Internal multi-channel conflict: An exploratory investigation and conceptual framework

Industrial Marketing Management 36 (2007) 29 – 43

Internal multi-channel conflict: An exploratory investigation and conceptual framework☆ Kevin L. Webb a,⁎, C. Jay Lambe b,1 a

Department of Marketing, College of Business, MSC 0205, James Madison University, Harrisonburg, VA 22807, United States b Department of Marketing, Albers School of Business and Economics, Seattle University, Seattle, WA 98122, United States Available online 2 August 2006

Abstract Multi-channel distribution is an increasingly important phenomenon in marketing, and the internal organizational dynamics associated with its use are strategically critical in nature. In this study, we focus on conflict internal to the supplier firm among the groups and individuals responsible for managing the various channels. We utilize a research approach consisting of four in-depth case studies with business-to-business marketing organizations to develop a holistic conceptual framework of internal multi-channel conflict and fourteen propositions for research. Results indicate that the life cycle stage plays a moderating role in determining the functionality of multi-channel conflict, that the supplier firm's internal market orientation is a determinant of the extent to which it will engage in internal multi-channel integration behaviors (i.e., superordinate goals, internal coordination and internal communication) and that internal and external multi-channel conflict are closely interrelated constructs. © 2006 Elsevier Inc. All rights reserved. Keywords: Multi-channel distribution; Channel conflict; Channel integration; Market orientation; Life cycle stage; Case studies; Qualitative research methods

In the not too distant past, many firms used one primary channel to market their products and services; secondary channels were often downplayed or even disguised in order to avert channel conflict (Coughlan, Anderson, Stern, & ElAnsary, 2001). However, multiple channel arrangements have become increasingly prevalent over the past decade, accelerated by the advent of the Internet (Geyskens, Gielens, & Dekimpe, 2002; Rosenbloom, 2004). Indeed, the use of multi-channel strategies to market products and services has now become the rule rather than the exception; despite growing importance of such strategies, there is a relative lack of academic research on this topic (Frazier, 1999). Moreover, marketing scholars such as Bolton, (2003, p. 2), suggest that “synchronizing multiple, complementary channels within an organization” is an underrepresented research topic in need of further study.

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Accepted for publication in Industrial Marketing Management special issue on multi-channel marketing strategy in business-to-business distribution channels. ⁎ Corresponding author. Tel.: +1 540 568 3165; fax: +1 540 568 2754. E-mail address: [email protected] (K.L. Webb). 1 Tel.: +1 206 296 2550. 0019-8501/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2006.06.013

While managerial research argues strongly that conflict is a critical concern with multi-channel distribution strategies (cf., Cespedes & Corey, 1990; Moriarty & Moran, 1990; Weigand, 1977), there has been little academic research that examines conflict in a multi-channel context. The vast majority of channel conflict research to date has addressed conflict between two organizations in a single channel (e.g., Anderson & Narus, 1990; Brown & Day, 1981; Eliashberg & Michie, 1984; Gaski, 1984; Lusch, 1976; Reve & Stern, 1979). The relative lack of attention to multi-channel conflict is significant because previous research suggests that there may be important structural differences between the dynamics of single channel and multi-channel conflict (Brown & Fern, 1992; Coughlan et al., 2001; Kotler, 1994). Thus, the objective of our research is to extend the limited body of literature on multi-channel conflict. We focus our attention on the internal-to-the-firm causes and effects of multichannel conflict. Specifically, we examine: (1) the conflict that can occur between the various channel entities within a supplier organization and (2) how such conflict internally can affect conflict with channel entities external to the firm and overall channel system performance. We refer to such conflict as internal multi-channel conflict, and we refer to the internal groups

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or entities that manage the various channels as channel coalitions. Examples of channel coalitions include, but are not limited to, a direct sales force, a distributor group, a telemarketing group, and an electronic commerce entity. We chose to examine multi-channel conflict from an internal-to-the-firm perspective because research suggests that the internal workings of an organization can effect external relations with other firms (Achrol & Kotler, 1999). Given that there are often significant levels of conflict between groups within an organization (cf., Barclay, 1991; Maltz & Kohli, 2000; Pondy, 1967; Thomas, 1976), it is reasonable to posit that such internal conflict might affect a firm's external relations. Indeed, Achrol and Kotler (1999) suggest that conflict within internal market networks – within which the marketing function must sometimes play multiple roles, including those of internal integrator, coordinator and conflict manager – can affect a firm's external relations and overall business performance. Because there has been little conceptual and empirical research on internal multi-channel conflict, our study is exploratory in nature. Hence, we use the literature and a multiple case research methodology – a research approach similar to Workman, Homburg, and Gruner (1998) and Kohli and Jaworski (1990) – applying simultaneously both deductive reasoning from the extant literature and inductive reasoning from our data to develop a propositional inventory for future research. Our research propositions address key antecedents and consequences of internal multi-channel conflict and are organized into a holistic conceptual framework. We find that three key behaviors are used by suppliers to integrate multiple channels: the use of superordinate goals internally, effective internal communication, and effective internal coordination among the channel coalitions. Suppliers can use these internal multi-channel integration behaviors as a mechanism to manage the level of internal multi-channel conflict. Interestingly, our results indicate that what we refer to as a firm's internal market orientation, or a sensitivity to the needs of a firm's internal market network, will have an effect on the level to which suppliers engage in internal multi-channel integration behaviors. We also find that the stage of the product life cycle moderates the functionality of both internal and external multi-channel conflicts in terms of their effects on channel system performance. Our research offers a number of important contributions to the multi-channel literature. First, we draw from theories in several domains of marketing along with our data to develop a conceptual framework of internal multi-channel conflict. This framework and its associated propositions for research provide the field with a grounded foundation from which to build and conduct further empirical research. Second, the internal perspective of channel management taken in this study is of particular relevance to marketing academics and practitioners alike in that we focus primarily on variables that can be controlled directly by managers in supplier organizations. Such knowledge is critical since research suggests that marketers' most important role may consist of their actions within the firm (e.g., Anderson, 1982). Third, we describe an important reciprocal relationship between channel conflict internally

