A Model of Distributor Firm and Manufacturer Firm Working Partnerships

Author(s): James C. Anderson and James A. Narus

Source: Journal of Marketing, Vol. 54, No. 1 (Jan., 1990), pp. 42-58
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/1252172 .
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 James C. Anderson & James A. Narus

A Model of DistributorFirm
and Manufacturer Firm
Working Partnerships
A model of distributor firm and manufacturer firm working partnerships is presented and is assessed
empirically on a sample of distributor firms and a sample of manufacturer firms. A multiple-informant
research method is employed. Support is found for a number of the hypothesized construct relations
and, in both manufacturer firm and distributor firm models, for the respecification of cooperation as an
antecedent rather than a consequence of trust. Some implications for marketing practice are discussed
briefly.

M ARKETPLACE trends have underscored the
need for a better understanding of working part-
nerships between manufacturer firms and distributor
firms. Sales through wholesaler-distributors have been
growing at a rate faster than the U.S. gross national
product (GNP) and topped the $1.4 trillion mark in
1987 (Arthur Andersen & Co. 1987). In another trend,
significant consolidation is occurring in the whole-
sale-distribution industry as larger, professionally
managed firms acquire smaller "mom-and-pop" firms
at a rapid rate. Finally, end-user or customer firms
have signalled through the growth of systems con-
tracts and preferred vendor programs an increased de-
sire to concentrate their purchases with fewer whole-
saler-distributors, to whom they offer longer-term
JamesC.Anderson is theWilliamL.FordProfessor of Marketingand
WholesaleDistribution andAssociateProfessorof Behavioral
Science
in Management,J. L.Kellogg GraduateSchoolof Management, North-
westernUniversity.
JamesA. Narusis AssociateProfessor of Manage-
ment,Babcock Graduate Schoolof Management, WakeForestUniver-
sity.Theauthorsgratefully acknowledgethe financialsupportof the
MarketingScienceInstituteandthe Distribution
Research & Education
the helpfulcomments
Foundation, andsuggestions of ErinAnderson,
F.RobertDwyer,GaryFrazier, GeorgeJohn,Robert Spekman, Barton
Weitz,andthethreeanonymous JMreviewers, andthe assistance of
Sethuraman withtheanalysis.
Rajagopalan
commitments (Arthur Andersen & Co. 1987). As a
confluent result, manufacturer firms and distributor
firms are involved in fewer, but increasingly signifi-
cant, working partnerships in which better coordina-
tion of marketing and technical activities is essential
for their mutual success in the customer marketplace.
In this article, we report a study of distributor and
manufacturer working partnerships, which we define
as the extent to which there is mutual recognition and
understanding that the success of each firm depends
in part on the other firm, with each firm consequently
taking actions so as to provide a coordinated effort
focused on jointly satisfying the requirements of the
customer marketplace. Aspects of manufacturer and
distributor working partnerships have received con-
siderable attention in channels research over the past
20 years (e.g., Frazier 1983a; Frazier and Sheth 1985;
Stern and Reve 1980). We attempt to contribute to
this knowledge and research in marketing channels in
at least two ways. First, we develop and present a
model of distributor firm and manufacturer firm work-
ing partnerships that is both broad in scope and spec-
ified in a testable form. Ster and Reve (1980) and
Frazier and Sheth (1985), in particular, have stressed
the need for constructing and testing more compre-
hensive models of marketing channel phenomena.
Second, we report an initial empirical assessment of

Journal of Marketing
42 / Journalof Marketing,January1990 Vol. 54 (January 1990), 42-58

