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IJPDLM
36,6
466
International Journal of Physical
Distribution & Logistics Management
Vol. 36 No. 6, 2006
pp. 466-478
q Emerald Group Publishing Limited
0960-0035
DOI 10.1108/09600030610677410
Partnering motives and partner
selection
Case studies of Finnish distributor
relationships in China
Lingyun Wang and Pekka Kess
Department of Industrial Engineering and Management, University of Oulu,
Oulu, Finland
Abstract
Purpose – To study the motives for partnership in marketing channels and provide an empirical
study on mutual selection between manufacturers and distributors.
Design/methodology/approach – The data were collected mainly from the interviews which
present the perspectives of both the Finnish manufacturers and Chinese distributors and agents.
Findings – Based on the empirical study, the new finding is that task-related and partner-related
dimensions in partner selection of international joint ventures also apply to distributor relationship.
We argue that a distributor relationship is a product-tied relationship, and product innovation can be
used as an approach for performance improvement in distributor relationship.
Research limitations/implications – The study consists of four case companies so the result
cannot be of general application. Nevertheless, it provides valuable information for further utilization.
Practical implications – The study provides empirical evidence of the motives of partnership and
mutual selection between manufacturers and distributors in China. The results of the study suggest
that distributor relationship management could be improved through product innovation.
Originality/value – The paper attempts to fill the gap in available research on the initiative stage of
distributor relationship while also providing some perceptions from the distributor side of the process.
Keywords Distribution operations, Distribution and inventory management, Partnership,
Distribution channels and markets, Finland, China
Paper type Research paper
Introduction
Foreign distributors take the responsibilities of marketing the manufacturers’ products
and servicing customers in local market. In comparison with other foreign market
entry alternatives, such as joint venture arrangements or overseas manufacturing
operations, exporting products through a distributor is a less resource-laden strategy.
Especially for those companies that lack foreign market knowledge or the necessary
financial, operational, and strategic resources, exporting through international
intermediaries is a relatively easy and practical way to enter overseas markets
(Bello and Gilliland, 1997). Much research in the literature on distribution contributes
The authors are greatly indebted to the interviewees in these case companies for sharing their
experience and insights on the subject matter. Jukka Teräs and Hongxue Zhang provided
valuable comments on the interview guide. Lingyun Wang was supported by a grant from the
Finnish graduate school in Industrial Engineering and Management, and by the Department of
Industrial Engineering and Management, at the University of Oulu, Finland.
to topics such as the performance improvement and management in selling alliances, Partnering
export channels, and partnership in logistics (Smith and Barclay, 1997; Bello and motives and
Gilliland, 1997; Tate, 1996; Gentry, 1996; Frankel et al., 1996). Even Liu and Wang
(1999) examine the patterns of the channel relationship management and the impact of partner selection
relationship management on distributor performance in the Chinese context. These
studies have focused on the dynamics of channel partnerships and their implications
for managing on-going relationships. However, little research focuses on the starting 467
point of the relationship formation and is designed to help both manufacturers and
distributors in their selection of a competent counterpart for future relationships. Some
previous distribution literature provides suggestions on distributor selection by
developing a distributor selection process (Fram, 1992), identifying the import
motivations of distributors from relationships (Katsikeas and Kaleka, 1999), exploring
industrial distributor’s expectations of benefits (Ghosh et al., 2004). Kim (1999) studied
the determinants of joint action in distributor-supplier relationships. But as Katsikeas
and Kaleka (1999) mentioned while there is a plethora of studies focusing on
manufacturers’ marketing activities, there is a lacuna of knowledge in the business
literature regarding the distributor side in the international exchange process.
This paper, based on a full study of partnership development and management in
