Factors affecting negotiation process and outcomes in continuing channel relationships

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Factors affecting negotiation process and outcomes in continuing channel relationships
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Subjects / Keywords:
Retail trade -- Management   ( lcsh )
Marketing -- Management   ( lcsh )
Marketing thesis Ph.D
Dissertations, Academic -- Marketing -- UF
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non-fiction   ( marcgt )

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Thesis:
Thesis (Ph.D.)--University of Florida, 1991.
Bibliography:
Includes bibliographical references (leaves 276-288).
Statement of Responsibility:
by Shankar Ganesan.
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Typescript.
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Vita.

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FACTORS


AFFECTING NEGOTIATION
CONTINUING CHANNEL


PROCESS AND OUTCOMES
RELATIONSHIPS


SHANKAR


GANESAN


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

































Copyright


Shankar


1991


anesan






























To my parents.















ACKNOWLEDGEMENTS


wish


express


sincere


appreciation


faculty,


staff


, and


students


Marketing


Department


University


Florida.


First


all,


wish


express


my gratitude


appreciation


advisor


Dr. Barton


Weitz


expert


advice,


to ler ance,


encouragement


being


a role


model


can


follow


rest


research


career


.My


special


thanks


also


to Dr.


John


Lynch,


whose


encouragement


advice


were


instrumental


success


dissertation.


would


also


like


thank


other


members


faculty


University


Florida:


Professors


Rich


Lutz


Alan


Sawyer


offering


critical


comments


during


initial


stages


this


dissertation.


would


also


like


take


this


opportunity


thank


Center


Retailing


of Florida


Education


sponsoring


this


Research


dissertation


University


research.


thanks


to all


staff


members


Center


Retailing


, especially


Kathy


Brown.


Due


to the


confidential


nature


data


collected


this


dissertation,


may










appreciate


time


taken


these


individuals


completing


questionnaires.


Finally


wish


express


my deep


appreciation


wife


Rama


, for


being


a constant


source


of moral


support


over


last


three


years.

















TABLE OF CONTENTS


ACKNOWLEDGEMENT

LIST OF TABLES

LIST OF FIGURES


ABSTRACT


S


.(( S (() *( S( I( S) I() *I S *(I S 405SSS SSS59S SSSSSS


. .. 0 . . . . . .. ....Vlll

..... .. ....................... . X

I *


. . . . . . . .. Xll


CHAPTERS


1 INTRODUCTION


* SS S 5 5* SSS 0 5 S ** S SSS SS *S S*a *a 1


Need to Manage Conflicts ........................
Conflict in Manufacturer-Retailer Relationships
Role of Negotiations in Conflict Resolution .....
Unresolved Issues ... .. ...... .. .
Importance of Continuing Relationships ..........
Negotiations in Continuing Relationships ...
Organization of the Dissertation ................


.. .....2





S.. ... 10
... ...12


REVIEW OF THE LITERATURE .............................. 14


Overview . . ........ .. .. ..
Definition of Various Forms of Exchange ..........
Characteristics of Market and Relational Exchanges ..
Consequences of Relational Exchanges ...............
Key Factors Governing Relational Exchanges .........
Summary .. ... .. ............. ... ..


..14
S. 14
..16
..22
..27
..54


3 CONCEPTUAL FRAMEWORK .. .. ...... ........ ............ 55


Overview .... .. .... .......... ......... .
Retailer's Expectation of Future Interactions .
Retailer's Long-Term Orientation ......... .....
Retailer's Initial Offer .......................
Message Sending Behavior and Disagreements .....
Conflict Resolution Strategies and Concessions
Negotiation Outcomes .... ...... .......... ...


. .. 55
S... ...55
S. . 66
. .. 80
.. .... 85
. .89
.. ... 93











4 METHODOLOGY

Overview ...


Research Setting, Questionnaire Development,
Respondent Solicitation and Data Collection
Development of Measures ....................


Summary

RESULTS


* . 4 .* S S S S
*. . . ..* S. ..*. . ..*. . . ..*. . . S 5 5 5 5 5 5* S


Overview


Retailer's Expectation of Future Interactions
Retailer's Long-term Orientation ..........
Retailer's Initial Offer .. .............
Message Sending Behaviors and Disagreements
Conflict Resolution Strategies ...............


........ 173


Retailer and -Vendor


Concessions


...... ... 206


Satisfaction with the Negotiations
Summary .. ...... .... .. . .


... ..
.... .. .


6 DISCUSSION . . .. . ............ ... 240


Overview


Contributions of the Dissertation .............


Directions for Future Research
Consequences for Practice ...


Limitations


Summary


* S S S S S S S S S S S S S
.............. S. .
. ... ... .0 .


* S S S S S S
* S S S S *
* S S S S S
* S S S S


APPENDICES


A SURVEY OF RETAIL BUYERS: PART A ......................

B SURVEY OF RETAIL BUYERS: PART B .....................

REFERENCES ................. .. ................. .. ....

BIOGRAPHICAL SKETCH .. .. ... .. ........ .............. .. ....















LIST OF TABLES


Frequency of Respondents


Relationship and


Dependence of


Based


Product


a Retailer


on the Nature of


Importance


on Vendor


Dependence of


Power


a Vendor on Retailer


Imbalance


Transaction Specific


Transaction Specific


Investments by the Retailer


Investments by the Vendor


Satisfaction with Past Negotiation Outcomes


Retailer' s


Trust


Vendor Organization .............. 16


4-9

4-10


Retailer's

Retailer's


Trust


Vendor's Representative


Expectation of Future


Interaction


*S .


Retailer's


Vendor's


Long -Term Orientation


Long-Term Orientation ..................... 166


4-13


Environmental


Uncertainty


Retailer's Message Sending Behavior


Vendor's Message


Sending Behavior


4-16


Retailer's


Use of


Conflict Resolution Strategies


4-17


Retailer's Satisfaction with


Means,


Standard Deviations,


Variables Affecting Retailer's


Future


the Negotiation


and Correlations of


Expectation of


Interactions









Means,


Standard Deviations,


and Correlations


Variables Affecting


Retailer's Long-Term


Orientation


Regression Equations and Estimated Standardized


Coefficients
Orientation


Retailer's Long-Term


Means,


Standard Deviations, .and


Correlations


Variables Affecting Retailer


Initial


Offer


Regression Equations and Estimated Standardized


Coefficients


Retailer


s Initial


Offer


Means,


Standard Deviations,


Correlations


Variables Affecting


Retailer's Message Sending


Behavior


the Level


of Disagreement


Regression Equations and Estimated Standardized


Coefficients


Behavior


Means,


Retailer


the Level


Standard Deviations,


Message Sending


of Disagreement


Correlations of
Use of Various


Variables Affecting Retailer's
Conflict Resolution Strategies


5-10


Analysis of


Retailer'


Use of Various Conflict


Resolution Strategies


5-11


Means,


Standard Deviations,


Correlations of


Variables


Affecting Retailer's


and Vendor'


Concession Behavior


Regression Equations and Estimated Standardized


Coefficients


Retailer'


and Vendor'


Concession Behavior


5-13


Means,


Standard Deviations,


Variables Affecting Retailer'


and Correlations of


Satisfaction with


Negotiations


5-14


Regression Equations and Estimated Standardized


Coefficients
Negotiations


Retailer


Satisfaction with















LIST OF FIGURES


Overview of


the Conceptual Framework ..................


Antecedents of
Interactions


a Retailer's Expectation of


Future


Antecedents of


a Retailer's Long-Term Orientation .... 101


Antecedents Affecting Other


Antecedents


Antecedents of


a Retailer's


Initial


Offer


Antecedents of


Level


of Disagreements Between


Retailers and Vendors


Styles


in Conflict Resolution ................


Determinants of


a Retailer's Conflict Resolution


Strategy


3-9a


Hypotheses re
Solving and
Strategies


latedd


the Retailer's


Use of


Problem


Compromise Conflict Resolution


3-9b


Hypotheses


related


the Retailer's use of


Aggressive Conflict Resolution Strategy


3-10


Effect of Retailer's Conflict Resolution Strategies
on Retailer's and Vendor's Concessions ............


3-11


Effect of Retailer's


Use of Conflict Resolution


Strategies and Concessions on Retailer's


Satisfaction with


the Negotiation


Antecedents of
Interactions


a Retailer's


Expectation of


Future


Antecedents of


a Retailer's


Long-Term Orientation ....


--









Effect


of Retailer'


on Retailer'


Retailer's


Conflict Resolution Strategies
Vendor's Concessions and


Satisfaction with Negotiation















Abstract of Dissertation Presented


the Graduate School


the University of
Requirements for


Florida


in Partial Fulfillment


the Degree of


Doctor


Philosophy


FACTORS AFFECTING NEGOTIATION PROCESS AND OUTCOMES
CONTINUING CHANNEL RELATIONSHIPS

By

Shankar Ganesan


May,


1991


Chairman:


Major


Barton A.


Department:


Weitz


Marketing


This dissertation describes a


study of


the antecedents


consequences of


a retailer's


long-term orientation in a


negotiation situation.


According


the conceptual


framework


proposed in


this


study,


retailers'


long-term orientation


function of


vendor


following:


organizations and


the degree


their


to which


representatives,


they trust


their


perception of vendors'


long-term orientation,


satisfaction


with past negotiations,


expectations of


future


interactions


with


vendors,


their dependence on


vendors and


vendors'


dependence on


them.


Similarly,


the hypotheses make










solving conflict


resolution strategies,


fewer


concessions and


a high level


of satisfaction with outcomes.


One hundred retail buyers


from six department


stores and


their


resources


provided


information


on their


relationship


on a major negotiation conducted between


them.


study


was conducted in


two phases:


the first


phase captured


retailers'


second phase,


long-term orientation and


the negotiation process


its antecedents and


and outcomes.


results


indicated


that


retailers'


long-term


orientation was affected by their perception


of vendors'


long-term orientation,


their


trust


in vendors'


representatives,


their


satisfaction with past negotiation


outcomes,


their


expectation of


future


interactions with


vendors,


the extent


to which


they depended on


vendors .


When


retailers made


initial


offer,


retailers'


perception of


the vendors


' long-term orientation


a significant


vendors made


effect on


initial


their


offer,


initial


vendors'


offer.


initial


When


offer was


significantly related


the retailers'


initial


offer.


Further


, the retailers'


initial


offer was significantly


related


to messages sent by both parties and


disagreements between


them.


level


strategy used by retailers


resolve conflicts depended on t


he extent of


disagreement and










compromising


strategy


resulted


in the


largest


concessions


both


parties.

















CHAPTER


INTRODUCTION


In recent


years,


a reduction


new


market


opportunities


increased


global


competition


forced


many


manufacturers


to place


greater


emphasis


on efficient


internal


operations

corporate


.To


improve


entities


have


their


internal


reassessed


efficiencies


their


corporate


, many

functions


such


as distribution.


This


reassessment


organizations


a more


balanced


emphasis


on the


needs


consumer


channel


intermediaries


. As


Stern


El-Ansary


(1988)


note,


Economic


middlemen
determine


Rather, the
distribution
interrelated


essence,


battles


versus


involving
middlemen


ultimate


relevant


system


producers


will


victors


unit


comprising


institutions


competitive


nature


not,
in the


versus


in the


competiti


an entire


agencies


producers


long


run,


marketplace.
on is an entire


network


(page


marketplace


forced


manufacturers


to achieve


channel


efficiencies


which


in turn


would


provide


them


a sustainable


competitive


advantage


channel


in the


marketplace.


intermediaries,


view


management


importance


conflicts


between


manufacturers


channel


members


become


a major


task


most


mananars











Need


to Manaae


Conflicts


In a distribution


channel,


even


though


role


each


channel


member


unique,


there


exists


operational


interdependence


between


channel


members.


This


interdependence


necessary


delivery


form,


time,


place,


possession


utilities


consumers


(Stern


-Ansary


1988)


In spite


this


interdependence,


capabilities,


expectations


, perceptions


, and


preferences


of channel


members


are


quite


different,


leading


to a state


latent


conflict.


many


situations,


this


latent


conflict


becomes


overt


channel


members


begin


to exert


their


influence


on each


other


(Etgar


Stern


1979


1971


Firat,


Tybout,


. Therefore,


Stern


a central


1975;


task


Rosenberg


channel


management


res


olve


manage


channel


conflicts


(Stern


Ansary


1988


.In


fact,


a survey


managers


dealing


with


channel


intermediaries


revealed


that


managers


spend


much


as one-fourth


their


time


on conflict


management


(Thomas


Schmidt


1976).


importance


conflict


management


in distribution


channels


literature.


generated


This


considerable


includes


research


empirical


marketing


measurement


conflict


Brown


1981;


enberg


Stern


1971)


, the










Sternthal,


Craig


1973


relationship


between


power


conflict


(Lusch


1976) .


This


suggests


that


conflict


distribution


channels


a pervasive


phenomenon


(Reve


Stern


1979) .


Conflict


Manufacturer-Retailer


Relationships


Conflict


between


channel


members


a retailing


environment


occurs


over


numerous


issues


Some


these


issues


are


markup,


terms


payment,


transportation


costs


, delivery,


advertising


allowances,


markdown


money.