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this model with research employing multiple infor-
mants within distribution firms and within manufac-
turer firms drawn from a cross-section of industries.
Phillips (1981) has demonstrated the need to use mul-
tiple informants within each firm to obtain more valid
estimates of organizational properties, and rarely have
both the manufacturer's and the distributor's perspec-
tives on channel partnerships been assessed empiri-
cally. John and Reve (1982) and Eliashberg and Michie
(1984) studied the joint perspective of manufacturers
and distributors, which has been referred to as a dyadic
perspective (cf. Achrol, Reve, and Stem 1983). In
contrast, we first assess separately the manufacturer
firm and distributor firm perspectives on working
partnerships. Then we assess the commonalities and
differences across perspectives.
A Model of Working Partnerships
Building on previous work in social exchange theory
(Kelley and Thibaut 1978; Thibaut and Kelley 1959)
and interorganizational exchange behavior (Anderson
and Narus 1984; Cadotte and Stem 1979; Frazier 1983a;
Robicheaux and El-Ansary 1976) and melding this work
with a series of interviews with 20 manufacturer firm
and distributor firm managers, we constructed a com-
prehensive model of ongoing, working partnerships in
marketing channels (Figure 1). Like previous concep-
tual models in this area (e.g., Cadotte and Ster 1979;
Dwyer, Schurr, and Oh 1987; Frazier 1983a;
Robicheaux and El-Ansary 1976), this model is meant
to apply to both manufacturerfirm and distributor firm
perspectives on working partnerships. The rationale is
that both firms are participants in the same exchange
relationship and, though they differ in the marketing
functions they perform, symmetry is expected in the
behavioral constructs that underlie the relationship. In
contrast, differences between manufacturers and dis-
tributors are expected in terms of the indicators that
reflect these constructs and the presence or relative
strengths of the posited construct relationships. Fi-
nally, the constructs in this model are conceptualized
as firm-level representations of the critical factors in
working partnerships.
Dependence and working partnerships. Depen-
dence, influence (i.e., power), and conflict are per-
haps the most widely studied aspects of channel work-
ing partnerships(Frazier 1983a; Heide and John 1988).
Dependence on the working partnership is concep-
tualized for each firm as outcomes given comparison
levelfor alternatives (CLat) (cf. Anderson and Narus
1984; Kelley and Thibaut 1978). CLalt in this context
is a standard that represents the overall quality of out-
comes (economic, social, and technical) available to
the firm from the best alternative exchange relation-
ship. Rather than simply considering a firm's per-
A Modelof DistributorFirmand Manufacturer
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ceived dependence on a working relationship, we con-
tend that the firm's perception of its dependence relative
to its partner's dependence on the relationship is a
construct of greater interest in channels research. It is
this relative dependence that determines the extent to
which a firm will have influence over, and be influ-
enced by, its partner. Relative dependence can be de-
fined as a firm's perceived difference between its own
and its partner firm's dependence on the working part-
nership. This relative dependence construct is sup-
ported by previous conceptual and empirical work on
interdependence (Cadotte and Ster 1979; Robicheaux
and El-Ansary 1976), countervailing power (Etgar
1976), and "power advantage" (Emerson 1962).
A primary consequence of relative dependence is
influence, or power. The conceptualizations of "in-
terfirm power," "potentialfor influence," and "achieved
influence" advanced by Frazier (1983b; Frazier and
Summers 1984, 1986; Frazier and Sheth 1985), which
are compatible with social exchange theory, appear to
offer the most managerially germane theoretical ex-
planation of the channel power phenomenon. Build-
ing upon this work, we use the constructs influence
over the partnerfirm and influence by the partnerfirm
to reflect the interdependent nature of working part-
nerships and the resultant need to have one's partner
firm take actions that can bring about (directly or in-
directly through facilitation) better outcomes for one's
own firm. These constructs representthe extent to which
a firm has applied its power to induce desired actions
by its partner firm. By doing so, a firm can "shape
its relationship with another firm" (Frazier 1983a). This
conceptualization of the influence constructs also is
consistent with the concept of behavioral control (cf.
Anderson and Narus 1984; Kelley and Thibaut 1978),
where by varying its own actions, a firm can make it
in the best interest of the partner firm to covary its
actions.
We predict a positive link between relative depen-
dence and influence by the partner firm and a negative
link between relative dependence and influence over
the partner firm. Specifically, we contend that the firm
with greater relative dependence has, by definition,
relatively greater interest in sustaining the relation-
ship, and that one way to do so is to be more receptive
to requests and amenable to changes suggested by its
partner firm. In contrast, the firm with lesser relative
dependence can use its superior position to request
changes of its partner that it believes will either mu-
tually increase the outcomes of both partners or singly
increase its own outcomes from the relationship (which
will have the effect, though, of moving the relation-
ship toward parity in relative dependence). These re-
lationships are supported by substantial conceptual and
empirical work (e.g., Frazier and Summers 1986; Gaski
1984).
FirmWorkingPartnerships
/ 43
 FIGURE1
Model of Manufacturer and Distributor Working Partnerships
In our model, conflict represents the overall level
of disagreement in the working partnership (for a re-
view of channel conflict research, see Reve and Ster
1979). As such, conflict is determined by the fre-
quency, intensity, and duration of disagreements. On
the basis of past research (Frazier 1983a; Gaski 1984),
we predict a positive causal relationship between in-
fluence by the partner firm and the level of conflict
in the working relationship. Conversely, we posit a
negative causal relationship between influence over
the partner firm and conflict (Gaski 1984). The greater
the influence a firm has over its partner firm, the less
conflict the firm encounters because it is in the best
interest of the partner to comply with the firm's re-
quests for action.
Coordinating efforts in working partnerships. In
this section, we consider constructs that underlie the
process of working together within a partnership. Be-
cause our modeling efforts focus on ongoing partner-
ships, we begin with the current evaluation of past
relationship outcomes. The construct that captures this
evaluation is outcomes given comparison level (CL),
which is a focal construct of social exchange theory
(cf. Kelley and Thibaut 1978; Thibaut and Kelley
1959). Outcomes given CL is defined as a firm's as-
44 / Journalof Marketing,
January1990
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sessment of the results (rewards obtained minus costs
incurred) from a given working partnership in com-
parison with expectations based on present and past
experience with similar relationships, and knowledge
of other firms' relationships (Anderson and Narus
1984).
Closely linked with outcomes given comparison
level is the construct communication, which can be
defined broadly as the formal as well as informal shar-
ing of meaningful and timely information between firms
(Anderson and Narus 1984). This definition has as its
focus the efficacy of information exchange rather than
the quantity or amount, and the construct inherently
taps past communications. That is, an informant who
is asked to characterize his or her firm's communi-
cation with a partner firm reflects on recent past ex-
perience between the firms.
We predict a positive correlation between out-
comes given comparison level and communication
(Anderson and Narus 1984). An explanation for this
prediction is reciprocal facilitation, whereby attaining
outcomes that surpass the comparison level facilitate
good communication between firms and communi-
cation facilitates achieving outcomes that surpass the
comparison level. We also predict a positive corre-
lation between relative dependence and outcomes given
 CL, based on the conceptualizationsof CLalt and CL
given by Thibaut and Kelley (1959), whereby out-
comes available from the best alternativerelationship
are a part of the firm's experience and so contribute
to the firm's expectations.
Trust in a working relationship and its implica-
tions for a firm's actions have been defined as "the
firm's belief that another company will perform ac-
tions that will result in positive outcomes for the firm,
as well as not take unexpected actions that would re-
sult in negative outcomes for the firm. The strength
of this belief may lead the firm to make a trusting
response or action, whereby the firm commits itself
to a possible loss, dependingupon the subsequentac-
tions of the othercompany"(AndersonandNarus1986,
p. 326). Truststill will be maintained,however, if the
firm believes its partnerhas taken the expected ac-
tions, but that forces beyond its control have negated
the expected outcomes. Some care must be taken,
though, in generalizing trust as a construct in inter-
personalrelationsto trust in working partnerships.In
interpersonal relations, participants expose them-
selves and theirown resourcesto potentialloss whereas
in interorganizationalrelations, it is the firm that po-
tentially will incur the loss. Trust as a construct in
channel partnershipstherefore may entail less inten-
sity and personal commitment.
We posit a positive path from outcomes given
comparisonlevel to trust. The rationale is that a re-
view of past results in comparisonwith expectations
leads to the firm's predictionor estimate of the extent
to which the partnerfirm will follow through on its
currentpromises. On the basis of these estimates, the
firm engages in or refrainsfrom trustingresponses or
actions.Ample supportfor this causallink can be found
in social science researchreviewed by Anderson and
Narus (1986), the conceptualwork of Dwyer, Schurr,
and Oh (1987), and the managerialinterviewswe con-
ducted.
Though the link between communicationand trust
has received attention (e.g., Bialaszewski and
Giallourakis 1985), researchersdo not agree on the
direction of the relationship. For instance, Dwyer,
Schurr, and Oh (1987) hypothesize that trust causes
communication,whereasAnderson,Lodish, and Weitz
(1987) contendthatcommunicationleads to trust. Our
interpretationis that building and sustaining working
partnershipsis an iterativeprocess. Meaningfulcom-
municationbetween firms in a working partnershipis
a necessaryantecedentof trust(cf. Andersonand Narus
1986). In subsequent periods, however, this accu-
mulation of trust leads to better communication.Our
model is meant to representthe working partnership
at one period of time. That is, it is a static model that
provides a single-time-periodperspective of ongoing
partnerships,in contrastto a dynamic model or inter-
temporalperspective. Therefore,and given the nature
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of communicationas a construct, we posit that at any
one point in time, (inherently past) communication
causes (present) trust.
Consideringthe consequences of trust, we posit a
positive causal path from trust to cooperation (cf.
Anderson and Narus 1986; Dwyer, Schurr, and Oh
1987). Cooperationis defined here as similaror com-
plementarycoordinatedactions taken by firms in in-
terdependent relationships to achieve mutual out-
comes or singularoutcomeswith expectedreciprocation
over time. Once trust is established, firms learn that
coordinated,joint efforts will lead to outcomes that
exceed what the firm would achieve if it acted solely
in its own best interests. In addition, within the con-
text of a trusting relationship, firms sometimes are
willing to postponetemporarilythe receiptof theirown
outcomes until some later time. Managerial inter-
views underscoredthe importantrole of this notion of
expected reciprocityin channel partnerships.
Another posited consequence of trust is function-
ality of conflict, which can be defined as an evaluative
appraisalof the results of recent efforts to resolve dis-
agreements (Rosenberg and Ster 1970; see also
Robicheauxand El-Ansary 1976; Rosenbloom 1973).
That is, in the minds of a firm's managers, to what
extent have recent disagreementswith a partnerfirm
been productively resolved? When partnerfirms use
disagreementsas a means of "clearingthe air" of po-
tentiallyharmfultensionsand ill-will, conflictcan have
functional and productive consequences. By making
conflict functional, partnerfirms maintaincordial re-
lations and tend to give each other the "benefitof the
doubt"in conflict episodes (Hardyand Magrath1988).
We believe that firms that have developed strongtrust
in a relationshipare more likely to work out their dis-
agreementsamicably and, in fact, accept some level
of conflict as being "just anotherpart of doing busi-
ness." This view is sharedby Dwyer, Schurr,and Oh
(1987).
We furtherhypothesize a negative causal relation-
ship between functionality of conflict and conflict.
Firms that have the ability to resolve conflicts have a
lower overall level of conflict in their working part-
nerships, in part because there are fewer recurring
conflicts. Another rationaleis that partnerfirms that
have functional conflict frame the issues differently
(Tversky and Kahneman 1981); conflict is seen as
"productivediscussion" rather than an "argument."
Support for this path also is found in the work of
Robicheauxand El-Ansary(1976) and Frazier(1983a).
Sustaining satisfaction in working partnerships.
Satisfaction has been defined as "a positive affective
state resulting from the appraisalof all aspects of a
firm's working relationship with another firm"
(Anderson and Narus 1984, p. 66). Note that satis-
faction is affective and can be contrastedwith an ob-
FirmWorkingPartnerships
/ 45
jective or "rational" summary assessment of out-
comes, as captured by the concept of outcomes given
comparison level (cf. Thibaut and Kelley 1959). Be-
cause of this conceptualization, a positive causal re-
lationship is posited from outcomes given CL to sat-
isfaction.
Satisfaction is the focal consequence of working
partnerships in our model, which is consistent with
past interorganizational exchange models (e.g.,
Anderson and Narus 1984; Frazier 1983a; Frazier,
Spekman, and O'Neal 1988). We contend that satis-
faction, by its nature, is not only a close proxy for
concepts such as perceived effectiveness, but also may
be more predictive of future actions by partner firm
managers. Further, satisfaction has been found to lead
to the long-term continuation of relationships (Gladstein
1984).
We posit a positive causal relationship between in-
fluence over the partner firm and satisfaction and a
negative causal relationship between influence by the
partner firm and satisfaction (Dwyer 1980; Wilkinson
1979). Firms that perceive that they are "calling the
shots" in a relationship will experience greater satis-
faction. Conversely, given that firms often perceive
some cost in complying with a partner's requests, either
in taking some action or in foregoing some other pos-
itive outcomes, a firm will experience lower satisfac-
tion to the extent that it perceives that it is influenced
by its partner firm. We further posit a negative causal
link between conflict and satisfaction (cf. Frazier 1983a;
Gaski 1984). Disagreements tend to block achieve-
ment of the firm's goals, eliciting frustration, and
thereby cause feelings of unpleasantness about the
partnership.
Finally, we predict a positive path from coopera-
tion to satisfaction. Working together with a partner
firm in pursuit of mutual benefits increases each firm's
perceptions of compatibility with its partner firm. This
