The Impact of Channel Function Performance on Buyer-Seller Relationships in Marketing Channels

Distributors, across sectors and countries, are faced by the threat of disintermediation. In many industries, horizontal consolidation and advances in information technology have made it easier for manufacturers to bypass distributors and do business directly with consumers. Distributors have responded to this threat or other destructive acts in a number of different ways that can be represented through Hirschman's (1970) Exit-Voice-Loyalty framework. One additional response that distributors frequently adopt is developing countervailing power through dependence-balancing actions. These actions are designed to strengthen bonds with customers and often manifest themselves in the provision of improved channel services to customers. Does this strategy work? We seek to address this in our paper. Specifically, we examine the nature and magnitude of the direct and interactive effects of (a) the performance of marketing functions and services by a distributor and (b) the dependence structure of its relationship with its customers on different dimensions of relationship quality - satisfaction, trust, commitment and conflict. Of particular interest to us is the effect of functional performance on relationship quality in situations characterized by high relative dependence of the distributor on the customer - this closely approximates the situation that many distributors, faced by the threat of disintermediation, find themselves in. Hypotheses from our model are tested using data collected from the paint industry in the Netherlands and Belgium.