing Yoo et al.s (2001) scale, we found that mean Individualism values for India andCanada were 2.13 and 3.41, respectively. One-way ANOVA results indicated that themean difference was significant (p , 0.001, F 109.03) and that Canadianrespondents were higher in Individualism compared to Indian respondents. Ourfindings correspond with Hofstedes conclusions in the sense that the IndianIndividualism index is lower than the Canadian index. Tables III and IV provide

country-wise descriptive statistics and correlation matrices for our dependent andindependent variables.

Tests of hypothesesAfter achieving satisfactory results in theCFAmodel,we testedthe studys specific researchhypotheses. We conducted regression analysis to examine the hypothesized relationshipsbetween a countrys culture and its affects on the bonding-commitment relationship.

Social bonding Structural bonding Commitment Individualism

Social bonding 1.00Structural bonding 0.43 (I) * 1.00

0.34 (C) *Commitment 0.30 (I) * 0.06ns(I) 1.00

0.24 (C) * 0.26 *(C)Individualism 20.14 (I)

ns20.28 * (I) 20.06

ns1.00

20.13 (C)ns

0.02ns

(C) 20.10ns

Mean (SD) 5.34 (0.90) (I) 5.60 (0.89) (I) 5.83 (0.60) (I) 2.13 (0.98) (I)4.16 (1.57) (C) 4.96 (0.75) (C) 5.03 (1.15) (C) 3.14 (1.08) (C)

Notes: *p , 0.01. nsNot significant at p , 0.05 level. aIndian data (I) and Canadian data (C)

Table III.Variable correlations,means and standarddeviations: Indian andCanadian samples

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Variable

Socialbonding

Structuralbonding

Commitment

Individualism

Socialbonding

individualism

Structuralbonding

individualism

Socialbonding

1.00

Structuralbonding

0.45*

1.00

Commitment

0.39*

0.29*

1.00

Individualism

20.33*

20.31*

20.28*

1.00

Socialbonding

individualism

0.39*

20.02ns

20.05ns

0.69*

1.00

Structuralbonding

individualism

20.17*

0.03ns

20.17*

0.93*

0.74*

1.00

Notes:*p,

0.01.

nsNon

-significantatp,

0.05level.aVariablesincludedindependent,dependent,moderatorandproductterms

Table IV.Variable correlations

(pooled data)a: main andinteraction terms


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The basis for the specific tests of the hypotheses and their results are presented inTables V and VI. As recommended by Malhotra (1996), we evaluate theunstandardised slope coefficients in conducting our cross-cultural comparisonbetween respondents from the two countries because unstandardised data reflect an

ethic standard, as they were unadjusted for within-sample variability:. Social bonding and commitment. The results reported in Table V indicate that

social bonding was positively related to commitment in both countries, whichsupports our H1. A further review of the individual items in Table V indicatethat the effect of social bonding on commitment was much higher in India than inCanada slope coefficients were b 0.22 (p , 0.01) and b 0.13 (p , 0.05)for the Indian and Canadian samples, respectively, thus supporting H3.

. Structural bonding and commitment. With respect to H2, the results reported inTable V support the structural bonding-commitment linkage for the Canadianbut not the Indian sample. Thus, H2 is only partially supported. Table V alsoindicates that the effect of structural bonding on commitment was higher in the

Canadian compared to the Indian sample. Slope coefficients in the Canadian andIndian samples were b 0.31 (p , 0.01) and b 20.05 (ns), respectively.Therefore, H4 was strongly supported.

. Individualisms influence on commitment, structural bonding and social bonding.Table VI presents the results of the HMRA that includes main and interaction(i.e. moderator) effects. All main effects were significant and of the expectedsigns: social bonding (b 0.33; p , 0.01) and structural bonding (b 0.14;p , 0.05) were positively related, and individualism (b 20.15; p , 0.01) wasinversely related, to commitment. The significant incremental R2 resultsreported in Table VI also indicated that the impact of social and structuralbonding on commitment was moderated by individualism. The signs of the

Unstandardized regression coefficientsVariable Pooled sample India Canada

Social bonding 0.23 * * 0.22 * * 0.13 *

Structural bonding 0.15 * 20.05 0.31 *

R2 0.17 0.09 0.10

Notes: *p , 0.05; * *p , 0.01; nsNot significant at p , 0.05 level

Table V.Country level effect ofstructural bonding andsocial bonding oncommitment

Variable(s) R2 R2 diff.