perceived compatibility, as well as the fulfillment as-
sociated with attaining desired outcomes, affords a
strong feeling of "chemistry" and results in satisfac-
tion with the partnership. This path has received long-
time support from channels analysts (e.g., Dwyer 1980;
Mallen 1963; Sibley and Michie 1982).
Method
Respondent Samples
To construct the samples of distributor firms and man-
ufacturer firms, the Distribution Research and Edu-
cation Foundation (DREF) initially mailed letters to
the chief executive officers of 5000 member firms of
the National Association of Wholesaler-Distributors
(NAW) inquiring about their firm's interest in partic-
ipating in the research. These firms represent more
46 / Journalof Marketing,
January1990
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than 110 industries. A total of 504 wholesaler-distrib-
utor firms returned completed, usable research-infor-
mation forms.
The research design called for each distributor firm
to evaluate its working partnership with one manu-
facturer firm. Preliminary field interviews revealed that
the working relationships with manufacturer firms that
supplied the first- or second-highest-selling product
lines tended to be uniformly positive, whereas rela-
tionships with the fourth manufacturerfirms were more
variable. To avoid potential restriction in range prob-
lems (Lord and Novick 1968) and to facilitate obtain-
ing variation in the relationships studied, the distrib-
utor executives were asked to specify as their
manufacturer partner the firm that supplied the fourth-
highest-selling product line and accounted for at least
5% of their total sales. As the typical distributor may
represent more than 100 product lines, however, the
fourth relationships were still of considerable impor-
tance to the distributor. If the distributor firm did not
carry four lines or if the fourth line did not account
for at least 5% of total sales, the executives were in-
structed to use the manufacturer of the third-highest-
selling product line, and so on.
The research design also called for multiple in-
formants for each manufacturer firm and distributor
firm. The distributor executives were asked to name
the highest-level manager at the manufacturerfirm with
whom they dealt, as well as the operational-level
manager with whom they interacted most frequently.
Finally, they were asked to name the operational-level
manager in their own firm who interacted with this
manufacturer firm most frequently. Thus, the unit of
analysis for the study was the firm, represented by
two informants.
Of the 504 sets of manufacturerand distributorfirms
mailed questionnaires, 16 returned the questionnaires
uncompleted (six partnerships had been terminated,
eight distributor firms had gone out of business, and
two manufacturer firms had gone out of business).
Therefore, the effective sample size was reduced to
488 sets of firms or 1952 informants.
A total of 1365 informants completed and returned
questionnaires, an overall response rate of 70%; the
response rate was 75% (730) for distributors and 65%
(635) for manufacturers. The average percentage of
distributor firm sales accounted for by the evaluated
manufacturer firm was 16.8%. Of primary interest are
the 253 distributor firms and 217 manufacturer firms
for which both informants in each firm responded.
A critical assumption in multiple-informant re-
search is that random measurement errors across in-
formants' reports are uncorrelated. This assumption
will hold if the two informants independently answer
the questionnaire. If there is collusion in answering
the measures or if only one individual answers both
questionnaires,the errorsare likely to be correlated.
To assess this independenceassumption,a correlation
between informantsin each firm was computedacross
responsesto 55 questionnaireitems (four measuresfor
each of the 10 constructs,plus 15 additionalitems that
were common across questionnaires).The two infor-
mantsfor four distributorfirms and four manufacturer
firms had correlationcoefficients greaterthan .99. In-
spection of the two informantreports from each of
these eight firms revealed identicalresponses to all 55
questions in seven cases and only one response dif-
ferent in the eighth. As the independenceof response
assumptionappeareduntenable for these firms, they
were eliminated from consideration. Thus, the final
samples for analysis consisted of 249 distributorfirms
and 213 manufacturerfirms.
Procedure
Preliminaryfield interviews were conductedwith ap-
proximately20 manufacturerfirm managersand dis-
tributorfirm managers. On the basis of these discus-
sions, two questionnaires-one for manufacturerfirms
and one for distributorfirms-were constructedto be
as parallel as possible. Four measures were included
for each of the 10 constructs in Figure 1. Both ver-
sions of the questionnairewere pretestedwith 15 dis-
tributormanagersand manufacturermanagers. In ad-
dition, the 12-person DREF Board of Directors
reviewed the drafts and offered comments on im-
provements.
Each of the 2016 individuals whose names were
obtainedon the research-information forms was mailed
under separate cover the appropriateversion of the
questionnaire. An envelope addressed to one of the
researcherswas enclosed. Two followup mailingswere
sent to nonrespondinginformants. As a followup to
the research, several field interviews and two focus
group interviews were conducted to gain additional
understandingof the results and to compare the re-
search-basedexplanationswith those from the every-
day experience of managers(cf. Calder 1977).
Analyses
Modeling approach. The approachfor confirmatory
measurementand structuralequation modeling of or-
ganizational properties recently given by Anderson
(1987) was used. First, a confirmatorycomposition
model specified the functional relationship between
measurementstaken from the two informantsper firm
and their correspondingorganization-levelindicators
(of the organizational constructs). A confirmatory
measurementor factor analysis model (cf. Joreskog
and Sorbom 1984, p. 1.9-10) next related the indi-
cators defined in the composition model to their pos-
ited underlying organizationalconstructs. A confir-
matory structuralmodel then was used to assess the
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posited working partnershipmodel in Figure 1.
Finally, a multiple-sampleanalysis was performed
to comparethe manufacturerfirm and distributorfirm
perspectives(J6reskog 1971). Figure 2 is an overview
of the model-buildingtask. For furtherexposition of
this confirmatory model-building approach, see
Anderson(1987). The LISRELprogram(J6reskogand
Sorbom 1984) was used throughoutfor model esti-
mation.
Respecification.Two kinds of respecificationswere
made. First, two measures were respecified as being
related to a single underlying indicator if the corre-
lation between their original two indicators was not
significantly different from 1.0, suggesting that the
informantshad not differentiatedthe indicatorsfrom
one another, and this finding was supportedby con-
tent considerations.Supportfor these respecifications
also was provided by the similarity coefficient (cf.
Anderson and Gerbing 1982) for the two indicators.
The other respecificationwas eliminationof mea-
sures, which was done underthreecircumstances.First,
measures were eliminated if perceptual agreement was
FIGURE2
Overview of the Model-Building Task
I. COMPOSITION MODEL - SPECIFIES THE FUNCTIONAL
RELATIONSHIPBETWEEN MEASUREMENTSTAKEN FROM
MULTIPLEINFORMANTSAND THEIRCORRESPONDING
ORGANIZATION-LEVEL INDICATORS(OF CONSTRUCTS).
PROVIDES AN ASSESSMENT OF THE PRECEPTUAL
AGREEMENTBETWEEN INFORMANTSWITHRESPECT TO
EACH MEASURE.
II. ORGANIZATIONALMEASUREMENTMODEL- RELATESTHE
INDICATORSTO THEIR POSITED, UNDERLYINGORGANIZA-
TIONALCONSTRUCTS. PROVIDES AN ASSESSMENT OF
CONVERGENTVALIDITYAND DISCRIMINANTVALIDITY.
III. ORGANIZATIONAL STRUCTURALMODEL - RELATESTHE
CONSTRUCTS TO ONE ANOTHERAS SPECIFIED BY THEORY
AND PAST RESEARCH. PROVIDES AN ASSESMENT OF
NOMOLOGICALVALIDITY.
IV. MULTIPLE- SAMPLEANALYSIS - GIVES AN ASSESSMENT
OF THE COMMONALITIES AND DIFFERENCES BETWEEN
DISTRIBUTORFIRMSAND MANUFACTURERFIRMSWITH
RESPECT TO THE SUBSTANTIVE,THEORETICALMODEL
OF INTEREST.
FirmWorkingPartnerships
/ 47
not significant (cf. James 1982), as revealed by a non-
significant pattern coefficient for one or both infor-
mants on the underlying indicator. Second, multidi-
mensional measures were eliminated. Such measures
have underlying indicators that exhibit a pattern of
correlations not significantly different from 1.0 with
several indicators of different posited constructs. Fi-
nally, measures that were not unidimensional were
eliminated; that is, the presence of large normalized
residuals (Joreskog and Sorbom 1984) signalled that
the alternate measures (from the two informants) could
not be related to an underlying indicator in a consis-
tent way (cf. Gerbing and Anderson 1988).
It is important to note that respecifications in the
composition model, as well as in the organizational
measurement model, are made independently of con-
siderations of the substantive, structural model. This
fact is a critical relative strength of staged estimation
approaches (cf. Anderson 1987) in comparison with
a "one-step" estimation approach whereby the com-
position, measurement, and structural models are es-
timated at the same time. In a staged approach, an
adequate goodness of fit for the composition model
implies nothing about the subsequent goodness of fit
(or need for respecification) of a posited measurement
model, just as in turn an adequate goodness of fit for
the measurement model implies nothing about the
subsequent goodness of fit (or need for respecifica-
tion) of a posited structural model.
Results
DistributorFirm Perspective
Composition model. After a series of respecifications
guided by goodness-of-fit information in conjunction
with content considerations, a final composition model
for the 249 distributor firms was obtained. This model
retains 42 of the 80 measures and yields 17 organi-
zation-level indicators. Though the chi square good-
ness of fit is still statistically significant (X64) =
814.74, p < .001), this model is judged to provide
acceptable fit.' The bases for this judgment are that
this model has relatively unambiguous meaning in terms
of content and has acceptable goodness of fit in a
'To provide a basis for comparison, eight-measure models, con-
sisting of the four posited measures of each construct taken across the
two informants, were estimated. These models are comparable to the
ones reported by Phillips (1981, Figure 2). For distributor firms, six
of the 10 "single-construct" models have chi square goodness-of-fit
values that are not significant (p > .05), two that have significant
values for chi square have acceptable values for GFI (.987 and .983)
and RMR (.028 and .046), and two are nonconvergent because of a
lack of external consistency of the two informants on one measure.
The point is that what constitutes "acceptable" goodness of fit and
what amounts of respecification are to be expected should be framed
by considerations of the size and complexity of the model (cf. Bentler
and Chou 1987).
48 / Journalof Marketing,January1990
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practical sense as indicated by the normed fit index
(cf. Bentler and Bonett 1980) value of .86. This value
means that 86% of observed-measure covariation is
explained by the composition model (Anderson and
Gerbing 1988). Further reinforcing this judgment are
the GFI value of .87 and the standardized RMR value
of .042, both of which are comparable to values ex-
pected from sampling error (cf. Anderson and Gerbing
1984). Though two normalized residuals remain that
have absolute values greater than two, the largest one
is only 2.32. Table 1 is a summary of the final com-
position model for distributor firms.
All patterncoefficients relating the measures to their
underlying indicators are positive and statistically sig-
nificant, indicating perceptual agreement between in-
formants on each of the organization-level indicators.
Note that no hypothesized indicators of conflict
(CONFL) are able to be defined. The estimated cor-
relation/covariance matrix for the indicators then be-
comes the input covariance matrix for the organiza-
tional measurement model.
Organizational measurement model. After several
respecifications, a final measurement model for dis-
tributor firms was obtained that is judged to provide
acceptable goodness of fit, though its associated chi
square value remains statistically significant (X13) =
89.27, p < .001). This judgment is based on mean-
ingful interpretability of the model in terms of content
and theory, an acceptable value of .92 for the normed
fit index, and the absence of normalized residuals with
absolute values greater than two. This judgment is
supported further by a GFI value of .95 and an RMR
value of .032. The parameter estimates for this mea-
surement model are reported in Table 2. Note that the
single indicator hypothesized to be related to satisfac-
tion (SATIS) was found to be multidimensional and
was not retained. This final measurement model, which
can be thought of as a "saturated" structural model
(cf. Bentler and Bonett 1980) because each construct
is related to every other construct, served as a base
model for assessments of the structural model when
the measurement and structural submodels were es-
timated simultaneously (cf. Anderson and Gerbing
1988).
Organizational structural model. The initial struc-
tural model, specified from the posited relationships
in Figure 1, gave relatively poor goodness of fit
(X35) = 341.30, p < .001). Several respecifications
were made that were indicated in terms of goodness
of fit and made theoretical sense. Of perhaps greatest
interest is the respecification of cooperation (COOPER)
as causally antecedent to trust (TRUST) rather than
being consequent to it. Though causal ordering is dif-
ficult to ascertain with cross-sectional data, this res-
pecified ordering does provide estimates that better re-
 TABLE 1
Summary of Final Composition Model for Distributor Firms
Constructa Indicators Example Measure
Influence b)y ,T ManufacturerX has considerable latitude in deciding how much field sales
partner firrn assistance and technical support they give to our firm for their product line
(7-point scale: strongly disagree/strongly agree)
Relative T?, T3 Computed as the difference between: (a) In your judgment, the total costs to
dependenc ;e your firm in switching to a competing manufacturer's product line would be
and (b) In your judgment, the total costs to ManufacturerX in
replacing your firm with another distributor in your trade area would be
(5-point scales: prohibitive/negligible)
Communication ManufacturerX lets our firm know as soon as possible of any unexpected
problems with things such as lead times, delivery schedules, or product
quality (7-point scale: strongly disagree/strongly agree)
Functionality of Disagreements between ManufacturerX and our firm have the
conflict productivity of our working relationship (5-point scale: considerably
increased/considerably decreased)
Trust Based upon your past and present experience, how would you characterize
the level of trust your firm has in its working relationship with Manufacturer
X? (7-point scale: don't trust ManufacturerX/trust ManufacturerX
completely)
Cooperation T11-T13 Computed as the sum of: (a) Our firm helps out Manufacturer X in whatever
ways they ask and (b) ManufacturerX helps our firm out in whatever ways
we ask (7-point scales: strongly disagree/strongly agree)
Satisfaction T14 Our firm's working relationship with ManufacturerX has been an unhappy
one (7-point scale: strongly disagree/strongly agree)
Outcomes given T15 The financial returns our firm gets from ManufacturerX's product line are
comparison level what we look for in distributing a product line (5-point scale: greatly
above/greatly below)
Influence over T16, 717 To what extent does ManufacturerX follow whatever recommendations your
partner firm firm makes regarding the marketing and selling of their product line? (7-
point scale: not at all/to a great extent)
aPosited as underlying the given organizational indicator(s).

