Industrial Marketing Management 40 (2011) 57

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Industrial Marketing Management

Business marketing in BRIC countries

Sergio Biggemann a,, Kim-Shyan Fam b,1
a b

Marketing Department, School of Business, University of Otago, New Zealand School of Marketing and International Business, Victoria University of Wellington, New Zealand

a r t i c l e

i n f o

a b s t r a c t
This paper highlights the increased importance of the BRIC countries (i.e., Brazil, Russia, India, and China) in the world economy. The BRICs are not only among the best economic performers but are responsible of a considerable part of the goods and services consumed globally and intensely trade one another. This means signicant business interaction that existing research fails to explain. Hence, this special issue was prepared to encourage publication of empirical research of business marketing that involves one or more BRIC countries. This paper briey introduces to the eleven research papers included in this special issue. 2010 Elsevier Inc. All rights reserved.

Available online 13 October 2010 Keywords: BRIC countries Brazil Russia India China Business marketing

1. Brazil, Russia, India, and China, the new development engine The BRIC countries as Brazil, Russia, India and China are frequently referred to have attracted a great deal of media and academic attention in the recent years. These countries are different from one another in their culture, background, language, and the structure of their economies. However, they have a common denominator: economic growth development in the BRICs has greatly exceeded growth compared to the world's leading industrialized nations. Even after the economic crisis that started in 2007, they continued outperforming the rest of the world. While in 2009 large economies shrunk as much as 6%, (e.g., Japan and Germany), Brazil stayed steady, India grew 5.9%, and China 8.1%; only Russia was the group's bad performer shrinking 7%. This and the forecast for 2010, which gives all these countries an expected economic growth above the average of developed economies, further increase the interest on these countries. Looking at the 2009 Real GDP (gures in 2005 US dollars provided by the World Bank), it is interesting to mention that Brazil is the world's 10th largest economy, Russia the 13th, India the 11th and China the 3rd. The combined economies of the BRIC nations are equivalent to 50% of the United States economy, the world's largest economy, and far exceed that of Japan, the world's second largest economy. However, the gures were rather different 10 years ago. In 1999, Brazil was still the 10th world largest economy while Russia was 15th, India 16th and China 7th. The sum of their economies represented only 30% of America's economy. While United States economy grew 20% in the last ten years, Brazil grew 36%, Russia grew

69%, India 92% and China is currently more than two and a half times wealthier than 10 years ago. If the trend continues, the BRICs are likely to occupy spots in the largest 10 world economies in the next few years, possibly at the expense of Canada and Spain. It is estimated that in 2009 the BRICs were responsible for 60% of the world's economic growth. In the second quarter of 2010 China had overtaken Japan as the second world economy, India keeps showing robust economic growth and Brazil as well as Russia have registered positive growth on this period. Thus, these countries are of signicant relevance to the world's economy. 2. Trading within the BRICs Although China is signicantly larger than the other three countries it does not disqualify them to be a member of BRIC group. The increased trading dynamics within the BRICs has been called to the attention of pundits and practitioners. China is the main supply partner to Russia and India and only second to Brazil. China is also an important customer representing the third largest market for Brazil, fourth for India and sixth for Russia. Individually neither Brazil, Russia, nor India is signicant from a Chinese perspective. However, as a group, they supply more than 18% of China imports, which makes them, as a group, China's largest trading partner ahead of Japan. In addition to the increased trading between these countries, their heads of state have initiated talks to create an inuence block to change the balance of power with the US and Europe. The leaders of these countries are arguing that the economic importance of the BRICs is underrepresented in institutions such as IMF and World Bank. Whether they manage to change this is yet to be known; however, within the BRICs interaction keeps increasing and the BRICs keep growing in importance to other developed countries. The BRICs appear to have progressed from an acronym only to an active block of nations.

