THE EFFECT OF RETAILER CONFLICTS BY
CORPORATE CHANNEL STRATEGY
GOU-FONG LIAW1
Graduate School of Resources Management, National Defense University
ZONG-WEI ZHU
Graduate School of Technology Management, Chung-Hua University
YAO-HSIEN LEE
Graduate School of Technology Management, Chung-Hua University
ABSTRACT
Dual distribution system is commonly seen in industrial markets. Although transaction cost and relationship-marketing theory have been successfully ap-plied to explaining distribution decisions, conflicts among retailers within dual channel are yet to be fully discussed in empirical study. Basically, when a manufacturer sells its product through two different channels, retailers will conflict and compete, given that they have to sell the same product at different prices. The purpose of this paper is to investigate conflicts between the manu-facturer and retailer within a dual channel. Based upon the power and conflict theory, this paper aims to build a conceptual model to explain channel conflicts in a dual channel structure. We dichotomize conflict into constructive and de-structive conflict types in order to further probe the content of conflict. Find-ings show that use of coercive power source will impact destructive conflict positively and significantly, while use of non-coercive power source impacts constructive conflict positively and significantly. Use of power is a mediator between use of power source and conflict. To conclude, we propose some managerial suggestions to manufacturers.
Keywords: Channel Conflict; Destructive Conflict, Constructive Conflict
(Received: August, 2002; 1st revised: September, 2002; 2nd revised: January, 2003; Accepted: March, 2003)
INTRODUCTION
Channel strategy is an important topic in marketing theory. In an attempt to gain more competitive edges, a manufacturer can choose to sell product via two or more
1
We would like to thank the National Science Council (NSC) of the Republic of China for financial assistance. (NSC-89-2416-H-123-002)
channels: vertical integration and/or franchise (Brickley & Frederick, 1987) for in-stance. Under these channel structures, retailers will compete and conflict severely. Reference to literatures about corporate channel decision leads us to summarize that a company’s channel decision relies on product substitution. In real practice, market players often apply two channel structures, namely dual channel, which has become a greater determinant from corporate view of the competition landscape (Gallini & Lutz, 1995). Heide and John (1995) refute that transaction theory fully explains dual chan-nel phenomena because economist concerned more about the firms to sell products through one or two channel. For instance, Heide & Dutta (1998) argues that exclusive dealing has been the subject of intense public policy debate. A central issue in this debate has been the relationship between exclusive dealing and business efficiency. The central finding is that business efficiency factor plays a significant role in a firm’s decision regarding exclusive dealing. It is also found that difficulties with evaluating distributors' adherence to assigned restrictions decrease the likelihood of using exclu-sive dealing in the first place.
That is, conflicts between retailer and manufacturer or among retailers only ex-plain by which channel a company decides to make or buy. This is where we encoun-ter a gap in marketing theory and start to analyze the effects of a manufacturer’s channel structure strategy on retailers conflict. The purpose of this study is to investi-gate channel conflict within dual channel, with empirical work on personal computer industry in Taiwan of R.O.C.
THEORY AND HYPOTHESES
This research aims to discuss how power structure affects conflict management in marketing channel, with questionnaire as survey methodology for empirical analy-sis. Together with published theories and empirical literatures in retrospect, we derive research hypotheses from examining whether channel conflict is influenced by chan-nel structure, manipulation of power source, and power itself, as the hypotheses will be proven by empirical work.
The Relationship between Use of Power Source and Power
Marketing Channel refers to “a structure of composite organizations, whose ac-tivities move product and ownership from producers to consumers”, as by Bucklin (1996) definition. From Pride and Ferrell’s (1991) point of view, marketing channel “is a group made up with individuals or organizations, who are responsible for the process transporting products from producers to consumers.” Channel structure is the number of intermediary merchants in the process of selling and distributing products from manufacturers to customers (Wei Chi-lin, 1993). This is to explicate channel
structure by channel levels – in other words, any intermediary merchant who executes the transaction of a product and its property right to the end buyer represents by itself one channel level. Stern, EI-Ansary and Coughlan (1996) regard channel structure as the status of how groups exchange with one another.
