Power source drivers and performance outcomes of functional and dysfunctional conflict in exporter–importer relationships

Although conflict is natural in buyer–seller relations, the issue has largely been studied in domestic market settings despite increasing globalization and the surge of cross-border inter-firm relationships. This research focuses on two different types of conflict, functional and dysfunctional, and examines how these are linked to coercive and non-coercive power bases and performance outcomes in exporter–importer relationships. Using survey data from 105 pairs of exporters and their foreign distributors, we find that only in the exporter group the use of coercive power by the foreign distributor lowers functional conflict. However, the use of coercive power by the overseas partner increases dysfunctional conflict and the use of non-coercive power reduces such conflict across both exporters and importers, although in the importer group this link is not significant. The results also suggest that functional conflict enhances performance only among importers. The use of problem solving conflict resolution boosts functional conflict's impact on performance among exporters, but adversely affects the performance effect of such conflict in the importer group. Nonetheless, problem solving resolution negatively affects the impact of dysfunctional conflict on performance in both the exporter and importer groups. Moreover, we find that power distance boosts the impact of dysfunctional conflict on performance in the relationship across the groups of exporters and importers. Implications of the findings for international marketing theory and practice are discussed, and limitations of the study considered along with future research directions.