THE BOUNDARIES OF RELATIONSHIP MARKETING
Boundary Personnel Communication
in Distribution Channel Relationships
ABSTRACT
Communication of information within distribution channel relationships is a basic work function performed, in part, by supplier and intermediary boundary personnel (e.g., supplier salespeople, owners of dealerships, branch managers of distributors, retail store buyers). While receiving significant attention in past channels research, especially in terms of how communication relates to channel sentiments, behaviors, and outcomes, the determinants of supplier and intermediary communication are still unclear. Taking a social exchange theory perspective, this paper builds a conceptual framework centering on industry-wide determinants of boundary personnel communication in distribution channel relationships. The motivation and ability of boundary personnel to communicate form the main pillars of the conceptual framework.
Suppliers of products and services often use independently-owned intermediary organizations to get their products and services to market, including distributors, retailers, franchisees, sales representative firms, and internet companies. A variety of information on rights and responsibilities, placing and receiving orders, end-customers, merchandizing, marketing, and selling must be shared between suppliers and associated intermediaries for inter-firm relationships to operate smoothly and effectively. In fact, communication or information sharing represents a fundamental channel function (work activity) that is necessary in all channel relationships, at least to some degree (Palmatier, et al. 2015). Intermediary personnel may frequently use what is learned in communication with associated supplier personnel about product attributes, usage capabilities, pricing, and pre- and post-purchase services in their contacts with end-customers.
Significant progress has been made within extant channels research in understanding the nature of channel communication. In a classic theoretical contribution, Mohr and Nevin (1990) develop a contingency theory in which communication strategy is proposed to moderate the impact of channel conditions on channel outcomes. Within empirical studies, the connections that inter-firm communication displays with other important constructs in the behavioral channel relationship has been focused upon (see Table 1). Communication in the channel relationship has been shown to be positively linked to manufacturer commitment (Anderson and Weitz 1992; Morgan and Hunt 1994), coordinated actions between the firms (Anderson and Narus 1990; Chen, Li, and Arnold 2013; Guiltinan, et al. 1980), reduced customer acquisition and operation costs (Cannon and Homburg 2001), trust (Anderson and Weitz 1989; Anderson and Narus 1990; Morgan and Hunt 1994), dealer satisfaction (Mohr and Sohi 1995), and performance improvement (Chen, Li, and Arnold 2013; Joshi 2009; Mohr and Spekman 1994; Paulraj, Lado, and Chen 2008). Mohr, Fisher, and Nevin (1996) find that collaborative communication has a stronger impact on dealer satisfaction and inter-firm coordination in less integrated (more independent) channel relationships and in low-control (as opposed to high control) channel relationships. Furthermore, how suppliers communicate information as a form of influence strategy (i.e., information exchange) in attempts to gain some control of channel member decision making has been examined in a number of studies (cf. Boyle et al. 1992; Frazier and Summers 1984; Frazier and Rody 1991; Keith, et al. 1990; Srivastava and Chakravarti 2009).
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While impressive, at least three important gaps exist in our understanding of the communication construct based on existing research in the marketing channels literature. First, extant research has largely ignored the determinants of communication in distribution channel relationships, focusing instead on how it is connected to other constructs that impact the functioning of the channel relationship and its outcomes. In other words, communication has been generally treated as an exogenous variable in empirical research in the channels area rather than as an endogenous variable (for an exception, see Frazier, et al. 2009, who examine determinants of intermediary sharing of strategic information with suppliers). Second, communication among boundary personnel of supplier organization (e.g., account salespeople) and boundary personnel of the intermediary organization (e.g., owners, general managers, sales managers) has not been emphasized. Instead, general communication among channel member firms has been centered upon. Boundary personnel are individuals whose jobs, solely or in part, center on coordinating inter-firm channel relationships. Third, industry level constructs have been largely ignored in favor of firm level and channel relationship-oriented constructs. An incomplete view of channel communication has been offered in the past as a result.
The purpose of this study is to examine determinants of communication between primary account salespeople of suppliers and boundary personnel of intermediaries in distribution channel relationships. Boundary personnel communication (BPC) refers to the degree to which information is formally exchanged between primary account salespeople of suppliers and boundary personnel of intermediary organizations through a common system of language, symbols, and signs. Information is data that have been organized or given structure and thus endowed with meaning (Glazer 1991). Social exchange theory is used at the foundation of the conceptual framework. The conceptual framework is designed to apply only to non-integrated channel systems where suppliers organize their channels by aligning with independent downstream channel members to reach end-customers.
Communication between multiple boundary personnel of the supplier organization (e.g., national sales manager, regional sales manager, primary account salesperson) and multiple boundary personnel of the intermediary organization (e.g., owner, CFO, general manager, marketing manager, sales manager) on strategic plans of the organizations seemingly occur regularly and with positive results. Such communication is beyond the scope of this study.
We examine each facet of communication identified by Mohr and Nevin (1990) (also see Mohr, et al. 1996). The amount of communication reflects how often the supplier’s account salesperson and intermediary boundary personnel communicate with one another, and the time duration of those discussions. Both supplier initiated communication and intermediary initiated communication are of relevance (i.e., bidirectional). Within our study, the method of communication (modality) is personal, largely face-to-face, potentially supplemented with telephone calls, emails, and texts of a personal nature. Information shared between firms in contracts, documents, and websites absent any personal communication is not examined in this study. The content of communication (i.e., the message that is transmitted) appears to be reflected, in part, based on the proposed determinants of BPC under the motivation dimension of our conceptual framework. We clarify this point as we develop the conceptual framework.
Our study is intended to make four incremental contributions to the channels literature above and beyond existing research. The first incremental contribution rests with our focus on primary determinants of supplier-intermediary communication in the conceptual framework. Prior research has centered primarily on linking channel member communication to sentiments, behaviors, and outcomes in channel relationships, not on determinants of channel member communication. Understanding determinants of such an important channel function is critical to progress in the marketing discipline. Thus our study will hopefully stimulate future empirical research by marketing and channels researchers on the determinants of supplier and intermediary communication.
The second incremental contribution resides in our emphasis on communication between primary account salespeople of suppliers and boundary personnel of intermediaries. Past research has looked at channel communication in general rather than examine communication among boundary personnel of channel member organizations. Primary account salespeople are employees of the supplier assigned to coordinate relationships with specific intermediary organizations. Communication involving boundary personnel is critical to the functioning of channel relationships, including how well end-customers are served (see Palmatier, et al. 2015).
The third incremental contribution relates to the two primary organizing pillars of our conceptual framework, motivation and ability. No study on communication or any other form of behavior between channel members has emphasized both motivation and ability in the past. Embracing each dimension appears to offer considerable insight into communication behavior between channel members.
The fourth incremental contribution of our study is based on our use of industry-wide constructs under the motivation and ability dimensions of the conceptual framework. Past research has focused on firm level and channel relationship-oriented constructs. An industry perspective is taken mainly because of the bidirectional nature of the BPC construct. Industry-wide conditions are likely to be highly relevant for both the primary account salesperson of the supplier and boundary personnel of the intermediary to raise and discuss in their meetings. If the constructs were at the firm level, either supplier-oriented or intermediary-oriented, the bidirectional nature of the SIC construct could be impeded. Moreover, relationship-oriented constructs are focused on the two party relationship and unlikely to generate the same discussion as industry-wide constructs. Suppliers and intermediaries conduct business and deal with competitors in an industry, not in isolation.