Based on the above, this research sets the marketing channel of personal com-puter (PC) product as the empirical subject to describe channel structure by the ex-change status of channel members. According to industry nature, we may categorize Taiwan domestic PC marketing channel into the following six types (Hu Tung-lai, 1987):
1. Manufacturer→Channel distributor→Independent distributor→Customer 2. Manufacturer→Independent distributor→Customer
3. Manufacturer→Franchise chain store→Customer
4. Manufacturer→Direct sales point of channel distributor→Customer 5. Manufacturer→Direct sales point of manufacturer→Customer 6. Manufacturer→Customer
The research scope covers channels that are more than one single level, in which the relation between independent distributor and supplier is characterized as detached channel structure because their transactions are temporary and at low interdependency. In contrast, franchise chain store, channel distributor and manufacturer’s direct sales point establish a relational channel structure with suppliers. Suppliers own the power to use corporate policy and audit measures to ensure its strategy be effectively imple-mented. Hence, their transactions are long-term oriented and at high interdependency (Weitz & Jap, 1995).
Although Gaski (1984) does not think there is an agreed definition for power, most literatures are quite consistent in interpreting and quoting power as “the ability to change other people’s behavior”, or as “the ability to motivate others to do what they have been unwilling to.” Put in the frame of marketing channel, the idea of power engenders the question of marketing channel power. It is widely acknowledged by academics that EI-Ansary and Stern (1972) define channel power as “a specific channel where a channel member controls the decision-making of marketing strategy of another member from a different channel level”. Two characteristics can be con-cluded for power: (Boyle & Dwyer (1995)) power is an ability or a potential instead of a realistic behavior change（Gaski and Nevin(1985) and (2) power controls the decision-making of channel members to assign each member’s effective and coopera-tive activity and improve eventual performance. The essence of channel power is ex-plicable according to dependency stance – the power of A over B is equal to B’s pendency level upon A. EI-Ansary and Stern (1972) point out that power is (1)
de-pendency and (2) power source function. Etgra (1977) proclaims that power is (1) source of power, (2) dependency, and (3) balance function. This controlling ability is traditionally viewed as the function of power source operated by the influencing party. Source of power reflects on the positioning, experience and ability to reward/penalize other members.
Source of power is also called bases of power. Buch, P. (1980) defines source of power as the source of influence within channel relations. French and Raven (1959) divide the content of power source into 5 kinds: reward, coercive, legitimate, expert and referent power types. In addition, we include Raven and Kruglanski’s (1970) in-formation power as the research variable. Channel leaders have the power source to influence channel members’ decisions and resource allocation. Furthermore, these leaders will gain power in the end.
In practice, the above sources of power are usually correlated and combined in use. As Hunt and Nevin (1974) differ coercive power from other sources of power, it is because coercive power implies negative punishment, while other sources (reward, legitimate, expert, and referent power) are the recognition of channel members toward the power-holding party. Therefore, Hunt and Nevin (1974) divide source of power into coercive and non-coercive type. Gaski (1984) thinks if a source of power is merely presented and not used, the result will be far divergent from or even contrary to the case if source were used in real. For example, having coercive power but not using it will let channel members feel merciful, and thus the conflict level when using such power will decrease and satisfaction level increase. On the other hand, although use of non-coercive power is welcomed by members, showing but not using the power can possibly lower members’ satisfaction level and enhance conflict chance. As a result, this research adopts Gaski’s (1984) view to set suppliers’ use of power source as research variable in place of possession of power source. By differentiating coer-cive from non-coercoer-cive power altogether with above theoretical support, we’ve come to the following research hypotheses:
H1: Positive effect of supplier’s use of power source on its possessed power in mar-keting channel.
H1-1: Supplier’s use of coercive power source positively and significantly affects its channel power.
H1-2: Supplier’s use of non-coercive power source positively and significantly affects its channel power.