Since


these


issues


retailer


encompass


elements


s profitability


can


of a retailing


be affected


mix,


quality


effectiveness


mechanisms


employed


to resolve


them.


retailing


environment,


strong


vendor


relations


can


help


retailer


develop


sustainable


competitive


advantage.


Retailers


with


strong


relationships


with


vendors


often


receive


merchandise


short-supply


, information


on new


best


selling


retailers


products,


receive


competitive


best


activity.


allowable


ces,


Further


, these


advertising


markdown


allowances


Clearly,


importance


resolving


conflicts


developing


long


-term


relationships


with


vendors


crucial


to the


survival


profitability


a retailing


organization.











Role


Negotiations


Conflic t


Resolution


Negotiations


play


a fundamental


crucial


role


many


marketing


contexts


including


manufacturer-dealer


retailer-vendor


relationships


a distribution


channel


buyer-seller


interactions


industrial


buying,


family


consumer


buying


decisions


. In


many


these


contexts,


strategies


such


as diplomacy


, exchange e


persons


adopting


superordinate


goals


Stern


El -Ansary


1988)


can


be employed

negotiations


as means


play


resolving


a vital


role


conflicts

effective


. However,

implementation


these


strategies


.As


Stern


1971)


indicates,


matter


what


makers


conflict


within


management


a channel,


mechanism


resolution


adopted


always


policy


result


bargaining--the


making


commitments,


offering


rewards,


threatening


punishments


or deprivation--between


among


members"


(page


132) .


Negotiation


occurs


in channel


situations


when


communication


is possible


when


each


party


only


an interest


in cooperating


with


other


party


order


to achieve


competing


a mutually


interests


beneficial


concerning


agreement,


specific


also


terms


that


agreement


(Schelling


1960


. As a result


many


recent


studies


have


focused


on bargaining


behavior


channel










et al.


1986


McAlister


, Bazerman,


Fader


1986


Neslin


Greenhalgh


1983


Schurr


Ozanne


1986).


Unresolved


Issues


In spite


recent


interest


negotiation


bargaining


importance,


most


these


studies


have


ignored


or chosen


ignore


some


characteristics


bargaining


a di


stribution


channel.


These


conceptual


models


have


not


dealt


with


the following


issues:


continuing


element


involved


baraainina


process.


Most


conceptualizations


dealing


with


bargaining


are


static,


sense


that


bargaining


occurs


between


parties


have


a large


investment


continuation


relationship


different


relationship


. The


from most


between


stribution


other


channel


channel


bargaining


members


environment


setting


occurs


substantially


longer


period


time


channel


partners


have


a strong


incentive


to continue


partnership


. This


long-


term


, continuing


aspect


channel


relationship


important


because


potential


benefits


coordinated


actions


high


investment


level


needed


to exploit


these


interdependencies


. Even


in conventional


channels


there


emphasis


on developing


long


-term


relationships


sole










sourcing


channel


intermediaries


. Therefore,


dynamics


such


a continuing


relationship


suggest


a need


take


into


account


impact


past


relationships


to consider


future


implications


a current


negotiation.


notion


of multiple


buyers


multiple


sellers.


Most


Fader


bilateral


models


1986


(except


assume


monopoly


paper


negotiations


single


McAlister


to be


buyer


, Bazerman,


occurring


a single


seller)


However,


reality,


most


common


occurrence


existence


retailers


manufacturers


most


dealers


dealing


with


retailers


multiple


carrying


dealers


goods


more


than


one


manufacturer


. In


a retailing


situation,


often


results


in negotiations


between


one


retailer


multiple


vendors


.To


capture


this


bargaining


characteristic,


both


laboratory


experiments


field


studies


need


take


into


account


comparison


level


alternatives


available


retailer


obtaining


In a field


information


from


study


this


retailer


would

on the


entail


either

vendors


being


considered


supply


a particular


merchandise


their


offers


or capturing


effects


multiple


vendors


(through


constructs


such


dependence


power


imbalance)


negotiation


strategy.


In a laboratory


experiment,


this


indicates


use


multiple


vendors


e bargaining










McAlister,


Bazerman,


and Fader


(1986)


However,


the notion of


multiple sellers and buyers was


introduced


this


paper


as a


manipulation of


should


from


the power


to understand


the entire set of


imbalance.


the impact


vendors being


Future experiments


of competitive offers


considered by the


retailer.


relationships between


individuals and


their


organization.


An issue


in distribution channels which has been debated


extensively


organizational


the use of key informants

characteristics. Phillips


capturing


(1981)


indicates


that many of


the paradigms used in distribution channels


attempt


to explain and


predict


the behavior


of organizations


or organizational


subunits and not


individuals.


According


him,


since organizational


characteristics are quite different


from individual


characteristics,


the notion


of key


informant


reports


as valid


indicators of


organizational


characteristics


is questionable.


One approach suggested by


Phillips


(1981)


would be


to use


organization


informants at different levels


to capture organizational


level


in an


constructs.


alternative approach is


to specify the levels at which


constructs operate.


example,


an important construct which


is used in


this dissertation


trust.


Trust can be specified


either


c-a -


an individual


1 evel


or at an organizational


level.


1










trust


vendor


representative


organization.


contrast,


organizational


trust


may


captured


through


reputation


construct


where


inputs


from


multiple


informants


both


from


within


organization


outside


organization


are


obtained.


This


suggests


that


there


need


distribution


channel


research


to clearly


specify


constructs


levels


at which


they


operate


then


develop


appropriate


measures.


Importance


Continuing


Relationships


focus


this


dissertation


on negotiations


between


channel


members


having


a continuing


relationship


retail


environment.


Retailers


past,


have


tended


concentrate


on short


-term


problems


mainly


because


intense


daily


activity.


considerably


due


However,


to greater


retail


intertype


environment


changed


competition


Wal-


Mart


vs.


Eckerds


on pharmaceutical


products)


, growth


vertical


marketing


systems


, changes


in technology


consumer


needs,


acce


leration


institutional


life


cycles


(Stern


-Ansary


1988


This


change


in retailing


environment has 1

strategic planing


to a greater


. An


important


emphasis


aspect


on long


-range


strategic


planning


to develop


a sustainable


competitive


advantage


which


can










operations


external


Efficient


such


inventory


relationship


external


relationships


with


vendors.


sustainable


with


operations


immediate


In other


competitive


words


advantage


distribution


suppliers

involve d


management)


customers.


developing


environment


, a key


: the


factor


is strong


strong


customers,


developing


vendor


relations.


Strong


vendor


relations


can


result


a long


-term


advantage


in many


ways


.Two


major


ways


a retailer


can


achieve


long


exc


-term


advantage


lusively


them


is by


getting


private


brand)


merchandise


or developing


made


a strong


relationship


with


vendo r


such


that


vendor


will


sell


exclusively


them


(exclusivity)


Long


-term


vendor


relationships


have


other


advantages


such


as deli


very


items


which


are


under


short


supply


haring


of market


information


preference


with


respect


to discounted


merchandise.


essence,


long


-term


relationships


provide


retailer


with


several


different


mechanisms


obtaining


sustainable


competitive


advantage.


However


relationships


in spite


traditional


obvious a

approach


advantages


in retailing


long

has


-term

been


adversarial


approach


Shapiro


1985)


, where


vendors


are


pitted


against


each


other


to obtain


best


possible


deal.


Such


an approach


advantageous


only


short


-run











Negotiations


Continuing


Relationships


main


thrust


negotiation


research


social


psychology


game


theory


until


now


been


to develop


models


which


explain


process


outcomes


negotiations


between


parties


a single


period


. These


single


period


or static


models


take


into


consideration


past


behavior


future


anticipated


behaviors


parties.


This


narrow


focus


negotiation


researchers


both


social


psychology


game


theory


stems


from


assumption


that


negotiation


occurs


between


parties


have


continuing


relationship.


As a result,


application


most


negotiation


research


areas


such


as manufacturer


distributor


or retailer-vendor


relationships


which


are


dominated


continuing


or long


-term


relationships


suspect.


To clarify


relationship


between


this


difference,


a consumer


us consider


a dealer


negotiating


sale


a car


.The


relationship


between


exists


until


a sale


is consummated


assuming


that


no fraudulent


activity


occurred


deal.


dealer


buyer


are


concerned


fashion


future


with


except


sales


future


when


.In


most s


or past


dealer


relationships


expects


Ltuations,


in any


goodwill


bargaining


explicit


to create


occurs










distributor

DuPont, a m


or a vendor


manufacturer


retailer


consumer


is relatively


industrial


permanent.


goods


calls


this


relationship


with


dealers


a "marketing


partnership


" The


characteristic


this


relati


onship


according


to DuPont,


desire


to seek


permanence


committed


relationship


with


dealer


Toys


' Us


leading


retailer


relationship


with


in toys


indicates


vendor


that


is essential


a strong

to developing


sustainable

relationship


competitive


advantage


expectation


. The

that


empha


such


relationship


will


continue


grow


attractive


compared


their


competitors.


example


difference

conceptual


dissertation


discussed


focus


model


above


previous


presented


is concerned


tries


to bring


negotiation


this


with


research


dissertation.


negotiation


between


This


retailers


vendors


situation,


have


continuing


researcher


relationships.


to focus


this


on antecedents


which


determine


long


-term


orientation


channel


members


effect


such


orientation


eventual


outcomes.


This


expand


focus


negotiation


research


from


restricted


emphasis


on current


strategies


outcomes


broader


view


of negotiation


which


considers


both


past











Organization of


the dissertation


This dissertation comprises of


six chapters.


A brief


description


of each chapter


is provided below.


Chapter


introduces


the need for


research


negotiations


between parties having a continuing


relationship.


seen in


this chapter,


the current


research


in negotiation views negotiation between parties as discrete


without any effect of past or


future of


an ongoing


relationship


Chapter


is a review of


research done


negotiations and continuing


in detail


relationships.


the characteristics of


This chapter


short-term and


looks


long-term


relationships,


the notion of


interorganizational


trust,


interpersonal and


the conceptualization of power,


research on future expectations and dissatisfaction with


outcomes.


Chapter


dissertation

that affect


3 describes


The conceptual


the nature of


the conceptual model


framework identifies constructs


interactions between retailers and


vendors


involved


in a continuing


relationship.


this


framework, a

motivational


set of


antecedent constructs affects


orientation of


the channel member


resulting










Chapter 4 c

dissertation. Th

collecting data,


describes


the methodology used


is chapter deals with

the data collection


the setting


process


the

for


, the measures


used,


the method of


analysis.


Chapter


focuses on


results obtained


from


analysis of


data


collected


this dissertation.


This


chapter describes


individual


relationships between


constructs


that are significant


possible reasons


some


and also


insignificant


speculates on


results.


Chapter


provides a discussion of


the results and a


brief


summary of


the significance of


this dissertation.


This


chapter


also mentions possible


future avenues of


research in


negotiations between continuing


channel members.

















CHAPTER


REVIEW


OF THE LITERATURE


Overview


Research


investigating


different


forms


exchange


mainly


emerged


from


economics


erature


dealing


with


vertical


integration


(Macneil


1978


issues


which


(Williamson


focused


1975


on contractual


contract


obligations


long


-term


relationships


This


chapter


-provides


an overview


various


streams


research


focussing


development


long


-term


relationships


, various


antecedents


long


-term


relationships,


consequences


key


long


characterist


-term


iCS


relationships


finally,


on behavior


channel


partners


This


chapter


emphasizes


four


factors


which


determine


relationships1:


existence


trust,


development


power,


long


satisfaction,


-term


expectations


future


interactions.


Definition


Various


Forms


of Exchange


Research


on interorganizational


relationships


mainly


fn l riic ls


n ~twn f


nrrmn


I--ir Ii n I It-


ma rkest


h i !Arrch i cal


roji L


1J I










competitive


markets.


Using


this


approach,


retailers


primarily


buy


on price,


use


multiple


sources


supply


to obtain


best


possible


deal


from


vendor


. Often,


this


involves


switching


suppliers


over


time


using


competition


among


vendors


to obtain


best


outcome.


A market


exchange


inherently


short


-term


oriented


because


focuses


on outcomes


from


one


transaction.


Another


been


form


used


of exchange


literature


known


as hierarchical


to denote


exchanges


exchange


between


vertical


integrated


units


(Williamson


1975) .


This


results


retail


have


buyers


merchandise


working

produced


within

rather


their

than


own


organization


buying


from


independent


vendor


market


Both


these


exchanges


form


opposite


ends


of a continuum.


An intermediary


form


exchange


relational


exchange


Spekman,


(Macneil


O'Neal


1979


Dwyer


1988) .


, Schurr


Relational


1986


exchanges


Frazier,


occur


when


independent


buyers


sellers


develop


relationships


with


long


-term


orientation


(Spekman


Johnston


1986).


relational


exchange e


advantages


associated


with


both


market


exchange


a hierarchical


exchange.


Specifically,


relational


economies


exchange


obtained


from


achieves

dealing


benefits


with


through


independent


scale

specialists.










relationships


While


relational


exchanges


provide


significant


benefits


to both


parties,


they


are


fragile


absence


a strong


governing


mechanism


such


marketplace


bureaucracy.


Characteristics


of Market


Relational


Exchanges


discussion


above


pointed


three


different


approaches


in retailer-vendor


relationships


First,


a market


exchange


where


focus


is on current


transactions,


second


relational


exchange e


where


focus


is on future


transactions,


third


a hierarchical


exchange


where


focus


is on future


transactions


through


bureaucratic


control.


