Abstract
While the term “bureaucracy” might conjure thoughts of a slow, stagnant system, some aspects of bureaucratic controls can enhance supplier relationships with independent distributors. Specifically, having formalized roles and expectations along with documented rewards/sanctions for both parties, shows the supplier is committed to a “win-win” relationship with the distributor. A survey of 314 independent industrial product distributors revealed how formalization and centralization affect the distributor's commitment to a supplier. This study confirms the notion of formalization and centralization having respective positive and detrimental effects on an exchange relationship. Guidelines for formalizing exchange roles across independent firms are also provided.
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