within the supplier firm and externally in the marketplace. Fourth, we identify the significant role of a key environmental variable – the product life cycle stage – in determining the effect of multi-channel conflict on channel system performance. Fifth, our research provides important insights on how to manage and minimize the tremendous level of conflict that can arise when multiple channels compete for the same customers, a phenomenon Kotler (1994, p. 548) has referred to as the “downside of multi-channel marketing”. 1. Methodology For many years, the prevailing paradigm for conducting research in organizational settings such as business marketing has been biased toward large sample multivariate statistical studies (Bettis, 1991). However, when the objective of a research project is basic understanding of a new phenomenon and/or the development of new theory, methodological diversity is required (Bonoma, 1985). More recently, Frazier and Antia (1995) suggest that qualitative research is urgently needed in the channels area to sort out theoretical difficulties. Johnston, Leach, and Lui (1999, p. 202) observe further that in businessto-business marketing situations “where multiple contextual variables influence organizational behavior… survey designs become less appropriate”. The case method is especially well suited for emerging topics such as multi-channel marketing, and the resulting theory is often novel, testable and empirically valid (Eisenhardt, 1989). Similar to Workman et al. (1998) and Kohli and Jaworski (1990), in this study we incorporate qualitative field observations together with existing theory, utilizing a positivistic approach that is both inductive and deductive in nature. Such a research approach is the most philosophically sound and appropriate for this topic, given the relative lack of understanding and conceptualization of multi-channel conflict to date. Given the inherent complexity and uniqueness associated with multi-channel distribution systems, we follow the case study methodology as described by Yin (1994) in this field study. Academics have recently called for greater use of Yin's methods in business marketing research (Johnston et al., 1999). Specifically, we utilize a multiple case, embedded research design by conducting in-depth studies with four separate firms as well as with multiple units of analysis within each firm (semistructured depth interviews with an average of fifteen channel managers in each firm). Case research can simultaneously include both inductive and deductive features. We make use of the extant literature to accomplish the first objective, and we use data from field interviews with channel managers from the four firms for the second purpose. We also closely follow Yin's recommended case study design tactics to ensure the strongest possible reliability and validity in this research project. 1.1. Sample Four firms were selected for the case studies based on several criteria salient to this research. First and foremost, all firms went

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to market via complex multiple channel systems and all four faced internal conflict-related challenges on a frequent basis as a regular part of doing business. Second, each firm was in a distinctly different stage of the product life cycle. The third criterion was based on the desire to strive for diversity with respect to the type of business (i.e., product or service, consumer or business-to-business) in order to enhance the generalizability of the study. To ensure the greatest possible level of participation and cooperation among those responsible for channel management functions, a high-level individual in each firm agreed to act in the role of internal corporate sponsor of each case study. These individuals endorsed the importance of this study and value of this research to their channel management personnel, and participated themselves. The official titles of the sponsors, and a brief description of their businesses, customers and distribution channels are provided in the Table 1. The business unit was the level of analysis for each of the four case studies. For example, Computer Inc. manufactures mainframes and PCs in addition to mid-range servers. Hosiery Inc. is a business unit within a diversified corporation that also manufactures apparel and food products. Thus, our sample selection of firms, or of business units within a larger organization, ensured that the vast majority of the product offering involved was closely related and in the same stage of the product life cycle. Accordingly, when we use the term product life cycle throughout the remainder of this paper, we are referring to the applicable product class or category. 1.2. Data collection The four case studies were conducted in the field at each firm's marketing headquarters location for the associated

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product or service, and each study took place over an average of five working days. Consistent with the sample size of previous qualitative studies (Drumwright, 1996), a total of fiftyeight semi-structured depth interviews averaging 1 hour in duration took place, an average of approximately fifteen per firm. All interviews were tape-recorded and subsequently transcribed, resulting in 750 pages of single-spaced textual data. The quality of respondents was exceptional; the vast majority of those interviewed were vice-presidents, directors or managers with direct responsibility for and authority over one or more of the firm's distribution channels. Like other qualitative, company-based marketing research (Drumwright, 1996), anonymity is used with all respondents. Interviews are often the most essential sources of case study information (Yin, 1994). The role of the interviewer is somewhat directive but open-ended in semi-structured interviews. The more the interviewee participates, the more their role may be considered that of a key informant rather than a respondent (Kvale, 1996). For purposes of consistency, all of the field interviews were conducted by the first author who possesses an MBA and doctorate in marketing, in addition to 7 years of experience in industrial sales and channel management. 1.3. Data analysis The craft of coding qualitative data has advanced dramatically as technology has improved (Miles & Huberman, 1994). Strauss and Corbin (1990) provide an excellent description of the procedures used for coding the qualitative interview data in this study. The transcribed interview text was coded and analyzed using a qualitative data analysis program, NUD⁎IST (Non-numerical Unstructured Data Indexing, Searching and

Table 1 Participating organizations and primary channels of distribution Organization

Product category Stage of the End customer classification Title of internal of business product life cycle corporate sponsor

Messaging Inc. Wireless messaging service provider

Accelerating growth

Computer Inc.

Midrange computer server manufacturer

Decelerating growth

Electrical equipment manufacturer

Maturity

Hosiery manufacturer

Decline

Electric Inc.

Hosiery Inc.

Businesses and consumers

All businesses

Primarily businesses, some consumers

All consumers

V. P. of sales and marketing

V. P. of channel management and strategy

V. P. of channel marketing

Primary direct channels

Primary indirect channels

• Company sales force (large accounts) • Company sales force (medium accounts) • Phone/electronic/catalog • Company sales force (large accounts) • Company sales force (medium accounts) • Marketing support centers • Phone/electronic/catalog • Company sales force (construction) • Company sales force (industrial)

• Affiliate resellers • Agents/assns • Retailers • Agents • Value-added resellers Wholesale distributors

• Wholesale distributors

• Industrial MRO supply • Retail (DIY, contractor) Corporate V. P. and • Factory outlet stores • Department stores CEO of business unit • Phone/electronic/catalog • Food, drug, and mass merchandisers

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Theorizing), that has been used previously in the marketing literature (Flint, Woodruff, & Gardial, 2002). Following the qualitative data analysis using NUD⁎IST, both authors had extensive discussions about key organizational themes, exchanged numerous drafts of documents, and compared the insights we derived from the case studies with the extant literature in an iterative fashion. In essence, the field observations served as a catalyst for deeper exploration of prior research to better account for and explain our findings. The two authors met and compared their categorizations of the data throughout the development of the conceptual framework until consensus was reached. Next, we present a conceptual framework of key antecedents and consequences of internal multi-channel conflict, and offer an inventory of propositions for future research. 2. Conceptual framework and research propositions Through the synthesis and integration of extant marketing literature with our interviews with channel executives from the four firms in our sample, we developed propositions that resulted in a conceptual framework (see Fig. 1). The framework does not provide an exhaustive list of constructs that might be relevant to channel networks and multi-channel conflict. Instead, like Workman et al. (1998, p. 27), “the framework should be regarded as delineating the most important categories of constructs and then identifying the more important constructs in each category”. 2.1. Antecedents of internal multi-channel conflict Conflict is pervasive both within and between groups as well as organizations (Hunger & Stern, 1976). In the context of distribution channels, three primary causes of conflict have been

identified: goal incompatibility, domain dissensus, and differing perceptions of reality (Reve & Stern, 1979; Rosenberg & Stern, 1971). Congruous with Coughlan et al. (2001), we view internal multi-channel conflict as being opponent-centered behavior on the part of one channel coalition that may prevent or impede another channel coalition from achieving its goals. We identify three distinct internal multi-channel integration behaviors: the use of superordinate goals internally, effective internal coordination, and effective internal communication among the supplier firm's channel coalitions. Because each of these three integration behaviors corresponds directly to one of the three conflict causes, and in the interest of parsimony, our conceptual framework includes the internal multi-channel integration behaviors only. Hence, we organize our analysis below in three sections, each of which relates a conflict cause to an integration behavior and its resulting effect on internal multichannel conflict. 2.1.1. Goal incompatibility and superordinate goals Our examination of the causes of internal multi-channel conflict begins with goal incompatibility. Overall goals are often broken down into specific functional objectives that conflict with each other. Consequently, in order for one functional area to achieve its goals, another functional area may be required to sacrifice, or at least compromise, its primary goals. In the context of this study, goal incompatibility exists when it is perceived that the objectives of all the channel coalitions cannot be achieved concurrently. When a given channel coalition succeeds in meeting its goals it will be at the expense of at least one other channel coalition in the firm. Moreover, goals of internal entities may also conflict with those of the firm. Goal incompatibility can take the form of conflicting objectives related to growth rates, revenues, profits and/or market share.

