Conflict management in dual distribution channel systems: the moderating role of learning capabilities
| Date | 12 February 2020 |
| Published date | 12 February 2020 |
| DOI | https://doi.org/10.1108/JABS-02-2019-0052 |
| Pages | 525-540 |
| Author | Ryuta Ishii |
| Subject Matter | Strategy,International business |
Conflict management in dual distribution
channel systems: the moderating role of
learning capabilities
Ryuta Ishii
Abstract
Purpose –In dual distribution channel systems, integrated channels (manufacturer-owned) and
independent channels(distributor-owned) are likely to adopt destructivebehaviours. To suppress such
behaviours, manufacturersneed to implement conflict management systems.The purpose of this study
is to examine the moderatingrole of conflict-learning capability (CLC) in the relationshipbetween conflict
management system and destructive behaviour. This study also investigates whether interactions
betweenconflict management systems andCLC improve the overall channel performance.
Design/methodology/approach –Using survey data from 157 Japaneseindustrial manufacturers, this
study conductedregression analyses and mediationanalyses.
Findings –The results show that boundary and compensation systems have different effects on
destructive behaviours.On the one hand, compensation systems withstrong CLC have a larger impact,
although those with weakCLC can also suppress destructive behavioursto some degree. On the other
hand, boundarysystems with strong CLC suppress destructivebehaviours, but those with weak CLC do
not. In addition, this study reveals that manufacturers with strong CLC can indirectly improve overall
channel performance by implementing conflict management systems and suppressing destructive
behaviours.
Originality/value –Previous studies reveal that boundary and compensation systems suppress
destructivebehaviours. However, these studiesneglect the importance of organisationalcapability in the
successful implementation of conflict managementsystems. By focusing on CLC, this study advances
our understandingof dual distribution and channelconflict.
Keywords Conflict, Organizational learning, Multichannel, Marketing channels, Boundary system,
Compensation system
Paper type Research paper
Introduction
Dual distribution channel system refers to a channel system composed of both integrated
channels (manufacturer-owned) and independent channels (distributor-owned) (Dutta
et al.,1995
;Sa Vinhas and Heide, 2015). Industrial manufacturers[1] often use a dual
distribution channel system to increase the sales of their products and respond to a variety
of customer needs. In fact, a recent survey (Kabadayi, 2011;Takata, 2019) shows that 54
per cent of US industrial manufacturers and 72 per cent of Japanese industrial
manufacturers use both integrated and independent channels to market their products,
suggesting that dual channel systems are becoming the rule rather than the exception in
industrial markets (Sa Vinhas and Anderson,2005;Krafft et al., 2015).
Although dual channel systems provide various benefits to industrial manufacturers,
there are often conflicts[2] between the integrated and independent channels (Eyuboglu
and Kabadayi, 2005;Webb and Lambe, 2007). Channel conflict is “a situation in which
Ryuta Ishii is based at the
Department of Business
Administration, Faculty of
Economics, Fukui
Prefectural University,
Fukui, Japan and Graduate
School of Business and
Commerce, Keio
University, Tokyo, Japan.
Received 13 February 2019
Revised 24 September 2019
11 January 2020
Accepted 11 January 2020
The author would like to thank
Professor Akinori Ono for his
helpful assistance and valuable
comments. The author also
thanks Professor John W.
Cadogan, Professor Tomokazu
Kubo, Professor Yoritoshi Hara
and two anonymous reviewers
for providing constructive
suggestions and valuable
comments. This study was
financially supported by JSPS
KAKENHI (Grant Number
JP17J03156).
DOI 10.1108/JABS-02-2019-0052 VOL. 14 NO. 4 2020, pp. 525-540, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 525
one channel member perceives another channel member(s) to be engaged in behaviour
that is preventing or impeding it from achieving its goal” (Stern and El-Ansary, 1988,
p. 306). In dual channel settings, channel conflicts become apparent in the form of
destructive behaviours, such as refusing to refer leads, hiding information and
withholding assistance (Sa Vinhas and Anderson,2005, 2008). These destructive
behaviours result in poor channel system performance. Thus, manufacturers must design
conflict management systems to restrict such behaviours (Claro et al., 2018;Webb and
Lambe, 2007).
Previous studies have identified two types of conflict management systems: boundary
systems, which differentiate target customers, geographical areas and offered products
across channels, and compensation systems, which offer economic incentives to a channel
if it plays an important role in a sale achieved by the other channel (Moriarty and Moran,
1990;Sa Vinhas and Anderson, 2005). Recent empirical evidence shows that boundary and
compensation systems both help prevent conflict between integrated and independent
channels and reduce the risk of destructivebehaviours (Sa Vinhas and Anderson, 2005;Sa
Vinhas and Heide, 2015).
Previous studies have made valuable contributions to the literature on dual channel conflict
but have neglected the role of organisational capability in the implementation of conflict
management systems. In other words, these studies implicitly assume that the benefits of
conflict management systems do not change with a firm’s organisational capability.
However, given that conflict management systems are complicated and requireinteractions
and negotiations between channel members (Sa Vinhas and Anderson,2005, 2008), not all
manufacturers can effectively implement the systems. This raises the question of what
characteristics describe thosemanufacturers that do have successful conflict management
systems.
The key construct in answering the above question may be found in conflict-learning
capabilities (CLC). This construct refers to a firm’s ability to learn the opinions of its channel
members and the causes of conflict. Recent studies suggest that CLC enable
manufacturers to learn about independent channel members and to achieve superior
performance outcomes (Chang and Gotcher, 2010;Tang et al., 2017). Given that firms with
strong CLC possess much knowledge about channel members and conflicts, these firms
may be better able to implement effective conflict management systems. Thus, it
is important to determine whetherCLC enhance the effects of conflict management systems
on destructive behaviours, for both academic researchers and marketing managers.
Accordingly, the purpose of this study is to investigate the moderating role of CLC in a dual
channel setting.
This study contributes to the literature in the following two important ways. First, it examines
the moderating role of CLC, showing that boundary and compensation systems have
different effects on destructive behaviours. On the one hand, compensation systems with
strong CLC have a larger impact, although those with weak CLC do also suppress
destructive behaviours to some degree. On the other hand, boundary systems with strong
CLC suppress destructive behaviours,but those with weak CLC do not.
Second, this study examines the effects of conflict management systems on economic
performance. Previous studies on dual channel conflict focuson behavioural consequences
such as severe competition and destructive behaviour (Sa Vinhas and Anderson, 2005;
Sa Vinhas and Heide, 2015) but neglect economic consequences. In general, because the
aim of most firms is to improve economic performance, it is claimed that channel research
should focus explicitly on economic indicators such as market share, sales growth and
profit margin (Skinner et al., 1992). This study reveals that manufacturers with strong CLC
can indirectly improve overall channel performance by implementing conflict management
systems and suppressing destructivebehaviours.
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