Distributors' Business Characteristics, Buyer/Seller Relationship and Market Orientation

Abstract

The high level of customer concentration that suppliers normally face in competitive domestic and international business markets makes selecting customers a critical issue. This study empirically examines the relationship between the supplier's market orientation, the buyer-seller relationship and requirements for foreign distributor characteristics. Based on an exploratory study of more than 80 Australian wine export oriented firms, it appears that firms presenting the strongest market orientation and a longer term buyer-seller relationship perspective select their overseas distributors differently than those firms with a weak market orientation and a shorter-term perspective in their business relationships. The difference between the groups lies in the role that different distributors' business characteristics play in the selection of overseas business partners. Our results suggest that firms, which are both strongly market oriented and long-term oriented are more likely to select overseas distributors who (1) have an important sales force, (2) have good knowledge about the Australian wine industry, and (3) have a management culture and capabilities similar to the producer firm. We also demonstrate that the former group achieved better business performance, in accordance with the literature on market orientation and buyer-seller relationship.

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