vestigation channel power and satisfaction in a marketing channel

8/11/2019 vestigation Channel Power and Satisfaction in a Marketing Channel

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Abstract — Numerous previous studies have shown that in thecurrent complex business environment, the competition faced by

business organizations is no longer mere interfirm competition, butalso interchannel competition caused by adapting to industryglobalization. Considering this trend, this study discusses thecorrelation between channel power theory, relationship commitmentand channel satisfaction. This study employs the food industry as theresearch subject. The results provide non-coercive power had a

positive and significant impact on the channel firms communicationand commitment, as well as the supplier communication andcommitment had a positive and significant impact on the economicsatisfaction and non-economic satisfaction of channel firms.

Keywords — Channel power, relationship !uality, satisfaction.

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'(')*NT studies have demonstrated that the exertionof channel power and channel relationships have asignificant influence on relationship !uality +, +/, +0,+12, +33. The feeling experienced by channel membersaffects their organizations decision-ma4ing behaviors5members perception of channel power results in thecategorization of channel power +12. "n their studies onchannel relationship between distributors, numerous scholarsemphasized the importance of satisfaction +6, +6. Thesatisfaction is a typical assessment criteria used in channelmar4eting +16. The perceived value of relationship !uality

provides organizations the opportunity to obtain morecustomers. 7ith the wide variety of bric4 and mortar, or

virtual channels, customers can now use these options, whichmay further affect the correlation between their satisfactionand loyalty. The positive or negative outcome from theinteractive relationship between buyers and sellers in modernchannels is influenced by their perception of relationship!uality. "n mar4eting relationship, commitment and trust bothhave a positive impact on factors such as compliance,collaboration, conflict, communication, and uncertainty +/,+10, +32.

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The complexity of the channel environment, diversity inthe modern mar4et, and emphasis on professional jobassignment

and strategic alliance mean organizations in an industry are

no longer separate firms that complete all operationalactivities independently5 instead, they are gradually becominga member of the mar4eting channel system. 8urthermore,relationship !uality is gaining increasing influence oncollaboration in partner relationships. Therefore, this study

98engyi 7u. is %octoral with the :raduate "nstitute of ;anagement <ciences,Tam4ang &niversity, Tamsui, Taipei. *nd *djunct "nstructor with the%epartment of ;ar4eting and (ogistics ;anagement, Chihlee "nstitute of Technology, =ancial, Taipei >corresponding phone? @220-A-B/3A/205 e-mail?annie.wu1BBmsa.hinet.net D.

Euehhua (ee is *ssociate Frofessor with Tam4ang &niversity, Tamsui, Taipei>e-mail? yuehhuamail.t4u.edu.twD

discusses number of topics including the channel power types,the measurement construct for relationship !uality, and thechannel satisfaction types. 7e hoped the research would

identify the factors influencing channel satisfaction and serveas a reference for organizations to allocate their resourcesappropriately, thereby earning long-term competitiveadvantages.

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Channel power results from channel members perceptionof reward and punishment behavior, recognition, professional4nowledge, and s4ills. Thus, channel power can becategorized into five main types, namely rewards power,coercive power, legitimate power, referent power, and expert

power. The five types of power all have a substantial impact,

especially for channel members such as suppliers or distributors. These powers demonstrate intention, their aim ischanging the other partys decision, execution, and, on a

psychological level, their cognition +, +3, +A, +1A, +3/."n numerous studies, communication is considered a factor

involved in the successful development of long-termrelationships. 8rom the people perspective, communication isa way of establishing and maintaining a sound relationship

between different groups or partners who are closelyconnected. Communication has a positive impact on channel

power and satisfaction +, +1, +11."n channel allocation, asymmetry in channel power is

because of the inability to exercise channel power. This leads

to the relatively more powerful channel members ta4ingadvantage of other members fear, which has an adverseimpact on the partners perception and intrinsic trust of eachother. The use of coercive and non-coercive power in channel

power affects partners perception of honesty and benevolenceregarding trust between channel members. *symmetricchannel power causes further imbalance, instability, andreduced trust in channel partner relationships. Therefore,asymmetry in channel power is closely related to thedeterioration of trust. Coercive power is a type of opportunistic behavior rather than an act to offer other members expediency5 the use of coercive power reduces trust

between collaborating partners +, +2, +30.