Corresponding author. Tel.: +64 3 479 8467; fax: +64 3 479 8172. E-mail addresses: sergio.biggemann@otago.ac.nz (S. Biggemann), kim.fam@vuw.ac.nz (K.-S. Fam). 1 Tel.: +64 4 463 6459, 027 563 6459(Mobile); fax: +64 4 463 5231. 0019-8501/$ see front matter 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2010.09.004

S. Biggemann, K.-S. Fam / Industrial Marketing Management 40 (2011) 57

3. Business-to-business marketing and the BRICs The BRICs have built large manufacturing and service-providing capacity to the extent that China is called the factory of the world whereas India has turned to be a major exporter of information technology and software workers. Brazil has a large manufacturing and service capacity too and is the largest exporter in Latin America, while Russia is the world's largest exporter of oil and natural gas, and is also an important player in technology products and services. This implies signicant interaction between the BRICs and governments and companies around the world, which is relevant from a business marketing perspective. Most of today's knowledge of business marketing, which arguably includes relationship marketing and the work of the IMP group, is grounded on studies conducted in traditional Western countries. Only in the last few years, scholars have started to question the validity of measures such as trust and commitment to explain business relationships in non-Western contexts. Likewise, the idea of companies working in large networks that create direct and indirect relationships needs further analysis when suppliers of new countries enter the playing eld. This is even more important when the new parties happen to be important business partners. Of course business marketing is not only about relationships and networks, nding solutions to business problems that deliver value to customers and end consumers is also a fundamental issue. In the current world business context when two or more companies interact, the likelihood of a BRIC being supplier or buyer is large. Thus, research in the area of business marketing that involves one or more BRIC countries is becoming increasingly relevant. Increasing understanding on business marketing matters associated to the BRIC is the reason why this special issue was prepared. 4. Contributions to this special issue From the large number of submissions received 11 are included in this special issue; four from Brazil, two from Russia, two from India and three from China. However, this proportion does not strictly reect the composition of the papers received. Articles were included in this special issue based on its relevance and contribution to advance knowledge in the topic. Even though each paper has a main focus in one country, the validity of their ndings may be generalizable to a larger number of countries. The articles of this issue illustrate the variety of research currently conducted in the area. They also support the idea of the BRICs being a matter of global relevance because researchers are not limited to academics working in the BRICs. Authors are afliated to universities and industries in more than 10 different countries that have extensively collaborated to conduct research in the topic. In one paper authors were from Russia, Germany, Iran, South Africa, and Greece, which is rather consistent with the network interactionist view of business marketing. All but one paper were multi-authored, the majority being ve-author papers. This special issue addresses questions regarding relationship quality and their effects on customers loyalty and account managers performance, the role of market orientation and development of relationship capabilities, as well as the role of salesperson's customer orientation and value creation through business relationships. Other topics include procurement information searching strategies and strategies to reduce prospecting costs, performance measurement studies and multidimensional scale developments, among other topics. While one researcher is interested in business customers behavior in India, another researcher is studying the effects of conict management on relationships in China, and a third one is interested in interfunctional collaboration in Russia; all of them conducting independent research in, arguably, related topics. In organizing the contents of the issue, we, the guest editors, decided to present the articles by country. That is, starting from Brazil, following

with Russia, then India and nally China. For the articles about the same country no special reason explains the order of their publication with the exception of the rst article that addresses marketing metrics because measurement is critical to improve performance. A synopsis of each paper is presented in the following lines: Hoffmann Sampaio, Simes, Gattermann Perin, and Almeida (2011) conducted research to examine how managers approach marketing measures in Brazil. Based on a large-scale empirical study, Hoffmann et al. identied the most relevant marketing metrics from the perspective of Brazilian managers encountering that indicators pertaining to customer vision are the most important, followed by nancial indicators, indicators related to product vision, and nally market and innovation. Compared to the ndings of previous studies, UK managers prioritize prots over any other measure whereas China managers care about customer behavior similar to Brazilian managers. The study concludes that marketing and other management metrics should be better integrated one another. Brashear Alejandro, Kowalkowski, da Silva Freire Ritter, Zancan Marchetti, and Prado (2011) motivated by the increased complexity of products and services that companies deal with and thus the complexity of sourcing, conducted research to understand the inuence of information search efforts of buying rms in key purchase decisions. Brashear Alejandro et al. evaluated the inuence of organizational, personal, and situational information search on purchase decisions of integrated business management systems drawing on data from large Brazilian rms. From an organizational perspective centralization of information was found to negatively affect information search efforts whereas formalization was positively related to search efforts. From a personal perspective a degree of innovative initiative was found important for information search efforts. Finally from a situational perspective novelty and bargaining power were found to be key drivers of the information search effort. Among other managerial implications this research warns about the negative effects of buying power on efforts to seek information. Medeiros Pereira, Sellitto, Borchardt and Geiger (2011) studied the process involved in organizing a buyer's fair, which is a fair where rst and second-tier suppliers of the automotive industry make known their buying requirements for non-critical items to small and medium-sized enterprises. The fair itself is the outcome of action research conducted by the authors whom were given the task to nd a faster and less expensive way for large companies to nd small and medium-size enterprises to outsource non critical items. This paper not only contributes to managerial practice in procurement, but also opens a complete new avenue of research for academics interested in buying behavior. In the last paper from Brazil, Brashear Alejandro, Vilaca Souza, Boles, Puga Ribeiro, and Monteiro (2011) focused on relationship quality (RQ) in emerging markets. The study evaluates loyalty, relationship value and performance as outcomes of relationship quality, conceptualized as relationship contacts and relationship-specic investments. Data come from the Brazilian automotive industry. The study nds that both forms of relationship quality are important but through distinct paths. Relationship quality developed through the account managers has direct affects on loyalty and perceptions of relationship value. At the rm level, however, relationship quality is indirectly related to loyalty through relationship-specic investments. Relationship-specic investments are important to the buyers loyalty to the rm and their perceived performance, but are not signicantly related to perceptions of overall value. The study nds that loyalty cannot be directly explained by RQ with the company. Instead, it is related to the RQ with account managers. The last helps managers in organizational markets by revealing the importance of a rm's account managers in generating customer loyalty and perceptions of value from the relationship. Both articles from Russia are from the same research group, but with slightly different authors. In the rst paper Smirnova, Naud, Henneberg, Mouzas, and Kouchtch (2011) investigate the role of market orientation on business performance. Drawing on data from

