Adding direct or independent channels to multiple channel mix

Abstract

PurposeThis paper aims to clarify the conditions under which firms can add direct or independent channels to their single channel system and switch to multiple channel systems. Using the transaction cost theory, variables, i.e. specific asset investments, internal uncertainty, and environmental uncertainty, this study seeks to examine how those variables affect firms' decision to adopt a specific multiple channel mix.Design/methodology/approachThe study was conducted within the context of a manufacturer and its multiple channel systems. Using a survey method, primary data were collected from 189 US manufacturers and 98 Taiwanese OEMs. The t‐test and regression analyses were used to test the hypotheses.FindingsThe results indicate that under high‐specific asset investments, high‐environmental uncertainty, and high‐internal uncertainty conditions firms add direct channels and adopt an independent‐direct multiple channel system. On the other hand, under low levels of those variables firms expand their channel system into multiple channels by adopting an independent‐independent multiple channel system.Research limitations/implicationsThe findings provide guidelines to managers regarding the composition of their multiple channel systems. As a limitation, this study uses only three transaction cost variables. Future studies should include other variables that may affect channel design decisions.Originality/valueWhile various studies have analyzed firms' decision to switch to multiple channels by adopting new channels, the nature of those added channels remains under‐researched. This study aims to fill that gap. Also, unlike some other similar studies that only depend on US data, this study tests the hypotheses with the data obtained not only from US manufacturers but also from Taiwanese OEMs