Fig. 1. A conceptual model of internal multi-channel conflict.

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Of all the possible conflict reduction techniques, the superordinate goal appears to be most effective (Hunger & Stern, 1976). As originally conceptualized by Sherif (1962, p. 19), superordinate goals refer to “goals that are urgent and compelling for all groups involved but whose attainment requires the resources and efforts of more than one group”. A superordinate goal will cause two conflicting groups to reconceptualize the situation, thereby reducing conflict-oriented behavior (Sherif, 1962). Superordinate goals were utilized to varying degrees by the four firms participating in this study. Messaging Inc. manages goal setting in a variety of ways. The first way in which Messaging Inc. implements goals involves the referral of business from one channel to another. For example, if a salesperson determines that another channel can better meet the needs of a particular customer and they refer the customer to the other channel, the sales rep receives as much credit as if he/she had made the sale. In order to eliminate ‘double-paying’ of salespeople in these situations, the historical percentage of business referred to other channels is simply added to their quota. The second way Messaging Inc. sets goals is through the use of superordinate goals. One of the channel heads describes how it works: “Each channel has specific goals for the channel. You might say my compensation is tied to my channel's performance. My channel performance is going to be a small percentage of my pay, my incentive, though. Where the overall company performance is a much larger incentive. So in turn, you're not so me-oriented as you are companyoriented. You're doing what's best for the company and the customer versus what is best for your channel.” With respect to establishing goals, Computer Inc. is also increasingly utilizing superordinate goals in an attempt to better coordinate the efforts of their distribution channels. Interviews with Computer Inc. provided several salient examples: “We would like to get [the direct sales force] to the point of indifference and we have done a number of things to make them indifferent such that you would get credit for the revenue regardless of whether you closed the business or whether [any other channel] did. Because otherwise, yes, we had a ton of conflict.” “We actually do have incentives where we will pay our sales people more for effective use of appropriate channels. In fact, the compensation plan for [the direct sales force] basically says if you get a certain revenue result and have facilitated all of it through partners you will earn more than if you had facilitated none of it through partners.” Both our telecoverage and our [direct] sales force are compensated for all channels of distribution in their assigned territory. The intent there is to make them channel of distribution neutral from a customer/buyer behavior point of view.

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Similarly, Electric Inc. has also begun to use superordinate goals with the company's direct sales force as a mechanism to get them involved with the newer, indirect distribution channels, industrial MRO suppliers and retail. “We typically approach objective-setting from the customer viewpoint. In other words, we don't set a goal for the channel. We set a goal for the customer that channel serves.” “Does the Electric Inc. sales rep receive credit for business that goes through [an industrial MRO supplier] in their territory? Yes. And retail.” Although superordinate goals can reduce conflict, Hosiery Inc. illustrates that an incomplete implementation of superordinate goals can cause, rather than reduce, conflict. Within Hosiery Inc., the compensation benefits are not extended to all parties involved. Specifically, managers of the indirect channels receive credit for sales of their brands through the direct channels; however, the reverse is not true. Such an inconsistency results in managers' goals being in conflict with one another, as expressed by the CEO of the direct channels. “The bonus system does cause conflicts, because sometimes our objectives are at odds with what is best for the corporation.” In summary, the use of superordinate goals within the supplier organization serves as a mechanism for coordinating channel activities and reducing unwanted conflict by aligning the goals of the channels in a complementary, synergistic manner. Based on these findings, we offer the following two research propositions: P1. Increased use of superordinate goals among the supplier organization's channel coalitions will be inversely related to the level of internal multi-channel conflict. P2. Increased use of superordinate goals among the supplier organization's channel coalitions will be positively related to the level of internal coordination. 2.1.2. Domain dissensus and internal channel coordination Next we turn our attention to the second cause of channel conflict, domain dissensus (Reve & Stern, 1979). In the setting of internal multi-channel conflict, domain dissensus exists when channel coalitions must draw from the same base of limited resources, external and/or internal, in order to accomplish their tasks and objectives. The greater the overlap in resource requirements and/or the more limited the resource base, the greater the domain dissensus (Coughlan et al., 2001). External sources of domain dissensus among channel coalitions include the population of customers, the product offering, along with the services rendered or functions performed. Internal sources of domain dissensus include funding allocation, employee skills, and reliance among the channels on common manufacturing units. In their discussion of internal market networks, Achrol and Kotler (1999) describe the role of marketing within the

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organization as a coordinator and conflict manager, as well as an internal integrator. Channel coordination is the synchronization of activities and flows by channel members (Mohr & Nevin, 1990). Within the firm, marketing personnel often play a coordinating role, linking demands from the outside to functional departments on the inside (Flint et al., 2002). Moller and Rajala (1999) further stress the importance of proper coordination among internal marketing units within industrial firms. Messaging Inc. provides a number of insightful examples of how excessive domain dissensus can lead to internal multichannel conflict. The subject of segmentation and overlap in the marketplace receives plenty of attention. Price discrepancies across channels for similar or identical products were mentioned frequently as a source of conflict. The final comment below, offered by a sales manager with the direct sales force that focuses on large accounts, is striking in terms of how strong an influence Messaging Inc.'s largest and most established channel of distribution has on internal resource allocation. “We segment our direct sales within our own environment because we can control that. However, when we go beyond that and we go to affiliates, they are calling on all those segments themselves. So the biggest overlap is between our affiliate channel and those that are inclined to call on the same people we're calling on in our direct environment. And most likely in the Fortune 1000 arena.” “The typical one is when you get a Messaging Inc. product from one channel at a lower price than at another channel. That's something that piques peoples' interest. That's where we would have some conflict internally.” “I mean, my channel and my marketing group doesn't lose. I mean, we always win. Truly. I've been here longer and I have a bigger staff and I have, you know, we get the resources we need because of the size of the channel. And because we are bringing in the revenue. After all, we are the most important channel! [laughing here]” Messaging Inc. has embarked upon several policies and activities to try and better coordinate their channels internally. They have used the marketing mix to differentiate their channels and prevent multi-channel conflict. Perhaps most important is a set of agreements incorporated in a written document entitled “Inter-Channel Management”, which was originally referred to as “Inter-Channel Conflict”. These agreements explicitly state the roles and responsibilities of each Messaging Inc. channel coalition, including the intended target market. “Rules of engagement” among the channels are clearly specified, as are procedures for transferring new leads and present customers from one channel to another. Computer Inc. also experienced conflicting issues related to domain dissensus, including ownership of the customer and product offering. The two areas most frequently cited in terms of generating internal conflict were pricing and promotion. Because most of the promotions are price-related, the two

