Do Supplier CEO’s National Cultural Origins Affect Supplier–Customer Relationships?

Abstract

This study investigates how the national cultural origins of supplier chief executive officers (CEOs), as characterized by Hofstede’s cross-cultural dimensions, influence the duration of supplier–customer relationships. By analyzing the cultural origins of supplier CEOs from 20 countries over a 25-year period, we find that supplier CEOs with high long-term orientation (LTO) and high uncertainty avoidance (UNA) are associated with longer lasting supplier–customer relationships, while those with high individualism (IND) are associated with shorter relationship durations. These findings are robust to several alternative explanations of customer and supplier CEO variables. To address potential endogeneity—specifically, the concern that CEOs with certain cultural traits may be more likely to join particular firms—we employ a two-stage analysis using predicted cultural origins. Analyses of the mechanisms show that high-LTO suppliers tend to invest more in innovation, high-IND CEOs receive higher compensation, and high-UNA suppliers are less likely to engage in risky activities. Implications and suggestions for future research are also discussed in detail.