b (standardized

regression coefficients) F value

Social bonding 0.17 0.33 * * 27.78 * *

Structural bonding 0.14 *

Individualism 0.19 0.02 20.15 * * 21.18 * *

Social bonding individualism 0.23 0.04 20.67 * * 20.32 * *

Structural bonding individualism 0.30 0.07 2.03 * * 23.74 * *

Notes: *p , 0.05; * *p , 0.01

Table VI.Results of hierarchicalmoderator regressionanalysis (pooled data):main and moderatoreffects

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interaction terms (b 20.67 and b 2.03) were statistically significant and inthe predicted direction. Thus, H5 and H6 were supported by the data. The twointeraction terms accounted for 11 percent of the incremental variance of themodel, an amount that has significant practical as well as theoretical

implications. Based on the test developed by Sharma et al. (1981), we concludethat individualism serves as a significant moderator variable in thebonding-commitment relationship.

. Bonding and commitment low vs high individualism group analysis. In order tocorroborate individualisms moderating effect on commitment, we separated thestudy samples into two groups low and high individualism. The resultsreported in Table VII indicate that the effect of social bonding on commitmentwas much higher in the group measuring low in individualism compared to thegroup with the higher individualism score. Slope coefficients were b 0.34(p , 0.001) and b 0.06 (ns) for the low- and high-individualism groups,respectively. Furthermore, the effect of structural bonding on commitment was

higher in the high (b

0.38 (p,

0.001)) relative to the low (b 2

0.06 (ns))individualism group. These grouped data findings corroborated the resultsexhibited in Table VI and add additional support for H5 and H6.

Discussion and conclusionsWe have learned from the relationship marketing literature that bonding is related tocommitment. We also have learned from the cross-cultural marketing literature thatgroups differ with respect to the values they hold dear and that impact upon groupmembers judgments and choices. Our research questions in this study emanate fromthe intersection of these two bodies of thought: do cultural values influence thebonding-commitment relationship? More particularly, does individualism moderate therelationship between social bonding and commitment, and between structural bondingand commitment? Secondly, do the social bonding-commitment and structuralbonding-commitment relationships differ across cultures? The objective of this studywas to test several hypotheses related to these questions.

Social and structural bonding are hypothesized as antecedents to commitment. UsingOLS regression analysis at the country level, we found that social bonding wasantecedent to commitment in both the Indian and Canadian samples, but that structuralbonding led to commitment only in the Canadian sample. Hence, Canadian corporatecustomers commit to their banks through both channels: by establishing personalrelationships with bank representatives as well as through mutually shared expectationsand mutually beneficial objectives. They utilize both personal (i.e. social bonding)

Unstandardized regression coefficientsVariable Pooled sample Low individualism group High individualism group

Social bonding 0.23 * * 0.34 * * 0.06ns

Structural bonding 0.15 * 20.06ns 0.38 * *

R2 0.17 0.24 0.12

Notes: *p , 0.05; * *p , 0.01; nsNot significant at p , 0.05 level

Table VII.Effect of structuralbonding and social

bonding on commitment:low versus high

individualism groups


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and transactional specific means (i.e. structural bonding) in creating commitment to acommercial bank. Indian corporate customers, on the other hand, depend on personalrelationships when developing commitment to their banks. Apparently, neither mutualeconomic benefits nor the explicit tasks performed by bank staff appear to influence the

degree to which commitment is formed. Thus, the Indian customers relationship with thebank representative determines the strength of the Indian corporate customerscommitment to the bank. Our results from the country-specific analyses dramatize thestrong effect social bonding has on generating commitment in the Indian sample, and theequally strong effect structural bonding has on influencing commitment in the Canadiansample.

When the data were pooled for HRMA (i.e. Indian and Canadian respondents datawere combined), both social and structural bonding became important commitmentantecedents, although the social bonding effect was stronger than the structuralbonding effect. Several explanations for this difference in findings come to mind. First,the increased sample size of pooling the data may have created sufficient statisticalpower to detect a significant effect for the structural bonding measure. Second, thestrength of the Canadian reliance on structural bonding may have dominated theIndian indifference to structural bonding as a means of generating commitment.In either case, it appears from the two analyses that social bonding is an importantsource of commitment, but that structural bonding is less likely to be important to theIndian corporate customer. This finding corroborates previous study results reportedby Williams et al. (1998), Rodriguez et al. (1999), Paulin et al. (2000) and Colgate andDanaher (2000).

We also discovered that individualism influenced commitment directly as well asmoderating the strength of the relationship between the two forms of bonding andcommitment. In the HMRA, individualism was negatively related to commitment,meaning that higher levels of individualism resulted in lower levels of commitment.