These


appro


aches


highlight


character


stics


which


are


quite


different


from


each


other


. The


characteristics


two


approaches


(market


relational)


are


discussed


this


section


(hierarchical


exchange


particularly


relevant


this


context).


Frame


for


Exchanges


Market


exchanges


tend


to viewed


"discrete


transactions "


with


parties


having


very


little


commitment


each


other


. This


leads


a channel


member


to focus


on the


current


transaction.


A relational


exchange


characterized


a higher


level


functional


interdependence


where


shared


Time










transactions


future


implications


of a relationship


are


brought


future


present


transactions.


incorporate


future


thus


disallowing


comparison,


transactions


consideration


relational


present.


exchanges


According


Macneil


1980


, the


present


relational


transactions


used


planning


preparing


future


arrived.


Goal


IncomDatibilitv


Goal


incompatibility


a relationship


degree


which


a set


specific


goals


objectives


one


party


are


ompatible


those


other


party


(Stern


Heskett


1969


Studies


channel


management


have


focused


on the


effect


goal


incompatibility


on channel


conflict


. In


their


study


franchised


industrial


installation


distribution


network


manufacturer,


a large


Eliashberg


Michie


1984


found


different


sets


of goals


franchisor


franchisee.


Even


preference


orderings


on different


goals


franchisor


franchisee


were


different.


Anderson


Weitz


(1989


found


that


goal


compatibility


among


channel


members


trust


industrial


a desire


sector


to continue


to higher


relationship


levels


a long


time. In

evidence


spite


regarding


these

the


studies,


level


there

goal i


is no systematic


ncompatibility










values


trust


two -way


communication


, one


would


expect


higher


level


goal


compatibility


between


parties.


Transaction


Costs


According


transaction


cost


framework


(Williamson


1979,


1981


firms


strive


economize


their


transaction


costs


Transaction


costs


are


costs


assoc


lated


with


writing


negotiating


implementing


a contract


between


two


part


ies.


In market


exchanges


which


are


based


on disc


rete


transactions,


transaction


screte


costs


transactions


are


not


to several


envisage


reasons


future


First,


transactions


hence


no contracts


are


need


ed for


enforcement


contingencies


at a future


point


time.


Second,


discrete


transactions


depend


on the


efficiency


market


system


hence


have


little


transaction


specific


investments.


result,


both


parties


can


change


partners


without


worrying


about


investments


idiosyncratic


relationship.


Third


occas


screte


ionally


transactions


law.


are


easier


enforced


to monitor


soc


such


norms


exchanges


because


relatively


level


ambiguity


objects


exchange.


In contrast,


relational


exchanges


encourage


development


specialized


investments


which


are


idiosyncratic


particular


transaction


and,


hence,










opportuni

opportuni


stic


behavior

behaviors


other


, part


have


party.


To reduce


to write


contracts


ch indicate

s increases


how

the


future


contingenci


transaction


specific


would

costs.


resolved.


An alternative


mechanism


used


channel


member


s in


relational


exchanges


reduce


opportuni


behavior


reduce


transaction


specific


costs


to develop


a high


deg r


mutual


trust


This


would


obviate


need


contingent


claims


contract


between


parties


An empirical


ssue


that


been


addressed


so far


literature


is whether


relational


exchanges


are


characterized


high


transaction


costs


Transaction


Specific


Investments


According


to Frazier


et al


1988)


relational


exchanges


invol


high


level


specialized


investments


in human


phys


ical


assets


. Often


, in


relational


exchanges


such


as Just


In-Time


assets


JIT)


such


exchanges


as a new


, specialized


plant


inve


next


stment


Original


in durabi


Equipment


Manufactur


OEM


new


warehouse


more


delivery


vehi


are


essential


ose


functioning


OEM


supplier


.In


many


cases


, these


specialized


investments


cannot


transferred


or redeployed


elsewhere


. Therefore


these


transaction


specific


investments


raise


eve










parties


to dedicate


resources


partnership.


Ford,


which


a champion


exchanges


, makes


substantial


investment


suppliers


Improve


their


productivity


effi


ciency.


CAD/CAM


Often,


systems


Ford


to de


helped


sign


many


suppliers


their


install


component


new


parts


instead


providing


area


specifications


interpersonal


relationships


supplier.


, close


relationships


have


been


found


to have


a higher


level


irretrievable


investment,


1.e.,


investments


in time,


energy,


emotional


costs


, self-disclosures


, and


money


(Kelly


1978)


Rusbult


1980


investment


model


indicates


that


relationships


which


have


a higher


level


investment


may


have


greater


commitment,


i.e.


a sense


of loyalty


partner,


an expectation


continuity


relationship,


a willingness


to sacrifice


short


-term


outcomes


order


to strengthen


relationship.


retailing


environment


there


seems


to be


some


evidence


exchanges


that


have


retailers


a high


degree


vendors


have


transaction


relational


specific


investment.


JC Penney


, a leading


department


store


chain,


developed


computerized


procurement


inventory


systems


along


with


their


long


-term


suppliers


to minimize


inventory


costs.










mainly


because


future


contingencies


exist


exchange


1980) .


is a simple


other


, monetiz


hand,


able


relational


economic


exchange


exchanges


focus


Macneil


on the


substance


of planning


only


initial


period


main


focus


on planning


structure


process


exchange


rules


regulations


conduct


exchange


future

planning


periods

a for s


. The


specific


parties

issues


exchange e


occurring


realize


future


that


IS COS


difficult


hence


focus


planning


is on


establishing


self


-regulatory


mechanisms


These


mechanisms


establi


sh approaches


to solve


problems


in a mutually


beneficial


way


when


gaps


exist


planning


process.


Partners


in a relational


exchange


are


likely


to share


future


plans


take


into


consideration


potential


outcomes


their


partners


. Partners


in a relational


exc


change


are


more


likely


to share


information


about


technological


advances


new


innovations,


thus


identify


opportunities


future


Level


plan


Risk


functional


interdependence


high


level


transaction


specific


investments,


relational


exchanges


are


perceived


as relatively


high


sk by


parties


exchange.


In JIT


exchanges


which


are


the


extreme










In contrast


risk

the


transactions


associated


parties


with


depend


discrete

on efficiencies


competitive


markets.


In fact


multiple


suppliers


are


often


rule,


indicating


a spread


across


suppliers.


Consequences


Relational


Exchanges


In spite


of lack


empirical


evidence


regarding


consequences


relational


or long


-term


exchange


there


seems


to be


some


evidence


based


on actual


relationships


that


relational


exchanges


improve


profitability


exc


changes.


This


section


focuses


on the


effect


long


-term


relationships


on issues


discussed


during


exchange,


communication


bargaining


strategies


employed.


Focus


Exchange


Theoretical


research


area


industrial


purchasing


(Frazier


, Spekman,


O'Neal


1988


; Spekman


1988


suggests


that


focus


exchange


in a market


exchange


price


a product.


original


equipment


manufacturer


(OEM)


relies


on a large


number


suppliers


who


can


played


against


each


other


to obtain


best


sible


price.


buyer


considers


potential


sources


as homogeneous,


therefore


risk


associated


with


switching


from


one


supplier


to another


very


low.


This


results


a low


degree










relational


exchanges.


Salmond


(1987)


argues


that


relational


exchanges develop between OEMs


and suppliers when suppliers


offer


customized-differentiated parts


differentiation provides


the core product and


the OEMs an


to the OEM.


incentive


the value added services


This

focus


rather


than


price of


the product alone.


focus


such an


exchange


no longer on


the price of


a product but on cost containment,


value analysis,


An issue which needs


joint product development


to be addressed


(Spekman


empirically


1988).


whether


focus of


exchange on


value added


services and


core


product


is a direct consequence of


differentiated


product


offered by the supplier.

Communication


Communication between


rties


relationship can be discussed


in an exchange


terms of


frequency and


content of


communication.


Macneil


(1978,


1980)


indicates


that


relational


transactions are characterized by extensive,


deep,


informal


or formal


communication.


In contrast,


communication


between parties


in a market


exchange characterized by


discrete


transactions are


limited and


formal.


In an industrial


purchasing


context,


Frazier


et al.


(1988)


argue


that


communication between OEMs and suppliers










more


product


Often,


frequently


development,


OEMs


on issues


value


suppliers


such


analysis


work


as cost


, and


closely


containment,


joint


to define


new


designs.


quality


standards


devise


ways


means


to implement


states


tical


quality


control


procedures


This


increased


level


interdependence


generates


intense,


informal,


frequent


communications


between


part


In channel


management


, most


literature


deals


with


communication


between


manufacturers


distributors


Stern


-Ansary


1988)


indi


cate


that


communication


plays


important


role


effi


ciency


a channel


system


performance.


According


to Teas


Sibley


(1980)


communication


reduces


role


ambiguity


thus


improves


channel

that in


performance.


tense


Anderson


communication


occurs


Weitz (

between


1989


firms


have


found


having


high


stakes


greater


trust.


As relational


exchanges


result


high


stakes


to the


high


level


transaction


specific


investment


in the


relationship


, communication,


both


intense


informal,


can


expected


between


channel


members


relational


exchange.


Long


-term


relationships


area


interpersonal


relationships


are


also


characterized


increasing


interaction,


greater


openness


longer


periods


time


, and


es.










the area


of bargaining and negotiations,


several


studies have


looked at


the antecedents of


communication,


especially message sending behaviors


(Pruitt


1981)


Although


most


bargaining


studies


have looked at


relationships


from a


static or

the effect


a discrete viewpoint,

of anticipation of f


a few studies


futuree


have


interactions


looked at

on the


behavior


of bargainers


(see


section on expectation


future


interactions


a more detailed discussion).


These studies


indicate


that anticipation of


future


interactions


leads


cooperative behaviors


(Ben-Yoav and Pruitt


1984)


when


other party is


seen as cooperative.


These cooperative


behaviors


are often in


the form of


cooperative communication


where one's goals,


priorities,


and values are conveyed


other


party.


Baraainina


Macneil


(1978)


indicates


that bargaining


in a discrete


transaction focuses mainly on


the price of


a product.


This


focus on price leads


"distributive" bargaining,


which


focuses on how the available benefits are


to be distributed.


In contrast,


in relational


transactions,


both parties


strive


for

This


"joint creative effort

is done by extending


or mutually beneficial


the bargaining horizon


outcomes.

include


future periods of


time.










units)


inside


the boundaries of


a group of


companies


committed


to long-term cooperation.


He argues


that


negotiations


in domesticated markets


focus on structural


issues,


and not on


transactional


focus on specific


transaction)


or contractual


(time-bound agreements)


issues.


These structural negotiations


are strategic as


they apply to


form and


intensity of


long


-term relations.


Arndt


(1979)


Dwyer,


Schurr,


and Oh


(1986)


make a case for


increased


research in


the area of


negotiations


long-term


relationships


Most of


studies


Soc


psychology and game


theory


have


focused on discrete negotiations


(focus on specific


transactions).


A few studies


in social


psychology have


attempted


to capture


long-term orientation of


bargainer


by manipulating


the presence or


absence of


future


interactions with


the other


bargainer


(Ben-Yoav and Pruitt


1984;


Gruder


1971;


Shapiro


1975;


Marlowe,


Gergen,


and Doob


1966;


Roering,


Slusher,


and Schooler


1975


. Bargainers


in the


presence of


future interactions were


told


that


they would be


in a


cooperative


task with


their


current bargainer


the end


the bargaining


session while subjects


the absence of


future interaction condition were not


given such


instructions.


It was


found


that bargainers who anticipated










negotiator


regarding


length


relationship,


affects


negotiation


behaviors


tactics.


Factors


Governina


Relational


Exchanaes


There


are


several


factors


which


affect


emergence


development


relational


or long


-term


exchanges


. This


dissertation


focuses


on four


such


elements:


trust


between


parties


exchange,


extent


satisfaction


/dissatis

future in


faction


between


teractions,


parties,


degree


expectations


power


about


imbalance


between


parties


Each


these


factors


discussed


depth


following


sections.


Trust


Goliembiewski


McConkie


(1975)


indicate


that


there


no single


variable


that


so thoroughly


influences


interpersonal


group


behavior


trust


. The


burgeoning


literature


in social


psychology


marketing


emphasizes


important


point


: trust


acts


a salient


factor


determining


spirit

same 1


character


literature


indicate


a huge

s that


range

trust


relationships.


is critical


personal


growth


development


as well


task


performance.


some


observers


, trust


seems


to be


an edifice











important t


1969)


component of


. Although


labor


this does not


relations and bargaining


exhaust


(Nigro,


the entire catalog


applications,


it does offer


a cursory glimpse of


centrality


trust


in much social behavior.


Meaning of Trust


In social


parlance,


trust and


synonyms have been


used


so often with such


varied


intentions


that


vagueness


apparent


the multiple meanings given


trust.


For working


purposes,


at least,


in common


usage:


Trust
person
Trust


implies


reliance on


, or confidence


some event,


thing.


reflects an expectations about outcomes


perceptions and life experiences.
Trust indicates a charge or duty


imposed


based on


faith


confidence as a condition of


(Webster's New


International


some relationship.
Dictionary)


these definitions


imply


some expectations of


some


kind--but


the different kinds


expectations are not clearly


distinguished


(Barber


1983) .


