Institutional distance and knowledge acquisition in international buyer-supplier relationships : the moderating role of trust

Abstract

Institutional distance can generate expanded opportunities for multinational firms to facilitate learning and responsiveness. However, such distance can also create obstacles regarding knowledge transfer and integration. A theoretical puzzle concerns the mechanisms and conditions in which international buyers and suppliers can overcome institutional distance and acquire new knowledge. We develop an integrative moderated-mediation model in which institutional distance prevents parties from accessing knowledge but, when knowledge is obtained and mutual trust is developed, it promotes cross-border knowledge acquisition in international buyer-supplier exchange, particularly between international firms and firms from the Asia Pacific region. These findings indicate that firms can overcome the challenges of regulative and cognitive distance and facilitate access to knowledge and knowledge acquisition when they are able to develop and cultivate relationships of mutual trust with foreign partners. While normative distance may create learning incentives and opportunities in international buyer-supplier relationships, its impacts on knowledge accessibility and acquisition are insignificant.