produce the construct correlations, given the pattern
of posited relationships of TRUST and COOPER with
their antecedent constructs and consequent constructs.
Consistent with this change in causal sequence, paths
were added from communication (COMMUN) and
outcomes given CL (CL) to COOPER. Further, paths
were added from influence over the partner firm (IN-
FLOV) to influence by the partner firm (INFLBY) and
to functionality of conflict (FUNCON), and from
COOPER to FUNCON.
The hypothesized correlation between relative de-
pendence (RELDEP) and CL and the predicted path
from TRUST to FUNCON were not significant and
thereafter were not estimated. This respecified struc-
tural model for distributor firms is shown in Figure 3.
Though this structural model still has a significant
chi square difference value in comparison with the
measurement model (X2(9) = 51.30, p < .001), it is
judged to provide acceptable goodness of fit in a prac-
tical sense. There are two bases for this judgment.
First, this structural model provides adequate expla-
nation of the construct covariances; put differently,
the remaining explanatory ability of the 19 paths that
were constrained to zero is of little practical conse-
quence, as indicated by a decrement in the normed fit
index of only .046 for this structural model from the
measurement model (from .919 to .873). Second,
though adding the next path (INFLBY -> TRUST) that
was indicated and could potentially be justified the-
oretically produces a statistically significant differ-
ence in goodness of fit (X2(l) = 8.2, p < .005), this
path is judged not to be of practical significance in
that the magnitude of the estimate is small (332 = -.13)
and the increment in the normed fit index it provides
is only .007.
Manufacturer Firm Perspective
Composition model. As with the distributorfirm model,
after a series of respecifications guided by goodness-
of-fit information in conjunction with content consid-
erations, a final composition model for the 213 man-
ufacturer firms was obtained. This model also retains
44 of the 80 measures and yields 17 organization-level