four Sino-Finnish distributor and agent relationships, attempts to fill the gap by
studying the following key questions:
(1) Why do the foreign manufacturers and Chinese distributors establish
partnerships in marketing channels?
(2) What factors are important when foreign manufacturers select a distributor in
China?
(3) What factors are important when a Chinese distributor selects a foreign
manufacturer?
In this paper, we examine the perceptions of both the Finnish manufacturers and
Chinese distributors. With this perspective, we can gain a clearer view of partnership
formation in the marketing channel, and how manufacturers and distributors can
select the right partners to provide quality products and services to the end customers.
Weber (2000) suggested that the distribution is the weakest link in the marketing
chain. Partnering with distributors is one way to improve the performance of
distributors. We therefore study the topics in the paper based on the theoretical
background of partnership.
Hendrick and Ellram (1993) define partnership as an ongoing relationship between
two organizations with a commitment over an extended time period, and a mutual
sharing of the risks and rewards of the relationship. Mohr and Spekman (1994) believe
that partnerships are purposive strategic relationships between independent firms who
share compatible goals, strive for mutual benefit, and acknowledge a high level of
mutual interdependence. For the purpose of this research, partnership is defined as an
interactive relationship for continuous cooperation between two independent
companies for long-term mutual benefits.
The layout of the paper is as follows: it starts with a literature review for the
motives of developing partnership and partner selection. Then, the methodology of
the study is introduced. Thereafter, the findings of the case study are presented and
discussed. Finally, the conclusions are given.
IJPDLM Literature review
36,6 Motives for partnership
It is a costly and time-consuming process to establish a successful partnership. Both
partners need to make more commitment, mutual adaptation, and contribute learning
and resources. So there should be many tangible and intangible benefits achieved only
by partnership. One of the main driving forces behind entering strategic partnerships
468 is the need for a strategic development of partner companies (Contractor and Lorange,
1988; Eisenhardt and Schoonhoven, 1996; Hoffmann and Schlosser, 2001).
Koza and Lewin’s (2000) research suggests that the most important reason for
entering an alliance is to augment and support the adaptation strategies of the parent.
Successful companies understand that strategic alliances can be a powerful means for
adaptation in a turbulent or uncertain environment.
Our literature review reveals Contractor’s (1986) comprehensive view of the motives
for companies entering a partnership. He identified seven broad benefits from various
types of cooperative efforts. The following are the seven major potential benefits with
related various rationales:
(1) Risk reduction:
.
product portfolio diversification;
.
dispersion and/or reduction of fixed costs;
.
lower total capital investment; and
.
faster entry and payback.
(2) Economies of scale and/or rationalization:
.
lower average cost from larger volume; and
.
lower cost by using comparative advantage of each partner.
(3) Complementary technologies and patents:
. technological synergy; and
.
exchange of patents and territories.
(4) Co-opting or blocking competition:
.
defensive joint ventures to reduce competition; and
.
offensive joint ventures to increase costs and/or lower market share for a
third company.
(5) Overcoming government-mandated investment or trade barrier:
.
receiving permit to operate as a “local” entity because of local partner; and
.
satisfying local content requirements.
(6) Initial international expansion:
.
benefit from local partner’s know-how.
(7) Vertical quasi integration:
.
access to materials;
.
access to technology;
.
access to labor;
.
access to capital;
 .
regulatory permits; Partnering
.
access to distribution channels; motives and
.
benefits from brand recognition; partner selection
.
establishing links with major buyers; and
.
drawing on existing fixed marketing establishment.
469
Teegen (2000) believes that the risk, cost, and technology access motivators for alliance
formation are as relevant domestically as they are internationally. For international
business, market access for technology firms is a critical impetus for alliance
formation. Permission to enter a market and relationship with or knowledge about key
customers are often impenetrable entry barriers for firms operating independently in
their quest of overseas markets.

