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Reciprocity, asymmetry and information sharing in manufacturer-dealer networks
Scaud. 1. Mgmr. Vol. 6. No. 4. pp. 3W321. Printed in Great Britain
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KSl-7527/90 153.M)+ 0.00 IWO Pergamon Press plc
RECIPROCITY, ASYMMETRY AND INFORMATION SHARING IN MANUFACTURER-DEALER NETWORKS BEHLijL ijSDiKEN Bogazigi University (First received March 1989: accepted in revised form September 1990) Abstract -This paper reports on an exploratory study of factors affecting the degree of voluntary information sharing by dealers in a distribution network. The dealer network of a manufacturer of materials for the construction and manufacturing industries provided the setting for the study. Results suggest that information sharing bshaviour is shaped by mixed motives. Resource flows and dealer perceptions of the manufacturer’s role performance emerged as the most important predictors of information sharing by dealers. Intrachannel competition was also negatively related to the flow of information from dealers. Implications for interorganizational theory and channel management are discussed in a concluding section. Key
words: Interorganizational
cooperation;
information
sharing;
distribution
channels.
INTRODUCTION Theoretical and empirical research on interorganizational relationships have both been dominated by work on social service organizations. With its roots in exchange theory a predominant concern in this stream of work has been the antecedents and consequences of interorganizational cooperation and coordination (Whetten, 1982). Another strand of research in this domain has adopted a resource dependence perspective and has sought to understand power-dependence relations among interacting organizations (e.g. Pfeffer and Leong, 1977; Provan et al., 1980; Provan, 1982). More recently this second approach has been extended to relationships among profit-seeking organizations (Skinner and Guiltinan, 1986; Skinner et al., 1987). Manufacturer-dealer networks have provided the setting for these studies. In fact. over the last 15 years, a significant amount of research in marketing has been devoted to the study of power relations in distribution channels. As one channel researcher (Etgar, 1978) has observed, however, this strand of work in marketing literature has been characterized by a preoccupation with the concept of channel control. No empirical study in this stream of research has investigated the problem of cooperation between manufacturers and their dealers. The purpose of this paper is to extend previous thinking and research on interorganizational cooperation to a business setting, by examining variations in cooperative behaviour among dealers in a distribution network. Channels of distribution provide the interorganizational researcher with a unique setting in a business environment, where a primary goal is to achieve cooperation and coordination in a network of organizations. Distribution channels can be considered as a division of labour at the macrolevel, creating networks of specialized and vertically linked firms (Reve and Stern, 1979). This view treats distribution channels as social action systems (cf. Van de 309
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Ven, 1976) made up of organizations which are simultaneously motivated by self-interest and collective goals, and which are therefore interested in attaining at least some level of cooperation and coordination within the network. The study reported here examined a particular cooperative interorganizational activity, namely voluntary information sharing. The paper reports on an exploratory investigation of the possible predictors of the extent to which dealers voluntarily supply information about themselves and their local environments to the manufacturer which they represent. The focus is on one type of distribution system, comprised of one manufacturer and a network of affiliated dealers. Such manufacturer-dealer networks are interorganizational systems consisting of a central body, i.e. the manufacturer. and a relatively large number of affiliates, and these systems are characterized by dependency relationships with a balance in favour of the manufacturer (Provan and Skinner. 1989). A central premise of the study is that variation in cooperative behaviour among less powerful network members in such interorganizational systems is likely to be a function of mixed motives, namely reciprocity considerations and the asymmetry inherent in the relationship (Schmidt and Kochan, 1977; Oliver, 1990). The present study incorporates elements of both exchange theoretical and resource-dependence approaches in examining the frequency of information flows from network members to the central organization, i.e. the manufacturer. More specifically, the design of the study allows for an exploration of the relative effects of various aspects of the manufacturer-dealer relationship, dealer characteristics and the intrachannel context on information sharing by dealers.
THEORETICAL
BACKGROUND
Information sharing has been identified as a cooperative interorganizational activity and as a precursor of other forms of cooperative linkages among organizations (Schermerhorn, 1977). As Van de Ven and Ferry (1980) have observed, information flow serves maintenance and integration functions in interorganizational systems. It can facilitate resource exchanges and contribute to enhanced coordination among organizations. Hall er al. (1977), for instance, found in a sample of organizations dealing with problem youths that quality of communications was positively related to the extent of coordination among these organizations, and negatively related to the degree of conflict. Likewise, Guiltinan et al. (1980) have shown in a channel setting that the level of coordination was associated with perceptions of effective communications. Information has also been regarded as a valued resource in itself, and one that is sought by organizations. Searching for and collecting information is regarded as crucial to organizational adaptiveness. Organizations need to establish and maintain external information networks to monitor their environments. Dealers in distribution networks can act as boundary-spanning organizations for the manufacturers which they represent. They can provide the manufacturer with access to information on a wide range of issues such as market conditions, competitors’ practices, and customer reactions to product, pricing and promotion policies. Organization researchers have also recognized, however, that information serves as an element of exchange and a critical source of power in interorganizational relationships. Access to information valued by others may constitute a power base, and the release or
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restriction of information may be employed as a coping mechanism in managing relations with more powerful parties. As Pfeffer and Salancik (1978) observe, information sharing may be used as a mechanism for avoiding or exercising influence in interorganizational relationships. They also suggest that organizations will be inclined to reveal information to the extent that such action is likely to serve their interests. The preceding discussion highlights the problematic nature of information sharing in the context of interorganizational settings characterized by complementary functions and, thus, vertical interdependence. Information sharing appears to present a dilemma to organizations in managing their relationships in such settings. On the one hand, there are individual or joint benefits to gain from the voluntary sharing of information; on the other, there is the possibility of promoting self-interest by being uncooperative and restricting the flow of information. As Pfeffer and Salancik (1978) have observed, information disclosure can be a major source of conflict between interacting organizations. More specifically, in the context of marketing channels Etgar (1979) notes the widespread complaint among manufacturers about difficulties in obtaining feedback from distributors on market conditions. Extant literatures in marketing and organization theory offer limited specific guidance on the range of factors that are likely to impinge upon the information sharing behaviour of less powerful parties in an interorganizational relationship. Theoretical work that has addressed the broader problem of interorganizational cooperation in both literatures, on the other hand, has been guided by exchange theoretical or resource-dependence perspectives. The present paper draws upon ideas from both of these approaches. Exchange theory approaches have emphasized mutual benefits in interactions among organizations and have assumed that norms of reciprocity govern interorganizational relationships. Theorizing informed by a resource-dependence perspective, on the other hand, suggests that levels of dependence may be a primary determinant of cooperative behaviour among interacting organizations. Variables derived from both these models have been incorporated into the design of the present study. Role performance
and information sharing