Following


Barber


(1983),


"Expectations are


the meanings actors


attribute


themselves


others as


they make cho


ices


about which actions and


reactions


are rationally effective and


emotionally and


morally appropriate"


(page


The concept of


expectations


a generalized


one


and as a


result


only those expectations


which are


related


fundamental meanings of


trust are


* ,, s.,, 1 4 aaa q


,


LLrrr rrrr r.L~L


rlLA










.The


expectation


technically


competent


role


performance


from


those


involved


in social


relationships


systems.


expectation


that


partners


in interaction


will


carry


their


fiduciary


obligations


responsibilities


first


expectation


most


general


one


which


humans


social


internal


ze


order


pers


istence


realization.


natural


Luhmann


1980


moral


points


that


such


a generalized


trust


helps


reducing


complexity


social


life


.One


does


worry


about


falling


down


or a person


being


slapped


others


, simply


because


this


generalized


trust


. Several


social


psychologists


generalized


have


highlighted


expectation


or trust


importance


as an aid


this


to general


development


learning


abilities


individuals


Gibb


1964;


Rotter


1971


Against


this


backdrop


of generalized


expectancy,


second


second


third


expectations


definition


refers


have


to the


very


specific


meaning


meanings.


trust


as the


expectation


technically


competent


role


performance.


competent


performance


expected


may


relate


to expert


knowledge


, technical


facility


or everyday


performance


individual.


In a retailing


context,


a vendor


who


delivers


goods


on time


may


be considered


trustworthy,


as a result










monitored


very


easily.


However,


when


situations


arise


where


such


performances


cannot


be monitored,


trust


becomes


extremely


powerful


medium


which


directs


exchange


relation


ships.


A fiduciary


obligation


placed


vendor


or retailer


to perform


in a way


that


does


not


take


advantage


trust


imposed


on them.


second


trust


expectation


bargaining


seems


literature


to reflect the

(Pruitt 1981).


focus

Trust


expectancy


that


a person'


word,


promise


reliable


that


person


competent


will


manner


fulfill


necessary


in an exchange


obligations


relationship


in a


competent


role


performance).


Lindskold


1978


refers


this


expectation


"objective


credibility.


However


obligation


, the


seems


third


to be


definition


a key


trust


element


as a fiduciary


conceptualization


trust.


person


may


not


always


act


way


s/he


says


s/he


will


will


trusted


actions


are


considered


benevolent


partner


. Lindskold


1978)


refers


this


an attribution


benevolence


or nonmanipulativeness


. In


other


words,


a person


is perc


eived


as someone


cares


about


outcomes


others


nonmanipulative,


s/he


likely


to be


trusted.


Swan


Nolan


1985)


define


trust


in terms










component


indicates


the person's subjective probability about


truthfulness


an object person'


statements.


Intentions


reflect


the person's plans


to behave


in a


trusting


mistrusting way towards


the object person.


Though


their


definition of


trust


is directly based


on the


tripartite model


of attitude,


similar


the definitions proposed by


Barber


(1983)


Lindskold


(1978)


the definitions


indicate


that


there


is belief


element which


is based


objective assessment of


an object person's


truthfulness


and an affective element which is


subjective and based on


attributions


regarding the object


person'


behavior


past.


Levels of


Trust


Along with different expectations,


one has


to be


exacting


in specifying


the particular


social


relationship or


social


system of


reference


(Barber


1975) .


What


regarded as


competence or fiduciary responsibility between a retail buyer


vendor's


representative may be quite different


from the


expectations about each other's organization.


In other words,


imperative that


the level


at which


trust operates


should be clearly specified.


In organizational


trust may operate at an interpersonal


level


settings,


or organizational


level


or both.


In certain


exchange relationships,






32



Trust and Lona-Term Relationshios


Trust plays an important


role


the development of


long-term relationships.


the most basic


level,


one party


to undertake some actions


before


the other


party and


thus


must


rely on


the other party to honor


its commitments.


Thus,


any type of


coordinative action by one party


in a


relationship


in a


is open


relationship develop


to exploitation.


the confidence


Through


that


trust

short


, parties

-term


inequities


relationship will be corrected and will


lead


to long-term benefits


(Kronman


1985).


Institutional


economists'


are concerned with market


failure due


to opportunism


(Williamson


1975) .


The greatest


potential


such opportunistic behavior


relationships where


in long-term


the market based discipline is


removed or


reduced by a


lack of


large numbers of


competitive entities.


In such a noncompetitive situation,


the hazards of


opportunistic behavior


exchange


is greater because


termination of


relationship cannot be easily achieved.


In a


noncompetitive situation,


opportunistic tendencies can


cripple efficient


profit


exchange because


the party indulging


it often results


in such behaviors.


in higher


Williamson


argues


that hazards of


opportunism can be reduced by the use


of more administratively coordinated structures


to govern










undesirable behavior


such as opportunism.


Following


this


suggestion,


one may argue


that hazards of


opportunistic


behavior


in long-term relationships can be mitigated or


removed


a strong cooperative attitude such


as trust


prevails.


Frazier,


Spekman,


and O'Neal


(1988)


indicate


that a key


factor which contributes


success


committed long-


term relationships


such


the JIT


exchanges


is the


level


trust between


the supplier


the OEM.


Trust


extremely


important because of


the high


transaction specific


investments committed


relationship.


In fact,


Frazier


et al.


argue


that a high level


trust may exist even before


the supplier


and OEM initiate


the JIT


exchange.


Trust is


enhanced as


tangible evidence of


personal


integrity


accumulates,


promises are upheld and


opportunistic behaviors


are


forgone.


Consequences of Trust


Trust leads


to hiah-risk


coordinative behavior.


Coordinative behavior between parties


in a exchange


relationship


is necessary for


reaching mutually acceptable


agreements


(Pruitt


1981


Coordinative behavior


can be


classified as high-risk,


moderate-risk,


low-risk


depending


on the amount of


risk


involved


in various actions










action would be a


large concession


that


seeks a reciprocal


concession,


a proposal


compromise,


a unilateral


tension-


reducing ac

priorities.


;tion,


or statements about one's motives and


Normally,


such high-risk coordinative actions


leave a


party open


image


loss


(perception of


the bargainer


as a person willing


to concede more


than necessary)


, position


loss


their


a pos


ition


initial


in which a bargainers


position),


information loss


cannot move back


(bargainer's


statements about values,

other party for devising


loss of


aiming


priorities,


and limits used by the


threats or positional


opportunity for competitive behavior


at cooperation will be


commitments)


(bargainer


inconsistent with competitive


behavior


at a later


stage).


Trust


encourages coordinative


actions by


reducing


the dangers of


four


types


losses


described above.


Position loss


reduced because


the other


party


is expected


to concede in return.


Image


loss


reduced


the behavior will not simply strengthen


the other party's


determination.


Information loss


reduced as


the other party


is not expected


to misuse


information.


Finally,


loss of


competitive behavior does not


play an


important


role as


intention is


Thus


to coordinate with


trust


the other party.


encourages high-risk coordinate action by


reducing th


e dangers of


image loss,


position loss,










Trust


leads


to effective


problem


solvina


. In


spite


sparse


evidence,


trust


seems


to lead


to effective


problem


solving


. In


low-trust


groups


, Zand


1972


notes


"interpersonal


perceptions


relationships


problem.


interfere


Energy


with


creativity


distort


are


diverted


from


finding


comprehensive


realistic


solutions


members


use


problem


as an instrument


to minimize


vulnerability

demonstrated


" Using


that


a quasi


subjects


-experimental


exposed


design,


instructions


Zand

including


high


versus


levels


trust


differ


significantly


terms


their


behavior


. Specifically


, high


trust


more


open


exchange


relevant


ideas


feelings,


greater


clarification


goals


problems


more


extensive


search


alternative


courses


action,


increased


sharing


influence


among


participants


, greater


satisfaction


among


participants


about


their


problem


solving


efforts


, greater


motivation


to implement


deci


ions,


a feeling


interpersonal


enhanced


closeness


problem


within


solving


groups.


a group.


these


Interestingly,


behaviors


Zand


results


were


same


when


data


was


gathered


independent


ways


: self-reports


from


subjects


, and


reports


from


observers


group


performance


who


inkling


experimental


conditions


. In


other


studies,


(1970










Further


suspicion


groups


were


given


more


threats


lies


than


sharing


information.


Trust


leads


to cooperative


behavior.


A number


researchers

bargaining


have


found


behavior


systematic rel

an individual


ationship


s predi


between


position


trust


others


Based


on a number


studi


appears


that


trusting


bargainers


behave


more


cooperatively


than


those


are


ess


trusting


. Deutsch


1962)


indicates


that


when


indi


vidual s


choose


to cooperate,


they


essentially


place


their


fate


hands


others


This


a basic


trust.


Gibb


(1964


proposes


that


concerns


controlling


others


becomes


relatively


minor


trusting


individuals.


Such


condition


facilitates


cooperation.


Tedeschi,


Hiester,


Gahagan


1969


Schl enker


, Helm,


Tedeschi


(1973


found


that


individuals


trusted


others


behaved


more


cooperati


were


vely


in trust.


Prisoner


Deutsch


s Dilemma


(1960)


game


also


than


found


those


support


trust


as a facilitator


cooperative


behavior


. He


found


that


subjects


more


who


cooperatively


goals


than


cooperative


subj ects


orientation


a goal


behaved


being


competitive.


IKimmel


et al.


1980


found


that


under


high


aspirations,


high


trust


produced


cooperative


behavior


form


direct


information


exc


change


while


trust


produced










Kimmel


et al.


study)


high


trust led


to higher


level


agreements,


fewer unreciprocated concessions,


distributive messages compared


to a


fewer


low trust condition.


In summary,


behavior


low trust


it produces evar


communications which concea.


is an antecedent of

sive, complaint, or

L the true attitudes


distributive


aggressive

(Mellinger


1959)


whereas high


especially


trust

form of


foste

self


rs


integrative behavior,


-disclosures about needs and


priorities


(Kimmel


et al.


1980) .


Thus,


based


on the empirical


evidence one can


conclude


that


trust


results


in cooperative


behavior.


For more


than


two decades


the phenomena of


power


channels


distribution has been given regular


empirical


attention


the marketing


literature.


Stern and El-Ansary


(1988


indicate


that a major


function


of power


to specify


roles of


the channel members


effective coordination


between parties.


Meanina of


Power


Based on


the numerous definitions of


power


, Stern and


El-Ansary


(1988)


conclude


that


power


the ability to get


another channel member


to do what


the latter would not have










increase


in the


probability


enacting


a behavior


after


A has


made


an intervention,


compared


with


probability


enacting


behavior


absence


s intervention.


In a marketing


context,


according to


El-Ansary


Stern


1972):


nme power
control d
strategy
different


to qualify


a channel


member


decision variables
of another member


level


as power,


stribution
it should


his/her


ability


marketing


a given


.For


channel


this


different


control


from


the
over


influenced


member


own- marketing


original
strategy.


level


control


(page


above


nature


definition


power


will


been


be used


greatly


this


discussion.


illuminated


works


Emerson


(1962)


French


Raven


1959).


Emerson


focused


relationship


between


power


dependence.


Power


viewed


from


viewpoint,


extent


to which


channel


members


depend


on one


another


.The


more


highly


dependent


A is


on B,


more


power


B has


over


According


to Emerson


, the


dependence


on A is


directly

mediated


proportional


to B


inversel


s motivational

y proportional


investment


goals


availability


those


goals


to B outside


A-B relationship


Another


approach


to power-dependency


issue


to view


dependency

exchange t


from


heory


a social


rests


exchange


two


perspective.


important


constructs


social


: comparison


S S S S -


a


i .


1


q .


h










present


experience


their


knowledge


firms


similar


themselves


compared


.The


against


outcomes


this


obtained


standard,


from


determine


a relationship,


attractiveness


relationship.


comparison


level


alternate


lives


alt)


contrast,


average


quality


outcomes


channel


members


can


expect


from


best


alternative


(resource


vendor)


their


present


exchange


relationship.


As such,


comparison


level


alternatives


represents


lowest


level


outcomes


a channel


member


will


accept


still


remain


relationship


.The


level


outcomes


from


current


relationship


compared


comparison


level


alternatives


.determines


level


dependency


one


party


another.


A much


broader


conceptualization


power


dependency


is provided


Heide


John


1988) .


According


Heide


John


(1988) ,


a channel


member


A is


dependent


channel


member


B if


Channel


member


A considers


outcomes


from


relationship


as highly


important.


. The


magnitude


channel


member


s business


with


B is


very


high.


Channel


member


outcome


from


relationship


much


higher


than


best


other


alternative.


There


are


fewer


alternative


sources


exchange


available










Channel


member


A has


invested


high


transaction


specific


assets


in the


relationship


Thus


more


dependent


channel


member


A is


on B based


these


sources


dependence


, greater


power


French


Raven


(1959


added


more


specificity


notion


power


identifying


sources


or bases


power.


According


to French


Raven


1959) ,


sources


power


over


are


based


s perception


that


A has


ability


to mediate


rewards


s perception


that


A has


ability


to mediate


punishments


perception


that


A has


legitimate


right


prescribe


behavior


identification


with


s perception


that


A has


some


special


knowledge


expertness.


These


power


sources


have


been


designated


reward,


coercive,


legitimate,


referent,


expert


power


bases


. The


greater


sources


power


available


to a channel


member,


greater


power


channel


member.