The Relationship between Power and Channel Conflict
Gaski (1984) combines several researchers’ views to define channel conflict as the stress and tension resulted from impediment by some channel members against
others’ right to know and performance achievement. Generally speaking, channel conflict is induced by the following reasons, by Stern and EI-Ansary (1972): (1) In-consistent goal: The fact that big manufacturers are growth oriented while retailers are contented with status quo is likely to produce conflicts. (2) Inconsistent activity do-main: Activities of channel members diversify and conflict with one another based upon different target, geographic, function, responsibility, and marketing skills. (3) Inconsistent interpretation of context: Retailers may feel unfair of the way supplier allocates resources and thus trigger conflicts. In channel power structure, conflicts are usually generated by the functional interdependency of merchants’ exchange relations. Use of power is the reaction to a conflict and its trigger as well. In the past researchers held that conflicts were non-functional and destructive, because conflicts tended to induce channel members’ self-defense and further the conflict severity. When a mem-ber establishes use of coercive power, other memmem-bers may react with a even more violent conflict instead of working towards a problem resolution. However, Stern, EI-Ansary and Coughlan (1996) assert that conflict resultantly can be constructive if the channel conflict is properly evaluated and managed. Basing from this point, we come to the hypotheses:
H2: Direct positive effect of supplier’s use of coercive power source on destructive conflict in marketing channel.
H3: Direct positive effect of supplier’s use of non-coercive power source on construc-tive conflict in marketing channel.
Menon, Bharadwaj and Howell (1996) raise a behavioral model to distinguish functional from dysfunctional conflicts. Functional conflicts are health-prone, positive challenges in rationale of thoughts, belief, and hypotheses and generally found in in-novative and successful organizations. Dysfunctional conflicts are unhealthy behav-iors, which are exemplified by distorted and concealed information that hurts decision making and produces antagonism and distrust in interaction.
Rawwas, Vitell and Barnes (1997) hold that channel conflict is inevitable. In general, stress from a low degree tension can alleviate the conflict, but the presence of conflict over a long period of time is all too often destructive at last. It is not appro-priate to look at conflict as a single construct. As a result, Rawwas et al. (1997) divide conflict into constructive and destructive conflict based on its impact on the organiza-tion. Thus, we further the hypotheses:
H4: Significantly positive effect of supplier’s power on destructive conflict in marketing channel.
The Relationship between Channel Source of Power and Conflict
Lusch (1976) researches on the relationship between source of power and con-flict, and finds that coercive source of power increases the channel conflict standard while non-coercive source of power decreases it. Brown, Lusch and Muehling (1983) examine the relationship among source of power, dependency, perception of power and perception of conflict. They conclude that source of power and use of power are at the same time the cause to channel conflict and the solution to resolve or alleviate conflict occurrence. In regards to the relationship between source of power and con-flict, Gaski (1984) observes that coercive source of power is positively correlated to conflict, and non-coercive source of power is negatively related to conflict. Rawwas, Vitell and Barnes (1997) issue findings from how usage of individual source of power affects conflict management: use of expert power increases the outcome of construc-tive conflict results, while coercive power contributes to destrucconstruc-tive conflict results. Besides, using power significantly increases constructive conflict resolution. This re-search moves forward t o hypothesize:
H6: In different channel structure, there is significant difference in supplier’s use of coercive and non-coercive power, channel power and resulted destructive and con-structive conflict.
H7: Different channel structure brings forth significant difference in impact of sup-plier’s use of power source on its power and resulted destructive and constructive conflict.
H7-1: Supplier’s use of coercive power source impacts its power differently in differ-ent channel structures.
H7-2: Supplier’s use of coercive power source impacts destructive conflicts differ-ently and significantly in different channel structures.
H7-3: Supplier’s use of non-coercive power source impacts its power differently in different channel structures.
H7-4: Supplier’s use of non-coercive power source impacts constructive conflicts dif-ferently and significantly in different channel structures.
Theoretical framework of this research with support of above reference litera-tures is illustrated in Figure 1.
