Culture and international trade credit risk management: a qualitative exploration of Chinese small and medium-sized enterprises

The research adopts integrated, triangulated, multiple qualitative methods: focus groups, semi-structured interviews, field observation and document analysis. Informants include local suppliers of small to medium-sized enterprises. A combination of sequential, theoretical and snowball sampling has been used. Data analysis was performed through an iterative, hermeneutical approach, which incorporates coding, categorising, reflective interpreting and tabulating data, and developing explanatory theories and frameworks. <br><br>Various cultural factors have been discovered to be associated with Chinese suppliers’ ITCRM, including: 1) Chinese native cultural values such as guanxi (interpersonal relationship), renqing (reciprocal obligation), mianzi (face), baotuan (solidarity and cooperation), harmony, and forbearance; 2) cultural practices such as disregard of contracts; 3) beliefs such as locus of control.<br><br>The study reveals that there are six different cultural stances towards native cultural attributes that are taken by informants (‘maintaining’, ‘reflecting’, ‘eroding’, ‘opposing’, ‘minimising’ and ‘switching’). This study further explores the reasons and causes which account for these variations of adaptation by suggesting a process model. The model allows us to gain a deeper understanding of the dynamic change in values of local suppliers when they are exposed to both foreign cultures and international business complexities.<br><br>This study also reveals that as a result of taking different cultural stances and values, local suppliers in China tend to demonstrate different practices and behaviours in their international trade credit decisions. These suppliers’ trading styles have been categorised as ‘conventional’, ‘bounded’, ‘stereotypical’, ‘conservative’, ‘rational’ and ‘pragmatic’.<br><br>Theoretically, this study contributes to a better understanding of intra-cultural variations, and the mechanism of intra-individual change towards cultural values. This study also contributes to an understanding of credit risk management in the international business context. Practical implications and suggestions for international trade practitioners are also discussed.