Partner selection in partnerships

Many companies believe that the right partner is important to the partnership. Partner
selection is an important task in the stages of partnership formation. In the literature
on partner selection, Geringer (1991) made a significant contribution by arguing that
partner selection criteria in international joint ventures are based on two dimensions
which are partner- and task-related. The partner-related dimension refers to those
variables which become relevant only if the chosen investment mode involves
the presence of multiple partners. Examples include a partner’s national or corporate
culture, the degree of favorable past association between the partners, compatibility of
and trust between partners’ top management teams, and a partner’s organizational size
or structure. The task-related dimension refers to those variables which are intimately
related to the viability of a proposed venture’s operations regardless of whether the
chosen investment mode involves multiple partners. The variables could be tangible or
intangible, human or nonhuman, in nature. Examples include patents or technical
know-how, financial resources, experienced managerial personnel, and access to
marketing and distribution systems. In Geringer’s (1991) research, the relative
importance of a particular task-related selection criterion was shown to be closely
related to three variables associated with a parent firm’s strategic context. These
variables included management perceptions of:
(1) the extent to which that dimension was critical to the venture’s performance;
(2) the parent’s current competitive position vis-à-vis that critical successful factor
(CSF) dimension; and
(3) the anticipated future level of difficulty to be encountered in internal efforts to
achieve a viable competitive position on that CSF dimension.

Al-Khalifa and Peterson’s (1999) research indicates that the partner-related factors are
significantly more important than task-related factors in selecting a partner. They
suggest that task-related factors are dominant in the decision to engage in a joint
venture as a strategic device, the choice of partner to implement the decision is
dominated by partner-related factors. They also point out the decision factors in
partner selection cannot be regarded as fixed in relative importance or magnitude.
Their importance in a given situation depends on the function of the size and
experience of the company, and of the education and experience of CEO.
IJPDLM Shipley et al. (1989) establish selection criteria in recruiting overseas distributor,
36,6 which consists of sales and market factors, product and service factors, and risk
factors. They point out that most exporters emphasize marketing capability and
commitment while undervaluing the risk criteria.
Cavusgil et al. (1995) have developed an expert system based on exploratory
interviews. This system provides criteria for selecting foreign distributors, which includes
470 criteria such as financial and company strengths, product factors, marketing skills,
commitment, and facilitating factors. With the suggestion for using this expert system as a
screening device, they also recommend some sound practice for selecting distributors,
such as on-site evaluation before decision making; revealing the managerial competence
and the degree of commitment by asking the distributor for a local marketing plan and
competitive analysis; selecting distributors on the recommendation from the industry
peers; and using a trial agreement to avoid costly compensation.

Research design and methodology

Background of case companies
In this paper, four Sino-Finnish distributor and agent relationships are examined.
We took these case companies from a list of companies provided by the
Finnish-Chinese Trade Association. This paper stems from a research project based
on the main research question on how Finnish companies could establish successful
partnerships in China. First, we tried to find some companies who have already
established partnerships in China as a base for our empirical study. We contacted these
companies on the list, and informed them about our research purpose. Five Finnish
companies with previously established distributor and agent relationships in China
were willing to participate in this study and also satisfied our research setting.
Of these five Finnish case companies, one of the Chinese distributors refused the
interview. One Finnish case company recommended two Chinese distributors of its
different products as interviewees from the Chinese side. As a result, the study is based on
the four paired answers of both Finnish manufacturers and Chinese distributors and
agents.

Data collection
This study used a multiple case studies methodology. The main data were collected from
interviews and documents. An interview guideline was developed based on a theoretical
study and included a broad range of questions about partnership development and
management. Before the formal interviews, three pretests were carried out with a
technology specialist, an account manager, and a managing director in the different
companies with a knowledge of partnerships. These three companies are not included in
this paper. Some modifications were made after every pretest. Nine in-depth face-to-face
interviews were held between November 2004 and March 2005. All the interviews were
recorded and later transcribed. For the purpose of this paper, we gather the information
about their motives for partnership entry and the issue of mutual selection from the
perspective of both Finnish manufacturers and Chinese distributors.
The validity of interviews depends on the willingness of the interviewees to
candidly reveal their views and opinions, and the interviewer’s ability to understand
them correctly. In these cases, the interviewees have long experience of partnerships
and/or are personally involved in the partnership formation. The terminology in the
field of partnership is familiar to both parties. The questions about the motives and Partnering
partner selection are open ended. The interviewees answered these questions based on motives and
their experience of partnership formation and experience of working with each other.
The researcher as an outsider does not compromise the objectivity of the data. partner selection