COMMUNICATION IN CHANNEL RELATIONSHIPS
Anderson and Narus (1990) and Morgan and Hunt (1994) broadly define communication in a channels context as the formal as well as informal sharing of meaningful and timely information between firms. Anderson and Weitz (1992) define communication as the open sharing of information through frequent two-way interactions in channel relationships. Mohr, et al. (1996) view collaborative communication as a combination of frequency, bi-directionality, formality, and non-coercive content. Joshi (2009) replaces non-coercive information sharing with rationality as a key facet of the collaborative communication construct, defining collaborative communication as the extent to which a firm communicates with associated channel members on a frequent, formal, and reciprocal basis while using rationality as a means by which to influence them.
Based on this foundation, we define boundary personnel communication (BPC) as the degree to which information is formally exchanged between primary account salespeople of suppliers and boundary personnel of intermediary organizations through a common system of language, symbols, and signs. We base our definition on the facets of communication, including frequency, bi-directionality, and formality, elaborated upon in Mohr and Nevin (1990), Mohr, et al. (1996), and Joshi (2009). The formality portion of the definition in Anderson and Narus (1990) and Morgan and Hunt (1994), and the bi-directional portion of the definition in Anderson and Weitz (1989) were relied upon as well.
CONCEPTUAL FRAMEWORK
Social exchange theory, with roots in economics, psychology, and sociology, explains change and stability as a process of negotiated exchanges between parties (Blau 1964; Homans 1961; Thibaut and Kelley 1959). The theory posits that relationships are formed and behaviors conducted within them based on factors impacting associated costs and benefits, and a comparison of alternative courses of action. The theory was developed to explain the factors underlying communication, interaction, and resource transfers within exchange relationships. When managers and firms find they are rewarded for particular actions, they tend to repeat those actions. The exchange process brings satisfaction when fair returns are received for a given level of investment (cost).
Social exchange theory guided the selection of the determinants of BPC in our conceptual framework (see Figure 1). The potential benefits of boundary personnel communication were focused upon in selecting the constructs under the motivation dimension of Figure 1 and the channel relationship component. Both the potential benefits and costs of boundary personnel communication were considered when selecting the constructs under the ability dimension of Figure 1.
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In conjunction with social exchange theory, an industry perspective was taken in developing the motivation and ability dimensions of the conceptual framework. An industry refers to a group of suppliers (manufacturers and service-providers) and intermediaries attempting to conduct business in a product-service category in a general market (Harrigan 1983; Porter 1985). Industry level constructs are likely to be relevant and important to discuss from the point-of-view of both supplier and intermediary boundary personnel. On the whole, firm level constructs were considered unlikely to adequately impact the bidirectional nature of the BPC construct.
Motivation to Communicate
The motivation of supplier account salespeople and intermediary boundary personnel to communicate with one another reflects their desire to engage in the behavior because of benefits that are seen to accrue to distribution channel relationships. Industry products and services, the industry environment, and industry end-customers are the construct categories under the motivation dimension in Figure 1. The constructs within these categories are seen to impact the nature of the “content” of the communication between boundary personnel. That is, the individual constructs under the motivation dimension may drive the message (i.e., what is discussed and emphasized between boundary personnel in BPC).
Industry products and services. Product-service line complexity is the number and type of products and services attempted to be sold by suppliers and intermediaries to the customer base in the industry. Specifically, it involves the number of product-service lines (i.e., breadth) and how many products-service models a given line includes (i.e., depth).
A challenge for both suppliers and intermediaries facing high product-service line complexity is enabling their personnel to adequately comprehend the totality of products and services being marketed and sold to end-customers in the industry (Day 1994). Newly introduced products and services must be considered as well. Suppliers need such knowledge in making decisions on additions or deletions to their existing products-services (i.e., product-service development) and shaping their marketing strategies. Intermediaries need such knowledge since the end-customers they serve are likely to perceive high risks when product-service line complexity is high. That is, end-customers having difficulty grasping available product and service options are likely to face decision-making uncertainty, leading to perceptions that unknown negative outcomes may occur after making their buying decisions (Atuahene-Gima 1997; Holak and Lehmann 1990). In addition, high product-service line complexity makes both information collection and direct comparisons of attributes across alternatives more costly for end-customers (Shugan 1980; Wernerfelt 1985). Intermediaries must provide information to end-customers in a suitable manner to reduce the customer confusion that arises from product-line complexity (Huffman and Kahn 1998; Gourville and Soman 2005). As a result, intermediary personnel must possess knowledge about available products and services, whether carried by their companies or not, to properly serve end-customers. Wernerfelt (1995) shows that when product lines are greater in number, higher sales assistance by way of two-way nonprice communication between buyer and seller is required. BPC among boundary personnel can provide both suppliers and intermediaries with a better understanding of the products and services available in the industry at any given moment in time.
For example, the worldwide lighting and bulb industry exhibits high product-service line complexity for both business-to business customers and residential customers.[1] Many different lighting options exist, along with a varied array of associated services (e.g., delivery, installation). Suppliers, including Phillips NV, General Electric, and Osram Sylvania, and intermediaries (e.g., electrical product distributors, lighting retailers) must stay abreast of the different products-services and the new products-services being introduced in the industry in order to serve end-customers. The primary account salespeople of suppliers and boundary personnel of intermediaries are likely to frequently meet to discuss alternative product-service options and customer reactions to them.
Proposition 1: Industry product-service line complexity is positively associated with boundary personnel communication.
Price stability is the degree to which end-prices of products-services offered to the customer base in the industry vary over time. Frequent price changes would reflect price instability.[2] If price-oriented sales promotions are frequently offered, price instability would be present.
When prices are relatively stable in an industry, there is less need for supplier account salespeople and boundary personnel of intermediaries to frequently discuss them and their underlying rationale. Traditional reasoning reinforcing the integrity of firm pricing of products and services would suffice. On the other hand, when price instability exists in an industry, prices to end-customers and the reasoning behind their variation need to be understood by boundary personnel of both supplier and intermediary organizations (see Zbaracki et al. 2004). Suppliers need such information in setting the pricing on their own products-services and developing arguments to justify their price points. Intermediaries need such information in representing products and services to end-customers, and justifying the basis for their prices. That is, intermediaries must be equipped to handle pricing questions from their customers. Zbaracki et al. (2004) find that for an industrial manufacturer, the costs of communicating the logic of price change to customers comprises almost three-quarters of the total costs involved in adjusting prices. Importantly, frequent price changes tend to be associated with customer antagonism and reduced customer demand (Anderson and Simester 2010). Frequent price promotions may confuse consumers because their expected and observed prices do not match (Winer 1986). This tends to lower the perceived quality and equity of a brand in the long-run (Yoo, et al. 2000). Thus firms in an industry with price instability need to communicate the rationale of price changes to customers to mitigate their potential negative impact. Moreover, frequent promotional activity involving product-service pricing in some fashion would require channel member boundary personnel to communicate the details of each promotion.
For example, pricing to end-customers is quite stable in the business-to-business base chemical industry (e.g., petrochemicals and basic inorganics, sulfuric acid).[3] In this industry, prices evolve slowly and are based largely on demand and supply conditions, and few promotions are offered. As a result, account salespeople of suppliers and boundary personnel of intermediaries in this industry appear to have less need to communicate with one another about the nature of product pricing over time.