The concept of role performance has been a central construct in those conceptual formulations in marketing which draw upon role-theory (e.g. Robicheaux and El-Ansary, 1976-1977) or the exchange perspective (e.g. Frazier, 1983a) to explain the dynamics of interrelations in distribution channels. According to this view, as a consequence of the macrolevel division of labour, firms in distribution channels assume a set of tasks and responsibilities which define their role as channel members. The notion of role performance covers the totality of the intrachannel tasks and responsibilities of each channel member to facilitate exchanges within the network. Each channel member, in turn, forms role expectations about others in the network as regards performance levels in connection with these tasks and responsibilities. The role performances of the various firms, as Frazier (1983a) argues, affect the actual and perceived outcomes derived from the relationship - specifically, by facilitating or hindering the goal attainment of other channel members. Since the level of the manufacturer’s performance in an array of role elements serves as an important vehicle for the goal attainment of dealers, perceptions of high role performance will be a motivator for cooperative behaviour. High role performance, Frazier argues further, should contribute positively to collaborating on issues of joint concern. He also suggests that how well the
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manufacturer carries out its channel role, wilt also serve to reduce role ambiguity on the part of dealers, thus enhancing their role satisfaction and consequently fostering positive attitudes towards cooperation. Furthermore, due to reciprocity considerations in longitudinal exchange relations (Cook, 1977), perceptions of high role performance are likely to elicit greater conformity to the manufacturer’s role prescriptions on the part of dealers; a significant element in these prescriptions is the supply of information about focal environments. Asymmetry and information sharkg Studies in the resource-dependence tradition (e.g. Benson. 1975: Provan, 19%) have argued that dependency relations are likely to affect the degree of autonomy of the affiliated organizations in a network. Based on this line of thinking, Stern and Reve (1980) have proposed that in the context of distribution channefs. low fevefs of dependence will fead to isolated decision making and thus to less cooperation. The level of dependence is also likely to affect the amount of interest which organizations will have in maintaining the interorganizational relationship. Greater dependence would imply that the dependent organization, in this case the dealer. would have more at stake in maintaining the relationship and would therefore be motivated to mobilize its own resources towards this end and to avoid action Iikely to invite retaliation by the manufacturer. Provan and Skinner (1989) found some support for this view in their study of opportunistic behaviour among dealers. Notable among their findings is a highly significant negative relationship between dependence on the manufacturer’s services and opportunistic behaviour. Furthermore, information sharing may be employed as a mechanism for counterbalancing asymmetry in interorganizational relations. As Aldrich (1979) has suggested, one way of redressing the balance in a dependency relationship is by supplying the other party with valued resources. In addition to broader considerations discussed above as regards cooperative behaviour, this possibility would also suggest a positive relationship between dependence and the propensity to share information. Although manufacturer-dealer networks are generally characterized by asymmetrical relationships in favour of manufacturers because of their central position in their networks, and the large number of dealers typicafly found in such systems, the specific levels of dependence will vary among the dealers in the network. Emerson’s (1962) initial formulation and more recent extensions (e.g. Pfeffer and Salancik, 1978; Provan et al., 1980; Provan, 1984) suggest that the degree of asymmetry for individual dealers is likely to vary with various aspects of the direct ties with the supplier and on any countervailing sources of power emanating from the dealers’ interna strengths and the network context that surrounds the relationship. Deafer dependence. Two specific dimensions of dependence can be identified in dyadic manufacturer-dealer relationships, One of these, as Pfeffer and Salancik (1978) have suggested, concerns the relative magnitude of the resource exchange. In the context of manufacturer-deater networks this aspect of dependence is associated with the degree to which a dealer is tied to a single manufacturer as opposed to serving as an outlet for a number of suppliers. There is evidence in marketing literature (e.g. Etgar, 1976; Skinner and Guiitinan, 1985) that multiple ties reduce dependence on a focal supplier. Being tied to a single supplier implies high levels of dependence. both because of the critical impact of the relationship on the dealers’ goal attainment and because of the perceived difficulties of switching to alternative suppliers. A second dimension of dependence
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proposed in the literature is associated with the volume of resource flows from the manufacturer to the dealer. Skinner et al. (1987). for instance, have suggested that higher volume can mean more dependence due to the vital importance of the stable flow of products or services from the manufacturer. Disruptions in these flows are likely to be more important to high volume dealers. This aspect of the linkage is also associated with the effort, time and monetary resources invested in the relationship, which for the high volume dealer serves as yet another source of dependence (Frazier, 1983a). The inr
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easily substitutable. Small size is also likely to make organizations more vulnerable and of less crucial importance. In a channel context, organization size was found to be a significant element in the dealers’ countervailing power against the supplier (Etgar, 1976). These considerations would therefore lead to the expectation that in so far as dealer characteristics such as size and years in the network serve to modify perceptions of dependence on the manufacturer, they will also have negative effects on cooperative behaviour.
THE STUDY Research setting and sample
The dealer network of a manufacturer of materials for the manufacturing and construction industries provided the setting for this study. At the time when the data were being collected, the network consisted of 127 dealers, of which 119 were independent and eight were owned by the manufacturer. The latter, at the time, accounted for about half the manufacturer’s total sales. The present study is confined to the manufacturer’s relationships with its independent dealers. For the independent dealers this particular channel approximates an “administered system” (Stern and El-Ansary, 1988, p. 320) where “. . . coordination of marketing activities is achieved through programmes developed by one or a limited number of firms”, in this case the manufacturer. Administered systems are similar to conventional channels in that affiliates are essentially self-orientated, but there is at least some system-wide orientation in the network. Typically the dealers had been associated with the manufacturer for a long time, the mean number of years being 13.0 for firms in the sample. The dealers were scattered throughout Turkey; the manufacturer was represented in 48 of the 67 cities in the country. In slightly less than 40% of the cities in which the manufacturer was represented, there was a single dealer to distribute the manufacturer’s products but there was no guarantee that new dealers might not appear in their territory. The number of channel members in the rest of the cities varied between two and five, with the exception of one large metropolitan area where concentration was high. Of the 127 dealers, 44 were in this metropolitan area and two of these were owned by the manufacturer. Of the remaining six dealers owned by the manufacturer, five were the sole distributors of the manufacturer’s products in the cities where they were located. In only one case were there three independent dealers in addition to the manufacturer-owned distributor in the particular city. Data collection
Data were obtained from two sources. One of these was a questionnaire addressed to dealer principals - the sole proprietor or a managing partner. The use of single informants is justified because of the small size (mean number of employees = 11.0) of the organizations involved (Frazier, 1983b). A covering letter from the marketing manager of the manufacturer explained that the object of the study was to contribute to the development of better working relationships with dealers, and guaranteed that only the researcher would have access to individual responses. A stamped envelope addressed to the researcher was also enclosed. Of the 119 independent dealers 59 responded, giving a response rate of 49.6%.
