The Effect of Retailer Conflicts by Corporate Channel Strategy

Dual distribution system is commonly seen in industrial markets. Although transaction cost and relationship-marketing theory have been successfully applied to explaining distribution decisions, conflicts among retailers within dual channel are yet to be fully discussed in empirical study. Basically, when a manufacturer sells its product through two different channels, retailers will conflict and compete, given that they have to sell the same product at different prices. The purpose of this paper is to investigate conflicts between the manufacturer and retailer within a dual channel. Based upon the power and conflict theory, this paper aims to build a conceptual model to explain channel conflicts in a dual channel structure. We dichotomize conflict into constructive and destructive conflict types in order to further probe the content of conflict. Findings show that use of coercive power source will impact destructive conflict positively and significantly, while use of non-coercive power source impacts constructive conflict positively and significantly. Use of power is a mediator between use of power source and conflict. To conclude, we propose some managerial suggestions to manufacturers.