Relationship versus Transaction Marketing in China: An Institutional Approach

Abstract

This study takes a transaction governance institutional approach to predict firms’ choice between relationship versus transaction marketing in China. Drawing on the literatures on relational versus discrete transactions and their respective governance institutions of social relational governance versus market mechanisms, the paper posits that firms can either practice relationship marketing to reinforce social relational governance to support relational exchanges, or launch transaction marketing to enhance the effectiveness of market mechanisms to promote discrete transactions. The paper further argues that such decisions are determined by institutional, industry, and firm attributes. Empirical results support these arguments which provide strong research and practical implications.