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The rise and fall of channel The rise and

fall of channel
management management
Lars-Erik Gadde
Department of Industrial Marketing, Chalmers University of Technology, 129
Gothenburg, Sweden
Received 10 June 2015
Revised 15 September 2015
Abstract 16 December 2015
Purpose – The purpose of this paper is to describe and analyse the shifting perspectives on the Accepted 18 December 2015
organising and the managing of “distribution”, characterised as channels, systems or networks.
Design/methodology/approach – The paper is based on a review of previous research, identifying
three periods featuring diverse conceptualisations: the early distribution literature, the channel
management perspective and today’s network approaches.
Findings – The study shows that the early literature relied on holistic framings. This perspective was
replaced by the narrower channel management view, influenced by concepts from two evolving
approaches: marketing management and behavioural/social schools-of-thought. Changing business
conditions eroded the basis for channel management and paid the way for current arrangements,
featuring network-like conditions.
Originality/value – Several reviews of distribution have been published, primarily focusing on the
specific features of the perspectives applied. This paper emphasises dynamic aspects by attempting
to explain how and why new perspectives emerge and the reasons for their reduced significance
over time.
Keywords Distribution history, Channel management, Network dynamics
Paper type General review

1. Introduction
“Managing in an interactive business world” was the theme of the first of IMP’s
workshops preceding the symposium celebrating the 40 year anniversary. The IMP
approach is one of the schools-of-thought that affected the view of what is perceived
appropriate mechanisms for managing. In general, management principles have been
adapted to the changing conditions featuring the increasingly interactive business
world. This paper aims at analysing such developments within a field that over time
has been labelled “distribution channels”, “marketing channels”, “distribution systems”
and “distribution networks”. The main mission of these arrangements, henceforth
referred to as “distribution”, has been expressed as “bridging production and
consumption” (Lewis, 1968), and “connecting the technology of production with the
technology of use” (Alderson, 1965). “Distribution” is a highly relevant area for analysis
of changing managerial approaches because the perspectives on the form and
functioning of bridges and connections have been modified considerably over time.
The intention with the paper was to analyse reorientations of managerial approaches
during the four decades following the IMP take-off in 1976. At that time the mainstream
perspective on distribution was a “channel management” approach (e.g. Stern and
El-Ansary, 1982). Over time, the attention to this perspective decreased and today the main
emphasis is on inter-organisational coordination of distribution network constellations
(e.g. Gadde, 2012). Understanding the transformation from channel management to IMP Journal
network coordination required investigation of the roots of channel management. Vol. 10 No. 1, 2016
pp. 129-153
Therefore, the historical review covered three phases: the period preceding channel © Emerald Group Publishing Limited
2059-1403
management, the channel management era and today’s distribution arrangements. DOI 10.1108/IMP-06-2015-0021
IMP The overall purpose of this paper is to describe and analyse the shifting perspectives
10,1 on the organising and the management of distribution – why these changes occurred
and what consequences they caused. Wilkinson (2001, p. 23) claimed that such
knowledge is important because we can learn from history, implying that insights into
current issues “can be found by examining earlier work”. Especially regarding analysis
of distribution dynamics, history is significant because “it helps us to interpret the past
130 by identifying the reasons for important transitions” (Day, 1996, p. 14). Understanding
the evolvement of the managerial mechanisms is timely, since today’s distribution
contexts feature considerable changes. Technological development within
manufacturing, logistics and systems for information exchange provide opportunities
for new distribution solutions. These arrangements challenge established principles
with regard to the extent of specialisation, the dependence on resource sharing and the
consequences for the relationships between firms (Olsson et al., 2013).

2. Research issues and methodology

The main research issues are to describe and analyse the three perspectives on
managing and organising distribution and to explain the reasons for the
transformation from one perspective to the next. Methodologically, the paper is
based entirely on previous research.
The analysis of the early perspectives on distribution, originating in the beginning
of the 1900s, builds on several historical reviews, for example, Gattorna (1978), Shaw
and Jones (2005), Wilkie and Moore (2003) and Wilkinson (2001).
Regarding the two following perspectives, this author has quite closely followed the
development of the distribution literature during 40 years. For the channel
management perspective, evolving from the middle of the 1960s, these observations
were combined with information from the above historical reviews, as well as central
textbooks (e.g. Stern and El-Ansary, 1982) and various papers. The main features of the
perspective appeared to be the coordinative role of channel captains (Little, 1970) and
their exercise of power and control (e.g. Stern, 1969). As a special link to the
establishment of IMP, this author reviewed all distribution papers published in 1976 in
the three most prestigious marketing journals.
Finally, the analysis of current distribution arrangements builds entirely on the
interpretation of this author. The shift towards a new perspective became evident
in the beginning of the 1990s. The most significant aspect of the transformation
towards the network-like, post-channel, arrangements showed to be the changing
perceptions and features of inter-organisational relationships (e.g. Kumar, 1996; Narus
and Anderson, 1996). The review of the literature, following a “snowball approach”,
focused on the shift from confrontational aspects, like power and conflict, towards
increasingly collaborative approaches, featuring trust and commitment.
The paper presented at the conference covered all three perspectives, but showed to
be too voluminous for journal publication. The reviewers and the editor recommended
a split of the conference submission into two papers. This one covers the two first
perspectives and the evolving conditions that eroded the base of the channel
management approach. The current distribution arrangements will be investigated in a
coming issue of this journal.
Table I illustrates the content of the paper and the structure of the analysis of the
shifting perspectives on distribution, as well as the main sources. The time periods
indicated are simplifications of reality since perspectives tend to evolve and regress
successively. The paper concludes in Section 6.
Period 1900-1965 1965-1990 1990-2000 2000-
The rise and
fall of channel
Content Early perspectives on Channel management Changing conditions Current management
distribution perspective require a new perspective on
approach distribution
Section Section 3 Section 4 Section 5 Forthcoming
issue
Central Shaw and Jones (2005), Stern (1969), Young and 131
sources Gattorna (1978), Alderson Rosenbloom (1987), Wilkinson (1989),
(1957, 1965), Wilkinson Etgar (1976b), Little Morgan and Hunt
(2001), Wilkie and Moore (1970), Robicheaux and (1994), Narus and Table I.
(2003) El-Ansary (1976) Anderson (1987), The structure of the
Frazier and Antia analysis of the three
(1995), Kumar (1996) perspectives

3. Early perspectives on distribution

This section presents three early approaches to distribution (3.1). This is followed by
discussion of the integration of these approaches (3.2) and the relationship between
distribution organising and performance (3.3). The section concludes in 3.4 by
identification of the roots of the channel management perspective.