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 TABLE2
Final Organizational Measurement Model for Distributor Firms
Constructa
Indicator
Indicator INFLBY RELDEP COMMUN FUNCON TRUST COOPER CL INFLOV Specificity
L1 .995 (.00)b 0c 0 0 0 0 0 0 .01 (.09)
12 0 .995 (.00) 0 0 0 0 0 0 .01 (.09)
15 0 0 .82 (.06) 0 0 0 0 0 .33 (.04)
L6 0 0 .88 (.05) 0 0 0 0 0 .24 (.04)
17 0 0 0 .995 (.00) 0 0 0 0 .01 (.09)
9L 0 0 0 0 .995 (.00) 0 0 0 .01 (.09)
11 0 0 0 0 0 .83 (.05) 0 0 .32 (.04)
L12 0 0 0 0 0 .90 (.05) 0 0 .19 (.03)
L15 0 0 0 0 0 0 .995 (.00) 0 .01 (.09)
16 0 0 0 0 0 0 0 .995 (.00) .01 (.09)
Organizational Construct Estimated Correlation (4D)d
INFLBY RELDEP COMMUN FUNCON TRUST COOPER CL INFLOV
INFLBY 1.000 .066 .069 .065 .065 .068 .064 .066
RELDEP .258 1.000 .070 .064 .064 .068 .064 .066
COMMUN -.126 -.028 1.000 .063 .063 .033 .069 .069
FUNCON -.120 -.051 .563 1.000 .071 .060 .065 .066
TRUST -.211 -.067 .558 .493 1.000 .058 .066 .064
COOPER -.098 -.089 .839 .667 .733 1.000 .067 .068
CL -.074 .080 .178 .153 .245 .328 1.000 .064
INFLOV .213 -.252 .153 .253 -.035 .085 .094 1.000
aParameterestimate with its standard error given in parentheses.
bParameterfor constructs with single indicator fixed at .995.
CParameterfixed at zero.
dOrganizationconstruct factor correlations are below the diagonal and standard errors are above the diagonal.