(iterature discussions on commitment in organizations and buyer behavior also present very important perspectives.Commitment refers to the long-term interactive behavior withcooperative values that partners demand, it is a promise in thetightly connected social exchange relationships betweenchannels and organizational partners +0, +13, +1/, +31,+3. Channel power has a significant impact on strategies,relationship commitment, and collaboration. "n the currentcomplex and competitive mar4etplace, to build a long-termchannel relationship, numerous suppliers and distributors relyon the mutual commitment regarding relationship !uality.

vestigation channel power and satisfaction in amar4eting channel

8engyi. 7u, and Euehhua. (ee



<tudies have found that from the perspective of distributor,the use of coercive power by suppliers restricts and confinesthe commitment partners have toward each other. The use of non-coercive power has a positive effect on partnership bystrengthening the commitment, whereas coercive power has anegative effect on partnerships by wea4ening the commitment+0, +1B, +1, +33, +36, +3A.

"n mar4eting relationship, channel satisfaction is not one-

dimensional but can also be further developed into economicsatisfaction and non-economic satisfaction, or psychologicalsatisfaction or social satisfaction +, +1, +/, +6.'conomic satisfaction is achieved when members of thechannel networ4 system value channel relationships, theobjective achievement rate, partner efficiency and

productivity, and the growth in financial resource allocations5non-economic satisfaction arises from factors such as theimportance members place on their interactions with

partners, how strongly their missions and goals areconnected, the proactive sharing and discussion of their operational designs, and the level of respect experienced. Thetwo types of satisfaction differ in that members of thedistribution channels can contribute in ways >such as stoc4 turnover, marginal profit, and transaction discountsD that leadto the economic satisfaction of commercial partners theyinteract with as appropriate. Gowever, they may be re!uiredto provide elements that can lead to further social or

psychological satisfaction, such as demonstrating behaviorsdeemed as meaningful, which can lead to feeling naturallysatisfied +6, +/, +3.

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This study employed confirmatory factor analysis >C8*D tomeasure the scales construct validity, which includesconvergent validity and discriminant validity. Convergent

validity indicates that the measurement results of the samedimension are highly correlated, and this validity can bedetermined using the composite reliability and averagevariance extracted. This study adopted the threshold valuessuggested determined that the standardized factor loadingshould exceed B.05 the composite reliability should exceedB.5 the average variance extracted should exceed B./ toindicate that convergent validity exists +2. The final resultsappear in Table ". (astly, it is observed that the goodness of fitstatistic is acceptable. The I 1J df >1.B2/D, :8" >B.2/6D, *:8">B.21BD, #;<'* >B.B0/D, and N8" >B.2A1D achieved thesuggested thresholds +1, +3, +, +A.

"n this study, channel power is categorized into coercive power and non-coercive power. Coercive power refers to the power to impose punishment on people who disobey orders5non-coercive power is further categorized into reward power,legitimate power, referent power, and expert power and usedto provide benefits to organizations. This study adopted thechannel power scales developed to construct the!uestionnaire. +B, +3B, +6B. 7hen partners wor4 with oneanother to achieve congruent objectives, they showrelationship commitment. *dditionally, they conducttransactions with appropriate behavior to maintain andstrengthen the long-term collaborative relationship. Therelationship commitment !uestion items were developed from

the modification of the scales proposed by +12 and +3. Thechannel satisfaction is categorized into economic satisfactionand non-economic satisfaction. 'conomic satisfaction arisesfrom the channel members gaining economic benefits,whereas non-economic satisfaction is achieved whenmembers feel valued, happy, and satisfied. This study adoptedthe channel satisfaction scales proposed by +6 and +3 andcategorized satisfaction into economic satisfaction and non-

economic satisfaction. This study used a seven-point (i4ertscale for the !uestionnaire items5 the respondents answeredthe !uestions using a scale of to , which indicatedKstrongly disagree,L Kdisagree,L Kslightly disagree,L Kneither agree nor disagree,L Kslightly agree,L Kagree,L and Kstronglyagree.L