issues are inextricably linked as indicated in the following statements: “Who owns the customer? That was a term we used a few years ago and you still hear it. There were hours worth of discussion and dialog on that subject. That was clearly where the most conflict was occurring, cross-channel conflict.” “An example is not having the product available. That is clearly a point of contention if one channel has it and the other does not.” “If you don't have a pricing strategy that is conducive to fairness and equity among all of those, you will skew your channel results to a particular one.” Like Messaging Inc., Computer Inc. took an important step toward better coordinating their channels internally by developing a formal document detailing their vast array of channel resources, including how they should be utilized strategically. A key element of the framework is a comprehensive inventory of Computer Inc.'s channels, including a detailed description of their attributes and core capabilities. The framework positions the various channel resources alongside the various product and customer segments. It also includes channel principles, guidelines for selecting channels, and where appropriate, “rules of engagement”. Computer Inc. was one of two firms involved in this study that formally established groups within their organizations dedicated to managing channels strategies as their distribution systems have grown. Institutionalizing such a channel management group has proven to be an effective means of enhancing channel coordination internally. Comprised of individuals with significant channel-related experience, the channel management group spends considerable time coordinating issues involving pricing and product offering among all of the firm's channels. Conflicts resulting from domain dissensus were abundant within Electric Inc. Issues included overlap in the marketplace, limited internal resources, pricing, and authorization of the indirect channels. Many of the conflicts stem from the traditional dominance of the electrical distributor channel together with the relative newness of the industrial MRO and retail channels. For example, authorization and pricing agreements with electrical distributors were determined regionally. However, the retail and industrial MRO channels were established using a single nationwide agreement for each firm including uniform pricing everywhere. The resulting challenges are illustrated in the following quotes from Electric Inc.'s channel managers: “When you overlay those two strategies, a regional-based strategy and a national strategy, that's where the conflict occurs.” “[Retail] doesn't like the fact that we added [industrial MRO]. Electrical distributors don't like the fact that we added [industrial MRO]. The next channel we add, or

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channel move we make, [industrial MRO] won't like. Let me think — I've got a whole list of problems! And one of the disadvantages of using multiple channels is that you have multiple costs internally. Because you've got different requirements.” “If it's appropriate to have national pricing, I would think it would be appropriate for us to institute that policy throughout all our channels. If it's good, then let's do it. If it's not good, let's not do it. But let's not do it both ways. It's the tail wagging the dog.” It is apparent from the remarks above that Electric Inc. is operating in a much more reactive mode with respect to coordinating its channel strategy internally than Computer Inc. Interestingly, Electric Inc. is the other firm in this study that established a highly qualified group of individuals internally, dedicated to managing channels. Unlike both Messaging Inc. and Computer Inc., though, Electric Inc. had not yet developed a formal document specifying the roles, responsibilities and domains of the various channels for purposes of improving internal coordination. Hosiery Inc.'s channel managers also expressed their concerns about numerous issues related to internal conflict over domain matters. In addition to overlap in the marketplace and internal resource constraints, virtually all of the marketing mix variables generate conflict. Consider the first comment below, offered by the CEO responsible for the direct channels: “Pricing. When you can have a new product, compared to when [the indirect channels] get it. Especially if it's going well with the new product, and supplies are limited. The conflicts come in all kinds of issues. You know, how far [an outlet] store is from several mall locations. Some people think we're making the catalog look too nice, therefore it's too inviting. Other people say, ‘make it look junky’. You know, you've got just lots of people involved with lots of different opinions on how it should be done.” “The outlet consumer, there is cross-over. There is clearly cross-over and I don't think anyone would argue that there are people who shop our outlets and then they shop department stores. We know about 22–25% of our customers cross-over.” With regard to internal coordination of domain related channel conflict, Hosiery Inc. has neither developed a formal document addressing the salient issues, nor have they instituted a group to manage the strategies and tactics of the various channels. Organizationally this has created challenges. Disagreements between the direct and indirect channels at times are not addressed until the matter is elevated to the corporate level. Such problems are reflected in the following remarks: “There is a constant area of tension, I think aggravated by the way that organizationally the [direct and indirect

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channels] report up through a different chain of command. So you have to go to a fairly high level in the organization to resolve differences.” “The interaction among channels is complicated. There are lots of different levels and angles of interest. So the decisions are slow and complicated. And lots of times, they don't stick. Because once they're made, somebody will be the squeaky wheel, and it gets re-opened and remade. So, it's complicated, the internal dynamics between divisions.” In summary, domain dissensus among the internal coalitions responsible for managing the supplier's distribution channels can lead to internal multi-channel conflict. Proactive and effective internal coordination among the supplier's channel coalitions serves as a mechanism for reducing unwanted conflict by clearly delineating the intended domain of each of the channels. The marketing mix appears to be especially important in that it can be controlled internally. From this analysis, we offer the following research proposition: P3. Greater levels of internal coordination among the supplier organization's channel coalitions will be inversely related to the level of internal multi-channel conflict. 2.1.3. Differing perceptions of reality and internal channel communication Differing perceptions of reality are important sources of conflict, because they indicate that there will be differing bases of action in response to the same situation (Coughlan et al., 2001). Moreover, conflict resulting from differing perceptions of reality is often the result of a lack of communication Frequent, relevant, and timely communications can prevent unwanted conflict by aligning perceptions. Also, effective channel communication can have a positive influence on channel coordination (Celli & Frazier, 1996). Consistent with prior research (Mohr & Nevin, 1990), we conceptualize internal channel communication as a multidimensional construct, characterized by frequent, two-way, formal, and non-coercive communications among the supplier's internal channels. Central to the context of this study, in their discussion of internal market networks, Achrol and Kotler (1999) argue that the role of marketing within the firm should include the tasks of internal infomediary, organizational educator, and creator of marketing knowledge. Similarly, Moller and Rajala (1999) describe the internal boundary spanning activities of marketing communications and the resulting positive effect on internal coordination efforts. Empirical research in the marketing literature has examined conflict, communication and coordination from an internal perspective. Internal barriers to communication have also been found to significantly increase internal conflict (Barclay, 1991). We begin our investigation of the effectiveness of internal communication among the channel coalitions with Messaging Inc. The data seem to indicate that communication among the channel heads is generally productive, but that is not always the