H6 H7 Channel Structure Discrete Structure Relationship Structure H2 (+) Use of Coercive Sources of Power Destructive Con-flict Power Use of Non-coercive Sources of Power Reward Power Coercive Power Legitimate Power Expert Power Referent Power Information Power Constructive Con-flict H1-1 (+) H1-2 (+) H3 (+) H5 (-) H4 (+) FIGURE 1 Research Framework
METHODOLOGY
Measurement of ConstructsChannel Structure：EI-Ansary and Coughlan (1996) define channel structure as “the
framework of how channel members exchange products or services”. Domestic PC distributors in Taiwan operate differently by their roles as an independent wholesaler, franchisee, direct sales point of distributor or direct sales point of manufacturer. This research observes past literatures to dichotomize channel structure into two kinds: the
relationship between independent wholesaler and supplier is categorized as discrete channel structure, whereas franchisee and direct sales points of distributor and manu-facturer are categorized as relational channel structure. Sales territory covers Taipei, Hsinchu, Taichung and Kaohsiung.
Use of Sources of Power: According to Buch (1980) on power source, the definition
is “the source of influence in a channel relationship”. From literatures we learn that power source is categorized into power of coercion, of reward, expert, referent, le-gitimate or information. Gaski (1984) believes if power source is only presented and not used, the result will be far from the case if the power source is exercised. We adopt Gaski’s (1984) suggestion and Hunt and Nevin’s (1974) categorization of power source, sorting uses of reward, expert, referent, legitimate and information power into the use of non-coercive power source, as opposed to use of coercive power source. For non-coercive power source, we refer to Gaski’s (1984) measurement of use of non-coercive power source and abide by Likert 5-point scale measurement from “most frequent” (5 points) to “hardly any” (one point). Supplier’s use of coercive power source is measured by Gaski and Nevin’s (1985) method in six questions, also evaluated by Likert 5-point scale from “most frequent” (5 points) to “hardly any” (one point).
Channel Power: EI-Ansary and Stern (1972) define channel power as “a channel
member’s ability to control marketing decision variables of other channel-level mem-bers in a specific channel”. Measurement of questionnaire follows not only Gaski and Nevin (1985)] and Jen-ho Hsieh (1993), but also interviews with companies to con-solidate ten items regarding supplier’s influence on distributors in the matter of mar-keting strategy. Distributor’s power is evaluated by means of distributor induction following Likert 5-point scale measurement from “the weakest” (5 points) to “the strongest” (1 point).
Destructive Conflict and Constructive Conflict: The definition is by Rawwas, Vitell and Barnes (1997) to categorize conflict into constructive and destructive con-flicts by functional and non-functional evaluation of conflict on a channel specifically or overall organization. The definition follows: (1) Constructive conflict: Short-term wise, self-inspection and problem resolution are searched for within the organization upon disagreements of channel members on non-personal issues. (2) Destructive con-flict: Long-term wise, opposition among channel members increases because of dis-agreements caused by personal agenda. Quantifiable modeling follows Rawwas et al. (1997), dividing conflict into constructive and destructive conflicts and measuring by Likert 5-point scale from “most agreeable” (5 points) to “very disagreeable” (1 point).
Sample
Marketing channel of personal computer industry is chosen as the prime research subject, and more specifically, survey subjects include PC distributors at modern in-formation outlets that are merchandised island-wide. Research team conducts personal interviews at Taipei NOVA, TT Station, Hsinchu NOVA, Taichung NOVA, and Kaoh-siung NOVA. In total of five outlets with 167 PC distributors, there are 156 effective questionnaires excluding 11 invalid ones, and the turn-in rate of effective survey is 93.41%. This research releases in total 167 questionnaires and receive 156 effective copies in return, in which independent PC distributors take a propensity. Among them, 14.1% are independent distributors that directly purchase from manufacturers, 63.5% are independent distributors who order from wholesalers, 11.6% is franchise store, and direct sales point is the minority. Direct sales point of wholesaler and manufac-turer respectively takes up 8.9% and 1.9%. In empirical analysis of this research, the independent distributor in sample data is categorized as detached channel structure and in subtotal of 121; franchise and direct sales point are relational structure and in subtotal of 35.
Research Limited
To the effect of research discretion, we carefully design research scope and methodology to suit the context, and yet the design will restrict generalized explana-tion of research results. Channel structure theory is usually expressed in continuum from short-run detached transaction to long-run relational trade. In order to simplify the analysis, we divide channel structure into detached and relational channel struc-tures, and thus we cannot tell the continuum state of each operation type (be it dis-tributor, direct sales point or franchise store). In research sample, the majority belongs to detached channel structure – 121 in subtotal, whereas there are only 35 under rela-tional structure category. It is unavoidable that we encounter some bias or skews when analyzing comparative differences of the two channel structures. The research sample contains only modern outlets with rental space bid by merchandisers. Any other type of PC distributor is not inclusive of survey scope as one of the research constraints.