3.1 Basic approaches in the beginning of the 1900s

The early literature applied a broad perspective on the “distribution of raw materials
for production and finished output” (Sparling, 1906, quoted in Gripsrud, 2004, p. 192).
Sparling perceived marketing as an element dealing with the commercial processes
within the much broader field of distribution. Regarding conceptualisations, three main
schools-of-thought were identified, each applying its specific perspective.
The functional school focused on the activities required to fulfil the distribution
tasks. The main issues for channel functionalists were to identify the most efficient
functional mix in a given situation, and to analyse how this mix influenced structural
arrangements (Gattorna, 1978). This approach can be traced back to Shaw (1912) who
defined five main distribution functions: risk sharing; transportation; financing; selling
and assembling/sorting/reshipping. Clark (1922), who appears to have coined the
term “distribution channel”, reduced the number of functions to three: exchange
functions, physical distribution functions and facilitating functions – each with its set
of sub-functions (Shaw and Jones, 2005). The list of functions was refined and extended
by several researchers. The most comprehensive version included 120 functions within
16 categories (Shaw and Jones, 2005). The authors concluded that the divergences
among researchers concerning the numbers and the structuring of functions were
perceived problematic and reduced the attention to this perspective.
The institutional school was concerned with the organisations involved in
distribution. Weld (1916) was provided with credit as the founding father of this
perspective, “based on his discussion of the value of specialized middlemen in
performing marketing tasks” (Sheth et al., 1988, p. 74). Various forms of intermediate
institutions, identified as wholesalers, retailers, distributors, agents, etc., “exist because
of the transactional and exchange economies they allow” (Gattorna, 1978, p. 484). Since
these economies are context dependent, distribution arrangements are diverse for
various products and industries. One significant research issue was to identify
appropriate combinations of institutions, with associated consequences for the length
IMP of channels. One ongoing debate among “institutionalists” concerned whether
10,1 or not facilitating agencies (financial institutions, common carriers, service companies,
public warehouses, etc.), who do not take title to goods, should be interpreted as
channel members.
The commodity school took the point of departure in the characteristics of goods
and how these features impacted distribution arrangements. Shaw and Jones (2005)
132 traced the roots of this perspective back to Cherington (1920) and his analysis of goods
categories. Copeland (1924) was the most influential advocate of the commodity school
through his differentiation between producer goods and consumer goods, and the
recognition of derived demand. His classification system, “represents one of the longest
strings of conceptual building” in distribution (Shaw and Jones, 2005, p. 251).
Copeland’s classification was refined by Aspinwall (1956a) through the distinction
between shopping goods, convenience goods, and goods in between the two, and the
associated consequences for channel length. The commodity approach was refined
successively and is considered “one of the few examples of a marketing concept that
was improved over time and not later abandoned to the scrap heap of history” (Shaw
and Jones, 2005, p. 251).

3.2 Alderson’s integrated view of distribution arrangements

It is unlikely that the distribution pioneers 100 years ago would have seen themselves
as advocates of the schools-of-thought that were patterned by reviewers of the
literature many decades later. In fact, the distinction between the approaches
represents an artificial demarcation between researchers. The functional school would
be quite meaningless if the organisations undertaking the functions were not taken into
consideration. In the same way, isolated theorising regarding institutions would have
had no interest without bringing in the allocation of functions among organisations.
Moreover, for both approaches, commodity issues were central, because the features of
goods substantially impact the performance and the functioning of distribution.
The linking of functional and institutional issues and their connections to
performance was a main concern in the literature above and further strengthened in the
1950s (Wilkie and Moore, 2003). The main determinant of this development was the
book by Alderson (1957), suggesting an integrated and holistic view of distribution.
Shaw and Jones (2005, p. 243) claimed this book, authored by “the dominant scholar of
his time”, to be the most important contribution to academic thought in marketing.
Alderson’s approach is normally identified as “functionalism”, which should not be
mixed with the functional school discussed above. According to Wilkinson (2001, p. 30),
Alderson’s functionalism represented “an intellectual framework for integrating our
understanding of the marketing system as a socio-economic system”. Shaw and Jones
(2003) claimed that although Alderson (1957) labelled his approach functionalism, it is
actually better categorised as a system approach. Alderson defined functionalism as a
method, beginning by “identifying some system of action”, such as marketing, and then
attempting “to determine how and why it works as it does” (Alderson, 1957, pp. 16-17).
Functionalism involves “the whole system and undertakes to interpret the parts in
terms of how they service the system”.
Alderson (1965) further emphasised the holistic perspective in the claim that
the primary task of distribution was to connect the “technology of production with the
technology of use” since what is exchanged between business partners “appears at
very different settings at these two levels” (Alderson, 1965, p. 12). The arrangement
connecting the two is portrayed as an “organised behaviour system”, configured as
“a system of action of which individual firms are elements”, where the activities of one The rise and
firm are “supplementing the activities of other firms”. Therefore, coordinated action is fall of channel
required since the value-generating processes “cannot function without sustained
cooperation” (Alderson, 1965, p. 239).
management
The new, integrative, approach was influenced by inspiration from organisation
theory. Ridgeway (1957) extended the scope by taking inter-organisational issues into
consideration. He claimed that “a manufacturer and his dealers make up a competitive 133
system which is in need of administration much as a single organisation” in order to
operate effectively as an integrated totality (Ridgeway, 1957, p. 466). McCammon and
Little (1965, p. 330) departed from Alderson’s organised behaviour system view and
concluded that this approach had distinct advantages since “a channel is a purposive
and rational assemblage of firms rather than a random collection of enterprises”.
Ambitions to secure efficient performance in such constellations require some form
of organising.