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case at lower levels. To illustrate, the first two quotations below come from one channel head; the others come from individuals at either the manager or director level. There appears to be a noticeable drop-off in communication effectiveness the lower the level in the organization. “You may have it go all the way up — we sort of call it the silo of management. It goes to the top of the channel and the channel heads get together. Or we try to resolve it below that point so the channel heads don't have to get involved, if it is incident by incident, but they can get involved if there are trends.” “I think communications between the channel heads is pretty good. In terms of regular communications among the channels, we're working on that. I think it could be better.” “Internal communication? There's a ‘choke’ getting it out to the grass roots.” Computer Inc. has institutionalized a promising mechanism designed to proactively enhance internal channel communication. The Vice President of Channel Strategy and Management describes how the process works: “We put into place a process whereas people adjust prices in any channel. I have a representative that sits on a review board to review that pricing and if it looks like one channel is attempting to advantage themselves over the others, that wouldn't result in an improvement in the aggregate performance of that product rather than just a channel shift, and we are not attempting to do just channel shift, then I reject that pricing proposal until there are adjustments made to the other channels.” All of the proposed promotions are initiated by the product division managers. These divisions are involved with all the channels, direct and indirect. The remarks below provide some insights about the process from the participants' perspective. They also reveal that the process is not perfect. “I get together a workable plan, then work through channel management here, because they own the channels. I'm a product division looking to use these channels.” “Quite frankly, [some of our indirect channels] and the [direct] sales force don't talk and uncoordinated activity occurs.” The following rich description of the promotional review meetings comes from an individual from the channel management group who participates in the meetings each week. “I always participate every Wednesday in something called the Promotions Review Board. The function of the promo board is product divisions will come forth and say, for whatever reasons, I need to hype up the market for my product. They say this is what I would like to do. On the board, the participants or reviewers that sit on the board are myself for channels, there is a lawyer, someone from

business practices, finance, field sales, services, software; there are representatives from many functions. Everybody sits and listens to this and says if you do this I'll have a problem because of that, or could I suggest you do it this way. Everybody gives input. It's actually a consensus of everybody on the review board who determines what the final promotion is going to look like. All the parties have to approve it. Now my function is very clearly to make sure that there is a balance across all the channels and I try not to be one-sided. Usually it is the sponsor who will say, I really don't want to put it in all the channels; I really want to test drive it in ‘Channel A’ first. I'm usually the one taking exception to that. I sort of look at the promotion and say if you run this only in this one channel, the other channel is going to say you are disadvantaging me. Prior to my coming into this department, apparently there wasn't a person who represented the channels who sat on this board.” Electric Inc. has established a smaller group to enhance communication among the internal channels, with pricing authority independent of the firm's direct sales channels and in the market for residential products only. The following quote is from the manager responsible for residential pricing: “One thing we have done is that we do have a clearinghouse right now of all these channel conflicts with respect to pricing. I'm in the middle. I don't work for [the other channels] and I don't work for retail. I try to stay independent. Retail can't go out and do their own thing without working the other channel through me.” Effective internal communication appears to in turn produce effective coordination among Electric Inc.'s distribution channels, as indicated by these following two remarks. Interestingly, the first respondent refers to the “price increase” committee. The second comment is illustrative of the importance of internal communication being a precedent to external marketing strategies. “I also involved, represented the department in the price increase committee. As long as we communicate, these things are caught, as long as we work together. They could have had a price increase without us reviewing some of the things and knowing what they were going to do, and it could have gone wild. Because retail and channel marketing, even though we are in the same area, really are two very separate departments.” “When you come up with a new strategy or a new plan, you have to sell it internally first. And sometimes that's the more difficult sale! You've got to have your own company on board first.” Emotions were also frequently associated with channel conflict within Electric Inc. Effective internal communication was cited as the best way to overcome emotions, as indicated in the following comments from channel managers. The emphasis on presenting facts in the second remark reinforces the need for rationality.

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“Upper management does not focus much on conflict. Further down, conflict is present, often over products and prices. Communication is the absolute key. You try and take the emotion out, but it isn't handled very well, especially over prices.” “Overwhelm them with facts. The more facts you have, the better off you are taking it out of an emotional discussion.” Hosiery Inc. appears to have problems communicating at lower levels of the organization that only surface periodically during previously scheduled top-level meetings. The first two quotations below come from top managers of the direct and indirect channels, respectively; the latter are from mid-level managers that are not part of the higher-level corporate meetings: “We have a very good way of dealing with those types of issues. We have what we call top-to-top meetings. These meetings are where the CEOs and the Presidents of each of the divisions, we get together on a quarterly or at least a twice a year basis, and hammer out issues and agree strategically on what we're doing with the businesses and that's what we communicate back to the troops. And those are very effective ways to communicate.” “Most of that interaction would take place at my level and above. Where the conflicts would be resolved. I think it works well. It works very well. Quite constructive.” “The worst piece that we do, the thing we do the worst is, when we make changes off-line, out of the formal process, we are poor communicators of those.” “The [indirect channel] brand divisions are too busy to meet with the direct channels. Because they don't have to worry. I'm not going anywhere. I'm not going to any competitor. They've got our business.” In summary, differing perceptions of reality among the channels can lead to internal multi-channel conflict. As indicated by the data, however, proactive and effective internal communication among the supplier's channel coalitions serves as a mechanism both for reducing unwanted conflict as well as coordinating channel activities by establishing a common understanding within the organization of the intended multichannel strategy and tactics. Hence, we offer the following research propositions: P4. Greater levels of internal communication among the supplier organization's channel coalitions will be inversely related to the level of internal multi-channel conflict. P5. Greater levels of internal communication among the supplier organization's channel coalitions will be positively related to the level of internal coordination. 2.2. The role of internal market orientation The works of Dwyer and Welsh (1985) on “internal political economy” and Gronroos (1982) on “internal marketing”

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brought to prominence issues internal to the firm that affect the ability of a firm to successfully implement business strategies. Achrol and Kotler (1999, p. 149) suggest further that firms have an internal market network comprised of, “enterprise units that operate as semiautonomous profit centers buying from, selling to, or investing in other internal and external units as best serves their needs on market determined terms of trade but subject to firm policy”. Thus, given that firms have internal coalitions that must be appeased and coordinated to successfully implement any kind of policy or strategy, organizations must engage in “internal marketing”, which suggests that firms should apply the marketing concept internally to be able to apply it externally (e.g., Gronroos, 1982; Gummesson, 1994). Further, the internal marketing concept suggests that an internal market orientation (hereafter, IMO) facilitates the successful implementation of business strategies (Conduit & Mavondo, 2001; Lings, 2004). Hence, we conceptualize IMO as a firm business philosophy that facilitates the overall aims of a firm by encouraging actions that satisfy the needs and objectives of the various internal coalitions. IMO has tremendous implications for the integration of multi-channel strategies because the relationship among the internal channel coalitions of a firm affects the relationships that a firm has with its external channel partners and outcomes from those relationships (Achrol & Kotler, 1999). As we discuss below, the literature and our field data suggest that the multi-channel integration behaviors (internal coordination, internal communication, and superordinate goals) are reflective of an IMO because they facilitate the satisfaction of the needs and objectives of the various internal channel coalitions. Internal Coordination. Internal coordination requires ongoing and systematic gathering of information about the needs and objectives of the various internal channel coalitions. Also, internal coordination as discussed earlier is an attempt to use that information to maximize outcomes for the internal channel coalitions in two ways: (1) individually by attempting to minimize domain overlap among the coalitions (Coughlan et al., 2001; Reve & Stern, 1979), and (2) collectively by using the information to better coordinate the channel to improve channel performance and, hence, increase the overall “pie” of revenues and profits that will be divided among the various channel coalitions (Jap, 2001). Our field data also support the notion that internal coordination involves the systematic gathering of information about internal channel coalitions and the use of that information to satisfy the needs and objectives of the various internal channel coalitions. For example, as discussed earlier, Computer Inc. develops “rules of engagement” for their internal channel coalitions based on a comprehensive inventory of the attributes and capabilities of its various channels, and it has formal channel management groups established to understand the various channel coalitions. And all of the firms interviewed use such data to try to reduce domain dissensus and better serve the interests of their internal channel coalitions. Hence, the next proposition

