Channel relationships from the perspectives of manufacturers and their connecting distributors in Indonesia

Abstract

Purpose – Paired channel relationship constructs are used to conjointly compare the perspectives of Indonesian manufacturers and their connecting distributors when engaging and relating across each shared marketing channel. The purpose of this paper is to hypothesize long-term orientation (LTO) and role-performance as joint drivers that positively influence dependence, satisfaction, and trust constructs for each manufacturer and distributor domain. Design/methodology/approach – A structural equation modelling-comparative model is developed, tested, and validated for the Indonesian manufacturing sector. The sample size is 140 pairs of medium-to-large-sized manufacturers and their connecting distributors. The respondent is individual who is responsible and knowledgeable in dealing with his/her company’s manufacturer or distributor. Findings – Both the manufacturer-distributor LTO and their role-performance jointly drive the outcomes of the shared marketing channel relationship, and both parties’ behaving similarly (except for the influence of their role-performance onto their partner’s satisfaction). Research limitations/implications – This study have not investigated possible two-way interactions between constructs across the channel. Combined, paired, manufacturer and distributor dataset questions can expose the connectivities relationships between the partners. The insignificant influence of role-performance on economic satisfaction within the manufacturer domain requires further research on the possible presence of mediating construct(s) between those constructs, and on the broadening of the definition of satisfaction. Past channel research revealed that trust interacts with satisfaction, yet this study does not find significant interactions between the outcomes constructs. Practical implications – In Indonesia each marketing channel’s manufacturer and distributor management team should jointly enhance both their shared long-term relationship, and their respective role-performance. This long-term view is implementable through long-term marketing channel contracts. Originality/value – This study contributes to marketing channel theory with the LTO and the role-performance of a channel partner jointly driving the other partner’s economic satisfaction, trust, and their dependence specifically within the Indonesian context. The benchmarking of a marketing channel’s performance within a trusting and satisfying channel relationship sets the framework for the development of future optimization studies (of at least the five connectivities constructs used herein).

I can’t but we can!

“…Inter-organizational compatibility leads to symbiotic effect across partnering organizations (Sarkar et al, 2001, Jean et al, 2014. Interorganizational compatibility has been established as a positive predictor of value chain competencies (Rajaguru and Matanda, 2013;Sukresna et al, 2016), information exchange and trust (Byrne and Power, 2014) and strategic alliances (Polonsky et al, 2011). Compatible goals and values provide a foundation for the sustainable relationship between channel partners and stimulate channel partners to comply with formal agreements (Lambert and Enz, 2012).…”

“…Power symmetry nurtures positive channel relationships. Goal compatibility assists in developing ties with channel partners and nurtures friendship, affection and social support (Fang et al, 2015;Sukresna et al, 2016). The development of collaborative relationships in marketing channel necessitates commitment and right orientation of mutual interests.…”

“…Congruence view infers that the high-level goal of compatibility between channel partners can lead to the greater motivation among them for information sharing and coalition formation (Samaddar et al, 2006). Organizations with capability to share sensitive strategic information and develop strategic partnerships can lead the organizational process of integration and organizational performance (Jean et al, 2014;Sukresna et al, 2016). Compatibility in inter-organizations' goals encourages sharing of information related to demand, sales and strategy.…”

“…Either party should not exercise coercive power to maintain trustworthy relationships. Strong partnership and goal compatibility can be the foundation of long-term sustainable engagement, innovation and continuous improvement (Rajaguru and Matanda, 2013;Sukresna et al, 2016). The experts engaged in outsourcing can use these value drivers to understand their stakeholder and their respective priorities for value co-creation.…”

Global Value Chains’ Disaggregation through Supply Chain Collaboration, Market Turbulence, and Performance Outcomes

“…In addition to the question of how organizational supply chain relationships provide advantage, it is also unclear how robust relational advantage may be [71,72]. The behavioral theory of the firm [73] focuses on solving short-term organizational problems to reduce environmental uncertainty; and thereafter, controlling the industry environment through standardized operational plans and procedures, leading to a reduction in GVC disaggregation, and institutional and stakeholder pressures [30,49,57,[74][75][76]. As an extension of the relational view and contingency theory of the firm, behavioral theory emphasizes on sustained competitive advantage for firms when firms can control their environment for better improved performance built through relationships with other firms.…”