FINDINGS
ReliabilityThe reliability of use of power source, power and conflict measures was assessed by cronbach’s α and composite reliability. All results are presented in table 1. Given these results from table 1, all of constructs, including use of power source, power and conflict, have acceptable reliabilities (α >0.7; GFI, AGFI >0.9). For further investi-gate construct validity, I use confirmatory factor analysis to assess both use of power source and conflict separately. The results show that all factors loading are significant
(t>2) and that correlation coefficients between factors are low enough and insignifi-cant. Thus, construct validity is satisfied.
TABLE 1
The Results of Confirmatory Factor Analysis Fit Index
construct GFI AGFI
Composite Reliability
Cronbach’s α
Use of coercive power source 0.968 0.916 0.919 0.845
Use of reward power source 0.821 0.819
Use of expert power source 0.821 0.803
Use of referent power source 0.787 0.811
Use of legitimate power source 0.769 0.753 Use Non-coercive power source Us of information source 0.928 0.901 0.849 0.876 Power source 0.965 0.931 0.813 0.837 Construct conflict 0.774 0.734 Destructive conflict 0.976 0.882 0.767 0.791
Effect on relationship of path of Model
To investigate the impact of exercised of power source to channel destructive and constructive conflict, I use LISREL model to estimate structure paths. Correlated pairs of exogenous or endogenous constructs are not shown here for the sake of clarity. Overall, the model fit very well (GFI=0.921, AGFI=0.885, RMR=0.021). The results presented in Table 2.
TABLE 2
Summaries of Direct Effect, Indirect Effect and Total Effect Direct Effect Indirect Effect Total Effect Variables Use of Coercive Power Source Use of Non-coercive Power Source Power Use of Coercive Power Source Use of Non-coercive Power Source Power Use of Coercive Power Source Use of Non-coercive Power Source Power Power 0.024 0.654* --- ---- --- --- 0.024 0.654* --- Destructive Conflict 0.668* ---- -0.245 -0.565* -0.785* --- 0.503* -0.785* -0.245 Construct Conflict --- 0.231 0.324 0.389* 0.689* --- 0.678* 0.922 * 0.324 Note: ‘*’ t>2.
Above table on data shows that, in direct effect, a manufacturer’s use of coercive power source has insignificantly positive effect on power, but significantly impact on destructive conflict. In indirect effect, the path “use coercive power source→power→ destructive conflict” is negative and significant and the path “use non-coercive power
source→power→destructive conflict” is negative and significant. The path both, “use coercive power source→power→constructive conflict” and “use non-coercive power source→power→constructive conflict” are significantly positive. These results reveal that, manufacturers exercise coercive power source will increase destructive conflict directly. However, while manufacturers exercise non-coercive power source not only will impact constructive conflict significantly but also increase power significantly. Thus, manufacturers can increase constructive and weaken destructive conflict by way of using power. For controlling the moderating effect of channel structure, we use multi-group of LISREL model to estimate coefficients separately. The results summa-rized as followers.
TABLE 3
Results of Structure Path Coefficient under Relationship Marketing Channel
exogenous endogenous Coercive Power Source Reward Power Source Expert Power Source Referent Power Source Legitimate Power Source Information Power Source Power Power 0.11 0.70* -0.22 0.31 0.46* 0.43* -- Destructive Conflict 0.56* -- -- -- -- -- -0.15 Construct Conflict -- 0.07 -0.16 0.14 0.37* 0.04 0.21 Note: ‘*’ t>2. TABLE 4
Results of Structure Path Coefficient under Discrete Marketing Channel
exogenous endogenous Coercive Power Source Reward Power Source Expert Power Source Referent Power Source Legitimate Power Source Information Power Source Power Power 0.02 0.04 -0.34* 0.43* 0.17* 0.10 -- Destructive Conflict 0.46* -- -- -- -- -- -0.18 Construct Conflict -- 0.21 -0.17 0.20 0.27* 0.03 0.09 Note: ‘*’ t>2.