FIGURE3
Model of Working Partnerships from the Distributor Firm Perspective

Influence over
Partner Firm
-.25

Relative
Dependence .33 .20
) Influence by
Partner Firm

Communication 79
Cooperation .65 \
CoopeA \ Functionality
.88 / .83 .91 of Conflict
A~.82
.82 .88
.18
5 16 .18 ~ 11
73
15/ 16 12

Outcomes Given
Comparison
Levels Trust

Note: Indicators and their pattern

-- coefficients r are -depicted
- onlv for constriarte
--..., .W. %,WI..IOLI. U with
*111 miltinp ;
Th rlr-- -
were each defined by a.-.-single indicator with
-. -- VV iL u i LIinr;inn trr
i i : inuicaiuiao ir ri e em ining constructs
the pattern coefficient set at .995 and the indicator specificity set at .01. All
parameter estimates are statistically significant (p < .05). Standardized estimates are given.

50 / Journalof Marketing,
January1990

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 indicators. Though the chi square goodness of fit is
still statistically significant (X(722) = 1022.65, p <
.001), this model is judged to provide acceptable fit.2
This judgment is based on a value of .82 for the normed
fit index, a GFI value of .83, and a standardized RMR
value of .046. Though four normalized residuals re-
main that have absolute values greater than two, the
largest one is only 2.40. Table 3 is a summary of the
final composition model for manufacturer firms.
Again, all pattern coefficients relating the mea-
sures to their underlying indicators are positive and
statistically significant, indicating perceptual agree-
ment between informants for each of the organization-
level indicators. Note that no hypothesized indicators
of the constructs influence over the partner firm (IN-
FLOV) or functionality of conflict (FUNCON) are able
to be defined. The estimated correlation/covariance
matrix for the indicators then becomes the input ma-
2As before, to provide a basis for comparison, eight-measure models,
consisting of the four posited measures of each construct taken across
the two informants, were estimated. For manufacturer firms, seven
of the 10 "single-construct" models have chi square values that are
not significant (p > .05) and three are nonconvergent, two because
of a lack of significant perceptual agreement between the two infor-
mants on one measure and the other because of a lack of external
consistency of the two informants on one measure. Note that Phillips
(1981) also obtained some nonconvergent solutions.
trix for the manufacturer organizational measurement
model.
Organizational measurement model. After several
respecifications, a final measurement model for man-
ufacturer firms was obtained that is judged to provide
adequate goodness of fit, though its corresponding chi
square value remains statistically significant (X22) =
187.29, p < .001). This judgment is based on mean-
ingful interpretability in terms of content and theo-
retical considerations, an acceptable value of .88 for
the normed fit index, a GFI value of .88, and a stan-
dardized RMR value of .049. Only a single normal-
ized residual has an absolute value greater than two
(-2.76). The parameter estimates for this final mea-
surement model are reported in Table 4.
Organizational structural model. The initial struc-
tural model, again specified from the posited rela-
tionships in Figure 1, gave relatively poor goodness
of fit (X41) = 334.52, p < .001). Several respecifi-
cations were made that were indicated from goodness
of fit information and made substantive sense. As with
the distributor firm perspective, COOPER was res-
pecified as causally antecedent to TRUST, rather than
being consequent to it. Consistent with this change in
causal sequence, paths were added from COMMUN
and CL to COOPER. However, in this model, a direct

TABLE3
Summary of Final Composition Model for Manufacturer Firms
a.^ _ .m . ..
construct- Indicators Example
-- - - - - - u-- -- Measure
- - --- -1 -
Influence by T1, T2 Firm X exerts influence over the way our company markets our
partner firm product line through their firm (5-point scale: a great deal of/next to no)
Relative 73, 74 Computed as the difference between: (a) There are other manufacturers
dependence available to Firm X who sell product lines comparable to those of our
company and (b) There are other distributors in Firm X's trading area who
could provide comparable distribution for our company's products (7-point
scales: strongly disagree/strongly agree)
Communication Firm X lets our company know as soon as possible of any unexpected
problems they are experiencing with such things as poor cash flow or other
financial difficulties (7-point scale: strongly disagree/strongly agree)
Conflict Firm X and our company have significant arguments in our working
relationship (7-point scale: strongly disagree/strongly agree)
Trust Based upon your past and present experience, how would you characterize
the level of trust your company has in its working relationship with Firm X?
(7-point scale: don't trust Firm X/trust Firm X completely)
Cooperation T13, T14 Computed as the sum of: (a) Our company helps out Firm X in whatever
ways they ask and (b) Firm X helps our company out in whatever ways we
ask (7-point scales: strongly disagree/strongly agree)
Outcomes given T15, T16 Overall, how would you characterize the results of your company's working
comparison level relationship with Firm X? (7-point scale: it has fallen far short of
expectations/it has greatly exceeded our expectations)
Satisfaction T17 Our company's working relationship with Firm X has been an
unhappy one
(7-point scale: strongly disagree/strongly agree)
aPosited as underlying the given organizational indicator(s).

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 TABLE4
Final Organizational Measurement Model for Manufacturer Firms
Constructa Indicator
Indicator INFLBY RELDEP COMMUN CONFL TRUST COOPER CL SATIS Specificity
L1 .995 (.0)b C 0 0 0 0 0 .01 (.10)
L4 0 .995 (.00) 0 0 0 0 0 0 .01 (.10)
L6 0 0 .63 (.07) 0 0 0 0 0 .61 (.07)
L7 0 0 .91 (.07) 0 0 0 0 0 .17 (.07)
L8 0 0 0 .995 (.00) 0 0 0 .01 (.10)
L9 0 0 0 0 .95 (.05) 0 0 0 .10 (.02)
,11 0 0 0 0 .88 (.05) 0 0 0 .22 (.03)
L12 0 0 0 0 .81 (.06) 0 0 0 .35 (.04)
113 0 0 0 0 0 .995 (.00) 0 0 .01 (.10)
L15 0 0 0 0 0 0 .995 (.00) 0 .01 (.10)
i17 0 0 0 0 0 0 0 .995 .01 (.10)

Organizational Construct Estimated Correlation (()d

INFLBY RELDEP COMMUN CONFL TRUST COOPER CL SATIS
INFLBY 1.000 .078 .074 .069 .071 .076 .077 .070
RELDEP .520 1.000 .072 .070 .071 .073 .073 .071
COMMUN .295 .499 1.000 .073 .052 .072 .072 .073
CONFL .019 -.183 -.414 1.000 .059 .076 .076 .082
TRUST .144 .196 .668 -.778 1.000 .066 .062 .064
COOPER .456 .349 .452 -.437 .548 1.000 .086 .073
CL .481 .336 .475 -.456 .670 .731 1.000 .076
SATIS .079 .214 .348 -.644 .628 .347 .459 1.000
aParameterestimate with its standard error given in parentheses.
bParameterfor constructs with single indicator fixed at .995.
CParameterfixed at zero.
dOrganizationconstruct factor correlations are below the diagonal and standard errors are above the diagonal.