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industrial rms from multiple regions of Russia the authors found that customer orientation and interfunctional coordination affect relational capabilities of the rm, and thus overall business performance. However, Smirnova, Naude, et al. claim that in Russia only market orientation aspects, which are aimed at developing a competitor orientation, have direct positive outcomes for the rm. Among the managerial implications, this article suggests that market orientation and relational capabilities, aimed at the development of interrm cooperation, and the integration of processes among the rms in industrial markets, can be the language that will help the rms to understand each other and nd mutually benecial solutions. In the second paper Smirnova, Henneberg, Ashnai, Naud, and Mouzas (2011) investigate the role of interfunctional collaboration between marketing and purchasing functions in industrial companies. This research focuses on interactions between marketing and purchasing within the same organization and how it facilitates demand chain integration between rms. Smirnova, Henneberg, et al. found that marketing-purchasing collaboration affects interfunctional interaction. The article stresses the importance of understanding the business partner to improve business performance. Collaborating within and between organizations is only starting to develop in the Russian environment where in the past its centralized model did not require such capabilities to be developed. This research also contributes by arguing that Russian managerial practices are not signicantly different to those in traditional Western economies. They are just less developed, the authors argue. Two articles account for the India component of this special issue. In the rst article Gupta, Navare, and Melewar (2011) identify factors that inuence the behavior of business customers of international rms in emerging markets such as India. Gupta et al., argue that business sustainability inuences local rms behavior towards international rms in their business dealings stronger than business risk. In the second article Singh and Koshy (2011) explore whether value is created by salespeople and if so, how. Drawing on quantitative data gathered from small and medium Indian enterprises, Singh and Koshy found that salesperson's customer orientation directly leads to value creation and relationship development with customers, whereas a sales orientation destroys value. From a managerial perspective, the paper argues that relationship development and value creation are not only different constructs but that the rst does not necessarily lead to the second. In the rst of three articles about China, Yang, Zhou, and Jiang (2011) study the effectiveness of formal control and trust as governance mechanisms to safeguard business transactions nding that the joint effects of formal control and trust on governing transactions depend on the relational ties that the focal partners share. In situations of strong relational ties formal control reduces trust whereas in situations of weak relational ties formal control increases trust. Yang et al. advice managers to rst identify the relational ties and then decide which governance mechanism is better to apply. Occasionally, the authors argue, control mechanisms contribute to increase trust between parties. The second article related to China is about Guanxi. Yen, Barnes, and Wang (2011) propose a measurement scale for measuring Guanxi based on three Chinese relational constructs ganqing, renqing and xinren. Drawing on qualitative and survey data from Taiwanese trading companies, Yen et al. identify 11 items to assess Guanxi, supported by empirical evidence as opposed to previous work that tended to be conceptual. From a managerial perspective the authors call for more social interaction between Western companies and Chinese counterparts. They also suggest Western suppliers to familiarize with practices of constant exchange of favors and gift giving, however, avoiding crossing the line to the point that a gift becomes a bribe. The last article of this special issue focuses on integrating, accommodating and compromising as strategies for conict handling that affect trust and commitment. Based on data from Chinese and Indian human resources outsourcing service providers, Ndubisi (2011) studies the effects of these conict handling strategies

