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The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis

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  • Erin Anderson

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

This descriptive study explores the reasons for integration of the personal selling function, i.e., the use of employee (“direct”) salespeople rather than manufacturers' representatives (“reps”). A hypothesized model is developed based on both transaction cost analysis and the sales force management literature. Data from 13 electronic component manufacturers covering 159 U.S. sales districts are used to estimate a logistic model of the probability of “going direct” in a given district. Results are shown to be stable across specification and estimation methods and to fit the data well. The transaction cost model is generally supported. The principal finding is that the greater the difficulty of evaluating a salesperson's performance, the more likely the firm to substitute surveillance for commission as a control mechanism, i.e., to use a direct sales force. Among other findings, direct sales forces are also associated with complex, hard-to-learn product lines and with districts that demand considerable nonselling activities. Several factors prove unrelated, including company size, the amount of travel a district requires, and the importance of key accounts. This article was originally published in , Volume 4, Issue 3, Pages 234–254, in 1985.

Suggested Citation

  • Erin Anderson, 2008. "The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis," Marketing Science, INFORMS, vol. 27(1), pages 70-84, 01-02.
    • Handle: RePEc:inm:ormksc:v:27:y:2008:i:1:p:70-84
    DOI: 10.1287/mksc.1070.0333
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    References listed on IDEAS

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    Cited by:

    1. Murali Mantrala & Sönke Albers & Fabio Caldieraro & Ove Jensen & Kissan Joseph & Manfred Krafft & Chakravarthi Narasimhan & Srinath Gopalakrishna & Andris Zoltners & Rajiv Lal & Leonard Lodish, 2010. "Sales force modeling: State of the field and research agenda," Marketing Letters, Springer, vol. 21(3), pages 255-272, September.
    2. Alessandro Banterle & Stefanella Stranieri, 2013. "Sustainability Standards and the Reorganization of Private Label Supply Chains: A Transaction Cost Perspective," Sustainability, MDPI, vol. 5(12), pages 1-17, December.
    3. Miao Li & Luluo Peng & Guijun Zhuang, 2020. "Sales Control Systems and Salesperson Commitment: The Moderating Role of Behavior Uncertainty," Sustainability, MDPI, vol. 12(7), pages 1-18, March.
    4. Perna, Andrea & Cardinali, Silvio & Gregori, Gian Luca, 2013. "Coping with alternatives in sales organisations: Experiences from an Italian company," jbm - Journal of Business Market Management, Free University Berlin, Marketing Department, vol. 6(3), pages 107-122.
    5. Rambocas, Meena & Meneses, Raquel & Monteiro, Carlos & Brito, Pedro Quelhas, 2015. "Direct or indirect channel structures. Evaluating the impact of channel governance structure on export performance," International Business Review, Elsevier, vol. 24(1), pages 124-132.
    6. Ramos, Carla & Claro, Danny P. & Germiniano, Renato, 2023. "The effect of inside sales and hybrid sales structures on customer value creation," Journal of Business Research, Elsevier, vol. 154(C).

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