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A comparison of responding and non-responding dealers revealed no significant differences in geographical location, but showed that responding dealers had significantly higher sales of the manufacturer’s products. The second data source was the manufacturer’s records. Data on dealer sales were obtained from these records. Variables and measures
The dependent variable in the present analysis is the degree of information sharing by the dealers in the network. This variable was operationally defined as the frequency of dealer-to-manufacturer information flows. A five-item scale was used to measure this variable. The respondents were asked to indicate how frequently they provided information to the manufacturer on each of the following issues: the practices of dealers working with the manufacturer’s competitors, new product needs of customers, sales forecasts, local manufacturers of competitive products, and the financial situation of customers. The three response categories were “very frequently”, “sometimes”. and “seldom”. The coefficient alpha for this sample was 0.78. Three classes of variables, namely, manufacturer’s role performance, dealer dependence on the manufacturer, and dealers’ countervailing power sources were incorporated in the present study as possible predictors of dealers’ communication behaviour. Manufacturer’s role performance was operationalized by obtaining dealer perceptions of how well the manufacturer performed its role in the distribution system. Specifically, the dealers were asked how satisfied they were with the manufacturer’s performance with respect to the following role elements: product information, price information and up-dating, information on new business opportunities, personnel training, dealer meetings, information on financial situation of customers, advice on legal and tax issues, manufacturer’s advertising, promotion materials, sales incentive programmes, competitive information, and visits from the manufacturer’s sales staff. For each role element the respondents were given five response categories ranging from “very satisfied” to “not satisfied at all”. Three of the items were later deleted from the scale because of a relatively large number of non-responses. A coefficient alpha of 0.80 was obtained for the nine-item scale. Two separate measures were employed to assess different aspects of dealer dependence on the manufacturer. The first measure assessed the extent to which the dealers worked with a single manufacturer rather than with several suppliers. The share of the manufacturer’s products in the total sales of the dealer was used to measure this aspect of dependence. The actual resource flows in the manufacturer-dealer dyad, namely the volume (in tons) of dealer sales of the manufacturer’s products, was used as the second dependence measure. Data on dealer sales in the full year preceding data collection were obtained from the manufacturer’s records. Two dealer characteristics were included in the study as surrogate measures for dealer importance. One such variable was the number of years that the dealer had been affiliated with the network. Organizational size, the second variable, was measured by the total number of employees. Finally, as was noted above in describing the research setting, the members of the manufacturer-dealer network were operating in one of two very different intrachannel contexts. One of these, the large metropolitan area, is characterized by a very large
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number (over one-third of all dealers) of geographically proximate intrachannel competititors. The dealers in this setting also faced competition from the two distributors owned by the manufacturer. The second setting, on the other hand, is characterized by very few or no proximate intrachannel competitors, by defacfo territorial exclusives for some dealers, and by very little or no competition from the manufacturer’s own distributors. A dummy variable (low intrachannel competition = 0; high intrachannel competition = 1) was used to distinguish between these two different intrachannel contexts.
FINDINGS
AND DISCUSSION
Table 1 reports the means, standard deviations and the zero-order correlations between the variables included in the study. Table 2 presents the results of the regression analysis with the frequency of information flows as the dependent variable. Results reported in this table show that the analysis yielded a highly significant regression equation which explains over 40% of the variance in the dependent variable. Resource flows, role performance and intrachannel competition emerge as significant predictors of dealers’ propensity to share information. These results provide some interesting evidence regarding the issues that triggered the present study. Firstly, the findings do provide some support for the contention that cooperative behaviour in the form of information sharing is an organizational response shaped by mixed motives. Satisfaction with role performance and the resource flow measure of dependence both emerge as highly significant predictors of information sharing by dealers. The finding as regards the intrachannel context, however, is contrary to what was expected. Specifically, as expected, perceptions of effective role performance on the part of the manufacturer appear to engender cooperative responses in the dealers. The more the dealers perceive that they are receiving support and positive contributions to their own goal attainment, the greater their motivation to put more into the maintenance of the relationship and to provide the feedback which is a resource valued by the manufacturer. The positive relationship posited between asymmetry in the linkage and information sharing, on the other hand, receives only partial support. The extent to which the dealer was tied to a single manufacturer did not emerge as a significant predictor of dealer information sharing, although the simple correlation was positive and significant (r = 0.26). This may be due to the high correIation (r = 0.47) between this measure and the volume of resource flows. Indeed resource flows emerge as the strongest predictor of the dealers’ propensity to release information. Low volume dealers probably perceive themselves as marginal in the network, and see little value in investing resources in better integration of their activities with the manufacturer’s policies and actions. They may perceive less interest in contributing towards collective system goals or in providing the manufacturer with valued resources, with a view to obtaining benefits in the future. Neither of the two variables regarding dealer characteristics was related to information sharing behaviour. In fact the direction of the relationships, although not significant, is the opposite to what was expected. These results may be taken to support Skinner and Guiltinan’s (1985) observation that dealer characteristics such as size and years in the
Size (no. of cmployccs)
13.0 (l-35) I I .o (2-130)
0.36 (O-1)
39.6 (2-100) 624.2 (25-291 I)
27.4 (13-45)-l
2.6
17.6
8.9
0.26’
-0. I4
-0.03
0.43***
0.04
0.14
0.47***
2
correlations
0.08
-0.07
0.05
672.2
0.48
0.18
1
31.0
6.7
Standard deviations
statistics and zero-order
***p < 0.001; **p c 0.01; *p < 0.05. tNumbers in parentheses indicate the observed range for each variable.
Information sharing 7. Frequency of information flows
6.
Dealer characteristics 5. Years in network
Intrachannel context 4. Intrachannel competition
Dealer dependence 2. Share in dealers’ total sales (%) 3. Resource flows from manufacturer to dealer (in tons)
Manufacturer’s role performance 1. Satisfaction with role performance
Means
Table 1. Descriptive
0.38**
0.00
-0.06
0.24*
3
4
-0.17
0.02
-0.23*
between variables
0.21
-0.30’
5
0.09
6
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Table 2. Regression results with frequency information flows as the dependent variablet Satisfaction with role performance Share in dealers’ total sales Resource flows Intrachannel competition Years in network Size Multiple Adjusted
R
0.3s** 0.08 0.46’** -0.34* 0.13 0.12 0.71 0.43:”
i
+**p c 0.001; tstandard
of
betas
**p < 0.01; *p < 0.05. are
reported.
network may affect manufacturer perceptions of the dealers’ critical importance, but they may not be perceived by the dealers as a source of countervailing power in modifying the asymmetry in their relations with the manufacturer. In fact, militating against asymmetry considerations there might be factors such as the familiarity and trust that can develop over time and which contribute positively towards greater openness in communication. Likewise, smaller dealers may have fewer resources (e.g. staff) which could be devoted to the collection and processing of information to share \vith the manufacturer. An important and interesting finding in this study concerns the significant negative relationship between intrachannel competitive context and information sharing nith the manufacturer. Two sets of possible explanations can be offered for this somewhat unexpected finding, given the dependence implications of variations in the number of dealers in different local areas. Again, one of these is connected with the countervailing power implications of local contexts within the network. First, if dealers in densely populated areas are likely to perceive themselves as more readily substitutable. then this might make them less keen to share information of a negative kind. Secondly, in so far as the central organization in the network (i.e. the manufacturer) could be expected in such settings to be more involved in regulating horizontal relationships among network affiliates, dealers might see the release of information as yet another way of encouraging interference on the part of the manufacturer. Finally, dealers which enjoy a small numbers situation may perceive themselves to be more advantageously located in terms of information control. Dealers operating in the same locality are likely to have access at least partly to similar kinds of information, which means they are less likely to be in sole possession of specialized information. The use of information as a way of balancing dependence may thus be limited in a large numbers situation. Dealers operating in a small numbers situation, on the other hand, may see the information which they control as a more valuable resource which can be more readily employed as a balancing mechanism. A second set of explanations concerns the differences in competitive dynamics engendered by variations in the size of network membership in different local areas. Problems and territorial conflict are likely to emerge among dealers as a consequence of competitive horizontal relationships. If dealers feel their interests are threatened. this will probably make appreciation of collective interest more difficult.