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P6. The greater a firm's internal market orientation (IMO), the greater the level of internal coordination among its channel coalitions. Internal Communication. Firms use internal communication to gather information about the needs and objectives of their internal channel coalitions. Internal communication is also used to disseminate information to channel coalitions to increase their satisfaction by better aligning perceptions. Also, internal communication facilitates improved outcomes for all of the internal channel coalitions by enhancing internal channel coordination (Moller & Rajala 1999). And firms that exhibit a strong IMO will share knowledge broadly throughout the organization (Conduit & Mavondo 2001; Lings, 2004). Our field data lends support to the notion that communication is a behavior that is reflective of IMO. For example, Computer Inc. encourages bilateral communication through its promotions review board to learn about the needs of its various internal channel coalitions. Both Messaging Inc. and Computer Inc. used written communication to share information about customers and customer-linking activities in an effort to coordinate their internal channel coalitions. Thus, P7. The greater a firm's internal market orientation (IMO), the greater the level of internal communication among its channel coalitions. Superordinate Goals. The financial reward system represented by the implementation of superordinate goals reflects the use of a firm's information about its internal channel coalitions' needs and to facilitate their satisfaction. Since internal channel coalition coordination efforts affect customer satisfaction, firms with an IMO are willing to make internal coordination investments in the form of incentives that reward internal channel coalitions based on the degree to which the firms achieve their overarching multi-channel goals (Achrol & Kotler 1999). Such incentives are designed to reduce the degree to which the interests of internal channel coalitions are in opposition to the overall multi-channel objectives of the firm. Our data also suggests that firms will offer incentives to internal channel coalitions in an effort to align their interests with that of their organizations. In fact, all four firms interviewed used some form of internal channel coalition incentives tied to overarching multi-channel goals. Messaging Inc. compensates their channel heads based on the performance of the entire organization rather than their own channel. Hosiery Inc. gives the brand divisions that manage indirect channels credit for all sales of their brand through their direct channels. And, similarly, Electric Inc. had begun to give their direct sales force credit for all sales through both the retail and MRO channels, while Computer Inc. encouraged their large account sales force to utilize alternate channels by compensating them for that business as well. P8. The greater a firm's internal market orientation (IMO), the greater the degree to which the firm will utilize superordinate goals internally among its channel coalitions.

2.3. Internal and external multi-channel conflict Although the focus of this study was on internal multichannel conflict, analysis of the data revealed that the relationship between conflict internal to the supplier organization and externally with direct channels, intermediaries and customers in the marketplace is important. Indeed, multi-channel conflict among the supplier's internal coalitions can result in vertical or horizontal conflict externally; likewise, external conflict can produce conflict internally among the supplier's channel coalitions. Hence, the reciprocal relationship between internal and external conflicts cannot and should not be ignored. The political economy framework (Arndt, 1983; Stern & Reve, 1980) provides strong support for such an interrelationship among internal and external variables in a multi-channel setting, as does the connection between internal and vertical networks described by Achrol and Kotler (1999). Previous research suggests that perceptions of conflict will be greater in multi-channel distribution systems than in single channel structures (Brown & Fern, 1992). Hence, it is reasonable to posit that as distribution channel systems become more complex – both internally and externally – perceived conflict will also increase both internally and externally. Such a reciprocal relationship between internal and external multichannel conflict is illustrated in the following comments from the data. Four quotations are provided below, one each from Messaging Inc., Computer Inc., Electric Inc., and Hosiery Inc., respectively. “People in the direct sales force have expressed concern [internally] that they are losing accounts or losing customers to [a very large private-label reseller]. [The reseller] is not targeting the Fortune 1000. The instructions they are giving their sales people – and their sales managers have been instructed to do this – is to go get Messaging Inc. customers.” “What [our intermediaries] hate is being embarrassed by their own customers who say, ‘You've been screwing me for the last six months, because I just saw this promotion from [Computer Inc.'s direct channel] and they are giving me a better price than you do.” “If you are an account rep for Electric Inc. today, you are assigned accounts. Suppose [a large national industrial distributor] comes up with an integrated supply contract with one of your top ten accounts. You are going to have to support [the distributor]. You don't have a choice. So that is kind of where we're at and as we struggle internally and, talk about intra-company struggle, there's one right there.” “When you have a new product, you almost never get the demand right [internally]. If it's a hot one, you're always chasing it. So the worst thing that can happen to it is to have one of your department store retailers, and you're not shipping. They walk into a Hosiery Inc. factory outlet and see the same product.”

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From these observations, we offer the next two propositions for research. P9. Greater levels of multi-channel conflict internally among the supplier organization's channel coalitions will be positively related to the level of external channel conflict in the marketplace. P10. Greater levels of external channel conflict in the marketplace will be positively related to the level of multi-channel conflict internally among the supplier organization's channel coalitions. 2.4. The moderating role of the product life cycle Kohli and Jaworski (1990, p. 16) assert that “supply and demand side factors are potential moderators of market orientation on business performance”. A central question in the channel conflict literature is: under what conditions is conflict constructive, or functional, and under what conditions is conflict destructive, or dysfunctional? Coughlan et al. (2001) argue that while conflict is usually thought to be dysfunctional, it can be functional when channel members work through differences, challenge one another to break old habits and assumptions, and improve their collective performance. Consistent with prior marketing research that takes a perceptual view of channel performance (Jap, 2001; Kumar, Stern, & Achrol, 1992), we conceptualize internal multi-channel performance as the perception on the part of the supplier organization's internal channel coalitions/managers of the collective success of the entire portfolio of channels. Ensuring that conflict is functional requires an understanding and recognition of each party's contribution and interdependence. Assael (1969) was the first to examine this issue in a distribution channel setting. Rosenbloom (1973) suggests that channel efficiency increases up to a point as the number of conflict episodes increased, but beyond a certain threshold further conflict episodes become destructive. Investigation of this important topic has continued over time, both empirically from an internal perspective (Barclay, 1991; Maltz & Kohli, 2000), and conceptually from an external perspective (Vaaland & Hakansson, 2003). We believe that the functionality of internal multi-channel conflict is a key issue in this study, and we posit that the stage of the product life cycle affects the functionality of internal multi-channel conflict. Previous research suggests that product category age and demand are important determinants of channel strategy (Anderson & Coughlan, 1987; Frazier & Rody, 1991). Anderson and Zeithaml (1984) find that the stage of the life cycle is an important contingency variable in business strategy formulation and performance. Indeed, firms need to examine the dynamics of multiple channels throughout the life cycle (Frazier, 1999), and to proactively anticipate and modify their distribution channel arrangements as the life cycle progresses (Lele, 1986). Over the long term, conflict among multiple channels is an almost inevitable step as companies adjust to the advancing life cycle (Coughlan et al., 2001). As Hubbard, Kumar, and Stern (2001, p.45) observe, “the rapid growth of multi-channel distribution