Findings and discussion

Based on the analysis of the interviews, the motives for partnership and the factors in 471
partner selection are presented in the section. These issues are presented from the
perspectives of both the Finnish manufacturers and Chinese distributors and agents in
one case. When the issues of partner selection were discussed with the Finnish
interviewees, the answers are mainly about the factors for selecting Chinese distributors.
Whereas when the same issues were discussed with the Chinese interviewees, two
aspects of the issues were considered:
(1) what factors are considered when the Chinese distributors select the Finnish
manufacturers (Q1); and
(2) what factors should be considered when foreign companies try to find a
distributor in China (Q2).

In each case, we illustrate the two aspects of manufacturer and distributor selection
from the Chinese interviewees.

Case A
The motives for partnership and the issues of partner selection in case A are presented
in Table I. In case A, there are two distributors for two different kinds of product in
the Chinese market. The Finnish manufacturer’s product is one of the distributors’
product lines. The Finnish manufacturer is an innovative manufacturer of biochemical
products. His motive for partnership was simply to enter the Chinese market. The two
Chinese distributors are privately-owned companies and provide sales and services.
One distributor’s motive is to extend the product line to increase customers’ options,
and another’s motive is to make financial profit from new products which do not have
an existing market in China.
The Finnish manufacturer selected the distributor for three reasons. Firstly, the
distributor was really interested in the products so the distributor would use resources
and make efforts in the market. Secondly, the Chinese distributor was a company
owned and run by young people to minimize the cultural differences and facilitate

Case A Finnish manufacturer Chinese distributor

Product/service Biochemical product Sales and services

Motives for partnership Chinese market entry Extend product lines
Make profit
Factors in partner Product interest Answer to Q1: Answer to Q2:
selection Non-Chinese traditional Partner’s product Honest and reliable
company Honest and reliable Good communication
Geographic location Good communication Qualification of distributor Table I.
Brand image defence Motives and partner
Persistent activities selection of case A
IJPDLM starting the business. Thirdly, the geographic location of the distributor was a relevant
36,6 factor.
We combine here the views of two Chinese distributors. There are three factors in
selecting the Finnish manufacturer. The first one was the manufacturer’s product.
Working as an exclusive distributor, it is quite important that the product has a
competitive advantage over similar products and a viable market. Secondly, the
472 manufacturer should be honest and reliable in both character and his product. Thirdly,
good communication is necessary to deal with market information and customer
demand.
Five suggestions were also made by the Chinese distributors, regarding the choice
of a Chinese distributor. Besides the factors, such as honesty and reliability, and good
communication, the qualification of the Chinese distributor must be considered for
industries with special requirements. The Chinese distributors also believe that a good
distributor must know how to defend the brand image of the products he is selling
based on the prospect of substantial long-term rewards. One distributor suggests that
it is very important to make unremitting efforts at the beginning stage of selling
innovative products because there is no existing market.

Case B
The motives for partnership and the issues of partner selection in case B are presented
in Table II. In case B, the Chinese distributor only sells the manufacturer’s product.
The Finnish manufacturer is a creative company specialized in environmental and
building maintenance technology. Entry to the Chinese market was the motive of the
Finnish manufacturer with the goal of becoming a market leader everywhere it
operates. The Finnish manufacturer expected to become a market leader in China by
providing as wide a range of services as possible. The Chinese distributor is a
privately-owned company operating in the area of environmental protection of
construction projects, which is a totally new business area in China. The motive of the
Chinese distributor was to explore a new market in China.
Based on the experience of distributor selection, the Finnish manufacturer believed
that persistence is the most important factor because his services are new solutions for
traditional ways of doing things, and persistence is needed to sell these new ideas.
Secondly, it was essential for the distributor have enough financial backing to support
the projects in the business. The Finnish manufacturer in this case suggested selecting
a female distributor in China after several failed experiences of male distributors who
disappeared with the customer’s payment. Not surprisingly, in his opinion Chinese
young men are not reliable or loyal to the company, whereas young women are honest

