EXPRESS: Deconstructing Channel Restructuring

Abstract

Channel restructuring is a firm’s redesign and optimization of its channel system to serve markets more effectively. Restructuring demands significant investments of time, capital, and managerial attention, as firms must reconfigure processes, renegotiate agreements with channel partners, and manage the operational disruptions that inevitably accompany structural change. As even the most rigorously planned restructuring efforts can falter if partners do not buy in, it is paramount that firms secure the compliance of partners they seek to retain in the revised channel system. Prior research lacks a comprehensive and integrated conceptualization of channel restructuring, the available restructuring options, and the implications of restructuring for the firm’s downstream channel partners. We offer a channel restructuring typology comprising six restructuring types and delineate the functional role, status, and financial implications of each type for the firm’s partners. We provide theoretically grounded, testable propositions regarding the impact of restructuring on partner compliance. This paper offers scholars guidance for empirical investigation. It also highlights factors that practitioners should consider when designing and implementing channel restructuring to achieve both operational efficiencies and sustain partner relationships.