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This study used the t-value and standardized parameter estimates to determine whether the hypotheses are supported.Fositive standardized parameter estimation values indicatethat the test results have a positive correlation5 conversely,negative standardized parameter estimation values indicate

the test results have a negative correlation. Non-coercive power has a positive impact on the distributorscommunication. Non-coercive power also has a positiveimpact on the distributors commitment. Communication hasa positive impact on trust. Trust has a positive impact oncommitment. The greater the suppliers communication, thegreater the economic satisfaction of the distributor. Thegreater the suppliers communication, the greater the non-economic satisfaction of the distributor. The greater thesuppliers commitment to the distributor, the greater their economic satisfaction. The greater the suppliers commitmentto the distributor, the greater their non-economic satisfaction.

).;*N*:'#"*( ";F("C*T"$N<7ith information becoming increasingly transparent,

developments in the way information is exchanged, andadvancements in "nternet applications and communicationtechnologies, business organizations now enjoy a commercialenvironment with no boundaries or time constraints. "n theglobalized business environment, one 4ey development areafor businesses is to incorporate different local cultures,locations, and industry bac4grounds in their organizationalmanagement and models. Traditional business modelsfocused on benefits for the organization itself5 suppliers anddistributors often had conflicting relationships. Nowadays,mar4ets worldwide are considered a single mar4et because of

globalization. The 4ey to achieving critical advantages isoffering a comprehensive supply chain system. 'mphasis iscurrently on enhancing the supplier-distributor relationship tocreate mutual benefits and win-win situations.

This study found that in the food industry, the perceptionthat the supplier-distributor relationship is complex isreflected in their communication and commitment. 7hensuppliers use coercive power, distributors do not tend todisplay strong feelings regarding the communication andcommitment, whereas when suppliers use non-coercive

power, distributors show strong feelings regarding



communication and commitment. This leads to distributorsexperiencing better channel satisfaction with their suppliersand a higher expectation of having a long-term collaborativerelationship with suppliers. Therefore, suppliers mustcontinuously adjust their strategies according to distributor needs to maximize mutual benefits between partners.

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T*=(' "C8* #'<&(T<

(atent variable ;easurementvariable

8actor loading

<tandardizederror t-value Composite

reliability *)' Cronbachs R :oodness of fit

Coercive Fower CF1 B.A10 - -

B.AB B.0/ B.AB/I 1J dfS1.B2/

CF B.20 B.B60 1B.A61 :8"SB.2/6CF3 B.2A B.B6A 2.A2 *:8"SB.21B,

Non-coerciveFower

NCF3 B.22 - -

B.A3/ B.B0 B.A33

#;<'*SB.B0/ NCF/ B.223 B.B66 11.31 N8"SB.2A1 NCF6 B.20B B.B62 1./ NN8"SB.A31 NCF1 B.266 B.B/B 1B.3/0

NCF0 B.2B B.B6A 2.231 NCF B./B B.B0B 0.60

CommunicationC;&1 B.23A - -

B.2A1 B.3/ B.2AC;&3 B.AB B.B6A 1B.6BBC;& B.216 B.B/6 ./33

Trust

T#6 B.22 - -

B.A13 B./ B.A10T#1 B.20/ B.B/ 1.B0T#3 B.201 B.B6/ 1B.A16T# B.20 B.B6 1B.206

CommitmentC;;3 B.202 - -

B.ABA B.02 B.AB2C;;1 B.2A/ B.B60 1.2AC;; B.200 B.B/ 1B.66

'conomic <atisfaction

'<6 B.2/2 - -

B.A2 B.32 B.AA'<3 B.223 B.B60 1B.00'<1 B.200 B.B/B A.A3'< B.212 B.B/3 2.636

Non-economic

<atisfaction

N'<1 B.AB - -B.A1B B.A1 B.A1B N'<3 B.AB/ B.B61 16./06

N'< B.2/6 B.B63 1.0A



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vestigation channel power and satisfaction in a marketing channel

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