Manufacturers' and distributors' capabilities influencing dual channel choice

Abstract

PurposeMany manufacturers implement a dual channel strategy, which can be defined as the simultaneous use of integrated and independent channels of distribution for the same product line. This study employs the resource-based theory and examines how manufacturers' and distributors' capabilities affect manufacturers' choices of dual channel strategy. The study also examines how fit between organisational capability and channel structure affects channel system performance.Design/methodology/approachEmpirical testing was conducted using survey data collected from 262 Japanese business-to-business manufacturers. This study performed a multinomial logistic regression analysis to examine the antecedents of dual channel strategy and a t-test to examine its performance implications.FindingsThe results show that manufacturers' information capabilities and the availability of distributors' selling capabilities affect whether manufacturers choose a dual channel strategy, and that market turbulence moderates the effects of these two capability factors. The results also indicate that manufacturers can improve their channel system performance by choosing channel strategies that fit organisational capabilities.Originality/valueMost previous studies employ transaction cost theory to identify the factors driving the choice of dual channel strategy. However, these studies neglect the heterogeneity of resources/capabilities. Little is known about whether capability factors affect the dual channel strategy, and how this choice can be linked to channel system performance. By addressing this knowledge gap, this study contributes to enhance our understanding of dual channels.

Farmers' choice between endogenous vs. exogenous e-commerce: alignment with resources and performance goals

“…On a wider scale, by investigating how the alignment between external and internal resources and chosen e-commerce model (endogenous vs. exogenous) impacts performance outcomes (market expansion vs. price premium), our study adds to the literature that investigates the role of e-commerce in agribusiness (Fecke et al , 2018; Ng, 2005; Zeng et al , 2017). On top of this, our study also offers insights for scholars who investigate the trade-offs between various types of marketing channels through TCE and RBT lenses in general (He et al , 2013; Ishii, 2020; Kabadayi, 2011) and in the digital setting in particular (Chintagunta et al , 2012; Chircu and Mahajan, 2006).…”

“…Farmers can opt to develop own e-commerce platform or they can use third party e-commerce platforms (Yin et al , 2019). The extant channel management literature suggests that TCE can only to some extent explain the choice between different types of channels and therefore such an approach needs to be complemented with RBT (Ishii, 2020). To account for these effects, we investigate how external (support from an agricultural cooperative) and internal resources (quality labels) shape the effectiveness of endogenous vis-à-vis exogenous e-commerce models.…”

“…According to the literature, e-commerce may increase the profitability of agricultural businesses because of increased sales potential and the ability to decrease search and trading costs (Batte and Ernst, 2007; Montealegre et al , 2007) which advocates the plausibility of the TCE approach. TCE theory (Williamson, 1979, 1981) has been a thriving field that explains a firm's sales and distribution channel choice (Ishii, 2020). The main premise behind TCE is that the actors involved in exchanges are looking for optimal governance modes that will minimize their transaction costs.…”

“…For instance, studies in multichannel management suggest that when a producer's e-commerce platform performs the same functions as the intermediary, then the reliance on the intermediary decreases (Chung et al , 2012). However, recent studies suggest that TCE is not a sufficient theoretical lens to measure the effectiveness of specific channels (He et al , 2013; Ishii, 2020) and suggest that aspects of RBT should be incorporated. RBT views a firm as a bundle of resources and capabilities that can be leveraged when deciding on the optimal organization of firm activities (Barney, 1999).…”

“…RBT views a firm as a bundle of resources and capabilities that can be leveraged when deciding on the optimal organization of firm activities (Barney, 1999). In the channel management domain, RBT envisions that the decision on choosing one's own vs. a third-party channel structure should depend on idiosyncratic resources that a firm can leverage (He et al , 2013; Ishii, 2020). Hence, we suggest that the performance outcomes of the specific e-commerce governance structure adopted by farmers depends on the provision of external (support from an agricultural cooperative) (Zeng et al , 2017) and internal (quality labels) resources (Masuda and Kushiro, 2018).…”