Proposition 2: Industry price stability is inversely associated with boundary personnel communication.
Product-service differentiation is the extent to which significant variation exists in product-service attributes, qualities, and performance across competitive offerings in an industry (Burnham, Frels, and Mahajan 2003; Stimpert and Duhaime 1997; Narver and Slater 1990). Within some industries, high levels of product-service differentiation are present, with individual suppliers possessing brands with strong and distinct images, and with intermediaries exhibiting unique characteristics. In other industries, product-service differentiation is low.
When significant product-service differentiation exists in an industry, the need for BPC among boundary personnel appears to increase. Firms require access to information to maintain a differentiation strategy successfully and this information should be gathered from multiple sources, including from channel partners (Svendsen, et al. 2011). More specifically, suppliers must gain up-to-date intelligence on end-customer reactions to competitor offerings and their positioning in the marketplace. Intermediary boundary personnel are in a position to provide such intelligence (cf. Frazier, et al. 2009).
Moreover, manufacturer heterogeneity reduces the extent to which knowledge concerning one supplier is applicable to other suppliers (Schmalensee 1982), increasing the uncertainty and the “cost of thinking” associated with decision making for end-customers (Alba and Hutchinson 1987; Shugan 1980). Intermediaries must understand how products-services are differentiated and inform end-customers about the distinct benefits of the products and services they are offering. Accordingly, account salespeople of suppliers are likely to communicate considerable information on consumer perceptions and the distinctive characteristics of their products and services, including value propositions (i.e., why targeted customers purchase the product-service), to associated intermediaries, who can use this information in their marketing and sales activities to showcase supplier products-services to end-customers. Relying on specialized knowledge of a supplier can result in channel members providing superior solutions to downstream customers (Ho and Ganesan 2013; Mesquita, et al. 2008; Srivastava, et al.1998). In contrast, when product differentiation in the industry is low, the uniqueness of alternative products and services is not the basis for intermediary sales to end-customers as much as their own marketing, selling, and service initiatives.
For example, product-service differentiation is high in the digital signal processor (DSP) industry.[4] DSPs are microprocessors specially designed for application and use in particular products to maximize their performance (e.g., navigation systems, guitar amplifiers, mobile phones). Suppliers include Texas Instruments, Freescale, XMOS, CEVA, and Analog Devices, who use major global distributors like Arrow and Hamilton-Hallmark to serve the vast majority of original equipment manufacturer (OEM) customers. Decision makers in OEMs perceive significant product differentiation (e.g., reliability, functionality, performance) across alternative DSPs. Supplier account salespeople may take considerable time explaining the nature of their DSPs, including value propositions and applications, to distributor boundary personnel. In turn, distributor boundary personnel are likely to spend considerable time explaining to supplier account salespeople the nature of their sales presentations on DSPs to end-customers and how competitors are trying to win business.
Proposition 3: Industry product-service differentiation is positively associated with boundary personnel communication.
Industry environment. A competitive disequilibrium exists in an industry whenever a particular change or shock could potentially alter the market share positions of suppliers and intermediaries, whether positively or negatively. It could occur for many reasons, including a major merger, a major acquisition, a major cost reduction, the presence of a new technology, the introduction of a continuous or discontinuous innovation, a product-service problem, non-traditional behavior by an emerging market segment, or a major and impactful change in resource commitment, strategy, or implementation by a key industry player. In contrast, an industry is in competitive equilibrium when market share positions are relatively constant.
When a competitive disequilibrium is present in an industry, boundary personnel are expected to increasingly communicate with each other. Potential changes in market position in an industry are taken seriously by all concerned (Norton 1987). When faced with disequilibrium, firms desire to continuously learn and develop their core competencies to achieve a state of equilibrium (Lei, et al. 1996). Information exchange with external partners becomes critical for firms to update their knowledge base to deal with the change. Account salespeople of suppliers and intermediary boundary personnel are likely to discuss in depth the nature of the change or shock, how it could alter the status quo, and how their firms should respond.
For example, a competitive disequilibrium currently exists in the domestic motorcycle industry.[5] Triumph, with only around a 1% market share of motorcycles in the US market, has instituted a store-within-a-store strategy in its roughly 200 dealers, establishing “Triumph World” as the official retail environment for the brand. Authorized independent dealers must provide an exclusive area on premises separate from all other motorcycle brands for the display of the new Triumph motorcycles, clothing, and accessories, displaying Triumph approved graphics and signage, colors, lighting, flooring, fixtures, wall frames, garment cubes, nesting tables, and accessory displays to properly convey the brand image. Competing suppliers are concerned that this strategy could enrich the end-customer shopping experience for the Triumph brand and alter the market share positions of suppliers and dealers. As a result, communication between the primary account salespeople of suppliers and boundary personnel of the intermediaries is likely heightened in the industry, as the implications of the new strategy are considered by Triumph and its dealers, as well as competing suppliers and dealers.
Proposition 4: A competitive disequilibrium in an industry is positively associated with boundary personnel communication.
A competitive disequilibrium is expected to stimulate additional communication between account salespeople of suppliers and boundary personnel of intermediaries on product-service differentiation in the industry. A change or shock that could enhance the market share positions of existing firms will likely promote discussion on how to take advantage of the situation based on the distinct differences in products and services among existing brands. On the other hand, if the change or shock is threatening in nature, focusing more on how products and services are differentiated may provide suppliers and intermediaries with meaningful directions in combatting the situation and maintaining current market share positions.
For example, the Samsung recently had serious battery issues with its Galaxy Note 7 phones, leading to some phones overheating and catching fire.[6] The problem prompted two recalls and eventually discontinuation of the product. Account salespeople of competitors of Samsung most likely tried to take advantage and communicated with associated dealer boundary personnel how their phones could be sold to potential customers of Samsung. Account salespeople of Samsung and boundary personnel of its authorized dealers likely frequently met to discuss how the damage could be contained.
Proposition 5: When a competitive disequilibrium exists in an industry, the positive relationship between industry product-service differentiation and boundary personnel communication will be strengthened.
Industry end-customers. End-customer heterogeneity is the degree to which end-customers in an industry differ with respect to their tastes and preferences for products and services (cf. Achrol and Stern 1988). In some industries, end-customers tend to be relatively homogeneous in their tastes and preferences (e.g., ultra-sound equipment for hospitals), while in other industries, tremendous diversity can exist across different market segments and vertical niches (e.g., bicycles).
Customer diversity is likely to increase task complexity faced by suppliers and intermediaries, since it increases the knowledge and skills required to serve the entire market (Day 1994). In such cases, the need to "customize" product offerings for members of individual customer segments should be high. As a result, supplier account salespeople and boundary personnel of intermediaries may frequently meet to discuss the major customer segments that exist in the industry and how to appeal to each of them.
For example, end-customer heterogeneity is quite high in the handbag industry.[7] Many different segments of female shoppers exist, each with varying preference structures. Some are attracted to luxury handbags (e.g., Michael Kors), others to stylish but more moderate priced handbags (e.g., Brighton Collectibles), while still other shoppers are more utilitarian and purchase basic handbags at a relatively low price. Boundary personnel in this industry likely frequently meet to brainstorm on how to effectively attract business from particular segments.