Table 3 shows that, under relationship marketing channel, reward, legitimate and information power source have a significant positive effect on power and that legiti-mate power source has a significant positive and direct effect on constructive conflict. These results imply that manufacturer can use legitimate power source to increase power as well as increase construct conflict. But within discrete marketing channel, expert has a significantly negative effect on power and that referent, legitimate impact on power positive and significantly. Legitimate power source also has significantly positive and direct effect on constructive conflict. These results reveal that no matter what the channel structure, increasing legitimate power source is the effective way of increasing constructive conflict. Tables 4 shows that within relationship marketing
channel, information power source directly influences power but power insignifi-cantly impact destructive as well as constructive conflict. So, information and reward power sources are only influence power. Within discrete marketing channel, coercive power source has a negative and direct effect on destructive conflict and that both re-ward and information power sources are not effective factors to influence power. These results imply that within discrete channel manufacturers can’t increase power by way of using reward and information power sources. Especially, if manufacturers use of expert power source will decrease power and thus use of expert power source is not an effective way of increasing power.
Conclusion and Managerial Implication
This study examines the process of managing conflict in channel distribution by using power sources and channel power. Prior empirical research in marketing chan-nel has conducted by investigating only destructive conflict and ignoring construct conflict. In this article, we dichotomize conflict into two types, which are destructive and constructive conflict and it will be useful to manage conflict. Data were collected from a survey of 156 personal computer dealers about their relationship with their primary suppliers.
The results of this study are summarized as followers: According to research re-sults on table 5 shows that, manufacturers use of non-coercive power sources are posi-tively related with channel power and, when conflict occur, exercised non-coercive power source are able to indirectly decrease destructive outcomes and increase con-struct outcomes. In addition, exercised coercive power sources are directly increase destructive outcomes. No matter what the channel structure is a relational or discrete, only exercise of legitimate power sources is positively associated with constructive conflict and constructive conflict in the relational channel structure is more significant than discrete channel structure.
In PC marketing channel, use of non-coercive power source is positively corre-lated with power. This is because use of supplier’s non-coercive power source is for the purpose of encouraging or helping distributors to effectively implement marketing strategies and achieve business goal. Use of non-coercive power is more likely to earn identification from distributors and increase influence over them at the same time. Use of coercive power source is directly and significantly correlated with destructive con-flict in channel. Our research supports the viewpoint of Gaski (1984) and Rawwas, Vitell and Barnes (1997) showing that use of supplier’s coercive power increases op-positions among channel members and result in destructive conflicts within channel
relationship. In addition, despite that use of non-coercive power source does not have direct and significantly positive correlation with constructive channel conflict, it is viable to indirectly and significantly decrease occurrence of destructive conflict and increase constructive conflict through power influence. To suppliers, use of non-coercive power source is an effective influence strategy for conflict management.
In relational channel structure, use of supplier’s reward and legitimate power and chances of constructive conflict are significantly greater than those in detached chan-nel structure. We infer that this is because in relational chanchan-nel structure, contract (chain store) or direct exclusive relationship (distributor’s or manufacturer’s direct points of sales) binds suppliers and distributors. Suppliers use its corporate policy and audit mechanism to ensure strategies are effectively practiced, and thus suppliers are more powerful. If suppliers and distributors have long-term partnership and both are dedicated to achieving business goals, their conflicts are oftentimes constructive and gaining.
In both relational and detached channel structures, use of supplier’s coercive power is significantly and positively correlated to destructive channel conflict. In rela-tional channel structure, supplier’s use of reward, legitimate, and information power is positively correlated to its power. Whereas in detached channel structure, supplier’s use of expert, referent and legitimate power is positively correlated to its power, in which the practice of expert power is significantly and negatively correlated with power. This is probably because in PC channel, independent distributors are more self-centered about their own business management philosophy, and think that suppli-ers’ suggestions are not only unnecessary but also geared to defeat distributors’ ego. In relational or detached channel structure, only the use of legitimate power is positively correlated with constructive conflict. Increasing PC supplier’s use of legitimate power will be beneficial for conflict management in marketing channel.