Case B Finnish manufacturer Chinese distributor

Product/service Central vacuum cleaner, Sales and services

etc.
Motives for partnership Chinese market entry New market exploration
Factors in partner selection Persistent activities Answer to Q1: Answer to Q2:
Table II. Financial strength Prospect of partner’s Similarity in values
Motives and partner Female partner product Commitment
selection of case B Reliable Honest and reliable
and reliable. The women take things more seriously and learn new things quickly. Partnering
They even continue to learn things to develop themselves and for the company in motives and
which they are working.
From the perspective of the Chinese distributor, she believed that the first important partner selection
factor in partner selection was the prospect of the manufacturer’s product in the
Chinese market. Based on her case, she commented that such a product was an
innovative way to resolve traditional problems, added to the fact that there was a zero 473
market for this product at that time in China. So, the product had enormous prospects
which inspired her to explore the potential market. Secondly, she claimed the
manufacturer must be reliable.
She suggested a foreign company should try to find a Chinese distributor with
similar values so the distributor can commit to the business with energy and resources.
It is vital that the Chinese distributor is honest and reliable, so that it will bring benefits
to the foreign company and customers.

Case C
The motives of partnership and the issues of partner selection in case C are presented in
Table III. In case C, the Chinese agent is a privately-owned company and only sells the
product of the Finnish manufacturer. The Finnish company is a worldwide famous
manufacturer of burners with over ten years’ experience of exporting to China. The
Finnish manufacturer had two motives for forming the partnership. One was to expand
their areas in China to new areas where nobody had sold the product before. Another was
to try to work closely with selected main customers. Originally, the Chinese company
worked as the agent of another foreign company. However, that established marketing
network became vacant because of the termination of the cooperation. The motive of the
Chinese company was to fill up the existing marketing network through the partnership.
The Finnish manufacturer tried to find an agent who satisfied five factors. The first
factor was the geographical area covered by the agent. The Finnish manufacturer sought
an agent who has a marketing network wide enough to cover more areas in China.
Secondly, the agent should have good contacts with the main customers. Thirdly, the
partner should have the technical ability required for the technological background of the
products, otherwise, there would be problems in learning about the products,
understanding the customer needs and so on. Fourthly, the agent’s corporate culture
should suit Finnish manufacturer’s values, working style, and management style. Fifthly,
the agent should have the financial strength to sustain the business development.

Case C Finnish manufacturer Chinese agent

Product/service Burner Sales and services

Motives for partnership Cover more areas Fill up marketing network
Work closely with
main customers
Factors in partner Area coverage Answer to Q1: Answer to Q2:
selection Customer contacts Partner’s product Well-known partner
Technical ability Long-term cooperation Familiar with industry Table III.
Corporate culture Corporate culture Motives and partner
Financial strength Loyal to product selection of case C
IJPDLM The Chinese agent considered two factors in manufacturer selection. The Chinese
36,6 agent believed that the manufacturer’s product must have its own advantage in the
Chinese market. At the same time, the cooperation should have a long-term strategy. It
is particularly important to establish a brand with long-term benefits.
Based on this experience, the Chinese agent suggested four factors to be taken into
account when a foreign manufacturer selects a Chinese distributor. Firstly, the
474 distributor should be well-known in the industry so that the product is accepted by the
public quickly. Secondly, the distributor should be familiar with the industry so that
sales will increase in a short time. Thirdly, it is better to have similar corporate cultures
for the purposes of long-term cooperation. Finally, the distributor should be loyal to the
product so that he will commit himself to the business.

