Distribution Channel Conflict: Implications for Channel Governance, and Performance

Abstract

In this dissertation, my focus is on understanding distribution channel conflict, its relationship with efficient channel governance and its impact on channel performance. In particular, I will study (1) how the channel conflict can be defined and interpreted, (2) how channel conflict can affect channel governance, (3) what would be the performance outcomes of channel conflict, and (4) how channel conflict can be managed. My theoretical frameworks borrow mainly from transaction cost economics theory (TCE), and strategic marketing. On the empirical side, I employ several methods including meta-analysis (Two-Stage SEM) as well as different econometrics techniques such as Conditional Mixed-Process (CMP) regression estimation. My data comes from diverse sources and are mainly hand collected and created from archival sources. For the meta-analysis study, I extract empirical results of more than 100 studies on channel conflict since the 1960s. For the other empirical efforts, the data comes from various sources. The major data collection undertakings include extracting and integrating data from: (1) Franchise Disclosure Document (FDD) of more than 1000 franchise firms, (2) firms records, and (3) specific franchise rankings such as Entrepreneur and Franchise Times’ rankings spanning from 2004 to 2015. The dissertation comprises following broad inter-related chapters (excluding Introduction and Conclusion chapters): (1) Managing Channel Conflict: Insights from the Current Literature, (2) Conflict and Performance in Channels: A Meta-Analysis, (3) Channel Conflict: Bad for Business?, (4) Adapting to Channel Conflict: An Empirical Study?, and (5) Two Views on Channel Conflict. Chapter 1 is a compendium on channel conflict that not only provides a comprehensive literature review on channel conflict (since the 1960s) but also identifies gaps and provides some managerial perspectives on channel conflict. One of the identified gaps in Chapter 1 revolves around the role of channel conflict and its relationship with other inter-firm constructs. In Chapter 2, I build on this identified gap by conducting a comprehensive meta-analysis study using Two-Stage SEM (TSSEM) method to aggregate the previous findings on channel conflict and its relationship with other inter-firm constructs particularly channel performance. I also investigate the potential moderators of the conflict-performance link. Chapters 1 and 2 set the stage for the next empirical work. One of the enduring debates in the channel domain is about the functionality and dysfunctionality of channel conflict. In Chapter 3, I address this directly by exploring the non-linear (inverted U-shaped) relationship between channel conflict and performance. While Chapter 3 explores the empirical relation between conflict and performance, another understudied but important research question is about how firms react to channel conflict. Such reactions can span the range from relying on relational norms to more explicit adjustment in channel governance. In Chapter 4, I address this by examining the effect of manifest channel conflict on channel governance, controlling for relational norms. In particular, I study how firms adapt their channel governance following litigation. Finally, Chapter 5 is a reflection on the body of knowledge that I have investigated above. This chapter will provide two views on channel conflict by comparing two different channel conflict conceptualizations. I illustrate the differences between these two views by comparing them based on firms’ objectives, conflict characteristics, and managerial approaches toward channel conflict, providing real-world examples of how firms approach and manage channel conflict.