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Going direct to market: The influence of exchange conditions

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  • Sumit K. Majumdar
  • Venkatram Ramaswamy

Abstract

When faced with the strategic choice of going direct to market versus the option of using intermediaries, a firm is posited to evaluate the benefits to customers from going direct to market, and the transaction costs involved in using intermediaries. In this paper, we discuss how these evaluations might differ depending upon the microcharacteristics of the exchange domain. Based on these theoretical considerations, specific propositions are offered regarding the conditions under which firms might rely more heavily on direct channels. These propositions are tested by conducting a cross'sectional empirical analysis using a large sample of manufacturing firms operating in diverse exchange domains. We also control for the impact of macrolevel environmental characteristics, as well as firm‐level characteristics that may influence the direct to market decision. Our empirical results confirm that customer benefits and transaction costs are important considerations in going direct to market.

Suggested Citation

  • Sumit K. Majumdar & Venkatram Ramaswamy, 1995. "Going direct to market: The influence of exchange conditions," Strategic Management Journal, Wiley Blackwell, vol. 16(5), pages 353-372.
    • Handle: RePEc:bla:stratm:v:16:y:1995:i:5:p:353-372
    DOI: 10.1002/smj.4250160503
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    Cited by:

    1. VG Sridharan & Michelle M. S. Phang, 2014. "Dependent on one but vulnerable to another: opportunism threats and control solutions for customization providers," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(2), pages 591-624, June.
    2. Yao, Dong-Qing & Liu, John J., 2003. "Channel redistribution with direct selling," European Journal of Operational Research, Elsevier, vol. 144(3), pages 646-658, February.
    3. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    4. Gautam Ray & Dazhong Wu & Prabhudev Konana, 2009. "Competitive Environment and the Relationship Between IT and Vertical Integration," Information Systems Research, INFORMS, vol. 20(4), pages 585-603, December.
    5. Yao, Dong-Qing & Liu, John J., 2005. "Competitive pricing of mixed retail and e-tail distribution channels," Omega, Elsevier, vol. 33(3), pages 235-247, June.
    6. King, Ruth C. & Sen, Ravi & Xia, Mu, 2002. "Impact of Web-Based e-Commerce on Channel Strategy," Working Papers 02-0123, University of Illinois at Urbana-Champaign, College of Business.
    7. Coelho, Filipe & Easingwood, Chris, 2008. "A model of the antecedents of multiple channel usage," Journal of Retailing and Consumer Services, Elsevier, vol. 15(1), pages 32-41.

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