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These negative attitudes may also affect the relations with the manufacturer, because it is within the power of this central organization to allow new members to join the network. Furthermore, and specifically as regards information sharing, a competitive intrachannel environment may also foster secrecy. thus hampering inclinations towards greater openness in communications. In this particular research context, such competitive concerns may have been aggravated by the prevailing dual distribution system.
CONCLUSIONS A number of important implications that emerge from the findings of this exploratory study merit further attention. Evidence from this study suggests that mixed motives also prevail in shaping cooperative relationships in interorganizational networks consisting of profit-seeking organizations. Variables. derived from both reciprocal and asymmetrical models (Oliver, 1990) in the literature, emerge as significant predictors of voluntary information sharing by dealers in a manufacturer-distributor network. It is also worth noting, however, that significant results in the predicted direction were obtained for only one of the measures employed to assess dealer dependence on a supplier. Considering the nature of the measures employed. this seems to suggest that the measures probably tap two separate aspects of the dependency relationship between affiliates and the central organization in manufacturer-dealer or similar networks. It may be useful to distinguish between two separate dimensions, which may be labelled as strategic and operational dependence. In the particular context of distribution channels, dealer choices between being tied to a single supplier or serving a number of suppliers simultaneously may have implications for dependence of a more strategic nature. Being tied to a single distribution network, although still a form of loose coupling, implies a linkage is of a quasi-firm (Luke et al., 1989) situation. Such an interorganizational strategic kind, and for the dealer in the dyad it would have important implications for survival. The resource flow measure employed in the present study, on the other hand, probably refers to dependence of a more day-to-day operational kind with implications for efficiency. In the light of this distinction information sharing could perhaps be said to emerge as a response to higher levels of operational dependence. Information control, in this case by dealers, is probably perceived as a resource that may be employed as a mechanism for enhancing stability and improving coordination. It may be felt that the value of this resource is limited in responding to more fundamental sources of dependence. A second major finding of this study concerns the impact of intranetwork structure on cooperative behaviour. Contrary to what would be expected predominantly on the basis of a dependence perspective, geographically dispersed affiliates appeared to be more inclined to share information compared with those operating in densely populated areas. Perhaps the threat of substitutability and of heightened influence on the part of the manufacturer in densely populated settings breeds an inclination towards restriction of information. It is also possible that the competitive dynamics which inevitably arise in such settings may override dependence considerations in generating cooperative behaviour. Overlapping domains and the negative attitudes towards the manufacturer that intrachannel competition cultivates, apparently discourage cooperative behaviour and can make system-wide integration more difficult.
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Some obvious caveats should be mentioned. First, a single network provided the setting for the present study. Although this avoids the confounding effects of interchannel differences, it raises questions about the external validity of the results. Verification of these findings is required in different channel settings and interorganizational contexts. Second, as regards the measures used in the study some common method bias may exist since satisfaction with role performance and information sharing were both assessed by questionnaire measures. Moreover, it would be desirable to improve the intrachannel context measure in a number of ways. In this study it was only possible to employ a binary measure and it would be preferable to extend this kind of work to settings which vary more widely in terms of the number of network members in the respective localities. Furthermore, this particular variable may have been contaminated by the presence of a dual distribution system in the network and by the fact that competition from manufacturer-owned dealers was also significantly greater in the high as opposed to the low intrachannel competition setting. In spite of these shortcomings, however, it is hoped that the results reported here will spur future studies that will enable verification and further extension of the outcomes of this research. Longitudinal studies based on data obtained from both sides of the dyad will be required for a better understanding of the processes inferred in this study and of the dynamics of the interrelationships between these variables over time. Future research should also consider the impact of variables such as the extent of influence and the ways in which it is exercised by the central organization, dealers’ external linkages in their respective domains, and possibly the effects of the extrachannel environment specifically, the degree of interchannel competition. Most significant in this respect will be research that will investigate the distinction proposed here between dependence of a strategic kind and dependence of an operational nature in interorganizational relationships. Such research could look into the possibility of finding different patterns of responses to these different aspects of the dependency relationship, and the extent to which these responses serve as alternatives to one another. Acknowledgemenrs
- I would like to thank the journal reviewers and Sten Jonsson for their,criticisms and comments on an earlier version of this paper. Muzaffer Bodur. Hayat E. Kabasakal and Arzu Iseri have also offered useful comments on previous drafts.
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Hall. R. H., Clark, J. P.. Giordano. P. C.. Johnson. P. V. and van Roekel. ILI.. Patterns of interorganizational coordination. Adminisrranve Science Qnarter!y (1977). pp. 457-475. Luke, R. D.. Begun. J. W. and Pointer, D. D.. Quasi firms: strategic interorganizational forms in the health care industry. Academy of Managemenr Review (1989). pp. 9-19. Oliver. C., Determinants of interorganizational relationships: integration and future directions. Academy of Managemenr Review (1990). pp. 241-265. Pfeffer, J. and Leong, A.. Resource allocations in United Funds: examination of power and dependence, Social Forces (1977). pp. 775-790. Pfeffer. J. and Salancik. G. R., The External Conrrol of Organizufions (New York: Harper and Row. 1978). Provan, K. G.. Interorganizational linkages and influence over decision making, Acudemy of Munugemem Journal (1982), pp. 443-451. Provan, K. G.. Interorganizational cooperation and decision making autonomy in a consortium multi-hospital system. Acudemy of Munagemenf Review (1981). pp. 49-t-504. Provan, K. G., Beyer, J. M. and Kruytbosch. C., Environmental linkages and power in resource-dependence relations between organizations, Administrative Science Quarterly (1980). pp. 200-225. Provan, K. G. and Skinner. S. J., Interorganizational dependence and control as predictors of opportunism in dealer-supplier relations. Academy of Managemenf Journal (1989). pp. 202-212. Reve. T. and Stern, L. W.. Interorganizational relations in marketing channels, Academy of Manugemenr Review (1979). pp. 405-416. Robicheaux, R. A:-and El-Ansary, A. I.. A general model for understanding channel member behaviour, Journal of Retrdling (1976-1977). No. 4. on. 13-30. 93-94. Schermerhorn. J. R.,-Information’sharing as’mterorganizational activity. Academy of Manugemenr Journal (1977). pp. 148-153. Schmidt, S. M. and Kochan. T. A.. Interorganizational relationships: patterns and motivations, Administrative Science Qmrrrerly (1977). pp. 220-234. Skinner, S. J., Donnelly, J. H. and Ivancevich. J. M., Effects of transactional form on environmental linkages and power dependence relationships, Academy of Manngemem Jorcrnul (1987). pp. 577-588. Skinner, S. J. and Guiltinan. J. P., Perceptions of channel control, JournuJ of Rerailing (1985). No. 4. pp. 6588. J. P., Extra-network linkages, dependence. and power, Social Forces (1986). Skinner. S. J. and Guiltinan, pp. 702-713. Stern. L. W. and El-Ansary, A. I., Marketing Channels (Englewood Cliffs. NJ: Prentice-Hall. 1988). third edn. Stern. L. W. and Reve, T., Distribution channels as political economies: a framework for comparative analysis, Journal of Marketing (1980). No. 3, pp. 52-64. Van de Ven, A. H., On the nature, formation, and maintenance of relations among organizations, Academy of Management Review (1976). No. 4, pp. 2.l-36. Van de Ven, A. H. and Ferry, D. L., Measuring and Assessing Orgunixnions (New York: Wiley. 1980). Whetten, D. A.. Objectives and issues: setting the stage. In: D. L. Rogers and D. A. Whetten (Eds). Inrerorganizurional Coordination (Ames, IA: Iowa State University Press. 1982). pp. 3-8. Williamson, 0. E., Markers and Hierarchies (New York: Free Press. 1975).