3.3 Organising and efficiency

Two issues were significant for the perspectives on distribution in the first half of the
1900s: to identify appropriate conditions for economic efficiency and to design
adequate organisational forms to achieve these benefits. Owing to this attention to
economic performance, Gattorna (1978) defined the “micro-economic” school as a
separate perspective, since channels of distribution traditionally were regarded as
flows of goods and services that should be directed as economically as possible. One of
the early advocates of institutionalism (Nystrom, 1915, p. 11), declared the purpose of
his book to be “to determine the most economical routes through which the goods may
be transferred from producers to consumers” (referenced in Shaw and Jones, 2003,
p. 41). From a functionalist view it was pointed out that distribution functions should
be allocated to channel members in a mix that “provides the greatest profit either to the
consumer or to the channel members with the most power” (Gattorna, 1978, p. 484).
One of the most significant contributions concerned the relationship between
efficiency and organisational principles (Bucklin, 1960). His basic assumption was that
the features of a channel “emerges from the basic economic conditions and
organisational capabilities which dictate the minimal cost route” (Bucklin, 1960, p. 380).
Bucklin aimed at constructing a general theory of channel organisation, based on the
view of a “normative” (or “ideal”) channel with regard to prevailing economic
conditions. Since previous research had arrived at a variety of interpretations
regarding the distribution functions, Bucklin established a set of criteria to derive a
relevant grouping. Five functions met these criteria, one of which was “production”,
normally not taken into consideration in channel research. The features of the
normative channel were compared with those of the actual (“the extant channel”),
which then could be modified in order to advance performance.
Efforts to improve performance were means of overcoming criticism in relation to
the contemporary organising of distribution, involving several levels of intermediaries.
In the first half of the 1900s, distribution costs increased substantially, due to
expansion of trade and commerce in terms of goods volumes, sales territories,
assortments and demands for extended services. Therefore, distribution costs came to
account for an ever-increasing proportion of total expenditures since manufacturing
costs were reduced through rationalisations. The expansion of distribution required an
increasing number of intermediaries in order to economise on exchange. The
correlation between increasing costs and the number of intermediaries caused severe
IMP doubts regarding the efficiency of prevailing organisational forms. In the USA a federal
10,1 investigation generated a report with the title “Does distribution cost too much?”
(Stewart and Dewhurst, 1939). Similar questioning concerning the effectiveness of
distribution arrangements in the mid-1900s were reported from several countries
(Törnqvist, 1933; Dawson, 2007; Quinn and Sparks, 2007).
The analysis of channel economies received increasing attention over time (e.g.
134 Balderston, 1958; McCammon and Little, 1965). Bucklin (1965) showed how different
combinations of postponement and speculation impacted on distribution costs.
Attempts were made to move the unit of analysis from the firm towards a holistic view,
in line with recommendations in Alderson (1957, 1965). This development was
exemplified by book titles like “Vertical market structures” (Baligh and Richartz, 1967),
“Integration and efficiency in marketing systems” (Mattsson, 1969) and “Vertical
marketing systems” (Bucklin, 1970). However, there were severe problems in taking
this analytical step, as explained by McCammon and Little (1965). Gattorna (1978, p. 477)
highlighted this issue by asking: “What does “efficiency” in a channel context really
mean?” One particular problem, pointed out by McCammon et al. (1971, p. 334),
regarded the optimisation models that often led researchers to focus on “static
efficiency and effectiveness in existing constellations”, thus overlooking potential
economies from innovation.

3.4 The roots of channel management

Gattorna (1978, p. 476) criticised the micro-economic school for the implicit assumption
that “cost and efficiency considerations are the only important factors”, while other
aspects were more or less neglected. This simplification did not provide “even a hint of
the social constraints surrounding the achievement of economies in a channel
sequence” (Gattorna, 1978, p. 475). McCammon et al. (1971, p. 334) arrived at the same
conclusion in the claim that “non-economic influences such as bargaining and political
activities were completely ignored”. In the 1960s, these conditions began to change,
owing to the influence from two evolving schools-of-thought: the marketing
management approach and the behavioural/social system approach.
Regarding the first approach, the “marketing decision variables” launched by
Howard (1957), evolved into the concept of the marketing mix (Kelley and Lazer, 1958),
and the four Ps in McCarthy (1960). In this way “distribution”, that once included
marketing as one of its sub-issues, was reduced to one of four elements of the
marketing mix. This change drew the attention away from Alderson’s holistic view and
the new framing transferred distribution “from a system-wide perspective to a focus on
how the channel captain should behave to secure an efficient distribution of his
products” (Gripsrud, 2004, p. 195). Such recommendations for coordinated action
through centralised leadership were provided by several authors (e.g. Davidson, 1957;
McCarthy, 1960). Little (1970, p. 5) discussed the need for coordination and devoted this
task to a “channel leader” represented by “the member institution with the greatest
power”. Similarly, Stern (1971a, p. 305) concluded that “some form of centralised power
is a prerequisite for orderly behaviour within a channel system”.
The influence of the behavioural/social system school stemmed from the “growing
awareness that conduct of channel members, as well as channel performance, are
affected considerably by the behavioural interaction among channel members”
(Gattorna, 1978, p. 495). The significance of such factors were pointed out by Alderson
(1957, 1965) in his analysis of the simultaneously occurring patterns of conflict
and cooperation in the organised behaviour systems, subject to investigation also by
Mallen (1963). Moreover, analysis of power alignment was pointed out as a prerequisite The rise and
for understanding channel evolution (Balderston, 1958). A supplementary concept fall of channel
useful for analysis was the theory of countervailing power developed in Galbraith
(1956). However, the breakthrough of behavioural research was achieved through the
management
book edited by Stern (1969). This publication presented models of behavioural aspects
applicable for channel analysis, such as role theory, and the two concepts that were
mostly adopted by channel researchers: power and conflict. The frameworks in Stern’s 135
book enabled analysis of principles for inter-organisational coordination and influence
of non-economic factors.

4. The channel management perspective

This section portrays the main features of the channel captain view (4.1) and the basic
mechanisms of the channel management approach (4.2). The state-of-the-art of the
perspective in the mid-1970s is presented in 4.3, while 4.4 brings up some consequences
of the approach that became problematic when business conditions changed.

4.1 Marketing management and channel captains

The significance of channel captains and systems leaders was apparent in both
textbooks and journal papers. Within the marketing management orientation, a
distribution channel was defined as “the route taken by a product as it moves from the
producer to the user” (Rosenbloom, 1987, p. 4). Moreover, this process was seen
“through the eyes of marketing management in producing and manufacturing firms”.
On this basis, the main task of distribution concerned the “channelling out” of products
from the factory as efficiently as possible. Similar thoughts were expressed in journal
articles where it was claimed that “the primary objective is to optimise distribution
arrangements for a product or product line” (Cespedes, 1988, p. 98).
In his historical analysis of distribution, Gripsrud (2004) concluded that the shift
towards a channel captain view implied that marketing management came to focus on
the legal and psychological aspects of exchange, inspired by developments within
consumer behaviour. In this way, issues related to physical distribution were less
important for marketing management and became the subject of logistics – an evolving
academic discipline (Heskett et al., 1964). The separation of marketing and logistics was
a way to tackle the problem that “the movement of goods and the movement of
information are obviously quite different processes” (Aspinwall, 1956b, p. 1). Therefore,
the split of the two was rational from an economic view, but caused unwanted
consequences for the linkages between them. Converse (1958) and Bartels (1988)
concluded that the broad distribution area was separated into “two halves”:
mainstream marketing dealing with “social” aspects of exchange, and logistics dealing
with “physical” aspects. Rather than applying all-encompassing frameworks on the
connections between the technology of production and the technology of use;
researchers now came to focus on one of the two halves – and even specialise on limited
aspects within each half.
These conditions provided particular prerequisites for a producer’s channel
management activities, expressed as “the administration of existing channels to secure
the cooperation of channel members in achieving the firm’s distribution objectives”
(Rosenbloom, 1987, p. 223). A critical strategic issue for a manufacturer was to secure
cooperation from business partners, including identification of their problems and
offering adequate support. However, the main mechanism in the administration of
IMP channels was about “providing leadership through the effective use of power to achieve
10,1 control” (Rosenbloom, 1987, p. 223). In a similar vein, Stern and El-Ansary (1982)
recommended exploitation of power as the main managerial instrument.

