Abstract
Consumers’ conceptions of a market's institutional logic affect mechanisms of firm–consumer relationships, but are generally neglected in comparative studies of international marketing. This study bridges institutional and relationship marketing theories to examine two questions: do consumers hold meaningful mental models of a market's institutional logics, and do these mental models explain differentiated patterns of market relationships across international contexts? Building on contract-relational duality, we develop a market-level construct for capturing consumers’ socially constructed mental models for the institutional logics of market action. We theorize that differences in consumers’ institutional logics will influence both their evaluation of a firm's capabilities (first-order effect) and the degree to which they reward a firm through their commitment (second-order effect). These bridging predictions are tested using data from the insurance industry across three international markets. Our results show that the German insurance market is located in the relatively high contracts–low relational quadrant, whereas the US and Dutch markets are both located in the relatively low contracts – high relational quadrant. Our results also suggest that consumer commitment conforms to a principle of alignment such that commitment accrues to providers who align their capabilities with consumers’ prevalent institutional logics of the market, and penalizes those who deviate from it.
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Acknowledgements
The authors thank Deepak Sirdeshmukh for his assistance in data collection in the United States, and thoughtful contribution to the development of ideas at the formative stages of this paper. Financial support for data collection in the United States was provided by a research grant from the Weatherhead School of Management, Case Western Reserve University. Financial support for data collection in Germany was provided by a grant from the German Research Foundation (DFG grant no. HO 2224/1-1). The authors appreciate Hartmut Holzmüller's assistance in arranging the DFG grant, and for input in the initial stages. The paper benefitted from the constructive comments of the reviewers and the thoughtful guidance of the Area Editor during the review process, which is sincerely acknowledged.
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Accepted by Daniel Bello, Area Editor, 3 September 2009. This paper has been with the authors for three revisions.
APPENDIX
APPENDIX
Secondary Data Analysis of Insurance Markets
After the identification of German, US, and Dutch insurance markets as targets of study, additional secondary data were collected to ensure adequate variation along the two consumers’ institutional logics of market action (CILMA) dimensions. Focused on auto and home insurance, and using the Internet among others, we first identified contracts/policies for auto and home insurance in the US, the Netherlands, and Germany, and compared their level of detail using contract length as a proxy for the importance of contracts in market exchanges (Faems, Janssens, Madhok, & van Looy, 2008).
As Table A1 shows, we found that German contracts are the most lengthy and Dutch contracts the shortest. The US holds a middle position. This confirms the variation for the countries selected along the dimension of formal contract. The difference in length of contract in Germany and the Netherlands, and Germany and the US, is provided to support our interpretation. Moreover, the results for auto and home insurance mimic the results from our empirical data on consumer perceptions of contracts dimension.
Second, for the relational-logics dimension we researched the types of advice given to consumers by federal agencies and independent consumer-report-like agents for selecting and dealing with insurance providers. The objective was to learn more about the nature and type of advice provided (e.g., price/content, relational). In addition to federal and consumer society sites, we studied commercial sites offering product and provider comparisons.
The results show that major state insurance regulators in the US provide detailed guidance to consumers on how to deal with insurance providers (Erhemjamts & Leverty, 2007). Dutch and German federal agencies provide only general advice, and refrain from detailed suggestions (Menhart, Pyka, Ebersberger, & Hanusch, 2003; Vletter-van Dort, 2006). Notable are US federal agents’ suggestions to consumers to look beyond price when dealing with a provider (e.g., consider also company reputation, positive word of mouth, etc.). Consider for instance the following excerpt from a shopper's guide developed by the State of Ohio in the US (http://www.insurance.ohio.gov/Consumer/OCS/CompleteGuides/CompleteHomeGuide.pdf):
Wise shoppers look for more than price … The process of choosing a proper policy for your home must take into account many important factors. The policy offered at the lowest cost may not offer the level of insurance protection you need. If you have been satisfied with your company's service in the past, it may not be wise to jump to an unknown company to save a few dollars. If you have not been satisfied with your company, or if you are shopping for the first time, ask friends and relatives for references about the service they have received from companies they have used. (p. 10)
The German federal agency Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) does provide consumers with information but only at a very general level (see http://www.bafin.de/cln_116/nn_723254/DE/Verbraucher/FAQVerbraucher/Versicherungen/versicherungen__node.html?__nnn=true). In the Netherlands, Autoriteit Financiële Markten (AFM) provides information for consumers (http://consument.afm.nl/consumenten/producten/verzekering/hoe.aspx), and has recently opened a new Internet site Consuwijzer (http://www.consuwijzer.nl/Ik_wil_advies_over/Geld_en_verzekeringen/Verzekeren). However, the level of information is still basic, and thus extremely limited.
Independent consumer agencies in all three countries do provide consumers with detailed, additional information. For our secondary data research we focused on agencies that require membership status. In the US, the Consumer Reports offers extensive comparisons and advice for selecting insurance (www.ConsumerReports.org). Suggestions that can be found include, for instance, to “call your state insurance departments to get a measure of complaints about the carriers you’re considering” and “Stick with a company that treats you well … loyalty seems to count” (re auto insurance). In Germany, Stiftung Warentest (http://www.test.de/themen/versicherung-vorsorge/) provides independent information and test results for many different sorts of products and services. The organization provides advice to consumers, such as what to do in order to obtain the cheapest insurance, and points out alternatives for consumers who want to change insurance providers. Several studies are available (e.g., auto insurance, home insurance, and personal valuables) comparing price and content of the offers set forward. Relational advice is limited. A similar independent consumer organization also exists in the Netherlands: Consumentenbond (http://www.consumentenbond.nl/). Like their German counterpart they focus on price/content comparison, and provide suggestions for switching providers. Their range of studies pertaining to insurance is limited.
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Singh, J., Lentz, P. & Nijssen, E. First- and second-order effects of consumers’ institutional logics on firm–consumer relationships: A cross-market comparative analysis. J Int Bus Stud 42, 307–333 (2011). https://doi.org/10.1057/jibs.2009.101
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DOI: https://doi.org/10.1057/jibs.2009.101