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KSl-7527/90 153.M)+ 0.00 IWO Pergamon Press plc
RECIPROCITY, ASYMMETRY AND INFORMATION SHARING IN MANUFACTURER-DEALER NETWORKS BEHLijL ijSDiKEN Bogazigi University (First received March 1989: accepted in revised form September 1990) Abstract -This paper reports on an exploratory study of factors affecting the degree of voluntary information sharing by dealers in a distribution network. The dealer network of a manufacturer of materials for the construction and manufacturing industries provided the setting for the study. Results suggest that information sharing bshaviour is shaped by mixed motives. Resource flows and dealer perceptions of the manufacturer’s role performance emerged as the most important predictors of information sharing by dealers. Intrachannel competition was also negatively related to the flow of information from dealers. Implications for interorganizational theory and channel management are discussed in a concluding section. Key
words: Interorganizational
cooperation;
information
sharing;
distribution
channels.
INTRODUCTION Theoretical and empirical research on interorganizational relationships have both been dominated by work on social service organizations. With its roots in exchange theory a predominant concern in this stream of work has been the antecedents and consequences of interorganizational cooperation and coordination (Whetten, 1982). Another strand of research in this domain has adopted a resource dependence perspective and has sought to understand power-dependence relations among interacting organizations (e.g. Pfeffer and Leong, 1977; Provan et al., 1980; Provan, 1982). More recently this second approach has been extended to relationships among profit-seeking organizations (Skinner and Guiltinan, 1986; Skinner et al., 1987). Manufacturer-dealer networks have provided the setting for these studies. In fact. over the last 15 years, a significant amount of research in marketing has been devoted to the study of power relations in distribution channels. As one channel researcher (Etgar, 1978) has observed, however, this strand of work in marketing literature has been characterized by a preoccupation with the concept of channel control. No empirical study in this stream of research has investigated the problem of cooperation between manufacturers and their dealers. The purpose of this paper is to extend previous thinking and research on interorganizational cooperation to a business setting, by examining variations in cooperative behaviour among dealers in a distribution network. Channels of distribution provide the interorganizational researcher with a unique setting in a business environment, where a primary goal is to achieve cooperation and coordination in a network of organizations. Distribution channels can be considered as a division of labour at the macrolevel, creating networks of specialized and vertically linked firms (Reve and Stern, 1979). This view treats distribution channels as social action systems (cf. Van de 309
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Ven, 1976) made up of organizations which are simultaneously motivated by self-interest and collective goals, and which are therefore interested in attaining at least some level of cooperation and coordination within the network. The study reported here examined a particular cooperative interorganizational activity, namely voluntary information sharing. The paper reports on an exploratory investigation of the possible predictors of the extent to which dealers voluntarily supply information about themselves and their local environments to the manufacturer which they represent. The focus is on one type of distribution system, comprised of one manufacturer and a network of affiliated dealers. Such manufacturer-dealer networks are interorganizational systems consisting of a central body, i.e. the manufacturer. and a relatively large number of affiliates, and these systems are characterized by dependency relationships with a balance in favour of the manufacturer (Provan and Skinner. 1989). A central premise of the study is that variation in cooperative behaviour among less powerful network members in such interorganizational systems is likely to be a function of mixed motives, namely reciprocity considerations and the asymmetry inherent in the relationship (Schmidt and Kochan, 1977; Oliver, 1990). The present study incorporates elements of both exchange theoretical and resource-dependence approaches in examining the frequency of information flows from network members to the central organization, i.e. the manufacturer. More specifically, the design of the study allows for an exploration of the relative effects of various aspects of the manufacturer-dealer relationship, dealer characteristics and the intrachannel context on information sharing by dealers.
THEORETICAL
BACKGROUND
Information sharing has been identified as a cooperative interorganizational activity and as a precursor of other forms of cooperative linkages among organizations (Schermerhorn, 1977). As Van de Ven and Ferry (1980) have observed, information flow serves maintenance and integration functions in interorganizational systems. It can facilitate resource exchanges and contribute to enhanced coordination among organizations. Hall er al. (1977), for instance, found in a sample of organizations dealing with problem youths that quality of communications was positively related to the extent of coordination among these organizations, and negatively related to the degree of conflict. Likewise, Guiltinan et al. (1980) have shown in a channel setting that the level of coordination was associated with perceptions of effective communications. Information has also been regarded as a valued resource in itself, and one that is sought by organizations. Searching for and collecting information is regarded as crucial to organizational adaptiveness. Organizations need to establish and maintain external information networks to monitor their environments. Dealers in distribution networks can act as boundary-spanning organizations for the manufacturers which they represent. They can provide the manufacturer with access to information on a wide range of issues such as market conditions, competitors’ practices, and customer reactions to product, pricing and promotion policies. Organization researchers have also recognized, however, that information serves as an element of exchange and a critical source of power in interorganizational relationships. Access to information valued by others may constitute a power base, and the release or
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restriction of information may be employed as a coping mechanism in managing relations with more powerful parties. As Pfeffer and Salancik (1978) observe, information sharing may be used as a mechanism for avoiding or exercising influence in interorganizational relationships. They also suggest that organizations will be inclined to reveal information to the extent that such action is likely to serve their interests. The preceding discussion highlights the problematic nature of information sharing in the context of interorganizational settings characterized by complementary functions and, thus, vertical interdependence. Information sharing appears to present a dilemma to organizations in managing their relationships in such settings. On the one hand, there are individual or joint benefits to gain from the voluntary sharing of information; on the other, there is the possibility of promoting self-interest by being uncooperative and restricting the flow of information. As Pfeffer and Salancik (1978) have observed, information disclosure can be a major source of conflict between interacting organizations. More specifically, in the context of marketing channels Etgar (1979) notes the widespread complaint among manufacturers about difficulties in obtaining feedback from distributors on market conditions. Extant literatures in marketing and organization theory offer limited specific guidance on the range of factors that are likely to impinge upon the information sharing behaviour of less powerful parties in an interorganizational relationship. Theoretical work that has addressed the broader problem of interorganizational cooperation in both literatures, on the other hand, has been guided by exchange theoretical or resource-dependence perspectives. The present paper draws upon ideas from both of these approaches. Exchange theory approaches have emphasized mutual benefits in interactions among organizations and have assumed that norms of reciprocity govern interorganizational relationships. Theorizing informed by a resource-dependence perspective, on the other hand, suggests that levels of dependence may be a primary determinant of cooperative behaviour among interacting organizations. Variables derived from both these models have been incorporated into the design of the present study. Role performance
and information sharing