Individualism, as a main effect, exerts a negative impact upon commitment, which isconsistent with findings from cross-cultural research (Hofstede, 1980, 2001).Self-centered people tend to rely on their own devices to achieve ends and place lessresponsibility on others, and commitment to others will likely be less. Thus, corporatecustomers who are highly individualistic will likely show less commitment to theirbanks. The more important finding, however, is that higher levels of individualismnegatively affected the social bonding-commitment relationship. In the pooled HRMAanalysis, the social bonding by individualism interaction term (i.e. the individualismmoderator) was negative, which signified that the strength of the social bonding effectwas lessened when individuals reported strong individualistic tendencies. Not onlydoes high individualism negatively influence the degree of commitment directly, it alsodampens reliance on social bonding as a means of generating commitment. On the

other hand, high individualism exerts a strong positive effect on the structuralbonding-commitment relationship. In the pooled analysis, the structural bonding byindividualism interaction term was positive and very strong. A similar effect wasdiscovered in the grouped analysis structural bonding was highly significant for thehigh-individualistic group but social bonding was not. The results suggest, therefore,that highly individualistic customers are more concerned with objective measures ofsuccess in their relationships with banks and place less emphasis on the personalrelationship itself.

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ImplicationsIn studying the perceptions of the Indian and Canadian banking customers, we havenot only established valuable empirical benchmarks, but we have also providedinsights as to how and why relational models work in eastern and western cultures.

A major question addressed in our study is whether cultural differences affect thestrength of social or structural bonds on commitment in Indian and Canadian banking.Our evidence indicates that it does. In this respect the study has contributed to theadvancement of knowledge regarding banking customer-provider relationships in bothcountries. Furthermore, our effort represents one of the few marketing studies toempirically verify the moderating role of cultural values in customer-client,business-to-business relationships in a service sector. Both pooled and country-levelanalyses suggest that social bonding (affective and personal) is crucial to buildingcommitment, a finding that supports previous studies by Williams et al. (1998),Rodriquez and Wilson (1999), Paulin et al. (2000) and Colgate and Danaher (2000).However, our findings demonstrate that the influence of social bonding on commitmentis comparatively higher for Indian (lower individualism) compared to Canadian (higherindividualism) customers, while structural bonding is more important for Canadianthan for Indian customers.

Our findings have significant implications for banking service providers withregard to establishing and maintaining relationships with international and immigrantcustomers. From a managerial point of view, country and cultural group leveldifferences should be considered carefully when developing international servicestrategies. Our results show that understanding the linkage between individualismand aspects of a bank-customer business relationship will provide useful insights forhow firms should allocate marketing resources to different cultural service markets. Toignore the impacts of cultural differences is to run the risk that marketing practices inone country may prove to be insufficient, or inappropriate, in another. Corporate

customers steeped in traditional Indian culture will place significant importance on thebank representative with which they work. While transaction-specific services andconcrete displays of efficiency will matter to them, our data indicate the personalrelationship is most important and will matter more in the long run. It is also importantthat managers bear in mind that societies undergo cultural changes: as members ageand pass on they are replaced with newer members whose values may not reflect thoseof their parents or grandparents, or of their traditional business institutions. Hence,a national culture is always in a state of transition. In the current era, individualismmay be on the rise as Indians, particularly young Indians, increasingly attempt toemulate the values and behaviors of western societies. With the emergence of a highlyintegrated world, where information, location and products are much more accessible,it is quite likely todays Indian youth will gravitate closer to westernized values and

expectations. If the trend continues, todays youths children will be even more likely toacculturate western values individualism in particular. More over, these people willwork in Indian businesses and make decisions about banks and banking services. Inbrief, they will become corporate customers eventually. Clearly, the implication forbanks is to remain abreast of the shifting cultural values and adjust their customerservice strategies to accommodate appropriately the cultural needs of each group theyservice. In conclusion, because cultural conditions differ among countries, and becauserelationships between customers and service providers (e.g. banks) differ as well,


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approaches to relationship marketing may vary and cannot be treated ashomogeneous. Our findings dramatize that cultural values have a strong influenceon how relationship marketing is practiced. We believe banks and other financialinstitutions can benefit by managing relationships more in tune with the cultural

imperatives of the society while, at the same time, maintaining a vigilant eye ondynamic changes occurring in that society.