path from COMMUN to TRUST was still indicated.
Paths were added from CL to INFLBY, TRUST to
CONFL, and INFLBY to COOPER; also, a correla-
tion parameter (421) was added between RELDEP and
COMMUN. The hypothesized direct path from IN-
FLBY to SATIS was not significant and thereafter was
not estimated.
This respecified structural model provides an ad-
equate explanation of the construct covariances, though
its goodness-of-fit difference from the measurement
model is statistically significant (X2() = 27.81, p <
.01). As in the distributor firm results, there is no loss
in explanation of practical consequence from con-
straining the remaining 13 paths to zero, as indicated
by a decrement in the normed fit index of only .017
(from .885 to .868).3 The parameter estimates for this
final model are reported in Figure 4.
Multiple-Sample Analysis
To assess the commonalities and differences in man-
ufacturer firm and distributor firm perspectives on
3Nonetheless, to provide another comparison model (as was done with
distributor firms), the manufacturer firm structural model that repre-
sented the next-most-likely theoreticalalternativewas estimated. Adding
a direct path from COOPER to SATIS did not result in even a sta-
tistically significant improvement in goodness of fit (X2 = 1.59,
p > .05). Hence, the more parsimonious respecified structuralmodel
was judged to give the best representation of the manufacturer firm
perspective.
working partnerships, two alternative multiple-sample
models were estimated. First, we estimated a model
having no constraints across samples on the structural
parameters. As this model gives the lowest chi square
goodness-of-fit value that could be obtained with any
model that has equality constraints, it provides the ba-
sis for judging the acceptability of models in which
equality constraints are specified. We then estimated
a model in which the five relationships that the dis-
tributor firm and manufacturer firm structural models
have in common were constrained to be equal across
the two samples: RELDEP -- INFLBY, COMMUN
--->COOPER, CL -- COOPER, COOPER -> TRUST,
and the correlation between COMMUN and CL.
The unconstrained model gives a chi square value
of 355.67 (d.f. = 67, p < .001). Note that this chi
square value and degrees of freedom are equal to the
respective sums for the structural models estimated
separately for the two samples. The model with equal-
ity constraints on the five common relationships pro-
vides a chi square value of 416.29 (d.f. = 72, p <
.001). Of most interest here, though, is the rejection
of the hypothesis that these five relationships are in-
variant across the two samples (X5) = 60.62, p <
.001). Relaxing the equality constraints on the COM-
MUN -> COOPER and COOPER --- TRUST paths,
in turn, results in a nonsignificant chi square differ-
ence value (Xd(3) = 2.44, p > .25). Hence, the REL-
DEP -> INFLBY and CL -> COOPER paths and the

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 FIGURE4
Model of Working Partnerships from the Manufacturer Firm Perspective

Note: Indicators and their pattern coefficients are depicted only for constructs with multiple indicators. The remaining constructs
were each defined by a single indicator with the pattern coefficient set at .995 and the indicator specificity set at .01. All
parameter estimates are statistically significant (p < .05). Standardized estimates are given.

correlation between COMMUN and CL can be con-
sidered invariant across the distributor firm and man-
ufacturer firm samples. The structural parameter es-
timates for this constrained model are reported in Table
5. Note that the COMMUN -> COOPER and COOPER
TRUST paths differ only in magnitude across the
two samples and may reflect the differences in oper-
ationalizations of the constructs across samples.
Discussion
We have attempted to make several contributions to
the knowledge and study of channel relationship phe-
nomena. We have provided a more comprehensive,
testable model of manufacturer firm and distributor
firm working partnerships. Substantively, though the
research findings must be viewed as tentative because
of the number of respecifications that were necessary,
they provide a rich basis for further theory develop-
ment in this area. We also have applied a research
method that enables more comprehensive assessments
of models composed of firm-level constructs, such as
those that typify channels of distribution. We first dis-
cuss the implications of our research findings for
channels research, then briefly speculate on some im-
plications for marketing practice.
Implications for Channels Research
Theory development. Substantively, the final respe-
cified structural models represent acceptable expla-
nations of the construct covariances for the distributor
firm perspective and the manufacturer firm perspec-
tive. Outcomes given comparison level and relative
dependence, constructs adapted from social exchange
theory (Kelley and Thibaut 1978; Thibaut and Kelley
1959), along with the construct of communication ap-
pear to be critical exogenous constructs in the expla-
nation of manufacturer and distributor working part-
nerships. Cast within a nomological network that
encompasses the understudied constructs of trust, co-
operation, and satisfaction and the often-researched
constructs of influence and conflict, this social ex-
change perspective appears to offer the basis for a
comprehensive model of channel working partner-
ships. The construct relationships present in these
models contribute to channel knowledge in two ways:
support is gained for the robustness and generality of
relationships predicted from past research and the un-
anticipated relationships provide a basis for further
theory development and research in this area. We limit

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 TABLE 5
Final Structural Model for Distributor and Manufacturer Firms
Distributor Firms Manufacturer Firms
Path Estimate S.E. Estimate S.E.
RELDEP- INFLOV (y11) -.25 .06 .00 .00
RELDEP - INFLBY (Y21)a .37 .04 .37 .04
CL - INFLBY (723) .00 .00 .36 .06
COMMUN -> TRUST (Y32) .00 .00 .50 .07
COMMUN - COOPER (Y42) .80 .07 .32 .06
CL - COOPER (Y43)a .17 .04 .17 .04
CL - SATIS (Y73) .00 .00 .20 .05
INFLOV - INFLBY (P21) .31 .06 .00 .00
COOPER - TRUST (134) .73 .06 .34 .06
INFLBY - COOPER (142) .00 .00 .29 .06
INFLBY - CONFL (352) .00 .00 .15 .05
TRUST CONFL (353) .00 .00 -.77 .05
INFLOV FUNCON (P61) .20 .05 .00 .00
COOPER - FUNCON (P64) .65 .06 .00 .00
TRUST - SATIS (173) .00 .00 .25 .08
CONFL -, SATIS (175) .00 .00 -.41 .08
RELDEP, COMMUN (b21) .00 .00 .46 .06
RELDEP, CL (b31) .00 .00 .33 .06
COMMUN, CL (432)a .24 .05 .24 .05
aParameterestimate constrained to be equal between distributorfirm and manufacturer firm samples.

