This article examines governance decisions within an emerging and increasingly common form of channel: the partially integrated channel (PIC). The PIC is defined as a single vertical channel in which both market governance and hierarchical governance exist (i.e., the employees of one channel member work on a full-time basis at an exchange partner's facilities, performing functions that the exchange partner traditionally performs). Building on the transaction cost analysis and governance value analysis literature streams, the authors examine ongoing governance decisions within the PIC. Data were collected in the fashion apparel market of South Korea using multisource, reciprocally matched data in which a manufacturer's directly employed sales force is deployed at department store retailers as the sole frontline employees for their brand. The authors find that brand reputation, downstream market uncertainty, and sales force performance ambiguity influence manufacturer control over sales operations and manufacturer flexibility with retailers in unique ways. The authors discuss implications of this work for theory and practice.
AndersonErin (2008), “The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis,”Marketing science, 27 (January), 70–84.
2.
AndersonErin, Barton, and WeitzA. (1992), “The Use of Pledges to Build and Sustain Commitment in Distribution Channels,”Journal of Marketing Research, 29 (February), 18–34.
CarsonStephen J., MadhokAnoop, and WuTao (2006), “Uncertainty, Opportunism, and Governance: The Effects of Volatility and Ambiguity on Formal and Relational Contracting,”Academy of Management Journal, 49 (October), 1058–1077.
5.
CellyKirti S., and FrazierGary L. (1996), “Outcome-Based and Behavior-Based Coordination Efforts in Channel Relationships,”Journal of Marketing Research, 33 (May), 200–211.
6.
DjelicMarie-Laure, and AinamoAntti (1999), “The Coevolution of New Organizational Forms in the Fashion Industry: A Historical and Comparative Study of France, Italy, and the United States,”Organization science, 10 (September/October), 622–38.
7.
DuttaShantanu, BergenMark, HeideJan B., and JohnGeorge (1995), “Understanding Dual Distribution: The Case of Reps and House Accounts,”Journal of Law, Economics & Organization, 11 (April), 189–205.
8.
Fashion Brands Yearbook (2004), Seoul, South Korea: Fashion Apparel News.
9.
FornellClaes, David, and LarckerF. (1981), “Evaluating Structural Equation Models with Unobservable Variables and Measurement Error,”Journal of Marketing Research, 19 (February), 39–50.
FriedmanThomas L. (2006), The World Is Flat.New York: Farrar, Straus and Giroux.
12.
GhoshMrinal, and JohnGeorge (1999), “Governance Value Analysis and Marketing Strategy,”Journal of Marketing, 63 (Special Issue), 131–45.
13.
GhoshMrinal, and JohnGeorge (2005), “Strategic Fit in Industrial Alliances,”Journal of Marketing Research, 42 (August), 346–57.
14.
GhoshMrinal, and JohnGeorge (2009), “When Should Original Equipment Manufacturers Use Branded Component Contracts with Suppliers?”Journal of Marketing Research, 46 (October), 597–611.
15.
HeideJan B. (1994), “Interorganizational Governance in Marketing Channels,”Journal of Marketing, 58 (January), 71–85.
16.
HeideJan B. (2003), “Plural Governance in Industrial Purchasing,”Journal of Marketing, 67 (October), 18–29.
17.
JapSandy, and GanesanShankar (2000), “Control Mechanisms and Relationship Life Cycle: Implications for Safeguarding Specific Investments and Developing Commitment,”Journal of Marketing Research, 37 (May), 227–46.
18.
JerathKinshuk, and John ZhangZ. (2010), “Store-Within-a-Store,”Journal of Marketing Research, 37 (August), 748–63.
19.
JohnGeorge, Barton, and WeitzA. (1989), “Salesforce Compensation: An Emprical Investigation of Factors Related to Use of Salary Versus Incentive Compensation,”Journal of Marketing Research, 26 (February), 1–14.
20.
JohnstonJohn (1984), Econometric Methods, 3d ed.New York: McGraw-Hill.
JonesGeoffrey, KannoAkiko, and EgawaMasako (2004), “Making China Beautiful: Shiseido and the China Market,” Harvard Business School Case No. 9-805-003, Harvard University.
KulpSusan C., LeeHau L., and OfekElie (2004), “Manufacturer Benefits from Information Integration with Retail Customers,”Management science, 50 (April), 431–44.
25.
LambertDouglas M., MarmorsteinHoward, and SharmaArun (1990), “Industrial Salespeople as a Source of Market Information,”Industrial Marketing Management, 19 (May), 141–48.
26.
LassarWalfried M., MittalBanwari, and SharmaArun (1995), “Measuring Customer-Based Brand Equity,”Journal of Consumer Marketing, 12 (4), 11–20.
27.
LindellMichael K., and WhitneyDavid J. (2001), “Accounting for Common Method Variance in Cross-Sectional Research Designs,”Journal of Applied Psychology, 86 (1), 114–21.