on trust and commitment. Ndubisi nds conict handling styles signicantly associated with trust and commitment. He also studies the moderating effect of culture nding that it has a direct impact on commitment but not on trust. Culture moderates the impact of compromising conict handling on trust and commitment. In addition, this article reports that the effects of culture are signicantly higher for the Chinese service providers compared to the Indians. 5. Conclusions All the papers included in this special issue and many others that we regrettably could not be included demonstrate that business marketing research is an important stream of research in the BRICs. The topics that have been addressed do not differ signicantly from those studied in traditional Western countries. However, their ndings, not always consistent with existing knowledge, contribute to its advancement. The main differences between BRICs and Western countries were found in the effects of culture on relationship development and, in the case of Russia, the effects of many years of communism that still affect business practices. However, a signicant part of existing knowledge in business marketing is suitable to studying the BRICs. The articles published in this special issue open new avenues for research. As the trading levels within the BRICs and between them and the rest of the world continue to increase, gaining knowledge from the BRICs becomes even more important. References
Brashear Alejandro, T., Kowalkowski, C., da Silva Freire Ritter, J. G., Zancan Marchetti, R., & Prado, P. H. (2011). Information search in complex industrial buying: Empirical evidence from Brazil. Industrial Marketing Management, 40(1). Brashear Alejandro, T., Vilaca Souza, D., Boles, J. S., Puga Ribeiro, . H., & Monteiro, P. R. R. (2011). The outcome of company and account manager relationship quality on loyalty, relationship value and performance. Industrial Marketing Management, 40(1). Gupta, S., Navare, J., & Melewar, T. (2011). Investigating the implications of business and culture on the behaviour of customers of international rms. Industrial Marketing Management, 40(1). Hoffmann Sampaio, C., Simes, C., Gattermann Perin, M., & Almeida, A. (2011). Marketing metrics: Insights from Brazilian managers. Industrial Marketing Management, 40(1). Medeiros Pereira, G., Sellitto, M. A., Borchardt, M., & Geiger, A. (2011). Procurement cost reduction for customized non-critical items in an automotive supply chain: an action research project. Industrial Marketing Management, 40(1). Ndubisi, N. O. (2011). Conict handling, trust and commitment in outsourcing relationship: A Chinese and Indian study. Industrial Marketing Management, 40(1). Singh, R., & Koshy, A. (2011). Does salesperon's customer orientation create value in b2b relationships? Empirical evidence from India. Industrial Marketing Management, 40(1). Smirnova, M., Henneberg, S. C., Ashnai, B., Naud, P., & Mouzas, S. (2011). Understanding the role of marketing - purchasing collaboration in industrial markets: The case of Russia. Industrial Marketing Management, 40(1). Smirnova, M., Naud, P., Henneberg, S. C., Mouzas, S., & Kouchtch, S. P. (2011). Relational capabilities and performance outcomes: The case of Russian industrial rms. Industrial Marketing Management, 40(1). Yang, Z., Zhou, C., & Jiang, L. (2011). When do formal control and trust matter? A context-based analysis of the effects on marketing channel relationships in China. Industrial Marketing Management, 40(1). Yen, D. A., Barnes, B. R., & Wang, C. L. (2011). The measurement of Guanxi: Introducing the GRX scale. Industrial Marketing Management, 40(1). Sergio Biggemann is Senior Lecturer in Marketing at the Marketing Department at the University of Otago in Dunedin, New Zealand. His current areas of research are in the dynamics of business interaction, risk management in extended networks and sustainability and value chain integrity. He has special interest in the BRIC countries as a new block or countries relevant to the world economic development and the business environment. Kim-Shyan Fam is a Professor of Marketing and Head of School of Marketing and International Business at Victoria University of Wellington, New Zealand. His research interests include faith and value based advertising and promotion, marketing of education, and CSR of SMEs in Asia. He has published in, among others, Journal of Advertising Research, Journal of Business Research, Psychology and Marketing, European Journal of Marketing, and Journal of Business Ethics.