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systems has significantly increased the potential for discord between suppliers and channel intermediaries”. Accordingly, we examine the potentially key role of the life cycle as a determinant of the functionality of multi-channel conflict. Results from the interview data illustrate the differences among the four firms with regard to their perception of the functionality of internal multi-channel conflict across the various stages of the product life cycle. Specifically, the life cycle stage plays an important moderating role in determining conflict functionality. Consider first remarks from three channel managers at Messaging Inc., beginning with the Vice President of Sales and Marketing: “If I don't hear my channels bitching at each other, I don't have enough distribution.” “When you've got a business that is growing at a 20% annual rate, the conflict may not have the same focus, or intensity, as it would if you were in a mature business.” “It's a function of the life cycle and evolution of the marketplace. And it's good conflict… Because in an industry that is growing so fast, the key element is awareness.” Messaging Inc. views internal multi-channel conflict as being functional in terms of its impact on internal multi-channel performance. Such conflict not only is an indicator of sufficient market coverage, but also it fosters creativity and innovation, and encourages experimentation that is quickly tested in the market. Computer Inc. channel managers expressed similar views; while they were growing more slowly than Messaging Inc., they were still part of an expanding product market. We begin with the Vice President of Channel Management and Strategy. “If there is no channel conflict, if you don't get complaints… then you should fire me.” “In order to optimize your channel strategy, you must have conflict. You must manage that conflict.” “I don't necessarily think channel conflict is a bad thing. I think it has to be conscious and controlled.” “Yes, there is conflict among the internal channels. Watching conflict and making sure you reach that magic level of healthy conflict versus no conflict, which is unhealthy, versus too much conflict, which is unproductive. I think at this point we are probably short on conflict.” The relatively positive tone of the comments about channel conflict begins to change noticeably with the interview data from the firm in the maturity stage of the product life cycle, Electric Inc. Channel managers expressed concern over the destructive, or dysfunctional, effects of internal multi-channel conflict. “The internal conflict, the internal struggle we have when this occurs is tremendous. We have a paradigm we are in — a tremendous fondness for the electrical distributor.”

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“So our challenge now is how are we going to reduce the conflict between us.” While the detrimental effects of internal multi-channel conflict emerged as a factor in the maturity stage with Electric Inc., its dysfunctional impact on internal multi-channel performance became more pronounced in the decline stage with Hosiery Inc. Such increasingly negative sentiments are reflected by the following remarks from three Hosiery Inc. channel managers. “Cannibalization. Each [brand] division is in the process of trying to develop a way of quantifying cannibalization between a direct channel and their indirect brand channels.” “…the pressure to grow. You have a large-based business. It gets harder to grow.” “Take electronic retailing. We have conflicts with our brand divisions over that. We're saying, ‘hey guys, this is a new world’.” Our interview data and prior research suggest (Webb & Hogan, 2002) that during the introduction and growth stages of the product life cycle, internal multi-channel conflict will have a positive effect on internal multi-channel performance. Indeed, growth markets provide both existing and new channels with sales opportunities (Dwyer & Oh, 1987), making inter-channel cannibalization less likely (Geyskens et al., 2002). Conversely, during the maturity and decline stages of the product life cycle, internal multi-channel conflict will have a negative effect on internal multi-channel performance, often exacerbated by intense inter-channel rivalry (Dwyer & Oh, 1987). This moderating effect of the product life cycle on performance operates in a gradual manner, slowly evolving through the stages from mostly positive to mostly negative, in terms of the overall effects on internal multi-channel performance. Given the close interdependence between internal and external multi-channel conflicts explained earlier, logic suggests that the effect of both forms of conflict on internal multichannel performance will be similar. That is, the influence of external multi-channel conflict on internal multi-channel performance will also be moderated by the product life cycle. Hence, we offer the following four research propositions. P11. During the introduction and growth stages of the product life cycle, the positive effect of internal multi-channel conflict on internal multi-channel performance will be greater in relation to the negative effect. The magnitude of this relationship will decrease gradually as the product life cycle progresses through introduction and growth. Internal multi-channel conflict will have its most positive effect on internal multi-channel performance early in the introduction stage, with a limited effect occurring as growth decelerates. P12. During the maturity and decline stages of the product life cycle, the negative effect of internal multi-channel conflict on internal multi-channel performance will be greater in relation to the positive effect. The magnitude of this relationship will

increase gradually as the product life cycle progresses through maturity and decline. Internal multi-channel conflict will have a limited effect on internal multi-channel performance early in the maturity stage, with its most negative effect occurring as decline accelerates. P13. During the introduction and growth stages of the product life cycle, the positive effect of external multi-channel conflict on internal multi-channel performance will be greater in relation to the negative effect. The magnitude of this relationship will decrease gradually as the product life cycle progresses through introduction and growth. External multi-channel conflict will have its most positive effect on internal multichannel performance early in the introduction stage, with a limited effect occurring as growth decelerates. P14. During the maturity and decline stages of the product life cycle, the negative effect of external multi-channel conflict on internal multi-channel performance will be greater in relation to the positive effect. The magnitude of this relationship will increase gradually as the product life cycle progresses through maturity and decline. External multi-channel conflict will have a limited effect on internal multi-channel performance early in the maturity stage, with its most negative effect occurring as decline accelerates. 3. Discussion In this article, we have drawn from both the extant literature and our field observations to develop research propositions and a conceptual framework of internal multi-channel conflict. Through our conceptual framework, we extend the limited body of conceptual and empirical research about multi-channel distribution. Moreover, our focus on the internal dynamics of multi-channel conflict addresses an important gap in the marketing literature by investigating the integration of multiple channel activities within an organization (Bolton, 2003). Our findings indicate important integration behaviors that influence the level of internal multi-channel conflict are the use of superordinate goals, effective internal communication, and effective internal coordination among the supplier's channel entities. The extent to which suppliers practice these behaviors is affected by their IMO. Interestingly, our research suggests further that the product life cycle stage moderates the effect of both internal and external multi-channel conflict on the internal multi-channel performance. Finally, we find that a positive and reciprocal relationship exists between internal and external multi-channel conflict. In this study we draw from theories in several domains of marketing, including channel conflict (Reve & Stern, 1979), internal market networks (Achrol & Kotler, 1999), market orientation (Kohli & Jaworski, 1990; Narver & Slater, 1990), the product life cycle (Anderson & Zeithaml, 1984), and political economy (Arndt, 1983; Stern & Reve, 1980). The inherent organizational complexity of multi-channel distribution systems justifies the use of such a broad spectrum of theories, and the application and unification of these complementary theories to the study of multi-channel distribution in