Proposition 6: Industry end-customer heterogeneity is positively associated with boundary personnel communication.
Facing a competitive disequilibrium, account salespeople of suppliers and boundary personnel of intermediaries are expected to discuss end-customer heterogeneity even more in their communication with one another. If the change or shock has potential for positive results, boundary personnel may consider how to enhance the likelihood that members of alternative customer segments with varying preferences buy their products and services. In contrast, if the change or shock is potentially adverse in nature, boundary personnel may frequently meet and discuss how to maintain business with existing customer segments even when their tastes and preferences suggest they could leave and purchase alternative products-services.
For example, firms in the cosmetics industry are finding that the millennial segment is behaving differently than other customer segments, leading to a competitive disequilibrium.[8] Rather than invest in expensive skin creams, millennials often desire makeup or masks with more immediate effects. Suppliers known for antiaging products, such as Estee Lauder and Cody, have seen a decline in sales, while other suppliers known more for their makeup and masks, such as MAC, Smashbox, and Tom Ford, have seen sales grow. Supplier account salespeople and boundary personnel of intermediaries (e.g., department stores, drug stores) in the industry are likely to meet and communicate how to take advantage of existing product portfolios, including how to merchandize and sell antiaging products to a skeptical and sizeable segment of consumers.
Proposition 7: When a competitive disequilibrium exists in an industry, the positive relationship between end-customer heterogeneity and boundary personnel communication will be strengthened.
End-customer involvement is how personally interested customers are in buying and consuming a product or service (Hoyer and MacInnis 2004; Shaffer and Sherrell 1997). When involvement is high, customers may search for a large amount of information on alternative brands and their inherent qualities before making purchase decisions (Wickens 1984; Zaichkowsky 1985).
End-customers with high involvement may expect more from their shopping experiences. Higher customer involvement also implies that customers are likely to appreciate personalized interaction with firm representatives and to value customization of the marketing mix to suit their individual needs (Gordon, McKeage, and Fox 1998). As a result, when customer involvement is relatively high in an industry, account salespeople of suppliers and boundary personnel of intermediaries must explore how to meet general customer expectations and establish meaningful sales encounters.[9] Part of this challenge means equipping intermediary sales personnel with deep knowledge of the products and services they represent. Absent adequate product-service knowledge, intermediary sales personnel will be unable to satisfy end-customers who give high priority to gaining, evaluating, and comprehending brand-related information (Hoyer and MacInnis 2004; Smith and Buchholz 1991).
For example, end-customer involvement is relatively high in the wrist watch industry.[10] As such, the retail shopping experience is vital to many consumers of watches. Customers with high personal interest in the product category expect retail stores to carry a representative line of the brands of watches they are authorized to carry and effectively merchandize and display them. Importantly, these same customers expect retail sales personnel to exhibit excellent product knowledge, including an understanding of the unique qualities, positioning, and status of the alternative brands. The primary account salesperson of the supplier may frequently meet with retailer sales personnel and management to explore how shopping experiences can be enriched for highly involved consumers.
Proposition 8: Industry end-customer involvement is positively associated with boundary personnel communication.
End-customer expertise is defined as customer’s background knowledge about the performance of a product and the general understanding of how similar brands perform on average (Sharma and Patterson 1999). Customer expertise encompasses both firm-specific knowledge and market-based knowledge (Bell and Eisingerich 2007). End-customers gain expertise in a product category as they gain significant product-related experiences (Park, Mothersbaugh, and Feick 1994).
The need for boundary personnel to frequently communicate with one another when end-customer involvement is high may be tempered to some extent when end-customer expertise is also high. Expertise in a product domain allows consumers to more rapidly and accurately evaluate options, and learn more product-related information on their own (Alba and Hutchinson 1987). Expert customers can readily evaluate product offerings and compare a product’s performance with other alternatives in the market on their own. Accordingly, experts need less assistance from intermediary personnel when making their purchase decisions. More sales and technical assistance is needed from intermediaries when end-customers have little expertise, as such end-customers are not as well equipped to understand the meaning of product information and their product options.
For example, in the business-to-business market for computer hardware and software, many business firms have their own information system departments staffed by technological experts.[11] While their involvement is high, these experts tend to be comfortable making buying decisions on their own without that much assistance from intermediary personnel working for major distributors like Tech Data and Ingram-Micro.
Proposition 9: Industry end-customer expertise weakens the positive relationship between end-customer involvement and boundary personnel communication.
Ability to Communicate
The ability of supplier and intermediaries to communicate is their capability to do so. While motivation relates to the importance of boundary personnel communication, ability relates to how well the communication is likely to be received. That is, whether the content in the communication will be processed and utilized by the personnel of the organizations in future behaviors (e.g., supplier boundary personnel passing intelligence up the ladder; intermediary boundary personnel utilizing knowledge gained in the communications to market and sell supplier products and services to end-customers). Three industry level constructs comprise this dimension of the conceptual framework, interdependence magnitude, interdependence asymmetry, and trust.
Interdependence magnitude is the extent to which the suppliers and intermediaries are dependent on their channel relationships in an industry (Gundlach and Cadotte 1994; Emerson 1962). When interdependence magnitude is high, suppliers and intermediaries tend to exhibit high dependence on their channel relationships or the need to maintain their exchange relationships in order to achieve desired goals) (Frazier 1983). The power of the firms tends to be high as a result.
High interdependence magnitude reflects channel relationships where the firms are highly important to each other. The influence of the messages provided by boundary personnel is likely to be enhanced when power is high, making communication more effective (Frazier and Summers 1984; 1986). Kim and Hsieh (2003) find that when mutual dependence is high, bilateral communication between suppliers and intermediaries tends to be relatively high. Moreover, the risks associated with information sharing should be lessened because high interdependence makes it unlikely that the channel partners will engage in opportunistic behavior (Kumar, Scheer, and Steenkamp 1995). High bilateral dependence between suppliers and intermediaries has been found to be positively associated with relational behavior characterized by information exchange (Lusch and Brown 1996; Izquierdo and Cillan 2004).
For example, interdependence magnitude is high in the domestic construction equipment industry.[12] Firms like Caterpillar and Komatsu are market leaders and use highly selective distribution, aligning with exclusive dealers per trade area. Dependence levels on each side tend to be high. Communication between boundary personnel is likely to occur frequently because of dependence and influence among the firms (Fites 1996).
Proposition 10: Industry interdependence magnitude is positively associated with boundary personnel communication.
Interdependence asymmetry in an industry is the extent to which interdependence levels among suppliers and intermediaries are unbalanced or asymmetric (Gundlach and Cadotte 1994). When interdependence asymmetry is high, a distinct power advantage exists for certain suppliers and intermediaries because they exhibit less dependence on their channel relationships than their counterparts in a relative sense (Emerson 1962).
Boundary personnel appear hesitant to frequently communicate information with more powerful channel members. The primary reason appears to be the fear that shared information could be used against their firms’ best interests (cf. Frazier et al. 2009). Thus under such conditions the potential benefits of sharing information are unlikely to offset the associated risks.
For example, interdependence asymmetry is high in the automobile industry in the US market.[13] Suppliers like Ford, General Motors, and Toyota are much less dependent on their individual dealers than their dealers are on them, providing them a distinct power advantage in their channel relationships. This is expected to reduce the amount of communication in the channel, as dealer boundary personnel may exhibit caution in sharing many types of information.