Gaski


1984)


pointed


that


though


there


considerable


amount


consensus


among


marketing


researchers


A-I- A. .- I t I A-t~ -- -A .


L I


1


_ I


L


I


'I










whereas


exercised


power


refers


actual


use


such


power


to alter


behavior


channel


members.


Consecauences


Power:


Some


Experimental


Results


Prisoner


s Dilemma


Paradiam.


effect


power


asymmetry


on bargaining


PD paradigm


varying


effectiveness


actual


been


assessed


or perceived


status


parties


or payoff


or by


matrices


varying


. In


experimental


manipulation


reward


power


structure


through


status


variation,


power


each


party


believes


he/she


can


entitled


to exerci


varied.


In the


manipulation


power


through


reward


allocation,


initial


allocation


resources


among


parties


varied.


Irrespective


way


power


between


parties


manipulated,


general


conclusion


effectiveness


that


. In


power


most


asymmetry


games,


affects


bargaining


cooperative


behavior


measured


number


cooperative


moves


made


party.


Status


variations


: Rekosh


Feigenbaum


(1966)


Faley


Tedeschi


(1971)


manipulated


status


a PD


game


had


subjects


negotiate


again


an experimental


confederate.


Rekosh


cooperative


Feigenbaum


choices


1966)


with


found


greater


that


frequency


subjects


when


made


playing


against


a peer


(with


equal


power)


rather


than


a graduate


PD )










status


than


status;


rank


cadets


behaved


more


cooperatively when


other


person


was


a low


status


than


high


status


Thes e


studies


others


. Rubin


and


Brown


1975


provide


some


evidence


that


equal


power


bargainers


behave


more


cooperatively


(make


more


cooperative


moves


than


those


with


unequal


power.


Matrix


variation


: Most


studies


this


category


manipulate


these


power


experiment


varying


matrix


matrices


which


values


outcomes


game.


to both


players


outcomes


are


symmetrical


favored


one


were


player


contrasted


over


with


another


those


. In


which


general,


findings


these


studies


indicate


that


bargainers


with


equal


power


behave


more


cooperatively


(make


cooperative


moves


with


greater


frequency)


than


bargainers


having


unequal


power.


Reward


structure:


these


experiments


, power


was


manipulated


differentially


allocating


initial


resources


or control


over


experimental


situation.


Aranoff


Tede


schi


1968)


awarded


one


member


a pair


subjects


initial


advantage


, 50,


100,


points.


was


found


that


magnitude


frequency


mutually


subject


cooperative


s advantage


moves


increased,


decreased.


Acme- Bolt


truckina


came.


support


proposition


about


effect


power


also


been


obtained










gate


reflects


power


party


can


control


outcomes


other


party.


results


indicated


that


mean


joint


outcomes


bargaining


effectiveness


was


greater


when


bargain


ers


equal


power


or 2


gates)


than


unequal


power


gate


Bilateral


monooolv.


Komorita


Barnes


1969


tested


effects


power


in a bilateral


monopoly


paradigm


found


that


subj ec t


pairs


with


equal


power


reached


agreements


more


often,


required


fewer


trials


to do


made


larger


concessions


than


those


with


unequal


power


. Further


, numerous


other


studies


have


indicated


that


bargainers


with


high


power


relative


those


their


partner


tend


to behave


manipulatively


, and


exploitatively


, while


those


with


power


tend


to behave


submi


ssively


(see


Rubin


Brown


1975


studies


relating


to thi


In marketing


, a few


experiments


have


investigated


effect


power


asymmetry


on negotiation


process


outcomes.


earliest


experiment


was


a laboratory


imulation


manufacturer retailer


bargaining


Walker


1971) .


In this


experiment


, the


balanced


power


condition


negotiations


between


one


manufacturer


one


retailer


while


unbalanced

retailers.


power


Walker


condition

utilized


had

this


one


manufacturer


design


to study


and

the


two

effects










over


time


they


learned


where


a mutually


acceptable


agreement


was


likely


occur


adjusted


their


offers


that


section.


As a result,


they


required


fewer


bids


, tended


yield


less


profit,


communicated


less


frequently


in coming


terms.


Walker


not


however,


compare


processes


outcomes


bargaining


asymmetric


power


setting


with


bargaining


a balanced


structure.


Dwyer


Walker


(1981)


extended


this


design


compare


negotiation


process


outcomes


in a symmetrical


power


distribution


against


an asymmetrical


power


distribution.


They


concluded


that


bargainers


were


more


powerful


made


more


demanding


initial


bids,


yielded


less


from


their


initial


positions


, made


fewer


bids


to obtain


an acceptable


agreement,


sent


a larger


proportion


demanding


-threatening


messages,


made


higher


individual


profit


achieved


agreements


which


gave


total


them


disproportionately


profits


favorably


Further,


disposed


towards


larger


weak


their


share


bargainers


partners


their


were


were


group


ess


less


satisfied


with


their


performance


compared


to bargainers


equal


power


condition.


Another


study which


investigates


effects


symmetric


Fader


asymmetric


1986) .


power


power


is by


channel


McAlister,


members


Bazerman,


this










number


buyers


sellers,


while


other


markets


there


were


sellers


every


buyer-


a situation


power


imbalance


favor


buyer


Orthogonal


this


manipulation


power


, power


was


also


manipulated


number


transactions


each


channel


member


could


complete,


providing


a power


advantage


seller


. Thus,


one


market


provided


power


imbalance


in favor


seller,


other


favor


buyer


other


market


situations


represented


power


balanced


situations


. This


study


found


that


higher


power


channel


members


reached


more


profitable


agreements


than


lower


power


channel


members.


Further,


channel


members


with


higher


power


were


able


to reach


greater


overall


profitability


than


lower


power


channel


members


. This


experiment


also


showed


that


dyads


with


equal


power


reached


more


integrative


agreements


than


dyads


with


unbalanced


power.


This


experiment


found


support


most


conclusions


reached


Dwyer


Walker


(1981)


Game


theoretic


approaches.


A few marketing


studies


have


employed


utility


based


theories


prediction


outcomes


a variety


bargaining


situations


. The


most


prominent


among


them


been


use


Nash'


1950)


bargaining


solution


prediction


bargaining


outcomes


. Nash


s bargaining


solution


an axiomatically













differences


in outcomes


dyads


with


asymmetrical


power


compared


to dyads


with


symmetrical


power.


Consequences


Power:


Field


Studies


In spite


large


number


marketing


field


studies


focussing


on power


conflict,


many


studies


have


looked


consequences


power


. The


focus


most


channel


research


sources


been


power


on investigating


power


relationship


consequences


between


power.


a distributive


system


automobiles


Lusch


1976)


found


that


coercive


sources


power


increased


conflict


while


noncoercive


sources


power


decreased


conflict.


Wilkinson


1981)


reported


support


same


relationship


suggested


that


causal


direction


relationship


may


erroneous


. The


relationship


between


power


sati


sfaction


was


found


to be


dependent


on whether


power


was


exercised


or not.


Specifically,


exerc


ised


power


to lower


sati


sfaction


while


unexercised


power


to higher


sati


sfaction


channel


member


who


lower


power


(Gaski


Nevin


1985).


ExPectations


Future


Interactions


Several


studies


social


psychology


have


found


that


buyers


sellers


committed


to future


interactions


tend










beyond


immediate


transaction


may


imply


a greater


weighting


opponents


outcomes


than


a single


period


negotiation.


Meaning


Expectation


Future


Interactions


Expectations


future


interaction


simply


expectation


on the


part


bargainers


that


they


would


interact


with


their


opponent


at a future


point


time.


spite


some


simplicity


ambiguity


researchers


have


this


usage


used


construct


this


a slightly


there


construct.


different


seems


In fact,


construct


to be


some


called


expectation


cooperative


future


interaction


(Ben-Yoav


Pruitt


1984


. They


define


expectation


cooperative


future


interaction


anticipation


working


toward


common


goal


with


other


party


at a later


point


time.


should


noted


interaction


that


assumes


expectation


certain


level


cooperative


cooperativeness


future


trust


between


parties.


Although


studies


using


both


constructs


will


discussed


here,


is necessary


to keep


mind


that


expectations


cooperative


future


interactions


probably


function


high


expectations


future


interaction


high


trust.


Consequences


Expectations


Future


Interaction


A number


studies


seem


to suggest


that


expectation










that


game


would


continue


three


more


periods


. Half


subjects


partner,


while


were

e the


told

othe


that t

r half


hey would

were told


interact

that th


with


ey


same


would


interact


with


a different


partner


after


each


game


. They


found


that


subjects


expected


future


interactions


with


their


partner


moves


behaved


than


more


subjects


cooperatively


expect ted


(made


future


more


cooperative


interactions


with


different


partner.


In another


experiment


, Marlowe,


Gerg en,


Doob


1966


subjects


play


a 30


trial


game


. The


subjects


were


either


to expect


that


they would


meet


with


their


partner


after


game


or they


were


given


no such


expectation.


was


found


that


subj ec ts


anticipated


future


interactions


were


ess


exploitative


than


those


expect


to meet


other


partner


in future.


In direct


contrast,


a PD experiment


Swingle


1969)


found


subjects


who


expec t


future


interaction


behaved


more


cooperatively


than


subj ects


anticipated


future


interactions.


This


apparent


inconsi


stency


in results


was


resolved


an experiment


Gruder


1969)


In a bargaining


experiment,


subjects


to believe


tha t


other


bargainer


was


"fair


reasonable"


also


manipulated


versus


"exploitative


expectation


unreasonable"


future


. He


interactions










fair


reasonable


opponent


expecting


future


interactions


were


more


compromi


sing


behaved


cooperatively


than


when


opponent


was


perceived


as exploitative


spite


a high


expectation


future


interaction.


appears


that


expectation


future


interaction


leads


to cooperative


fair


behavior


reasonable


when


leads


other


to greater


party


is perceived


competitive


behavior


when


other


is seen


as competitive


or exploitative.


Consequences


of Expectation


Cooperative


Future


Interactions


As indicated


above,


there


substantial


evidence


which


suggests


that


an expectation


cooperative


future


interaction


leads


to cooperative


behavior.


Pallak


Heller


(1971)


found


that


commitment


to future


interaction


with


cooperative


partner


encouraged


acceptance


influence


attempts


partner


. Hancock


Sorrentino


1980)


found


that


anticipation


future


interaction


with


a group


enhanced


likelihood


conformity


group


norms


when


subject


received


prior


group


support.


-Yoav


Pruitt


(1984)


found


that


subjects


expected


cooperative


future


interactions


reached


higher


integrative


agreements


when


their


aspiration


levels


were


high.


In a family


decision


making


context


, Corfmann


Lehmann


(1987


found


that


spouses


were


more


committed


vv -a..&


marital


relationship


exercised










especially


other


is perceived


as a cooperative


partner.


This


enough


suggests


to obtain


that


expectations


a cooperative


future


behavior


: the


interaction


perception


a bargaining


opponent


as fair


reasonable


also


important


factor


Satisfaction


Robicheaux


-Ansary


1975)


suggest


that


satisfaction


fundamental


importance


in understanding


channel


relationships


. They


propose


that


a channel


member's


sati


sfaction


with


relationship


with


another


firm


results


higher


productivity within


channel.


Stern


Reve


1980


adopt


a similar


perspective


their


political


economy


framework


indicate


that


channel


member


satisfaction


directly

channel


affects

operates


the

. Thi


internal e

s suggests


efficiency with


that


which


satisfaction


within


channel


relationship


is an important


construct.


However,


bargaining


context,


may


more


important


to focus


sati


faction


stemming


from


outcomes


obtained


parties


st encounters


. To


understand


construct


satisfaction,


both


satisfaction


with


entire


relationship


and


satisfaction


with


past


negotiation


outcomes


are


addressed.










ina of


Satisfaction with a Relationshio and


Consequences


The earliest definition


buying


satisfaction in a


situation was offered by Howard and Sheth


consumer


1969


According


them,


consumer


satisfaction was:


The buyer's cognitive state of


bei


inadequately rewarded in a buying


sacrifice s/he has


undergone. (page


ng adequately or
situation for the
145)


Although


satisfaction,


construct.


this definition provides


fails


example,


some basic


to elaborate on


idea


the domain of


not clear whether


one should


include all


the attributes of


a product,


or reaction


to sales


assistance etc.


then measure satisfaction along all


those


dimensions.


Churchill


(1979)


emphasized


the need


specify the domain of


this construct


accurately.


Following


suggestion,


Ruekert and


Churchill


(1984)


define


channel member


the domain of


satisfaction as:


characteristics of


relationship between a


channel member


and another


institution in


the channel


which


the focal


organization finds


instrumental


rewarding


or satisfying


, profitable,
(page 227)


Based on

uncovered


this definition, Ru

four dimensions of


ekert and Churchill

channel member sat


(1984


isfaction.


These are


A product dimension


which


reflects


the demand


for,


staR r an0 nF fllltt flE


snri


t h0 m f liqfrflti rnr' nr n nriin1-


Mean


nll;rl i t~r nF










An assistance


dimension,


which


assess


how


well


manufacturer


supports


intermediary


with


such


aids


cooperative


advertise


programs


point


purchase


displays.