4.2 The basic mechanisms of channel management

Stern (1969) represented the breakthrough of behavioural distribution research, by
136 presenting conceptualisations useful for channel management. El-Ansary and Stern
(1972, p. 47) refined these concepts and defined power as “the ability of a channel
member to control the decision variables in the marketing strategy of another firm”.
This definition clearly related to the channel captain perspective through the link
between power and control. Power is rooted in dependence (Emerson, 1962) and the
more dependent one party is, the more powerful is the counterpart. Power is derived
from various power bases identified in other research disciplines. Most channel
researchers adopted the concepts developed by social psychologists French and Raven
(1959), who distinguished between five power bases, some of which were coercive and
some non-coercive.
Regarding conflict, Stern and Gorman (1969, p. 156) described a conflictual situation
as arising when a channel member (a component) “perceives the behaviour of another
component to be impeding the attainment of its goals or the effective performance of its
instrumental behaviour patterns”. Above we discussed power as a means of affecting
the actions of others. Obviously, such influencing attempts through exploitation of
power may be perceived as impeding goal attainment, thus generating conflict. It was
acknowledged by several researchers at the time that channels contain an inherent
conflict potential owing to complex interdependencies among the organisations
involved. Most analysts perceived conflict dysfunctional, and recommended its
elimination (Gattorna, 1978). However, some authors pointed out potential benefits of
conflict. For example, Assael (1969) concluded that conflict is not always bad and
established criteria for identification of constructive conflict. In a similar vein, Stern
and Heskett (1969, p. 292) claimed that “where no conflict exists there may be situations
of complacency in which innovation would not be generated”.
Control was an issue in the above definitions of power and conflict. According to
El-Ansary and Robicheaux (1974, p. 2), “control is the ability to predict events and
achieve desired outcomes”. Control thus signifies the ability of one party in a channel to
stipulate policies to its business partners. The extent and exercise of control can vary
widely and be evaluated in terms of compliance to the mandate of the “controller”. One
way to achieve control is through authority, based on either ownership or sources of
power. Other forms of control rely on contractual mechanisms, including incentives
and compensation.

4.3 The state-of-the-art of channel management in the mid-1970s

The instruments for channel management were fully developed in the middle of the
1970s. The state-of-the-art at the time was captured through review of all distribution
papers published in 1976 in the three most prestigious marketing journals: Journal of
Marketing, Journal of Marketing Research and Journal of Retailing. One of the most
important papers was Robicheaux and El-Ansary (1976), presenting a model for
understanding channel behaviour. The aim of their contribution was to provide “a
comprehensive model of channel member behaviour that integrates much of earlier
research” that had focused “on particular behavioural constructs in isolation”
(Robicheaux and El-Ansary, 1976, p. 13). The authors had normative ambitions and The rise and
claimed that “the model can also help managers to better understand the behaviour of fall of channel
firms on other channel levels and to design strategies” (Robicheaux and El-Ansary,
1976, p. 13). Their model contained five groups of variables that previously had been
management
treated as isolated constructs: position and role; power, leadership and control; conflict
and cooperation; performance and satisfaction/dissatisfaction; communication and
bargaining. 137
Other papers focused on connections between the constructs in the Robicheaux-El-
Ansary model. Lusch (1976) analysed sources of power and the associated impact on
intrachannel conflict in a study motivated by the fact that “little has been done to relate
the two concepts” (Lusch, 1976, p. 382). He concluded that non-coercive sources of
power (e.g. an automobile manufacturer’s ability to provide high-quality assistance to
dealers) were effective for reducing intrachannel conflict. Coercive sources of power
(i.e. ability to “punish”) increased intrachannel conflict. In the concluding section an
interesting comment was that “the study perhaps left more questions unanswered than
it answered” (Lusch, 1976, p. 388).
Etgar (1976a, p. 254) investigated the relationship between power and control, with
emphasis on “channel domination and countervailing power”. Analysis of the
relationship between insuring companies and insurer agents showed that the power of
the former correlated significantly with measures of their power sources, and the
agent’s dependency and countervailing power. The study revealed the most potential
vehicles of control in the insurer’s control mix, and the areas where this control could be
accepted most readily.
Conflict was dealt with in Shuptrine and Foster (1976). Their study concerned the
distribution of a consumer product and the potential sources of conflict related to three
behavioural concepts: position in the system, role expectations and organisational
domain. The authors concluded that conflict is likely to occur when channel members
do not agree on the legitimacy of a specific firm’s position. This happens when they do
not share the role expectation of this firm, or do not accept its claim of domain
regarding markets, products or services. If channel members could come to a
reasonable degree of consensus, the possibility for strengthening overall performance
would be enhanced.
Etgar (1976b) compared the operational efficiency of administratively coordinated
vertical marketing systems with market coordinated systems. In the latter
arrangements “firms at each level only concerned themselves with the distribution of a
product to the next adjacent level” and relied on coordination through market mechanisms
(Etgar, 1976b, p. 12). Such arrangements were compared with systems controlled by a
channel captain where “allocation of functions, control, and operations of systems are
achieved by managerial vehicles of coordination” (Etgar, 1976b, p. 18). The study showed
that centralised coordination considerably improved the efficiency of distribution.
The performance of the distribution system for automobiles was investigated by
Moyer and Whitmore (1976). The study was motivated by the fact that little
consideration had been given to the overall effectiveness of car distribution, despite the
great size and complexity of this system. The authors concluded that “on some criteria
the marketing channels for automobiles perform well, in a number of important ways
changes are called for” (Moyer and Whitmore, 1976, p. 40). Three obstacles to such
changes were identified. First, automobile manufacturers prioritised continual
enhancement of the process of manufacturing and showed little interest in the
improvement of marketing. Second, manufacturers’ conventional wisdom was that
IMP channels should build on aggressive and independent dealers. This perception
10,1 inhibited marketing leadership by manufacturers and tended to deter “the exploitation
of vertical programming potential, which has helped to rationalise the distribution of
many other products” (Moyer and Whitmore, 1976, p. 40). Third, the authority and
power sources of manufacturers enabled them to preserve the existing system. The
remaining articles dealing with distribution in the three journals concerned the role of
138 intermediaries (Webster, 1976) and the distribution of services (Donelly, 1976).
One interesting conclusion from the review of the eight papers was that not a single
reference was made to Alderson’s contributions. One decade after the publication of the
famous 1965 book, he was not even mentioned as a footnote in mainstream distribution
channel texts. A new perspective had replaced his holistic view. This perspective
required concepts and models related to specific channel management issues, thus
necessitating a narrowing of Alderson’s broad approach.