28.
MadhokAnoop, Stephen, and TallmanB. (1998), “Resources, Transactions and Rents: Managing Value Through Interfirm Collaborative Relationships,”Organization science, 9 (May), 326–39.
29.
MaloneThomas W. (1987), “Modeling Coordination in Organizations and Markets,”Management science, 33 (October), 1317–32.
30.
McFarlandRichard G., BloodgoodJames M., and PayanJanice M. (2008), “Supply Chain Contagion,”Journal of Marketing, 72 (March), 63–79.
31.
McFarlandRichard G., ChallagallaGoutam N., and ShervaniTasadduq A. (2006), “Influence Tactics for Effective Adaptive Selling,”Journal of Marketing, 70 (October), 103–117.
32.
MohrJakki, FisherRobert J., and NevinJohn R. (1996) “Collaborative Communication in Interfirm Relationships: Moderating Effects of Integration and Control,”Journal of Marketing, 60 (July), 103–115.
33.
NoordewierThomas G., JohnGeorge, John, and NevinR. (1990), “Performance Outcomes of Purchasing Arrangements in Industrial Buyer Vendor Relationships,”Journal of Marketing, 54 (October), 80–93.
34.
OhJungmi, Susan, and FioritoS. (2002), “Korean Women's Clothing Brand Loyalty,”Journal of Fashion Marketing and Management, 6 (3), 206–222.
35.
OuchiWilliam G. (1979), “A Conceptual Framework for the Design of Organizational Control Mechanisms,”Management science, 25 (September), 833–48.
36.
PodsakoffPhilip M., MacKenzieScott B., LeeJeong-Yeon, and PodsakoffNathan P. (2003), “Common Method Biases in Behavioral Research: A Critical Review of the Literature and Recommended Remedies,”Journal of Applied Psychology, 88 (5), 879–903.
37.
PoppoLaura (2003), “The Visible Hands of Hierarchy Within the M-Form: An Empirical Test of Corporate Parenting of Internal Product Exchanges,”Journal of Management studies, 40 (March), 403–428.
38.
RichardsonJames (1996), “Vertical Integration and Rapid Response in Fashion Apparel,”Organization science, 7 (July/August), 400–412.
39.
RindfleischAric, Jan, and HeideB. (1997), “Transaction Cost Analysis: Past, Present, and Future Applications,”Journal of Marketing, 61 (October), 30–54.
40.
RobertsJohn (2004), The Modern Firm.New York: Oxford University Press.
41.
Sa VinhasAlberto, and AndersonErin (2005), “How Potential Conflict Drives Channel Structure: Concurrent (Direct and Indirect) Channels,”Journal of Marketing Research, 42 (November), 507–515.
42.
SchoonhovenClaudia B. (1981), “Problems with Contingency Theory: Testing Assumptions Hidden with the Language of Contingency ‘Theory’,”Administrative sciences Quarterly, 26 (September), 349–77.
43.
StumpRodney L., and HeideJan B. (1996), “Controlling Supplier Opportunism in Industrial Relationships,”Journal of Marketing Research, 33 (November), 431–41.
44.
WathneKenneth H., and HeideJan B. (2004), “Relationship Governance in a Supply Chain Network,”Journal of Marketing, 68 (January), 73–90.
45.
WeigeltKeith, and CamererColin (1988), “Reputation and Corporate Strategy: A Review of Recent Theory and Application,”strategic Management Journal, 9 (September/October), 443–54.
46.
WilliamsonOliver E. (1975), Markets and Hierarchies: Analysis and Antitrust Implications.New York: The Free Press.
47.
WilliamsonOliver E. (1991), “Comparative Economic Organization: The Analysis of Discrete Structural Alternatives,”Administrative science Quarterly, 36 (June), 269–97.
48.
WilliamsonOliver E. (2002), “The Theory of the Firm as Governance Structure: From Choice to Contract,”Journal of Economic Perspectives, 16 (Summer), 171–96.
49.
WorkmanJohn P.Jr., HomburgChristian, and GrunerKjell (1998), “Marketing Organization: An Integrative Framework of Dimensions and Determinants, Journal of Marketing, 62 (July), 21–41.
50.
WuytsStefan, StremerschStefan, Van den BulteChristophe, and FransesPhilip Hans (2004), “Vertical Marketing Systems for Complex Products: A Triadic Perspective,”Journal of Marketing Research, 41 (November), 479–87.
51.
ZajacEdward, Cyrus, and OlsenP. (1993), “From Transaction Cost to Transaction Value Analysis: Implications for the Study of Interorganizational Strategies,”Journal of Management studies30 (January), 131–46.
52.
ZellnerArnold (1962), “An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias,”Journal of the American statistical Association, 57 (June), 348–68.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