The concept of role performance has been a central construct in those conceptual formulations in marketing which draw upon role-theory (e.g. Robicheaux and El-Ansary, 1976-1977) or the exchange perspective (e.g. Frazier, 1983a) to explain the dynamics of interrelations in distribution channels. According to this view, as a consequence of the macrolevel division of labour, firms in distribution channels assume a set of tasks and responsibilities which define their role as channel members. The notion of role performance covers the totality of the intrachannel tasks and responsibilities of each channel member to facilitate exchanges within the network. Each channel member, in turn, forms role expectations about others in the network as regards performance levels in connection with these tasks and responsibilities. The role performances of the various firms, as Frazier (1983a) argues, affect the actual and perceived outcomes derived from the relationship - specifically, by facilitating or hindering the goal attainment of other channel members. Since the level of the manufacturer’s performance in an array of role elements serves as an important vehicle for the goal attainment of dealers, perceptions of high role performance will be a motivator for cooperative behaviour. High role performance, Frazier argues further, should contribute positively to collaborating on issues of joint concern. He also suggests that how well the
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manufacturer carries out its channel role, wilt also serve to reduce role ambiguity on the part of dealers, thus enhancing their role satisfaction and consequently fostering positive attitudes towards cooperation. Furthermore, due to reciprocity considerations in longitudinal exchange relations (Cook, 1977), perceptions of high role performance are likely to elicit greater conformity to the manufacturer’s role prescriptions on the part of dealers; a significant element in these prescriptions is the supply of information about focal environments. Asymmetry and information sharkg Studies in the resource-dependence tradition (e.g. Benson. 1975: Provan, 19%) have argued that dependency relations are likely to affect the degree of autonomy of the affiliated organizations in a network. Based on this line of thinking, Stern and Reve (1980) have proposed that in the context of distribution channefs. low fevefs of dependence will fead to isolated decision making and thus to less cooperation. The level of dependence is also likely to affect the amount of interest which organizations will have in maintaining the interorganizational relationship. Greater dependence would imply that the dependent organization, in this case the dealer. would have more at stake in maintaining the relationship and would therefore be motivated to mobilize its own resources towards this end and to avoid action Iikely to invite retaliation by the manufacturer. Provan and Skinner (1989) found some support for this view in their study of opportunistic behaviour among dealers. Notable among their findings is a highly significant negative relationship between dependence on the manufacturer’s services and opportunistic behaviour. Furthermore, information sharing may be employed as a mechanism for counterbalancing asymmetry in interorganizational relations. As Aldrich (1979) has suggested, one way of redressing the balance in a dependency relationship is by supplying the other party with valued resources. In addition to broader considerations discussed above as regards cooperative behaviour, this possibility would also suggest a positive relationship between dependence and the propensity to share information. Although manufacturer-dealer networks are generally characterized by asymmetrical relationships in favour of manufacturers because of their central position in their networks, and the large number of dealers typicafly found in such systems, the specific levels of dependence will vary among the dealers in the network. Emerson’s (1962) initial formulation and more recent extensions (e.g. Pfeffer and Salancik, 1978; Provan et al., 1980; Provan, 1984) suggest that the degree of asymmetry for individual dealers is likely to vary with various aspects of the direct ties with the supplier and on any countervailing sources of power emanating from the dealers’ interna strengths and the network context that surrounds the relationship. Deafer dependence. Two specific dimensions of dependence can be identified in dyadic manufacturer-dealer relationships, One of these, as Pfeffer and Salancik (1978) have suggested, concerns the relative magnitude of the resource exchange. In the context of manufacturer-deater networks this aspect of dependence is associated with the degree to which a dealer is tied to a single manufacturer as opposed to serving as an outlet for a number of suppliers. There is evidence in marketing literature (e.g. Etgar, 1976; Skinner and Guiitinan, 1985) that multiple ties reduce dependence on a focal supplier. Being tied to a single supplier implies high levels of dependence. both because of the critical impact of the relationship on the dealers’ goal attainment and because of the perceived difficulties of switching to alternative suppliers. A second dimension of dependence
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proposed in the literature is associated with the volume of resource flows from the manufacturer to the dealer. Skinner et al. (1987). for instance, have suggested that higher volume can mean more dependence due to the vital importance of the stable flow of products or services from the manufacturer. Disruptions in these flows are likely to be more important to high volume dealers. This aspect of the linkage is also associated with the effort, time and monetary resources invested in the relationship, which for the high volume dealer serves as yet another source of dependence (Frazier, 1983a). The inr
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easily substitutable. Small size is also likely to make organizations more vulnerable and of less crucial importance. In a channel context, organization size was found to be a significant element in the dealers’ countervailing power against the supplier (Etgar, 1976). These considerations would therefore lead to the expectation that in so far as dealer characteristics such as size and years in the network serve to modify perceptions of dependence on the manufacturer, they will also have negative effects on cooperative behaviour.
THE STUDY Research setting and sample
The dealer network of a manufacturer of materials for the manufacturing and construction industries provided the setting for this study. At the time when the data were being collected, the network consisted of 127 dealers, of which 119 were independent and eight were owned by the manufacturer. The latter, at the time, accounted for about half the manufacturer’s total sales. The present study is confined to the manufacturer’s relationships with its independent dealers. For the independent dealers this particular channel approximates an “administered system” (Stern and El-Ansary, 1988, p. 320) where “. . . coordination of marketing activities is achieved through programmes developed by one or a limited number of firms”, in this case the manufacturer. Administered systems are similar to conventional channels in that affiliates are essentially self-orientated, but there is at least some system-wide orientation in the network. Typically the dealers had been associated with the manufacturer for a long time, the mean number of years being 13.0 for firms in the sample. The dealers were scattered throughout Turkey; the manufacturer was represented in 48 of the 67 cities in the country. In slightly less than 40% of the cities in which the manufacturer was represented, there was a single dealer to distribute the manufacturer’s products but there was no guarantee that new dealers might not appear in their territory. The number of channel members in the rest of the cities varied between two and five, with the exception of one large metropolitan area where concentration was high. Of the 127 dealers, 44 were in this metropolitan area and two of these were owned by the manufacturer. Of the remaining six dealers owned by the manufacturer, five were the sole distributors of the manufacturer’s products in the cities where they were located. In only one case were there three independent dealers in addition to the manufacturer-owned distributor in the particular city. Data collection
Data were obtained from two sources. One of these was a questionnaire addressed to dealer principals - the sole proprietor or a managing partner. The use of single informants is justified because of the small size (mean number of employees = 11.0) of the organizations involved (Frazier, 1983b). A covering letter from the marketing manager of the manufacturer explained that the object of the study was to contribute to the development of better working relationships with dealers, and guaranteed that only the researcher would have access to individual responses. A stamped envelope addressed to the researcher was also enclosed. Of the 119 independent dealers 59 responded, giving a response rate of 49.6%.