Soc


interaction


dimension


which


reflects


how


satisfactorily


interactions


between


manufacturer


intermediary


are


handled


, primarily


through


sales


representative


servicing


the account.


Hunt


Nevin


(1974


have


found


that


channel


member


satisfaction


with


respect


to all


aspects


a relationship)


may


lead


to higher


morale,


greater


cooperation


fewer


terminations


relationships,


fewer


individual


ass


action


suits

Lusch


reduced


1976


found


effort

that


to seek


channel


protective


member


legi


satisfaction


station.


leads


redu


friction


between


parties,


lower


dysfunctional


conflict,


increased


channel


efficiency.


Sati


sfaction


also


been


found


to be


related


exercise


power.


Specifically,


use


noncoercive


sources


power


tends


increase


satisfaction


while


use


coercive


sources


tends


to decrease


sati


faction


Lusch


1976;


Mitchie


Roering


1978


Stern


Reve


1980) .


These


empirical


studies


clearly


indicate


that


channel


member


satisfaction


plays


very


important


role


channel


performance.










found


to affect


the bargainer's behavior


in future periods.


Satisfaction/


dissatisfaction with outcomes


refers


to a


bargainer's


cognitive state of being


adequately or


inadequately rewarded


services


in terms of


outcomes.


Research on social motives has


shown


that bargainers


have different motives depending on whether


they are ahead


behind


their opponent in


terms of


their outcomes


(Messick and


Thorngate


1967


McClintock


et al.


1973) .


In a study by


MacCrimmon


(1973)


it was


found


that subjects who were behind


acted


their


own self-interest compared


to subjects who-


were ahead.


Corfman and Lehmann


(1987


found


that a


bargainer's decision history affected


the outcomes


in the


future periods.

dissatisfied wit


Specifically, individuals who were

h the outcomes of joint past decisions were


more


influential


in subsequent decisions.


They


indicate


that


this may be due


to either


increase in preference


preferred


outcomes or


a desire


to even


the score in future


encounters.


Siegel and Fouraker


(1960)


indicate


that high


dissatisfaction may even lead a bargainer


to maximize


opponent's displeasure at


risk of


own outcomes and


satisfaction.


In sum,


dissatisfaction with past outcomes


leads


to a


tendency to maximize own gain


the next bargaining










from


outcomes


differ


across


channel


members


having


equal


power


compared


to channel


members


having


unequal


power.


Summary


Research


marketing


, economics


, social


psychology


contract


law


provide


a bas


framework


conceptualization


long


-term


relationships.


Research


these


areas


suggest


that


long


-term


relationships


have


characteristics


which


are


different


from


short


-term


exchanges


or hierarchical


exchanges


. Research


also


suggests


that


trust


between


parties,


degree


power


imbalance,


expectations

satisfaction


about

with


future


interactions


existing


relationship


the d

play


degree


an important


emergence


long


-term


relationships


. Parties


involved


long


-term


relationships


exhibit


behaviors


which


are


substantially


different


from


those


having


short-term


relationships


exchanges


along


, and


dimensions


type


related


bargaining


focus


communication


strategies


adopted


parties


.The


next


chapter


develops


these


ideas


into


a conceptual


framework


which


looks


into


antecedents


consequences


a long


-term


orientation.













CHAPTER


CONCEPTUAL


FRAMEWORK


Overview


focus


this


dissertation


on negotiations


between


channel


members


involved


a long


-term


relationship.


conceptual


framework


identifies


constructs


which


affect


negotiation


process


outcomes


such


relationships.


In this


framework,


a set


of antecedent


factors


affects


motivational


turn,


orientation


instrumental


of a channel


determining


member,


which


the negotiation


process


outcomes


that


channel


member


. The


negotiation


process


outcomes


determine


post-bargaining


satisfaction


channel


member


. An


overview


conceptual


framework


presented


Figure


3-1.


Retailer'


Expectation


Future


Interactions


Recent


research


channels


distribution


(Heide


John


1990;


Anderson


Weitz


1989


indicated


that


longevity


a channel


relati


onship


dependent


on a channel


member


s perception


likelihood


that


relationship


will


continue


. Research


area


channels


a 2..I -- .


_--3


A- -


L.t. .-, I


I,, r


~u


II










the antecedents of


a retailer's expectation of


future


interactions.


Definition of


Retailer'


s Expectation of


Future


Interactions


Expectation of


bilateral


future


expectation of


construct captures


future


interactions


the perception of


continuity by a channel member.


the probability or


interactions and does not


likelihood of


capture the attitude


This


such

e towards


such a


relationship or


the desire


to conduct


such a


relationship with


the other


channel member.


Antecedents of Retailer'


Expectation of


SFuture Interactions


Prior


research has


indicated


that


factors


such as


transaction specific


investments by channel members,


degree of


envi ronmental


uncertainty and power


imbalance


significantly affect


a channel member


the expectation of f

(Heide and John 1990;


uture


interactions


Anderson and


Weitz


1990) .


However,


these studies


have not


looked at


the effects


the above mentioned


expectations of


future


constructs


interactions.


together on the

Further, the dimensions


environmental


different


uncertainty proposed


from those proposed


(Heide and John consider


this study are


the above mentioned studies


technological


and volume










interactions


. The


effect


various


antecedents


retailer


expectation


future


interactions


shown


Figure


Effect


decision


making


uncertainty


on retailer


expectation


of future


interactions


Decision


making


uncertainty


degree


to which


decision


making


units


an organization


cannot


anticipate


accurately


predict


environment


Pfeffer


Salancik


1978) .


example


from


a retailer's


perspective,


one


source


uncertainty


degree


to which


demand


cannot


accurately


predicted.


A major


benefit


a long


-term


relationship


reducing


uncertainty


environment.


A long


-term


relationship


along


with


other


forms


strategic


alliance


offers


innovative


response


to environmental


uncertainty.


Such


long-


term


relationships


result


in greater


access


information,


raw


materials,


markets


, technology


, capital


other


sources


expertise


which


allow


firms


to make


deci


sons


with


less


uncertainty.


Decision


positive


making


negative


uncertainty


impact


a retailer


on retailer


both


s expectation


future


interactions


Decision


making


uncertainty


makes


difficult


to specify


tasks


that


must


be performed


manner


i n wh; h


t-n ha


n r fIr mL


;,nr9


r r r


t"h P~t


h;ltlP


trcrnrlnr


Y











behavior


vendor


mechanism. In such

positively related

relationships and


leading


conditions,


failure


decision


development


thus,


retailer's


making<

long


expectation


market


uncertainty


-term


future


interactions.


However,


a long-term


relationship


may


have


other


difficulties


when


dealing


with


high


level


complexity


turbulence


in the


environment.


a s


hift


strategy


is needed


in such


uncertain


environments,


may


easier


retailer


to negotiate


with


or change


a new


vendor


than


an entrenched


vendor


(Arrow


1984).


Recently,


Balakrishnan


Wernerfelt


1986)


Heide


John


1990


indicated


Klein,


that


these


Frazier,


divergent


Roth


results


1990


may


have


better


explained


isolating


different


dimen


sons


uncertainty.


As a result,


dimensions


environmental


uncertainty


are


introduced:


envi ronmental


volatility


diversity.


These


dimensions


were


examined


Leblebici


Salancik


(1981)


found


to have


strong


effects


on the


deci


sion


processes


organizations.


Environmental


volatility


refers


extent


to which


market


demand


changes


are


rapid.


High


volatility


retail


demand,


industry would


inability


reflect


rapid


to predict


fluctuations


trends


future


in customer


outcomes










procedures


Therefore,


high


volatility


in specific


markets


should


lead


to low


levels


future


expectations.


Environmental


diversity


reflects


extent


to which


there


are


multiple


sources


uncertainty


environment


. Aldrich


1979


A retail


market


which


includes


multiple


users


products,


multiple


vendors,


many


competitor


would


capture


this


notion


environmental


diver


sity.


A firm


facing


such


a wide


variety


would


have


little


difficulty


formulating


element


effective

segmenting


strategic


programs


different


markets


each


. This


diverse

indicates


that


environmental


uncertainty


faced


an organization


need


experienced


an individual


buyer


dealing


with


specific


market


. This


will


encourage


retailer


buyer


develop


channel


structures


that


are


relatively


permanent.


Thus,


environmental


diversity


will


lead


to long


-term


relationships


resulting


higher


expectation


future


interactions


with


these


vendors.


: Environmental


retailer


s expect


volatility is n
tions of future


egatively


related


interactions


: Environmental


retailer'


diver


expectations


sity
of


is positively


future


related


interactions


Effect


transaction


specific


assets


on retailer


expectation


future


interactions










relationship


are


easily


redeployable


have


little


salvage


Long


value


-term


other


relationships


relationships


between


(Williamson


retailers


1981).


vendors


are


preserved


large


transaction


specific


investments


even


when


number


alternatives


large.


switching


costs


imposed


transaction


specific


assets


make


short


-term


exchanges


hazardous


(Treleven


19 87 )


Opportunism


vendor


retailer


is curbed


long


sticky


nature


exchange


relationship


through


transaction


specific


assets


. In


such


situations


idiosyncratic


investments


lead


"mutual


hostage


taking"


make


termination


relationship


an arduous


task


both


parties


Axelrod


1984


suggests


that


expectation


transaction


future


exchanges


specific


parties


assets


which


, there


itself


ers


a credible


capacity


retaliation


opportunism


exists


these


committed


situations


channel


, transaction


members


specific


relationship


investments

create


strong


exit


barriers


both


parties


thus,


increase


expectation


basic


future


argument


interactions


channel


is complicated


two


members.


distinct


sources


transaction


specific


assets


in the


retailing


context.


In a retailer


-vendor


relationship


each


party


might


invest


specific


assets


Therefore,


effects


are










situations


(e.g.


is high while


low)


transaction specific

transaction specific


the effect of


transaction spe


investment by retailer

investment by vendor

cific investments on


retailer's


expectation of


future interactions


likely


to be


negative.


level


by a retailer


transaction specific


vendor


investments made


is positively related


retailer's expectation


future


interactions only when


retailer and


vendor


invest


significantly


transaction specific


assets.


Effect of


competition in


vendor market on


retailer's


expectation of


future


interactions


Competition in


the vendor market


reflects


the number


alternate vendors available


retailer


a particular


product category


(Anderson and


Weitz


1986)


Economic


theory suggests


that market based


exchanges


are


more efficient when


there are a


large number


alternative


suppliers.


A large base of


suppliers


protects


retailer


from hazards of


opportunistic behavior


by a


vendor


because


any such opportunistic behavior


can be dealt by replacing


current vendor with a new one.


the other


hand,


when


number


alternative vendors


is small,


opportunism can


cripple


the exchange by significantly elevating


transaction costs.


Snr-r o~e a


Thus,


fho ro-n lor


I -N


competition


1~lllt~o


in vendor market


rn nrnforFo mI"rknt hscwri










H4: Greater
negatively


competition


related


vendor


to retailer


market


s expectation


future


interactions.


Effect


vower


imbalance


on retailer


expectations


future


interactions


Power


favorable


imbalance


or unfavorable,


degree


to the


asymmetry


retailer


power


in an exchange


relationship.


Power


is the


ability


one


party


to get


other


party


to do


something


which


other


party


would


normally


(Schopler


1965


Dahl


1964) .


An example


use


such


power


in a


forced


retailing


to provide


context


a full


is a situation


guarantee


where


guarantee


vendor


that.


unsold


merchandise


retailer


will


taken


back


vendor)


to a retailer


Such


full


guarantees


are


rarely


provided


most


vendors.


concept


power


can


also


viewed


terms


dependency

depends on


one


party


party


on another


B to achieve


. When

desired


a party


goal


A greatly


, party


considered


more


powerful


(Emerson


1962) .


According


power-dependence


theory,


dependence


one


party


(vendor)


on another


other


party


retailer


(retailer)


increases,


is greater.


power


Thus,


possessed


a retailer


power


advantage


arises


when


vendor


more


dependent


retailer


than


retailer


is on


vendor.










availability


alternate


retailers


would


contribute


vendor


power


over


retailer.


It has


been


found


laboratory


experiments


that


buyers


sellers


possess


a power


advantage


over


their


channel


partner


take


advantage


asymmetrical


power


situation


obtain


higher


outcomes


(Dwyer


Walker


1981;


McAlister,


Bazerman,


studies


Fader


using


1986) .


a survey


effect


methodology.


also


Anderson


been


Narus


found


1984


have


found


that


channel


members


possess


a power


advantage


concentrate


on translating


this


power


advantage


into


asymmetrical


outcomes


leading


to dissatisfaction


power


channel


member


A retailer


power


advantage


less


dependent


on the


vendor


than


vendor


on the


retailer


. In


other


words,


retailer


many


other


alternatives


which


can


provide


him/her


with


outcomes


comparable


current


outcomes.


As a result,


retailer


likely


to obtain


maximum


outcomes


from


current


vendor


using


offers


from


alternative


vendors


as a


leverage


in negotiations


. Even


current


relationship


terminated,


retailer


with


a power


advantage


can


obtain


outcomes


similar


those


previously


obtained.


Thus


, channel


relationships


ess


with


cooperation


a power


greater


imbalance


conflict


are


characterized


(Dwyer,


Schurr,










trust


between


channel


members


deteriorates


leading


short


-term


view


relationship.