Proposition 11: Industry interdependence asymmetry is inversely related to boundary personnel communication.
Trust in an industry refers to the degree to which suppliers and intermediaries have confidence in one another’s honesty and benevolence (Morgan and Hunt 1994). Perceptions of trust build up over time because of firm actions that demonstrate these traits.
When trust is high, channel members are unlikely to be that concerned about the misuse or leakage of sensitive information (Frenzen and Nakamoto 1993). That is, boundary personnel are unlikely to believe that shared information will be used by the other firm to enhance selfish interests (Dyer and Singh 1998; Frazier et al., 2009; Inkpen and Tsang 2005). Instead, boundary personnel are likely to believe that shared information will facilitate more effective attainment of common goals and assist in joint problem solving (Anderson and Weitz 1989; Anderson and Narus 1990).
For example, trust tends to be low among suppliers and dealers in the domestic automobile industry.[14] Suppliers are generally seen as being most interested in achieving their own financial goals, even at the expense of their dealers’ goal attainment. Boundary personnel communication is likely to be adversely impacted by this lack of trust.
Proposition 12: Industry trust among suppliers and intermediaries is positively associated with boundary personnel communication.
Channel Relationships
This dimension of the conceptual framework is focused on two-firm (supplier and intermediary) exchange relationships rather than on industry level constructs. Two constructs compose this dimension, supplier-intermediary goal aspirations and boundary personnel competence.
Supplier-intermediary goal aspirations represent the extent to which the supplier and the intermediary seek to significantly improve their current financial performance. In many exchange relationships, channel members are not satisfied with their current goal attainment and desire to do better.
When supplier-intermediary goal aspirations are high, boundary personnel communication is expected to be relatively high. In such cases, the firms are searching for ways to better serve end-customers and enhance the impact of their marketing and sales efforts on end-customer decision-making. According to previous research, when the aspirations of two parties in a relationship are moderately high, they tend to work jointly to arrive at mutually acceptable solutions (cf. Ben-Yoav and Pruitt 1984). In a channel setting, members who have high goal aspirations may be motivated to communicate frequently with one another to achieve their goals (McAlister, Bazerman, and Fader 1986). Frequent communication on how to improve existing performance levels may prove fruitful or at least be seen as such by firm personnel (Joshi 2009; Paulraj, et al. 2008).
For example, Lehman Gross Bahn (Markin) is a German company that markets and sells large scale toy trains in the US market through a group of authorized independent toy dealers. Recently, sales have been disappointing for both LGB and many of its dealers, as fewer young people are attracted to the products and the hobby.[15] Goal aspirations remain high for both LGB and many of its dealers. In all likelihood, this desire has led boundary personnel of LGB and many dealers to increase contact with one another, discussing among other issues product attributes and pricing, and how younger customers can be attracted to the hobby through special local events.
Proposition 13: Supplier-intermediary goal aspirations are positively associated with boundary personnel communication.
Boundary personnel competence reflects their ability to adequately perform their jobs (Anderson and Weitz 1989). High boundary personnel competence indicates that such employees are capable of exceling on critical job responsibilities.
When the competence of the boundary personnel of each firm is high, the credibility of the information they share should be increased (Maltz and Kohli 1996; Moorman, Zaltman, and Deshpande 1992). Greater mutual perception of role competence has been found to be strongly associated with greater open communication between the parties (Smith and Barclay 1997). “Channel members may bypass the factory (reduce communication) and devise their own solutions when liaison personnel are perceived as ineffective” (Anderson and Weitz 1989, p. 315). Thus boundary personnel communication should increase when their competence is high, as benefits of the behavior may be seen as forthcoming.
For example, Caterpillar is known for recruiting and training highly competent salespeople that specialize in effectively coordinating inter-firm relationships with authorized dealers.[16] In turn, authorized dealers of Caterpillar are known to be among the very best in the industry, with highly competent managers and sales personnel. The account salesperson of Caterpillar is more likely to communicate with dealer boundary personnel under such conditions.
Proposition 14: Boundary personnel competence is positively associated with boundary personnel communication.
Proximate Outcomes
To this point, the conceptual framework has centered on explaining the major determinants of boundary personnel communication in distribution channel relationships. By taking the set of proposed determinants into account, the resulting amount (frequency) of formal and bi-directional boundary personnel communication should be appropriate based on a balancing of the likely benefits and costs of the behavior. In turn, reaching this level of boundary personnel communication is expected to result in three proximate (immediate) outcomes in the two-firm channel relationship. These proximate outcomes may impact the attainment of supplier and intermediary financial goals (e.g., sales, sales growth, profits) longer term.
Supplier-intermediary marketing and sales capabilities are higher-order and complex sets of routines that involve how the two firms carry out specific marketing and sales work activities (e.g., merchandizing, advertising, personal selling) (Day 1994). Information exchanged between the firms on products, customers, and competitors should deepen understanding of how to conduct business. Thus more communication between the primary account salesperson of the supplier and boundary personnel of the intermediary should enhance how members of each firm perform marketing and sales work activities (Chen, Li, and Arnold 2013).
Proposition 15: Boundary personnel communication is positively associated with supplier-intermediary marketing and sales capabilities.
Supplier-intermediary conflict is the frequency of disagreements that exists among the two firms (Brown and Day 1981). “Because conflict may produce either functional or dysfunctional consequences (Rosenbloom 1973), channel members should strive to restrict it to functional levels (Stern 1971).”
Frequent communication is likely to make supplier and intermediary personnel more aware of the individual concerns and motivations of each party (Etgar 1979). Misunderstandings and incorrect strategies are likely to be reduced as a result, as would be mutual feelings of frustration. Disagreements could still occur, but they are unlikely to lead to dysfunctional consequences in most cases under conditions of high inter-firm communication.
Proposition 16: Boundary personnel communication is inversely associated with supplier-intermediary conflict.
Supplier-intermediary coordination is the extent to which the supplier and intermediary work well together in accomplishing their collective set of tasks (Mohr, Fisher, and Nevin 1996). When the primary account salesperson of the supplier and boundary personnel of the intermediary take the time and make the effort to share information, solicit and give feedback, and routinize communication flows, improved coordination of their efforts is likely to occur.
Proposition 17: Boundary personnel communication is positively associated with supplier-intermediary coordination.
INTERACTION OF MOTIVATION AND ABILITY
The conceptual framework proposes that motivation to communicate is distinct in impact on communication in relation to the ability to communicate. That is, the corresponding research propositions are developed and stated independent of one another. However, interactions between the motivation and ability dimensions could occur, as illustrated in Figure 2.
[Place Figure 2 About Here]
In cell 1 of Figure 2, motivation and ability are each at a low level. Under such conditions, communication between channel members is likely to be minimal, as the need for boundary personnel to keep in contact with one another is constrained and the effectiveness of any communication is limited. The number of supplier account salespeople can be kept relatively small.
In cell 2 in Figure 2, the motivation to communicate is high, but the ability to communicate is low. Boundary personnel communication is expected to be relatively high in this cell because of the need to communicate. Issues regarding product lines, differences among brands, and variations across consumers have to be addressed. However, low ability is likely to impede the effectiveness of any such communication. The strategic imperatives for the firms would appear to be to reduce communication or attempt to increase ability to communicate through increased dependence, dependence balancing efforts, and trust.