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A comparison of responding and non-responding dealers revealed no significant differences in geographical location, but showed that responding dealers had significantly higher sales of the manufacturer’s products. The second data source was the manufacturer’s records. Data on dealer sales were obtained from these records. Variables and measures
The dependent variable in the present analysis is the degree of information sharing by the dealers in the network. This variable was operationally defined as the frequency of dealer-to-manufacturer information flows. A five-item scale was used to measure this variable. The respondents were asked to indicate how frequently they provided information to the manufacturer on each of the following issues: the practices of dealers working with the manufacturer’s competitors, new product needs of customers, sales forecasts, local manufacturers of competitive products, and the financial situation of customers. The three response categories were “very frequently”, “sometimes”. and “seldom”. The coefficient alpha for this sample was 0.78. Three classes of variables, namely, manufacturer’s role performance, dealer dependence on the manufacturer, and dealers’ countervailing power sources were incorporated in the present study as possible predictors of dealers’ communication behaviour. Manufacturer’s role performance was operationalized by obtaining dealer perceptions of how well the manufacturer performed its role in the distribution system. Specifically, the dealers were asked how satisfied they were with the manufacturer’s performance with respect to the following role elements: product information, price information and up-dating, information on new business opportunities, personnel training, dealer meetings, information on financial situation of customers, advice on legal and tax issues, manufacturer’s advertising, promotion materials, sales incentive programmes, competitive information, and visits from the manufacturer’s sales staff. For each role element the respondents were given five response categories ranging from “very satisfied” to “not satisfied at all”. Three of the items were later deleted from the scale because of a relatively large number of non-responses. A coefficient alpha of 0.80 was obtained for the nine-item scale. Two separate measures were employed to assess different aspects of dealer dependence on the manufacturer. The first measure assessed the extent to which the dealers worked with a single manufacturer rather than with several suppliers. The share of the manufacturer’s products in the total sales of the dealer was used to measure this aspect of dependence. The actual resource flows in the manufacturer-dealer dyad, namely the volume (in tons) of dealer sales of the manufacturer’s products, was used as the second dependence measure. Data on dealer sales in the full year preceding data collection were obtained from the manufacturer’s records. Two dealer characteristics were included in the study as surrogate measures for dealer importance. One such variable was the number of years that the dealer had been affiliated with the network. Organizational size, the second variable, was measured by the total number of employees. Finally, as was noted above in describing the research setting, the members of the manufacturer-dealer network were operating in one of two very different intrachannel contexts. One of these, the large metropolitan area, is characterized by a very large
B. ijSDiKEN
316
number (over one-third of all dealers) of geographically proximate intrachannel competititors. The dealers in this setting also faced competition from the two distributors owned by the manufacturer. The second setting, on the other hand, is characterized by very few or no proximate intrachannel competitors, by defacfo territorial exclusives for some dealers, and by very little or no competition from the manufacturer’s own distributors. A dummy variable (low intrachannel competition = 0; high intrachannel competition = 1) was used to distinguish between these two different intrachannel contexts.
FINDINGS
AND DISCUSSION
Table 1 reports the means, standard deviations and the zero-order correlations between the variables included in the study. Table 2 presents the results of the regression analysis with the frequency of information flows as the dependent variable. Results reported in this table show that the analysis yielded a highly significant regression equation which explains over 40% of the variance in the dependent variable. Resource flows, role performance and intrachannel competition emerge as significant predictors of dealers’ propensity to share information. These results provide some interesting evidence regarding the issues that triggered the present study. Firstly, the findings do provide some support for the contention that cooperative behaviour in the form of information sharing is an organizational response shaped by mixed motives. Satisfaction with role performance and the resource flow measure of dependence both emerge as highly significant predictors of information sharing by dealers. The finding as regards the intrachannel context, however, is contrary to what was expected. Specifically, as expected, perceptions of effective role performance on the part of the manufacturer appear to engender cooperative responses in the dealers. The more the dealers perceive that they are receiving support and positive contributions to their own goal attainment, the greater their motivation to put more into the maintenance of the relationship and to provide the feedback which is a resource valued by the manufacturer. The positive relationship posited between asymmetry in the linkage and information sharing, on the other hand, receives only partial support. The extent to which the dealer was tied to a single manufacturer did not emerge as a significant predictor of dealer information sharing, although the simple correlation was positive and significant (r = 0.26). This may be due to the high correIation (r = 0.47) between this measure and the volume of resource flows. Indeed resource flows emerge as the strongest predictor of the dealers’ propensity to release information. Low volume dealers probably perceive themselves as marginal in the network, and see little value in investing resources in better integration of their activities with the manufacturer’s policies and actions. They may perceive less interest in contributing towards collective system goals or in providing the manufacturer with valued resources, with a view to obtaining benefits in the future. Neither of the two variables regarding dealer characteristics was related to information sharing behaviour. In fact the direction of the relationships, although not significant, is the opposite to what was expected. These results may be taken to support Skinner and Guiltinan’s (1985) observation that dealer characteristics such as size and years in the
Size (no. of cmployccs)
13.0 (l-35) I I .o (2-130)
0.36 (O-1)
39.6 (2-100) 624.2 (25-291 I)
27.4 (13-45)-l
2.6
17.6
8.9
0.26’
-0. I4
-0.03
0.43***
0.04
0.14
0.47***
2
correlations
0.08
-0.07
0.05
672.2
0.48
0.18
1
31.0
6.7
Standard deviations
statistics and zero-order
***p < 0.001; **p c 0.01; *p < 0.05. tNumbers in parentheses indicate the observed range for each variable.
Information sharing 7. Frequency of information flows
6.
Dealer characteristics 5. Years in network
Intrachannel context 4. Intrachannel competition
Dealer dependence 2. Share in dealers’ total sales (%) 3. Resource flows from manufacturer to dealer (in tons)
Manufacturer’s role performance 1. Satisfaction with role performance
Means
Table 1. Descriptive
0.38**
0.00
-0.06
0.24*
3
4
-0.17
0.02
-0.23*
between variables
0.21
-0.30’
5
0.09
6
B. irSDiKEN
318
Table 2. Regression results with frequency information flows as the dependent variablet Satisfaction with role performance Share in dealers’ total sales Resource flows Intrachannel competition Years in network Size Multiple Adjusted
R
0.3s** 0.08 0.46’** -0.34* 0.13 0.12 0.71 0.43:”
i
+**p c 0.001; tstandard
of
betas
**p < 0.01; *p < 0.05. are
reported.