our discussion to the supported predictions and re-
specifications of greatest theoretical interest.
The relationship of relative dependence to influ-
ence by the partner firm found for both manufacturer
firm and distributor firm perspectives and the rela-
tionship of relative dependence to influence over the
partner firm found for the distributor firm perspective
support our hypotheses. A contribution to theory de-
velopment is the use of relative rather than simple de-
pendence on the working relationship. Relative de-
pendence, as we conceptualize it, seems to capture
more fully the interdependent nature of channel work-
ing partnerships. Further, drawing upon Emerson
(1962), we believe relative dependence captures any
extant imbalance in the "relationship state" of depen-
dence. Consequently, "individual behavior" is under-
taken by each firm to restore balance, which is rep-
resented in our model as two constructs, influence over
the partner firm and influence by the partner firm. A
contribution from the model for distributor firms is
that these two constructs appear to be distinct, though
related, constructs rather than opposite ends of a sin-
gle continuum, supporting the notion of "individual
behavior" by each partner firm.
An intriguing possibility for further theory devel-
opment and channels research is the linkage between
relative dependence and the dependence-balancing
operations proposed by Heide and John (1988). Based
on transaction cost analysis, the premise of their work,
which was supported empirically, is that the more de-
pendent firm in a working relationship needs to pro-
tect its transaction-specific assets by taking various
actions, such as closer bonding with end-user firms.
Relative dependence may be a critical antecedent to
the enactment of these dependence-balancing opera-
tions.
The respecification of greatest interest in terms of
theory development is the respecification of cooper-
ation as being causally antecedent, rather than con-
sequent, to trust. This respecification provided better
explanation of the construct covariances for both per-
spectives. The reason may be the way in which man-
ufacturer and distributor informants think about co-
operation and trust. When asked about their perceptions
of their firm's trust in a working relationship, infor-
mants give a present state report; that is, they an-
swered on how much their firm trusts the partner firm
at the current point in time. In contrast, informant re-
ports on cooperation implicitly tap past cooperation
in that, when asked about their perceptions of their
firm's cooperation with the partner firm, informants
considered recent past experiences when the two firms
had worked together. That past cooperation is a nec-
essary antecedent of present trust is supported by the
research of Matthews and Shimoff (1979), which found
that trust in two-person exchange relationships devel-
oped slowly over a number of cooperative exchanges,
even when a contingency was present that made low
levels of trust costly. Support also is provided by the
work of Frazier (1983a) and Dwyer and Lagace (1986).
Iteratively, cooperation leads to trust which, in turn,
leads to a greater willingness to cooperate in the fu-
ture, which then generates greater trust, and so on.
Thus, in a static model of working partnerships, co-

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operation tentatively appears to be causally antecedent
to trust. To our knowledge, the relationship between
cooperation and trust has not previously been assessed
empirically in marketing channels. Given the critical
nature of these constructs, further channels research
is needed in which these constructs again are embed-
ded in a nomological network. Naturally, longitudinal
research or laboratory studies would better enable re-
searchers to make inferences about the causal ordering
of cooperation and trust.
As a consequence of this change in causal se-
quence for cooperation and trust, several related re-
specifications were made. Direct paths from com-
munication and from outcomes given comparison level
to cooperation were substituted for those leading to
trust, though a direct path from communication to trust
for the manufacturer firm perspective was retained.
The classical work of Deutsch (1958, 1960, 1962) on
the conditions that promote trust and cooperation sup-
ports these direct paths.
Finally, the five relationships that the distributor
firm and manufacturer firm structural models have in
common can be thought of as the "core" set of sub-
stantive findings. The multiple-sample analysis re-
vealed that distributor firms and manufacturer firms
share similar perspectives on the positive effect of rel-
ative dependence on influence by the partner firm, the
positive effect of outcomes given comparison level (CL)
on cooperation, and the positive correlation between
communication and outcomes given CL. Also, though
there are differences in magnitude across perspec-
tives, manufacturers and distributors appear to have
similar perspectives on the positive effect of com-
munication on cooperation and the positive effect of
cooperation on trust. Further study of these relation-
ships, either in greater depth within smaller models or
again embedded within a larger nomological network,
is particularly recommended for future empirical re-
search in marketing channels.
Research approach. We used a structural equation
modeling approach in conjunction with a multiple-in-
formant method. Structural equation models com-
posed of a "large" number of constructs have some
comparative strengths in terms of their ability to con-
tribute to knowledge and understanding. Though two-
or three-construct studies, which characterize much of
past channels research, contribute to our knowledge
of marketing channels, many such studies would have
to be done to investigate systematically all of the con-
struct interrelationships specified by a more compre-
hensive model. Moreover, comprehensive testing of
such models enables one to make more meaningful
assessment of nomological validity (Campbell 1960),
an essential part of construct validity (Cronbach and
Meehl 1955).
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There is an implicit tradeoff between making models
of some set of phenomena, such as channel working
partnerships, more comprehensive and the subsequent
ability to obtain "acceptable" goodness of fit for such
"large" models. In discussing this tradeoff, Bentler
and Chou (1987) suggest the heuristic that in areas
where knowledge about the variables is limited (as in
marketing channels), models be limited to, at most,
20 variables. Hence, with three or preferably four
measured variables per construct, a model would con-
tain about five or six constructs. Note, though, that
the use of multiple informants further accentuates this
tradeoff.
Future work in channel partnerships might ad-
vance in two complementary ways. First, greater
knowledge of channels variables can be gained through
more rigorous construct definition, pretesting, and scale
development (cf. Angleitner, John, and Lohr 1986).
Second, longitudinal research would make great con-
tributions to our understanding of these channels vari-
ables. Longitudinal research could be directed at sets
of "core" constructs, making possible better infer-
ences about both their development over time and their
causal sequence.
In this research approach, multiple informants
within each firm each respond to several measures for
each construct. This affords a more precise delinea-
tion of firm-level constructs from potential sources of
measurement error contained in multiple-informant
reports (cf. Anderson 1987). The crucial component
in this representation is informant bias; the extent of
its presence determines whether multiple informants
are needed or a single informant is sufficient. Firm-
level representation of marketing channel constructs
necessitates the use of multiple informants unless one
can justify the assumption that informant bias is of no
practical consequence. In other words, the individual
informant's perceptions of the firm must be reasona-
bly veridical. To enable channel researchers to make
a better informed decision on the usage of multiple
versus single informants, further research is needed to
determine the research contexts and marketing chan-
nel phenomena for which informant bias is likely to
be substantial, thus necessitating multiple informants.
Several considerations in employing multiple in-
formants certainly make the research process more
difficult. First, a multiple-informant method involves
the independent participation of two or more individ-
uals at each firm, exacerbating the problem of ob-
taining adequate sample sizes. In addition, as dem-
onstrated in our research, the assumption that the
multiple informants are answering the questionnaires
independently can be untenable for some firms, es-
pecially when mail questionnaires are used. Finally,
the cost of conducting key informant research in-
creases at a rate greater than simply the number of
FirmWorkingPartnerships
/ 55
 informants per firm because of incomplete firm par-
ticipation.
Implications for Marketing Practice
Research findings and the followup qualitative re-
search suggest several ways in which both manufac-
turer firms and distributor firms can actively manage
their working partnerships. Relative dependence is
found to be a significant antecedent of influence in
the working partnership, which suggests that a less
dependent firm can enact successfully the various in-
fluence strategies (e.g., requests, information ex-
change) proposed by Frazier and Summers (1984,
1986). A more dependent firm, in contrast, should seek
ways to add value (or reduce cost) to the exchange
for the partner firm at a relatively small cost to itself
(cf. Narus and Anderson 1987, 1988). At the same
time, as suggested by the work of Heide and John
(1988), the more dependent firm can protect its trans-
action-specific assets through various dependence-
balancing actions.
Another implication for marketing practice comes
from consideration of the two social exchange con-
structs, which can be expressed managerially as out-
comes compared with expectations and outcomes
compared with alternatives. In our experience, firms
typically have only a coarse understanding of how the
outcomes they are providing to partner firms compare
with these two standards. Hence each firm needs to
gain and periodically update its understanding of its
partner firm's requirements or expectations and the al-
ternative outcomes competitors are offering. This un-
derstanding then can be translated into responsive pro-
grams and systems that enable the partnership to be
mutually satisfying over time.
Trust is a core construct in our model, with an-
tecedents of outcomes given comparison level, com-
munication, and cooperation. Meaningful joint annual
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