Case D
The motives for partnership and the issues of partner selection in case D are presented
in Table IV. In case D, the Chinese agent is a privately-owned company. The Finnish
manufacturer’s product is one of his product lines. The Finnish manufacturer
specializes in logistics automation. His main motive was to enter the Chinese market.
Similarly, the Chinese partner’s motive was to enlarge their market in a new business
in the form of a partnership.
The Finnish manufacturer commented that he has been very lucky in China
because they had quite an easy and profitable start as they sealed a big deal early on.
Based on the long experience of working with their agent, the Finnish manufacturer
believed that it was very important to the business that the agent already has some
contacts with many customers in China, especially on a personal level. The agent
should also have a good ability to source business and to make business. Finally, the
agent should have enough human resources to develop the business effectively and
efficiently.
In the opinion of the Chinese agent, the main factor in partner selection was
manufacturer’s product and questions about the demand in Chinese market; the nature
and scope of the customer; the number of the target customers the Chinese partner had.
In short, the product of the foreign manufacturer was a critical factor from the agent’s
perspective.
For a foreign company selecting a distributor in China, the Chinese agent suggested
that the foreign company should firstly select an honest and reliable partner. Secondly,
the distributor should have enough human resources to develop the business.

Case D Finnish manufacturer Chinese agent

Product/service Logistics automation Sales and services

product
Motives for partnership Chinese market entry Market enlarge
Factors in partner Customer contacts Answer to Q1: Answer to Q2:
selection Ability to source business Partner’s product Honest and reliable
Enough human resources Enough human resources
Table IV. Technology background
Motives and partner Communication and
selection of case D coordination skills
Thirdly, the partner should have the necessary background in technology for the work. Partnering
Finally, there should be good communication and coordination between the motives and
manufacturer and the distributor.
partner selection
Cross case analysis
It is quite clear that the driving motive of the Finnish manufacturers is entry to the
Chinese market. Although there are different motives on the part of the Chinese 475
distributors and agents, the distributors leverage their marketing competency through
partnership. From the case study, the motives principally stem from the company
development strategies of both the Finnish manufacturers and Chinese distributors
and agents. This empirical study corroborates Contractor’s (1986) view of the motives
for companies entering partnerships.
These four cases further indicate that the expert system developed by Cavusgil et al.
(1995) can be used as a decision support tool, but it is not the final answer in practice. In
practice, the factors in distributor selection are strongly influenced by the experience
and knowledge of the persons involved in the distributor selection. Our empirical study
also indicates that partner- and task-related dimensions as identified by Geringer
(1991) in partner selection of joint ventures can also be applied to distributor selection
in distributor relationship. However, from the distributor’s perspective of
manufacturer selection, the task-related dimension can be described as
product-related dimension. This finding indicates that the competitive ability of the
manufacturer’s product is a critical basis for the future commitment of distributors in
the partnerships.
One further result of this study is that product replacement and innovation on the
part of the manufacturer are ways of motivating the distributor and improving the
performance of a distributor relationship, which is one point which has been seriously
overlooked in distributor relationship management. It makes us conclude that the
distributor relationship is a product-tied relationship. Much distribution literature
concentrates on performance improvement of distributor relationships by process and
relationship management (Smith and Barclay, 1997; Bello and Gilliland, 1997; Tate,
1996; Gentry, 1996; Frankel et al., 1996), while ignoring the product itself. Nevertheless,
our empirical study also shows that sales results in the Chinese market are closely
related to product improvement and the original idea of the product design. Even the
lifecycle of the product determines the lifetime of distributor relationship. As one
Chinese distributor commented that the cooperation will become looser and looser as
time goes on, even to the point of termination, if there is no innovation in the products,
or the product innovation does not keep pace with the market development.
When we compare the suggestions on distributor selection from the manufacturers
and distributors, one interesting finding is that manufacturers concentrate on the
task-related dimension while the distributors concentrate on the partner-related
dimension. The reason for this could be that the distributors do not doubt their
marketing competency, and are confident in their financial and technology strength to
sustain the business. However, the manufacturers are always concerned about the
task-related dimension of the distributors before the decision-making and the sales
results materialize.
Regarding the selection of Chinese distributors, one distinctive factor recognized by
the Finnish manufacturers is that it is important the distributor has already
IJPDLM established a good personal relationship with customers. Since, China is a
36,6 relationship-driven society (Liu and Wang, 1999), maintaining good relationships
with customers, especially on a personal level, is one way of building trust. Chinese
customers usually prefer to deal with the persons they know well when there are many
choices. Customer contact is a competitive advantage for distributors in the face of
many competitors. The second distinctive factor recognized by the Finnish
476 manufacturers is that the distributor should have more human resources than just
himself, because of the huge market area in China.
Among the suggestions from the Chinese distributors on foreign companies
selecting distributors in China, the defence of brand image should be given more
attention. In the case study, both partners agreed that their relationship is based on
long-term cooperation. The role of brand image defence is to create a new market and
gain acceptance from potential customers. The role of the distributor is not only to sell
the product to the market, but also to build up the market when there is no existing
market for the manufacturer’s product. An experienced distributor should have the
skills to develop insight into the potential business, and be committed to persisting in a
non-existing market.
One surprising finding in cases A, B, and D is that distributor relationship
formation is quite a short process often in quick response to variables such as customer
demand, an unexpected encounter and a potential market. Surprisingly, only the
distributor selection in case C was subjected to an in-depth analysis before deciding to
enter the distributor relationship. An in-depth analysis of distributor selection is
undoubtedly advisable prior to distributor relationship, even though (as in case C) it
is no guarantee of satisfaction with the distributor relationship.
One further observation is that the Chinese distributors and agents are mainly
privately-owned companies. Most privately-owned companies in China have been
developed in the 20 years period since the open door policy (Asian Development Bank,
2003). These privately-owned companies have more market orientation and are
sensitive to the market changes and customer needs. On the other hand
privately-owned companies sometimes are limited by their technical capability if the
product requires a distributor with a strong technical background. Two solutions for
this problem could be the recruitment of employees with the necessary technical
background in the distributor’s company, and further training and education from the
manufacturers in the beginning stages.
We also identified two distributor relationships. One we called a closely-tied
relationship which means the distributor only has the manufacturer’s product to sell.
The other is called a loosely-tied relationship which means the manufacturer’s product
is just one of the distributor’s product lines. From this study, we cannot conclude that
these two relationships lead to different performance on the part of distributor.
However, our study indicates that, in both relationships, both manufacturers and
distributors perceive trust as the cornerstone of a successful distributor relationship.