4.4 Some consequences of the channel management perspective

The channel captain approach implied arm’s-length features in manufacturer-
distributor relationships. These conditions were in line with general recommendations
at the time regarding avoidance of dependence on specific business partners. By
working too closely with one business partner, the firm risked being locked-in if better
opportunities became available elsewhere. Moreover, dependence on a particular
partner could be problematic with regard to the counterpart’s exploitation of power.
Arm’s-length relationships thus tended to be the norm in “conventional channels”
(Anderson et al., 1997). In these arrangements, relationships featured tensions since the
manufacturer’s objective “to move the greatest possible value of goods at the highest
price” was not easy to combine with the distributor’s goal “to negotiate the lowest possible
price” (Buzzel and Ortmeyer, 1995, p. 86). These diverse ambitions resulted in conditions
where “loosely aligned and relatively autonomous manufacturers, wholesalers, and
retailers […] customarily bargained aggressively with each other” (Davidson, 1970, p. 7).
Alderson (1965, p. 253) claimed that “sometimes the elements of conflict are so pronounced
that an effective channel can scarcely be said to exist”. The channel captain approach
made a middleman to be “perceived an instrument of the producer’s marketing strategy”
(Quinn and Murray, 2005, p. 3). The status of this “instrument” was low and in a US study
it was concluded that, in many cases, manufacturers at the time viewed a distributor as
“a necessary evil” (Narus and Anderson, 1987, p. 35).
When arm’s-length conditions are at hand, business exchange concerns
standardised products and services since adaptations are avoided. Such settings
favour the principle of speculation (Bucklin, 1965). This logic, building on mass
production and mass distribution, was accompanied by huge inventories at several
distribution levels, as well as substantial costs. Inventories were required owing to long
lead times and for handling “the erratic behaviour of suppliers and customers” (Hayes
and Pisano, 1994, p. 78). Inventories served as buffers between the technology of
production and the technology of use and caused relatively little interdependence
between activities and limited the need for coordination across corporate boundaries.
The technology of production determined distribution operations, which tended
to follow the “logic of aggregation” (Lampel and Mintzberg, 1996). This logic built
on standardisation – “standardisation of taste that allowed for standardised design,
standardisation of design that allowed for mechanised mass production, and a
standardisation of products that allowed for mass distribution” (Lampel and
Mintzberg, 1996, p. 21).
 The ongoing development of information technology (IT) was not supposed to The rise and
change these conditions fundamentally. When IT started to impact on business fall of channel
operations in the beginning of the 1980s, expectations primarily concerned the
opportunities to improve the functioning of market mechanisms through enhanced
management
availability of information. The title of one paper is symptomatic: “The logic of
electronic markets” (Malone et al., 1989). The new technology was supposed to
strengthen market forces, implying improvements for both buyers and sellers. One 139
source argued that IT would become a significant tool for identification of new
customers and for “automation to boost sales and marketing” (Moriarty and Swartz,
1989, p. 100). Moreover, it was claimed that IT would increase the power of buyers
through the opportunity to find new suppliers and evaluate them in rational ways
(Porter and Millar, 1985).

5. Changing conditions call for new perspectives

Towards the end of the 1900s, the need for reorientation of the perspective on the
organising and management of distribution became visible. Dynamics in the
distribution context made the channel management approach less adequate than
before. The section starts with analysis of the challenges towards the channel captain
role of manufacturers (5.1). This is followed by discussion of novel distribution
arrangements enabled through technological development (5.2). These conditions
affected the view of distribution relationships, where arm’s-length conditions in many
cases were replaced by more cooperative relationships (5.3). Therefore, confrontational
relationship concepts, such as power, conflict, and control appeared less relevant than
before (5.4). Instead the attention was directed to collaborative concepts, like trust and
commitment, discussed in 5.5.

5.1 Manufacturers were challenged as channel captains

The view of distribution as starting in the factory and controlled by a manufacturer
remained a common perspective for long time. For instance, Stern and Weitz (1997,
p. 286) commented that “it is somewhat surprising to find that most of the focus […]
takes the manufacturer’s rather than distributor’s perspective in examining marketing
issues”. The authors were surprised because the distribution reality featured “growing
dominance of ‘downstream’ channel members”, and predicted a general shift of
authority away from manufacturers because of the success of intermediaries like
WalMart, Home Depot and Toys “R” Us. Stern and Weitz (1997) concluded that firms in
the distributive trades had achieved greater economies of scale through increasing
centralisation and the establishment of chain organisations. These factors, in
combination with efficient transportation methods and sophisticated management
information systems reduced the power of manufacturers in the USA. Furthermore,
a European study found that the focus of wholesaling had shifted “from facilitating the
sale of what is produced […] to identifying customer needs and then sourcing
solutions” (Dawson, 2007, p. 315). Similar findings were reported from Japan where
wholesalers had become “a more integral part of their customers’ operations” (Rawwas
et al., 2008, p. 105). Over time, there was a clear shift in orientation, away from the focus
on the output operations of manufacturers. Increasingly, the situation of buyers and
users was taken into consideration (e.g. Gunasekaran and Ngai, 2005; Gadde, 2012).
The separation of marketing and logistics in the mid-1900s was efficient from an
economic perspective, but caused other problems. Aspinwall (1956b, p. 1) argued that
IMP effective strategy is contingent on a well-functioning interplay between “the manner of
10,1 physical distribution and the manner of promotion”. These conditions changed
considerably when the two halves were separated and Converse (1958) perceived this
restructuring counterproductive. The outcome was that “marketing and logistics which
were initially closely linked, drifted apart” ( Juttner et al., 2007, p. 379), which caused
severe problems. Bartels (1976, p. 24) concluded that ”the functions grouped under
140 marketing management had little, if anything to do with physical distribution
processes and costs”. Schary and Becker (1973, p. 249) claimed that “marketing issues,
such as customer service [….] have not appeared to be the principal concern of physical
distribution managers”. Such situations resulted in “poor coordination” which was
perceived “dysfunctional to corporate operations and also have negative effects on
corporate performance” (Murphy and Poist, 1996, p. 16). In a similar vein, Bartels (1988,
p. 87) argued that the segregation of the negotiating function from physical distribution
was problematic from a customer perspective, since buyer preferences are
“as dependent upon availability of physical products, parts, and services, as it is
upon psychological satisfaction”. Distributors and other intermediaries focusing on the
needs of specific buyers were obviously in better position to coordinate marketing and
logistics activities than were production-oriented manufacturers.
These conditions made it necessary for manufacturers to develop a variety of ways
to reach out to customers, since needs are diverse. Therefore, multichannel marketing
became a significant theme, implying that a supplier uses several business partners to
satisfy the needs of buyers. The practice of multichannel marketing expanded
tremendously (Neslin and Shankar, 2009) and made distribution arrangements
increasingly complex (Hibbard et al., 2001). Wilson and Daniel (2007) explained this
development as a response to requirements for transformations grounded in the need of
suppliers to supplement their own resources with those of business partners. The
authors claimed that the major issue for suppliers is that “they must be able to combine
resources in new ways, gain additional resources and dispose of superfluous resources”
(Wilson and Daniel, 2007, p. 10). In doing this, manufacturers became increasingly
dependent on the resources of various types of intermediaries.

