Price Delegation in Sales Organizations: An Empirical Investigation

Abstract

Abstract

Delegation of pricing authority to the sales force: An agency-theoretic perspective of its determinants and impact on performance

“…So far, however, empirical research on price delegation is very limited in the sales management literature. Indeed, to our knowledge, the only published empirical study following the early work of Stephenson et al (1979) is that of Hansen, Joseph, and Krafft (2008). Further, the extant empirical studies have limitations.…”

“…Specifically, Stephenson, Cron, and Frazier (1979) report that only 23% of all responding firms in their survey gave full pricing authority, while 48% gave medium authority (i.e., pricing latitude was limited to pre-specified ranges), and 29% granted low pricing authority to their sales forces (i.e., sales personnel had no authority to deviate from list prices or could do so only with prior management approval). More recently, a survey by Hansen, Joseph, and Krafft (2008) found that only 11% of all firms fully delegate pricing decisions, while 28% of the responding companies yield no pricing authority at all to their sales forces (i.e., price is determined exclusively by management).…”

Steering sales reps through cost information: An investigation into the black box of cognitive references and negotiation behavior

“…According to Stephenson et al (1979), in the hospital supplies industry, only 23% of firms give full pricing authority to salespeople; others allow no (29%) or limited (48%) authority. Hansen, Joseph, and Krafft (2008) report that among their sample of 222 German sales organizations from various industries, only 11% grant their sales reps full pricing authority, whereas 28% give none and 61% allow only limited pricing authority. Our findings should prompt firms that limit pricing authority to think carefully about the indirect ways in which they might guide sales reps' behavior by using insights from behavioral economics, applied to the context of price negotiations.…”

How Agency-Theoretic Factors Affect the Delegation of Pricing Authority to the Sales Force: An Empirical Study

“…Specifically, Stephenson, Cron, and Frazier (1979) report that only 23% of all responding firms in their survey gave full pricing authority, while 48% gave medium authority (i.e., pricing latitude was limited to pre-specified ranges), and 29% granted low pricing authority to their sales forces (i.e., sales personnel had no authority to deviate from list prices or could do so only with prior management approval). More recently, a survey by Hansen, Joseph, and Krafft (2008) found that only 11% of all firms fully delegate pricing decisions, while 28% of the responding companies yield no pricing authority at all to their sales forces (i.e., price is determined exclusively by management).…”

“…So far, however, empirical research on price delegation is very limited in the sales management literature. Indeed, to our knowledge, the only published empirical study following the early work of Stephenson et al (1979) is that of Hansen, Joseph, and Krafft (2008). Further, the extant empirical studies have limitations.…”