Conclusion
This paper contributes to the age-old problem, which has defied solution, of selection of
an effective international distributor (Fram, 1992). Our study is based on four paired
in-depth interviews with both manufacturers and distributors. The theoretical
contribution of our study is on the issue of manufacturer and distributor selection from
the perspective of distributors. A new finding from the case study is that Geringer’s Partnering
(1991) task- and partner-related dimensions of partner selection apply not only to motives and
international joint ventures, but also to distributor relationships. In the mutual
selection process, it is more product-related when the distributor selects a partner selection
manufacturer. Furthermore, from our study, we conclude that a distributor
relationship is a product-tied relationship and this finding provides a completely
new platform from which to commence future research on distributor relationship 477
management.
The managerial contribution of our study suggests that distributor selection cannot be
formalistic. Besides marketing competency, a competent distributor may be described as
one who is ambitious about the future, has the ability to study, take initiative, give
commitment, be a willing communicator, and be honest and ethical. A win-win distributor
relationship is a well-balanced tandem between the manufacturer’s product and the
distributor’s marketing competency. Our study suggests that product innovation is one
way of improving the performance of distributor relationship to bring about fruitful
results, and even to extend the lifetime of distributor relationship. This finding reveals a
new approach for further research in distributor relationship management.
In conclusion, the case companies are limited in number and therefore the results
cannot be generalized but they give valuable data about the case companies which can
subsequently be further examined. For additional research, there is room here for more
in-depth studies about improving the performance of distributor relationship by
product innovation.

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Lingyun Wang can be contacted at: lingyun.wang@oulu.fi

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