Retail Buyer Control Systems: Implications of Buyer Behavior Strategies for Performance

Abstract

This study investigates management control systems in retailing and examines how they connect to retail buyers’ behavior strategies and retail performance. We test hypotheses with a structure equation modeling (SEM) based on survey data from 149 merchandising division heads at Japanese supermarkets. The results reveal that outcome-based control promotes buyers’ price negotiation orientation while behavior-based control encourages buyers’ innovative behavior orientation. Moreover, both of these distinct behavior strategies yield greater retail performance. This study contributes toward the development of a generalized model of how retailers can manipulate buyers’ behavior strategies from the management perspective by applying organizational control theory in the field of retail buying.

How do retailers increase the benefits of buyer innovativeness?

“…The positive influence of innovativeness on performance has been well-established across many industries (Calantone et al, 2002;Hohenberg and Homburg, 2016;Jean et al, 2012;Mallin et al, 2014;Matsuo, 2009). Overall, research supports the view that retailers and buyers who utilize innovative practices often benefit in terms of both specific performance measures as well as competition in the marketplace (Kim and Takashima, 2016). As innovative personnel tend to be intrinsically motivated and seek new challenges through open communications (Miao et al, 2007), innovativeness facilitates retail buyers' ability to develop unique and more effective solutions to problems.…”

“…We conceptualize buyer innovativeness as the actions used to proactively create and implement new ideas and approaches to solve strategic issues and problems in merchandising activities (Kim and Takashima, 2016). To understand buyer innovativeness, one must appreciate the role of the boundary spanner.…”

“…First, we captured buyer innovativeness using five items adopted from Kim and Takashima (2016), including buyers' propensity to experiment with new ideas and try new merchandise, sales promotion, or suppliers to problem-solve merchandising issues. Second, inter-departmental communication between merchandising and store divisions was adapted from Rodríguez et al (2007).…”

“…Second, this study is novel in using inter-departmental communication to explain the antecedents of buyer innovativeness. This is important as prior studies examining the antecedents of buyer innovativeness have strictly focused on motivation (Ganesan and Weitz, 1996;Keaveney, 1995) and management control systems (Kim and Takashima, 2016). Few studies have focused on the lateral relations between merchandising and store divisions in retailing.…”

“…Second, several other studies (Ganesan and Weitz, 1996;Keaveney, 1995;Kim and Takashima, 2016) examined the determinants of retail buyer innovativeness through the lens of individuals' psychological factors, such as motivation. However, these studies have not assessed the central role of the boundary retail buyers provide spanning between inside and outside the organization, thus leaving less clarity on how intra-organizational communication influences buyer innovativeness.…”