In cell 3 in Figure 2, the motivation to communicate is low, but the ability to communicate is high. Under such conditions, boundary personnel communication is expected to be only moderate, since the need to communicate is not that strong, even though communication is likely to be effective when it does happen.
Finally, in cell 4 of Figure 2, both the motivation and ability to communicate is high. Boundary personnel communication is likely to be the highest in this cell and unlikely to require revision. The major challenge for suppliers is to ensure they have enough account salespeople to implement such a high level of communication.
DISCUSSION
This study has developed a conceptual framework centered on determinants of communication between supplier account salespeople and intermediary boundary personnel. A series of research propositions in need of empirical testing have been offered.
Theoretical Implications
This study is intended to provide four incremental contributions or novel insights to the channels literature. The first rests with the focus on key determinants of supplier-intermediary communication in distribution channel relationships. Prior channels research has primarily emphasized how inter-firm communication relates to other behavioral constructs and outcomes, not on its primary determinants. Our conceptual framework, based on social exchange theory, identifies a number of constructs likely to impact supplier-intermediary communication and should be informative to channels researchers. Our study will hopefully stimulate and guide future empirical research on what drives alternative levels of supplier-intermediary communication in channel relationships.
Among the proposed determinants, the competitive disequilibrium construct is highly interesting. It is expected to have a main effect on communication as well as moderating effects on the impact of product-service differentiation and end-customer heterogeneity on communication. Channel members are likely to be highly sensitive to any shock or change that could impact market share positions in an industry, and reflect such concerns in their inter-firm communication.
Also noteworthy in a theoretical sense is that the proposed determinants under the motivation dimension of the conceptual framework are likely to largely shape the “content” of the communication between supplier account salespeople and intermediary boundary personnel. That is, product-service line complexity, price stability, product-service differentiation, competitive disequilibrium, end-customer heterogeneity, end-customer involvement, and end-customer expertise are likely to drive what is discussed in communications between supplier account salespeople and intermediary boundary personnel.
The second incremental contribution comes from our emphasis on communication between boundary personnel. There are many forms of communication that can take place between channel members, such as those associated with formal written contracts, policy statements, and websites. Examining all forms of communication in one study is unlikely to be that fruitful, especially when considering determinants could vary by form. We chose to center our study on communication between primary account salespeople of suppliers and boundary personnel of intermediary organizations, which has never been the emphasis in any channels study previously. Such an emphasis is important as boundary personnel play a key role in the coordination of channel relationships (Palmatier, et al. 2015). A key responsibility of any supplier account salesperson is to communicate relevant information to intermediary boundary personnel. A key responsibility of any intermediary boundary person is to grasp relevant information from communications with supplier account salespeople and transfer it to others so that they can perform their jobs better, including serving end-customers in an exemplary fashion,
The third incremental contribution comes from the organization of the conceptual framework around the motivation and ability dimensions. No channels study has incorporated both dimensions in the past. Motivation reflects channel member desire to engage in a behavior because of likely benefits to the distribution channel relationship. Ability reflects the capability of the firms’ personel to perform the behavior. Both dimensions and their associated constructs appear needed in adequately explaining why supplier and intermediary boundary personnel would take the time to frequently communicate with one another.
The fourth incremental contribution is based on our reliance on industry-wide constructs under the motivation and ability dimensions of the conceptual framework. Firm level and channel relationship-oriented constructs have dominated prior research. Industry level constructs appear to offer content highly relevant for discussion between supplier account salespeople and intermediary boundary personnel compared to firm level or relationship oriented constructs. Thus they are more likely to be critical considering the bi-directional nature of BPC in our study. It appears fruitful for future empirical research on channel communication to focus on industry-wide constructs, at least in part.
Managerial Implications
Communication among channel members is an important among managers of both supplier and intermediary organizations because of potential benefits and investments-costs. Unnecessary communication (Etgar 1979) is wasteful, leading to few if any benefits and high costs. In contrast, an appropriate level of communication between channel members can lead to substantial benefits, including satisfied end-customers, at an acceptable cost.
Primary among the concerns of suppliers is how many account salespeople are necessary to coordinate channel relationships, with obvious revenue and cost implications. The decision is largely based on how many independent intermediaries individual account salespeople can adequately manage (i.e., span of control), which is impacted by the amount of personal communication each intermediary requires. Based on the proposed industry-level determinants in the conceptual framework, suppliers can hopefully learn from this study and make some rough determination of how much communication is needed in their channel systems, deriving an approximate number of necessary account salespeople in the process. As more empirical research is conducted on the research propositions offered in this study, managers will have more knowledge to rely upon in making such a decision.
Moreover, managers within intermediary organizations may benefit from our conceptual framework as well. Some communication with suppliers is could be a waste of boundary personnel time, as suppliers agitate for more support of their brands-products. Intermediary managers may be able to utilize proposed determinants of communication under the motivation dimension to determine which supplier account salespeople need to be interacted with in a substantial way. Where inter-firm communication is vital, how intermediary boundary personnel can transfer what is learned to marketing and sales employees so they can more effectively deal with end-customers deserves priority.
Finally, aside from the motivation to communicate, the ability of suppliers and intermediaries to communicate with one another is clearly a critical issue. Without adequate ability, frequent communication makes little sense. Thus where a large amount of communication appears necessary, attention to how interdependence magnitude and trust can be heightened, and interdependence asymmetry can be lessened to some degree appears warranted.
Future Research Needs
The most obvious research need is for marketing and channels researchers to begin testing the research propositions developed in this study. Embracing industry-wide constructs in empirical research on channel communication appears most fruitful, as opposed to the traditional focus on firm level and channel relationship-oriented constructs.
Within this study, the amount of communication and the frequency of communication were not separated. It is unlikely the two will always go hand in hand. That is, the amount of time spent in individual meetings between boundary personnel may not coincide with the frequency of such meetings. Thus future research needs to distinguish between these two constructs.
A fascinating issue for future research relates to how communications between supplier account salespeople and intermediary boundary personnel end up influencing end-customer decision making, if at all. If intermediary boundary personnel pass on important information from these communications to marketing and sales personnel in their firms and these personnel process, retain, and utilize this information in their contacts with end-customers, considerable impact could be seen. However, many steps would need to take place for this to occur. Potentially, boundary personnel communication could influence what end-customers learn about alternative products and services, shopping experiences, and purchase decisions.
Finally, information leakage from communications between supplier account salespeople and intermediary boundary personnel could take place. Intermediary boundary personnel could share information gleaned in these communications with account salespeople of firms competing with the suppliers in question. Where intermediaries represent the products-services of competing suppliers, a common occurrence, information leakage may be especially prominent. Supplier account salespeople could share information gained in such meetings with competitors of the intermediaries. How information leakage impacts the motivation of boundary personnel to communicate with one another must receive research attention in the future. Steps taken by channel members in attempts to ensure confidentiality also need to be examined.