According to the conclusion of this research, we propose some suggestions and managerial implication. 1. Under relational marketing channel, manufacturers have to establish an award system, which can motivate distributors, or to establish the fast business information system, understand the need of user and the future tendency of marketing. Manufacturers should establish the marketing policy, strategy clearly to provide the distributor to fit. In addition, manufacturers as well can by way of society public welfare of participate, receive the approbation of the distributor, or is to accord with distributor, establish the corporate action norms. 2. Under discrete marketing channel, manufacturers should not use of expert power source to increase construct conflict but use of referent and legitimate power source are more effective way of
in-creasing construct conflict although these two power sources are not significant effect on both types of conflict. 3. Finally, manufacturers should avoid adopting punitive strategy to distributors, and excessive professional recommend increase the influence of distributors. Exercised of the legitimate power is the most effective strategy to in-crease the constructive conflict. However, exercised of the legitimate power is a norm of contractual basis primarily to do, including all kind of marketing dynamic activity and the allocation way of the channel profit. Once contractual relationship was build, retailers will recognize that manufacturers have legal rights to limit and punish them, so all marketing activity, which including promotion, pricing, will be harmonized.
Channel climate is not taken into consideration in this research framework. Key-suk Kim (2000) believes channel climate (including Dyadic Trust and Dyadic Rela-tionship Continuity) will disturb inter-firm power asymmetry, use of coercive influ-ence strategies, and the relationship between the two. It will be facilitative to include channel climate and channel trust relations in research framework for a better under-standing of the impact from coercive and non-coercive channel power source on channel conflict, as a tentative direction for future research colleagues.
TABLE 5
Summary of Research Hypotheses and Tests Results
Tests Results
H1-1 Supplier’s use of coercive power source has no significant impact on its power. Not supported H1-2 Supplier’s use of non-coercive power source has significantly positive impact on its power. Supported H2 Supplier’s use of coercive power source has significantly positive impact on destructive
conflict in channel. Supported
H3 Use of non-coercive power source has direct and significant positive effect on constructive
conflict in channel. Supported
H4 Supplier’s power does not show any significant negative impact on destructive conflict in
channel. Not supported
H5 Supplier’s power hasn’t any significant and negative impact on constructive conflict in
channel. Not supported
H6 1. In relational and detached channel structure, use of coercive power source does not show any significant difference.
2. In relational channel structure, use of reward and legitimate power is significantly greater than in detached channel structure, whilst there are no significant difference in use of expert, referent and information power.
3. In relational channel structure, supplier’s ownership of channel power is significantly greater than in detached channel structure
4. In relational and detached channel structure, the scale of destructive conflict among channel members is pretty much the same.
5. The scale of constructive conflict in relational channel structure is significantly greater than that in detached channel structure.
Partly supported
H7-1 The impact of supplier’s use of coercive power source on its power does not show any
significant differences in between different channel structures. Not supported H7-2 In both relational and detached channel structures, use of supplier’s coercive power source
shows positive impact on destructive conflict without any major difference. Not supported H7-3 In relational channel structure, use of reward, legitimate and information power has
sig-nificant impact on power itself. In detached channel structure, use of expert, referent and legitimate power has significant impact on power.
Supported H7-4 In relational and detached channel structures, only the use of legitimate power within
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Biographical Sketches
1. Gou-Fong Liaw, Management Scholar, earned his Ph.D. degree at the University of Taiwan; he is an Associate Professor of Graduate School of Resources Manage-ment, National Defense Management College. His current research interests include Marketing Channel, Marketing Strategy and Promotional Strategy.
2. Zong-Wei Zhu, Management Scholar, he is a Graduate Student of Doctor, Gradu-ate School of Technology Management, in Chung-Hua University. His current re-search interests include economic and social systems in organizational behavior. 3.Yao-Hsien Lee, Economic and Management Scholar, earned his Ph.D. degree at the
University of North Carolina; he is an Associate Professor of Graduate School of Technology Management, Chung-Hua University; His current research interests in-clude economic and industry systems in organizations.