network may affect manufacturer perceptions of the dealers’ critical importance, but they may not be perceived by the dealers as a source of countervailing power in modifying the asymmetry in their relations with the manufacturer. In fact, militating against asymmetry considerations there might be factors such as the familiarity and trust that can develop over time and which contribute positively towards greater openness in communication. Likewise, smaller dealers may have fewer resources (e.g. staff) which could be devoted to the collection and processing of information to share \vith the manufacturer. An important and interesting finding in this study concerns the significant negative relationship between intrachannel competitive context and information sharing nith the manufacturer. Two sets of possible explanations can be offered for this somewhat unexpected finding, given the dependence implications of variations in the number of dealers in different local areas. Again, one of these is connected with the countervailing power implications of local contexts within the network. First, if dealers in densely populated areas are likely to perceive themselves as more readily substitutable. then this might make them less keen to share information of a negative kind. Secondly, in so far as the central organization in the network (i.e. the manufacturer) could be expected in such settings to be more involved in regulating horizontal relationships among network affiliates, dealers might see the release of information as yet another way of encouraging interference on the part of the manufacturer. Finally, dealers which enjoy a small numbers situation may perceive themselves to be more advantageously located in terms of information control. Dealers operating in the same locality are likely to have access at least partly to similar kinds of information, which means they are less likely to be in sole possession of specialized information. The use of information as a way of balancing dependence may thus be limited in a large numbers situation. Dealers operating in a small numbers situation, on the other hand, may see the information which they control as a more valuable resource which can be more readily employed as a balancing mechanism. A second set of explanations concerns the differences in competitive dynamics engendered by variations in the size of network membership in different local areas. Problems and territorial conflict are likely to emerge among dealers as a consequence of competitive horizontal relationships. If dealers feel their interests are threatened. this will probably make appreciation of collective interest more difficult.
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These negative attitudes may also affect the relations with the manufacturer, because it is within the power of this central organization to allow new members to join the network. Furthermore, and specifically as regards information sharing, a competitive intrachannel environment may also foster secrecy. thus hampering inclinations towards greater openness in communications. In this particular research context, such competitive concerns may have been aggravated by the prevailing dual distribution system.
CONCLUSIONS A number of important implications that emerge from the findings of this exploratory study merit further attention. Evidence from this study suggests that mixed motives also prevail in shaping cooperative relationships in interorganizational networks consisting of profit-seeking organizations. Variables. derived from both reciprocal and asymmetrical models (Oliver, 1990) in the literature, emerge as significant predictors of voluntary information sharing by dealers in a manufacturer-distributor network. It is also worth noting, however, that significant results in the predicted direction were obtained for only one of the measures employed to assess dealer dependence on a supplier. Considering the nature of the measures employed. this seems to suggest that the measures probably tap two separate aspects of the dependency relationship between affiliates and the central organization in manufacturer-dealer or similar networks. It may be useful to distinguish between two separate dimensions, which may be labelled as strategic and operational dependence. In the particular context of distribution channels, dealer choices between being tied to a single supplier or serving a number of suppliers simultaneously may have implications for dependence of a more strategic nature. Being tied to a single distribution network, although still a form of loose coupling, implies a linkage is of a quasi-firm (Luke et al., 1989) situation. Such an interorganizational strategic kind, and for the dealer in the dyad it would have important implications for survival. The resource flow measure employed in the present study, on the other hand, probably refers to dependence of a more day-to-day operational kind with implications for efficiency. In the light of this distinction information sharing could perhaps be said to emerge as a response to higher levels of operational dependence. Information control, in this case by dealers, is probably perceived as a resource that may be employed as a mechanism for enhancing stability and improving coordination. It may be felt that the value of this resource is limited in responding to more fundamental sources of dependence. A second major finding of this study concerns the impact of intranetwork structure on cooperative behaviour. Contrary to what would be expected predominantly on the basis of a dependence perspective, geographically dispersed affiliates appeared to be more inclined to share information compared with those operating in densely populated areas. Perhaps the threat of substitutability and of heightened influence on the part of the manufacturer in densely populated settings breeds an inclination towards restriction of information. It is also possible that the competitive dynamics which inevitably arise in such settings may override dependence considerations in generating cooperative behaviour. Overlapping domains and the negative attitudes towards the manufacturer that intrachannel competition cultivates, apparently discourage cooperative behaviour and can make system-wide integration more difficult.
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irSDiKEN
Some obvious caveats should be mentioned. First, a single network provided the setting for the present study. Although this avoids the confounding effects of interchannel differences, it raises questions about the external validity of the results. Verification of these findings is required in different channel settings and interorganizational contexts. Second, as regards the measures used in the study some common method bias may exist since satisfaction with role performance and information sharing were both assessed by questionnaire measures. Moreover, it would be desirable to improve the intrachannel context measure in a number of ways. In this study it was only possible to employ a binary measure and it would be preferable to extend this kind of work to settings which vary more widely in terms of the number of network members in the respective localities. Furthermore, this particular variable may have been contaminated by the presence of a dual distribution system in the network and by the fact that competition from manufacturer-owned dealers was also significantly greater in the high as opposed to the low intrachannel competition setting. In spite of these shortcomings, however, it is hoped that the results reported here will spur future studies that will enable verification and further extension of the outcomes of this research. Longitudinal studies based on data obtained from both sides of the dyad will be required for a better understanding of the processes inferred in this study and of the dynamics of the interrelationships between these variables over time. Future research should also consider the impact of variables such as the extent of influence and the ways in which it is exercised by the central organization, dealers’ external linkages in their respective domains, and possibly the effects of the extrachannel environment specifically, the degree of interchannel competition. Most significant in this respect will be research that will investigate the distinction proposed here between dependence of a strategic kind and dependence of an operational nature in interorganizational relationships. Such research could look into the possibility of finding different patterns of responses to these different aspects of the dependency relationship, and the extent to which these responses serve as alternatives to one another. Acknowledgemenrs
- I would like to thank the journal reviewers and Sten Jonsson for their,criticisms and comments on an earlier version of this paper. Muzaffer Bodur. Hayat E. Kabasakal and Arzu Iseri have also offered useful comments on previous drafts.
REFERENCES Aldrich, H., Organizations and Environments (Englewood Cliffs. NJ: Prentice-Hall, 1979). Benson, J. K., The interorganizational network as a political economy, Administrarirvz Science Quarter!\ (1975), pp. 229-249. Cook, K. S., Exchange and power in networks of interorganizational relations, The Sociological Quarterly (1977). pp. 62-82. Emerson, R. M., Power-dependence relations, American Sociological Review (1962). pp. 31-tO. Etgar, M., Channel domination and countervailing power in distribution channels, Journal of Marketing Research (1976), pp. 254-262. Etgar, M.. Selection of an effective channel control mix, Journal of Marketing (1978). No. 3. pp. 53-58. Etgar, M., Sources and types of intrachannel conflict. Journal of Retailing (1979), No. 1, .pp. 61-78. Frazier, G. L., Interorganizational exchange behaviour in marketing channels: a broadened perspective. Journal of Marketing (1983a), No. 4, pp. 68-78. Frazier, G. L., On the measurement of interfirm power in channels of distribution, Journal of Marketing Research (1983b), pp. 158-166. Guiltinan, J. P., Rejab, I. B. and Rodgers, W. C., Factors influencing coordination in a franchise channel. Journal of Retailing (1980), No. 3, pp. 41-58.
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