H5: Power


imbalance


is negatively


related


in a retailer
d to retailer


-vendor


relationship


s expectation


future


interactions.


Effect


of Antecedents


on Other


Antecedents


effects


various


antecedents


retailer


expectation


future


interactions


on other


antecedents


shown


Figure


Effect


transaction


specific


assets


on competition


vendo r


market


Investment


in transaction


specific


investments


reduces


number


vendors


available


to retailer


as an exchange


partner


. Transaction


specific


assets


are


idiosyncratic


investments


tailored


relationship


between


a specific


retailer


vendor,


these


investments


lose


their


value


when


relationship


breaks


down.


In such


situations


, other


vendors


cannot


as substitutes


. Therefore,


transaction


specific


investments


create


exit


barriers


between


retailers


potential


vendors


thus


, reduce


number


substitutes


available


retailer.


Anderson


imbalance i


Weitz


s more


1989


pronounced


indicate


that


in conventional


effect
channel


th


power
.an in


w










Investment


retailer


transaction


is negatively


specific


related


assets


competition


vendor


market.


Effect


competition


vendor


market


on Dower


imbalance


Viewed


from


a dependence


perspective,


power


retailer


relative


dependent


on thi


to vendor

e retailer


degree


obtaining


to which

scarce


vendor


resources.


When


there


are


many


suppliers


market


each


whom


can


provide


similar


resources


to the


retailer,


retailer


more


power


compared


vendor


. The


vendo r


is more


dependent


Such


on the


asymmetric


retailer


dependence


than


retailer


situation


creates


is on


power


vendor.


favorable


one


party.


Competition


related


power


vendo r


imbalance


market


in the


channel


positively
1 dyad.


Effect


transaction


s oecific


investments


retailer


vendor


on Dower.


imbalance


Transaction


investments


specific


tailored


investments


to a relationship


are


such


specialized


that


relationship


were


to be


terminated


value


these


assets


outside


relationship


would


very


low.


Transaction


specific


investments


pose


problems


channel


members


unless


channel


partners


also


invest


reciprocating


transaction










terminated.


The potential


risk of


losing


specific


investments


by the retailer


the vendor


creates


a power


imbalance


relationship.


Transaction specific


investment by one party alone,


either
power


retailer


imbalance.


investments or


vendor,


When both parties


a lot of


specify


positively related
have no specific


investments,


specific investments are negatively related
imbalance.


Retailer


to power


s Long-Term Orientation


Pruitt and Kimmel


(1977)


after


reviewing


twenty years of


experimental


gaming


literature concluded


that a critical


factor determining


the behavior


a bargainer


at a given


point


in a negotiation game


the bargainer's short-term or


long-term perspective.


Bargainers with a short-term


perspective are concerned only with


the options and outcomes


the current negotiation while bargainers with a


long-term


perspective


focus on achieving


future goals


and are concerned


with both current and future outcomes.


According


their


review,


short-term perspective


leads


to noncooperative


behavior


by subjects


in a


Prisoner's


Dilemma paradigm while


long term perspective


results


in cooperative behavior.


this dissertation,


term


"orientation"


has been used


instead


term


"perspective"


, though both


terms have









interfirm exchange adopted by channel members.


Firms with


a short-term orientation rely on efficiencies of market


exchanges


while


to maximize


firms with a


exchanges


to maximize


their profits during


a negotiation


long-term orientation rely on


their profits over


relational


a series


negotiations.


Relational


exchanges obtain efficiencies


through


joint


synergies


resulting


from investment


exploitation of


idiosyncratic


assets


risk sharing.


Both


orientations have


the ultimate objective of


outcomes obtained by channel members,


maximizing


and do not


imply any


altruistic motives on


the part of


channel members.


Both long

conceptualized


-term and short-term orientations are


this dissertation as polar opposites on a


single dimension.


As a


result,


short-term orientation is


negatively correlated with long-term orientation.


In other


word


an increase


in short


-term orientation will


decrease


long-term orientation of


a channel member.


expository


clarity,


long-term


- short-term continuum will


referred


to as


the degree of


long-term orientation


Since


focus of


this dissertation is on


will be presented


from


the retailer,


the retailer's viewpoint.


hypotheses


However,


priori


there is no clear


case


these hypotheses


to differ


when


viewed


from a vendor's viewpoint.


A-~~~ A. A.- A -.1.- A


1,,, LY, L L: LL~LL


.


L









future interactions merely capture


the probability of


future interaction between


retailer


vendor.


Definition of Retailer'


Lona-Term Orientation


A retailer's


long-term orientation is


the degree


which a


retailer


is concerned with future outcomes


leading


a goal


of maximi


zing outcomes over


a long period


time.


Antecedents of


Retailer's Lona-Term Orientation


A retailer's


long-term orientation is affected by


economic,


environmental


section explicates


relationship factors.


the effect of


these


This


factors on a


retailer's


long-term orientation.


antecedents on retailer's


The effect of various


long-term orientation is


shown


Figure


3-3.


Effect


individual


trust on retailer's


lona-term


orientation


Trust


in an individual


is a belief


that an individual's


word


fulfill


or promise is


obligations


reliable and


in an


that


individual


exchange relationship


(Blau


will


1964;


Rotter


1967) .


This definition


emphasizes


truthfulness


aspect of


trust which Lindskold


(1978


refers


to as objective


credibility:


an expectancy held by an individual


that


vgl w










outcomes


a retailer


along


with


their


own


will


trusted


to a greater


extent


than


vendors


are


solely


interested


their


own


welfare.


It should


noted


that


second


type


trust


can


exist


even


when


objective


credibility


vendors


less


than


perfect:


vendors


may


way


they


they


will


because


competing


demands


or situations


beyond


their


control.


In other


words,


vendors


will


trusted


if their

(Lindskol


actions

d 1978).


are


perceived


In this


as benevolent


definition


trust,


retailer


focus


on an individual


s trust


other


person,


an individual


Retailer


s long


-term


orientation


also


affected


trust


they


have


on vendor


organization.


Trust


a vendor


organization


refers


belief


a retailer


that


vendor


organization


will


fulfill


obligations


exchange


relationship.


Trust


in an individual


vendor


or organization


have


similar


effects


on retailer


s long


-term


orientation.


Trust


affects


ways:


long


trust


-term


reduces


orientation


chances


a retailer


opportunistic


three


behavior


vendor,


trust


increases


confidence


retailer


long


that


short


period


-term

trust


inequities


reduces


will


resolved


transaction


over


costs


exchange


relationship.










agreement


terms.


writing


to unanticipated


to bounded


, negotiating


contingency


rationality


implementing


enforcing


costs


a contract,


comprehensive


possible.


contract


At best


involving


, only


a long


incomplete


-term


relationship


contracting


can


achieved.


Williamson


1981)


argues


that


such


incomplete


contracts


are


feasible


only


there


mutual


trust


between


parties


. Incomplete


contracting


in a trusting


relationship


means


that


, the


parties


agree


to adapt


to unanticipated


contingencies


in a mutually


profitable


manner


In such


trusting


relationships,


retailers


vendors


are


likely


respond


to inequities


through


solutions


over


long


-run


instead


responding


to inequities


through


opportunistic


behaviors


This


suggests


that


trust


acts


as a dampening


mechanism


opportunistic


behavior


in an exchange


relationship


Thus


, when


trust


exists,


long


-term


idiosyncratic


investments


can


made


with


limited


risk


because


channel


members


will


refrain


from


using


their


power


renege


on contracts


or use


a shift


circumstances


to obtain

trusting


profits


relationship


their

s are


favor

likely


(Lorentz

to have


1988)

lower


Further,

transaction


costs


incomplete


contracts


are


sufficient


running


exchange


relationship.


summary,


trust


reduces








: Trust


in an individual


vendor


is positively related


to retailer's


long-term orientation.


: Trust


in vendor


organization is


positively related


to retailer's


Effect of


long-term orientation.


retailer's dissatisfaction with Dast outcomes and


retailer's


lona term orientation


A retailer's dissatisfaction with past outcomes


reflects


a cognitive state of


feeling


inadequately


rewarded


past activities concerning


relationship


(Howard and Sheth


1969)

the r


These activities


wroduc t


in a


(satisfaction with


channel


distribution refer


product quality),


financial


(satisfaction with gross margin,


credit


policies),


ass i stance


(satisfaction with promotional


assistance),


and social


interaction


(satisfaction with


vendor's


representative)


dimensions of


relationship


(Ruekert and


Churchill


1984).


Research in


the area of


family decision making has


indicated

previous


that a dyad's decision history,


periods affects


1.e


the current outcomes


the outcome

(Corfman and


Lehmann


1987) .


Losses


in the past periods


increase


the desire


to even


the score


in current and


future exchanges


enhancing


the strength of


preferred outcomes.


This


similar


to Kelly and Thibaut's


1978


work where


the outcomes


themselves describe


In other words,


satisfactorinesss"


subjects who are dissatisfied due


the exchanges.


to lower


-,, t 4-.-\ n,.arl -i rf n ne r F t 1 1 vr


Clr ra


Ck A A ~ F1 C ~ r h


1; Lhl


Ar r C n Am A A


*I









behind but were concerned with


the outcomes


their


partners


along with


their


own when


they were ahead.


These studies


indicate


that


focus of


a bargainer


shifts


immediate or


short-term gains when he/she


dissatisfied with


past


outcomes.


Equity frameworks,


the other


hand propose an


intervening


"equi ty/inequity"


construct which determines


satisfactoriness of


the perceptions of


outcomes.


equity or


In other words,


inequity,


outcomes drive


leading


satisfaction or dissatisfaction with outcomes.


indicates


Equity theory


that dissatisfaction with past outcomes due


inequities


in distress will


exchange will


try to


result in distress.


restore


Individuals


the equity


relationship by emphasizing


their own outcomes


in future


periods.


This suggests


that


retail buyers who perceive


inequity in past negotiation encounters are


likely to


dissatisfied


leading


to a short-term view of


their


relationship.


H11:


A retailer's dissatisfaction with past outcomes


negatively related
orientation.


Effect of


retailer's


long- term


lona-term orientation on retailer's


lona-


term orientation


4 S .


~ndo


I










term orientation


reflects


the degree


to which


the vendor


focuses on


future outcomes


rather


than current outcomes


alone.


increase


in vendor's


long-term orientation,


indicates


greater


commitment of


the vendor


to continue and build


relationship.


As Dwyer,


Schurr,


and Oh


(1987


point out


that


relationships


that are committed,


are aware of


alternatives


but do not


indulge


in continuous and


frenetic


testing of


commitment


to each other.


A long-term oriented vendor


provides high and


considers


consistent inputs


relationship durable


to the


resulting


relationship,


in reduced risks


and higher

H12:


efficiency for


Vendor's


related


the retailer.


long-term orientation is positively


to retailer


long -term orientation.


Effect of


retailer's exDectations o f


future


interactions


retailer's


lona-term orientation


Research in Prisoner's Dilemma


paradigm


(Pruitt and


Kimmel


1977)


indicated


that bargainers who expected


future


interactions with


their partner


behaved more


cooperatively than bargainers who did not expect


future


interactions


. The


implication of


this


result


that a


anticipation of working with


the other party changes


attitudes


and behaviors of parties


involved


. Marlowe,


Gergen










subjects


in a PD experiment


behaved


cooperatively


towards


other


party


only


other


party


was


perceived


fair


reasonable


rather


than


being


exploitative.


This


suggests


that


retailer


s expectation


future


interactions


will


lead


long

fair


-term

and


orientation

reasonable b


only


oth


when


which


the

are


vendor

elements


is perceived


trust.


: A retailer


s expectation


future


interactions


itively


under


high


related
levels


to retailer


trust


s long


in vendor


-term


orientation


representative.


H14:


A retailer


positively


under


high


relat


eve


s expectation o
ed to retailer'


trust


future


long


in vendor


interactions


-term


orientation


organization.


Effect


dependence


on retailer


s lono


-term


orientation


Dependence


a firm


on B is


defined


degree


which


outcomes


to A from


obtained


best


relationship


firm


alternative,


are


highly


A exceed

outcomes


valued,


outcomes

obtained


A has


available


A from


alternative


sources


or potential


sources


exchange


Heide


John


1988)


One


sources


dependence


extent


investment


a channel


member


in assets


specific


relationship.


A retailer


invested


created


barriers


to exit


from


such


a relationship.


These


relationships


with


high


switching


costs


result


in an










opportunism


is to


vertically


integrate.


In a retailing


context


, vertical


integration


quite


often


a feasible


solution


(Heide


John


1988


.The


only


other


alternative


to develop


long


-term


relationships


with


vendors.


Long


-term


relationships


with


vendors


are


less


dependent


on the


retailer


could


safeguard


assets


reduce


dependence


over


long


-run.


A retailer


increases


transaction


specific


investment


in a relationship


translates


this


investment


into


outcomes


which


are


superior


best


alternative

dependence

balanced de


a vend

on the


pendenc


or


has,


can


retailer.

e between


increase


This

the


vendor


could result

retailer and


in a more

vendor.


In contrast,


dependence


a vendor


on retailer


increases,


retailer


opportunity


to deny


long


-term


contracts


with


vendor


which


could


be used


as a safeguard


vendor


against


retailer


s opportunistic


behavior.


other


words,


since


risk


associated


with


transaction


specific


assets


is vendor


retailers


are


less


likely


to be


motivated


to develop


a long


-term


relationship.