5.2 Technological development favoured novel arrangements

During the channel management era, business exchange was characterised by
standardisation that promoted cost efficiency, but gave little room for customised
offerings. These conditions were problematic for suppliers aiming at taking customers’
needs as the point of departure. However, these problems were overcome through the
development of technologies that enabled restructuring of distribution. First,
production technologies were improved in directions that made economies of
manufacturing less dependent on large-scale operations. These conditions reduced lead
times in production and enhanced the opportunities for customised solutions (Hayes
and Pisano, 1994). Second, improvements in logistics reduced lead times even further,
as well as decreased the costs for adaptations of logistical solutions (Christopher and
Towill, 2001). Third, IT developments enhanced both speed and accuracy of the
information flow, which also improved coordination and control of material flows (Bello
et al., 2002). A US study of innovative distribution arrangements concluded that such
solutions relied on “information technology and integrated logistics system that can
monitor the availability of products and services, process orders and deliver products
and services rapidly from distant locations to customer sites” (Narus and Anderson,
1996, p. 114).
 As described in Section 4, IT was expected to improve opportunities for “playing the The rise and
market”. When IT had become established, Garcia-Dastugue and Lambert (2003) fall of channel
evaluated its impact on supply chain management and concluded that IT is useful for
two types of coordination. One form was representative of the initial expectations
management
concerning electronic tools for the handling of supplier databases and various auction
systems. The second one regarded improved coordination in established buyer-supplier
relationships. In such settings, the main objective is to enhance performance in 141
materials flows through information exchange. Exploiting this potential requires that
“business is not considered on a transaction-by transaction basis”, but rather as a
“long-term, mutually rewarding, engagement” requiring joint investments (Garcia-
Dastugue and Lambert, 2003, p. 258). Such coordination across the boundaries of firms
affected the features of business relationships.
Evolving distribution formats were characterised by the principle of postponement
(rather than speculation), the logic of individualisation (instead of standardisation) and
governed by the technology of use (rather than the technology of production). These
novel circumstances had considerable implications for distribution management.
Interdependences between activities increased when postponement replaced
speculation (Van Hoek, 2001). Postponement, in turn, enabled a significant reduction
of costly inventories (White and Pearson, 2001), through the implementation of just-in-
time deliveries in B2B-distribution (Kaneko and Nojiri, 2008) and systems for “efficient
consumer response” in B2C (Kotzab, 1999). When inventory buffers were reduced, the
need for coordination increased. The ultimate form of postponement is build-to-order,
which requires coordinative actions across corporate boundaries (Gunasekaran and
Ngai, 2005). In such arrangements, the input operations of buyers provide the point of
departure. Therefore, the focus on the outbound flow from the manufacturer’s factory
was supplemented with increasing attention to the features of the customer end of the
supply chain and the content of business relationships (Hulthén and Gadde, 2007).

5.3 Arm’s-length conditions gave way to collaborative relationships

When channel management ruled the game, producer-distributor relationships often
featured tensions and conflict. Webster (1976) pointed to problems related to feedback
of market information, inventory levels and exclusivity issues. However, Webster’s
main conclusion regarded a clear trend among manufacturers towards greater reliance
on “fewer, larger and better-managed distributors” (Webster, 1976, p. 10). Distributors
had become more significant in the strategy of producers because of increasing size
through mergers and acquisitions, and the establishment of distributor chains. Webster
portended modified relationships in the conclusion that “the idea of partnership
remains essential” and expected manufacturers to increase the support given to
distributors.
Webster’s prediction showed adequate and the market like, arm’s-length conditions
were modified when technical development made customisation a viable option at
reasonable cost. Customisation, in turn, required firms to engage in long-term
relationships and joint investments. In such arrangements buyer and seller become
mutually dependent, because potential benefits from shared assets cannot be exploited
without interdependencies. Therefore, new thoughts about relationships emerged.
Hardy and Magrath (1988) illustrated how partnership-oriented producer-
distributor relationships could improve the performance of manufacturers. Narus
and Anderson (1987, p. 35) argued for productive partnerships based on “coordinated
actions directed at mutual objectives, strategies and tactics that are consistent across
IMP organizations”. Benefits of close relationships were reported concerning, for example,
10,1 exchange of information (Reddy and Marvin, 1986), physical distribution (Bowersox,
1990) and knowledge transfer (Cavusgil, 1990). Insights regarding potential advantages
of modified relationships impacted several distribution levels. For example, Hoyt and
Huq (2000) claimed that producer-distributor relationships evolved from arm’s-length
arrangements to collaborative relationships, relying on trust and information sharing.
142 Buzzel and Ortmeyer (1995, p. 85) found that between wholesalers and retailers
“formerly adversarial relationships […] are giving way to cooperative partnerships in
which both try to improve”. Such conditions were prerequisites “in the never-ending
battle to reduce costs while maintaining and improving quality and service”, which
required companies to “embark on co-operative alliances” (Wagner et al., 2002, p. 254).
Numerous examples were reported of performance enhancements attributed to
closer relationships (e.g. Narus and Anderson, 1996; Kumar, 1996; Jap, 1999; Kuei
et al., 2001; Petersen et al., 2005). Such cooperative efforts represented huge potential for
cross-enterprise benefits “including improved customer service, better inventory
management, more efficient use of resources, reduced cycle times, and increased
information sharing” (Daugherty et al., 2006, p. 61). Narus and Anderson (1996, p. 112)
studied distribution innovations in the USA and found that innovative organisations
“realise that by sharing their resources and capabilities in novel ways and new
situations they can take advantage of profit-making opportunities they could not
exploit on their own”. Frazier and Antia (1995) concluded that retailers, distributors
and manufacturers were developing closer relationships to improve their joint
performance. Johnson and Umesh (2002) found that many companies used inter-firm
relationships to outsource functions and tasks previously performed within the firm’s
ownership boundaries, because of limitations in their own resource bases.
Outsourcing implied that activities previously integrated within one firm, now had
to be coordinated across corporate boundaries. As discussed above, the separation of
marketing and logistics caused coordination problems within a firm. These conditions
were further accentuated when coordination now became inter-firm issues. On the other
hand, separation of marketing and logistics enhanced the opportunities for
outsourcing, because specialised firms were established, dealing with one of the
issues. A firm focusing on either the flow of materials or the flow of information can
work more efficiently and effective than firms dealing with both. Specialisation makes
it possible to handle each operation at its optimum capacity, while a firm handling both
must compromise between the two. These conditions are explained by the theory of
non-proportional change (Boulding, 1962). Therefore, in the flow of materials,
specialised logistic service providers got a strong foothold (e.g. Carbone and Stone,
2005; Marasco, 2008). Regarding information exchange, the evolvement of IT gave rise
to several types of specialised intermediaries (e.g. Olsson et al., 2013).
The above discussion illustrates potential relationship benefits, enabled through
increasing involvement between business partners. However, involvement also
imposes significant relationship costs due to resource intensive investments and
adaptations (Ford et al., 2003). Therefore, Nevin (1995) concluded that in some
situations the costs of building close relationships may outweigh the benefits. In a
similar vein, Frazier and Antia (1995, p. 32) argued that “hard economic facts are
pulling many channel members away from cooperative efforts” because of their costs.
Moreover, even if potential effects appear promising, some researchers questioned the
actual realisation of these benefits (e.g. Kapoor and Gupta, 1997; Daugherty et al., 2006),
well expressed in the title of another paper: “The unfulfilled promise of supply chain
collaboration” (Sabath and Fontanella, 2002, p. 24). Therefore, a highly significant The rise and
managerial issue is to find the appropriate balance between relationship benefits and fall of channel
relationship costs, which is about deciding the level of involvement in the relationship.
The analysis of these conditions calls for renewed attention to the behavioural and
management
social dimensions of relationships.