Our findings introduce a number of questions that are suggestive of future researchdirections. First, we have discussed Indian and Canadian cultures as if they werehomogeneous. Are they in fact homogeneous or do sub-sets exist, which wouldtherefore require banks to identify each sub-set in devising effective customer servicestrategies? Do other cultural values (e.g. uncertainty avoidance, power distance, etc.)moderate the bonding-commitment relationship? If so, what is the direction andstrength of the relationship? Does individualism also moderate the trust-commitmentrelationship? Do other national cultural values moderate the trust-commitmentrelationship? Our foray into the intersection of relationship marketing andcross-cultural marketing research is ripe with possibilities to explore. In this study,we have garnered support for the argument that individualism influences bonding andcommitment in the Indian and Canadian banking context. The questions posed abovewill direct our future inquiries.

Limitations and future researchOur results clearly indicate that individualism moderates the bonding-commitmentlinkage at the customer level. Social rather than structural bonding processes influenceIndian corporate customers, who are characterized by low individualism, whereasCanadian corporate customers place higher preference on structural bonding processes.Our conclusions, however, may assume more homogeneity within cultural groups thanactually occurs. Samiee and Jeong (1994) argue that sub-cultures may be present within

the geographic boundaries of different countries, and that variations in relationshipexpectations between sub-cultures in the same country may exist as well. Similarly, intheir research in relationship marketing, Donthu and Yoo (1998) discovered individuallevel variations in service quality expectations across several countries. Although wedemonstrate individual level effects of bonding on commitment between groupsmeasuring high and low on individualism, other within-group moderators may beoperative as well. We suggest therefore that future studies focus on evaluatingsub-cultures within a dominant national culture in order to confirm our generalizations.Secondly, we have investigated the moderating effect of a single cultural value individualism. Would a similar relationship hold for risk avoidance, long-termorientation, or other cultural or national values? It is expected that additional patternsexist, which, if true, suggest that culture might play a more significant role in

relationship building and maintenance than originally thought. Third, our hypothesesare posed in the context of a specific business service relationship commercialbanking. Our study findings would be generalized to a broader class of buyer-sellerrelationships if additional service sectors were studied as well. Fourth, the studys focusis directed to the effect of an aspect of national culture on the bonding-commitmentrelationship. Undoubtedly, several other variables influence commitment in buyer-sellerrelationships, as suggested by Wilson (1995). If the study were expanded to link otherfactors, in addition to national culture, conclusions regarding the nature of the

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bank-customer relationship would be more enlightening. Finally, in this study, ourresearch focus was directed to only the buyers perspective. In a dyadic relationshipanalysis, however, both buyers and sellers observations are very much important formaking a meaningful conclusions. For this reason we recommend future research work

be based on a dyadic perspective, which may provide a more accurate assessment ofcross-cultural buyer-seller relationships.

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Appendix

Corresponding authorSatyabhusan Dash can be contacted at: [email protected]

Commitment adapted from Morgan and Hunt (1994)Please rate your agreement with each of the 1. Our business firm is committed to our bankfollowing statements. 2. We intend to maintain the relationship with our

bank indefinitely3. The relationship our firm has with our bank is

deserving of our firms maximum efforts tomaintain

Structural bonding adapted from Rodriquez and Wilson (1999) and Smith (1998)How important are all the following characteristics toyou in terms of continuing your

1. Formal contracts or agreements between your firmand the bank

relationship with your bank? 2. Sharing of industry or competitive informationbetween your firm and the bank

3. Electronic ties or linkages between your businessfirm and bank (such as electronic mail, access tocomputerized banking transaction system, etc.)

4. Economic benefits associated with your relationship

with your bank5. Exchange cards, gifts and the like on birthdays,holidays or on special events between your firm andbank

Social bonding adapted from Rodriquez and Wilson (1999) and Smith (1998)How important are all the following characteristics toyou in terms of continuing your

1. Friendship between you and your bankrepresentative

relationship with your bank? 2. Establishing personal relationship with you andyour bank representative

3. Sharing of personal advice or support with yourbank representative

4. Feelings of belongingness or acceptance betweenyou and your bank representative

Individualism adapted from Yoo et al. (2001)Please rate your agreement with each of the following

statements

1. Individual should sacrifice self-interest for the group

(either at such school or the work place)w

2. Individuals should stick with the group eventhrough difficulties

w

3. Group welfare is more important than individualrewards

w

4. Group success is more important than individualsuccess

w

5. Individuals should only pursue their goals afterconsidering the welfare of the groupw

6. Group loyalty should be encouraged even ifindividual goals suffer

w

Notes: Socialbonding andstructuralbonding scale item: 1 veryimportant, 7 very unimportant.Individualismand commitment scale items: 1 strongly agree, 7 strongly disagree.

wDenotes reverse coded item

Table AI.Measurement scale items

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