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general and internal multi-channel conflict in particular is a key contribution of this research. The conceptual framework we developed in this article provides a theoretical foundation of internal multi-channel conflict. The relative absence of previous research in such an internal multi-channel context in comparison to a dyadic setting between two organizations is noteworthy. For example, in their discussion of the internal political economy, Dwyer and Welsh (1985, p. 398) explicitly state that the domain they examine is “…among channel members (not within a channel member)”. Several other aspects of this research contribute to the literature. We establish an important link between multi-channel conflict that is internal to the supplier firm and that which is external to the supplier firm in the marketplace. Also, using a case-based, cross-industry approach, we identify the importance of a key environmental variable – the product life cycle – as a moderator of the functionality of both internal and external multi-channel conflicts. Finally, we found that key multi-channel integration behaviors are affected by a firm's IMO, a variable that can be controlled by channel managers within the supplier firm. 4. Managerial implications One finding from this research that has practical implications for marketers who manage multi-channel distribution systems is that some degree of conflict is desirable. Properly managed, internal conflict among the supplier's channel coalitions can actually enhance the performance of the overall distribution system. We found this phenomenon to be particularly evident in the early stages of the product life cycle. The major challenge is recognizing the point at which the level of internal multichannel conflict becomes dysfunctional, thereby harming the performance of the overall distribution system. Managers can use assessments of the stage of the product life cycle to determine the desired degree of conflict, and to modify their strategies and tactics accordingly. With this in mind, marketing managers may actually want to take specific actions designed to increase the amount of conflict among their various channels in the growth stages of the life cycle. For example, following the successful introduction of a new product line by the supplier firm's sales force, the supplier may be wise to quickly expand the product offering to additional channels, direct and/or indirect. While such action is likely to be met with resistance by those in the sales force, the overall benefits to the firm may outweigh the drawbacks. Similarly, in the latter stages of the life cycle, firms may find it beneficial to cease using some channels that may be performing well, but at the expense of other less costly channels. Once again such a change is likely to be met with resistance, and care must be taken not to do so in a manner that results in legal or anti-competitive issues, especially with indirect channel partners whose mere survival may depend upon access to the supplier's relevant products. Channel managers also need to understand and appreciate the reciprocal relationship between internal and external multichannel conflicts. When making decisions that are likely to affect one, they must strive to proactively anticipate potential

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ramifications on the other. The internal perspective taken in this study is particularly salient to channel managers. Due to the formal authority they possess within their organizations, their ability to foster a market orientation, implement superordinate goals, and encourage effective communication and coordination is much greater internally than externally with another firm. Channel managers should exploit this critical advantage in their strategies and tactics. 5. Limitations and future research As with any research, our study has limitations that can be addressed by future research. The most significant limitation of this research stems from the fact that the case study methodology utilized involved only four organizations. As is typical in such studies (e.g., Narayandas & Rangan, 2004), the limited number of firms constrains the generalizability of our findings. However, we believe that our careful selection of the focal organizations' businesses mitigates this circumstance, and that our research has important implications for the channel management literature and for further research. Despite the relatively small number of subjects and therefore the lack of statistical validity, such a methodology is more appropriate when the goal of the research is theory development as opposed to theory testing (Bonoma, 1985; Eisenhardt, 1989; Narayandas & Rangan, 2004). In this study, the pursuit of a deeper understanding of internal multi-channel conflict was given precedence over generalizability. Future research in this important area should examine the potential role of channel demand growth (Geyskens et al., 2002) on internal and external multi-channel conflicts. Conceptualized in the form a channel life cycle, research is needed to determine when such a construct might be related to or distinct from the product life cycle in a multi-channel distribution system context. In addition, consistent with the political economy paradigm (Arndt, 1983; Stern & Reve, 1980), future research in this area needs to simultaneously investigate internal and external coordination to determine what relationship exists between the two constructs. Similarly, previous channels research (Frazier, 1983; Gaski, 1984) suggests that relative power and dependence, both internally and externally, may have a moderating effect on internal and external conflicts, respectively. Finally, recent marketing research has focused on intraorganizational factors that affect key account management (Homburg, Workman, & Jensen, 2002; Workman, Homburg, & Jensen, 2003). Determining the effects of internal multi-channel conflict on boundary-spanning personnel such as key account managers would be valuable to academics and managers alike. 6. Conclusion The study of multi-channel distribution strategies and the associated internal dynamics is an increasingly important topic that is underrepresented in the marketing literature (Bolton, 2003; Frazier, 1999). This article focuses on internal multichannel conflict, its antecedents and its consequences. Using a

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Kevin L. Webb (Ph.D., Kenan-Flagler Business School, University of North Carolina) is an Assistant Professor of Marketing in the College of Business at James Madison University. Prior to joining the JMU faculty in 2005, Dr. Webb was a member of the marketing faculty in the Robins School of Business at the University of Richmond and the LeBow College of Business at Drexel University. For seven years before entering academe, Professor Webb worked in the electrical industry for Square D Company as a sales engineer and distribution account manager. His research interests include business-tobusiness marketing, distribution channel management, sales management, and qualitative research methods. He has published articles in Industrial Marketing Management, the Journal of Business-to-Business Marketing, the Journal of Business and Industrial Marketing, and the Journal of Marketing Channels. Dr. Webb's dissertation research in the area of multi-channel distribution systems was selected as the Outstanding Submission by the Institute for the Study of Business Markets.

C. Jay Lambe (Ph.D., The Darden School at University of Virginia) is an Assistant Professor of Marketing in the Albers School of Business and Economics at Seattle University. For ten years prior to entering academe he was engaged in business-to-business marketing for both Xerox and AT&T. His research interests include business-to-business marketing, relationship marketing, marketing strategy, and alliance and key account management. He has also been consulted by businesses, such as Cap Gemini Ernst and Young and MasterCard International, on these topics. He has publications in the Journal of the Academy of Marketing Science, Journal of Product Innovation Management, European Journal of Marketing, Journal of Personal Selling and Sales Management, International Journal of Management Reviews, Journal of Business-to-Business Marketing, Industrial Marketing Management, and Journal of Relationship Marketing. He is on the Editorial Review Boards of the Journal of Business-to-Business Marketing and Industrial Marketing Management. Prior to joining the faculty at Seattle University, he was on the faculty at Virginia Tech and Texas Tech University.