5.4 Reduced relevance of confrontational managerial concepts 143

When relationships turned increasingly collaborative, the behavioural concepts related
to confrontation became less attractive. During the channel management era, the
main issues regarded the impact on distribution of power and conflict, and the
relationship between the two. Hunt and Ray (1981) reported a review of the research on
behavioural dimensions of channel relationships. They found that “power” appeared as
the most frequent research issue, identified in 138 studies, while conflict was the focus
of 98 studies. Aspects related to relationship confrontation dominated, while more
collaborative issues received scant attention, exemplified by “cooperation” (13 studies)
and “satisfaction” (11).
Gattorna (1978) criticised the state-of-the-art of behavioural research at the time,
with the argument that prevailing conceptualisations were defective. Researchers
tended to adopt arbitrary classifications of power, postulating particular effects. Then,
observations were made and explanations provided. However, according to Gattorna,
these explanations were not much more than descriptions of the observations, implying
the tautological effect that “observed behaviour is used to explain itself” (Gattorna,
1978, p. 497). To improve these conditions, Lusch and Brown (1996) aimed at modifying
the power-base model developed by Hunt and Nevin (1974). They did so by considering
what motivates a channel member to yield power to another party. Unfortunately, the
authors had to conclude that their modified power model proved to be no better than
the original one.
Gaski (1984) reviewed the state-of-the art of studies of power and conflict and
criticised the analytical rigour of this research. He concluded that the papers showed
considerable weaknesses regarding both methodological and conceptual issues. Gaski’s
overall finding (valid also in relation to the “most central and seminal papers”) was that
“serious questions must be raised concerning just what can be legitimately concluded
about the subject” (Gaski, 1984, p. 21). Gaski (1988) extended this discussion of the
validation of power. At the end of this paper he was not sure “if a valid power measure
is ever created” (Gaski, 1988, p. 32).
Young and Wilkinson (1989, p. 109) also criticised mainstream research, arguing
that “there was a disproportionate concern with studying industries which exhibited
tensions”. The authors claimed that this approach “distorted the understanding of
how channels functioned” since there seemed to be a view that a study was deemed
successful if significant levels of tension could be found. They concluded therefore that
these researchers “were studying the unusual rather than the norm in channel
relations” (Young and Wilkinson, 1989, p. 109).