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FIGURE 1
Boundary Personnel Communication
[pic]
TABLE 1
Summary of Empirical Findings from Studies Related to Communication
in Distribution Channel Relationships
| |Authors |Journal |Theory |Definition of communication/information |Key empirical findings |
| | | | |sharing/influence strategy | |
|1 |Guiltinan et al. 1980|Journal of Retailing |None |Communication processes and structures are a |In a franchise channel, personal and |
| | | | |vehicle for persuasive information, for |impersonal communications by the |
| | | | |communicating and enhancing authority, and |franchisor that contain information |
| | | | |for fostering participative decision making. |perceived as helpful by franchisees |
| | | | | |is likely to lead to overall |
| | | | | |coordination in the relationship. |
|2 |Frazier and Summers |JM |None |Interfirm influence strategy refers to the |In a manufacturer-dealer relationship|
| |1984 | | |content and structure of communications |characterized by high |
| | | | |utilized by a source firm’s personnel in |interdependency, manufacturer’s |
| | | | |their influence attempts with target firms. |boundary personnel mostly use |
| | | | | |information exchange as the main |
| | | | | |influence strategy as opposed to |
| | | | | |other strategies like |
| | | | | |recommendations, requests, promises, |
| | | | | |threats, and legalistic. This leads |
| | | | | |to better agreement between |
| | | | | |manufacturer and supplier on key |
| | | | | |marketing decisions. |
|3 |Anderson and Weitz |Marketing Science |Social exchange theory |Intensive two-way communication concerned |In a channel dyad involving |
| |1989 | | |with sharing information about plans, |manufacturers and independent sales |
| | | | |programs, expectations, goal setting, and |agents, two-way communication and |
| | | | |performance evaluation. |trust between the parties are |
| | | | | |positively correlated. When the |
| | | | | |stakes are high for one or both |
| | | | | |parties, two-way communication tends |
| | | | | |to be high, but when the dyadic |
| | | | | |relationship is old and |
| | | | | |well-established, two-way |
| | | | | |communication tends to be low. Also, |
| | | | | |when the sales agents perceive |
| | | | | |manufacturer’s boundary personnel to |
| | | | | |be competent, communications tend to |
| | | | | |be high. |
|4 |Anderson and Narus |JM |Social exchange theory |Communication is the formal as well as |In a manufacturer-distributor working|
| |1990 | | |informal sharing of meaningful and timely |partnership, communication between |
| | | | |information between firms. |the partners is positively correlated|
| | | | | |with economic, social, and technical |
| | | | | |outcomes of the exchange |
| | | | | |relationship. Communication also |
| | | | | |leads to trust in channel |
| | | | | |relationship. |
|5 |Keith et al. 1990 |JM |None |Influence strategies represent the "means" or|In an influence attempt by a |
| | | | |"instruments" one firm uses to exert power |principal in a principal-broker |
| | | | |over another in a channel relationship. |relationship, the broker has a higher|
| | | | | |perception of self-control and |
| | | | | |greater satisfaction in the |
| | | | | |interaction when the principal uses |
| | | | | |expert, information or referent base |
| | | | | |of power than when the principal uses|
| | | | | |reward or coercive power. Thus, use |
| | | | | |of expert, information or referent |
| | | | | |base of power by the principal is |
| | | | | |likely to lead to desired behaviors |
| | | | | |from the broker in a channel |
| | | | | |relationship. |
|6 |Frazier and Rody 1991|JM |Reciprocal action theory|Influence strategies involve alternative |In industrial product channel |
| | | | |means of communication available to a firm’s |relationships, if one firm uses a |
| | | | |personnel in their influence attempts with |coercive or noncoercive strategy then|
| | | | |associated channel members. |the other firm will reciprocate with |
| | | | | |the same strategy. When a firm has |
| | | | | |higher power in the relationship, it |
| | | | | |is more likely to use noncoercive |
| | | | | |strategies. The level of conflict in |
| | | | | |the relationship also influences |
| | | | | |choice of influence strategy – higher|
| | | | | |level of latent conflict leads to use|
| | | | | |of coercive strategies whereas higher|
| | | | | |level of manifest conflicts leads to |
| | | | | |use of both coercive and noncoercive |
| | | | | |strategies. |
|7 |Anderson and Weitz |JMR |None |Communication refers to sharing information |In a manufacturer-distributor |
| |1992 | | |through frequent two-way interchanges. |relationship, open and two-way |
| | | | | |exchange of information increases |
| | | | | |both parties’ commitment to the |
| | | | | |relationship. |
|8 |Boyle et al. 1992 |JMR |Control theory |Influence strategies refers to the structure |In a manufacturer-dealer relationship|
| | | | |and content of communications by boundary |characterized by relational |
| | | | |personnel in a source firm that are intended |structure, information exchange and |
| | | | |to change behaviors of a target firm. |recommendations are the main |
| | | | | |influence strategies employed. Also, |
| | | | | |various influence strategies will be |
| | | | | |more frequently employed in channel |
| | | | | |relationship in hierarchical |
| | | | | |governance mode than in market |
| | | | | |governance mode. |
|9 |Ganesan 1993 |JMR |None |Problem-solving strategy is a type of |In a retailer-vendor relationship, |
| | | | |negotiation strategy that involves exchange |long-term orientation between |
| | | | |of priority information about each party’s |retailers and vendors leads to |
| | | | |goals, values, and constraints to resolve |adoption of problem-solving strategy |
| | | | |conflict in a dyadic relationship. |(in which communication is likely |
| | | | | |high) to resolve major conflicts. A |
| | | | | |retailer who has more power than the |
| | | | | |vendor is likely to use |
| | | | | |problem-solving strategy to resolve |
| | | | | |conflict. Also, a retailer is likely |
| | | | | |to be more satisfied with the |
| | | | | |negotiations when it uses |
| | | | | |problem-solving strategy. |
|10 |Mohr and Spekman 1994|SMJ |None |Communication captures the utility of the |In a manufacturer-dealer |
| | | | |information exchanged and is deemed to be a |relationship, communication quality, |
| | | | |key indicant of the partnership’s vitality. |information sharing, and |
| | | | |Three aspects of communication behavior are |participation in planning and goal |
| | | | |communication quality, extent of information |setting are significant factors that |
| | | | |sharing, and participation in planning and |influence the success of the |
| | | | |goal setting. |partnership. |
|11 |Morgan and Hunt 1994 |JM |Social exchange theory |Communication is defined as the formal as |In relationship marketing between two|
| | | | |well as informal sharing of meaningful and |firms, communication contributes |
| | | | |timely information between firms. |positively to the development of |
| | | | | |trust and commitment in the |
| | | | | |relationship. |
|12 |Mohr and Sohi 1995 |Journal of Retailing |Organizational |Communication is the glue that holds together|When bilateral expectations about |
| | | |communication theory, |the channel of distribution |extensive information sharing exist |
| | | |TCE, Relational | |in a manufacturer-dealer |
| | | |contracting theory | |relationship, frequency |
| | | | | |bidirectionality, and formality of |
| | | | | |communication increases. Dealers |
| | | | | |perceive manufacturers’ communication|
| | | | | |to be of high quality when |
| | | | | |communication frequency is high. |
| | | | | |Higher perceived quality of |
| | | | | |communication is associated with |
| | | | | |greater dealer satisfaction with |
| | | | | |manufacturer’s communication. |
