Empirically Testing the Boundaries of Benevolence in Asymmetric Channel Relations: A Response to Economic Dependence

By Gassenheimer, Jule B.; Houston, Franklin S. et al. | Journal of Managerial Issues, Spring 2004 | Go to article overview
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Empirically Testing the Boundaries of Benevolence in Asymmetric Channel Relations: A Response to Economic Dependence

Gassenheimer, Jule B., Houston, Franklin S., Manolis, Chris, Journal of Managerial Issues

The recent attention paid to reseller-supplier relationships in the marketing literature focuses heavily on both economic and social dependence to explain market exchange and the building and maintaining of channel relationships. This dual focus evolved as researchers began to realize that marketing decisions which were based solely on traditional, economic principles undermined the potentially powerful effects of interpersonal channel relationships, and often resulted in exchanges rife with social problems, inefficiencies, and premature termination (Granovetter, 1985). The social aspects of channel relationships--in conjunction with economic motivations--have proven not only invaluable to long-term, marketing success (Anita and Frazier, 2001; Grewal and Dharwadkar, 2002), but also have provided a foundation for solidarity and win-win business solutions (cf., Anderson and Narus, 1990; Frazier and Rody, 1991).

So why, despite overwhelming support for solidifying effective channels of distribution using both economic and social inducements, do many buyer-seller relationships still interdict the effects of social reasoning and thereby base the strength of relations primarily on economic issues? The literature credits economic dependence, arguing that self-interest dominates channel decisions (e.g., Heide and John, 1988; Wathne et al., 2001; Wathne and Heide, 2000).

Our research aims to shed new light on the attitudes toward and nature of asymmetrically dependent reseller--supplier relationships. We investigate an important social characteristic of these relationships-reseller perceptions of supplier benevolence. Based on self-interest inherent in transaction cost analysis (TCA), we test the notion that in channel settings where small resellers work with several economically stronger suppliers, self-interest, rather than affective attachment (or detachment), drives the future of the relationships (cf., Anita and Frazier, 2001).

Unlike previous marketing channels studies that focus on economic dependence by isolating a single dyadic relationship, the current research expands the single dyad perspective to include multiple, simultaneous dyadic asymmetric relationships. By taking a multi-partner approach to channel relationships, we offer a more valid perspective of how small businesses respond to their asymmetric dependent positions, and interpret the social characteristics of specific relationships. We chose an extreme market situation to study in order to draw the underlying relationships into clear view. Based on extant literature, we contend that (1) reseller economic dependence will affect reseller assessments of relatively powerful suppliers and (2) reseller perceptions of supplier benevolence will mediate these assessments.

In the following section, we review the relevant literature and subsequently develop our model and establish hypotheses. Next, we describe the study's setting, present our measures, and empirically test the conceptual model. After discussing our findings, we conclude with managerial and theoretical implications, limitations, and suggestions for future research.


Economic Dependence

Economic dependence reflects a channel partner's economic reliance on and evaluation of economic opportunities provided by another member of the channel (Frazier, 1983; El-Ansary and Stern, 1972). According to a "midget reseller--giant supplier perspective," when customer loyalty follows supplier brands in consumer-driven, branded markets, survival of small resellers often hinge on a reseller's ability to forge economic relations with a limited number of relatively powerful, self-interest-seeking suppliers. In such cases, resellers need the specific suppliers more than the suppliers need any one reseller. We refer to a relationship where an economic power advantage exists as asymmetric economic dependence.

TCA and dependence theory provide the rationale for why midget resellers yield to the demands of relatively powerful suppliers, and continue in relationships despite skepticism toward supplier self-interest motives (Heide and John, 1988; Wathne and Heide, 2001).

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Empirically Testing the Boundaries of Benevolence in Asymmetric Channel Relations: A Response to Economic Dependence


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