5.5 The impact of collaborative managerial concepts

The literature on collaborative relationships began to expand in the late 1970s (Young
and Wilkinson, 1989). Then the 1980s and 1990s witnessed “a movement of focus from
power and conflict to ostensibly more positive concepts” (Hopkinson and Blois, 2014,
p. 138). Initially, cooperation was usually considered as an end-point in the same
IMP dimension as conflict (Gattorna, 1978). Robicheaux and El-Ansary (1976) criticised this
10,1 approach and recommended separate dimensions, since conflict and cooperation can
exist simultaneously. Payan (2007, p. 225) claimed that sometimes cooperation was
viewed as “antithetical to competition”. With support from Stern (1971b) and
Rindfleisch (2000), Payan concluded that also this case required two dimensions, as
both features can exist within the same business relationship.
144 Morgan and Hunt (1994) aimed at filling the gap in the behavioural field pointed out
by Alderson (1965) when he asked for a cooperative theory. In the ambition to
understand the linkages between cooperation on the one hand, and “productive, effective,
relational exchange” on the other, the authors claimed that the “presence of relational
commitment and trust is central” (Morgan and Hunt, 1994, p. 22). Trust was defined to be
at hand “when one party has confidence in an exchange partner’s reliability and
integrity” while “commitment to the relationship is defined as an enduring desire to
maintain a valued relationship” (Morgan and Hunt, 1994, p. 23). The authors developed a
model where trust and commitment were positioned as mediating variables between five
important antecedents (e.g. relationship benefits and opportunism) and five outcomes
(e.g. cooperation and functional conflict). The study showed that “commitment and trust
are, indeed, key”, with trust as the strongest force (Morgan and Hunt, 1994, p. 31). It was
surprising, however, that “the test failed to support a path from relationship benefits to
relationship commitment” (Morgan and Hunt, 1994, p. 32).
The paper by Morgan and Hunt (1994) initiated a huge stream of research on trust,
indicated by the conclusion of Arnott (2007) that work with specific interest in trust
exploded from the mid-1990s. Several studies found performance enhancements related
to the occurrence of trust, in terms of improved coordination, increased channel partner
satisfaction, efficient logistics and superior overall performance (Sezen and Yilmaz,
2007). Other studies indicated that trust in a relationship tended to discourage the use
of coercive influence tactics (Hibbard et al., 2001; Lusch et al., 2003). Andaleeb (1995)
concluded that trust was positively correlated to cooperation with indirect linkages to
performance, but questioned the implicit assumption in previous research that “when a
party A has chosen to be dependent on party B, A trusts B” (Andaleeb, 1995, p. 159).
Andaleeb made the important observation that it is indeed possible for a dependent
party not to trust the business partner.
Owing to the fundamental changes that inter-firm relationships were undergoing,
Geyskens et al. (1998) conducted a meta-analysis of the role of trust in previous
research. They found the role of trust highly significant and concluded that “trust
contributes to satisfaction and long-term orientation over and beyond the effects of
economic outcome of the relationship” (Geyskens et al., 1998, p. 224). Kumar (1996)
identified a shift from a “power game” to a “trust game”. He concluded that “by
working together as partners, retailers and manufacturers can provide the greatest
value to customers at the lowest cost” (Kumar, 1996, p. 95). Retailers that trusted their
manufacturers were more committed to the relationship, less likely to develop
alternative sources of supply, and performed at higher levels than other retailers.
Moreover, trust enabled the sharing of confidential information, the undertaking of
joint investments and the understanding of the business of the counterpart. Finally,
trust was accompanied by adjusted information systems and dedicated people and
resources in order to better serve the partner.
In the efforts to manage relationships in increasingly complex settings, “the
construct of commitment has garnered much attention as it has been linked to superior
performance” (Kim et al., 2011, p. 521). The authors discussed various forms of
commitment and investigated the impact of these forms on the outcome of “destructive The rise and
acts” from a channel partner. The particular interest was devoted to what type of fall of channel
commitment leads to performance enhancement and damage mitigation. The results
provided significant implications for the allocation of resources to the various
management
relationships of a firm. Anderson and Weitz (1992) analysed the nature of commitment
between independent manufacturers and distributors, emphasising the linkages
between commitment and various forms of pledges that bind channel members to the 145
relationship. The most important pledging for both parties was the extent of
idiosyncratic investments. Contractual forms represented another type of pledging in
terms of exclusive dealing and territorial exclusivity. The authors concluded that
formal contracts were less important than “implicit contracts”, represented by the set of
common understanding that was built over time.
Both commitment and trust thus have been subject to substantial research efforts in
order to clarify their linkages to relationship performance and management. Most
studies found that commitment and trust feature well-functioning relationships and
that performance and trust/commitment were correlated. However, the studies were
more unclear concerning the causality of this relationship. Therefore it might be
possible to argue that trust and commitment are in fact outcome of well-functioning
relationships, rather than determinants.
In an excellent review of the research on trust, Young (2006) concluded that research
tells us that “trust is important and that it is linked to relational performance, but
reveals very little about why it is so” (Young, 2006, p. 442). The lack of research on
these mechanisms led her to argue that “trust research reached something of a ‘dead
end’ some time ago” (Young, 2006, p. 442). Criticism has been directed also to the
mainstream perceptions of the role of trust. For example, Young and Wilkinson (1989,
p. 120) claimed that “trust is not an inevitable part of a trading relationship and it is not
essential for cooperation/coordination to occur”. Furthermore, Gadde and Håkansson
(2001) argued that both trust and commitment are multidimensional concepts,
exemplified with the definition of Morgan and Hunt (1994, p. 23) that expressed trust as
manifested in behaviour described as “consistent, competent, honest, fair, responsible,
helpful and benevolent”. There are obvious problems with this broad definition since
one actor may be perceived competent, but not very helpful.
In a similar vein, Gadde and Håkansson (2001) claimed that commitment to maintain
a long-term relationship is not necessarily based on trust. The underlying reason can be
that there are no relevant alternatives, or that the current business partner, despite
weaknesses, is perceived more beneficial than others. Moreover, Young and Denize
(1995) found that relationships continued, without economic or social benefits accruing,
even in situations where alternatives were available. Despite dissatisfaction,
relationships were prolonged because of risk aversion, inertia, psychological
dependence and even “the belief that their accountants ‘glory’ is reflected on
themselves” (Young and Denize, 1995, p. 32). Backhaus and Buschken (1999, p. 245)
observed “the paradox of unsatisfying but stable relationships”. Their study revealed
that many firms were notoriously unhappy with some of their business relationships.
Despite these conditions the relationships continued owing to relation-specific
investments and adaptations. Similar results were reported by Anderson and Jap (2005,
p. 76). These examples show that business may continue even if the parties neither like
nor trust each other. Moreover, they need not be committed to each other in the
meaning of Morgan and Hunt (1994, p. 23) that defined commitment as the “enduring
desire to maintain a valued relationship”.
IMP When it comes to the managerial implications of the studies of trust and
10,1 commitment, Hibbard et al. (2001) concluded that most research concentrated on their
interrelationship and their antecedents, rather than explored their consequences. In
addition, uncertainty about the causality of their connections to performance, and the
multi-dimensionality of the two concepts, made it problematic to apply them in the
managing of distribution arrangements. Young (2006, p. 442) is even more explicit in
146 this problematizing by concluding that these conditions make it impossible to manage
trust: “managers can only manage the antecedents of trust and hope for the best”.

6. Concluding discussion
The conclusions of this paper relate to the features of the channel management
perspective, the reasons for its emergence and the factors undermining its position. The
final conclusions regarding perspective shifts will be formulated in the forthcoming paper,
after the analysis of the organising and managing of today’s distribution arrangements.
The first contribution of the paper is the analysis of the roots of the channel
management perspective. This approach evolved through influences from marketing
management and the socio-behavioural view of distribution. The interest of researchers
prescribing to these schools required more specialised frameworks than the broad
perspective offered by Alderson (1957, 1965). Alderson’s approach had emerged as a
response to the need for integrating three previously unconnected views of distribution.
Second, the basic channel management recipe recommended manufacturing firms to act
as channel captains in order to control the behaviour of their business partners and the entire
system of distribution. In the channel management approach, Alderson’s broad scope of
distribution was reduced to one of the elements of the marketing mix of the firm. The main
managerial mechanism to apply was the exploitation of power and control mechanisms.
Since some power bases were clearly coercive, relationships tended to be conflictual.
Third, changing conditions in the business context challenged the principle of
channel management and eventually lead to its fall. The channel captain approach had
to be abandoned when intermediaries became more influential and technological
development enabled customer adapted solutions. In turn, these solutions required
enhanced attention to collaborative relationships.
Fourth, evolving relationships featuring extended involvement between the parties
enabled considerable performance improvements. At the same time, however, these
settings were resource-demanding and created interdependencies between firms, both
directly and indirectly. In these business conditions power and control were no longer
as useful mechanisms as they once had been.
Finally, cooperative concepts like trust and commitment showed to be less relevant
than expected for the understanding of the features of evolving distribution
arrangements. Actually, as will be shown in the forthcoming paper, reinterpretation of
“confrontational” concepts like power, conflict and control are more useful for the
analysis and the understanding of the contemporary distribution landscape.

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Corresponding author
153
Lars-Erik Gadde can be contacted at: largad@chalmers.se

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