|13 |Lusch and Brown 1996 |JM |Relational contacting |Information exchange refers to a bilateral |In a wholesale distributor-supplier |
| | | |theory |expectation that parties will proactively |relationship, greater use of |
| | | | |provide information useful[17]. |normative contracts to govern the |
| | | | | |relationship is associated with |
| | | | | |higher information exchange. |
| | | | | |Interdependence and long-term |
| | | | | |orientation in the relationship is |
| | | | | |positively associated with |
| | | | | |information exchange. |
|14 |Mohr, Fisher and |JM |None |Communication is the glue that holds together|In a manufacturer-dealer relationship|
| |Nevin 1996 | | |the channel of distribution |that has lower levels of integration |
| | | | | |and manufacturer control, |
| | | | | |collaborative communication has a |
| | | | | |stronger positive effect on dealer |
| | | | | |satisfaction, commitment, and |
| | | | | |coordination between the channel |
| | | | | |members. |
|15 |Smith and Barclay |JM |Exchange theory, |Communication openness is defined as the |In selling partner relationships, |
| |1997 | |Attribution theory, Role|formal and informal sharing of timely |greater perceived role competence is |
| | | |theory |information between partners and is concerned|associated with higher level of open |
| | | | |with the mutual disclosure of plans, |communication between partners. |
| | | | |programs, expectations, goals, motives, and |Higher open communication leads to |
| | | | |evaluation criteria. |higher mutual satisfaction and higher|
| | | | | |perceived task performance by selling|
| | | | | |partners. |
|16 |Cannon and Homburg |JM |None |Supplier information sharing is the extent to|In a buyer-supplier relationship, |
| |2001 | | |which the supplier openly shares information |more frequent communication lowers |
| | | | |about the future that maybe useful to the |acquisition and operations costs for |
| | | | |customer relationship. |the buyer firms. Specifically, |
| | | | | |frequent written/electronic |
| | | | | |communication lowers acquisition and |
| | | | | |operations costs, while frequent |
| | | | | |face-to-face communication lowers |
| | | | | |operations costs for buyer firms. |
|17 |Kim and Hsieh 2003 |JMR |None |Bilateral communication is defined as the |In industrial distributor-supplier |
| | | | |extent to which a distributor and its |relationships, distributor dependence|
| | | | |supplier exchange and share information with |is positively related to bilateral |
| | | | |each other. |communication, while supplier |
| | | | | |dependence is positively related to |
| | | | | |bilateral communication only at |
| | | | | |moderate levels. |
|18 |Paulraj et al. 2008 |Journal of Operations |Relational view of |Inter-organizational communication refers to |In a collaborative buyer-supplier |
| | |Management |strategic management |the frequent exchange of |relationship, long-term relationship |
| | | | |information on strategic and operational |orientation, relational norms, and |
| | | | |matters, and involves sharing tacit, critical|information technology are |
| | | | |information and knowledge. |antecedents of interorganizational |
| | | | | |communication. Interorganizational |
| | | | | |communication enhances the |
| | | | | |performance of buyers and suppliers |
| | | | | |in the relationship. |
|19 |Frazier et al. 2009 |JM |Exchange theory |Strategic information is processed and |In a supplier-distributor |
| | | | |retained data within a distributor |relationship, distributors share |
| | | | |organization that have implications for |higher amount of external and |
| | | | |firms’ long-range decision making. |internal strategic information (ESI |
| | | | | |and ISI) when dependence asymmetry is|
| | | | | |in their favor and when both firms’ |
| | | | | |transaction specific investments are |
| | | | | |high. When distributor trusts the |
| | | | | |supplier, ISI sharing is increased, |
| | | | | |but when environmental uncertainty is|
| | | | | |high ISI sharing is reduced. High |
| | | | | |distributor product-market |
| | | | | |familiarity enhances ESI sharing. |
|20 |Joshi 2009 |JM |Control theory |Collaborative communication is defined as the|In manufacturer-supplier |
| | | | |extent to which manufacturers communicate |relationships, collaborative |
| | | | |with their suppliers on a frequent, formal, |communication, by positively |
| | | | |and reciprocal basis while using rationality |impacting supplier’s knowledge of |
| | | | |as a means by which to influence them. |manufacturer’s needs and |
| | | | | |expectations, and supplier’s |
| | | | | |affective commitment to the |
| | | | | |relationship, leads to continuous |
| | | | | |supplier performance improvement. |
|21 |Srivastava and |JMR |Sequential bargaining; |Explicit communication is indicated as the |In a manufacturer-distributor |
| |Chakravarti 2009 | |game theory |exchange of messages that may vary in tone |bargaining situation with information|
| | | | |(informational, relational and coercive) from|asymmetries, explicit communication |
| | | | |a fixed menu. |rather than no communication, leads |
| | | | | |to better bargaining outcomes for the|
| | | | | |manufacturer. These outcomes are more|
| | | | | |favorable to the manufacturer when |
| | | | | |manufacturer is highly uncertain |
| | | | | |about consumers’ reservation prices. |
|22 |Chen et al. 2013 |Industrial Marketing |Relational view and RBV |Collaborative communication refers to the |In industrial markets, a firm’s |
| | |Management | |extent to which firms communicate with their |collaborative communication enhances |
| | | | |customers through frequent interactions, |its marketing as well as |
| | | | |reciprocal basis, and routine contacts while |market-linking capabilities. This |
| | | | |adopting rationality as a means to |leads to higher levels of customer |
| | | | |effectively influence them. |satisfaction and loyalty, and better |
| | | | | |coordination between the firm and its|
| | | | | |customers to achieve mutual goals. |
FIGURE 2
MOTIVATION-ABILITY INTERACTION AND COMMUNICATION
[pic]
-----------------------
[1] US Lighting & Bulb Manufacturing, Market Update, NAICS-33511, National Association of Industrial Distributors, July 2014, pages 8-10.
[2] Sam Schechner, “To Set Prices, Stores Turn to Algorithms,” Wall Street Journal, May 9, 2017, A1, A10.
[3] Deloitte, “Pricing in the Chemical Industry,” December 2014, pages 1 to 11.
[4] “Choosing the Right Digital Signal Processor;” TR/Tutorials/dsp_advanced/ch4_1.htm.
[5] North County Motorsports, Inc. versus Triumph Motorcycles, lawsuit, Summer, 2015.
[6] Recode, Ina Fried, “Samsung Says Two Separate Battery Issues were too Blame for All of Its Galaxy Note 7 Problems,” January 22, 2017.
[7] Fashionista, Maria Bobila, “Handbag Sales are Increasing in the U.S., But Less So Among Millennials,” NPD Group Study, May 10, 2016.
[8] Sharon Terlep, “Millennials Give Beauty Business a Makeover,” Wall Street Journal, May 4, 2016, p. B1.
[9] High customer involvement in an industry does not mean every end-customer exhibits such a tendency. It only means involvement is relatively high for many end-customers in the industry.
[10] 2015/01/19/”How the Watch Industry Will Save Itself,” John Biggs.
[11] Edhy Rahaedjo, 11-29-2006, “Decision Making in Information Technology Acquisition: A Systems Analysis Approach,” University of Missouri.
[12] Fites, Donald (1996), “Make Dealers Your Partners,” Harvard Business Review, 74 (March-April), 84-95.
[13] Kumar et al. (1996).
[14] Jeffrey Liker and Thomas Choi (2004), “Building Deep Supplier Relationships,” Harvard Business Review, December.
[15] James Hagerty, “End of the Line for Model Trains? Aging Hobbyists Trundle On,” Wall Street Journal, February 10, 2016.
[16] Fites 1996.
[17] Lusch and Brown (1996) refer to this definition in Heide and John (1992) but do not explicitly define information exchange in their paper.
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