: Dependence


a retailer


on vendor


positively


related


to retailer


s long


-term


orientation.


: Dependence


related


to retailer


a vendor
's long-


on retailer


term


is negatively


orientation


Effect


Antecedents


on Other


Antecedents










Effect of


dissatisfaction with


Dast outcomes on vendor's


trustworthiness


Research in equity theory and


social


exchange e


theory


suggests


that


inequitable outcomes


the past affect


behavior


in subsequent


periods


(Adams


1965


; Kelly


Thibaut


1978) .


In a continuing


relationship


, dissatisfaction with


past


outcomes


indicates an inequity


in social


exchange.


According


to equity theory,


when individuals


find


themselves


participating


inequitable


relationships,


they feel


distress.


This distress


results


in physiological


psychological


arousal


such


as anger,


resentment,


mistrust.

disadvanta


Such social

ge in an ex


inequity which


change


leaves one -member


relationship affects


at a


their


feelings


towards


the other party.


Specifically,


feelings


such


resentment,


anger,


and being


taken advantage of


, generated


to dissatisfaction result


in suspicion and mistrust


the channel


partner.


In a retailing environment,


a retailer


perceives


inequity


in a


relationship due


to poor outcomes


the past will be dissatisfied and


likely to view the


vendor,


both as an individual


untrustworthy and


exploitative.


as an organization


Although,


to be


the retailer may


still


continue such a


relationship,


there is


likely to be a


reduced


level


trust


vendor.










H17:


A retailer'


negatively related
representative.


dissatisfaction with past


retailer'


s trust


outcomes


in vendor's


: A retailer


s di


negatively related


organization.


satisfaction with past


retailer


trust


outcomes


vendor


Effect of


Dower


imbalance on


trust


When one party possesses


a high leverage over


the other


party,


the stronger party becomes manipulative and


exploitative.


This


leads


the weaker party to mistrust


intentions


the stronger party.


Anderson and Weitz


1989)


found


that


power


imbalance significantly decreased


trust


between dyads


in conventional


channels.


In a


retailing


context,


a retailer who


lower power


than


vendo r


likely


to mistrust


the vendor.


Conversely


vendor who


lower


power


compared


to retailer


likely


to mistrust


intentions of


the stronger


retailer


, resulting


lower


trust.


them,


Retail


are


buyers who


likely to attribute


perceive a power


their mistrust


imbalance against


to both


organization and


individuals


representing


organization.


H19:


vendor


in vendor'


Power


imbalance


relationship


favoring


the vendor


is negatively to


representative.


in a


retailer


retail
s trust


Power


vendor


imbalance


relationship


favoring


the vendor


is negatively related


in a


retail


retailer'












Effect


transaction


specific


investments


on dependence


Transaction


investing


specific


party


assets


(Heide


create


John


exchange


1988)


difficulties


These


difficulties


could


arise


appropriate


because


some


an opportunistic


fraction


exchange


value


partner


immobile


assets


This


happens


investing


party


can


no longer


rely


on the


In other

specific


threat


words

asset!


to switch


, switching

s prevent c


to another


costs


redible


supplier


to immobile


threats


or vendor.

transaction


. Therefore,


extent


dependence


a function


magnitude


specific


assets.


H21:


Transaction


positively
vendor.


specific


related


: Transaction


positively
retailer.


specific


related


investments
dependence


investments
dependence


a retailer
a retailer


vendor


are


are


a vendor


Effect


transaction


specific


investments


a vendor


vendor


s lona


-term


orientation


Transaction


specific


assets


vend o r


are


immobile


assets


that


increase


dependence


vendor


on a


retailer


. Although,


to opportunistic


specific


behavior


assets


retailer,


vendor


they


also


could


send


lead


signals


.. .- ., p. r~w%4-.'t 1 n r a ~ -r A 4 r r I-r a Cmyn. .n s


rrrC4:l


r AA ~~ ; n A


tt~~~ A I*


FA C~A


Ar ~


r


fA


C~A










retailer


that


relationship


reduced,


thus


increasing


possibility of


a long-term relationship.


H22:


Transaction specific


positively related


orientation.


investments


the vendor


by a


vendor


long-term


are


Effects of


in vendor


vendor's


3KELOBUJEJ CligatatiDD DO.I 82dJUUL'JS


organization and


1trus


representative


Vendor' s


long-term orientation


supports


increased


levels


trust


several


reasons.


First,


when


the vendor


long-


term oriented,


retailers


believe


that


they can correct


short


term inequities.


Further,


when


the association is


perceived


to be more durable,


each party


is more confident


that


other will


fulfill


the obligations


faithfully


. Essentially,


vendor's


increases


long-term orientation


likelihood


(e.g.


of good behavior


through increased TSI)


on the part of


vendor,


reduces


the possibility of


opportuni


stic


behavior.


H24:


Vendor's


long-term orientation is positively


related


to retailer


trust


in vendor's


representative.


H25:


Vendor's


related


long-t


to retailer


erm orientation


s trust


vendor


positively
organization.


Summarv


Long-term orientation of


a retailer


is affected by


rat-n~~~~~~~ 4 a e a' r. tf -n %I fl %


;*rCAC~S


trust


raC~;larln nv


El~cllrh


c.'L\ ,










perceived dependence of


retailer


and vendor


on each


other.


Retail r


s Initial


Offer


Overview


A bargainer's

negotiation between


initial


offer


parties.


often sets

An initial


the tone of

offer conveys


important


information about bargainers perception of


their


adversary


, and


their


own aspirations and


limits.


example,


a high initial


that


offer


the bargainer


often sends a signal


has high aspirations.


the opponent


In some cases,


also


signals a


lack of


trust between


the bargainer


opponent.


Therefore,


initial


offer


is an


important


part


the bargaining process.


Definition of


Retailer's


Initial


Offer


initial


receive


s/her


offer


first


the benefits a retailer would

offer was accepted by the vendor.


initial


offer made by retailers


is a


function of


their


aspiration level.


Aspiration level


level


of benefit sought by a


retailer during a specific negotiation encounter


(Pruitt





--










offers


to protect


their


aspiration levels.


This


stems


from a


fear o

closer


f position


their


loss.


Once negotiators make


aspiration levels,


initial


is difficult


offers


them


increase


their


offers during


the negotiation without


losing


face


their


opponents.


As a


result,


to achieve


their


true aspiration levels,


conceal


negotiators


their aspirations by making


find it necessary to

initial offers which are


high and


offer


then


level.


trading concessions


Experimental


from this


evidence has shown


high

that


initial

higher


aspiration


levels


produce higher


initial


offers


(Hammer


Harnett


1975;


Yukl


1974)


Antecedents of


Retailer'


Initial


Offer


Relative


Retailer's own Asoiration Level


Retailer's


level)


initial


O


depends on whether


iffer

the


(relative


retailer


to own aspiration


the vendor makes


initial


offer.


Since,


the model


under


situations


is different


are depicted


, both are discussed separately.


in Figure


Retailer makes


two models


3-5.


initial 1


offer


Effect of


retailer's


long-term orientation on retailer's


initial


offer.


long-term orientation of


retailer


affects


their


initial


offer.


Retailers who are


long-term


- -- w









overtly concerned about


position


loss


(loss due


discovery of


true aspiration level by the other party)


Image


loss


(loss due


the discovery of


limits).


Even if


moderate initial


retailers


offers


are confident


result


that


in short


-term inequities,


such inequities will


balance out


long


run.


Long-term oriented retailers behave


responsively towards


the vendors and


expect t


similar


response


from


the vendor.


Retailers having a long-term orientation


tend


to be


truthful about


their


aspiration levels,


and hence


make


initial


offers which are closer


to their


aspiration


level


(Pruitt


1981).


A study by Schoeninger


and Wood


(1969)


found


that


intimate couples exchanged


truthful


information about


aspirations,


adopted


problem solving approach.


contrast,


stranger dyads


started out with high


initial


demands,


and made small


concessions


from this high


initial


demand.


H26:


Retailer' s


related


long-term orientation is


the retailer'


s initial


offer


negatively
(relative t


own aspiration level).


Effect of


vendor


lona-term orientation on


retailer's


initial


offer.


Vendor' s


long-term orientation


indicates a


commitment on


the part of


vendor


towards developing


a long-


term relationship.


Retailers who perceive


the vendor


to be


1 nn n rnrm nr4m ont oui


Rra r'nni r iont


that anR Qhnrt-- trm










retailers who consider


the vendor


long-term oriented are


likely to


take more


risks by being honest about


their


aspiration


levels,


resulting


in initial


offers close


their


aspiration levels.


H27:


Vendor's


long-term orientation is negatively


related


to retailer's


retailer's aspiration


initial
level).


offer


(compared


Vendor makes


initial


offer


Effect of


vendor' s


initial offer


on retailer's


initial


offer.


Research


in negotiations


indicates


that bargainers'


initial


offers are affected by their perception of


the other


party's


behavior.


One common occurrence


in negotiations


strategy imitation,


other party when


wherein a negotiator cooperates with


the other's actions are perceived as


cooperative and acts competitively when


the other


is seen as


competitive.


Opponent's


behavior


that


is seen as competitive


puts


target on


the defensive and


thus elicits a


competitive behavior


return


(Kimmel


et al.


1980) .


A common


imitation behavior


occurs when


the vendor makes a


tough


initial


offer.


When such an offer


is perceived as competitive


leads


to a similar


tough initial


offer by the


retailer.


Vendor's


long-term orientation affects


the attributions


a retailer makes


regarding


the vendor's


initial


offer.









retailer.


the other


hand,


tough


initial


offer


from a


short-term oriented vendor


likely to


be attributed


to a


desire


to make profits at


the expense of


retailer.


such


initial


situations,


offer


retailer


likely to attribute


as being exploitative and


unfair.


tough


This


likely to


result


in matching


initial


offer


greater


than


retailer's


true aspiration


level.


H28:


Vendor's


retailer's


initial


initial


offer


offer


aspiration level)


positively related


(relative


to retailer's own


Effect on


retailer' s


long-term orientation on retailer's


initial


offer.


rationale


this


hypothesis


the same


the one


in H25.


The only difference


that


the vendor


makes


initial


offer


this


case.


H29:


Retailer's


related
retailer


long-term orientation is


retailer' s


own aspiration


initial
level).


offer


negatively
relative to


Effect of


vendor's


19EQL191ELOlidit iddlJ2


vendr'.


initial


offer.


A vendor's


long-term orientation indicates a


commitment on


the part of


vendor


towards developing a


long-


term relationship.


Retailers who perceive


long-term oriented are more


likely


the vendor


to be


to expect an initial


offer


from a


vendor


close


the vendor's


true aspiration level.


Retailers


perceive


long-term oriented vendors


to be


truthful


about


their priorities and values.


This


similar


Cltitncan rnrvnri$-araA ,-l II ~i. ma 4. tn t. 4 nnaC:n t rr t


retailer s


vendor's


c~tll=rt; nnE









H30:


Vendor's


long-term orientation is negatively


related


to vendor's


own aspiration level)


initial


offer


(relative


to vendor's


Message Sendina


Behaviors and Disagreements


Research in negotiations


focused


on the


importance


initial


offers


in determining


the negotiation process


(Pruitt


1981


Research has


indicated


that an extreme opening


initial


to higher


offer


outcomes


(indicating a


tough strategy)


the bargainer making


can


initial


lead

offer


(Siegel and


Fouraker


1960;


Bartos


1966,


1970) .


However,


there


are


limitations


to such a conclusion.


Typically,


researchers


have


found


that


excessive


intransigence or


toughness may


lead


impasse and lack of


when bargainers do not

may be appropriate. Hi


agreement.


trust


gh init


Others


each other,

ial offers


have argued


that


a high initial

followed by a s


offer


series


concessions


(referred


to as


heuristic


trial


error


strategy)


allow suspicious bargainers


infer


each other's


priorities without direct disclosures


. In other words,


under


low trust concessions


establishing confidence


integrative agreements


In a


from a high initial


in each other


(Tutzauer


relationship which is


and Roloff

long-term,


offer


thus,


help


lead


1988).

the role of


initial


offer


becomes critical.


In contrast


situation


described above.


a hiah initial


offer


relative


to harnain r'










other


and has


serious


repercussions on negotiation behaviors.


A high initial


offer


in a


long-term relationship dictates


message sending behavior of


vendor,


which in


turn affects


message sending behavior


behaviors of


retailer.


retailers and vendors determine


The message sending


level


disagreement between


bargainers.


The model


is shown


in Figure


Effect of


retailer'


and distributive message sending behavior


Sa r f


Retailer's


initial


offer


(relative


to retailer's own


aspiration level


indicates


the degree


to which


retailer


truthfully reveals


the goals of


the negotiation.


retailer's


the vendor


initial


abandons


offer


exceeds


information


the aspiration level,


exchange


favor


distributive messages which include


threats,


putdowns,


fabricated


persuasive arguments


(Kimmel


et al.


1980).


other


hand,


a retailer's


initial


offer which


is close


retailer's


aspiration level


likely to


result


information exchange about priorities and ways


to solve


problems.


H31:


Retailer's


initial


offer


(relative


own aspiration level) is positively related
distributive message sending behavior.


to retailer's


to vendor's


initial


nffpr


nn vanrj n r c


-